SBIR at the Department of Defense (2014) / Chapter Skim
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Appendix F: Selected Case Studies
Appendix F: Selected Case Studies
Pages 289-393
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From page 289... ...
Case studies were an important part of data collection for this study, in conjunction with other sources such as agency data, the survey, interviews with agency staff and other experts, and workshops on selected topics. The impact of SBIR funding is complex and often multifaceted, and although these other data sources provide important insights, case studies allow for an understanding of the narrative and history of recipient firms -- in essence, providing context for the data collected elsewhere.
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is a privately held company headquartered in Eden Prairie, Minnesota. It was founded in 1981 by
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Several ATC-NY products funded by SBIR awards have evolved into products. These include the Online Digital Forensic Suite™, CYDEST™ (which provides simulated cyber defense training on virtualized computer networks)
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Concept of Operation video." Products and Commercialization ATC has reinvented itself a number of times to adjust to changing commercial environments and opportunities. Although initially a consulting company, its development of commercial products led to the application of core technologies in new areas and to the spinoff of a subsidiary to focus on computer security issues.
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It is ideal for rapid incident response, compliance management and e-discovery in enterprises, and for the needs of law enforcement. OnLine Digital Forensic Suite™ (OnLineDFS)
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Proctor said that part of the increase in patenting at ATC reflects the growing importance of commercialization metrics at DoD, where patents are one of the metrics feeding into a company's commercialization score. In addition, the company found that individual algorithms could be patented that had applications across a number of potential markets.
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An engineer wishing to apply for SBIR funding first needs to make the case internally that the project will result in commercial sales, then writes the proposal -- which provides valuable training in and of itself. If ATC wins an award, then engineer is asked to run the project, which not only provides critical experience, but also acts as a valuable internal incentive for staff and limits the amount of management involvement.
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ATC found that when the TPOC changed, the project usually failed to reach Phase III. He suggested that the agencies consider ways to reduce or eliminate this problem, which to some degree has declined since DoD sharply reduced the time line for initial topic submission to publication in a solicitation from more than 2 years to about 1 year.
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By 1996, the company had 40 employees, largely PhDs, with the work closely centered on robotics, sensors, and remote applications. During this period, SBIR awards opened the door to a number of sponsors especially in DoD and NASA.
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Cybernet is currently building its sixth ATACS for Army. This rapid delivery was made possible in part by the SBIR compete clause, which permitted the Army to sole source the contract to Cybernet based on the competition for the previous SBIR award.
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The objective is to release war fighters from the burden of performing routine diagnostic and maintenance, allowing them to focus on the mission at hand. Health Care MedStar™ is a web-based system for outpatient care that collects physiological data from personal patient devices and sends the data to a webbased electronic patient and data management system.
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Earlier work in this area included the force feedback work that eventually led to licensing by Immersion (see below)
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In 1998, Cybernet decided that it would be best to license its technology to Immersion in exchange for royalties and some equity -- a decision that led Microsoft to announce an agreement with Immersion within weeks of the deal. Even though Cybernet did not directly commercialize its SBIRsupported force feedback technologies, they were eventually deployed by Immersion and are now found in a majority of mobile phone handsets as well as many game controllers.
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Regarding the size of awards, Dr. Jacobus believed that results would be optimized by keeping Phase I SBIR awards as small as possible, while ensuring that funding for Phase II was sufficient to complete prototype development or a similar level of technology exploration.
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In his view, this would be more useful than commercialization training. o Allocate some SBIR funding via the primes, that is, allow the primes input into the development of topics and the selection of awards.
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Currently, areas of interest, in addition to ASW, include mine warfare and unmanned vehicles, where data fusion is an important technology. Today, DoD accounts for about three-quarters of DHWA revenues, and Navy alone accounts for about one-half, according to Dr.
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This outcome was, however, the result of a long period of development. A number of early SBIR awards were used to develop environmental data fusion for mine warfare.
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Monach, the company's core technologies are now: multiple hypothesis data fusion (used in many different fusion applications) ; non-Gaussian tracking (now called particle filters)
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DHWA often works for these clients in conjunction with DoD primes, sometimes as a subcontractor and other times as the prime itself, especially on SBIR awards. Prime partners include Lockheed Martin, Northup Grumman, Boeing, General Dynamics, the Institute for Defense Analysis, and SAIC.
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From page 308... ...
The company won a SBIR Tibbetts award in 1999, a SBIR Phase 2 Excellence Award in 1997, citations and awards from the Navy and the Defense Logistics Agency, as well as recognition from the Military Operations Research Society and the Operations Research Society American. Working with Prime Contractors Although many SBIR companies report difficulties in working with primes at DoD, DHWA has a long record of working with them successfully.
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From page 309... ...
The SBA TechNet database shows 104 Phase I awards and 37 Phase II awards since the first award in 1983, providing a total of about $26 million in SBIR funding over the time period. The bulk of DHWA's SBIR work has been on DoD awards, and more than one-half of these has been for Navy (see Table F-3)
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Navy SBIR Theater Undersea Warfare Initiative (TUSWI) Non- Navy Lockheed Martin Gaussian Data Fusion System (NGDFS)
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TABLE F-3 DHWA DoD SBIR Awards by Phase and Component Phase I Phase II AF 13 4 Army 11 1 DARPA 5 0 MDA 9 2 OSD 5 1 Navy 49 26 DoD Total 92 34 SOURCE: SBA TechNet database, accessed September 19, 2012.
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Overall, Dr. Monach said that SBIR funding levels were acceptable and that reporting did not impose an undue burden.
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Fetch technology is designed to connect millions of websites, to gather data for a myriad of applications, including competitive intelligence, news aggregation, data analysis, and background screening. Most of the technology was developed in conjunction with SBIR funding, with support from several DoD agencies including DARPA, as well as NSF.
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The company made significant moves toward further commercialization in 2011. In February 2011, it was reported that the company had raised $4.6 million in a B series venture capital round.13 And in March, xEconomy reported that Fetch had signed a development agreement with In-QTel, the venture capital arm of the intelligence community.
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From page 315... ...
Each of the major technical innovations at Fetch could be linked directly or indirectly to the steady flow of SBIR funding between 2001 and 2010. Yet at the same time, the company's original orientation toward research continued to be fueled by the ready acquisition of more SBIR awards.
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This reflects a fundamental shift in position as a contract R&D house to a company focused on manufacturing and selling commercial products. Giner continues to be profitable, with revenues and profits growing substantially since 2006.
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The company was selected as a vendor by Lockheed Martin for work on the ISIS space program for NASA. Laboratory hydrogen.
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Power Generation Growing interest in hydrogen-based power has created opportunities for Giner, which has considerable expertise in hydrogen electrolysis and in fuel cells. Hydrogen (H2)
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stacks on-board the Seawolf class, in due course. Giner is also working with NASA and prime contractors to adapt PEM technology to living and working in a vacuum, where power consumption is a key factor.
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Short- and Long-Duration Energy Storage Giner is currently developing different types of energy storage devices (capacitors, lithium batteries, regenerative fuel cells)
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Mittelsteadt expressed strong support for efforts aimed at ensuring that any company applying for SBIR funding actually meets the agency's needs, which reduces costs and increases efficiency for the agency and the company. For example, he approved of the DoE pre-submission notice, which encouraged potential applicants to submit a 2- to 3-page white paper outlining possible research for prior review by agency staff.
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Frost, the company pursued a range of technologies using SBIR awards during the late 1990s. In 1998 the company received a DARPA research contract, which helped fund development of the technology that led to the PackBot, one of iRobot's first commercial application.
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Since inception, iRobot has sold more than 4,500 tactical military robots.15 The development of civilian robots continued in parallel, and the first Roomba entered the market in September 2002. The Roomba family has proved to be an enormous commercial success, with more than 7 million units sold.16 More recently, the company's focus has further evolved, as the balance of sales has increasingly shifted to the civil side.
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22 USPTO, iRobot assignee search, accessed September 14, 2012.
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. SBA's TechNet database reports that iRobot received about $8.5 million in SBIR funding 23 According to SBA TechNet database, Nekton won 19 Phase I and 9 Phase II awards between 1989 and 2006, from NASA, DOE, DoD, HHS, and DOC.
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Admiral Dyer noted that the sole source capacity attached to SBIR awards was excellent in theory but was not much used by the Services in practice. iRobot had not been able to use sole source, to his recollection.
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("Mayflower") is a privately owned company headquartered in Burlington, Massachusetts.
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Mayflower provided its GPS antenna AJ electronics to ATK/Draper for use in Navy BTERM II projectiles.29 Mayflower also developed and applied its GPS/anti-jam technology to the Navy's Guidance Integrated Fuze (GIF) Demonstration Program and is developing miniaturized anti-jam antenna electronics and a single-chip SAASM GPS receiver for use in the GIF guidance electronics unit.
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Customers Mayflower serves both government and private sector markets. Government Mayflower has served a range of government clients, including: Navy: SPAWAR, NAVSEA, and NAVAIR commands and Naval Surface Warfare Center and Office of Naval Research Army: CECOM, Army Aviation & Missile Systems Command, and SMDC Air Force: AFRLs in Dayton, Ohio, and Rome New York, Philips Laboratory, Space Flight Test Center, 746th Test Squadron, GPS Wing JPRS: JTRS JPEO, San Diego, CA Department of Transportation Federal Aviation Administration NASA: Johnson Space Center, Marshall Space Flight Center, Jet Propulsion Laboratory
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TABLE F-4 Mayflower Communications Patents 7,994,971 GPS-based measurement of roll rate and roll angle of spinning platforms 7,852,964 Anti-jam filter system and method for high-fidelity high-data rate wireless communication 5,596,600 Standalone canceler of narrow band interference for spread spectrum receivers 5,268,927 Digital adaptive transversal filter for spread spectrum receivers SOURCE: U.S. Patent and Trademark Office online database, accessed September 26, 2011.
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From page 331... ...
Since 2008, Mayflower has been especially successful. Not only did it receive more than $10 million in SBIR funding in 2008-2010, but also it succeeded in transitioning 9 of its 10 2007-2010 Phase I awards into Phase II -- a remarkably high success rate, which suggests that DoD customers are increasingly appreciative of the technology being developed at Mayflower.
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Alice Wertz, Chief Financial Officer Hawthorne, CA Established in 1984, Microcosm is a small business specializing in reducing space mission cost. The company started as part of Ithaco, Inc.
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Microcosm's Space Systems Division focuses on space mission architecting, mission and systems engineering, and related orbit and attitude analysis services. The company claims to have unparalleled experience in space mission engineering among small companies and even among larger companies.
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Publications and Knowledge Transfer Unusual for a small business, Microcosm is responsible for a number of key textbooks on space mission engineering. The company created and published Space Mission Analysis and Design (SMAD)
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Reinventing SMAD -- Methods for Dramatically Reducing Space Mission Cost and Schedule, in preparation. Microcosm also provides two training workshops on "Space Mission Engineering" and "Reducing Space Mission Cost." Microcosm and SBIR Microcosm has received 48 Phase I and 25 Phase II awards, totaling approximately $24 million.31 The company is a strong proponent of the SBIR program and has used SBIR funding to start almost all of its major technology initiatives, according to Dr.
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From page 336... ...
Task order contracts, which are more common, add dramatically to costs for the small business. For example, a recent contract assigned a prime contractor as the owner of the contract -- requiring them to be paid a fee for managing the contract, that the prime contractor do some portion of the work, and that they retain review responsibilities over the project.
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Wertz. Many COs have little understanding of the SBIR program, and rules regarding SBIR Phase III awards are almost universally ignored.
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Kelly, R.S. Ruoff, Strength and breaking mechanism of multiwalled carbon nanotubes under tensile oad, Science 287(5453)
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Safety 4) Capacity to develop intermediate products NCTI has developed methods to continuously produce very long, pure, carbon nanotubes, in the millimeter range of length, at high growth rates.
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shielding applications that require high conductivity. Taken together, these advances mean that some of the advantages of CNTs identified in the laboratory are now being delivered at commercially significant scale -- and which can therefore be used to address a range of potential markets.
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protection directly onto the structure. The Juno mission could be an important inflection point for NCTI: not only did it mean that NCTI's core technology was now space qualified against the rigorous standards set by NASA in support of a very important space mission, but also NCTI showed that it could be a reliable partner to a prime contractor, supporting its business strategy as a provider of intermediate inputs.
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Antoinette, even though the SBIR awards have come later in the technology development process than is sometimes the case, they have provided critical validation for the company and for its technology, which has helped in discussions with prime contractors and customers and in attracting investors. Michael Gurau of Community Ventures, who led the Series A round in 2006, observed that these awards would be important when NCTI sought further funding to expand production.
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DoD, through its Title III Defense Production Act, has designated NCTI's products as "critical to national defense." To date, the Company has been awarded $25M in TIII funding to scale its manufacturing capacity. Together with the SBIR awards discussed above, NCTI has received continuous government funding for the past 4-5 years.
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SBIR awards had led NAVSYS to develop technology that used GPS to improve the accuracy of "smart bombs." The company had expanded to 50 employees in anticipation of a Phase III contract, but the Air Force instead awarded the contract (and the 42 Annual Report, 2010.
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She also wants to transition ownership of the company to an employee stock ownership plan that now owns about 4 percent of its stock. Technologies and Products NAVSYS has developed a number of commercial products and services primarily based on the GPS technologies developed with support from SBIR funding.
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TIDGET® The base TIDGET sensor is a low-cost device that can be used for locating vehicles and other objects when combined with a communications data link. The device is much simpler than a conventional GPS receiver, which reduces costs, increases response times, and requires less power drain.
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From page 347... ...
Klotz, then Vice Commander of Headquarters Air Force Space Command, now the Air Force Assistant Vice Chief of Staff, "Talon NAMATH ensures the most up-to-date GPS data possible is provided directly to the cockpits of aircraft carrying out attacks against enemy targets. When employed with the Air Force's newest precision weapon, the small diameter bomb, this capability makes strikes more precise, and therefore more effective, while at the same time limiting collateral damage."45 TALON NAMATH: Illustrating The Procurement Challenge for SBIR Companies The Talon Namath system was very successful technically -- delivering more than initially expected, according to Dr.
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Brown, so operational progress has been limited. SBIR Awards NAVSYS won its first SBIR award from the Air Force in 1989.
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From page 349... ...
to provide much wider ranging technical solutions. In the late 1960s through the early 1980s the company successfully acquired a number of sole source contracts from NASA and DoD, focused on solving problems identified by the staff at NASA Centers and DoD agencies.
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Key Capabilities NEAR's mission is to develop and acquire knowledge of fluid mechanics and to transfer this knowledge to the aerodynamics industry by consulting and software licensing. Analytical services are available to customers who require data for evaluating new ideas, for supporting wind tunnel and flight tests, and for FAA certification efforts.
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Domestic clients include almost all of the prime contractors working in aerospace, including the following: ATK Space Exploration Technologies (Space X) United Technologies Aerospace Systems Bell Helicopter Boeing Military Airplane General Dynamics, Electric Boat Division Goodyear Aerospace Company Integrated Systems, Inc.
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The company has served almost all branches and components of DoD that issue SBIR awards.
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This can make it difficult to pursue Phase III effectively.
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Technologies were licensed from the Applied Physics Laboratory at JHU and formed the basis for the approach funded through NAVAIR SBIR (see below)
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It appears that over time JHU determined that participation in commercial ventures -- in which government agencies would likely end up paying commercial rates for technology acquisition -- might endanger their primary R&D funding streams.
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Prior to that, Optemax successfully acquired a Congressional earmark for further research. Since then, Optemax has been working to find connections to other possible funding sources, including prime contracts (especially Lockheed Martin)
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Ms. Collier believes that NAVAIR SBIR staff is focused on spreading SBIR money to a large number of companies and have adopted a highly linear view of technology development and the role of SBIR awards.
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The True Color Night Vision -- Fusion system did not move forward because the Army decided that the EMCCD technology was too expensive, had high power consumption, and had high noise level. So the Army decided to invest in a new technology to replace the EMCCD.
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From page 359... ...
In addition to multiple SBIR awards, OKSI has received quality awards. In 2011, OKSI received a Tibbetts award, which followed a 2006 Army Quality Award for its Continuously Variable Aperture/Cold Stop technology, which is used for automated target recognition in the Future Combat Systems platform as well as other applications.49 OKSI partnered with Raytheon and L-3, DRS Communications, and Cincinnati Electronics to implement this technology.
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This tends to create significant gaps between topic authors and acquisitions programs. There is a particular problem aligning SBIR awards with acquisitions.
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Andrew Sherman -- Founder, Powdermet and MesoCoat; CEO, MesoCoat September 24, 2012 By telephone Powdermet is a privately held nanotechnology and advanced materials research and development organization, headquartered in Euclid, Ohio. The company was founded by Mr.
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Sherman was the principal investigator on SBIR awards from 1987-1996, and was the company's chief metallurgist and business development manager. It was his original vision of "nanoengineered powder metallurgy", or building in nanostructural features to micron-mm sized particle "repeating microstructural units" which led to the spinout from Ultramet.
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From page 363... ...
Powdermet in turn would utilize SBIR awards to generate the technology and fund the company's ongoing operations. The first connection with Kennametal was forged via the ATP award from NIST, focused on the market for cutting tools, and eventually led to the building of a nano-engineered carbide powder production plant in Cleveland 51 See |
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Overall, the new facility cost about $6 million to acquire, clean-up hazards from prior industrial operations, renovate, and purchase and install the nanoengineered powder production equipment. The transition from California to Ohio was not without cost: Powdermet lost key employees among its 15 total employees.
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Powdermet retained its core processes and still had solid revenues of $500 thousand to $1 million from toll processing work. It also continued to win highly competitive SBIR awards to continue to improve the technology and customizing nanomaterials for DoD and other agency needs.
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From page 366... ...
In fact, the company was is due diligence for an investment with a corporate partner in the oil and gas industry at the time of the financial crash- the corporate partner was wiped out with the loss of a $500M line of credit and ultimately went bankrupt in early 2009. Due to the strength of the technology platform, SBIR and industry validation, MesoCoat able to find a corporate venture partner in Abakan Inc., whose principles had roots in the mining industrial sector.
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From page 367... ...
The result is a microcomposite cermet coating that the company claims offers revolutionary performance and cost breakthroughs. The technology for this application was based on the Army SBIR Phase II award, and further developed and perfected using the congressional earmark funding, and a related SBIR from the department of energy on nuclear criticality control for waste and fuel packages that taught Powdermet how to design with a wide range of materials in the structure.
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Other Awards MesoCoat was recently recognized by Forbes as one of "The Most Promising American Companies" and was the highest ranked material science and nanotechnology company on the list. Powdermet has won approximately 100 federal and state awards (including SBIR awards)
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Sherman noted that outside of the SBIR program there a very few funding sources for entrepreneurs to develop and support the science, team, and tools needed to commercialize emerging technologies. He TABLE F-5 Mesocoat SBIR Awards Phase I Phase I Phase II Phase II Agency Awards Amounts Awards Amounts DoD 38 3,069,824 12 7,622,370 DOE 10 899,865 1 578,592 EPA 1 70,000 NASA 9 679,545 2 1,049,994 NSF 9 796,998 1 499,998 Total 67 5,516,232 16 9,750,954 SOURCE: SBA TechNet Awards database, accessed September 24, 2012.
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Perhaps as a result, new companies are finding it harder to access SBIR funding. SBIR awards are now being made to established larger companies, which can provide more and better data and offer the lowest risk, rather than to the most creative and innovative companies.
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From page 371... ...
In order to establish its credibility, Qualcomm had to prove the feasibility of this new and unproven technology. It took the company more than 6 years to firmly establish the feasibility of the technology, and it was during this period that the SBIR awards proved influential.
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field trial for Pactel in San Diego -- a trial which provided critical evidence that CDMA technology could be applied successfully. The timing of the trial suggests that SBIR funding indeed played an important role.
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The result is high quality -- but very limited capacity. As it became clear that new digital networks would be required, a new standard emerged -- time division multiple access (TDMA)
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Qualcomm solved the problem by using existing automatic gain control circuits in the handset, which became the basis for what it called the open loop power control method.60 At the same time, Qualcomm used new technology at the base station to deliver closed loop feedback to handsets hundreds of times a second, which required the handset to increase or reduce power based on needs of the cell. This technology was patented in November 1989 and provided a solution to a subtly different problem, that of outside interference (e.g., phones in motion)
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Critically, SBIR funding provided a crucial influx of funding in 1988 and 1989, providing about $700,000 in 1988 award cycle funds. According to Dr.
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Finally, it is worth noting that SBIR funding for the technology was largely provided by DoD and in particular by Navy. Although it does not appear that Navy directly acquired Qualcomm technology in advance of its privatesector success, the continuation of funding suggests that Navy found positive outcomes from its SBIR awards with Qualcomm.
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From page 377... ...
The Qualcomm business model is worth noting. Once Qualcomm provided CDMA technology and supported initial implementation by providing a complete package of software and hardware, including both handsets and base stations, it quickly adjusted to re-focus on the IP side of its operations, developing partnership relations with telecoms manufacturers and operators.
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The SBIR awards were acquired by TRI/Austin, and this case study focuses on that division. TRI/Austin's areas of technical expertise include materials science, composite materials and products, environmentally compliant alternative material development, adhesives, polymer science, coatings, nondestructive testing, accelerated life testing, reliability engineering, and specialized instrument development.
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From page 379... ...
Part of the transition process for using materials in the military is testing and qualification. TRI has developed, tested, and qualified numerous materials for military use, for example Bond-CoatR, which was developed under a Navy Phase II SBIR and significantly extends the life of submarine and other underwater electrical connectors and is mandated for use by the Navy.76 Business Strategy and Commercialization TRI began as a contract research house, and it used SBIR award funding to supply the armed forces with specific research required to address technical problems.
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Today, TRI sees itself as a company providing "cradle-to-grave" advanced materials for advanced applications, not only within DoD where the company has four primary customers, but also in the oil industry around its home base in Austin, Texas. This focus on commercialization has led the company into relationships with a number of prime contractors (discussed in the TRI and the Primes section below)
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From page 381... ...
Dingus, Ecomass emerged directly from an Army Phase I SBIR funding. The Army has successfully tested the product for use as nontoxic training projectiles in an effort to reduce or eliminate additional lead contamination problems at its firing ranges, where more than 700 million rounds are fired each year.
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However, he notes that the first $25 million has already been allocated, and if 79 SBA TechNet SBIR Awards database, accessed October 21, 2011.
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This suggests a considerably lower success rate than for regular Phase II SBIR awards.80 SBIR and Data Rights Data rights are an extremely important part of the SBIR program, according to Dr. Dingus.
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In addition to superior performance, ProtecktR weighs and costs less than currently used blast energy dissipating floor mats. The ProtecktR technology development, design, and testing were initially performed under an Army TARDEC SBIR Phase II (SBIR Topic number ARMY 06-192, Contract Number W56HZV-08-C-0047)
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TRX SYSTEMS: SBIR CASE STUDY Based on interview with Carol Politi, CEO February 2, 2013 Greenbelt, MD TRX Systems is a privately held company headquartered in Greenbelt, Maryland. Founded by Carole Teolis, Gilmer Blankenship, and Ben Fun, TRX established a focus on indoor location in part because of its success in winning an SBIR award from NSF in 2007, which provided critical seed capital.
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From page 386... ...
The NEON Engine software includes application programming interfaces APIs for integrating input or constraints from partner systems and for providing indoor location data to third-party applications. System Components In addition to delivering location information in an API, TRX delivers an application into the public safety market (called NEON Tracker Command Software)
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RF ranging, and GPS. These Tracking Units interface to radios or smartphones to transmit location information back to the NEON Tracker Command software.
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Key features include: Real-time 2D and 3D location of personnel Clear situational awareness, indoors and out Effective after action review Portable, lightweight, and rapidly deployed. Partners and Business Model TRX has focused primarily on infrastructure-free applications for which it has a substantial competitive advantage and on government applications in particular.
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TRX is building a soldier-worn device that shares location information and leverages available communications (to other squad members and optionally to ground sensors and vehicle-based navigation systems and command) , generating dynamic and timely information for improving navigation.
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. "The ability to locate personnel operating indoors and often in hazardous situations improves command effectiveness, increases personnel safety and ultimately saves lives," said Mel Gaceta, investment manager, Motorola Solutions Venture Capital.
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It has since received several awards from DoD, including a recently expanded award from DoD's Army training command. Three of TRX's four Phase I awards have been selected for Phase II, providing total committed SBIR funding as of yearend 2012 of about $3 million.
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Ms. Politi observed some angel and VC funders are concerned that companies will become dependent upon SBIR funding, and apply for programs that become distractions from developing a product business.
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From page 393... ...
LARTA's method focuses on business planning and partnerships from the start of Phase I, which could also help to support a new initiative within an existing company. TRX has also used the method to train new PIs.
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