SBIR at the Department of Defense (2014) / Chapter Skim
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4Commercialization Initiatives in the DoD SBIR Program
4Commercialization Initiatives in the DoD SBIR Program
Pages 94-133
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From page 94... ...
1 Although DoD is by no means a monolithic entity, it is convenient (and necessary sometimes) to talk about the "DoD SBIR program." However, the reality is that no such program actually exists -- there are quite different programs at each of the Services, and many of the larger components have differentiated programs as well.
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From page 95... ...
he process of developing marketable products or services and producing and delivering products or services for sale (whether by the originating party or by others) to Government or commercial markets.2 At DoD, however, "Phase III" also has additional and separate meanings; in general, it means not that a project has reached the market, but that it has transitioned into use within DoD as the transition of technologies, products, and services developed under the SBIR Program to Phase III including the acquisition process.3 More specifically, Phase III in DoD means that a further contract exists from DoD or a DoD supplier which is certified as a Phase III contract by the contracting officer -- i.e., it is certified as following on from an SBIR or Small Business Technology Transfer (STTR)
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From page 96... ...
.] shall develop and issue a strategy for effectuating the transition of successful projects under the SBIR Program."5 More importantly, perhaps, in 1992 commercialization was formally incorporated into SBIR program objectives6: "emphasize the program's goal of increasing private sector commercialization of technology " "the innovative products and services developed by small business concerns participating in the small business innovation research program have been important to the national defense, as well as to the missions of the other participating Federal agencies [.
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From page 97... ...
February 1998 -- DoD extended Fast Track, requested that all relevant DoD entities develop an SBIR plan that included performance-based Phase III metrics, stressed Phase III results as a criterion for proposal evaluation, and initiated a policy to pull acquisition programs closer to the SBIR program. January-November 1999 -- Navy implemented a Rapid Commercial Off-the-Shelf (COTS)
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From page 98... ...
USD (A&T) submitted a Report to Congress on DoD SBIR program improvements in six acquisition areas.12 This reflected Congressional concerns raised in the FY2000 Defense Appropriation Act, for example, "unless program managers budget for Phase III SBIR participation in their acquisition programs [.
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From page 99... ...
This marked SBIR's first documented step into DoD acquisition: "The Program Manager shall develop an acquisition strategy that plans for the use of technologies developed under the SBIR program, and gives favorable consideration of funding to successful SBIR technologies. At milestone and appropriate program reviews for ACAT I programs, the PM shall address the program's plans for funding the further development and insertion into the program of SBIR-developed technologies."13 Also in 2002, Congress funded the Defense Acquisition Challenge (DAC)
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From page 100... ...
work with small business.20 GAO also remained engaged. In June 2005, GAO told Congress that the DoD SBIR Program was not capturing commercialization results and that the Defense Acquisition Challenge, Technology Transition Initiative and Quick Reaction Fund had together generated only four fielded projects (out of 68 18 Office of Management and Budget Program Assessment: Defense SBIR/STTR, September 27, 2003.
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From page 101... ...
on the implementation of new DoD SBIR commercialization initiatives, directing a fresh DoD-wide review of SBIR commercialization with quadrennial follow-up reports to Congress.22 The seven questions were as follows: How did DoD plan to implement the new requirement in the FY2006 National Defense Authorization Act (NDAA) for research focus of its SBIR and STTR programs?
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From page 102... ...
platforms." Navy became the first DoD Component to take this step.24 And in June 2006, PEO Submarine issued a first-in-DoD instruction to its PMs requiring plans to provide incentives that would encourage prime contractors to include SBIR projects, thus helping to achieve affordability and innovation goals. 25 2006-2011: CPP AND AFTER The growing pressure on DoD from Congress and other stakeholders for more effective use of SBIR led in January 2006 to the introduction of four significant reforms in the context of the FY2006 National Defense Authorization Act.26 Quadrennial review of the SBIR topic development process at the Service level, to help ensure alignment between topics and high priority Service acquisition needs; Introduction of the Commercialization Pilot Program (CPP)
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From page 103... ...
into defense acquisition programs required four actions: Expanding resources for maturing technology beyond Technology Readiness Level (TRL) 5; Expanding resources and developing strategies for mitigating risk in innovative technologies; Reducing barriers to competition and to new suppliers such as small business; A formal DoD-wide mechanism for improving technology transition from S&T into defense acquisition programs.29 CPP's mission was therefore quite straightforward: "The purpose of the CPP is to accelerate the transition of SBIR-funded technologies to Phase III, especially into systems being developed, acquired and maintained for the warfighter."30 28 OUSD (AT&L)
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From page 104... ...
, a defense-focused venture investment firm with consulting capabilities. MILCOM helped identify SBIR projects and companies with high transition potential that met high-priority requirements, provided market research and business plan development, matched SBIR companies to customers and facilitated collaboration, prepared detailed technology transition plans and agreements, and -- notably -- provided additional funding for select SBIR projects.
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From page 105... ...
At the same time, Army continued to expanded outreach, training, and collaboration opportunities for PEOs and acquisition PMs, seeking to strengthen the links between the SBIR program and the acquisition programs.32 Army does not appear to publicly provide systematic or aggregate results from CPP: its web site mentions three cases in which CPP projects generated significant sales. However, because these were the most promising of current SBIR projects, this is not a surprise.
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From page 106... ...
The AF CPP report also claimed credit for meetings organized at the 2009 DoD SBIR "Beyond Phase II" Conference. In transitioning from the pilot CPP to the ongoing CRP, AF states, "The Air Force has implemented a strategically-driven process that directly links Program Executive Officers' representatives to Air Force Research Laboratory Technical Points of Contact (TPOCs)
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From page 107... ...
. The key levers for enhanced commercialization at AF are SBIR Technology Transition Plans (STTPs)
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From page 108... ...
."39 STTPs thus constitute an important effort by AF to ensure that SBIR projects are "tightly tied to critical stakeholders and necessary funding."40 37 Air Force SBIR Briefing for NRC Staff, June 2013; Air Force agency staff interviews, June 28, 2013. 38 Richard Flake, Interview, June 28, 2013.
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From page 109... ...
Although STTPs do not necessarily include formal reporting requirements back to the SBIR office, AF claims that of the 108 STTP/SMTPs signed to date, 10 are inactive while 45 have generated outcomes that are now "in the hands of the customer."41 The AF target is to reach STTP agreements for 20 percent of prioryear Phase II awards, although this will clearly be challenging, as Figure 4-4 indicates. AF tracking shows that CRP supports transitions, and these transitions in turn provide significant benefits for AF acquisition programs.
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From page 110... ...
JEIDDO (1) SOURCE: Air Force SBIR Briefing for NRC Staff, June 2014.
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From page 111... ...
The Navy SBIR program was aligned with the Assistant Secretary of the Navy -- Research, Development and Acquisition (ASN RDA) but had links to SYSCOMs down to PEO levels.
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From page 112... ...
SOURCE: Air Force SBIR SBIR Office.
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From page 113... ...
By FY2009, the Navy CPP had matured considerably. The annual CPP report indicated that Navy was now setting aside approximately 20 percent of SBIR program funding for selected CPP projects, funding them above the normal Phase II limits.
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From page 114... ...
These events enabled 41 Navy SBIR companies to present prescreened technologies for potential partnership. Technical Assistance CPP participants could leverage other Navy initiatives, such as the Navy Transition Assistance Program (TAP)
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From page 115... ...
It started as a Navy transition tool, but after 2008 emerged from CPP practice as a method for identifying SBIR projects with greatest ACAT "pull," then leveraging increased levels of SBIR investment with ACAT non-SBIR matching funds, using the GAO-recommended "gated process" of technology approval. This emergence reflects an important aspect of the Navy SBIR program: its extraordinary degree of decentralization.
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From page 116... ...
The course culminates in the Navy Opportunity Forum, a showcase at which selected companies can market their technologies, and which is well attended by executives from the prime contractors. Results from Navy Transition Initiatives Navy has also pioneered efforts to improve data collection to document transition successes.
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From page 117... ...
400 300 200 100 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Fiscal Year FIGURE 4-5 Phase III contracts reported through the Federal Procurement Data System, by total value, FY1999-2011. SOURCE: Navy SBIR program office.
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From page 118... ...
as well as the matching funds from acquisition programs. However, although these transitions attracted about $4.5 million in Navy transition funding, a larger backlog of projects did not receive Navy support and hence is still in the queue
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From page 119... ...
Altogether, the Navy investment is $2.9 million, which has resulted in Phase III revenues of $35 million to date, as well as extensive, ongoing, and expanding cost savings and efficiency gains for Navy. _____________________________ SOURCE: Navy SBIR Success Stories Database; Promia Inc.
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From page 120... ...
For all of these projects, Transition Agreements have been signed and matching funds from the acquisition programs have at least in principle committed. The fact that the projects are stuck suggests that the acquisition programs like these projects but are not prepared to fully fund them, or that the Navy's financial commitment to transition -- although large -- is not enough to meet Service needs.
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From page 121... ...
acquisition programs, which are also responsible for maturing innovative technologies for product development, at 17 percent.45 January 2009 -- The DoD Office of Inspector General reported possible underreporting of SBIR commercialization and recommended better reporting, supplemental administration funding, and SBIR internal champions within acquisition program offices.46 Between June 2010 and August 2011 -- USD AT&L issued five memoranda on transformation of the DoD acquisition system to increase competition and affordability, principally by creating new small business access. The "Better Buying Power" memos were 45 RAND National Defense Research Institute, Estimating the Cost of Administering DoD SBIR, June 2008.
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From page 122... ...
The period was marked by a flurry of acquisition related memos and guidance for DoD SBIR programs (Table 4-3)
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From page 123... ...
proposition that innovative SBIR technologies could bring efficiencies of cost, schedule, and performance to DoD acquisition if decisions were made within acquisition programs.51 The Deputy Under Secretary of Defense (DUSD) formally recognized the program,52 and in 2008 a Navy report on first-year progress with PEO Submarine's Virginia-class and PEO Integrated Warfare Systems AntiSubmarine Program supported the House appropriators' hypothesis.53 The same year, a Navy survey of DoD Tier 1 and 2 prime contractors, integrators, and suppliers noted among other findings that technology commercialization 51 Committee on Appropriations-Report 110-279, Report on the DoD Appropriations Bill 2008, July 2007, pp.
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From page 124... ...
decisions are most effectively made within acquisition programs and their industry correlate offices -- that is, at lower acquisition levels.54 Beginning with the FY2008 DoD Appropriations Bill, Congress annually supported this "Small Business Technology Insertion" program in amounts ranging from $100 million in FY2008 to $50 million in FY2012, to ensure funding support for actual technology insertion. Although funding was originally split between the Services for the two highest-priority ACAT programs each, by FY2010 this funding was allocated to Navy ACAT programs only, based on prior results.
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From page 125... ...
) In its May 2010 report on the proposed FY2011 NDAA, HASC cited a December 2009 Defense Science Board finding that DoD "lacks the ability to rapidly field new capabilities to the warfighter" and cited the success of Small Business Technology Insertion to justify a competitive DoD Rapid Innovation Program (RIP)
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From page 126... ...
AF instead focused on enhancing connections between SBIR and prime contractors and, through the addition of new TTAs with explicit mandates to work out of selected AF bases, to encourage the transition of SBIR technologies. Navy Commercialization Training Navy has supported an extensive Technology Assistance Program (TAP)
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From page 127... ...
We have seen that in 2004 Navy's PEO Ships supported the first-ever ACAT I Technology Insertion Plan to identify SBIR technologies for system integration -- the first time that acquisitions programs had deliberately planned to include SBIR technologies as a core part of their eventual deployment decisions, and the first time that acquisitions had made a formal and significant effort to seek out SBIR-funded technologies.62 Today, a much greater percentage of topics originate with the acquisition programs' informal estimates Agency interviews suggest that these now account for about 50 percent of Army topics, 70 percent of AF topics, and about 65 percent of Navy topics. And even for topics that originate elsewhere, acquisitions input has increased.
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From page 128... ...
128 TABLE 4-5 Navy Utilization of Prognostics and Health Management Tool Topics and Phase I 1.0- Activity Metrics -- 0.9.1 09.2 09.3 2009 10.1 10.2 10.3 2010 11.1 11.2 11.3 2011 S Measured by Topic Solicitation Number of Navy Topics A 91 66 67 224 104 87 41 232 86 84 11 181 Published in Solicitation Percentage of "Provider B Enterprise" Published 61.5 75.8 70.1 68.3 73.1 57.5 82.9 69.0 73.3 33.3 * 50.3 Topics (goal 10%)
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From page 129... ...
Table dated Tuesday, April 17, 2012. SOURCE: Navy SBIR program office.
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From page 130... ...
P.L.112-39 (FY13 NDAA) supports small business technology transition: Title XVI "Industrial Base Matters" includes two sections in Subtitle B and 11 sections in five Parts of Subtitle C that establish processes to increase DoD acquisition contracts and subcontracts to small business, either directly from federal agencies or from industry contractors.
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From page 131... ...
In 2006, PEO Subs issued a first-in-DoD instruction to PMs that required development of plans to encourage primes to include SBIR projects.3 In 2009, Navy partnered with AF on four Focused Industry Technology Workshops, each hosted by a different prime contractor. Efforts to engage the primes also include the Navy Opportunity Forum, an annual event usually held near Washington, DC, which brings together selected SBIR companies and projects, Navy acquisitions managers, and staff from primes.
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From page 132... ...
SOURCE: Navy SBIR program office.
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From page 133... ...
CHAPTER 4 133 illustrations of the key deliverables for the subs and joint strike fighter development programs highlight a positive link between acquisitions and the SBIR program -- albeit at a level that does not address the scale of the impact or the extent of more, similar successes in other categories.
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