Meeting Mission Needs

Charles J. Holland

Department of Defense


Dr. Holland said that as Deputy Under Secretary of Defense for Science and Technology, he worked for Dr. Ron Sega, the Director of Defense Research and Engineering, the chief technology officer for the Department of Defense (DoD). Dr. Holland’s role was to help oversee the planning and execution of the Department’s $10 to 12 billion of non-SBIR science and technology programs and to play an additional role in the SBIR program.13

He seconded Dr. Gansler’s observation that the science and technology activities in the Department were widely distributed among the services and agencies. His job was to ensure that those activities were coordinated as parts of an integrated whole. The SBIR program was executed by every activity that had its own budget, with shared responsibility in oversight. The program also worked in partnership with the Small and Disadvantaged Business Utilization Office, managed by Frank Ramos. The DoD releases multiple solicitations, all electronically, with proposal topic generation and proposal topic review vetted by his office for technical quality and clarity.14

13

Details of the DoD SBIR program are displayed at <http://www.acq.osd.mil/sadbu/sbir/homepg.htm>.

14

By custom, government SBIR agencies use the term “topic” to refer to research topic, especially when advertising an R&D need through the SBIR program. For example, a topic listed by the DoD SBIR program as of October 2005 was “Hyperspectral/Multispectral imaging for transient events,” seeking a laser-based system that could discriminate among various targets. The announcement, on the SBIR website, listed expected accomplishments for Phases I, II, and III, and also described the Private Sector Commercial Potential, which included remote sensing for various purposes and other research activities. Access at <http://www.dodsbir.net/Topics/Default.asp>.



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SBIR and the Phase III Challenge of Commercialization: Report of a Symposium Meeting Mission Needs Charles J. Holland Department of Defense Dr. Holland said that as Deputy Under Secretary of Defense for Science and Technology, he worked for Dr. Ron Sega, the Director of Defense Research and Engineering, the chief technology officer for the Department of Defense (DoD). Dr. Holland’s role was to help oversee the planning and execution of the Department’s $10 to 12 billion of non-SBIR science and technology programs and to play an additional role in the SBIR program.13 He seconded Dr. Gansler’s observation that the science and technology activities in the Department were widely distributed among the services and agencies. His job was to ensure that those activities were coordinated as parts of an integrated whole. The SBIR program was executed by every activity that had its own budget, with shared responsibility in oversight. The program also worked in partnership with the Small and Disadvantaged Business Utilization Office, managed by Frank Ramos. The DoD releases multiple solicitations, all electronically, with proposal topic generation and proposal topic review vetted by his office for technical quality and clarity.14 13 Details of the DoD SBIR program are displayed at <http://www.acq.osd.mil/sadbu/sbir/homepg.htm>. 14 By custom, government SBIR agencies use the term “topic” to refer to research topic, especially when advertising an R&D need through the SBIR program. For example, a topic listed by the DoD SBIR program as of October 2005 was “Hyperspectral/Multispectral imaging for transient events,” seeking a laser-based system that could discriminate among various targets. The announcement, on the SBIR website, listed expected accomplishments for Phases I, II, and III, and also described the Private Sector Commercial Potential, which included remote sensing for various purposes and other research activities. Access at <http://www.dodsbir.net/Topics/Default.asp>.

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SBIR and the Phase III Challenge of Commercialization: Report of a Symposium Science and Technology in the DoD He said that one reason he enjoyed working for the DoD was “that you really have a mission. People’s lives are on the line, today and tomorrow, and our job is to try to have that appropriate balance of science and technology that will apply in the near term as well as the far term.” He listed some “revolutionary advances” made possible by science and technology research, including stealth aircraft, adaptive optics and lasers, night vision, global positioning systems, and phased array radar. Added to this list, he said, should be the development of human-computer interfaces and much of the information technology that was critical to advanced modern defensive capabilities. He added that the development of stealth technologies that began in the 1970s were outcomes of the Cold War realization that U.S. forces could not win wars based on numbers of troops, so it would have to rely on advanced technology to maintain superiority. He said that the defense mission would continue to grow in complexity and described three perspectives of the future. All would depend on network-centric-enabled operation, given that “we would not know where the next threat would arise.” This would require networking and rapid mobility to better deal with uncertainties. Guidance would come from the White House to the Joint Chiefs of Staff. One perspective included four kinds of operations that would be necessary for the newly complex world of the future. These include Combat Operations, which is today a strength. Two others are Stability Operations and Homeland Security, which were still challenges. Finally, Strategic Deterrence would involve communicating the message to potential enemies that the Department would be able to respond to aggression. A second perspective of the future includes eight functional concepts required to execute operations. These included battle-space awareness, force application, command and control, focused logistics, protection, net-centric operation, joint training, and force management. His mission in science and technology was to provide knowledge and tools to support those functional concepts. The third perspective, somewhat more complex, involves “what we’ve got to worry about.” This list included not only about the traditional kinds of battles familiar today, but “irregular” battles that include unconventional methods adopted by non-state and state actors, terrorism, insurgency, civil war, and emerging concepts. This, he said, is the nature of every conflict today where is it not possible to draw clear lines between friend and foe. Another challenge included “catastrophic” situations that included the use of weapons of mass destruction (WMD), a threat that is spreading throughout the world. Finally, he listed the challenge of trying to make sure that the United States is not surprised by “disruptive,” previously unknown technologies or new uses of existing technologies. This, for the DoD, he said, was a challenging spectrum which demands the most effective application of science and technology,

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SBIR and the Phase III Challenge of Commercialization: Report of a Symposium FIGURE 6 Changing security environment: four challenges. including the development of technologies through the SBIR program. He defined the main characteristic of today’s strategic environment as “uncertainty.” DoD’s Strategic Plans The DoD was approaching these challenges by coordinating a set of strategies and plans among the various military services and defense agencies. The purpose of the plans was to make sure the department, including the SBIR program, is spending its budget as effectively as it can. These strategies and plans for the Basic Research Plan (6.1) and the Defense Technology Area Plan (6.2, 6.3) are published bi-annually for Congress, DoD contractors, and others. The plans were classified, even though its individual pieces were not, because the document as a whole would constitute for an enemy a valuable insight into the DoD’s intentions. The first plan he described was the annual Joint Warfighting S&T Plan (JWSTP) to bring the power of emerging technologies to the needs of the warfighter. This plan was coordinated with the Joint Staff and the Pentagon to design science and technology programs that best support the eight functional concepts described above. Within the JWSTP are programs with milestones and metrics. He mentioned the Military Operations in Urban Terrain as an example of a defense technology program that is nearing completion. Some of the goals of

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SBIR and the Phase III Challenge of Commercialization: Report of a Symposium the program are enhanced situational awareness, precise position location inside buildings, a combat identification system effective in buildings, improved individual mobility, and increased lethality and weapons capabilities. All of these goals required S&T components. A second plan was the Defense Technology Area Plan (DTAP), which was “a detailed plan focusing DoD science on militarily significant technologies in specific functional areas.” DTAP included near-term, applied research to enable new capabilities, such as the development of an improved jet fighter propulsion system. A third plan is the Basic Research Plan, which supports long-term development. Each service had its own basic research program, supported by a small, service-wide program called the Defense Advanced Research Projects Agency (DARPA), originally designed to give researchers the freedom to explore potentially revolutionary ideas.15 DoD’s S&T Strategy Cutting across all three areas and embracing all the services and agencies, the DoD also had an S&T strategy that emphasized three areas: energy and power technologies, surveillance and knowledge systems, and the national aerospace initiative. The first area, energy and power technologies, included many systems and ideas, in three categories. Power generation included fuel cells, fuel reforming, and novel power; energy storage developed batteries and capacitors; and power management and control developed switching and conditioning, power transmission and distribution, and thermal management. Examples of specific goals were fighter aircraft with laser weapons and electric warships with the flexibility to either use all power for steaming or to shift the electric energy for weapons use. The Army, for its future combat system, wanted vehicles using electric power, which could both propel vehicles or stop and use that energy for other purposes. He said that the DoD placed high value on these cross-cutting activities because they often led to enabling technologies and innovations. As a result, the department had doubled its investments in these projects, many of which involved small businesses, such as the development of batteries, fuel cells, and other technologies. 15 Historically, DARPA has been seen as a model for how the government can foster transformative research. (National Research Council, Assessment of Department of Defense Basic Research, Washington, D.C.: The National Academies Press, 2005, p. 2). Yet many observers have noted that DARPA’s approach has shifted away from risky research toward a focus on short-term deliverables. (“An Endless Frontier Postponed [Editorial],” Science, May 6, 2005; “Pentagon Redirects Its Research Dollars,” The New York Times, April 2, 2005.

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SBIR and the Phase III Challenge of Commercialization: Report of a Symposium The second cross-cutting area was surveillance and knowledge systems, whose goal was to develop ideas for network-centric-enabled operations. The objectives were persistent surveillance and total knowledge of events on the battlefield, giving the ability to rapidly deploy force before the enemy could act. These systems included high-bandwidth communications, sensors and unmanned vehicles, knowledge management systems, and cyber warfare. Because these projects are common knowledge, they had to include information assurance and other protective activities. The third cross-cutting area was the national aerospace initiative. One objective is to develop hypersonic, suborbital vehicles that can reach targets more quickly than existing craft. A second is to gain access to space from locations other than the two existing ground launching sites that might be vulnerable to attack. Techniques included two-stage-to-orbit and single-stage-to-orbit systems. Finally, the aerospace initiative is developing new space technologies, including micro-satellites and multifunction satellites. Expanding the S&T Base In addition to these specific programs, he described a broader effort to expand the science and technology base by using technology from other initiatives and partners. These include the Small Business Innovation Research program and its smaller cousin, the Small Business Technology Transfer (STTR) program. A third broad effort is to ensure a supply of talented people for the future through the National Defense Education Act and variants of that act. The DoD also works with both domestic and international partners to develop technology, and with other agencies, such as the National Science Foundation and the Department of Energy. He then turned to the DoD’s SBIR program, the largest source of early-stage technology financing in the United States. Of the $2 billion in total federal SBIR/ STTR funding in FY05, involving 11 federal agencies, approximately half that amount will be spent by the DoD.16 (See Figure 7.) The reason DoD has the 16 The Small Business Technology Transfer (STTR) program expands public-private sector partnerships to include the joint venture opportunities for small business and the nation’s premier non-profit research institutions. Federal agencies with extramural R&D budgets over $1 billion are required to administer STTR programs using an annual set-aside of 0.30 percent. Currently, five Federal agencies participate in the STTR program: DoD, DoE, DHHS (NIH), NASA, and NSF. The SBIR and STTR programs differ in two major ways. First, under the SBIR program, the Principal Investigator must have his/her primary employment with the small business concern at the time of award and for the duration of the project period. However, under the STTR program, primary employment is not stipulated. Second, the STTR program requires research partners at universities and other non-profit research institutions to have a formal collaborative relationship with the small business concern. At least 40 percent of the STTR research project is to be conducted by the small business concern, and at least 30 percent of the work is to be conducted by the single, “partnering” research institution.

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SBIR and the Phase III Challenge of Commercialization: Report of a Symposium FIGURE 7 SBIR is the largest source of early-stage technology financing in the United States: SBIR/STTR agency funding. largest SBIR program (nearly $1 billion in SBIR funding and $125 million in STTR funding) is that it taxes the entire research, development, technology and engineering (RDT&E) spectrum, not just R&D, and it includes 10 participant DoD components.17 The current overarching goal of the SBIR program is commercialization, and Dr. Holland reported that the DoD does “a pretty good job” in reaching this objective. He said that 55 percent of Phase II projects were in the DoD’s data base that tracks information on the commercialization success of small firms. Some 37 percent had sales and 40 percent had investment in activities that were not SBIR investments. The major sources of income were almost equal, with the private sector contributing 47 percent and the DoD or DoD prime contractors contributing 44 percent. (See Figure 8.) As examples, he offered summaries of two of DoD’s largest Phase III commercialization outcomes. The first resulted in about $763 million in sales for early work on excimer lasers, including “tools and techniques of great benefit to the semiconductor business.”18 The second one, resulting in income of several hundred million dollars, was a program that developed guidance and sensing tech- 17 These are the Army, Navy, Air Force, DARPA, MDA, DTRA, SOCOM, OSD, CBD, and NGA. 18 According to the DoD SBIR “success stories” website, “Under four DoD and DoE SBIR awards between 1989 and 1993, Science Research Laboratory, Inc. (SRL) of Somerville, Massachusetts developed a cluster of solid-state pulsed power technologies that made excimer lasers, for the first time, a commercially-viable tool for the UV lithography now used in writing current-generation integrated circuits onto computer chips.” See <http://www.acq.osd.mil/sadbu/sbir/success/index.htm>.

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SBIR and the Phase III Challenge of Commercialization: Report of a Symposium FIGURE 8 DoD SBIR Phase III commercialization. NOTE: Reported to DoD in CCR Database by firms submitting proposals to DoD in 2000-2005. nology for anti-radiation missiles.19 He emphasized how different were the outcomes and markets for these two SBIR projects and noted that such diversity characterized SBIR activities in general and contributed to its success. Echoing a point made earlier by Dr. Gansler, he said that the SBIR program produced not only large systems for commercialization, but also small components and important incremental improvements. He showed a slide of such small successes produced for the Army that would be used in the Iraqi theater, including: Components for miniature portable power supplies developed by Mesoscopic Devices A Shot Pocket Charger technology developed by Space Hardware Optimization Technology Cybernet’s Tactical Ammunition Sorter, developed and deployed for the U.S. Army in Camp Arifjan, Kuwait 19 “Under the Navy and MDA SBIR programs, Silicon Designs Inc. of Issaquah, Washington developed the ‘accelerometer’ used in most DoD missile systems…. Total sales of the accelerometer to DoD and commercial customers are $40 million per year. DoD’s initial SBIR investment was just $1.2 million.” See Web site cited in footnote 18.

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SBIR and the Phase III Challenge of Commercialization: Report of a Symposium He concluded by asserting that the SBIR program is “very important for the DOD,” and for every agency, as “part of an overall collection of things where we try to make sure that we really do have the best technology for the warfighter.” He noted that the DoD’s SBIR program worked well with both large and small firms, universities, other federal labs, and U.S. coalition partners. This broad reach was essential, he concluded, “because science and technology is critical to our success and to our future.” DISCUSSION Dr. Gansler pointed out that the examples of large commercialized systems given above were programs initiated by DoD SBIR awards; later, after development, DoD entities also became the purchasers. He said that in other cases, programs that began under SBIR contracts to the DoD later developed products of commercial value that had little to do with the original defense work. He cited the example of Martek Biosciences, now a profitable biotechnology firm that began work with DoD SBIR funding for space programs. Today, Martek sells commercial products for medical purposes that have little to do with the DoD.20 Other case studies show that projects also may move from one federal agency to another during technology development, according to the changing capabilities of the technology or changing needs of agencies. A New Role for Small Business Research A questioner asked Dr. Gansler how S&T needs had changed since 9/11, and whether shifts in the industrial base since the Cold War would affect the distribution of research capabilities. Dr. Gansler agreed that the two issues were related, and that the structure of research in the defense establishment was now “totally different” since 9/11. After the Cold War, consolidation in the defense industry trimmed the number of large defense contractors to six and reduced the participation of small firms. Since 9/11, the DoD has searched more widely for ideas and innovations and sought the R&D participation of more small businesses. He said the DoD was also seeking the participation of more universities in doing research. Specifically, he noted the need to move beyond the large research universities to the smaller campuses, such as Bowie State University in Maryland, a historically black university he had recently visited. “We need to figure out how to get research done at more schools,” he said. Dr. Gansler then introduced the members of the first panel. 20 Martek Biosciences Corp. develops and sells products extracted from microalgae, including formula for children’s milk. <http://www.martekbio.com/home.asp>.