Reporting Requirements

Each agency has its own reporting requirements, noted Ms. Quintana. “Uniformity in reporting would help.”

Financing Gap

The existence of a financing gap varies by agency SBIR program, according to Ms. Quintana. The Army bridges over the gap, making the transition from Phase I to Phase II relatively seamless. The Navy has a funding gap between phases of its program, making it very hard for small companies without alternative financing.

Requirements for Phase IIB Matching Funds

Air Force and Navy require that matching funds for Phase IIB grants be contingent on approval of the contract, as specified in a letter by the organization to provide the match. This causes trouble: One problem is that the timing is tricky. It requires that a contingency pledge be made not too soon and not too late—timing which may not suit the potential provider of the matching funds. Another problem is that many companies who would provide matching funds do not think in terms of contingencies—they decide either to provide the funding or not to provide it. In contrast, NSF does not require that the matching funds be expressed as a contingency. Therefore, companies are able to use a purchase order or sales revenue in the bank. NSF’s approach, according to Ms. Quintana, makes it easier for companies to comply with the Phase IIB matching funds requirement.

Solicitation Cycles

Unlike some of the other interviewees, Ms. Quintana does not believe that more solicitations each year would be advantageous. In fact, she sees more solicitations and more changes in topics as a potential burden, as company staff must be constantly monitoring the situation and trying to respond to the changes. Once yearly posting of topics allows companies more time to plan their research programs around the announced topics.

SUMMARY

This case study illustrates the role played by SBIR grants in the creation of a company as a spin-off of another small company. It also shows how the company used SBIR and other research funding sources to develop a portfolio of technologies attractive to a larger company that recently acquired it. The case illustrates the dual special roles played by highly targeted SBIR grants from defense agencies and by less targeted grants from NSF. It describes SBIR-funded innovations



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