A Flexible Approach to Other Possible Agency Initiatives and Strategies

A number of suggestions seem to be best addressed through the design and rollout of carefully designed pilot programs. This would require in some cases waivers from SBA for activities not otherwise permitted under the SBA Guidelines. SBA should be encouraged to take a highly flexible view of all agency proposals for pilot programs. Some possible options that could be explored in this way include:

  • Small Phase III awards. These could be a key to bridging the “valley of death” between technology development and commercialization. Providing even small Phase III awards—perhaps enough money to fly a demonstration payload—for a technology not ready for a full Phase III might be explored.

  • Unbundling larger Phase III awards. Organizing larger contracts into smaller components would open Phase III opportunities. For example, the unbundling of a large contract for a complex life sciences module being competed by Lockheed and McDonnell Douglas in 1995 led to Orbitec’s major $57 million Phase III award.

  • Redefining T&E within SBIR. DoD and SBA could adopt a wider view of RTD&E, so that SBIR projects could qualify for limited T&E funding. That in turn would help fund improvements in readiness level.

  • Spring loading Phase III, by putting place in milestones that could help to trigger initial Phase III funding. This could occur in the context of larger, staged, Phase II awards in which additional stages fund more Demonstration and T&E when non-SBIR funds or resources are leveraged (beyond current Phase II-plus).

This chapter’s focus is on a key phase of the program, the transition from a successful Phase II to Phase III. It describes the multiple challenges participating firms, program managers, and senior management face in maximizing the returns on the SBIR program at DoD. Also described, however, are a wide range of measures developed over a decade to meet the transition challenge and address congressional concerns about the need for greater commercialization. This active experimentation, and the flexibility that permits it, are hallmarks of the SBIR program at DoD.

The recommendations made here are intended to contribute to enhanced output from the program that is increasingly seen as an asset by Program Executive Officers and others in the Defense acquisition process. The growing interest of the prime contractors, the new incentives provided by Congress, and the growing recognition of SBIR companies as a valuable source of innovation are all positive trends that these recommendations are intended to enhance.

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