Cover Image

HARDBACK
$73.75



View/Hide Left Panel

An Assessment of the Small Business Innovation Research Fast Track Program in Southeastern States

Albert N. Link

University of North Carolina at Greensboro

EXECUTIVE SUMMARY

This paper presents descriptive findings from 12 case studies of Small Business Innovation Research (SBIR) award recipients in southeastern states. The focus of the case studies was to determine, to the extent possible, if the Fast Track Initiative encourages more rapid commercialization of research results through the acquisition of private investment capital, and if Fast Track projects progress more rapidly than standard SBIR awards. The key findings from the sample of 12 firms indicate that:

  • Fast Track projects proceed to Phase II research faster than non-Fast Track projects;

  • Fast Track projects develop a commercialization strategy sooner than non-Fast Track projects, but those Fast Track projects do not anticipate having commercial products sooner than non-Fast Track projects; and

  • the post-Phase II funding expected to be needed to commercialize Fast Track projects is greater than is expected to commercialize non-Fast Track projects.



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE An Assessment of the Small Business Innovation Research Fast Track Program in Southeastern States Albert N. Link University of North Carolina at Greensboro EXECUTIVE SUMMARY This paper presents descriptive findings from 12 case studies of Small Business Innovation Research (SBIR) award recipients in southeastern states. The focus of the case studies was to determine, to the extent possible, if the Fast Track Initiative encourages more rapid commercialization of research results through the acquisition of private investment capital, and if Fast Track projects progress more rapidly than standard SBIR awards. The key findings from the sample of 12 firms indicate that: Fast Track projects proceed to Phase II research faster than non-Fast Track projects; Fast Track projects develop a commercialization strategy sooner than non-Fast Track projects, but those Fast Track projects do not anticipate having commercial products sooner than non-Fast Track projects; and the post-Phase II funding expected to be needed to commercialize Fast Track projects is greater than is expected to commercialize non-Fast Track projects.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE INTRODUCTION The U.S. Department of Defense (DoD) requested that the National Academy of Sciences (NAS) review its Small Business Innovation Research (SBIR) Fast Track program to determine, to the extent possible, if the Fast Track Initiative encourages more rapid commercialization of research results through the acquisition of private investment capital, and if Fast Track projects progress more rapidly than do the standard SBIR awards. To accomplish this, NAS undertook a multifaceted research strategy that included both a broad-based mail survey to a representative sample of SBIR awardees and focused regional case studies from that sample. This descriptive paper presents the findings from 12 case studies of award recipients in southeastern states. It will join other researchers ’ papers that focus on various regions of the United States. In the second section, the overall NAS strategy for the collection of information related to the above two questions is described. Then, In the third section, the process for selecting these 12 southeastern firms is presented. In the fourth section, observations about the commercialization impacts realized to date from the Fast Track Initiative are offered. In the fifth section, observations about other project impacts are discussed. In the sixth section, estimates of the social benefits associated with the SBIR program, and the Fast Track Initiative in particular, are presented.1 Concluding remarks are presented in the last section. The Appendix to the paper contains brief summaries of each of the 12 projects studied. NAS STRATEGY FOR COLLECTION OF INFORMATION NAS was asked by DoD to determine, to the extent possible, if the Fast Track Initiative encourages more rapid commercialization of research results through the acquisition of private investment capital, and if Fast Track projects progress more rapidly than do the standard SBIR awards. Toward that end, a team of researchers was assembled, and each was assigned a different region of the country from which to identify a sample of Fast Track program awardees and non-Fast Track program awardees. Each researcher was given latitude with regard to how he/she approached the questions during the interview data collection process; however, certain crosscutting issues were common to each. These crosscutting issues related to information about the background of each firm being interviewed, information about how the SBIR award is affecting the firm’s research and commercialization strategy, and each firm’s general opinion about the administration of the SBIR awards program. 1   A more detailed analysis is provided by Link and Scott, “Estimates of the Social Returns to Small Business Innovation Research Projects?” in this volume.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE SELECTION OF THE CASE STUDY FIRMS As requested by NAS, the geographic focus for this paper is southeastern states. An inspection of background information provided by DoD and NAS shows that there have been 31 SBIR awards to firms in southeastern states over the period from 1993 to 1996.2 Of these 31, six firms received Phase II awards through the Fast Track Initiative. These six firms are shown in the upper portion of Table 1. NAS requested that 12 case studies be conducted in southeastern states, six non-Fast Track firms were thus selected for the purpose of comparison. Several factors were considered in the selection of the six non-Fast Track firms, including state, duration of the Phase II project, and number of employees in the firms. The six non-Fast Track firms are shown in the lower portion of Table 1. Also shown in Table 1 are selected characteristics of the firms and their projects. Because of the small size of the defined population of regional firms, comparability of firms and projects between the Fast Track and non-Fast Track groups is not defined on the basis of a statistical criterion. DoD provided the name and telephone number of the principal investigator (PI) for each Phase II project in each of the firms in Table 1, based on information from the Phase II application. In most cases, the PI’s name was correct, but more often than not the firm had moved or changed its telephone number. However, each noted PI was eventually located and contacted by telephone. During the initial conversation, the nature of the study was described, confidentiality issues were discussed, and an overiew of the type of information being requested was given. After that initial conversation, a subsequent telephone interview time was arranged. In three instances, the PI was not interested in participating in the telephone interview. In those three instances, the DoD technical monitor on the project was located and contacted; he intervened and reinforced to each of the three PIs the importance of the study to DoD and assuaged confidentiality concerns. Subsequently, each of these three individuals agreed to participate in a telephone interview, although two of the three (both Fast Track) agreed to answer only a limited number of telephone interview questions. The focus of these two limited interviews was the importance of the Fast Track program in closing the funding gap between Phase I research and Phase II research. Each of the other 10 full telephone interviews focused on this issue as well as other issues related to commercialization. As seen from Table 1, the group of Fast Track projects and the group of non-Fast Track projects are similar in the following dimensions: Each Phase II project was proposed to last approximately 24 months; the average number of employees in the company that was specific to the Phase II project was nine; and the companies themselves had been in operation for approximately eight years prior to the Phase II research. Each complete interview averaged just over 60 minutes. 2   These firms are located in Alabama, Georgia, Florida, North Carolina, and Tennessee.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE TABLE 1 Selected Characteristics of the Sample of Firms Interviewed Firm State Fast Track (F) Project Duration (months)a Number of Employeesb Year Founded Matis, Inc. GA F 24 5 1990 OPTS, Inc. AL F 24 5 1994 CG2, Inc. AL F 24 15 1995 Power Technology Services, Inc. NC F 12c 5 1984 Summitec Corporation TN F 30 19 1987 Bevilacqua Research Corporation AL F 24 7 1992 System Design and Analysis Corporation AL   24 3 1996 Accurate Automation Corporation TN   24 17 1989 MicroCoating Technologiesd GA   24 8 1993 Optimization Technology, Inc. AL   24 21 1983 Optical E.T.C., Inc. AL   24 5 1990 Intelligent Investments NC   24 3 1995 aProposed project duration. bNumber of full-time-equivalent employees at the time the project was funded; two part-time employees equal one full-time employee. cAs discussed in the Appendix, this company originally was funded for a basic Phase II but has received additional Phase II funding, thus extending the duration to 2 years. dFormerly CCVD, Inc. INDICATIONS OF COMMERCIAL IMPACTS ASSOCIATED WITH FAST TRACK PROJECTS None of the firms interviewed has commercialized a product or process that was associated with the Phase II award under study. This absence of direct commercialization success was expected a priori because the Fast Track Initiative is a relatively young program and there are few firms that have even completed their Phase II study. In fact, from the 12 firms interviewed, only 2 are just now (in 1999) at the end of their Phase II research. However, other information was obtained during the interviews in an effort to glean some preliminary insight into the possible commercialization impacts associated with the Fast Track program. This other information is described in the Appendix. Because the sample size is small, the technologies differ across firms, and the research and commercialization expertise is unique to each firm, care should be exercised in generalizing beyond this sample of 12 firms/projects about the possible commercial impacts associated with the Fast Track program. Before proceeding to discuss issues related to commercialization, it was the case in each of the 12 firms that the Phase II research was related to the research background of the PI or the firm. It was also the case in each of the 12 firms that this Phase II research would form the foundation for subsequent research—which may or may not be SBIR funded. In other words, there is no indication among the

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE TABLE 2 Average Funding Gap Between Phase I and Phase II Research Status Funding Gap (months) Fast Track firms < 1 Non-Fast Track firms 4.3 group of 12 firms that the Phase II research under study was sought in a one-time opportunistic fashion; it is part of each firm ’s long-term technology strategy. Length of the Funding Gap Each of the 12 interviewees was asked, as background information, if Fast Track facilitated continuous funding from Phase I into Phase II. That is, each was asked if there was a funding gap between these two milestones. Among the Fast Track projects, five firms reported no funding gap at all, and one firm reported a four-month funding gap. In this latter situation, the Phase II project was approved in a timely manner, although funding was not immediately available from DoD. Among the non-Fast Track projects, the average funding gap was 4.3 months, with a range from 0 months to 12 months. (See Table 2.) If commercialization is enhanced by a reduction of time between Phase I and Phase II, then these descriptive findings, as summarized by the data in Table 2, are suggestive of one aspect of the benefits associated with the Fast Track Initiative. Time to Commercialization Each interviewee was asked how soon after the Phase II project’s completion will the technology(ies) being developed be commercialized. Six of the Fast Track firms that responded to this question, expected the mean time period to be nine months. The six non-Fast Track firms also expected the mean time period to be nine months. See (Table 3.) Based on the data in Table 3, it appears that the reduced funding gap associated with Fast Track firms is not related to the expected duration from the end of Phase II to commercialization. Hence, one cannot conclude that these Fast Track firms expect to commercialize faster than the non-Fast Track firms. Commercialization Strategy Four of the six Fast Track PIs stated that their commercialization strategy was currently in place as a result of working with their third-party private-sector investor. Each of the PIs in these four firms went on to say that the Fast Track Initiative was instrumental in their receiving third-party funding. One respondent

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE TABLE 3 Average Expected Duration from End of Phase II to Commercialization Status Time to Commercialization (months) Fast Track firms 9 Non-Fast Track firms 9 referred to Fast Track as being “critical” for his obtaining an outside investor, and another respondent stated that SBIR’s support gave his project “instant credibility” to the outside investor.3 Two of the Fast Track firms are receiving third-party funding from other government sources and neither thought of their research as having a commercialization strategy. All of the non-Fast Track firms eventually expect to obtain third-party funding. Two of these six firms reported that they do not yet have a commercialization strategy, but anticipate developing one when outside funding is obtained. These two firms anticipate finding outside funding through a joint venture arrangement with already identified but not yet contacted private-sector firms. A third firm has found a local investor, and a commercialization plan is being developed. The other three firms hope to be able to commercialize but are unsure of their ability to acquire additional private-sector funds and/or unsure of how to commercialize a product. No firm mentioned that its geographic location gave it any advantage in attracting third-party funding. The above two findings are not necessarily at odds with one another. The fact that Fast Track firms develop a commercialization strategy sooner than non-Fast Track firms perhaps may say more about the expected success of their commercialization efforts than about the timing of their commercialization efforts. Post-Phase II Precommercialization Funding Requirements Each interviewee was asked the approximate level of additional funding that will be required to commercialize its technology(ies) between the end of Phase II research and the expected date of commercialization. Mean responses are in Table 4. The expected funding needs in Table 4 are the averages for four Fast Track firms and for six non-Fast Track firms. Based on these statistics, Fast Track projects are expected to require more than twice the additional funds of non-Fast Track projects. To reemphasize, the type of project and the related technology differ between these two broad groups, as seen from the project summaries in the Appendix. 3   Each of these respondents was emphatic about the confidentiality of the interview information, and each was very uncomfortable about a subsequent discussion with the third-party investor, although the names of all third-party investors are public information. Accordingly, no interviews were conducted with any third-party investors.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE TABLE 4 Average Additional Non-SBIR Funding Expected for Commercialization Status Required Funding Fast Track firms $744,000 Non-Fast Track firms $354,000 Total Research from Concept to Commercialization Related to the additional non-SBIR funding expected to be needed for commercialization of the Phase II technology(ies), as discussed in the preceding section, Table 5 shows the average total cost to conduct Phase I research and Phase II research, from all sources, plus the additional funding expected to be needed for commercialization. On the basis of the dollar amounts in Table 5, Fast Track projects will cost approximately 54 percent more than non-Fast Track projects, on average. OBSERVATIONS ABOUT OTHER PROJECT IMPACTS Other characteristics of the 12 Phase II research projects studied, as well as differences in those characteristics between the group of Fast Track projects and non-Fast Track projects, are described in this section. Employment Growth The number of employees in each firm at the time that the Phase II award was made is shown in Table 1 above.4 Each PI was asked how many additional employees were added to the firm during the Phase II research. Using the algorithm that two part-time employees equals one full-time-equivalent employee, the average growth in employees among the six Fast Track firms and among the six non-Fast Track firms is shown in Table 6. Three of the six non-Fast Track PIs reported that the number of new employees hired during Phase II would be reduced once the research was completed; in fact, two of the three PIs that reported a post-Phase II decline in employment are in the two firms with the greatest growth in numbers of employees (180 percent and 133 percent) during the Phase II research. None of the six Fast Track PIs made such a statement; in fact, all Fast Track PIs were of the opinion that employment growth due specifically to the Phase II project would be permanent. 4   One should not generalize about the average employment size of an SBIR Fast Track firm compared to a non-Fast Track firm on the basis of the employment data in Table 1 because the comparable six non-Fast Track firms included in this study were selected, in part, on the basis of the number of employees.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE TABLE 5 Average Total Research Cost from Concept to Expected Commercialization Status Research Costs Fast Track firms $1,894,000 Non-Fast Track firms $1,233,000 Fast Track Versus Non-Fast Track Applications Previous funding relationships between each of the 12 firms and SBIR is shown in Table 7. Both Fast Track and non-Fast Track firms have had previous award experience with the SBIR program.5 All six of the non-Fast Track PIs stated that they were aware of the Fast Track program, but each PI stated that his/her firm did not pursue that funding avenue primarily because of lack of time and experience in identifying a potential third-party investor. SBIR Administration Each PI was queried about his/her experience with the SBIR on this Phase II project. The six Fast Track firms reported complete satisfaction with the Fast Track process and had no suggestions for changes. Noteworthy is the fact that three of the six Fast Track PIs stated that they had previous investment dealings with the company that invested in their Phase II project. Two of the non-Fast Track firms did offer constructive suggestions. One PI recommended that SBIR provide assistance to firms, especially the very small ones, regardless of their previous relationship with SBIR, about how to market and how to commercialize products. Another PI noted that the six-month Phase I period is too short a time for a small firm with no or little commercialization experience to identify a potential investor, much less to establish a relationship and attract outside funding. All 12 interviewed firms expected to seek additional SBIR research support in the future. The six Fast Track firms anticipated applying again through the Fast Track program, and the six non-Fast Track firms were uncertain about their future use of Fast Track. Intellectual Property Protection None of the 12 interviewed PIs reported any patent activity related to their current Phase II project. Only one, a non-Fast Track firm, expected to file a 5   Respondents also were asked if they have sought or expect to seek funding from the Advanced Technology Program at the National Institute of Standards and Technology. None knew about the program.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE TABLE 6 Employment Growth During Phase II Status Employment Growth (%) Fast Track firms 82 Non-Fast Track firms 74 patent at the completion of the Phase II research. The dominant reasons offered for the lack of patenting activity were the cost of filing and the cost of patent protection after the fact. PRELIMINARY ESTIMATES OF THE SOCIAL RETURN TO SBIR FUNDING As discussed in Link and Scott’s contribution to this volume, as part of this NAS review of DoD’s Fast Track Initiative, a model was formulated for estimating the social rate of return attributable to SBIR-sponsored research projects. Only the findings from the application of this model to the projects studied are described here. All firms, Fast Track as well as non-Fast Track, reported that they would not have undertaken the entire research project absent SBIR support (one Fast Track PI reported that his firm would have undertaken a small portion of the research absent SBIR funding). For each project, two rates of return are shown in Table 8: a private rate of return absent SBIR support under the counterfactual situation in which the research was undertaken, and a lower bound on the social rate of return associated with the SBIR-sponsored project. TABLE 7 Previous Funding Relationships Between Sample Firms and SBIR Firm Fast Track (F) Previous SBIR Awards Matis, Inc. F Phase 1 OPTS, Inc. F Phase 2 CG2, Inc. F none Power Technology Services, Inc. F Phase 2 Summitec Corporation F Phase 2 Bevilacqua Research Corporation F Phase 2 System Design and Analysis Corporation   none Accurate Automation Corporation   Phase 2 MicroCoating Technologiesa   Phase 2 Optimization Technology, Inc.   Phase 2 Optical E.T.C., Inc.   Phase 1 Intelligent Investments   none aFormerly CCVD, Inc.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE TABLE 8 Private and Social Rates of Return   Rate of Return (%) Status Private Social Fast Track firms 28 132 Non-Fast Track firms 21 104 A more complete economic interpretation of the findings reported in Table 8, as well as cross-project differences in the net social rates of return are discussed by Link and Scott (1999). Also in Link and Scott (1999) is a detailed discussion of the elements of market failure associated with the projects studied and the related markets on which the technologies are focused. These aspects of market failure are noted, but are not discussed, in each project summary in the Appendix. It is sufficient for this descriptive paper simply to note that SBIR is providing a socially desirable role in funding both Fast Track and non-Fast Track projects; however, the estimated social rate of return (actually a lower bound on the social rate of return) for Fast Track projects is greater than for non-Fast Track projects. This finding is discussed in detail by Link and Scott (1999). CONCLUDING OBSERVATIONS The descriptive information presented in this paper indicates that in some dimensions Fast Track firms and programs are different from non-Fast Track firms and programs. However, the southeastern states sample studied and summarized herein is too small to infer more definite conclusions. A comparison of the case study results from other regions in the United States will confirm or not confirm the propositions stated in this paper. Also, and perhaps more importantly, a case comparison of Fast Track and non-Fast Track projects after Phase II research is completed and after sufficient time has passed to evaluate the commercialization results from the projects seems warranted. ACKNOWLEDGMENTS This paper has benefited from the comments and suggestions of David Audretsch and John Scott. REFERENCE Link, Albert N. and John T. Scott, 1999. “Estimates of the Social Returns to Small Business Innovation Research Projects,” this volume.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE APPENDIX Research Summary of Phase II Projects Matis, Inc., Atlanta, Georgia COMPANY ORIGIN: Founded in 1990 in Georgia. PROJECT: A Novel Computational System for Real-Time Analysis and Prediction of Antenna-to-Aircraft and Antenna-to-Antenna Interactions. PRINCIPAL INVESTIGATOR: Vladimir Oliker, Vice President of the company; Engineer. PROJECT SUMMARY: There is a major problem with communication systems in general, and with antenna systems in particular. If antennas have no obstructions, then signals are transmitted and received clearly. However, such an environment rarely exists. On aircraft and ships, there often are obstructions of one form or another. These obstructions could be communications hardware or parts of the vehicle on which the communications are mounted. It is therefore critical to the quality of the communication system that the antennas be in an optimal position to minimize interference. Matis is developing software to simulate the antenna’s environment and to measure the communication quality of alternative antenna placements. Given simulated information on alternative placements, it is the responsibility of engineers to trade off communication efficiency with engineering feasibility. The technology to develop this software comes from previous research projects. COMMENT: Absent SBIR funding, Matis likely would have taken on this project on a limited scale. Although the capital and labor costs to undertake this research are extraordinarily high, Matis has previous investment relationships with companies and could acquire partial funding. OPTS, Inc., Huntsville, Alabama COMPANY ORIGINS: Founded in 1994 in Alabama. PROJECT: Imaging Automatic Gain Control for Target Acquisition, Automatic Target Recognition, and Tracking. PRINCIPAL INVESTIGATOR: Charles Hester, President of the company; Industrial Scientist. PROJECT SUMMARY: It is important for a missile to know what it is going to hit as opposed to where it is going to hit. For example, a missile might see two vehicles, a tank and a truck, at a predetermined location. To be most effective, the missile should be able to distinguish between vehicles and hit the most militarily important one. To be able to do this, the missile guidance system must be able to process infrared images into a pattern recognition program; however, there is tremendous noise in infrared imaging. Existing technology relies on what is called

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE simple gain, meaning that the sited image is enlarged in all dimensions. OPTS is developing hardware to install on missiles that will enhance images selectively, or apply gain selectively, so as to improve recognition. This will take place in real time on the missile. COMMENT: Absent the SBIR award, the firm would not have undertaken this research. The reason is that the capital costs are high and there are few investment sources. Also, there is a very limited commercial market for this technology; hence, finding a commercial investor was extremely difficult. CG2, Inc., Huntsville, Alabama COMPANY ORIGINS: Founded in 1995 in Alabama. PROJECT: Virtual Reality Scene Generation by Means of Open Standards. PRINCIPAL INVESTIGATOR: David King, President of the company; Engineer. PROJECT SUMMARY: To test a missile, it has to be developed, tested under controlled conditions, and then fired. The model must be fired a significant number of times to verify its capabilities. The cost for each firing is between $10 million and $15 million. CG2 is investigating a lower-cost process for verifying the capabilities of a missile under development. The software that is being developed is designed to run a hardware-in-loop process. After a missile is launched once, all of the information from that launch is stored in a simulation computer. The simulation computer is then connected to the circuitry of a new missile, and to an image scene generator. Then the image scene generator is connected to the missile, completing the loop. The loop first repeats for the new missile the flight of the tested missile. Then, there is what is called a validated simulation. Once the simulation is validated, the missile can be tested in various environments that are created by the image scene generator. For example, the image scene generator can tell the missile that it is seeing various things (e.g., a mountain) and it will measure how the missile reacts. The missile’s reaction is stored in the simulation computer. Once completed, this technology can save the DoD billions of dollars per year in unneeded missile firings. COMMENT: Because of the high capital costs for this research and the lack of available funding sources, this research would not have been undertaken in the absence of the SBIR award. Outside investors would not have been interested because the market is so small, and the technology can be imitated quickly. Accordingly, CG2’s outside investor is the government. Power Technology Services (PTS), Inc., Raleigh, North Carolina COMPANY ORIGINS: Founded in 1984 in North Carolina. PROJECT: A New Dual-Gated Motion Control Technology for Hybrid Electric Power Systems.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE PRINCIPAL INVESTIGATOR: John Driscoll, President of the company; Engineer. PROJECT SUMMARY: Motion control motors use approximately 70 percent of all electricity in the United States. About half of them are used in industry. These motors currently are controlled by insulated gate bipolar transistor (IGBT) technology. These IGBT chips are very expensive and need to be imported from Japan. PTS is developing a double-sided flip chip that is smaller and will be less expensive than Japan’s IGBT chip. In addition, these chips will be made domestically. The chips have an immediate use in military electric tanks. Driscoll was previously a scientist at General Electric, and he holds patents from that tenure. It is these patents that are forming the technological base for the research. COMMENT: Absent the SBIR award, this research would not have taken place. The reason is the high capital cost of obtaining access to a fabrication facility to produce the chips. Efforts were made to acquire funds for this project before applying to SBIR, but no investors would incur the cost. Summitec Corporation, Oak Ridge, Tennessee COMPANY ORIGINS: Founded in 1987 in Tennessee. PROJECT: Very-Low-Bit-Rate-Error-Resilient Video Communication. PRINCIPAL INVESTIGATOR: Andrew Yin, President of the company; Researcher. PROJECT SUMMARY: The lack of available bandwidth is the technical constraint on video imaging, especially wireless video imaging. With limited band-width, transmission of pictures is difficult and slow and video is nearly impossible. Summitec is developing a compression-like software that will select only the important pieces of information to transmit over a narrow bandwidth so that video images will be clear. As the technical monitor explained, this software is like getting 10 pounds of potatoes into a 5 pound bag. The primary use of the software is in surveillance. Video information can be transmitted to planes to assist them in locational bombing. COMMENT: Outside investors are very difficult to locate because the commercial return to this technology will not occur quickly. The long-time to market is the hurdle that investors see. Bevilacqua Research Corporation, Huntsville, Alabama COMPANY ORIGINS: Founded in 1992 in Alabama. PROJECT: A Dialectic Approach to Intelligence Data Fusion for Threat Identification. PRINCIPAL INVESTIGATOR: Andy Bevilacqua, President of the company; Engineer. PROJECT SUMMARY: The goal of this project is to produce a software archi-

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE tecture that will make computers think more like people think. DoD has a strong desire to be able to do intelligent programming. It has attempted this in the past through what was called “role-based expert systems.” That technology worked fine in a FORTRAN world of “if this, then that.” However, the needs of DoD are more complex, and alternative technology is needed. The software being developed will take systematic concepts and translate them into numbers so that the computer can process them. For example, when people think of a concept, they do so in terms of a vector of characteristics of the concept. However, if two concepts are combined, then the vector of characteristics of the combined concepts is not necessarily a linear combination of the individual concept vectors. Bevilacqua calls this architecture a “cognitive reasoning engine.” COMMENT: The company would not have undertaken this concept absent SBIR funding for two reasons. One, it did not have access to sufficient funding and the commercial applications of the technology would not have been readily understood by investors. Two, the architecture can be imitated quickly once commercialized. The third-party investor in this project is the government. System Design and Analysis Corporation (SDAC), Huntsville, Alabama COMPANY ORIGINS: Founded in 1996 in Alabama. PROJECT: A Generic Ducted Rocket Test Facility Setup and Simulation Program. PRINCIPAL INVESTIGATOR: Gary Kirkham, Partner in the company; Computer Science. PROJECT SUMMARY: The company is developing a software tool specific to ducted rockets. When designing a facility to test rockets, there are cost reasons for being able to test the facility prior to testing the rockets. There are software packages on the market to assist in the design of test facilities, but they are generic in their abilities and thus are not sophisticated enough to meet the needs of ducted rocket facilities. COMMENT: The company considered applying to the Fast Track program but could not find investors. The reason was that the research takes a long time to complete and commercialize. Hence, sources of capital were not available for such high-market-risk projects. Accurate Automation Corporation, Chattanooga, Tennessee COMPANY ORIGINS: Founded in 1989 in Tennessee. PROJECT: Neural Network Figure of Merit Subsystem. PRINCIPAL INVESTIGATOR: Alianna Maren, Researcher. PROJECT SUMMARY: Many military vehicles use radar. Each vehicle can have multiple radar units, and radar can be located away from the vehicles as well. It is likely that radar in both locations might be tracking the same signal. Each radar

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE will produce its own information but, because each is in a different position at different times, each will have periods of locational advantage, but there will be overlapping information. To be precise in tracking, what is needed is a total combined or “fused” picture of what is being tracked. Although it is technologically possible to fuse overlapping information, the question then becomes one of how good or accurate the fused picture is. The answer to that question required a definition of “good.” This research project deals with the development of a proof of concept that algorithms can be developed to define good. The output of the Phase II research is a commercializable software package that incorporates the algorithms developed. COMMENT: Commercial potential is far off and there could not be investors or borrowed money absent SBIR. MicroCoating Technologies (formally CCVD, Inc.),Atlanta, Georgia COMPANY ORIGINS: Founded in 1993 in Georgia. PROJECT: Non-Chromate Combustion Chemical Vapor Deposition (CCVD) Coating for Naval Engine Components. PRINCIPAL INVESTIGATOR: Andrew Hunt, President of the company; Materials Science. PROJECT SUMMARY: Hexavalent chrome is widely used in the Navy as well as in industry. However, it is a known carcinogen, and thus its use creates a toxic waste problem. The U.S. Environmental Protection Agency (EPA) knows of the problems associated with hexavalent chrome, but it has not yet mandated that it cease being used because no replacement is yet available (EPA practice). Congress has given DoD an internal directive to find a replacement material, and so, MicroCoating is developing such a material. It is based on a thin-film oxide that can be applied to metal during a CCVD process. During that process, the thin film is sprayed on metal with a flame, and the residual gas contains a replacement molecular coating that performs like hexavalent chrome but has more environmentally friendly properties. COMMENT: This project would not have occurred absent SBIR. In fact, the company would not be in business. Hunt did try to find venture funding but it was simply not available. Venture capitalists are not interested in materials science. Industry eventually will need to use this process, but until EPA mandates a replacement, industry will not invest. His process can very easily be imitated, but he holds a flame deposition patent that will protect it. Optimization Technology, Inc., Huntsville, Alabama COMPANY ORIGINS: Founded in 1983 in California. Branch located in Auburn and that is how McGraw became involved. California branch could not make it but the Auburn branch did.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE PROJECT: C41 Distributed Performance Simulation Environment. Principal Investigator : Chris McGraw, President of the company; Computer Science. PROJECT SUMMARY: As computers have moved from a supercomputer mainframe environment to a “distributed paradigm” where desktop computers are networked, a problem has arisen as to how best to share the processing loads across components in the network so as to maximize the efficiency of the network. This is not an interoperability problem; it is an ex post workload problem. Powerful desktop computers are being purchased but, depending on where the software resides and how the processing load is spread across machines, it could well be that the whole operates less efficiently than the potential sum of the parts. It is impossible to predict a priori how best to distribute workload. One needs trial and error to see what network configuration degrades the system the least. C4D is a software package that simulates various office systems before systems are purchased. The user can determine how to distribute software and workload efficiently. COMMENT: There seem to be two aspects of market failure here, according to McGraw: (1) The work is very theoretical and outside investors have a hard time understanding it; and (2) it is hard to identify investors. McGraw claims that it is not so much that the outside funding market is thin as it is that it is hard to know how to find investors. Optical E.T.C., Inc., Huntsville, Alabama COMPANY: Founded in 1990 in Alabama. PROJECT: High-G Microelectromechanical Accelerometer. Principal Investigator: Arthur Werkheiser, Vice President (partner) of the company; Engineer. PROJECT SUMMARY: The Air Force uses light gas guns for testing the air dynamics of various devices. These guns are 300-500 ft long. Artillery shells or small missiles are shot through these guns and pictures are taken of events such as ionization, tumbling, and other aerodynamic properties. When these pictures are taken, the acceleration of the object must be known. Acceleration needs to be measured up to 120,000 Gs (humans black out at 8-10 Gs. A sensor was needed that could be mounted on the object to measure acceleration in such an environment. The company is building such a sensor on silicon chips, using infrared devices that can withstand the acceleration. The technology underlying this project is known as microelectromechanical systems. COMMENT: The technical risk associated with this project is large because the sensor needs to be so small (0.33 in.3). It also will be very hard to appropriate property rights once it is commercialized.

OCR for page 194
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Intelligent Investments, Greensboro, North Carolina COMPANY ORIGINS: Founded in 1995 in North Carolina. PROJECT: Multiagent Tool for Effective Network-Based Training Systems. PRINCIPAL INVESTIGATOR: David Goldstein, President of the company; Computer Science. PROJECT SUMMARY: Software is being developed in an interactive way to develop Web pages. Multiple individuals in different locations can work on the development of the page simultaneously. COMMENT: The software can be partially imitated, but not totally, since he claims to have greater technical experience than others.