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OCR for page 343
The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Annex D Description of Department of Defense SBIR Fast Track Program* Since October 1995 DoD’s SBIR and STTR programs have featured a “Fast Track” process for SBIR/STTR projects that attract outside investors who will match Phase II funding, in cash, contingent on the project’ s selection for Phase II award. Projects that obtain such outside investments and thereby qualify for the Fast Track will (subject to qualifications described in the solicitation): Receive interim funding of $30,000 to $50,000 between phases I and II; Be evaluated for Phase II award under a separate, expedited process; and Be selected for Phase II award provided they meet or exceed a threshold of “technically sufficient” and have substantially met their Phase I technical goals. Consistent with DoD policy, this process should prevent any significant gaps in funding between phases I and II for Fast Track projects, and result in a significantly higher percentage of Fast Track projects obtaining Phase II award than non-Fast Track projects. Thus far, over 90 percent of projects qualifying for the Fast Track have received interim funding and been selected for Phase II award. As of April 2000, 156 projects are on the Fast Track and, under these projects, $110 million in DoD SBIR funds has directly leveraged at least $50 million in matching funds from outside investors. * http://www.acq.osd.mil/sadbu/sbir/overview.html
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The Small Business Innovation Research Program: AN ASSESSMENT OF THE DEPARTMENT OF DEFENSE FAST TRACK INITIATIVE Under the Fast Track, a small company can offer an investor the opportunity to obtain a match of between one and four dollars in DoD SBIR (or STTR) funds for every dollar the investor puts in. To qualify for the Fast Track, small companies and their outside investors must follow the procedures detailed in Section 4.5 of the SBIR solicitation. The most important of these procedures are summarized as follows. First, toward the end of a small company’s Phase I SBIR (or STTR) project, the company and its investor submit a Fast Track application. In the Fast Track application, the company and investor: State that the investor will match both interim and phase II SBIR (or STTR) funding, in cash, contingent on the company’s selection for Phase II award. The matching rates needed to qualify for the Fast Track are as follows: For small companies that have never before received a phase II SBIR or STTR award from DoD or any other federal agency, the matching rate is 25 cents for every SBIR (or STTR) dollar. (For example, if such a company receives interim and Phase II SBIR funding that totals $750,000, it must obtain matching funds from the investor of $187,500.) For all other companies, the matching rate is 1 dollar for every SBIR (or STTR) dollar. (For example, if such a company receives interim and Phase II SBIR funding that totals $750,000, it must obtain matching funds from the investor of $750,000.) The matching funds may pay for additional R&D on the company’s SBIR (or STTR) project or, alternatively, they may pay for other activities (e.g., marketing) that further the development and/or commercialization of the technology. Certify that the outside funding qualifies as a “Fast Track investment,” and the investor qualifies as an “outside investor,” as defined in DoD Fast Track Guidance. Outside investors may include such entities as another company, a venture capital firm, an individual “angel” investor, a non-SBIR, non-STTR government program; they do not include the owners of the small business, their family members, and/or affiliates of the small business. Second, DoD will notify each Fast Track company, no later than 10 weeks after the end of Phase I, whether it has been selected for Phase II award. Once notified, the company and investor must certify, within 45 days, that the entire amount of the matching funds from the outside investor has been transferred to the company.
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