Anyone frustrated why their SBIR/STTR proposal rejection letter was limited on detailed feedback? Maybe you had multiple similar submissions with differing evaluation results. All can seem a bit confusing when taken as a whole, especially if it’s your first time playing the SBIR/STTR game. Allow me to shed some light on these otherwise murky waters.

But to keep things interesting let’s just make the answer simple with an easy rule of thumb. If you have a potential Government or Military customer that is willing to pay now, and time is of the essence in any sense (especially for the customer), then go OTA, otherwise go SBIR. Is it that simple, no, but can it be that simple, yes. There are many things to consider, and you could come up with all kinds of justifications for either contract given any number of situations. At the end of the day, people like simple answers to hard questions. To that end, it is best to look to the primary advantages and disadvantages of each to form a rule of thumb.

Just like apples and oranges, they are both fruits that come from a tree, and eventually must be picked by someone to consume, but that’s where the similarities end. Specific Topics are the original form of the SBIR/STTR program dating back decades. The entire plan for all SBIR/STTR phases is mapped out from the start by the Gov/Mil customer with the need. It truly is the unique nail searching for its specific hammer. Open topics on the other hand, are something very different. The Open Topics are in many senses the inverse of Specific Topics, where the hammer goes searching for its applicable nail. The core idea behind Open Topics is that there exist products that could provide a capability to Government or Military users that those potential users don’t know they need, and this program allows businesses to pitch these products to the Gov/Mil. When starting from the solution and working backwards to the need, it’s easy to understand why it is much more difficult to find product market fit, let alone a single customer with all the necessary funding to fully build out and/or acquire the product.

The dirty little secret in military innovation circles is that MANY military personnel regard the SBIR/STTR program as “free money”. This isn’t an entirely inaccurate belief, in that all SBIR programs have some kind of funding support possible to Phase 1 and/or Phase 2 contracts, but the whole point of the program is to get to Phase 3 where it’s all on the customer to fund everything. Rather the customer went any number of other contracting routes to acquire the product or service, or chose to use a SBIR/STTR contract, it all ends the same way with a military customer funding the purchase. The hot potato game of trying to make some other military organization pay for your military organization’s wants or needs, can be the most frustrating and opaque game that many defense businesses end up suffering through.

Your usual first move in the SBIR/STTR program, is to simply focus on winning early phase awards, but the real pro move is to utilize later funding to help achieve earlier funding. This has everything to do with the lesser-known fact that Phase 1 & 2 funding awards have very restrictive regulatory limits on the type (“color” in military parlance) of money used, versus the types of funding that can be used in Phase 3. Phase 1 & 2 are developmental phases, therefore by regulation, require the use of RDT&E funding. Phase 3 is a commercialization/acquisition phase so other types (“colors”) of money can be used like O&M or procurement. All military organizations have access to O&M, and it is the primary type (“color”) of money they will try to utilize for most things in yearly spending. Very few units outside of Headquarters, Labs, or Centers have access to RDT&E money, so paying for anything developmental is always a perpetual challenge for regular units.

It was a great weekend at SXSW here in Austin, and a really healthy discussion on a wide range of innovation topics at Capital Factory's events. Of the many interesting items that got discussed, to which I will have subsequent articles covering, was one I wanted to highlight of interest in a "Joint Open Topic SBIR" program across the DoD. The interesting thing about this concept is that many people forget or simply don't know that, despite only the combined Air Force and Space Force SBIR program offering an Open Topic solicitation currently (Navy starting in summer 23), there has always been the availability to utilize any SBIR/STTR selection or award by any federal organization. Let's take a look at the direct language from the AF/SF SBIR program covering everyone's favorite example of what does this mean..."Selectable - Not Funded".

"The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are highly competitive programs that encourage domestic small businesses to engage in Federal Research/Research and Development (R/R&D) with the potential for commercialization. Through a competitive awards-based program, SBIR and STTR enable small businesses to explore their technological potential and provide the incentive to profit from its commercialization." (www.sba.gov)