The trick to succeeding at SBIR/STTR awards is to use the long game to help win the short game, while also guaranteeing future success…

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.

You need to go out and find one or multiple military units or organizations that want to support your Phase 1 or 2 effort. They have O&M money to potentially devote to the award, but legally can’t use it for that phase. You work an arrangement where the unit pledges their funding support of their O&M money for phase 3, but it is documented in the Phase 1 and/or 2 applications. Remember the SBIR/STTR application has a section for commercialization strategy that you must submit, there is also a section in the Customer Memorandum for the Gov/Mil to describe the Phase 3 transition, both sections can be used to detail the commitment of O&M funding for purchase on your widget. Ultimately you are competing for SBIR funding, and Gov/Mil matching funds in Phase 1 or 2 is best, but the second best is a commitment to phase 3 purchase. Documenting that is important!

Also, the other important thing to note about the Phase 3 funding commitment is that it doesn’t need to be large to establish the contract. Most government contracting shops will execute a Phase 3 contract for any small amount the gov/mil customer requests within reason. It is still work for the contracting shop, so generally $10K or above is a good minimum threshold. That amount is also a very affordable amount for just about any unit to absorb out of their annual budget. So, get even the $10K “token” purchase guarantee up front during Phase 1 or 2, use that as a way to help win the early phase funding from the SBIR/STTR program, then use the promised gov/mil token funding to get that Phase 3 contract executed. Now you have everything you need to shop follow-on orders for the next 3+ years on that sole-source contract that can support MUCH larger purchases from any number of units/organizations.