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Small Business in the Defense Industry

Do you have a small business in the defense industry?

As you read this, Congress is evaluating FY23 defense bills and grappling with a decision to extend the Small Business Innovation Research (SBIR) program; specifically, the portion of the program that focuses on Phase I—the most nascent of technologies. Kevin Landtroop recently wrote an excellent opinion piece in War on the Rocks. It should be required reading for any company reliant on the SBIR process. Landtroop’s business model, in part, relies on helping companies navigate the SBIR labyrinth. This should not dissuade you from reading, as understanding the idiosyncrasies and nuances requires such an insider’s perspective that someone who swims in the SBIR currents daily can provide.

Small Business in the Defense Industry: SBIR Program

I previously wrote in National Defense about the SBIR program. Specifically, how the goals of SBIR phases are to reduce risk while moving technology and capability to a program of record that supports a warfighter need and requirement. Too many companies look to SBIR Phase I grants as a means to fuel continuous and sometimes irrelevant research. There are companies with no intention of doing more than demonstrating something in the hopes of making a quick sale to a prime as their exit strategy. The word irrelevant may seem harsh, but not all scientific and technical advancement supports warfighting. Just because we can doesn’t mean we should, or must, invest in every new idea.

If one pictures a pyramid with Phase I at the base and Phase III near the vertex, the number of Phase I awards is approximately 1,000 for every Phase III award. That’s an intentionally difficult climb for any new capability.

The buzz within industry is that all SBIR funding is on the chopping block in the FY23 defense discussion. That is not the case—it’s just Phase I in question. Share on X

Landtroop’s article reaffirms a valid point that having many companies in the technology development funnel is better than having fewer. That means allowing more companies in the earliest phase. I predict Congress will not make the draconian cut to all Phase I efforts. The political backlash, particularly in an election year, is not worth it. However, they may take steps to tighten the mesh of the filter that screens Phase I opportunities. That would be a healthy adjustment. Allowing fewer, more relevant entries into Phase I makes sense.

DoD Savings

Searching for DoD savings in the world of innovation is preposterous, but here we are.

There are many other places to save money in DoD besides cutting the SBIR program. Alternative starting points include personnel change of station moving costs and the concept of base housing. Each cost billions annually and can be improved by changing the mechanisms and benefits.

My vote is for adjusting the entry to Phase I SBIR such that the linkage to warfighter need is strengthened. A wholesale elimination of the early-level entry for technology would be foolish.

What can you do? If you use the SBIR Phase I program and have not written to your Member of Congress about its importance to you, it is almost too late. Jot out a two-paragraph note and send it this week. As I have written before, coalition messages make a difference.

The Make Your Move podcast is a multi-season series devoted to the lessons learned of military members in their post-active duty lives. I hope you enjoy the stories of the men and women brave enough to share their transition stories so publicly. Listen to the latest episode here.

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