ExPreS more about ASSETs 2014

Private-Sector funded, project
awards: SBIR targeted
With opportunity to respond to Tech Seeker listed TOPs - Technology Opportunity Projects - open ONLY to those having been SBIR-STTR involved, the most recent addition to the ASSET system is iP3: the solicitation and proposal-based component of the now well- proven Tech Seeker needs-driven approach.
      Organized around three types of project grouping, this (currently) twice-a-year offering draws down on 30+ years of lessons-learned SBIR experience. To some extent, therefore, iP3 can perhaps initially be usefully understood as a private-sector funded version of the federal SBIR program which since 1982, has delivered on
  • almost $40B of contract and grant funding on now well over 100,000 selected projects - almost one-third having gone to the more substantial Phase II effort
  • involving more than 21,000 qualified small firms - including many now famous names having, in part, got their start with SBIR support. Perhaps significantly, some of those erstwhile SBIR awardees are now ASSETs participant in the Tech Seeker role.  
  •       As one such player noted recently "I know what we were like when we were at their stage.  We want to tap into some of that energy and fresh insights."
Topic Sources:  Tech Seekers
   Spring 2014 iP3 Funding Levels: $8M-$10M
In their continuing role as Tech Seekers, some federal agency personnel are indicating interest in having iP3 Topics listing(s).  It is likely that a few of these projects will be offered in the upcoming  iP3 Spring 2014 solicitation. 
    However, the critical difference between SBIR and iP3 is that the primary source of Topics are major/mid- sized corporations who, in their role as Tech Seekers, will
  • Prepare and submit their TOPs
  • Review the received submissions
  • and then Fund their selections.
   Based on numbers of submitted TOPs to date and those in the works, all indications are that - if projects are continued into Phase II at anticipated levels - the funding levels for the Spring 2014 iP3 Solicitation will be roughly equivalent in dollar commitment to that of the total annual SBIR budget of one of the smaller agencies: $8M-10M.
     With new Tech Seekers joining returning partici-pants, this represents a strong increase over previous offerings. This augers well for this newer vehicle becoming a useful addition to the SBIR resource-access landscape providing (invited) participating SBIR awardees with a new source of technology development funding; revenue streams and business partnering opportunities.

A proposal submission system that is responsive to the posted needs of larger and mid-sized corporations is obviously not an entirely new concept.
  • Growing numbers of Large/Mid-sized Corporations are implementing policies pro-actively to engage external talent often now to include their offering Idea Submission Portals. These are websites providing overviews of what they're looking for, areas of technology interest some also having actual problem descriptions. Interested parties are invited to submit non-proprietary summaries of their ideas and suggestions for consideration by the Sponsoring source 
  • Many industry and trade organizations and others sponsor Open Innovation discussion and guidance for their Members and schedule events that often include 'partnering' opportunities involving small firms or academics. The various SBIR Commercial- ization Support and Events offered by contractors to the participating agencies are a variation on this theme.
That noted - and with all due respect to the good intentions behind these offerings - one really has to ask of those involved - large firm and small alike -
  • Have these types of endeavor actually been useful in terms of business outcomes?
  • Has the depth in quality connection that you seek been forthcoming?
Private sector initiatives:
Perhaps a more direct comparison of what iP3 is about are the various and several private-sector entities offering what are often referred to as 'Open Innovation' platforms. Grounded in listing topics - Technology Challenges - crafted by large /mid-sized corporations, these players have become a high-profile presence in the space offering cash awards paid by those Corporations to those whose submissions are selected.

SBIR awardee involvement:
Some SBIR-involved firms have been responsive to these Open Innovation Solicitations. Those that report having done quite well - a good-sized project; more than one award over time and/or having subsquent interaction with the Tech Seeker - are almost entirely the larger, longer-term SBIR active. Strikingly, they are generally also those having previous contract R&D background and experience - all of which prepares them well for these types of work-(generally) done-for-hire projects. 

Most smaller (and younger) SBIR awardees, however - often having a more narrowly defined business emphasis and technical capabilities - are much less likely to have been Open Platform responsive. Those that have tried to respond report that
  • the problem-solving on-demand approach, often involving smaller dollars, at arms-length and with an all-comers-welcome approach is - at best - a distraction and - at worst - simply not working well for them.        
  • interestingly, they also note that the process of new Topic listings being continously added and relatively unfiltered is problematic. Being time and resource challanged, the need to make frequent check-ins to see if there might be something of interest apparently gets old quickly.
While the scale, diversity and quality of the Open Innovation Platform system offerings is impressive, at the core of what they do - and how they do it - is Crowd-Sourcing. A powerful tool in many contexts crowd-sourcing would seem inherently to be a much less than precise means of identifying quality research competencies.
  
As the old joke goes ...there is some "good news" and some "bad news".

The Bad News first:
Driven by the extensive Regulatory Requirements required by (the finally-achieved) SBIR reauthorization - along with a few other provisions that were added in - recent/ongoing changes to Program Management is meaning that for many talented, highly capable, small firms access to federal dollars for technology and business development in some agencies is becoming far more problematic.
All indications are that - certainly
in the near-term - that situation does
NOT seem likely to improve!

Major drop in number of 
actively funded awardees
Data shows very clearly:
  • significantly reduced total numbers of SBIR Awardees
  • and - particularly disturbing - fewer newcomer firms than in any period since mid-90s when SBIR was at about 30% of present dollar commitment.
Our systematic tracking of the business condition of SBIR-involved firm suggests that in some states previously healthy SBIR-involved firms are laying off/ not replacing employees and more than we have seen previously are quietly closing their doors.
    The prolonged economic downturn has obviously taken its toll among us too.  However, add in far more rigorous audit requirements than previously and the substantially increased emphasis in some agencies on fraud, waste and abuse provisions - only rarely an issue among this population - and it can be argued that this is a lot less than a small-business friendly environment.

The Good News
Expansion of the well-proven ASSET system now to include what amounts to a private sector funded version of SBIR is welcome news. This important addition and expansion of non-government SBIR-dedicated funding is coming in response to
  • almost all Tech Seekers having been previously ASSETs events involved seeing IP3 as a useful expansion towards managing - and increasing - the extent of their SBIR involvement.
  • and others who had found the constraints of event participation problematic or have previously had limited SBIR-exposure are very interested in trying out this different approach.
This augers well for growth in this important new pool of support funding available exclusively to quality SBIR awardees and to the prospects for viable working relationships that are mutually advantageous.

iP3 involvement:  improved SBIR
success rate and better dollar access
  • With the increased stress in application review of extent to which small firm can offer evidence of how they will get their projects to use-condition (commercialize) being iP3 involved - and, by extension, showing active industry connection - is clearly being seen as positive factor.
  • With most Tech Seekers providing Support Letters to SBIR submissions by firms with which they are connected, we are now seeing them actually adding dollars to Phase II projects in particular to broaden the scope of the project to include elements of particular interest to them.



With the stress on funding inherently risky but often promising endeavor in small and often very young firms, a powerful organizing principle in the early SBIR effort - NSF in 1977-79 - was that the initial funding, time and work commitment by the small firm, and risk exposure by the funding source should all be limited.  Roland Tibbetts - the acknowledged Father of SBIR and initiator of Phase I-Phase II - referred to his process as 'fly before you buy'.  With his limited budget and need to get the best value from what he had, his approach was
  • to award small dollars - less than 10% of project overall - for a limited period to several selected applicants responsive to his carefully crafted Topic Listings
  • in the judgment that that initial effort w/could provide the basis for decision whether to commit more substantial funds.
In effect, Roland was giving the small firm a 'rope by which to hang themselves'.  With enough funds to support the effort for a few months - to set what they proposed in context - if their idea, methodologies and capabilities were any good would become apparent. Only those projects would be considered for Phase II the time and cost of this evaluative effort had been limited.
 
Similar approach recommended: with an added benefit
In addition to the Fail-Fast approach implicit in SBIR, ASSETs and iP3 also is about bringing together players of very different resource base, ways of working and business objectives.  
     Experience suggests that effective collaborations are about much more than the technology match.  The Phase I-Phase II SBIR approach modified for iP3 usage provides a defined - and limited - period during which the parties can get to know each other and build the trust without the stress of major dollars at stake and, still worse, the time pressures of a mission-critical project.
The primary driver for the political effort that created SBIR now over three decades ago was that, while at the time
  • the federal government supported some 50% of the R&D undertaken in the United States - today it is less than half that
  • and some 15% of advanced degreed engineers and scientists working in the US were small business employed - today it is almost 40%
as a class of R&D qualifed players, small business were almost entirely excluded from any access into that funding.  Even with expansion of SBIR now to an annual budget across all SBIR participating agencies, small firms even today in the United States still account for not even 5% of federal R&D support.   

With the long-fought for - and highly controversial - passage of the SBIR enabling legislation achieved in the Summer 1982, those of us involved had next to tackle the hugely important task of simply getting out the word about what was now available to qualified parties that were nowhere listed. To do that, decisions had to be made about how best to expedite that process.  Many of those decisions now define what SBIR is and how it works.  Those decisions met the task requirements then;  variations of those are now refected in how iP3 is structured and managed.
  1. Single solicitation: Multiple Topic document - printed and mailed out in the early SBIR days;  accessible electronically today.
Topics for iP3 are forthcoming from multiple sources, across a wide range of technical areas and often having very different time frameworks.  Some Tech Seekers offering up several TOPS; others only a single option.
  • All these are clustered into a single announcement made in the same time period.  
  • Currently the iP3 Solicitation of offered TWICE a year
  • Why?
  • The designated 
  1. Within the competitively bid iP3 elements - FutureThinking® and SBIRChallenge® - the sponsoring Tech Seeker has complete autonomy over 
    • Topic choice and emphasis
    • Designated funding levels for each stage of project and overall
    • Criteria by which selection will be made
    • Overall management of the project
 
What 30 years of SBIR experience has taught us is that the private sectormay be able to offer better ways of getting ful value from what is intiated.  Stove piping
Pre-proposal submission: non-proprietary information IP related issues: SBIR specific provisions
In the federal arena, applicants are always advised to limit the extent of any proprietary information submitted in response to an issued RFP. All pages including such data are so marked and those page numbers listed elsewhere in the document. Federal personnel are further precluded from releasing such data
Clearly these conditions do not
(cannot?) apply in the private sector.
Indeed, for neither party to these transactions is there interest in either revealing or seeing proprietary information until an NDA/CDA is in place.
       To that end, iP3 is set up such that inital SBIR awardee response and related materials provided will focus primarily on data indicating the small firm's relevant capabilities and experience to include
  1. White Paper:  2-3 pages to a recommended format prepared by the applicant small firm entirely based on Non-Proprietary information
  2. Project Marker: a one pager prepared by applicant to an Abstract-type format.  Synopsis of their understanding of the task to hand and relevance of their expertise and experience to address that task
  3. Business Profile: prepared by idi this piece, drawing down on the extensive detail tracked in our systems on every SBIR-STTR involved small firm, this piece overviews the extent and form of the firm's SBIR involvement (award titles: source and funding levels); brief description of the firm as company: location, size , revenues, management;  patents, VC and/or public/private status etc.
 Coincident with passage of the SBIR enabling legislation, Bayh-Dole also took effect ceding to academic and non-profit organization and, critically, to small firms the patent rights to technology developed with federal support.  
   The SBIR enabling legislation also granted to small firms an important additional provision. Expanded in time applicability several times since original passage, by law any project that is SBIR funded carries with it extensive technical data rights. Specifically, these data may not be disclosed by an federal source.

   As noted recently by perhaps the recognized expert in this space
  • "These data right can "roll over" indefinitely
    • If competitors wish to gain access to SBIR data, they have either to purchase the company or the technology line that data supports"
      David P. Metzger, Esquire,
  • Partner, Arnold & Porter LP
Clearly, this value-retention provision could be of major positive factor in situations where a Tech Seeker would partner with an SBIR-involved firm either through iP3 or elsewhere on an effort that is federally funded (eg SBIRConnect®).  
Forms of payments: Contracts versus grants Complexs projects
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