COMMENTARY
CONTRACTS AND CAPITAL
The Army’s Small Business Innovation Research (SBIR) program follows a generic and prescriptive process that gets companies on contract an average of 224 days from the time they submit their proposals. This rigid structure makes the program easy to manage, but it is not efficient for companies or for Army stakeholders.
The Army Applications Laboratory’s (AAL) Special Program Awards for Required Technology Needs (SPARTN) program is the only Army SBIR program to tailor base contract award amounts specific to each topic. The funding amount is derived through tailored base contracts, the SBIR enhancement program, high-dollar value Phase IIb contracts and faster contracting speeds. AAL identifies where commercial technology is mature enough to skip the standard proof-of-concept contract stage, and allows companies to enter the program on higher value Phase II prototyping contracts. SPARTN can also award different companies Phase I and Phase II contracts simultane- ously for the same topic, which allows the Army to pursue the most promising technologies for a program when companies have relevant solutions at different maturity levels. Traditional Army SBIR did neither of these, making companies apply for Phase I and then Phase II contracts regardless of the maturity of the technology.
SPARTN is also the only Army program that offers SBIR Phase IIb awards. These contracts are a cost-sharing measure between industry and the Army that drive down the Army’s development costs. Companies use match- ing funds—both from the program manager and the company—for a contract of up to $24 million total value. This additional funding can accelerate project delivery
timelines and help companies develop technology to a higher maturity level or add beneficial features.
The SBIR enhancement program will match an equiva- lent investment from a company of up to $500,000 for promising technologies. Historically, this match is acti- vated toward the end of Phase II prototype development. SPARTN activates matching funds at the time of applica- tion for Phase II, which opens the door to getting more features or a more mature solution faster through an injection of more capital. About 30 percent of eligible SPARTN companies have exercised the option, pour- ing $1.5 million in private cash contributions into Army modernization in just three months—roughly 80 percent of Army SBIR’s yearly average for companies’ cash contributions.
While these capital incentives are attractive, companies will remain skeptical of SBIR opportunities if the Army cannot pay them on commercially acceptable timelines. For all SPARTN topics, review timelines were cut from an average of 78 days to 14.8 days. SPARTN also gets companies on contract quickly. The 224-day average from solicitation close to contract award for Army SBIR is 48 days on average for SPARTN. SPARTN puts money in the hands of companies two to three times faster by using deliverable-based, rather than time-based, contracts and making the initial deliverable due very early in the contract. SPARTN pays up to half the contract value in the second week, while SBIR pays one-sixth of the contract on rigid timelines. With SPARTN, small businesses don’t pay out of pocket to work with the Army.
SPARTN topics offer only two paths for companies on contract: transition to follow-on contracts or early offramp of technologies without transition potential.
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