R&D funding vehicle could supercharge small biz innovation programs

The hunt for innovation within the federal government has led to a spending boom in two multistage, multiyear programs designed to bring potential innovative technologies to market and it's an opportunity for small business contractors, Deltek analysts said Tuesday.  

The Small Business Technology Transfer and Small Business Innovation Research, or STTR and SBIR, programs provide contracts to small businesses to help promote research and development and innovation efforts in a three-phased effort, with the ultimate goal of taking them to market.

Phases I and II of the programs include contract funding to test the feasibility of research ideas and then offer continued R&D funding as the programs advance. Phase III tests the commerciality of the programs and solicits funding from the private sector to help bring them to market. 

Steve Mihalisko, a principal research analyst at Deltek, said in a webinar Tuesday that demand drivers, particularly within the Defense Department, have helped push annual spending in both SBIR and STTR higher over the past decade.

Those drivers, combined with an anticipated new contract vehicle for the go-to-market phase of the twin programs, offers a unique opportunity for small contractors to capitalize on the federal government's hunger for innovation.

"Right now, there isn't even a common contract vehicle, method or way to effectively...bring SBIR [Phase] III contractors to the governmentwide acquisition community in any kind of efficient manner," he said. 

That's expected to change this year with a new contract vehicle that the General Services Administration's Office of Assisted Acquisition Service is working on to bridge the gap between the research and commercialization phases, while bringing more governmentwide access to the new technologies. 

After offering a request for information in July 2022, GSA officials have been on a multi-city tour to meet with industry partners involved in the SBIR community for one-on-one market outreach sessions that is expected to conclude next week. 

Mihalisko said that GSA disclosed last fall that it was reviewing a business case for the IDIQ and concept development was ongoing. 

Nevertheless, Deltek projects that a solicitation for a contract vehicle could be on the street by May, followed by a possible award in November that would allow small contractors with SBIR contracts the opportunity to sell their Phase III technologies governmentwide. 

"So companies that would finish a Phase II or have a technology they are ready to sell could submit a proposal to get on the vehicle," he said. "The vehicle would be on an open basis, so very much like a schedule. So those companies can get on this vehicle and make it a much more efficient process to market to potential government customers."

Such a contract vehicle would have the potential to drive a robust market for  and STTR contracts even higher. Deltek researchers said the total spend of Phase III SBIR and STTR contracts alone grew from more than $1 billion in fiscal 2014 to more than $2.8 billion in 2022. 

Among the biggest spenders in the SBIR/STTR market are the Air Force and the Navy, who have boosted both their SBIR and STTR spending across Phase I and II contracts in recent years.