Let’s expand the SBIR and STTR programs to let American small businesses drive innovation in defense

Innovation lies at the heart of a nation’s progress and prosperity, driving economic growth, technological advancement, and societal development. In the United States, fostering innovation has been a longstanding goal, and one effective way of achieving this is through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. These programs play a crucial role in promoting research, development, and commercialization of cutting-edge technologies, while simultaneously supporting small businesses. As we navigate a rapidly changing global landscape, there is a compelling case for the United States government to expand these initiatives to further boost innovation, create jobs, and enhance economic competitiveness.

The SBIR and STTR programs are designed to drive innovation

Envisioned as catalysts for technological transformation, the SBIR and STTR programs were established in the early 1980s with intent of providing funding and resources to small businesses engaged in research and development (R&D) activities. These programs provide the rocket fuel to small businesses to unleash their immense potential in terms of innovation, agility, and responsiveness. SBIR focuses on funding technological innovation in phases, starting from basic research and culminating in commercialization, while STTR emphasizes collaboration between small businesses and research institutions.

Equal opportunities to create fair competition

The disparity in reimbursement practices between large prime defense contractors and small businesses is undeniably unjust and undermines the principles of fair competition and equal opportunity. While large corporations receive reimbursement for bid and proposal expenses as well as research and development expenses through overheads and general & administrative expenses, small businesses often face the financial burden of these costs without similar reimbursement privileges. This imbalance not only hampers the growth potential of smaller enterprises but also perpetuates a cycle of concentration of resources and power within the defense industry. To level the playing field and foster a genuinely competitive landscape, it is imperative that the government bolster both the SBIR and STTR programs to ensure equitable treatment and support for innovation, irrespective of a company’s size or scale.

Advantages of expanding SBIR and STTR

•  Stimulating technological advancement: Expanding SBIR and STTR programs will lead to the creation of more fertile ground for technological breakthroughs. Additional funding means more projects can be supported, fostering research in a wide array of industries, from healthcare and energy to agriculture and defense.
• Job creation and economic growth: Small businesses are known to be substantial contributors to job creation. Expanding these programs will not only encourage startups but also enable existing small businesses to scale up their operations, leading to increased hiring and economic growth.
• Enhancing U.S. competitiveness: In the global economy, staying competitive is paramount. By channeling resources into innovation endeavors, the U.S. can maintain its leadership position across various industries, thereby safeguarding its long-term economic sustainability.
• Cross-disciplinary collaboration: The collaborative nature of STTR programs, where small businesses partner with research institutions, facilitates the cross-pollination of innovation and ensures a diverse range of perspectives are considered.
• Technology transfer and commercialization: SBIR and STTR programs inherently encourage the commercialization of research outcomes. Expanding these programs would mean more technologies successfully make their way into the market, benefiting both the public and the economy.

Addressing the challenges of program expansion

• Resource allocation: The government needs to ensure proper allocation of resources to maintain program effectiveness and prevent dilution of impact. With expansion, careful resource allocation becomes paramount. Ensuring funds are effectively distributed and projects are tracked is essential to maximize the impact of these programs.
• Balancing risk and reward: Not all projects will succeed, and some might not yield immediate commercial returns. Not every project will culminate in market success, but it’s essential to recognize that failures contribute to the iterative process of innovation. Moreover, these “failures” often contribute valuable lessons to the innovation ecosystem. Striking the balance between mitigating risk and embracing experimentation is key.
• Ensuring accountability: As funding expands, maintaining accountability and transparency becomes crucial to prevent misuse of funds. As scope broadens, rigorous evaluation mechanisms must be in place to assess project viability and maintain program integrity.

The trajectory of a nation is often defined by their ability to innovate and adapt. In this context, SBIR and STTR programs represent an instrumental stride toward securing America’s innovation legacy. By championing an expansion of these programs, the United States government acknowledges the indispensable role small businesses play in driving progress. Beyond the economic implication, this expansion stands as a testament to the nation’s commitment to fostering creativity, research and collaboration. As the world embraces a future characterized by transformative technologies, a robust SBIR and STTR ecosystem can serve as the vanguard, shaping a more innovative, prosperous, and resilient nation for generations to come.

-        By David Walker, Intergalactic CFO