Here is Air Force acquisition chief William Roper talking at an Ask Me Anything webinar. He was discussing the pitch day events, which starts at $50K using Small Business Innovation Research (SBIR) funding. In phase II (~$1 million) and phase III ($10+ million), SBIR funds need to be matched with dollars from the program offices, who would be the eventual customers that would transition new technology to operations:
It can’t be an SBIR only dollar. They [private investors] are smart enough to know when you have a pot of money that’s fenced by Congress and you can only spend it for that, that’s free money. You can only use it for that thing, you can’t pay other bills. It doesn’t show a commitment from that Air Force that we’re spending SBIR funds. The second there’s a program office dollar on the table, it’s matched from SBIR — we want to make it easy. The fact that the program team is willing to do that makes the difference for private investors.
Roper wants about half of all Air Force SBIR funding to go to Air Force Ventures. There was about $660 million of SBIR/STTR funding in 2019. That means about $330 million for the Ventures.
Just want to do a quick sanity check. There will be about 1,000 awards of $50K (zero matching with program office), 300 awards of ~$1 million (1 program office dollar for every 2 SBIR dollars), and 30-50 awards of $10+ million (1:1 matching). So the total government bill will be about $650 million to $850 million or more, with about $400 million to $600 million required of SBIR.
I wanted to bring up one potential issue. Is it really the duty of a program office to transition new technologies? Program office funding was supposed to be justified based on the requirements and contract proposals currently in execution by incumbent contractors. Air Force ventures requires program offices to draw funding away from the baseline plan of the incumbents. That can be a difficult tradeoff.
It might also require putting a straight-jacket around the entrant’s activities to fit the funding justification.
Then, if the pitch day projects go well, we come to another question: will it transition into its own program of record, or will it replace the incumbent in the existing program? In the former case, the program office doesn’t benefit in status or funding from having scaled the entrant. In the latter case, the program office has to make a tough choice about whether to replace the incumbent. We’ve seen the challenges of replacing a program’s incumbent in space launch (SpaceX) and DCGS (Palantir).
It would be nice if the Program Executive Offices themselves received some un-programmed funds to support Air Force Ventures. After all, they are supposed to take a portfolio view. They can take a more neutral view. Then, if things are going well, they can help coordinate funding for a new program of record, or tradeoffs within the program offices.
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