Here are some good recommendations from USAF contracting officers Steven Groenheim and John Diekel, Restructuring the SBIR/STTR process:
First, we should consider overhauling the application process. The aforementioned AFWERX SBIR CSO 21.1 solicitation is 92 pages long and full of government contracting jargon. The length and complexity of this solicitation directly causes two interwoven problems for startups — knowledge and capital. Since most founders of startups are experts in their respective fields instead of government contracting, there is a clear knowledge gap between the personnel at AFWERX and startups… Because the USAF’s SBIR process is so complex we actually dissuade founders and startups from doing business with us — a founder we spoke with recently informed us it costs him $30,000 to apply for a SBIR contract with the USG because the processes are so complex his company has to hire outside consultants. Instead this founder, like many others, prefers to not risk the time and money ventured on applying for a SBIR contract.
And I love this one, often unappreciated:
… within the application portal itself, the USAF asks companies applying for SBIRs to provide their cost data on how they will use the proposed funding if awarded a contract. However, all SBIR Phase 1 and Phase 2 contracts are capped at $50,000 and $750,000 respectively. These funding amounts are far less than the threshold set forth by the Truthful Cost or Pricing Data Act, formerly the Truth in Negotiations Act which requires certified cost data prior to contract award for contracts exceeding $2,000,000 among other very specific criteria (ref: FAR 15.403).This may seem like a minor requirement, but to founders and technologists who may be unfamiliar with terms like indirect labor costs or general and administrative costs, this requirement can become daunting and costly very quickly. Removing the cost data section from the SBIR application would immensely reduce the workload for the application process for startups and reduce the workload for USAF acquisition personnel in evaluating proposals.
There’s a lot more at the link. One thing is that companies submitting to SBIR will often be considered nontraditional firms. Purchases from nontraditionals are classified as commercial items by the FY16 NDAA Section 857. I wonder if this is well known and taken advantage of, because commercial items are exempt from TINA. However, they are not exempt from the contracting officer’s responsibility to determine price reasonableness using “other than” certified cost or pricing data. Which gets you back to the same place.
The Air Force likely does not need to require cost data from SBIR. This is especially true since it’s not like government is really at risk of being over-priced like buying spare parts. The $50K or $750K doesn’t often cover the cost of a proof of concept, but firms are willing to take it because it gives them an entry way to a sole source with much larger customers. The government’s risk isn’t being price gouged on a SBIR, but that the SBIR isn’t useful to military customers and nothing transitions.
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