Small Business Innovation Research: fostering win-win innovation for government and industry

In July, I had the privilege of attending the National Contract Management Association’s World Congress. It was particularly exciting that part of the Missile Defense Agency’s booth focused on the Small Business Innovation Research (SBIR) program. SBIR holds a special place in my heart, since it was part of the curriculum I studied at George Washington University’s Master of Science in Government Contracts program. DigitalGlobe participates in the SBIR program and under the program developed Signature Analyst™ analytic software and methods, which applies machine learning to geospatial data to narrow geographic search.

What is SBIR?

SBIR came to be in 1982 as part of the Small Business Innovation Development Act, which was created to stimulate technical innovation while encouraging small businesses to meet government research and development goals, including using minority and disadvantaged businesses. The act also aims to increase private sector commercialization of innovations derived from federal research and development.

The beauty of SBIR lies in its focus on fostering innovation and maintaining administrative flexibility, which is often absent in U.S. government procurements. Currently, federal agencies with R&D budgets of more than $100 million are required to set aside 3.2 percent of their R&D funds for SBIR in 2017.

The three phases of the SBIR program

SBIR awards are made in three phases:

  • Phase I (feasibility and proof of concept) establishes technical merit, feasibility and commercial potential of the effort, and also determines the performance quality of the awardee prior to moving to Phase II. Phase I awards normally do not exceed $150,000 for six months.
  • Phase II (research/R&D) funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II.
  • Phase III (commercialization) occurs when the small business pursues commercialization of the efforts put forth in Phase I and II. While federal funding ends after Phase II, Phase III brings the most important benefits to a small business’s long-term success in the federal marketplace.

SBIR Phase III win for government: Royalty-free license to use and rapid acquisition

One of the most important elements of the SBIR program for the government is that it provides a cost-effective means of applying commercial innovation to a wide variety of missions. Any government funding applied to a SBIR Phase III contract allows the U.S. government to acquire SBIR data rights to resulting capabilities developed under contract. SBIR data rights provides the U.S. government a royalty-free license to use technology while protecting the IP of the industry partner. To the extent multiple government sponsors have SBIR Phase III contracts with the same industry partner, this creates a tremendous opportunity to collectively benefit from a shared technology investment. Also given that the SBIR partner went through a competitive evaluation during Phase I and II of the program, government sponsors are also able to manage accelerated procurement cycles to award sole-source contracts and task orders to fund logical extensions of SBIR data. As reflected in the SBIR policy, examples of logical extensions include software, data and professional services.

SBIR Phase III win for industry: Right to commercialize and acquire sole-source awards

While executing SBIR Phase III contracts may limit the amount of license fees an industry partner may generate from the U.S. government, it does provide many benefits that can facilitate growth and encourage continued investments by industry. The government must protect industry from disclosure and non-governmental use of all SBIR technical data developed from work performed under an SBIR funding agreement for a period of not less than four years from delivery of the last deliverable under that agreement (either Phase I, Phase II or federally-funded SBIR Phase III). This is different from other government-funded development that grants unlimited data rights under FAR 52.227-14. Relinquishing unlimited data rights to the government creates a disincentive to innovate because the government retains the right to share technology with competitors.

Perhaps even more valuable than the IP protection afforded through the SBIR program is the right to receive sole-source funding agreements under Phase III. This is expressly provided in the SBIR Policy Directive and the SBIR/STTR Reauthorization Act of 2011. The logic stems from data rights. Because the government cannot share data generated by a SBIR award, the SBIR rights holder must be awarded work involving the SBIR data. In addition, there are no small business requirements for a SBIR Phase III award. This is worth mentioning because a small business that successfully graduates to Phase III could either be acquired or graduate from small-business status, and the government will still want access to SBIR data. The SBIR rights go with the technology and do not rely on a maximum revenue or employee count.

DigitalGlobe | Radiant SBIR data has delivered mission value to the government for over a decade

  • When DigitalGlobe combined with GeoEye, it benefited from the SBIR data rights gained through GeoEye’s SPADAC. SPADAC was an innovative geospatial predictive analytics firm that graduated to Phase III status via a Department of Homeland Security SBIR program in late 2005.
  • Signature Analyst™ tools and analytic tradecraft were developed to apply machine learning to many layers of geospatial data to reveal potential threats and vulnerabilities.
  • Through internal investment and numerous SBIR Phase III contract awards, DigitalGlobe|Radiant has assembled a broad portfolio of geospatial capabilities with SBIR data rights that harness automation and crowdsourcing to extract information and discover patterns of activity at scale.
  • We have helped numerous customers benefit from DigitalGlobe|Radiant SBIR data rights through the award of sole-source task orders and contracts on rapid-procurement timelines.

DigitalGlobe | Radiant’s SBIR Phase III practice

DigitalGlobe has SBIR Phase III contracts in place today with a variety of defense and intelligence community customers. DigitalGlobe works alongside our government customers to apply extensions to Signature Analyst to their unique mission. We are leveraging these capabilities to build crowdsourced mapping applications, applying computer vision to recognize objects in satellite imagery and radar data, and supporting pattern analysis to inform military operations. Because DigitalGlobe developed these technologies through the SBIR program and continues to iterate on the capabilities, we are excited to equip multiple government customers with solutions for their complex geospatial mission needs. If you would like to learn more about how we have helped our customers benefit from our portfolio of geospatial analytic capabilities with SBIR data rights, check out our Reflections on GEOINT Blog Series.