Innovation Partnership Federal Funding Bulletin
Volume 1, Issue 4 – July, 2003
A Great Resource for an SBIR Company
A modern ship or submarine contains a wide variety of complex and sophisticated systems as well as some huge brute-force, fire-breathing applications of energy conversions. Virtually all engineering and manufacturing disciplines are represented in the miles of wires, pipes, gadgets, computers, systems--you name it--found in the vessel, necessary for advancing, fighting, and simply living. Testing this huge complex of technologies under actual and simulated conditions has evolved over the years from taking a casual test drive to experiencing total component failure under the worst possible conditions--and everything in between.
Over the years, the U.S. Navy’s Ship Systems Engineering Station NAVSEA in Philadelphia has developed facilities to support and test this complex infrastructure. This is no simple task, as not only are high quality modern facilities required, but supporting those facilities also requires water cooling capabilities, fire protection, sufficient fuel, sound facilities, laboratories, special equipment and buildings, air conditioning, electric motors the size of motor homes, huge circuit breaker panels, tiny test instruments, and countless kinds of pumps, valves, hydraulics, and electronics. And the list could go on.
There is no way these facilities can be fully used each day, and there is no way the facilities cannot be used when needed.
Herein lies a wonderful opportunity for small businesses working in the SBIR/STTR program.
Most technologies involve some sort of hardware, software, or component system that does something that may need to be demonstrated as being able to perform as promised. An example could be some new signal processing fiber optic gadget, or a new fuel cell located in a hostile environment. Getting an endorsement on product performance could be a great asset to a company.
The NAVSEA installation has 27 facilities:
In most cases, it would be either impossible or impractical for a small business (and most big companies, for that matter) to create a test facility to verify component testing to the degree that the Ship Systems Engineering Station has at its disposal.
The beauty of these facilities is that the management of the station is interested in having the facilities used by non-military entities, not only to keep them “tuned up,” but also to make sure they are keeping pace with developing technology. It is understood that a small business could not afford to pay the cost of operating these facilities to have its product tested. By the same token, the Navy cannot allow a person unfamiliar with the facilities to conduct a test without knowledge of what he or she is doing.
The ideal arrangement, therefore, is for the small business to pay a modest fee to use the facilities, while an experienced station engineer supervises the setup and running of the test--creating a win-win situation for both parties. The small business gets to test its component for a reasonable price, while the facility is used during “downtimes” and is upgraded as necessary to keep abreast of new product testing needs. This arrangement allows both parties to get what they want--and need.
An example of one of the 27 facilities is the Fuel Cell Laboratory. This laboratory is devoted to the testing and evaluation of fuel cell power plants for naval surface and undersea applications. It consists of a 900 square foot NFPA Class 1 Division 1 Group B hazardous-atmosphere rated test chamber, with an adjacent assembly/checkout laboratory and a test control room. The laboratory is designed for testing up to 2.5 megawatts of power generated from fuel cells, including interconnection with nearby electrical or mechanical laboratories to form an integrated system. Additional supporting facilities include 2,000 square feet of outside storage, NPFA Class C hazardous-atmosphere rated fume hoods, and reaction gas storage facilities. Dedicated computer-controlled instrumentation--including a gas chromatograph and on-line gas analyzers--and video recording equipment are available for testing fuel cells and fuel reforming hardware.
The contact for this facility is Patrick J. McGinnis, P.E. Project Manager, 215-897-7103 or mcginnispj@nswccd.navy.mil.
“Only a fool tests the depth of the water with both feet.”
African Proverb
Words from a Winner—Acoustech Corporation
COMPANY NAME: Acoustech Corporation
LOCATION: State College, PA
NUMBER OF EMPLOYEES: 3
Mr. Jim McConnell, President of Acoustech Corp., took time to answer some questions regarding the SBIR application process in his own words:
You, of course, are very familiar with the technology that your company has been developing. How would you describe your project and its benefits to people completely unfamiliar with it?
Acoustech performs R&D on advanced underwater acoustic sensors and performs consulting in the area of noise/vibration control. The former has been sponsored by the SBIR Program and the latter has been sponsored by private industry. With regard to the sensors, Acoustech has developed a series of high precision sensors that can measure the acoustic pressure and the acoustic particle velocity at a single point in space. The sensors can be used as a diagnostic measurement tool to map the complex sound radiation patterns from submerged structures and can be useful in supporting off-shore oil exploration. They can also be instrumental in understanding how certain species of marine life communicate and can effectively localize sources of sound (e.g. submarines) within the ocean.
How many SBIR awards has your company won and from which agencies have you received them? Have you received any other awards?
Acoustech has won four SBIR awards: three Phase I and one Phase II , with two pending--a Phase II SBIR a Phase I STTR. The awards have all been sponsored by the Navy through agencies such as the Naval Air Warfare Center-Aircraft Division (Pautuxent River, MD), the Defense Advanced Research Projects Agency (Arlington, VA), and the Office of Naval Research (Arlington, VA).
Acoustech has begun to commercialize our sensing technology and has sold a variety of sensors to researchers in academia. The Pennsylvania State University; Applied Research Laboratory, Boston University; Marine Biological Laboratory, Virginia Commonwealth University; Department of Biology, University of Kentucky; Mechanosensory Physiology Laboratory, and the University di Parma in Italy have all procured sensors from Acoustech. This has amounted to sales of over $100,000.
From time-to-time, Acoustech has obtained sponsorship from private industry to resolve noise/vibration issues on large-scale machinery and fluid transport systems. These sponsors include Air Products and Chemicals (Allentown, PA) and Robinson Fans (Zelienople, PA). The work has brought us around the world to such places as Shanghai, China.
Regarding the process of the actual writing of the SBIR proposal, how much time did it take?
Anywhere from a few days to a few weeks to a few months. It depends on your expertise, the topic you are responding to, and whether you’re preparing a Phase I or Phase II proposal.
How early did you begin the process?
It ranged from the day the SBIR/STTR solicitation was issued up until a few days before the proposal submission deadline. Generally speaking, the latter approach is discouraged since it may lead to a project that has been structured improperly from a technical, business, and financial standpoint.
What resources did you find the most helpful?
The library system at the Pennsylvania State University is extremely helpful in obtaining background information published in scholarly journals, books, etc. The National Technical Information Service and the Defense Technical Information Center can also be helpful in gathering information.
Were you able to speak to anyone with the federal agency as you planned your proposal?
Yes. It is very common practice to have correspondence with the sponsor to ensure that your understanding of the problem statement is correct. We have also consulted with the SBIR/STTR Help Desk on numerous occasions to resolve issues that have arisen during the proposal preparation/submission process.
What, in your opinion, is the most difficult part of the process?
Widespread commercialization of the technology is the hardest part of the process. If a company earns its keep on a contract-to-contract basis, then its employees earn their living on a paycheck-to-paycheck basis. These issues are not good for growth at either the corporate or personal level.
Moreover, commercialization requires a substantial financial commitment at the Phase III level (in the millions of dollars), either from a government agency and/or private investors, to support the infrastructure required to bring a product to the marketplace. The infrastructure usually takes the form of assembling a team of engineers/scientists, technicians, manufacturing experts, marketing specialists, administrative personnel, in a transfer/manufacturing environment. Commercialization cannot happen without the team and the team cannot exist without positive cash flow. It can often be a Catch-22.
How has receiving the award affected your business?
Over the years, Acoustech has had a staff ranging anywhere from one to five employees. We currently have three employees and plan to hire more in order to support future contracts and commercialization endeavors.
How much time do you spend dealing with “administrative issues” related to the award (reporting, record keeping, etc.)?
On average, about one day per week, but this will change as the company grows. Among the most laborsome tasks are those which support inventory control of government property and justification of indirect cost rates associated with G&A and overhead expenses. These are issues common to all DoD sponsored contracts. Routine audits occur from various agencies.
Have you needed to/been able to make changes to your original plan as your project has progressed?
Yes. Anyone who runs a small business or is about to start one has to become a chameleon of sorts so they can leverage their business/technical expertise in a stop-on-a-dime fashion and move in another direction to support whatever issue arises during the performance of a contract. Sometimes the scope of work changes as a result of something you’ve learned, sometimes you must obtain contract extensions or request additional funding, sometimes the competition comes up with a better idea, and sometimes you flat out make a mistake and have to rework the problem from the beginning.
Where does your project stand now?
All of our Phase I projects are complete. The Phase II project will be complete by September 2003 and the pending awards should start sometime later this summer. We have started commercializing the Phase II technology as mentioned earlier, but it has not been widespread. However, we are in the initial stages of securing Phase III funding from private investors to transition the technology.
What advice would you give to someone applying for an SBIR grant for the first time?
Most people that apply for their first SBIR/STTR grant have recently started a small business and are just one of a few employees, if not the sole employee. While there is some level of prestige and personal satisfaction in running your own business, more often than not, the personal commitment is usually an order-of-magnitude more than what is anticipated. The learning curve is high, the ideas have to be realistic and marketable, and the competition is often one step ahead. You must be able to weigh the prospect of success with the real potential for failure and consider how it may affect you from a financial standpoint as well as the prospects for incurring irreversible harm to lifelong relationships (e.g. professional colleagues, marriage/family, friends, etc.).
That being said, the best advice I can give to someone applying for their first grant is to carefully balance the costs of the project with the technical approach that is proposed. It’s truly amazing how fast $70K can be spent in six months with only one employee on the payroll.
Another important concept is to protect your intellectual property (e.g. patents, trademarks, copyrights, etc.). It’s virtually impossible to commercialize a new idea if someone else can copy it and produce it cheaper than you. With that in mind, keep detailed records of all written correspondence. Maintain a daily log of your telephone conversations. Do not divulge any company information to anyone without executing a non-disclosure agreement first. Hire a good patent attorney, intellectual property strategist, and an accountant, all ideally with experience in government contracting and in particular with the SBIR/STTR program.
“If your ship doesn’t come in, swim out to it!”
Jonathan Winters
Visit the Innovation Partnership web site at www.innovationpartnership.net for more information about the SBIR/STTR programs and resources available to help Pennsylvania entrepreneurs and researchers win a greater share of federal funding.
© 2003 Lytmos Group, LLC