Demystifying Navy SBIRs
I spent the last few days attending the Sea Air Space conference in National Harbor, MD. My mission was to understand how the SBIR process really works in the Navy, and get a better sense of the nuances a startup needs to understand to navigate it.
It’s important to note that the SBIR process is different for each of the services! What I am going to explain below pertains to the Navy, and I will highlight the core differences based on what I learned.
After sharing that I have been engaged with several Silicon Valley startups, I received the following valuable piece of advice from a senior government leader across the Navy’s SIBR and STTR programs: “Remember, your solution becomes my problem when we work together, and to date, no company from Silicon Valley has manufactured a ship or a sub.”
I highlight this quote because it’s humbling and grounds us all in appreciating what the Defense Industrial Complex has been able to accomplish to date. Though there is a common refrain across Defense and Industry right now—that innovation is happening in the commercial sector and we must bring it into Defense—that does not mean Silicon Valley always knows better, and it certainly does not imply startups will solve every problem.
It’s also important to recognize the work the Navy incurs when working with a startup to explore what’s possible. Startups should not just sell their solutions, but solve mission problems. This is critical when pursuing a SBIR or STTR and throughout the lifetime of a company as it delivers to the Defense sector. Now… on to understanding some basics…
First, within the Navy, there are separate SBIR/STTR offices, each of which has a unique mission set and therefore is looking for different technologies. These include:
Naval Air Systems Command (NAVAIR)
Naval Facilities Engineering Systems Command (NAVFAC)
Office of Naval Research (ONR)
Naval Supply Systems Command (NAVSUP)
Strategic Systems Programs (SSP)
Marine Corps Systems Command (MCSC)
Naval Sea Systems Command (NAVSEA)
Naval Information Warfare Systems Command (NAVWAR)
You want to align your technology to the specific mission set of one or more of these offices. That’s where your SBIR Phase I opportunities will originate.
Second, the Navy generates SBIR Phase I topics by working with engineers and technical SMEs from across their Program Executive Offices (PEOs). From what I learned, this is a key difference in how the Navy executes SBIRs as compared to the other services, some of which interpret needs and make awards to promising solutions. What the Navy’s approach allows for is greater continuity from SBIR Phase I to Phase III awards, which is ultimately when a technology is funded for commercialization.
Third, the Navy makes SBIR Phase I awards for $140k. Startups should think about these as 6-month feasibility sprints. Another $100k can be awarded as an option, or bridge, to get a startup to Phase II if the government selects the startup from Phase I to graduate to Phase II,
Phase II awards are for technology development and demonstration. SBIR Phase II awards do not exceed $2M. Phase II awardees are automatically enrolled in the Navy SBIR Transition Program, which the Navy offers for free to help Phase II awardees get broader exposure to customers and industry that will help increase its chances of obtaining a Phase III award or even lead to partnering or acquisition opportunities the startup can pursue.
Phase III awards are made only when Phase II has successfully been completed and a PEO sees the value in allocating its funding for Phase III. In other words, SBIR Phase I and II awards are funded out of the Navy’s SBIR budget, and SBIR Phase III awards are funded out of the PEOs. Ideally, since a Navy PEO engineer or technical SME initiated the SBIR Phase I request, that same PEO will pick up the startup when it graduates to Phase III.
Phase III is considered the commercialization phase, when the startup would scale its technology for broader sale to US Defense customers and potentially for commercial use. The Navy boasts tremendous success in getting SBIR Phase I awardees all the way through to Phase III, and they attribute that to the connectivity with the PEOs from the start. Their SBIR Phase III success stories showcase companies getting contracts anywhere between $1M and $250M.
So how does NavalX fit in? NavalX generally searches across SBIR Phase I and Phase II awardees to plug them into additional pressing mission needs. You have to have a SBIR Phase I or Phase II award to work with NavalX. I’m sure there are exceptions, but this point was validated by government leaders I spoke to aligned to the NAVSEA and NAVAIR SBIR/STTR offices.
Timing is key for SBIRs! The Navy pre-releases topics, allowing direct communication between the startup and the topic technical point of contact (TPOC; i.e. the PEO engineer or technical SME behind the topic). This is an unbelievable opportunity for startups to get their questions answered in a way that protects their competitive differentiation. After the pre-release phase ends, startups can submit questions, but answers are published publicly for all to see and inform their responses. This also enables startups to establish an initial connection with a stakeholder who could be important for progressing to Phase III’s level of maturation.
It took many conversations and the distilling of many booth handouts to develop this brief synopsis. Please contact info@sargentinitiatives.com if you’d like more information or the reference material for this blog. Bottom line up front, the system can be navigated, and truly, the Navy is open for business.
