Podcast Show Notes
2025-10-07 Federal Market Insights Episode 27 — Session Overview
WPI Podcast Episode 27 Summary
The federal government is supportive of Research and Development activities. On one level their support and interest is shown by the dollars spent in PSC category A – Research and Development. In FY 24, approximately $64B was spent.
Awards associated with the SBIR/STTR program are included in these amounts. The SBIR/STTR program is restricted to U.S. small businesses. Unlike the size standard for general procurements, the size standard for the SBIR/STTR program is defined as companies employing up to 500 employees.
Additionally, 11 federal agencies meet the statutory requirements for participation.
“Federal agencies with extramural R&D budgets of $100 million or more are required to allocate a portion of that funding (currently 3.2%) to conduct an agency-run SBIR program. Currently, 11 federal agencies operate SBIR programs: the Departments of Agriculture (USDA), Commerce (DOC), Defense (DOD), Education (ED), Energy (DOE), Health and Human Services (HHS), Homeland Security (DHS), and Transportation (DOT); Environmental Protection Agency (EPA); National Aeronautics and Space Administration (NASA); and National Science Foundation (NSF).
A complementary program, the STTR program, was created in 1992 (P.L. 102-564) to facilitate the commercialization of university and federal R&D through support for cooperative R&D between small businesses and research institutions. Federal agencies with extramural R&D budgets of $1 billion or more are required to allocate a portion of that funding (currently 0.45%) to conduct an agency-run STTR program. Six federal agencies currently operate STTR programs: USDA, DOD, DOE, HHS, NASA, and NSF.”
Ref: https://www.congress.gov/crs_external_products/IF/HTML/IF12874.web.html
Additionally, the agencies make awards using either contracts and/or grants and companies must be alert to the differences between these different award vehicles.
There are other opportunities to conduct federal Research and Development. The SBIR/STTR program is recognized as the primary one.
With this as background, today’s topic addresses differences between procurement and Research and Development.
The reason that this topic was selected was that companies will see a topic, which in many cases is fairly general, and want to know how to participate. Their interest isn’t conducting research and development. Rather, they believe that they have a product or solution to the issue described by the topic.
The issue is, the SBIR/STTR program is not a procurement program.
The federal government defines Research and Development needing to have each of the following characteristics.
- Novel – aimed at new findings
- Creative – focuses on original concepts or idea
- Uncertain – never been done before
- Systematic – planned and budgeted
- Transferable – reproducible
Ref: https://www.acquisition.gov/sites/default/files/manual/PSC%20Manual%20April%202025.pdf; page 8
Definitions of Research and Development: An Annotated Compilation of Official Sources,
National Science Foundation; page 20
Knowing these definitions may be the difference between having a proposal selected vice rejected. Proposals that clearly show the relationship between these characteristics and the intended research will make part of the review process simpler. The alternative is to submit a proposal and rely upon the reviewer to see the critical relationships.
These characteristics do not use the term innovative or innovation. Also, the SBIR/STTR programs are not focused on innovation. That’s an important distinction.
The federal government is continually seeking new technologies. These include both innovation and products created through research and development.
The DIB, the Defense Industrial Base is changing. Companies should be aware of these changes and possibly the impact to their business. Prior to the development of the internal combustion engine, the Army Calvary owned and maintained horses. During this era buggy whip manufacturers were part of the DIB. As internal combustion engines became the norm and replaced horses, the need for buggy whips declined and so did the need for buggy whip manufacturers. The rise of the internal combustion engine forced a change in the DIB.
Now there are new technologies such as 3d printing and additive manufacturing. These technologies are in their infancy. However, DLA has test programs that explore their use in current procurement. DLA also has an office focused on research and development of these technologies.
Is the DIB getting ready to change once again? Possibly. If these technologies become the norm, how will that impact today’s machine shops and general fabricators?
DoD periodically lists critical technologies being sought.
See: https://www.cto.mil/osc/critical-technologies/
These may be over the horizon technologies from a readily available perspective. However, they signal a new need and therefore may be additional signals that the DIB will change as old technologies are replaced by newer technologies.
Toward the end of the podcast we discussed three defense related articles. A common feature of these articles
The first article discussed a novel way of updating flight software. Currently, flight software is a slow methodical process that takes time. A variation of the current process is to update the software and use a flight simulator to check for any issues. Currently, there have been experiments where a software requirement is identified in flight, the requirement is sent back to the ground, fixes – updates created and the updated software transmitted to the aircraft.
The second article described and US Army unit in Europe. The unit had procured a drone from the approved list for $10,000. The drone was tested, landed and disassembled. The unit attempted to determine why the drone was so expensive. This was accomplished through trial and error. Using a BPA to purchasing needed parts and 3d printers to produce other parts, the unit started to manufacture their own drones – approximately 3.5 drones per $10,000. Now they have increased their ability to manufacture and are producing about 200 drones per week.
In the last article, we discussed a company Picogrid who has developed software that acts as a “universal translator.” Picogrid is working with Palantir A major Federal and DoD contractor specializing in AI software. This relationship is resulting in additional capabilities and value.
Army Units in Europe Bypass Industry to Build Less Expensive Drones