Office of Small Business Programs for the Department of Defense

Victor CiardelloDirector, Small Business Technology and

Industrial Base

The Society of American Military EngineersWashington DC Post

2007 Small Business ConferenceOctober 18, 2007

DoD Office of Small Business Programs

• DoD FY2006 Small Business Performance• The Need for Small Business

– Mentor-Protégé Program– Small Business Innovation Research Program/ Small

Business Technology Transfer Program

Total Eligible Dollars

Small Business Dollars

Small Business

Percentage

$235 $51.3 21.8%

SDB Dollar

s

SDB % SDVOSB

Dollars

SDVOSB %

WOSB Dollars

WOSB %

HUBZone Dollars

HUBZone %

$14.7 6.3% $1.6 0.7% $6.90 2.9% $4.7 2.0%

Department of Defense FY2006 Prime Contract Awards

$ =Billion *Source SBA Goaling Report

Department of Defense FY2006 Subcontract Awards

Total Eligible Dollars

Small Business Dollars

Small Business

Percentage

$106.6 $39.6 37.20%

SDB Dollar

s

SDB % SDVOSB

Dollars

SDVOSB %

WOSB Dollars

WOSB %

HUBZone Dollars

HUBZone %

$5.1 4.80% $0.7 0.70% $5.80 5.50% $1.8 1.70%

$ =Billion *Source SBA Goaling Report

DoD Office of Small Business Programs

• DoD FY2006 Small Business Performance• The Need for Small Business

– Mentor-Protégé Program– Small Business Innovation Research Program/

Small Business Technology Transfer Program

The Need for Small Business

Imperatives demand technology… Challenges make it harder to get

• Need for speed & flexibility to address emerging and evolving threats

• Consolidating industrial base• Budget pressures • Less R&D investment in industry• Increasing emphasis on/need for joint capability

acquisition

The Central Challenge: Where will innovation come from and how will we get it?

Over Two Decades of Consolidation:

What were over 100 “name plate” primes in the1980s are now five firms…

1990 1991 19931992 1995 1996 1997 19981994 200420032002200120001999 2005 2006

Sources: DM&A, Washington Technology, Company reports, and CSIS Analysis. Federal Services Defense Hardware Commercial IT

RaytheonREMCO SA

Hughes ElectronicsBET PLC's Rediffusion Simulation

General Dynamics Missile DivisionMagnavox

STC PLC–Navigation SystemsTRW-LSI Products Inc.

Corporate JetsE-Systems

HRB Systems Inc.Chrysler Techn. AirborneTexas Instr. El. Defense

Raytheon

Allied Signal, Inc. (Comm Systems)Aerospace Group (Australia)

Boeing Australia Ltd.

JPS Communications, Inc.Solipsys

Honeywell International Corp. (Australia)

Photon Research Associates, Inc.

BoeingBoeing Co.

Rockwell

Litton Precision GearMcDonnell Douglas

Hughes Electronics Satellite

SVS, Inc.

Autometric, Inc.

Continental Graphics Corp.

Jeppesen Sanderson, Inc.

Hawker de Havilland Ltd. (Australia)

Conquest, Inc.

Frontier Systems, Inc.

General Dynamics

GeneralDynamicsBath Iron Works

Lockheed Martin Defense Sys, Armament SysLucent Advanced Technology Systems

Computing Devices International, IncNASSCO Holdings, Inc.Gulfstream Aerospace

GTE Government Systems Corp. UnitsSanta Barbara

Primex TechnologiesGalaxy Aerospace

Motorola Integrated Info SysGM Defense

SIGNAL Corp.Trident Data Systems

MRJ Technology Solutions

Pacific-Sierra Research Corp.DatumCom Corp.

Veridian Corp.Digital System Resources, Inc.

ERIM International, Inc.

Spectrum Astro, Inc.Tripoint Global Communications, Inc.

Engineering Technology, Inc.

Northrop Grumman

NorthropLTV–Aircraft OperationsGeneral Dynamics Space Business

GrummanWestinghouse El. Defense

Syscon Corp.Logicon, Inc.

Applied Technology AssociatesGeodynamics Corp.

Ryan AeronauticalKistler Aerospace Corp.Alvis Logistics–EDD Business

Inter-National Research Institute (INRI)

Teledyne Ryan Aeronautical

DPC Technologies, Inc.Comptek Research, Inc.

Federal Sys Grp (Sterling Software, Inc.)Federal Data Corp.

NYMA, Inc.Sylvest Management Systems Corp.Tisoft, Inc.

Technical and Management Assistance, Inc.R.O.W. Sciences, Inc.

Telos Corp.

Taratin

PRC (Black & Decker)General Instruments–DefenseVarian–Solid State Devices

Litton IndustriesAvandale Industries

Newport News ShipbuildingTRW

BDM International Inc.

XonTech, Inc.

TASC (Primark)

LockheedMartinMartin Marietta Corp.

Lockheed

Space Systems Division (General Dynamics)

GE Aerospace

Loral Corp.

IBM Federal SystemsUnisys Corp Defense Systems

Honeywell-Electro-OpticsFairchild Weston Systems Inc.

Ford AerospaceLibrascope

LTV–Missile Business

General Dynamics–Ft. WorthMEL

COMSAT Corp.OAO Corp.

Affiliated Computer Services, Inc. (ACS)

The SYTEX Group, Inc.STASYS Ltd. (UK)

Sippican Holdings, Inc.

Chart supplied by the Center for Strategic & International Studies (CSIS)

= Army

= Navy

= Air Force

= DoD

Key:

DoD Functional Capability Areas

Comanche

AAAV

MIDS-LVT

JTRS

C-17LPD 17Land

Warrior

MEADSABL

PAC-3

SBL

MTHEL

THAAD

AWACS (C4)

BradleyUpgrade

MH60-R/S

AWACSsensors

JSIMSMMA

sensors

C-130

BMDS

LCS

SDB

CH-47F

GCSS

AESA

MC2A (C4)GBS

C-5

Stryker

FMTV

CV-22

NTW

SM 2

E2CReproduction

Global Hawk

MV-22

NAS

Force Application

EELV

GPS

F-22/35sensors

SBIRSHigh/Low

JLENS

ATIRCM/ CMWS

NPOESS

Longbowradar

BattlespaceAwareness

T-AOE(X)LHA MPF(F)

JDAM

FCSF-22

F-35

CSAR

Excalibur

AMRAAMF-18

JavelinDDG-51

Tomahawk

AIM-9X

ChemDemil

JSTARSsensors

ATIRCM

Protection

WIN-T

CEC

Adv EHF

FCS (C4ISR)

MMA (C4)

MUOS

Command &Control

MP RTIPsensors

MC2Asensors

FocusedLogistics

•All source intelligence•Environmental Data•Own Force Info•Predictive Analysis•Knowledge Management

•JBMC2•Communications & Computer Environment

•Land, Maritime, Air, Space Operation•Joint Targeting•Conventional, nuclear, computer network, electronic attack•Psychological•Special Ops•SEAD•Military Deception

•Personnel & Infrastructure Protection (OPSEC - missile defense, electronic protection)•Computer Network Defense•Counter and Non- Proliferation•Consequence Management

•Deployment•Distribution•Sustain•Medical•Mobility•Logistics C2

Warfighting Capabilities, Technologies, and Industrial Capabilities: The Increasing Need for Small Businesses

Functional Capability

# Warfighting Capabilities

# Technologies

Priority Critical Technologies and

Components Assessed

Battlespace Awareness

357 270 72

Command & Control 189 293 58

Force Application 787 212 61

Protection 440 277 64

Focused Logistics 271 364 58

Total 2,044 1,416 313

Source: Booz Allen Hamilton and ODUSD(IP)

For the industrial capabilities assessed, ~36% of the companies with relevant products have less than 100 employees.

The Mentor-Protégé Pilot Program was The Mentor-Protégé Pilot Program was established on November 5, 1990 (Public Law established on November 5, 1990 (Public Law 101-510) in an effort to respond to concerns, 101-510) in an effort to respond to concerns, raised by DoD prime contractors, that many raised by DoD prime contractors, that many

SDBs did not possess the technical SDBs did not possess the technical capabilities to perform DoD subcontract capabilities to perform DoD subcontract

requirements, making it difficult for these requirements, making it difficult for these prime contractors to achieve their SDB prime contractors to achieve their SDB

subcontracting goals.subcontracting goals.

National Defense Authorization 2005 Changes to Public Law 106-65, Subtitle D,

Section 841

New agreements through Sep 30, 2010 Extend participation through Sep 30, 2013

Section 842 Protégé eligibility extended to: Service-Disabled Veterans (SDVOSB) Qualified HUBZone small businesses

Mentor-Protégé Program Eligibility

A Qualifying Mentor must be:– Performing under at least one active approved

subcontracting plan negotiated with the DoD or another Federal agency

– be eligible for award of Federal contracts

A Qualifying Protégé must be one of the following:– A Small Disadvantaged Business (SDB) concern

certified by SBA, or– A qualified organization employing the severely

disabled, or– A Woman-Owned Small Business (WOSB)– A Service-Disabled Veteran-Owned Small

Business (SDVOSB)– A Qualified HUBZone Small Business Concern

$30.3

$44.4$44.3

$29.3$32.3$31.8

$18.3

$25.8$25.9

$3.0

$24.5

$3.0

$26.4$25.5$25.4

$19.5

$2.5$4.5 $25.9

$0.4

$25.8$20.9

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45F

Y92

FY

93

FY

94

FY

95

FY

96

FY

97

FY

98

FY

99

FY

00

FY

01

FY

02

FY

03

FY

04

FY

05

FY

06

F07

F08

Program Funding Withhold Omnibus Reprograming

MPP Funding FY1992 – FY2007

Mill

ions

Type of MPP Agreements

Direct Reimbursed MP AgreementsDirect Reimbursed MP AgreementsDirect ReimbursementDirect Reimbursement of cost of developmental of cost of developmental

assistance:assistance:– Identify Specific Contract Vehicle/Contracting Identify Specific Contract Vehicle/Contracting

Officer EndorsementOfficer Endorsement– Minimum of 50% Technical TransferMinimum of 50% Technical Transfer– Required use of an HBCU/MI/SBDC/PTACRequired use of an HBCU/MI/SBDC/PTAC– Direct cost reimbursement of allowable costs Direct cost reimbursement of allowable costs

outlined in Appendix I, including:outlined in Appendix I, including:• Direct labor costs (for assistance by Mentor firm Direct labor costs (for assistance by Mentor firm

employees)employees)• Assistance provided by HBCUs/MIs/SBDCs/PTACsAssistance provided by HBCUs/MIs/SBDCs/PTACs• Other costsOther costs

– Detailed Cost BreakdownDetailed Cost Breakdown– Military Services/Other Defense Agencies may Military Services/Other Defense Agencies may

have additional requirementshave additional requirements– Military Services/Other Defense Agencies ApprovalMilitary Services/Other Defense Agencies Approval

Type of Agreements

Credit MP AgreementsCredit MP AgreementsCredit Credit toward SDB subcontracting goals:toward SDB subcontracting goals:

– No Military Service or Other Defense Agency No Military Service or Other Defense Agency approval requiredapproval required

– More focused on business infrastructure/business More focused on business infrastructure/business developmentdevelopment

– Costs incurred under Credit AgreementCosts incurred under Credit Agreement• May be applied (in the following multiples)May be applied (in the following multiples)

towards the SDB subcontracting goal under towards the SDB subcontracting goal under any any Federal Agency Subcontracting plan: (FAR Federal Agency Subcontracting plan: (FAR 19.703)19.703)

» 4x for assistance provided by 4x for assistance provided by HBCUs/MIs/SBDCs/PTACsHBCUs/MIs/SBDCs/PTACs

» 3x for assistance by Mentor firm employees3x for assistance by Mentor firm employees» 2x other costs2x other costs

Mentor-Protégé ProgramTypes of Developmental Assistance

Types of Developmental Assistance:

– Technical Transfer, including CMMI, ISO9000 or Six Sigma Certifications

– Business Infrastructure Development

– Award of subcontracts under DoD contracts on a non-competitive basis

– Progress payments (up to 100%)– Advance payments – Loans

– Investments in the protégé firm that have a need in exchange for ownership interest (10% or less)

153 Current Active Mentor-Protégé Agreements

31

1118

105 6 10

2 1

59

0

20

40

60

80

100

NU

MB

ER

OF

ME

NT

OR

-PR

OT

ÉG

É

AG

RE

EM

EN

TS

94 Reimbursable Agreements

59 Credit Agreements

UTP-2M-1

ILP-5M-4

TXP-10M-6

NMP-2M-1

NVP-1

OKP-2

WAP-7M-2

OR

MTP-3

ID

WY

COP-5M-4

NDP-1

SDP-3

NEP-1M-1

KSP-2M-1

MOP-3M-2

AR

LAP-1M-1

TN P-5, M-1

WIP-1

CA P-34 M-7

FL P-14 M-3

ME

AKP-5

HIP-2

WV

NC

VAP-28, M-21

PAP-6

IN

OHP-2M-1 MD P-13, M-5

Has Participants No Participants P Protégé Participants M Mentor Participants

RI M-1CT P-3, M-5

NJ P-4, M-3

MA P-3, M-3

DC P-5, M-1

AZ P-4 M-2 GA

P-2M-1

SC P-2 M-1AL

P-14 M-8

Participation by State – FY07Mentor and Protégé Participants

NE P-2 M-1

IN M-2

KYNCP-4

IA

MN P-1

MS

AR

WVP-2

NYP-1M-1

MIP-2M-1

VTNH

Mentor-Protégé Program Participation by Eligibility

1991-2006

WOSB5.3%

Employs Severely Disabled

0.6%

HUBZone1.1%

SDVOSB1.5%

SDB91.5%

Protégé Industry Sector FY 2007

Unreported, 11%

Manufacturing, 25%

R&D, 1%

Construction, 8%

Service, IT, 55%

Mentor-Protégé Robotics Initiative

Active Robotics Protégés• AnthroTronix• Epsilon *• Geodetics *• Kuchera Defense • RE2• Stratom• Sullivan• Mesa Robotics• Referentia• Lorimar Group, Inc.Potential Robotics Protégés• Holman Industries• Defense Technology Solutions,

LLC• Photon-X• Shee Atika Technologies LLC• Digital Artefacts

Service-Disabled Veteran-Owned & Veteran Owned Protégés

16 firms entered Program as SDVOSB Protégés:

In addition there are:•7 additional SDVOSBs Protégés that entered the Program as an SDB•35 Veteran-Owned Protégés

Alliance of Architects and Engineers

Information Innovators, Inc. Stratom, Inc.

Brigadier Construction Services, LLC

Maintenance Inspection Services (MIS)

Tompco, Inc.

Chequamegon Bay Engineering, LLC

Oak Grove Technologies Veterans Construction Inc.

Damar Machine Company

QTechnology International, Inc.

Washington Square Associates, Inc.

Defense Manufacturing & Supply (DMS)

Regulus Corporation

EnVetCoSonju Industrial

Nunn Perry Protégé Awardees Revenue growth ($)

(Cumulative)

$44.8

$80.1

$121.0

$191.0

$49.0

$96.8

020406080

100120140160180200

2005 2006 2007

Start ofAgreement

End ofPerformancePeriod

Nunn-Perry Award Year

10 awardees

12 awardees

8 awardees

Nunn Perry Protégé Awardees Employee growth (#)

(Cumulative)

572

1272

964

1237

521

739

0

200

400

600

800

1000

1200

1400

2005 2006 2007

Start ofAgreement

End ofPerformancePeriod

Nunn-Perry Award Year

10 awardees12 awardees

8 awardees

Protégé Share of Total DoD Prime Contract Awards FY2003-FY2006

$187.5 $194.1$219.3 $233.9

$1.8$2.2

$2.3$3.4

$-

$50

$100

$150

$200

$250

FY2003 FY2004 FY2005 FY2006

Bil

lio

ns

Total ProtégéPrimeContractAw ards

Total DoDPrimeContractAw ards

1.16% 1.05%.96% 1.47%P rotégé % of

Total DoD P rime Contract Awards

Protégé Share of Total DoD Small Business Prime ContractAwards FY2003-FY2006

$42.0 $44.8

$53.9 $51.2

$1.8$2.2

$2.3$2.4

$-

$10

$20

$30

$40

$50

$60

FY2003 FY2004 FY2005 FY2006

Bil

lio

ns

Total ProtégéSmallBusinessPrimeContractAw ards

Total DoDSmallBusinessPrimeContractAw ards

5.46% 4.69%4.69% 4.42%

P rotégé % of Total DoD Small Business

P rime Contract Awards

Protégé Share of Total DoD Small Disadvantagted Business Prime Contract Awards FY2003-FY2006

$11.6 $11.7

$14.7 $14.6

$1.4 $1.6

$1.7 $1.6

$-

$2

$4

$6

$8

$10

$12

$14

$16

$18

FY2003 FY2004 FY2005 FY2006

Bil

lio

ns

Total ProtégéSmallDisadvantedBusinessPrimeContractAw ards

Total DoDSmallDisadvantedBusinessPrimeContractAw ards

13.36% 11.54%12.00% 10.61%

P rotégé % of Total DoD Small

Disadvantaged Business P rime Contract Awards

Average Award Dollars Per SDB ContractorFY2003-FY2006

$4.80

$1.57

$6.21 $5.29$6.13

$0.33

$1.97$2.63

$0

$1

$2

$3

$4

$5

$6

$7

FY2003 FY2004 FY2005 FY2006

Mil

lio

ns

Protégé Award

Other SmallDisadvantagedBusinessAward

SBIR-STTRProgram Eligibility Criteria

• SBIR– Organized for- profit U.S. business, located in the US– At least 51% U.S.- owned by individuals and independently

operated – 500 or fewer employees– Principal Investigator’s primary employment with small business

during project

• STTR– Formal Cooperative R&D Effort (Minimum 40% by small

business, 30% by U.S. research institution)– U.S. Non-profit Research Institution (College or University; other

R&D center) – Intellectual Property Agreement - Allocation of Rights in IP and

Rights to Carry out Follow-on R&D and CommercializationBroad purpose: Ensure small businesses receive share

of federal R&D and leverage the unique innovative character of small business

DoD is about Half the Federal SBIR Program

Largest of 11Participating Federal Agencies

SBIR FY06 Budget

$1.13B

STTR FY05 Budget

$130M

NSF4.4%DoE

4.9%

Others*3.0%

NASA5.4%

NIH27.6%

DoD54.7%

SBIR/STTR Program Structure

• Phase I: Project Feasibility– Generally 6 months,

not exceeding $100,000

• Phase II: Project Development to Prototype– Generally 2 years, not

exceeding $750,000

SBIR/STTR Funds:

• Phase III: Commercialization in Military and/or Private Sector– Sale of product or service– Additional R&D of technology – Manufacturing/production

start-up – Marketing start-up/marketing– Training workforce to

manufacture or sell new products

SBIR/STTR Does Not Fund:

0

200

400

600

800

1000

1200

1400

1600

Air Plat

form

s

Chem-B

io Def

ense

Info

rmat

ion S

yste

ms

Groun

d & S

ea V

ehicl

es

Mat

erial

s & P

roce

sses

Biomed

ical

Senso

rs

Electro

nics

Battle

spac

e Envir

onmen

ts

Space

Plat

form

s

Human Sys

tem

s

Weap

ons

Nuclear T

echnolo

gy

Key Technology Areas:Focus of SBIR Investments

Source: SBIR & STTR solicitations, FY02-FY06

Num

ber

of

Top

ics

DoD Office of Small Business Programs

(703) 604-0157www.acq.osd.mil/osbp

DoD Mentor-Protégé Programwww.acq.osd/sadbu/mentor_protege