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Free Money: How to get federal grants to research
and develop ideas
by Margaret Owen Thorpe
UpsizeMag.com
Three minnesota companies share a lucrative body
of knowledge.
• Hitchcock Industries, in Bloomington,
makes critical aircraft parts, specializing in large aluminum sand
castings. If you have flown in a Boeing plane, you have flown with
Hitchcock’s parts.
Certain aluminum sand casting processes, however,
haven’t changed since Hitchcock’s founding nearly 90 years
ago. The processes interrupt manufacturing flow and consume excess
time. The industry calls the process that removes mold sand from
component cores “Shake’n’Bake.” It can take
up to 24 hours, and the machines look like industrial film noir.
A garage-sized, well-blackened oven bakes the parts.
Then employees transfer them to a king-sized table and it shakes
them for hours until the sand comes out. Jim Van Wert, Hitchcock’s
chief technical officer, thought there had to be a 21st century
way.
• Minnesota Wire & Cable lives next door
to the St. Paul Saints on Energy Park Drive. Like its neighbors,
Minnesota Wire seldom sticks to the tried and expected. Family-owned,
it employs more than 300 people, and its customers know it can solve
a problem. It has worked with medical device firms to develop innovative
wiring systems.
After 9/11, CEO and President Paul Wagner thought Minnesota Wire
should see if it could help the Department of Defense. The Army
said, “What can you do to rescue our Land Warrior project?
It’s a wearable computer for soldiers, and it’s 14 months
behind schedule.” Minnesota Wire quickly transferred its technology
for wearable medical monitoring systems to this application and
won the Army’s gratitude. Wagner’s next question was,
“What else can we do?”
• Twin Star Medical of Minneapolis just received
Food and Drug Administration approval to market its first product.
A young company, Twin Star began when Rick Odland, of the University
of Minnesota and Hennepin County Medical Center, developed a new
idea for treating compartment syndrome, the build-up of fluid in
an injured leg or arm. Doctors now treat the condition by opening
up the limb to drain the fluid. They create a gaping wound, and
the treatment leaves a large, nasty scar.
Odland thought a catheter with tiny openings might
work like a soaker hose in reverse and draw out the fluid with less
trauma. Odland joined Jim Stice, president of Twin Star, to research
the catheter’s potential and, if it worked, bring it to market.
What do Hitchcock Industries, Minnesota Wire &
Cable, and Twin Star Medical have in common? What do they share
with publicly held Minnesota companies such as SurModics, NVE, and
PPT Vision? All of them use free federal money to research and develop
their answers to real problems.
They’re using the Small Business Innovation
Research/Small Business Technology Transfer program, commonly called
SBIR/STTR. Eleven federal departments and agencies — Agriculture,
Commerce, Defense, Education, Energy, Health and Human Services,
Homeland Security, Transportation, Environmental Protection Agency,
NASA, and the National Science Foundation fund innovative development
by U.S.-owned companies of fewer than 500 employees.
STTR transfers concepts developed at universities
to such companies. The Department of Defense and the National Institutes
of Health (in Health and Human Services) offer the most funding
and take proposals several times a year. The other agencies have
smaller budgets and post research topics once a year.
How it works
Each agency posts “solicitations,” a list
of research topics. The topics, particularly from the Department
of Defense, may ask for very specific solutions; if the solution
works, the department is often the first customer. Some topics are
broader, such as these from the National Institutes of Health:
• Development of biosensors and field-ready
instruments to measure environmental levels of chemical contaminants;
• Development of technologies to determine the bioavailability
of contaminants in order to better characterize the potential for
exposure at sites.
Occasionally, topics encourage applicants to define
both the problem and the solution, as did one from the Department
of Defense Missile Defense Agency, to which Hitchcock Industries
responded. The National Institutes of Health, notes program manager
Kathleen Shino, also invites companies to suggest topics.
Each agency posts research topics on its own Web
site, but www.sbirworld.com, sponsored by the National Science Foundation,
lists all topics from all agencies. It shows open solicitations
— those topics currently available for funding, as well as
closed solicitations — previous topics. It has a link to what
research and what companies have received funds.
SBIR/STTR provides grants in two phases. It makes Phase I grants,
generally for up to $100,000, for researching technical feasibility.
Phase II, which can only follow Phase I, usually offers up to $750,000
for development to commercialization.
SBIR/STTR does not provide funds for actual marketing
and sales. If a “fatal flaw” turns up, whether in Phase
I or Phase II, the company does not have to repay the funds. Award
winners also keep full control of their patents and other intellectual
property.
Says Pat Dillon, who guided numerous Minnesota companies
through the SBIR/STTR program during 11 years with Minnesota Project
Innovation: “This program is not just about getting grants
and contracts. It really represents the American dream. It supports
entrepreneurship and innovation and supports the economy by encouraging
the next generation of knowledge and capability.” It’s
a partnership between public and private sectors to grow our nation,
he says, much as federal land grants were in the 19th century.
How to get grants
“It’s not that hard,” says Paul Wagner
of Minnesota Wire. “In the 15 months since we started, we’ve
received three Phase I grants and one Phase II, and we’re expecting
another.”
Hitchcock’s Jim Van Wert agrees. When he joined
Hitchcock last year, the company submitted its first SBIR application
— to replace shake’n’bake — to the Missile Defense
Agency. It then submitted another to National Science Foundation
for a new alloy process. It won both grants.
Wagner and Van Wert must know something special,
because, nationally, only about 10 percent of all applications are
funded. What do they know?
Steve Linder, SBIR program manager at the Missile
Defense Agency, says Hitchcock “focused on a problem that has
impact not only to the Missile Defense Agency but to the Department
of Defense in general. They were very detailed in the description
of their approach and identified a very logical transition path
for the technology.”
Program managers at National Science Foundation and National Institutes
of Health make a similar point. Joe Hennessey of NSF says his first
question about any idea is, “So what?” Kathleen Shino
of NIH says, “Who cares?”
“We’re not a basic research program,”
notes Hennessey.
“We’re looking for real solutions to real
problems for real people,” Shino explains.
Linder adds, “Many applicants do not take the time to understand
the customer.” While it’s important that a company be
technologically competent, it must show that some significant market
wants the solution and that it solves a real problem. Technologies
searching for problems don’t win; neither does engineer entertainment.
The program managers urged companies to get to know
the program, the agencies, the program managers and the topic authors.
SBIR/STTR is not an arms-length bidding process; it is collaboration.
First, says National Science Foundation’s Hennessey,
“Attend one of the semi-annual national conferences with all
participating agencies. You’ll learn how the program works,
and talk with program managers about what’s important to them.”
The next conference takes place in Albany, New York, in November;
another will be in Louisville, Kentucky, in May. Check www.sbirworld.com
for information.
Second, recommends Linder, “Use the open discussion
period to obtain information that will help you write a better proposal.”
When an agency posts topics, a period of open discussion follows
before it accepts proposals. During that time, companies should
call the program manager and discuss what’s behind the agency’s
interest and their ideas.
In addition to showing the proposed idea solves a
real problem for real people, successful proposals must demonstrate
that:
• the company knows what it’s doing;
• it knows who else is doing what in the same field;
• it knows who the key players are in the technology’s
market;
• it understands how that market system works.
“It’s all about the science,” notes
Shino. The technical proposal forms an application’s core.
A company describes the science underlying its concept and details
technical objectives, the work plan for each objective, and the
criteria that will determine if the objectives are met.
While researchers’ credentials are important,
reviewers judge whether an applicant knows what it’s doing
by the proposal’s scientific quality. It helps, too, says Twin
Star’s Stice, to “have some preliminary pilot data, something
that’s more than an idea.”
Know what others do
The proposal must contain a “state-of-the-art”
statement. Who else has done what? What has worked? What hasn’t?
Why? Companies should include both commercial and academic work.
If you’re working with fuel cells, know well the work of Ballard
Power and Plug Power, which used SBIR to do its early work.
Applicants must show that they know the technology’s
anticipated users and what they want and why. Hitchcock submitted
letters of support from Boeing and United Defense. Know the market’s
key industry and professional organizations and attend their conferences.
Know who and what drives that market. If it’s medical technology,
understand third-party payers, managed health care, and Group Purchasing
Organizations.
A company doesn’t have to speak fluent bureaucrat
to use SBIR/STTR. The acronyms and military-derived jargon may intimidate,
but several resources can help.
“If you’re smart, strategic and savvy,
you can do this,” says Dillon, formerly of Minnesota Project
Innovation. The federal program managers want applicants to succeed.
They’re very accessible by e-mail and phone. They also assist
award winners to develop commercialization plans.
Locally, the Defense Alliance of Minnesota offers
peer-to-peer advice and hosts events at which companies can meet
successful applicants and key federal resources. It’s not limited
to defense companies; it recently featured medical companies working
with the Department of Defense. Dillon co-facilitates the Alliance
with Chip Laingen, a former Navy commander.
The Minnesota Department of Employment and Economic
Development encourages Minnesota companies to pursue SBIR/STTR.
Coordinator Betsy Lulfs talks with interested companies and will
offer overview sessions later this year. The University of St. Thomas
Small Business Development Center offers one-to-one consulting.
Wisconsin companies may contact Dillon at the Wisconsin Entrepreneurs’
Network in Eau Claire.
“We put our heart, soul and passion into this,
and we’ve hired 30 people since January,” says Paul Wagner
of Minnesota Wire & Cable.
“It’s the difference between surviving
and not, and it gives us credibility that our technology has been
peer-reviewed,” says Jim Stice.
“SBIR is helping us solve problems we’ve
had forever,” comments Jim Van Wert. Go for it, all three might
add.
[contact] Joe Hennessey, Ph.D., Industrial Innovation
Programs, National Science Foundation: 703.292.7069; jhenness@nsf.gov;
www.nsf.gov. Steve
Linder, Missile Defense Agency: 703.883.8318; steve.linder@mda.mil.
Kathleen Shino, National Institutes of Health: 301.435.2689; www.nih.gov.
Jim Stice, Twin Star Medical: 763.576.5172; jamesstice@aol.com.
Jim Van Wert, Hitchcock Industries: 952.881.1000; vanwertj@hitchcockusa.com;
www.hitchcockusa.com.
Paul Wagner, Minnesota Wire & Cable Co., 651.642.1800; pwagner@mnwire.com;
www.mnwire.com
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