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How to get federal grants to research and develop ideas
by Margaret Owen Thorpe 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; jh******@*sf.gov; www.nsf.gov. Steve Linder, Missile Defense Agency: 703.883.8318;**********@*da.mil“> st**********@*da.mil. Kathleen Shino, National Institutes of Health: 301.435.2689; www.nih.gov. Jim Stice, Twin Star Medical: 763.576.5172; ja********@*ol.com. Jim Van Wert, Hitchcock Industries: 952.881.1000; va******@**********sa.com; www.hitchcockusa.com. Paul Wagner, Minnesota Wire & Cable Co., 651.642.1800; pw*****@****re.com; www.mnwire.com
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