NDAA and DoD SBIR Outlook

 

If you’re not interested in DoD SBIR, you can skip this section but it may be important to those of you who are in the world of DoD.

In the small business mindset, the DoD SBIR program differs from the civilian agencies in that the pot of gold at the end of the rainbow is actually “insertion,” or selling your SBIR outcome to the service/warfighter. In DoD speak, an SBIR product or service that benefits the warfighter (and is purchased by the service) is synonymous to “commercialization”.

Therefore when we look at the National Defense Authorization Act (NDAA) with DoD SBIR glasses, there’s much more to the 3,000+ pages than just the few lines of SBIR reauthorization language. What’s the health of the DoD budget and buying power going to look like?

Sorry to whip a dead horse, but once again we have a conflict between and Authorization and an Appropriation. The NDAA (amongst other things) is a giant Authorization. Intent of legislation does not always translate to reality of implementation. Stick with me for a little bit and you’ll understand the problem.

In an oversimplification, an Authorization is the congressional mechanism to authorize a program and budget for that program, but provides no actual funds. It does create an authorization of an Appropriation whereby a separate appropriation bill is the vehicle that provides the funding. You can authorize $5m for a particular program, but if the appropriation bill is only for $1m, all you get is the $1m.

In the case of the new NDAA, budgets in DoD spending are significantly increased (for 2017 levels), BUT under the current CR (which is really a continuing appropriation at 2016 levels), the numbers are actually many billions of dollars lower than the NDAA allows for FY-2017. So expect lower spending and somewhat inadequate funding for new programs and purchases (until or unless congress passes real FY-2017 appropriations, which in lieu of a new CR is needed by April 28, 2017).

As a result of the current CR, the pentagon has identified more than 150 programs that will be disrupted by the flat funding. Congressional fixes may be made for only a few. Some R&D efforts have been diminished, while some bean counters estimate less than $16B rather than the $24B budgeted will be awarded. The effect from these CRs is a budget frozen for 7 months at last year’s level.

Further, there are significant other changes in the DoD acquisition community. The long standing Office of the Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L), (artfully managed by Frank Kendall, who has been a good supporter of SBIR) will be shutdown. It will be replaced by two new entities: a) Office of the Undersecretary of Defense for Research and Engineering; b) Office of the Undersecretary of Defense for Acquisition and Sustainment.

Although we don’t know what changes may be expected for the acquisition community, Senator John McCain (R-AZ) stated that this change was necessary because AT&L had grown so large, and the work they did was focusing too much on compliance, which was at the expense of innovation. The change is to be made by February of 2018.

FYI, the NDAA was passed overwhelmingly, 375 – 34 in the house and 92 – 7 in the Senate.

 

Courtesy of  SBIR Insider, Zyn Systems www.zynsys.com/sbir

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