Learn how SpaceWERX SBIR funding works, what Space Force applicants should prepare, and how to manage an award with compliant accounting, timekeeping, and project cost tracking.
Winning a Space Force SBIR award can help your company prove technical feasibility, develop a prototype, and move new technology closer to military or commercial use.
Your company then needs a reliable way to track employee time, project costs, contractor expenses, and how award funding is used.
SpaceWERX manages the United States Space Force’s SBIR and Small Business Technology Transfer programs. Applicants need to show that their technology can address a Space Force need. Awardees need accounting records that show how project funds, labor, and other costs are managed.
Putting the right system in place early can make the project easier to manage and help your company prepare for future government funding.
Understanding the Space Force SBIR Program
The United States Space Force uses SpaceWERX to connect small businesses with military customers looking for new technologies and capabilities.
SpaceWERX supports technologies with government and commercial potential. Depending on the opportunity, companies may respond to an established Space Force problem or propose a commercial solution that could be adapted to meet a military need.
SBIR funding generally supports research and development performed by an eligible small business. STTR follows a similar structure but requires the small business to partner with a nonprofit research institution. For STTR awards, the small business must perform at least 40% of the work and the research institution must perform at least 30%.
The technology may receive most of the attention during the application process. Applicants should still consider how they will manage the financial side of the work if they receive an award.
Who’s Eligible to Apply?
To apply for Space Force SBIR funding, your company generally must meet federal small business eligibility requirements:
- Be a U.S.-based, for-profit small business with no more than 500 employees
- Be more than 50% owned and controlled by U.S. citizens, permanent resident aliens, or qualifying small business concerns
- Perform the required share of the research and development work in the United States
- Meet the eligibility requirements in the active solicitation at the time of award
- The principal investigator’s primary employment must be with the small business
You do not need prior Department of Defense experience to apply. You do need a strong technical concept, a capable team, and the ability to meet government contracting requirements if selected.
For Direct-to-Phase-II opportunities, the company must also show that it has already completed work comparable to a Phase I feasibility effort and can connect the technology to a real Space Force need.
How SpaceWERX Funding Works
The right funding path depends on how far the technology has progressed and whether the company already has a Space Force customer.
Funding amounts, timelines, and submission requirements can change by opportunity. Applicants should use the active solicitation when preparing a proposal or project budget.
Phase I: Prove Feasibility
Phase I helps a small business prove the technical merit and commercial viability of an idea. Open Topic projects include customer discovery to confirm that the technology addresses a Space Force need.
SpaceWERX Phase I
- Funding: $75,000 to $180,000
- Performance Period: 3 to 12 months
A Phase I award may involve a smaller budget and fewer transactions, but it is still important to establish the right accounting processes from the beginning. Team 80 helps awardees track labor, contractor costs, project purchases, and supporting records while preparing for future funding.
Phase II: Develop the Prototype
Phase II continues the research and development effort. Work may include prototype development, integration, testing, demonstrations, and preparation for operational use.
SpaceWERX Phase II
- Funding: $1.25 million to $1.8 million
- Performance Period: Up to 24 months
Open Topic Follow-On Phase II and Direct-to-Phase-II applicants need a United States Space Force Customer Memorandum. Specific Topics have a pre-identified customer.
As the project grows, the accounting usually becomes more involved. The company may hire employees, use specialized subcontractors, purchase prototype materials, or divide engineering time between the SBIR project and commercial work.
The accounting system should keep those activities separated and show how actual project costs compare with the approved budget.
Direct-to-Phase-II (D2P2)
Direct-to-Phase-II allows qualified small businesses to begin with Phase II after completing work comparable to a Phase I feasibility effort.
The applicant must document its technical progress, show that the technology is ready for further development, and explain how it addresses a Space Force need. The proposal should demonstrate technical feasibility, product-mission fit, and a clear plan with a Space Force stakeholder.
Funding limits, performance periods, and submission requirements vary by opportunity, so applicants should follow the active solicitation.
STRATFI, TACFI, and Phase III
Companies with successful Phase II projects completed within the past two years can pursue STRATFI or TACFI funding.
- STRATFI funding: $3 million to $15 million
- TACFI funding: $375,000 to $2 million
- Phase III funding: Non-SBIR or STTR government funding or private investment
STRATFI and TACFI require matching funds from government sources, private investment, or a combination of both. These programs help bridge the gap between Phase II development and Phase III scaling.
Reliable project records can help a company understand what its technology costs to develop, explain how different funding sources were used, and prepare for follow-on opportunities.
Prepare Your Accounting Before the Award Starts
You do not need every accounting process finished before submitting a proposal. You should know what needs to be ready if your company is selected.
Start with a cost volume that reflects how the company expects to perform the work.
Depending on the opportunity, the proposed budget may include:
- Direct labor
- Materials and prototype costs
- Subcontractors or consultants
- Travel and testing
- Equipment
- Indirect costs
- Profit or fee
Each proposed cost should have a reasonable basis. The approved budget is a plan. Once the project begins, the accounting records need to show what the company actually spends.
Timekeeping should be addressed before employees begin award work. Asking employees to reconstruct their hours from calendars or memory can make labor charges difficult to support.
This is particularly important when engineers divide their time among Space Force work, commercial development, investor-funded research, and other government awards.
What a Space Force SBIR Accounting System Should Track
Government-funded projects often require more detail than ordinary small business bookkeeping.
Do You Need a DCAA-Compliant Accounting System?
Not every SpaceWERX or Space Force SBIR award requires a DCAA-compliant accounting system. The contract type, payment structure, applicable clauses, and final award documents determine the accounting requirements.
Cost-reimbursement, time-and-materials, labor-hour, and certain other contract types may require an adequate accounting system. A firm-fixed-price or milestone-based award may not require a formal DCAA review, but the company still needs reliable timekeeping, project cost tracking, and supporting records.
Always review the active solicitation and final award terms to confirm what applies to your contract.
Your accounting system should show where project money went and why.
Depending on the award, it may need to support:
- Costs by award, project, task, or milestone
- Employee time and labor distribution
- Direct and indirect cost separation
- Budget-to-actual reporting
- Subcontractor and vendor documentation
- Identification of unallowable costs
DFARS accounting-system criteria address many of these areas, including direct and indirect cost segregation, cost accumulation by contract, timekeeping, labor distribution, monthly cost determination, and exclusion of unallowable costs.
Direct and Indirect Costs
Direct costs can be tied specifically to the Space Force project.
Examples include
- Employee labor
- Prototype materials
- Project testing
- Approved travel
- Subcontractor work
Indirect costs support several projects or the business as a whole.
Examples include
- Shared facilities
- Business insurance
- Administrative labor
- Accounting support
- Company-wide software
The company needs a consistent way to classify these costs. Similar expenses should not be treated differently simply because one project has more funding available.
Project Cost Tracking
Each Space Force SBIR award should have its own project or job-cost structure.
This keeps award spending separate from commercial activity, private investment, independent research, and other contracts. The award can require additional tracking by task, milestone, contract line item, or funding modification.
Project cost reports allow management to compare actual spending with the approved budget. That makes it easier to catch labor overruns, unexpected material costs, or indirect-rate changes before they become larger problems.
Timekeeping and Labor Distribution
Employees should record the hours they work and assign those hours to the correct project or indirect activity.
Time records should be completed regularly, reviewed by a manager, and supported by an audit trail when corrections are made. Payroll and labor distribution should reflect those recorded hours.
The process connects three important records: Employee time → payroll cost → project cost.
That relationship becomes especially important when one employee works across several projects.
Supporting Documents and Unallowable Costs
Every project cost should have documentation behind it.
A vendor invoice should show what was purchased. A subcontractor invoice should explain the work performed. Travel records should identify the business purpose. Labor charges should connect to timecards and payroll.
The accounting system should identify expenses that cannot be charged to the award. Depending on the contract terms and applicable rules, examples include alcohol, entertainment, lobbying, federal income taxes, unsupported personal expenses, and costs unrelated to the project.
These expenses can remain in the company’s books, but they should be identified and excluded from government billings or indirect-rate calculations when required.
Common Space Force SBIR Accounting Problems
Many accounting problems begin when a company starts the technical work before setting up its financial processes.
Common issues:
- Employees charging time without project-based timekeeping
- Commercial and government expenses being recorded together
- Indirect rates without a clear calculation method
- Missing invoices, receipts, or subcontractor support
- Project costs recorded in broad research and development accounts
Fixed-price payments mistaken for permission to stop tracking project costs
A fixed-price payment structure can reduce certain cost-reporting requirements, but the company still needs reliable books, supporting records, and a clear understanding of what the project costs to complete.
The goal is to create a practical financial process that supports the project without adding unnecessary administrative work.
SpaceWERX SBIR Accounting Services
Team 80 supports applicants and awardees with the accounting, timekeeping, and project cost reporting required for federally funded research and development.
The award type and contract terms determine the accounting requirements. Team 80 builds and manages the financial process around those requirements from the start.
Team 80 provides:
- DCAA-compliant accounting-system setup when required
- Project cost tracking and budget-to-actual reporting
- Timekeeping and labor distribution
- Indirect-rate support
Monthly bookkeeping and financial reporting - Payroll and bill-pay coordination
- Ongoing accounting-system management
The service includes the accounting, timekeeping, payroll, bill-pay, and reporting tools needed to manage the award. Each client works with a dedicated accounting team that handles day-to-day accounting, maintains project records, and reviews financial results with the company.
You can focus on developing your space technology while Team 80 manages the accounting and keeps your records ready for the next stage of funding.
Get Ready to Manage Your Space Force SBIR Award
Whether you are preparing for Phase I, moving into Phase II, or reviewing the accounting requirements in a new award, Team 80 can help you put the right system in place.
A SpaceWERX award can open the door to new Space Force and commercial opportunities. The right accounting system helps your company manage the current project while preparing for follow-on funding and future government contracts.
Sarah Sinicki
Team 80 CEO
Sarah is a leader focused on serving small businesses in various industries. She has worked with a multitude of companies over the last 25 years and loves helping business owners find success. Sarah is genuinely committed to unburdening Team 80 clients so that they have the freedom to focus on their business. In her free time, you can find her spending time with her husband, two kids, and her Yorkies, Marley and Ziggy. When she is not helping business owners, you can find her in a Reb3l Groove class dancing it out. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal.
