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The Air Force Helms Innovative Programs with AFWERX SBIR

The U.S. Air Force powers innovation through AFWERX, a team of technological advisers that pilot the agency’s Small Business Innovation Research (SBIR) program.

AFWERX is a U.S. Air Force and the Department of Defense (DoD) program that fosters small business technological innovation. Those innovations are funded via competition in the Air Force Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR), encouraging startups to research and develop products and services.

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Entrepreneurs who pilot startups often encounter three significant obstacles:

  • Coming up with the cash to fund their project.
  • Finding the market to fit the product they’ve developed.
  • Landing their first paying customer.

But when those entrepreneurs are developing commercial technology meant for the Air Force, there’s one group that can accelerate the process of overcoming obstacles and help break the sound barrier of innovation.

The Air Force’s AFWERX team runs a Small Business Innovation Research (SBIR) program, awarding contracts to entrepreneurs who aim high.

What Does AFWERX SBIR Stand For?

The acronym AFWERX does not represent a phrase or name abbreviation; “AF” stands for “Air Force,” and “WERX” is shorthand for “work project.”

It represents a U.S. Air Force program that fosters a culture of innovation within the service.

AFWERX, a team of technology advisors within the Air Force Research Laboratory (AFRL), seeks ground-breaking ideas and invests seed money to move projects from the laboratory into production.

The advisors accomplish this by overseeing the Air Force’s arm of the Department of Defense (DoD) Small Business Innovation Research (SBIR) program.

As part of its effort to attract the best and brightest minds in technology, AFWERX hosts tech competitions, issues exploratory contracts to fund research and development, and matches startups with venture capital investors to spur paradigm-shifting ideas. AFWERX also includes sister organizations, including SOFWERX, MGMWERX, and DEFENSEWERX.

What is the AFWERX SBIR Mission?

First established in 2017 by the Secretary of the Air Force and reporting to the Vice Chief of Staff of the Air Force, AFWERX provides an environment conducive to thoughtful, deliberate, innovation.

Through open topic solicitations, small businesses can submit innovative solutions that have yet to be deployed in service to the DoD.

And we’re not only talking about developing wartime technology like fighter jets and bombers—the Air Force is a large and varied organization that requires a wide range of products in the medical field, construction, law enforcement, communications, energy, and more.

Essentially, any innovative technology that could be applied to a small city could have a use in the Air Force.

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What are AFVentures?

The Department of the Air Force’s commercial investment group, AFVentures, is a division of AFWERX that works to expand the number of small businesses working with the Air Force.

It accomplishes this by awarding small startups a development contract to help them survive the complex qualifying process for a defense contract.

Venture capital firms are often hesitant to work with companies that might not develop a high-margin product capable of quickly growing to produce a far greater return than the firm’s initial investment.

AFVentures levels the playing field, finding funding for startups through various programs—including Strategic Fund Increase, which sees AFVentures match a certain amount of funding already received by the startup via a private investor.

AFVentures give the DoD a window into the innovations outside of large contractors such as Raytheon and Boeing—helping the federal government tap into the valuable work being done to address nontraditional concerns, such as cyberwarfare.

Since it launched in 2018, AFVentures has awarded $710 million in contracts to various small business startups. Meanwhile, through the Air Force SBIR/STTR program, AFVentures even found itself on the frontlines of the nation’s response to the COVID pandemic, gathering and deploying valuable ideas about how to battle the virus.

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Who is Eligible for AFWERX SBIR?

The SBIR/STTR programs affiliated with AFWERX share many of the eligibility requirements of other government agencies. These eligibility requirements are as follows:


  • Must be a for-profit business
  • Must be based in the U.S.
  • Must have 500 or fewer employees
  • The Principal Investigator must be primarily employed (more than 50 percent) with the small business applicant


  • Must be a for-profit business
  • Must be based in the U.S.
  • Must partner with a U.S. research institution
  • Must be a formal cooperative research and development effort
  • At least 40 percent of the work must be performed by the small business, with 30 percent of the work performed by the partnering research institution.


Like other SBIR programs across the federal landscape, AFWERX comprises two main phases for research and development (R&D) and one ancillary phase mainly for commercialization purposes.


Most AFWERX Phase I SBIR program funding is awarded in response to open topic Commercial Solution Openings. CSOs are used to acquire innovative commercial projects, with open topics inviting industries to propose solutions to Air Force problems. To view the issues for which the Air Force seeks solutions, check out the AFVentures Focus Areas for Phase I.

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How Much Funding is Awarded in AFWERX SBIR Phase I?

The Air Force describes its AFWERX Phase I SBIR program funding as “small bets,” doling out between 1,000 and 1,500 Phase I awards to the tune of $50,000 each.


How Long Is AFWERX SBIR Phase I?

Each AFWERX SBIR Phase I award of $50,000 covers three months.


Approximately a third of Air Force Phase I awards have what it takes to transition to Phase II, which AFWERX describes as “medium bets.”

How Much Funding is Awarded in AFWERX SBIR Phase II?

The “medium bets” placed by AFWERX can total up to $750,000 per small business.


How Long Is AFWERX SBIR Phase II?

Each AFWERX SBIR Phase II award of $750,000 covers 15 months of prototype development.

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Yes! While AFWERX does not always guarantee the availability of Direct-to-Phase II (D2P2) opportunities, it is a program that is currently being made available.

D2P2 allows AFWERX to award an SBIR Phase II award to a small business, regardless if that small business was awarded any Phase I funding.

This page from AFWERX AFVentures helps to answer D2P2 specific questions.

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These funding sources enable AFWERX to emphasize big-ticket contracts and are intended to help the small businesses substantially increase the dollar amount received in awarded funds.

Highly beneficial but often tricky to navigate, Supplemental Funding Pilot Programs through AFWERX typically appear in two forms, Strategic Funding Increase (STRATFI) and Tactical Funding Increase (TACFI). Additionally, each supplemental funding opportunity has its own requirements and funding amounts.

Both STRATFI and TACFI are intended for companies that have already won an SBIR/STTR Phase II award in the last three years. These companies become eligible to receive additional funding through these supplemental programs to scale their Phase II efforts further.

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One of AFWERX’s Supplemental Funding Pilot Programs, STRATFI awards are between $3 million and $15 million of SBIR funding and cover up to 48 months of performance.

A matching component requires that non-SBIR funding be put up to receive the award. For every $1 of SBIR/STTR funds, companies must also receive $2 of other government funds or $1 of additional government funds and $2 of private funds.

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What is the Tactical Funding Increase (TACFI)?

Another of AFWERX’s Supplemental Funding Pilot Programs, TACFI, awards amounts from $375,000 to $1.7 million and up to 24 months of activity. For every dollar of SBIR/STTR funds, companies must also receive at least $1 of other government funding (non-SBIR/STTR) or $1 of private funding.

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AFWERX Research Topics

“Research topics” refer to the many diverse technology categories small businesses could research in their SBIR program proposal. The technology categories include: 

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  • Administrative Services
  • Dress and Appearance
  • Health/Physical Fitness
  • Personnel
  • Training/Learning

General Areas

  • Manufacturing
  • Advanced Materials
  • Base Infrastructure
  • Energy and Power
  • Energy and Efficiency
  • Maintenance

Information Technology

  • Artificial Intelligence and Machine Learning
  • Augmented, mixed, and virtual reality
  • Communication and collaboration
  • Cyber Security
  • Data
  • Data analytics
  • Electronics/Microelectronics
  • Emerging Technologies
  • Information Technology
  • Modeling and Simulation
  • Robotics

Mission Readiness

  • Aeromedical Evacuation
  • Air Refueling
  • Autonomy and Autonomous systems
  • Battle Management
  • Cargo Operations
  • Communications
  • Emergency Response
  • Intelligence, Surveillance, and Reconnaissance (ISR)
  • Personnel Transportation
  • Physical Security/ Security Forces

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What is the Air Force SBIR Open Topic?

The federal agencies participating in the SBIR program present a set collection of topics they want you to research and develop into products and services.

While the Air Force takes part in this type of SBIR program solicitation, they also take a unique approach. 

The U.S. Air Force, through AFWERX, allows organizations to propose solutions for their “open topic” research area. This open topic can be any commercially viable technology that the small business believes could be potentially useful to the Air Force. 

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Essentially, Open Topic allows small businesses to solve problems that the Air Force doesn’t know they have.

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AFWERX SBIR Program Success Stories

Though the process of landing an AFWERX SBIR award from the DoD can be grueling, there are plenty of success stories to inspire you along the way.

Lickenbrock Technologies

Total SBIR Investment: $895,000

Missouri-based Lickenbrock Technologies developed Fast Expectation-Maximization Ordered Subsets (FEMOS), a reconstruction algorithm that creates scans with greater resolution and contrast than commercial computed tomography (CT) scans.

Funding through the Air Force AFWERX SBIR program, an investment of $895,000, helped Lickenbrock accelerate the speed of its algorithm to seven times the original speed, significantly reducing the amount of time it takes to finish a scan. 

The SBIR investment improved the quality of the reconstructions and diversified the variety of specimens the system is capable of scanning.

With further development, Lickenbrock Technologies expects $500,000 to $1 million per year in commercial, industrial use profits. 

Specular Theory

Total SBIR Investment: $1.5 million

With SBIR funding, California-based Specular Theory developed a next-generation virtual reality flight simulation training system explicitly designed to guide pilots in the exact science of in-air refueling. 

Traditional air refueling training costs the Air Force thousands of dollars per flight and requires at least two aircraft and two full crews. 

This is where Specular Theory saw an opportunity for improvement. 

The virtual training program reduces the number of failures and helps reduce the number of times pilots must practice in real aircraft. As a result, the cost savings in that area alone are substantial. 

Traditional air refueling training costs the Air Force thousands of dollars per flight, which requires at least two aircraft and two full crews. 

Students often require extra flights to gain proficiency, adding cost and time. This virtual training program is connected to The Air Force SBIR funding allowing Specular Theory to adapt its existing products into an immersive student experience not typically available in consumer applications. 

SBIR invested close to $1.5 million into the project, while the product has pulled in $5 million in Phase III contracts for Specular Theory. 

iNovex Information Systems

Total SBIR Investment: $899,154

The Air Force’s SBIR program supported Maryland-based iNovex Information Systems in its effort to develop an open-source data collaboration platform known as Mobi-SRE. This platform pulls together and analyzes data for the weapon system design acquisition lifecycle. 

With this development, users can better use pre-existing data, accelerate the process, reduce errors, and increase access to more comprehensive and consistent information. 

This reduces the time it takes to get advanced weapon technology into the hands of the boots on the ground—or in the air. 

iNovex Information Systems utilized the investment to research the specific Air Force needs and limitations. Then, they used that information to specifically build and expand the data platform to address those problems. 

The Air Force SBIR invested $899,154 into the project, and the company has received close to $1.5 million in Phase III contracts. As a result, it is positioned to save the Air Force an estimated $5 million.

Are you a small business owner with innovative ideas? Get your AFWERX accounting in order with Team 80.

Get A Free Consultation for Your AFWERX SBIR Accounting Services
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Sarah Sinicki Photo

Sarah Sinicki

Partner & Director of Business Development at Team 80 LLC

Sarah is a Colorado native and loves everything about our beautiful state. In her free time you can find her spending time with her husband, two kids and her Yorkie named Marley. She also enjoys paddle-boarding, riding her cruiser bike, and just hanging out with friends and family. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal. As one of the Partners of Team 80, she certainly does have a passion for helping small businesses. She is able to apply her 20 years of experience to tailor an accounting solution for a business owner no matter what industry they might be in.

Been with Team 80: May 2008

Metropolitan State University of Denver
Degree Name: BS
Field Of Study Accounting
Graduated: 1998

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Prime Information Regarding the USDA SBIR Program

SBIR awards granted by the USDA give small businesses the power to enhance American agriculture. 

The U.S. Department of Agriculture (USDA) is one of 11 federal agencies participating in the Small Business Innovation Research (SBIR) program. Through SBIR, the USDA offers competitively awarded grants to eligible and qualified small businesses that develop products, services, and processes to address problems in agriculture and provide significant public benefits.

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In facilitating comprehensive accounting services for a slew of small businesses, Team 80 has come across many important initiatives that aim to better the lives of countless individuals. This front-row seat to meaningful innovation is one of the many perks we enjoy while crunching numbers for clients.

The strides made by startups awarded funds through the USDA’s SBIR program are truly impressive—altering the very landscape of American agriculture, the environment, rural communities, and rural healthcare.

Throughout this article, we’ll examine the finer details of the USDA program and tell you everything you need to know to apply. We’ll also highlight some of the most remarkable awardees.

What Does USDA SBIR Stand For?

USDA SBIR stands for the United States Department of Agriculture (USDA) Small Business Innovation Research (SBIR) program. Administered by the National Institute of Food and Agriculture (NIFA), the USDA’s SBIR program awards projects that focus on bolstering American agriculture while protecting the environment and strengthening rural communities and the healthcare that keeps them safe.

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What is the USDA SBIR Mission?

The USDA is one of 11 federal agencies participating in the SBIR program, which awards grants and funds to eligible small businesses. The USDA seeks to select qualified small companies with proposals for high-quality, advanced research projects through the SBIR program. The research must relate to scientific opportunities and issues within agriculture, with the ultimate goal of benefiting the public.

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The USDA’s SBIR program stimulates technological innovations in the private sector, strengthens the role of small businesses in federal research projects, increases the potential commercialization of innovations, and fosters the advancement of women-owned and socially or economically disadvantaged small businesses.

Ultimately, the USDA wants these SBIR projects to provide solutions for American agricultural efforts and society. This is facilitated by combining science, research, production, and marketing in a way that transforms innovative ideas into practical realities.

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Open to all eligible small businesses, Phase I establishes the first step in the USDA’s SBIR process. The objective is to determine the scientific feasibility of the small business idea and map out its commercial potential.

How Much is the USDA SBIR Phase I Award?

The funding limit for the USDA SBIR Phase I award is $100,000.

The duration of the USDA SBIR Phase I is eight months.

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Open only to previous Phase I awardees, USDA SBIR Phase II continues the research and development established in Phase I while scaling up the efforts and funds awarded. Phase II also allows the small business to begin planning commercialization and implementing the technology, product, or service.

The funding limit for the USDA Phase II award is $600,000.

How Do I Apply for a USDA SBIR Award?

To apply for a USDA SBIR award, you must first establish whether or not your company is eligible.  Eligibility comes down to your company’s size, ownership, and control requirements—all established by the Small Business Administration’s (SBA) Guide to SBIR/STTR Program Eligibility. The requirements include:

  • Must be a small business in the U.S. with no more than 500 employees, including affiliates.
  • It must be a for-profit business.
  • Must be more than 50 percent owned and controlled by U.S. citizens or permanent resident aliens.
  • The bulk of the ownership and work must reside with the grant recipient, though you may have business partners and contract out a minor share of the work.

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Move forward with your application process by registering your business on the SBIR/STTR Company Registry. This gives you access to the system and will provide you with a unique control ID for all of your submissions.

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What are the USDA Research Topics?

The USDA addresses various agricultural, environmental, community, and health concerns, represented by specific SBIR research areas. Research topics include:

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  • Forests and Related Resources
    • Projects related to forests and grasslands’ health, diversity, and productivity. The main area of focus should be on sustaining forest resources, addressing the impact of climate change, developing value-added materials, and protecting existing ecosystems.

  • Plant Production and Protection — Biology
    • A biological approach to enhancing crop production and protection. Projects should aim to reduce the impact of harmful agents, advance plant improvement methods, and develop new food and specialty crops.

  • Plant Production and Protection — Engineering
    • An engineering approach to the same crop enhancement and protections mentioned above, this area utilizes economically and environmentally sound production, post-harvest, and storage systems. 

  • Animal Production and Protection
    • Supports the development of innovative technologies that assist agricultural concerns and animal producers to improve efficiency while preventing disease and outbreaks, conserving resources, and reducing production costs.

  • Conservation of Natural Resources
    • Focused on air, soil, and water, this area creates tech for conserving and protecting essential natural resources. Projects must work to sustain farm and forest productivity by reducing erosion, enhancing quality, developing irrigation techniques, reducing pollution, and promoting these transformative technologies. 

  • Food Science and Nutrition
    • Efforts in this area must develop products and processes related to what we eat and how it relates to health. Projects can work to improve processing and packaging methods for better quality and nutritional value, promote programs and products that increase the consumption and understanding of healthy foods, and reduce childhood obesity.

  • Rural and Community Development
    • Improve the economic vitality of rural communities and reduce poverty by conceptualizing and commercializing tech, products, processes, and services. In addition, projects should enhance the efficiency and equity of public and private investments, build a diversified workforce, and increase resilience to disasters. 

  • Aquaculture
    • Projects include a wide array of concerns related to ocean life, such as increasing reproductive efficiency and genetic improvement in fish and shellfish, enhancing animal health, food safety, production efficiency, cost-effective production of alternative proteins, and reducing water usage.


  • Biofuels and Biobased Products
    • Efforts should promote product usage through innovative technologies that increase bio-production from agriculture materials and provide new opportunities to diversify agriculture’s role in the raw materials industry. 


  • Small and Mid-Size Farms
    • Projects aimed at increasing the sustainability and profitability of farms and ranches through plant, animal, organic, and natural products. There are also opportunities to enhance farm safety, increase operational efficiency, and conserve natural resources. 


  • Phase I awardees can request an additional $6,500 through TABA. Applicants awarded a USDA SBIR Phase I grant will receive a contact from a USDA-funded vendor on what services are available and how to obtain those services at no cost to your business. If you select your own TABA provider, you must include this as “Other Direct Costs” in your budget. You must also have a detailed budget justification and a signed letter of commitment from the provider. 


  • Phase II awardees can request up to an additional $50,000 through TABA. Grant recipients in Phase II must select their own TABA vendor while also including the requested TABA amount in their budget as “Other Direct Costs” and provide a detailed budget justification and a signed letter of commitment from the vendor.

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Note: TABA funds may not be used for research and development (R&D) activities that the grant funds otherwise support. However, electing to use TABA will not take away from a company’s R&D budget. Instead, it is in addition to the USDA SBIR grant and can only be used for TABA services.

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The highly competitive nature of the SBIR program makes it a grueling process—but it’s this characteristic that also makes winning the award deeply gratifying. Over the years, USDA SBIR Phase II awardees have run the gamut from projects that enhance food safety and nutrition to projects that fortify agricultural efforts and animal protection. To give you a general idea of what it takes to receive a grant from the USDA, here are some past winners of the agency’s SBIR program Phase II.

Whole Trees, LLC

Answering the call by USDA officials to “develop new markets for forest byproducts that encourage healthy timber management,” Whole Trees, LLC created value from an abundant, near-waste byproduct of well-managed forests. The Wisconsin-based company utilized the $579,540 Phase II award to develop a process to use de-barked, un-milled whole timbers and proprietary steel connections as a cost-competitive and environmentally sound structural building material for columns, beams, and truss assemblies in place of steel, concrete, or milled lumber. The R&D led to an expanded supply chain, improved design values, associated cost reductions, and enhanced product safety, performance, and reliability.

Green Heron Tools

Thirty percent of U.S. farmworkers are women. However, farming tools have never been explicitly designed with women in mind. That all changed with Green Heron Tools, a woman-owned, Pennsylvania-based company that received SBIR Phase II awards totaling $532,157. Green Heron Tools developed a new line of ergonomically efficient garden tools to address the specific needs of women’s bodies. The Phase II award led to the development and commercialization of HERShoval, a safer, scientifically designed alternative to standard unisex tools and tools made smaller solely for aesthetic purposes.

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The USDA’s SBIR Directly Serves Citizens

Projects born from the USDA’s SBIR program seem geared explicitly toward addressing the overarching health of the average citizen and the day-to-day issues faced by America’s working farmers. It’s innovation with an immediate impact!

However, that impact can be dulled if you fall short of SBIR accounting requirements.

Like the SBIR programs across all federal agencies, the USDA boasts accounting rules and regulations that can seriously slow progress. The requirements are numerous and highly consequential, from the separation of direct and indirect costs to general ledger management to error-free timekeeping records.

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Team 80 has the experience necessary in the arena of government grants to make this process as headache-free as possible—giving you the bandwidth to focus on your innovation.

Get A Free Consultation for Your USDA SBIR Accounting Services
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Sarah Sinicki

Partner & Director of Business Development at Team 80 LLC

Sarah is a Colorado native and loves everything about our beautiful state. In her free time you can find her spending time with her husband, two kids and her Yorkie named Marley. She also enjoys paddle-boarding, riding her cruiser bike, and just hanging out with friends and family. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal. As one of the Partners of Team 80, she certainly does have a passion for helping small businesses. She is able to apply her 20 years of experience to tailor an accounting solution for a business owner no matter what industry they might be in.

Been with Team 80: May 2008

Metropolitan State University of Denver
Degree Name: BS
Field Of Study Accounting
Graduated: 1998

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A Deep Dive Into The Navy SBIR Program

The Small Business Innovation Research (SBIR) program connects America’s naval departments to invaluable ideas and technologies.

Under the Department of Defense (DoD), the Navy makes funds available to small business entrepreneurs through the Small Business Innovation Research (SBIR) program. The Navy consists of multiple components known as System Commands or SYSCOM. These components focus on different areas of naval operations. 

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The Department of Defense (DoD) is one of 11 federal agencies tasked with deploying funds to entrepreneurs through the Small Business Innovation Research (SBIR) program. But what sets the DoD apart from other government departments is the sheer reach of its funding. 

With 14 diverse components and a combined annual budget of $1.8 billion, the DoD is the most significant contributor to the federal government’s SBIR program. And the Navy is one of the department’s components, doling out contracts and netting practical military solutions from entrepreneurs. 

What is the SYSCOM SBIR?

Though the Navy is typically associated with maritime missions, it also includes both land- and aviation-based duties. It all adds to a diverse set of technological needs, which the Navy organizes as System Commands, or SYSCOMs.

Each of the Navy’s participating SYSCOM missions boasts its own SBIR budget and unique guidelines, particularly for Phase II of the programs. One of the Navy’s SYSCOMs, the Office of Naval Research (ONR), is responsible for administering the SBIR program, dividing the solicitations into groups representing the needs of each SYSCOM.

What is ONR SBIR?

Though it administers the overall efforts of the entire Navy SBIR program, the ONR also deploys its own ONR SBIR SYSCOM topics. The overarching goal of its ONR mission is to foster, plan, facilitate, and transition scientific research with the expressed purpose of sustaining naval power into the future while preserving national security efforts.

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The SBIR program related to NAVAIR involves the R&D of projects that provide material support for aircraft and airborne weapon systems for the Navy. NAVAIR SBIR cultivates small business innovations that develop naval aviation aircraft, weapons, and systems operated by sailors and marines. This effort often takes the form of research, design, systems engineering, test and evaluation, training facilities and equipment, logistics support, and more.

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Formerly dubbed Space and Naval Warfare Systems Command (SPAWAR), this SYSCOM changed its name to reflect the emergence of cybersecurity as a vital frontline defense. NAVWAR SBIR provides the country with critical networks, sensors, and systems to connect air, surface, subsurface, space, and cyberspace military assets in the name of national security. 

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The oldest of the Navy’s SYSCOMs, NAVFAC was established in 1842 as the Bureau of Yards and Docks. Today, NAVFAC performs facilities engineering for the Navy and Marine Corps. With assistance from the entrepreneurial minds gathered through the NAVFAC SBIR program, this SYSCOM plans, builds, and maintains sustainable facilities, delivering combat base services and equipment.

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What is MCSC SBIR?

Though a critical part of the Navy, the MCSC is the acquisition authority of the Marine Corps, exercising contract and technical command for ground weapon and information technology programs. The MCSC SBIR seeks to fund new technology R&D by small businesses to equip and sustain forces with competent and cost-effective systems while assisting with the transition of new technology into all operations.

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Protecting the country from bad actors around the globe would be nearly impossible without the necessary support systems firmly in place—this is where NAVSUP steps in for the Navy. This SYSCOM makes sure the Navy and its service people have all the supplies, services, and full quality-of-life support they need to perform their duty. NAVSUP SBIR could include a diverse array of tasks, including supply chain management, transportation, food and postal services, and even the movement of household goods and personal effects.

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What is SSP SBIR?

The Strategic Systems Program Office is instrumental in producing and supporting the Navy’s arsenal of submarine-launched ballistic missiles and other strategic weapons systems. What’s more, SSP executed the Polaris Sales Agreement with the United Kingdom and developed conventional hypersonic weapons. SSP SBIR calls on a highly specialized workforce with scientific, engineering, and professional expertise.

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To learn more about the specific SBIR programs for each of the above Navy SYSCOMs, reach out to the official SBIR contacts.

The Navy SBIR awards $140,000 in Phase I, with an option for an additional $100,000. Phase I consists of a period not to exceed six months.

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Phase II awards typically range from $500,000 to $1.7 million in size, and the performance period is generally 24 months. However, other funding mechanisms are in place along with Phase II that could top off at $3.6 million. As for non-SBIR funding, that amount has no cap.

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  • All SBIR awardees must be more than 50 percent directly owned and operated by one or more U.S. citizens.
  • Applicants must be a small business located in the U.S. with no more than 500 employees, including affiliates.
  • The small business must be a for-profit business.
  • The bulk of the work must be performed by the grant recipient, although business partners are allowed, and you may contract out a minor share of the work.

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Navy SBIR topics are available for a host of SYSCOMs, with an extensive list displayed on the Navy’s official SBIR site. Some of the current open topics include Digital Firing Device for NAVAIR, Submarine Deep Escape for NAVEA, and Radar Seeker Model for Hypersonic Weapon Full Life Cycle Support for SSP.

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Can I Use TABA Funds for Navy SBIR?

Earlier in this article, we stated that Phase III of SBIR—involving commercialization—does not include federal funds. However, one of the ways small businesses can receive discretionary funding meant for commercialization is through the Technical and Business Assistance (TABA) program. TABA is a backchannel that enables federal agencies to lend a financial hand to small businesses by funding vendors to support commercialization efforts. 

For information regarding SBIR TABA, contact the Navy’s SBIR Program Management Office.

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Accounting Requirements of the Navy SBIR Program

All applications submitted to the Navy SBIR program and its SYSCOM components must include an impeccable accounting system, complete with cost data, procedures for pricing prototyping requirements, and time record keeping. Applications submitted without these tenets of an acceptable SBIR accounting system will likely fall short, as the process is highly competitive. 

Some of the specific accounting requirements for SBIR include:

  • Proper segregation of direct costs from indirect costs
  • A robust timekeeping system
  • Exclusion of unallowable costs
  • Identification of cost by contract line item
  • Accumulation of charges under general ledger control

Team 80 tasks its crew of experts to handle all of your SBIR accounting concerns, as they are well-versed in the many details and nuances of the SBIR process.Our accounting tools and systems are an invaluable resource—helping you and your team focus on developing an  innovative idea that floats to the surface in the sea of Navy SBIR applications.

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Ben Smith

Director of Governmental Accounting

Ben has worked in and around small business for the majority of his career. Ben didn’t start out as an accountant, but was actually a chef. In 2009 he opened his own catering business. The accounting duties for the catering company fell on Ben’s shoulders, and that was when he realized accounting was a much better fit for him! Ben is passionate about helping small business owners make their companies successful, and brings a highly varied set of experiences to the table to help in this pursuit. When he’s not crunching numbers he can be found hanging out with his wife Maaike and their Miniature Pinscher Milo, or pursuing his other passions which include skiing, windsurfing, Brazilian Jiu Jitsu, playing guitar and riding dirt bikes.

Been with Team 80: Since Sept 2018

Colorado State University-Global Campus
Degree Name: Bachelor of Science (BS)
Field Of Study: Accounting
Graduated: 2016

Colorado State University
Degree Name: BA
Field Of Study: English
Graduated: 1995

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The Top 20 Questions People Ask About SBIR Phase II

SBIR Phase II focuses on the development, demonstration, and delivery of your small business’ proposed innovation.

Phase II of the federal government’s Small Business Innovation Research (SBIR) Program continues the research and development (R&D) initiated in SBIR Phase I. Funding received in Phase II is based on the scientific, technical, and commercial potential of the proposed project. All SBIR grants are federally funded.

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The journey through the three phases of the government’s Small Business Innovation Research (SBIR) program is long and arduous, no matter which federal agency you’re courting for funds.

But when all your hard work pays off, and you receive your funding at the end of a phase, there’s nothing sweeter!

However, there’s no time to rest on your laurels. As soon as you make it through Phase I, it’s time to put your team into high gear and get to work on Phase II.

The second of three phases in your SBIR effort, Phase II sees the continuation of the research and development (R&D) you started in the first phase. It’s crucial that you press on with your efforts—don’t fall behind now when you’re so close to the finish line!

To help make this process as fruitful as possible, we’ve gathered the top 20 questions people ask about SBIR Phase II.

Table of Contents

  1. What Is SBIR Phase II?

Let’s start at the very foundation of SBIR Phase II, the basic definition.

In the second phase, your team takes the R&D that was initiated in phase I to the next level.

Phase II is the stage that truly gives life to your business, and more importantly, your technology. Phase II awards are given based on the results of the research and tests conducted in Phase I and are intended to fund the creation of an actual, workable prototype.

In the simplest terms, Phase II sees your innovative idea become an actual product.

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  1. How Much Funding is Awarded in SBIR Phase II?

The funds you receive in your Phase II award are based mainly on the results you achieved in Phase I and depend on which federal agency you’re working with.

It’s entirely possible that you could receive more than $1 million in a Phase II award, though the average is roughly around $920,000.

For example, the Department of Defense’s Navy awards funding that typically ranges from $500,000 to $1,700,000.

  1. How Long is Phase II of SBIR?

The SBIR Phase II award period typically lasts up to 24 months.

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  1. What are the Eligibility Requirements for SBIR Phase II?

First and foremost, only small businesses that have received an SBIR Phase I award are eligible for SBIR Phase II awards.

And while each federal agency might have different technical requirements for Phase II, the general requirements for eligibility mirror those of Phase I and are as follows:

  • The small business must operate in the U.S., outside of a small number of subcontractors or consultants.
  • The company must have fewer than 500 employees.
  • The company must be majority-owned by U.S. citizens.
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  1. How Does the Small Business Administration Define a “Small Business Concern” for the SBIR program?

As stated above, only small businesses can strive for an SBIR Phase II award. But what is a “small business concern?” The Small Business Administration (SBA) defines it as such:

  • Organized for-profit

  • Located in the U.S., operating primarily within the U.S., or makes a significant contribution to the U.S. economy through taxes or makes use of American products, materials, or labor.

  • Legally considered an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust, or cooperative. If it is a joint venture, there can be no more than 49 percent participation by foreign business entities.

  • At least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the U.S.

  • Has no more than 500 employees, including affiliates

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  1. What Federal Agencies Participate in SBIR Phase II?

The same 11 agencies that award funds in the first phase also participate in SBIR Phase II.

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For contact information for each agency, check out our blog about SBIR Phase I.


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  1. Can a Small Business receive an SBIR Phase II Award from an Agency Other Than The One That Issued The Phase I Award?

Yes! Any small business that receives a Phase I award from one federal agency may receive a Phase II award from another agency.

This happens through a written determination that the topics of the awards are the same, and both agencies report the awards to the SBA.

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  1. Does SBIR Phase II Require a Commercialization Plan?

Yes! The SBIR Phase II award process requires a consideration of the proposal’s commercial potential. 

This includes the possibility to transition the technology to private sector applications, government applications, or government contractor applications.

Commercial potential in SBIR II may be demonstrated through:

  • The small business’ record of successfully commercializing other research.
  • Phase II funding commitments from the private sector or other non-SBIR funding sources.
  • General indicators of the commercial potential of the innovation.

  1. Can I Skip SBIR Phase I and Go Directly to Phase II?

No. The results of your SBIR Phase I work determine whether or not there will be a Phase II to continue your efforts. Only Phase I awardees are eligible for a Phase II award.

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  1. What is a “Direct-to-Phase II” SBIR Award?

Though you cannot “skip” Phase I and go directly to Phase II, if you already have a working prototype, there is a pathway known as “Direct-to-Phase II.”

This pathway is for small businesses that have already performed Phase I research through other funding sources. However, this is not available for the STTR program.

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  1. What is The “Fast-Track” Mechanism in SBIR Phase II?

Presently available in solicitations at various participating government agencies, the Fast-Track mechanism expedites the decision and award process for SBIR Phase II funding.

This is mainly for scientifically meritorious proposals with a high potential for commercialization. Fast-Track incorporates a submission and review process in which both Phase I and Phase II proposals are submitted and reviewed together.

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  1. What is the Difference Between Fast-Track and Direct-to-Phase II?

The primary difference between Fast-Track and Direct-to-Phase II applications is the timing of the Phase I project work. 

Phase I work is the first component of the project period in a Fast-Track. Direct-to-Phase II bypasses this step.

Instead, Direct-to-Phase II applicants must have performed the equivalent of Phase I research before applying.

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  1. What is SBIR Phase IIB?

When you renew your Phase II application for another round of funding, it’s known as SBIR Phase IIB. 

Offered at some federal agencies such as the Department of Health & Human Services or the Department of Defense, Phase IIB is mainly for R&D proposals that need a long time and more significant funds to get from theory to prototype.

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  1. What is the Difference between STTR and SBIR Phase II?

The significant difference between the SBIR and STTR Phase II is that the STTR requires the small business to forge a partnership with a nonprofit research institution to collaborate on R&D in Phase II.

In both SBIR and STTR, the award goes to the small business, which is the primary contractor or awardee, while the nonprofit research institution takes on the role of a subcontractor.

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  1. Can I switch from the SBIR or the STTR Programs after Receiving Phase I Funding?

Yes! SBIR and STTR applicants can switch programs when they arrive at Phase II or Phase IIB to any active and open SBIR or STTR solicitation.

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  1. How Do You Apply for SBIR Phase II?

Small businesses can submit an SBIR Phase II proposal anytime between six months and two years after the start date of their Phase I award.

If you don’t know the start date of your Phase I award, it can be found on your Phase I award letter.

Your team’s principal investigator must remain in contact with the appropriate government agency to stay up-to-date, as well as to inform the agency of any potential roadblocks.

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  1. Can I Change the Title of my Proposal Between SBIR Phase I and Phase?

Yes! You can submit an SBIR Phase II proposal with a different title than Phase I. Just be sure to include the Phase I award number on all documents you submit for review.

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  1. Who Decides SBIR Phase II Proposal Submission Dates?

Awardees must establish proposal submission dates for Phase II. However, federal agencies may negotiate mutually acceptable Phase II proposal submission dates with each awardee.

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  1. What is the SBIR’s Federal And State Technology (FAST) Partnership Program?

The FAST Partnership Program funds organizations with the expressed purpose of increasing the number of SBIR and STTR awards from women, socially/economically disadvantaged individuals, and small businesses in underrepresented areas (typically, rural states). 

This is accomplished through outreach, technical and business assistance, and financial support.  

Go to the FAST Partnership Program web portal to learn more about funding and check out a state-by-state listing of current FAST awardees.

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  1. What are the SBIR Phase II Accounting Requirements?

Once a small business is awarded an SBIR Phase II contract or grant, the federal government has much higher expectations regarding tracking time, costs, and the overall accounting system. 

Simply put: There’s a lot of money on the line during Phase II, so the government will scrutinize every dollar and cent. What’s more, many SBIR/STTR Phase II awards are cost-plus-fixed-fee (CPFF) instead of a firm-fixed-price (FFP)—this designation presents a greater risk to the federal government.

Along every step of the way in SBIR Phase II, the government must be assured that the small business possesses an accounting system that can calculate indirect rates, separate direct from indirect costs, and isolate unallowable costs from allowable ones. 

And finally, your accounting system must be able to report how much has been billed on a contract and how much is still yet to be billed.

For a small business already stretched thin working on R&D for their innovative idea and starting to think about commercial applications, keeping the accounting side straight and clear can be a formidable task. 

Team 80 steps in as your partner in this accounting process, taking on the workload while staying in constant contact with your team from the start of your journey, all the way to the realization of your goal.

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If you’ve been awarded an SBIR Phase II Grant learn more about Team 80’s SBIR and STTR Accounting Services. 

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Sarah Sinicki

Partner & Director of Business Development at Team 80 LLC

Sarah is a Colorado native and loves everything about our beautiful state. In her free time you can find her spending time with her husband, two kids and her Yorkie named Marley. She also enjoys paddle-boarding, riding her cruiser bike, and just hanging out with friends and family. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal. As one of the Partners of Team 80, she certainly does have a passion for helping small businesses. She is able to apply her 20 years of experience to tailor an accounting solution for a business owner no matter what industry they might be in.

Been with Team 80: May 2008

Metropolitan State University of Denver
Degree Name: BS
Field Of Study Accounting
Graduated: 1998

Female & Male Asian American Business Owners sitting at table working on accounting using laptop and calculator

How Do I Clean Up My Accounting Records?

We get it. Accounting and bookkeeping are complicated.

Small business owners come to us all the time with questions like:

Women Owner of a flower business sitting at a table with a laptop, invoices and calculator doing her accounting records“How do I clean up old QuickBooks transactions,” “How do small businesses maintain their accounts?”, “Why is bookkeeping so hard?”

Your time running a business isn’t best spent reconciling transactions or cleaning up balance sheets. You simply don’t have the time to focus your energy on accounting, and maybe because of it, your financial records have gotten a little chaotic and messy.

It happens. But should it KEEP happening? No. Unchecked messes can devastate a small business. Having impeccably clean books is everything.

For your business to survive and thrive, you MUST have clean account records and books. You should be able to access your business finances at the drop of a hat if need be.

Let’s take a look at some things you can do to clean up your chaotic bookkeeping.

Table of contents:


Are your personal and business accounts separate?


As mentioned in our previous blog, entrepreneurs shouldn’t blend their personal and business accounts.Female Business Owner sitting at table working on accounting using phone in hand and laptop on table

Every small business needs to have its own business account, period. Several banks offer low to no-fee, interest-earning accounts for small businesses, and almost all of these accounts have ATM accessibility and online/mobile banking tools.

“It will save you lots of headaches down the road if you keep your business and personal banking transactions in separate accounts. You should run all business transactions through a business bank account or credit card. Personal expenses should be kept separate.” — Sarah Sinicki, Director of Business Development, Team 80 Small Business Accounting and Bookkeeping


My software receives transactions from my bank feed; why are none of them reconciled?

You understand the importance of reconciliations. You know that when you don’t conduct regular bank reconciliations, you lose insight into how well your business is doing. You integrated your bank feed with your accounting software for this reason.

female business owner sitting at table with laptop, papers and calculator working on accountingBut what if your accounting system shows you’ve reconciled nothing? There’s a good chance you thought integrating your bank feed was all you had to do.

Unfortunately, that isn’t the case.

Importing transactions is only part of the process. No accounting software will do all the work for you. You still need to review, enter, and code each transaction into the correct general ledger account every time.

Compare transactions in your software with the same ones on your bank statements. Once you have reviewed everything, the difference between the ending balance in your accounting system and your bank statement should be $0.00.


How do I clean up old transactions in my accounting software?

Keeping your financial records clean is crucial for financial health visibility.

Purging old transactions by either deleting or voiding them out is a perfect way to unclutter and refine your reporting accuracy.

Doing so will ensure you have a true sense of where you stand when it comes to your finances.Senior Male Business Owner sitting at table working on accoutning

“If you are going to clean these transactions yourself, you need to make sure all transactions from your bank and credit cards are entered and coded in your accounting system correctly. The bank balance on your statement should tie to your books each month. If not, you will need to investigate and find out where the discrepancy is coming from.” — Sarah Sinicki


Is the balance sheet you manually keep track of missing entries?

You’re busy running your business. And you might forget to track an expense.

Errors happen – it’s human nature. But, when transactions fall through the cracks they can be hard to detect later. If you use an accounting spreadsheet, the best thing you could do is set it up as a check register, where you can enter each transaction and ensure it mirrors the bank statement like you would with your personal bank account.

As a quick fix, this method will suffice. In the long run, it won’t serve you well. For your business to grow, you need to invest in an accounting package and maybe consider hiring accounting professionals for help.

There is a lot at stake. If you make a mistake, you could be setting yourself up for incorrect tax filings or penalties.

If you don’t have the time, and you know you’re out of your element, it’s time to outsource your accounting to a trusted team.

We would love to bear your accounting burden! Get in touch with us today!

Sarah Sinicki Photo

Sarah Sinicki

Partner at Team 80 LLC


Sarah Sinicki is a Partner and Director of Business Development with Team 80 in Colorado where she is able to apply her 20 years of experience to tailor an accounting solution for a business owner no matter what industry they might be in.