Gail & Jim Greenwood, Greenwood Consulting Group, Inc.

Copyright © 2002 by Greenwood Consulting Group, Inc.

With DOD’s Phase I proposals for its FY2002.2 solicitation due shortly, we thought it would be a good time to remind applicants about the Option Programs available to Phase I applicants at the Army and Navy.

These two DOD components have created option programs to transition Phase I projects more smoothly into Phase II efforts. Phase I options are typically only funded after the decision has been made to award the Phase II project. Then projects that Army and Navy have selected for Phase II funding will be allowed to pursue the Option tasks that the company specified in its Phase I proposal.

Army does not fund six month, $100k Phase I SBIR projects. Applicants for Army Phase I funding must specify a basic project that costs no more than $70,000 and takes no more than six months to perform. However, a series of optional tasks can be specified that would cost up to an additional $50,000 and take up to another four months to perform after the Phase I project is completed and if Army intends to fund the Phase II project.

Navy also has a $70,000 cap on Phase I feasibility studies for a term of six months. Applicants can receive up to an additional $30,000 for up to three additional months worth of effort if they propose optional tasks to be performed after Navy decides to fund their Phase II work.

Several important considerations relative to these option programs:

Do not propose a $100,000 base project to either Army or Navy. This seems to be an obvious conclusion from the description of the option programs given above, but we continue to see Phase I proposals to these components that fail to follow the $70k maximum on Phase I base projects.

Phase I of an SBIR project with any agency usually is a feasibility study. With either Army or Navy, feasibility must be proven within the base period of six months and $70,000. Never propose to continue to pursue or prove feasibility during the option period.

If you are proposing optional tasks, you must specify what they are, and the budget justification for them, as part of your Phase I proposal to Army and Navy. This is different than the Fast Track program in which Phase I winners submit applications after they have already started the Phase I work.

The option tasks should be logical activities to move the project from a Phase I feasibility study and into a Phase II R&D effort. They should be real and significant tasks, not superfluous activities to justify sucking up some of the military’s money

The option tasks and budget should be clearly distinguished in the proposal from the base feasibility project tasks and budget.

The option tasks and budget must be included in the 25 page Phase I proposal limit. As the Army suggests, try to put the option budget on the same cost proposal sheet as the base Phase I project by just creating two columns of cost data, one for the base and one for the option.

We strongly recommend that every applicant for Phase I funding from Army and Navy request the option. This is the only way that you can get the full $850,000 for Phases I and II of a project with either of these components. It also shows that you are serious about addressing the military’s needs, and that you are anxious to move into the Phase II R&D effort--these are positive impressions that you want to make on the Phase I proposal reviewer.