1. Office of Small Business Programs for the Department of Defense Victor Ciardello Director, Small Business Technology and Industrial Base The Society of American Military Engineers Washington DC Post 2007 Small Business Conference October 18, 2007

2. DoD Office of Small Business Programs DoD FY2006 Small Business Performance The Need for Small Business –Mentor-Protégé Program –Small Business Innovation Research Program/ Small Business Technology Transfer Program

3. Total Eligible Dollars Small Business Dollars Small Business Percentage $235$51.321.8% SDB Dollars SDB %SDVOSB Dollars SDVOSB % WOSB Dollars WOSB % HUBZone Dollars HUBZone % $14.76.3%$1.60.7%$6.902.9%$4.72.0% Department of Defense FY2006 Prime Contract Awards $ =Billion *Source SBA Goaling Report

4. Department of Defense FY2006 Subcontract Awards Total Eligible Dollars Small Business Dollars Small Business Percentage $106.6$39.637.20% SDB Dollar s SDB %SDVOSB Dollars SDVOSB % WOSB Dollars WOSB % HUBZone Dollars HUBZone % $5.14.80%$0.70.70%$5.805.50%$1.81.70% $ =Billion *Source SBA Goaling Report

5. DoD Office of Small Business Programs DoD FY2006 Small Business Performance The Need for Small Business –Mentor-Protégé Program –Small Business Innovation Research Program/ Small Business Technology Transfer Program

6. The Need for Small Business Imperatives demand technology… Challenges make it harder to get Need for speed & flexibility to address emerging and evolving threats Consolidating industrial base Budget pressures Less R&D investment in industry Increasing emphasis on/need for joint capability acquisition The Central Challenge: Where will innovation come from and how will we get it?

7. Over Two Decades of Consolidation: What were over 100 “name plate” primes in the1980s are now five firms… 199019911993 19921995199619971998199420042003200220012000199920052006 Sources: DM&A, Washington Technology, Company reports, and CSIS Analysis.Federal ServicesDefense HardwareCommercial IT Raytheon REMCO SA Hughes Electronics BET PLC's Rediffusion Simulation General Dynamics Missile Division Magnavox STC PLC–Navigation Systems TRW-LSI Products Inc. Corporate Jets E-Systems HRB Systems Inc. Chrysler Techn. Airborne Texas Instr. El. Defense Raytheon Allied Signal, Inc. (Comm Systems) Aerospace Group (Australia) Boeing Australia Ltd. JPS Communications, Inc. Solipsys Honeywell International Corp. (Australia) Photon Research Associates, Inc. Boeing Boeing Co. Rockwell Litton Precision Gear McDonnell Douglas Hughes Electronics Satellite SVS, Inc. Autometric, Inc. Continental Graphics Corp. Jeppesen Sanderson, Inc. Hawker de Havilland Ltd. (Australia) Conquest, Inc. Frontier Systems, Inc. General Dynamics General Dynamics Bath Iron Works Lockheed Martin Defense Sys, Armament Sys Lucent Advanced Technology Systems Computing Devices International, Inc NASSCO Holdings, Inc. Gulfstream Aerospace GTE Government Systems Corp. Units Santa Barbara Primex Technologies Galaxy Aerospace Motorola Integrated Info Sys GM Defense SIGNAL Corp. Trident Data Systems MRJ Technology Solutions Pacific-Sierra Research Corp. DatumCom Corp. Veridian Corp. Digital System Resources, Inc. ERIM International, Inc. Spectrum Astro, Inc. Tripoint Global Communications, Inc. Engineering Technology, Inc. Lockheed Martin Martin Marietta Corp. Lockheed Space Systems Division (General Dynamics) GE Aerospace Loral Corp. IBM Federal Systems Unisys Corp Defense Systems Honeywell-Electro-Optics Fairchild Weston Systems Inc. Ford Aerospace Librascope LTV–Missile Business General Dynamics–Ft. Worth MEL COMSAT Corp. OAO Corp. Affiliated Computer Services, Inc. (ACS) The SYTEX Group, Inc. STASYS Ltd. (UK) Sippican Holdings, Inc. Chart supplied by the Center for Strategic & International Studies (CSIS)

8. = Army = Navy = Air Force = DoD Key: DoD Functional Capability Areas Comanche AAAV MIDS-LVT JTRS C-17 LPD 17 Land Warrior MEADS ABL PAC-3 SBL MTHEL THAAD AWACS (C4) Bradley Upgrade MH60- R/S AWACS sensors JSIMS MMA sensors C-130 BMDS LCS SDB CH-47F GCSS AESA MC2A (C4) GBS C-5 Stryker FMTV CV-22 NTW SM 2 E2C Reproduction Global Hawk MV-22 NAS Force Application EELV GPS F-22/35 sensors SBIRS High/Low JLENS ATIRCM / CMWS NPOESS Longbow radar Battlespace Awareness T-AOE(X) LHA MPF(F) JDAM FCS F-22 F-35 CSAR Excalibur AMRAAM F-18 Javelin DDG-51 Tomahawk AIM-9X Chem Demil JSTARS sensors ATIRCM Protection WIN-T CEC Adv EHF FCS (C4ISR) MMA (C4) MUOS Command & Control MP RTIP sensors MC2A sensors Focused Logistics All source intelligence Environmental Data Own Force Info Predictive Analysis Knowledge Management JBMC2 Communications & Computer Environment Land, Maritime, Air, Space Operation Joint Targeting Conventional, nuclear, computer network, electronic attack Psychological Special Ops SEAD Military Deception Personnel & Infrastructure Protection (OPSEC - missile defense, electronic protection) Computer Network Defense Counter and Non- Proliferation Consequence Management Deployment Distribution Sustain Medical Mobility Logistics C2

9. Warfighting Capabilities, Technologies, and Industrial Capabilities: The Increasing Need for Small Businesses Functional Capability # Warfighting Capabilities # Technologies Priority Critical Technologies and Components Assessed Battlespace Awareness 35727072 Command & Control18929358 Force Application78721261 Protection44027764 Focused Logistics27136458 Total2,0441,416313 Source: Booz Allen Hamilton and ODUSD(IP) For the industrial capabilities assessed, ~36% of the companies with relevant products have less than 100 employees.

11. The Mentor-Protégé Pilot Program was established on November 5, 1990 (Public Law 101-510) in an effort to respond to concerns, raised by DoD prime contractors, that many SDBs did not possess the technical capabilities to perform DoD subcontract requirements, making it difficult for these prime contractors to achieve their SDB subcontracting goals.

12. National Defense Authorization 2005 Changes to Public Law 106-65, Subtitle D, Section 841 New agreements through Sep 30, 2010 Extend participation through Sep 30, 2013 Section 842 Protégé eligibility extended to: Service-Disabled Veterans (SDVOSB) Qualified HUBZone small businesses

13. Mentor-Protégé Program Eligibility A Qualifying Mentor must be: –Performing under at least one active approved subcontracting plan negotiated with the DoD or another Federal agency –be eligible for award of Federal contracts A Qualifying Protégé must be one of the following: –A Small Disadvantaged Business (SDB) concern certified by SBA, or –A qualified organization employing the severely disabled, or –A Woman-Owned Small Business (WOSB) –A Service-Disabled Veteran-Owned Small Business (SDVOSB) –A Qualified HUBZone Small Business Concern

14. MPP Funding FY1992 – FY2007 Millions

15. Type of MPP Agreements Direct Reimbursed MP Agreements Direct Reimbursement of cost of developmental assistance: –Identify Specific Contract Vehicle/Contracting Officer Endorsement –Minimum of 50% Technical Transfer –Required use of an HBCU/MI/SBDC/PTAC –Direct cost reimbursement of allowable costs outlined in Appendix I, including: Direct labor costs (for assistance by Mentor firm employees)Direct labor costs (for assistance by Mentor firm employees) Assistance provided by HBCUs/MIs/SBDCs/PTACsAssistance provided by HBCUs/MIs/SBDCs/PTACs Other costsOther costs –Detailed Cost Breakdown –Military Services/Other Defense Agencies may have additional requirements –Military Services/Other Defense Agencies Approval

16. Type of Agreements Credit MP Agreements Credit toward SDB subcontracting goals: –No Military Service or Other Defense Agency approval required –More focused on business infrastructure/business development –Costs incurred under Credit Agreement May be applied (in the following multiples) towards the SDB subcontracting goal under any Federal Agency Subcontracting plan: (FAR 19.703)May be applied (in the following multiples) towards the SDB subcontracting goal under any Federal Agency Subcontracting plan: (FAR 19.703) »4x for assistance provided by HBCUs/MIs/SBDCs/PTACs »3x for assistance by Mentor firm employees »2x other costs

17. Mentor-Protégé Program Types of Developmental Assistance Types of Developmental Assistance: –Technical Transfer, including CMMI, ISO9000 or Six Sigma Certifications –Business Infrastructure Development –Award of subcontracts under DoD contracts on a non-competitive basis –Progress payments (up to 100%) –Advance payments –Loans –Investments in the protégé firm that have a need in exchange for ownership interest (10% or less)

18. 153 Current Active Mentor-Protégé Agreements NUMBER OF MENTOR-PROTÉGÉ AGREEMENTS 94 Reimbursable Agreements 59 Credit Agreements

19. UT P-2 M-1 IL P-5 M-4 TX P-10 M-6 NM P-2 M-1 NV P-1 OK P-2 WA P-7 M-2 OR MT P-3 ID WY CO P-5 M-4 ND P-1 SD P-3 NE P-1 M-1 KS P-2 M-1 MO P-3 M-2 AR LA P-1 M-1 TN P-5, M-1 WI P-1 CA P-34 M-7 FL P-14 M-3 ME AK P-5 HI P-2 WV NC VA P-28, M-21 PA P-6 IN OH P-2 M-1 MD P-13, M-5 Has Participants No Participants P Protégé Participants M Mentor Participants RI M-1 CT P-3, M-5 NJ P-4, M-3 MA P-3, M-3 DC P-5, M-1 AZ P-4 M-2 GA P-2 M-1 SC P-2 M-1 AL P-14 M-8 Participation by State – FY07 Mentor and Protégé Participants NE P-2 M-1 IN M-2 KY NC P-4 IA MN P-1 MS AR WV P-2 NY P-1 M-1 MI P-2 M-1 VT NH

20. Mentor-Protégé Program Participation by Eligibility 1991-2006

21. Protégé Industry Sector FY 2007

22. Mentor-Protégé Robotics Initiative Active Robotics Protégés AnthroTronix Epsilon * Geodetics * Kuchera Defense RE2 Stratom Sullivan Mesa Robotics Referentia Lorimar Group, Inc. Potential Robotics Protégés Holman Industries Defense Technology Solutions, LLC Photon-X Shee Atika Technologies LLC Digital Artefacts

23. Service-Disabled Veteran-Owned & Veteran Owned Protégés 16 firms entered Program as SDVOSB Protégés: In addition there are: 7 additional SDVOSBs Protégés that entered the Program as an SDB 35 Veteran-Owned Protégés Alliance of Architects and Engineers Information Innovators, Inc.Stratom, Inc. Brigadier Construction Services, LLC Maintenance Inspection Services (MIS) Tompco, Inc. Chequamegon Bay Engineering, LLC Oak Grove TechnologiesVeterans Construction Inc. Damar Machine Company QTechnology International, Inc. Washington Square Associates, Inc. Defense Manufacturing & Supply (DMS) Regulus Corporation EnVetCo Sonju Industrial

24. Nunn Perry Protégé Awardees Revenue growth ($) ( Cumulative) Nunn-Perry Award Year 10 awardees 12 awardees 8 awardees

25. Nunn Perry Protégé Awardees Employee growth (#) ( Cumulative) Nunn-Perry Award Year 10 awardees 12 awardees 8 awardees

30. SBIR-STTR Program Eligibility Criteria SBIR –Organized for- profit U.S. business, located in the US –At least 51% U.S.- owned by individuals and independently operated –500 or fewer employees –Principal Investigator’s primary employment with small business during project STTR –Formal Cooperative R&D Effort (Minimum 40% by small business, 30% by U.S. research institution) –U.S. Non-profit Research Institution (College or University; other R&D center) –Intellectual Property Agreement - Allocation of Rights in IP and Rights to Carry out Follow-on R&D and Commercialization Broad purpose: Ensure small businesses receive share of federal R&D and leverage the unique innovative character of small business

31. DoD is about Half the Federal SBIR Program Largest of 11 Participating Federal Agencies SBIR FY06 Budget $1.13B STTR FY05 Budget $130M

32. SBIR/STTR Program Structure Phase I: Project Feasibility –Generally 6 months, not exceeding $100,000 Phase II: Project Development to Prototype –Generally 2 years, not exceeding $750,000 SBIR/STTR Funds: Phase III: Commercialization in Military and/or Private Sector –Sale of product or service –Additional R&D of technology –Manufacturing/production start- up –Marketing start-up/marketing –Training workforce to manufacture or sell new products SBIR/STTR Does Not Fund:

33. Key Technology Areas: Focus of SBIR Investments Source: SBIR & STTR solicitations, FY02-FY06 Number of Topics

34. DoD Office of Small Business Programs (703) 604-0157 www.acq.osd.mil/osbp DoD Mentor-Protégé Program www.acq.osd/sadbu/mentor_protege