52 



SBIR Improvements 



The SBIR program is a sound and well-managed prognum. I want to give you my input on how the 

 program can be improved from the viewpomt of reducing the paperwork burden fiicing a new 

 start-up small business. 



1) Cost ProtMsals - Most small start-up businesses cannot afford the time or expense required to 

 prepare proposals m the elaborate detail that is required when an SBIR proposal exceeds $500,000. 

 Yet, if we want to be responsive, (and receive an award), we are required to comply with these rules 

 at the expense of otiicr more critical and productive endeavors such as maiketmg, recruiting, 

 research, planning, etc There are over 30 data elements reqiured in a Phase 11 cost proposal and 

 several corresponding questions to be answered. While this type of information may be necessary 

 to protect the Government's interest when dealing with multi-million dollar contracts, it is 

 counterproductive to the small business environment where the emphasis must be focused on 

 developing new technology and new businesses From our previous experience, we have found that 

 there is more than adequate experience in the Government's proctnement ofQces to determine 

 whether or not the proposed effort and pnce arc reasonable 



2) Accountme Svstems - Accounting system requirements for Phase 11 contracts arc another area 

 where too much emphasis is misplaced to the detriment of the small start-up business 'What might 

 be considered as a moderate accounting system for a going concern, m most instances, is 

 considered to be cumbersome by start-up firms. Requinng elaborate accounting segregation for 

 unallowable costs, types of costs, etc., docs not facilitate the conduct of small business innovative 

 -esearch Nor does jit recognize that in many cases, the leaders of the start-up business are working 



^ losv or no compensation, do not rent or buy elaborate facilities, offer modest benefits, etc 



essentially performmg each contract on a cost share basis. For these Phase 11 contracts, the 

 Government can ensure it is receiving fair and reasonable value, by the relying on technical reports 

 and evaluation that arc currently part of the process. 



5; Type of Contract - Usually, one of the reasons for an elaborate accounting system is the use of a 

 cost plus fixed fee (CPFF) type contract. This can be easily remedied by the use of firm fixed price 

 (FEP) contracts that arr'a'dmimstratively much easier to accommodate. 



4) Terms and Conditions - One of our recently awarded Phase I contracts contained over 90 

 contract provisions. This is overkill and unwarranted Again, placing an imnecessary burden on the 

 entrepreneur that is inconsistent with the amoimt of dollars mvolved. 



Closing Remarks 



Again, Mr. Chairman and members of the Subcommittee, I appreciate having this opportunity to 

 share our experience with the SBIR program with you today. Keep up your excellent work in 

 helpmg to make the SBIR program even better! I will be pleased to answer any questions that you 

 may have 



GREY FOX 



Tcefaiiuloeiei, luc 



