Tips on Navigating DOD’s DSIP

We at the CTC have recognized the great opportunities for our Wisconsin companies with the Department of Defense SBIR program.  As you might know, the DoD awards contracts, not grants through their SBIR process which means they are looking to be your customers; and they will fund your research so that they can purchase your eventual product.  An exciting part of the DoD funding is in the Air Force’s AFWERX open topics.  We have written on DoD and AFWERX before and will do more, but I wanted to focus on the Defense SBIR/STTR Innovation Portal (DSIP) and particularly the budgets for the AFWERX open topics.  DSIP is the portal through which you upload your documents and it will require registration.  The DoD asks that you create and upload specific volumes, ranging from the simple cover page (Volume I) through the technical description (Volume II) and the budget cost (Volume III).  There are additional ‘volumes’ to include.  As an aside, the last listed section, Volume VI, is a training module where you will be asked to read through a presentation related to fraud and waste and ‘certify’ that you have read and understood the material.  We recommend that you complete this certification as soon as you can since it is a simple process and will take between 30 minutes and an hour to complete.

I also wanted to address the budgets for the DoD and AFWERX topics that you will complete in the DSIP. Note that the allowed budgets for the BAA’s and the AFWERX solicitations will be stated in the guidelines, but they can be quite varied in amounts.  Each program tends to have a target budget they will fund.  AFWERX SBIR open topics are commonly limited to $50,000.  A notable difference between DoD and other agencies is with the allowed fee or profit your company can claim. With the DoD it is suggested to be between 6% and 11%.  Other agencies will strongly suggest or limit your profit claim to 7%.  So, should you claim the profit of 11% for a DoD proposal?  We advise against this as during review the department may question why you wish such an unusually high budget and they likely will not allow it. If they disallow 11%, they will not feed the money back into your direct costs, they will just remove it from your overall budget and your award will be adjusted lower accordingly.  We recommend keeping the profit at 7% or perhaps 8% for this reason.  Also, how the profit is calculated is different for the DoD.  Most other agencies ask that you determine your direct and indirect costs and calculate your 7% fee as fraction of that total.  DoD asks that you take the budget cap ($50,000 in the case of AFWERX) and calculate your fee percent from that.  The result is you will get a slightly higher dollar amount for a fee than using the method used by other agencies.

The cost volume using the DSIP site is also calculated internally on the portal.  You do not assemble a document of your budget nor do you upload a .pdf file of the budget; instead, you type in the dollar amounts for the various sections directly into the portal.  There will be sections for labor costs, supplies and other direct costs.  Additionally, you will find indirect costs split up between ‘overhead’ and ‘G&A’.  You may wish to calculate these costs as closely as you can prior to submission to smooth the process of the budget cost volume, and it might be a good idea to consult your accountant to determine the best placement of a cost into overhead or G&A.

I also wanted to note some unusual issues found in the process of preparing and uploading a proposal.  First, we have seen the solicitations, particularly with AFWERX, change, often without warning and very close to the deadline.  These changes have been significant.  We note that a recent STTR solicitation originally budgeted for $150,000 was changed to $50,000 just three weeks before the deadline.  We also have seen the deadlines moved back to later dates, just before the due date.  These announcements would not be generally known unless you check the solicitation guidelines often. Historically then, we have seen these guideline documents being regularly updated and changed, even after the official release date.  Of course, we recommend you submit your proposal early, well before the deadline as DISP has suffered from instability and problems, especially when many people are trying to access the site at the same time.

For more guidance on the DOD SBIR program visit our page devoted to DOD education.

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