How sherpas guide startups through government contracting terrain

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U.S. defense and intelligence agencies are eager to tap into commercial innovation, and many startup founders are eager to win government funding. The problem is the two groups often have trouble communicating.

“A lot of these founders are technologists, not government procurement experts,” said Matt Kozlov, Los Angeles managing director for seed accelerator Techstars. “Even with accelerator programs and Department of Defense initiatives to make it easier, navigating the government market is still really hard.”

Founders without military or government contracting backgrounds face an indecipherable array of potential programs and funding sources. Imagine coming from academia or the software sector and trying to make sense of conversations that revolve around AFWERX, CFIUS, DIU, In-Q-Tel, SBIR and STRATFI.

RENT-A-SHERPA

What’s a startup to do? Many turn to so-called sherpas — retired military officers who help them navigate the unfamiliar terrain.

“A commercial startup company with great new technology to sell to DoD probably does still need to hire someone or find a consultant to do customer discovery, sales and make introductions,” said Warren Katz, chairman of the Alliance for Commercial Technology in Government, a nonprofit that helps commercial firms do business with government agencies on commercial terms.

Consultants tend to fall into three categories. Some, having worked in the Pentagon or on Capitol Hill, specialize in introductions to members of Congress who can see to it that specific programs or technologies are included in the National Defense Authorization Act.

A second group consists primarily of retired military officers who introduce founders to people in government agencies who can sign off on Small Business Innovation Research (SBIR) contracts or identify government applications for commercial technology.

Former military contracting officers, who make up the third group, share their knowledge of the military’s complex process of writing requirements, acquiring technology through five-year funding cycles and creating programs of record, funded and approved campaigns to deploy new goods or services.

TECH SCOUTS

It is not supposed to be this difficult. Government agencies have been working for years to identify commercial technology with military applications and make it easier for startups to sell dual-use products and services. However, they still provide far less support than large technology companies seeking cutting-edge hardware or software.

“If I have a software company with a hot new artificial intelligence or cybersecurity technology and I go to a Microsoft tech scout, that Microsoft tech scout doesn’t tell me to find my own way around Microsoft,” said Katz, who previously served as managing director of the Techstars Air Force Accelerator. “They don’t say, ‘Go fumble around and bumble around and maybe you’ll stumble into somebody who might want your stuff.’ That tech scout’s job is to match my hot technology with internal customers inside that giant monolithic organization.”

The Defense Innovation Unit (DIU) plays a similar role within the Defense Department. DIU invites companies to submit papers of no more than five pages explaining how the firm’s technology could help address challenges related to space, artificial intelligence, autonomy and other topics. If DIU sees merit in a proposal, the agency can issue a prototype award in as little as two months and follow it up with a sole-source contract.

A CONUNDRUM

The U.S. Air Force and U.S. Space Force established AFWERX and SpaceWERX in 2017 and 2020, respectively, to speed up adoption of commercial technology for government missions.

AFWERX, in particular, is prolific. The innovation program managed by the Air Force Research Laboratory hands out more than 1,000 Small Business Innovation Research contracts annually. The vast majority are Phase One SBIR awards of $50,000 or less.

To win follow-on contracts, startups need a military customer, called an end-user, to sign a memorandum of understanding explaining the need for the technology. Entrepreneurs without military backgrounds often turn to consultants to introduce them to potential end-users.

“It’s the conundrum of the unknown unknown,” said Andrew Bossert, a former Space and Missile Systems center contracting officer and managing partner of the Space Advisory Group, a consulting firm based in Albuquerque, New Mexico. “The end-user doesn’t know that the technology exists, and the technologist doesn’t know that the end-user exists.”

REALISTIC EXPECTATIONS

Consultants serve as guides, explaining potential uses for a startup’s technology and helping entrepreneurs find military laboratories, combatant commands or program offices that may be interested.

“It’s not a realistic expectation for a little startup company to have that person on staff,” Katz said.

What’s more, potential applications for commercial technology may be classified, something an entrepreneur is unlikely to discover without partners, advisors or consultants who possess security clearances.

“Based on my experience and what I was briefed into, I can know that a company’s thruster will enable XYZ mission,” said Severin Blenkush, a retired U.S. Air Force colonel and the Space Advisory Group’s other managing partner. “I can’t tell them what it’s going to be used for. But I can tell them there is a need for it and say, ‘Let’s go talk to this individual over here,’” said Blenkush, a former U.S. Air Force and National Reconnaissance Office contracting officer.

This article originally appeared in the March 2022 issue of SpaceNews magazine.