How Federal Contracts Benefit Small Businesses & Communities

How does the annual ~$2.4 billion in SBIR/STTR federal contracts benefit small businesses and the communities they’re located in? Find out here.

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Fast Facts:

• Between FY 1995 – FY 2012, companies awarded up to Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) Phase II contracts made $121 billion in sales.
• During that time, over half of the 17,000 contracts awarded resulted in commercialization.
• Those businesses had a $347 billion impact on the U.S. economy in that same period.
• Small Business Innovation Research (SBIR)/Small Business Technology Transfer (STTR) contracts created over 1.5 million jobs in that period, each averaging over $70,000 per yearly salary.
• The federal government allocates 5% of its award budget to specifically women/minority-owned or otherwise disadvantaged businesses. In FY 2020, almost 10% of awards went to these businesses, doubling initial goals.
• From 2010 to 2020, the federal government awarded shy of $30 billion in SBIR/STTR grants. Conversely, West Virginia received about $40 million, a little over 0.1%. Vertx Partners provides the opportunity for West Virginia to earn more and feel the positive effects of these grants.

America’s Seed Fund

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants are often touted as “America’s seed fund.” It’s crucial to properly examine that claim and discover how these grants impact the businesses they’re being awarded to and the communities in which those businesses are located. Luckily, researchers have conducted extensive studies following the programs’ conceptions.

As you can see above, a quick overview of several stats amassed by the federal government confirms that the SBIR/STTR programs live up to their reputation. In this article, we’ll briefly cover the positive impacts SBIR/STTR grants have on businesses driven enough to pursue them.

The SBIR/STTR programs help drive the U.S. economy. Every year, as federal departments release regular solicitations, their selected topics help spur investment and innovation. In poll after poll, we find that many businesses report receiving SBIR/STTR funding as transformative to their business. For some, this award program is so essential that their enterprise would not exist without it.

With West Virginia receiving such a comparatively small portion of the pie, it can be hard for business owners and community members in the state to properly appreciate the impact of the SBIR/STTR programs and others like it. Hopefully, that’s where this article sheds light on the programs’ successes. It also illustrates the benefits of a company like Vertx, which touts these programs’ transformative potential.

The Numbers in Context

In a study commissioned by the Department of Defense, the researchers asked one key question: “What resulted from the DoD SBIR/STTR investment of approximately $14.4 billion in Phase II R&D projects initiated by over 4,400 small businesses?” The breakthrough study incorporated almost 17,000 contracts awarded from FY 1995 to FY 2012 to form its conclusions. It found that the U.S. Department of Defense saw a 22:1 return on its investment.

When the federal government partners with small private businesses and research institutions, the long-term effect of these collaborations is a net positive.

Additionally, defense funding contributes not just to weapons development and testing as is so commonly believed, but towards building thriving communities and creating jobs for workers within those communities.

To help illustrate that point, consider that over half of those 17,000 contracts resulted in commercialization. The study estimates that even more will likely be successful in time, just that commercialization is a process that can take up to a decade, and newer contracts haven’t had a chance to go public yet.

With a previously mentioned cumulative sale total of $121 billion, the study examining FY 1995 – FY 2012 found that each contract (valued at around $800,000) generated over $7 million in revenue for the awardee. That means the federal government made a tremendous turnaround within a decade of investment. This further demonstrates the mutual benefit these programs offer on a micro scale.

Real-World Success Stories

From infrared brain scanners, foldable solar panels, and microchips your smartphone uses, SBIR/STTR grants are responsible for funding real success stories. These technologies have the power not just to benefit these parties on a monetary level but in everything from daily living to national defense.

The state of West Virginia and surrounding Appalachian communities stand to benefit from and contribute to this innovative process.

It’s becoming increasingly apparent that small businesses perform a substantial chunk of innovative R&D. These programs are designed to facilitate that progress without impeding small businesses’ autonomy. If there’s one challenge we consistently hear about at Vertx Partners, it’s that lawmakers didn’t write these programs with the ease-of-use ideology one sees in the private sector. Making the leap from the private to the public world can be difficult. Protocols and terminology change, but that’s why we formed Vertx Partners: to give interested businesses a leg up in applying for these grants.

Like the prospects you see here? Contact Vertx Partners today. An experienced team member will reach out and help determine a course of action best suited for your business. It’s completely free and only takes about 5 minutes.