Heidi Jacobus, Chairman and CEO for Cybernet Systems Corporation, appeared September 19, before the Defense Business Panel to provide testimonial on the merits and deficiencies in the current Small Business Innovative Research (SBIR) program as applied to the Department of Defense. This special panel was established by the chairman of the House Armed Services Committee.

Jacobus, who has 20 years of experience since starting a high-technology federal contracting business from scratch, shared that without the highly-competitive, merit-based SBIR program, she is confident that her company would not have been able to exist.

Jacobus believes the current SBIR Reauthorization, in its 12th continuing resolution (CR), has been fraught with fractiousness over many issues, including who is eligible to compete for an SBIR, and who qualifies as a small-business owner and operator. “I believe the proposed changes are drastic departures from a 30-year proven program,” said Jacobus, “and will not be for the good of the Soldier, Sailor, Airman or Marine.”

Cybernet has received many federal contracts and although they have worked for many agencies, their work is mostly for the Department of Defense, all selected after rigorous nationwide competitions. In addition to the federal contracts, Cybernet Systems Corporation has been granted more than 35 U.S. Patents for their innovations.

In her testimony, Jacobus argues the viewpoint that the allocation of SBIR funds to 1-500 person sized small businesses should not exist, that ‘if the company is good enough it can compete for R & D contracts.’ But Jacobus told the panel she could give many examples from her business’ attempts to win contracts in David and Goliath settings.

“Without SBIR, nearly one half of the nation’s technically competitive technical staff will not be allowed to bring their knowhow directly to the DoD,” she said. “They will only be allowed to compete with service firms like travel agencies, janitorial service and temp agencies for what is still an insignificant dollar amount small business contracting through the large Prime contractors.”

She continued on to explain how large companies that desire the forward looking work can apply massive internal research and development funds (IR&D or “IRAD”), which are for the most part also re-purposed federal funds. “Even in the case of a small “starter” contract of several hundred thousand dollars, a larger prime can apply “loss-leader” funds and “special knowledge pertaining to the bid” to its bid and proposal (B&P) funded effort,” said Jacobus. “The result is the smaller businesses won’t win, even when they are lower in cost and may have a technical edge.”

When Jacobus founded Cybernet, the largest of defense contactors were far smaller than they are now, and communication and potential collaboration was easier. “We have built our business on niche, innovative, advanced military technologies and the occasional commercial spin-out license,” she said. “Our group has many advanced degrees, with Ph.D.s and many Masters Degrees in a variety of topics – computer science, electrical engineering, mathematics, mechanical engineering, nuclear engineering, physics and so on.”

But there is a place for both small and large businesses in this ecosystem and each part works with the other, Jacobus noted. “Small business is an unrecognized, but vital part of the defense supply base and SBIR is all that keeps it available to the DoD,” she said. “Keep SBIR, keep SBIR strong. We are, as they say, shovel ready.”

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