How to Fund Your ATO Through SBIR and Achieve an Enterprise Deal with the Department of Defense

January 26, 2023

So, you’ve taken the first essential step to federal funding and on-ramped through the Small Business Innovation Research (SBIR) program. Now you have some R&D money, sole-source authority, and a decent foot in the door to continue pursuing that goal of a consistent enterprise deal with the Department of Defense (DoD). So what stands in your way of successfully transitioning from SBIR to production? For many companies, a huge barrier at this point is securing an authority to operate (ATO).

ATO presents itself as such a huge barrier because: 

  1. You can’t bring your technology to market without it.
  2. It can traditionally take 12–18 months to complete the process.
  3. It can cost upwards of a million dollars to achieve.

Many companies, without the right guidance through the program, delay their pursuit of this accreditation and risk a delayed go-to-market timeline. This can cause financial delays that can make it difficult to sustain operations until the ATO finally goes through and they can take their technology to market. 

Second Front Systems™ (2F) has an alternative approach to DoD accreditation with its Game Warden® platform, which can help companies bypass some of these barriers by making the process quicker and more affordable. 

In addition, there are ways to utilize government contracts such as the SBIR program to cover the costs of the Game Warden platform, making ATO even less of a barrier in your pursuit of an enterprise deal with the DoD. 

How Can SBIR Open Topic Help to Fund Your ATO?

The SBIR program was established under the Small Business Innovation Development Act 1982, with the defined purpose of “strengthening the role of innovative small business concerns in Federally-funded research and development.” It has evolved over the years through different passed extension acts. 

There are other, more traditional ways of doing business with the government; however, those routes are incredibly process-driven, competition-focused, and difficult to navigate. 

SBIR, on the other hand, allows companies to achieve “sole-source authority” upon being awarded a Phase I (or in some cases a Direct to Phase II), which helps them bypass a lot of the processes, thus speeding things up considerably. This is significant in the field because that saved revenue can be used to start covering the costs of acquiring ATO, including the costs of 2F’s Game Warden platform. It can also provide follow-on funding through Stratfi/Tacfi to pad the process toward going to market. 

Different Opportunities to Utilize

We consider SBIR to be one of the best “on-ramps” to federal funding because, if navigated efficiently, the program typically enables revenue generation in about 6–9 months, as opposed to the upwards of a year that you tend to see in traditional paths. 

This means that in as little as 6–9 months, you can start covering the costs of achieving ATO with these contracting vehicles: 

  • Phase II
  • Phase II and a Half (2.5 or IIB)
  • Stratfi/Tacfi
  • some Phase IIIs.

How to Incorporate ATO Costs into Proposals through Open Topic

The most recent SBIR reauthorization, passed in September of 2022, included a requirement in section 7 that is incredibly relevant to this program and process. The reauthorization indicated that the DoD is to “conduct not less than 1 open topic announcement at each component of the agency per fiscal year.”

AFWERX and, as a later result, SpaceWERX, have been conducting regular open-topic solicitations for years, which has provided a lot of opportunity, especially in this realm. 

We suggest doing this through a Phase II open topic because it is one of the most time-efficient options. It is important to prioritize accreditation and get it done as soon as possible, or else you might risk a delay in going to market. We see many companies wait until Phase III to pursue an ATO, and this can often be too late.  Accreditation should be viewed as an early door opener because getting it earlier can impact what awards you can pursue. 

In addition, a Phase II gives you the opportunity to write the deliverables with your government customer. Setting it up for a Phase III, at scale, a piece of that project could be: 

  1. Subcontracting part of your costs to 2F

The SBIR/STTR program allows for, and even encourages, subcontracting and the utilization of consultants to enhance your team. This is because most small companies don’t have all the necessary skills and assets in-house, and therefore, require outside assistance. This includes assistance needed to secure an ATO. 

  1. Including 2F’s services into the cost of the deliverable.

You can subcontract part of your costs by including the subcontractor in the cost of the deliverable. This means that you identify what you plan to achieve and indicate the subcontractor as an essential part in the achievement. You then price that service out in the deliverable and timeline. 

It is important to note that while you should absolutely incorporate ATO into your scope of key deliverables, it is important to do it in a way that doesn’t overpromise. We see a lot of companies promising they’ll get ATO in the deliverable but then proceed through the traditional ATO route, which takes longer. They run into issues when they need to change the contract: they find themselves at the mercy of the government to change the original agreement, which can then possibly make them unable to invoice for that deliverable. 

ATO can be a significant barrier to success when working with the federal government, particularly when operating along traditional paths, which can be time-consuming and costly. These challenges can be mitigated by prioritizing accreditation as soon as possible while accurately scoping deliverables in government contracts.

2F offers a more time- and cost-effective solution, and you can use SBIR Open Topic to cover the costs of achieving ATO.

For more information on SBIR contracting support, reach out to Long Capture.

To begin your accreditation journey with Game Warden, book a free demo today here.  

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