Government
Defense Department courting small businesses If, as the Bible says, "there is a season," the high-technology folks in small business are still waiting for their spring to arrive in Washington. The Reagan Administration, they feel, is so biased toward corporate fat cats that the little entrepreneur feels left out. "Overall, the picture is dim," laments Sam Cardon of General Technical Services, a small research and development firm in Upper Darby, Pa. Cardon speaks as president of the American Association of Small Research Companies. Arthur S. Obermayer, president of Moleculon Inc. of Cambridge, Mass., agrees. " T h e Reagan Administration is not treating small business and big business equally," he says. Reaganites, of course, believe that quick Congressional approval of their economic packages will improve the climate for everyone. But the innovative wing of small business believes it needs special priming. Actions like the Administration's decision to end the Interior Department's water research and technology program do nothing to lift the mood. Small business is the main beneficiary of the $18.7 million program and now that source of support is drying up. But the story isn't all bad. One place, at least, is trying to take up some of the slack and it isn't hard to guess where it is in a guns-over-butter Administration. The place is the Defense Department and its Small Business & Economic Utilization Policy Office headed by chemical engineer Hal C. Felsher. A dedicated booster of the American dream, Felsher's rhetoric harks back to scenes of Fourth of July picnics in home town U.S.A. The program he is promoting is DOD's Small Business Advanced Technology Program. Brochures about it are being mailed to thousands of small businesses this week. Even Obermayer, a frequent commuter to Washington, exults in it. Says Felsher: "I'm really excited about this program. I'm excited because the one thing that made this country great is the profit motive. Every guy wants to make that million bucks. If he wins one of our contracts he will probably go out and buy his wife a mink coat and his father-in-law will tell him what a great son-in-law he is. That's what this country's all about. I think I can tap those potentials." The competition will be keen to 20
C&ENMay4, 1981
Felsher: grease way for the small guy
win the 100 or so initial contracts from what will be at most an $8 million program for fiscal 1982. But it's a start. And if proposed legislation is successful, the idea could spread throughout the government. Felsher's three-phase program is modeled after the National Science Foundation's Small Business Innovation Research Program headed by Roland Tibbetts, who three years ago invented the concept. Despite the foundation's wish to eliminate Tibbetts' program, Congress wants to keep it. The Reagan Administration accordingly is giving it $5 million. President Carter, however, budgeted $13 million for it for fiscal 1982. Phase I at DOD consists of grants of up to $50,000 for small companies to develop a concept related to future weapons needs. About 100 grants will be awarded in December on the basis of proposals that are due by next Aug. 31. Concept development should take no more than six months after which the most promising ones will be chosen for Phase II. Phase II is the "plum," says Felsher. This consists of concept development awards of up to $500,000, taking up to two years until the next and final phase. Phase III will include follow-on DOD production awards, "where appropriate," and/or commercial application of the research. Pentagon money, of course, would fund that phase, but private capital would be required for any commercial development. Felsher says the program has a fiscal 1982 budget of "between $4 million and $8 million." It is only a
small part of the overall DOD contract figures for small, high-technology business. In fiscal 1981, the Pentagon awarded a little more than $584 million in research, development, test, and evaluation contracts to small companies, or 7.1% of the total funds awarded to all companies. The Pentagon does concede, however, that the sums apply to both high- and lowtechnology companies. Felsher says he wants to make it as easy as possible for companies to qualify for Phase I. "I want to grease the way for the small guy. I'm saying to them all they need is 20 pages to explain what they propose to do. I'm telling them not to fill up their proposal with fancy paraphernalia. Fancy brochures don't mean a lot to me. They don't have too much life history." The list of areas in which Felsher will be soliciting under the program would seem to have considerable commercial application, besides the obvious relevance to defense. The list includes acoustics, artificial intelligence, chemical detection and decontamination, combustion processes, biotechnology, fluid mechanics, lasers and photo-optics, materials and coatings, solar and electrical power, and solid lubrication. Whether concepts emerging from these contracts will materialize as weapons systems won't be known for years. And whether the contracts do indeed serve to boost the overall U.S. economy is debatable. The two flattest industrial economies in the world are the two most military economies—the U.S. and the Soviet Union. And the concern is that increased military spending will put at least the U.S. even further into the hole as consumer and quality of life needs are met more and more inadequately. Bruce Stokes, senior researcher at Worldwatch Institute in Washington and author of the recently published book, "Helping Ourselves," says the real problems of security are much more global today and involve matters of energy and environment. His book is partly about the role of small business in improving local economies and his feeling is that small business innovation with emphasis on defense needs could result in the same old boom-bust cycles that plague every democracy whose militarism waxes and wanes. "It may be better for small business if the federal government did more to twist corporate arms to subcontract their work with small companies," he points out. Wil Lepkowski, Washington
