Army xTech and Federal Prize Competitions for Startups

A federal prize competition pays for a result rather than a proposal: an agency publishes a challenge, companies submit a short entry, a jury scores it, and the winners receive cash and sometimes a follow-on award. The Army's xTech program is the clearest example for companies, and other agencies, NIH and NASA among them, run challenges under the same federal prize authority. I write the entries, and Army xTech is among the programs behind the more than $11.7M secured for clients.

How prize competitions differ from grants

Two statutes carry most federal prizes. Under 15 U.S.C. 3719, the head of an agency may carry out a program to award prizes competitively to stimulate innovation that has the potential to advance the agency's mission; a private entity must be incorporated in and maintain a primary place of business in the United States, and an individual must be a US citizen or permanent resident. Under 10 U.S.C. 4025, the Department of War may award cash prizes and other types of prizes, including procurement contracts and other agreements, through a competitive process with a widely advertised solicitation, and the use of that authority counts as competitive procedures. The Army's xTech program says it runs competitions under both: 10 U.S.C. 4025 for cash prizes with the option of follow-on contracts such as SBIR and other transaction agreements, and 15 U.S.C. 3719 for cash prizes.

• Stages, not a single proposal. xTech describes three phases: a white paper, a pitch event, then proof of concept presentations and potential follow-on contracts. NIH challenges such as the NIDA and NIMHD ones run a Phase 1 concept or prototype round and a Phase 2 with larger prizes.

• Cash at each stage. xTech competitions pay semifinalists and finalists fixed amounts and then award the winners, and the program says it also provides education, mentorship and networking.

• Follow-on awards where the rules say so. xTech competitions run under 10 U.S.C. 4025 can act as a competitive down select for an SBIR, STTR or other transaction award, and the competition page states which follow-on is available and to whom.

• No budget narrative. The entry is scored on the technology, the team and the fit with the problem, which makes a prize the fastest route to a first federal relationship.

Who this fits and who it does not

Eligibility is set by each competition. The xTech Search competition rules limit entry to small, for-profit, independent US businesses that meet the SBIR size and ownership rules, with one submission per entity, and they offer finalists and winners the option to submit a Phase I Army SBIR or STTR proposal. Other xTech competitions open the field: the G-TEAD competition rules accept nonprofit and for-profit organizations of any size, domestic and foreign, that are incorporated in and keep a primary place of business in the US or an allied country and are not based in a foreign country of concern, while reserving its SBIR follow-on for entities that qualify as a US small business. NIH challenges under 15 U.S.C. 3719 require a private entity to be incorporated in and keep a primary place of business in the United States.

• It fits a company with a working or near working technology that can be shown in a few pages and a short video, and that can commit a team to a pitch and, for Army competitions, to a soldier exercise.

• It fits a company that fails the SBIR ownership or size test but wants an Army relationship: the prize and the other transaction follow-on remain open to it where the rules say so.

• It does not fit a project that is still an idea; the G-TEAD competition asks for technology readiness level 6 or higher, and NIH prototype challenges ask for data.

How the process works

An xTech competition page states the open and close dates, the phases with their dates, the prize structure and the eligibility rules; submissions go through the xTech evaluation system, and after each phase every competitor receives an email with access to its scores and comments. For NIH challenges, the challenge page on nih.gov states the registration and submission windows, the prize purse by phase and the eligibility rules under the statute. Working backward from a close: the white paper or concept entry within the page limit, the video where one is required, the CAGE or NCAGE code needed to receive a prize, and the pitch deck ready before the semifinalist announcement.

My read

• A prize entry is a sales document with evidence. The scoring rubric on the competition page is the outline, and every claim needs a result, a measurement or a demonstration behind it.

• The follow-on is the real prize. For a US small business, winning an Army competition that carries a Direct to Phase II SBIR option is worth more than the cash, so the entry should be written with that proposal in mind.

• Eligibility differs from one xTech competition to the next, so a large or foreign owned company should read the rules before dismissing the program.

• The competition page sets the window. A company that keeps a current white paper and video can enter whenever one opens.

Competitions open now

Frequently asked questions

Can a company that does not qualify for SBIR enter xTech?

In the competitions whose rules open entry to businesses of any size, yes; the SBIR follow-on then goes only to entrants that qualify as a US small business, and the others remain eligible for other follow-on opportunities as the rules state.

Is prize money taxable or restricted?

The competition rules and the statute govern the prize; the rules state how a prize is paid and what registration the winner needs. I do not give tax advice.

How much can an agency award?

The statutes set approval thresholds: under 15 U.S.C. 3719 a competition may not award more than $1,000,000 in cash without the approval of the agency head, and under 10 U.S.C. 4025 the cash limit without Under Secretary approval is $2,000,000.

What does the consultant do on a prize entry?

The white paper or concept entry against the rubric, the video script, the pitch deck, and the follow-on SBIR or other transaction proposal when the competition carries one.