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SBA SBIR/STTR Policy Directive Updates

The Small Business Administration (SBA) issued a series of updates to the SBIR/STTR Policy Directive on May 2, 2019. Use this link to review the full SBIR/STTR Policy Directive. This article summarizes some of those key changes.

The SBA develops policy directives for the governance of the program. Agencies can create their own policies but they must not contradict, weaken or conflict SBA policy. Therefore, it is critically important to check each agency’s individual guidelines and funding opportunity announcement for further details. Policy directive changes are not retroactive and apply only to funding agreements going forward.

Data Rights: Policy Directive changes clarify that data is owned by the small business and provides a narrower definition of intellectual property for added clarity. Replacing the pervious policy of unlimited times of renewable data rights protection is a period of 20 years from the date of award. This period is non-renewable and can be voluntarily disclaimed, in which case the government has only limited rights to the data. In order to qualify as protected data, the data must be appropriately marked in the application or if disclosed without appropriate marking, cured within 6 months from time of submission.

Phase III Funding Clarifications: While there is no SBIR/STTR money available for Phase III, Phase III is an important part of the SBIR/STTR program. Funding sources are ‘tagged’ Phase III to demonstrate the full pathway to commercialization. Some agencies have been less transparent about Phase III opportunities. The new Policy Directives requires agencies to consider and document up front whether a requirement for award will involve Phase III work. If it does, the agency must also specify if the Phase III includes sole source procurement.

Sole Source Procurement: As a follow on to the Phase III clarifications, the new Policy Directive clarifies the meaning of “sole source” as a non-competitive contract, which is required if practical. And, agencies must act in a way that is consistent with the Congressional intent to support the commercialization of the SBIR/STTR- developed technology by the SBIR/STTR Awardee using strategies such as:

  • Referencing the SBIR/STTR Awardee’s brand name as a required deliverable in the RFP
  • Requiring the prime awarded to use evaluation factors favoring subcontracting to the SBIR/STTR concern
  • Providing incentives to the prime for utilizing SBIR/STTR Awardees as subcontractors

New policy directive includes an increased reporting burden to the agency if it chooses not to use the SBIR firm or issue a Phase III, including:

  • Steps the agency has taken to fulfill the special acquisition
  • Reason why a follow-on Funding Agreement was not practicable

The small business can file an appeal with the SBA if it feels any of these requirements have not been met. If appeal is filed, the Funding Agreement officer must suspend further action on the funding agreement until a written decision on the appeal is issued by the SBA.

Phase IIB Follow on Funding: The Policy Directive now clarifies the requirements related to Phase II B funding, requiring these awards to apply the same guidelines and funding limits as initial Phase II awards.  Further, agencies may not allocate more than 5% of funds for making these awards.

Technical Assistance: This update is designed to provide small businesses with technical and business assistance services to increase odds of successful commercialization. Funds are available to help small businesses:

  • Make better technical decisions concerning market validation, IP protections, regulatory plans, manufacturing, plans, etc.
  • Solve technical problems which arise during projects
  • Minimize technical risk associated with the project
  • Develop and commercialize the technology, including IP protections

Small businesses may request technical assistance in the amounts of $6,500 for Phase I and $50,000 for Phase II. The Directive says this amount shall be requested in addition to the amount of the award for Phase I and in addition to or included in the amount of the award in Phase II. However, Each agency can set its own policy—check with the agency! Some agencies have their own vendors and programs (i.e., Dawnbreaker) and prefer the funds are not requested. Other agencies allow the small business to choose their own vendor.

Cost Sharing: Clarification provided on cost sharing. Cost sharing is prohibited in Phase I and may not be a Phase II requirement. Cost sharing can be taken in to consideration for Phase II funding and it can be used as a requirement for certain special awards.

State Matching Funds: The Policy Directive clarifies that state matching funds are not considered duplicative funding and may be accepted by the small business without penalty.

Partnering with Research Institutions: Small businesses may now collaboration with more than one research institution on a proposal as long as one institution serves as the ‘prime’ and receives at minimum of 30% of the total budget.

Manufacturing-Related R&D: The Policy Directive clearly states that priority shall be given to proposals that address manufacturing-related R&D.

As always, the most important thing is to check with each agency and read each funding opportunity announcement carefully. Rules and requirements may vary from agency to agency and depending on funding opportunity. Each agency is happy to answer questions about their individual interpretation of each of these Policy Directive changes. Feel free to reach out directly to the agency contacts for clarification prior to submission of an application.

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