STTR/SBIR Guidance

SBA Role:

The Small Business Administration¹ has oversight responsibility for the management of the STTR and SBIR programs.  The US Small Business Administration plays an important role as the coordinating agency for the STTR and the SBIR programs.  The SBA directs the 11 agencies' implementation of SBIR, reviews their progress, and reports annually to Congress on its operation. SBA is also the information link to SBIR. SBA collects solicitation information from all participating agencies and publishes it quarterly in a Pre-Solicitation Announcement (PSA). The PSA is a single source for the topics and anticipated release and closing dates for each agency's solicitations.

The STTR program was created by Title II of the Small Business Research and Development Enhancement Act of 1992 (P.L. 102-564), reauthorized until the year 2001 by the Small Business Reauthorization Act of 1997 (P.L. 105-135), and reauthorized again until September 30, 2009, by the Small Business Technology Transfer Program Reauthorization Act of 2001 (P.L. 107-50).   

Federal agencies with extramural R&D budgets over $1 billion are required to administer STTR programs using an annual set-aside of 0.30%.  Currently, five Federal agencies participate in the STTR program: the National Aeronautics and Space Administration, the National Science Foundation, and the Departments of Defense, Energy, and Health and Human Services. 

Description of the Small Business Innovation Research Program (SBIR):

SBIR is a highly competitive program that encourages small business to explore their technological potential and provides the incentive to profit from its commercialization. By including qualified small businesses in the nation's R&D arena, high-tech innovation is stimulated and the United States gains entrepreneurial spirit as it meets its specific research and development needs.

Competitive Opportunity for Small Business:

SBIR targets the entrepreneurial sector because that is where most innovation and innovators thrive. However, the risk and expense of conducting serious R&D efforts are often beyond the means of many small businesses. By reserving a specific percentage of federal R&D funds for small business, SBIR protects the small business and enables it to compete on the same level as larger businesses. SBIR funds the critical startup and development stages and it encourages the commercialization of the technology, product, or service, which, in turn, stimulates the U.S. economy.

Since its enactment in 1982, as part of the Small Business Innovation Development Act, SBIR has helped thousands of small businesses to compete for federal research and development awards. Their contributions have enhanced the nation's defense, protected our environment, advanced health care, and improved our ability to manage information and manipulate data.

SBIR Qualifications:

Small businesses must meet certain eligibility criteria to participate in the SBIR program.

  • American-owned and independently operated
  • For-profit
  • Principal researcher employed by business
  • Company size limited to 500 employees

 

The SBIR System:

Each year, eleven federal departments and agencies are required by SBIR to reserve a portion of their R&D funds for award to small business.  The complete 2006-2007 submission cycle is available at: http://www.win-sbir.com/schedule.html.  The following agencies designate R&D topics and accept proposals:

  • Department of Agriculture
  • Department of Commerce
  • Department of Defense
  • Department of Education
  • Department of Energy
  • Department of Health and Human Services
  • Department of Homeland Security
  • Department of Transportation
  • Environmental Protection Agency
  • National Aeronautics and Space Administration
  • National Science Foundation ²

Three-Phase Program:

Following submission of proposals, agencies make SBIR awards based on small business qualification, degree of innovation, technical merit, and future market potential. Small businesses that receive awards then begin a three-phase program.

  • Phase I is the startup phase. Awards of up to $100,000 for approximately 6 months support exploration of the technical merit or feasibility of an idea or technology.
  • Phase II awards of up to $750,000, for as many as 2 years, expand Phase I results. During this time, the R&D work is performed and the developer evaluates commercialization potential. Only Phase I award winners are considered for Phase II.
  • Phase III is the period during which Phase II innovation moves from the laboratory into the marketplace. No SBIR funds support this phase. The small business must find funding in the private sector or other non-SBIR federal agency funding.

 

STTR is similar to the Small Business Innovation Research (SBIR) program in that both programs seek to increase the participation of small businesses in Federal R&D and to increase private sector commercialization of technology developed through Federal R&D.  The unique feature of the STTR program is that, for both Phase I and Phase II projects, at least 40% of the work must be performed by the small business, and at least 30% of the work must be performed by a non-profit research institution.  Such institutions include Federally-funded research and development centers (for example, DOE national laboratories), universities, non-profit hospitals, and other non-profits Description of the Small Business Technology Transfer Program (STTR):

STTR is an important small business program that expands funding opportunities in the federal innovation research and development arena. Central to the program is expansion of the public/private sector partnership to include the joint venture opportunities for small business and the nation's premier nonprofit research institutions. STTR's most important role is to foster the innovation necessary to meet the nation's scientific and technological challenges in the 21st century.

Competitive Opportunity for Small Business:

STTR is a highly competitive program that reserves a specific percentage of federal R&D funding for award to small business and nonprofit research institution partners. Small business has long been where innovation and innovators thrive. But the risk and expense of conducting serious R&D efforts can be beyond the means of many small businesses.

Conversely, nonprofit research laboratories are instrumental in developing high-tech innovations. But frequently, innovation is confined to the theoretical, not the practical. STTR combines the strengths of both entities by introducing entrepreneurial skills to high-tech research efforts. The technologies and products are transferred from the laboratory to the marketplace. The small business profits from the commercialization, which, in turn, stimulates the U.S. economy.

STTR Qualifications: Small businesses must meet certain eligibility criteria to participate in the STTR Program.

  • American-owned and independently operated
  • For-profit
  • Principal researcher need not be employed by small business
  • Company size limited to 500 employees
  • No size limit for nonprofit research institution.
  • Principal place of business located in the United States;
  • Is at least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in the U.S.;
  • Has, including its affiliates, no more than 500 employees;

The nonprofit research institution must also meet certain eligibility criteria.

  • Located in the US
  • Meet one of three definitions
  • Nonprofit college or university
  • Domestic nonprofit research organization
  • Federally funded R&D center (FFRDC)
  • Enterprise must qualify as a small business;
  • Minimum of 40 percent of the STTR project must be carried out by the small business;
  • Minimum of 30 percent of the effort must be performed by the research institution;
  • Written agreement must be negotiated with the research institution; and, Phase I and Phase II research work must be performed by the small business and the research institution in the United States. 

The STTR System:

Each year, five federal departments and agencies are required by STTR to reserve a portion of their R&D funds for award to small business/nonprofit research institution partnerships.

  • Department of Defense
  • Department of Energy
  • Department of Health and Human Services
  • National Aeronautics and Space Administration
  • National Science Foundation

These agencies designate R&D topics and accept proposals.

Three-Phase Program:

Following submission of proposals, agencies make STTR awards based on small business/nonprofit research institution qualification, degree of innovation, and future market potential. Small businesses that receive awards then begin a three-phase program.

  • Phase I is the startup phase. Awards of up to $100,000 for approximately one year fund the exploration of the scientific, technical, and commercial feasibility of an idea or technology.
  • Phase II awards of up to $750,000, for as long as two years, expand Phase I results. During this period, the R&D work is performed and the developer begins to consider commercial potential. Only Phase I award winners are considered for Phase II.
  • Phase III is the period during which Phase II innovation moves from the laboratory into the marketplace. No STTR funds support this phase. The small business must find funding in the private sector or other non-STTR federal agency funding.

¹ http://www.sba.gov/sbir/indexsbir-sttr.html

² http://www.nsf.gov/eng/sbir/faq.jsp  This FAQ provided by the NSF is very helpful for faculty who might be interested in submitting an proposal for SBIR funds. http://www.wisconsinsbir.org/  The University of Wisconsin has compiles a useful STTR/SBIR web resource.