The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are highly competitive programs that encourage domestic small businesses to engage in Federal Research/Research and Development (R/R&D) with the potential for commercialization. Through a competitive awards-based program, SBIR and STTR enable small businesses to explore their technological potential and provide 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.
Central to the STTR program is the partnership between small businesses and nonprofit research institutions. The STTR program requires the small business to formally collaborate with a research institution in Phase I and Phase II. STTR's most important role is to bridge the gap between performance of basic science and commercialization of resulting innovations.
The mission of the SBIR/STTR programs is to support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy.
Only United States small businesses are eligible to participate in the SBIR/STTR programs. A small business must meet the eligibility requirements set forth in 13 CFR 121.702 "What size and eligibility standards are applicable to the SBIR and STTR programs?" at the time of Phase I and II awards, which specify the following criteria
For SBIR awards from agencies using the authority under 15 U.S.C. 638(dd)(1), an awardee may be owned and controlled by more than one VC, hedge fund, or private equity firm so long as no one such firm owns a majority of the stock.
Phase I awardees with multiple prior awards must meet the benchmark requirements for progress toward commercialization.
For STTR, the partnering nonprofit research institution must also meet certain eligibility criteria:
1.The small business awardee and its partnering institution are required to establish an intellectual property agreement detailing the allocation of intellectual property rights and rights to carry out follow-on research, development or commercialization activities.
2.STTR requires that the small business perform at least 40% of the R&D and a single partnering research institution perform at least 30% of the R&D.
3.The STTR program allows the Principal Investigator to be primarily employed by the partnering research institution.
The SBIR Program is structured in three phases:
The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II. SBIR/STTR Phase I awards are generally $50,000 - $250,000 for 6 months (SBIR) or 1 year (STTR).
The objective of Phase II is to continue the R/R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II. Typically, only Phase I awardees are eligible for a Phase II award. SBIR/STTR Phase II awards are generally $750,000 for 2 years.
The objective of Phase III, where appropriate, is for the small business to pursue commercialization objectives resulting from the Phase I/II R/R&D activities. The SBIR/STTR programs do not fund Phase III. At some Federal agencies, Phase III may involve follow-on non-SBIR/STTR funded R&D or production contracts for products, processes or services intended for use by the U.S. Government.
The SBIR/STTR Statute (15 U.S.C. §638) establishes cap for the maximum dollar amount of SBIR and STTR awards, above which an agency must request a SBA-approved waiver. SBA shall adjust the maximum dollar amount every year for inflation. The adjusted cap is effective for all solicitations and corresponding topics issued on or after the date of the adjustment. Agencies may amend their solicitation and other program literature accordingly. Agencies have the discretion to issue awards for less than maximum dollar amount. For more information regarding a specific agency's award guidelines, please visit their solicitation and website. Agencies may exceed this cap for a specific topic with approval from SBA prior to the release of the solicitation, award, or modification to the award for a topic issued on or after the date of adjustment.
As of November 2020, agencies may issue a Phase I award (including modifications) up to $259,613 and a Phase II award (including modifications) up to $1,730,751 without seeking SBA approval. Any award above those levels will require a waiver. Agencies considering this authority should review SBIR/STTR Policy Directive §7(i)(4) for additional information.
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