SBIR Policy Directive 2012
E. Section 6--Eligibility and Application (Proposal) Requirements
1. Section 6(a)--Eligibility Requirements
SBA amended this section of the directive to address the new statutory requirements concerning small businesses that are majority-owned by venture capital operating companies (VCOCs), hedge funds or private equity firms. Specifically, section 5107 of the Reauthorization Act states that businesses that are owned in majority part by VCOCs, private equity firms or hedge funds may be eligible to participate in the SBIR Program, under certain conditions.
First, SBA must amend its size regulations, at 13 CFR part 121, to address ownership, control, and affiliation for these businesses. SBA has issued a proposed rule addressing this issue, with a request for comments.
Second, if the agency elects to use this authority, it must submit a written determination letter to SBA, the Senate Committee on Small Business and Entrepreneurship, the House Committee on Small Business and the House Committee on Science, Space, and Technology. The agency must explain how awards to small business that are majority-owned by multiple VCOCs, hedge funds or private equity firms will induce similar and additional funding of small business innovations, contribute to the mission of the agency, demonstrate a need for public research, and otherwise fulfill the capital needs of small businesses for SBIR projects.
Third, small businesses that are majority-owned by multiple VCOCs, hedge funds or private equity firms must register with the SBA prior to submitting an SBIR application. The registration is available at www.SBIR.gov, and will be available when the SBA issues a final rule amending 13 CFR part 121 concerning ownership and control of SBIR applicants.
Finally, agencies electing to use this authority may only issue a certain percentage of their SBIR awards to small businesses that are majority-owned by multiple VCOCs, hedge funds or private equity firms. The National Institute of Health (NIH), Department of Energy (DOE), and the National Science Foundation (NSF) may award not more than 25% of their SBIR funds to such small businesses. All other SBIR agencies may award not more than 15% of their SBIR funds to these small businesses. If the agency has not exceeded these maximum statutory percentages, the participating agencies may make awards to small businesses that are majority-owned by multiple VCOCs, hedge funds or private equity firms under the STTR Program. If an agency exceeds this maximum statutory percentage of awards to small businesses that are majority-owned by multiple VCOCs, hedge funds or private equity firms, it must transfer this excess amount from its non-SBIR and non-STTR R&D funds to the SBIR funds.
SBA also amended this section to address the new statutory requirement concerning ``covered small business concerns.'' Section 5107 defines a covered small business concern as a small business that was not majority-owned by multiple VCOCs, hedge funds or private equity firms at the time of application but then is so-owned at the time of the award. If the agency makes an award to such a firm more than 9 months after the closing date of the solicitation, the firm is eligible (so long as it meets all other eligibility criteria such as performance of work, etc.). In addition, by statute, if an agency makes such an award to a ``covered small business concern,'' the agency must transfer an amount equal to the amount of that award from its non-SBIR and non- STTR R&D funds to the agency's SBIR funds.
SBA considered amending the requirement concerning the principal investigator's primary employment. Specifically, SBA considered further defining primary employment to mean that the principal investigator must perform at least 51% of his/her work (as opposed to the current requirement that they perform a minimum of one half), based on a 40- hour workweek, in the employ of the small business. SBA seeks comments on whether this further clarification is needed.
SBA amended this section to address the certification requirements at the time a SBC submits its proposal and at the time it receives an SBIR award. Section 5143 of the Reauthorization Act requires each SBIR awardee to certify that it is in compliance with the laws relating to the program. SBA's Administrator is required to develop, in consultation with the Council of Inspectors General on Integrity and Efficiency, the procedures and requirements for this certification after providing notice of and an opportunity for public comment on such procedures and requirements. SBA requested public input on its certification requirements in a proposed rule. SBA will consider further input received on this final directive.
In the directive, SBA explains that all applicants that are majority-owned by multiple VCOCs, hedge funds or private equity firms must submit a certification and register with www.SBIR.gov (once SBA issues a final regulation amending 13 CFR part 121). The specifics relating to the certification and registration database are discussed later in the section.
Further, all SBIR awardees must submit a certification at the time of award stating that it meets the size, ownership and other requirements of the SBIR Program. The directive explains that agencies may request similar certifications prior to award, such as at the time of submission of the application. Some agencies, including NSF, currently require SBIR applicants to submit such a certification to ensure eligibility at time of award. The specifics relating to the certification is discussed later in this notice.
In addition to the certification requirements, sections 5132-5135 of the Reauthorization Act requires that SBIR applicants and awardees provide, and agencies collect, certain information concerning their ownership, investors, and principal investigators, among other things.
In an effort to streamline and simplify this data collection, SBA requires that the small business provide this information to the databases available at www.SBIR.gov, rather than to each individual agency with each SBIR application or award. The specifics relating to this certification and data collection are discussed below.
unofficial copy annotated by Zyn Systems