SBIR Policy Directive Updated Jan 8, 2014
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9. Responsibilities of SBIR Agencies and Departments
** Jan 8, 2014 Amendments in Blue **
9. Responsibilities of SBIR Agencies and Departments
(a) General Responsibilities. The Act requires each agency
participating in the SBIR Program to:
(1) Unilaterally determine the categories of projects to be
included in its SBIR Program, giving consideration to maintaining a
portfolio balance between exploratory projects of high technological
risk and those with greater likelihood of success. Further, to the
extent permitted by the law, and in a manner consistent with the
mission of that agency and the purpose of the SBIR program, each
Federal agency must:
(b) Discretionary technical assistance to SBIR awardees.
(i) Give priority in the SBIR program to manufacturing-related
research and development in accordance with Executive Order 13329. In
addition, agencies must develop an Action Plan for implementing
Executive Order 13329, which identifies activities used to give
priority in the SBIR program to manufacturing-related research and
development. These activities should include the provision of
information on the Executive Order on the agency's SBIR program Web
(2) Release SBIR solicitations in accordance with the SBA master
(ii) Give priority to small business concerns that participate in
or conduct energy efficiency or renewable energy system research and
(iii) Give consideration to topics that further one or more
critical technologies as identified by the National Critical
Technologies panel (or its successor) in reports required under 42
U.S.C. 6683, or the Secretary of Defense in accordance with 10 U.S.C.
(3) Unilaterally receive and evaluate proposals resulting from
program solicitations, select awardees, issue funding agreements, and
inform each awardee under such agreement, to the extent possible, of
the expenses of the awardee that will be allowable under the funding
(4) Require a succinct commercialization plan with each proposal
submitted for a Phase II award.
(5) Collect and maintain information from applicants and awardees
and provide it to SBA to develop and maintain the database, as
identified in Sec. 11(e) of this policy Directive.
(6) Administer its own SBIR funding agreements or delegate such
administration to another agency.
(7) Include provisions in each SBIR funding agreement setting forth
the respective rights of the United States and the awardee with respect
to intellectual property rights and with respect to any right to carry
out follow-on research.
(8) Ensure that the rights in data developed under each Federally-
funded SBIR Phase I, Phase II, and Phase III award are protected
(9) Make payments to awardees of SBIR funding agreements on the
basis of progress toward or completion of the funding agreement
requirements and in all cases make payment to awardees under such
agreements in full, subject to audit, on or before the last day of the
12-month period beginning on the date of completion of such
(10) Provide an annual report on the SBIR Program to SBA, as well
as other information concerning the SBIR Program. See Sec. 10 of this
Policy Directive for further information on the agency's reporting
requirements, including the frequency for specific reporting
(11) Include in its annual performance plan required by 31 U.S.C.
1115(a) and (b) a section on its SBIR Program, and submit such section
to the Senate Committee on Small Business and Entrepreneurship and to
the House Committees on Science, Space and Technology and Small
(12) Establish the agency's benchmarks for progress towards
commercialization. See Sec. 4(a)(3) of the directive for further
(1) Agencies may enter into agreements with vendors to provide
technical assistance to SBIR awardees, which may include access to a
network of scientists and engineers engaged in a wide range of
technologies or access to technical and business literature available
through on-line data bases. Each agency may select a vendor for a term
not to exceed 5 years. The vendor must be selected using competitive
and merit-based criteria.
(i) The purpose of this technical assistance is to assist SBIR
(A) Making better technical decisions on SBIR projects;
(B) Solving technical problems that arise during SBIR projects;
(C) Minimizing technical risks associated with SBIR projects; and
(D) Commercializing the SBIR product or process.
(ii) An agency may not enter into a contract with the vendor if the
contract amount provided for technical assistance is based upon the
total number of Phase I or Phase II awards, but may enter into a
contract with the vendor based upon the total amount of awards for
which assistance is provided.
(2) Each agency may provide up to $5,000 of SBIR funds for the
technical assistance described above in (c)(1) per year for each Phase
I award and each Phase II award. The amount will be in addition to the
award and will count as part of the agency's SBIR funding, unless the
agency funds the technical assistance using non-SBIR funds. The agency
may not use SBIR funds for technical assistance unless the vendor
provides the services to the SBIR awardee.
(3) An SBIR applicant may acquire the technical assistance services
set forth in (c)(1)(i) above itself and not through the vendor selected
by the Federal agency.
The applicant must request this authority from the Federal agency and
demonstrate in its SBIR application that the individual or entity
selected can provide the specific technical services needed. If the
awardee demonstrates this requirement sufficiently, the agency shall
permit the awardee to acquire such technical assistance itself, in an
amount up to $5,000, as an allowable cost of the SBIR award. The per
year amount will be in addition to the award and will count as part of
the agency's SBIR funding, unless the agency funds the technical
assistance using non-SBIR funds.
(c) Agencies must publish the information relating to timelines for
awards of Phase I and Phase II funding agreements and performance start
dates of the funding agreements that are reported to SBA in the
agency's Annual Report (See Sec. 10(a) of the directive). SBA will
also publish this information on www.SBIR.gov.
(d) Interagency actions.
(1) Joint funding. An SBIR project may be financed by more than one
Federal agency. Joint funding is not required but can be an effective
arrangement for some projects.
(e) Limitation on use of funds.
(2) Phase II awards. An SBIR Phase II award may be issued by a
Federal agency other than the one that made the Phase I award. Prior to
award, the head of the Federal agency for the Phase I and Phase II
awards, or designee, must issue a written determination that the topics
of the awards are the same. Both agencies must submit the report to
(3) Participation by WOSBs and SDBs in the SBIR Program. In order
to meet statutory requirements for greater inclusion, SBA and the
Federal participating agencies must conduct outreach efforts to find
and place innovative WOSBs and SDBs in the SBIR Program. These SBCs
will be required to compete for SBIR awards on the same basis as all
other SBCs. However, SBIR agencies are encouraged to work independently
and cooperatively with SBA to develop methods to encourage qualified
WOSBs and SDBs to participate in the SBIR Program.
(1) Each SBIR agency must expend the required minimum percent of
its extramural budget on awards to SBCs. Agencies may not make
available for the purpose of meeting the minimum percent an amount of
its extramural budget for basic research that exceeds the minimum
percent. Funding agreements with SBCs for R/R&D that result from
competitive or single source selections other than an SBIR Program must
not be considered to meet any portion of the required minimum percent.
(2) An agency must not use any of its SBIR budget for the purpose
of funding administrative costs of the program, including costs
associated with program operations, employee salaries, and other
associated expenses, unless the exception in paragraph (3) below or
Sec. 12(b)(4)(ii) applies.
(3) Pilot to Allow for Funding of Administrative, Oversight, and
Contract Processing Costs. Beginning on October 1, 2012 and ending on
September 30, 2015, and upon establishment by SBA of the agency-
specific performance criteria, SBA shall allow an SBIR Federal agency
to use no more than 3% of its SBIR budget for one or more specific
activities, which may be prioritized by the federal SBIR/STTR
Interagency Policy Committee. The purpose of this pilot program is to
assist with the substantial expansion in commercialization activities,
prevention of fraud/waste/abuse, expansion of reporting requirements by
agencies and other agency activities required for the SBIR Program.
Funding under this pilot is not intended to and must not replace
current agency administrative funding in support of SBIR activities.
Rather, funding under this pilot program is intended to supplement such
(i) A Federal agency may use this money to fund the following
(A) SBIR and STTR program administration, which includes:
(I) internal oversight and quality control, such as verification of
reports and invoices and cost reviews, and waste/fraud/abuse prevention
(including targeted reviews of SBIR or STTR awardees that an agency
determines are at risk for waste/fraud/abuse);
(II) Carrying out any activities associated with the participation
by small businesses that are majority-owned by multiple venture capital
operating companies, hedge funds or private equity firms;
(III) Contract processing costs relating to the SBIR or STTR
program of that agency, which includes supplementing the current
workforce to assist solely with SBIR or STTR funding agreements;
(IV) Funding of additional personnel to work solely on the SBIR
Program of that agency, which includes assistance with application
(V) Funding for simplified and standardized program proposal,
selection, contracting, compliance, and audit procedures for the SBIR
program, including the reduction of paperwork and data collection.
(B) STTR or SBIR Program-related outreach and related technical
assistance initiatives not in effect prior to commencement of this
pilot, except significant expansion or improvement of these
(I) Technical assistance site visits;
(II) Personnel interviews;
(III) National conferences;
(C) Commercialization initiatives not in effect prior to
commencement of this pilot, except significant expansion or improvement
of these initiatives.
(D) For DoD and the military departments, carrying out the
Commercialization Readiness Program set forth in 12(b) of this
directive, with emphasis on supporting new initiatives that address
barriers in bringing SBIR technologies to the marketplace, including
intellectual property issues, sales cycle access issues, accelerated
technology development issues, and other issues.
(ii) Agencies must use this money to attempt to increase
participation by SDBs and WOSBs in the SBIR Program, and small
businesses in states with a historically low level of SBIR awards. The
agency may submit a written request to SBA to waive this requirement.
The request must explain why the waiver is necessary, demonstrate a
sufficient need for the waiver, and explain that the outreach
objectives of the agency are being met and that there has been
increased participation by small businesses in states with a
historically low level of SBIR awards.
(iii) SBA will establish performance criteria each fiscal year by
which use of these funds will be evaluated for that fiscal year. The
performance criteria will be metrics that measure the performance areas
required by statute against the goals set by the agencies in their work
plans. The performance criteria will be based upon the work plans
submitted by each agency for a given fiscal year and will be agency-
specific. SBA will work with the SBIR agencies in creating a simplified
template for agencies to use when making their work plans.
(iv) Each agency must submit its work plan to SBA at least 30
calendar days prior to the start of each fiscal year for which the
pilot program is in operation. Agency work plans must include the
following: A prioritized list of initiatives to be supported; the
estimated percentage of administrative funds to be allocated to each
initiative or the estimated amounts to be spent on each initiative;
milestones for implementing the initiatives; the expected results to be
achieved; and the assessment metrics for each initiative. The work plan
identify initiatives that are above and beyond current practice and
which enhance the agency's SBIR program.
(v) SBA will evaluate the work plan and provide initial comments
within 15 calendar days of receipt of the plan. SBA's objective in
evaluating the work plan is to ensure that, overall, it provides for
improvements to the SBIR Program of that particular agency. If SBA does
not provide initial comments within 30 calendar days of receipt of the
plan, the work plan is deemed to be approved. If SBA does submit
initial comments within 30 calendar days, agencies must amend or
supplement their work plan and resubmit to SBA. Once SBA establishes
the agency-specific performance criteria to measure the benefits of the
use of these funds under the work plan, the agency may begin using the
SBIR funds for the purposes set forth in the work plan. Agencies can
adjust their work plans and spending throughout the fiscal year as
needed, but must notify SBA of material changes in the plan.
(vi) Agencies must coordinate any activities in the work plan that
relate to fraud, waste, and abuse prevention, targeted reviews of
awardees, and implementation of oversight control and quality control
measures (including verification of reports and invoices and cost
reviews) with the agency's Office of Inspector General (OIG). If the
agency allocates more than $50,000,000 to its SBIR Program for a fiscal
year, the agency may share this funding with its OIG when the OIG
performs the activities.
(vii) Agencies shall report to the Administrator on use of funds
under this authority as part of the SBIR/STTR Annual Report. See Sec. 10 generally and Sec. 10(i).
(4) An agency must not issue an SBIR funding agreement that
includes a provision for subcontracting any portion of that agreement
back to the issuing agency, to any other Federal Government agency, or
to other units of the Federal Government, except as provided in
paragraph (f)(5) below. SBA may issue a case-by-case waiver to this
provision after review of an agency's written justification that
includes the following information:
(i) An explanation of why the SBIR research project requires the
use of the Federal facility or personnel, including data that verifies
the absence of non-federal facilities or personnel capable of
supporting the research effort.
(5) An agency may issue an SBIR funding agreement to a small
business concern that intends to enter into an agreement with a Federal
laboratory to perform portions of the award or has entered into a
cooperative research and development agreement (see 15 U.S.C. 3710a(d))
with a Federal laboratory, only if there is compliance with the
(ii) Why the Agency will not and cannot fund the use of the federal
facility or personnel for the SBIR project with non-SBIR money.
(iii) The concurrence of the SBC's chief business official to use
the federal facility or personnel.
(i) The agency may not require the small business concern enter
into an agreement with any Federal laboratory to perform any portion of
an SBIR award, as a condition for an SBIR award.
(ii) The agency may not issue an SBIR award or approve an agreement
between an SBIR awardee and a Federal laboratory if the small business
concern will not meet the minimum performance of work requirements set
forth in Sec. 6(a)(4) of this directive.
(iii) The agency may not issue an SBIR award or approve an
agreement between an SBIR awardee and a Federal laboratory that
violates any SBIR requirement set forth in statute or the Policy
Directive, including any SBIR data rights protections.
(iv) The agency and Federal laboratory may not require any SBIR
awardee that has an agreement with the Federal laboratory to perform
portions of the activities under the SBIR award to provide advance
payment to the Federal laboratory in an amount greater than the amount
necessary to pay for 30 days of such activities.
(6) No agency, at its own discretion, may unilaterally cease
participation in the SBIR Program. R/R&D agency budgets may cause
fluctuations and trends that must be reviewed in light of SBIR Program
purposes. An agency may be considered by SBA for a phased withdrawal
from participation in the SBIR Program over a period of time sufficient
in duration to minimize any adverse impact on SBCs. However, the SBA
decision concerning such a withdrawal will be made on a case-by-case
basis and will depend on significant changes to extramural R/R&D 3-year
forecasts as found in the annual Budget of the United States Government
and National Science Foundation breakdowns of total R/R&D obligations
as published in the Federal Funds for Research and Development. Any
withdrawal of an SBIR agency from the SBIR Program will be accomplished
in a standardized and orderly manner in compliance with these
statutorily mandated procedures.
(7) Federal agencies not otherwise required to participate in the
SBIR Program may participate on a voluntary basis. Federal agencies
seeking to participate in the SBIR Program must first submit their
written requests to SBA. Voluntary participation requires the written
approval of SBA.
(f) Preventing Fraud, Waste, and Abuse.
(1) Agencies shall evaluate risks of fraud, waste, and abuse in
each application, monitor and administer SBIR awards, and create and
implement policies and procedures to prevent fraud, waste and abuse in
the SBIR Program. To capitalize on OIG expertise in this area, agencies
must consult with their OIG when creating such policies and procedures.
Fraud includes any false representation about a material fact or any
intentional deception designed to deprive the United States unlawfully
of something of value or to secure from the United States a benefit,
privilege, allowance, or consideration to which an individual or
business is not entitled. Waste includes extravagant, careless, or
needless expenditure of Government funds, or the consumption of
Government property, that results from deficient practices, systems,
controls, or decisions. Abuse includes any intentional or improper use
of Government resources, such as misuse of rank, position, or authority
or resources. Examples of fraud, waste, and abuse relating to the SBIR
Program include, but are not limited to:
(i) Misrepresentations or material, factual omissions to obtain, or
otherwise receive funding under, an SBIR award;
(2) At a minimum, agencies must:
(ii) Misrepresentations of the use of funds expended, work done,
results achieved, or compliance with program requirements under an SBIR
(iii) Misuse or conversion of SBIR award funds, including any use
of award funds while not in full compliance with SBIR Program
requirements, or failure to pay taxes due on misused or converted SBIR
(iv) Fabrication, falsification, or plagiarism in applying for,
carrying out, or reporting results from an SBIR award;
(v) Failure to comply with applicable federal costs principles
governing an award;
(vi) Extravagant, careless, or needless spending;
(vii) Self-dealing, such as making a sub-award to an entity in
which the PI has a financial interest;
(viii) Acceptance by agency personnel of bribes or gifts in
exchange for grant or contract awards or other conflicts of interest
that prevents the Government from getting the best value; and
(ix) Lack of monitoring, or follow-up if questions arise, by agency
personnel to ensure that awardee meets all required eligibility
requirements, provides all required certifications, performs in
accordance with the terms and conditions of the award, and performs all
work proposed in the application.
(i) Require certifications from the SBIR awardee at the time of
award, as well as after award and during the funding agreement
lifecycle (see Sec. 8(h) and Appendix I for more information);
(ii) Include on their respective SBIR Web page and in each
solicitation, information explaining how an individual can report
fraud, waste and abuse as provided by the agency's OIG (e.g., include
the fraud hotline number or Web-based reporting method for the agency's
(iii) Designate at least one individual in the agency to, at a
minimum, serve as the liaison for the SBIR Program, the OIG and the
agency's Suspension and Debarment Official (SDO) and ensure that
inquiries regarding fraud, waste and abuse are referred to the OIG and,
if applicable, the SDO.
(iv) Include on their respective SBIR Web page information
concerning successful prosecutions of fraud, waste and abuse in the
SBIR or STTR programs.
(v) Establish a written policy requiring all personnel involved
with the SBIR Program to notify the OIG if anyone suspects fraud,
waste, and/or abuse and ensure the policy is communicated to all SBIR
(vi) Create or ensure there is an adequate system to enforce
accountability (through suspension and debarment, fraud referrals or
other efforts to deter wrongdoing and promote integrity) by developing
separate standardized templates for a referral made to the OIG for
fraud, waste and abuse or the SDO for other matters, and a process for
tracking such referrals.
(vii) Ensure compliance with the eligibility requirements of the
program and the terms of the SBIR funding agreement.
(viii) Work with the agency's OIG with regard to its efforts to
establish fraud detection indicators, coordinate the sharing of
information between Federal agencies, and improve education and
training to SBIR Program officials, applicants and awardees;
(ix) Develop policies and procedures to avoid funding essentially
equivalent work already funded by another agency, which could include:
searching Tech-Net prior to award for the applicant (if a joint
venture, search for each party to the joint venture), key individuals
of the applicant, and similar abstracts; using plagiarism or other
software; checking the SBC's certification prior to award and funding
and documenting the funding agreement file that such certification
evidenced the SBC has not already received funding for essentially
equivalent work; reviewing other agency's policies and procedures for
best practices; and reviewing other R&D programs for policies and
procedures and best practices related to this issue; and
(x) Consider enhanced reporting requirements during the funding
(g) Interagency Policy Committee. The Director of the Office of
Science and Technology Policy (OSTP) will establish an Interagency
SBIR/STTR Policy Committee, which will include representatives from
Federal agencies with an SBIR or an STTR program and SBA. The
Interagency SBIR/STTR Policy Committee shall review the following
issues (but may review additional issues) and make policy
recommendations on ways to improve program effectiveness and
(1) The SBIR.gov databases described in Sec. 9(k) of the Small
Business Act (15 U.S.C. 638(k));
(2) Federal agency flexibility in establishing Phase I and II award
sizes, including appropriate criteria for exercising such flexibility;
(3) Commercialization assistance best practices of Federal agencies
with significant potential to be employed by other agencies and the
appropriate steps to achieve that leverage, as well as proposals for
new initiatives to address funding gaps that business concerns face
after Phase II but before commercialization.
(4) The need for a standard evaluation framework to enable
systematic assessment of SBIR and STTR, including through improved
tracking of awards and outcomes and development of performance measures
for the SBIR Program and STTR program of each Federal agency.
(5) Outreach and technical assistance activities that increase the
participation of small businesses underrepresented in the SBIR and STTR
programs, including the identification and sharing of best practices
and the leveraging of resources in support of such activities across
(h) National Academy of Sciences Report. The National Academy of Sciences (NAS) will conduct a study and issue reports on the SBIR and STTR programs.
(1) Prior to and during the period of study, and to ensure that the concerns of small business are appropriately considered, NAS shall consult with and consider the views of SBA's Office of Investment and Innovation and the Office of Advocacy and other interested parties, including entities, organizations, and individuals actively engaged in enhancing or developing the technological capabilities of small business concerns.
(2) The head of each agency with a budget of more than $50,000,000 for its SBIR Program for fiscal year 1999 shall, in consultation with SBA, and not later than 6 months after December 31, 2011, cooperatively enter into an agreement with NAS regarding the content and performance of the study. SBA and the agencies will work with the Interagency Policy Committee in determining the parameters of the study, including the specific areas of focus and priorities for the broad topics required by statute. The agreement with NAS must set forth these parameters, specific areas of focus and priorities, and comprehensively address the scope and content of the work to be performed. This agreement must also require the NAS to ensure there is participation by and consultation with, the small business community, the SBA, and other interested parties as described in paragraph (1).
(3) NAS shall transmit to SBA, heads of agencies entering into an agreement under this section, the Committee on Science, Space and Technology, the Committee on Small Business of the House of Representatives, and to the Committee on Small Business of the Senate a copy of the report, which includes the results and recommendations, not later than 4 years after December 31, 2011, and every subsequent four years.
unofficial copy annotated by Zyn Systems