[Federal Register Volume 79, Number 5 (Wednesday, January 8, 2014)]
[Rules and Regulations]
[Pages 1303-1309]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-31374]
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Rules and Regulations
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Federal Register / Vol. 79, No. 5 / Wednesday, January 8, 2014 /
Rules and Regulations
[[Page 1303]]
SMALL BUSINESS ADMINISTRATION
13 CFR Chapter I
RIN 3245-AF84
Small Business Innovation Research Program Policy Directive
AGENCY: Small Business Administration.
ACTION: Notice of amendments to final policy directive.
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SUMMARY: The U.S. Small Business Administration (SBA) is amending its
Small Business Innovation Research (SBIR) Program Policy Directive in
response to public comments SBA received on the final SBIR Policy
Directive, published on August 6, 2012. SBA is also making several
minor clarifying changes to ensure that the SBIR participants clearly
understand certain program requirements.
DATES: These amendments to the SBIR Policy Directive are effective
January 8, 2014.
FOR FURTHER INFORMATION CONTACT: Edsel Brown, Assistant Director,
Office of Innovation, at (202) 401-6365 or [email protected].
SUPPLEMENTARY INFORMATION: On December 31, 2011, the President signed
into law the National Defense Authorization Act for Fiscal Year 2012
(Defense Reauthorization Act), Public Law 112-81, 125-Stat. 1298.
Section 5001, Division E of the Defense Reauthorization Act contains
the SBIR/STTR Reauthorization Act of 2011 (Reauthorization Act), which
amended the Small Business Act and made several amendments to the SBIR
Program. The Reauthorization Act required SBA to issue amendments to
the SBIR Policy Directive and publish the amendments in the Federal
Register within 180 days of when the Reauthorization Act was passed.
On August 6, 2012, SBA published a final SBIR Policy Directive
implementing the various provisions of the Reauthorization Act at 77 FR
46806. The directive made several key changes to the SBIR Program
relating to eligibility, the SBIR award process, SBIR Program
administration, and fraud, waste and abuse. Although the SBIR Policy
Directive is intended for use by the SBIR participating agencies, SBA
believed that public input on the directive from all parties involved
in the program would be invaluable. Therefore, SBA sought public
comments on the final directive, and stated that it may amend the
directive in response to these comments at a later time.
Response to Comments
In response to this request, SBA received comments on various parts
of the directive. Several comments recommended that SBA strengthen and
clarify the Policy Directive language with regard to SBIR data rights
and the obligation of federal agencies to give a preference in
contracting to SBIR awardees for follow-on Phase III work. SBA agrees
that these are areas of the SBIR policy that are vital to the program
and require clarification and improvement. SBA continues to evaluate
these issues and will address them in a subsequent Policy Directive
revision.
SBA also received comments that the definition of Essentially
Equivalent Work in section 3(j) of the Policy Directive should be
changed to be more in line with the common usage. The concern is that
the definition in the Policy Directive is more stringent than the norm
for Government contracting and places a higher burden on the small
businesses participating in the SBIR program. The commenter, however,
did not provide SBA with this commonly used definition and SBA could
not find one. Therefore, SBA has not modified the definition at this
time. However, SBA has revised the language in section 7(d) of the
Directive to further clarify funding of ``essentially equivalent
work.''
Section 4(a)(3) of the Policy Directive, ``Agency benchmarks for
progress towards commercialization'' sets forth the program policy
regarding an eligibility requirement for Phase I awards. SBA received
comments requesting clarification of the time periods used to calculate
the transition rate and commercialization rate benchmark requirements.
Commenters also requested clarification about how agencies determine
which firms must comply with the transition rate and commercialization
rate benchmarks. In response to these comments, SBA revised and
reorganized section 4(a)(3) to clarify several procedural elements
about the benchmark determinations and enhance its readability.
Section 4(a)(3) clarifies the time periods used to calculate
awardee rates of transition from Phase I to Phase II and provides two
examples of the calculation. While the rate is calculated using Phase I
awards received in the most recent 5,10, or 15-year period (agencies
choose which period they use), excluding the most recently completed
fiscal year; the period used when counting the Phase II awards is
lagged one year. That is, when calculating the number of Phase I awards
received over a particular time period, the time period evaluated does
not include the most recently completed fiscal year; however, when
calculating the number of Phase II awards received, the time period
evaluated does include the most recently completed fiscal year but does
not include the first year of the period evaluated for Phase I awards
received. The period used to calculate Phase II awards is lagged one-
year because it is unlikely that a new Phase I would transition to a
Phase II within the same year. SBA also clarified that the Phase II
transition benchmark requirement applies only to awardees that have
received more than 20 Phase I awards over the applicable time period
and that the commercialization benchmark applies only to firms that
received more than 15 Phase II awards over the applicable time period.
Based on additional input from the agencies participating in the
SBIR program, SBA also revised several procedural elements of the Phase
II transition benchmark requirement in section 4(a)(3) to simplify the
process for small businesses and reduce the administrative burden on
the agencies. Specifically, in section 4(a)(3)(iii), SBA changed the
start date for the one-year ineligibility period for firms that do not
meet the benchmarks. The date was changed from the date of application
submission to June 1st of each year. SBA made this change for several
reasons: (1) It is a clearly defined period for affected small
businesses; (2) to
[[Page 1304]]
provide sufficient time for agencies to enter fully verified award data
from the prior fiscal year into the TechNet database; and (3) to
eliminate the need for agencies to track multiple periods of
ineligibility. SBA will use its TechNet Data system to generate the
list of companies that do not meet agency Phase II transition
benchmarks and provide this list to the agencies each year on June 1.
Finally, SBA also added a procedure to notify awardee firms if they are
on the ineligible list and to enable firms to provide feedback directly
to SBA if they believe their rate was calculated using incomplete award
information.
Some respondents asked if the provision in section 4(b)(5) allowing
one Sequential Phase II award included supplementary awards such as
Phase 2.5 or Phase IIb awards in the definition of a Phase II award.
SBA relocated the language at section 4(b)(6) to new section 4(b)(8)
and added new section 4(b)(6) to clarify SBA's policy on supplemental
phase II awards. Section 4(b)(6) now clarifies how Phase II award
amounts are calculated when supplemental awards are issued.
Furthermore, section 4(b)(6) specifies that all supplementary awards,
such as a Phase IIb, must be linked to either an initial Phase II or a
sequential Phase II award and is added to the amount of that award for
the purpose of determining the size of the Phase II award. This means
that all supplementary Phase II awards including options, enhancements,
administrative supplements, and Phase IIb-type programs are considered
as part of the initial Phase II or sequential Phase II from which they
derive and are therefore subject to the Phase II per-award guideline
amount of $1 million and limit of $1.5 million.
SBA repeated the language in section 9(d)(2) in new section
4(b)(7), which explains how a Phase I awardee may receive an award from
one agency and also may receive a subsequent Phase II award from
another agency. SBA also clarified in section 4(b)(7) that the same
process applies to a second, sequential Phase II award that follows an
initial Phase II award from a different agency. This policy is relevant
to interagency actions, which are found at section 9 of the Policy
Directive, and also to Phase II awards, which is found at section 4 of
the Policy Directive.
SBA received comments concerning section 9 of the Policy Directive,
which address measures to prevent fraud, waste and abuse in the
program. The respondents commented that the administrative requirements
contained in section 9 may be too stringent and may discourage small
businesses from applying. SBA notes that it developed these
requirements, including the procedures and requirements for
certification, in consultation with the Council of Inspectors General
on Integrity and Efficiency. SBA believes that these provisions can
help reduce fraud, waste and abuse in the program and does not think
these provisions should be changed at this time.
SBA received comments on the Department of Defense's (DoD's)
Commercialization Readiness Program, outlined in section 12(b) of the
SBIR Policy Directive. In response to comments that agency efforts to
increase transitions to Phase III could reduce the innovative nature of
SBIR awards, SBA has added that when DoD reports on its Phase II
insertion incentives, it should note efforts to ensure that such
incentives do not act to shift the focus of SBIR Phase II awards away
from relatively high-risk innovation projects. SBA also amended the
provisions relating to the use of SBIR funds for the DoD
Commercialization Readiness Program. According to section 1615 of the
National Defense Authorization Act for Fiscal Year 2013 (NDAA), Public
Law 112-239, 126 Stat. 1632, DoD has the authority to use 1% of its
SBIR funding for purposes of administering the Commercialization
Readiness Program.
A number of comments asked us to change features that, because they
are required by statute, we were not able to modify.
Miscellaneous Changes
The inadvertent omission of the term ``extramural'' before ``R/R&D
budgets'' was corrected in section 2(b), which identifies the source of
funds for the program.
Section 3 contains definitions of terms that appear throughout the
Policy Directive. SBA made an editorial revision to the definition of
``Awardee'' in section 3(e). SBA revised the word ``receiving'' to
``that receives.''
Section 4(b)(1), which identifies the objective and nature of a
Phase II award, includes a statement regarding the eligibility of
successor in interest firms for SBIR awards. Because this statement
pertains more generally to eligibility for all SBIR awards, it was
removed from section 4(b)(1) and added to section 6(a) which addresses
program eligibility requirements.
In Section 6, SBA removed the reference to the STTR program
regarding the option to make awards to small businesses that are
majority owned by multiple venture capital operating companies, hedge
funds or private equity firms. When SBA issued its final size
regulations on December 27, 2012 (77 FR 76215), it reviewed this issue
and determined that such businesses may not participate in the STTR
program. Additionally, SBA added the language previously found at
section 4(b)(1) regarding successor in interest firms to section
6(a)(5), because section 6(a) addresses general program eligibility.
Sections 6(a)(2) through 6(a)(6) were reorganized and renumbered in
order to increase readability.
Section 7 addresses issues related to program funding processes.
SBA revised the language in paragraph 7(d) to clarify that while
duplicate or similar proposals may be submitted in response to
apparently similar solicitation topics, essentially equivalent work may
not be funded. In addition, SBA revised paragraph (h)(1), which says
that funding agreement modifications should be kept to a minimum, to
address only modifications that increase the dollar amount of awards.
Paragraph (h)(1) also referred to modifications of periods of
performance and scope of work. SBA clarified section 7(h)(1) to specify
that the concern regarding the number of modifications made to an award
pertains only to changes that increase the dollar amount of awards.
Section 8 of the Directive addresses the terms of agreement under
SBIR awards. SBA clarified section 8(a) by removing language stating
that agencies should discourage SBCs from submitting proprietary
information and revised section 8(d) to clarify that the continued use
of agency-owned property applies to property acquired by the awardee
under the contract.
In response to concerns regarding the cost and accountability of
the continuing study by the National Academy of Sciences, SBA modified
section 9(h) to clarify that the agreement required between the
agencies and the National Academy of Sciences must be made in
consultation with the SBA and must comprehensively address the scope
and content of the work to be performed.
Section 10(h) explains the process for agencies to submit their
SBIR program annual reports to SBA. Paragraph (h)(4) contains a list of
information that must be included in each agency's annual report. SBA
clarified section 10(h)(4)(xi) to note that agencies must report all
instances in which an agency pursued R/R&D, services, production, or
any combination thereof of a technology developed under an SBIR award
with an entity other than that SBIR awardee.
Section 10(j) contains information on the other reporting
requirements for
[[Page 1305]]
SBIR participating agencies. Section 10(j)(2) discusses a system that
will list any individual or small business concern that received an
SBIR award and that has been convicted of a fraud-related crime
involving SBIR funds or found civilly liable for a fraud-related
violation involving SBIR funds. SBA clarified this section to note that
SBA will list those individuals and small business concerns of which
SBA has been made aware.
Section 12(b) addresses the Commercialization Readiness Program at
the Department of Defense (DoD). SBA clarified the source of funding
for this program by removing the sentence in paragraph (b)(4)(ii)
stating that funds for the program would come from the 3%
administrative set-aside, and by clarifying that the funds shall not be
subject to the limitations on the use of funds in section 9(e)(3). In
addition, in section 12(b)(6)(iii)(C), SBA clarified that the DoD must
include, along with its description of the incentives used for this
program, information on measures taken to ensure that such incentives
do not shift the focus of the SBIR Phase II awards away from the
relatively high-risk innovation projects they are intended to promote.
Section 12(b)(5) addresses DoD's Commercialization Readiness
Program. The Policy Directive states that DoD may establish transition
goals and reporting requirements for awards less than $1,000,000,000.
The amount listed in section 12(b)(5) contained a typographical error,
which was corrected to $100,000,000.
Appendix I provides instructions for the preparation of program
solicitations. In Appendix I, SBA revised the certification check box
regarding notification if work is subsequently funded by another
Federal agency to clarify that it pertains to work funded and completed
under the award rather than to the work proposed for the award.
The updated SBIR Policy Directive, incorporating all changes noted
here, will be posted on www.sbir.gov.
Notice of Amendments to Final Policy Directive; Small Business
Innovation Research Program
To: The Small Business Innovation Research Program Managers.
Subject: Amendments to SBIR Policy Directive Published on August 6,
2012 at 77 FR 46806.
1. Purpose. The purpose of this notice is to inform SBIR agencies
of amendments made to the recently published SBIR Policy Directive.
2. Authority. Section 9(j)(3) of the Small Business Act (15 U.S.C.
638(j)) requires the Administrator of the U.S. Small Business
Administration (SBA) to issue an SBIR Program Policy Directive for the
general conduct of the SBIR Program.
3. Procurement Regulations. It is recognized that the Federal
Acquisition Regulations and agency supplemental regulations may need to
be modified to conform to the requirements of the final Policy
Directive. SBA's Administrator or designee must review and concur with
any regulatory provisions that pertain to areas of SBA responsibility.
SBA's Office of Innovation coordinates such regulatory actions.
4. Personnel Concerned. This Policy Directive serves as guidance
for all federal government personnel who are involved in the
administration of the SBIR Program, issuance and management of Funding
Agreements or contracts pursuant to the SBIR Program, and the
establishment of goals for small business concerns in research or
research and development acquisition or grants.
5. Originator. SBA's Office of Innovation and Technology.
6. Date. The policy directive is effective on January 8, 2014.
Authorized by:
Dated: December 26, 2013.
Pravina Raghavan,
Deputy Associate Administrator, Office of Investment and Innovation
Small Business Administration.
Dated: December 26, 2013.
Jeanne Hulit,
Acting Administrator.
SBA amends the SBIR Policy Directive as follows:
1. Amend section 2(b) by adding the term ``extramural'' before ``R/
R&D budgets'' each place it appears.
2. Revise section 3(e) to read as follows:
(e) Awardee. The organizational entity that receives an SBIR Phase
I, Phase II, or Phase III award.
3. Revise section 4(a)(3) to read as follows:
(3) Agency benchmarks for progress towards commercialization. Each
agency must determine whether an applicant for a Phase I award that has
won multiple prior SBIR awards meets the agency's benchmark
requirements for progress towards commercialization before making a new
Phase I award to that applicant. For the purpose of this requirement,
applicants are assessed using their prior Phase I and Phase II SBIR and
STTR awards across all SBIR agencies.
(i) Agencies must apply two benchmark rates addressing an
applicant's progress towards commercialization--the Phase II Transition
Rate Benchmark and the Commercialization Rate Benchmark.
(A) The Phase II Transition Rate Benchmark sets the minimum
required number of Phase II awards the applicant must have received for
a given number of Phase I awards received during the specified period.
This Transition Rate Benchmark applies only to Phase I applicants that
have received more than 20 Phase I awards over the time period used by
the agency for the benchmark determination.
(B) The agency Commercialization Rate Benchmark sets the minimum
Phase III commercialization results that a Phase I applicant must have
realized from its prior Phase II awards in order to be eligible to
receive a new Phase I award from that agency. This benchmark
requirement applies only to Phase I applicants that have received more
than 15 Phase II awards over the time period used by the agency for the
benchmark determination.
(ii) Consequence. If an awardee fails to meet either of the
benchmarks, that awardee is not eligible for an SBIR Phase I award (and
any Phase II award issued pursuant to paragraph (b)(1)(ii) below) for a
period of one year from the time of the determination.
(iii) Timing of the determination and consequence period. The SBIR
awardee Phase II transition rates and commercialization rates are
calculated using the data in SBA's TechNet database. For the purpose of
these benchmark requirements, awardee firms are assessed once a year,
on June 1st, using their prior SBIR and STTR awards across all
agencies. SBA makes this tabulation of awardee transition rates and
commercialization rates available to the agencies. Each SBIR agency
uses this tabulation to determine which companies do not meet that
agency's benchmark rates and are therefore ineligible to receive new
Phase 1 awards from that agency during the one-year period beginning on
June 1st and ending on May 31st. SBA notifies these ineligible firms of
the determination and the one year restriction on Phase I awards.
Agencies must notify SBA of any applications denied because of the
failure to meet the benchmarks.
(iv) Phase II Transition Rate Benchmark. Each agency must establish
an SBA-approved Phase II Transition Rate Benchmark and applicable time
period. The benchmark rates and time periods are posted at
www.sbir.gov. Agencies must seek approval for any subsequent changes
from SBA.
(A) The agency Phase II Transition Rate Benchmark establishes the
number of Phase II awards a small business
[[Page 1306]]
concern must have received for a given number of Phase I awards
received over the past 5, 10 or 15 fiscal years, excluding the most
recently completed fiscal year. Each agency selects both the rate to be
applied and the length of time that the agency will use to evaluate
whether a small business concern has met the Transition Rate Benchmark.
The period over which Phase I awards are counted excludes the most
recently completed fiscal year. The time period over which Phase II
awards are counted includes the most recently completed fiscal year and
excludes the first year of the time period evaluated for Phase I
awards.
Example: On August 1, 2014, an SBC submits an application to an
agency using a Transition Rate Benchmark of 0.25 and a 5-year time
period. The June 1, 2014 TechNet Company Registry tabulation shows
that the SBC received 24 Phase I awards during FY08-FY12. Since this
SBC has received 20 or more Phase I awards during the 5-year period,
the SBC is required to meet the Transition Rate Benchmark. The SBC
received 8 Phase II awards in FY09-FY13 and therefore has a 5-year
Phase II transition rate of 8/24 or 0.33 ( of Phase II
awards in FY09-FY13/ of Phase I awards in FY08-FY12).
Because the SBC meets or exceeds the agency Transition Rate
Benchmark, it is considered for award through the usual proposal
evaluation process.
Example 2: On September 1, 2014, an SBC is interested in
applying for a Phase I award, knows it has received a number of
Phase I awards in recent years, but is unsure if it is meeting the
required Phase II transition rate. The company official logs onto
the Company Registry at SBIR.gov to check its status and sees a flag
saying it did not meet the required benchmark transition rate of
0.25 on June 1, 2014 and is therefore ineligible for a Phase I award
through May 31, 2015. The company checks its records and sees that
it received 30 Phase I awards during FY08-FY12 and 6 Phase II awards
during FY09-FY13. Its transition rate is therefore 6/30 or 0.20
which is under the required rate of 0.25. The SBC does not apply for
a new Phase I award through May 31, 2015 because it knows its
application would be rejected.
Example 3: On September 1, 2014, an SBC official interested in
applying for a Phase I award logs onto the Company Registry at
SBIR.gov and sees the flag saying it did not meet the required
benchmark transition rate of 0.25 on June 1, 2014 and is not
eligible for a Phase I award through May 31, 2015. However, when the
company checks its own records, it sees that it received 8 Phase II
awards during FY09-FY13, not the 6 awards showing on the Web site.
Its transition rate is therefore 8/30 or 0.26 which is above the
required rate of 0.25. The company official therefore goes to
SBIR.gov, clicks on the ``Dispute Transition Rate'' button, and
enters the information about the discrepancy. SBA uses the
information provided by the company and, working with the relevant
agencies, identifies that two Phase II awards from FY09 had been
inadvertently omitted. SBA updates and corrects the database and
informs the firm that it is indeed eligible to receive SBIR Phase I
awards.
(B) An SBC that has received more than 20 Phase I awards in the
relevant time period can view its Phase II transition rate on the
Company Registry page at SBIR.gov. Generally, the award data used to
calculate an SBC's transition rate will be complete by the end of March
each year. An SBC may view its SBIR/STTR award information on the
Company Registry at any time. If an awardee believes its Phase II
transition rate is calculated using incomplete award information, the
awardee may dispute the rate using the link provided on the Company
Registry, provide the additional award information, and request a
reconsideration of its transition rate. Requests for reconsideration of
a firm's transition rate received by SBA from April 1st through April
30th of each year will be considered for the June 1st transition rate
assessment.
(C) Agencies must set the Phase II Transition Rate Benchmark as
appropriate for their programs and industry sectors. When setting the
Transition Rate Benchmark, agencies should consider that Phase I is
designed and intended to explore high-risk, early-stage research ideas
and, as a result, not all Phase I awards are expected to result in a
Phase II award.
(v) Commercialization Rate Benchmark. By October 1, 2013, each
agency will establish an SBA-approved Commercialization Rate Benchmark
that establishes the level of Phase III commercialization results an
SBC must have received from work it performed under prior Phase II
awards, over the prior 5, 10 or 15 fiscal years, excluding the most
recently completed two fiscal years. Agencies may define this
benchmark:
(A) in financial terms, such as by using the ratio of the dollar
value of revenues and additional investment resulting from prior Phase
II awards relative to the dollar value of the Phase II awards received
over the time period;
(B) in terms of the share of Phase II awards received over the time
period that have resulted in the introduction of a product to market;
or
(C) by other means such as using a commercialization scoring system
that rates awardees on their past commercialization success.
(vi) Agencies must submit their Transition Rate Benchmark,
Commercialization Rate Benchmark, and time periods to SBA for approval.
SBA will publish the benchmarks and time periods, seek public comment,
and maintain a table of the current requirements on www.sbir.gov. The
benchmarks and time periods become effective when SBA posts the
approved measures on www.sbir.gov. Agencies must submit any changes to
the benchmarks or time periods to SBA for prior approval.
(vii) SBA maintains a system that records all Phase I, Phase II and
Government Phase III awards, and other commercialization information;
and calculates the Phase II transition rates for all Phase I awardees
and the commercialization rates for all Phase II awardees.
(viii) If an applicant fails to meet an agency's benchmark, its
name will appear on the list of companies made available to the
agencies on June 1 of each year. An agency may not make a Phase I award
to an applicant that does not meet the agency's benchmark.
(ix) If an awardee believes its determination was made in error, it
may provide SBA with the pertinent award information and request a
reassessment. To do so, awardees may use the link on the Company
Registry at www.sbir.gov.
4. Amend section 4(b) by revising paragraph (b)(1) by moving
language to 6(a)(4), renumbering paragraph (b)(6) as (b)(8), and
inserting paragraphs (b)(6) and (b)(7) to read as follows:
(b) Phase II.
(1) The object of Phase II is to continue the R/R&D effort from the
completed Phase I. Unless an exception set forth in paragraphs (i) or
(ii) below applies, only SBIR Phase I awardees are eligible to
participate in Phase II.
(i) A Federal agency may issue an SBIR Phase II award to an STTR
Phase I awardee to further develop the work performed under the STTR
Phase I award. The agency must base its decision upon the results of
work performed under the Phase I award and the scientific and technical
merit, and commercial potential of the Phase II proposal. The STTR
Phase I awardee must meet the eligibility and program requirements of
the SBIR Program in order to receive the SBIR Phase II award.
(ii) During fiscal years (FY) 2012 through 2017, the National
Institutes of Health (NIH), Department of Defense (DoD) and the
Department of Education (DoEd) may issue a Phase II award to a small
business concern that did not receive a Phase I award for that R/R&D.
Prior to such an award, the heads of those agencies, or designees, must
issue a written determination that the small business has demonstrated
the scientific and technical merit and feasibility of the ideas that
appear to have commercial potential. The determination must be
[[Page 1307]]
submitted to SBA prior to issuing the Phase II award.
. . . [paragraphs (2) through (4) are unchanged] . . .
(5) A Phase II awardee may receive one additional, sequential Phase
II award to continue the work of an initial Phase II award. The
additional, sequential Phase II award has the same guideline amounts
and limits as an initial Phase II award.
(6) Agencies may offer special SBIR awards, such as Phase IIB
awards, that supplement or extend Phase II awards. For example, some
agencies administer Phase IIB awards that differ from the base Phase II
in that they require third party matching of the SBIR funds. Each such
supplemental award must be linked to a base Phase II award (the initial
Phase II, or the second sequential Phase II award). Any SBIR funds used
for such special or supplementary awards are aggregated with the amount
of the base Phase II to determine the size of that Phase II award.
Therefore, while there is no limit on the number of such special/
supplementary awards, there is a limit on the total amount of SBIR
funds that can be administered through them--the amounts of these
awards count towards the size of the initial Phase II or the sequential
Phase II, each of which has a guideline amount of $1 million and a
limit of $1.5 million. (Note that Phase IIB awards under the NIH SBIR
program are administered as second, sequential Phase II awards, not
supplemental awards. As such, they are base Phase II awards and subject
to the Phase II guideline amounts and limits of $1 million and $1.5
million).
(7) A concern that has received a Phase I award from an agency may
receive a subsequent Phase II award from another agency if each agency
makes a written determination that the topics of the relevant awards
are the same and both agencies report the awards to the SBA including a
reference to the related Phase I award and initial Phase II award if
applicable.
(8) Agencies may issue Phase II awards for testing and evaluation
of products, services, or technologies for use in technical or weapons
systems.
5. Revise section 6(a)(2) through Sec. 6(a)(6)to read as follows:
(2) For Phase I, a minimum of two-thirds of the research or
analytical effort must be performed by the awardee. For Phase II, a
minimum of one-half of the research or analytical effort must be
performed by the awardee. Occasionally, deviations from these
requirements may occur, and must be approved in writing by the funding
agreement officer after consultation with the agency SBIR Program
Manager/Coordinator. An agency can measure this research or analytical
effort using the total contract dollars or labor hours, and must
explain to the small business in the solicitation how it will be
measured.
(3) For both Phase I and Phase II, the primary employment of the
principal investigator must be with the SBC at the time of award and
during the conduct of the proposed project. Primary employment means
that more than one-half of the principal investigator's time is spent
in the employ of the SBC. This precludes full-time employment with
another organization. Occasionally, deviations from this requirement
may occur, and must be approved in writing by the funding agreement
officer after consultation with the agency SBIR Program Manager/
Coordinator. Further, an SBC may replace the principal investigator on
an SBIR Phase I or Phase II award, subject to approval in writing by
the funding agreement officer. For purposes of the SBIR Program,
personnel obtained through a Professional Employer Organization or
other similar personnel leasing company may be considered employees of
the awardee. This is consistent with SBA's size regulations, 13 CFR
121.106--Small Business Size Regulations.
(4) For both Phase I and Phase II, the R/R&D work must be performed
in the United States. However, based on a rare and unique circumstance,
agencies may approve a particular portion of the R/R&D work to be
performed or obtained in a country outside of the United States, for
example, if a supply or material or other item or project requirement
is not available in the United States. The funding agreement officer
must approve each such specific condition in writing.
(5) An SBIR awardee may include, and SBIR work may be performed by,
those identified via a ``novated'' or ``successor in interest'' or
similarly-revised funding agreement, or those that have reorganized
with the same key staff, regardless of whether they have been assigned
a different tax identification number. Agencies may require the
original awardee to relinquish its rights and interests in an SBIR
project in favor of another applicant as a condition for that
applicant's eligibility to participate in the SBIR Program for that
project.
(6) NIH, Department of Energy and National Science Foundation may
award not more than 25% of the agency's SBIR funds to SBCs that are
owned in majority part by multiple venture capital operating companies,
hedge funds, or private equity firms through competitive, merit-based
procedures that are open to all eligible small business concerns. All
other SBIR agencies may award not more than 15% of the agency's SBIR
funds to such SBCs. SBIR agencies may or may not choose to utilize this
funding option. A table listing the agencies that are currently using
this authority can be found at www.SBIR.gov. This authority is set
forth in 13 CFR 121.701 through 121.705.
(i) Before permitting participation in the SBIR program by SBCs
that are owned in majority part by multiple venture capital operating
companies, hedge funds, or private equity firms, the SBIR agency must
submit a written determination 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 at least 30
calendar days before it begins making awards to such SBCs. The
determination must be made by the head of the Federal agency or
designee and explain how awards to such SBCs in the SBIR program will:
(A) induce additional venture capital, hedge fund, or private
equity firm funding of small business innovations;
(B) substantially contribute to the mission of the Federal agency;
(C) address a demonstrated need for public research; and
(D) otherwise fulfill the capital needs of small business concerns
for additional financing for SBIR projects.
(ii) The SBC that is majority-owned by multiple venture capital
operating companies, hedge funds, or private equity firms must register
with SBA in the Company Registry Database, at www.SBIR.gov, prior to
the date it submits an application for an SBIR award.
(iii) The SBC that is majority-owned by multiple venture capital
operating companies, hedge funds, or private equity firms must submit a
certification with its proposal stating, among other things, that it
has registered with SBA.
(iv) Any agency that makes an award under this paragraph during a
fiscal year shall collect and submit to SBA data relating to the number
and dollar amount of Phase I awards, Phase II awards, and any other
category of awards by the Federal agency under the SBIR program during
that fiscal year. See section10 of this directive for the specific
reporting requirements.
(v) If an agency awards more than the percentage of the funds
authorized under section 6(a)(2) of the Policy Directive, the agency
shall transfer from its non-SBIR and non-STTR R&D funds to the agency's
SBIR funds any amount
[[Page 1308]]
that is in excess of the authorized amount. The agency must transfer
the funds not later than 180 days after the date on which the Federal
agency made the award that exceeded the authorized amount.
(vi) If a Federal agency makes an award under a solicitation more
than 9 months after the date on which the period for submitting
applications under the solicitation ends, a Covered Small Business
Concern is eligible to receive the award, without regard to whether it
meets the eligibility requirements of the program for a SBC that is
majority-owned by multiple venture capital operating companies, hedge
funds, or private equity firms, if the Covered Small Business Concern
meets all other requirements for such an award. In addition, the agency
must transfer from its non-SBIR and non-STTR R&D funds to the agency's
SBIR funds any amount that is so awarded to a Covered Small Business
Concern. The funds must be transferred not later than 90 days after the
date on which the Federal agency makes the award.
6. Revise section 7(d) to read as follows:
(d) Essentially Equivalent Work. SBIR participants often submit
duplicate or similar proposals to more than one soliciting agency when
the announcement or solicitation appears to involve similar topics or
requirements. However, ``essentially equivalent work'' must not be
funded in the SBIR or other Federal programs, unless an exception to
this rule applies. Agencies must verify with the applicant that this is
the case by requiring them to certify at the time of award and during
the lifecycle of the award that they do not have essentially equivalent
work funded by another Federal agency.
7. Revise section 7(h)(1) to read as follows:
(h) Periods of Performance and Extensions.
(1) In keeping with the legislative intent to make a large number
of relatively small awards, modification of funding agreements to
increase the dollar amount should be kept to a minimum, except for
options in original Phase I or II awards.
8. Revise section 8(a) to read as follows:
(a) Proprietary Information Contained in Proposals. The
standardized SBIR Program solicitation will include provisions
requiring the confidential treatment of any proprietary information to
the extent permitted by law. The solicitation will require that all
proprietary information be identified clearly and marked with a
prescribed legend. Agencies may elect to require SBCs to limit
proprietary information to that essential to the proposal and to have
such information submitted on a separate page or pages keyed to the
text. The Government, except for proposal review purposes, protects all
proprietary information, regardless of type, submitted in a contract
proposal or grant application for a funding agreement under the SBIR
Program, from disclosure.
9. Revise section 8(d) to read as follows:
(d) Continued Use of Government Equipment. Agencies must allow an
SBIR awardee participating in the third phase of the SBIR Program
continued use, as a directed bailment, of any property transferred by
the agency to the Phase II awardee or acquired by the awardee for the
purpose of fulfilling the contract. The Phase II awardee may use the
property for a period of not less than 2 years, beginning on the
initial date of the concern's participation in the third phase of the
SBIR Program.
10. Revise section 9(h) to read as follows:
(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.
11. Revise section 10(h)(4)(xi) to read as follows:
(xi) All instances in which an agency pursued R/R&D, services,
production, or any combination thereof of a technology developed under
an SBIR award with an entity other than that SBIR awardee. See section
9(a)(12) for minimum reporting requirements.
12. Revise section 10(j)(2) to read as follows:
(2) The system will include a list of any individual or small
business concern that has received an SBIR award and that has been
convicted of a fraud-related crime involving SBIR funds or found
civilly liable for a fraud-related violation involving SBIR funds, of
which SBA has been made aware.
13. Revise section 12(b)(4) to read as follows:
(4) Funding.
(i) Beginning with FY 2013 and ending in FY 2015, the Secretary of
Defense and each Secretary of a military department is authorized to
use its SBIR funds for administration of this program in accordance
with the procedures and policies set forth in section 9(e)(3) of this
directive.
(ii) In addition, the Secretary of Defense and Secretary of each
military department is authorized to use not more than an amount equal
to 1% of its SBIR funds available to DoD or the military departments
for payment of expenses incurred to administer the Commercialization
Program. Such funds--
(A) shall not be subject to the limitations on the use of funds in
9(e)(2) or 9(e)(3) of this directive; and
(B) shall not be used to make Phase III awards.
14. Revise section 12(b)(5) to read as follows:
(5) Contracts Valued at less than $100,000,000. For any contract
awarded by DoD valued at less than $100,000,000, the Secretary of
Defense may:
(i) establish goals for the transition of Phase III technologies in
subcontracting plans; and
(ii) require a prime contractor on such a contract to report the
number and dollar amount of the contracts entered
[[Page 1309]]
into by the prime contractor for Phase III SBIR projects.
15. Revise section 12(b)(6) to read as follows:
(6) The Secretary of Defense shall:
(i) set a goal to increase the number of SBIR Phase II contracts
that lead to technology transition into programs of record of fielded
systems;
(ii) use incentives in effect as of December 31, 2011 or create new
incentives to encourage agency program managers and prime contractors
to meet the goal set forth in paragraph (6)(i) above; and
(iii) submit the following to SBA, as part of the annual report:
(A) the number and percentage of Phase II SBIR contracts awarded by
DoD that led to technology transition into programs of record or
fielded systems;
(B) information on the status of each project that received funding
through the Commercialization Program and the efforts to transition
these projects into programs of record or fielded systems; and
(C) a description of each incentive that has been used by DoD, the
effectiveness of the incentive with respect to meeting DoD's goal to
increase the number of SBIR Phase II contracts that lead to technology
transition into programs of record of fielded systems, and measures
taken to ensure that such incentives do not act to shift the focus of
SBIR Phase II awards away from relatively high-risk innovation
projects.
16. Revise paragraph 1(a) of the Appendix I: Instructions for
Preparation of SBIR Program Solicitation to read as follows:
(a) Summarize in narrative form the request for proposals and the
objectives of the SBIR Program.
17. In Appendix I, in the SBIR Funding Agreement Certification and
the SBIR Funding Agreement Certification--Life Cycle Certification,
revise the checkbox addressing potential duplicative funding to read as
follows:
It will notify the Federal agency immediately if all or a portion of
the work authorized and funded under this award is subsequently funded
by another Federal agency.
[FR Doc. 2013-31374 Filed 1-7-14; 8:45 am]
BILLING CODE 8025-01-P