Small Business Innovation Research and Small Business Technology Transfer Programs Phase II

The Small Business Administration (SBA), through the SBIR/STTR Policy Directive, provides policy guidance for these programs. A main purpose of the legislation is to stimulate technological innovation and increase private sector commercialization among small business concerns and enable them to undertake and to obtain the benefits of research and development in order to maintain and strengthen the competitive free enterprise system and the national economy. The goal of Phase II is to continue research and development while increasing the focus on commercialization. The STTR program aims to foster technology transfer through formal cooperative R&D between small businesses and nonprofit research institutions. The USDA SBIR/STTR programs Assistance Listing 10.212, is therefore in a unique position to meet both the goals of USDA and the purpose of the SBIR/STTR legislation by transforming scientific discovery and innovation both social and economic benefit, and by emphasizing private sector commercialization.

Only previous USDA-NIFA SBIR/STTR Phase I awardees who have not previously applied for Phase II support are eligible to apply for Phase II support through this FY 2023 RFA. This includes those awardees identified via a “novated” or “successor-in-interest” revised funding agreement. A Phase I project may only apply for a Phase II award once. If a Phase I awardee was unsuccessful in receiving a Phase II award with a previous application, then the awardee is not eligible to resubmit the proposal under this or a future Phase II program solicitation. Failure to meet an eligibility criterion by the application deadline may result in the application being excluded from consideration or, even though an application may be reviewed, will preclude USDA NIFA from making an award.Each applicant submitting an application must qualify as a Small Business Concern (SBC) through registration with the SBA for R/R&D purposes at the time of award (see Definitions in Appendix II and Appendix III).SBIR/STTR program eligibility requirements are in place to ensure that the funds go only to small, independent businesses within the United States. The regulations include restrictions about (1) the type of firm, (2) its ownership structure, and (3) the firm’s size in terms of the number of employees. The purpose of the requirement regarding type of firm is to target the awards to firms with an economic interest in developing the idea or research into a commercial application. The purpose of the ownership requirement is to limit the program to independent firms controlled by United States citizens or permanent resident aliens as a way of maximizing the likelihood that the funding will stimulate innovative activity within the United States economy. The purpose of the size restriction (number of employees of the firm and its affiliates) is to limit program funding to small business concerns which have a unique capacity for innovation and are more likely to be constrained by lack of access to such funding.TYPE OF FIRM1. An SBIR/STTR small business awardee must be a business concern – it must be organized as a for-profit concern and meet all of the other requirements for a “business concern” in 13 C.F.R. § 121.105.2. Non-profit entities are not eligible.3. If an awardee is a joint venture, each party to the joint venture must be a concern that satisfies all program eligibility requirements.OWNERSHIP & CONTROLA majority (more than 50%) of your firms’ equity (e.g., stock) must be directly owned and controlled by one of the following:1. One or more individuals who are citizens or permanent resident aliens of the United States,2. Other for-profit small business concerns (each of which is directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States).3. A combination of (1) and (2) above.4. Multiple venture capital operating companies, hedge funds, private equity firms, or any combination of these, so long as no one such firm owns or controls more than 50% of the18equity. Note: This option is allowed only for SBIR/STTR awards from agencies that are using the authority provided in § 5107 of the SBIR/STTR Reauthorization Act (majority‐VC‐ owned authority),15 U.S.C. § 638(dd)(1).Note: If an Employee Stock Ownership Plan owns all or part of the concern, each stock trustee and plan member is considered an owner. If a trust owns all or part of the concern, each trustee and trust beneficiary is considered an owner.For more information on SBIR/STTR eligibility go to https://www.sbir.gov/sites/default/files/elig_size_compliance_guide.pdfA potential grantee that is a subsidiary must show that the parent company or parent companies are also a small business entity as described above. The parent companies must be a small business and located within the United States. The parent company or parent companies must provide documentation supporting their small business status (the documentation should be included in, Other Attachments, Field 12, of the Research and Related (R&R) Other Project Information form as directed by Part IV of this RFA). If the parent company or one of the parent companies is a nonprofit organization or an organization outside of the United States, then the subsidiary is not eligible to submit an SBIR/STTR application.Joint ventures, limited partnerships and venture capital are eligible provided the entity created qualifies as a small business concern as defined in this program solicitation.In addition, for SBIR, the primary employment of the Project Director/Principal Investigator (PD/PI) must be with the small business concern at the time of award and during the conduct of the proposed project. Eligible primary employment means that more than one-half (51%) of the PD’s/PI’s time is spent in the employ of the small business during the award period of performance. Primary employment with the small business precludes the applicant as a full-time employee with another organization or academic institution. While the PD/PI must work more than one-half (51%) of his/her time for the small business during the entire grant period, there is no time requirement for the PD’s/PI’s work on the proposed research. Prior Federal Employees must provide documentation that post termination requirements from Federal Service has been completed at time of submission.For STTR, the PD/PI for the proposed project (or, if multiple PD/PIs, at least one PD/PI) must be employed by and perform more than one half (51%) of the PD/PIs time in the employ of either the small business concern or the partnering nonprofit Research Institution. For projects with multiple PD/PIs, at least one PD/PI must meet the primary employment requirement. That PD/PI will serve as the contact PD/PI for the Project Team.To apply to both the SBIR and STTR programs, the PD/PI must be employed more than one-half (51%) by the Small Business Concern.Size. An SBIR/STTR awardee, combined with its affiliates, must not have more than 500 employees. The small business concern must be the primary performer of the proposed research effort. In Phase II, for SBIR, a minimum of one-half (50%) of the research or analytical work, as determined by budget expenditures, must be performed by the proposing small business concern organization. For STTR Phase I, as determined by budget expenditures, a minimum of 30% and19a maximum of 60% of the research or analytical work must be performed by a single nonprofit research institution (e.g., university, federal laboratory, etc.). To apply to both the SBIR and STTR programs, at least 30% but not more than 50% of the research must be conducted by a single nonprofit research institution (e.g., University, Federal Laboratory, etc.).Work in the United States. For Phase II, the R/R&D work must be performed in the United States. On rare and unique circumstances, for example, a supply, material or project requirement may not be available in the United States, agencies may allow that particular portion of the R/R&D work to be performed or obtained outside of the United States. Upon award, the Phase II awardee may request an exception as described in the award terms and conditions and submit to USDA-NIFA for approval.Benchmark. A small business firm that submits a Phase II application and has received more than 15 SBIR/STTR Phase II awards during the preceding 5 fiscal years must document the extent to which it was able to secure Phase III funding/sales to develop concepts resulting from previous Phase II SBIR/STTR awards. In addition, the documentation must include the name of the awarding agency, date of award, funding agreement number, amount, topic or subtopic title, follow-on agreement amount, source and date of commitment, and current commercialization status for each Phase II award. This information will be retained for the report required under section 105 of the Small Business Research and Development Enhancement Act of 1992.