[Federal Register Volume 79, Number 216 (Friday, November 7, 2014)]
[Proposed Rules]
[Pages 66342-66343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-26583]

[[Page 66342]]



13 CFR Chapter I

RIN 3245-AG64

Small Business Innovation Research (SBIR) and Small Business 
Technology Transfer (STTR) Policy Directives; Data Rights; Phase III 
Award Preference; Other Clarifying Amendments

AGENCY: Small Business Administration.

ACTION: Advanced Notice of Policy Directive Amendments; request for 


SUMMARY: The Small Business Administration (SBA) seeks comments from 
the public on two key areas of the SBIR and STTR Policy Directives that 
the SBA is considering revising: SBIR and STTR data rights, and the 
Government's responsibilities with respect to SBIR and STTR Phase III 
awards. The SBA intends to provide greater clarity and detail on these 
issues in the Policy Directives.

DATES: Comments must be received on or before January 6, 2015.

ADDRESSES: You may submit comments, identified by RIN 3245-AG64, by any 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include RIN 3245-AG64 in the 
subject line of the message.
     Mail/Hand Delivery/Courier: Edsel Brown, Office of 
Innovation, U.S. Small Business Administration, 409 Third Street SW., 
Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT: Edsel Brown Jr., Assistant Director, 
Office of Technology, Office of Innovation and Investment, (202) 205-
6450 or at [email protected].

SUPPLEMENTARY INFORMATION: On August 6, 2012, SBA published a final 
SBIR Policy Directive at 77 FR 46806, and a final STTR Policy Directive 
at 77 FR 46855 (both available at www.sbir.gov), implementing the 
various provisions of the National Defense Authorization Act for Fiscal 
Year 2012 (Defense Authorization Act), Public Law 112-81, 125-Stat. 
1298, related to the SBIR and STTR programs. These provisions were 
specifically enacted in Section 5001, Division E of the Defense 
Authorization Act, the SBIR/STTR Reauthorization Act of 2011 
(Reauthorization Act), which amended the Small Business Act and made 
several amendments to the SBIR and STTR Programs. Subsequent to the 
publication of the SBIR and STTR final directives SBA issued clarifying 
amendments on January 8, 2014 at 79 FR 1303 (SBIR) and 79 FR 1309 
    In the notices of the final directives, SBA stated it intended to 
update the directives on a regular basis and to restructure and 
reorganize the directives, as well as address certain policy issues 
(e.g., those concerning data rights). At this time, SBA intends to 
revise the SBIR and STTR policy directives to provide greater 
clarification of SBIR and STTR data rights and the issues related to 
SBIR and STTR Phase III work. SBA intends this clarification to provide 
additional guidance to agencies regarding the implementation of the 
programs, additional policy language to inform regulatory texts in the 
Federal Acquisition Regulation and agency supplemental regulations, and 
useful information for SBIR/STTR awardee and applicant firms.
    Although the SBIR and STTR Policy Directives are intended for use 
by the SBIR and STTR participating agencies, SBA believes that public 
input from all parties involved in the program would be invaluable. 
Therefore, before proceeding with proposed changes, SBA would like to 
know from the public if there are specific concerns that SBA should 
address when clarifying program policy in these identified areas.

1. SBIR/STTR Data Rights

    The Small Business Act provides for SBIR and STTR awardees to 
receive certain data rights. See e.g. 15 U.S.C. 638(j)(1)(B)(v) 
(``retention of rights in data generated in the performance of the 
contract by the small business concern;''); id. at 638(j)(2)(A) and 
638(p)(2)(B)(v) (``retention by a small business concern of the rights 
to data generated by the concern in the performance of an [SBIR or 
STTR] award for a period of not less than 4 years;''). SBA's Policy 
Directives also explain that agencies must protect from disclosure and 
non-governmental use all SBIR/STTR technical data developed from work 
performed under an SBIR or STTR funding agreement for a period of not 
less than four years from delivery of the last deliverable under that 
agreement (either Phase I, Phase II, or Federally-funded SBIR/STTR 
Phase III) unless the agency obtains permission to disclose such SBIR 
or STTR technical data from the awardee or applicant. See SBIR and STTR 
Policy Directives, section 8(b)(2).
    SBA has heard from small businesses that SBIR and STTR data has 
been disclosed to large contractors in procurement specifications, 
solicitations, or through reverse engineering. SBA has also received 
reports that Government contractors have been unaware that SBIR and 
STTR awards have special features with regard to data rights. SBA 
intends to address these issues by clarifying the language on data 
rights in the policy directives. SBA specifically requests comments on 
the following:
     The extent to which the awardee owns the data it generates 
in performance of an award.
     The Government's obligations to protect SBIR/STTR data 
from disclosure for at least four years following the delivery of the 
last deliverable of an SBIR/STTR award.
     During the protection period, the Government's right to 
access, review and evaluate SBIR/STTR data, but not to modify the data.
     After the protection period expires, the Government's 
right to use and disclose the data solely on behalf of the government, 
which means that the government may use and disclose data for 
competitive procurements (with non-disclosure agreements) but cannot 
use the data for commercial (non-governmental) purposes.
     Possible discrepancies between current FAR and agency 
supplemental regulations and SBA's SBIR/STTR Policy Directives.
     The feasibility and helpfulness of a short form data 
rights option (especially for grant agencies). Such a short form would 
be a simple agreement stating that the Government receives essentially 
no rights to SBIR/STTR technical data. The simplified data rights 
option would be for any agency or specific award.

2. SBIR/STTR Phase III Policy

    The Small Business Act, as implemented by the SBIR and STTR Policy 
Directives at section 4(c), states that a Phase III award is one that 
derives from, extends, or completes efforts made under prior funding 
agreements under the SBIR program--

     in which commercial applications of SBIR-funded 
research or research and development are funded by non-Federal 
sources of capital or, for products or services intended for use by 
the Federal Government, by follow-on non-SBIR Federal funding 
awards; or
     for which awards from non-SBIR Federal funding sources 
are used for the continuation of research or research and 
development that has been competitively selected using peer review 
or merit-based selection procedures;

15 U.S.C. 638(e)(4)(C); see also, id. at 638(e)(6)(C).
    If the government is interested in pursuing further work that was 
performed under an SBIR or STTR award, the government must, to the 
extent practicable, pursue that work with the SBIR or STTR awardee that 
performed the earlier work.

[[Page 66343]]

    In the program's recent reauthorization legislation, Congress added 
the following language to the Small Business Act reinforcing the 
responsibility of the government to pursue such work with the awardee 

    PHASE III AWARDS.--To the greatest extent practicable, Federal 
agencies and Federal prime contractors shall issue Phase III awards 
relating to technology, including sole source awards, to the SBIR 
and STTR award recipients that developed the technology.

Id. at 638(r)(4).
    SBA is concerned that there is ambiguity or misunderstanding about 
how this policy governing Phase III awards should be implemented. 
Agencies and awardee firms may disagree as to whether new work 
qualifies as SBIR/STTR Phase III work. Additionally, even if there is 
agreement that the follow-on work is Phase III work, there may be 
disagreement as to how the agency is required to show preference to the 
SBIR/STTR awardee for the Phase III work.
    One question that has been raised is whether preference for the 
Phase III work can be shown within a competitive solicitation. Another 
question is how such preference can or should be shown if the SBIR or 
STTR awardee would perform the Phase III work as a subcontractor to a 
prime federal contractor. Finally, there may be uncertainty about the 
steps that should be taken when applying the preference.
    SBA intends to revise the language in the Policy Directives to 
clarify these issues, that is, the responsibility of agencies with 
regard to Phase III work and processes that can be used when 
determining the appropriate actions in Phase III cases. To help in the 
development of the revised policy guidance, SBA requests comments on 
the following:
     Whether SBA should define ``to the greatest extent 
practicable'' with respect to when agencies shall issue these Phase III 
awards; and if so, how the phrase should be defined.
     Whether, if the agency elects not to issue a Phase III 
sole source award to the SBIR or STTR Phase II awardee for follow-on 
Phase III work, there are other ways the agency could meet this 
statutory requirement.
     Whether an SBIR or STTR awardee can receive the required 
Phase III preference within a full and open competition.
     Whether the policy directive should outline the steps an 
agency must take in deciding or understanding when the Phase III 
preference applies.

    Authority: 15 U.S.C. 638

    Dated: September 15, 2014.
Javier E. Saade,
Associate Administrator, Office of Investment and Innovation.

Maria Contreras-Sweet,
[FR Doc. 2014-26583 Filed 11-6-14; 8:45 am]