[Federal Register Volume 81, Number 67 (Thursday, April 7, 2016)]
[Notices]
[Pages 20484-20522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-07817]



[[Page 20483]]

Vol. 81

Thursday,

No. 67

April 7, 2016

Part III





Small Business Administration





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Small Business Innovation Research Program and Small Business 
Technology Transfer Program Policy Directive; Notice

  Federal Register / Vol. 81 , No. 67 / Thursday, April 7, 2016 / 
Notices  

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SMALL BUSINESS ADMINISTRATION

RIN 3245-AG64


Small Business Innovation Research Program and Small Business 
Technology Transfer Program Policy Directive

AGENCY: Small Business Administration.

ACTION: Notice of Proposed Amendments to SBIR and STTR Policy 
Directives.

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SUMMARY: This document proposes to revise the Small Business Innovation 
Research (SBIR) and Small Business Technology Transfer (STTR) program 
Policy Directives. Specifically, the Small Business Administration 
proposes to combine the two directives into one document, clarify the 
data rights and Phase III preference afforded to SBIR and STTR small 
business awardees, add definitions relating to data rights, and clarify 
the benchmarks for progress towards commercialization.

DATES: You must submit your comments on or before June 6, 2016.

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.
     Mail, Hand Delivery/Courier: Edsel Brown, Assistant 
Director, Office of Innovation, U.S. Small Business Administration, 409 
Third Street SW., Washington, DC 20416.
    SBA will post all comments to this proposed rule on 
www.regulations.gov. If you wish to submit confidential business 
information (CBI) as defined in the User Notice at www.regulations.gov, 
you must submit such information to Edsel Brown, or send an email to 
[email protected]. Highlight the information that you consider to be 
CBI and explain why you believe SBA should hold this information as 
confidential. SBA will review your information and determine whether it 
will make the information public.

FOR FURTHER INFORMATION CONTACT: Edsel Brown, Assistant Director, 
Office of Innovation, at (202) 401-6365 or [email protected].

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

    The purpose of the Small Business Innovation Research (SBIR) 
program is to stimulate innovation in the US economy by engaging 
innovative small business concerns (SBCs) in Federally-funded research 
and research and development (R/R&D). Similarly, the purpose of the 
Small Business Technology Transfer (STTR) program is to foster 
partnerships of ideas and technologies between innovative SBCs and 
research institutions through Federally-funded R/R&D. Federal agency 
awards to SBCs pursuant to the SBIR program and awards to SBCs for 
cooperative R/R&D efforts with research institutions pursuant to the 
STTR program assist the small business and research communities by 
commercializing innovative technologies.
    Both programs use a phased process, uniform throughout the Federal 
Government, to solicit proposals and award funding agreements for R/R&D 
to meet stated agency needs or missions. To stimulate and foster 
scientific and technological innovation, including increasing 
commercialization of Federal R/R&D, the program follows a competitive 
process of three phases: Phase I, Phase II, and Phase III.
    The Small Business Act (Act) requires that the Small Business 
Administration (SBA) issue a policy directive setting forth guidance to 
the Federal agencies participating in the SBIR and STTR programs. The 
Act provides SBA with broad authority to direct participating agencies 
in the administration of the programs. The SBIR and STTR Policy 
Directives outline how agencies must generally conduct their programs. 
Each agency, however, can tailor their program to meet the needs of the 
individual agency, as long as the general principles of the program set 
forth in the Act and directive are followed. Therefore, when 
incorporating SBIR and STTR policy into agency-specific regulations and 
procedures, agencies may develop language needed to implement the 
policy effectively; however, no agency may apply policies, directives, 
or clauses, that contradict, weaken, or conflict with the policy as 
stated in the directive.
    SBA reviews its policy directives regularly to determine areas that 
need updating and further clarification. On November 7, 2014, SBA 
issued an advance notice of policy directive amendments and request for 
comments at 77 FR 66342. In this notice, SBA explained that it intended 
to update the directives on a regular basis and to restructure and 
reorganize the directives, as well as address certain policy issues 
relating to SBIR and STTR data rights and the issues related to SBIR 
and STTR Phase III work. In this notice, SBA outlined what it believes 
are the issues concerning data rights and Phase III awards and 
requested feedback on several questions posed. SBA received over thirty 
comments offering recommendations and providing examples of how these 
issues affect SBIR/STTR companies. While the comments varied on the 
recommendations for specific changes, they were generally in agreement 
that the sections of the directives relating to data rights and Phase 
III awards need further clarification.
    With this notice, SBA is proposing to amend both the SBIR and STTR 
policy directives by combining the two directives into one because the 
general structure of both programs is the same. In addition, SBA is 
proposing clarification of the important issues relating to both 
programs concerning data rights, Phase III awards and benchmarks to 
commercialization achievement. Although the policy directives are 
intended for use by the participating agencies, SBA believes that 
public input on the proposed provisions from all parties involved in 
the program is invaluable. Therefore, SBA is soliciting public comments 
on these proposed amendments. A section-by-section outline of the 
proposed amendments is set forth below.

II. Proposed Amendments

1. Section 1--Purpose

    In this section, SBA proposes to clarify that SBA is issuing one 
directive for both programs and that all provisions in the directive 
apply to both the SBIR and STTR programs unless specifically noted 
otherwise.

2. Section 2--Summary of Statutory Provisions

    In this section, SBA proposes to delete any references to prior 
fiscal years that are no longer relevant to the operation of the 
programs. In addition, SBA proposes to clarify that agencies must 
``obligate'' a certain percentage of the agency's total extramural R&D 
obligations each fiscal year on awards to small businesses under the 
programs. This amendment responds to recommendations from the 
Government Accountability Office (GAO) in a report titled ``More 
Guidance and Oversight Needed to Comply with Spending and Reporting 
Requirements'' (available at http://www.gao.gov/assets/670/663909.pdf), 
that SBA should amend its policy directives to clarify the funding 
requirements for the programs.

3. Section 3--Definitions

    In this section, SBA proposes to add several terms and definitions 
that relate to SBIR and STTR data rights. When drafting these 
provisions, SBA considered the fact that the SBIR and STTR programs are 
unique within the Federal Government. The broad intent

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of the programs is to stimulate economic growth and development by 
supporting technological innovation through small business. Because it 
is funded as a set-aside share of agency R&D, it also has the goal of 
meeting the mission needs of the various participating agencies.
    The purpose of SBIR and STTR data rights is to provide an incentive 
for small businesses to engage in government-funded innovative research 
and to support its potential commercialization. This incentive comes 
from the prospects for successful commercialization by the innovating 
small business through first-mover advantage, license or sale of the 
IP, sale of the business, or sale of its related intangible assets 
(intellectual capital, knowledge, innovation capacities). Legislative 
history of the Small Business Research and Development Enhancement Act 
of 1992 stated:

    Section 4(e) of the bill directs SBA to modify its policy 
directives so as to protect small companies in three areas. The 
first of these is data rights. The bill directs SBA to extend an 
SBIR awardee's rights to data generated in the performance of its 
project to 4 years (as opposed to 2 years in current law). This 
provision grows out of the Committee's concern that small businesses 
capable of producing top quality research might be reluctant to 
participate in the program if they fear losing control over their 
ideas.

H.R. Rep. No. 554(I), 102nd Cong., 2nd Sess. 1992, 24 (emphasis added). 
Further, legislative history of the Small Business Technology Transfer 
(STTR) program states the following with respect to data rights:

    Lastly, of the major provisions included in this legislation, S. 
856 strengthens the data rights protection for companies and 
research institutions that conduct STTR projects. The change in data 
rights is important because it clarifies that STTR companies, like 
SBIR companies, retain the data rights to their technology through 
all phases of an STTR project. Some agencies have been interpreting 
the law to mean that STTR companies only retain their data rights 
through phases I and II. This clarification helps protect STTR 
companies from losing control of their research so that they have a 
greater chance of commercializing their technology themselves. This 
clarification is important because the Committee has learned that 
some agencies are providing the data to bigger contractors for 
development, thereby cutting out the small business. This 
unfortunate situation not only robs small businesses of revenues, 
but it also results in expensive legal costs for small businesses to 
protect their data rights.

S. Rep. No. 54, 107th Cong., 1st Sess. 2001 (emphasis added). Thus, 
SBIR and STTR data rights give value to the work performed and thereby 
form an essential element of the SBIR and STTR incentive and impact.
    The Act specifically directs SBA to issue directives to the 
participating agencies that provide for the retention by the SBC of 
rights in data generated in the performance of an SBIR or STTR award. 
See 15 U.S.C. 638(j)(1)(``(v) retention of rights in data generated in 
the performance of the contract by the small business concern;''). It 
also states that these rights should be provided for a minimum of four 
years. See 15 U.S.C. 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;''). The purpose of these statutory provisions is to 
ensure that the SBC retains the rights to the data, and that the small 
business' data rights apply to all phases of the program.
    In accordance with the Small Business Act, the policy directives 
currently explain that the SBC owns the data generated under the award, 
and that the Government has an obligation to protect the data from 
disclosure for at least four years. SBA recognizes that agencies with 
procurement and acquisition programs can face an apparent conflict 
between the longer term economic development goals of the programs, 
which depend on the ability of the participating small business to 
realize the commercial benefits from its new technology, and the 
shorter term procurement interests of the agency that focus on 
acquiring the technology from the SBC at a reasonable cost and 
controlling its development and application. In light of this potential 
conflict at the agency level, SBA must ensure that agency practices 
related to their acquisition programs do not weaken or undermine the 
effectiveness of the program at stimulating innovation and economic 
development through small business. SBA must ensure that SBIR/STTR data 
are properly handled at all times. At the same time, SBA recognizes the 
mutual benefits involved in administering the programs within 
procurement agencies and has proposed mechanisms to manage these 
conflicting interests.
    SBA's proposed amendments are based on a review of the statute, 
legislative history and current directives, expertise and experience at 
the funding agencies, and comments received from the public. SBA 
believes that the current directives need clarification to reflect the 
principles noted above and is proposing to update the directives and 
define several new terms at this time. The proposed terms to be defined 
relating to data rights include the following: Computer Database, 
Computer Programs, Computer Software, Computer Software Documentation, 
Data, Form Fit and Function Data, SBIR/STTR Technical Data Rights, 
Operations Maintenance Installation or Training (OMIT) Data, Prototype, 
SBIR/STTR Computer Software Rights, SBIR/STTR Data, SBIR/STTR Data 
Rights, SBIR/STTR Protection Period, SBIR/STTR Technical Data Rights, 
Technical Data, and Unlimited Rights. SBA has based these definitions, 
to the extent practicable, on definitions used in the Federal 
Acquisition Regulations (FAR) and the Defense Federal Acquisition 
Regulations Supplement (DFARS).
    With respect to specific definitions, SBA is proposing to clarify 
the definition of SBIR/STTR Data by explaining that it includes all 
data developed or generated in the performance of an SBIR/STTR award, 
including Technical Data and Computer Software.
    With respect to prototypes, SBA proposes to define the term 
prototype to include any model, in any type of form, which is at any 
stage in development. SBA also proposes to clarify that the release of 
a prototype, other than Computer Software, to an SBIR/STTR Awardee's 
competitor, which may enable the competitor to dissemble the prototype 
and glean the protected data, is contrary to the purpose and intent of 
the Act, and the implementing Policy Directive. The release of a 
prototype during the protection period may provide the SBC's 
competitors with the Technical Data to enable them to commercialize the 
product and harm the SBC's ability to benefit from the technology. To 
address this concern, SBA has added to Section 8 of the Policy 
Directive, language notifying agencies of the potential impact of use 
or release during the protection period of a prototype developed under 
an SBIR/STTR award and requesting that agencies monitor the release and 
use of such prototypes.
    SBA also proposes to clarify the data rights afforded the SBC and 
the Federal government during the statutory SBIR/STTR protection 
period, and after the protection period has expired, in the proposed 
definitions of SBIR/STTR Technical Data Rights, SBIR/STTR Computer 
Software Rights, Unlimited Rights, SBIR/STTR Protection Period, SBIR/
STTR Data Rights, and SBIR/STTR Data. The current directives state that 
the SBC retains the rights in data for a minimum of 4 years from the 
date of the last deliverable. This protection period (referred to in 
the proposed amendments as the ``SBIR/STTR protection period'') is 
extended with each subsequent, related, SBIR or STTR

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award. The current directives provide that the Government may not use, 
modify, reproduce, release, perform, display, or disclose data or 
computer software for a minimum of 4 years. After expiration of the 
SBIR/STTR protection period, the Government has a royalty-free license 
to use, and to authorize others to use on its behalf, these data for 
government purposes, and is relieved of all disclosure prohibitions and 
assumes no liability for unauthorized use of these data by third 
parties.
    As currently written, it would appear from the Policy Directives 
that the Government cannot use the data for any purpose during the 
protection period and then, once the protection period expires, use the 
data for Government purposes. The SBA does not intend for the 
Government to have no use of this data during the protection period; 
rather, it is intended that the Government have limited rights to use 
the data so that agencies can effectively evaluate the technology and 
administer their programs.
    In clarifying the data rights protections, the SBA reviewed the FAR 
and DFARS, which outline distinct rights the Government generally 
receives when acquiring goods and services: Unlimited rights, limited 
rights and specifically negotiated rights (FAR) or government purpose 
rights (DFARS). Pursuant to the FAR, with unlimited rights, the 
Government receives rights as the name implies--unlimited use of the 
data, whether for Government or commercial purposes. With respect to 
limited rights for data other than computer software and restricted 
rights for computer software, the FAR provides that the Government 
receives the right to use the data or computer software for internal 
purposes only and is limited as to when third parties, including 
support service contractors, can access and use the data. With respect 
to government purpose rights, the DFARS provides that the Government 
receives the right to use the data for Government purposes, such as for 
manufacturing for Government purposes. In such cases, the Government 
can allow third parties to have access to the data to manufacture for 
Government purposes; however, the third party must sign a nondisclosure 
agreement and cannot use the data for its own (commercial) purposes.
    In the directive, the SBA proposes that the Government receives 
what is referred to as SBIR/STTR Technical Data Rights to Technical 
Data and other Data that is not Computer Software, and SBIR/STTR 
Computer Software Rights to Computer Software during the SBIR/STTR 
Protection Period. These limited rights are intended and designed to be 
similar to the rights set forth in the FAR and DFARS for for Data 
developed exclusively at private expense. This approach is appropriate 
for SBIR/STTR Data, as the goal of the program is to advance the 
commercialization efforts of the awardees, and thus SBA sought to 
provide rights in data that are comparable to the highest level of data 
rights protection provided by the Government. There are differences 
between how the FAR and DFARS defines the Government's rights in data 
developed exclusively at private expense. As a result, the proposed 
definitions of SBIR/STTR Computer Software Rights and SBIR/STTR 
Technical Data are not exact copies of the Limited Rights Notice or 
Restricted Rights Notice provided in FAR 52.227-14 or the Limited 
Rights and Restricted Rights in DFARS 252.227-7013 and 7014. SBA is 
proposing single definitions that will apply to both civilian and 
defense agencies participating in the programs. The proposed 
definitions are intended to reflect the main elements of the FAR and 
DFARS definitions of the Government's rights in data developed 
exclusively at private expense, including restrictions on the rights to 
release and disclose that data, with the aim to encourage the awardee's 
pursuit and achievement of commercialization.
    SBA worked closely with agency experts in developing terminology to 
appropriately describe the limited rights assigned to Technical Data 
and Computer Software. The section of the FAR related to SBIR data 
rights (FAR 52.227-20) does not use specific terms to describe the 
limited rights assigned to SBIR Data, while the DFARS (252.227-7018) 
uses the terminology Limited Rights and Restricted Rights.
    The SBA intends that the Government retain a right to use SBIR/STTR 
Data during the protection period for non-commercial purposes and for 
project evaluation and assessment. SBA does not intend for the 
Government's internal use of SBIR/STTR Data to interfere with, weaken, 
or undermine the rights or interests of the SBC in this data. 
Consequently, the SBA has clarified that during the SBIR/STTR 
protection period, the Government is permitted some, limited or 
restricted, rights to use the data.
    SBA proposes that the minimum length of the SBIR/STTR Protection 
Period be increased from 4 years to 12 years. SBA also proposes to 
remove the provision in Section 8 of the directive that allows a 
subsequent SBIR/STTR award to extend the protection period of a 
related, prior SBIR/STTR award. This provision currently makes it 
possible for the protection period to be continuously extended as long 
as the SBC receives Phase III work. SBA believes this current provision 
should be removed only if the minimum length of the protection period 
is increased to at least 12 years, which is three times the length of 
the current protection period. SBA believes that this longer period of 
protection will provide SBIR/STTR Awardees with sufficient opportunity 
to further develop and commercialize the technology represented in the 
protected SBIR/STTR Data. SBA notes that the 12 year period of 
protection is a minimum period and that agencies may choose to adopt a 
longer period of time at their discretion.
    SBA proposes that once the SBIR/STTR Protection Period expires, the 
Government has Unlimited Rights in the SBIR/STTR Data. This means that, 
after the protection period, the Government may use the data for any 
activity and for any purpose, which would include a competitive 
procurement or foreign military sale. Granting the Government Unlimited 
Rights after the protection period will clarify for agencies and SBCs 
participating in the program that any use or disclosure of SBIR/STTR 
Data is permissible at that time. Currently, the data rights clause 
contained in the directive limits the Government's use and disclosure 
of SBIR/STTR Data after the protection period to Government use. The 
terms ``Government use'' and ``Government purpose'' are not defined in 
the directive or the FAR. While Government Purpose is defined in the 
DFARS as essentially a non-commercial use, the DFARS does not currently 
grant Government Purpose rights in SBIR/STTR Data either during or 
after the protection period. The Government generally does not operate 
for the purpose of creating a profit for itself or non-Government 
entities. As such, SBA is proposing Unlimited Rights after the 
protection period because this will eliminate uncertainty about, and 
the need to determine, whether a Government use or release after the 
protection period is considered a ``Government Purpose'' use. SBA 
believes these changes simplify and clarify the Government's rights in 
SBIR/STTR Data.
    The SBA has also proposed clarifying that at any time during the 
SBIR/STTR Protection Period, the SBIR/STTR Awardee, or entity that 
holds the rights to the data, can provide the Government with greater 
rights, such as Unlimited Rights. However, the Government cannot 
negotiate these rights prior to an SBIR/STTR award and cannot make

[[Page 20487]]

issuance of an SBIR/STTR award conditional upon the relinquishment of 
any data rights. This is not a change from the current policy.
    In this section, SBA also considered whether to amend the 
definition of Essentially Equivalent Work to include work funded by 
State programs and is asking for public comment on whether this 
proposed amendment is appropriate. Currently, SBIR/STTR Awardees may 
not receive duplicate funding from federal sources for Essentially 
Equivalent Work. However, an awardee may receive State or other program 
funding for the same work to be performed under an SBIR/STTR award. 
Such State program funding may provide effective supplemental funding 
for SBIR/STTR projects, or it may tend to be redundant funding that has 
the effect of drawing limited State program funds away from other 
early-stage innovation efforts seeking funding. By including the term 
``State programs'' in the definition of Essentially Equivalent Work, 
SBIR/STTR Awardees will not be allowed to receive State program funds 
for the same work performed under an SBIR/STTR award.
    Finally, SBA proposes to delete several terms and definitions that 
SBA believes are common and therefore do not need to be defined in a 
directive. Specifically, SBA proposes to delete the following terms: 
Cooperative agreement, feasibility, funding agreement officer, and 
grant.

4. Section 4--Phased Structure of Programs

    In this section, SBA proposes to move information concerning agency 
benchmarks towards commercialization to Section 6, since these 
benchmarks relate to eligibility. In addition, SBA proposes to clarify 
the preferences that agencies must afford prior Phase I or Phase II 
awardees with respect to Phase III awards.
    The Small Business Act states that a Phase III award is one that:

. . . derives from, extends, or completes efforts made under prior 
funding agreements under the SBIR program--
    (i) 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
    (ii) 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 id. Sec.  638(e)(6)(C). The purpose of the 
Phase III award is to provide the small business that developed the 
technology in Phases I or II the opportunity to commercialize it, 
whether through a Federal prime or subcontract or other type of 
agreement.
    With respect to Phase III, Congress had directed SBA to provide, 
for the SBIR/STTR participating agencies:

procedures to ensure, to the extent practicable, that an agency 
which intends to pursue research, development, or production of a 
technology developed by a small business concern under an SBIR 
program enters into follow-on, non-SBIR funding agreements with the 
small business concern for such research, development, or 
production;

15 U.S.C. 638(j)(2)(C) (emphasis added). A few years ago, Congress 
passed and the President signed into law the National Defense 
Authorization Act for Fiscal Year 2012, Public Law 112-81, which 
affected the SBIR and STTR programs. Specifically, section 5001, 
Division E of the Defense Authorization Act contained the SBIR/STTR 
Reauthorization Act of 2011 (Reauthorization Act), which set forth 
several provisions relating to the SBIR and STTR programs, including a 
provision relating to Phase III.
    With the Reauthorization Act, Congress amended the Small Business 
Act to emphasize, again, that agencies are to utilize small business 
Phase I or II awardees for Phase III awards, by adding another 
provision in the Act that states:

    (4) 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.

15 U.S.C. 638(r)(4) (emphasis added). This provision addresses the 
concern that, at times, agencies have failed to use this authority, 
bypassed the small business that created the technology, and pursued 
the Phase III work with another business rather than actively 
supporting and encouraging the commercialization or further development 
of SBIR/STTR technology by the innovative small business that developed 
the technology. As a result, SBA is required by statute to report to 
Congress cases where agencies fail to comply with the reporting 
requirements and intent of the SBIR/STTR Phase III policy set forth in 
statute. Id. 638 (j)(3)(C).
    Therefore, if the government is interested in pursuing further work 
that was performed under an SBIR or STTR award, the government must, to 
the greatest extent practicable, pursue that work with the SBIR or STTR 
awardee that performed the earlier work. Notwithstanding the strong 
congressional mandate codified in statute, SBA continues to hear from 
small businesses, agencies and trade groups that SBIR/STTR Awardees do 
not receive Phase III awards. One comment received on the notice of 
proposed amendments to the policy directive suggested that some 
officials do not fully understand how this policy on Phase III awards 
can be implemented.
    As a result, SBA has proposed to explain that agencies must, to the 
greatest extent practicable, determine whether a requirement, 
solicitation or intended work either is Phase III work or includes it. 
If the requirement is or includes Phase III work, or if the agency is 
later informed that it is or includes Phase III work, SBA proposes that 
the agency must document that the requirement is Phase III and then 
evaluate the practicability (to the greatest extent) of pursuing the 
required work with the SBIR or STTR awardee that conducted the prior 
SBIR or STTR work. This would mean that the agency must first consider 
whether it can issue a sole source award to the Phase I or Phase II 
awardee. Awarding the Phase III work to the SBIR or STTR firm on a sole 
source basis is not practicable if, for example, the firm is no longer 
in business or cannot perform the work itself or with subcontractors. 
SBA proposes that the decision by the agency that it is not practicable 
to issue a sole award to the SBIR/STTR Awardee must be documented in 
the contract file and a copy of that decision, including the rationale, 
provided to SBA.
    SBA received some comments from the public concerning other 
preferences that may be afforded to SBIR/STTR Awardees for Phase III. 
As a result, SBA proposes that if the agency determines that it cannot 
issue a sole source award for the Phase III, then it must consider 
whether there are other ways to provide the preference to the SBIR/STTR 
Awardee such as, for example, including a brand-name requirement for 
the SBIR/STTR Awardee's deliverable within its solicitation when 
appropriate or including an evaluation factor for prime contractors or 
evaluation points for prime contractors that utilize SBIR/STTR 
Awardees. Unless the agency finds that it is not practicable to pursue 
the Phase III work with the SBIR or STTR Awardee, the agency must 
provide a preference and must always consider issuing a sole source 
award first and foremost when providing this preference.

[[Page 20488]]

    In addition to clarifying the Phase III preference, SBA has 
proposed clarifications to the notice and appeal procedures with 
respect to Phase III awards or non-awards. As noted above, SBA has 
proposed that the agency must notify SBA when it does not intend to 
issue a Phase III award and then SBA can file a notice of intent to 
appeal and then the actual appeal.
    In light of the foregoing, SBA also proposes to clarify paragraph 
(c)(3) concerning the competitions requirements for Phase III awards. 
Specifically, SBA proposes that if a Justification and Approval are 
required by the procuring agency for a Phase III sole source, the 
agency can state that the SBIR/STTR Phase III award is derived from, 
extends, or completes efforts made under prior SBIR/STTR funding 
agreements issued competitively and sole source awards are authorized 
pursuant to 15 U.S.C. 638(r)(4).

5. Section 6--Eligibility and Application (Proposal) Requirements

    SBA has proposed deleting the requirement that a SBC can partner 
with only one research institution under the STTR program. SBA believes 
that a small business can partner with more than one research 
institution under the STTR program as long as at least 30% of the work 
under the award is performed by a single partnering research 
institution. For example, if the SBC is performing 40% of the work 
itself and subcontracting 30% to the single research institution, the 
SBC may subcontract the remaining 30% to one or more other research 
institutions or to another entity.
    SBA has also proposed moving the agency benchmark performance 
requirements from Section 3 to this section of the directive. The 
benchmark performance requirements, set forth in 15 U.S.C. 638qq, are 
designed to ensure a minimum degree of awardee progress towards 
commercialization. Specifically, the Act requires that agencies 
establish standards, or benchmarks, to measure: (1) The success of 
Phase I awardees in receiving Phase II awards, and (2) the success of 
Phase I awardees in receiving Phase III awards. Agencies have 
established these benchmarks, which were published in the Federal 
Register and are also available at www.SBIR.gov. Any subsequent changes 
in the benchmarks must be approved by SBA.
    SBA has proposed clarifying when SBA calculates awardee progress 
towards meeting the benchmark rates, that each agency determines 
whether a Phase I applicant meets both of its benchmarks, and that the 
details regarding agency benchmark rates and the implementation of this 
requirement are available to the public on www.SBIR.gov.
    SBA proposed allowing participation by Tribally-owned SBIR/STTR 
applicants and awardees. Section 9 of the Small Business Act does not 
prohibit participation by small business concerns that are owned and 
controlled by Indian Tribes and it was never the intent of SBA to 
exclude participation of these entities in these small business 
innovation programs.

6. Section 7_Program Funding Process

    SBA proposed modifying the section on Dollar Value of Awards to 
state that SBA will review the effects of inflation on the guideline 
amounts annually to determine if program-wide changes in the amounts 
are warranted, and will post the inflation amounts and any adjustments 
to the guideline amount on www.sbir.gov.

7. Section 8--Terms of Agreement Under SBIR/STTR Awards

    SBA's proposed amendments to this section clarify the main elements 
of the SBIR/STTR Data Rights, the SBIR/STTR Protection Period, and the 
terms and conditions that must be set forth in the SBIR/STTR 
solicitation and award as it relates to data rights. The proposed 
changes in this section relate to the proposed amendments to the data 
rights definitions contained in Section 3. SBA notes that while the 
Government receives SBIR/STTR Technical Data Rights and SBIR/STTR 
Computer Software Rights in marked SBIR/STTR Data, these rights are 
intended to provide a level of protection similar to that which is 
provided to data an agency receives that was developed exclusively at 
private expense. SBA also clarifies in this section that SBIR/STTR Data 
Rights may be negotiated; however, an agency must not make issuance of 
an SBIR/STTR award conditional upon the small business negotiating or 
consenting to negotiate modification or transfer of these rights.
    Section 8 is also revised to remove the provision that a subsequent 
SBIR/STTR award extends the protection period of a related prior award. 
The Policy Directive currently states: ``Agencies are released from 
obligation to protect SBIR data upon expiration of the protection 
period except that any such data that is also protected and referenced 
under a subsequent SBIR award must remain protected through the 
protection period of that subsequent SBIR award.'' This policy poses 
administrative challenges for the funding agencies to determine, prior 
to the release of SBIR/STTR Data, whether or not a subsequent award 
exists that extends the Government's obligation to protect that data. 
SBA believes that, if this extension provision is removed, an increase 
in the minimum required protection period from 4 years to 12 years 
provides an awardee firm with sufficient time to take measures to 
protect the data or utilize it to its commercial advantage.
    This section also contains the proposed terms of the non-disclosure 
agreement that must be entered between the Government and a non-
Governmental entity receiving SBIR/STTR Data in accordance with the 
Government's limited rights in that data. The proposed requirements are 
that the non-Governmental entity: (1) Understands and acknowledges the 
limitations on the Government's access, use, modification, 
reproduction, release, performance, transmission, display or disclosure 
as set forth in the agreement; (2) is prohibited from further 
releasing, disclosing, or using the data without the written permission 
of the SBIR/STTR Awardee; (3) agrees to destroy or return to the 
Government all SBIR/STTR Data, and all copies in its possession, at or 
before the time specified in the agreement, and to notify the procuring 
agency that all copies have been destroyed or returned; (4) is 
prohibited from using the data for a commercial purpose; and (5) agrees 
that the SBIR/STTR Data will be accessed and used for the sole purpose 
of providing impartial advice or technical assistance directly to the 
Government. The directives do not currently require that a Government 
contractor with access to SBIR/STTR Data enter a nondisclosure 
agreement, however, SBA believes this is necessary to ensure that any 
non-Governmental entity recipient of the data understands the 
limitations on the use and disclosure of SBIR/STTR Data. These 
requirements were modeled off of the nondisclosure agreement 
requirements contained in the DFARS and FAR for contractor access to 
SBIR/STTR Data.
    SBA proposes to limit the time period during which an SBIR/STTR 
Awardee may correct markings of SBIR/STTR Data or add omitted markings 
to SBIR/STTR Data. Currently, there is no time limit on when an awardee 
may correct or add omitted markings to its data. Several of the funding 
agencies expressed concern that having no time limit can create 
administrative burdens and noted that there is a 6-month time limit to 
correct or add protective markings on data delivered by awardees 
outside the SBIR/STTR program, including other SBCs. We are proposing a 
6-month time period from the date the data was delivered during which 
an

[[Page 20489]]

awardee may correct or add the appropriate markings to SBIR/STTR Data 
it has submitted. SBA is requesting public comment on this change.
    SBA has also proposed language to be included in section 8 of the 
directive to reflect its concern regarding the treatment of prototypes, 
other than Computer Software, that are developed under an SBIR/STTR 
award. SBA states that agencies should handle such prototypes with 
caution to prevent the potential disclosure of the innovative 
technology or data developed under an SBIR/STTR award. While a 
prototype may not itself be considered SBIR/STTR Data because it is not 
``recorded information,'' it may be possible under certain 
circumstances for an agency or non-Government entity to glean protected 
aspects through observation or reverse engineering.

8. Section 9--Responsibilities of SBA

    SBA proposes moving information in Appendix X relating to the 
National Academy of Sciences study to this section.

9. Section 10--Reporting Requirements for Agencies, Applicants and 
Awardees

    In this section, SBA proposes to amend the title to clarify that 
the section relates to all reporting requirements required by statute. 
SBA also proposes to delete references to reports that were due in 2012 
and 2014 and therefore are no longer relevant.
    10. In addition, SBA has proposed deleting any references to 
TechNet and replacing them with ``www.SBIR.gov.'' Any system that SBA 
uses to report or collect information will be on the www.SBIR.gov Web 
site, which is SBA's central Web site for everything relating to the 
SBIR/STTR programs. Appendix I: Instructions for SBIR and STTR Program 
Solicitation Preparation
    SBA proposes amending the certifications that small businesses must 
submit prior to, upon and after an SBIR/STTR award. Specifically, SBA 
proposes combining the SBIR and STTR certifications into one and noting 
on the document those paragraphs that are applicable to STTR only. In 
addition, SBA has proposed clarifying the certification to ensure the 
Federal government is not funding projects where other funding has 
covered the same work, including State grants.
    SBA also proposes clarifying the Instructions set forth in the 
Policy Directive and adding a specific model clause that must be 
reflected in all solicitations and resulting funding agreements to 
ensure the SBIR/STTR Awardee's data rights are protected. This proposed 
model clause would ensure that data rights are applied consistently 
throughout the Federal government.
    The proposed clause sets forth the pertinent terms and definitions 
relating to data rights, which are also set forth and defined in 
Section 3 of the directive. In addition, the proposed clause in 
Appendix I states that the awardee small business owns the data 
developed or generated during the award, defines the protection period 
during which the Government has SBIR/STTR Technical Data Rights and 
SBIR/STTR Computer Software Rights in the data, and states that the 
Government has Unlimited Rights upon expiration of the protection 
period. The proposed clause requires the awardee to mark its protected 
data, which is the current practice in the Federal government.

11. Appendix II: SBIR/STTR Program Database

    SBA is proposing to remove this appendix of database codes from the 
directive and to instead maintain a current list of the database codes 
on www.SBIR.gov as a ready reference for the funding agencies.

12. Appendix III: Performance Areas and Metrics

    SBA is proposing to remove this list of examples of performance 
metrics and to instead maintain a current example list, in addition to 
the required metrics, as a ready reference on www.sbir.gov.

III. Request for Comments

    SBA worked with the various SBIR and STTR participating agencies to 
gather input and feedback and issued an advanced notice seeking 
comments on the topics presented in this notice. SBA now requests 
comments on the specific amendments proposed.
    In particular, SBA is requesting feedback on its proposed 
clarification of the Government's SBIR/STTR data rights in SBIR/STTR 
Data during an SBIR/STTR Protection Period of not less than 12 years. 
SBA is interested in whether the public believes that these limitations 
on the Government's use and disclosure are sufficient to protect SBIR/
STTR Data from use or release that could harm the ability of the 
awardee to benefit commercially from its SBIR/STTR work. Similarly, do 
the rights in SBIR/STTR Data that are proposed create potential adverse 
impacts on the Government's research and development goals? Has SBA 
achieved a sufficient balance between the interests of the SBIR/STTR 
awardees and the Government during the protection period by proposing 
rights in data that are similar to the Government's rights in data 
developed exclusively at private expense? SBA also seeks input on 
whether the proposed minimum length of the protection period is 
appropriate to achieve the policy goals associated with protecting 
SBIR/STTR Data. If the public feels that the proposed SBIR/STTR Data 
Rights and protection period do not adequately protect SBIR/STTR Data, 
please provide alternative suggestions and a rationale for their 
adoption.
    Additionally, SBA seeks comment on its proposal that the Government 
receives Unlimited Rights in the SBIR/STTR Data following the 
expiration of the protection period. Is there a specific need to 
protect SBIR/STTR Data from the Government's commercial use of such 
data after the protection period? If so, please provide examples of 
when the Government has used such data for commercial purposes to the 
disadvantage of the SBIR/STTR Awardee and alternatives to Unlimited 
Rights.
    SBA is also specifically seeking comments on its proposal to 
eliminate the extension of the protection period when a subsequent, 
related SBIR/STTR award is made. Will the elimination of this policy 
create unforeseen harm to SBIR/STTR Awardees even if the protection 
period is increased to a minimum of 12 years? If so, explain any 
perceived negative effect of this proposed policy change, given the 
longer protection period. SBA also seeks alternative approaches that 
would address the current administrative burden on agencies to 
determine whether data may be released when subsequent awards are made 
by different agencies.
    Additionally, SBA specifically requests comments on the proposed 
language added to section 8 regarding prototypes. SBA is concerned that 
agencies may reverse engineer, use, and release prototypes other than 
software, or enable others to do so, for any purpose and at any time 
because agencies do not consider prototypes to be within the definition 
of SBIR/STTR Data, and as a result do not consider prototypes protected 
by SBIR/STTR Technical Data Rights and SBIR/STTR Computer Software 
Rights. The concept of a prototype or item appears distinguishable from 
the concept of data, as defined in the FAR and DFAR as ``recorded 
information.'' SBA is concerned that even though participating agencies 
do not consider prototypes to be ``recorded information,'' a prototype 
may be reverse engineered to reveal the innovative technology developed 
by the SBIR/STTR Awardee in its performance

[[Page 20490]]

of the SBIR/STTR award. In these cases, reverse engineering the 
prototype and using that information to either manufacture the product 
internally within the Government or through a procurement could harm 
the ability of an SBIR/STTR Awardee to commercialize the technology. 
SBA intends that the combination of its proposed changes to the Phase 
III award process in addition to the proposed language to be included 
in section 8 will address its concerns. SBA seeks public input on 
whether this is the best way to encourage agencies to prevent harmful 
use or disclosure of prototypes. SBA also seeks input on whether the 
directive adequately addresses protections against possible uses of 
delivered SBIR/STTR Data that is computer software that would 
inappropriately harm the SBC's prospects of commercializing the 
technology.
    SBA is also seeking public comment on the proposed establishment of 
a time limit of 6 months for SBIR/STTR Awardees to correct or add 
omitted markings on SBIR/STTR Data it has delivered. Does this present 
a significant challenge or hardship for the Awardee?
    SBA will review and consider all comments received to determine 
whether amendments are needed to improve the general conduct of the 
programs.
Notice of Proposed Amendments to the Policy Directive for the Small 
Business Innovation Research (SBIR) and Small Business Technology 
Transfer Research (STTR) Programs
To: The SBIR and STTR Program Managers
Subject: SBIR/STTR Policy Directive Proposed Revisions

    1. Purpose. The Small Business Administration (SBA) proposes to 
revise its Small Business Innovation Research (SBIR) and Small Business 
Technology Transfer Research (STTR) program Policy Directives. 
Specifically, SBA proposes to combine the two directives into one 
document, clarify the data rights afforded to SBIR and STTR small 
business awardees, add definitions relating to data rights, clarify the 
Phase III preference to be afforded to SBIR and STTR awardees, and 
clarify the benchmarks for progress towards commercialization.
    2. Authority. The Small Business Act (15 U.S.C. 638(j) and (p)) 
requires the SBA Administrator to issue an SBIR and STTR program Policy 
Directive for the general conduct of the programs.
    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 a final Policy Directive. 
SBA's Administrator or designee has a role in reviewing any regulatory 
provisions that pertain to programs authorized by the Small Business 
Act.
    4. Personnel Concerned. This Policy Directive serves as guidance 
for all Federal government personnel who are involved in the 
administration of the SBIR and STTR programs, issuance and management 
of funding agreements or contracts pursuant to the programs, 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 Investment.
    6. Date. Public comments on the proposed amendments to the Policy 
Directive must be submitted within 60 days following publication in the 
Federal Register.

    Dated: March 25, 2016.
Mark L. Walsh,
Associate Administrator for the Office of Investment and Innovation.

    Dated: March 25, 2016.
Maria Contreras-Sweet,
Administrator.

1. Purpose

    (a) Sections 9(j) and 9(p) of the Small Business Act (Act) require 
that the Small Business Administration (SBA) issue Policy Directives 
for the general conduct of the SBIR and STTR programs within the 
Federal Government.
    (b) This Policy Directive fulfills SBA's statutory obligation to 
provide guidance to the participating Federal agencies for the general 
operation of the SBIR and STTR programs. Because most of the policy for 
the SBIR and STTR program is the same, SBA issues a single Policy 
Directive for both programs. Unless one of the programs is specifically 
mentioned, the term ``program'' or ``programs'' refers to both the SBIR 
and STTR programs. In addition, ``SBIR/STTR'' is used throughout to 
refer to both programs.
    (1) The following sections pertain only to the STTR program: Sec.  
3(ff)--Definition of ``Research Institution,'' Sec.  7(k)--Management 
of the STTR Project, Sec.  8(c)--Allocation of Intellectual Property 
Rights in STTR Award, and Sec.  12(e)--Phase 0 Proof of Concept 
Partnership Pilot Program.
    (2) The following sections pertain only to the SBIR program: Sec.  
3(b)--Definition of ``Additionally Eligible State,'' Sec.  3(l)--
Definition of ``Covered Small Business,'' Sec.  4(b)(1)(ii)--Direct to 
Phase II Awards, Sec.  6(a)(6)--Majority-Owned by Multiple VCOCs, Hedge 
Funds or Private Equity Firms, Sec.  6(b)(1)(ii)--Registration and 
Certifications for Proposal and Award for Majority-Owned by Multiple 
VCOCs, Hedge Funds or Private Equity Firms, and Appendix I--
Certifications for Proposal and Award for Majority-Owned by Multiple 
VCOCs, Hedge Funds or Private Equity Firms.
    (3) Additional or modified instructions may be issued by SBA as a 
result of public comment or experience. With this directive, SBA 
fulfills the statutory requirement to simplify and standardize the 
program proposal, selection, contracting, compliance, and audit 
procedures for the programs to the extent practicable, while allowing 
the participating agencies flexibility in the operation of their 
individual programs. Wherever possible, SBA has attempted to reduce the 
paperwork and regulatory compliance burden on SBCs applying to and 
participating in the SBIR/STTR programs, while still meeting the 
statutory reporting and data collection requirements.
    (c) The statutory purpose of the SBIR program is to strengthen the 
role of innovative small business concerns (SBCs) in Federally-funded 
research or research and development (R/R&D). Specific program purposes 
are to: (1) stimulate technological innovation; (2) use small business 
to meet Federal R/R&D needs; (3) foster and encourage participation by 
socially and economically disadvantaged small businesses (SDBs), and by 
women-owned small businesses (WOSBs), in technological innovation; and 
(4) increase private sector commercialization of innovations derived 
from Federal R/R&D, thereby increasing competition, productivity and 
economic growth.
    (d) In addition to the broad goals of the SBIR program, the 
statutory purpose of the STTR program is to stimulate a partnership of 
ideas and technologies between innovative SBCs and non-profit Research 
Institutions. By providing awards to SBCs for cooperative R/R&D efforts 
with Research Institutions, the STTR program assists the U.S. small 
business and research communities by supporting the commercialization 
of innovative technologies.
    (e) Federal agencies participating in the programs (participating 
agencies) are obligated to follow the guidance provided by this Policy 
Directive. Each agency is required to review its rules, policies, and 
guidance on the programs to ensure consistency with this Policy 
Directive and to make any necessary changes in accordance with each 
agency's normal procedures. This is

[[Page 20491]]

consistent with the statutory authority provided to SBA concerning the 
SBIR/STTR programs.

2. Summary of Statutory Provisions

    (a) The SBIR program is codified at Sec.  9 of the Small Business 
Act, 15 U.S.C. 638. The SBIR program is authorized until September 30, 
2017, or as otherwise provided in law subsequent to that date.
    (b) Each Federal agency with an extramural budget for R/R&D in 
excess of $100,000,000 must participate in the SBIR program and spend 
(obligate) the following minimum percentages of their extramural R/R&D 
budgets for awards to small business concerns for R/R&D under the SBIR 
program:
    (1) not less than 2.9% of such budget in fiscal year 2015;
    (2) not less than 3.0% of such budget in fiscal year 2016; and
    (3) not less than 3.2% of such budget in fiscal year 2017 and each 
fiscal year after.
    A Federal agency may exceed these minimum percentages.
    (c) The STTR program is also codified at Sec.  9 of the Small 
Business Act, 15 U.S.C. 638. The STTR program is authorized until 
September 30, 2017, or as otherwise provided in law subsequent to that 
date.
    (d) Each Federal agency with an extramural budget for R/R&D in 
excess of $1,000,000,000 must participate in the STTR program and spend 
(obligate) the following minimum percentages of their extramural R/R&D 
budgets (obligations) on awards to small business concerns under the 
STTR program:
    (1) not less than 0.40% of such budget in fiscal years 2014 and 
2015; and
    (2) not less than 0.45% of such budget in fiscal year 2016 and each 
fiscal year after.
    A Federal agency may exceed these minimum percentages.
    (e) In general, each participating agency must make SBIR/STTR 
awards for R/R&D through the following uniform, three-phase process:
    (1) Phase I awards to determine, insofar as possible, the 
scientific and technical merit and feasibility of ideas that appear to 
have commercial potential.
    (2) Phase II awards to further develop work from Phase I that meets 
particular program needs and exhibits potential for commercial 
application.
    (3) Phase III awards where commercial applications of SBIR/STTR 
program-funded R/R&D are funded by non-Federal sources of capital; or 
where products, services or further research intended for use by the 
Federal Government are funded by non-SBIR/STTR sources of Federal 
funding.
    (f) Participating agencies must report to SBA on the calculation of 
the agency's extramural R&D budget, for the purpose of determining 
SBIR/STTR program funding, within four months of enactment of each 
agency's annual Appropriations Act.
    (g) The Act explains that agencies are authorized and directed to 
cooperate with SBA in order to carry out and accomplish the purpose of 
the programs. As a result, each participating agency shall provide 
information to SBA for SBA to monitor and analyze each agency's SBIR/
STTR program and to report annually to the Senate Committee on Small 
Business and Entrepreneurship and to the House Committees on Science 
and Small Business. For more information on the agency's reporting 
requirements, including the frequency for specific reporting 
requirements, see Sec.  10 of the Policy Directive.
    (h) SBA establishes databases and Web sites to collect and 
maintain, in a common format, information that is necessary to assist 
SBCs and assess the SBIR/STTR programs.
    (i) SBA implements the Federal and State Technology (FAST) 
Partnership Program to strengthen the technological competitiveness of 
SBCs, to the extent that FAST is authorized by law.
    (j) The competition requirements of the Armed Services Procurement 
Act of 1947 (10 U.S.C. 2302, et seq.) and the Federal Property and 
Administrative Services Act of 1949 (41 U.S.C. 3101, et seq.) must be 
read in conjunction with the procurement notice publication 
requirements of Sec.  8(e) of the Small Business Act (15 U.S.C. 
637(e)). The following notice publication requirements of Sec.  8(e) of 
the Small Business Act apply to SBIR/STTR participating agencies using 
contracts as a SBIR or STTR funding agreement.
    (1) Any Federal executive agency intending to solicit a proposal to 
contract for property or services valued above the amounts set forth in 
Federal Acquisition Regulations (FAR) Sec.  5.101, must transmit a 
notice of the impending solicitation to the Government wide point of 
entry (GPE) for access by interested sources. See FAR Sec.  5.201. The 
GPE, located at www.fbo.gov, is the single point where Government 
business opportunities, including synopses of proposed contract 
actions, solicitations, and associated information, can be accessed 
electronically by the public. In addition, an agency must not issue its 
solicitation for at least 15 days from the date of the publication of 
the GPE. The agency must establish a deadline for submission of 
proposals in response to a solicitation in accordance with FAR Sec.  
5.203.
    (2) The contracting officer must generally make available through 
the GPE those solicitations synopsized through the GPE, including 
specifications and other pertinent information determined necessary by 
the contracting officer. See FAR Sec.  5.102.
    (3) Any executive agency awarding a contract for property or 
services must synopsize the award through the GPE in accordance with 
FAR subpart 5.3.
    (4) The following are exemptions from the notice publication 
requirements:
    (i) In the case of agencies intending to solicit Phase I proposals 
for contracts in excess of $25,000, the head of the agency may exempt a 
particular solicitation from the notice publication requirements if 
that official makes a written determination, after consulting with the 
Administrator of the Office of Federal Procurement Policy and the SBA 
Administrator, that it is inappropriate or unreasonable to publish a 
notice before issuing a solicitation.
    (ii) The SBIR/STTR Phase II award process.
    (iii) The SBIR/STTR Phase III award process.

3. Definitions

    (a) Act. The Small Business Act (15 U.S.C. 631, et seq.), as 
amended.
    (b) Additionally Eligible State. (SBIR only) A State in which the 
total value of funding agreements awarded to SBCs under all agency SBIR 
programs is less than the total value of funding agreements awarded to 
SBCs in a majority of other States, as determined by SBA's 
Administrator in biennial fiscal years and based on the most recent 
statistics compiled by the Administrator.
    (c) Applicant. The organizational entity that qualifies as an SBC 
at all pertinent times and that submits a contract proposal or a grant 
application for a funding agreement under the SBIR/STTR programs.
    (d) Affiliate. This term has the same meaning as set forth in 13 
CFR part 121--Small Business Size Regulations, Sec.  121.103, ``How 
Does SBA Determine Affiliation?''. Further information about SBA's 
affiliation rules and a guide on affiliation is available at 
www.SBIR.gov and www.SBA.gov/size.
    (e) Awardee. The organizational entity that receives an SBIR or 
STTR Phase I, Phase II, or Phase III award.
    (f) Commercialization. The process of developing products, 
processes, technologies, or services and the

[[Page 20492]]

production and delivery (whether by the originating party or others) of 
the products, processes, technologies, or services for sale to or use 
by the Federal government or commercial markets.
    (g) Computer Database. A collection of data recorded in a form 
capable of being processed by a computer. The term does not include 
Computer Software.
    (h) Computer Programs. A set of instructions, rules, or routines 
recorded in a form that is capable of causing a computer to perform a 
specific operation or series of operations.
    (i) Computer Software. Computer programs, source code, source code 
listings, object code listings, design details, algorithms, processes, 
flow charts, formulae, and related material that would enable the 
software to be reproduced, recreated, or recompiled. Computer Software 
does not include Computer Databases or Computer Software Documentation.
    (j) Computer Software Documentation. Owner's manuals, user's 
manuals, installation instructions, operating instructions, and other 
similar items, regardless of storage medium, that explain the 
capabilities of the Computer Software or provide instructions for using 
the software.
    (k) Covered Small Business Concern. [SBIR only] A small business 
concern that: (1) was not majority-owned by multiple venture capital 
operating companies (VCOCs), hedge funds, or private equity firms on 
the date on which it submitted an application in response to a 
solicitation under the SBIR program; and (2) is majority-owned by 
multiple venture capital operating companies, hedge funds, or private 
equity firms on the date of the SBIR award.
    (l) Data. All recorded information, regardless of the form or 
method of recording or the media on which it may be recorded. The term 
does not include information incidental to contract or grant 
administration, such as financial, administrative, cost or pricing or 
management information.
    (m) Essentially Equivalent Work. Work that is substantially the 
same research, which is proposed for funding in more than one contract 
proposal or grant application submitted to the same Federal agency or a 
State program, or submitted to two or more different Federal agencies 
or State programs for review and funding consideration; or work where a 
specific research objective and the research design for accomplishing 
the objective are the same or closely related to another proposal or 
award, regardless of the funding source.
    (n) Extramural R/R&D Budget/Obligations. The sum of the total 
obligations for R/R&D minus amounts obligated during a given fiscal 
year for R/R&D activities by employees of a Federal agency in or 
through Government-owned, Government-operated facilities. For the 
Agency for International Development, the ``extramural budget'' does 
not include amounts obligated solely for general institutional support 
of international research centers or for grants to foreign countries. 
For the Department of Energy, the ``extramural budget'' does not 
include amounts obligated for atomic energy defense programs solely for 
weapons activities or for naval reactor programs. (See also Sec.  7(i) 
of this Policy Directive for additional exemptions related to national 
security.)
    (o) Feasibility. The practical extent to which a project can be 
performed successfully.
    (p) Federal Agency. An executive agency as defined in 5 U.S.C. 105, 
and a military department as defined in 5 U.S.C. 102 (Department of the 
Army, Department of the Navy, Department of the Air Force), except that 
it does not include any agency within the Intelligence Community as 
defined in Executive Order 12333, Sec.  3.4(f), or its successor 
orders.
    (q) Federal Laboratory. As defined in 15 U.S.C. 3703, means any 
laboratory, any federally funded research and development center, or 
any center established under 15 U.S.C. 3705 & 3707 that is owned, 
leased, or otherwise used by a Federal agency and funded by the Federal 
Government, whether operated by the Government or by a contractor.
    (r) Funding Agreement. Any contract, grant, or cooperative 
agreement entered into between any Federal agency and any SBC for the 
performance of experimental, developmental, or research work, including 
products or services, funded in whole or in part by the Federal 
Government.
    (s) Form, Fit, and Function Data. Data relating to items, 
components, or processes that are sufficient to enable physical and 
functional interchangeability, and data identifying source, size, 
configuration, mating and attachment characteristics, functional 
characteristics, and performance requirements. For computer software it 
means data identifying source, functional characteristics, and 
performance requirements, but specifically excludes the source code, 
algorithms, processes, formulas, and flow charts of the software.
    (t) Innovation. Something new or improved, having marketable 
potential, that includes the development of new technology, the 
refinement of existing technology, or the development of new 
applications for existing technology.
    (u) Intellectual Property. The separate and distinct types of 
intangible property that are referred to collectively as ``intellectual 
property,'' including but not limited to: patents, trademarks, 
copyrights, trade secrets, and mask works..
    (v) Joint Venture. See 13 CFR 121.103(h).
    (w) Key Individual. The principal investigator/project manager and 
any other person named as a ``key'' employee in a proposal submitted in 
response to a program solicitation.
    (x) Operations, Maintenance, Installation, or Training Purposes 
(OMIT) Data. Data that is necessary for operation, maintenance, 
installation, or training purposes (but not including detailed 
manufacturing or process data).
    (y) Participating Agency(ies). A federal agency with an SBIR or 
STTR program. An ``SBIR/STTR Agency.''
    (z) Principal Investigator/Project Manager. The one individual 
designated by the applicant to provide the scientific and technical 
direction to a project supported by the funding agreement.
    (aa) Program Solicitation. A formal solicitation for proposals 
issued by a Federal agency that notifies the small business community 
of its R/R&D needs and interests in broad and selected areas, as 
appropriate to the agency, and requests for proposals from SBCs in 
response to these needs and interests.
    (bb) Prototype. A product, material, thing, system, or process, or 
a model thereof, that is in development, regardless of whether it is in 
tangible, electronic, graphic or other form, at any stage of 
development prior to its intended ultimate commercial production and 
sale. The term ``Prototype'' includes computer programs embedded in 
hardware or devices.
    (cc) Research or Research and Development (R/R&D). Any activity 
that is: (1) a systematic study directed toward greater knowledge or 
understanding of the subject studied; (2) a systematic study directed 
specifically toward applying knowledge and innovation to meet a 
recognized but unmet need; or (3) a systematic application of knowledge 
and innovation toward the production of useful materials, devices, and 
systems or methods, including design, development, and improvement of 
Prototypes and new processes to meet specific requirements.
    (dd) Research Institution. One that has a place of business located 
in the United States, which operates primarily

[[Page 20493]]

within the United States or which makes a significant contribution to 
the U.S. economy through payment of taxes or use of American products, 
materials or labor, and is: (1) A non-profit institution as defined in 
section 4(3) of the Stevenson-Wydler Technology Innovation Act of 1980 
(that is, an organization that is owned and operated exclusively for 
scientific or educational purposes, no part of the net earnings of 
which inures to the benefit of any private shareholder or individual); 
or (2) A Federally-funded R&D center as identified by the National 
Science Foundation in accordance with the Federal Acquisition 
Regulation issued in accordance with section 35(c)(1) of the Office of 
Federal Procurement Policy Act (or any successor regulation). A non-
profit institution can include hospitals and military educational 
institutions, if they meet the definition above.
    (ee) SBIR/STTR Computer Software Rights. The Government's rights 
during the SBIR/STTR Protection Period in specific types of SBIR/STTR 
Data that are Computer Software.
    (1) The Government may use, modify, reproduce, release, perform, 
display, or disclose SBIR/STTR Data that are Computer Software within 
the Government. The Government may exercise SBIR/STTR Computer Software 
Rights within the Government for:
    (i) Use in Government computers;
    (ii) Modification, adaptation, or combination with other computer 
software, provided that the Data incorporated into any derivative 
software are subject to the rights in paragraph (ee) and that the 
derivative software is marked as containing SBIR/STTR Data;
    (iii) Archive or backup; or
    (iv) Distribution of a computer program to another Government 
agency, without further permission of the awardee, if the awardee is 
notified of the distribution and the identity of the recipient prior to 
the distribution, and a copy of the SBIR/STTR Computer Software Rights 
included in the funding agreement is provided to the recipient.
    (2) The Government shall not release, disclose, or permit access to 
SBIR/STTR Data that is Computer Software for commercial, manufacturing, 
or procurement purposes without the written permission of the awardee. 
The Government shall not release, disclose, or permit access to SBIR/
STTR Data outside the Government without the written permission of the 
awardee unless:
    (i) The non-Governmental entity has entered into a non-disclosure 
agreement with the Government that complies with the terms for such 
agreements outlined in section 8 of this Policy Directive; and
    (ii) The release or disclosure is--
    (A) To a Government support service contractor for purposes of 
supporting Government internal use or activities, including evaluation, 
diagnosis and correction of deficiencies, and adaptation, combination, 
or integration with other Computer Software provided that SBIR/STTR 
Data incorporated into any derivative software are subject to the 
rights in paragraph (ee); or
    (B) Necessary to support certain narrowly-tailored essential 
Government activities for which law or regulation permits access of a 
non-Government entity to a contractors' data developed exclusively at 
private expense, non-SBIR/STTR Data, such as for emergency repair and 
overhaul.
    (ff) SBIR/STTR Data. All appropriately marked Data developed or 
generated in the performance of an SBIR or STTR award, including 
Technical Data and Computer Software developed or generated in the 
performance of an SBIR or STTR award. The term does not include 
information incidental to contract or grant administration, such as 
financial, administrative, cost or pricing or management information.
    (gg) SBIR/STTR Data Rights. The Government's license rights in 
SBIR/STTR Data during the SBIR/STTR Protection Period as follows: SBIR/
STTR Technical Data Rights in SBIR/STTR Data that are Technical Data or 
any other type of Data other than Computer Software that is properly 
marked, and SBIR/STTR Computer Software Rights in SBIR/STTR Data that 
is Computer Software. Upon expiration of the protection period for 
SBIR/STTR Data, the Government's obligation to protect that data 
expires and the Government's rights in that data convert to Unlimited 
rights. The Government receives Unlimited Rights in all unmarked data.
    (hh) SBIR/STTR Protection Period. The period of time during which 
the Government is obligated to protect SBIR/STTR Data against 
unauthorized use and disclosure in accordance with SBIR/STTR Data 
Rights. The SBIR/STTR Protection Period begins at award of an SBIR/STTR 
funding agreement and ends not less than twelve years after acceptance 
of the last deliverable under that agreement (See Sec.  8(b)(4) below).
    (ii) SBIR/STTR Technical Data Rights. The Government's rights 
during the SBIR/STTR Protection Period in SBIR/STTR Data that are 
Technical Data or any other type of Data other than Computer Software.
    (1) The Government may, use, modify, reproduce, perform, display, 
release, or disclose SBIR/STTR Data that are Technical Data within the 
Government; however, the Government shall not use, release, or disclose 
the data for procurement, manufacture or commercial purposes; or 
release or disclose the SBIR/STTR Data outside the Government except as 
permitted by paragraph (2) below or by written permission of the 
awardee.
    (2) SBIR/STTR Data that are Technical Data may be released outside 
the Government without any additional written permission of the awardee 
only if the non-Governmental entity or foreign government has entered 
into a non-disclosure agreement with the Government that complies with 
the terms for such agreements outlined in section 8 of this Policy 
Directive and the release is:
    (i) Necessary to support certain narrowly-tailored essential 
Government activities for which law or regulation permits access of a 
non-Government entity to a contractors' data developed exclusively at 
private expense, non-SBIR/STTR Data, such as for emergency repair or 
overhaul;
    (ii) To a Government support services contractor in the performance 
of a Government support services contract and the release is not for 
commercial purposes or manufacture;
    (iii) To a foreign government for purposes of information and 
evaluation if required to serve the interests of the U.S. Government; 
or
    (iv) To non-Government entities or individuals for purposes of 
evaluation.
    (jj) Small Business Concern. A concern that meets the SBIR/STTR 
program eligibility requirements set forth in 13 CFR 121.702, ``What 
size and eligibility standards are applicable to the SBIR and STTR 
programs?''.
    (kk) Socially and Economically Disadvantaged SBC (SDB). See 13 CFR 
part 124, subpart B.
    (ll) Socially and Economically Disadvantaged Individual. See 13 CFR 
124.103 & 124.104.
    (mm) Student/Faculty-owned small business. A small business that is 
majority-owned by a faculty member or a student of an institution of 
higher education as defined in 20 U.S.C. 1001.
    (nn) Subcontract. Any agreement, other than one involving an 
employer-employee relationship, entered into by an awardee of a funding 
agreement calling for supplies or services for the performance of the 
original funding agreement.
    (oo) Technology Development Program.
    (1) the Experimental Program to Stimulate Competitive Research of 
the

[[Page 20494]]

National Science Foundation as established under 42 U.S.C. 1862g;
    (2) the Defense Experimental Program to Stimulate Competitive 
Research of the Department of Defense;
    (3) the Experimental Program to Stimulate Competitive Research of 
the Department of Energy;
    (4) the Experimental Program to Stimulate Competitive Research of 
the Environmental Protection Agency;
    (5) the Experimental Program to Stimulate Competitive Research of 
the National Aeronautics and Space Administration;
    (6) the Institutional Development Award (IDeA) Program of the 
National Institutes of Health; and
    (7) the Agriculture and Food Research Initiative (AFRI) of the 
Department of Agriculture.
    (pp) Technical Data. Recorded information, regardless of the form 
or method of the recording, of a scientific or technical nature 
(including Computer Software Documentation and Computer Databases). The 
term does not include Computer Software or financial, administrative, 
cost or pricing, or management information, or other data incidental to 
contract or grant administration. The term includes recorded Data of a 
scientific or technical nature that is included in Computer Databases.
    (qq) United States. The 50 states, the territories and possessions 
of the Federal Government, the Commonwealth of Puerto Rico, the 
District of Columbia, the Republic of the Marshall Islands, the 
Federated States of Micronesia, and the Republic of Palau.
    (rr) Unlimited Rights. The Government's rights to access, use, 
modify, prepare derivative works, reproduce, release, perform, display, 
disclose, or distribute Data in whole or in part, in any manner and for 
any purpose whatsoever, and to have or authorize others to do so.
    (ss) Women-Owned SBC (WOSB). An SBC that is at least 51% owned by 
one or more women, or in the case of any publicly owned business, at 
least 51% of the stock is owned by women, and women control the 
management and daily business operations.

4. Phased Structure of Programs

    The SBIR/STTR programs employ a phased process, uniform throughout 
the Federal Government, of soliciting proposals and awarding funding 
agreements for R/R&D, production, services, or any combination, to meet 
stated agency needs or missions. Agencies must issue SBIR/STTR awards 
pursuant to competitive and merit-based selection procedures. Agencies 
may not use investment of venture capital or investment from hedge 
funds or private equity firms as a criterion for an SBIR/STTR award. 
Although matching funds are not required for Phase I or Phase II 
awards, agencies may require a small business to have matching funds 
for certain special awards (e.g., to reduce the gap between a Phase II 
and Phase III award). In order to stimulate and foster scientific and 
technological innovation, including increasing commercialization of 
Federal R/R&D, the program must follow a uniform competitive process of 
the following three phases, unless an exception applies:
    (a) Phase I. Phase I involves a solicitation of contract proposals 
or grant applications to conduct feasibility-related experimental or 
theoretical R/R&D related to described agency requirements. These 
requirements, as defined by agency topics contained in a solicitation, 
may be general or narrow in scope, depending on the needs of the 
agency. The object of this phase is to determine the scientific and 
technical merit and feasibility of the proposed effort and the quality 
of performance of the SBC with a relatively small agency investment 
before consideration of further Federal support in Phase II.
    (1) Several different proposed solutions to a given problem may be 
funded.
    (2) Proposals will be evaluated on a competitive basis. Agency 
criteria used to evaluate SBIR/STTR proposals must give consideration 
to the scientific and technical merit and feasibility of the proposal 
along with its potential for commercialization. Considerations may also 
include program balance with respect to market or technological risk or 
critical agency requirements.
    (3) Agency benchmarks for progress towards commercialization must 
be met to be eligible to participate in Phase I of the program. See 
section 6(a) for a description of this Phase I eligibility requirement.
    (4) Agencies may require the submission of a Phase II proposal as a 
deliverable item under Phase I.
    (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/STTR 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. Similarly, an agency may issue an STTR Phase II award to 
an SBIR Phase I awardee to further develop the work performed under the 
SBIR 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 
Phase I awardee must meet the eligibility and program requirements of 
the Phase II program from which it will receive the award in order to 
receive the Phase II award.
    (ii) [SBIR only] 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 SBIR award to a 
small business concern that did not receive a Phase I SBIR 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 submitted to SBA prior to issuing the Phase II award.
    (2) Funding must be based upon the results of work performed under 
a Phase I award and the scientific and technical merit, feasibility and 
commercial potential of the Phase II proposal. Phase II awards may not 
necessarily complete the total research and development that may be 
required to satisfy commercial or Federal needs beyond the SBIR/STTR 
program. The Phase II funding agreement with the awardee may, at the 
discretion of the awarding agency, establish the procedures applicable 
to Phase III agreements. The Government is not obligated to fund any 
specific Phase II proposal.
    (3) The SBIR/STTR Phase II award decision process requires, among 
other things, consideration of a proposal's commercial potential. 
Commercial potential includes the potential to transition the 
technology to private sector applications, Government applications, or 
Government contractor applications. Commercial potential in a Phase II 
proposal may be evidenced by:
    (i) the SBC's record of successfully commercializing SBIR/STTR or 
other research;
    (ii) the existence of Phase II funding commitments from private 
sector or other non-SBIR/STTR funding sources;
    (iii) the existence of Phase III, follow-on commitments for the 
subject of the research; and
    (iv) other indicators of commercial potential of the idea.
    (4) Agencies may not use an invitation, pre-screening, or pre-
selection process for eligibility for Phase II. Agencies must note in 
each

[[Page 20495]]

solicitation that all Phase I awardees may apply for a Phase II award 
and provide guidance on the procedure for doing so.
    (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/STTR 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/STTR 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/
STTR 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/STTR 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.
    (c) Phase III. Phase III refers to work that derives from, extends, 
or completes an effort made under prior SBIR/STTR funding agreements, 
but is funded by sources other than the SBIR/STTR programs. Phase III 
work is typically oriented towards commercialization of SBIR/STTR 
research or technology.
    (1) Phase III work: Each of the following types of activity 
constitutes SBIR/STTR Phase III work:
    (i) Commercial application (including testing and evaluation of 
products, services or technologies for use in technical or weapons 
systems) of SBIR/STTR-funded R/R&D that is financed by non-Federal 
sources of capital. (Note: The guidance in this Policy Directive 
regarding SBIR/STTR Phase III pertains to the non-SBIR/STTR federally-
funded work described in (ii) and (iii) below. It does not address 
private agreements an SBIR/STTR firm may make in the commercialization 
of its technology, except for a subcontract to a Federal contract that 
may be a Phase III.).
    (ii) SBIR/STTR-derived products or services intended for use by the 
Federal Government, funded by non-SBIR/STTR sources of Federal funding.
    (iii) Continuation of SBIR/STTR work, funded by non-SBIR/STTR 
sources of Federal funding.
    (2) Data Rights. A Phase III award is, by its nature an SBIR/STTR 
award, has SBIR/STTR status, and must provide for SBIR/STTR Data 
Rights. If an SBIR/STTR Awardee receives a funding agreement (whether 
competed, sole sourced or a subcontract) for work that derives from, 
extends, or completes efforts made under prior SBIR/STTR funding 
agreements, then the funding agreement for the new work must have all 
SBIR/STTR Phase III status and SBIR/STTR Data Rights.
    (3) Competition Requirement. The competitions for SBIR/STTR Phase I 
and Phase II awards satisfy any competition requirement of the Armed 
Services Procurement Act, the Federal Property and Administrative 
Services Act, and the Competition in Contracting Act. An agency that 
wishes to fund an SBIR/STTR Phase III award, which is an extension of 
prior Phase I and/or Phase II awards, is not required to conduct 
another competition for the Phase III award in order to satisfy those 
statutory provisions. As a result, in conducting actions relative to a 
Phase III SBIR/STTR award, it is sufficient to state for purposes of a 
Justification and Approval, if one is deemed required by the agency, 
that the project is an SBIR/STTR Phase III award that is derived from, 
extends, or completes efforts made under prior SBIR/STTR funding 
agreements and is authorized pursuant to 15 U.S.C. 638(r)(4).
    (4) Phase III work may be for products, production, services, R/
R&D, or any such combination.
    (5) There is no limit on the number, duration, type, or dollar 
value of Phase III awards made to a business concern. There is no limit 
on the time that may elapse between a Phase I or Phase II award and 
Phase III award, or between a Phase III award and any subsequent Phase 
III award. A Federal agency may enter into a Phase III SBIR/STTR 
agreement at any time with a Phase II awardee. Similarly, a Federal 
agency may enter into a Phase III SBIR/STTR agreement at any time with 
a Phase I awardee. A subcontract to a Federally-funded prime contract 
may be a Phase III award.
    (6) Size. The small business size limits for Phase I and Phase II 
awards do not apply to Phase III awards.
    (7) Special acquisition requirement. Agencies or their Government-
owned, contractor-operated (GOCO) facilities, Federally-funded research 
and development centers (FFRDCs), or Government prime contractors that 
pursue R/R&D or production of technology developed under the SBIR/STTR 
program shall issue Phase III awards relating to the technology, 
including sole source awards, to the Awardee that developed the 
technology under an SBIR/STTR award, to the greatest extent 
practicable.
    (i) Implementing the requirement. In recognition of the prior 
merit-based competitive selection of, and subsequent commitment of 
agency funds to SBIR/STTR Awardees and the broad intent of the program 
to promote the commercial success of these small businesses, Agencies 
must make a good faith effort to negotiate with such Awardees regarding 
the performance of the new, related, work and to issue Phase III awards 
for the work. When implementing this requirement, the agency must 
identify the planned work as SBIR/STTR Phase III and consider the 
practicability of pursuing the work with the Awardee through a sole 
source award by performing market research to determine whether the 
firm is available, capable and willing to perform the work. In every 
case, the funding agency must act in ways consistent with the 
Congressional intent to support the commercialization of an SBIR/STTR-
develop technology by the SBIR/STTR Awardee, and all parties must 
proceed along these steps in good faith.
    (ii) Sole Source Awards. If pursuing the Phase III work with the 
Awardee is found to be practicable, the agency must award a non-
competitive contract to the firm.
    (iii) Other Preference. If pursuing the Phase III work with the 
Awardee on a sole source/non-competitive basis is not practicable, the 
Agency must document the file and provide a copy of the decision, 
including the rationale, to the SBA. In addition, the agency must 
consider whether there are other means of affording preference for the 
Phase III work and the SBIR/STTR Awardee, such as, for example, using a 
brand-

[[Page 20496]]

name requirement for the SBIR/STTR Awardee's deliverable in the 
solicitation when appropriate, or using an evaluation factor that gives 
preference or priority to offerors utilizing SBIR/STTR Awardees for the 
Phase III work.
    (iv) Agency Notice of Intent to Award. An agency, or its GOCOs or 
FFRDCs, that intends to pursue Phase III work (which includes R/R&D, 
production, services, or any combination thereof of a technology 
developed under an SBIR/STTR award), with an entity other than the 
Phase I or Phase II SBIR/STTR Awardee, must notify SBA in writing prior 
to such an award. This notification must include, at a minimum:
    (A) The steps the agency has taken to fulfill the special 
acquisition requirement (e.g., a good faith effort to make the award to 
the SBIR/STTR Awardee).
    (B) The reasons why a follow-on funding agreement with the SBIR/
STTR Awardee is not practicable (e.g., SBIR/STTR Awardee was not 
willing or interested in the work, not capable of doing the work or 
functioning as a prime and subcontracting the work, or no longer in 
business).
    (C) The identity of the entity with which the agency intends to 
make an award to perform the research, development, or production; the 
type of funding agreement to be used; and the amounts of the agreement.
    (v) SBA Notice of Intent to Appeal. SBA may appeal a decision by an 
agency (or its GOCOs or FFRDCs) to pursue Phase III work with a 
business concern other than the SBIR/STTR Awardee that developed the 
technology to the head of the contracting activity.
    (A) If SBA receives an agency's notice of intent to make an award 
under (iv) above, SBA may file a notice of intent to appeal with the 
funding agreement officer no later than 5 business days after receiving 
the agency's notice of intent to make award.
    (B) If an agency is pursuing work that SBA has determined is Phase 
III work and has not complied with either of the reporting requirements 
above, SBA may notify the agency at any time of its intent to appeal 
the decision to proceed with the work. SBA makes such determinations 
based on all information it receives, including information presented 
directly to SBA by an SBIR/STTR Awardee.
    (vi) Suspension of Work. Upon receipt of SBA's notice of intent to 
appeal, the funding agreement officer must suspend further action on 
the acquisition until the head of the contracting activity issues a 
written decision on the appeal. The funding agreement officer may 
proceed with award only if he or she determines in writing that the 
award must be made to protect the public interest. The funding 
agreement officer must include a statement of the facts justifying such 
a determination and provide a copy of its determination to SBA.
    (vii) SBA Appeal. Within 10 business days of SBA's Notice of Intent 
to appeal, SBA may file a formal appeal with the head of the agency. 
SBA's appeal will state with specificity SBA's conclusion that the 
agency's obligation to make a Phase III award ``to the greatest extent 
practicable'' has not been fulfilled.
    (viii) Agency Decision. Within 30 business days of receiving SBA's 
appeal, the head of the agency's contracting activity must render a 
written decision setting forth the basis of his or her determination. 
During this period, the agency should consult with SBA and review any 
case-specific information SBA believes to be pertinent.
    (ix) SBA case report to Congress. SBA notifies Congress of all 
instances in which an agency pursued Phase III R/R&D, or production of 
a technology developed under an SBIR/STTR award, with a business or 
entity other than the SBIR/STTR Awardee. SBA will notify Congress of 
such instances, of any agency determination or decision justifying an 
award to other than the Phase III SBIR/STTR Awardee, and of any SBA 
appeals of agency decisions under this section.

5. Program Solicitation Process

    (a) Topics/Subtopics. At least annually, each agency must issue a 
program solicitation that sets forth a substantial number of R/R&D 
topics and subtopic areas consistent with stated agency needs or 
missions. Agencies may decide to issue joint solicitations. Both the 
list of topics and the description of the topics and subtopics must be 
sufficiently comprehensive to provide a wide range of opportunities for 
SBCs to participate in the agency R&D programs. Topics and subtopics 
must emphasize the need for proposals with advanced concepts to meet 
specific agency R/R&D needs. Each topic and subtopic must describe the 
needs in sufficient detail to assist in providing on-target responses, 
but cannot involve detailed specifications to prescribed solutions of 
the problems.
    (b) Master Schedule. The Act requires issuance of SBIR/STTR Phase I 
program solicitations in accordance with a Master Schedule coordinated 
between SBA and the SBIR/STTR agency. The SBA office responsible for 
coordination is: Office of Innovation, U.S. Small Business 
Administration, 409 Third Street, SW, Washington, DC 20416. Phone: 
(202) 205-6450. Fax: (202) 205-7754. Email: [email protected]. Web 
site: www.SBIR.gov.
    (c) Coordination of Agency Schedules. For maximum participation by 
interested SBCs, it is important that the planning, scheduling and 
coordination of agency program solicitation release dates be completed 
as early as practicable to coincide with the commencement of the fiscal 
year on October 1. Bunching of agency program solicitation release and 
closing dates may prohibit SBCs from preparation and timely submission 
of proposals for more than one SBIR/STTR project. SBA's coordination of 
agency schedules minimizes the bunching of proposed release and closing 
dates. SBIR/STTR agencies may elect to publish multiple program 
solicitations within a given fiscal year to facilitate in-house agency 
proposal review and evaluation scheduling.
    (d) Posting of Master Schedule. SBA posts a Master Schedule of 
release dates of program solicitations with links to the participating 
agency Web sites. For more information see section 10(c).
    (e) Simplified, Standardized, and Timely SBIR/STTR Program 
Solicitations
    (1) The Act requires simplified, standardized and timely SBIR/STTR 
solicitations and for agencies to use a ``uniform process'' minimizing 
the regulatory burden for SBCs. Therefore, the instructions in Appendix 
I to this Policy Directive purposely depart from normal Government 
solicitation format and requirements.
    (2) Agencies must update SBIR.gov with information on each 
solicitation and modification no later than 5 days after the date of 
release of the solicitation or modification to the public. This must 
include any update to the Web site link for the program solicitation.
    (3) SBA does not intend that the SBIR/STTR program solicitation 
replace or be used as a substitute for unsolicited proposals for R/R&D 
awards to SBCs. In addition, the SBIR/STTR program solicitation 
procedures do not prohibit other agency R/R&D actions with SBCs that 
are carried on in accordance with applicable statutory or regulatory 
authorizations.

6. Eligibility and Application (Proposal) Requirements

    (a) Eligibility Requirements
    (1) Certification. To receive SBIR/STTR funds, each awardee of a 
Phase I or Phase II award must qualify as an SBC at the time of award 
and at any other time set forth in SBA's regulations at 13 CFR 121.701-
121.705. Each Phase

[[Page 20497]]

I and Phase II awardee must submit a certification stating that it 
meets the size, ownership and other requirements of the SBIR or STTR 
program at the time of award, and at any other time set forth in SBA's 
regulations at 13 CFR 121.701-705. SBA's size regulations for the SBIR/
STTR program require that an awardee be directly owned and controlled 
by individuals or small business concerns; however, SBA is clarifying 
that a small business concern directly owned and controlled by an 
Indian Tribe or by another small business concern that is directly 
owned and controlled by an Indian Tribe may also be eligible to 
participate in the SBIR/STTR programs.
    (2) Performance of Work Requirements. For SBIR Phase I, a minimum 
of two-thirds of the research or analytical effort must be performed by 
the awardee. For SBIR Phase II, a minimum of one-half of the research 
or analytical effort must be performed by the awardee. For STTR Phase I 
and Phase II, not less than 40 percent of the R/R&D work must be 
performed by the SBC, and not less than 30 percent of the R/R&D work 
must be performed by a partnering Research Institution. Occasionally, 
deviations from these requirements may occur, and must be approved in 
writing by the funding agreement officer after consultation with the 
agency SBIR/STTR 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) Employment of the Principal Investigator. For both Phase I and 
Phase II, the primary employment of the principal investigator must be 
with the SBC (or the research institution--STTR only) 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 employment time is spent in the employ of the SBC (or 
research institution--STTR only). 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/STTR Program 
Manager/Coordinator. Further, an SBC may replace the principal 
investigator on an SBIR/STTR Phase I or Phase II award, subject to 
approval in writing by the funding agreement officer. For purposes of 
the SBIR/STTR programs, 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, ``How Does SBA Calculate Number of 
Employees?''.
    (4) Location of the work. 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) Novated/Successor in Interested/Revised Funding Agreements. An 
SBIR/STTR Awardee may include, and SBIR/STTR work may be performed by, 
those identified via a ``novated'' or ``successor in interest'' or 
similarly-revised funding agreement. For example, in order to receive a 
Phase III award, the awardee must have either received a prior Phase I 
or Phase II award or been novated a Phase I or Phase II award (or 
received a revised Phase I or Phase II award if a grant or cooperative 
grant). In addition, an SBIR/STTR Awardee may include those that have 
merely reorganized with the same key staff (e.g., reorganized from a 
partnership to an LLC), regardless of whether they have been assigned a 
different tax identification number. In cases where there is a novation 
or similarly revised funding agreement, agencies may require the 
original awardee to relinquish its rights and interests in an SBIR/STTR 
project in favor of another applicant as a condition for that 
applicant's eligibility to participate in the programs for that 
project.
    (6) Majority-Owned by Multiple VCOCs, Hedge Funds or Private Equity 
Firms [SBIR Only]. NIH, Department of Energy, and National Science 
Foundation may each 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. Any other SBIR participating agency 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 121.701-121.705.
    (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 section 10 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)(6) 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 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

[[Page 20498]]

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.
    (7) Agency benchmarks for progress towards commercialization.
    (i) Before making a new Phase I award to an awardee that has won 
multiple prior SBIR/STTR awards, each agency must establish benchmarks 
for progress towards commercialization and determine whether an 
applicant meets those benchmarks. Agencies must apply two SBA-approved 
performance standards (benchmarks) addressing an awardee's progress 
towards commercialization: a Phase II Transition Rate that sets a 
minimum required rate of progress from Phase I to Phase II over a 
specified period, and a Commercialization Rate Benchmark that sets the 
minimum commercialization results an awardee must have realized from 
its prior SBIR/STTR awards over a specified period.
    (ii) If an awardee fails to meet either of the benchmarks, that 
awardee is not eligible for a new Phase I award (and any new Phase II 
award issued pursuant to paragraph 4(b)(1)(ii)) for a period of one 
year from the time of the determination.
    (iii) For each benchmark, agencies establish a threshold number of 
prior awards an awardee must have won for the benchmark requirement to 
be applied.
    (iv) Using information received from the agencies and from SBIR/
STTR Awardees, SBA identifies the companies that have won more than the 
threshold number of awards and calculates the Phase II Transition Rates 
and Commercialization Rates for those companies. The results of this 
assessment are used by each agency to determine if a company fails to 
meet a benchmark rate and is therefore not eligible for a new Phase I 
award. Agencies must notify SBA of any applications denied because of 
failure to meet the benchmarks. The assessment results and eligibility 
determinations are not made public. Participating agencies and SBA 
officials view the results through secure user accounts on 
www.SBIR.gov. Each participating company can view the results of the 
last benchmark assessment once it has created a Small Business User 
account on www.SBIR.gov. If an awardee believes its assessment was made 
in error, it may provide SBA with the pertinent award information and 
request a reassessment.
    (v) Current details of these requirements and the implementation 
processes used by the agencies are posted on www.SBIR.gov under the 
``Performance Benchmark Requirements'' tab. Changes to these benchmarks 
requirements and procedures become effective when posted on the 
www.SBIR.gov. Agencies must submit any changes to the benchmarks to SBA 
for prior approval. If approved, SBA will publish the benchmarks and 
allow for public comment at least 60 days before becoming effective.
    (b) Proposal (Application) Requirements.
    (1) Registration and Certifications for Proposal and Award.
    (i) Each applicant must register in SBA's Company Registry Database 
at www.SBIR.gov (see Appendix I) and submit a .pdf document of the 
registration and any required certifications with its application if 
the information cannot be transmitted automatically to the SBIR/STTR 
agencies from www.SBIR.gov. Applicants must have updated their 
information on the Company Registry no more than 6 months prior to the 
date of a proposal submission.
    (ii) Agencies may request the SBIR/STTR applicant to submit a 
certification at the time of submission of the application, which 
requires the applicant to state that it intends to meet the size, 
ownership and other requirements of the SBIR/STTR program at the time 
of award of the funding agreement, if selected for award. See Appendix 
I for the required text of the certification.
    (iii) [SBIR Only] For those agencies using the authority under 
section 6(a)(6) of the Directive, each Phase I and Phase II applicant 
that is majority-owned by multiple venture capital operating companies, 
hedge funds, or private equity firms is required to submit a specific 
certification with its SBIR application to the SBIR agency (see 
Appendix I for the required text of the certification).
    (2) Commercialization Plan. A succinct commercialization plan must 
be included with each proposal for an SBIR/STTR Phase II award. 
Elements of a commercialization plan will include the following, as 
applicable:
    (i) Company information. Focused objectives/core competencies; 
specialization area(s); products with significant sales; and history of 
previous Federal and non-Federal funding, regulatory experience, and 
subsequent commercialization.
    (ii) Customer and Competition. Clear description of key technology 
objectives, current competition, and advantages compared to competing 
products or services; description of hurdles to acceptance of the 
innovation.
    (iii) Market. Milestones, target dates, analyses of market size, 
and estimated market share after first year sales and after 5 years; 
explanation of plan to obtain market share.
    (iv) Intellectual Property. Patent status, technology lead, trade 
secrets or other demonstration of a plan to achieve sufficient 
protection to realize the commercialization stage and attain at least a 
temporal competitive advantage.
    (v) Financing. Plans for securing necessary funding in Phase III.
    (vi) Assistance and mentoring. Plans for securing needed technical 
or business assistance through mentoring, partnering, or through 
arrangements with state assistance programs, SBDCs, Federally-funded 
research laboratories, Manufacturing Extension Partnership centers, or 
other assistance providers.
    (3) Data Collection. Each Phase I and II applicant is required to 
provide information on www.SBIR.gov (see Appendix II). Each SBC 
applying for a Phase II award is required to update its 
commercialization information on www.SBIR.gov for all of its prior 
Phase II awards (see Appendix II).

7. Program Funding Process

    Because the Act requires a ``simplified, standardized funding 
process,'' specific attention must be given to the following areas of 
SBIR/STTR program administration:
    (a) Timely Receipt of Proposals. Program solicitations must 
establish proposal submission dates for Phase I and may establish 
proposal submission dates for Phase II. However, agencies may also 
negotiate mutually acceptable Phase II proposal submission dates with 
individual Phase I awardees.
    (b) Review of Proposals. SBA encourages Participating Agencies to 
use their routine review processes for SBIR/STTR proposals whether 
internal or external evaluation is used. A more limited review process 
may be used for Phase I due to the larger number of proposals 
anticipated. Where appropriate, ``peer'' reviews external to the agency 
are authorized by the Act. SBA cautions Participating Agencies that all 
review procedures must be designed to minimize any possible conflict of 
interest as it pertains to applicant proprietary data. The standardized 
SBIR/STTR solicitation

[[Page 20499]]

advises potential applicants that proposals may be subject to an 
established external review process and that the applicant may include 
company designated proprietary information in its proposal.
    (c) Selection of Awardees.
    (1) Time period for decision on proposals.
    (i) The National Institutes of Health (NIH) and the National 
Science Foundation (NSF) must issue a notice to an applicant for each 
proposal submitted stating whether it was recommended or not for award 
no more than one year after the closing date of the solicitation. NIH 
and NSF agencies should issue the award no more than 15 months after 
the closing date of the solicitation. Pursuant to paragraph (iii) 
below, NIH and NSF are encouraged to reduce these timeframes.
    (ii) All other participating agencies must issue a notice to an 
applicant for each proposal submitted stating whether it was 
recommended or not for award no more than 90 calendar days after the 
closing date of the solicitation. Agencies should issue the award no 
more than 180 calendar days after the closing date of the solicitation.
    (iii) Agencies are encouraged to develop programs or measures to 
reduce the time periods between the close of a Phase I solicitation/
receipt of a Phase II application and notification to the applicant as 
well as the time to the issuance of the Phase I and Phase II awards. As 
appropriate, agencies should adopt accelerated proposal, evaluation, 
and selection procedures designed to address the gap in funding these 
competitive awards to meet or reduce the timeframes set forth above. 
With respect to Phase II awards, SBA recognizes that Phase II 
arrangements between the agency and applicant may require more detailed 
negotiation to establish terms acceptable to both parties; however, 
agencies must not sacrifice the R/R&D momentum created under Phase I by 
engaging in unnecessarily protracted Phase II proceedings.
    (iv) Request for Waiver.
    (A) If the agency determines that it requires additional time 
between the solicitation closing date and the notification of 
recommendation for award, it must submit a written request for an 
extension to SBA. The written request must specify the number of 
additional calendar days needed to issue the notice for a specific 
applicant and the reasons for the extension. If an agency believes it 
will not meet the timeframes for an entire solicitation, the request 
for an extension must state how many awards will not meet the statutory 
timeframes, as well as the number of additional calendar days needed to 
issue the notice and the reasons for the extension. The written request 
must be submitted to SBA at least 10 business days prior to when the 
agency must issue its notice to the applicant. Agencies must send their 
written request to: Office of Innovation, U.S. Small Business 
Administration, 409 Third Street SW., Washington, DC 20416. Phone: 
(202) 205-6450. Fax: (202) 205-7754. Email: [email protected].
    (B) SBA will respond to the request for an extension within 5 
business days, as practicable. SBA may authorize an agency to issue the 
notice up to 90 calendar days after the timeframes set forth in 
paragraphs (c)(1)(i) and (ii).
    (C) Even if SBA grants an extension of time, the SBIR/STTR agency 
is required to develop programs or measures to reduce the time periods 
between the close of a Phase I solicitation/receipt of a Phase II 
application and notification to the applicant as well as the time to 
the issuance of the Phase I and Phase II awards as set forth in 
paragraph (c)(1)(3) above.
    (D) If an SBIR/STTR agency does not receive an extension of time, 
it may still proceed with the award to the small business and must 
complete the requirements in (C) above.
    (2) Standardized solicitation.
    (i) The standardized SBIR/STTR program solicitation must advise 
Phase I applicants that additional information may be requested by the 
awarding agency to evidence awardee responsibility for project 
completion and advise applicants of the proposal evaluation criteria 
for Phase I and Phase II.
    (ii) The SBIR/STTR agency will provide information to each Phase I 
awardee considered for a Phase II award regarding Phase II proposal 
submissions, reviews, and selections.
    (d) Essentially Equivalent Work. SBIR/STTR applicants 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/STTR or other Federal agency or State 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 or 
State program.
    (e) Cost Sharing. Cost sharing can serve the mutual interests of 
the participating agencies and certain program awardees by assuring the 
efficient use of available resources. However, cost sharing on SBIR/
STTR projects is not required, although it may be encouraged. 
Therefore, cost sharing cannot be an evaluation factor in the review of 
proposals. The standardized SBIR/STTR program solicitation (Appendix I) 
will provide information to prospective program applicants concerning 
cost sharing.
    (f) Payment Schedules and Cost Principles.
    (1) SBIR/STTR Awardees may be paid under an applicable, authorized 
progress payment procedure or in accordance with a negotiated/
definitized price and payment schedule. Advance payments are optional 
and may be made under appropriate law. In all cases, agencies must make 
payment to recipients under SBIR/STTR funding agreements in full, 
subject to audit, on or before the last day of the 12-month period 
beginning on the date of completion of the funding agreement 
requirements.
    (2) All SBIR/STTR funding agreements must use, as appropriate, 
current cost principles and procedures authorized for use by the 
participating agencies. By the time of award, agencies must have 
informed each Awardee of the applicable Federal regulations and 
procedures that refer to the costs that, generally, are allowable under 
funding agreements.
    (3) Agencies must, to the extent possible, attempt to shorten the 
amount of time between the notice of an award under the SBIR/STTR 
program and the subsequent release of funding with respect to the 
award.
    (g) Funding Agreement Types and Fee or Profit. Statutory 
requirements for uniformity and standardization require consistency in 
application of SBIR/STTR program provisions among SBIR/STTR agencies. 
However, consistency must allow for flexibility by the various agencies 
in missions and needs as well as the wide variance in funds required to 
be devoted to SBIR/STTR programs in the agencies. The following 
instructions meet all of these requirements:
    (1) Funding Agreement. The type of funding agreement (contract, 
grant, or cooperative agreement) is determined by the awarding agency, 
but must be consistent with 31 U.S.C. 6301-6308. Contracting agencies 
may issue SBIR/STTR awards as fixed price contracts (including firm 
fixed price, fixed price incentive or fixed price level of effort 
contracts) or cost type contracts, consistent with the Federal 
Acquisition Regulations and agency supplemental acquisition 
regulations. In some cases,

[[Page 20500]]

small businesses seek progress payments, which may be appropriate under 
fixed-price R&D contracts and are a form of contract financing for 
firm-fixed-price contracts. However, for certain agencies, in order to 
qualify for progress payments or an incentive type contract, the small 
business's accounting system would have to be audited, which can delay 
award, unless the contractor has an already approved accounting system. 
Therefore SBIR/STTR agencies should consider using partial payments 
methods or on a deliverable item basis or consider other available 
options to work with the SBIR/STTR Awardee.
    (2) Fee or Profit. Except as expressly excluded or limited by 
statute, awarding agencies must provide for a reasonable fee or profit 
on SBIR/STTR funding agreements, consistent with normal profit margins 
provided to profit-making firms for R/R&D work.
    (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.
    (2) Phase I. Period of performance normally should not exceed 6 
months for SBIR or 1 year for STTR. However, agencies may provide a 
longer performance period where appropriate for a particular project.
    (3) Phase II. Period of performance under Phase II is a subject of 
negotiation between the awardee and the issuing agency. The duration of 
Phase II normally should not exceed 2 years. However, agencies may 
provide a longer performance period where appropriate for a particular 
project.
    (i) Dollar Value of Awards.
    (1) Generally, a Phase I award (including modifications) may not 
exceed $150,000 and a Phase II award (including modifications) may not 
exceed $1,000,000. Agencies may issue an award that exceeds these award 
guideline amounts by no more than 50%.
    (2) SBA reviews these amounts every year for the effects of 
inflation and posts these inflation effects and any resulting 
adjustments on www.SBIR.gov. Adjusted guidelines are effective for all 
solicitations issued on or after the date of the adjustment, and may be 
used by agencies to amend the solicitation and other program 
literature. Agencies have the discretion to issue awards for less than 
the guidelines.
    (3) There is no dollar limit associated with Phase III SBIR/STTR 
awards.
    (4) Agencies may request a waiver to exceed the award guideline 
amounts established in paragraph (i)(1) by more than 50% for a specific 
topic. Agencies must submit this request for a waiver to SBA prior to 
release of the solicitation, contract award, or modification to the 
award for the topic. The request for a waiver must explain and provide 
evidence that the limitations on award size will interfere with the 
ability of the agency to fulfill its research mission through the SBIR 
or STTR program; that the agency will minimize, to the maximum extent 
practicable, the number of awards that exceed the guideline amounts by 
more than 50%; and that research costs for the topic area differ 
significantly from those in other areas. After review of the agency's 
justification, SBA may grant the waiver for the agency to exceed the 
award guidelines by more than 50% for a specific topic. SBA will issue 
a decision on the request within 10 business days. The waiver will be 
in effect for one fiscal year.
    (5) Agencies must maintain information on all awards exceeding the 
guidelines set forth in paragraph (i)(1), including the amount of the 
award, a justification for exceeding the guidelines for each award, the 
identity and location of the awardee, whether the awardee has received 
any venture capital, hedge fund, or private equity firm investment, and 
whether the awardee is majority-owned by multiple VCOCs, hedge funds, 
or private equity firms.
    (6) The award guidelines do not prevent an agency from funding 
SBIR/STTR projects from other (non-SBIR/STTR) agency funds. Non-SBIR/
STTR funds used on SBIR/STTR efforts do not count toward the award 
guidelines set forth in (i)(1).
    (j) National Security Exemption. The Act provides for exemptions 
related to the simplified standardized funding process ``if national 
security or intelligence functions clearly would be jeopardized.'' This 
exemption should not be interpreted as a blanket exemption or 
prohibition of SBIR/STTR participation related to the acquisition of 
effort on national security or intelligence functions except as 
specifically defined under Sec.  9(e)(2) of the Act, 15 U.S.C. 
638(e)(2). Agency technology managers directing R/R&D projects under 
the SBIR and STTR programs, where the project subject matter may be 
affected by this exemption, must first make a determination on which, 
if any, of the standardized proceedings clearly place national security 
and intelligence functions in jeopardy, and then proceed with an 
acceptable modified process to complete the SBIR/STTR action. SBA's 
SBIR/STTR program monitoring activities, except where prohibited by 
security considerations, must include a review of nonconforming SBIR/
STTR actions justified under this public law provision.
    (k) Management of the STTR Project [STTR only]. The SBC, and not 
its partnering Research Institution(s), is to provide satisfactory 
evidence that it will exercise management direction and control of the 
performance of the STTR funding agreement. Regardless of the proportion 
of the work or funding allocated to each of the performers under the 
funding agreement, the SBC is to be the primary party with overall 
responsibility for performance of the project. All agreements between 
the SBC and the Research Institution cooperating in the STTR funding 
agreement, or any business plans reflecting agreements and 
responsibilities between the parties during performance of STTR Phase I 
or Phase II funding agreement, or for the commercialization of the 
resulting technology, should reflect the controlling position of the 
SBC.

8. Terms of Agreement Under SBIR/STTR Awards

    (a) Proprietary Information Contained in Proposals. The 
standardized SBIR/STTR Program solicitation shall 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 solely for proposal review purposes, shall 
not use or disclose, or authorize any other person or entity to use or 
disclose, all proprietary information, regardless of type, submitted in 
a contract proposal or grant application for a funding agreement under 
the SBIR/STTR programs.
    (b) Rights in Data Developed under An SBIR/STTR Funding Agreement.
    (1) General. The Act provides for retention by an SBC Awardee of 
the rights to data generated by the concern in the performance of an 
SBIR/STTR award. These data rights provide an incentive for SBCs to 
participate in Federally-funded research projects and contribute to the 
ability of small business Awardees to commercialize the technology 
developed under the program. The central purpose of SBIR/

[[Page 20501]]

STTR Data Rights is to provide the Federal Government with the degree 
of access to an Awardee's SBIR/STTR Data needed to evaluate the work 
and effectively utilize the results and at the same time ensure that 
the Federal Government or competitors of the SBIR/STTR Awardee cannot 
use SBIR/STTR Data in ways (e.g., for commercial purposes or to produce 
future technical procurement specifications) that would inappropriately 
diminish the rights or associated economic opportunities of the small 
business that developed the data. The data rights provisions and 
definitions provided in this PD are designed to ensure that, for 
properly marked SBIR/STTR Data, during the SBIR/STTR Protection Period, 
the Government provides effective protection of the data that is 
comparable to and at least as strong as the protection the Government 
gives to delivered proprietary data that is developed exclusively at 
private expense.
    (2) Application of SBIR/STTR Data Rights. SBIR/STTR Agencies must 
ensure that awardees of an SBIR/STTR funding agreement retain 
appropriate proprietary rights for all SBIR/STTR Data generated in the 
performance of the award. In general, this results in the Government 
receiving SBIR/STTR Data Rights in all SBIR/STTR Data during the SBIR/
STTR Protection Period, except for certain types of Data that are not 
subject to such data rights restrictions due to the nature of the data 
(e.g., Form, Fit, and Function Data or Operations, Maintenance, 
Installation, and Training Purposes (OMIT Data). SBIR/STTR Data Rights 
apply to all SBIR/STTR awards, including subcontracts or subgrants to 
such awards, that fall within the statutory definition of Phase I, II, 
or III of the SBIR/STTR programs, as described in Sec.  4 of this 
Policy Directive. The scope and extent of the SBIR/STTR Data Rights 
applicable to Federally-funded Phase III awards are identical to the 
SBIR/STTR Data Rights applicable to Phases I and II SBIR/STTR awards. 
SBIR/STTR Data Rights provide license rights to the Federal Government. 
SBIR/STTR Data Rights restrict the Federal Government's use and release 
of properly marked SBIR/STTR Data only during the SBIR/STTR Protection 
Period; after the Protection Period the Government receives Unlimited 
Rights in that data. The Government receives Unlimited Rights in all 
unmarked data.
    (3) SBIR/STTR Data Rights--Main Elements:
    (A) An SBC retains title and ownership of all SBIR/STTR Data it 
develops or generates in the performance of an SBIR/STTR award. The SBC 
retains all rights in SBIR/STTR Data that are not granted to the 
Government in accordance with this Policy Directive. These rights of 
the SBC do not expire.
    (B) The Government receives SBIR/STTR Data Rights during the SBIR/
STTR Protection Period on all appropriately marked SBIR/STTR Data. 
These rights enable the Federal Government to use SBIR/STTR Data in 
limited ways within the Government, such as for project evaluation 
purposes, but are intended to prohibit uses and disclosures that can 
result in the disclosure of the SBIR/STTR Data that may undermine the 
SBC's future commercialization of the associated technology. The 
Government receives Unlimited Rights in all unmarked data.
    (C) After the SBIR/STTR Protection Period has expired, the Federal 
Government receives Unlimited Rights in SBIR/STTR Data that was subject 
to SBIR/STTR Data Rights during the protection period. Unlimited Rights 
allows for any type of use or release of the SBIR/STTR Data within the 
Government, and permits the Government to release SBIR/STTR Data 
outside the Government, and to authorize others to use that data, for 
any purpose.
    (4) SBIR/STTR Protection Period. The SBIR/STTR Protection Period 
begins with award of an SBIR/STTR funding agreement and ends twelve 
years, or longer at the discretion of the Funding Agency, after 
acceptance of the last deliverable under that agreement (either Phase 
I, Phase II, or Federally-funded SBIR/STTR Phase III) unless, 
subsequent to the award, the agency negotiates for some other 
protection period for the SBIR/STTR Data.
    (5) Marking Requirements, and Requirements for Omitted or Incorrect 
Markings. To receive the protections accorded to SBIR/STTR Data 
pursuant to SBIR/STTR Data Rights, any SBIR/STTR Data that is delivered 
must be marked with the appropriate SBIR/STTR Data Rights legend or 
notice, in accordance with agency procedures. The Government assumes no 
liability for the access, use, modification, reproduction, release, 
performance, display, disclosure, or distribution of SBIR/STTR Data 
delivered without markings. If SBIR/STTR Data is delivered without the 
required legend or notice, the SBIR/STTR Awardee may, within 6 months 
of such delivery (or a longer period approved by the agency for good 
cause shown), request to have an omitted SBIR/STTR Data legend or 
notice, as applicable, placed on qualifying Data. If SBIR/STTR Data is 
delivered with an incorrect or nonconforming legend or notice, the 
agency may correct, or permit correction at the awardee's expense, of 
such incorrect or nonconforming notice(s).
    (6) Negotiated Rights.
    (A) Specially Negotiated Licenses Authorized Only After Award. An 
agency must not, in any way, make issuance of an SBIR/STTR award 
conditional upon the Awardee negotiating or consenting to negotiate a 
specially negotiated license or other agreement regarding SBIR/STTR 
Data. The negotiation of any such specially negotiated license 
agreements shall be permitted only after award.
    (B) Following issuance of an SBIR/STTR award, the Awardee may enter 
into a written agreement with the awarding agency to modify the license 
rights that would otherwise be granted to the agency during the 
Protection Period. However, any such agreement must be entered into 
voluntarily and by mutual agreement of the SBIR/STTR Awardee and 
agency, and not a condition for additional work under the funding 
agreement or the exercise of options. Such a bilateral data rights 
agreement must be entered into only after the subject SBIR/STTR award 
(which award must include an appropriate SBIR/STTR Data Rights clause) 
has been signed. Any such specially negotiated license must be in 
writing under a separate agreement after the SBIR/STTR funding 
agreement is signed. A decision by the awardee to relinquish, transfer, 
or modify in any way its rights in SBIR/STTR Data must be made without 
pressure or coercion by the agency or any other party. Any provision in 
a competitive non-SBIR or SBIR solicitation that would have the effect 
of diminishing SBIR/STTR Data Rights shall have no effect on the 
provision of SBIR/STTR Data Rights in a resulting Phase I, Phase II, or 
Phase III award.
    (7) SBIR/STTR Data Rights Clause. To ensure that SBIR/STTR Awardees 
receive the applicable data rights, all SBIR and STTR solicitations and 
resulting funding agreements must fully implement all of the policies, 
procedures, and requirements set forth in this Policy Directive in 
appropriate provisions and clauses incorporated into the SBIR/STTR 
solicitations and awards. Paragraph (5)(d)(3) of Appendix I: 
Instructions for Preparation of SBIR/STTR Program Solicitations 
provides a sample SBIR/STTR data rights clause containing the key 
elements that must be reflected in the clause used in agency 
solicitations. SBA will report to the Congress any attempt or action by 
an agency, that it is aware of, to condition an SBIR or STTR award on 
the negotiation of lesser data rights or to

[[Page 20502]]

exclude the appropriate data rights clause from the award.
    (c) Nondisclosure Agreement for Releases Outside the Government. In 
accordance with the Government's SBIR/STTR Data Rights, the Government 
must enter into an appropriate nondisclosure agreement (NDA) with any 
non-governmental entity that is authorized to receive SBIR/STTR Data 
(that is subject to SBIR/STTR Data Rights) during the SBIR/STTR 
Protection Period, except as otherwise permitted by the Awardee 
asserting the SBIR/STTR Data Rights. The NDA must contain terms and 
conditions to ensure that the non-governmental entity:
    (1) Understands, acknowledges, and agrees that it's use, 
modification, reproduction, release, display, disclosure, and 
distribution of the SBIR/STTR Data is permitted only for the specific 
activities authorized by the NDA (which must be authorized by SBIR/STTR 
Data Rights, or otherwise authorized by the SBIR/STTR Awardee);
    (2) Is prohibited from further using, modifying, reproducing, 
releasing, displaying, disclosing, or distributing the data unless it 
receives the written permission of the Government (when authorized by 
the SBIR/STTR Awardee) or the written permission of the SBIR/STTR 
Awardee;
    (3) Agrees to destroy (or return to the Government at the request 
of the Government), all SBIR/STTR Data, and all copies in its 
possession, at or before the time specified in the agreement, and to 
notify the procuring agency that all copies have been destroyed (or 
returned as requested by the Government);
    (4) Is prohibited from using the data for a commercial purpose 
unless it receives the written permission of the Government (when 
authorized by the SBIR/STTR Awardee) or the written permission of the 
SBIR/STTR Awardee itself; and
    (5) Ensures that its employees, subcontractors, and other entities 
that are authorized to receive SBIR/STTR Data are bound by use and 
nondisclosure restrictions consistent with the NDA prior to being 
provided access to such SBIR/STTR Data.
    (d) [STTR only] Allocation of Intellectual Property Rights in STTR 
Award.
    (1) An SBC, before receiving an STTR award, must negotiate a 
written agreement between the SBC and the partnering Research 
Institution, allocating intellectual property rights and rights, if 
any, to carry out follow-on research, development, or 
commercialization. The SBC must submit this agreement to the awarding 
agency with the proposal. The SBC must certify in all proposals that 
the agreement is satisfactory to the SBC.
    (2) The awarding agency may accept an existing agreement between 
the two parties if the SBC certifies its satisfaction with the 
agreement, and such agreement does not conflict with the interests of 
the Government. SBA will provide a model agreement to be adopted by the 
agencies and used as guidance by the SBC in the development of an 
agreement with the Research Institution. The model agreement will 
direct the parties to, at a minimum:
    (A) State specifically the degree of responsibility, and ownership 
of any product, process, or other invention or innovation resulting 
from the cooperative research. The degree of responsibility shall 
include responsibility for expenses and liability, and the degree of 
ownership shall also include the specific rights to revenues and 
profits.
    (B) State which party may obtain United States or foreign patents 
or otherwise protect any inventions resulting from the cooperative 
research.
    (C) State which party has the right to any continuation of 
research, including non-STTR follow-on awards.
    (3) The Government will not normally be a party to any agreement 
between the SBC and the Research Institution. Nothing in the agreement 
is to conflict with any provisions setting forth the respective rights 
of the United States and the SBC with respect to intellectual property 
rights and with respect to any right to carry out follow-on research.
    (e) Title Transfer of Agency-Provided Property. Under the Act, the 
Government may transfer title to property provided by the SBIR/STTR 
agency to the awardee or acquired by the awardee for the purpose of 
fulfilling the contract where such transfer would be more cost 
effective than recovery of the property.
    (f) Continued Use of Government Equipment. Agencies must allow an 
SBIR/STTR Awardee participating in an SBIR/STTR Phase III award 
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/STTR program.
    (g) Grant Authority. The Act does not, in and of itself, convey 
grant authority. Each agency must secure grant authority in accordance 
with its normal procedures.
    (h) Conflicts of Interest. SBA cautions Participating Agencies that 
awards made to SBCs owned by or employing current or previous Federal 
Government employees may create conflicts of interest in violation of 
FAR Part 3 and the Ethics in Government Act of 1978, as amended. Each 
participating agency should refer to the standards of conduct review 
procedures currently in effect for its agency to ensure that such 
conflicts of interest do not arise.
    (i) American-Made Equipment and Products. Congress intends that the 
awardee of a funding agreement under the SBIR/STTR program should, when 
purchasing any equipment or a product with funds provided through the 
funding agreement, purchase only American-made equipment and products, 
to the extent possible, in keeping with the overall purposes of this 
program. Each SBIR/STTR agency must provide to each awardee a notice of 
this requirement.
    (j) Certifications After Award and During Funding Agreement 
Lifecycle.
    (1) A Phase I funding agreement must state that the awardee shall 
submit a new certification as to whether it is in compliance with 
specific SBIR/STTR program requirements at the time of final payment or 
disbursement.
    (2) A Phase II funding agreement must state that the awardee shall 
submit a new certification as to whether it is in compliance with 
specific SBIR/STTR program requirements prior to receiving more than 
50% of the total award amount and prior to final payment or 
disbursement.
    (3) Agencies may also require additional certifications at other 
points in time during the life cycle of the funding agreement, such as 
at the time of each payment or disbursement.
    (k) Updating www.SBIR.gov. Agencies must require each Phase II 
awardee to update the commercialization information on the award 
through the company's account on www.SBIR.gov upon completion of the 
last deliverable under the funding agreement. In addition, the awardee 
is requested to voluntarily update the commercialization information on 
that award annually thereafter for a minimum period of 5 years.
    (l) Prototypes. Participating agencies must handle all prototypes 
developed under an SBIR/STTR award with caution during the SBIR/STTR 
Protection Period to prevent any use or disclosure of these items that 
has the potential to reveal the innovative aspects of the technology in 
ways that may harm the awardee's ability to commercialize the 
technology. In particular, reverse engineering of

[[Page 20503]]

prototypes may reveal, to a Government or non-Government entity, the 
SBIR/STTR Data that is applied or embodied in the item. While a 
prototype may not itself be considered SBIR/STTR Data because it is not 
``recorded information,'' SBA cautions agencies that it is a violation 
of the purpose and intent of the Small Business Act to release or use a 
prototype during the SBIR/STTR Protection Period in a way that harms 
the awardee's ability to take advantage of the economic opportunities 
of its SBIR/STTR Data. SBA notes that the DFARS Restricted Rights 
license granted to the Government for computer software prohibits non-
governmental entities from reverse-engineering, disassembly, or 
decompiling Computer Software, except in extremely limited 
circumstances.

9. Responsibilities of SBIR/STTR Agencies and Departments

    (a) General Responsibilities. Each agency participating in the 
SBIR/STTR program must:
    (1) Unilaterally determine the categories of projects to be 
included in its SBIR/STTR 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/STTR program, each 
Federal agency must:
    (i) give priority in the SBIR/STTR 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/STTR program to manufacturing-related research and 
development. These activities should include the provision of 
information on the Executive Order on the agency's SBIR/STTR program 
Web site.
    (ii) give priority to small business concerns that participate in 
or conduct energy efficiency or renewable energy system research and 
development projects.
    (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. 
2522.
    (2) Release SBIR/STTR solicitations in accordance with the SBA 
master schedule.
    (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 
agreement.
    (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(c) of this Policy Directive.
    (6) Administer its own SBIR/STTR funding agreements or delegate 
such administration to another agency.
    (7) Include provisions in each SBIR/STTR 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/STTR Phase I, Phase II, and Phase III award are protected 
properly.
    (9) Make payments to awardees of SBIR/STTR 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 
requirements.
    (10) Provide an annual report on the SBIR/STTR program to SBA, as 
well as other information concerning the SBIR/STTR program. See Sec.  
10 of this Policy Directive for further information on the agency's 
reporting requirements, including the frequency for specific reporting 
requirements.
    (11) Include in its annual performance plan required by 31 U.S.C. 
1115(a) and (b) a section on its SBIR/STTR 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 
Business.
    (12) Establish the agency's benchmarks for progress towards 
commercialization and include the information necessary to implement 
the benchmarks in each solicitation. See Sec.  6(a)(7) of the directive 
for further information.
    (b) Discretionary technical assistance to SBIR/STTR Awardees.
    (1) Agencies may enter into agreements with vendors to provide 
technical assistance to SBIR/STTR 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/STTR 
Awardees in:
    (A) making better technical decisions on SBIR/STTR projects;
    (B) solving technical problems that arise during SBIR/STTR 
projects;
    (C) minimizing technical risks associated with SBIR/STTR projects; 
and
    (D) commercializing the SBIR/STTR 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/STTR funds for the 
technical assistance described above in (b)(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/STTR funding, unless 
the agency funds the technical assistance using non-SBIR/STTR funds. 
The agency may not use SBIR/STTR funds for technical assistance unless 
the vendor provides the services to the SBIR/STTR Awardee.
    (3) An SBIR/STTR applicant may acquire the technical assistance 
services set forth in (b)(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/STTR 
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/STTR award. The per year amount will be 
in addition to the award and will count as part of the agency's SBIR/
STTR funding, unless the agency funds the technical assistance using 
non-SBIR/STTR 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

[[Page 20504]]

will also publish this information on www.SBIR.gov.
    (d) Interagency actions.
    (1) Joint funding. An SBIR/STTR project may be financed by more 
than one Federal agency. Joint funding is not required but can be an 
effective arrangement for some projects.
    (2) Phase II awards. An SBIR/STTR 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 
SBA.
    (3) Participation by WOSBs and SDBs in the SBIR/STTR 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/STTR program. These 
SBCs will be required to compete for SBIR/STTR awards on the same basis 
as all other SBCs. However, SBIR/STTR agencies are encouraged to work 
independently and cooperatively with SBA to develop methods to 
encourage qualified WOSBs and SDBs to participate in the SBIR/STTR 
program.
    (e) Limitation on use of funds.
    (1) Each SBIR/STTR 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/STTR program 
must not be considered to meet any portion of the required minimum 
percent.
    (2) An agency must not use any of its SBIR/STTR 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, 2017, 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/STTR 
activities. Rather, funding under this pilot program is intended to 
supplement such funds.
    (i) A Federal agency may use this money to fund the following 
specific activities:
    (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/
STTR program of that agency, which includes assistance with application 
reviews; and
    (V) funding for simplified and standardized program proposal, 
selection, contracting, compliance, and audit procedures for the SBIR/
STTR 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 
initiatives, including:
    (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/STTR 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/STTR program, and small 
businesses in states with a historically low level of SBIR/STTR 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/STTR 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/STTR 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 
must identify initiatives that are above and beyond current practice 
and which enhance the agency's SBIR/STTR 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/STTR 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

[[Page 20505]]

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/STTR 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/STTR 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.
    (ii) Why the Agency will not and cannot fund the use of the federal 
facility or personnel for the SBIR/STTR project with non-SBIR/STTR 
money.
    (iii) The concurrence of the SBC's chief business official to use 
the federal facility or personnel.
    (5) An agency may issue an SBIR/STTR 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 
following.
    (i) The agency may not require that the small business concern 
enter into an agreement with any Federal laboratory to perform any 
portion of an SBIR/STTR award, as a condition for an SBIR/STTR award.
    (ii) The agency may not issue an SBIR/STTR award or approve an 
agreement between an SBIR/STTR 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/STTR award or approve an 
agreement between an SBIR/STTR Awardee and a Federal laboratory that 
violates any SBIR/STTR requirement set forth in statute or the Policy 
Directive, including any SBIR/STTR data rights protections.
    (iv) The agency and Federal laboratory may not require any SBIR/
STTR Awardee that has an agreement with the Federal laboratory to 
perform portions of the activities under the SBIR/STTR 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/STTR program. R/R&D agency budgets may cause 
fluctuations and trends that must be reviewed in light of SBIR/STTR 
program purposes. An agency may be considered by SBA for a phased 
withdrawal from participation in the SBIR/STTR 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/STTR agency from the SBIR/
STTR 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/STTR program may participate on a voluntary basis. Federal 
agencies seeking to participate in the SBIR/STTR 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/STTR awards, and create 
and implement policies and procedures to prevent fraud, waste and abuse 
in the SBIR/STTR 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/
STTR program include, but are not limited to:
    (i) misrepresentations or material, factual omissions to obtain, or 
otherwise receive funding under, an SBIR/STTR award;
    (ii) misrepresentations of the use of funds expended, work done, 
results achieved, or compliance with program requirements under an 
SBIR/STTR award;
    (iii) misuse or conversion of SBIR/STTR award funds, including any 
use of award funds while not in full compliance with SBIR/STTR program 
requirements, or failure to pay taxes due on misused or converted SBIR/
STTR award funds;
    (iv) fabrication, falsification, or plagiarism in applying for, 
carrying out, or reporting results from an SBIR/STTR 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.
    (2) At a minimum, agencies must:
    (i) Require certifications from the SBIR/STTR Awardee at the time 
of award, as well as after award and during the funding agreement 
lifecycle (see Sec.  8(i) and Appendix I for more information);

[[Page 20506]]

    (ii) Include on their respective SBIR/STTR 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 
OIG);
    (iii) Designate at least one individual in the agency to, at a 
minimum, serve as the liaison for the SBIR/STTR 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/STTR 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/STTR program to notify the OIG if anyone suspects fraud, 
waste, and/or abuse and ensure the policy is communicated to all SBIR/
STTR personnel.
    (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/STTR 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/STTR 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 SBIR.GOV 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 
agreement.
    (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 
efficiency:
    (1) The www.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 
agencies.
    (h) National Academy of Science 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.

10. Reporting Requirements--for Agencies, Applicants and Awardees

    (a) General. The Small Business Act requires agencies to collect 
meaningful information from SBCs and ensure that reporting requirements 
are streamlined to minimize the burden on small businesses.
    (1) SBA is required to collect data from agencies and report to the 
Congress information regarding applications by and awards to SBCs by 
each Federal agency participating in the SBIR/STTR program. 
Participating agencies report data using standardized templates that 
are provided, maintained, and updated by SBA on www.SBIR.gov.
    (2) The Act requires a ``simplified, standardized and timely annual 
report'' from each Federal agency participating in the SBIR/STTR 
program (see Sec.  3 for the definition of Federal agency), which is 
submitted to SBA. In addition, agencies are required to report certain 
items periodically throughout the year to SBA. Agencies may identify 
certain information, such as award data information, by the various 
components of each agency. SBA collects agency reports through the 
www.SBIR.gov portal. If the www.SBIR.gov databases are unavailable, 
then the report must be emailed to [email protected].

[[Page 20507]]

    (3) To meet these requirements, the SBIR/STTR program has the 
following key principles:
    (i) Make updating data available electronically;
    (ii) Centralize and share certain data through secure interfaces to 
which only authorized government personnel have access;
    (iii) Have small business enter the data only once, if possible; 
and
    (iv) Provide standardized procedures.
    (b) Summary of SBIR/STTR Databases.
    (1) The Act requires that SBA coordinate the implementation of 
electronic databases at the SBIR/STTR agencies, including the technical 
ability of the agencies to share the data. In addition, the Act 
requires the reporting of various data elements, which are clustered 
together in the following subsections:
    (i) Solicitations Database (to include the Master Schedule);
    (ii) www.SBIR.gov, which includes the following databases:
    (A) Company Registry Database;
    (B) Application Information Database;
    (C) Award Information Database;
    (D) Commercialization Database;
    (E) Annual Report Database; and
    (F) Other Reporting Requirements Database.
    (2) The subsections below describe the data reporting requirements, 
including reporting mechanisms, the frequency of data collection and 
reporting, and whether this information is shared publicly or is 
protected and only available to authorized personnel. The table below 
summarizes the data collection requirements for each database; however, 
there may be some divergences at the individual data field level. Refer 
to Appendix II the detailed reporting requirements at the data field 
level. SBA notes that in fiscal year 2012, SBA began a phased 
implementation of this data collection.

----------------------------------------------------------------------------------------------------------------
                                                                    Collection/Reporting
             Database                  Reporting Mechanism               Frequency            Public/ Government
----------------------------------------------------------------------------------------------------------------
Solicitations....................  Agency XML or manual upload  Within 5 business days of    Public.
                                    to http://www.SBIR.gov.      solicitation open date.
Company Registry.................  SBC reports data to          Register or reconfirm at     Government only.
                                    www.SBIR.gov. Agency         time of application.
                                    receives .pdf from company.
Application Information..........  Agency provides XML or       Quarterly..................  Government only.
                                    manual upload to
                                    www.SBIR.gov.
Award Information................  XML or manual upload to      Quarterly..................  Public.
                                    www.SBIR.gov.
Commercialization................  Agencies + companies report  Agencies update in real      Government only.
                                    to www.SBIR.gov.             time SBC updates prior to
                                                                 subsequent award
                                                                 application and
                                                                 voluntarily thereafter.
Annual Report....................  Agency XML or manual upload  Annually...................  Public.
                                    to www.SBIR.gov.
Other Reports....................  As set forth in the          As set forth in the          Public.
                                    directive.                   directive.
----------------------------------------------------------------------------------------------------------------

    (3) SBIR/STTR Awardees will have user names and passwords assigned 
in order to access their respective awards information in the system. 
Award and commercialization data maintained in the database can be 
changed only by the awardee, SBA, or the awarding SBIR/STTR Federal 
agency.
    (c) Master Schedule & the Solicitations Database.
    (1) SBA posts an electronic Master Schedule of release dates of 
program solicitations with links to Internet Web sites of agency 
solicitations on www.SBIR.gov.
    (i) On or before August 1, each agency representative must notify 
SBA in writing or by email of its proposed program solicitation release 
and proposal due dates for the next fiscal year. SBA and the agency 
representatives will coordinate the resolution of any conflicting 
agency solicitation dates by the second week of August. In all cases, 
SBA will make final decisions. Agencies must notify SBA in writing of 
any subsequent changes in the solicitation release and close dates.
    (ii) For those agencies that use both general topic and more 
specific subtopic designations in their SBIR/STTR solicitations, the 
topic data should accurately describe the research solicited.
    (iii) Agencies must post on their Internet Web sites the following 
information regarding each program solicitation:
    (A) list of topics upon which R/R&D proposals will be sought;
    (B) Agency address, phone number, or email address from which SBIR/
STTR program solicitations can be requested or obtained, especially 
through electronic means;
    (C) names, addresses, and phone numbers of agency contact points 
where SBIR/STTR-related inquiries may be directed;
    (D) release date(s) of program solicitation(s);
    (E) closing date(s) for receipt of proposals; and
    (F) estimated number and average dollar amounts of Phase I awards 
to be made under the solicitation.
    (2) SBA will manage a searchable public database that contains all 
solicitation and topic information from all SBIR/STTR agencies. 
Agencies are required to update the Solicitations Database, (available 
at www.SBIR.gov), within 5 business days of a solicitation's open date 
for applications and/or submissions for SBCs. Refer to Appendix II for 
detailed reporting requirements. The main data requirements include:
    (i) type of solicitation--SBIR/STTR;
    (ii) Phase--I or II;
    (iii) topic description;
    (iv) sub-topic description;
    (v) Web site for further information; and
    (vi) applicable contact information per topic or sub-topic, where 
applicable and allowed by law.
    (d) Company Registry Database.
    (1) SBA maintains and manages a company registry to track ownership 
and affiliation requirements for all companies applying to the SBIR/
STTR program, including those that are majority-owned by multiple 
VCOCs, private equity firms, or hedge funds.
    (2) Each SBC applying for a Phase I or Phase II award must register 
on www.SBIR.gov prior to submitting an application. The SBC will report 
and/or update ownership information to SBA prior to each SBIR/STTR 
application submission. The SBC can view the ownership and affiliation 
requirements of the program on the registry site.
    (3) Data collected in the Company Registry Database will not be 
shared publicly. Refer to Appendix II for details on specific fields 
shared publicly.
    (4) The SBC will save its information from the registration in a 
.pdf document

[[Page 20508]]

and will append this document to the application submitted to a given 
agency unless the information can be transmitted automatically to SBIR/
STTR agencies.
    (5) Refer to Appendix II for the required reporting fields. The 
main data requirements include:
    (i) basic identifying information for the SBC;
    (ii) the number of employees for the SBC;
    (iii) whether the SBC has venture capital, hedge fund or private 
equity firm investment and if so, include:
    (A) the percentage of ownership of the awardee held by the VCOC, 
hedge fund or private equity firm;
    (B) the registration by the SBC of whether or not it is majority-
owned by VCOCs, hedge funds, or private equity firms. Please note that 
this may be auto-populated through the individual calculations of 
investments in the SBC already submitted.
    (iv) information on the affiliates of the SBC, including:
    (A) the names of all affiliates of the SBC;
    (B) the number of employees of the affiliates;
    (e) Application Information Database.
    (1) SBA will manage an Application Information Database on 
information on applications to the SBIR/STTR program across agencies.
    (2) Each agency must upload application data to the Application 
Database at www.SBIR.gov at least quarterly.
    (3) The data in the applicant database is only viewable to 
authorized government officials and not shared publicly.
    (4) Refer to Appendix II for detailed reporting requirements. The 
main data requirements for each Phase I and Phase II application 
include:
    (i) name, size, and location of the applicant, and the identifying 
number assigned;
    (ii) an abstract and specific aims of the project;
    (iii) name, title, contact information, and position in the small 
business of each key individual that will carry out the project;
    (iv) percentage of effort each key individual identified will 
contribute to the project;
    (v) Federal agency to which the application is made and contact 
information for the person responsible for reviewing applications and 
making awards under the program.
    (5) The Application Information Database connects and cross-checks 
information with the Company Registry and government personnel can see 
connected data.
    (f) Award Information Database.
    (1) SBA manages a database on awards made within the SBIR/STTR 
program across agencies.
    (2) Each agency must update the Award Information Database 
quarterly, if not more frequently.
    (3) Most of the data available on the Award Information Database is 
viewable and searchable by the public on www.SBIR.gov.
    (4) Refer to SBIR.gov for detailed reporting requirements. The data 
requirements for each Phase I and Phase II award include:
    (i) information similar to the Application Information Database--if 
not already collected;
    (ii) the name, size, and location of, and the identifying number 
assigned;
    (iii) an abstract and specific aims of the project;
    (iv) the name, title, contact information, and position in the 
small business of each key individual that will carry out the project;
    (v) the percentage of effort each identified key individual will 
contribute to the project;
    (vi) the Federal agency making the award;
    (vii) award amount;
    (viii) principal investigator identifying information--including 
name, email address, and demographic information;
    (ix) detailed information on location of company;
    (x) whether the awardee:
    (A) has venture capital, hedge fund or private equity firm 
investment and if so, the amount of such investment received by SBC as 
of date of award and amount of additional capital awardee has invested 
in SBIR/STTR technology;
    (B) is a WOSB or has a woman as a principal investigator;
    (C) is an SDB or has a socially and economically disadvantaged 
individual as a principal investigator;
    (D) is owned by a faculty member or a student of an institution of 
higher education as defined in 20 U.S.C. 1001); and
    (E) has received the award as a result of the Commercialization 
Readiness Pilot Program for Civilian Agencies set forth in Sec.  12(c) 
of the directive.
    (xi) an identification of any business concern or subsidiary 
established for the commercial application of a product or service for 
which an SBIR or STTR award is made.
    (5) The Award Information Database connects and cross-checks 
information with the Company Registry and Application Information 
Database, and government personnel can see connected data.
    (g) Commercialization Database.
    (1) The Commercialization Database stores information reported by 
awardees on the commercial activity resulting from their past SBIR/STTR 
awards.
    (2) Commercialization data is inputted to this database in two 
ways: awardees enter their commercialization data directly into the 
commercialization database on www.SBIR.gov, and agencies can upload to 
the database at www.sbir.gov commercialization data they have collected 
from awardees.
    (3) The Commercialization Database is currently maintained by SBA.
    (4) Awardees are required to update this information on their prior 
Phase II awards in the Commercialization Database when submitting an 
application for an SBIR/STTR Phase II award and upon completion of the 
last deliverable for that award.
    (5) Commercialization data at the company level will not be shared 
publicly. Aggregated data that maintains the confidentiality of 
companies may be reported in compliance with the statute.
    (6) Refer to www.sbir.gov for the specific commercialization data 
reporting fields. The main data requirements include for every Phase II 
award:
    (i) any business concern or subsidiary established for the 
commercial application of a product or service for which an SBIR/STTR 
award is made;
    (ii) total revenue resulting from the sale of new products or 
services, or licensing agreements resulting from the research conducted 
under each Phase II award;
    (iii) additional investment received from any source, other than 
Phase I or Phase II awards, to further the research and development 
conducted under each Phase II award;
    (iv) any contract with the federal government marked as an SBIR/
STTR Phase III award; and
    (v) any narrative information that a Phase II awardee voluntarily 
submits to further describe the commercialization efforts of its awards 
and related research.
    (7) The SBC may apportion sales or additional investment 
information relating to more than one Phase II award among those 
awards, if it notes the apportionment for each award. Companies are 
requested to update their records in this database on a voluntary basis 
for at least 5 years following the completion of award.
    (8) Awardees will update their information and add project 
commercialization and sales data using their user names and passwords. 
SBA and SBIR/STTR agencies will coordinate data collection to ensure 
that

[[Page 20509]]

small businesses will not need to report the same data more than once.
    (9) Note that the Award Information and Commercialization Databases 
will contain the data necessary for agencies to determine whether an 
applicant meets the agency's benchmarks for progress towards 
commercialization.
    (h) Agency Annual Report to SBA.
    (1) Agencies must submit their report to SBA on an annual basis and 
will report for the period ending September 30 of each fiscal year. The 
report is due to SBA no later than March 15 of each year. For example, 
the report for FY 2015 (October 1, 2014--September 30, 2015) must be 
submitted to SBA by March 15, 2016.
    (2) SBA provides the Annual Report form to agencies through 
www.SBIR.gov. SBA reserves the right to modify the fields of the Annual 
Report data form beyond those identified in this directive.
    (3) A number of the fields of the Annual Report template are pre-
populated by SBA with data from the SBIR/STTR program database. SBA 
works with the agencies to resolve any data inconsistencies.
    (4) The annual report includes the following:
    (i) SBIR/STTR program dollars obligated through program funding 
agreements for Phase I, Phase II, and other uses of program funds, 
during the reporting fiscal year.
    (ii) Number of topics and subtopics contained in each program 
solicitation.
    (iii) Number of proposals received by the agency for each topic and 
subtopic in each program solicitation.
    (iv) Agency total extramural R/R&D obligations for the reporting 
fiscal year including an explanation of its calculation and how it 
differs, if at all, from the amount reported to the National Science 
Foundation pursuant to the annual Budget of the United States 
Government.
    (v) The minimum dollar amount the agency is required to obligate 
per fiscal year for the SBIR and STTR programs. This amount is 
calculated by applying the statutory per centum to the agency's total 
extramural R/R&D obligations made during the fiscal year (adjusted for 
the appropriate exclusions); and if the minimum amount was not met, the 
agency must provide the reasons why and an explanation of how the 
agency plans to meet the requirement in the future. Agencies may 
provide an explanation of the specific budgeting process their agency 
uses to allocate funds for the SBIR/STTR programs and describe any 
issues they may see with the compliance determination procedure.
    (vi) For all applicants and awardees in the applicable fiscal 
year--where applicable, the name and address, solicitation topic and 
subtopic, solicitation number, project title, total dollar amount of 
funding agreement, and applicable demographic information. The agency 
is not required to re-submit applicant and award information in the 
annual report that it has already reported to SBA through www.SBIR.gov 
as required.
    (vii) Justification for the award of any funding agreement 
exceeding the award guidelines set forth in Sec.  7(i) of this 
directive, the amount of each award exceeding the guidelines, the 
identity and location of the awardee, whether the awardee has received 
any venture capital, hedge fund, or private equity firm investment, and 
whether the awardee is majority-owned by a venture capital operating 
company, hedge fund or private equity firm.
    (viii) Justification for awards made under a topic or subtopic 
where the agency received only one proposal. Agencies must also provide 
the awardee's name and address, the topic or subtopic, and the dollar 
amount of award. Awardee information must be collected quarterly--in 
any case, but updated in the agency's annual reports.
    (ix) All instances where the Phase II Awardee did not receive a 
Phase I award.
    (x) All instances in which an agency pursued R/R&D, services, 
production, or any combination thereof of a technology developed under 
an SBIR/STTR award with an entity other than that Awardee. See Sec.  
9(a)(12) for minimum reporting requirements.
    (xi) The number and dollar value of each SBIR/STTR and non-SBIR/
STTR award (includes grants, contracts and cooperative agreements as 
well as any award issued under the Commercialization Program) over 
$10,000 and compare the number and amount of SBIR/STTR awards with 
awards to other than SBCs.
    (xii) Information relating to the pilot to allow for funding of 
administrative, oversight, and contract processing costs, including the 
money spent on each activity and any other information required in the 
approved work plan to measure the benefits of using these funds for the 
specific activities--especially, as it pertains to the goals outlined 
in the work plan. See Sec.  9(e)(3) concerning the Pilot to Allow for 
Funding of Administrative, Oversight, and Contract Processing Costs.
    (xiii) Outreach. A description and the extent to which the agency 
is increasing outreach and awards to SDBs and WOSBs.
    (xiv) VCOC-owned. General information about the implementation of 
and compliance with the allocation of funds for awardees that are 
majority-owned by multiple VCOCs, hedge funds or private equity firms.
    (xv) Phase III appeals. Descriptive information on any appeals 
filed on Phase III awards pursuant to Sec.  4(c)(7) of the directive 
and notices of noncompliance with the policy directive filed by SBA.
    (xvi) Phase III awards. Information relating to each Phase III 
award made by that agency either as a prime or subcontract, including 
the name of the business receiving the Phase III award, the dollar 
amount, and the awarding agency or prime contractor.
    (xvii) Commercialization Programs. An accounting of funds, 
initiatives, and outcomes under the commercialization programs set 
forth in Sec.  12(b) & (c) of this directive.
    (xviii) Manufacturing. Information relating to the agency's 
enhancement of manufacturing activities, if the agency awards more than 
$50,000,000 under the SBIR and STTR programs combined in a fiscal year. 
The report must include:
    (A) a description of efforts undertaken by the agency to enhance 
U.S. manufacturing activities;
    (B) a comprehensive description of the actions undertaken each year 
by the agency in carrying out the SBIR or STTR programs to support 
Executive Order 13329 (relating to manufacturing);
    (C) an assessment of the effectiveness of the actions taken at 
enhancing the R&D of U.S. manufacturing technologies and processes;
    (D) a description of efforts by vendors selected to provide 
discretionary technical assistance to help SBIR and STTR business 
concerns manufacture in the U.S.; and
    (E) recommendations from the agency's SBIR and STTR program 
managers of additional actions to increase manufacturing activities in 
the U.S.
    (xix) Performance Areas and Metrics. As part of agency work plans 
submitted pursuant to Sec.  9(e) of the directive, SBA works with the 
agencies to establish the performance criteria and metrics used to 
measure agency performance. The Small Business Act establishes broad 
performance areas for the program, including commercialization, 
streamlining, outreach, etc. Agencies must report their progress, using 
the SBA-approved performance criteria, at the end of each fiscal year 
as part of the annual report. The metrics and performance areas will 
evolve over time and can be found at www.SBIR.gov.
    (j) Other Reporting Requirements.

[[Page 20510]]

    (1) SBA will set forth a list of reports that agencies are required 
by statute to submit, in a table format, which will be available at 
www.SBIR.gov.
    (2) SBA's SBIR/STTR program database will include a list of any 
individual or small business concern that has received an SBIR/STTR 
award and that has been convicted of a fraud-related crime involving 
SBIR/STTR funds or found civilly liable for a fraud-related violation 
involving SBIR/STTR funds, of which SBA has been made aware.
    (3) Program Funding Compliance. Agencies must submit to SBA's 
Administrator, not later than 4 months after the date of enactment of 
its annual Appropriations Act, a report on the agency's plan to meet 
the program funding requirement for the current fiscal year. SBA 
provides detailed guidance regarding this report on www.sbir.gov. The 
report must include the following main elements:
    (A) an explanation of the calculation of total Extramural R/R&D 
including an itemization of each research program excluded from the 
calculation and a brief explanation of why it is excluded,
    (B) a review of the agency's compliance with the funding 
requirement in the prior fiscal year to determine if the program 
funding process enabled the agency to meet the requirement, and
    (C) a funding plan showing how the agency is budgeting its funds 
for the SBIR/STTR programs during the current fiscal year so as to meet 
or exceed the year's expected minimum obligations requirement for the 
program
    (4) Agencies must provide notice to SBA of any case or controversy 
before any Federal judicial or administrative tribunal concerning the 
SBIR/STTR program of the Federal agency. This does not include agency 
level protests of awards unless and until the protest is before a 
Federal court or administrative body. The agency must provide notice to 
SBA within 15 business days of the agency's written notification of the 
case or controversy.
    (5) Agencies must provide notice of all instances in which an 
agency pursued research, development, production, or any such 
combination of a technology developed by an SBC using an award made 
under the SBIR/STTR program of that agency, where the agency determined 
that it was not practicable to enter into a follow-on non-SBIR/STTR 
program funding agreement with that concern. The agency must provide 
notice to SBA within 15 business days of the agency's award. The report 
must include, at a minimum:
    (i) the reasons why the follow-on funding agreement with the 
concern was not practicable;
    (ii) the identity of the entity with which the agency contracted to 
perform the research, development, or production; and
    (iii) a description of the type of funding agreement under which 
the research, development, or production was obtained.
    (6) Agencies must provide information supporting the agency's 
achievement of the Interagency Policy Committee's policy 
recommendations on ways to improve program effectiveness and 
efficiency. This includes qualitative and quantitative data as 
appropriate, which would measure the agency's progress. The agency must 
provide this information to SBA at the end of each fiscal year.
    (7) Agencies must provide an annual report to SBA, Senate Committee 
on Small Business and Entrepreneurship, House Committee on Small 
Business, and the House Committee on Science, Space, and Technology on 
SBIR and STTR programs and the benefits of these programs to the United 
States. Prior to preparing the report, the agency shall develop metrics 
to evaluate the effectiveness and benefit to the United States of the 
SBIR and STTR programs. The metrics must be science-based and 
statistically driven, reflect the mission of the agency, and include 
factors relating to the economic impact of the programs. The report 
must describe in detail the agency's annual evaluation of the programs 
using these metrics. The final report must be posted online so it can 
be made available to the public.
    (8) NIH, DoD and the Department of Education must provide the 
written determination to SBA anytime it issues a Phase II award to a 
small business concern that did not receive a Phase I award for that R/
R&D. The determination must be submitted prior to award.
    (9) SBA will compile data and report to Congress on the Federal and 
State Technology (FAST) Partnership Program, described in Sec.  12 of 
this Policy Directive. If required by the FAST grant, the grantees will 
report a comprehensive list of the companies that received assistance 
under FAST and if those companies received SBIR or STTR awards and any 
information regarding mentors and Mentoring Networks, as required in 
the Federal and State Technology (FAST) Partnership Program.
    (k) Further Clarification on Availability of SBC Information.
    (1) Unless stated otherwise, the information contained in the 
Company Registry Database, the Application Information Database, and 
the Commercialization Database is solely available to authorized 
government officials, with the approval of SBA. This includes Congress, 
GAO, agencies participating in the SBIR and the STTR programs, Office 
of Management and Budget, OSTP, Office of Federal Procurement Policy, 
and other authorized persons who are subject to a nondisclosure 
agreement with the Federal Government covering the use of the 
databases. These databases are used for the purposes of evaluating and 
determining eligibility for the SBIR/STTR program, in accordance with 
Policy Directives issued by SBA. Pursuant to 15 U.S.C. 638(k)(4), 
certain information provided to those databases are privileged and 
confidential and not subject to disclosure pursuant to 5 U.S.C. 552 
(Government Organization and Employees); nor must it be considered to 
be publication for purposes of 35 U.S.C. 102 (a) or (b).
    (2) Most of the information in the Award Information and Annual 
Reports Databases will be available to the public. Any information that 
will identify the confidential business information of a given small 
business concern will not be disclosed to the public. Those databases 
are available at www.SBIR.gov and offer a vast array of user-friendly 
capabilities that are accessible by the public at no charge. The Award 
Information Database allows for the online submission of SBIR/STTR 
awards data from all SBIR/STTR agencies. It also allows any end-user to 
perform keyword searches and create formatted reports of SBIR/STTR 
awards information, and for potential research partners to view 
research and development efforts that are ongoing in the SBIR and the 
STTR programs, increasing the investment opportunities of the SBIR/STTR 
SBCs in the high tech arena.
    (l) Waivers.
    (1) Agencies must request an extension for additional time between 
the solicitation closing date and notification of recommendation for 
award. SBA will respond to the request for an extension within 5 
business days, as practicable. See Sec.  7(c)(1) of the directive for 
further information.
    (2) Agencies must request a waiver to exceed the award guidelines 
for Phase I and Phase II awards by more than 50% for a specific topic. 
See Sec.  7(i)(4) of the directive for further information.
    (3) Agencies must request a waiver to not use its SBIR funds, as 
part of the pilot allowing for the use of such funds for certain SBIR-
related costs, to increase participation by SDBs and

[[Page 20511]]

WOSBs in the SBIR/STTR Program, and small businesses in states with a 
historically low level of SBIR/STTR awards. See Sec.  9(e)(3)(ii) of 
the directive for further information.
    (4) Agencies must request a waiver to issue a funding agreement 
that includes a provision for subcontracting a portion of that 
agreement back to the issuing agency if there is no exception to this 
requirement in the directive. See Sec.  9(e)(4) of the directive for 
further information.

11. Responsibilities of SBA

    (a) Policy.
    (1) SBA establishes policy and procedures for the program by 
publishing and updating the SBIR/STTR Policy Directive and promulgating 
regulations. Policy clarification of any part or provision of the 
directive or regulations may be provided by SBA.
    (2) It is essential that SBIR/STTR agencies do not promulgate any 
policy, rule, regulation, or interpretation that is inconsistent with 
the Act, this Policy Directive, or SBA's regulations relating to the 
SBIR/STTR program. SBA's monitoring activity will include review of 
policies, rules, regulations, interpretations, and procedures generated 
to facilitate intra- and interagency SBIR/STTR program implementation.
    (3) Waivers providing limited exceptions to certain policies can be 
found at Sec.  10 of the directive.
    (b) Outreach. SBA conducts outreach to achieve a number of 
objectives including:
    (1) Educating the public about the SBIR/STTR program via 
conferences, seminars, and presentations;
    (2) Highlighting the successes achieved in the program by 
publishing (via press releases and www.SBIR.gov) success stories, as 
well as hosting awards programs;
    (3) Maintaining www.SBIR.gov, which is an online public information 
resource that provides comprehensive information regarding the SBIR/
STTR program. This information includes: a listing of solicitation 
information on currently available SBIR/STTR opportunities, award 
information on all Phase I and Phase II awards, summary annual award 
information for the whole program, and contact information for SBA and 
agency program managers.
    (c) Collection and publication of program-wide data. SBA collects 
and maintains program-wide data within the SBIR.gov data system. This 
data includes information on all Phase I and II awards from across all 
SBIR/STTR agencies, as well as Fiscal Year Annual Report data. See 
Sec.  10 of the directive for further information about reporting and 
data collection requirements.
    (d) Monitoring implementation of the program and annually reporting 
to Congress.
    SBA is responsible for providing oversight and monitoring the 
implementation of the SBIR/STTR program at the agency level. This 
monitoring includes:
    (1) SBIR/STTR Funding Allocations. The Act establishes the source 
of the funds for the SBIR and STTR programs (extramural R/R&D), the 
percentage of such funds to be obligated through the SBIR and STTR 
programs, and it requires that SBA monitor these annual allocations. 
Agencies may include in their annual report to SBA an explanation of 
the specific budgeting process used to allocate funds to the SBIR/STTR 
programs and describe any issues observed with the compliance 
determination process.
    (2) SBIR/STTR Program Solicitation and Award Status. The 
accomplishment of scheduled SBIR/STTR events, such as SBIR/STTR program 
solicitation releases and the issuance of funding agreements is 
critical to meeting statutory mandates and to operating an effective, 
useful program. SBA monitors these and other operational features of 
the SBIR/STTR Program and publishes information relating to notice of 
and application for awards under the SBIR/STTR program for each SBIR/
STTR agency at SBIR.Gov. SBA does not plan to monitor administration of 
the awards except in instances where SBA assistance is requested and is 
related to a specific SBIR/STTR project or funding agreement.
    (3) Follow-on Funding Commitments. SBA will monitor whether follow-
on non-Federal funding commitments obtained by Phase II awardees for 
Phase III were considered in the evaluation of Phase II proposals as 
required by the Act.
    (4) Fraud, Waste, and Abuse (FWA). SBA will ensure that each SBIR/
STTR agency has taken steps to maintain a FWA prevention system to 
minimize its impact on the program.
    (5) Performance Areas, Metrics, and Goals. SBA is responsible for 
defining performance areas consistent with statute (e.g., reducing 
timelines for award, simplification) against which agencies will set 
goals. SBA will work with the agencies to set metrics, in order to 
measure an agency's accomplishments of its goals against the defined 
performance areas. The purpose of these metrics and goals is to assist 
SBA in evaluating and reporting on the progress achieved by the 
agencies in improving the SBIR/STTR program. For further information on 
Performance Areas, Metrics and Goals see Sec.  10(i).
    (e) Additional efforts to improve the performance of the program. 
SBA, in its continuing effort to improve the program, will make 
recommendations for improvement within the framework of the Program 
Managers' meetings. This may include recommending a ``best practice'' 
currently being utilized by an agency or business, or open discussion 
and feedback on a potential ``best practice'' for agency adoption. This 
may also involve program-wide initiatives.
    (f) Federal and State Technology Partnership (FAST) Program. SBA 
coordinates the FAST program. SBA develops the solicitation, reviews 
proposals, and oversees grant awards. FAST provides awardees with 
funding to assist in outreach, proposal preparation, and other 
technical assistance to developing innovation oriented SBCs.

12. Supporting Programs and Initiatives

    (a) Federal and State Technology Partnership Program. The purpose 
of the FAST Program is to strengthen the technological competitiveness 
of SBCs in the United States. Congress found that programs that foster 
economic development among small high-technology firms vary widely 
among the States. Thus, the purpose of the FAST Program is to improve 
the participation of small technology firms in the innovation and 
commercialization of new technology, thereby ensuring that the United 
States remains on the cutting-edge of research and development in the 
highly competitive arena of science and technology. SBA administers the 
FAST Program. Additional and detailed information regarding this 
program is available at www.SBIR.gov.
    (b) Commercialization Readiness Program--DoD
    (1) General. The Secretary of Defense and the Secretary of each 
military department is authorized to create and administer a 
``Commercialization Readiness Program'' to accelerate the transition of 
technologies, products, and services developed under the SBIR program 
to Phase III, including the acquisition process. The authority to 
create this Commercialization Readiness Program does not eliminate or 
replace any other SBIR or STTR program that enhances the insertion or 
transition of SBIR or STTR technologies. This includes any program in 
effect as of December 31, 2011.
    (2) Identification of research programs for accelerated transition 
to acquisition process. The Secretary of each military department must 
identify research

[[Page 20512]]

programs of the SBIR or STTR program that have the potential for rapid 
transitioning to Phase III and into the acquisition process and certify 
in writing that the successful transition of the program to Phase III 
and into the acquisition process is expected to meet high priority 
military requirements of such military department.
    (3) Limitation. The Secretary of Defense shall identify research 
programs of the SBIR or STTR program that have the potential for rapid 
transitioning to Phase III and into the acquisition process after 
receiving this certification from each military department.
    (4) Funding.
    (i) Beginning with FY 2013 and ending in FY 2015 (unless otherwise 
extended), 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 SBIR/STTR 
Commercialization Readiness 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.
    (5) Contracts Valued at not less than $100,000,000. For any 
contract awarded by DoD valued at not 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 into by the prime 
contractor for Phase III projects.
    (6) The Secretary of Defense shall:
    (i) set a goal to increase the number of SBIR/STTR 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/STTR 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/STTR 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 Phase II awards away from relatively high-risk innovation 
projects.
    (c) Commercialization Readiness Pilot Program for Civilian 
Agencies.
    (1) General. The Commercialization Readiness Pilot Program permits 
the head of any Federal agency participating in the SBIR program 
(except DoD) to allocate not more than 10% of its funds allocated to 
the SBIR program--
    (i) for follow-on awards to small businesses for technology 
development, testing, evaluation, and commercialization assistance for 
SBIR or STTR Phase II technologies; or
    (ii) for awards to small businesses to support the progress of 
research, research and development, and commercialization conducted 
under the SBIR or STTR programs to Phase III.
    (2) Application to SBA. Before establishing this pilot program, the 
agency must submit a written application to SBA not later than 90 days 
before the first day of the fiscal year in which the pilot program is 
to be established. The written application must set forth a compelling 
reason that additional investment in SBIR or STTR technologies is 
necessary, including unusually high regulatory, systems integration, or 
other costs relating to development or manufacturing of identifiable, 
highly promising small business technologies or a class of such 
technologies expected to substantially advance the mission of the 
agency.
    (3) SBA's Determination. SBA must make its determination regarding 
an application submitted under paragraph (2) above not later than 30 
days before the first day of the fiscal year for which the application 
is submitted. SBA must also publish its determination in the Federal 
Register and make a copy of the determination and any related materials 
available to the Committee on Small Business and Entrepreneurship of 
the Senate and the Committee on Small Business and the Committee on 
Science, Space, and Technology of the House of Representatives.
    (4) Maximum Amount of Award. The SBIR agency may not make an award 
to a small business concern under this pilot program in excess of 3 
times the dollar amounts generally established for Phase II awards 
under Sec.  7(i)(1) of this directive.
    (5) Registration. Any small business concern that receives an award 
under this pilot program shall register with SBA in the Company 
Registry Database.
    (6) Award Criteria or Consideration. When making an award under 
this pilot program, the agency is required to consider whether the 
technology to be supported by the award is likely to be manufactured in 
the United States.
    (7) Termination of Authority. The authority to establish a pilot 
program under this section expires on September 30, 2017, unless 
otherwise extended.
    (d) Technology Development Program. The Act permits an agency that 
has established a Technology Development Program to review for funding 
under that program, in each fiscal year:
    (1) any proposal to provide outreach and assistance to 1 or more 
SBCs interested in participating in the SBIR program, including any 
proposal to make a grant or loan to a company to pay a portion or all 
of the cost of developing an SBIR proposal, from an entity, 
organization, or individual located in--
    (i) a State that is eligible to participate in that technology 
development program; or
    (ii) an Additionally Eligible State.
    (2) any meritorious proposal for an SBIR Phase I award that is not 
funded through the SBIR program for that fiscal year due to funding 
constraints, from an SBC located in a state identified in (i) or (ii) 
immediately above.
    (e) [STTR only] Phase 0 Proof of Concept Partnership Pilot Program.
    (1) General. The Director of the National Institutes of Health 
(NIH) may use $5,000,000 of the funds allocated for the STTR program 
set forth in Sec.  2(b) of this directive for a Proof of Concept 
Partnership Pilot Program to accelerate the creation of small 
businesses and the commercialization of research innovations from 
qualifying institutions. A qualifying institution is a university or 
other Research Institution that participates in the NIH's STTR program. 
The Director shall award, through a competitive, merit-based process, 
grants to qualifying institutions in order to implement this program. 
These grants shall only be used to administer Proof of Concept 
Partnership awards.
    (2) Awards to Qualifying Institutions.

[[Page 20513]]

    (i) The Director may make awards to a qualifying institution for up 
to $1,000,000 per year for up to 3 years.
    (ii) In determining which qualifying institutions will receive 
pilot program grants, the Director of NIH shall consider, in addition 
to any other criteria the Director determines necessary, the extent to 
which qualifying institutions--
    (A) have an established and proven technology transfer or 
commercialization office and have a plan for engaging that office in 
the program's implementation;
    (B) have demonstrated a commitment to local and regional economic 
development;
    (C) are located in diverse geographies and are of diverse sizes;
    (D) can assemble project management boards comprised of industry, 
start-up, venture capital, technical, financial, and business experts;
    (E) have an intellectual property rights strategy or office; and
    (F) demonstrate a plan for sustainability beyond the duration of 
the funding award.
    (3) Proof of Concept Partnerships. A qualifying institution 
selected by NIH shall establish a Proof of Concept Partnership with NIH 
to award grants to individual researchers. These grants should provide 
researchers with the initial investment and the resources to support 
the proof of concept work and commercialization mentoring needed to 
translate promising research projects and technologies into a viable 
company. This work may include technical validations, market research, 
clarifying intellectual property rights position and strategy, and 
investigating commercial or business opportunities.
    (4) Award Guidelines for Small Businesses. The administrator of a 
Proof of Concept Partnership program shall award grants in accordance 
with the following guidelines:
    (i) The Proof of Concept Partnership shall use a market-focused 
project management oversight process, including--
    (A) a rigorous, diverse review board comprised of local experts in 
translational and proof of concept research, including industry, start-
up, venture capital, technical, financial, and business experts and 
university technology transfer officials;
    (B) technology validation milestones focused on market feasibility;
    (C) simple reporting effective at redirecting projects; and
    (D) the willingness to reallocate funding from failing projects to 
those with more potential.
    (ii) The Proof of Concept Partnership shall not award more than 
$100,000 towards an individual proposal.
    (5) Educational Resources and Guidance. The administrator of a 
Proof of Concept Partnership program shall make educational resources 
and guidance available to researchers attempting to commercialize their 
innovations.
    (6) Limitations.
    (i) The funds for the pilot program shall not be used for basic 
research or to fund the acquisition of research equipment or supplies 
unrelated to commercialization activities.
    (ii) The funds for the pilot program can be used to evaluate the 
commercial potential of existing discoveries, including proof of 
concept research or prototype development; and activities that 
contribute to determining a project's commercialization path, to 
include technical validations, market research, clarifying intellectual 
property rights, and investigating commercial and business 
opportunities.
    (7) Termination of Authority. The pilot program under this 
subsection shall terminate on September 30, 2017, unless otherwise 
extended.

Appendix I: Instructions for SBIR and STTR Program Solicitation 
Preparation

    a. General. Subsections 9(j) and 9(p) of the Small Business Act (15 
U.S.C. 638(j)) requires simplified, standardized and timely SBIR/STTR 
solicitations and for SBIR/STTR agencies to utilize a ``uniform 
process'' minimizing the regulatory burden of participation. Therefore, 
the following instructions purposely depart from normal Government 
solicitation formats and requirements. SBIR/STTR solicitations must be 
prepared and issued as program solicitations in accordance with the 
following instructions.
    b. Limitation in Size of Solicitation. In the interest of meeting 
the requirement for simplified and standardized solicitations, while 
also recognizing that the Internet has become the main vehicle for 
distribution, each agency should structure its entire SBIR/STTR 
solicitation to produce the least number of pages (electronic and 
printed), consistent with the procurement/assistance standing operating 
procedures and statutory requirements of the participating Federal 
agencies.
    c. Format. SBIR/STTR program solicitations must be prepared in a 
simple, standardized, easy-to-read, and easy-to-understand format. It 
must include a cover sheet, a table of contents, and the following 
sections in the order listed.
    1. Program Description
    2. Certifications
    3. Proposal Preparation Instructions and Requirements
    4. Method of Selection and Evaluation Criteria
    5. Considerations
    6. Submission of Proposals
    7. Scientific and Technical Information Sources
    8. Submission Forms
    9. Research Topics
    d. Cover Sheet. The cover sheet of an SBIR/STTR program 
solicitation must clearly identify the solicitation as an SBIR/STTR 
solicitation, identify the agency releasing the solicitation, specify 
date(s) on which contract proposals or grant applications (proposals) 
are due under the solicitation, and state the solicitation number or 
year.
    e. Instructions for Preparation of SBIR or STTR Program 
Solicitation--Sections 1-9
Sec.  1. Program Description.
    (a) Summarize in narrative form the request for proposals and the 
objectives of the SBIR or STTR program.
    (b) Describe in narrative form the agency's SBIR or STTR program 
including a description of the three phases. Note in your description 
whether the solicitation is for Phase I or Phase II proposals. Also 
note in each solicitation for Phase I, that all awardees may apply for 
a Phase II award and provide guidance on the procedure for doing so.
    (c) Describe program eligibility.
    (d) List the name, address and telephone number of agency contacts 
for general information on the SBIR or STTR program solicitation.
    (e) Whenever terms are used that are unique to the SBIR or STTR 
program, a specific SBIR or STTR solicitation or a portion of a 
solicitation, define them or refer potential offerors/applicants to a 
source for the definition. At a minimum, the definitions of ``funding 
agreement,'' ``R/R&D,'' ``SBC,'' ``SBIR/STTR data,'' and ``SBIR/STTR 
data rights'' must be included.
    (f) Include information explaining how an individual can report 
fraud, waste and abuse (e.g. include the fraud hotline for the agency's 
Office of Inspector General);
Sec.  2. Certifications.
    (a) This section must include certifying forms required by 
legislation, regulation or standing operating procedures, to be 
submitted by the applicant to the contracting or granting agency. This 
would include certifying forms such as those for the protection of 
human and animal subjects.
    (b) This section must include any certifications required 
concerning size,

[[Page 20514]]

ownership and other SBIR or STTR program requirements.
    (i) The agency may request the SBIR/STTR applicant to submit a 
certification at the time of submission of the application or offer. 
The certification may require the applicant to state that it intends to 
meet the size, ownership and other requirements of the SBIR or STTR 
program at the time of award of the funding agreement, if selected for 
award.
    (ii) The agency must request the applicant to submit a 
certification at the time of award and at any other time set forth in 
SBA's regulations at 13 CFR 121.701-121.705. The certification will 
require the applicant to state that it meets the size, ownership and 
other requirements of the SBIR or STTR program at the time of award of 
the funding agreement.
    (iii) The agency must request the Awardee to submit certifications 
during funding agreement life cycle. A Phase I funding agreement must 
state that the awardee shall submit a new certification as to whether 
it qualifies as a SBC and that it is in compliance with specific SBIR 
or STTR program requirements at the time of final payment or 
disbursement. A Phase II funding agreement must state that the awardee 
shall submit a new certification as to whether it qualifies as a SBC 
and that it is in compliance with specific SBIR or STTR program 
requirements prior to receiving more than 50% of the total award amount 
and prior to final payment or disbursement.
    (iv) Agencies may require additional certifications at other points 
in time during the life cycle of the funding agreement, such as at the 
time of each payment or disbursement.
    (c) The agency must use the following certification at the time of 
award and upon notification by SBA, must check www.SBIR.gov for updated 
certifications prepared by SBA:
SBIR/STTR Funding Agreement Certification
    All small businesses that are selected for award of an SBIR/STTR 
funding agreement must complete this certification at the time of award 
and any other time set forth in the funding agreement that is prior to 
performance of work under this award. This includes checking all of the 
boxes and having an authorized officer of the awardee sign and date the 
certification each time it is requested.
    Please read carefully the following certification statements. The 
Federal government relies on the information to determine whether the 
business is eligible for a Small Business Innovation Research (SBIR) 
program or Small Business Technology Transfer (STTR) program award. A 
similar certification will be used to ensure continued compliance with 
specific program requirements during the life of the funding agreement. 
The definitions for the terms used in this certification are set forth 
in the Small Business Act, SBA regulations (13 CFR part 121), the SBIR/
STTR Policy Directive and also any statutory and regulatory provisions 
referenced in those authorities.
    If the funding agreement officer believes that the business may not 
meet certain eligibility requirements at the time of award, they are 
required to file a size protest with the U.S. Small Business 
Administration (SBA), who will determine eligibility. At that time, SBA 
will request further clarification and supporting documentation in 
order to assist in the verification of any of the information provided 
as part of a protest. If the funding agreement officer believes, after 
award, that the business is not meeting certain funding agreement 
requirements, the agency may request further clarification and 
supporting documentation in order to assist in the verification of any 
of the information provided.
    Even if correct information has been included in other materials 
submitted to the Federal government, any action taken with respect to 
this certification does not affect the Government's right to pursue 
criminal, civil or administrative remedies for incorrect or incomplete 
information given in the certification. Each person signing this 
certification may be prosecuted if they have provided false 
information.
    The undersigned has reviewed, verified and certifies that (all 
boxes must be checked unless otherwise directed):
    (1) [square] The awardee business concern meets the ownership and 
control requirements set forth in 13 CFR 121.702.
    (2) If a corporation--all corporate documents, namely: articles of 
incorporation and any amendments, articles of conversion, by-laws and 
amendments, shareholder meeting minutes showing director elections, 
shareholder meeting minutes showing officer elections, organizational 
meeting minutes, all issued stock certificates, stock ledger, buy-sell 
agreements, stock transfer agreements, voting agreements, and documents 
relating to stock options, including the right to convert non-voting 
stock or debentures into voting stock, must evidence that the 
corporation meets the ownership and control requirements set forth in 
13 CFR 121.702. (Check one box).
    [square] Yes [square] N/A Explain why N/A:
    (3) If a partnership, the partnership agreement evidences that it 
meets the ownership and control requirements set forth in 13 CFR 
121.702. (Check one box).
    [square] Yes [square] N/A Explain why N/A:
    (4) If a limited liability company--the articles of organization 
and any amendments, and operating agreement and amendments, evidence 
that it meets the ownership and control requirements set forth in 13 
CFR 121.702. (Check one box).
    [square] Yes [square] N/A Explain why N/A:
    (5) The birth certificates, naturalization papers, or passports 
show that any individuals it relies upon to meet the eligibility 
requirements are U.S. citizens or permanent resident aliens in the 
United States. (Check one box).
    [square] Yes [square] N/A Explain why N/A:
    (6) [square] It has no more than 500 employees, including the 
employees of its affiliates.
    (7) [square] SBA has not issued a size determination currently in 
effect finding that this business concern exceeds the 500 employee size 
standard.
    (8) During the performance of the award, the principal investigator 
will spend more than one half of his/her time as an employee of the 
awardee (or research institution--STTR only) or has requested and 
received a written deviation from this requirement from the funding 
agreement officer. (Check one box).
    [square] Yes [square] Deviation approved in writing by funding 
agreement officer: _%
    (9) All, essentially equivalent work, or a portion of the work 
proposed under this project (check applicable line):
    [square] Has not been submitted for funding to another Federal 
agency or State program.
    [square] Has been submitted for funding to another Federal agency 
or State program but has not been funded under any other grant, 
contract, subcontract or other transaction.
    [square] A portion has been funded by another grant, contract, or 
subcontract as described in detail in the proposal and approved in 
writing by the funding agreement officer.
    (10) During the performance of award, the awardee will perform the 
applicable percentage of work unless a deviation from this requirement 
is approved in writing by the funding agreement officer (check 
applicable line and fill in if needed):
    [square] SBIR Phase I: at least two-thirds (66 2/3%) of the 
research.
    [square] SBIR Phase II: at least half (50%) of the research.

[[Page 20515]]

    [square] STTR Phase I or Phase II: at least forty percent (40%) of 
the research.
    [square] Deviation approved in writing by the funding agreement 
officer: %
    (11) During performance of award, the research/research and 
development will be performed in the United States unless a deviation 
is approved in writing by the funding agreement officer (check one 
box).
    [square] Yes [square] Waiver has been granted
    (12) [square] During performance of award, the research/research 
and development will be performed at the awardee's facilities with its 
employees, except as otherwise indicated in the SBIR/STTR application 
and approved in the funding agreement.
    (13) The SBIR awardee has registered itself on SBA's database as 
majority-owned by venture capital operating companies, hedge funds or 
private equity firms (check one box).
    [square] Yes [square] No [square] N/A Explain why N/A: ______
    (14) It is a Covered Small Business Concern (a small business 
concern that: (a) was not majority-owned by multiple venture capital 
operating companies (VCOCs), hedge funds, or private equity firms on 
the date on which it submitted an application in response to an SBIR 
solicitation; and (b) on the date of the SBIR award, which is made more 
than 9 months after the closing date of the solicitation, is majority-
owned by multiple venture capital operating companies, hedge funds, or 
private equity firms). (Check one box).
    [square] Yes [square] No
    (15) [square] I 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.
    (16) [For STTR only] The small business concern, and not a 
partnering Research Institution, is exercising management direction and 
control of the performance of the STTR funding agreement.
    Yes [square] No [square]
    (17) [square] I understand that the information submitted may be 
given to Federal, State and local agencies for determining violations 
of law and other purposes.
    (18) [square] I am an officer of the business concern authorized to 
represent it and sign this certification on its behalf. By signing this 
certification, I am representing on my own behalf, and on behalf of the 
business concern that the information provided in this certification, 
the application, and all other information submitted in connection with 
this application, is true and correct as of the date of submission. I 
acknowledge that any intentional or negligent misrepresentation of the 
information contained in this certification may result in criminal, 
civil or administrative sanctions, including but not limited to: (1) 
fines, restitution and/or imprisonment under 18 U.S.C. 1001; (2) treble 
damages and civil penalties under the False Claims Act (31 U.S.C. 3729 
et seq.); (3) double damages and civil penalties under the Program 
Fraud Civil Remedies Act (31 U.S.C. 3801 et seq.); (4) civil recovery 
of award funds, (5) suspension and/or debarment from all Federal 
procurement and nonprocurement transactions (FAR Subpart 9.4 or 2 CFR 
part 180); and (6) other administrative penalties including termination 
of SBIR/STTR awards.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Signature                                   Date __/__/__
------------------------------------------------------------------------
Print Name (First, Middle, Last)
 
------------------------------------------------------------------------
Title
 
------------------------------------------------------------------------
Business Name
 
------------------------------------------------------------------------

    (d) The agency must use the following certification during the 
lifecycle of the funding agreement in accordance with subsection 8(h) 
of the directive and paragraph 2(b)(iv) of this Appendix and upon 
notification by SBA, must check www.SBIR.gov for updated certifications 
prepared by SBA:
SBIR/STTR Funding Agreement Certification--Life Cycle Certification
    All SBIR/STTR Phase I and Phase II awardees must complete this 
certification at all times set forth in the funding agreement (see 
Sec.  8(h) of the SBIR/STTR Policy Directive). This includes checking 
all of the boxes (unless otherwise directed) and having an authorized 
officer of the awardee sign and date the certification each time it is 
requested.
    Please read carefully the following certification statements. The 
Federal government relies on the information to ensure compliance with 
specific program requirements during the life of the funding agreement. 
The definitions for the terms used in this certification are set forth 
in the Small Business Act, the SBIR/STTR Policy Directive, and also any 
statutory and regulatory provisions referenced in those authorities.
    If the funding agreement officer believes that the business is not 
meeting certain funding agreement requirements, the agency may request 
further clarification and supporting documentation in order to assist 
in the verification of any of the information provided.
    Even if correct information has been included in other materials 
submitted to the Federal government, any action taken with respect to 
this certification does not affect the Government's right to pursue 
criminal, civil or administrative remedies for incorrect or incomplete 
information given in the certification. Each person signing this 
certification may be prosecuted if they have provided false 
information.
    The undersigned has reviewed, verified and certifies that (all 
boxes must be checked except where otherwise directed):
    (1) The principal investigator spent more than one half of his/her 
time as an employee of the awardee (or research institution--STTR only) 
or the awardee has requested and received a written deviation from this 
requirement from the funding agreement officer.
    [square] Yes [square] No [square] Deviation approved in writing by 
funding agreement officer: _%
    (2) All, essentially equivalent work, or a portion of the work 
performed under this project (check the applicable line):
    [square] Has not been submitted for funding to another Federal 
agency or State program.
    [square] Has been submitted for funding to another Federal agency 
or State program but has not been funded under any other grant, 
contract, subcontract or other transaction.
    [square] A portion has been funded by another grant, contract, or 
subcontract as described in detail in the proposal and approved in 
writing by the funding agreement officer.
    (3) Upon completion of the award, the awardee will have performed 
the applicable percentage of work, unless a deviation from this 
requirement is approved in writing by the funding agreement officer 
(check the applicable line and fill in if needed):
    [square] SBIR Phase I: at least two-thirds (66 2/3%) of the 
research.
    [square] SBIR Phase II: at least half (50%) of the research.
    [square] STTR Phase I or Phase II: at least forty percent (40%) of 
the research.
    [square] Deviation approved in writing by the funding agreement 
officer: %
    (4) The work is completed and the small business awardee has 
performed the applicable percentage of work, unless a deviation from 
this requirement is approved in writing by the funding agreement 
officer (check the applicable line and fill in if needed):
    [square] SBIR Phase I: at least two-thirds (66 2/3%) of the 
research.
    [square] SBIR Phase II: at least half (50%) of the research.

[[Page 20516]]

    [square] STTR Phase I or Phase II: at least forty percent (40%) of 
the research.
    [square] Deviation approved in writing by the funding agreement 
officer: %
    [square] N/A because work is not completed
    (5) [For STTR only] The small business concern, and not a 
partnering Research Institution, is exercising management direction and 
control of the performance of the STTR funding agreement.
    Yes [square] No [square]
    (6) The research/research and development is performed in the 
United States unless a deviation is approved in writing by the funding 
agreement officer.
    [square] Yes [square] No [square] Waiver has been granted
    (7) The research/research and development is performed at the 
awardee's facilities with its employees, except as otherwise indicated 
in the SBIR/STTR application and approved in the funding agreement.
    [square] Yes [square] No
    (8) [square] I 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.
    (9) [square] I understand that the information submitted may be 
given to Federal, State and local agencies for determining violations 
of law and other purposes.
    (10) [square] I am an officer of the awardee business concern 
authorized to represent it and sign this certification on its behalf. 
By signing this certification, I am representing on my own behalf, and 
on behalf of the business concern, that the information provided in 
this certification, the application, and all other information 
submitted in connection with the award, is true and correct as of the 
date of submission. I acknowledge that any intentional or negligent 
misrepresentation of the information contained in this certification 
may result in criminal, civil or administrative sanctions, including 
but not limited to: (1) fines, restitution and/or imprisonment under 18 
U.S.C. 1001; (2) treble damages and civil penalties under the False 
Claims Act (31 U.S.C. 3729 et seq.); (3) double damages and civil 
penalties under the Program Fraud Civil Remedies Act (31 U.S.C. 3801 et 
seq.); (4) civil recovery of award funds, (5) suspension and/or 
debarment from all Federal procurement and nonprocurement transactions 
(FAR Subpart 9.4 or 2 CFR part 180); and (6) other administrative 
penalties including termination of SBIR/STTR awards.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Signature                                   Date __/__/__
------------------------------------------------------------------------
Print Name (First, Middle, Last)
 
------------------------------------------------------------------------
Title
 
------------------------------------------------------------------------
Business Name
 
------------------------------------------------------------------------

    (e) [SBIR only] The agency must require any SBC that is majority-
owned by multiple venture capital operating companies, hedge funds, or 
private equity firms to submit the following certification with its 
SBIR application:

Certification for SBIR Applicants that are Majority-Owned by Multiple 
Venture Capital Operating Companies, Hedge Fund or Private Equity Firms

    Any small business that is majority-owned by multiple venture 
operating companies (VCOCs), hedge funds or private equity firms and is 
submitting an application for an SBIR funding agreement must complete 
this certification prior to submitting an application. This includes 
checking all of the boxes and having an authorized officer of the 
applicant sign and date the certification each time it is requested.
    Please read carefully the following certification statements. The 
Federal government relies on the information to determine whether the 
business is eligible for a Small Business Innovation Research (SBIR) 
program award and meets the specific program requirements during the 
life of the funding agreement. The definitions for the terms used in 
this certification are set forth in the Small Business Act, SBA 
regulations (13 CFR part 121), the SBIR Policy Directive and also any 
statutory and regulatory provisions referenced in those authorities.
    If the funding agreement officer believes that the business may not 
meet certain eligibility requirements at the time of award, he/she is 
required to file a size protest with the U.S. Small Business 
Administration (SBA), who will determine eligibility. At that time, SBA 
will request further clarification and supporting documentation in 
order to assist in the verification of any of the information provided 
as part of a protest. If the funding agreement officer believes, after 
award, that the business is not meeting certain funding agreement 
requirements, the agency may request further clarification and 
supporting documentation in order to assist in the verification of any 
of the information provided.
    Even if correct information has been included in other materials 
submitted to the Federal government, any action taken with respect to 
this certification does not affect the Government's right to pursue 
criminal, civil or administrative remedies for incorrect or incomplete 
information given in the certification. Each person signing this 
certification may be prosecuted if they have provided false 
information.
    The undersigned has reviewed, verified and certifies that (all 
boxes must be checked):
    (1) [ballot] The applicant is NOT more than 50% owned by a single 
VCOC, hedge fund or private equity firm.
    (2) [ballot] The applicant is more than 50% owned by multiple 
domestic business concerns that are VCOCs, hedge funds, or private 
equity firms.
    (3) [ballot] I have registered with SBA at www.SBIR.gov as a 
business that is majority-owned by multiple VCOCs, hedge funds or 
private equity firms.
    (4) [ballot] I understand that the information submitted may be 
given to Federal, State and local agencies for determining violations 
of law and other purposes.
    (5) [ballot] All the statements and information provided in this 
form and any documents submitted are true, accurate and complete. If 
assistance was obtained in completing this form and the supporting 
documentation, I have personally reviewed the information and it is 
true and accurate. I understand that, in general, these statements are 
made for the purpose of determining eligibility for an SBIR funding 
agreement and continuing eligibility.
    (6) [ballot] I understand that the certifications in this document 
are continuing in nature. Each SBIR funding agreement for which the 
small business submits an offer or application or receives an award 
constitutes a restatement and reaffirmation of these certifications.
    (7) [ballot] I understand that I may not misrepresent status as 
small business to: 1) obtain a contract under the Small Business Act; 
or 2) obtain any benefit under a provision of Federal law that 
references the SBIR program.
    (8) [ballot] I am an officer of the business concern authorized to 
represent it and sign this certification on its behalf. By signing this 
certification, I am representing on my own behalf, and on behalf of the 
SBIR applicant or awardee, that the information provided in this 
certification, the application, and all other information submitted in 
connection with this application, is true and correct as of the date of 
submission. I acknowledge that any intentional or negligent 
misrepresentation of the information contained in this certification 
may result in criminal, civil or administrative sanctions, including

[[Page 20517]]

but not limited to: (1) fines, restitution and/or imprisonment under 18 
U.S.C. 1001; (2) treble damages and civil penalties under the False 
Claims Act (31 U.S.C. 3729 et seq.); (3) double damages and civil 
penalties under the Program Fraud Civil Remedies Act (31 U.S.C. 3801 et 
seq.); (4) civil recovery of award funds, (5) suspension and/or 
debarment from all Federal procurement and nonprocurement transactions 
(FAR Subpart 9.4 or 2 CFR part 180); and (6) other administrative 
penalties including termination of SBIR/STTR awards.

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Signature                                   Date __/__/__
------------------------------------------------------------------------
Print Name (First, Middle, Last)
 
------------------------------------------------------------------------
Title
 
------------------------------------------------------------------------
Business Name
 
------------------------------------------------------------------------

    Sec.  3. SBIR/STTR Proposal Preparation Instructions and 
Requirements. The purpose of this section is to inform the applicant on 
what to include in the proposal and to set forth limits on what may be 
included. It should also provide guidance to assist applicants, 
particularly those that may not have previous Government experience, in 
improving the quality and acceptance of proposals.
    (a) Limitations on Length of Proposal. Include at least the 
following information:
    (1) SBIR/STTR Phase I proposals must not exceed a total of 25 
pages, including cover page, budget, and all enclosures or attachments, 
unless stated otherwise in the agency solicitation. Pages should be of 
standard size (8 1/2'' x 11''; 21.6 cm x 27.9 cm) and should conform to 
the standard formatting instructions. Margins should be 2.5 cm and type 
at least 10 point font.
    (2) A notice that no additional attachments, appendices, or 
references beyond the 25-page limitation shall be considered in 
proposal evaluation (unless specifically solicited by an agency) and 
that proposals in excess of the page limitation shall not be considered 
for review or award.
    (b) Proposal Cover Sheet. Every applicant is required to provide a 
copy of its registration information printed from the Company Registry 
unless the information can be transmitted automatically to SBIR/STTR 
agencies. Every applicant must also include at least the following 
information on the first page of proposals. Items 8 and 9 are for 
statistical purposes only.
    (1) Agency and solicitation number or year.
    (2) Topic Number or Letter.
    (3) Subtopic Number or Letter.
    (4) Topic Area.
    (5) Project Title.
    (6) Name and Complete Address of Firm.
    (7) Disclosure permission (by statement or checkbox), such as 
follows, must be included at the discretion of the funding agency:
    ``Will you permit the Government to disclose your name, address, 
and telephone number of the corporate official of your concern, if your 
proposal does not result in an award, to appropriate local and State-
level economic development organizations that may be interested in 
contacting you for further information? Yes__No__''
    (8) Signature of a company official of the proposing SBC and that 
individual's typed name, title, address, telephone number, and date of 
signature.
    (9) Signature of Principal Investigator or Project Manager within 
the proposing SBC and that individual's typed name, title, address, 
telephone number, and date of signature.
    (10) Legend for proprietary information as described in the 
``Considerations'' section of this program solicitation if appropriate. 
This may also be noted by asterisks in the margins on proposal pages.
    (c) Data Collection Requirement
    (1) Each Phase I and Phase II applicant is required to provide 
information for SBA's database (www.SBIR.gov). The following are 
examples of the data to be entered by applicants into the database:
    (i) Any business concern or subsidiary established for the 
commercial application of a product or service for which an SBIR or 
STTR award is made.
    (ii) Revenue from the sale of new products or services resulting 
from the research conducted under each Phase II award;
    (iii) Additional investment from any source, other than Phase I or 
Phase II awards, to further the research and development conducted 
under each Phase II award.
    (iv) Update the information in the database for any prior Phase II 
award received by the SBC. The SBC may apportion sales or additional 
investment information relating to more than one Phase II award among 
those awards, if it notes the apportionment for each award.
    (2) Each Phase II awardee is required to update the appropriate 
information on the award in the database upon completion of the last 
deliverable under the funding agreement and is requested to voluntarily 
update the information in the database annually thereafter for a 
minimum period of 5 years.
    (d) Abstract or Summary. Applicants will be required to include a 
one-page project summary of the proposed R/R&D including at least the 
following:
    (1) Name and address of SBC.
    (2) Name and title of principal investigator or project manager.
    (3) Agency name, solicitation number, solicitation topic, and 
subtopic.
    (4) Title of project.
    (5) Technical abstract limited to two hundred words.
    (6) Summary of the anticipated results and implications of the 
approach (both Phases I and II) and the potential commercial 
applications of the research.
    (e) Technical Content. SBIR or STTR program solicitations must 
require, as a minimum, the following to be included in proposals 
submitted thereunder:
    (1) Identification and Significance of the Problem or Opportunity. 
A clear statement of the specific technical problem or opportunity 
addressed.
    (2) Phase I Technical Objectives. State the specific objectives of 
the Phase I research and development effort, including the technical 
questions it will try to answer to determine the feasibility of the 
proposed approach.
    (3) Phase I Work Plan. Include a detailed description of the Phase 
I R/R&D plan. The plan should indicate what will be done, where it will 
be done, and how the R/R&D will be carried out. Phase I R/R&D should 
address the objectives and the questions cited in (e)(2) immediately 
above. The methods planned to achieve each objective or task should be 
discussed in detail.
    (4) Related R/R&D. Describe significant R/R&D that is directly 
related to the proposal including any conducted by the project manager/
principal investigator or by the proposing SBC. Describe how it relates 
to the proposed effort, and any planned coordination with outside 
sources. The applicant must persuade reviewers of his or her awareness 
of key, recent R/R&D conducted by others in the specific topic area.
    (5) Key Individuals and Bibliography of Directly Related Work. 
Identify key individuals involved in Phase I including their directly-
related education, experience, and bibliographic information. Where 
vitae are extensive, summaries that focus on the most relevant 
experience or publications are desired and may be necessary to meet 
proposal size limitation.
    (6) Relationship with Future R/R&D.

[[Page 20518]]

    (i) State the anticipated results of the proposed approach if the 
project is successful (Phase I and II).
    (ii) Discuss the significance of the Phase I effort in providing a 
foundation for the Phase II R/R&D effort.
    (7) Facilities. A detailed description, availability and location 
of instrumentation and physical facilities proposed for Phase I should 
be provided.
    (8) Consultants. Involvement of consultants in the planning and 
research stages of the project is permitted. If such involvement is 
intended, it should be described in detail.
    (9) Potential Post Applications. Briefly describe:
    (i) Whether and by what means the proposed project appears to have 
potential commercial application.
    (ii) Whether and by what means the proposed project appears to have 
potential use by the Federal Government.
    (10) Similar Proposals or Awards. WARNING--While it is permissible 
with proposal notification to submit identical proposals or proposals 
containing a significant amount of essentially equivalent work for 
consideration under numerous Federal or State program solicitations, it 
is unlawful to enter into funding agreements requiring essentially 
equivalent work. If there is any question concerning this, it must be 
disclosed to the soliciting agency or agencies before award. If an 
applicant elects to submit identical proposals or proposals containing 
a significant amount of essentially equivalent work under other Federal 
or State program solicitations, a statement must be included in each 
such proposal indicating:
    (i) The name and address of the agencies to which proposals were 
submitted or from which awards were received.
    (ii) Date of proposal submission or date of award.
    (iii) Title, number, and date of solicitations under which 
proposals were submitted or awards received.
    (iv) The specific applicable research topics for each proposal 
submitted or award received.
    (v) Titles of research projects.
    (vi) Name and title of principal investigator or project manager 
for each proposal submitted or award received.
    (11) Prior SBIR Phase II Awards. If the SBC has received more than 
15 Phase II awards in the prior 5 fiscal years, the SBC must submit in 
its Phase I proposal: name of the awarding agency; date of award; 
funding agreement number; amount of award; topic or subtopic title; 
follow-on agreement amount; source and date of commitment; and current 
commercialization status for each Phase II award. (This required 
proposal information will not be counted toward the proposal pages 
limitation.)
    (f) Cost Breakdown/Proposed Budget. The solicitation will require 
the submission of simplified cost or budget data.
    Sec.  4. Method of Selection and Evaluation Criteria.
    (a) Standard Statement. Essentially, the following statement must 
be included in all SBIR or STTR program solicitations:
    ``All Phase I and II proposals will be evaluated and judged on a 
competitive basis. Proposals will be initially screened to determine 
responsiveness. Proposals passing this initial screening will be 
technically evaluated by engineers or scientists to determine the most 
promising technical and scientific approaches. Each proposal will be 
judged on its own merit. The Agency is under no obligation to fund any 
proposal or any specific number of proposals in a given topic. It also 
may elect to fund several or none of the proposed approaches to the 
same topic or subtopic.''
    (b) Evaluation Criteria.
    (1) The SBIR/STTR agency must develop a standardized method in its 
evaluation process that will consider, at a minimum, the following 
factors:
    (i) The technical approach and the anticipated agency and 
commercial benefits that may be derived from the research.
    (ii) The adequacy of the proposed effort and its relationship to 
the fulfillment of requirements of the research topic or subtopics.
    (iii) The soundness and technical merit of the proposed approach 
and its incremental progress toward topic or subtopic solution.
    (iv) Qualifications of the proposed principal/key investigators, 
supporting staff, and consultants.
    (v) Evaluations of proposals require, among other things, 
consideration of a proposal's commercial potential as evidenced by:
    (A) the SBC's record of commercializing SBIR or other research,
    (B) the existence of second phase funding commitments from private 
sector or non-SBIR funding sources,
    (C) the existence of third phase follow-on commitments for the 
subject of the research, and,
    (D) the presence of other indicators of the commercial potential of 
the idea.
    (2) The factors in (b)(1) above and other appropriate evaluation 
criteria, if any, must be specified in the ``Method of Selection'' 
section of SBIR program solicitations.
    (c) Peer Review. The solicitation must indicate if the SBIR/STTR 
agency contemplates that as a part of the SBIR/STTR proposal 
evaluation, it will use external peer review.
    (d) Release of Proposal Review Information. After final award 
decisions have been announced, the technical evaluations of the 
applicant's proposal may be provided to the applicant. The identity of 
the reviewer must not be disclosed.
    Sec.  5. Considerations. This section must include, as a minimum, 
the following information:
    (a) Awards. Indicate the estimated number and type of awards 
anticipated under the particular SBIR/STTR program solicitation in 
question, including:
    (1) Approximate number of Phase I awards expected to be made.
    (2) Type of funding agreement, that is, contract, grant, or 
cooperative agreement.
    (3) Whether fee or profit will be allowed.
    (4) Cost basis of funding agreement, for example, fixed-price, cost 
reimbursement, or cost-plus-fixed fee.
    (5) Information on the approximate average dollar value of awards 
for Phase I and Phase II.
    (b) Reports. Describe the frequency and nature of reports that will 
be required under Phase I funding agreements. Interim reports should be 
brief letter reports.
    (c) Payment Schedule. Specify the method and frequency of progress 
and final payment under Phase I and II agreements.
    (d) Innovations, SBIR/STTR Data Rights, Inventions and Patents.
    (1) Proprietary Information in Proposals. The following statement 
must be included in all SBIR/STTR solicitations:
    ``Information contained in unsuccessful proposals will remain the 
property of the applicant. The Government may, however, retain copies 
of all proposals. Public release of information in any proposal 
submitted will be subject to existing statutory and regulatory 
requirements. If proprietary information is provided by an applicant in 
a proposal, which constitutes a trade secret, proprietary commercial or 
financial information, confidential personal information or data 
affecting the national security, it will be treated in confidence, to 
the extent permitted by law. This information must be clearly marked by 
the applicant with the term ``confidential proprietary information''

[[Page 20519]]

and the following legend must appear on the title page of the proposal:
    `These data shall not be disclosed outside the Government and shall 
not be duplicated, used, or disclosed in whole or in part for any 
purpose other than evaluation of this proposal. It is agreed that as a 
condition of award of this funding agreement, the Government shall have 
SBIR/STTR Data Rights in properly marked data that is contained in the 
proposal dated_____, upon which this contract is based. However, data 
contained on pages___, are not subject to the Government's SBIR/STTR 
Data Rights.' ''
    (2) Alternative To Minimize Proprietary Information. Agencies may 
elect to instruct applicants to limit proprietary information to only 
that absolutely essential to their proposal.
    (3) SBIR/STTR Data Rights Clause. Agencies must include a clause in 
their SBIR and STTR Program solicitations and resulting funding 
agreements that reflects the following necessary elements:

SBIR/STTR Data Rights Clause

    (a) Definitions.
    (1) Computer Software. Computer programs, source code, source code 
listings, object code listings, design details, algorithms, processes, 
flow charts, formulae, and related material that would enable the 
software to be reproduced, recreated, or recompiled. Computer Software 
does not include Computer Databases or Computer Software Documentation.
    (2) Data. All recorded information, regardless of the form or 
method of recording or the media on which it may be recorded. The term 
does not include information incidental to contract or grant 
administration, such as financial, administrative, cost or pricing or 
management information.
    (3) SBIR/STTR Data. All appropriately marked Data developed or 
generated in the performance of an SBIR or STTR award, including 
Technical Data and Computer Software developed or generated in the 
performance of an SBIR or STTR award. The term does not include 
information incidental to contract or grant administration, such as 
financial, administrative, cost or pricing or management information.
    (4) SBIR/STTR Data Rights.
    (A) The Government's license rights in SBIR/STTR Data during the 
SBIR/STTR Protection Period are as follows: SBIR/STTR Technical Data 
Rights in SBIR/STTR Data that are Technical Data or any other type of 
Data other than Computer Software that is properly marked, and SBIR/
STTR Computer Software Rights in SBIR/STTR Data that is Computer 
Software. Upon expiration of the protection period for SBIR/STTR Data, 
the Government's obligation to protect that data expires and the 
Government's rights in that data convert to Unlimited Rights. The 
Government receives Unlimited Rights in all unmarked data.
    (B) An Awardee retains title and ownership of all SBIR/STTR Data it 
develops or generates in the performance of an SBIR or STTR Phase I, 
Phase II, or Phase III award (including a Phase III award that is a 
subcontract or subgrant), and retains all rights in SBIR/STTR Data not 
granted to the Government. These of the Awardee rights do not expire.
    (5) SBIR/STTR Technical Data Rights. The Government's rights during 
the SBIR/STTR Protection Period in SBIR/STTR Data that are Technical 
Data or any other type of Data other than Computer Software.
    (A) The Government may, use, modify, reproduce, perform, display, 
release, or disclose SBIR/STTR Data that are Technical Data within the 
Government; however, the Government shall not use, release, or disclose 
the data for procurement, manufacturing, or commercial purposes; or 
release or disclose the SBIR/STTR Data outside the Government except as 
permitted by paragraph (2) below or by written permission of the 
awardee.
    (B) SBIR/STTR Data that are Technical Data may be released outside 
the Government without any additional written permission of the awardee 
only if the non-Governmental entity or foreign government has entered 
into a non-disclosure agreement with the Government that complies with 
the terms for such agreements outlined in section 8 of this Policy 
Directive and the release is:
    (i) Necessary to support certain narrowly-tailored essential 
Government activities for which law or regulation permits access of a 
non-Government entity to a contractors' data developed exclusively at 
private expense, non-SBIR/STTR Data, such as for emergency repair or 
overhaul;
    (ii) To a Government support services contractor in the performance 
of a Government support services contract and the release is not for 
commercial purposes or manufacture;
    (iii) To a foreign government for purposes of information and 
evaluation if required to serve the interests of the U.S. Government; 
or
    (iv) To non-Government entities or individuals for purposes of 
evaluation.
    (6) SBIR/STTR Computer Software Rights. The Government's rights 
during the SBIR/STTR Protection Period in specific types of SBIR/STTR 
Data that are Computer Software.
    (A) The Government may use, modify, reproduce, release, perform, 
display, or disclose SBIR/STTR Data that are Computer Software within 
the Government. The Government may exercise SBIR/STTR Computer Software 
Rights within the Governmen for:
    (1) Use in Government computers;
    (2) Modification, adaptation, or combination with other computer 
software, provided that the Data incorporated into any derivative 
software are subject to the rights in paragraph (ee) and that the 
derivative software is marked as containing SBIR/STTR Data;
    (3) Archive or backup; or
    (4) Distribution of a computer program to another Government 
agency, without further permission of the awardee, if the awardee is 
notified of the distribution and the identity of the recipient prior to 
the distribution, and a copy of the SBIR/STTR Computer Software Rights 
included in the funding agreement is provided to the recipient.
    (B) The Government shall not release, disclose, or permit access to 
SBIR/STTR Data that is Computer Software for commercial, manufacturing, 
or procurement purposes without the written permission of the awardee. 
The Government shall not release, disclose, or permit access to SBIR/
STTR Data outside the Government without the written permission of the 
awardee unless:
    (i) The non-Governmental entity has entered into a non-disclosure 
agreement with the Government that complies with the terms for such 
agreements outlined in section 8 of this Policy Directive; and
    (ii) The release or disclosure is--
    (I) To a Government support service contractor for purposes of 
supporting Government internal use or activities, including evaluation, 
diagnosis and correction of deficiencies, and adaptation, combination, 
or integration with other Computer Software provided that SBIR/STTR 
Data incorporated into any derivative software are subject to the 
rights in paragraph (ff); or
    (II) Necessary to support certain narrowly-tailored essential 
Government activities for which law or regulation permits access of a 
non-Government entity to a contractors' data developed exclusively at 
private expense, non-SBIR/STTR Data, such as for emergency repair and 
overhaul.
    (7) SBIR/STTR Protection Period. The period of time during which 
the Government is obligated to protect SBIR/STTR Data against 
unauthorized use and disclosure in accordance with SBIR/STTR Data 
Rights. The SBIR/STTR

[[Page 20520]]

Protection Period begins at award of an SBIR/STTR funding agreement and 
ends not less than twelve years after acceptance of the last 
deliverable under that agreement (See Sec.  8(b)(4) of the SBIR/STTR 
Policy Directive).
    (8) Technical Data. Recorded information, regardless of the form or 
method of the recording, of a scientific or technical nature (including 
Computer Software Documentation and Computer Databases). The term does 
not include Computer Software or financial, administrative, cost or 
pricing, or management information, or other data incidental to 
contract or grant administration. The term includes recorded Data of a 
scientific or technical nature that is included in Computer Databases.
    (9) Unlimited Rights. The Government's rights to access, use, 
modify, prepare derivative works, reproduce, release, perform, display, 
disclose, or distribute Data in whole or in part, in any manner and for 
any purpose whatsoever, and to have or authorize others to do so.
    (b) Allocation of SBIR/STTR Data Rights.
    (1) An SBC has ownership of all SBIR/STTR Data it develops or 
generates in the performance of an SBIR/STTR award. The SBC retains all 
rights in SBIR/STTR Data that are not granted to the Government in 
accordance with this Policy Directive. These rights of the SBC do not 
expire.
    (2) During the SBIR/STTR Protection Period, the Government receives 
SBIR/STTR Technical Data Rights in SBIR/STTR Data that is Technical 
Data or any other type of Data other than Computer Software; and SBIR/
STTR Computer Software Rights in SBIR/STTR Data that is Computer 
Software.
    (3) After the protection period, the Government receives Unlimited 
Rights in all SBIR/STTR Data that was protected during the protection 
period.
    (4) The Government receives Unlimited Rights in all unmarked data.
    (c) Identification and Delivery of SBIR/STTR Data. Any SBIR/STTR 
Data delivered by the awardee, and in which the awardee intends to 
limit the Government's rights to use and disclosure to SBIR/STTR 
Technical Data Rights and SBIR/STTR Computer Software Rights, must be 
delivered with restrictive markings. The Government assumes no 
liability for the access, use, modification, reproduction, release, 
performance, display, disclosure, or distribution of SBIR/STTR Data 
delivered without markings. The Awardee or its subcontractors or 
suppliers shall conspicuously and legibly mark all such SBIR/STTR Data 
with the appropriate legend.
    (1) The authorized legend shall be placed on each page of the SBIR/
STTR Data. If only portions of a page are subject to the asserted 
restrictions, the SBIR/STTR Awardee shall identify the restricted 
portions (e.g., by circling or underscoring with a note or other 
appropriate identifier). With respect to SBIR/STTR Data embodied in 
Computer Software, the legend shall be placed on: (1) The printed 
material or media containing the Computer Software; or (2) the 
transmittal document or storage container. The legend shall read as 
follows:

                          SBIR/STTR Data Rights
------------------------------------------------------------------------
                  Funding agreement No.
------------------------------------------------------------------------
Date Last Deliverable Due                                 ..............
------------------------------------------------------------------------
SBIR/STTR Awardee                                         ..............
------------------------------------------------------------------------
SBIR/STTR Awardee Address                                 ..............
------------------------------------------------------------------------

    This is SBIR/STTR Data (or is Computer Software or a prototype that 
embodies or includes SBIR/STTR Data) to which the SBIR/STTR Awardee has 
SBIR/STTR Data Rights and to which the Government has received SBIR/
STTR Technical Data Rights (or SBIR/STTR Computer Software Rights) 
during the SBIR/STTR Protection Period and Unlimited Rights after the 
Protection Period, as those terms are defined in the SBIR/STTR funding 
agreement. Any reproduction of SBIR/STTR Data or portions of such data 
marked with this legend must also reproduce the markings.

     (End of Legend)

    (2) If the SBIR/STTR Awardee has marked its data using the date 
last deliverable due, and the date of acceptance of the last 
deliverable differs from the date the last deliverable is due, the 
SBIR/STTR Awardee has the option of remarking the data with the date of 
acceptance of the last deliverable. Data submitted without correct or 
appropriate markings may be corrected within 6 months from the date the 
data is delivered.
    (d) Relation to patents. Nothing regarding SBIR/STTR Data Rights or 
SBIR/STTR Limited Rights in this clause shall imply a license to or 
imply a requirement to license to the Government under any patent to a 
Subject Invention (As defined under the Bayh-Dole Act) under an SBIR/
STTR award.

     (End of Clause)

    (4) Copyrights. Include an appropriate statement concerning 
copyrights and publications addressing national security 
considerations, if any, and the appropriate acknowledgement and 
disclaimer statement.
    (5) Invention Reporting. Include requirements for reporting 
inventions. Include appropriate information concerning the reporting of 
inventions, for example:
    ``SBIR/STTR Awardees must report inventions to the awarding agency 
within 2 months of the inventor's report to the awardee.''
    Note: Some agencies provide electronic reporting of inventions 
through the NIH iEdison Invention Reporting System (iEdison System). 
The iEdison System may be used to satisfy all invention reporting 
requirements mandated by the applicable regulations. Access to the 
system is through a secure interactive Internet site, http://www.iedison.gov, to ensure that all information submitted is protected. 
All agencies are encouraged to use the iEdison System. In addition to 
fulfilling reporting requirements, the iEdison System notifies the user 
of future time sensitive deadlines with enough lead-time to avoid the 
possibility of loss of patent rights due to administrative oversight.
    (e) Cost-Sharing. Include a statement essentially as follows:
    ``Cost-sharing is permitted for proposals under this program 
solicitation; however, cost-sharing is not required. Cost-sharing will 
not be an evaluation factor in consideration of your Phase I 
proposal.''
    (f) Profit or Fee. Include a statement on the payment of profit or 
fee on awards made under the SBIR/STTR program solicitation.
    (g) Joint Ventures or Limited Partnerships. Include essentially the 
following language: ``Joint ventures and limited partnerships are 
eligible provided the entity created qualifies as a small business 
concern as defined in this program solicitation.''
    (h) Research and Analytical Work. Include essentially the following 
statement:
    SBIR:
    (1) ``For Phase I a minimum of two-thirds of the research and/or 
analytical effort must be performed by the proposing small business 
concern unless otherwise approved in writing by the funding agreement 
officer after consultation with the agency SBIR Program Manager/
Coordinator.
    (2) For Phase II a minimum of one-half of the research and/or 
analytical effort must be performed by the proposing small business 
concern unless otherwise approved in writing by the funding agreement 
officer after

[[Page 20521]]

consultation with the agency SBIR Program Manager/Coordinator.''
    STTR:
    ``For both Phase I and Phase II, not less than 40 percent of the R/
R&D work must be performed by the SBC, and not less than 30 percent of 
the R/R&D work must be performed by a, partnering Research Institution, 
as defined in this solicitation.''
    (i) Awardee Commitments. To meet the legislative requirement that 
SBIR/STTR solicitations be simplified, standardized and uniform, 
clauses expected to be in or required to be included in SBIR/STTR 
funding agreements must not be included in full or by reference in 
SBIR/STTR program solicitations. Rather, applicants must be advised 
that they will be required to make certain legal commitments at the 
time of execution of funding agreements resulting from SBIR/STTR 
program solicitations. Essentially, the following statement must be 
included in the ``Considerations'' section of SBIR/STTR program 
solicitations:
    ``Upon award of a funding agreement, the awardee will be required 
to make certain legal commitments through acceptance of numerous 
clauses in Phase I funding agreements. The outline that follows is 
illustrative of the types of clauses to which the contractor would be 
committed. This list is not a complete list of clauses to be included 
in Phase I funding agreements, and is not the specific wording of such 
clauses. Copies of complete terms and conditions are available upon 
request.''
    (j) Summary Statements. The following are illustrative of the type 
of summary statements to be included immediately following the 
statement in subparagraph (i). These statements are examples only and 
may vary depending upon the type of funding agreement used.
    (1) Standards of Work. Work performed under the funding agreement 
must conform to high professional standards.
    (2) Inspection. Work performed under the funding agreement is 
subject to Government inspection and evaluation at all times.
    (3) Examination of Records. The Comptroller General (or a duly 
authorized representative) must have the right to examine any pertinent 
records of the awardee involving transactions related to this funding 
agreement.
    (4) Default. The Government may terminate the funding agreement if 
the contractor fails to perform the work contracted.
    (5) Termination for Convenience. The funding agreement may be 
terminated at any time by the Government if it deems termination to be 
in its best interest, in which case the awardee will be compensated for 
work performed and for reasonable termination costs.
    (6) Disputes. Any dispute concerning the funding agreement that 
cannot be resolved by agreement must be decided by the contracting 
officer with right of appeal.
    (7) Contract Work Hours. The awardee may not require an employee to 
work more than 8 hours a day or 40 hours a week unless the employee is 
compensated accordingly (for example, overtime pay).
    (8) Equal Opportunity. The awardee will not discriminate against 
any employee or applicant for employment because of race, color, 
religion, sex, or national origin.
    (9) Affirmative Action for Veterans. The awardee will not 
discriminate against any employee or application for employment because 
he or she is a disabled veteran or veteran of the Vietnam era.
    (10) Affirmative Action for Handicapped. The awardee will not 
discriminate against any employee or applicant for employment because 
he or she is physically or mentally handicapped.
    (11) Officials Not To Benefit. No Government official must benefit 
personally from the SBIR/STTR funding agreement.
    (12) Covenant Against Contingent Fees. No person or agency has been 
employed to solicit or secure the funding agreement upon an 
understanding for compensation except bona fide employees or commercial 
agencies maintained by the awardee for the purpose of securing 
business.
    (13) Gratuities. The funding agreement may be terminated by the 
Government if any gratuities have been offered to any representative of 
the Government to secure the award.
    (14) Patent Infringement. The awardee must report each notice or 
claim of patent infringement based on the performance of the funding 
agreement.
    (15) American Made Equipment and Products. When purchasing 
equipment or a product under the SBIR/STTR funding agreement, purchase 
only American-made items whenever possible.
    (k) Additional Information. Information pertinent to an 
understanding of the administration requirements of SBIR/STTR proposals 
and funding agreements not included elsewhere must be included in this 
section. As a minimum, statements essentially as follows must be 
included under ``Additional Information'' in SBIR/STTR program 
solicitations:
    (1) This program solicitation is intended for informational 
purposes and reflects current planning. If there is any inconsistency 
between the information contained herein and the terms of any resulting 
SBIR/STTR funding agreement, the terms of the funding agreement are 
controlling.
    (2) Before award of an SBIR/STTR funding agreement, the Government 
may request the applicant to submit certain organizational, management, 
personnel, and financial information to assure responsibility of the 
applicant.
    (3) The Government is not responsible for any monies expended by 
the applicant before award of any funding agreement.
    (4) This program solicitation is not an offer by the Government and 
does not obligate the Government to make any specific number of awards. 
Also, awards under the SBIR/STTR program are contingent upon the 
availability of funds.
    (5) The SBIR/STTR program is not a substitute for existing 
unsolicited proposal mechanisms. Unsolicited proposals must not be 
accepted under the SBIR/STTR program in either Phase I or Phase II.
    (6) If an award is made pursuant to a proposal submitted under this 
SBIR/STTR program solicitation, a representative of the contractor or 
grantee or party to a cooperative agreement will be required to certify 
that the concern has not previously been, nor is currently being, paid 
for essentially equivalent work by any Federal agency.
Sec.  6. Submission of Proposals.
    (a) This section must clearly specify the closing date on which all 
proposals are due to be received.
    (b) This section must specify the number of copies of the proposal 
that are to be submitted.
    (c) This section must clearly set forth the complete mailing and/or 
delivery address(es) where proposals are to be submitted.
    (d) This section may include other instructions such as the 
following:
    (1) Bindings. Please do not use special bindings or covers. Staple 
the pages in the upper left corner of the cover sheet of each proposal.
    (2) Packaging. All copies of a proposal should be sent in the same 
package.
    Sec.  7. Scientific and Technical Information Sources. Wherever 
descriptions of research topics or subtopics include reference to 
publications, information on where such publications will normally be

[[Page 20522]]

available must be included in a separate section of the solicitation 
entitled ``Scientific and Technical Information Sources.''
    Sec.  8. Submission Forms. Multiple copies of proposal preparation 
forms necessary to the contracting and granting process may be 
required. This section may include Proposal Summary, Proposal Cover, 
Budget, Checklist, and other forms the sole purpose of which is to meet 
the mandate of law or regulation and simplify the submission of 
proposals.
    Sec.  9. Research Topics. Describe sufficiently the R/R&D topics 
and subtopics for which proposals are being solicited to inform the 
applicant of technical details of what is desired. Allow flexibility in 
order to obtain the greatest degree of creativity and innovation 
consistent with the overall objectives of the SBIR/STTR program.

[FR Doc. 2016-07817 Filed 4-6-16; 8:45 am]
 BILLING CODE 8025-01-P