[Federal Register Volume 88, Number 116 (Friday, June 16, 2023)]
[Notices]
[Pages 39439-39441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-12854]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

National Institutes of Health


Implementation of the NIH SBIR and STTR Foreign Disclosure Pre-
Award and Post-Award Requirements

AGENCY: National Institutes of Health, HHS.

ACTION: Notice.

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SUMMARY: The National Institutes of Health (NIH) announces publication 
and serves as Notice for the extramural community on recent policy 
changes made for the Small Business Innovation Research Program (SBIR) 
and the Small Business Technology Transfer Program (STTR). This Notice 
implements additional disclosure requirements and post-award reporting 
requirements for small business concerns (SBCs) for covered 
relationships. In addition, this serves as notification of NIH's due 
diligence program to assess security risks and denial of award when 
foreign relationships or commitments with countries of concern pose a 
significant risk as provided in the SBIR and STTR Extension Act of 2022 
at https://www.congress.gov/117/plaws/publ183/PLAW-117publ183.pdf under 
these programs. This policy serves as an update to section 18. Grants 
to For Profit Organizations of the NIH Grants Policy Statement (GPS) at 
https://grants.nih.gov/grants/policy/nihgps/HTML5/section_18/18_grants_to_for-profit_organizations.htm and will be incorporated in 
the FY24 publication. In addition, the NIH Application Guide will be 
updated to reflect instructions for submission of required 
documentation.

DATES: The policy changes are now available for viewing.

ADDRESSES: Please visit our website to view the policy changes at 
https://grants.nih.gov/policy/PolicyNotices.php.

FOR FURTHER INFORMATION CONTACT: Stephanie Fertig, Health and Human 
Services (HHS) Small Business Program Lead, Small business Education 
and Entrepreneurial Development (SEED). Email: [email protected]. Phone 
number (301) 827-8595. Centers for Disease Control and Prevention (CDC) 
Contact: Terrance Perry, CDC Office of Grants Services, Office of 
Financial Resources. Email: [email protected]. Phone number (770) 488-
8424). Food and Drug Administration (FDA) Contact: Kimberly Pendleton, 
FDA Office of Finance, Budget, Acquisitions, and Planning. Email: 
[email protected]. Phone number (240) 402-7610.

SUPPLEMENTARY INFORMATION:

Background

    The SBIR and STTR Extension Act of 2022 (the Act) Public Law 117-
183, 136 stat. 2180 https://www.congress.gov/117/plaws/publ183/PLAW-117publ183.pdf, signed into law by President Biden on September 30, 
2022, reauthorized the SBIR program, the STTR program, and related 
pilot programs through September 30, 2025.
    The Act includes major changes to the SBIR and STTR programs, 
including:
     increased minimum performance standards (refer to NOT-OD-
23-092, https://grants.nih.gov/grants/guide/notice-files/NOT-OD-23-092.html),
     disclosure requirements regarding ties to foreign 
countries,
     a requirement for federal agencies that manage SBIR and 
STTR programs to establish a due diligence program to assess security 
risks posed by applicants,
     denial of award and recovery authority provisions when 
ties to foreign countries of concern pose a significant risk.
    Foreign countries of concern are defined in the Act as the People's 
Republic of China, the Democratic People's Republic of North Korea, the 
Russian Federation, the Islamic Republic of Iran, or any other country 
determined to be a country of concern by the U.S. Secretary of State. 
An up-to-date list of countries determined to be countries of concern 
by the Secretary of State will be maintained and accessible on SBIR.gov 
on SBA's Required Disclosures of Foreign Affiliations or Relations web 
page at https://www.sbir.gov/foreign_disclosures.
    In response to the passing of the Act, the U.S. Small Business 
Administration (SBA) has issued a form, Required Disclosures of Foreign 
Affiliations or Relationships to Foreign Countries (referred to as the 
``disclosure form'' hereafter) that will be administered by federal 
agencies to identify and assess the risk of covered foreign 
relationships for SBC applicants applying for SBIR and STTR funding. 
Publication of the final form is forthcoming.

Applicability

    This policy applies to all competing applications for funding under 
the NIH, CDC, and FDA SBIR and STTR programs submitted for due dates on 
or after September 5, 2023.

Policy

    Each SBC applying for the SBIR and STTR programs under the NIH, 
CDC, and FDA is required to disclose all funded and unfunded 
relationships with foreign countries, using the disclosure form, for 
all owners and covered individuals. A ``covered individual'' is defined 
as all senior key personnel identified by the SBC in the application 
(i.e., individuals who contribute to the scientific development or 
execution of a project in a substantive, measurable way). Applicants 
must include the following information on the disclosure form:
     the identity of all owners and covered individuals of the 
SBC who are a party to any malign foreign talent recruitment program;
     the existence of any parent company, joint venture, or 
subsidiary of the SBC that is based in or receives funding from, any 
foreign country of concern;
     any current or pending contractual or financial obligation 
or other agreement specific to a business arrangement, or joint 
venture-like arrangement with an enterprise owned by a foreign state or 
any foreign entity;
     whether the SBC is wholly owned in a foreign country;

[[Page 39440]]

     any venture capital or institutional investment and if the 
investing entity has a general partner or any other individual holding 
a leadership who has a foreign affiliation with any foreign country of 
concern;
     any technology licensing or intellectual property sales or 
transfers to a foreign country of concern during the 5-year period 
preceding submission of the proposal;
     any foreign business entity, offshore entity, or entity 
outside the United States related to the SBC;
     any owners, officers, or covered individuals that have a 
foreign affiliation with a research institution located in a foreign 
country of concern;
     information technology and information safeguarding plans.
    Upon request, applicants will submit the completed disclosure form 
via the Just-In-Time (JIT) process described in the NIH GPS section 
2.5.1 Just-in-Time Procedures at https://grants.nih.gov/grants/policy/nihgps/HTML5/section_2/2.5.1_just-in-time_procedures.htm. The 
disclosure form and any additional agency-specific information must be 
submitted electronically using the Just-in-Time feature in the eRA 
Commons. Applicants must continue to comply with NIH Other Support 
disclosure requirements as provided in Section 2.5.1 at https://grants.nih.gov/grants/policy/nihgps/HTML5/section_2/2.5.1_just-in-time_procedures.htm. SBC applicants applying to CDC and FDA will follow 
each agency's policies for submitting additional documents during the 
pre-award process. Applicants may be required to provide similar 
information on the disclosure form that is also submitted as a part of 
the other support reporting for senior/key personnel identified in the 
application. Applicants that do not submit the completed disclosure 
form during the JIT process will not be considered for funding.
    SBIR/STTR Notices of funding opportunities and terms and conditions 
of award will be updated to reflect the policy above.

Due Diligence Program To Assess Security Risks

    NIH, CDC, and FDA have implemented a due diligence program designed 
to assess security risks posed by applicants. The due diligence program 
will assess the cybersecurity practices, patent analysis, employee 
analysis, and foreign ownership of a SBC seeking an award, including 
the financial ties and obligations of the SBC and employees of the SBC 
to a foreign country, foreign person, or foreign entity. After 
reviewing the application, including JIT elements and the disclosure 
form, NIH, CDC, and FDA may request the SBC provide copies of any 
contractual or financial obligation or other agreement specific to a 
business arrangement, or joint venture-like arrangement with an 
enterprise owned by a foreign state or any foreign entity in effect 
during the 5-year period (calendar year) preceding submission of the 
proposal. NIH, CDC, and FDA may decline to move forward with an award 
based on security risks determined during the assessment. NIH, CDC, and 
FDA will not issue an award prior to completing the assessment process.

Denial of Awards

    Applicants and recipients are encouraged to consider whether their 
entity's relationships with foreign countries of concern will pose a 
security risk. Prior to issuing an award, NIH, CDC, and FDA will 
determine whether the SBC submitting the application:
     has an owner or covered individual that is party to a 
malign foreign talent recruitment program;
     has a business entity, parent company, or subsidiary 
located in the People's Republic of China or another foreign country of 
concern; or
     has an owner or covered individual that has a foreign 
affiliation with a research institution located in the People's 
Republic of China or another foreign country of concern.
    A finding of foreign involvement with countries of concern will not 
necessarily disqualify an applicant. NIH, CDC, and FDA will provide SBC 
applicants the opportunity to address any identified security risks 
prior to award. Final award determinations will be based on whether the 
applicant's involvement falls within any of the following risk 
criteria, per the Act:
     interfere with the capacity for activities supported by 
NIH, CDC, or FDA to be carried out;
     create duplication with activities supported by NIH, CDC, 
or FDA;
     present concerns about conflicts of interest;
     were not appropriately disclosed to NIH, CDC, or FDA;
     violate Federal law or terms and conditions of NIH, CDC, 
or FDA; or
     pose a risk to national security.
    NIH, CDC, and FDA will not issue an award under the SBIR/STTR 
program if the covered relationship with a foreign country of concern 
identified in this guidance is determined to fall under any of the 
criteria provided above, and the risk cannot be resolved.

Post-Award Reporting Requirements

    Recipients are responsible for monitoring their relationships with 
foreign countries of concern post-award, for any changes that may 
impact previous disclosures. SBCs receiving an award under the SBIR/
STTR program are required to submit an updated disclosure form to 
report any of the following changes to NIH, CDC, and FDA throughout the 
duration of the award:
     any change to a disclosure on the disclosure form;
     any material misstatement that poses a risk to national 
security; and
     any change of ownership, change to entity structure, or 
other substantial change in circumstances of the SBC that NIH, CDC, and 
FDA determine poses a risk to national security.
    Updated disclosure forms are required within 30 days of any change 
in ownership, entity structure, covered individual, or other 
substantive changes in circumstance, as described above. In addition, 
regular updates are required at the time of all SBIR/STTR annual, 
interim, and final Research Performance Progress Reports (RPPRs). 
Recipients will be required to upload these updated disclosures using 
the Additional Materials (AM) tool in eRA Commons. System enhancements 
to facilitate these uploads are underway, with an anticipated 
deployment in calendar year 2024. The RPPR Instruction Guide will be 
updated to reflect this process.
    If the recipient reports a covered foreign relationship that meets 
any of the risk criteria prohibiting funding described in this 
guidance, NIH, CDC, and FDA may withhold funding until the covered 
relationship has been dissolved. The recipient will be required to 
submit documentation verifying the relationship has been terminated. If 
the risk cannot be resolved, NIH, CDC, and FDA may deem it necessary to 
terminate the award for material failure to comply with the federal 
statutes, regulations, or terms and conditions of the federal award. 
Refer to Section 8.5.2 Remedies for Noncompliance or Enforcement 
Actions: Suspension, Termination, and Withholding of Support (https://grants.nih.gov/grants/policy/nihgps/HTML5/section_8/8.5.2_remedies_for_noncompliance_or_enforcement_actions-_suspension__termination__and_withholding_of_support.htm?Highlight=termination for more information. Recipients are encouraged to monitor their 
covered foreign relationships post-award and avoid entering into 
relationships, both funded and unfunded, that may pose a security risk 
and jeopardize their ability to retain their award.

[[Page 39441]]

Agency Recovery Authority and Repayment of Funds

    An SBC will be required to repay all amounts received from NIH, 
CDC, and FDA under the award if either of the following determinations 
are made upon assessment of a change to their disclosure:
     the SBC makes a material misstatement that NIH, CDC, and 
FDA determine poses a risk to national security; or
     there is a change in ownership, change in entity 
structure, or other substantial change in circumstances of the SBC that 
NIH, CDC, and FDA determine poses a risk to national security.
    The repayment requirements and procedures provided in Section 8.5.4 
Recovery of Funds at https://grants.nih.gov/grants/policy/nihgps/HTML5/section_8/8.5.4_recovery_of_funds.htm of the NIH GPS apply and may also 
be subject to additional noncompliance and enforcement actions as 
described in Section 8.5.2 of the GPS. Recipients are required to 
follow the repayment procedures provided in the Guidance for Repayment 
of Grant Funds to the NIH at https://grants.nih.gov/policy/compliance.htm.

    Dated: June 6, 2023.
Tara A. Schwetz,
Acting Principal Deputy Director, National Institutes of Health.
[FR Doc. 2023-12854 Filed 6-15-23; 8:45 am]
BILLING CODE 4140-01-P