7. SBIR Funding Process
Because the Act requires a ``simplified, standardized funding
process,'' specific attention must be given to the following areas of
SBIR Program administration:
(a) Timely Receipt and Review of Proposals.
(1) Participating agencies must establish appropriate dates and
formats for review of proposals.
(i) All activities related to Phase I proposal reviews must
normally be completed and awards made within 6 months from the closing
date of the program solicitation. However, agencies may extend that
period up to 12 months based on agency needs.
(ii) 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, accomplish
proposal reviews expeditiously, and proceed with Phase II awards. While
recognizing that Phase II arrangements between the agency and applicant
may require more detailed negotiation to establish terms acceptable to
both parties, agencies must not sacrifice the R/R&D momentum created
under Phase I by engaging in unnecessarily protracted Phase II
(iii) SBIR participants often submit duplicate or similar proposals
to more than one soliciting agency when the work projects appear to
involve similar topics or requirements, which are within the expertise
and capability levels of the applicant. To the extent feasible, more
than one agency should not fund ``essentially equivalent work'' under
the SBIR or other Federal programs. For this purpose, the standardized
program solicitation will require applicants to indicate the name and
address of the agencies to which essentially equivalent work proposals
were made, or anticipated to be made, and to identify by subject the
projects for which the proposal was submitted and the dates submitted.
The same information will be required for any previous Federal
Government awards. To assist in avoiding duplicate funding, each agency
must provide to SBA and to each SBIR agency a listing of Phase I and
Phase II awardees, their complete address, and the title of each SBIR
project. This information should be distributed no later than release
of the funding agreement award information to the public.
(b) Review of SBIR Proposals. SBA encourages SBIR agencies to use
their routine review processes for SBIR 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 SBIR 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 solicitation
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. Normally, SBIR agencies must establish a
proposal review cycle wherein successful and unsuccessful applicants
will be notified of final award decisions within 6-months of the
agency's Phase I proposal closing date. However, agencies may extend
that period up to 12 months based on agency needs.
(1) The standardized SBIR Program solicitation must:
(i) Advise Phase I applicants that additional information may be
requested by the awarding agency to evidence awardee responsibility for
(ii) Advise applicants of the proposal evaluation criteria for
Phase I and Phase II.
(2) The SBIR agency and each Phase I awardee considered for a Phase
II award must arrange to manage Phase II proposal submissions, reviews,
(d) Cost Sharing. Cost sharing can serve the mutual interests of
the SBIR agencies and certain SBIR awardees by assuring the efficient
use of available resources. However, cost sharing on SBIR 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 Program solicitation (Appendix I) will provide
information to prospective SBIR applicants concerning cost sharing.
(e) Payment Schedules and Cost Principles.
(1) SBIR 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 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 funding agreements must use, as appropriate, current
cost principles and procedures authorized for use by the SBIR agencies.
At the time of award, agencies must inform each SBIR awardee, to the
extent possible, of the applicable Federal regulations and procedures
that refer to the costs that, generally, are allowable under funding
(f) Funding Agreement Types and Fee or Profit. Statutory
requirements for uniformity and standardization require consistency in
application of SBIR Program provisions among SBIR 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 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.
(2) Fee or Profit. Except as expressly excluded or limited by
statute, awarding agencies must provide for a reasonable fee or profit
on SBIR funding agreements, consistent with normal profit margins
provided to profit-making firms for R/R&D work.
(g) 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
extend periods of performance, to increase the scope of work, or 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. 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
(h) Dollar Value of Awards.
(1) Generally, a Phase I award may not exceed $150,0001 and a Phase
II award may not exceed $1,000,0002. SBA may adjust these amounts once
every 5 years to reflect economic adjustments and programmatic
considerations. There is no dollar level associated with Phase III SBIR
(2) An awarding agency may exceed those award values where
appropriate for a particular project. After award of any funding
agreement exceeding $150,0001 for Phase I or $1,000,0002 for Phase II, the
agency's SBIR representative must provide SBA with written
justification of such action. This justification must be submitted with
the agency's Annual Report data. Similar justification is required for
any modification to a funding agreement that would bring the cumulative
dollar amount to a total in excess of the amounts set forth above.
(i) 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 participation related to the
acquisition of effort on national security or intelligence functions
except as specifically defined under section 9(e)(2) of the Act, 15
U.S.C. 638(e)(2). Agency technology managers directing R/R&D projects
under the SBIR Program, 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 action. SBA's SBIR
Program monitoring activities, except where prohibited by security
considerations, must include a review of nonconforming SBIR actions
justified under this public law provision.
1 Phase I amount changed from $100k to $150k on March 30, 2010 (RIN 3244-AF61)
2 Phase II amount changed from $750k to $1m on March 30, 2010 (RIN 3244-AF61)