SBIR Gateway

SBIR Insider Newsletter
Policy Directives and CCR
October 1, 2012

Dear SBIR Insider,

Welcome to fiscal year 2013! Of course in SBIR FY-13 is not handled in a uniform manner, so it's not easy to tell where a particular agency is at any given time. It is also not easy to know when each agency will implement particular provisions of the new SBIR law and policy directives.

The battle for SBIR reauthorization may have been won, but it is very questionable as to what you have actually won. There is not an "individual" "Darth Vader" at work, but small businesses are once again a victim of circumstance due to a combination of congressional disrespect (from a few but powerful forces), irresponsible knee-jerk reactions to the misdeeds of a few small businesses (let's call them what they are, "crooks"), subordination of small business interests to the "K" street lobbyists (let's call them what they are, the bosses of many of our most powerful congressional leaders).

Consequently SBIR has congealed into a blob of complexity that few understand, let alone agree upon, and it's affecting everyone including SBA, the agencies, small businesses, universities, primes, and the support networks.

In this issue:

The SBIR Policy Directive and its Role

Putting things in perspective, first you have the SBIR code (15 USC 638) which contains the law that governs the SBIR and STTR programs. The SBIR/STTR reauthorization process utilized a portion of the National Defense Authorization Act (NDAA) of 2012 that contained the language to modify/update the SBIR program by modifying 15 USC 638.

Next, the SBA was directed by the law to draw up policy directives (PDs) that provide guidance to the agencies (and to you) as to the rules and procedures of administering and running the SBIR and STTR programs. The PDs are supposed to simply define what needs to be done, and how. The PD should (but doesn't always) follow the law and/or congressional intent. That's where the fight starts.

Congress, upon passing the NDAA in late December, gave the SBA a very short time period to write the PD(s) and get them implemented. This was no easy task, but the PDs have been published and are in effect right now. The SBA is asking for your comments to these PD provisions. That's great but unrealistic.

Growth & Complexities of the Policy Directives Make Commenting Problematic

The new SBIR PD, it's preamble and appendices are a behemoth. Few if any fully understand it, and many who think they do, don't. This is not totally SBA's fault. SBA had a few webinars that were very helpful to the experienced SBIR companies, but not so much for novice and intermediates.

The new PD is roughly double the size of the last one. The agencies are stressed by all the new requirements, and you will be too when you learn about them. The original goal of streamlining, simplifying and speeding up the process is unrealistic given all the new registration, eligibility and reporting requirements that congress added.

The PD has grown from 11,905 words to almost 22,000 (and that doesn't count the preamble or appendices). The old PD had 2 appendices, the new has 10. This is being handled like the tax code, "just add more stuff to it". The result is similar to the tax code in that many of you will require assistance in order to deal with the new demands of SBIR. More on that later.

Your Commenting on the Policy Directive

In order to properly comment on the PD, you need to understand it a little better. We have created a tool for you to be able to traverse the PD in small sections, as well as look at hot topics we've highlighted for you. For those who want more, we give you access to the law as well. Also included is a search engine (powered by Google) to help you find items of interest.

The PD tool is located at Here's a brief description on how to use the tool:

The column on the left is the SBA's Summaries & Explanations, also known as their "Preamble" (divided in many sections). On the top right is "Hot Topics" that many of you asked for (with links to the relevant portions of the PD), then we have the NDAA language (which most of you won't use), and we have the updated 15 USC 638 code, which is the codification of SBIR law.

Following that is the actual SBIR PD in 12 sections. If you click on one of those sections and scroll down to the bottom of the section, you will see a link that takes you to the former PD so you can see the changes (that's mostly for the policy geeks). This is followed by the 10 appendices.

Because of the complexity of the PD, and perhaps the instability of, only 4 comments have been posted so far (as compared to almost 200 for the previous commenting period for size standards). You can add your comments on the SBIR Policy Directive by going to Comments are legally due on October 5, 2012 BUT SBA should consider extending the commenting period as they did for the 2002 SBIR policy directive, due to the complexities and the timing of the period covering the end of summer vacation time.

But wait, there's more! is arguing with itself as part of it is saying that the cutoff date for comments is Oct 4, while other parts (as published in the Federal Register article) say October 5. If the programming of the system carries the earlier date, you won't be able to post a comment on the 5th. That's like being shut out of an election. Could that amount to fraud, the way some over zealous IGs look at things? Read on…

Fraud, Waste and Abuse - The Biggest Fraud!

For some unexplained , undocumented and unsupported reason, some power brokers in Congress decided that small businesses working in SBIR are the biggest crooks and thieves in all of federal government contracting.

Yes there have been some sad cases of blatant fraud and abuse in some SBIR projects, and all of us want the bad guys caught and prosecuted. However, to portray SBIR and small business to be a standout in government fraud, waste and abuse (FWA) is a totally inaccurate, ignominious and unsupportable innuendo by people of dubious reputation.

The propensity to lie, cheat, steal is not a trait of small business, but is a trait of some human beings. These people can be part of government, universities, religion, non-profits, large business, health/medicine, charities, media, small business and yes, of course, politics.

That begs the question as to why congress has instituted in SBIR the most extreme set of FWA standards and regulations ever seen in a government program. For example, in the previous PD, Section 9 "Responsibilities of SBIR Participating Agencies and Departments" was comprised of 1,627 words and one reference to fraud, waste or abuse.

However, in the new PD (due to the law, not SBA) the section has been expanded to 4,120 words with 48 separate references to fraud, waste or abuse! In addition each agency has been ordered to post on their SBIR web site a notice to report FWA to the Inspector Generals (IG). This is SBIR specific only, not for universities, primes, non-profits, governments etc.

For example, I'm not picking on NIH, they are doing what the law now prescribes, but lets look at their SBIR site at and notice the big FWA box on the right. Compare that to any of their other grant pages (such as ) Why is this being applied only to SBIR pages and not others? Simple answer, it's in the law. By the way, kudos to NIH SBIR program manager Dr. Matthew Portnoy for being the first to implement an agency SBIR support page to highlight "What to Expect and When" as it relates to the changes in the NIH's SBIR/STTR programs.

What Constitutes Fraud Waste and Abuse?

This is a good question and one that bears some investigation. If you want to see what you're facing, go to our hot topics PD page at then scroll down to "6. Fraud, Waste & Abuse." Click on the 3 citations, Policy Directive, Amendment, and Law. You might not believe what you see. One slight error could be a crime rather than a mistake?

In last week's "SBIR-ALERT - September 28, 2012" published by the Economic Development Office of Pacific Northwest National Laboratory, contributing author and SBIR champion Jim Greenwood (Greenwood Consulting Group, Inc) wrote an excellent, informative and entertaining article based on FWA, entitled "SBIR Proposal Writing Tip: Indirect Cost Warning / Reducing Your Indirect Costs by Serving Jail Time" It's what we used to call "kidding on the square." Very informative.

You should be able to find it on the SBIR Alerting Service web site at Look for the September 28, 2012 issue. If you don't already subscribe to this biweekly email publication, it's free and highly recommended.

Eligibility, Commercialization and Technical Assistance

Are you aware of items such as the Minimum Commercialization Rate that companies must meet/exceed? How about the plethora of new databases you must register in?

A new company must conform to eligibility standards by getting a D&B number, register in the SAM database (including reps and certs), SBA's new Company Registry Database,, eRa commons (NIH), Fedconnect (DOE), DoD/SBIR, and/or Fastlane (NSF).

More and more is being expected from small businesses in SBIR and some agencies are looking at making additional provisions for Discretionary Technical Assistance to SBIR awardees.

This includes efforts to a) Make better technical decisions on SBIR projects; b) Solve technical problems that arise during SBIR projects; c) Minimize technical risks associated with SBIR projects; and d) Commercializing the SBIR product or process

In fact some agencies are looking for vendors with special expertise in these and other areas to help SBIR awardees. For example the Navy had posted a Request for Information (RFI) for companies that may have qualifications to provide services to awardees. Although the RFI is now closed, it is very probable that an RFP (request for proposals) may ensue. Interested parties should read the Navy's RFI (sources sought) on FedBizOpps at then stay tuned for a potential RFP.

National SBIR Conference - Portland OR / Nov 13 - 15, 2012

If there has ever been a "must attend" National SBIR conference, this is it! With the new SBIR and STTR Policy Directives active and in place, this will be the first time you'll be able to hear directly from the agencies as to what the changes will be and how each agency is implementing them. You'll also be able to schedule 1 on 1 time for face to face communication with program managers.

SBA will be there, as will several IGs. As a first, there will be a session with an IG panel that includes a small business advocate attorney, a guy named Jere Glover.

There will also be a session on the reauthorization and congressional intent featuring Ms. Kevin Wheeler, the SBIR superstar Senate staffer who has helped keep SBIR alive since the late 90's. Ms. Wheeler was the SBIR Person of the Year for 2008. Believe me folks, no congressional staffer has fought longer and harder for your SBIR program than Kevin. Kevin will be joined by Jere Glover and there will be some troublemaker named Rick Shindell to moderate.

There is much more and the agenda is currently being updated, I've been told that they are going to extend the early bird rate of $495 that closed September 30, through October 15. After that registration will be $595. It may take a day or two before that becomes available, so check on their site at

Closing Thoughts

With all the new overhead being added to SBIR, I can't help but recall the words of the most successful SBIR veteran off all time, Dr. Irwin Jacobs, cofounder of Qualcomm. In his testimony to the Senate Committee on Small Business & Entrepreneurship last year Jacobs cautiously noted: "It sounds as if there has been some requirement creep over the years, because I remember it as being a very straight forward, a very simple process to get a proposal in and very quickly get an answer back, and it sounds like that has changed dramatically."

Indeed it has Dr. Jacobs. In fact, Dr. Chris Busch, an SBIR success and champion cautioned us many years ago of complicating the process. As his pleas fell on deaf ears, Dr. Busch decided to retire and enjoy life. We miss him!

In our next issue we'll have some SBIR politics for our political junkie readers. Of course I'll try to give you the best of both worlds, we'll have the "Fare and Bank Balance" of Fox, and the "Fairgrounds and Balancing Acts" of MSNBC.



Rick Shindell
SBIR Gateway
Zyn Systems
40 Alderwood Dr.
Sequim, WA 98382
[email protected]

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