SBIR Gateway

SBIR Insider Newsletter
Farewell 2012
December 29, 2012

Dear SBIR Insider,

Our last SBIR Insider of 2012 brings some clarity on size standard / eligibility issues, Commercialization Readiness Program (CRP) administrative funds, as well as items such as agency compliance with the new rules and regulations. There is also considerable uncertainty due to possible sequestration, "fiscal cliff" compromises, and we have sad news on the passing of another SBIR champion.

In this issue:

SBA Issues Final Rule on SBIR/STTR Size Standard Regulations

On December 27, 2012 the SBA delivered on Sean Greene's goal to provide a final rule on SBIR/STTR size standards by the end of calendar year 2012, in accordance with the SBIR/STTR reauthorization legislation. The size standard regulations are a separate but related issue from the SBIR and STTR Policy Directives (PD) issued by SBA on August 6, 2012.

The SBIR/STTR size standard regulations are handled by SBA's Office of Size Standards, who issued the proposed rule on May 15, 2012 addressing ownership, control and affiliation for participants in the SBIR and STTR programs. The SBA solicited comments on the proposed rule (they stated they received about 250 comments) and then published their final rule based on evaluation of the comments, the law, and SBA protocol. This final rule becomes effective January 28, 2013.

Three "unexpected" issues in the proposed rule generated a furor resulting in a letter to the President, Congress and SBA from the SBTC signed by several hundred small businesses throughout the country. The issues were:

1. A Definition of the term "Domestic Small Business" -
2. Eligibility at time of award or at time of submission.
3. Relaxation of affiliation rules

The Domestic Small Business definition - spurred a major uproar because many in the SBIR community interpreted this as opening the door to ownership of a small business concern by a foreign and/or non-small business entity.
The terminology and the issue has been deleted.

Eligibility at time of award and/or at time of submission - also started a major controversy. SBA proposed that eligibility be at time of proposal submission rather than (the original) time of award. SBA seemed somewhat surprised by this backlash because it was not their intent to infer that the PI must be employed by the small business at the time of proposal submission, but mainly the ownership and company structure must meet size standards at the time of submission. (there's more to it than that, and it's complex. We'll include more in our next issue).
Eligibility remains as it has been in the past, with a cautionary note that there are other extenuating circumstances as listed in the SBIR and STTR policy directives such as requiring the small business to certify it meets the other program criteria (e.g. performing the required percentage of work, employing the principal investigator) at the time of award and during the lifecycle of the award.

Relaxation of affiliation rules - A discussion on this could make War and Peace look like a short story. We will have this covered in some detail in the next SBIR Insider.

Note: The SBIR Gateway ( will be posting an SBIR Size Standard reference tool similar to the one we did for the SBIR Policy Directive (see This will take a couple of weeks for us to put together for you, and we'll notify you about this in our next issue.

The complete final rule can be viewed at: (the new web 2.0 way) (the actual "official" federal register PDF)

SBA is supposed to publish a new final rule for the SBIR and STTR PDs because they made their August 6 PDs effective immediately upon publishing (without comment). This was done for time sake and SBA did ask for, and receive comments on the PDs. The updated PDs were supposed to be published by the end of calendar year 2012, but we are hearing rumors that they will be published in the first quarter of 2013.

SBA Policy Directive and Regulation Compliance by the Agencies

Now that we know what the SBA's new regulations and policy directives are, it will take some time before the agencies will be able to comply with all the new items. We also know there are upcoming changes to the PDs that should be published soon (as stated in the previous article). It will also take some time before the SBA is able deliver on their new responsibilities.

The bottom line for the small businesses competing for SBIR awards is to follow the agency's solicitation instructions carefully. The agencies will adopt the new rules when they can, but in many cases it will not be immediate.

There is also the matter of interpretation of the rules, such as the elimination of DoD's "Invitational" phase II solicitations. I've had many companies tell me that they read the PD and they feel they can now apply for a DoD phase II based on their earlier phase I awards (some going back to FY-2009).

Don't bet on it! The DoD will offer guidance as to how they will implement the change, but they have the right to make that change from the present forward, not reaching back to the past. It's always ok to ask, but some are treating this like it is demand to the agencies.

Also, kiss your old SBIR program goodbye. Congress and the SBA (responding to congressional intent), have taken away what was once a relatively simple, fast and elegant way to do awards, by adding layers of complexity to the process, some of which the SBA and the agencies are not in a position to execute. It may get very ugly out there for a while.

Once again, the bottom line is to follow the agency's solicitation instructions because those will follow what the agency is able to manage.

2013 NDAA Conference Report Passed by Congress, Sent to the President

The National Defense Authorization Act for fiscal year 2013 has passed both House and Senate and now awaits the President's signature, expected next week.

This NDAA includes the restoration of the 1% administrative funding for the DoD's Commercialization Readiness Program (CRP) that was inadvertently omitted in last year's NDAA which included the entire reauthorization of SBIR and STTR.

Also included in this NDAA is a host of small business contracting and subcontracting goals and mandates for measuring and meeting those goals. It also includes guidance on what to do with…. cheaters (both big and small). We will include a report on this after the President signs it into law. It is a huge document.

Once again kudos must go to the leaders and staff of the House Armed Services Committee, Buck McKeon (R-CA) chair; Adam Smith (D-WA) ranking member; and the Senate Armed Services Committee, Carl Levin (D-MI) chair; John McCain (R-AZ) ranking member.

2012 SBIR Person of the Year - Kedma Ough

Ms. Kedma Ough (pronounced "Oh"), is the executive director and founder of the not-for-profit MIPO (the Micro-enterprise Inventors Program of Oregon). At a time when states were reluctant to commit resources to host our biannual National SBIR Conferences, along came Ms. Ough, with a vision and goal to bring the Fall 2012 National SBIR/STTR Conference to Portland, Oregon (there hadn't been an SBIR National Conference for a whole year).

Unlike previous state sponsored National SBIR Conferences, this one included some state sponsors in name, but it was Kedma Ough and her MIPO organization that bore the financial risk. With all the drama of the GAO meeting debacle that had federal agencies bailing out of conferences, it was uncertain if any of the federal agency folk would be able to participate. This would have been disastrous.

The safest route financially would have been for her to simply cancel the conference early enough to limit the penalties and loss, but Ms. Ough wouldn't hear of it. She understood the great value this conference would bring to innovative small businesses not only in her state of Oregon, but throughout the nation. She built some backup plans to make sure the small business community would be served.

The National SBIR Conferences are the most important and worthwhile SBIR conferences for beginners and intermediates, a lesson Ough learned three years earlier when she attended her first National Conference in Reno, NV.

Kedma Ough could have taken the easy way out but instead she and her partners/crew delivered an excellent National SBIR Conference under the most difficult of circumstances. The full story is at

Nominations Now Open for 2013 Tibbetts Awards & Hall of Fame

The SBA has now opened to accept nominations for the 2013 Tibbetts Awards and the SBIR Hall of Fame.

The Tibbetts Awards are presented to those small businesses and individuals judged to exemplify the best in the SBIR program. The award is named for Roland Tibbetts, acknowledged as the father of the Small Business Innovation Research (SBIR) program, and is presented to companies and individuals that promote the mission and goals of the SBIR program and Small Business Technology Transfer (STTR):

  • to stimulate technological innovation;
  • to use small business to meet federal research and development needs;
  • to encourage diverse participation in technological innovation; and
  • to increase commercialization of Federal research.

Anyone can nominate a business and/or individual for a Tibbetts Award – including self-nominations. Nomination packages must be submitted through the portal using the "Enter a Submission" tab. Please note, you will need to establish a free account with in order to submit any nominations.

The nomination period will close on January 31, 2013 at 11:00 PM ET. Complete details are available at:

Tibbetts Award:

Hall of Fame:

National Spring SBIR 2013 Conference Set

The Spring 2013 National SBIR/STTR Conference is set for May 14-16 in National Harbor, MD (Washington DC area). This will mark the first time since 2007 that the conference was not hosted by a state or state representative organization.

This National SBIR/STTR Conference is to be collocated with the 2013 TechConnect World and National Innovation Summit and Showcase, to be held at the Gaylord National Hotel & Convention Center.

The TechConnect Conference usually draws about 4,000 people, so rooms will be at a premium.

Back in the late 90's we had some National SBIR Conferences collocated with larger venues, and it worked out well. However, in today's economy, in order to keep the SBIR registration price low, SBIR registration folks cannot participate with the larger conference events.

SBIR registration is set for $375 / $425, while the TechConnect (which allows you to do all conferences) is $675 / $775.

Agenda's are being formulated so there are no SBIR details as yet. The conference web site is at:

The SBIR Coach, Fred Patterson, Passes - Reauthorized in Heaven

Fred Patterson, aka The SBIR Coach passed away November 16, 2012, on his 69th birthday. Fred was an SBIR giant, friend, educator, mentor and fearless combatant in the world of SBIR, but more importantly a beloved father, husband, and a great and caring human being.

Fred has played an important role in SBIR over many years and was in the trenches battling for SBIR reauthorization. Earlier this year Fred was presented with a "Champion of Small Business" award from the Small Business Technology Council (SBTC) and the National Small Business Association (NSBA). He really cherished that.

Fred was a man of faith, and he was made of iron. He spent a good deal of his adult life as a cancer caregiver, losing his first wife to cancer, and later helping his second wife Kay, who was battling terminal ovarian cancer. In October of 2011, while helping Kay, Fred was diagnosed with throat cancer. This was a battle Fred believed he could win. Since we were going through the SBIR reauthorization battle at that time, I suggested to Fred that we start a new campaign, "Reauthorize Fred!" He liked the idea and used it in fun.

On November 3, 2012 Kay passed away and Fred was prepared (as much as anyone can be) for the passing of his wife. However, at this time he encountered some new medical problems and was hospitalized. Fred was confident that he could beat this, and he told folks that he intended to be at the National SBIR Conference in Portland on November 13-15. That was not to be, as Fred slipped into a coma then passed away on November 16.

I was told that the family would keep Fred's postings and tributes on his "Caring Bridge web pages for a while longer. You'll find it at

Fred Patterson leaves a void that will not be filled in our SBIR community. This reminds me of a song I used to play on the big old theatre pipe organs (decades ago), "The Song Has Ended But The Melody Lingers On"

Rest in peace my friend.

Closing Thoughts

That's all for this year. I'm wishing you all a happy and healthy New Year.



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

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