SBIR Gateway

SBIR Insider Newsletter
March 7, 2011

Dear SBIR Insider,

We have a few important items for your consideration. One is the latest on reauthorization, from both the Senate and House. Another is on the ramifications of a government shutdown that could happen after March 18.

We have 2 critical views on this important subject for you, one from a leading professional on government contracting, the other from a former DoD SBIR program manager. If you're an SBIR/STTR company, you'll want to read this!

In this issue:

Highlights of S.493 – The SBIR/STTR Reauthorization Act of 2011

The Senate is going to mark up their new SBIR reauthorization bill (S. 493) on Wednesday, March 9. This bill is basically the compromise bill that the Senate worked out in the waning hours of last year's congress.

If you want a stable and acceptable SBIR comprise bill to be passed, please consider calling your Senator today and asking them to cosponsor and support S.493, The SBIR/STTR Reauthorization Act of 2011.

You can easily find your Senator's Washington DC phone number by going to and scrolling down to their names. Their phone numbers are clearly listed.

This compromise bill is an updated version of last year's S. 4053 and it retains the Industry support from the SBTC, BIO, U.S. Chamber of Commerce, NFIB, NVCA, and NSBA. The changes are primarily dates and some small technical corrections.

At the time of this writing S.493 is not yet available on Thomas, but it is available (all 112 pages) on the Senate Committee on Small Business and Entrepreneurship web site at:

Basically here are the highlights of the bill:

  • Makes firms majority owned and controlled by multiple venture capital firms eligible for up to 25 percent of the SBIR funds at NIH, NSF, and DoE and up to 15 percent of the funds at the other eight agencies.
  • Reauthorizes the programs for 8 years, retaining Dr. Coburn’s amendment, instead of 14 years as adopted by the Committee.
  • Increases the SBIR program allocation by one percent, from 2.5 to 3.5 percent, at all agencies, spread out over ten years.
  • Increases the STTR program allocation from.3 percent to .6 percent over six years.
  • Allows for up to 3 percent of the SBIR allocation for administrative, oversight and processing costs if there is an allocation increase.
  • Codifies the award guidelines for SBIR and STTR awards from $100,000 to $150,000 for Phase I and from $750,000 to $1 million for Phase II; Allows for a sequential Phase II.
  • Limits award increases to 50 percent ($225,000 for Phase I, $1.5 million for Phase II) to address "jumbo" awards that have greatly exceeded the guidelines for Phase I and Phase II and cut out other small businesses.
  • Annual increases for inflation to keep award levels realistic for r&d costs.
  • Reauthorizes and enhances the Federal and State Technology Partnership program, or FAST program, and the Rural Outreach Program, programs that have been effective in increasing the participation of small business in federal research and development and the start-up of high-tech firms.
  • Streamlines and improves data collection and reporting requirements for the SBIR and STTR programs, including developing metrics for annual evaluations by each participating agency, as reflected in the amendment by Dr. Coburn.
  • For oversight and fraud prevention, mandates amendment of the SBIR/STTR Policy Directives to include specific measures to prevent waste, fraud and abuse; requires inspectors general of participating federal agencies to establish fraud detection measures, coordinate fraud related information sharing between agencies, and provide fraud prevention related education and training to agencies administering the program; and strengthens the SBA’s existing Tech-Net Database to help IGs combat cases of waste, fraud and abuse.

The committee will mark the bill up on Wednesday morning, March 9, and they hope to have it before the full Senate soon thereafter.

The House Small Business Committee's SBIR Plans

The House Small Business Committee under the chairman Sam Graves (R-MO), will be hosting the first of their SBIR hearings sometime mid March (details to be announced soon).

Mr. Graves has indicated that the committee will operate differently than it did in the past under the democratic former chair, Nydia Velazquez (D-NY). Graves started to show that difference immediately when his staff started to reach out to a broader spectrum of the small business community. We'll know more when we see the witness list for their upcoming SBIR hearing.

Graves has showed us that he has significantly more savvy when it comes to outreach than his democratic predecessor, Velazquez. He has a very respectable and improved web site (see ) while Velazquez's continues to be an embarrassment to the democratic party (see

It will be interesting to see if Graves can do a better job of making their hearings available in an improved manner rather than Velazquez's often under-modulated Youtube video highlights.

Graves' committee has a lot of new faces this year and a few returning senior level representatives such as long time SBIR supporter Roscoe Bartlett [R-MD]. We also see the return of former ranking member of the committee, Steve Chabot [R-OH].

Lots of new faces on the other side of the committee lead by ranking member Velazquez. Jason Altmire [D-PA] is one of the few democratic holdovers.

Jurisdiction of the SBIR program is shared with another House committee. The House Committee on Science, Space, and Technology (formerly Committee on Science and Technology) is chaired by Ralph Hall [R-TX] with Eddie Bernice Johnson [D-TX] as ranking member.

The Subcommittee on Technology and Innovation, that has oversight of SBIR, is chaired by Ben Quayle [R-AZ], with David Wu, [D-OR] as ranking member. It is expected that this committee will work closely with the House Small Business Committee on SBIR reauthorization.

A Professionally Informed Opinion of what to do in case of a Gov't Shutdown

[NOTE/Disclaimer: The articles in the SBIR Insider and the SBIR Gateway are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue presented.]

The following information are some notes from one of our SBIR Insider readers who is considered an expert on government contracting items. We thank them very much and hope you will find this helpful:

“The Government shutdown prevents the government from spending any new money. First and foremost, this prevents federal employees from going to work because every hour they spend on the job, they incur new obligations in federal spending for that hour they worked. Therefore, non-essential federal employees go home, and cannot work. Federal contractors are in a very different position. To the extent that federally appropriated funds have been obligated to their contracts (as must be the case on all contracts at the start of the contract), the contractor can and must continue to perform, to the extent possible. That is because funding obligated to the contract has already been spent from the government’s standpoint, and does not represent a new expenditure.

Thus, if funding is available on a contract, the contractor must perform, if it can, or face default. This will probably be true for most SBIR contractors. However, no options, modifications, extensions, or other contract actions can extend the performance past the point where contract funding has been obligated to the contract. That is true for the most part because contracting officers cannot be on the job to award new contracts, modify existing ones, or add additional funding. If a shutdown becomes imminent, and a new contract, modification, option or other action is pending, you may wish to contact your contracting officer and seek immediate action which may not be possible when the shutdown actually occurs.

However, if a contracting officer issues a stop work order on your contract, you must cease performance. Some contracting officers do this and some don’t. You may have some contacts that continue and some that do not. You must follow the orders of your authorized contracting officer (not program officials, however well-meaning they may be). Subcontractors will follow guidance from their prime contractors, who in turn receive orders from their federal contracting officers.

The nuance here, used several times already in this explanation, is “if the contractor can perform.” If access to a federal facility is required for your contract performance, and the facility is closed (a testing facility, for example), and a contracting officer has not issued a stop work order, your contract is then and then only “shut down” and you cannot proceed. However, some facilities are open because “essential personnel” are required to report under the shutdown. If you can gain access to the federal facility to perform your contract, then once again, you have an obligation to proceed until funding runs out, if it does. If all performance can be accomplished in your own facility (research/research and development), and no stop work order has been issued, then proceed.

There are many variations on these principles, but these are the basic ones. Anticipating a shut down and arranging for performance in advance is not a violation of the rules, but rather, prudent. Knowing your rights as well as your obligations in a shutdown is essential.

A Former SBIR Program Manager's View of a Gov't Shutdown

In response to the SBIR Insider's recent article on what to do if a shutdown seems immanent, here's some advice from former Air Force SBIR/STTR program manager, Steve Guilfoos:

"Recommend your clients contact their government Contracting Officer before the government shuts down and have them specifically ask about funding during a shut down – they should NOT wait on a letter telling them to stop work."

"For the AF and most of the DOD, most Phase Is are fully funded and therefore funds are available – just the processing of the invoice may be held up. Phase IIs are usually partially funded year by year and might be in more jeopardy on future funds availability."

NSF Releases FY-2011 (2) SBIR

The National Science Foundation (NSF) has released its FY-2011 SBIR (2) [NSF 11-691] solicitation which will open to receive proposals on May 10, 2011 and close June 10, 2011 (due by 5 p.m. proposer's local time).

This NSF solicitation consists of 4 broad based topics:

  • Biological and Chemical Technologies (BC)
  • Education Applications (EA)
  • Electronics, Information and Communication Technologies (EI)
  • Nanotechnology, Advanced Materials, and Manufacturing (NM)

Although the NSF SBIR program is grants based, they utilize their tried and true FastLane proposal submission system rather than NSF allows proposals of up to $150.000 per topic and allows only 2 proposals per solicitation from any 1 company.

This NSF solicitation is available at

The main NSF SBIR web site is located at:

We promised to have additional coverage on the Waste, Fraud & Abuse (WFA) items, but there are so many time sensitive issues to cover first, we'll have to save the WFA for a later issue.

So far readers seem to be liking the new html format of our letters (about 3 to 1) but we haven't heard from many of you who can't receive html mail. So the jury is still out. Some tell us that the SBIR Insider is now easier to read on handheld devices. Let us know how you feel.



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

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