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Key Changes in SBIR and STTR Policy Directives


Set-aside percentages are increased.   For FY 2012, SBA has issued guidelines to the agencies that the set-aside share is increased to 2.6%, prior to the new Policy Directives being issued.  The share will increase by 0.1 percentage point each fiscal year until it reaches 3.2% for fiscal year 2017.  It will remain at that level after that.  For STTR, the set-aside percent was increased to 0.35% for 2012 and 2013, and will increase to 0.4% for 2014 and 2015, and to 0.45% for 2016 and thereafter.  Note that agencies may exceed these minimum percentages. 

Award sizes.   STTR award sizes (guideline amounts) are increased to match SBIR amounts:  $150,000 for  Phase I and $1 million for Phase II.   Awards may not exceed guideline amounts by more than 50% ($225,000 for Phase I and $1.5 million for Phase II).  Agencies must report all awards exceeding the guideline amounts and must receive a special waiver from SBA to exceed the guideline amounts by more than 50%.   

Admin funding pilot.  A new pilot program permitting agencies to use 3% of their SBIR funds for administration of SBIR and STTR programs.  Each agency must submit their plan of work to SBA for approval by 10/1/2012.  The funds should be used to provide added support rather than simply replace the non-SBIR funds formerly used, and the work should focus on material improvements in performance of the program on critical issues (e.g. streamlining the award process).  While the funding comes from the SBIR budget only, it is to be used for administration of both programs. 

Technical assistance.  The amount of SBIR funds permitted to be used for technical assistance is raised from $4000 to $5000 per award per year.  This is to be in addition to the award amount for both Phase I and Phase II.  Awardees may contract this amount to a provider other than the vendor selected by the agency. 


VC-owned firms.  The biggest change in eligibility required by the reauthorization legislation will be allowing firms that are majority-owned by multiple venture capital operating companies (VCOCs), hedge funds and/or private equity firms to receive SBIR and STTR awards.  SBA has published a proposed rule to amend SBIR/STTR size regulations (Federal Register Vol. 77, No. 94, May 15, 2012) to make this change and to make other modifications to the ownership requirements and affiliation rules.  This proposed rule was open for public comment through July 16, 2012.  The SBA is currently reviewing the comments and plans to issue the final rule in early 2013, at which time the changes will become effective.  Until then, the current regulations at 13 C.F.R. §121.702 remain in effect. 

Company Registry.   All applicants will be required to register with the Company Registry Database at at the time of application.  This will become effective when the size regulation final rule is published in the Federal Register (anticipated date is 1/1/2013). 

Cross-program awards.  Agencies have the option to allow STTR Phase I awardee to receive SBIR Phase II award and SBIR Phase I awardee to receive STTR Phase II award.  Implementation is at agency discretion. 

Cross-agency awards.  Clarifies that a Phase I awardee may receive a Phase II award from an agency other than the one that awarded the related Phase I.  Reporting to SBA by both agencies is required. 

Direct to Phase II pilot.  For fiscal years 2012-2017, the NIH, DoD, and Department of Education may issue Phase II SBIR awards to firms to pursue Phase I solicitation topics without requiring the applicant to have received a Phase I award for related work.  Implementation is at agency discretion. 

Open Phase II competition:  Beginning 10/1/2012, agencies must allow all Phase I awardees to apply for a follow-on Phase II award.  Issuing Phase II awards via invitation only will not be permitted.  Agencies will need to include information on the Phase II application process in all Phase I solicitations released on or after 10/1/2012 and notify their Phase I awardees of this change in practice. 

Second Phase II.   Agencies may award a second, sequential, Phase II to continue a Phase II project. 

Commercialization standards for Phase I applicants

Phase I to Phase II Transition Rate:  Beginning  1/1/2013, Phase I applicants that have won prior SBIR/STTR Phase I awards, must meet agency-specific standards for progress towards Phase II.   Proposed benchmark rates will be published in the Federal Register for comment on 10/1/2012. 

Phase II to Phase III Commercialization Rate:  Effective 10/1/2013, Phase I applicants that have previously won SBIR/STTR Phase II awards, will be required to meet agency-specific standard rates of commercialization success from those Phase II awards.   Proposed benchmarks will be published in the Federal Register for comment on 7/1/2013. 

Company commercialization record.  Once the necessary data systems are in place, all applicants will be required, as part of the application process, to provide information on the commercialization of their prior SBIR/STTR awards.  The anticipated date for this to be operational is 10/1/2014. 

Streamlining the award process

The Reauthorization Act requires changes aimed at reducing gaps in time between close of the solicitation and notification of award.   Agencies are to implement these measures as soon as is practicable.  In addition, the Policy Directives include new reporting requirements for the participating agencies to develop data needed to monitor and analyze these time lags. 

Data & Reporting

Central data system.  An improved program-wide data system will be developed to facilitate administrative reporting and program evaluation.  The system will enable applicants and agencies to provide the required information into the Tech-Net database (  Tech-Net will consist of the following databases:  (1) Solicitations Database of all solicitations and topic information from the agencies; (2) Company Registry housing company information on all SBIR applicants including specific information on SBC applicants that are majority-owned by multiple VCOCs, hedge funds and/or private equity firms; (3) Application Information Database of information on each SBIR application; (4) Award Information Database of information on each SBIR awardee; (5) Commercialization Database of SBCs that have received prior SBIR awards; (6) Annual Report Database used to generate the Annual Report that SBA submits to Congress; and (7) Other Reports Database containing information required by statute but not stored in other databases.  These databases will be designed to minimize the reporting burden on small business. 

New measures to guard against fraud, waste, abuse

Company certifications.  Awardee firms must certify they are meeting program requirements not only at the time of award, but also at points during the lifecycle of the award.  Lifecycle certification was recommended by a working group of Inspector Generals.  This does not alter the policy that awardees may complete their SBIR/STTR award even if they no longer meet the definition of an SBC. 

Information systems.  Agencies must:  include on their website, and in each solicitation, a telephone hotline number or web-based method for reporting fraud, waste and abuse; include on the agency’s website successful prosecutions of fraud, waste and abuse in the SBIR Program; designate at least one individual to serve as liaison for the SBIR/STTR Program to the Office of Inspector General (OIG) and the agency’s Suspension and Debarment Official (SDO); and maintain procedures to enforce accountability (e.g., creating templates for referrals to the OIG or SDO).

Increased support for commercialization

Technical assistance.  Amounts increased to $5000, flexibility on use, applies to STTR as well.

Commercialization Readiness Programs.  DoD Commercialization Readiness Pilot is made permanent and includes the STTR program; Commercialization Readiness Pilot programs for civilian agencies are authorized allowing agencies to use up to 10% of SBIR/STTR funds to support commercialization and Phase III efforts.

Phase III preference.  Agencies directed to support SBIR/STTR awardees in their efforts to commercialize SBIR/STTR work through, among other things, Phase III sole-source contracts. 

Implementation Calendar for Changes to SBIR and STTR Policy Directives

Effective date

New program element

Already in effect

SBIR set-aside share = 2.6%,  STTR set-aside share = 0.35%

STTR award guideline amounts raised to same as SBIR

Immediately/with next issued solicitation

150 % cap on award amount

Phase II competitions must be open

Cross-program awards allowed:  SBIR to STTR, STTR to SBIR

Cross-agency awards allowed

Technical assistance amount increased from $4000 to $5000

Immediately/as soon as practical

Shortened timelines for application evaluation and award notification

Commercialization data required from all awardees upon proposal submission

Subcontracting portion of award to Federal laboratory is permitted


SBIR Set-aside share increased to 2.7%

Administrative Pilot Funding available to Agencies

Agencies finalize Fraud, Waste & Abuse language in solicitations/funding agreements, post policies and contact numbers on websites, and implement lifecycle certifications

Agencies publish Phase I – Phase II Transition Rate benchmark in Federal Register – 60-day comment period begins

New reporting requirements


Phase I – Phase II Transition Rate benchmarks effective

Size Rule finalized (expected: 1/1/2013)

Company Registry (version 1.0) registration required for all applicants

New eligibility requirements (re:  ownership and affiliation)


Agencies publish Commercialization Rate benchmarks (Phase II – Phase III) in Federal Register - 60-day comment period begins


Commercialization Rate benchmarks effective

SBIR Set-aside share increased to 2.8%,  STTR set-aside share increased to 0.4%