Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive, 12794-12849 [2019-06129]

Agencies

• SMALL BUSINESS ADMINISTRATION

[Federal Register Volume 84, Number 63 (Tuesday, April 2, 2019)]
[Notices]
[Pages 12794-12849]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06129]



[[Page 12793]]

Vol. 84

Tuesday,

No. 63

April 2, 2019

Part IV





Small Business Administration





-----------------------------------------------------------------------





Small Business Innovation Research Program and Small Business 
Technology Transfer Program Policy Directive; Notice

Federal Register / Vol. 84 , No. 63 / Tuesday, April 2, 2019 / 
Notices

[[Page 12794]]


-----------------------------------------------------------------------

SMALL BUSINESS ADMINISTRATION

RIN 3245-AG64


Small Business Innovation Research Program and Small Business 
Technology Transfer Program Policy Directive

AGENCY: Small Business Administration.

ACTION: Final SBIR and STTR Policy Directives.

-----------------------------------------------------------------------

SUMMARY: This document revises the Small Business Innovation Research 
(SBIR) and Small Business Technology Transfer (STTR) program Policy 
Directives. Specifically, the Small Business Administration combines 
the two directives into one document, clarifies the data rights and 
Phase III preference afforded to SBIR and STTR small business awardees, 
adds definitions relating to data rights, and clarifies the benchmarks 
for progress towards commercialization.

DATES: These revisions to the SBIR/STTR Policy Directive are effective 
on May 2, 2019.

FOR FURTHER INFORMATION CONTACT: Edsel Brown, Assistant Director, 
Office of Innovation, at (202) 401-6365 or [email protected].

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

    The purpose of the Small Business Innovation Research (SBIR) 
program is to stimulate innovation in the US economy by engaging 
innovative small business concerns (SBCs) in Federally-funded research 
and research and development (R/R&D). Similarly, the purpose of the 
Small Business Technology Transfer (STTR) program is to foster 
partnerships of ideas and technologies between innovative SBCs and 
research institutions through Federally-funded R/R&D. Federal agency 
awards to SBCs pursuant to the SBIR program and awards to SBCs for 
cooperative R/R&D efforts with research institutions pursuant to the 
STTR program assist the small business and research communities by 
commercializing innovative technologies.
    Both programs use a phased process, uniform throughout the Federal 
Government, to solicit proposals and award funding agreements for R/R&D 
to meet stated agency needs or missions. To stimulate and foster 
scientific and technological innovation, including increasing 
commercialization of Federal R/R&D, the program follows a three phase 
process: Phase I, Phase II, and Phase III.
    The Small Business Act (the Act) requires that the Small Business 
Administration (SBA) issue a policy directive setting forth guidance to 
the Federal Agencies participating in the SBIR and STTR programs 
(Participating Agencies). The Act provides SBA with broad authority to 
direct Participating Agencies in the administration of the programs. 
The SBIR and STTR (SBIR/STTR) Policy Directives outline how agencies 
must generally conduct their programs. Each agency, however, can tailor 
its program to meet the needs of the individual agency, as long as the 
general principles of the program set forth in the Act and directive 
are followed. Therefore, when incorporating SBIR/STTR policy into 
agency-specific regulations and procedures, Participating Agencies may 
develop and apply processes needed to implement the policy effectively; 
however, no Participating Agency may develop and apply policies, 
directives, or clauses, that contradict, weaken, or conflict with the 
policy as stated in the directive.
    SBA reviews its policy directives regularly to determine areas that 
need updating and further clarification. On November 7, 2014, SBA 
issued an advance notice of policy directive amendments and request for 
comments at 77 FR 66342. In this notice, SBA explained that it intended 
to update the directives on a regular basis and to restructure and 
reorganize the directives, as well as address certain policy issues 
related to SBIR/STTR data rights and issues related to SBIR/STTR Phase 
III work. SBA outlined what it believed were the issues concerning data 
rights and Phase III awards and requested feedback on several questions 
posed. SBA received over thirty comments offering recommendations and 
providing examples of how these issues affect SBIR/STTR companies. 
While the comments varied on the recommendations for specific changes 
they were generally in agreement that the sections of the directives 
relating to data rights and Phase III awards needed further 
clarification.
    On April 7, 2016, SBA issued a notice of proposed policy directive 
amendments and request for comments at 81 FR 20484. In the notice, SBA 
proposed combining the SBIR/STTR directives into one document and 
revising sections of the directive to clarify SBIR/STTR data rights, 
issues related to SBIR/STTR Phase III work, and benchmarks toward 
commercialization. SBA specifically requested feedback on several of 
the proposed amendments, including its clarification of the Federal 
Government's SBIR/STTR data rights in SBIR/STTR Data, as that term is 
defined in the final SBIR/STTR Policy Directive, during an SBIR/STTR 
protection period. More specifically, SBA requested feedback on the 
proposed 12-year length of the protection period, the Federal 
Government's Unlimited Rights in SBIR/STTR Data after the protection 
period, the elimination of the extension of the protection period when 
a subsequent, related SBIR/STTR award is made, the language added to 
Sec.  8 regarding prototypes, and its proposed establishment of a time 
limit of 6 months for SBIR/STTR awardees to correct or add omitted 
markings on SBIR/STTR Data it has delivered. The notice called for a 
60-day comment period, with June 6, 2016, as the deadline for comments. 
In response to a formal request to extend the comment period, SBA 
issued a notice at 81 FR 34426, extending the comment period an 
additional 30 days to July 6, 2016. SBA received a total of 42 comments 
in response to the proposed policy directive amendments, which are 
viewable on Regulations.gov using docket number RIN 3245-AG64.
    The comments supported combining the SBIR and STTR Policy 
Directives and generally supported the proposed clarifications of SBIR/
STTR data rights during the protection period, the clarifications of 
the Phase III preference requirement and process, and the majority of 
other proposed changes. However, several commenters strongly objected 
to the proposed removal of the ability to extend data rights through 
subsequent awards, the proposed 12-year protection period, and to the 
proposal that the Federal Government receives Unlimited Rights in SBIR/
STTR Data after the protection period expires. These objections came 
primarily from the small business community. Commenters pointed out 
that these changes would reduce the incentive for small businesses to 
participate in the program and are antithetical to the small business 
commercialization goals of the programs.
    SBA recognizes that to be efficient and effective at stimulating 
small business innovation, the SBIR/STTR programs must maintain the 
features of the programs that create strong incentives for small 
businesses to participate, and SBA must scrutinize whether changes to 
the SBIR/STTR Policy Directive are consistent with the goals of the 
programs. As a result, SBA is removing these specific proposed changes 
from this amendment and will work closely with the Participating 
Agencies to identify ways to address the related administrative 
concerns discussed in the proposed policy directive in a way that does 
not weaken

[[Page 12795]]

the data rights protection of appropriately marked SBIR/STTR Data.
    Commenters also strongly objected to the inclusion of state program 
funding in the definition of Essentially Equivalent Work, because it 
would be more difficult to complement an SBIR/STTR award with 
additional funds from state programs. SBA recognizes the importance and 
advantage of leveraging SBIR/STTR awards with other sources of funds 
and clarifies that awardees are prohibited from accepting funds from 
multiple public funding sources for the same work; however, SBA 
supports the use of appropriate complementary funding from public 
funding sources for work that is not essentially equivalent.
    In addition, several commenters expressed concern about the 
retroactivity of any revisions to the policy directive, especially as 
they pertain to the length of the protection period, the effective 
extension of data rights through subsequent awards, and the 
Government's rights in SBIR/STTR Data after the protection period. SBA 
recognizes the importance of certainty in these aspects of the 
programs, because they directly impact an awardee's ability to 
commercialize innovations derived from federal R/R&D. As such, SBA does 
not intend to alter the terms or rights associated with any funding 
agreements that pre-date the effective date of this notice.
    With this notice, SBA amends both SBIR/STTR Policy Directives. A 
section-by-section outline of the proposed amendments, comments 
received, and the final adopted approach is provided below.

II. Amendments

1. Section 1--Purpose

    SBA proposed to issue one directive for both programs and that all 
provisions in the directive apply to both the SBIR and STTR programs 
unless specifically noted otherwise. SBA received three comments 
supporting a combined policy directive for the SBIR and STTR programs 
and did not receive any comments in opposition. SBA is adopting this 
proposal and will issue one SBIR/STTR Policy Directive with provisions 
that apply to both programs unless specifically noted otherwise in the 
directive.

2. Section 2--Summary of Statutory Provisions

    In this section, SBA proposed to delete references to prior fiscal 
years that were no longer relevant to the operation of the programs. In 
addition, SBA clarified that agencies must ``obligate'' a certain 
minimum percentage of the agency's total extramural R/R&D obligations 
each fiscal year on awards to small businesses under the programs. This 
amendment responds to recommendations from the United States (U.S.) 
Government Accountability Office (GAO) in a report titled ``Small 
Business Research Programs: More Guidance and Oversight Needed to 
Comply with Spending and Reporting Requirements'' (GAO-14-431, 
available at https://www.gao.gov/assets/670/663909.pdf), that SBA should 
amend its policy directives to clarify the programs' annual spending 
requirements as written in the Act. SBA received one comment in 
opposition to this amendment, explaining that requiring Participating 
Agencies to obligate a certain amount per fiscal year does not 
recognize that some Participating Agencies have authority to 
appropriate funds across multiple fiscal years. In drafting this 
amendment, SBA considered GAO's finding that:

    [a]n agency can carry over funding from one year to the next and 
comply with spending requirements if the agency spends the minimum 
required amount during the fiscal year, regardless of the year the 
funding was appropriated.

    GAO-14-431 (Washington, DC 2014), 12. SBA believes the amendment 
clarifies the programs' annual spending requirement for all 
Participating Agencies, including those with appropriations spanning 
multiple fiscal years. As such, SBA is adopting the amendment as 
proposed.

3. Section 3--Definitions

    SBA proposed to amend and add several terms and definitions that 
relate to SBIR and STTR data rights. When drafting these provisions, 
SBA considered the fact that the SBIR/STTR programs are unique within 
the Federal Government. The broad intent of the programs is to 
stimulate economic growth and development by supporting technological 
innovation through small business. Because funding is allocated by 
specifying a minimum spending requirement as a share of agency R/R&D, 
it also has the goal of meeting the mission needs of the various 
Participating Agencies.
    The purpose of SBIR/STTR data rights is to provide an incentive for 
small businesses to engage in Government-funded innovative research and 
to support its potential commercialization. This incentive comes from 
the prospects for successful commercialization by the innovating small 
business through first-mover advantage, license or sale of the 
Intellectual Property, sale of the business, or sale of its related 
intangible assets (intellectual capital, knowledge, innovation 
capacities). Legislative history of the Small Business Research and 
Development Enhancement Act of 1992 stated:

    Section 4(e) of the bill directs SBA to modify its policy 
directives so as to protect small companies in three areas. The 
first of these is data rights. The bill directs SBA to extend an 
SBIR awardee's rights to data generated in the performance of its 
project to 4 years (as opposed to 2 years in current law). This 
provision grows out of the Committee's concern that small businesses 
capable of producing top quality research might be reluctant to 
participate in the program if they fear losing control over their 
ideas.

H.R. Rep. No. 554(I), 102nd Cong., 2nd Sess. 1992, 24 (emphasis added). 
Further, legislative history of the STTR program states the following 
with respect to data rights:

    Lastly, of the major provisions included in this legislation, S. 
856 strengthens the data rights protection for companies and 
research institutions that conduct STTR projects. The change in data 
rights is important because it clarifies that STTR companies, like 
SBIR companies, retain the data rights to their technology through 
all phases of an STTR project. Some agencies have been interpreting 
the law to mean that STTR companies only retain their data rights 
through phases I and II. This clarification helps protect STTR 
companies from losing control of their research so that they have a 
greater chance of commercializing their technology themselves. This 
clarification is important because the Committee has learned that 
some agencies are providing the data to bigger contractors for 
development, thereby cutting out the small business. This 
unfortunate situation not only robs small businesses of revenues, 
but it also results in expensive legal costs for small businesses to 
protect their data rights.

S. Rep. No. 54, 107th Cong., 1st Sess. 2001 (emphasis added). Thus, 
SBIR and STTR data rights give value to the work performed and thereby 
form an essential element of the incentive to participate in the SBIR/
STTR programs and the impact of these programs.
    The Act specifically directs SBA to issue directives to the 
Participating Agencies that provide for the retention by the SBC of 
rights in data generated in the performance of an SBIR or STTR award. 
See 15 U.S.C. 638(j)(1)(v) (``retention of rights in data generated in 
the performance of the contract by the small business concern;''). It 
also states that these rights should be provided for a minimum of four 
years. See 15 U.S.C. 638(j)(2)(A) and 638(p)(2)(B)(v) (``retention by a 
small business concern of the rights to data generated by the concern 
in the performance of an [SBIR or STTR] award for a period of not less 
than 4 years;''). The purpose of these statutory provisions is to 
ensure that the

[[Page 12796]]

SBC retains the rights to the data, and that the small business' data 
rights apply to all phases of the program.
    In accordance with the Act, the SBIR/STTR Policy Directives 
currently explain that the SBC owns the data generated under the award, 
and that the Government has an obligation to protect the data from 
disclosure for at least four years. SBA recognizes that agencies with 
procurement and acquisition programs may face an apparent conflict 
between the longer term economic development goals of the programs, 
which depend on the ability of the participating small business to 
realize the commercial benefits from its new technology, and the 
shorter term procurement interests of the agency that focus on 
acquiring the technology from the SBC at a reasonable cost and 
controlling its development and application. In light of this potential 
conflict at the agency level, SBA must ensure that agency practices 
related to their acquisition programs do not weaken or undermine the 
effectiveness of the program at stimulating innovation and economic 
development through small business. At the same time, SBA recognizes 
the mutual benefits involved in administering the programs within the 
existing structures of the procurement agencies and has incorporated 
mechanisms to manage these conflicting interests. The Act requires that 
SBA establish sufficient provisions in the SBIR/STTR Policy Directive 
to ensure that SBCs retain rights in the data generated during an SBIR/
STTR award.
    SBA's proposed amendments were based on a review of the statute, 
legislative history and current directives, expertise and experience at 
the funding agencies, and comments received from the public. SBA 
proposed to update and define several new terms relating to data 
rights, including the following: Computer Database, Computer Programs, 
Computer Software, Computer Software Documentation, Data, Form Fit and 
Function Data, Operations Maintenance Installation or Training (OMIT) 
Data, Prototype, SBIR/STTR Computer Software Rights, SBIR/STTR Data, 
SBIR/STTR Data Rights, SBIR/STTR Protection Period, SBIR/STTR Technical 
Data Rights, Technical Data, and Unlimited Rights. SBA has based these 
definitions, to the extent practicable, on definitions used in the 
Federal Acquisition Regulations (FAR) and the Defense Federal 
Acquisition Regulations Supplement (DFARS).
    With respect to specific definitions, SBA proposed to clarify the 
definition of the term SBIR/STTR Data by explaining that it includes 
all data developed or generated in the performance of an SBIR/STTR 
award, including Technical Data and Computer Software. SBA notes that 
the definition of SBIR/STTR Data in the proposed policy directive 
contained the term ``appropriately marked.'' This term was 
inadvertently and mistakenly included in the definition. SBIR/STTR Data 
is all data generated and developed in the performance of an SBIR/STTR 
award. The appropriate marking of such data, when delivered to the 
Government, provides the Government with SBIR/STTR Data Rights and 
obligates the Government to protect the data as SBIR/STTR Data, but it 
does not define the data as SBIR/STTR Data. SBA has corrected this 
unintentional error by removing ``appropriately marked'' from the 
definition of SBIR/STTR Data. SBA received one comment related to this 
definition, which supported the inclusion of Technical Data and 
Computer Software in the definition. As a result, SBA is adopting a 
revised definition of SBIR/STTR Data, which removes ``appropriately 
marked'' from the proposed definition.
    SBA proposed a new definition for Intellectual Property that 
removed references to ``ideas,'' ``know-how,'' ``business,'' 
``technical and research methods,'' ``other types of intangible 
business assets,'' ``all types of intangible assets either proposed or 
generated by an SBC as a result of its participation in the SBIR 
program,'' ``designs,'' and ``SBIR technical data.'' Two commenters 
objected to the proposed definition of this term, arguing that it 
unnecessarily narrows the scope of an awardee's intellectual property. 
The proposed definition contains a list of traditional intellectual 
property: Patents, copyrights, trade secrets, and mask works. SBA notes 
that this is not an exclusive list and although the current definition 
contains concepts such as ``ideas'' and ``business,'' these are not 
typically recognized as intellectual property. SBA is adopting its 
proposed definition of Intellectual Property.
    SBA proposed a definition of Unlimited Rights that included the 
right to access data that is subject to Unlimited Rights. One commenter 
objected to the inclusion of this right, as it is not included in the 
current definition of Unlimited Rights as found in the SBIR clauses of 
the FAR and DFARS. The commenter expressed concern that including a new 
right to access was an unnecessary expansion of the current definition 
and instead suggested that SBA adopt the current DFARS definition of 
Unlimited Rights. SBA agrees that it is unnecessary to include access 
at this time. The definition of Unlimited Rights is meant to reflect a 
combination of the elements found in both the FAR and DFARS definition 
of that term. As such, SBA is deleting reference to ``access'' in this 
definition and adopting the rest of the definition as proposed.
    With respect to prototypes, SBA proposed to amend the definition of 
the term Prototype to include any model, in any type of form, which is 
at any stage in development. SBA also proposed to clarify that the 
release of a prototype, other than Computer Software, to another 
concern, which may enable the that concern to disassemble the prototype 
and glean the protected data, is contrary to the purpose and intent of 
the Act, and the implementing SBIR/STTR Policy Directive. The release 
of a prototype during the protection period may provide other concerns 
with the Technical Data to enable them to commercialize the product and 
harm the SBC's ability to benefit from the technology. To address this 
concern, SBA proposed to add language to Sec.  8 of the SBIR/STTR 
Policy Directive, notifying agencies of the potential impact of use or 
release during the protection period of a prototype developed under an 
SBIR/STTR award and requesting that agencies monitor the release and 
use of such prototypes.
    SBA received three comments related to the proposed definition of 
Prototype and the clarifying language proposed for the protection of 
Prototypes in Sec.  8 of the Policy Directive. Two commenters supported 
the proposed definition and clarification, and one commenter opposed 
the inclusion of ``computer program embedded in hardware'' in the 
definition. The commenter that opposed the definition noted that 
embedded software is already protected by SBIR/STTR Computer Software 
Rights and thus specifying its inclusion in the definition of prototype 
is confusing. Computer Software that is developed through an SBIR/STTR 
award is protected data, even when embedded in a prototype. The 
definition of prototype has historically caused confusion among small 
businesses and agencies, and therefore SBA is adopting the definition 
of Prototype, as proposed, because it clarifies that such data embedded 
within a prototype may receive protection as SBIR/STTR Data.
    SBA also received a question regarding the proper method for 
marking a prototype so that it is subject to SBIR/STTR Data Rights. SBA 
notes that the awardee is responsible for appropriately marking the 
SBIR/STTR Data contained within the prototype in order to receive SBIR/
STTR data rights

[[Page 12797]]

protection in that data consistent with how it marks any other form of 
SBIR/STTR Data that is not contained within a prototype.
    In Sec.  3, SBA also proposed to clarify the data rights afforded 
the SBC and the Federal Government in the revised definitions of SBIR/
STTR Technical Data Rights, SBIR/STTR Computer Software Rights, 
Unlimited Rights, SBIR/STTR Protection Period, SBIR/STTR Data Rights, 
and SBIR/STTR Data. The current directives state that the SBC retains 
the rights in data for a minimum of 4 years from the date of the last 
deliverable. This protection period (referred to as the ``SBIR/STTR 
Protection Period'') is extended with each subsequent, related, SBIR or 
STTR award. The current directives provide that the Government may not 
use, modify, reproduce, release, perform, display, or disclose Data or 
Computer Software for a minimum of 4 years. After expiration of the 
SBIR/STTR Protection Period, the Government has a royalty-free license 
to use, and to authorize others to use on its behalf, these data for 
Government purposes, and is relieved of all disclosure prohibitions and 
assumes no liability for unauthorized use of these data by third 
parties.
    As currently written, it would appear from the policy directives 
that the Federal Government cannot use the data for any purpose during 
the protection period and then, once the protection period expires, may 
use the data for Government purposes. The SBA does not intend for the 
Federal Government to have no use of this data during the protection 
period; rather, it is intended that the Government have limited rights 
to use the data so that agencies can effectively evaluate the 
technology and administer their programs.
    In clarifying the data rights protections, the SBA reviewed the FAR 
and DFARS, which outline distinct rights the Government generally 
receives when acquiring goods and services: Unlimited rights, limited 
rights and specifically negotiated rights (FAR) or Government purpose 
rights (DFARS). Pursuant to the FAR, with unlimited rights, the 
Government receives rights as the name implies--unlimited use of the 
data, whether for Government or commercial purposes. With respect to 
limited rights for data other than computer software and restricted 
rights for computer software, the FAR provides that the Government 
receives the right to use the data or computer software for internal 
purposes only and is limited as to when third parties, including 
support service contractors, can access and use the data. With respect 
to Government purpose rights, the DFARS provides that the Federal 
Government receives the right to use the data for Government purposes, 
such as for manufacturing for Government purposes. In such cases, the 
Government can allow third parties to have access to the data to 
manufacture for Government purposes; however, the third party must sign 
a non-disclosure agreement and cannot use the data for its own 
(commercial) purposes. SBA proposed that the Federal Government 
receives what is referred to as SBIR/STTR Technical Data Rights to 
Technical Data and other Data that are not Computer Software, and SBIR/
STTR Computer Software Rights to Computer Software during the SBIR/STTR 
Protection Period. These limited rights are intended and designed to be 
similar to the rights set forth in the FAR and DFARS for Data developed 
exclusively at private expense. This approach is appropriate for SBIR/
STTR Data, as the goal of the program is to advance the 
commercialization efforts of the awardees, and thus SBA sought to 
provide rights in data that are comparable to the highest level of data 
rights protection provided by the Government to contractors. There are 
differences between how the FAR and DFARS define the Government's 
rights in data developed exclusively at private expense. As a result, 
the definitions of SBIR/STTR Computer Software Rights and SBIR/STTR 
Technical Data are not exact copies of the Limited Rights Notice or 
Restricted Rights Notice provided in FAR 52.227-14 or the Limited 
Rights and Restricted Rights in DFARS 252.227-7013 and 7014. SBA uses 
single definitions that will apply to both civilian and defense 
agencies participating in the programs. The definitions are intended to 
reflect the main elements of the FAR and DFARS definitions of the 
Government's rights in data developed exclusively at private expense, 
including restrictions on the rights to release and disclose that data, 
with the aim to encourage the awardee's pursuit and achievement of 
commercialization.
    SBA worked closely with agency experts in developing terminology to 
appropriately describe the limited rights assigned to Technical Data 
and Computer Software. The section of the FAR related to SBIR data 
rights (FAR 52.227-20) does not use specific terms to describe the 
limited rights assigned to SBIR Data, while the DFARS (252.227-7018) 
uses the terminology Limited Rights and Restricted Rights.
    The SBA intends that the Government retain a right to use SBIR/STTR 
Data during the protection period for non-commercial purposes and for 
project evaluation and assessment. SBA does not intend for the 
Government's internal use of SBIR/STTR Data to interfere with, weaken, 
or undermine the rights or interests of the SBC in this data. 
Consequently, the SBA proposed that during the SBIR/STTR Protection 
Period, the Government is permitted some limited, or restricted, rights 
to use the data.
    SBA received three comments that opposed the proposed definitions 
of SBIR/STTR Technical Data Rights and SBIR/STTR Computer Software 
Rights and three commenters that supported these definitions. Those in 
opposition expressed concerns that the proposed definitions of SBIR/
STTR Technical Data Rights and SBIR/STTR Computer Software Rights would 
permit the Government to release SBIR/STTR technology or other 
proprietary data to other concerns during the SBIR/STTR Protection 
Period. According to the comments, this may harm the SBC's ability to 
commercialize the technology and benefit from it. SBA intended and 
designed these rights to be similar to the rights set forth in the FAR 
and DFARS for data developed exclusively at private expense, with an 
aim to encourage the awardee's pursuit and achievement of 
commercialization.
    Under the proposed definitions, the Government retains a right to 
use SBIR/STTR Data during the protection period for non-commercial 
purposes and for project evaluation and assessment. Because these 
rights in data are comparable to the highest level of data rights 
protection by the Government, SBA does not believe these rights 
interfere with, weaken, or undermine the rights or interests of the SBC 
in SBIR/STTR Data. Furthermore, and specifically in response to the 
comments, these rights do not permit the Government to release 
appropriately marked SBIR/STTR Data to another concern during the 
protection period for purposes of a competitive Federal procurement or 
to advance the other concern's commercialization goals.
    One commenter expressed concern that the proposed definition of 
SBIR/STTR Computer Software Rights provides SBCs with rights beyond 
what is necessary to protect computer software developed under an SBIR/
STTR funding agreement. According to the commenter, the proposed 
definition may inadvertently limit broad areas of technology 
development, because there is no prescribed method for understanding 
computer software as it relates to commercialization, manufacturing, or 
procurement purposes. In addition, one commenter

[[Page 12798]]

believed that the proposed definition of SBIR/STTR Computer Software 
Rights contradicts itself. Specifically, this commenter stated that the 
Government's proposed right to modify, adapt, or combine Computer 
Software is inconsistent with paragraph (2) of the proposed definition, 
which provides that the Government shall not release, disclose, or 
permit access to SBIR/STTR Data that is Computer Software for 
commercial, manufacturing, or procurement purposes without the written 
permission of the awardee. SBA believes that the proposed definition of 
SBIR/STTR Computer Software Rights addresses these concerns. The 
proposed definition of SBIR/STTR Computer Software Rights clarifies 
that during the protection period, the Government is permitted some 
limited, or restricted, rights to use the data for non-commercial 
purposes and for project evaluation and assessment. As a result, SBA is 
adopting its proposed definitions of SBIR/STTR Computer Software Rights 
and SBIR/STTR Technical Data Rights.
    SBA received a comment objecting to the proposed definition of 
Form, Fit, and Function Data. The commenter noted that the proposed 
definition of Form, Fit, and Function Data is broader than the current 
definition in the DFARS, because it includes computer software, whereas 
the current DFARS definition only applies to Technical Data. SBA notes 
that the current FAR definition of Form, Fit, and Function Data 
includes computer software and that the DFARS has proposed a similar 
definition to apply to computer software, which has not yet been 
adopted, at 81 FR 39481 (June 16, 2016). The commenter expressed 
concern that SBA is expanding the Government's rights to data in which 
it does not currently have Unlimited Rights. The proposed definition of 
Form, Fit, and Function Data establishes a more predictable and 
congruous approach for all Participating Agencies and SBIR/STTR 
awardees that combines the key elements of Form, Fit, and Function Data 
as defined in both the FAR and DFARS. In light of this goal, as well as 
the pending proposed definition of Form, Fit, and Function Data in the 
DFARS and the current FAR definition of this term, SBA is adopting the 
proposed definition of Form, Fit, and Function Data.
    SBA received one comment objecting to the proposed definition of 
OMIT Data. The commenter explained that the proposed definition 
broadens the current definition in the FAR, because it includes 
computer software, whereas the current FAR definition excludes 
restricted computer software. According to the commenter, SBA's 
proposed definition notably expands the Government's rights to data in 
which it does not currently have Unlimited Rights. In addition, the 
commenter believes that the proposed definition will create uncertainty 
because it does not specify which types of computer software qualify as 
OMIT Data. The proposed definition of OMIT Data furthers the stated 
goal of establishing a more predictable and congruous approach to data 
rights across all Participating Agencies and SBIR/STTR awardees. 
Currently, the DFARS versions of the SBIR data rights clause provides 
the Government with Unlimited Rights in data generated under the award 
that are necessary for the installation, operation, maintenance, or 
training purposes (other than detailed manufacturing or process data). 
In addition, SBA believes that the proposed definition of OMIT Data 
sufficiently specifies which types of data, including computer software 
data, qualify as OMIT Data. Thus, SBA is adopting the proposed 
definition of OMIT Data.
    SBA received two comments objecting to the exclusion of Form, Fit 
and Function Data and OMIT Data from the definition of SBIR/STTR Data. 
The commenters note that excluding these types of data from the 
protection afforded SBIR/STTR Data is not consistent with SBA's concern 
regarding the disclosure of technical information contained within an 
SBIR/STTR developed prototype. Any appropriately marked data within a 
prototype receives protection under the proposed definition of SBIR/
STTR Technical Data Rights or SBIR/STTR Computer Software Rights. SBA 
proposed that the Government receives Unlimited Rights in Form, Fit, 
and Function data, and OMIT data, consistent with how the FAR (52.227-
14(b)(1)) and DFARS (252.227-7013(b)(1) and 252.227-7014(b)(1)) 
currently treat these types of data when associated with data developed 
exclusively at private expense. Additionally, the current FAR SBIR data 
rights clause (52.227-20(b)(1)) and DFARS SBIR data rights clause 
(252.227-7018(b)(1)) both provide the Government with unlimited rights 
in Form, Fit, and Function data. As a result, SBA is adopting, as 
proposed, the definition of SBIR/STTR Data.
    The proposed definition of SBIR/STTR Data Rights contains three 
principal policy approaches: (1) The elimination of the extension of 
SBIR/STTR Data Rights for data referenced in subsequent awards; (2) a 
finite protection period; and, (3) the Government receives Unlimited 
Rights in SBIR/STTR Data after the end of the protection period. SBA 
proposed to remove the provision in the directive that allows a 
subsequent SBIR/STTR award to effectively extend the protection period 
of a related, prior award, and replace it with a finite, but longer, 
minimum protection period. SBA noted in the proposed policy directive 
that the current policy of allowing extensions or resumption of data 
rights protection under subsequent SBIR/STTR awards creates an 
administrative challenge, because it is difficult for agencies to 
determine, prior to the disclosure of SBIR/STTR Data, whether that data 
is protected under a subsequent SBIR/STTR award. SBA had therefore 
proposed to remove the ability to extend or resume data rights 
protections for SBIR/STTR Data that is referenced in subsequent SBIR/
STTR awards. In conjunction with, and closely related to this proposed 
change in policy, SBA proposed to lengthen the SBIR/STTR Protection 
Period to a minimum of 12 years and provide the Government with 
Unlimited Rights after the expiration of the protection period.
    The comments received overwhelmingly opposed the proposed longer 
minimum protection period, the proposed removal of the extension or 
resumption of data rights protection, and the proposed provision of 
Unlimited Rights after the expiration of the protection period. 
Commenters noted that the current policies regarding the protection 
period, continuous data rights protection for SBIR/STTR Data developed 
under previous awards, and the Federal Government's right to use data 
for Government purposes after the protection period, are a necessary 
incentive for small business participation in the programs and are a 
critical incentive for funding officers to make subsequent awards to 
the small business that developed the technology. If SBIR/STTR Data 
developed under a Phase I or Phase II award cannot be protected under a 
subsequent Phase II or Phase III award executed after the proposed 12-
year protection period, a contracting officer could give that data to 
another concern or large business for the non-Government entity's 
commercialization, because SBA proposed that the Government receive 
Unlimited Rights in the SBIR/STTR Data after the protection period. SBA 
does not intend for small businesses to lose these primary incentives 
for participation in the program nor to eliminate the incentives for 
subsequent Phase II and Phase III awards to be made

[[Page 12799]]

to the small business that developed the technology.
    SBA proposed to eliminate the extension of SBIR/STTR Data Rights 
due to the administrative burden on agencies of identifying subsequent 
SBIR/STTR awards. One commenter expressed concern that SBA's proposal 
does not provide sufficient guidance as to whether SBIR/STTR Data 
developed under prior funding agreements would continue to receive 
protection beyond the proposed 12-year protection period if it had been 
developed into a new form. Additionally, one commenter noted that the 
related proposed change in the protection period would create a new 
administrative burden on agencies by requiring them to keep track of 
which SBIR/STTR Data were under the old policy and which were under the 
proposed policy. Commenters also noted that the administrative burden 
of tracking awards is an insufficient rationale to eliminate a policy 
that has been fundamental to small business participation in the 
programs. Furthermore, commenters suggested that the Government create 
a database to track all awards so that funding agreement officers could 
more easily determine which agencies have made SBIR/STTR awards and 
whether the data created pursuant to those awards is still within the 
protection period. Commenters noted that if agencies were unable to 
determine this information they should simply ask the prospective 
awardee whether it has received other SBIR/STTR awards or Phase III 
work. The prospective awardee has no incentive to obscure or misguide 
the agency regarding its award information, which may form the basis 
for the SBC to receive continued data rights protection of earlier 
developed and appropriately marked SBIR/STTR Data.
    Similarly, commenters strongly objected to the proposed 12-year 
protection period, which was proposed to compensate for the removal of 
the ability to protect SBIR/STTR Data under subsequent awards. 
Commenters noted that the proposed protection period was not long 
enough if the provision that effectively extends protection through 
subsequent awards is removed. Several commenters suggested that if SBA 
adopted Unlimited Rights at the expiration of the protection period, 
that such period be at least 20 years to cover the timeframe necessary 
for many technologies to be commercialized and to mirror the length of 
the patent protection period.
    In response to these comments and after further careful 
consideration of the issues, SBA has rejected two of these three 
elements of the proposed SBIR/STTR Data Rights definition. 
Specifically, SBA has rejected the proposed 12-year protection period 
and the proposed Unlimited Rights at the expiration of the protection 
period. SBA has decided, consistent with the proposed changes, to 
eliminate data rights extensions for appropriately marked SBIR/STTR 
Data referenced in subsequent awards. This decision was made based on 
several factors: (1) SBA's adoption of a considerably longer protection 
period than was proposed; (2) administrative ease for agencies and 
small business concerns to track the protection period; and (3) a 
greater alignment with the Government's protection period afforded to 
other forms of intellectual property.
    SBA notes that maintaining the ability to extend the data rights 
and the minimum 4-year protection period are current policies that have 
been in place for over a decade and that many commenters supported 
maintaining these current policies. These commenters emphasized that 
the continuous protection of an awardee's SBIR/STTR Data while actively 
pursuing or commercializing its technology with the Federal Government, 
provides a significant incentive for innovative small businesses to 
participate in these programs. A set timeframe for data rights 
protection, such as the proposed twelve years, creates a firm deadline 
on when a technology must reach commercialization to ensure protection 
of its data rights during that period. As such, SBA is challenged to 
determine the appropriate timeframe to cover a reasonable 
commercialization period for every type of technology developed in the 
SBIR/STTR programs. The timeframe necessary for computer software 
commercialization, for example, varies significantly from the timeframe 
necessary for airline engine technology commercialization. It may be a 
loss to the taxpayer if such technologies are protected longer than 
necessary and a loss to the small business if such technologies are 
protected for an insufficient period of time.
    SBA is adopting a 20-year protection period for appropriately 
marked SBIR/STTR Data and SBA intends that this much longer, finite 
protection period, even with the elimination of extensions to such 
period, will preserve the incentives for small business concerns to 
participate in the SBIR/STTR programs. SBA considered the comments 
submitted from small business concerns, advocacy groups, and 
participating agencies. Most small business concerns and advocacy 
groups commented that the proposed 12-year protection period was 
insufficient to cover development for particular technologies, 
especially given the proposed elimination of continuous data rights 
extensions. Several of these commenters suggested a 20-year protection 
period as an alternative to the proposed 12-year protection period. SBA 
is confident that 20 years will be sufficient to provide data rights 
protection during the entire development and commercialization process 
for most technologies in most industries that participate in the SBIR/
STTR programs. Additionally, the adoption of a 20-year protection 
period provides greater consistency with the 20-year protection period 
that the Government provides for patents issued by the U.S. Patent and 
Trademark Office. A 20-year protection period combined with the 
elimination of future extensions to SBIR/STTR data rights protection 
satisfies concerns raised by both small businesses and agencies 
regarding the administration and effectiveness of the SBIR/STTR 
program's data rights provisions. These changes are adopted: (1) In 
response to the comments received; (2) to maintain the primary 
incentives for small business participation in the programs; and, (3) 
to be consistent with the programs' statutory purpose to ``assist 
small-business concerns to obtain the benefits of research and 
development performed under Government contracts or at Government 
expense.'' 15 U.S.C. 638(b)(2).
    SBA acknowledges that it is challenging for the Participating 
Agencies to determine whether a Phase I or Phase II awardee has 
received subsequent Phase III work that requires an extension of their 
data rights protection. To remedy this challenge, SBA proposed the 
elimination of perpetual extensions in SBIR/STTR data rights 
protection. While many commenters opposed this change, given the 
proposed 12-year protection period, SBA is confident that by extending 
the protection period to 20 years, most small business concerns may 
achieve commercialization in that timeframe without the threat of a 
Government release or disclosure of SBIR/STTR Data to competitors. SBA 
is also clarifying that the protection period starts from the date of 
award, which has always been SBA's interpretation of its data rights 
policy, however, this is unclear in the current PD, which states that 
protection starts from the date of delivery of the last deliverable 
under an SBIR/STTR Award. This clarification will allow agencies and 
SBCs to know with

[[Page 12800]]

certainty, at the start of a Funding Agreement, the exact length of the 
SBIR/STTR Protection Period and can mark such data accordingly.
    SBA had also proposed to change the Government's rights in SBIR/
STTR Data after the SBIR/STTR Protection Period expires. Currently, the 
data rights clause contained in the directive allows the Government to 
use SBIR/STTR Data after the protection period ``for Government 
purposes.'' SBA noted that the term ``Government purpose'' is not 
defined in the policy directive or FAR and therefore proposed to grant 
the Government Unlimited Rights in SBIR/STTR Data after the protection 
period has expired. Many of the public comments strongly objected to 
this change arguing that it could be damaging to the small business 
awardees and possibly to the U.S. economy and U.S. competitiveness for 
SBIR/STTR Data to be made globally available, with no restrictions, 
after the protection period has ended. One commenter also noted the 
concern that providing Unlimited Rights after the 12-year protection 
period may eliminate an awardee's copyright protection in computer 
software that would otherwise extend beyond the 12-year protection 
period. According to the commenter, FAR Part 27 generally permits 
awardees to claim copyright protection in computer software and gives 
the Government broad rights in the software, except the right to 
publicly distribute. If the Government receives Unlimited Rights in 
computer software after the 12-year protection period, it would obtain 
a right to sublicense software to the private sector that is otherwise 
disallowed under the FAR.
    SBA agrees with these comments and, in response to these concerns, 
rejects this proposed change. We agree with the commenters that 
restricting the Government to retaining Government purpose rights after 
the protection period expires provides an important incentive for the 
small businesses participating in the programs and furthers the program 
purposes of increasing small business commercialization of innovative 
technology. SBA agrees that providing the Government with Unlimited 
Rights after the protection period would not prohibit the release of 
such data to international concerns of an SBIR/STTR awardee for 
commercialization purposes. SBA also understands the concern raised by 
several commenters regarding the variation in the length of time 
necessary to develop certain technologies. Commenters noted that 
medical and pharmaceutical technologies can take well over 12 years to 
develop and that it is critical to have a limitation on the 
Government's ability to release or disclose its data during that 
timeframe. In response, SBA is adopting a 20-year protection period, 
and will restrict the Government's use of that data after the 
protection period expires to Government purposes.
    SBA noted in the proposed policy directive, the data rights clause, 
as currently written, limits the Government's use and disclosure of 
SBIR/STTR Data after the protection period to Government use. The terms 
``Government use'' and ``Government purpose'' are not defined in the 
directive or the FAR. While Government purpose is defined in the DFARS 
as essentially a non-commercial use for a Government purpose, the DFARS 
does not currently grant Government purpose rights in SBIR/STTR Data, 
either during or after the protection period. Several commenters 
recommended that SBA adopt the DFARS definition of Government purpose 
instead of the proposed Unlimited Rights or the current undefined 
``Government use.'' Commenters argued that this would provide clarity 
on the scope of the Government's rights, which are currently lacking in 
the policy directive, while appropriately limiting those rights to 
Government purposes.
    SBA agrees with the commenters that the DFARS definition provides a 
limitation on the Government's use of SBIR/STTR Data after the 
protection period has expired and that this limitation supports small 
businesses' ability to continue commercialization efforts while 
providing the Government with greater rights to use the data. SBA notes 
that these rights include the ability of the Government to release the 
data to third-parties, subject to a non-disclosure agreement, for 
Federal Government manufacture or procurement. However, such releases 
do not allow for commercial use by third-party recipients of such data. 
SBA adopts the Government Purpose definition, as found at DFARS, to 
define the Federal Government's rights in appropriately marked SBIR/
STTR Data after the protection period expires.
    SBA notes that the U.S. Department of Energy (DOE) raised 
significant concerns that Government purpose, as defined in the DFARS, 
is too restrictive for DOE awards, given its unique statutory mandate 
and mission. DOE currently interprets ``Government use'' and 
``Government purpose'' as undefined in the SBIR/STTR Policy Directives, 
to permit its open publication of SBIR/STTR Data once the protection 
period expires. This interpretation of ``Government use'' and 
``Government purpose'' is more analogous with Unlimited Rights, which 
permits the open disclosure and publication of SBIR/STTR Data for any 
purpose. DOE argues that this practice is appropriate and necessary due 
to its statutory authority and mandate to disclose scientific and 
technical information, and therefore its release and disclosure of 
SBIR/STTR Data generated under SBIR/STTR awards issued by DOE are 
subject to Unlimited Rights after the expiration of the protection 
period. In support of this exception to the general rule regarding the 
Government's rights in SBIR/STTR Data after the protection period, DOE 
provided detailed information about the statutory authorities that are 
the foundation of its research and development practices and policies. 
DOE notes that the Atomic Energy Act of 1954, Public Law 83-703, 42 
U.S.C. 2013(b), authorizes DOE to effectuate policies by providing ``a 
program for the dissemination of unclassified scientific and technical 
information and for the control, dissemination, and declassification of 
Restricted Data, subject to appropriate safeguards, so as to encourage 
scientific and industrial progress.''
    DOE argues that this concept was reinforced by the Energy 
Reorganization Act of 1974 (ERA), Public Law 93-438, which directed the 
DOE to enter arrangements, including for the conduct of research and 
development activities as long as such arrangements wouldn't prevent 
the dissemination of scientific or technical information. The ERA at 42 
U.S.C. 5813(7), states that DOE is responsible for ``creating and 
encouraging the development of general information to the public on all 
energy conservation technologies and energy sources as they become 
available for general use, and the Administrator . . . shall, to the 
extent practicable, disseminate such information through the use of 
mass communications.'' The ERA also authorizes DOE to ``make 
arrangements (including contracts, agreements, and loans) for the 
conduct of research and development activities with private or public 
institutions or persons, including participation in joint or 
cooperative projects of a research, developmental, or experimental 
nature . . .'', however, ``the Administrator shall disseminate 
scientific, technical, and practical information acquired pursuant to 
this title through information programs and other appropriate means, 
and shall encourage the dissemination of scientific, technical, and 
practical information relating to energy so as to enlarge the

[[Page 12801]]

fund of such information and to provide that free interchange of ideas 
and criticism which is essential to scientific and industrial progress 
and public understanding.'' 42 U.S.C. 5817(a) and (e).
    DOE also points to the Department of Energy Organization Act of 
1977 (DEOA), which states that DOE's mission is ``[t]o carry out the 
planning, coordination, support, and management of a balanced and 
comprehensive energy research and development program,'' including 
``disseminating information resulting from such programs, including 
disseminating information on the commercial feasibility and use of 
energy from fossil, nuclear, solar, geothermal, and other energy 
technologies'' (42 U.S.C. 7112(5)). DOE argues that under the DEOA it 
became responsible for establishing and maintaining ``a central source 
of information on all energy resources and technology in furtherance of 
the research, development, and demonstration mission'' of DOE (42 
U.S.C. 5916). This information maintained by DOE shall be made 
available to the public, except for trade secrets or other proprietary 
information of another. Id.
    SBA notes that the Government purpose definition in the DFARS, as 
adopted in the SBIR/STTR Policy Directive, does not permit an agency's 
open publication of appropriately marked SBIR/STTR Data after the 
protection period. SBA understands the concerns raised by DOE on this 
point and provides an exception that exclusively applies to DOE, to 
receive Unlimited Rights in SBIR/STTR Data upon expiration of the 
protection period. This exception is consistent with its statutory 
authority, which requires the open publication of scientific and 
technical data. This means that once the protection period expires, DOE 
claims the right to openly publish the awardee's SBIR/STTR Data to 
include disclosure in compliance with its statutory authority. To be 
clear, all other Participating Agencies must utilize the Government 
Purpose definition found in Sec.  3 of the Policy Directive, which does 
not permit open publication of an awardee's appropriately marked data 
after the protection period.
    The SBA clarifies that at any time during the SBIR/STTR Protection 
Period, the SBIR/STTR awardee, or entity that holds the rights to the 
data, can provide the Government with greater rights, such as Unlimited 
Rights. However, the Government cannot negotiate these rights prior to 
an SBIR/STTR award and cannot make issuance of an SBIR/STTR award 
conditional upon the relinquishment of any data rights. This is not a 
change from the current policy. Additionally, SBA clarifies that the 
Government receives Unlimited Rights in any SBIR/STTR Data that is not 
appropriately marked. SBA received a comment suggesting further 
clarification that an awardee may mark such data to indicate that it 
retains title to the data even though the Government receives a license 
for Unlimited Rights in that data. SBA agrees with this point, and 
notes that awardees may mark data that is subject to Unlimited Rights 
to demonstrate that it retains title to such data.
    In addition to the amendments made to the data rights related 
definitions, SBA also considered whether to amend the definition of 
Essentially Equivalent Work to include work funded by State programs 
and requested public comment on whether this amendment would be 
appropriate. Currently, SBIR/STTR awardees may not receive duplicate 
funding from federal sources for Essentially Equivalent Work, but there 
is no explicit restriction regarding the acceptance of State program 
funding for work to be performed under an SBIR/STTR award. SBA proposed 
to include State program funding in the definition of Essentially 
Equivalent Work. Commenters overwhelmingly objected to the inclusion of 
State program funding in this definition, arguing that such funding 
provides important supplemental funding for SBIR/STTR-funded projects. 
In response to these comments, SBA is not altering the definition of 
Essentially Equivalent Work in these amendments. In addition, SBA added 
clarification to the Funding Agreement Certification and Life Cycle 
Certification language to specify that Essentially Equivalent Work 
applies to work funded by the same or any other Federal Agency, which 
conforms with the definition of Essentially Equivalent Work specified 
at Sec.  3(m) of the SBIR/STTR Policy Directive. This amendment also 
addresses a recommendation from GAO, included in a report titled 
``Small Business Research Programs: Additional Actions Needed to 
Implement Fraud, Waste, and Abuse Prevention Requirements'' (GAO-17-
337, available at https://www.gao.gov/products/GAO-17-337).
    Finally, SBA proposed to delete several terms and definitions that 
SBA believes are common and therefore do not need to be defined in a 
Policy Directive. Specifically, SBA deleted the following terms: 
Cooperative Agreement, Feasibility, Funding Agreement Officer, and 
Grant. SBA did not receive comments on these deletions and has adopted 
these proposed changes.

4. Section 4--Phased Structure of Programs

    SBA proposed to move information concerning agency benchmarks 
towards commercialization from Sec.  4 to Sec.  6 because these 
benchmarks affect program eligibility. In addition, SBA proposed to 
clarify the preferences agencies must afford SBIR/STTR awardees with 
respect to federally-funded Phase III awards.
    The Act states that a Phase III award is one that:

. . .derives from, extends, or completes efforts made under prior 
funding agreements under the SBIR program--
    (i) in which commercial applications of SBIR-funded research or 
research and development are funded by non-Federal sources of 
capital or, for products or services intended for use by the Federal 
Government, by follow-on non-SBIR Federal funding awards; or
    (ii) for which awards from non-SBIR Federal funding sources are 
used for the continuation of research or research and development 
that has been competitively selected using peer review or merit-
based selection procedures;

15 U.S.C. 638(e)(4)(C); see id. Sec.  638(e)(6)(C). The purpose of the 
Phase III award is to provide the small business that developed the 
technology in Phases I or II the opportunity to commercialize it, 
whether through a Federal prime or subcontract or other type of 
agreement.
    With respect to Phase III, Congress had directed SBA to provide, 
for the SBIR/STTR Participating Agencies:

procedures to ensure, to the extent practicable, that an agency 
which intends to pursue research, development, or production of a 
technology developed by a small business concern under an SBIR 
program enters into follow-on, non-SBIR funding agreements with the 
small business concern for such research, development, or 
production;

15 U.S.C. 638(j)(2)(C) (emphasis added). Section 5001, Division E of 
the National Defense Authorization Act for Fiscal Year 2012, Public Law 
112-81, contained the SBIR/STTR Reauthorization Act of 2011 
(Reauthorization Act) which set forth several provisions relating to 
the SBIR and STTR programs, including a provision relating to Phase 
III. The Reauthorization Act emphasized that agencies are to utilize 
small business Phase I or II awardees for Phase III awards by adding a 
provision in the Act that states:

    (4) PHASE III AWARDS.--To the greatest extent practicable, 
Federal agencies and

[[Page 12802]]

Federal prime contractors shall issue Phase III awards relating to 
technology, including sole source awards, to the SBIR and STTR award 
recipients that developed the technology.

15 U.S.C. 638(r)(4) (emphasis added). Section 1709, Division A of the 
National Defense Authorization Act for Fiscal Year 2018, Public Law 
115-91, further amended section 9(r)(4) of the Small Business Act (15 
U.S.C. 638(r)(4)) to now state:

    (4) Competitive procedures and justification for awards.--To the 
greatest extent practicable, Federal agencies and Federal prime 
contractors shall--
    (A) consider an award under the SBIR program or the STTR program 
to satisfy the requirements under section 2304 of title 10, United 
States Code, and any other applicable competition requirements; and
    (B) issue, without further justification, Phase III awards 
relating to technology, including sole source awards, to the SBIR 
and STTR award recipients that developed the technology.

This provision addresses the concern that, at times, agencies have 
failed to use this authority, bypassed the small business that created 
the technology, and pursued the Phase III work with another business 
rather than actively supporting and encouraging the commercialization 
or further development of SBIR/STTR technology by the innovative small 
business that developed the technology. SBA is required by statute to 
report to Congress cases where agencies fail to comply with the 
reporting requirements and intent of the SBIR/STTR Phase III policy set 
forth in statute. Id. 638 (j)(3)(C).
    Therefore, if the Federal Government is interested in pursuing 
further work that was performed under an SBIR or STTR award, the 
Government must, to the greatest extent practicable, pursue that work 
with the SBIR or STTR awardee that performed the earlier work. 
Notwithstanding the strong congressional mandate codified in statute, 
SBA continues to hear from small businesses, agencies, and trade groups 
that SBIR/STTR awardees do not receive Phase III awards.
    As a result, SBA proposed to clarify that agencies must, to the 
greatest extent practicable, determine whether a requirement, 
solicitation or intended work either is Phase III work or includes it. 
If the requirement is or includes Phase III work, or if the agency is 
later informed that it is or includes Phase III work, SBA has clarified 
that the agency must document that the requirement is Phase III and 
then evaluate the practicability (to the greatest extent) of pursuing 
the required work with the SBIR/STTR awardee that conducted the prior 
SBIR or STTR work. This means that the agency must first consider 
whether it can issue a sole source award to the Phase I or Phase II 
awardee. Awarding the Phase III work to the SBIR or STTR firm on a sole 
source basis is not practicable if, for example, the firm is no longer 
in business or cannot perform the work itself or with subcontractors. 
SBA clarifies that the decision by the agency that it is not 
practicable to issue a sole source award to the SBIR/STTR awardee must 
be documented in the contract file and a copy of that decision, 
including the rationale, must be provided to SBA.
    SBA further proposed to clarify that if the agency determines that 
it cannot issue a sole source award for Phase III, then it must 
consider whether there are other ways to provide the preference to the 
SBIR/STTR awardee. Unless the agency finds that it is not practicable 
to pursue the Phase III work with the SBIR/STTR awardee, the agency 
must provide a preference and must always consider issuing a sole 
source award first and foremost when providing this preference.
    In addition, SBA proposed to clarify the notice and appeal 
procedures with respect to Phase III awards or non-awards. SBA proposed 
that the agency must notify SBA when it does not intend to issue a 
Phase III award and then SBA may file a notice of intent to appeal, 
which may be followed by filing an appeal.
    In light of the foregoing, SBA proposed to clarify Sec.  4(c)(3) 
concerning the competition requirements for Phase III awards. 
Specifically, a Justification and Approval is no longer required by the 
procuring agency for a Phase III sole source award when a contracting 
officer determines that a technology that meets current agency 
requirements derives from, extends, or completes an effort made under a 
prior SBIR/STTR funding agreement issued competitively, and sole source 
awards are authorized pursuant to 15 U.S.C. 638(r)(4).
    Five commenters supported the proposed changes to the Phase III 
competition language. No commenters opposed the proposed changes; 
however, SBA received two suggested changes to the proposed 
clarification of the phrase ``to the greatest extent practicable.'' 
Specifically, one commenter recommended that Participating Agencies 
consider their mission and optimal small business participation when 
applying ``to the greatest extent practicable''. In addition, one 
commenter recommended that SBA revise the proposed language to clarify 
that Federal agencies and Federal prime contractors shall, to the 
greatest extent practicable, issue Phase III awards to the SBIR and 
STTR award recipients for all research and development or production 
efforts that use SBIR/STTR technology, not only those which pursue 
research and development or production of the technology. SBA believes 
the proposed clarification sufficiently outlines the process under 
which agencies and Federal prime contractors comply with the statutory 
provision that, to the greatest extent practicable, they issue Phase 
III awards relating to technology, including sole source awards, to the 
SBIR and STTR award recipients that developed the technology. 
Therefore, SBA is adopting the clarification as proposed.
    SBA received three comments recommending changes to SBA's 
characterization of a Phase III award in the competition language, 
which provides that a Phase III award is an extension of prior Phase I 
and/or Phase II awards. The commenters expressed concern that the 
proposed reference to Phase III awards is incomplete and recommended 
that SBA revise it to include work that derives from, or completes an 
effort made under prior SBIR/STTR funding agreements, as provided in 
Sec.  4(c) of the proposed policy directive. The language in Sec.  
4(c)(3) is sufficient and addresses the concern outlined in this 
comment. The Section in part states, ``. . . that the project is an 
SBIR/STTR Phase III award that is derived from, extends or completes 
efforts made under prior SBIR/STTR funding agreements and is authorized 
pursuant to 15 U.S.C. 638(c)(4).''
    In addition, one commenter suggested that SBA revise the policy 
directive to include bonuses or incentives to contracting officers and 
prime contractors that make Phase III awards. There were no suggestions 
for how SBA should implement these incentives. SBA believes this 
comment does not relate to SBA's proposed competition language and 
therefore falls outside the scope of this rulemaking.
    Lastly, SBA received one comment recommending that SBA not revise 
the policy directive to eliminate a reference to Phase III sole source 
authority under the FAR 6-302.5. According to the commenter, the FAR 
reference properly directs agencies, including those which require a 
Justification and Approval, to make Phase III sole source awards under 
the proper authority. In drafting the proposed competition language, 
SBA sought to establish a more uniform approach under which all 
Participating Agencies issue Phase III sole source awards. SBA believes 
the proposed language is sufficient for purposes of a

[[Page 12803]]

Justification and Approval, if one is deemed required by the procuring 
agency. Thus, SBA is adopting this language as proposed.
    SBA notes that it has updated the termination date for the phase 
flexibility, also known as Direct to Phase II, program to September 30, 
2022, or until expiration. Section 854 of the National Defense 
Authorization Act (NDAA) for Fiscal Year 2019, Public Law 115-232, 
August 13, 2018, extended the termination date for this program by 
amending 15 U.S.C. 638(cc).
    Section 860 of the NDAA for Fiscal Year 2019 also provided 
authority for Participating Agencies to establish a Commercialization 
Assistance Pilot Program for the SBIR Program. This pilot program 
authorizes Participating Agencies to award a third Phase II Award to 
certain eligible concerns. The funds are to be used by eligible 
concerns for research and development activities that build an eligible 
entity's Phase II program and to ensure the research funded under such 
Phase II is rapidly progressing towards commercialization. The pilot is 
set to terminate on September 30, 2022.

5. Section 5--Program Solicitation Process

    No substantive changes were made to this section.

6. Section 6--Eligibility and Application (Proposal) Requirements

    SBA proposed to delete the requirement that an SBC can partner with 
only one research institution under the STTR program. SBA believes that 
a small business can partner with more than one research institution 
under the STTR program as long as at least 30% of the work under the 
award is performed by a single partnering research institution. For 
example, if the SBC is performing 40% of the work itself and 
subcontracting 30% to the single research institution, the SBC may 
subcontract the remaining 30% to one or more other research 
institutions or to another entity. SBA clarifies that in this scenario, 
even though an SBC may partner with research institutions that are 
performing less than 30% of the work, the principal investigator must 
be primarily employed by the SBC or the single research institution 
performing at least 30% of the work.
    SBA proposed to move the agency benchmark performance requirements 
from Sec.  4 to this section of the directive. The benchmark 
performance requirements, set forth in 15 U.S.C. 638(qq), are designed 
to ensure a minimum degree of awardee progress towards 
commercialization. Specifically, the Act requires that agencies 
establish standards, or benchmarks, to measure: (1) The success of 
Phase I awardees in receiving Phase II awards, and, (2) the success of 
Phase I awardees in receiving Phase III awards. Agencies have 
established these benchmarks, which were published in the Federal 
Register and are available at www.SBIR.gov. Any subsequent changes in 
the benchmarks must be approved by SBA.
    SBA proposed to clarify that when SBA calculates awardee progress 
towards meeting the benchmark rates that each agency determines whether 
a Phase I applicant meets both of its benchmarks and that the details 
regarding agency benchmark rates and the implementation of this 
requirement are available to the public on www.SBIR.gov. SBA is 
adopting this language as proposed. This clarification addresses a 
recommendation from GAO in a report titled ``Small Business Research 
Programs: Agencies Need to Take Steps to Assess Progress Toward 
Commercializing Technologies'' (GAO-18-207, available at https://www.gao.gov/products/GAO-18-207).
    SBA is also clarifying the paragraph that addresses the consequence 
for failure to meet the benchmarks. The Small Business Act requires 
that SBIR/STTR awardees are ineligible for one year from the date of 
determination to participate in Phase I of the SBIR/STTR programs if 
they fail to satisfy the commercialization rate or transition rate 
benchmarks. 15 U.S.C. 638(qq)(1)(B) and (2)(B). SBA had interpreted the 
statutory consequence to mean that an SBC would be ineligible to 
receive an SBIR/STTR Phase I award for one year after the date of 
determination. SBA has reconsidered this approach and clarifies that 
the consequence is ineligibility to submit a proposal for a Phase I 
award for one year from the determination date. This clarification is 
consistent with the statutory consequence for failure to meet the 
commercialization rate or transition rate benchmarks and is more 
equitable for SBCs that have invested considerable time and money on 
proposal preparation, and that may have submitted a proposal while the 
SBC was compliant with the benchmarks. This clarification also 
increases procurement efficiency at the participating agencies by 
providing the ability to move forward with issuance of Phase I awards 
to SBCs that may have been compliant with the benchmarks at the time of 
proposal submission. Furthermore, this clarification addresses a 
recommendation from GAO in a report titled ``Small Business Research 
Programs: Agencies Need to Take Steps to Assess Progress Toward 
Commercializing Technologies'' (GAO-18-207, available at https://www.gao.gov/products/GAO-18-207).
    SBA has added language explicitly allowing participation by 
Tribally-owned SBIR/STTR applicants and awardees. Sec.  9 of the Act 
does not prohibit participation by SBCs that are owned and controlled 
by Indian Tribes and it was never the intent of SBA to exclude 
participation of these entities in these small business innovation 
programs.
    SBA received five comments related to the proposed changes in this 
section of the SBIR/STTR Policy Directive. Three of the comments 
supported SBA's proposed changes to this section. One comment suggested 
that SBA centralize the process for submitting commercialization data 
and should provide a way for firms to enter commercialization data. SBA 
notes that awardees currently have the ability to document 
commercialization data by updating their company profile in 
www.SBIR.gov. Another commenter asked whether an SBC owned and 
controlled by Indian Tribes can have more than 500 employees and 
participate in the program. SBA believes this question is addressed in 
Sec.  6(a) of the proposed policy directive and in the regulations 
governing the size and affiliation eligibility standards for SBIR/STTR 
participation. Pursuant to 13 CFR 121.702(c), an SBIR or STTR awardee, 
together with its Affiliates, must not have more than 500 employees. 
This provision governs all awardees, including those owned and 
controlled by Indian Tribes. SBA is adopting all of the proposed 
changes to Sec.  6.

7. Section 7--Program Funding Process

    SBA proposed to modify the section on Dollar Value of Awards to 
state that SBA will review the effects of inflation on the guideline 
amounts annually to determine if program-wide changes in the amounts 
are warranted and will post the inflation amounts and any adjustments 
to the guideline amounts on www.SBIR.gov. SBA received six comments 
related to Sec.  7 of the SBIR/STTR Policy Directive; however, these 
comments did not relate to SBA's proposed change regarding inflation 
adjustments for the Dollar Value of Awards and therefore are considered 
outside the scope of this rulemaking. SBA is adopting the proposed 
change to Sec.  7.
    SBA is adding a new paragraph to Sec.  7 to address the Pilot 
Program to Accelerate Department of Defense SBIR/STTR Awards. Section 
854(b)(2) of the NDAA for Fiscal Year 2019 authorized

[[Page 12804]]

this pilot program to reduce the time between an SBIR/STTR solicitation 
to award for SBIR/STTR Awardees that receive awards from DoD. The 
statute directs DoD to create simplified and standardized procedures 
for making Phase I, Phase II, and Phase III awards with the intent to 
decrease the time between solicitation and award.

8. Section 8--Terms of Agreement Under SBIR/STTR Awards

    SBA proposed amendments to this section to clarify the main 
elements of SBIR/STTR Data Rights, the SBIR/STTR Protection Period, and 
the terms and conditions that must be set forth in the SBIR/STTR 
solicitation and award as it relates to data rights. The proposed 
changes in this section relate to the proposed amendments to the data 
rights definitions contained in Sec.  3. SBA proposed that while the 
Government receives SBIR/STTR Technical Data Rights and SBIR/STTR 
Computer Software Rights in marked SBIR/STTR Data, these rights are 
intended to provide a level of protection similar to that which is 
provided to data an agency receives and that was developed exclusively 
at private expense. SBA also proposed to clarify in this section that 
SBIR/STTR Data Rights may be negotiated; however, an agency must not 
make issuance of an SBIR/STTR award conditional upon the small business 
negotiating or consenting to negotiate modification or transfer of 
these rights.
    Sec.  8 contains the proposed terms of the non-disclosure agreement 
that must be entered into between the Federal Government and a non-
Governmental entity receiving SBIR/STTR Data in accordance with the 
Government's limited rights in that data. The proposed requirements are 
that the non-Governmental entity: (1) Understands and acknowledges the 
limitations on the Government's access, use, modification, 
reproduction, release, performance, transmission, display or disclosure 
as set forth in the agreement; (2) is prohibited from further 
releasing, disclosing, or using the data without the written permission 
of the SBIR/STTR awardee; (3) agrees to destroy or return to the 
Government all SBIR/STTR Data and all copies in its possession, at or 
before the time specified in the agreement, and to notify the procuring 
agency that all copies have been destroyed or returned; (4) is 
prohibited from using the data for a commercial purpose; and, (5) 
agrees that the SBIR/STTR Data will be accessed and used for the sole 
purpose of providing impartial advice or technical assistance directly 
to the Government. The current directives have not required that a 
Federal Government contractor with access to SBIR/STTR Data enter a 
non-disclosure agreement; however, SBA believes this is necessary to 
ensure that any non-Governmental entity recipient of the data 
understands the limitations on the use and disclosure of SBIR/STTR 
Data. These requirements were based on the non-disclosure agreement 
requirements contained in the DFARS and FAR for contractor access to 
SBIR/STTR Data.
    SBA received several comments urging that, prior to any release of 
SBIR/STTR Data outside the Government during the protection period, the 
entity receiving the data should be required to enter a non-disclosure 
agreement not only with the Government but also with the SBC that owns 
the data. SBA may limit the Government's rights in SBIR/STTR Data 
during the protection period to protect the rights in data of the small 
business concerns participating in the programs; however, SBA does not 
have the authority to require two non-Government entities to enter a 
non-disclosure agreement.
    SBA proposed to limit the time period during which an SBIR/STTR 
awardee may correct or add omitted markings of SBIR/STTR Data to six 
months from the date the data was delivered. Currently, there is no 
time limit on when an awardee may correct or add omitted markings to 
its data. However, several of the funding agencies expressed concern 
that having no time limit can create administrative burdens and noted 
that there is a 6-month time limit to correct or add protective 
markings on data delivered by awardees outside the SBIR/STTR program 
and suggested that this requirement be imposed on SBIR/STTR awardees as 
well. SBA specifically requested public comment on this proposed 
change. Several commenters opposed the change pointing out that small 
business SBIR/STTR awardees may inadvertently submit data without the 
correct markings and that these firms should continue to be allowed to 
correct such a mistake at any time. SBA understands that a possible 
agency concern is that it may be difficult to protect SBIR/STTR data 
that was not properly marked when delivered and may therefore have 
already been released. Furthermore, SBA notes that several commenters 
supported the 6-month limitation and that this limitation is consistent 
with the timeframe that all other businesses, small and other than 
small, are afforded under FAR 52.227-14(f)(2) to appropriately mark 
their data to assert the Government's limited rights in that data. 
Commenters did not explain why SBIR/STTR awardees should be provided 
greater latitude in terms of the marking requirements as opposed to 
other small businesses or other businesses regardless of size. As such, 
SBA adopts the proposed 6-month limitation on marking SBIR/STTR Data.
    SBA proposed to include language in Sec.  8 of the directive to 
reflect its concern regarding the treatment of Prototypes, other than 
Computer Software, that are developed under an SBIR/STTR award. SBA 
states that agencies should handle such Prototypes with caution to 
prevent the potential disclosure of the innovative technology or data 
developed under an SBIR/STTR award. While a prototype may not itself be 
considered SBIR/STTR Data because it is not ``recorded information,'' 
it may be possible under certain circumstances for an agency or non-
Government entity to glean protected aspects through observation or 
reverse engineering. SBA received several comments regarding the 
protection and treatment of Prototypes. Many of these comments were in 
support of SBA's proposed changes to add language cautioning agencies 
against release or disclosure of prototypes in a way that would harm 
SBIR/STTR awardees. SBA has adopted the proposed changes.

9. Section 9--Responsibilities of SBIR/STTR Agencies and Departments

    SBA proposed to move information in Appendix X relating to the 
National Academy of Sciences study to this section. SBA received three 
comments related to Sec.  9 of the proposed policy directive. One 
commenter suggested that SBA include examples of actions that amount to 
fraud, waste, and abuse. Another commenter stated that the reporting 
and annual report paragraphs do not accommodate agencies with multi-
year funding, because they require that agencies report the amount of 
dollars obligated per fiscal year for the program. This same commenter 
also recommended that SBA change the term ``expend'' to ``obligate'' in 
Sec.  9(e)(1). These comments do not relate to SBA's proposed 
reorganization of the information in Appendix X related to the National 
Academy of Sciences study to this section. SBA is adopting the proposed 
reorganization of this information.
    SBA is revising the termination date for the administrative funding 
program to September 30, 2022, as this date was extended by section 854 
of the NDAA for Fiscal Year 2019. Additionally, pursuant to changes 
made in the NDAA 2019, SBA has modified the paragraphs within Sec.  9 
of the Policy Directive that address technical and business assistance 
awards for SBIR/STTR

[[Page 12805]]

Awardees. The NDAA 2019 increases the maximum amount of funding that 
the Participating Agencies may use for such awards and expanded the 
potential uses for such funds. The statute also directs SBA to 
establish a maximum amount of assistance that may be received through 
these technical and business assistance awards. SBA intends to solicit 
input from the public as part of a published comment period prior to 
establishing this amount. Once SBA determines the appropriate maximum 
amount, such guidance will be provided on www.sbir.gov and in the 
Policy Directive.

10. Section 10--Reporting Requirements for Agencies, Applicants and 
Awardees

    In this section, SBA proposed to amend the title to clarify that 
the section relates to all reporting requirements required by statute. 
SBA also proposed to delete references to reports that were due in 2012 
and 2014 and therefore are no longer relevant. In addition, SBA 
proposed to delete references to TechNet and replace them with 
``www.SBIR.gov.'' Any system that SBA uses to report or collect 
information will be on the www.SBIR.gov website, which is SBA's central 
website for everything relating to the SBIR/STTR programs. SBA received 
four comments in response to its proposed changes to Section 10. Two 
commenters noted that there may be security risks associated with the 
reporting requirements for agencies, applicants, and awardees. There 
were no suggestions for how SBA should address these risks, and SBA did 
not propose changes related to the security of agency reporting. 
Another commenter stated that SBA should simplify and standardize all 
duplicate reporting of commercial data, and recommended that the 
National Science Foundation (NSF) be required to report on each 
organization receiving a grant under the Phase 0 Proof of Concept Pilot 
Program. Specifically, this commenter recommended that NSF report the 
number and names of entities that received assistance from each grant 
recipient, the number of SBIR proposals these entities submit, and the 
cost of each award per entity, recipient, and project. SBA notes that 
the National Institutes of Health (NIH) is the Participating Agency 
with authority for the Phase 0 Proof of Concept Pilot Program. SBA 
believes these comments fall outside the scope of the revisions and 
request for comments in the proposed policy directive. SBA received one 
comment in opposition to the proposed clarification, explaining that 
requiring agencies to report SBIR/STTR obligations per fiscal year does 
not recognize that some Participating Agencies have authority to 
appropriate funds across multiple fiscal years. As stated above, SBA 
believes proposed revisions respond to recommendations from the GAO, 
directing SBA to amend its policy directives to clarify the programs' 
annual spending requirements as written in the Act. Therefore, SBA is 
adopting the proposed changes to this section.

11. Section 11--Responsibilities of SBA

    SBA has made no changes to this section of the Policy Directive.

12. Section 12--Supporting Programs and Initiatives

    Section 854 of the NDAA for Fiscal Year 2019, extended the 
termination dates for the Commercialization Readiness Program for 
civilian agencies and the Phase 0 Proof of Concept Pilot Program. Both 
programs were extended through September 30, 2022.

13. Appendix I: Instructions for SBIR and STTR Program Solicitation 
Preparation

    SBA proposed to amend the certifications that small businesses must 
submit prior to, upon, and after an SBIR/STTR award by combining the 
SBIR and STTR certifications into one and noting on the document those 
paragraphs that are applicable to STTR only. SBA proposed to clarify 
the Instructions set forth in the SBIR/STTR Policy Directive adding a 
specific model clause that must be reflected in all solicitations and 
resulting funding agreements to ensure the SBIR/STTR awardee's data 
rights are protected. This model clause is intended to ensure that data 
rights are applied consistently throughout the Federal Government. The 
proposed clause sets forth the pertinent terms and definitions relating 
to data rights, which are also set forth and defined in Sec.  3 of the 
directive and discussed in more detail in Sec.  8 of the directive. In 
addition, the proposed clause in Appendix I states that the awardee 
small business owns the data developed or generated during the award, 
and clarifies that the Government has SBIR/STTR Technical Data Rights 
and SBIR/STTR Computer Software Rights in the data during the 
protection period. The clause requires the awardee to mark its 
protected data, which is the current practice in the Federal 
Government. SBA did not receive comments in response to these changes 
outside of the comments relevant to Sec.  s 3 and 8 of the proposed 
policy directive. SBA is adopting the proposed changes to Appendix I.
    13. Appendix II: SBIR/STTR Program Database. SBA proposed to remove 
this appendix of database codes from the directive and will instead 
maintain a current list of the database codes on www.SBIR.gov as a 
ready reference for the Participating Agencies. SBA did not receive 
comments related to this proposed deletion and is adopting this 
proposed change.
    14. Appendix III: Performance Areas and Metrics. SBA proposed to 
remove this list of examples of performance metrics and instead will 
maintain a current example list, in addition to the required metrics, 
as a ready reference on www.SBIR.gov. SBA did not receive comments 
related to this proposed deletion and is adopting this proposed change.
Notice of Final Policy Directive for the Small Business Innovation 
Research (SBIR) and Small Business Technology Transfer Research (STTR) 
Programs
To: The SBIR and STTR Program Managers
Subject: SBIR/STTR Policy Directive
    1. Purpose. The purpose of this notice is to set forth a final 
SBIR/STTR Policy Directive that combines the Small Business Innovation 
Research (SBIR) and Small Business Technology Transfer Research (STTR) 
program Policy Directives into one document, clarifies the data rights 
afforded to SBIR and STTR small business awardees, adds definitions 
relating to data rights, clarifies the Phase III preference to be 
afforded to SBIR and STTR awardees, and clarifies the benchmarks for 
progress towards commercialization.
    2. Authority. The Small Business Act (15 U.S.C. 638(j) and (p)) 
requires the SBA Administrator to issue an SBIR and STTR program Policy 
Directive for the general conduct of the programs.
    3. Procurement Regulations. It is recognized that the Federal 
Acquisition Regulations and agency supplemental regulations will need 
to be modified to conform to the requirements of this final SBIR/STTR 
Policy Directive. SBA's Administrator or designee has a role in 
reviewing any regulatory provisions that pertain to programs authorized 
by the Small Business Act.
    4. Personnel Concerned. This SBIR/STTR Policy Directive serves as 
guidance for all Federal Government personnel who are involved in the 
administration of the SBIR and STTR programs, issuance and management 
of funding agreements or contracts pursuant to the programs, and/or the 
establishment of goals for small business concerns in research or 
research and development acquisition or grants.

[[Page 12806]]

    5. Originator. SBA's Office of Investment and Innovation.

    Authorized By:

    Dated: February 19, 2019.
A. Joseph Shepard,
Associate Administrator for the Office of Investment and Innovation.

    Dated: March 22, 2019.
Linda E. McMahon,
Administrator.

Table of Contents

    1. Purpose.
    2. Summary of Statutory Provisions.
    3. Definitions.
    4. Phased Structure of Programs.
    5. Program Solicitation Process.
    6. Eligibility and Application (Proposal) Requirements.
    7. Program Funding Process.
    8. Terms of Agreement Under SBIR/STTR Awards.
    9. Responsibilities of SBIR/STTR Agencies and Departments.
    10. Reporting Requirements--for Participating Agencies, 
Applicants, and Awardees.
    11. Responsibilities of SBA.
    12. Supporting Programs and Initiatives.

1. Purpose

    (a) Sections 9(j) and 9(p) of the Small Business Act (the Act) 
require that the Small Business Administration (SBA) issue Policy 
Directives for the general conduct of the SBIR and STTR programs within 
the Federal Government.
    (b) This Policy Directive fulfills SBA's statutory obligation to 
provide guidance to the participating Federal agencies for the general 
operation of the SBIR and STTR programs. Because most of the policy for 
the SBIR and STTR program is the same, SBA issues a single Policy 
Directive for both programs. Unless one of the programs is specifically 
mentioned, the term ``program'' or ``programs'' refers to both the SBIR 
and STTR programs. In addition, ``SBIR/STTR'' is used throughout to 
refer to both programs.
    (1) The following sections pertain only to the STTR program: Sec.  
3(cc)--Definition of ``Research Institution,'' Sec.  7(k)--Management 
of the STTR Project, Sec.  8(c)--Allocation of Intellectual Property 
Rights in STTR Award, and Sec.  12(e)--Phase 0 Proof of Concept 
Partnership Pilot Program.
    (2) The following sections pertain only to the SBIR program: Sec.  
3(b)--Definition of ``Additionally Eligible State,'' Sec.  3(l)--
Definition of ``Covered Small Business,'' Sec.  4(b)(1)(ii)--Direct to 
Phase II Awards, Sec.  6(a)(6)--Majority-Owned by Multiple VCOCs, Hedge 
Funds or Private Equity Firms, Sec.  6(b)(1)(iii)--Registration and 
Certifications for Proposal and Award for Majority-Owned by Multiple 
VCOCs, Hedge Funds or Private Equity Firms, and Appendix I--
Certifications for Proposal and Award for Majority-Owned by Multiple 
VCOCs, Hedge Funds or Private Equity Firms.
    (3) Additional or modified instructions may be issued by SBA as a 
result of public comment or experience. With this directive, SBA 
fulfills the statutory requirement to simplify and standardize the 
program proposal, selection, contracting, compliance, and audit 
procedures for the programs to the extent practicable, while allowing 
the Participating Agencies flexibility in the operation of their 
individual programs. Wherever possible, SBA has attempted to reduce the 
paperwork and regulatory compliance burden on small business concerns 
(SBCs) applying to and participating in the SBIR/STTR programs, while 
still meeting the statutory reporting and data collection requirements.
    (c) The statutory purpose of the SBIR program is to strengthen the 
role of innovative SBCs in Federally-funded research or research and 
development (R/R&D). Specific program purposes are to: (1) Stimulate 
technological innovation; (2) use small business to meet Federal R/R&D 
needs; (3) foster and encourage participation by socially and 
economically disadvantaged SBCs (SDBs), and by women-owned SBCs 
(WOSBs), in technological innovation; and, (4) increase private sector 
commercialization of innovations derived from Federal R/R&D, thereby 
increasing competition, productivity and economic growth.
    (d) In addition to the broad goals of the SBIR program, the 
statutory purpose of the STTR program is to stimulate a partnership of 
ideas and technologies between innovative SBCs and non-profit Research 
Institutions. By providing awards to SBCs for cooperative R/R&D efforts 
with Research Institutions, the STTR program assists the U.S. small 
business and research communities by supporting the commercialization 
of innovative technologies.
    (e) Federal agencies participating in the programs (Participating 
Agencies) are obligated to follow the guidance provided by this Policy 
Directive. Each Participating Agency is required to review its rules, 
policies, and guidance on the programs to ensure consistency with this 
Policy Directive and to make any necessary changes in accordance with 
each agency's normal procedures. This is consistent with the statutory 
authority provided to SBA concerning the SBIR/STTR programs.

2. Summary of Statutory Provisions

    (a) The SBIR program is codified at Sec.  9 of the Act, 15 U.S.C. 
638. The SBIR program is authorized until September 30, 2022, or as 
otherwise provided in law subsequent to that date.
    (b) Each Federal agency with an extramural budget for R/R&D in 
excess of $100,000,000 must participate in the SBIR program and spend 
(obligate) a minimum percentage of their extramural R/R&D budgets 
(obligations) of not less than 3.2% of such budget in fiscal year 2017 
and for the percentage required by statute for each fiscal year after 
for awards to SBCs for R/R&D under the SBIR program.
    A Federal agency may exceed this minimum percentage.
    (c) The STTR program is also codified at Sec.  9 of the Act, 15 
U.S.C. 638. The STTR program is authorized until September 30, 2022, or 
as otherwise provided in law subsequent to that date.
    (d) Each Federal agency with an extramural budget for R/R&D in 
excess of $1,000,000,000 must participate in the STTR program and spend 
(obligate) a minimum percentage of their extramural R/R&D budgets 
(obligations) of not less than 0.45% of such budget in fiscal year 2016 
and for the percentage required by statute for each fiscal year after 
on awards to SBCs under the STTR program.
    A Federal agency may exceed this minimum percentage.
    (e) In general, each Participating Agency must make SBIR/STTR 
awards for R/R&D through the following uniform, three-phase process:
    (1) Phase I awards to determine, insofar as possible, the 
scientific and technical merit and feasibility of ideas that appear to 
have commercial potential.
    (2) Phase II awards to further develop work from Phase I that meets 
particular program needs and exhibits potential for commercial 
application.
    (3) Phase III awards where commercial applications of SBIR/STTR 
program-funded R/R&D are funded by non-Federal sources of capital; or 
where products, services or further research intended for use by the 
Federal Government are funded by non-SBIR/STTR sources of Federal 
funding.
    (f) Participating Agencies must report to SBA on the calculation of 
the agency's extramural R/R&D budget, for the purpose of determining 
SBIR/STTR program funding, within four months of enactment of each 
agency's annual Appropriations Act.
    (g) The Act explains that agencies are authorized and directed to 
cooperate with SBA in order to carry out and

[[Page 12807]]

accomplish the purpose of the programs. As a result, each Participating 
Agency shall provide information to SBA for SBA to monitor and analyze 
each agency's SBIR/STTR program and to report annually to the Committee 
on Small Business and Entrepreneurship of the Senate and to the 
Committee on Small Business and the Committee on Science, Space, and 
Technology of the House of Representatives. For more information on the 
agency's reporting requirements, including the frequency for specific 
reporting requirements, see Sec.  10 of the Policy Directive.
    (h) SBA establishes databases and websites to collect and maintain, 
in a common format, information that is necessary to assist SBCs and 
assess the SBIR/STTR programs.
    (i) SBA implements the Federal and State Technology (FAST) 
Partnership Program to strengthen the technological competitiveness of 
SBCs, to the extent that FAST is authorized by law.
    (j) The competition requirements of the Armed Services Procurement 
Act of 1947 (10 U.S.C. 2302, et seq.) and the Federal Property and 
Administrative Services Act of 1949 (41 U.S.C. 3101, et seq.) must be 
read in conjunction with the procurement notice publication 
requirements of Sec.  8(e) of the Act (15 U.S.C. 637(e)). The following 
notice publication requirements of Sec.  8(e) of the Act apply to SBIR/
STTR Participating Agencies using contracts as a SBIR or STTR Funding 
Agreement.
    (1) Any federal executive agency intending to solicit a proposal to 
contract for property or services valued above the amounts set forth in 
Federal Acquisition Regulations (FAR) Sec.  5.101, must transmit a 
notice of the impending solicitation to the Government wide point of 
entry (GPE) for access by interested sources. See FAR Sec.  5.201. The 
GPE, located at www.fbo.gov, is the single point where Government 
business opportunities, including synopses of proposed contract 
actions, solicitations, and associated information, can be accessed 
electronically by the public. In addition, an agency must not issue its 
solicitation for at least 15 days from the date of the publication of 
the GPE. The agency must establish a deadline for submission of 
proposals in response to a solicitation in accordance with FAR Sec.  
5.203.
    (2) The contracting officer must generally make available through 
the GPE those solicitations synopsized through the GPE, including 
specifications and other pertinent information determined necessary by 
the contracting officer. See FAR Sec.  5.102.
    (3) Any executive agency awarding a contract for property or 
services must synopsize the award through the GPE in accordance with 
FAR subpart 5.3.
    (4) The following are exemptions from the notice publication 
requirements:
    (i) In the case of agencies intending to solicit Phase I proposals 
for contracts in excess of $25,000, the head of the agency may exempt a 
particular solicitation from the notice publication requirements if 
that official makes a written determination, after consulting with the 
Administrator of the Office of Federal Procurement Policy (OFPP) and 
the SBA Administrator, that it is inappropriate or unreasonable to 
publish a notice before issuing a solicitation.
    (ii) The SBIR/STTR Phase II award process.
    (iii) The SBIR/STTR Phase III award process.

3. Definitions

    (a) Act. The Small Business Act (15 U.S.C. 631, et seq.), as 
amended.
    (b) Additionally Eligible State. (SBIR only) A State in which the 
total value of funding agreements awarded to SBCs under all agency SBIR 
programs is less than the total value of funding agreements awarded to 
SBCs in a majority of other States, as determined by SBA's 
Administrator in biennial fiscal years and based on the most recent 
statistics compiled by the Administrator.
    (c) Affiliate. This term has the same meaning as set forth in 13 
CFR part 121--Small Business Size Regulations, Sec.  121.103, ``How 
Does SBA Determine Affiliation?''. Further information about SBA's 
affiliation rules and a guide on affiliation is available at 
www.SBIR.gov and www.SBA.gov/size.
    (d) Applicant. The organizational entity that qualifies as an SBC 
at all pertinent times and that submits a contract proposal or a grant 
application for a funding agreement under the SBIR/STTR programs.
    (e) Awardee. The organizational entity that receives an SBIR or 
STTR Phase I, Phase II, or Phase III award. An ``SBIR/STTR Awardee.''
    (f) Commercialization. The process of developing products, 
processes, technologies, or services and the production and delivery 
(whether by the originating party or others) of the products, 
processes, technologies, or services for sale to or use by the Federal 
Government or commercial markets.
    (g) Computer Database. A collection of data recorded in a form 
capable of being processed by a computer. The term does not include 
Computer Software.
    (h) Computer Programs. A set of instructions, rules, or routines 
recorded in a form that is capable of causing a computer to perform a 
specific operation or series of operations.
    (i) Computer Software. Computer Programs, source code, source code 
listings, object code listings, design details, algorithms, processes, 
flow charts, formulae, and related material that would enable the 
software to be reproduced, recreated, or recompiled. Computer Software 
does not include Computer Databases or Computer Software Documentation.
    (j) Computer Software Documentation. Owner's manuals, user's 
manuals, installation instructions, operating instructions, and other 
similar items, regardless of storage medium, that explain the 
capabilities of the Computer Software or provide instructions for using 
the software.
    (k) Covered Small Business Concern. (SBIR only) A small business 
concern that: (1) Was not majority-owned by multiple venture capital 
operating companies (VCOCs), hedge funds, or private equity firms on 
the date on which it submitted an application in response to a 
solicitation under the SBIR program; and (2) is majority-owned by 
multiple venture capital operating companies, hedge funds, or private 
equity firms on the date of the SBIR award.
    (l) Data. All recorded information, regardless of the form or 
method of recording or the media on which it may be recorded. The term 
does not include information incidental to contract or grant 
administration, such as financial, administrative, cost or pricing or 
management information.
    (m) Essentially Equivalent Work. Work that is substantially the 
same research, which is proposed for funding in more than one contract 
proposal or grant application submitted to the same Federal Agency, or 
submitted to two or more different Federal Agencies for review and 
funding consideration; or work where a specific research objective and 
the research design for accomplishing the objective are the same or 
closely related to another proposal or award, regardless of the funding 
source.
    (n) Extramural R/R&D Budget/Obligations. The sum of the total 
obligations for R/R&D minus amounts obligated during a given fiscal 
year for R/R&D activities by employees of a Federal Agency in or 
through Government-owned, Government-operated facilities. For the 
Agency for International Development, the ``extramural budget'' does 
not include amounts obligated solely for general

[[Page 12808]]

institutional support of international research centers or for grants 
to foreign countries. For the Department of Energy, the ``extramural 
budget'' does not include amounts obligated for atomic energy defense 
programs solely for weapons activities or for naval reactor programs. 
(See also Sec.  7(j) of this Policy Directive for additional exemptions 
related to national security.)
    (o) Federal Agency. An executive agency as defined in 5 U.S.C. 105, 
and a military department as defined in 5 U.S.C. 102 (Department of the 
Army, Department of the Navy, Department of the Air Force), except that 
it does not include any agency within the Intelligence Community as 
defined in Executive Order 12333, Sec.  3.4(f), or its successor 
orders.
    (p) Federal Laboratory. As defined in 15 U.S.C. 3703, means any 
laboratory, any federally funded research and development center, or 
any center established under 15 U.S.C. 3705 and 3707 that is owned, 
leased, or otherwise used by a Federal Agency and funded by the Federal 
Government, whether operated by the Government or by a contractor.
    (q) Form, Fit, and Function Data. Data relating to items, 
components, or processes that are sufficient to enable physical and 
functional interchangeability, and data identifying source, size, 
configuration, mating and attachment characteristics, functional 
characteristics, and performance requirements. For Computer Software it 
means data identifying source, functional characteristics, and 
performance requirements, but specifically excludes the source code, 
algorithms, processes, formulas, and flow charts of the software.
    (r) Funding Agreement. Any contract, grant, or cooperative 
agreement entered into between any Federal Agency and any SBC for the 
performance of experimental, developmental, or research work, including 
products or services, funded in whole or in part by the Federal 
Government.
    (s) Government Purpose. Any activity in which the United States 
Government is a party, including cooperative agreements with 
international or multi-national defense organizations or sales or 
transfers by the United States Government to foreign governments or 
international organizations. Government purposes include competitive 
procurement, but do not include the rights to use, modify, reproduce, 
release, perform, display, or disclose Technical Data or Computer 
Software for commercial purposes or authorize others to do so.
    (t) Innovation. Something new or improved, having marketable 
potential, that includes the development of new technology, the 
refinement of existing technology, or the development of new 
applications for existing technology.
    (u) Intellectual Property. The separate and distinct types of 
intangible property that are referred to collectively as ``Intellectual 
Property,'' including but not limited to: patents, trademarks, 
copyrights, trade secrets, and mask works.
    (v) Joint Venture. See 13 CFR 121.103(h).
    (w) Key Individual. The Principal Investigator/Project Manager and 
any other person named as a ``key'' employee in a proposal submitted in 
response to a Program Solicitation.
    (x) Operations, Maintenance, Installation, or Training Purposes 
(OMIT) Data. Data that is necessary for operation, maintenance, 
installation, or training purposes (but not including detailed 
manufacturing or process data).
    (y) Participating Agency(ies). A federal agency with an SBIR or 
STTR program. An ``SBIR/STTR Agency.''
    (z) Principal Investigator/Project Manager. The one individual 
designated by the Applicant to provide the scientific and technical 
direction to a project supported by the Funding Agreement.
    (aa) Program Solicitation. A formal solicitation for proposals 
issued by a Federal Agency that notifies the small business community 
of its R/R&D needs and interests in broad and selected areas, as 
appropriate to the agency, and requests for proposals from SBCs in 
response to these needs and interests.
    (bb) Prototype. A product, material, object, system, or process, or 
a model thereof, that is in development, regardless of whether it is in 
tangible, electronic, graphic or other form, at any stage of 
development prior to its intended ultimate commercial production and 
sale. The term ``Prototype'' includes Computer Programs embedded in 
hardware or devices.
    (cc) Research Institution. One that has a place of business located 
in the United States, which operates primarily within the United States 
or which makes a significant contribution to the U.S. economy through 
payment of taxes or use of American products, materials or labor, and 
is: (1) A non-profit institution as defined in section 4(3) of the 
Stevenson-Wydler Technology Innovation Act of 1980 (that is, an 
organization that is owned and operated exclusively for scientific or 
educational purposes, no part of the net earnings of which inures to 
the benefit of any private shareholder or individual); or (2) A 
Federally-funded R/R&D center (FFRDC) as identified by the National 
Science Foundation (NSF) in accordance with the Federal Acquisition 
Regulation issued in accordance with section 35(c)(1) of the Office of 
Federal Procurement Policy Act (or any successor regulation). A non-
profit institution can include hospitals and military educational 
institutions, if they meet the definition above.
    (dd) Research or Research and Development (R/R&D). Any activity 
that is: (1) A systematic study directed toward greater knowledge or 
understanding of the subject studied; (2) a systematic study directed 
specifically toward applying knowledge and innovation to meet a 
recognized but unmet need; or (3) a systematic application of knowledge 
and innovation toward the production of useful materials, devices, and 
systems or methods, including design, development, and improvement of 
Prototypes and new processes to meet specific requirements.
    (ee) SBIR/STTR Computer Software Rights. The Federal Government's 
rights during the SBIR/STTR Protection Period in specific types of 
SBIR/STTR Data that are Computer Software.
    (1) The Federal Government may use, modify, reproduce, release, 
perform, display, or disclose SBIR/STTR Data that are Computer Software 
within the Federal Government. The Government may exercise SBIR/STTR 
Computer Software Rights within the Government for:
    (i) Use in Government computers;
    (ii) Modification, adaptation, or combination with other Computer 
Software, provided that the Data incorporated into any derivative 
software are subject to the rights in paragraph (ee) and that the 
derivative software is marked as containing SBIR/STTR Data;
    (iii) Archive or backup; or
    (iv) Distribution of a computer program to another Government 
agency, without further permission of the Awardee, if the Awardee is 
notified of the distribution and the identity of the recipient prior to 
the distribution, and a copy of the SBIR/STTR Computer Software Rights 
included in the Funding Agreement is provided to the recipient prior to 
the distribution. The agency in receipt of the distributed SBIR/STTR 
Data is subject to the data rights provisions in the SBIR/STTR Awardees 
SBIR/STTR funding agreement.
    (2) The Government shall not release, disclose, or permit access to 
SBIR/STTR Data that is Computer Software for

[[Page 12809]]

commercial, manufacturing, or procurement purposes without the written 
permission of the Awardee. The Government shall not release, disclose, 
or permit access to SBIR/STTR Data outside the Government without the 
written permission of the Awardee unless:
    (i) The non-Governmental entity has entered into a non-disclosure 
agreement with the Government that complies with the terms for such 
agreements outlined in Sec.  8 of this Policy Directive; and
    (ii) The release or disclosure is--
    (A) To a Government support service contractor or their 
subcontractor in the performance of a Government support services 
contract for internal Government use or activities, including 
evaluation, diagnosis and correction of deficiencies, and adaptation, 
combination, or integration with other Computer Software, provided that 
SBIR/STTR Data incorporated into any derivative software are subject to 
the rights in paragraph (ee), and provided that the release is not for 
commercial purposes or manufacture; or
    (B) Necessary to support certain narrowly-tailored essential 
Government activities for which law or regulation permits access of a 
non-Government entity to a contractors' data developed exclusively at 
private expense, non-SBIR/STTR Data, such as for emergency repair and 
overhaul.
    (ff) SBIR/STTR Data. All Data developed or generated in the 
performance of an SBIR or STTR award, including Technical Data and 
Computer Software developed or generated in the performance of an SBIR 
or STTR award. The term does not include information incidental to 
contract or grant administration, such as financial, administrative, 
cost or pricing or management information.
    (gg) SBIR/STTR Data Rights. The Government's license rights in 
properly marked SBIR/STTR Data during the SBIR/STTR Protection Period 
as follows: SBIR/STTR Technical Data Rights in SBIR/STTR Data that are 
Technical Data or any other type of Data other than Computer Software 
and SBIR/STTR Computer Software Rights in SBIR/STTR Data that is 
Computer Software. Upon expiration of the protection period for SBIR/
STTR Data, the Government has a royalty-free license to use, and to 
authorize others to use on its behalf, these Data for Government 
Purposes, and is relieved of all disclosure prohibitions and assumes no 
liability for unauthorized use of these Data by third parties. The 
Government receives Unlimited Rights in all Form, Fit, and Function 
Data, OMIT Data, and unmarked SBIR/STTR Data.
    (hh) SBIR/STTR Protection Period. The period of time during which 
the Government is obligated to protect SBIR/STTR Data against 
unauthorized use and disclosure in accordance with SBIR/STTR Data 
Rights. The SBIR/STTR Protection Period begins at award of an SBIR/STTR 
Funding Agreement and ends not less than twenty years from that date. 
(See Sec.  8(b)(4) of this Policy Directive).
    (ii) SBIR/STTR Technical Data Rights. The Federal Government's 
rights during the SBIR/STTR Protection Period in SBIR/STTR Data that 
are Technical Data or any other type of Data other than Computer 
Software.
    (1) The Government may, use, modify, reproduce, perform, display, 
release, or disclose SBIR/STTR Data that are Technical Data within the 
Federal Government; however, the Federal Government shall not use, 
release, or disclose the data for procurement, manufacture or 
commercial purposes; or release or disclose the SBIR/STTR Data outside 
the Government except as permitted by paragraph (2) below or by written 
permission of the Awardee.
    (2) SBIR/STTR Data that are Technical Data may be released outside 
the Federal Government without any additional written permission of the 
Awardee only if the non-Governmental entity or foreign government has 
entered into a non-disclosure agreement with the Federal Government 
that complies with the terms for such agreements outlined in Sec.  8 of 
this Policy Directive and the release is:
    (i) Necessary to support certain narrowly-tailored essential 
Government activities for which law or regulation permits access of a 
non-Government entity to a contractors' data developed exclusively at 
private expense, non-SBIR/STTR Data, such as for emergency repair and 
overhaul;
    (ii) To a Government support services contractor in the performance 
of a Government support services contract for internal Government use 
or activities, including evaluation, diagnosis or modification provided 
that SBIR/STTR Technical Data incorporated into any derivative Data are 
subject to the rights in paragraph (ii), and the release is not for 
commercial purposes or manufacture;
    (iii) To a foreign government for purposes of information and 
evaluation if required to serve the interests of the U.S. Government; 
or
    (iv) To non-Government entities or individuals for purposes of 
evaluation.
    (jj) Small Business Concern (SBC). A concern that meets the SBIR/
STTR program eligibility requirements set forth in 13 CFR 121.702, 
``What size and eligibility standards are applicable to the SBIR and 
STTR programs?''.
    (kk) Socially and Economically Disadvantaged Individual. See 13 CFR 
124.103 and 124.104.
    (ll) Socially and Economically Disadvantaged SBC (SDB). See 13 CFR. 
part 124, subpart B.
    (mm) Student/Faculty-owned SBC. A small business that is majority-
owned by a faculty member or a student of an institution of higher 
education as defined in 20 U.S.C. 1001.
    (nn) Subcontract. Any agreement, other than one involving an 
employer-employee relationship, entered into by an Awardee of a Funding 
Agreement calling for supplies or services for the performance of the 
original Funding Agreement.
    (oo) Technology Development Program.
    (1) the Established Program to Stimulate Competitive Research 
(EPSCoR) of the National Science Foundation as established under 42 
U.S.C. 1862g;
    (2) the Defense Established Program to Stimulate Competitive 
Research (DEPSCoR) of the Department of Defense;
    (3) the Established Program to Stimulate Competitive Research 
(EPSCoR) of the Department of Energy;
    (4) the Established Program to Stimulate Competitive Research 
(EPSCoR) of the Environmental Protection Agency;
    (5) the Established Program to Stimulate Competitive Research 
(EPSCoR) of the National Aeronautics and Space Administration;
    (6) the Institutional Development Award (IDeA) Program of the 
National Institutes of Health; and
    (7) the Agriculture and Food Research Initiative (AFRI) of the 
Department of Agriculture.
    (pp) Technical Data. Recorded information, regardless of the form 
or method of the recording, of a scientific or technical nature 
(including Computer Software Documentation and Computer Databases). The 
term does not include Computer Software or financial, administrative, 
cost or pricing, or management information, or other data incidental to 
contract or grant administration. The term includes recorded Data of a 
scientific or technical nature that is included in Computer Databases.
    (qq) United States. The 50 states, the territories and possessions 
of the Federal Government, the Commonwealth of Puerto Rico, the 
District of Columbia, the Republic of the

[[Page 12810]]

Marshall Islands, the Federated States of Micronesia, and the Republic 
of Palau.
    (rr) Unlimited Rights. The Federal Government's rights to use, 
modify, prepare derivative works, reproduce, release, perform, display, 
disclose, or distribute Data in whole or in part, in any manner and for 
any purpose whatsoever, and to have or authorize others to do so.
    (ss) Women-Owned SBC (WOSB). An SBC that is at least 51% owned by 
one or more women, or in the case of any publicly owned business, at 
least 51% of the stock is owned by women, and women control the 
management and daily business operations.

4. Phased Structure of Programs

    The SBIR/STTR programs employ a phased process, uniform throughout 
the Federal Government, of soliciting proposals and awarding Funding 
Agreements for R/R&D, production, services, or any combination, to meet 
stated agency needs or missions. Agencies must issue SBIR/STTR awards 
pursuant to competitive and merit-based selection procedures. Agencies 
may not use investment of venture capital or investment from hedge 
funds or private equity firms as a criterion for an SBIR/STTR award. 
Although cost sharing or matching funds cannot be required for Phase I 
or Phase II awards, agencies may require a small business to have 
matching funds for certain special awards (e.g., to reduce the gap 
between a Phase II and Phase III award). In order to stimulate and 
foster scientific and technological innovation, including increasing 
Commercialization of Federal R/R&D, the program must follow a uniform 
competitive process of the following three phases, unless an exception 
applies:
    (a) Phase I. Phase I involves a solicitation of contract proposals 
or grant applications to conduct feasibility-related experimental or 
theoretical R/R&D related to described agency requirements. These 
requirements, as defined by agency topics contained in a solicitation, 
may be general or narrow in scope, depending on the needs of the 
agency. The object of this phase is to determine the scientific and 
technical merit and feasibility of the proposed effort and the quality 
of performance of the SBC with a relatively small agency investment 
before consideration of further Federal support in Phase II.
    (1) Several different proposed solutions to a given problem may be 
funded.
    (2) Proposals will be evaluated on a competitive basis. Agency 
criteria used to evaluate SBIR/STTR proposals must give consideration 
to the scientific and technical merit and feasibility of the proposal 
along with its potential for Commercialization. Considerations may also 
include program balance with respect to market or technological risk or 
critical agency requirements.
    (3) Agency benchmarks for progress towards Commercialization must 
be met to be eligible to participate in Phase I of the program. See 
Sec.  6(a) of this Policy Directive for a description of this Phase I 
eligibility requirement.
    (4) Agencies may require the submission of a Phase II proposal as a 
deliverable item under Phase I.
    (b) Phase II.
    (1) The object of Phase II is to continue the R/R&D effort from the 
completed Phase I. Unless an exception set forth in paragraphs (i) or 
(ii) below applies, only SBIR/STTR Phase I Awardees are eligible to 
participate in Phase II.
    (i) A Federal Agency may issue an SBIR Phase II award to an STTR 
Phase I Awardee to further develop the work performed under the STTR 
Phase I award. Similarly, an agency may issue an STTR Phase II award to 
an SBIR Phase I Awardee to further develop the work performed under the 
SBIR Phase I award. The agency must base its decision upon the results 
of work performed under the Phase I award and the scientific and 
technical merit and commercial potential of the Phase II proposal. The 
Phase I Awardee must meet the eligibility and program requirements of 
the Phase II program from which it will receive the award in order to 
receive the Phase II award.
    (ii) [SBIR only] The National Institutes of Health (NIH), 
Department of Defense (DoD) and the Department of Education (DoEd) may 
issue a Phase II SBIR award to an SBC that did not receive a Phase I 
SBIR or STTR award for that R/R&D. Prior to such an award, the heads of 
those agencies, or designees, must issue a written determination that 
the small business has demonstrated the scientific and technical merit 
and feasibility of the ideas that appear to have commercial potential. 
The determination must be submitted to SBA prior to issuing the Phase 
II award. This pilot program shall terminate on September 30, 2022, 
unless otherwise extended.
    (iii) [SBIR only] A Federal Agency must implement a 
Commercialization Assistance Pilot Program, under which SBCs may apply 
to receive a third Phase II award to carry out further 
commercialization activities. Awards made under this pilot program may 
not exceed the limitation on size of awards and shall be disbursed 
during the performance of a Phase II award. The funds awarded may only 
be used for research and development activities that build on the Phase 
II work and ensure it is rapidly progressing towards commercialization. 
The head of each Participating Agency may be allocated not more than 5 
percent of the funds allocated to the SBIR program of that agency for 
the purpose of making awards under this pilot program. SBA may 
determine a covered agency has a sufficiently similar program, and thus 
is not required to implement the pilot program.
    (A) To be selected to receive an award under this pilot program, an 
SBC shall submit to the Participating Agency implementing the program 
an application at such time, in such manner, and containing such 
information as the Participating Agency may require, including:
    a. An updated Phase II commercialization plan; and
    b. The source and amount of the required matching funding.
    (B) Eligible SBCs has received:
    a. A Phase II award under an SBIR program; and
    b. A Sequential Phase II (``second Phase II'') from the covered 
agency to which the SBC is apply for a third Phase II award under this 
pilot program.
    (C) Matching funding from an eligible third party is required. The 
matching amount (excluding any fees collected by the SBC) must be equal 
to the amount of the award. SBCs may not use funding from ineligible 
sources to meet the matching requirement.
    a. Eligible third-party investors include:
    i. a SBC other than the eligible SBC;
    ii. venture capital firms;
    iii. individual investors;
    iv. a non-SBIR federal, state, or local government;
    v. or any combination thereof.
    b. Ineligible sources include:
    i. The eligible SBC's internal research and development funds;
    ii. Funding in forms other than cash (such as in-kind or other 
tangible assets);
    iii. Funding from the owners of the eligible SBC, or the family 
members or affiliates of such owners; or
    iv. Funding attained through loans or other forms of debt 
obligations.
    (D) Agencies shall consider the following when making awards under 
this pilot program:
    a. The extent to which such award could aid the eligible entity in 
commercializing the research funded under the eligible entity's Phase 
II program;
    b. Whether the updated Phase II commercialization plan provides a

[[Page 12811]]

sound approach for establishing technical feasibility that could lead 
to commercialization of such research;
    c. Whether the proposed activities to be conducted under such 
updated Phase II commercialization plan further improve the likelihood 
that such research will provide societal benefits;
    d. Whether the small business concern has progressed satisfactorily 
in Phase II to justify receipt of a subsequent Phase II SBIR award;
    e. The expectations of the eligible third-party investor that 
provides matching funding; and
    f. The likelihood that the proposed activities to be conducted 
under such updated Phase II commercialization plan using matching 
funding provided by such eligible third-party investor will lead to 
commercial and societal benefit.
    (E) The pilot under this subsection shall terminate on September 
30, 2022, unless otherwise extended.
    (2) Funding must be based upon the results of work performed under 
a Phase I award and the scientific and technical merit, feasibility and 
commercial potential of the Phase II proposal. Phase II awards may not 
necessarily complete the total research and development that may be 
required to satisfy commercial or Federal needs beyond the SBIR/STTR 
program. The Phase II Funding Agreement with the Awardee may, at the 
discretion of the awarding agency, establish the procedures applicable 
to Phase III agreements. The Government is not obligated to fund any 
specific Phase II proposal.
    (3) The SBIR/STTR Phase II award decision process requires, among 
other things, consideration of a proposal's commercial potential. 
Commercial potential includes the potential to transition the 
technology to private sector applications, Government applications, or 
Government contractor applications. Commercial potential in a Phase II 
proposal may be evidenced by:
    (i) the SBC's record of successfully commercializing SBIR/STTR or 
other research;
    (ii) the existence of Phase II funding commitments from private 
sector or other non-SBIR/STTR funding sources;
    (iii) the existence of Phase III, follow-on commitments for the 
subject of the research; and
    (iv) other indicators of commercial potential of the idea.
    (4) Agencies may not use an invitation, pre-screening, or pre-
selection process for eligibility for Phase II. Agencies must note in 
each solicitation that all Phase I Awardees may apply for a Phase II 
award and provide guidance on the procedure for doing so.
    (5) A Phase II Awardee may receive one additional, sequential Phase 
II award to continue the work of an initial Phase II award. The 
additional, sequential Phase II award has the same guideline amounts 
and limits as an initial Phase II award.
    (6) Agencies may offer special SBIR/STTR awards, such as Phase IIB 
awards, that supplement or extend Phase II awards. For example, some 
agencies administer Phase IIB awards that differ from the base Phase II 
in that they require third party matching of the SBIR/STTR funds. Each 
such supplemental award must be linked to a base Phase II award (the 
initial Phase II, or the second sequential Phase II award). Any SBIR/
STTR funds used for such special or supplementary awards are aggregated 
with the amount of the base Phase II to determine the size of that 
Phase II award. Therefore, while there is no limit on the number of 
such special/supplementary awards, there is a limit on the total amount 
of SBIR/STTR funds that can be administered through them--the amounts 
of these awards count towards the size of the initial Phase II or the 
sequential Phase II, each of which has a guideline amount of $1 million 
and a limit of $1.5 million. (Note that Phase IIB awards under the NIH 
SBIR program are administered as second, sequential Phase II awards, 
not supplemental awards. As such, they are base Phase II awards and 
subject to the Phase II guideline amounts and limits of $1 million and 
$1.5 million).
    (7) A concern that has received a Phase I award from an agency may 
receive a subsequent Phase II award from another agency if each agency 
makes a written determination that the topics of the relevant awards 
are the same and both agencies report the awards to the SBA including a 
reference to the related Phase I award and initial Phase II award if 
applicable.
    (8) Agencies may issue Phase II awards for testing and evaluation 
of products, services, or technologies for use in technical or weapons 
systems.
    (c) Phase III. Phase III refers to work that derives from, extends, 
or completes an effort made under prior SBIR/STTR Funding Agreements, 
but is funded by sources other than the SBIR/STTR programs. Phase III 
work is typically oriented towards Commercialization of SBIR/STTR 
research or technology, including through further R/R&D work.
    (1) Phase III work: Each of the following types of activity 
constitutes SBIR/STTR Phase III work:
    (i) Commercial application (including R/R&D, testing and evaluation 
of products, services or technologies for use in technical or weapons 
systems) of SBIR/STTR-funded R/R&D that is financed by non-Federal 
sources of capital. (Note: The guidance in this Policy Directive 
regarding SBIR/STTR Phase III pertains to the non-SBIR/STTR federally-
funded work described in (ii) and (iii) below. It does not address 
private agreements an SBIR/STTR firm may make in the Commercialization 
of its technology, except for a subcontract to a Federal contract that 
may be a Phase III.).
    (ii) SBIR/STTR-derived products or services intended for use by the 
Federal Government, funded by non-SBIR/STTR sources of Federal funding.
    (iii) Continuation of SBIR/STTR work, funded by non-SBIR/STTR 
sources of Federal funding including R/R&D.
    (2) Data Rights. A Phase III award is, by its nature an SBIR/STTR 
award, has SBIR/STTR status, and must include SBIR/STTR Data Rights 
protection. If an SBIR/STTR Awardee receives a Funding Agreement 
(whether competed, direct award, sole sourced or a subcontract) for 
work that derives from, extends, or completes efforts made under prior 
SBIR/STTR Funding Agreements, then the Funding Agreement for the new 
work must have all SBIR/STTR Phase III status and SBIR/STTR Data 
Rights.
    (3) Competition Requirement. The competitions for SBIR/STTR Phase I 
and Phase II awards satisfy any competition requirement of the Armed 
Services Procurement Act, the Federal Property and Administrative 
Services Act, and the Competition in Contracting Act. An agency that 
wishes to fund an SBIR/STTR Phase III award, which is an extension of 
prior Phase I and/or Phase II awards, is not required to conduct 
another competition for the Phase III award in order to satisfy those 
statutory provisions. As a result, in conducting actions relative to a 
Phase III SBIR/STTR award, it is sufficient to state for purposes of a 
Justification and Approval, if one is deemed required by the agency, 
that the project is an SBIR/STTR Phase III award that is derived from, 
extends, or completes efforts made under prior SBIR/STTR Funding 
Agreements and is authorized pursuant to 15 U.S.C. 638(r)(4). Further 
justification is not needed.
    (4) Phase III work may be for products, production, services, R/
R&D, or any such combination.
    (5) There is no limit on the number, duration, type, or dollar 
value of Phase III awards made to a business concern. There is no limit 
on the time that may elapse between a Phase I or Phase II award and 
Phase III award, or between a Phase III award and any subsequent Phase 
III award. A Federal Agency may enter into a Phase III SBIR/STTR

[[Page 12812]]

agreement at any time with a Phase II Awardee. Similarly, a Federal 
Agency may enter into a Phase III SBIR/STTR agreement at any time with 
a Phase I Awardee. A subcontract to a Federally-funded prime contract 
may be a Phase III award.
    (6) Size. The small business size limits for Phase I and Phase II 
awards do not apply to Phase III awards.
    (7) Special acquisition requirement. Agencies or their Government-
owned, contractor-operated (GOCO) facilities, Federally-funded research 
and development centers (FFRDCs), or Government prime contractors that 
pursue R/R&D or production of technology developed under the SBIR/STTR 
program shall issue Phase III awards relating to the technology, 
including sole source awards, to the Awardee that developed the 
technology under an SBIR/STTR award, to the greatest extent 
practicable, consistent with an Agency's mission and optimal small 
business participation.
    (i) Implementing the requirement. In recognition of the prior 
merit-based competitive selection of, and subsequent commitment of 
agency funds to SBIR/STTR Awardees and the broad intent of the program 
to promote the commercial success of these small businesses, Agencies 
must make a good faith effort to negotiate with such Awardees regarding 
the performance of the new, related, work and to issue Phase III awards 
for the work. When implementing this requirement, the agency will 
evaluate the work for consistency with its documented mission 
requirements and must consider the practicality of pursuing the work 
with the Awardee through a direct follow-on award by performing market 
research to determine whether the firm is available, capable, and 
willing to perform the work. If an award is made, the Agency must 
identify the funding agreement as an SBIR or STTR Phase III. The Agency 
must act in ways consistent with the Congressional intent to support 
the Commercialization of an SBIR/STTR-developed technology by the SBIR/
STTR Awardee, and all parties must proceed along these steps in good 
faith.
    (ii) Sole Source Awards. If pursuing the Phase III work with the 
Awardee is found to be practicable, the agency must award a non-
competitive contract to the firm.
    (iii) Other Preference. If pursuing Phase III work with the Awardee 
on a sole source/non-competitive basis does not meet the requirements 
set forth in the above sections regarding availability, practicality 
and capability, the Agency must document the file and provide a copy of 
the decision, including the rationale, to the SBA. The agency should 
also use other means of affording preference for the Phase III work, 
especially when the request is for a large acquisition program, which 
may not be best suited for an SBIR/STTR Award. Examples include 
reference to the SBIR/STTR Awardee's brand-name as a required 
deliverable in the request for proposals, requiring the prime awardee 
to use evaluation factors favoring subcontracting to SBIR/STTR 
concerns, or providing other incentives to the prime contractor for 
utilizing SBIR/STTR Awardees as subcontractors, as referenced in 15 
U.S.C. 638(y).
    (iv) Agency Notice of Intent to Award. An agency, or its GOCOs or 
FFRDCs, that intends to pursue Phase III work (which includes R/R&D, 
production, services, or any combination thereof of a technology 
developed under an SBIR/STTR award), with an entity other than the 
Phase I or Phase II SBIR/STTR Awardee, must notify SBA in writing prior 
to such an award. This notification must include, at a minimum:
    (A) The steps the agency has taken to fulfill the special 
acquisition requirement (e.g., a good faith effort to make the award to 
the SBIR/STTR Awardee).
    (B) The reasons why a follow-on Funding Agreement with the SBIR/
STTR Awardee is not practicable (e.g., SBIR/STTR Awardee was not 
willing or interested in the work, not capable of doing the work or 
functioning as a prime and subcontracting the work, or no longer in 
business).
    (C) The identity of the entity with which the agency intends to 
make an award to perform the research, development, or production; the 
type of Funding Agreement to be used; and the amounts of the agreement.
    (v) SBA Notice of Intent to Appeal. SBA may appeal a decision by an 
agency (or its GOCOs or FFRDCs) to pursue Phase III work with a 
business concern other than the SBIR/STTR Awardee that developed the 
technology to the head of the contracting activity.
    (A) If SBA receives an agency's notice of intent to make an award 
under (iv) above, SBA may file a notice of intent to appeal with the 
Funding Agreement officer no later than 5 business days after receiving 
the agency's notice of intent to make award.
    (B) If an agency is pursuing work that SBA has determined is Phase 
III work and has not complied with either of the reporting requirements 
above, SBA may notify the agency at any time of its intent to appeal 
the decision to proceed with the work. SBA makes such determinations 
based on all information it receives, including information presented 
directly to SBA by an SBIR/STTR Awardee.
    (vi) Suspension of Work. Upon receipt of SBA's notice of intent to 
appeal, the Funding Agreement officer must suspend further action on 
the funding agreement until the head of the contracting activity issues 
a written decision on the appeal. The Funding Agreement officer may 
proceed with award only if he or she determines in writing that the 
award must be made to protect the public interest. The Funding 
Agreement officer must include a statement of the facts justifying such 
a determination and provide a copy of its determination to SBA.
    (vii) SBA Appeal. Within 10 business days of SBA's notice of intent 
to appeal, SBA may file a formal appeal with the head of the agency. 
SBA's appeal will state with specificity SBA's conclusion that the 
agency's obligation to make a Phase III award ``to the greatest extent 
practicable'' has not been fulfilled.
    (viii) Agency Decision. Within 30 business days of receiving SBA's 
appeal, the head of the agency's contracting or grant-making activity 
must render a written decision setting forth the basis of his or her 
determination. During this period, the agency should consult with SBA 
and review any case-specific information SBA believes to be pertinent.
    (ix) SBA Case Report to Congress. SBA notifies Congress of all 
instances in which an agency pursued Phase III R/R&D, or production of 
a technology developed under an SBIR/STTR award, with a business or 
entity other than the SBIR/STTR Awardee. SBA will notify Congress of 
such instances, of any agency determination or decision justifying an 
award to other than the Phase III SBIR/STTR Awardee, and of any SBA 
appeals of agency decisions under this section.

5. Program Solicitation Process

    (a) Topics/Subtopics. At least annually, each agency must issue a 
Program Solicitation that sets forth a substantial number of R/R&D 
topics and subtopic areas consistent with stated agency needs or 
missions. Agencies may decide to issue joint solicitations. Both the 
list of topics and the description of the topics and subtopics must be 
sufficiently comprehensive to provide a wide range of opportunities for 
SBCs to participate in the agency R/R&D programs. Topics and subtopics 
must emphasize the need for proposals with advanced concepts to meet 
specific agency R/R&D needs. Each topic and subtopic must describe the 
needs in sufficient detail to assist in providing

[[Page 12813]]

on-target responses, but cannot involve detailed specifications to 
prescribed solutions of the problems.
    (b) Master Schedule. The Act requires issuance of SBIR/STTR Phase I 
Program Solicitations in accordance with a Master Schedule coordinated 
between SBA and the SBIR/STTR Participating Agency. The SBA office 
responsible for coordination is: Office of Innovation, U.S. Small 
Business Administration, 409 Third Street SW, Washington, DC 20416. 
Phone: (202) 205-6450. Fax: (202) 205-7754. Email: [email protected]. 
Website: www.SBIR.gov.
    (c) Coordination of Agency Schedules. For maximum participation by 
interested SBCs, it is important that the planning, scheduling and 
coordination of agency Program Solicitation release dates be completed 
as early as practicable to coincide with the commencement of the fiscal 
year on October 1. Bunching of agency Program Solicitation release and 
closing dates may prohibit SBCs from preparation and timely submission 
of proposals for more than one SBIR/STTR project. SBA's coordination of 
agency schedules minimizes the bunching of proposed release and closing 
dates. SBIR/STTR Agencies may elect to publish multiple Program 
Solicitations within a given fiscal year to facilitate in-house agency 
proposal review and evaluation scheduling.
    (d) Posting of Master Schedule. SBA posts a Master Schedule of 
release dates of Program Solicitations with links to the Participating 
Agency websites. For more information see Sec.  10(c) of this Policy 
Directive.
    (e) Simplified, Standardized, and Timely SBIR/STTR Program 
Solicitations
    (1) The Act requires simplified, standardized and timely SBIR/STTR 
solicitations and for agencies to use a ``uniform process'' minimizing 
the regulatory burden for SBCs. Therefore, the instructions in Appendix 
I to this Policy Directive purposely depart from normal Government 
solicitation format and requirements. Furthermore, while all of 
Appendix I is applicable for Phase I and Phase II procurements, only 
Sec.  5(d) of Appendix I is applicable for Phase III procurements.
    (2) Agencies must update www.SBIR.gov with information on each 
solicitation and modification no later than 5 days after the date of 
release of the solicitation or modification to the public. This must 
include any update to the website link for the Program Solicitation.
    (3) SBA does not intend that the SBIR/STTR Program Solicitation 
replace or be used as a substitute for unsolicited proposals for R/R&D 
awards to SBCs. In addition, the SBIR/STTR Program Solicitation 
procedures do not prohibit other agency R/R&D actions with SBCs that 
are carried on in accordance with applicable statutory or regulatory 
authorizations.

6. Eligibility and Application (Proposal) Requirements

    (a) Eligibility Requirements
    (1) Certification. To receive SBIR/STTR funds, each Awardee of a 
Phase I or Phase II award must qualify as an SBC at the time of award 
and at any other time set forth in SBA's regulations at 13 CFR 121.701-
121.705. Each Phase I and Phase II Awardee must submit a certification 
stating that it meets the size, ownership and other requirements of the 
SBIR or STTR program at the time of award, and at any other time set 
forth in SBA's regulations at 13 CFR 121.701-121.705. SBA's size 
regulations for the SBIR/STTR program require that an Awardee be 
directly owned and controlled by individuals or SBCs; however, SBA is 
clarifying that an SBC directly owned and controlled by an Indian Tribe 
or by another SBC that is directly owned and controlled by an Indian 
Tribe may also be eligible to participate in the SBIR/STTR programs.
    (2) Performance of Work Requirements. For SBIR Phase I, a minimum 
of two-thirds of the research or analytical effort must be performed by 
the Awardee. For SBIR Phase II, a minimum of one-half of the research 
or analytical effort must be performed by the Awardee. Occasionally, 
deviations from these SBIR requirements may occur, and must be approved 
in writing by the Funding Agreement officer after consultation with the 
agency SBIR/STTR program manager/coordinator. For STTR Phase I and 
Phase II, not less than 40 percent of the R/R&D work must be performed 
by the SBC, and not less than 30 percent of the R/R&D work must be 
performed by a partnering Research Institution. Deviations from these 
STTR requirements are not allowed, as the performance of work 
requirements are specified in statute at 15 U.S.C. 638(e). An agency 
can measure this research or analytical effort using the total award 
dollars or labor hours, and must explain to the small business in the 
solicitation how it will be measured.
    (3) Employment of the Principal Investigator/Project Manager. For 
both Phase I and Phase II, the primary employment of the Principal 
Investigator/Project Manager must be with the SBC (or the Research 
Institution--STTR only) at the time of award and during the conduct of 
the proposed project. Primary employment means that more than one-half 
of the Principal Investigator/Project Manager's employment time is 
spent in the employ of the SBC (or Research Institution--STTR only). 
This precludes full-time employment with another organization. 
Occasionally, deviations from this requirement may occur, and must be 
approved in writing by the Funding Agreement officer after consultation 
with the agency SBIR/STTR program manager/coordinator. Further, an SBC 
may replace the Principal Investigator/Project Manager on an SBIR/STTR 
Phase I or Phase II award, subject to approval in writing by the 
Funding Agreement officer. For purposes of the SBIR/STTR programs, 
personnel obtained through a Professional Employer Organization or 
other similar personnel leasing company may be considered employees of 
the Awardee. This is consistent with SBA's size regulations, 13 CFR 
121.106, ``How Does SBA Calculate Number of Employees?''.
    (4) Location of the work. For both Phase I and Phase II, the R/R&D 
work must be performed in the United States. However, based on a rare 
and unique circumstance, agencies may approve a particular portion of 
the R/R&D work to be performed or obtained in a country outside of the 
United States, for example, if a supply or material or other item or 
project requirement is not available in the United States. The Funding 
Agreement officer must approve each such specific condition in writing.
    (5) Novated/Successor in Interested/Revised Funding Agreements. An 
SBIR/STTR Awardee may include, and SBIR/STTR work may be performed by, 
those identified via a ``novated'' or ``successor in interest'' or 
similarly-revised Funding Agreement. For example, in order to receive a 
Phase III award, the Awardee must have either received a prior Phase I 
or Phase II award or been novated a Phase I or Phase II award (or 
received a revised Phase I or Phase II award if a grant or cooperative 
grant). In addition, an SBIR/STTR Awardee may include those that have 
merely reorganized with the same key staff (e.g., reorganized from a 
partnership to an LLC), regardless of whether they have been assigned a 
different tax identification number. In cases where there is a novation 
or similarly revised Funding Agreement, agencies may require the 
original Awardee to relinquish its rights and interests in an SBIR/STTR 
project in favor of another Applicant as a condition for that 
Applicant's eligibility to participate in the programs for that 
project.
    (6) Majority-Owned by Multiple VCOCs, Hedge Funds or Private Equity

[[Page 12814]]

Firms [SBIR Only]. NIH, Department of Energy (DOE), and NSF may each 
award not more than 25% of the agency's SBIR funds to SBCs that are 
owned in majority part by multiple venture capital operating companies, 
hedge funds, or private equity firms through competitive, merit-based 
procedures that are open to all eligible SBCs. Any other SBIR 
Participating Agency may award not more than 15% of the agency's SBIR 
funds to such SBCs. SBIR agencies may or may not choose to utilize this 
funding option. A table listing the agencies that are currently using 
this authority can be found at www.SBIR.gov. This authority is set 
forth in 13 CFR 121.701-121.705.
    (i) Before permitting participation in the SBIR program by SBCs 
that are owned in majority part by multiple venture capital operating 
companies, hedge funds, or private equity firms, the SBIR agency must 
submit a written determination to SBA, the Senate Committee on Small 
Business and Entrepreneurship, the House Committee on Small Business 
and the House Committee on Science, Space, and Technology at least 30 
calendar days before it begins making awards to such SBCs. The 
determination must be made by the head of the Federal Agency or 
designee and explain how awards to such SBCs in the SBIR program will:
    (A) induce additional venture capital, hedge fund, or private 
equity firm funding of small business innovations;
    (B) substantially contribute to the mission of the Federal Agency;
    (C) address a demonstrated need for public research; and
    (D) otherwise fulfill the capital needs of SBCs for additional 
financing for SBIR projects.
    (ii) The SBC that is majority-owned by multiple venture capital 
operating companies, hedge funds, or private equity firms must register 
with SBA in the Company Registry Database, at www.SBIR.gov, prior to 
the date it submits an application for an SBIR award.
    (iii) The SBC that is majority-owned by multiple venture capital 
operating companies, hedge funds, or private equity firms must submit a 
certification with its proposal stating, among other things, that it 
has registered with SBA.
    (iv) Any agency that makes an award under this paragraph during a 
fiscal year shall collect and submit to SBA data relating to the number 
and dollar amount of Phase I awards, Phase II awards, and any other 
category of awards by the Federal Agency under the SBIR program during 
that fiscal year. See Sec.  10 of this Policy Directive for the 
specific reporting requirements.
    (v) If an agency awards more than the percentage of the funds 
authorized under Sec.  6(a)(6) of this Policy Directive, the agency 
shall transfer from its non-SBIR and non-STTR R/R&D funds to the 
agency's SBIR funds any amount that is in excess of the authorized 
amount. The agency must transfer the funds not later than 180 days 
after the date on which the Federal Agency made the award that exceeded 
the authorized amount.
    (vi) If a Federal Agency makes an award under a solicitation more 
than 9 months after the date on which the period for submitting 
applications under the solicitation ends, a Covered Small Business 
Concern is eligible to receive the award, without regard to whether it 
meets the eligibility requirements of the program for a SBC that is 
majority-owned by multiple venture capital operating companies, hedge 
funds, or private equity firms, if the Covered Small Business Concern 
meets all other requirements for such an award. In addition, the agency 
must transfer from its non-SBIR and non-STTR R/R&D funds to the 
agency's SBIR funds any amount that is so awarded to a Covered Small 
Business Concern. The funds must be transferred not later than 90 days 
after the date on which the Federal Agency makes the award.
    (7) Agency Benchmarks for Progress Towards Commercialization.
    (i) Before making a new Phase I award to an Awardee that has won 
multiple prior SBIR/STTR awards, each agency must establish benchmarks 
for progress towards Commercialization and determine whether an 
Applicant meets those benchmarks. Agencies must apply two SBA-approved 
performance standards (benchmarks) addressing an Awardee's progress 
towards Commercialization: A Phase II Transition Rate that sets a 
minimum required rate of progress from Phase I to Phase II over a 
specified period, and a Commercialization Rate Benchmark that sets the 
minimum Commercialization results an Awardee must have realized from 
its prior SBIR/STTR awards over a specified period.
    (ii) If an Awardee fails to meet either of the benchmarks, that 
Awardee is not eligible to submit a proposal for a new Phase I award 
(and any new Phase II award issued pursuant to paragraph 4(b)(1)(ii)) 
for a period of one year from the time of the determination.
    (iii) For each benchmark, agencies establish a threshold number of 
prior awards an Awardee must have won for the benchmark requirement to 
be applied.
    (iv) Using information received from the agencies and from SBIR/
STTR Awardees, SBA identifies the companies that have won more than the 
threshold number of awards and calculates the Phase II Transition Rates 
and Commercialization Rates for those companies. The results of this 
assessment are used by each agency to determine if a company fails to 
meet a benchmark rate and is therefore not eligible to submit a 
proposal for a new Phase I award. Agencies must notify SBA of any 
applications denied because of failure to meet the benchmarks. The 
assessment results and eligibility determinations are not made public. 
Participating Agencies and SBA officials view the results through 
secure user accounts on www.SBIR.gov. Each participating company can 
view the results of the last benchmark assessment once it has created a 
Small Business User account on www.SBIR.gov. If an Awardee believes its 
assessment was made in error, it may provide SBA with the pertinent 
award information and request a reassessment.
    (v) Current details of these requirements and the implementation 
processes used by the agencies are posted on www.SBIR.gov under the 
``Performance Benchmark Requirements'' tab. Changes to these benchmarks 
requirements and procedures become effective when posted on 
www.SBIR.gov. Agencies must submit any changes to the benchmarks to SBA 
for prior approval. If approved, SBA will publish the benchmarks and 
allow for public comment at least 60 days before becoming effective.
    (b) Proposal (Application) Requirements.
    (1) Registration and Certifications for Proposal and Award.
    (i) Each Applicant must register in SBA's Company Registry Database 
at www.SBIR.gov (see Appendix I) and submit a .pdf document of the 
registration and any required certifications with its application if 
the information cannot be transmitted automatically to the SBIR/STTR 
Agencies from www.SBIR.gov. Applicants must have updated their 
information on the Company Registry no more than 6 months prior to the 
date of a proposal submission.
    (ii) Agencies may request the SBIR/STTR Applicant to submit a 
certification at the time of submission of the application, which 
requires the Applicant to state that it intends to meet the size, 
ownership and other requirements of the SBIR/STTR program at the time 
of award of the Funding Agreement, if selected for award. See Appendix 
I for the required text of the certification.

[[Page 12815]]

    (iii) [SBIR Only] For those agencies using the authority under 
Sec.  6(a)(6) of this Policy Directive, each Phase I and Phase II 
Applicant that is majority-owned by multiple venture capital operating 
companies, hedge funds, or private equity firms is required to submit a 
specific certification with its SBIR application to the SBIR agency 
(see Appendix I for the required text of the certification).
    (2) Commercialization Plan. A succinct commercialization plan must 
be included with each proposal for an SBIR/STTR Phase II award. 
Elements of a commercialization plan will include the following, as 
applicable:
    (i) Company information. Focused objectives/core competencies; 
specialization area(s); products with significant sales; and history of 
previous Federal and non-Federal funding, regulatory experience, and 
subsequent Commercialization.
    (ii) Customer and Competition. Clear description of key technology 
objectives, current competition, and advantages compared to competing 
products or services; description of hurdles to acceptance of the 
innovation.
    (iii) Market. Milestones, target dates, analyses of market size, 
and estimated market share after first year sales and after 5 years; 
explanation of plan to obtain market share.
    (iv) Intellectual Property. Patent status, technology lead, trade 
secrets or other demonstration of a plan to achieve sufficient 
protection to realize the commercialization stage and attain at least a 
temporal competitive advantage.
    (v) Financing. Plans for securing necessary funding in Phase III.
    (vi) Assistance and mentoring. Plans for securing needed technical 
or business assistance through mentoring, partnering, or through 
arrangements with State assistance programs, SBDCs, Federally-funded 
research laboratories, Manufacturing Extension Partnership centers, or 
other assistance providers.
    (3) Data Collection. Each Phase I and II Applicant is required to 
provide information on www.SBIR.gov (see Appendix II as posted on 
www.SBIR.gov). Each SBC applying for a Phase II award is required to 
update its Commercialization information on www.SBIR.gov for all of its 
prior Phase II awards (see Appendix II as posted on www.SBIR.gov).

7. Program Funding Process

    Because the Act requires a ``simplified, standardized funding 
process,'' specific attention must be given to the following areas of 
SBIR/STTR program administration:
    (a) Timely Receipt of Proposals. 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.
    (b) Review of Proposals. SBA encourages participating agencies to 
use their routine review processes for SBIR/STTR 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 participating 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/STTR 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.
    (1) Time Period for Decision on Proposals.
    (i) NIH and NSF must issue a notice to an Applicant for each 
proposal submitted stating whether it was recommended or not for award 
no more than one year after the closing date of the solicitation. NIH 
and NSF agencies should issue the award no more than 15 months after 
the closing date of the solicitation. Pursuant to paragraph (iii) 
below, NIH and NSF are encouraged to reduce these timeframes.
    (ii) All other Participating Agencies must issue a notice to an 
Applicant for each proposal submitted stating whether it was 
recommended or not for award no more than 90 calendar days after the 
closing date of the solicitation. Agencies should issue the award no 
more than 180 calendar days after the closing date of the solicitation.
    (iii) Agencies are encouraged to develop programs or measures to 
reduce the time periods between the close of a Phase I solicitation/
receipt of a Phase II application and notification to the Applicant as 
well as the time to the issuance of the Phase I and Phase II awards. As 
appropriate, agencies should adopt accelerated proposal, evaluation, 
and selection procedures designed to address the gap in funding these 
competitive awards to meet or reduce the timeframes set forth above. 
With respect to Phase II awards, SBA recognizes that Phase II 
arrangements between the agency and Applicant may require more detailed 
negotiation to establish terms acceptable to both parties; however, 
agencies must not sacrifice the R/R&D momentum created under Phase I by 
engaging in unnecessarily protracted Phase II proceedings.
    (iv) Request for Waiver.
    (A) If the agency determines that it requires additional time 
between the solicitation closing date and the notification of 
recommendation for award, it must submit a written request for an 
extension to SBA. The written request must specify the number of 
additional calendar days needed to issue the notice for a specific 
Applicant and the reasons for the extension. If an agency believes it 
will not meet the timeframes for an entire solicitation, the request 
for an extension must state how many awards will not meet the statutory 
timeframes, as well as the number of additional calendar days needed to 
issue the notice and the reasons for the extension. The written request 
must be submitted to SBA at least 10 business days prior to when the 
agency must issue its notice to the Applicant. Agencies must send their 
written request to: Office of Innovation, U.S. Small Business 
Administration, 409 Third Street SW, Washington, DC 20416. Phone: (202) 
205-6450. Fax: (202) 205-7754. Email: [email protected].
    (B) SBA will respond to the request for an extension within 5 
business days, as practicable. SBA may authorize an agency to issue the 
notice up to 90 calendar days after the timeframes set forth in 
paragraphs (c)(1)(i) and (ii).
    (C) Even if SBA grants an extension of time, the SBIR/STTR 
Participating Agency is required to develop programs or measures to 
reduce the time periods between the close of a Phase I solicitation/
receipt of a Phase II application and notification to the Applicant as 
well as the time to the issuance of the Phase I and Phase II awards as 
set forth in paragraph (c)(1)(iii) above.
    (D) If an SBIR/STTR Participating Agency does not receive an 
extension of time, it may still proceed with the award to the small 
business and must complete the requirements in (C) above.
    (2) Standardized Solicitation.
    (i) The standardized SBIR/STTR Program Solicitation must advise 
Phase I Applicants that additional information may be requested by the 
awarding agency to evidence Awardee responsibility for project 
completion and advise Applicants of the proposal evaluation criteria 
for Phase I and Phase II.
    (ii) The SBIR/STTR Agency will provide information to each Phase I

[[Page 12816]]

Awardee considered for a Phase II award regarding Phase II proposal 
submissions, reviews, and selections.
    (d) Essentially Equivalent Work. SBIR/STTR Applicants often submit 
duplicate or similar proposals to more than one soliciting agency when 
the announcement or solicitation appears to involve similar topics or 
requirements. However, Essentially Equivalent Work must not be funded 
in the SBIR/STTR or other Federal Agency programs, unless an exception 
to this rule applies. Agencies must verify with the Applicant that this 
is the case by requiring them to certify at the time of award and 
during the life cycle of the award that they do not have Essentially 
Equivalent Work funded by the same or another Federal Agency.
    (e) Cost Sharing. Cost sharing can serve the mutual interests of 
the Participating Agencies and certain program Awardees by assuring the 
efficient use of available resources. Cost sharing on SBIR/STTR 
projects cannot be required of Applicants for Phase I and Phase II, 
although it may be encouraged for any phase award. However, cost 
sharing cannot be an evaluation factor in the review of Phase I 
proposals. The standardized SBIR/STTR Program Solicitation (Appendix I) 
will provide information to prospective program Applicants concerning 
cost sharing.
    (f) Payment Schedules and Cost Principles.
    (1) SBIR/STTR 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/STTR 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/STTR Funding Agreements must use, as appropriate, 
current cost principles and procedures authorized for use by the 
Participating Agencies. By the time of award, agencies must have 
informed each Awardee of the applicable Federal regulations and 
procedures that refer to the costs that, generally, are allowable under 
Funding Agreements.
    (3) Agencies must, to the extent possible, shorten the amount of 
time between the notice of an award under the SBIR/STTR program and the 
subsequent release of funding with respect to the award.
    (i) Pilot Program to Accelerate Department of Defense SBIR and STTR 
Awards
    (A) The Under Secretary of Defense for Research and Engineering, 
acting through the Director of Defense Procurement and Acquisition 
Policy of the Department of Defense, shall establish a pilot program to 
reduce the time for awards under the SBIR and STTR programs of the 
Department of Defense, under which the Department of Defense shall--
    (i) develop simplified and standardized procedures and model 
contracts throughout the Department of Defense for Phase I, Phase II, 
and Phase III SBIR awards;
    (ii) for Phase I SBIR and STTR awards, reduce the amount of time 
between solicitation closure and award;
    (iii) for Phase II SBIR and STTR awards, reduce the amount of time 
between the end of a Phase I award and the start of the Phase II award;
    (iv) for Phase II SBIR and STTR awards that skip Phase I, reduce 
the amount of time between solicitation closure and award;
    (v) for sequential Phase II SBIR and STTR awards, reduce the amount 
of time between Phase II awards; and
    (vi) reduce the award times described in clauses (ii), (iii), (iv), 
and (v) to be as close to 90 days as possible.
    (B) In carrying out the pilot program under subparagraph (A), the 
Director of Defense Procurement and Acquisition Policy of the 
Department of Defense shall consult with the Director of the Office of 
Small Business Programs of the Department of Defense.
    (C) The pilot program under subparagraph (A) shall terminate on 
September 30, 2022.
    (g) Funding Agreement Types and Fee or Profit. Statutory 
requirements for uniformity and standardization require consistency in 
application of SBIR/STTR program provisions among SBIR/STTR Agencies. 
However, consistency must allow for flexibility by the various agencies 
in their missions and needs as well as the wide variance in funds 
required to be devoted to SBIR/STTR 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. Contracting agencies 
may issue SBIR/STTR awards as fixed price contracts (including firm 
fixed price, fixed price incentive or fixed price level of effort 
contracts) or cost type contracts, consistent with the FAR and agency 
supplemental acquisition regulations. In some cases, small businesses 
seek progress payments, which may be appropriate under fixed-price R&D 
contracts and are a form of contract financing for firm-fixed-price 
contracts. However, for certain agencies, in order to qualify for 
progress payments or an incentive type contract, the small business's 
accounting system would have to be audited, which can delay award, 
unless the contractor has an already approved accounting system. 
Therefore, SBIR/STTR Agencies should consider using partial payments 
methods or on a deliverable item basis or consider other available 
options to work with the SBIR/STTR Awardee.
    (2) Fee or Profit. Except as expressly excluded or limited by 
statute, awarding agencies must provide for a reasonable fee or profit 
on SBIR/STTR Funding Agreements, consistent with normal profit margins 
provided to profit-making firms for R/R&D work.
    (h) 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 
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 for SBIR or 1 year for STTR. 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 Participating 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 project.
    (i) Dollar Value of Awards.
    (1) Generally, a Phase I award (including modifications) may not 
exceed $150,000 and a Phase II award (including modifications) may not 
exceed $1,000,000. Agencies may issue an award that exceeds these award 
guideline amounts by no more than 50%.
    (2) SBA reviews these amounts every year for the effects of 
inflation and posts these inflation effects and any resulting 
adjustments on www.SBIR.gov. Adjusted guidelines are effective for all 
solicitations issued on or after the date of the adjustment, and may be 
used by agencies to amend the solicitation and other program 
literature. Agencies have the discretion to issue awards for less than 
the guidelines.

[[Page 12817]]

    (3) There is no dollar limit associated with Phase III SBIR/STTR 
awards.
    (4) Agencies may request a waiver to exceed the award guideline 
amounts established in paragraph (i)(1) by more than 50% for a specific 
topic. Agencies must submit this request for a waiver to SBA prior to 
release of the solicitation, contract award, or modification to the 
award for the topic. The request for a waiver must explain and provide 
evidence that the limitations on award size will interfere with the 
ability of the agency to fulfill its research mission through the SBIR 
or STTR program; that the agency will minimize, to the maximum extent 
practicable, the number of awards that exceed the guideline amounts by 
more than 50%; and that research costs for the topic area differ 
significantly from those in other areas. After review of the agency's 
justification, SBA may grant the waiver for the agency to exceed the 
award guidelines by more than 50% for a specific topic. SBA will issue 
a decision on the request within 10 business days. The waiver will be 
in effect for one fiscal year.
    (5) Agencies must maintain information on all awards exceeding the 
guidelines set forth in paragraph (i)(1), including the amount of the 
award, a justification for exceeding the guidelines for each award, the 
identity and location of the Awardee, whether the Awardee has received 
any venture capital, hedge fund, or private equity firm investment, and 
whether the Awardee is majority-owned by multiple VCOCs, hedge funds, 
or private equity firms.
    (6) The award guidelines do not prevent an agency from funding 
SBIR/STTR projects from other (non-SBIR/STTR) agency funds. Non-SBIR/
STTR funds used on SBIR/STTR efforts do not count toward the award 
guidelines set forth in (i)(1).
    (j) 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/STTR participation related to the acquisition of 
effort on national security or intelligence functions except as 
specifically defined under Sec.  9(e)(2) of the Act, 15 U.S.C. 
638(e)(2). Agency technology managers directing R/R&D projects under 
the SBIR and STTR programs, 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/STTR action. SBA's 
SBIR/STTR program monitoring activities, except where prohibited by 
security considerations, must include a review of nonconforming SBIR/
STTR actions justified under this public law provision.
    (k) Management of the STTR Project [STTR only]. The SBC, and not 
its partnering Research Institution(s), is to provide satisfactory 
evidence that it will exercise management direction and control of the 
performance of the STTR Funding Agreement. Regardless of the proportion 
of the work or funding allocated to each of the performers under the 
Funding Agreement, the SBC is to be the primary party with overall 
responsibility for performance of the project. All agreements between 
the SBC and the Research Institution cooperating in the STTR Funding 
Agreement, or any business plans reflecting agreements and 
responsibilities between the parties during performance of STTR Phase I 
or Phase II Funding Agreement, or for the Commercialization of the 
resulting technology, should reflect the controlling position of the 
SBC.

8. Terms of Agreement Under SBIR/STTR Awards

    (a) Proprietary Information Contained in Proposals. The 
standardized SBIR/STTR Program Solicitation shall include provisions 
requiring the confidential treatment of any proprietary information, 
unless disclosure is otherwise required by law. The solicitation will 
require that all proprietary information be identified clearly and 
marked with a prescribed legend. Agencies may elect to require SBCs to 
limit proprietary information to that essential to the proposal and to 
have such information submitted on a separate page or pages keyed to 
the text. The Government, except solely for proposal review purposes, 
shall not use or disclose, or authorize any other person or entity to 
use or disclose, all proprietary information, regardless of type, 
submitted in a contract proposal or grant application for a Funding 
Agreement under the SBIR/STTR programs.
    (b) Rights in Data Developed under an SBIR/STTR Funding Agreement.
    (1) General. The Act provides for retention by an SBC Awardee of 
the rights to Data generated by the concern in the performance of an 
SBIR/STTR award. These data rights provide an incentive for SBCs to 
participate in Federally-funded research projects and contribute to the 
ability of small business Awardees to commercialize the technology 
developed under the program. The central purpose of SBIR/STTR Data 
Rights is to provide the Federal Government with the degree of access 
to an Awardee's SBIR/STTR Data needed to evaluate the work and 
effectively utilize the results and at the same time ensure that the 
Federal Government or other concerns cannot use SBIR/STTR Data in ways 
(e.g., for commercial purposes or to produce future technical 
procurement specifications) that would inappropriately diminish the 
rights or associated economic opportunities of the small business that 
developed the Data. The SBIR/STTR Data Rights provisions and 
definitions provided in this Policy Directive are designed to ensure 
that, for properly marked SBIR/STTR Data, during the SBIR/STTR 
Protection Period, the Federal Government provides effective protection 
of the Data that is comparable to and at least as strong as the 
protection the Federal Government gives to delivered proprietary Data 
that is developed exclusively at private expense.
    (2) Application of SBIR/STTR Data Rights. SBIR/STTR Participating 
Agencies must ensure that Awardees of an SBIR/STTR Funding Agreement 
retain appropriate proprietary rights for all SBIR/STTR Data generated 
in the performance of the award. In general, this results in the 
Government receiving SBIR/STTR Data Rights in all SBIR/STTR Data during 
the SBIR/STTR Protection Period, except for certain types of Data that 
are not subject to such data rights restrictions due to the nature of 
the data (e.g., Form, Fit, and Function Data or OMIT Data). SBIR/STTR 
Data Rights apply to all SBIR/STTR awards, including subcontracts or 
subgrants to such awards, that fall within the statutory definition of 
Phase I, II, or III of the SBIR/STTR programs, as described in Sec.  4 
of this Policy Directive. The scope and extent of the SBIR/STTR Data 
Rights applicable to Federally-funded Phase III awards are identical to 
the SBIR/STTR Data Rights applicable to Phases I and II SBIR/STTR 
awards. SBIR/STTR Data Rights provide license rights to the Federal 
Government. SBIR/STTR Data Rights restrict the Federal Government's use 
and release of properly marked SBIR/STTR Data only during the SBIR/STTR 
Protection Period; after the protection period, the Federal Government 
has a royalty-free license to use, and to authorize others to use on 
its behalf, these data for Government Purposes, and is relieved of 
disclosure prohibitions related to such

[[Page 12818]]

Government Purposes, and assumes no liability for unauthorized use of 
these data by third parties. There is one exception to the rule that 
all Federal agencies receive Government Purpose rights in SBIR/STTR 
Data after the protection period. This exception is limited to the U.S. 
Department of Energy (DOE), whose statutory authorities, it has argued, 
mandates that it release and disclose all Government funded SBIR/STTR 
Data after the protection period. These authorities are the Atomic 
Energy Act of 1954, Public Law 83-703, 42 U.S.C. 2013(b); Energy 
Reorganization Act of 1974 (ERA), Public Law 93-438, 42 U.S.C. 5813(7); 
and the Department of Energy Organization Act of 1977 (DEOA), 42 U.S.C. 
7112(5). Based on these authorities, DOE receives Unlimited Rights in 
SBIR/STTR Data upon expiration of the SBIR/STTR Protection Period, and 
this exception is limited to DOE. The Federal Government receives 
Unlimited Rights in Form, Fit, and Function Data, OMIT Data, and all 
unmarked SBIR/STTR Data.
    (3) SBIR/STTR Data Rights--Main Elements:
    (i) An SBC retains title and ownership of all SBIR/STTR Data it 
develops or generates in the performance of an SBIR/STTR award. The SBC 
retains all rights in SBIR/STTR Data that are not granted to the 
Government in accordance with this Policy Directive. These rights of 
the SBC do not expire.
    (ii) The Government receives SBIR/STTR Data Rights during the SBIR/
STTR Protection Period on all appropriately marked SBIR/STTR Data. 
These rights enable the Federal Government to use SBIR/STTR Data in 
limited ways within the Government, such as for project evaluation 
purposes, but are intended to prohibit uses and disclosures of the 
SBIR/STTR Data that may undermine the SBC's future Commercialization of 
the associated technology. The Government receives Unlimited Rights in 
Form, Fit, and Function Data, OMIT Data, and all unmarked SBIR/STTR 
Data.
    (iii) After the SBIR/STTR Protection Period has expired, the 
Federal Government may use, and authorize others to use on its behalf, 
for Government Purposes, SBIR/STTR Data that was subject to SBIR/STTR 
Data Rights during the SBIR/STTR Protection Period. However, SBIR/STTR 
Data developed under awards issued by DOE are subject to Unlimited 
Rights after the SBIR/STTR Protection Period has expired.
    (4) SBIR/STTR Protection Period. The SBIR/STTR Protection Period 
begins with award of an SBIR/STTR Funding Agreement and ends twenty 
years, or longer at the discretion of the Participating Agency, from 
the date of award of an SBIR/STTR Funding Agreement (either Phase I, 
Phase II, or Federally-funded SBIR/STTR Phase III) unless subsequent to 
the award, the agency and the SBC negotiate for some other protection 
period for the SBIR/STTR Data.
    (5) Marking Requirements, and Requirements for Omitted or Incorrect 
Markings. To receive the protections accorded to SBIR/STTR Data 
pursuant to SBIR/STTR Data Rights, any SBIR/STTR Data that is delivered 
must be marked with the appropriate SBIR/STTR Data Rights legend or 
notice, in accordance with agency procedures. The Government assumes no 
liability for the access, use, modification, reproduction, release, 
performance, display, disclosure, or distribution of SBIR/STTR Data 
without markings. If SBIR/STTR Data is delivered without the required 
legend or notice, the SBIR/STTR Awardee may, within 6 months of such 
delivery (or a longer period approved by the agency for good cause 
shown), request to have an omitted SBIR/STTR Data legend or notice, as 
applicable, placed on qualifying Data. If SBIR/STTR Data is delivered 
with an incorrect or nonconforming legend or notice, the agency may 
correct or permit correction at the Awardee's expense of such incorrect 
or nonconforming notice(s).
    (6) Negotiated Rights.
    (i) Specially Negotiated Licenses Authorized Only After Award. An 
agency must not, in any way, make issuance of an SBIR/STTR award 
conditional upon the Awardee negotiating or consenting to negotiate a 
specially negotiated license or other agreement regarding SBIR/STTR 
Data. The negotiation of any such specially negotiated license 
agreements shall be permitted only after award.
    (ii) Following issuance of an SBIR/STTR award, the Awardee may 
enter into a written agreement with the awarding agency to modify the 
license rights that would otherwise be granted to the agency during the 
SBIR/STTR Protection Period. However, any such agreement must be 
entered into voluntarily and by mutual agreement of the SBIR/STTR 
Awardee and agency, and not a condition for additional work under the 
Funding Agreement or the exercise of options. Such a bilateral data 
rights agreement must be entered into only after the subject SBIR/STTR 
award (which award must include an appropriate SBIR/STTR Data Rights 
clause) has been signed. Any such specially negotiated license must be 
in writing under a separate agreement after the SBIR/STTR Funding 
Agreement is signed. A decision by the Awardee to relinquish, transfer, 
or modify in any way its rights in SBIR/STTR Data must be made without 
pressure or coercion by the agency or any other party. Any provision in 
a competitive non-SBIR or SBIR solicitation that would have the effect 
of diminishing SBIR/STTR Data Rights shall have no effect on the 
provision of SBIR/STTR Data Rights in a resulting Phase I, Phase II, or 
Phase III award.
    (7) SBIR/STTR Data Rights Clause. To ensure that SBIR/STTR Awardees 
receive the applicable data rights, all SBIR and STTR solicitations and 
resulting Funding Agreements must fully implement all of the policies, 
procedures, and requirements set forth in this Policy Directive in 
appropriate provisions and clauses incorporated into the SBIR/STTR 
solicitations and awards. Paragraph (5)(d)(3) of Appendix I: 
Instructions for Preparation of SBIR/STTR Program Solicitations 
provides a sample SBIR/STTR Data Rights clause containing the key 
elements that must be reflected in the clause used in Federal Agency 
solicitations. SBA will report to the Congress any attempt or action by 
an agency, that it is aware of, to condition an SBIR or STTR award on 
the negotiation of lesser data rights or to exclude the appropriate 
data rights clause from the award.
    (c) Non-disclosure Agreement for Releases Outside the Government. 
In accordance with the Government's SBIR/STTR Data Rights, the 
Government must enter into an appropriate non-disclosure agreement 
(NDA) with any non-Governmental entity that is authorized to receive 
SBIR/STTR Data (that is subject to SBIR/STTR Data Rights) during the 
SBIR/STTR Protection Period, except as otherwise permitted by the 
Awardee asserting the SBIR/STTR Data Rights. The NDA must contain terms 
and conditions to ensure that the non-governmental entity:
    (1) Understands, acknowledges, and agrees that its use, 
modification, reproduction, release, display, disclosure, and 
distribution of the SBIR/STTR Data is permitted only for the specific 
activities authorized by the NDA (which must be authorized by SBIR/STTR 
Data Rights, or otherwise authorized by the SBIR/STTR Awardee);
    (2) Is prohibited from further using, modifying, reproducing, 
releasing, displaying, disclosing, or distributing the Data unless it 
receives the written permission of the Federal Government (when 
authorized by the SBIR/STTR Awardee) or the written permission of the 
SBIR/STTR Awardee;

[[Page 12819]]

    (3) Agrees to destroy (or return to the Federal Government at the 
request of the Government), all SBIR/STTR Data, and all copies in its 
possession, at or before the time specified in the agreement, and to 
notify the procuring agency that all copies have been destroyed (or 
returned as requested by the Government);
    (4) Is prohibited from using the data for a commercial purpose 
unless it receives the written permission of the Federal Government 
(when authorized by the SBIR/STTR Awardee) or the written permission of 
the SBIR/STTR Awardee itself; and
    (5) Ensures that its employees, subcontractors, and other entities 
that are authorized to receive SBIR/STTR Data are bound by use and non-
disclosure restrictions consistent with the NDA prior to being provided 
access to such SBIR/STTR Data.
    (d) [STTR only] Allocation of Intellectual Property Rights in STTR 
Award.
    (1) An SBC, before receiving an STTR award, must negotiate a 
written agreement between the SBC and the partnering Research 
Institution, allocating Intellectual Property rights and rights, if 
any, to carry out follow-on research, development, or 
Commercialization. The SBC must submit this agreement to the awarding 
agency with the proposal. The SBC must certify in all proposals that 
the agreement is satisfactory to the SBC.
    (2) The awarding agency may accept an existing agreement between 
the two parties if the SBC certifies its satisfaction with the 
agreement, and such agreement does not conflict with the interests of 
the Government. SBA will provide a model agreement to be adopted by the 
agencies and used as guidance by the SBC in the development of an 
agreement with the Research Institution. The model agreement will 
direct the parties to, at a minimum:
    (i) State specifically the degree of responsibility, and ownership 
of any product, process, or other invention or Innovation resulting 
from the cooperative research. The degree of responsibility shall 
include responsibility for expenses and liability, and the degree of 
ownership shall also include the specific rights to revenues and 
profits.
    (ii) State which party may obtain United States or foreign patents 
or otherwise protect any inventions resulting from the cooperative 
research.
    (iii) State which party has the right to any continuation of 
research, including non-STTR follow-on awards.
    (3) The Government will not normally be a party to any agreement 
between the SBC and the Research Institution. Nothing in the agreement 
is to conflict with any provisions setting forth the respective rights 
of the United States and the SBC with respect to Intellectual Property 
rights and with respect to any right to carry out follow-on research.
    (e) Title Transfer of Agency-Provided Property. Under the Act, the 
Federal Government may transfer title to property provided by the SBIR/
STTR Participating Agency to the Awardee or acquired by the Awardee for 
the purpose of fulfilling the contract where such transfer would be 
more cost effective than recovery of the property.
    (f) Continued Use of Government Equipment. Agencies must allow an 
SBIR/STTR Awardee participating in an SBIR/STTR Phase III award 
continued use, as a directed bailment, of any property transferred by 
the agency to the Phase II Awardee or acquired by the Awardee for the 
purpose of fulfilling the contract. The Phase II Awardee may use the 
property for a period of not less than 2 years, beginning on the 
initial date of the concern's participation in the third phase of the 
SBIR/STTR program.
    (g) Grant Authority. The Act does not, in and of itself, convey 
grant authority. Each agency must secure grant authority in accordance 
with its normal procedures.
    (h) Conflicts of Interest. SBA cautions Participating Agencies that 
awards made to SBCs owned by or employing current or previous Federal 
Government employees may create conflicts of interest in violation of 
FAR part 3 and the Ethics in Government Act of 1978, as amended. Each 
Participating Agency should refer to the standards of conduct review 
procedures currently in effect for its agency to ensure that such 
conflicts of interest do not arise.
    (i) American-Made Equipment and Products. Congress intends that the 
Awardee of a Funding Agreement under the SBIR/STTR program should, when 
purchasing any equipment or a product with funds provided through the 
Funding Agreement, purchase only American-made equipment and products, 
to the extent possible, in keeping with the overall purposes of this 
program. Each SBIR/STTR Agency must provide to each Awardee a notice of 
this requirement.
    (j) Certifications After Award and During Funding Agreement Life 
Cycle.
    (1) A Phase I Funding Agreement must state that the Awardee shall 
submit a new certification as to whether it is in compliance with 
specific SBIR/STTR program requirements at the time of final payment or 
disbursement.
    (2) A Phase II Funding Agreement must state that the Awardee shall 
submit a new certification as to whether it is in compliance with 
specific SBIR/STTR program requirements prior to receiving more than 
50% of the total award amount and prior to final payment or 
disbursement.
    (3) Agencies may also require additional certifications at other 
points in time during the life cycle of the Funding Agreement, such as 
at the time of each payment or disbursement.
    (k) Updating www.SBIR.gov. Agencies must require each Phase II 
Awardee to update the Commercialization information on the award 
through the company's account on www.SBIR.gov upon completion of the 
last deliverable under the Funding Agreement. In addition, the Awardee 
is requested to voluntarily update the Commercialization information on 
that award annually thereafter for a minimum period of 5 years.
    (l) Prototypes. Participating Agencies must handle all Prototypes 
developed under an SBIR/STTR award with caution during the SBIR/STTR 
Protection Period to prevent any use or disclosure of these items that 
has the potential to reveal the innovative aspects of the technology in 
ways that may harm the Awardee's ability to commercialize the 
technology. In particular, reverse engineering of Prototypes may 
reveal, to a Government or non-Government entity, the SBIR/STTR Data 
that is applied or embodied in the item. While a Prototype may not 
itself be considered SBIR/STTR Data because it is not ``recorded 
information,'' SBA cautions agencies that it is a violation of the 
purpose and intent of the Act to release or use a Prototype during the 
SBIR/STTR Protection Period in a way that harms the Awardee's ability 
to take advantage of the economic opportunities of its SBIR/STTR Data. 
SBA notes that the Defense Federal Acquisition Regulations Supplement 
(DFARS) Restricted Rights license granted to the Government for 
Computer Software prohibits non-Governmental entities from reverse-
engineering, disassembly, or decompiling Computer Software (including 
computer software embedded within hardware), except in extremely 
limited circumstances.

9. Responsibilities of SBIR/STTR Agencies and Departments

    (a) General Responsibilities. Each agency participating in the 
SBIR/STTR program must:
    (1) Unilaterally determine the categories of projects to be 
included in its SBIR/STTR program, giving

[[Page 12820]]

consideration to maintaining a portfolio balance between exploratory 
projects of high technological risk and those with greater likelihood 
of success. Further, to the extent permitted by the law, and in a 
manner consistent with the mission of that agency and the purpose of 
the SBIR/STTR program, each Federal agency must:
    (i) Give priority in the SBIR/STTR program to manufacturing-related 
research and development in accordance with Executive Order 13329. In 
addition, agencies must develop an Action Plan for implementing 
Executive Order 13329, which identifies activities used to give 
priority in the SBIR/STTR program to manufacturing-related research and 
development. These activities should include the provision of 
information on the Executive Order on the agency's SBIR/STTR program 
website.
    (ii) give priority to SBCs that participate in or conduct energy 
efficiency or renewable energy system research and development 
projects.
    (iii) give consideration to topics that further one or more 
critical technologies as identified by the National Critical 
Technologies panel (or its successor) in reports required under 42 
U.S.C. 6683, or the Secretary of Defense in accordance with 10 U.S.C. 
2522.
    (2) Release SBIR/STTR solicitations in accordance with the SBA 
master schedule.
    (3) Unilaterally receive and evaluate proposals resulting from 
Program Solicitations, select Awardees, issue Funding Agreements, and 
inform each Awardee under such agreement, to the extent possible, of 
the expenses of the Awardee that will be allowable under the Funding 
Agreement.
    (4) Require a succinct Commercialization plan with each proposal 
submitted for a Phase II award.
    (5) Collect and maintain information from Applicants and Awardees 
and provide it to SBA to develop and maintain the database, as 
identified in Sec.  11(c) of this Policy Directive.
    (6) Administer its own SBIR/STTR Funding Agreements or delegate 
such administration to another agency. Such administrative services 
include the use of assisted acquisition service providers under the 
terms and conditions of a properly executed Interagency Agreement.
    (7) Include provisions in each SBIR/STTR Funding Agreement setting 
forth the respective rights of the United States and the Awardee with 
respect to Intellectual Property rights and with respect to any right 
to carry out follow-on research.
    (8) Ensure that the rights in Data developed under each Federally-
funded SBIR/STTR Phase I, Phase II, and Phase III award are protected 
properly.
    (9) Make payments to Awardees of SBIR/STTR Funding Agreements on 
the basis of progress toward or completion of the Funding Agreement 
requirements and in all cases make payment to Awardees under such 
agreements in full, subject to audit, on or before the last day of the 
12-month period beginning on the date of completion of such 
requirements.
    (10) Provide an annual report on the SBIR/STTR program to SBA, as 
well as other information concerning the SBIR/STTR program. See Sec.  
10 of this Policy Directive for further information on the agency's 
reporting requirements, including the frequency for specific reporting 
requirements.
    (11) Include in its annual performance plan required by 31 U.S.C. 
1115(a) and (b) a section on its SBIR/STTR program, and submit such 
section to the Senate Committee on Small Business and Entrepreneurship 
and to the House Committees on Science, Space and Technology and Small 
Business.
    (12) Establish the agency's benchmarks for progress towards 
Commercialization and include the information necessary to implement 
the benchmarks in each solicitation. See Sec.  6(a)(7) of the directive 
for further information.
    (b) Discretionary Technical and Business Assistance to SBIR/STTR 
Awardees.
    (1) Agencies may enter into agreements with 1 or more vendors to 
provide technical and business assistance to SBIR/STTR Awardees, which 
may include access to a network of scientists and engineers engaged in 
a wide range of technologies, assistance with product sales, 
intellectual property protections, market research, market validation, 
and development of regulatory plans and manufacturing plans, or access 
to technical and business literature available through on-line 
databases. For a term not to exceed 5 years, each agency may select 1 
or more vendors from which small business concerns may obtain 
assistance. Such selection must be based on competitive and merit-based 
criteria.
    (i) The purpose of this technical and business assistance is to 
assist SBIR/STTR Awardees in:
    (A) making better technical decisions on SBIR/STTR projects;
    (B) solving technical problems that arise during SBIR/STTR 
projects;
    (C) minimizing technical risks associated with SBIR/STTR projects; 
and
    (D) commercializing the SBIR/STTR product or process, including 
intellectual property protections.
    (ii) An agency may not enter into a contract with the vendor if the 
contract amount provided for technical assistance is based upon the 
total number of Phase I or Phase II awards, but may enter into a 
contract with the vendor based upon the total amount of awards for 
which assistance is provided.
    (2) Each agency may provide up to $6,500 of SBIR/STTR funds for the 
technical and business assistance described above in (b)(1) per year 
for each Phase I award, which shall be in addition to the amount of the 
award. Each agency may provide up to $50,000 of SBIR/STTR funds for 
technical and business assistance described above in (b)(1) per project 
for Phase II awards. The amount of technical and business assistance 
for Phase II awards, as determined appropriate by the head of the 
Federal agency, may be included as part of the recipient's award or be 
in addition to the amount of the recipient's award. The agency may not 
use SBIR/STTR funds for technical and business assistance unless a 
vendor provides the services to the SBIR/STTR Awardee.
    (3) A small business concern may, by contract or otherwise, select 
1 or more vendors to assist the small business concern in meeting the 
goals listed in paragraph (1). An SBIR/STTR Applicant may acquire the 
technical assistance services set forth in (b)(1)(i) above itself 
rather than through a vendor selected by the Federal Agency. The 
Applicant must request the authority to select its own technical and 
business assistance provider from the Federal Agency and demonstrate in 
its SBIR/STTR application that the individual or entity selected can 
provide the specific technical and business services needed. If the 
Awardee demonstrates this requirement sufficiently, the agency shall 
permit the Awardee to acquire such technical and business assistance 
itself, in an amount up to $6,500 per year for Phase I awards and up to 
$50,000 per award for Phase II awards, as an allowable cost of the 
SBIR/STTR award. The amount of technical and business assistance for 
Phase I awards shall be in addition to the amount of the award. Phase 
II awards, as determined appropriate by the head of the Federal agency, 
may be included as part of the recipient's award or be in addition to 
the amount of the recipient's award. The applicant may also seek 
business-related services aimed at improving the commercialization 
success of a small business concern from an entity, such as a public or 
private organization or an agency of or other entity established or

[[Page 12821]]

funded by a State that facilitates or accelerates the commercialization 
of technologies or assists in the creation and growth of private 
enterprises that are commercializing technology.
    (4) SBA must establish a limit on the value of business and 
technical assistance services received or purchased by SBCs awarded 
multiple Phase II awards in a fiscal year. SBA will seek public comment 
to gather input on the appropriate limit and will provide guidance on 
www.SBIR.gov.
    (5) A small business concern that receives technical or business 
assistance from a vendor during a fiscal year shall submit to the 
Federal agency contracting with the vendor a description of the 
technical or business assistance provided and the benefits and results 
of the technical or business assistance provided. The information 
required shall be collected by a Federal agency as part of a report 
required to be submitted by small business concerns engaged in SBIR or 
STTR projects of the Federal agency for which the requirement was in 
effect on August 13, 2018.
    (6) Not later than the end of fiscal year 2019, the Administrator 
of the Small Business Administration shall--
    (A) Conduct a survey of vendors providing technical or business 
assistance under section 9(q) of the Small Business Act (15 U.S.C. 
638(q)), and small business concerns receiving the technical or 
business assistance; and
    (B) Submit to the Committee on Small Business and Entrepreneurship 
of the Senate and the Committee on Small Business of the House of 
Representatives a report reviewing the efficacy of the provision of the 
technical or business assistance.
    (c) Timelines for Awards. Agencies must publish the information 
relating to timelines for awards of Phase I and Phase II Funding 
Agreements and performance start dates of the Funding Agreements that 
are reported to SBA in the agency's Annual Report (see Sec.  10(a) of 
this Policy Directive). SBA will also publish this information on 
www.SBIR.gov.
    (d) Interagency actions.
    (1) Joint funding. An SBIR/STTR project may be financed by more 
than one Federal Agency. Joint funding is not required but can be an 
effective arrangement for some projects.
    (2) Phase II awards. An SBIR/STTR Phase II award may be issued by a 
Federal Agency other than the one that made the Phase I award. Prior to 
award, the head of the Federal Agency for the Phase I and Phase II 
awards, or designee, must issue a written determination that the topics 
of the awards are the same. Both agencies must submit the report to 
SBA.
    (3) Participation by WOSBs and SDBs in the SBIR/STTR Program. In 
order to meet statutory requirements for greater inclusion, SBA and the 
Participating Agencies must conduct outreach efforts to find and place 
innovative WOSBs and SDBs in the SBIR/STTR program. These SBCs will be 
required to compete for SBIR/STTR awards on the same basis as all other 
SBCs. However, SBIR/STTR Agencies are encouraged to work independently 
and cooperatively with SBA to develop methods to encourage qualified 
WOSBs and SDBs to participate in the SBIR/STTR program.
    (4) Interagency Assisted Acquisitions. A Participating Agency may 
obtain assistance, as needed to meet its mission, by entering into a 
properly executed Interagency Agreement with another Federal Agency for 
the provision of acquisition services to award and administer funding 
agreements.
    (e) Limitation on use of funds.
    (1) Each SBIR/STTR Agency must expend the required minimum percent 
of its extramural budget on awards to SBCs. Agencies may not make 
available for the purposes of meeting the minimum percent an amount of 
its extramural budget for basic research that exceeds the minimum 
percent required for that year. Funding Agreements with SBCs for R/R&D 
that result from competitive or single source selections other than an 
SBIR/STTR program must not be considered to meet any portion of the 
required minimum percent.
    (2) An agency must not use any of its SBIR/STTR budget for the 
purpose of funding administrative costs of the program, including costs 
associated with program operations, employee salaries, and other 
associated expenses, unless the exception in paragraph (3) below or 
Sec.  12(b)(4)(ii) of this Policy Directive applies.
    (3) Funding of Administrative, Oversight, and Contract Processing 
Costs. Upon establishment by SBA of the agency-specific performance 
criteria, SBA shall allow an SBIR Participating Agency to use no more 
than 3% of its SBIR budget for one or more specific activities, which 
may be prioritized by the Federal SBIR/STTR Interagency Policy 
Committee. The purpose of this program is to assist with the 
substantial expansion in commercialization activities, prevention of 
fraud/waste/abuse, expansion of reporting requirements by agencies and 
other agency activities required for the SBIR program. Funding under 
this program is not intended to and must not replace current agency 
administrative funding in support of SBIR/STTR activities. Rather, 
funding under this program is intended to supplement such funds. The 
authority for this program shall terminate on September 30, 2022, 
unless otherwise extended.
    (i) A Federal Agency may use this money to fund the following 
specific activities:
    (A) SBIR and STTR program administration, which includes:
    (I) Internal oversight and quality control, such as verification of 
reports and invoices and cost reviews, and waste/fraud/abuse prevention 
(including targeted reviews of SBIR/STTR Awardees that an agency 
determines are at risk for waste/fraud/abuse);
    (II) carrying out any activities associated with the participation 
by small businesses that are majority-owned by multiple venture capital 
operating companies, hedge funds or private equity firms;
    (III) contract processing costs relating to the SBIR or STTR 
program of that agency, which includes supplementing the current 
workforce to assist solely with SBIR or STTR Funding Agreements;
    (IV) funding of additional personnel to work solely on the SBIR/
STTR program of that agency, which includes assistance with application 
reviews; and
    (V) funding for simplified and standardized program proposal, 
selection, contracting, compliance, and audit procedures for the SBIR/
STTR program, including the reduction of paperwork and data collection.
    (VI) funding for improvements that increase commonality across data 
systems, reduce redundancy, and improve data oversight and accuracy.
    (B) SBIR or STTR program-related outreach and related technical 
assistance initiatives not in effect prior to commencement of this 
pilot, except significant expansion or improvement of these 
initiatives, including:
    (I) Technical assistance site visits;
    (II) personnel interviews;
    (III) national conferences;
    (C) Commercialization initiatives not in effect prior to 
commencement of this pilot, except significant expansion or improvement 
of these initiatives.
    (D) For DoD and the military departments, carrying out the 
Commercialization Readiness Program set forth in Sec.  12(b) of this 
Policy Directive, with emphasis on supporting new initiatives that 
address barriers in bringing SBIR/STTR technologies to the marketplace, 
including Intellectual Property issues, sales cycle access

[[Page 12822]]

issues, accelerated technology development issues, and other issues.
    (ii) Agencies must use this money to attempt to increase 
participation by SDBs and WOSBs in the SBIR/STTR program, and small 
businesses in states with a historically low level of SBIR/STTR awards. 
The agency may submit a written request to SBA to waive this 
requirement. The request must explain why the waiver is necessary, 
demonstrate a sufficient need for the waiver, and explain that the 
outreach objectives of the agency are being met and that there has been 
increased participation by small businesses in states with a 
historically low level of SBIR/STTR awards.
    (iii) SBA will establish performance criteria each fiscal year by 
which use of these funds will be evaluated for that fiscal year. The 
performance criteria will be metrics that measure the performance areas 
required by statute against the goals set by the agencies in their work 
plans. The performance criteria will be based upon the work plans 
submitted by each agency for a given fiscal year and will be agency-
specific. SBA will work with the SBIR/STTR Agencies in creating a 
simplified template for agencies to use when making their work plans.
    (iv) Each agency must submit its work plan to SBA at least 30 
calendar days prior to the start of each fiscal year for which the 
pilot program is in operation. Agency work plans must include the 
following: A prioritized list of initiatives to be supported; the 
estimated percentage of administrative funds to be allocated to each 
initiative or the estimated amounts to be spent on each initiative; 
milestones for implementing the initiatives; the expected results to be 
achieved; and the assessment metrics for each initiative. The work plan 
must identify initiatives that are above and beyond current practice 
and which enhance the agency's SBIR/STTR program.
    (v) SBA will evaluate the work plan and provide initial comments 
within 15 calendar days of receipt of the plan. SBA's objective in 
evaluating the work plan is to ensure that, overall, it provides for 
improvements to the SBIR/STTR program of that particular agency. If SBA 
does not provide initial comments within 30 calendar days of receipt of 
the plan, the work plan is deemed to be approved. If SBA does submit 
initial comments within 30 calendar days, agencies must amend or 
supplement their work plan and resubmit to SBA. Once SBA establishes 
the agency-specific performance criteria to measure the benefits of the 
use of these funds under the work plan, the agency may begin using the 
SBIR funds for the purposes set forth in the work plan. Agencies can 
adjust their work plans and spending throughout the fiscal year as 
needed, but must notify SBA of material changes in the plan.
    (vi) Agencies must coordinate any activities in the work plan that 
relate to fraud, waste, and abuse prevention, targeted reviews of 
Awardees, and implementation of oversight control and quality control 
measures (including verification of reports and invoices and cost 
reviews) with the agency's Office of Inspector General (OIG). If the 
agency allocates more than $50,000,000 to its SBIR program for a fiscal 
year, the agency may share this funding with its OIG when the OIG 
performs the activities.
    (vii) Agencies shall report to the Administrator of the SBA on use 
of funds under this authority as part of the SBIR/STTR Annual Report. 
See Sec.  10 generally and Sec.  10(i) of this Policy Directive.
    (4) An agency must not issue an SBIR/STTR Funding Agreement that 
includes a provision for subcontracting any portion of that agreement 
back to the issuing agency, to any other Federal Government agency, or 
to other units of the Federal Government, except as provided in 
paragraph (e)(5) below. SBA may issue a case-by-case waiver to this 
provision after review of an agency's written justification that 
includes the following information:
    (i) An explanation of why the SBIR/STTR research project requires 
the use of the Federal facility or personnel, including data that 
verifies the absence of non-Federal facilities or personnel capable of 
supporting the research effort.
    (ii) Why the Federal Agency will not and cannot fund the use of the 
Federal facility or personnel for the SBIR/STTR project with non-SBIR/
STTR money.
    (iii) The concurrence of the SBC's chief business official to use 
the Federal facility or personnel.
    (5) An agency may issue an SBIR/STTR Funding Agreement to an SBC 
that intends to enter into an agreement with a Federal Laboratory to 
perform portions of the award or has entered into a cooperative 
research and development agreement (see 15 U.S.C. 3710a(d)) with a 
Federal Laboratory, only if there is compliance with the following.
    (i) The agency may not require that the SBC enter into an agreement 
with any Federal Laboratory to perform any portion of an SBIR/STTR 
award, as a condition for an SBIR/STTR award.
    (ii) The agency may not issue an SBIR/STTR award or approve an 
agreement between an SBIR/STTR Awardee and a Federal Laboratory if the 
SBC will not meet the minimum performance of work requirements set 
forth in Sec.  6(a)(4) of this Policy Directive.
    (iii) The agency may not issue an SBIR/STTR award or approve an 
agreement between an SBIR/STTR Awardee and a Federal Laboratory that 
violates any SBIR/STTR requirement set forth in statute or this Policy 
Directive, including any SBIR/STTR Data Rights protections.
    (iv) The Federal Agency and Federal Laboratory may not require any 
SBIR/STTR Awardee that has an agreement with the Federal Laboratory to 
perform portions of the activities under the SBIR/STTR award to provide 
advance payment to the Federal Laboratory in an amount greater than the 
amount necessary to pay for 30 days of such activities.
    (6) No agency, at its own discretion, may unilaterally cease 
participation in the SBIR/STTR program. R/R&D agency budgets may cause 
fluctuations and trends that must be reviewed in light of SBIR/STTR 
program purposes. An agency may be considered by SBA for a phased 
withdrawal from participation in the SBIR/STTR program over a period of 
time sufficient in duration to minimize any adverse impact on SBCs. 
However, the SBA decision concerning such a withdrawal will be made on 
a case-by-case basis and will depend on significant changes to 
extramural R/R&D 3-year forecasts as found in the annual Budget of the 
United States Government and NSF National Center for Science 
Engineering Statistics (NCSES) breakdowns of total R/R&D obligations as 
published in the Survey of Federal Funds for Research and Development. 
Any withdrawal of an SBIR/STTR agency from the SBIR/STTR program will 
be accomplished in a standardized and orderly manner in compliance with 
these statutorily mandated procedures.
    (7) Any Federal agency which has an extramural R/R&D budget in 
excess of $100,000,000 based on 3-year forecasts as found in the annual 
Budget of the United States Government and NSF NCSES Survey of Federal 
Funds for Research and Development should start participation in the 
SBIR program. Any Federal agency which has an extramural R/R&D budget 
in excess of $1,000,000,000 based on 3-year forecasts as found in the 
annual Budget of the United States Government and NSF NCSES Survey of 
Federal Funds for Research and Development should start participation 
in the STTR program. SBA will monitor the NCSES Survey of Federal Funds 
for Research and Development and notify a Federal

[[Page 12823]]

agency if it appears to be required to begin participation in the SBIR 
and/or STTR program, but it is the responsibility of Federal agencies 
to implement the institution of its agency's SBIR and/or STTR program. 
Federal agencies not otherwise required to participate in the SBIR/STTR 
program may participate on a voluntary basis. Federal agencies seeking 
to participate in the SBIR/STTR program must first submit their written 
requests to SBA. Voluntary participation requires the written approval 
of SBA.
    (f) Preventing Fraud, Waste, and Abuse.
    (1) Agencies shall evaluate risks of fraud, waste, and abuse in 
each application, monitor and administer SBIR/STTR awards, and create 
and implement policies and procedures to prevent fraud, waste and abuse 
in the SBIR/STTR program. To capitalize on OIG expertise in this area, 
agencies must consult with their OIG when creating such policies and 
procedures. Fraud includes any false representation about a material 
fact or any intentional deception designed to deprive the United States 
unlawfully of something of value or to secure from the United States a 
benefit, privilege, allowance, or consideration to which an individual 
or business is not entitled. Waste includes extravagant, careless, or 
needless expenditure of Government funds, or the consumption of 
Government property, that results from deficient practices, systems, 
controls, or decisions. Abuse includes any intentional or improper use 
of Government resources, such as misuse of rank, position, or authority 
or resources. Examples of fraud, waste, and abuse relating to the SBIR/
STTR program include, but are not limited to:
    (i) Misrepresentations or material, factual omissions to obtain, or 
otherwise receive funding under, an SBIR/STTR award;
    (ii) misrepresentations of the use of funds expended, work done, 
results achieved, or compliance with program requirements under an 
SBIR/STTR award;
    (iii) misuse or conversion of SBIR/STTR award funds, including any 
use of award funds while not in full compliance with SBIR/STTR program 
requirements, or failure to pay taxes due on misused or converted SBIR/
STTR award funds;
    (iv) fabrication, falsification, or plagiarism in applying for, 
carrying out, or reporting results from an SBIR/STTR award;
    (v) failure to comply with applicable federal costs principles 
governing an award;
    (vi) extravagant, careless, or needless spending;
    (vii) self-dealing, such as making a sub-award to an entity in 
which the PI has a financial interest;
    (viii) acceptance by agency personnel of bribes or gifts in 
exchange for grant or contract awards or other conflicts of interest 
that prevent the Government from getting the best value; and
    (ix) lack of monitoring, or follow-up if questions arise, by agency 
personnel to ensure that Awardee meets all required eligibility 
requirements, provides all required certifications, performs in 
accordance with the terms and conditions of the award, and performs all 
work proposed in the application.
    (2) At a minimum, agencies must:
    (i) Require certifications from the SBIR/STTR Awardee at the time 
of award, as well as after award and during the Funding Agreement life 
cycle (see Sec.  8(i) and Appendix I for more information);
    (ii) Include on their respective SBIR/STTR web page and in each 
solicitation, information explaining how an individual can report 
fraud, waste and abuse as provided by the agency's OIG (e.g., include 
the fraud hotline number or web-based reporting method for the agency's 
OIG);
    (iii) Designate at least one individual in the agency to, at a 
minimum, serve as the liaison for the SBIR/STTR program, the OIG and 
the agency's Suspension and Debarment Official (SDO) and ensure that 
inquiries regarding fraud, waste and abuse are referred to the OIG and, 
if applicable, the SDO.
    (iv) Include on their respective SBIR/STTR web page information 
concerning successful prosecutions of fraud, waste and abuse in the 
SBIR or STTR programs.
    (v) Establish a written policy requiring all personnel involved 
with the SBIR/STTR program to notify the OIG if anyone suspects fraud, 
waste, and/or abuse and ensure the policy is communicated to all SBIR/
STTR personnel.
    (vi) Create or ensure there is an adequate system to enforce 
accountability (through suspension and debarment, fraud referrals or 
other efforts to deter wrongdoing and promote integrity) by developing 
separate standardized templates for a referral made to the OIG for 
fraud, waste and abuse or the SDO for other matters, and a process for 
tracking such referrals.
    (vii) Ensure compliance with the eligibility requirements of the 
program and the terms of the SBIR/STTR Funding Agreement.
    (viii) Work with the agency's OIG with regard to its efforts to 
establish fraud detection indicators, coordinate the sharing of 
information between Federal Agencies, and improve education and 
training to SBIR/STTR program officials, Applicants and Awardees;
    (ix) Develop policies and procedures to avoid funding Essentially 
Equivalent Work already funded by the same or another agency, which 
could include: Searching www.SBIR.gov prior to award for the Applicant 
(if a Joint Venture, search for each party to the Joint Venture), Key 
Individuals of the Applicant, and similar abstracts; using plagiarism 
or other software; checking the SBC's certification prior to award and 
funding and documenting the Funding Agreement file that such 
certification evidenced the SBC has not already received funding for 
Essentially Equivalent Work; reviewing other agencies' policies and 
procedures for best practices; and reviewing other R&D programs for 
policies and procedures and best practices related to this issue; and
    (x) Consider enhanced reporting requirements during the Funding 
Agreement.
    (g) Interagency Policy Committee. The Director of the Office of 
Science and Technology Policy (OSTP) will establish an Interagency 
SBIR/STTR Policy Committee, which will include representatives from 
Federal Agencies with an SBIR or an STTR program and SBA. The 
Interagency SBIR/STTR Policy Committee shall review the following 
issues (but may review additional issues) and make policy 
recommendations on ways to improve program effectiveness and 
efficiency:
    (1) The www.SBIR.gov databases described in section 9(k) of the Act 
(15 U.S.C. 638(k));
    (2) Federal Agency flexibility in establishing Phase I and II award 
sizes, including appropriate criteria for exercising such flexibility;
    (3) Commercialization assistance best practices of Federal Agencies 
with significant potential to be employed by other agencies and the 
appropriate steps to achieve that leverage, as well as proposals for 
new initiatives to address funding gaps that business concerns face 
after Phase II but before Commercialization.
    (4) The need for a standard evaluation framework to enable 
systematic assessment of SBIR and STTR, including through improved 
tracking of awards and outcomes and development of performance measures 
for the SBIR program and STTR program of each Federal Agency.

[[Page 12824]]

    (5) Identification and sharing of best practices and the leveraging 
of resources in support of increasing the participation of small 
businesses underrepresented in the SBIR and STTR programs, including 
outreach and technical assistance activities for Applicants, Awardees, 
and others.
    (h) National Academy of Science Report. The National Academy of 
Sciences (NAS) will conduct a study and issue reports on the SBIR and 
STTR programs.
    (1) Prior to and during the period of study, and to ensure that the 
concerns of small business are appropriately considered, NAS shall 
consult with and consider the views of SBA's Office of Investment and 
Innovation and the Office of Advocacy and other interested parties, 
including entities, organizations, and individuals actively engaged in 
enhancing or developing the technological capabilities of SBCs.
    (2) The head of each agency with a budget of more than $50,000,000 
for its SBIR program for fiscal year 1999 shall, in consultation with 
SBA, and not later than 6 months after December 31, 2011, cooperatively 
enter into an agreement with NAS regarding the content and performance 
of the study. SBA and the agencies will work with the Interagency 
Policy Committee in determining the parameters of the study, including 
the specific areas of focus and priorities for the broad topics 
required by statute. The agreement with NAS must set forth these 
parameters, specific areas of focus and priorities, and comprehensively 
address the scope and content of the work to be performed. This 
agreement must also require the NAS to ensure there is participation by 
and consultation with, the small business community, the SBA, and other 
interested parties as described in paragraph (h)(1).
    (3) NAS shall transmit to SBA, heads of agencies entering into an 
agreement under this section, the Committee on Science, Space and 
Technology, the Committee on Small Business of the House of 
Representatives, and to the Committee on Small Business of the Senate a 
copy of the report, which includes the results and recommendations, not 
later than 4 years after December 31, 2011, and every subsequent four 
years.

10. Reporting Requirements--for Participating Agencies, Applicants, and 
Awardees

    (a) General. The Act requires agencies to collect meaningful 
information from SBCs and ensure that reporting requirements are 
streamlined to minimize the burden on small businesses.
    (1) SBA is required to collect data from Participating Agencies and 
report to the Congress information regarding applications by and awards 
to SBCs by each Federal Agency participating in the SBIR/STTR program. 
Participating Agencies report data using standardized templates that 
are provided, maintained, and updated by SBA on www.SBIR.gov.
    (2) The Act requires a ``simplified, standardized and timely annual 
report'' from each Federal Agency participating in the SBIR/STTR 
program (see Sec.  3 of the Policy Directive for the definition of 
Federal Agency), which is submitted to SBA. In addition, agencies are 
required to report certain items periodically throughout the year to 
SBA. Agencies may identify certain information, such as award data 
information, by the various components of each agency. SBA collects 
agency reports through the www.SBIR.gov portal. If the www.SBIR.gov 
databases are unavailable, then the report must be emailed to 
[email protected].
    (3) To meet these requirements, the SBIR/STTR program has the 
following key principles:
    (i) Make updating data available electronically;
    (ii) Centralize and share certain data through secure interfaces to 
which only authorized Government personnel have access;
    (iii) Have small business enter the data only once, if possible; 
and
    (iv) Provide standardized procedures.
    (b) Summary of SBIR/STTR Databases.
    (1) The Act requires that SBA coordinate the implementation of 
electronic databases at the SBIR/STTR Agencies, including the technical 
ability of the agencies to share the data. In addition, the Act 
requires the reporting of various data elements, which are clustered 
together in the following subsections:
    (i) Solicitations Database (to include the Master Schedule);
    (ii) www.SBIR.gov, which includes the following databases:
    (A) Company Registry Database;
    (B) Application Information Database;
    (C) Award Information Database;
    (D) Commercialization Database;
    (E) Annual Report Database; and
    (F) Other Reporting Requirements Database.
    (2) The subsections below describe the data reporting requirements, 
including reporting mechanisms, the frequency of data collection and 
reporting, and whether this information is shared publicly or is 
protected and only available to authorized personnel. The table below 
summarizes the data collection requirements for each database; however, 
there may be some divergences at the individual data field level. Refer 
to Appendix II (as posted on www.SBIR.gov) for the detailed reporting 
requirements at the data field level. SBA notes that in fiscal year 
2012, SBA began a phased implementation of this data collection.

----------------------------------------------------------------------------------------------------------------
                                                                 Collection/reporting
             Database                   Reporting mechanism           frequency            Public/government
----------------------------------------------------------------------------------------------------------------
Solicitations.....................  Agency XML or manual        Within 5 business      Public.
                                     upload to https://           days of solicitation
                                     www.SBIR.gov.               open date.
Company Registry..................  SBC reports data to         Register or reconfirm  Government only.
                                     www.SBIR.gov; Agency        at time of
                                     receives .pdf from          application.
                                     company.
Application Information...........  Agency provides XML or      Quarterly............  Government only.
                                     manual upload to
                                     www.SBIR.gov.
Award Information.................  Agency provides XML or      Quarterly............  Public.
                                     manual upload to
                                     www.SBIR.gov.
Commercialization.................  Agencies + companies        Agencies update in     Government only.
                                     report to www.SBIR.gov.     real time; SBC
                                                                 updates prior to
                                                                 subsequent award
                                                                 application and
                                                                 voluntarily
                                                                 thereafter.

[[Page 12825]]

 
Annual Report.....................  Agency XML or manual        Annually.............  Government only. Summary
                                     upload to www.SBIR.gov.                            SBA Annual Report based
                                                                                        on Agency-submitted
                                                                                        Annual Report data is
                                                                                        Public.
Other Reports.....................  As set forth in the         As set forth in the    Public.
                                     directive.                  directive.
----------------------------------------------------------------------------------------------------------------

    (3) SBIR/STTR Awardees will have user names and passwords assigned 
in order to access their respective awards information in the system. 
Award and Commercialization data maintained in the database can be 
changed only by the Awardee, SBA, or the awarding SBIR/STTR 
Participating Agency.
    (c) Master Schedule and the Solicitations Database.
    (1) SBA posts an electronic Master Schedule of release dates of 
Program Solicitations with links to internet websites of agency 
solicitations on www.SBIR.gov.
    (i) On or before August 1, each agency representative must notify 
SBA in writing or by email of its proposed Program Solicitation release 
and proposal due dates for the next fiscal year. SBA and the agency 
representatives will coordinate the resolution of any conflicting 
agency solicitation dates by the second week of August. In all cases, 
SBA will make final decisions. Agencies must notify SBA in writing of 
any subsequent changes in the solicitation release and close dates.
    (ii) For those agencies that use both general topic and more 
specific subtopic designations in their SBIR/STTR solicitations, the 
topic data should accurately describe the research solicited.
    (iii) Agencies must post on their internet websites the following 
information regarding each Program Solicitation:
    (A) List of topics upon which R/R&D proposals will be sought;
    (B) agency address, phone number, or email address from which SBIR/
STTR Program Solicitations can be requested or obtained, especially 
through electronic means;
    (C) names, addresses, and phone numbers of agency contact points 
where SBIR/STTR-related inquiries may be directed;
    (D) release date(s) of Program Solicitation(s);
    (E) closing date(s) for receipt of proposals; and
    (F) estimated number and average dollar amounts of Phase I awards 
to be made under the solicitation.
    (2) SBA will manage a searchable public database that contains all 
solicitation and topic information from all SBIR/STTR Agencies. 
Agencies are required to update the Solicitations Database, (available 
at www.SBIR.gov), within 5 business days of a solicitation's open date 
for applications and/or submissions for SBCs. Refer to Appendix II (as 
posted on www.SBIR.gov) for detailed reporting requirements. The main 
data requirements include:
    (i) Type of solicitation--SBIR/STTR;
    (ii) Phase--I or II;
    (iii) topic description;
    (iv) sub-topic description;
    (v) website for further information; and
    (vi) applicable contact information per topic or sub-topic, where 
applicable and allowed by law.
    (d) Company Registry Database.
    (1) SBA maintains and manages a company registry to track ownership 
and affiliation requirements for all companies applying to the SBIR/
STTR program, including those that are majority-owned by multiple 
VCOCs, private equity firms, or hedge funds.
    (2) Each SBC applying for a Phase I or Phase II award must register 
on www.SBIR.gov prior to submitting an application. The SBC will report 
and/or update ownership information to SBA prior to each SBIR/STTR 
application submission. The SBC can view the ownership and affiliation 
requirements of the program on the registry site.
    (3) Data collected in the Company Registry Database will not be 
shared publicly. Refer to Appendix II (as posted on www.SBIR.gov) for 
details on specific fields shared publicly.
    (4) The SBC will save its information from the registration in a 
.pdf document and will append this document to the application 
submitted to a given agency unless the information can be transmitted 
automatically to SBIR/STTR Agencies.
    (5) Refer to www.SBIR.gov for details on the required reporting 
fields. The main data requirements include:
    (i) Basic identifying information for the SBC;
    (ii) the number of employees for the SBC;
    (iii) whether the SBC has venture capital, hedge fund or private 
equity firm investment and if so, include:
    (A) The percentage of ownership of the Awardee held by the VCOC, 
hedge fund or private equity firm;
    (B) the registration by the SBC of whether or not it is majority-
owned by VCOCs, hedge funds, or private equity firms. Please note that 
this may be auto-populated through the individual calculations of 
investments in the SBC already submitted.
    (iv) information on the Affiliates of the SBC, including:
    (A) The names of all Affiliates of the SBC;
    (B) the number of employees of the Affiliates;
    (e) Application Information Database.
    (1) SBA will manage an Application Information Database on 
information on applications to the SBIR/STTR program across agencies.
    (2) Each agency must upload application data to the Application 
Information Database at www.SBIR.gov at least quarterly.
    (3) The data in the Application Information Database is only 
viewable to authorized Government officials and not shared publicly.
    (4) Refer to www.SBIR.gov for detailed reporting requirements. The 
main data requirements for each Phase I and Phase II application 
include:
    (i) Name, size, and location of the Applicant, and the identifying 
number assigned;
    (ii) an abstract and specific aims of the project;
    (iii) name, title, contact information, and position in the small 
business of each Key Individual that will carry out the project;
    (iv) percentage of effort each Key Individual identified will 
contribute to the project;
    (v) Federal agency to which the application is made and contact 
information for the person responsible for reviewing applications and 
making awards under the program.
    (5) The Application Information Database connects and cross-checks 
information with the Company Registry and Government personnel can see 
connected data.
    (f) Award Information Database.
    (1) SBA manages a database on awards made within the SBIR/STTR 
program across agencies.

[[Page 12826]]

    (2) Each agency must update the Award Information Database 
quarterly, if not more frequently.
    (3) Most of the data available on the Award Information Database is 
viewable and searchable by the public on www.SBIR.gov.
    (4) Refer to www.SBIR.gov for detailed reporting requirements. The 
data requirements for each Phase I and Phase II award include:
    (i) Information similar to the Application Information Database--if 
not already collected;
    (ii) the name, size, and location of, and the identifying number 
assigned;
    (iii) an abstract and specific aims of the project;
    (iv) the name, title, contact information, and position in the 
small business of each Key Individual that will carry out the project;
    (v) the percentage of effort each identified Key Individual will 
contribute to the project;
    (vi) the Federal agency making the award;
    (vii) award amount;
    (viii) Principal Investigator/Project Manager identifying 
information--including name, email address, and demographic 
information;
    (ix) detailed information on location of company;
    (x) whether the Awardee:
    (A) Has venture capital, hedge fund or private equity firm 
investment and if so, the amount of such investment received by SBC as 
of date of award and amount of additional capital Awardee has invested 
in SBIR/STTR technology;
    (B) is a WOSB or has a woman as a Principal Investigator/Project 
Manager;
    (C) is an SDB or has a Socially and Economically Disadvantaged 
Individual as a Principal Investigator/Project Manager;
    (D) is owned by a faculty member or a student of an institution of 
higher education as defined in 20 U.S.C. 1001); and
    (E) has received the award as a result of the Commercialization 
Readiness Pilot Program for Civilian Agencies set forth in Sec.  12(c) 
of this Policy Directive.
    (xi) an identification of any business concern or subsidiary 
established for the commercial application of a product or service for 
which an SBIR or STTR award is made.
    (5) The Award Information Database connects and cross-checks 
information with the Company Registry and Application Information 
Database, and Government personnel can see connected data.
    (g) Commercialization Database.
    (1) The Commercialization Database stores information reported by 
Awardees on the commercial activity resulting from their past SBIR/STTR 
awards.
    (2) Commercialization data is inputted to this database in two 
ways: Awardees enter their Commercialization data directly into the 
Commercialization Database on www.SBIR.gov, and agencies can upload to 
the database at www.SBIR.gov Commercialization data they have collected 
from Awardees.
    (3) The Commercialization Database is currently maintained by SBA.
    (4) Awardees are required to update this information on their prior 
Phase II awards in the Commercialization Database when submitting an 
application for an SBIR/STTR Phase II award and upon completion of the 
last deliverable for that award.
    (5) Commercialization data at the company level will not be shared 
publicly. Aggregated data that maintains the confidentiality of 
companies may be reported in compliance with the statute.
    (6) Refer to www.SBIR.gov for the specific Commercialization data 
reporting fields. The main data requirements include for every Phase II 
award:
    (i) Any business concern or subsidiary established for the 
commercial application of a product or service for which an SBIR/STTR 
award is made;
    (ii) total revenue resulting from the sale of new products or 
services, or licensing agreements resulting from the research conducted 
under each Phase II award;
    (iii) additional investment received from any source, other than 
Phase I or Phase II awards, to further the research and development 
conducted under each Phase II award;
    (iv) any contract with the Federal Government marked as an SBIR/
STTR Phase III award; and
    (v) any narrative information that a Phase II Awardee voluntarily 
submits to further describe the Commercialization efforts of its awards 
and related research.
    (7) The SBC may apportion sales or additional investment 
information relating to more than one Phase II award among those 
awards, if it notes the apportionment for each award. Companies are 
requested to update their records in this database on a voluntary basis 
for at least 5 years following the completion of award.
    (8) Awardees will update their information and add project 
Commercialization and sales data using their user names and passwords. 
SBA and SBIR/STTR Participating Agencies will coordinate data 
collection to ensure that small businesses will not need to report the 
same data more than once.
    (9) Note that the Award Information and Commercialization Databases 
will contain the data necessary for agencies to determine whether an 
Applicant meets the agency's benchmarks for progress towards 
Commercialization.
    (h) Participating Agency Annual Report to SBA.
    (1) Participating Agencies must submit their report to SBA on an 
annual basis and will report for the period ending September 30 of each 
fiscal year. The report is due to SBA no later than March 15 of each 
year. For example, the report for FY 2017 (October 1, 2016-September 
30, 2017) must be submitted to SBA by March 15, 2018.
    (2) SBA provides the Annual Report form to agencies through 
www.SBIR.gov. SBA reserves the right to modify the fields of the Annual 
Report data form beyond those identified in this directive.
    (3) A number of the fields of the Annual Report template are pre-
populated by SBA with data from the SBIR/STTR program database. SBA 
works with the agencies to resolve any data inconsistencies.
    (4) The annual report includes the following:
    (i) SBIR/STTR program dollars obligated through program Funding 
Agreements for Phase I, Phase II, and other uses of program funds, 
during the reporting fiscal year.
    (ii) Number of topics and subtopics contained in each Program 
Solicitation.
    (iii) Number of proposals received by the agency for each topic and 
subtopic in each Program Solicitation.
    (iv) Agency total extramural R/R&D obligations for the reporting 
fiscal year including an explanation of its calculation and how it 
differs, if at all, from the amount reported to the NSF NCSES Survey of 
Federal Funds for Research and Development pursuant to the annual 
Budget of the United States Government.
    (v) The minimum dollar amount the agency is required to obligate 
per fiscal year for the SBIR and STTR programs. This amount is 
calculated by applying the statutory per centum to the agency's total 
extramural R/R&D obligations made during the fiscal year (adjusted for 
the appropriate exclusions); and if the minimum amount was not met, the 
agency must provide the reasons why and an explanation of how the 
agency plans to meet the requirement in the future. Agencies may 
provide an explanation of the specific budgeting process their agency 
uses to allocate funds for the SBIR/STTR programs and describe any 
issues they may see with the compliance determination procedure. 
Agencies may also indicate

[[Page 12827]]

obligations made in the reporting year using prior fiscal years of 
appropriation within available funding obligation periods.
    (vi) For all Applicants and Awardees in the applicable fiscal 
year--where applicable, the name and address, solicitation topic and 
subtopic, solicitation number, project title, total dollar amount of 
Funding Agreement, and applicable demographic information. The agency 
is not required to re-submit Applicant and Awardee information in the 
annual report that it has already reported to SBA through www.SBIR.gov 
as required.
    (vii) Justification for the award of any Funding Agreement 
exceeding the award guidelines set forth in Sec.  7(i) of this Policy 
Directive, the amount of each award exceeding the guidelines, the 
identity and location of the Awardee, whether the Awardee has received 
any venture capital, hedge fund, or private equity firm investment, and 
whether the Awardee is majority-owned by a venture capital operating 
company, hedge fund or private equity firm.
    (viii) Justification for awards made under a topic or subtopic 
where the agency received only one proposal. Agencies must also provide 
the Awardee's name and address, the topic or subtopic, and the dollar 
amount of award. Awardee information must be collected quarterly in any 
case, but updated in the agency's annual reports.
    (ix) All instances where the Phase II Awardee did not receive a 
Phase I award.
    (x) All instances in which an agency pursued R/R&D, services, 
production, or any combination thereof of a technology developed under 
an SBIR/STTR award with an entity other than that Awardee. See Sec.  
10(i)(5) of this Policy Directive for minimum reporting requirements.
    (xi) The number and dollar value of each SBIR/STTR and non-SBIR/
STTR award (includes grants, contracts and cooperative agreements as 
well as any award issued under the Commercialization Programs) over 
$10,000 and compare the number and amount of SBIR/STTR awards with 
awards to other than SBCs.
    (xii) Information relating to the pilot to allow for funding of 
administrative, oversight, and contract processing costs, including the 
money spent on each activity and any other information required in the 
approved work plan to measure the benefits of using these funds for the 
specific activities--especially, as it pertains to the goals outlined 
in the work plan. See Sec.  9(e)(3) of this Policy Directive concerning 
the Pilot to Allow for Funding of Administrative, Oversight, and 
Contract Processing Costs.
    (xiii) Outreach. A description and the extent to which the agency 
is increasing outreach and awards to SDBs and WOSBs.
    (xiv) VCOC-owned. General information about the implementation of 
and compliance with the allocation of funds for Awardees that are 
majority-owned by multiple VCOCs, hedge funds or private equity firms.
    (xv) Phase III appeals. Descriptive information on any appeals 
filed on Phase III awards pursuant to Sec.  4(c)(7) of this Policy 
Directive and notices of noncompliance with the SBIR/STTR Policy 
Directive filed by SBA.
    (xvi) Phase III awards. Information relating to each Phase III 
award made by that agency either as a prime or subcontract, including 
the name of the business receiving the Phase III award, the dollar 
amount, and the awarding agency or prime contractor.
    (xvii) Commercialization Programs. An accounting of funds, 
initiatives, and outcomes under the commercialization programs set 
forth in Sec.  12(b) and (c) of this Policy Directive.
    (xviii) Manufacturing. Information relating to the agency's 
enhancement of manufacturing activities, if the agency awards more than 
$50,000,000 under the SBIR and STTR programs combined in a fiscal year. 
The report must include:
    (A) A description of efforts undertaken by the agency to enhance 
U.S. manufacturing activities;
    (B) a comprehensive description of the actions undertaken each year 
by the agency in carrying out the SBIR or STTR programs to support 
Executive Order 13329 (relating to manufacturing);
    (C) an assessment of the effectiveness of the actions taken at 
enhancing the R/R&D of U.S. manufacturing technologies and processes;
    (D) a description of efforts by vendors selected to provide 
discretionary technical assistance to help SBIR and STTR business 
concerns manufacture in the U.S.; and
    (E) recommendations from the agency's SBIR/STTR program managers/
coordinators of additional actions to increase manufacturing activities 
in the U.S.
    (xix) Performance Areas and Metrics. As part of agency work plans 
submitted pursuant to Sec.  9(e) of this Policy Directive, SBA works 
with the agencies to establish the performance criteria and metrics 
used to measure agency performance. The Act establishes broad 
performance areas for the program, including Commercialization, 
streamlining, outreach, etc. Agencies must report their progress, using 
the SBA-approved performance criteria, at the end of each fiscal year 
as part of the annual report. The metrics and performance areas will 
evolve over time and can be found at www.SBIR.gov.
    (i) Other Reporting Requirements.
    (1) SBA will set forth a list of reports that agencies are required 
by statute to submit, in a table format, which will be available at 
www.SBIR.gov.
    (2) SBA's SBIR/STTR program database will include a list of any 
individual or SBC that has received an SBIR/STTR award and that has 
been convicted of a fraud-related crime involving SBIR/STTR funds or 
found civilly liable for a fraud-related violation involving SBIR/STTR 
funds, of which SBA has been made aware.
    (3) Program Funding Compliance. Agencies must submit to SBA's 
Administrator, not later than 4 months after the date of enactment of 
its annual Appropriations Act, a report on the agency's plan to meet 
the program funding requirement for the current fiscal year. SBA 
provides detailed guidance regarding this report on www.SBIR.gov.
    The report must include the following main elements:
    (A) An explanation of the calculation of total extramural R/R&D 
including an itemization of each research program excluded from the 
calculation including the dollar amount and a brief explanation of why 
it is excluded,
    (B) a review of the agency's compliance with the funding 
requirement in the prior fiscal year to determine if the program 
funding process enabled the agency to meet the requirement, and
    (C) a funding plan showing how the agency is budgeting its funds 
for the SBIR/STTR programs during the current fiscal year so as to meet 
or exceed the year's expected minimum obligations requirement for the 
program.
    (4) Agencies must provide notice to SBA of any case or controversy 
before any Federal judicial or administrative tribunal concerning the 
SBIR/STTR program of the Federal agency. This does not include agency 
level protests of awards unless and until the protest is before a 
Federal court or administrative body. The agency must provide notice to 
SBA within 15 business days of the agency's written notification of the 
case or controversy.
    (5) Agencies must provide notice of all instances in which an 
agency pursued research, development, production, or any such 
combination of a technology developed by an SBC using an award made 
under the SBIR/STTR program of that agency, where the agency determined 
that it was not

[[Page 12828]]

practicable to enter into a follow-on non-SBIR/STTR Funding Agreement 
with that concern. The agency must provide notice to SBA within 15 
business days of the agency's award. The report must include, at a 
minimum:
    (i) The reasons why the follow-on Funding Agreement with the 
concern was not practicable;
    (ii) the identity of the entity with which the agency contracted to 
perform the research, development, or production; and
    (iii) a description of the type of Funding Agreement under which 
the research, development, or production was obtained.
    (6) Participating Agencies must provide information supporting the 
agency's achievement of the Interagency Policy Committee's policy 
recommendations on ways to improve program effectiveness and 
efficiency. This includes qualitative and quantitative data as 
appropriate, which would measure the agency's progress. The agency must 
provide this information to SBA at the end of each fiscal year.
    (7) Participating Agencies must provide an annual report to SBA, 
Senate Committee on Small Business and Entrepreneurship, House 
Committee on Small Business, and the House Committee on Science, Space, 
and Technology on SBIR and STTR programs and the benefits of these 
programs to the United States. Prior to preparing the report, the 
agency shall develop metrics to evaluate the effectiveness and benefit 
to the United States of the SBIR and STTR programs. The metrics must be 
science-based and statistically driven, reflect the mission of the 
agency, and include factors relating to the economic impact of the 
programs. The report must describe in detail the agency's annual 
evaluation of the programs using these metrics. The final report must 
be posted online so it can be made available to the public.
    (8) NIH, DoD and the DoEd must provide the written determination to 
SBA any time it issues a Phase II award to an SBC that did not receive 
a Phase I award for that R/R&D. The determination must be submitted 
prior to award.
    (9) SBA will compile data and report to Congress on the Federal and 
State Technology (FAST) Partnership Program, described in Sec.  12 of 
this Policy Directive. If required by the FAST grant, the grantees will 
report a comprehensive list of the companies that received assistance 
under FAST, whether those companies received SBIR or STTR awards, and 
any information regarding mentors and Mentoring Networks, as required 
in the FAST Partnership Program.
    (j) Further Clarification on Availability of SBC Information.
    (1) Unless stated otherwise, the information contained in the 
Company Registry Database, the Application Information Database, and 
the Commercialization Database is solely available to authorized 
Government officials, with the approval of SBA. This includes Congress, 
the Government Accountability Office (GAO), the SBIR/STTR Participating 
Agencies, Office of Management and Budget (OMB), OSTP, OFPP, and other 
authorized persons who are subject to an NDA with the Federal 
Government covering the use of the databases. These databases are used 
for the purposes of evaluating and determining eligibility for the 
SBIR/STTR program, in accordance with Policy Directives issued by SBA. 
Pursuant to 15 U.S.C. 638(k)(4), certain information provided to those 
databases is privileged and confidential and not subject to disclosure 
pursuant to 5 U.S.C. 552 (Government Organization and Employees); nor 
must it be considered to be publication for purposes of 35 U.S.C. 
102(a) or (b).
    (2) Most of the information in the Award Information and Annual 
Reports Databases will be available to the public. Any information that 
will identify the confidential business information of a given SBC will 
not be disclosed to the public. Those databases are available at 
www.SBIR.gov and offer a vast array of user-friendly capabilities that 
are accessible by the public at no charge. The Award Information 
Database allows for the online submission of SBIR/STTR awards data from 
all SBIR/STTR Agencies. It also allows any end-user to perform keyword 
searches and create formatted reports of SBIR/STTR awards information, 
and for potential research partners to view research and development 
efforts that are ongoing in the SBIR and the STTR programs, increasing 
the investment opportunities of the SBIR/STTR SBCs in the high tech 
arena.
    (k) Waivers.
    (1) Participating Agencies must request an extension for additional 
time between the solicitation closing date and notification of 
recommendation for award. SBA will respond to the request for an 
extension within 5 business days, as practicable. See Sec.  7(c)(1) of 
this Policy Directive for further information.
    (2) Participating Agencies must request a waiver to exceed the 
award guidelines for Phase I and Phase II awards by more than 50% for a 
specific topic. See Sec.  7(i)(4) of this Policy Directive for further 
information.
    (3) Participating Agencies must request a waiver to not use their 
SBIR funds, as part of the pilot allowing for the use of such funds for 
certain SBIR-related costs, to increase participation by SDBs and WOSBs 
in the SBIR/STTR program, and small businesses in states with a 
historically low level of SBIR/STTR awards. See Sec.  9(e)(3)(ii) of 
this Policy Directive for further information.
    (4) Participating Agencies must request a waiver to issue a Funding 
Agreement that includes a provision for subcontracting a portion of 
that agreement back to the issuing agency if there is no exception to 
this requirement in the directive. See Sec.  9(e)(4) of this Policy 
Directive for further information.

11. Responsibilities of SBA

    (a) Policy.
    (1) SBA establishes policy and procedures for the program by 
publishing and updating the SBIR/STTR Policy Directive and promulgating 
regulations. Policy clarification of any part or provision of the 
directive or regulations may be provided by SBA.
    (2) It is essential that SBIR/STTR Agencies do not promulgate any 
policy, rule, regulation, or interpretation that is inconsistent with 
the Act, this Policy Directive, or SBA's regulations relating to the 
SBIR/STTR program. SBA's monitoring activity will include review of 
policies, rules, regulations, interpretations, and procedures generated 
to facilitate intra- and interagency SBIR/STTR program implementation.
    (3) Waivers providing limited exceptions to certain policies can be 
found at Sec.  10(k) of this Policy Directive.
    (b) Outreach. SBA conducts outreach to achieve a number of 
objectives including:
    (1) Educating the public about the SBIR/STTR programs via 
conferences, seminars, and presentations;
    (2) Highlighting the successes achieved in the program by 
publishing (via press releases and www.SBIR.gov) success stories, as 
well as hosting awards programs;
    (3) Maintaining www.SBIR.gov, which is an online public information 
resource that provides comprehensive information regarding the SBIR/
STTR programs. This information includes: a listing of solicitation 
information on currently available SBIR/STTR opportunities, award 
information on all Phase I and Phase II awards, summary annual award 
information for the whole program, and contact information for SBA and 
SBIR/STTR program managers/coordinators.
    (c) Collection and publication of program-wide data. SBA collects 
and

[[Page 12829]]

maintains program-wide data within the www.SBIR.gov data system. This 
data includes information on all Phase I and II awards from across all 
SBIR/STTR Agencies, as well as fiscal year Annual Report data. See 
Sec.  10 of this Policy Directive for further information about 
reporting and data collection requirements.
    (d) Monitoring implementation of the program and annually reporting 
to Congress. SBA is responsible for providing oversight and monitoring 
the implementation of the SBIR/STTR programs at the agency level. This 
monitoring includes:
    (1) SBIR/STTR Funding Allocations. The Act establishes the source 
of the funds for the SBIR/STTR programs (extramural R/R&D), the 
percentage of such funds to be obligated through the SBIR and STTR 
programs, and it requires that SBA monitor these annual allocations. 
Participating Agencies may include in their annual report to SBA an 
explanation of the specific budgeting process used to allocate funds to 
the SBIR/STTR programs and describe any issues observed with the 
compliance determination process.
    (2) SBIR/STTR Program Solicitation and Award Status. The 
accomplishment of scheduled SBIR/STTR events, such as SBIR/STTR Program 
Solicitation releases and the issuance of Funding Agreements is 
critical to meeting statutory mandates and to operating an effective, 
useful program. SBA monitors these and other operational features of 
the SBIR/STTR programs and publishes information relating to notice of 
and application for awards under the SBIR/STTR programs for each SBIR/
STTR Participating Agency at www.SBIR.gov. SBA does not plan to monitor 
administration of the awards except in instances where SBA assistance 
is requested and is related to a specific SBIR/STTR project or Funding 
Agreement.
    (3) Follow-on Funding Commitments. SBA will monitor whether follow-
on non-Federal funding commitments obtained by Phase II Awardees for 
Phase III were considered in the evaluation of Phase II proposals as 
required by the Act.
    (4) Fraud, Waste, and Abuse (FWA). SBA will ensure that each SBIR/
STTR Participating Agency has taken steps to maintain a FWA prevention 
system to minimize its impact on the programs.
    (5) Performance Areas, Metrics, and Goals. SBA is responsible for 
defining performance areas consistent with statute (e.g., reducing 
timelines for awards, simplification) against which agencies will set 
goals. SBA will work with the Participating Agencies to set metrics, in 
order to measure an agency's accomplishments of its goals against the 
defined performance areas. The purpose of these metrics and goals is to 
assist SBA in evaluating and reporting on the progress achieved by the 
agencies in improving the SBIR/STTR programs. For further information 
on Performance Areas, Metrics and Goals see Sec.  10(h) of this Policy 
Directive.
    (e) Additional efforts to improve the performance of the program. 
SBA, in its continuing effort to improve the program, will make 
recommendations for improvement within the framework of the SBIR/STTR 
program managers/coordinators' meetings. This may include recommending 
a ``best practice'' currently being utilized by an agency or business, 
or open discussion and feedback on a potential ``best practice'' for 
agency adoption. This may also involve program-wide initiatives.
    (f) Federal and State Technology (FAST) Partnership Program. SBA 
coordinates and administers the FAST program. SBA develops the 
solicitation, reviews proposals, and oversees grant awards. FAST 
provides grantees with funding to assist in outreach, proposal 
preparation, and other technical assistance to developing innovation-
oriented SBCs.

12. Supporting Programs and Initiatives

    (a) Federal and State Technology (FAST) Partnership Program. The 
purpose of the FAST program is to strengthen the technological 
competitiveness of SBCs in the United States. Congress found that 
programs that foster economic development among small high-technology 
firms vary widely among the states. Thus, the purpose of the FAST 
program is to improve the participation of small technology firms in 
the innovation and Commercialization of new technologies, thereby 
ensuring that the United States remains on the cutting-edge of research 
and development in the highly competitive arena of science and 
technology. Additional and detailed information regarding this program 
is available at www.SBIR.gov.
    (b) Commercialization Readiness Program (CRP)--DoD.
    (1) General. The Secretary of Defense and the Secretary of each 
military department is authorized to create and administer the 
Commercialization Readiness Program (CRP) to accelerate the transition 
of technologies, products, and services developed under the SBIR 
program to Phase III, including the acquisition process. The authority 
for CRP does not eliminate or replace any other SBIR or STTR program 
that enhances the insertion or transition of SBIR or STTR technologies. 
This includes any program in effect as of December 31, 2011.
    (2) Identification of research programs for accelerated transition 
to acquisition process. The Secretary of each military department must 
identify research programs of the SBIR or STTR program that have the 
potential for rapid transitioning to Phase III and into the acquisition 
process and certify in writing that the successful transition of the 
program to Phase III and into the acquisition process is expected to 
meet high priority military requirements of such military department.
    (3) Limitation. The Secretary of Defense shall identify research 
programs of the SBIR or STTR program that have the potential for rapid 
transitioning to Phase III and into the acquisition process after 
receiving this certification from each military department.
    (4) Funding.
    (i) The Secretary of Defense and each Secretary of a military 
department is authorized to use its SBIR funds for administration of 
CRP in accordance with the procedures and policies set forth in Sec.  
9(e)(3) of this Policy Directive.
    (ii) In addition, the Secretary of Defense and Secretary of each 
military department is authorized to use not more than an amount equal 
to 1% of its SBIR funds available to DoD or the military departments 
for payment of expenses incurred to administer the CRP. Such funds--
    (A) shall not be subject to the limitations on the use of funds in 
9(e)(2) or 9(e)(3) of this Policy Directive; and
    (B) shall not be used to make Phase III awards.
    (5) Contracts Valued at not less than $100,000,000. For any 
contract awarded by DoD valued at not less than $100,000,000, the 
Secretary of Defense may:
    (i) Establish goals for the transition of Phase III technologies in 
subcontracting plans; and
    (ii) require a prime contractor on such a contract to report the 
number and dollar amount of the contracts entered into by the prime 
contractor for Phase III projects.
    (6) The Secretary of Defense shall:
    (i) Set a goal to increase the number of SBIR/STTR Phase II 
contracts that lead to technology transition into programs of record of 
fielded systems;
    (ii) use incentives in effect as of December 31, 2011 or create new 
incentives to encourage agency SBIR/STTR program managers/coordinators 
and prime contractors to meet the goal set forth in paragraph (6)(i) 
above; and
    (iii) submit the following to SBA, as part of the annual report:

[[Page 12830]]

    (A) The number and percentage of Phase II SBIR/STTR contracts 
awarded by DoD that led to technology transition into programs of 
record or fielded systems;
    (B) information on the status of each project that received funding 
through the CRP and the efforts to transition these projects into 
programs of record or fielded systems; and
    (C) a description of each incentive that has been used by DoD, the 
effectiveness of the incentive with respect to meeting DoD's goal to 
increase the number of SBIR/STTR Phase II contracts that lead to 
technology transition into programs of record or fielded systems, and 
measures taken to ensure that such incentives do not act to shift the 
focus of Phase II awards away from relatively high-risk innovation 
projects.
    (c) Commercialization Readiness Pilot Program for Civilian 
Agencies.
    (1) General. The Commercialization Readiness Pilot Program permits 
the head of any Federal Agency participating in the SBIR program 
(except DoD) to allocate not more than 10% of its funds allocated to 
the SBIR program--
    (i) for follow-on awards to small businesses for technology 
development, testing, evaluation, and Commercialization assistance for 
SBIR or STTR Phase II technologies; or
    (ii) for awards to small businesses to support the progress of 
research, research and development, and Commercialization conducted 
under the SBIR or STTR programs to Phase III.
    (2) Application to SBA. Before establishing this pilot program, the 
agency must submit a written application to SBA not later than 90 days 
before the first day of the fiscal year in which the pilot program is 
to be established. The written application must set forth a compelling 
reason that additional investment in SBIR or STTR technologies is 
necessary, including unusually high regulatory, systems integration, or 
other costs relating to development or manufacturing of identifiable, 
highly promising small business technologies or a class of such 
technologies expected to substantially advance the mission of the 
agency.
    (3) SBA's Determination. SBA must make its determination regarding 
an application submitted under paragraph (c)(2) above not later than 30 
days before the first day of the fiscal year for which the application 
is submitted. SBA must also publish its determination in the Federal 
Register and make a copy of the determination and any related materials 
available to the Committee on Small Business and Entrepreneurship of 
the Senate and the Committee on Small Business and the Committee on 
Science, Space, and Technology of the House of Representatives.
    (4) Maximum Amount of Award. The SBIR agency may not make an award 
to an SBC under this pilot program in excess of 3 times the dollar 
amounts generally established for Phase II awards under Sec.  7(i)(1) 
of this Policy Directive.
    (5) Registration. Any SBC that receives an award under this pilot 
program shall register with SBA in the Company Registry Database.
    (6) Award Criteria or Consideration. When making an award under 
this pilot program, the agency is required to consider whether the 
technology to be supported by the award is likely to be manufactured in 
the United States.
    (7) Termination of Authority. The authority to establish a pilot 
program under this section expires on September 30, 2022, unless 
otherwise extended.
    (d) Technology Development Program. The Act permits an agency that 
has established a Technology Development Program to review for funding 
under that program, in each fiscal year:
    (1) any proposal to provide outreach and assistance to 1 or more 
SBCs interested in participating in the SBIR program, including any 
proposal to make a grant or loan to a company to pay a portion or all 
of the cost of developing an SBIR proposal, from an entity, 
organization, or individual located in--
    (i) a State that is eligible to participate in that Technology 
Development Program; or
    (ii) an Additionally Eligible State.
    (2) any meritorious proposal for an SBIR Phase I award that is not 
funded through the SBIR program for that fiscal year due to funding 
constraints, from an SBC located in a State identified in (i) or (ii) 
immediately above.
    (e) [STTR only] Phase 0 Proof of Concept Partnership Pilot Program.
    (1) General. The Director of NIH may use $5,000,000 of the funds 
allocated for the STTR program set forth in Sec.  2(b) of this Policy 
Directive for a Proof of Concept Partnership Pilot Program to 
accelerate the creation of small businesses and the Commercialization 
of research innovations from qualifying institutions. A qualifying 
institution is a university or other Research Institution that 
participates in the NIH's STTR program. The Director shall award, 
through a competitive, merit-based process, grants to qualifying 
institutions in order to implement this program. These grants shall 
only be used to administer Proof of Concept Partnership awards.
    (2) Awards to Qualifying Institutions.
    (i) The Director may make awards to a qualifying institution for up 
to $1,000,000 per year for up to 4 years.
    (ii) In determining which qualifying institutions will receive 
pilot program grants, the Director of NIH shall consider, in addition 
to any other criteria the Director determines necessary, the extent to 
which qualifying institutions--
    (A) have an established and proven technology transfer or 
commercialization office and have a plan for engaging that office in 
the program's implementation;
    (B) have demonstrated a commitment to local and regional economic 
development;
    (C) are located in diverse geographies and are of diverse sizes;
    (D) can assemble project management boards comprised of industry, 
start-up, venture capital, technical, financial, and business experts;
    (E) have an Intellectual Property rights strategy or office; and
    (F) demonstrate a plan for sustainability beyond the duration of 
the funding award.
    (3) Proof of Concept Partnerships. A qualifying institution 
selected by NIH shall establish a Proof of Concept Partnership with NIH 
to award grants to individual researchers. These grants should provide 
researchers with the initial investment and the resources to support 
the proof of concept work and Commercialization mentoring needed to 
translate promising research projects and technologies into a viable 
company. This work may include technical validations, market research, 
clarifying Intellectual Property rights position and strategy, and 
investigating commercial or business opportunities.
    (4) Award Guidelines. The administrator of a Proof of Concept 
Partnership program shall award grants in accordance with the following 
guidelines:
    (i) The Proof of Concept Partnership shall use a market-focused 
project management oversight process, including--
    (A) a rigorous, diverse review board comprised of local experts in 
translational and proof of concept research, including industry, start-
up, venture capital, technical, financial, and business experts and 
university technology transfer officials;
    (B) technology validation milestones focused on market feasibility;
    (C) simple reporting effective at redirecting projects; and
    (D) the willingness to reallocate funding from failing projects to 
those with more potential.

[[Page 12831]]

    (ii) The Proof of Concept Partnership shall not award more than 
$100,000 towards an individual proposal.
    (5) Educational Resources and Guidance. The administrator of a 
Proof of Concept Partnership program shall make educational resources 
and guidance available to researchers attempting to commercialize their 
innovations.
    (6) Limitations.
    (i) The funds for the pilot program shall not be used for basic 
research or to fund the acquisition of research equipment or supplies 
unrelated to Commercialization activities.
    (ii) The funds for the pilot program can be used to evaluate the 
commercial potential of existing discoveries, including proof of 
concept research or Prototype development; and activities that 
contribute to determining a project's Commercialization path, to 
include technical validations, market research, clarifying Intellectual 
Property rights, and investigating commercial and business 
opportunities.
    (7) Termination of Authority. The pilot program under this 
subsection shall terminate on September 30, 2022, unless otherwise 
extended.

Appendix I: Instructions for SBIR and STTR Program Solicitation 
Preparation

    a. General. Subsections 9(j) and 9(p) of the Act (15 U.S.C. 638(j)) 
require simplified, standardized and timely SBIR/STTR solicitations and 
for SBIR/STTR Participating Agencies to utilize a ``uniform process'' 
minimizing the regulatory burden of participation. Therefore, the 
following instructions purposely depart from normal Government 
solicitation formats and requirements. SBIR/STTR solicitations must be 
prepared and issued as Program Solicitations in accordance with the 
following instructions.
    b. Limitation in Size of Solicitation. In the interest of meeting 
the requirement for simplified and standardized solicitations, while 
also recognizing that the internet has become the main vehicle for 
distribution, each agency should structure its entire SBIR/STTR 
solicitation to produce the least number of pages (electronic and 
printed), consistent with the procurement/assistance standard operating 
procedures and statutory requirements of the Participating Agencies.
    c. Format. SBIR/STTR Program Solicitations must be prepared in a 
simple, standardized, easy-to-read, and easy-to-understand format. It 
must include a cover sheet, a table of contents, and the following 
sections in the order listed.

1. Program Description
2. Certifications
3. Proposal Preparation Instructions and Requirements
4. Method of Selection and Evaluation Criteria
5. Considerations
6. Submission of Proposals
7. Scientific and Technical Information Sources
8. Submission Forms
9. Research Topics

    d. Cover Sheet. The cover sheet of an SBIR/STTR Program 
Solicitation must clearly identify the solicitation as an SBIR/STTR 
solicitation, identify the agency releasing the solicitation, specify 
date(s) on which contract proposals or grant applications are due under 
the solicitation, and state the solicitation number or year.
    e. Instructions for Preparation of SBIR or STTR Program 
Solicitation--Sections 1-9.
    Sec.  1. Program Description.
    (a) Summarize in narrative form the request for proposals and the 
objectives of the SBIR or STTR program.
    (b) Describe in narrative form the agency's SBIR or STTR program 
including a description of the three phases. Note in your description 
whether the solicitation is for Phase I or Phase II proposals. Also 
note in each solicitation for Phase I that all Awardees may apply for a 
Phase II award and provide guidance on the procedure for doing so.
    (c) Describe program eligibility.
    (d) List the name, address and telephone number of agency contacts 
for general information on the SBIR or STTR Program Solicitation.
    (e) Whenever terms are used that are unique to the SBIR or STTR 
program, a specific SBIR or STTR solicitation or a portion of a 
solicitation, define them or refer potential offerors/Applicants to a 
source for the definition. At a minimum, the definitions of ``Funding 
Agreement,'' ``R/R&D,'' ``SBC,'' ``SBIR/STTR Data,'' and ``SBIR/STTR 
Data Rights'' must be included.
    (f) Include information explaining how an individual can report 
fraud, waste and abuse (e.g. include the fraud hotline for the agency's 
Office of Inspector General);
    Sec.  2. Certifications.
    (a) This section must include certifying forms required by 
legislation, regulation or standard operating procedures, to be 
submitted by the Applicant to the contracting or granting agency. This 
would include certifying forms such as those for the protection of 
human and animal subjects.
    (b) This section must include any certifications required 
concerning size, ownership and other SBIR or STTR program requirements.
    (i) The agency may request the SBIR/STTR Applicant to submit a 
certification at the time of submission of the application or offer. 
The certification may require the Applicant to state that it intends to 
meet the size, ownership and other requirements of the SBIR or STTR 
program at the time of award of the Funding Agreement, if selected for 
award.
    (ii) The agency must request the Applicant to submit a 
certification at the time of award and at any other time set forth in 
SBA's regulations at 13 CFR 121.701-121.705. The certification will 
require the Applicant to state that it meets the size, ownership and 
other requirements of the SBIR or STTR program at the time of award of 
the Funding Agreement.
    (iii) The agency must request the Awardee to submit certifications 
during the Funding Agreement life cycle. A Phase I Funding Agreement 
must state that the Awardee shall submit a new certification that it is 
in compliance with specific SBIR or STTR program requirements at the 
time of final payment or disbursement. A Phase II Funding Agreement 
must state that the Awardee shall submit a new certification that it is 
in compliance with specific SBIR or STTR program requirements prior to 
receiving more than 50% of the total award amount and prior to final 
payment or disbursement.
    (iv) Agencies may require additional certifications at other points 
in time during the life cycle of the Funding Agreement, such as at the 
time of each payment or disbursement.
    (c) The agency must use the following certification at the time of 
award and upon notification by SBA, must check www.SBIR.gov for updated 
certifications prepared by SBA:

SBIR/STTR Funding Agreement Certification

    All small businesses that are selected for award of an SBIR/STTR 
Funding Agreement must complete this certification at the time of award 
and any other time set forth in the Funding Agreement that is prior to 
performance of work under this award. This includes checking all of the 
boxes and having an authorized officer of the Awardee sign and date the 
certification each time it is requested.
    Please read carefully the following certification statements. The 
Federal Government relies on the information to determine whether the 
business is eligible for a Small Business Innovation Research (SBIR) 
program or Small Business Technology Transfer (STTR)

[[Page 12832]]

program award. A similar certification will be used to ensure continued 
compliance with specific program requirements during the life of the 
Funding Agreement. The definitions for the terms used in this 
certification are set forth in the Small Business Act, SBA regulations 
(13 CFR part 121), the SBIR/STTR Policy Directive and also any 
statutory and regulatory provisions referenced in those authorities.
    If the Funding Agreement officer believes that the business may not 
meet certain eligibility requirements at the time of award, they are 
required to file a size protest with the U.S. Small Business 
Administration (SBA), which will determine eligibility. At that time, 
SBA will request further clarification and supporting documentation in 
order to assist in the verification of any of the information provided 
as part of a protest. If the Funding Agreement officer believes, after 
award, that the business is not meeting certain Funding Agreement 
requirements, the agency may request further clarification and 
supporting documentation in order to assist in the verification of any 
of the information provided.
    Even if correct information has been included in other materials 
submitted to the Federal Government, any action taken with respect to 
this certification does not affect the Government's right to pursue 
criminal, civil or administrative remedies for incorrect or incomplete 
information given in the certification. Each person signing this 
certification may be prosecuted if they have provided false 
information.
BILLING CODE 8025-01-P

[[Page 12833]]

[GRAPHIC] [TIFF OMITTED] TN02AP19.000


[[Page 12834]]


[GRAPHIC] [TIFF OMITTED] TN02AP19.001


[[Page 12835]]


[GRAPHIC] [TIFF OMITTED] TN02AP19.002


[[Page 12836]]


[GRAPHIC] [TIFF OMITTED] TN02AP19.003


[[Page 12837]]


[GRAPHIC] [TIFF OMITTED] TN02AP19.004

    (d) The agency must use the following certification during the life 
cycle of the Funding Agreement in accordance with subsection 8(j) of 
the SBIR/STTR Policy Directive and paragraph 2(b)(iii) of this Appendix 
and upon notification by SBA, must check www.SBIR.gov for updated 
certifications prepared by SBA:

SBIR/STTR Funding Agreement Certification--Life Cycle Certification

    All SBIR/STTR Phase I and Phase II Awardees must complete this 
certification at all times set forth in the Funding Agreement (see 
Sec.  8(j) of the SBIR/STTR Policy Directive). This includes checking 
all of the boxes (unless otherwise directed) and having an authorized 
officer of the Awardee sign and date the certification each time it is 
requested.
    Please read carefully the following certification statements. The 
Federal Government relies on the information to ensure compliance with 
specific program requirements during the life of the Funding Agreement. 
The definitions for the terms used in this certification are set forth 
in the Small Business Act, the SBIR/STTR Policy Directive, and also any 
statutory and regulatory provisions referenced in those authorities.
    If the Funding Agreement officer believes that the business is not 
meeting certain Funding Agreement requirements, the agency may request 
further clarification and supporting documentation in order to assist 
in the verification of any of the information provided.
    Even if correct information has been included in other materials 
submitted to the Federal Government, any action taken with respect to 
this certification does not affect the Government's right to pursue 
criminal, civil or administrative remedies for incorrect or incomplete 
information given in the certification. Each person signing this 
certification may be prosecuted if they have provided false 
information.

[[Page 12838]]

[GRAPHIC] [TIFF OMITTED] TN02AP19.005


[[Page 12839]]


[GRAPHIC] [TIFF OMITTED] TN02AP19.006


[[Page 12840]]


[GRAPHIC] [TIFF OMITTED] TN02AP19.007

    (e) [SBIR only] The agency must require any SBC that is majority-
owned by multiple venture capital operating companies, hedge funds, or 
private equity firms to submit the following certification with its 
SBIR application:

Certification for SBIR Applicants That Are Majority-Owned by Multiple 
Venture Capital Operating Companies, Hedge Fund or Private Equity Firms

    Any small business that is majority-owned by multiple venture 
operating companies (VCOCs), hedge funds, or private equity firms and 
is submitting an application for an SBIR Funding Agreement must 
complete this certification prior to submitting an application. This 
includes checking all of the boxes and having an authorized officer of 
the Applicant sign and date the certification each time it is 
requested.
    Please read carefully the following certification statements. The 
Federal Government relies on the information to determine whether the 
business is eligible for a Small Business Innovation Research (SBIR) 
program award and meets the specific program requirements during the 
life of the Funding Agreement. The definitions for the terms used in 
this certification are set forth in the Small Business Act, SBA 
regulations (13 CFR part 121), the SBIR/STTR Policy Directive and also 
any statutory and regulatory provisions referenced in those 
authorities.
    If the Funding Agreement officer believes that the business may not 
meet certain eligibility requirements at the time of award, he/she is 
required to file

[[Page 12841]]

a size protest with the U.S. Small Business Administration (SBA), which 
will determine eligibility. At that time, SBA will request further 
clarification and supporting documentation in order to assist in the 
verification of any of the information provided as part of a protest. 
If the Funding Agreement officer believes, after award, that the 
business is not meeting certain Funding Agreement requirements, the 
agency may request further clarification and supporting documentation 
in order to assist in the verification of any of the information 
provided.
    Even if correct information has been included in other materials 
submitted to the Federal Government, any action taken with respect to 
this certification does not affect the Government's right to pursue 
criminal, civil or administrative remedies for incorrect or incomplete 
information given in the certification. Each person signing this 
certification may be prosecuted if they have provided false 
information.

[[Page 12842]]

[GRAPHIC] [TIFF OMITTED] TN02AP19.008


[[Page 12843]]


[GRAPHIC] [TIFF OMITTED] TN02AP19.009

BILLING CODE 8025-01-C
    Sec.  3. Proposal Preparation Instructions and Requirements. The 
purpose of this section is to inform the Applicant on what to include 
in the proposal and to set forth limits on what may be included. It 
should also provide guidance to assist Applicants, particularly those 
that may not have previous Government experience, in improving the 
quality and acceptance of proposals.
    (a) Limitations on Length of Proposal. Include at least the 
following information:
    (1) SBIR/STTR Phase I proposals must not exceed a total of 25 
pages, including cover page, budget, and all enclosures or attachments, 
unless stated otherwise in the agency solicitation. Pages should be of 
standard size (8 1/2'' x 11''; 21.6 cm x 27.9 cm) and should conform to 
the standard formatting instructions. Margins should be 2.5 cm and type 
at least 10 point font.
    (2) A notice that no additional attachments, appendices, or 
references beyond the 25-page limitation shall be considered in 
proposal evaluation (unless specifically solicited by an agency) and 
that proposals in excess of

[[Page 12844]]

the page limitation shall not be considered for review or award.
    (b) Proposal Cover Sheet. Every Applicant is required to provide a 
copy of its registration information printed from the Company Registry 
unless the information can be transmitted automatically to SBIR/STTR 
Participating Agencies. Every Applicant must also include at least the 
following information on the first page of proposals. Items 8 and 9 are 
for statistical purposes only.
    (1) Agency and Program Solicitation Number or Year.
    (2) Topic Number or Letter.
    (3) Subtopic Number or Letter.
    (4) Topic Area.
    (5) Project Title.
    (6) Name and Complete Address of SBC.
    (7) Disclosure permission (by statement or checkbox), such as 
follows, must be included at the discretion of the funding agency:
    ``Will you permit the Federal Government to disclose the name, 
address, and telephone number of the corporate official of your 
concern, if your proposal does not result in an award, to appropriate 
local and State-level economic development organizations that may be 
interested in contacting you for further information? [ballot] Yes 
[ballot] No''
    (8) Signature of a company official of the proposing Small Business 
Concern and that individual's typed name, title, address, telephone 
number, and date of signature.
    (9) Signature of Principal Investigator or Project Manager within 
the proposing Small Business Concern and that individual's typed name, 
title, address, telephone number, and date of signature.
    (10) Legend for proprietary information as described in the 
``Considerations'' section of this Program Solicitation if appropriate. 
This may also be noted by asterisks in the margins on proposal pages.
    (c) Data Collection Requirement.
    (1) Each Phase I and Phase II Applicant is required to provide 
information for SBA's database (www.SBIR.gov). The following are 
examples of the data to be entered by Applicants into the database:
    (i) Any business concern or subsidiary established for the 
commercial application of a product or service for which an SBIR or 
STTR award is made.
    (ii) Revenue from the sale of new products or services resulting 
from the research conducted under each Phase II award;
    (iii) Additional investment from any source, other than Phase I or 
Phase II awards, to further the research and development conducted 
under each Phase II award.
    (iv) Update the information in the database for any prior Phase II 
award received by the SBC. The SBC may apportion sales or additional 
investment information relating to more than one Phase II award among 
those awards, if it notes the apportionment for each award.
    (2) Each Phase II Awardee is required to update the appropriate 
information on the award in the database upon completion of the last 
deliverable under the Funding Agreement and is requested to voluntarily 
update the information in the database annually thereafter for a 
minimum period of 5 years.
    (d) Abstract or Summary. Applicants will be required to include a 
one-page project summary of the proposed R/R&D including at least the 
following:
    (1) Name and complete address of SBC.
    (2) Name and title of Principal Investigator/Project Manager.
    (3) Participating Agency name, Program Solicitation number, and 
Program Solicitation topic and subtopic.
    (4) Title of project.
    (5) Technical abstract limited to two hundred words.
    (6) Summary of the anticipated results and implications of the 
approach (both Phases I and II) and the potential commercial 
applications of the research.
    (e) Technical Content. SBIR or STTR Program Solicitations must 
require, as a minimum, the following to be included in proposals 
submitted thereunder:
    (1) Identification and Significance of the Problem or Opportunity. 
A clear statement of the specific technical problem or opportunity 
addressed.
    (2) Phase I Technical Objectives. State the specific objectives of 
the Phase I research and development effort, including the technical 
questions it will try to answer to determine the feasibility of the 
proposed approach.
    (3) Phase I Work Plan. Include a detailed description of the Phase 
I R/R&D plan. The plan should indicate what will be done, where it will 
be done, and how the R/R&D will be carried out. Phase I R/R&D should 
address the objectives and the questions cited in (e)(2) immediately 
above. The methods planned to achieve each objective or task should be 
discussed in detail.
    (4) Related R/R&D. Describe significant R/R&D that is directly 
related to the proposal, including any conducted by the Principal 
Investigator/Project Manager or by the proposing SBC. Describe how it 
relates to the proposed effort, and any planned coordination with 
outside sources. The Applicant must persuade reviewers of his or her 
awareness of key, recent R/R&D conducted by others in the specific 
topic area.
    (5) Key Individuals and Bibliography of Directly Related Work. 
Identify Key Individuals involved in Phase I including their directly-
related education, experience, and bibliographic information. Where 
vitae are extensive, summaries that focus on the most relevant 
experience or publications are desired and may be necessary to meet 
proposal size limitation.
    (6) Relationship with Future R/R&D.
    (i) State the anticipated results of the proposed approach if the 
project is successful (Phase I and II).
    (ii) Discuss the significance of the Phase I effort in providing a 
foundation for the Phase II R/R&D effort.
    (7) Facilities. A detailed description, availability and location 
of instrumentation and physical facilities proposed for Phase I should 
be provided.
    (8) Consultants. Involvement of consultants in the planning and 
research stages of the project is permitted. If such involvement is 
intended, it should be described in detail.
    (9) Potential Post Applications. Briefly describe:
    (i) Whether and by what means the proposed project appears to have 
potential commercial application.
    (ii) Whether and by what means the proposed project appears to have 
potential use by the Federal Government.
    (10) Similar Proposals or Awards. WARNING--While it is permissible 
with proposal notification to submit identical proposals or proposals 
containing a significant amount of Essentially Equivalent Work for 
consideration under numerous Federal Agency Program Solicitations, it 
is unlawful to enter into Funding Agreements requiring Essentially 
Equivalent Work. If there is any question concerning this, it must be 
disclosed to the soliciting agency or agencies before award. If an 
Applicant elects to submit identical proposals or proposals containing 
a significant amount of Essentially Equivalent Work under other Federal 
Agency Program Solicitations, a statement must be included in each such 
proposal indicating:
    (i) The name and address of the Federal Agencies to which proposals 
were submitted or from which awards were received.

[[Page 12845]]

    (ii) Date of proposal submission or date of award.
    (iii) Title, number, and date of Program Solicitations under which 
proposals were submitted or awards received.
    (iv) The specific applicable research topics for each proposal 
submitted or award received.
    (v) Titles of research projects.
    (vi) Name and title of Principal Investigator/Project Manager for 
each proposal submitted or award received.
    (11) Prior SBIR Phase II Awards. If the SBC has received more than 
15 Phase II awards in the prior 5 fiscal years, the SBC must submit in 
its Phase I proposal: Name of the awarding agency; date of award; 
Funding Agreement number; amount of award; topic or subtopic title; 
follow-on agreement amount; source and date of commitment; and current 
Commercialization status for each Phase II award. (This required 
proposal information will not be counted toward the proposal pages 
limitation.)
    (f) Cost Breakdown/Proposed Budget. The solicitation will require 
the submission of simplified cost or budget data.
    Sec.  4. Method of Selection and Evaluation Criteria.
    (a) Standard Statement. Essentially, the following statement must 
be included in all SBIR or STTR Program Solicitations:

    All Phase I and II proposals will be evaluated and judged on a 
competitive basis. Proposals will be initially screened to determine 
responsiveness. Proposals passing this initial screening will be 
technically evaluated by engineers or scientists to determine the 
most promising technical and scientific approaches. Each proposal 
will be judged on its own merit. The Federal Agency is under no 
obligation to fund any proposal or any specific number of proposals 
in a given topic. It also may elect to fund several or none of the 
proposed approaches to the same topic or subtopic.

    (b) Evaluation Criteria.
    (1) The SBIR/STTR Participating Agency must develop a standardized 
method in its evaluation process that will consider, at a minimum, the 
following factors:
    (i) The technical approach and the anticipated agency and 
commercial benefits that may be derived from the research.
    (ii) The adequacy of the proposed effort, and its relationship to 
the fulfillment of requirements of the research topic or subtopics.
    (iii) The soundness and technical merit of the proposed approach 
and its incremental progress toward topic or subtopic solution.
    (iv) Qualifications of the proposed Principal Investigators/Project 
Managers, supporting staff, and consultants.
    (v) Evaluations of proposals require, among other things, 
consideration of a proposal's commercial potential as evidenced by:
    (A) The SBC's record of commercializing SBIR or other research,
    (B) the existence of Phase II funding commitments from private 
sector or non-SBIR funding sources,
    (C) the existence of Phase III follow-on commitments for the 
subject of the research, and,
    (D) the presence of other indicators of the commercial potential of 
the idea.
    (2) The factors in (b)(1) above and other appropriate evaluation 
criteria, if any, must be specified in the ``Method of Selection'' 
section of SBIR Program Solicitations.
    (c) Peer Review. The Program Solicitation must indicate if the 
SBIR/STTR Participating Agency contemplates that as a part of the SBIR/
STTR proposal evaluation, it will use external peer review.
    (d) Release of Proposal Review Information. After final award 
decisions have been announced, the technical evaluations of the 
Applicant's proposal may be provided to the Applicant. The identity of 
the reviewer must not be disclosed.
    Sec.  5. Considerations. This section must include, as a minimum, 
the following information:
    (a) Awards. Indicate the estimated number and type of awards 
anticipated under the particular SBIR/STTR Program Solicitation in 
question, including:
    (1) Approximate number of Phase I awards expected to be made.
    (2) Type of Funding Agreement, that is, contract, grant, or 
cooperative agreement.
    (3) Whether fee or profit will be allowed.
    (4) Cost basis of Funding Agreement, for example, fixed-price, cost 
reimbursement, or cost-plus-fixed fee.
    (5) Information on the approximate average dollar value of awards 
for Phase I and Phase II.
    (b) Reports. Describe the frequency and nature of reports that will 
be required under Phase I Funding Agreements. Interim reports should be 
brief letter reports.
    (c) Payment Schedule. Specify the method and frequency of progress 
and final payment under Phase I and II Funding Agreements.
    (d) Innovations, SBIR/STTR Data Rights, Inventions and Patents.
    (1) Proprietary Information in Proposals. The following statement 
must be included in all SBIR/STTR Program Solicitations:
    ``Information contained in unsuccessful proposals will remain the 
property of the Applicant. The Federal Government may, however, retain 
copies of all proposals. Public release of information in any proposal 
submitted will be subject to existing statutory and regulatory 
requirements. If proprietary information is provided by an Applicant in 
a proposal, which constitutes a trade secret, commercial or financial 
information, it will be treated in confidence, to the extent permitted 
by law, provided that the proposal is clearly marked by the Applicant 
as follows:
    (A) The following legend must appear on the title page of the 
proposal:

    This proposal contains information that shall not be disclosed 
outside the Federal Government and shall not be duplicated, used, or 
disclosed in whole or in part for any purpose other than evaluation 
of this proposal, unless authorized by law The Government shall have 
the right to duplicate, use, or disclose the data to the extent 
provided in the resulting contract if award is made as a result of 
the submission of this proposal . . . The information subject to 
these restrictions are contained on all pages of the proposal except 
for pages [insert page numbers or other identification of pages that 
contain no restricted information.]

    (End of Legend); and
    (B) The following legend must appear on each page of the proposal 
that contains information the Applicant wishes to protect:
    Use or disclosure of information contained on this sheet is subject 
to the restriction on the title page of this proposal.
    (2) Alternative To Minimize Proprietary Information. Agencies may 
elect to instruct Applicants to limit proprietary information to only 
that absolutely essential to their proposal.
    (3) SBIR/STTR Data Rights Clause. Participating Agencies must 
include a clause in their SBIR and STTR Program Solicitations and 
resulting Funding Agreements that reflects the following necessary 
elements:

SBIR/STTR Data Rights Clause

    (a) Definitions.
    (1) Computer Software. Computer programs, source code, source code 
listings, object code listings, design details, algorithms, processes, 
flow charts, formulae, and related material that would enable the 
software to be reproduced, recreated, or recompiled. Computer Software 
does not include Computer Databases or Computer Software Documentation.
    (2) Data. All recorded information, regardless of the form or 
method of recording or the media on which it may

[[Page 12846]]

be recorded. The term does not include information incidental to 
contract or grant administration, such as financial, administrative, 
cost or pricing or management information.
    (3) Form, Fit, and Function Data. Data relating to items, 
components, or processes that are sufficient to enable physical and 
functional interchangeability, and data identifying source, size, 
configuration, mating and attachment characteristics, functional 
characteristics, and performance requirements. For Computer Software it 
means data identifying source, functional characteristics, and 
performance requirements, but specifically excludes the source code, 
algorithms, processes, formulas, and flow charts of the software.
    (4) Government Purpose. Any activity in which the United States 
Government is a party, including cooperative agreements with 
international or multi-national defense organizations or sales or 
transfers by the United States Government to foreign governments or 
international organizations. Government Purposes include competitive 
procurement, but do not include the rights to use, modify, reproduce, 
release, perform, display, or disclose Technical Data or Computer 
Software for commercial purposes or authorize others to do so.
    (5) Operations, Maintenance, Installation, or Training Purposes 
(OMIT) Data. Data that is necessary for operation, maintenance, 
installation, or training purposes (but not including detailed 
manufacturing or process data).
    (6) SBIR/STTR Computer Software Rights. The Federal Government's 
rights during the SBIR/STTR Protection Period in specific types of 
SBIR/STTR Data that are Computer Software.
    (A) The Federal Government may use, modify, reproduce, release, 
perform, display, or disclose SBIR/STTR Data that are Computer Software 
within the Government. The Federal Government may exercise SBIR/STTR 
Computer Software Rights within the Government for:
    (1) Use in Federal Government computers;
    (2) Modification, adaptation, or combination with other Computer 
Software, provided that the Data incorporated into any derivative 
software are subject to the rights in Sec.  3(ee) of the SBIR/STTR 
Policy Directive and that the derivative software is marked as 
containing SBIR/STTR Data;
    (3) Archive or backup; or
    (4) Distribution of a computer program to another Federal agency, 
without further permission of the Awardee, if the Awardee is notified 
of the distribution and the identity of the recipient prior to the 
distribution, and a copy of the SBIR/STTR Computer Software Rights 
included in the Funding Agreement is provided to the recipient.
    (B) The Federal Government shall not release, disclose, or permit 
access to SBIR/STTR Data that is Computer Software for commercial, 
manufacturing, or procurement purposes without the written permission 
of the Awardee. The Federal Government shall not release, disclose, or 
permit access to SBIR/STTR Data outside the Government without the 
written permission of the Awardee unless:
    (i) The non-Governmental entity has entered into a non-disclosure 
agreement with the Government that complies with the terms for such 
agreements outlined in Sec.  8 of the SBIR/STTR Policy Directive; and
    (ii) The release or disclosure is--
    (I) To a Federal Government support service contractor or their 
subcontractor for purposes of supporting Government internal use or 
activities, including evaluation, diagnosis and correction of 
deficiencies, and adaptation, combination, or integration with other 
Computer Software provided that SBIR/STTR Data incorporated into any 
derivative software are subject to the rights in Sec.  3(ee) of the 
SBIR/STTR Policy Directive; or
    (II) Necessary to support certain narrowly-tailored essential 
Government activities for which law or regulation permits access of a 
non-Government entity to a contractors' data developed exclusively at 
private expense, non-SBIR/STTR Data, such as for emergency repair and 
overhaul.
    (7) SBIR/STTR Data. All Data developed or generated in the 
performance of an SBIR or STTR award, including Technical Data and 
Computer Software developed or generated in the performance of an SBIR 
or STTR award. The term does not include information incidental to 
contract or grant administration, such as financial, administrative, 
cost or pricing or management information.
    (8) SBIR/STTR Data Rights. The Federal Government's license rights 
in properly marked SBIR/STTR Data during the SBIR/STTR Protection 
Period are as follows: SBIR/STTR Technical Data Rights in SBIR/STTR 
Data that are Technical Data or any other type of Data other than 
Computer Software; and SBIR/STTR Computer Software Rights in SBIR/STTR 
Data that is Computer Software. Upon expiration of the protection 
period for SBIR/STTR Data, the Federal Government has a royalty-free 
license to use, and to authorize others to use on its behalf, these 
data for Government Purposes, and is relieved of all disclosure 
prohibitions and assumes no liability for unauthorized use of these 
data by third parties. The Federal Government receives Unlimited Rights 
in Form Fit, and Function Data, OMIT Data, and all unmarked SBIR/STTR 
Data.
    (9) SBIR/STTR Protection Period. The period of time during which 
the Federal Government is obligated to protect SBIR/STTR Data against 
unauthorized use and disclosure in accordance with SBIR/STTR Data 
Rights. The SBIR/STTR Protection Period begins at award of an SBIR/STTR 
Funding Agreement and ends not less than twenty years from that date 
(See Sec.  8(b)(4) of the SBIR/STTR Policy Directive).
    (10) SBIR/STTR Technical Data Rights. The Federal Government's 
rights during the SBIR/STTR Protection Period in SBIR/STTR Data that 
are Technical Data or any other type of Data other than Computer 
Software.
    (A) The Federal Government may, use, modify, reproduce, perform, 
display, release, or disclose SBIR/STTR Data that are Technical Data 
within the Government; however, the Government shall not use, release, 
or disclose the data for procurement, manufacturing, or commercial 
purposes; or release or disclose the SBIR/STTR Data outside the 
Government except as permitted by paragraph (B) below or by written 
permission of the Awardee.
    (B) SBIR/STTR Data that are Technical Data may be released outside 
the Federal Government without any additional written permission of the 
Awardee only if the non-Governmental entity or foreign government has 
entered into a non-disclosure agreement with the Federal Government 
that complies with the terms for such agreements outlined in Sec.  8 of 
the SBIR/STTR Policy Directive and the release is:
    (i) Necessary to support certain narrowly-tailored essential 
Government activities for which law or regulation permits access of a 
non-Government entity to a contractors' data developed exclusively at 
private expense, non-SBIR/STTR Data, such as for emergency repair and 
overhaul;
    (ii) To a Government support services contractor in the performance 
of a Government support services contract for internal Government use 
or activities, including evaluation, diagnosis or modification, 
provided that SBIR/STTR Technical Data incorporated into any derivative 
Data are subject to the rights in Sec.  3(ii) of the SBIR/STTR Policy 
Directive, and the release is not

[[Page 12847]]

for commercial purposes or manufacture;
    (iii) To a foreign government for purposes of information and 
evaluation if required to serve the interests of the U.S. Government; 
or
    (iv) To non-Government entities or individuals for purposes of 
evaluation.
    (11) Technical Data. Recorded information, regardless of the form 
or method of the recording, of a scientific or technical nature 
(including Computer Software Documentation and Computer Databases). The 
term does not include Computer Software or financial, administrative, 
cost or pricing, or management information, or other data incidental to 
contract or grant administration. The term includes recorded Data of a 
scientific or technical nature that is included in Computer Databases.
    (12) Unlimited Rights. The Government's rights to access, use, 
modify, prepare derivative works, reproduce, release, perform, display, 
disclose, or distribute Data in whole or in part, in any manner and for 
any purpose whatsoever, and to have or authorize others to do so.
    (b) Allocation of SBIR/STTR Data Rights.
    (1) An SBC retains ownership of all SBIR/STTR Data it develops or 
generates in the performance of an SBIR/STTR award. The SBC retains all 
rights in SBIR/STTR Data that are not granted to the Federal Government 
in accordance with the SBIR/STTR Policy Directive. These rights of the 
SBC do not expire.
    (2) During the SBIR/STTR Protection Period, the Federal Government 
receives SBIR/STTR Technical Data Rights in appropriately marked SBIR/
STTR Data that is Technical Data or any other type of Data other than 
Computer Software; and SBIR/STTR Computer Software Rights in 
appropriately marked SBIR/STTR Data that is Computer Software.
    (3) After the protection period, the Federal Government may use, 
and authorize others to use on its behalf, for Government Purposes, 
SBIR/STTR Data that was protected during the SBIR/STTR Protection 
Period. Awards issued by the U.S. Department of Energy are subject to 
Unlimited Rights after the expiration of the SBIR/STTR Protection 
Period.
    (4) The Federal Government receives Unlimited Rights in Form Fit, 
and Function Data, OMIT Data, and all unmarked SBIR/STTR Data
    (c) Identification and Delivery of SBIR/STTR Data. Any SBIR/STTR 
Data delivered by the Awardee, and in which the Awardee intends to 
limit the Federal Government's rights to SBIR/STTR Data Rights, must be 
delivered with restrictive markings. The Federal Government assumes no 
liability for the access, use, modification, reproduction, release, 
performance, display, disclosure, or distribution of SBIR/STTR Data 
without markings. The Awardee or its subcontractors or suppliers shall 
conspicuously and legibly mark all such SBIR/STTR Data with the 
appropriate legend.
    (1) The authorized legend shall be placed on each page of the SBIR/
STTR Data. If only portions of a page are subject to the asserted 
restrictions, the SBIR/STTR Awardee shall identify the restricted 
portions (e.g., by circling or underscoring with a note or other 
appropriate identifier). With respect to SBIR/STTR Data embodied in 
Computer Software, the legend shall be placed on: (1) The printed 
material or media containing the Computer Software; or (2) the 
transmittal document or storage container. The legend shall read as 
follows:

                          SBIR/STTR Data Rights
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Funding Agreement No.....................  .............................
------------------------------------------------------------------------
Award Date...............................  .............................
------------------------------------------------------------------------
SBIR/STTR Protection Period..............  .............................
------------------------------------------------------------------------
SBIR/STTR Awardee........................  .............................
------------------------------------------------------------------------
SBIR/STTR Awardee Address................  .............................
------------------------------------------------------------------------

    This is SBIR/STTR Data (or is Computer Software or a Prototype 
that embodies or includes SBIR/STTR Data) to which the SBIR/STTR 
Awardee has SBIR/STTR Data Rights and to which the Federal 
Government has received SBIR/STTR Technical Data Rights (or SBIR/
STTR Computer Software Rights) during the SBIR/STTR Protection 
Period and rights of use for Government Purposes after the SBIR/STTR 
Protection Period, as those terms are defined in the SBIR/STTR 
Funding Agreement. Awards issued by the U.S. Department of Energy 
are subject to Unlimited Rights after the SBIR/STTR Protection 
Period, as that term is defined in the SBIR/STTR Funding Agreement. 
Any reproduction of SBIR/STTR Data or portions of such data marked 
with this legend must also reproduce the markings.

(End of Legend)

    (2) Data submitted without correct or appropriate markings may be 
corrected within 6 months from the date the data is delivered.
    (d) Relation to patents. Nothing regarding SBIR/STTR Data Rights in 
this clause shall imply a license to or imply a requirement to license 
to the Federal Government any patent to a Subject Invention (as defined 
under the Bayh-Dole Act implemented at 37 CFR 401) made under an SBIR/
STTR award.

(End of Clause)

    (4) Copyrights. Include an appropriate statement concerning 
copyrights and publications addressing national security 
considerations, if any, and the appropriate acknowledgement and 
disclaimer statement.
    (5) Invention Reporting. Include requirements for reporting 
inventions. Include appropriate information concerning the reporting of 
inventions, for example:

    SBIR/STTR Awardees must report inventions to the awarding agency 
within 2 months of the inventor's report to the Awardee.

    Note:  Many federal agencies require electronic reporting of 
inventions and patents made with Federal funds through the 
Interagency Invention Reporting System (iEdison) that is maintained 
and managed by NIH. The iEdison System is used to satisfy all 
invention reporting requirements mandated by an SBIR/STTR award. 
Access to iEdison is through a secure interactive internet site, 
https://www.iedison.gov. All Federal Agencies are encouraged to use 
the iEdison System. In addition to fulfilling reporting 
requirements, iEdison notifies the user of future time sensitive 
deadlines with enough lead-time to avoid the possibility of loss of 
invention or patent ownership or rights.

    (e) Cost Sharing. Include a statement essentially as follows:

    Cost sharing is permitted for proposals under this Program 
Solicitation; however, cost sharing is not required. Cost sharing 
will not be an evaluation factor in consideration of your Phase I 
proposal.

    (f) Profit or Fee. Include a statement on the payment of profit or 
fee on awards made under the SBIR/STTR Program Solicitation.
    (g) Joint Ventures or Limited Partnerships. Include essentially the 
following language:

    Joint Ventures and limited partnerships are eligible provided 
the entity created qualifies as a Small Business Concern as defined 
in this Program Solicitation.

    (h) Research and Analytical Work. Include essentially the following 
statement:
    SBIR:

    (1) For Phase I a minimum of two-thirds of the research and/or 
analytical effort must be performed by the proposing Small Business 
Concern unless otherwise approved in writing by the Funding 
Agreement officer after consultation with the agency SBIR program 
manager/coordinator.
    (2) For Phase II a minimum of one-half of the research and/or 
analytical effort must be performed by the proposing Small Business 
Concern unless otherwise approved in writing by the Funding 
Agreement officer

[[Page 12848]]

after consultation with the agency SBIR program manager/coordinator.

    STTR:

    For both Phase I and Phase II, not less than 40 percent of the 
R/R&D work must be performed by the Small Business Concern, and not 
less than 30 percent of the R/R&D work must be performed by a 
partnering Research Institution, as defined in this Program 
Solicitation.

    (i) Awardee Commitments. To meet the legislative requirement that 
SBIR/STTR Program Solicitations be simplified, standardized and 
uniform, clauses expected to be in or required to be included in SBIR/
STTR Funding Agreements must not be included in full or by reference in 
SBIR/STTR Program Solicitations. Rather, Applicants must be advised 
that they will be required to make certain legal commitments at the 
time of execution of Funding Agreements resulting from SBIR/STTR 
Program Solicitations. Essentially, the following statement must be 
included in the ``Considerations'' section of SBIR/STTR Program 
Solicitations:

    Upon award of a Funding Agreement, the Awardee will be required 
to make certain legal commitments through acceptance of numerous 
clauses in Phase I Funding Agreements. The outline that follows is 
illustrative of the types of clauses to which the contractor would 
be committed. This list is not a complete list of clauses to be 
included in Phase I Funding Agreements, and is not the specific 
wording of such clauses. Copies of complete terms and conditions are 
available upon request.

    (j) Summary Statements. The following are illustrative of the type 
of summary statements to be included immediately following the 
statement in subparagraph (i). These statements are examples only and 
may vary depending upon the type of Funding Agreement used.
    (1) Standards of Work. Work performed under the Funding Agreement 
must conform to high professional standards.
    (2) Inspection. Work performed under the Funding Agreement is 
subject to Government inspection and evaluation at all times.
    (3) Examination of Records. The Comptroller General (or a duly 
authorized representative) must have the right to examine any pertinent 
records of the Awardee involving transactions related to this Funding 
Agreement.
    (4) Default. The Federal Government may terminate the Funding 
Agreement if the contractor fails to perform the work contracted.
    (5) Termination for Convenience. The Funding Agreement may be 
terminated at any time by the Federal Government if it deems 
termination to be in its best interest, in which case the Awardee will 
be compensated for work performed and for reasonable termination costs.
    (6) Disputes. Any dispute concerning the Funding Agreement that 
cannot be resolved by agreement must be decided by the contracting 
officer with right of appeal.
    (7) Contract Work Hours. The Awardee may not require an employee to 
work more than 8 hours a day or 40 hours a week unless the employee is 
compensated accordingly (for example, overtime pay).
    (8) Equal Opportunity. The Awardee will not discriminate against 
any employee or applicant for employment because of race, color, 
religion, sex, or national origin.
    (9) Equal Opportunity for Veterans. The Awardee will not 
discriminate against any employee or application for employment because 
he or she is a disabled veteran or veteran of the Vietnam era.
    (10) Equal Opportunity for People with Disabilities. The Awardee 
will not discriminate against any employee or applicant for employment 
because he or she is physically or intellectually disabled.
    (11) Officials Not To Benefit. No Federal Government official may 
benefit personally from the SBIR/STTR Funding Agreement.
    (12) Covenant Against Contingent Fees. No person or agency has been 
employed to solicit or secure the Funding Agreement upon an 
understanding for compensation except bona fide employees or commercial 
agencies maintained by the Awardee for the purpose of securing 
business.
    (13) Gratuities. The Funding Agreement may be terminated by the 
Federal Government if any gratuities have been offered to any 
representative of the Government to secure the award.
    (14) Patent Infringement. The Awardee must report each notice or 
claim of patent infringement based on the performance of the Funding 
Agreement.
    (15) American Made Equipment and Products. When purchasing 
equipment or a product under the SBIR/STTR Funding Agreement, purchase 
only American-made items whenever possible.
    (k) Additional Information. Information pertinent to an 
understanding of the administration requirements of SBIR/STTR proposals 
and Funding Agreements not included elsewhere must be included in this 
section. As a minimum, statements essentially as follows must be 
included under ``Additional Information'' in SBIR/STTR Program 
Solicitations:
    (1) This Program Solicitation is intended for informational 
purposes and reflects current planning. If there is any inconsistency 
between the information contained herein and the terms of any resulting 
SBIR/STTR Funding Agreement, the terms of the Funding Agreement are 
controlling.
    (2) Before award of an SBIR/STTR Funding Agreement, the Federal 
Government may request the Applicant to submit certain organizational, 
management, personnel, and financial information to assure 
responsibility of the Applicant.
    (3) The Federal Government is not responsible for any monies 
expended by the Applicant before award of any Funding Agreement.
    (4) This Program Solicitation is not an offer by the Federal 
Government and does not obligate the Government to make any specific 
number of awards. Also, awards under the SBIR/STTR program are 
contingent upon the availability of funds.
    (5) The SBIR/STTR program is not a substitute for existing 
unsolicited proposal mechanisms. Unsolicited proposals must not be 
accepted under the SBIR/STTR program in either Phase I or Phase II.
    (6) If an award is made pursuant to a proposal submitted under this 
SBIR/STTR Program Solicitation, a representative of the contractor or 
grantee or party to a cooperative agreement will be required to certify 
that the concern has not previously been, nor is currently being, paid 
for Essentially Equivalent Work by any Federal Agency.
    Sec.  6. Submission of Proposals.
    (a) This section must clearly specify the closing date on which all 
proposals are due to be received.
    (b) This section must specify the number of copies of the proposal 
that are to be submitted.
    (c) This section must clearly set forth the complete mailing and/or 
delivery address(es) where proposals are to be submitted.
    (d) This section may include other instructions such as the 
following:
    (1) Bindings. Please do not use special bindings or covers. Staple 
the pages in the upper left corner of the cover sheet of each proposal.
    (2) Packaging. All copies of a proposal should be sent in the same 
package.
    Sec.  7. Scientific and Technical Information Sources. Wherever 
descriptions of research topics or subtopics include reference to 
publications, information on where such publications will normally be

[[Page 12849]]

available must be included in a separate section of the solicitation 
entitled ``Scientific and Technical Information Sources.''
    Sec.  8. Submission Forms. Multiple copies of proposal preparation 
forms necessary to the contracting and granting process may be 
required. This section may include Proposal Summary, Proposal Cover, 
Budget, Checklist, and other forms the sole purpose of which is to meet 
the mandate of law or regulation and simplify the submission of 
proposals.
    Sec.  9. Research Topics. Describe sufficiently the R/R&D topics 
and subtopics for which proposals are being solicited to inform the 
Applicant of technical details of what is desired. Allow flexibility in 
order to obtain the greatest degree of creativity and innovation 
consistent with the overall objectives of the SBIR/STTR program.

[FR Doc. 2019-06129 Filed 4-1-19; 8:45 am]
 BILLING CODE 8025-01-P