Policies & Compliance

Funding Sources & Opportunities

4.4 SBIR/STTR

Various federal agencies provide funding to small businesses to conduct research and development with the goal of commercializing technology. This federal funding occurs via two different award mechanisms:

Small Business Innovation Research (“SBIR”)
Small Business Technology Transfer (“STTR”)

Both SBIR and STTR awards are made directly to a small business concern (“SBC”). A SBC is a for-profit company that is the applicant for a SBIR/STTR award.

STTRs require that the SBC collaborate with a research institution (“RI”) for a certain portion of the award. SBIRs do not require RI involvement, but SBCs often collaborate with RIs on SBIRs. A RI is the research institution partner, such as the University of Utah, that collaborates with a SBC for a SBIR/STTR award through a subcontract/subaward under the SBC.

University of Utah meets the criteria to serve as a RI for SBIRs and STTRs. The U's involvement in either a SBIR or a STTR occurs when it is either included in the proposal or the federal sponsor has provided approval to SBC to engage with the University and is awarded via a subcontract/subaward from the SBC to the University. In cases where there is a collaboration/subcontract/subaward between the SBC and the RI, there is an SBC PI and an RI PI (i.e. a PI for each side of the collaboration).

Currently, eleven separate agencies participate in the SBIR program, and five in the STTR program, and the standards can differ from program to program. Generally, the key differences between the two programs are as follows:

**Requirements for SBIR**
Applicability	Eligibility Requirements
SBC	Must be an American-owned business Must be independently operated Must be a for-profit business Must have five hundred or fewer employees If sub-contract with another party, or with multiple parties: SBC must do at least two-thirds of research during Phase I; SBC must do at least one-half of research during Phase II
SBC PI	Must be primarily employed with SBC University of Utah faculty are not eligible to be lead PI on a SBIR
RI	Involvement of RI is allowed but not required If the SBC subcontracts with RI, RI may conduct up to one-third of research during Phase 1; RI may do up to one-half of research during Phase II
Term	Phase I: up to 6 months Phase II: up to 2 years

**Requirements for STTR**
Applicability	Eligibility Requirements
SBC	Must be an American-owned business Must be independently operated Must be a for-profit business Must have 500 or fewer employees Not less than 40% of the research/research development must be performed by SBC
SBC PI	Must be primarily employed by either the SBC or the collaborating PI. University faculty or employee must have at least 10% effort on the award, which must be limited to either the U or the SBC (but not both).
RI	Research Institution collaborator required must be one of the following: A non-profit college or university; a domestic non-profit research organization; or a federally funded research and development center RI required to conduct at least 30% of research and development but may conduct up to 60%. Must be a formal collaboration.
Term	Phase I: up to 1 year Phase II: up to 2 years

For more information on PI eligibility, see the SBIR Tutorial.

If you are a PI and anticipate participating as a subrecipient to a SBC receiving funding, please also review the SBIR/STTR Implementation Procedure.

The Same Individual Serving as University PI and SBC PI

For SBIR awards, the SBC PI must be primarily employed by the SBC or "company". Most faculty members are fully employed by the University and therefore cannot serve as the PI for an SBC. To serve as PI for a SBC, the faculty member cannot have a University position or appointment of greater than 49%.

For STTR awards, the PI named on the award may be primarily employed by either the company or the University. The exception is for NSF STTR awards, in which the PI named on the award must be primarily employed by the SBC.

For the work conducted for both SBIR and STTR awards, the SBC PI and the RI PI may not be the same individual. While not explicitly stated, the STTR/SBIR policy, instructions, and project percentage requirements make clear that establishing a separation of entities and roles is important. Having the same person on both sides of the collaboration blurs the respective parties’ project roles, responsibilities and effort/time commitments.

Specific sponsor policies or requirements may differ and be more restrictive. For example, the NSF guidance states that no person who is an equity holder, employee, or officer of the proposing small business may (1) be paid as a consultant, or (2) be paid through a subaward budget, in either case, unless recommended and approved by the NSF.

Faculty members that have an interest in a SBC must read all sponsor requirements for SBIR/STTR proposals and awards carefully and note what situations may be prohibited or that may require advance sponsor approval. It is strongly recommended that the SBC engage counsel to review and advise on the grant awards, and hire accountants with specific expertise in SBIRs and STTRs.

Consulting for a Faculty Affiliated Company

Under University policy, faculty may work with outside companies as consultants. From a conflict of interest and conflict of commitment perspective, it is best for an individual to act either as a consultant to the company on grant-related activities, or as a researcher on a subcontract to the University, but not both.

As a general rule, if the faculty affiliated company is sponsoring research at the University under an SBIR or STTR, the faculty member should not be paid as a consultant under the award.

Use of Students and Post Docs

Graduate and undergraduate students are not allowed to perform work for either the University or the SBC in an SBIR/STTR award where the University faculty member has a financial interest in the SBC and the faculty member is the student's mentor.

Postdoctoral Research Scholars or Research Associates may be permitted to work on the University's portion of the grant under the subaward provided that (i) full disclosure is provided in writing by the faculty regardless of their interest in the SBC, (ii) the Department Chair provides approval, and (iii) the postdoc is provided a safe haven. For clarity, postdocs working on the University portion of the grant under the subcontract would not be in a PI capacity.

Postdocs* may be permitted to serve as the PI for an SBC, or work on the SBC's portion of the grant, however, faculty may not require that postdocs work on behalf of the SBC as a condition of their continued participation in their training program. It is generally recognized that an employment opportunity with a SBC may be beneficial to the postdoc's career. In this case, the postdoc may be required to reduce or sever their University appointment to become an employee of the SBC. The postdoc should be made aware of potential risks or consequences which may include: (i) severance of university appointment, (ii) severance of university employment and benefits, (iii) disruption of academic career path, and (iv) the postdoc’s former position at the University is not held and there is no guarantee of return to the University.

*Postdocs who are paid from fellowship or training awards generally should not be performing work on the SBC's portion of the SBIR/STTR

Use of Support Staff

Faculty may engage University support staff in support of the SBC in a limited capacity and only with the Department Chair’s prior approval. For example, the faculty may engage support staff in scheduling the faculty member’s time and reserving meeting rooms. Support staff should not be asked to make arrangements or handle reimbursements for SBC travel or hospitality. Developing a budget and proposal on behalf of the SBC (which excludes a budget proposal on behalf of WU as a subcontractor) would not be considered use of support staff in a “limited capacity.” When evaluating whether to approve a request to use University support staff, the Department Chair should ensure use of the University employees is in a limited capacity and that such use is documented in an appropriate agreement (e.g., a service agreement).

Management of Faculty Affiliated Company Grants

The faculty affiliated company/external entity is responsible for all grant administration relating to company grants, including SBIR and STTR grants. The faculty affiliated company/external entity should seek professional advice on appropriate grant management and administration.

SBC Use of University Space

Small businesses certify in their SBIR and STTR applications and award documents to the federal government that the SBC research and development will occur in SBC facilities using company employees unless otherwise indicated in the SBIR or STTR application and approved in the funding agreement. Therefore, performing the SBC portion of such research in University space using University resources — unless specifically approved by the funding agency and allowed by the University – subjects the company to potential criminal, civil, or administrative sanctions.

Federal and Sponsor Specific Guidance

The US Small Business Administration provides guidance to interested parties wishing to pursue SBIR or STTR funding opportunities. Their website includes general information as well as links to individual federal sponsor programs. Sponsors may have additional guidelines or restrictions and those small businesses seeking to pursue a SBIR or STTR project should be careful to thoroughly review guidelines and restrictions.

Resources

SBIR/STTR Implementation Procedure

Questions and concerns about SBIR/STTR should be addressed to Douglas Wawrzynski.

Additional External Resources:

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Office of Sponsored Projects

VP for Research

Requirements for SBIR

Requirements for STTR