NIH Small Business Grants SBIRSTTR

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NIH Small Business Grants SBIR/STTR
T63

• A Primer for Grants Managers
• Society of Research Administration International
  Meeting
• Milwaukee, Wisconsin October 2005
• How to Manage Small Business Grants
• Kathleen Shino, MBA

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Overview

• SBIR/STTR Program Description
• Eligibility Criteria
• Comparison/Contrast
• Phase I Phase II
• Fast-Track SBIR/STTR
• Resources

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Program Authorization

• The Small Business Innovation Research (SBIR)
  program was established under the Small Business
  Innovation Development Act of 1982 (P.L. 97-219),
  reauthorized until September 30, 2000 by the
  Small Business Research and Development
  Enhancement Act (P.L. 102-564), and reauthorized
  again until September 30, 2008 by the Small
  Business Reauthorization Act of 2000 (P.L.
  106-554).

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Program Authorization

• The Small business Technology Transfer Research
  (STTR) program was established by the Small
  Business Technology Transfer Act of 1992 (P.L.
  102-563, Title II), reauthorized until the year
  2001 by the Small Business Reauthorization Act of
  1997 (P.L. 105-135), and reauthorized again until
  September 30, 2009 by the Small Business
  Technology Transfer Program Reauthorization Act
  of 2001 (P.L. 107-50).

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SBIR/STTR3-Phase Program

• PHASE I
• Feasibility study (no preliminary data needed)
• 100K -- 6 months (SBIR) or 12 months (STTR)
  these are guidelines, not limits
• PHASE II
• Full Research/Research Dev.
• 2-Year Award -- 750K (SBIR and STTR)
• PHASE III
• Commercialization Stage
• Without SBIR/STTR Support

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SBIR/STTR Eligibility

• Determined at the time of award
• For-profit U.S. business firm
• 51 U.S. owned independently operated by
  individuals
• Small Business Concern (SBC) located in the U.S.
• 500 or fewer employees, including affiliates

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SBC Eligibility Requirement Ownership

• Individual proprietorship,
• Partnership,
• Limited Liability Company (LLC)
• Corporation (Inc., Corp.),
• Joint Venture (JV),
• association, trust or cooperative, except that
  where the form is a joint venture, there can be
  no more than 49 percent participation by foreign
  business entities in the joint venture

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SBC Eligibility Requirement Ownership

• 51 percent owned and controlled by one or more
  individuals who are citizens of, or permanent
  resident aliens in, the United States,
• (New) or for SBIR only gt 51 owned and operated
  by ANOTHER (one) small business concern that is
  itself 51 owned and controlled by one or more
  individuals

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SBC Eligibility Requirement of Employees

• Has, including its affiliates, not more than 500
  employees. The term "affiliates" is defined in
  greater detail in 13 CFR 121.3-2(a) and the term
  "number of employees" is defined in 13 CFR
  121.3-2(t).
• Based on Commonalities employees, ownership and
  location

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Change to SBIR eligibility ownership
requirement

• This change does not apply to STTR.
• Allow SBIR's to be more than 51 -owned and
  controlled by another for-profit business concern
  that is itself at least 51 owned and controlled
  by one or more individuals who are citizens of,
  or permanent resident aliens in the U.S.
• Currently in Congressional Committees for further
  review and SBA hearings (6/2005)
• SBIR awards to business concerns owned by
  venture capital operating companies or employee
  benefit or pension plans are not eligible.

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What do we look for?

• Business Structure Inc., Corp. LTD, JV, LLC, SA,
  PLC
• Does the application mention involvement with an
  investment company?
• Review the Commercialization Plan in Phase II
  applications or company description.
• Biosketch information - Are there any former or
  concurrent employment with larger entities?
  (Email links?)

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Where to Look?

• Search the internet, by using several search
  engines such as Google at http//www.google.com.
  There are a lot of good search engines available,
  i.e., Ask, Excite, Dogpile, Altavista, Mamma, and
  Metacrawler.

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So what kind of eligibility information will
be requested from a SBIR/STTR applicant?

• A listing of the majority shareholders, or all
  shareholders, including the venture capital
  investment companies,
• The percentage of stock each investor or company
  holds using common stock valuation, and
• Identify foreign investors/shareholders

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More Items We Ask for

• Copy of Articles of Incorporation, By-Laws and
  Board Meeting Minutes
• Copy of SBC and affiliates last annual
  statements to shareholders
• Audits (we check with NIH Division of Financial
  Advisory Services, and DCAA)

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Other eligibility concerns

• Federal Register notice, Volume 67, No. 185,
  September 24, 2002 (page 60090) states,
•         (f)(3) An agency must not issue an SBIR
  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.  SBA may issue a case-by-case
  waiver to this provision after review of an
  agencys written justification
• STTRs allow use of Federally Funded Research and
  Development Centers

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Eligibility aka Size Status

• The SBA final rule effective on June 21, 2004
• The final regulation provides that the size
  status of a concern for the purpose of a funding
  agreement under the SBIR program is determined as
  of the date of the award for both Phase I and
  Phase II SBIR awards or on the date of the
  request for a size determination, if an award is
  pending.
• FR Doc. 0410066 Filed 52004 845 am

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SBIR/STTR Requirements

• All project activities conducted in U.S.
• Normally Not-To-Exceed levels (NTE)
• Time Dollars are guidelines, not caps
• Exceptions must be justified and documented
• Project period
• SBIR R43 - negotiate 12 months budget period if
• Animals
• Human subjects involvement
• Third party (consortium/contracts)

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SBIR (R43) STTR (R41)Phase I

• Supplements allowable
• Program Income Additive Alternative
• Under Expanded Authorities
• No carryover Phase I to Phase II
• Other Support information Just-In-Time
• Human and Animal review date - JIT

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SBIR and STTR

• New Organizations need
• DUNS Number
• Entity Identification Number (EIN)
• Register in the NIH Commons (one-time AOR)
• Register in egrants.gov (one-time AOR)
• Register in Central Contract Registry (one-time
  AOR)
• Remember these essentials if applicable
• Human Subjects Assurance FWA(SBC)
• Animal Assurance for grantee (SBC)
• Misconduct in Science/Office of Research
  Integrity (ORI) renewed annually

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SBIR/STTR - Budgets

• Special instructions in PHS 398, Section V
• New SF424RR required December 1
• Non-Modular pages now required for all SBIR/STTR
  Phase I and Phase II
• Complete full budget page and budget
  justification
• See Omnibus Solicitation for SBIR/STTR for
  detailed instructions to applicants.

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SBIR Requirements (R43/R44)

• P.I. primarily employed by SBC gt50
• Dont confuse employment w/Time and Effort
• PI employment is rarely negotiable
• Phase I third party involvement
• Normally NTE 33 of total award amount
• Includes consultants consortia
• Does not include fee for service contracts
• May exceed 33 if requested, justified, approved
  by reviewers and program
• DOCUMENT the file for exceptions

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Percentage Calculations

• Work Performance (Research Activities)
• Normally based on total award amount
• Document file for exceptions
• Fee/profit (NTE 7)
• ONLY for SBIR/STTR grantee (SBC)
• Based on total DC FA
• All direct, FA and fee must be requested in the
  application
• All other mechanisms prohibited from fee/profit
  on grants

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SBIR Requirements (R44)Phase II

• Commercialization Plan required for All Phase II
  applications
• PI employment gt50 by SBC
• Third party costs normally NTE 50
• Total amount awarded normally NTE 750,000 (D.C.,
  FA fee)

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STTR Requirements (R41/R42) Phase I II

• Research Institution effort Minimum 30
• STTR budget page from RI required
• Small Business effort Minimum 40
• Principal Investigator
• Minimum 10 time effort
• Must have formal agreement with SBC
• Phase II Total amount normally NTE 750,000
  (D.C., FA fee)
• Commercialization Plan for Phase II

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Caution Conflict of Interest (COI)

• Employees of the RI/consortium should not appear
  on the small business budget, nor serve as the
  business official for the small business
• The PI on the RI budget may not serve as a
  consultant to the SBC on the same project (NIH
  GPS)
• The COI regs do not apply to Phase I

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Fast-Track SBIR/STTR (1R44/R42)

• Submit and Review Phase I II applications
  concurrently
• Needs preliminary data for Phase I
• Milestones required for Phase I
• Requires same eligibility and program levels as
  SBIR/STTR Phase I II
• Caution check summary statement --Phase II
  delinked by reviewers?

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NATIONAL INSTITUTES OF HEALTHSBIR FAST-TRACK
Standard application, review, award process
7-9 months
6 months
Fast-Track review option
6 months
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Commercialization Plan

• Formerly Product Development Plan
• Required for all Phase II applications
• 7 Points must be addressed
• Often provides affiliation information
• Must be confirmed prior to funding Phase II in
  Fast-track applications

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Indirect Costs (IDC)/FA

• Phase I SBIR/STTR
• If available, use the negotiated rateCommercial
  Rate Agreement Distribution Services (C-RADS)
• If a negotiated rate is not available, applicant
  should propose an estimated rate not to exceed
  40 of total direct costs
• Grantees may only claim actual IDC and these
  claims are subject to audit
• NIH will not negotiate Phase I SBIR/STTR FA
  rates

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Indirect Costs (IDC)/FA

• Phase II SBIR/STTR
• If available, the negotiated rate will be used
• No negotiated rate? If the requested rate exceeds
  25, then a rate must be negotiated
• If the proposed estimated rate does not exceed
  25 of total direct costs, then an award can be
  made without negotiation
• DFAS should review grantee capability if no FA
  is negotiated send request to Special Services
• Grantees may only claim actual costs and these
  claims are subject to an audit

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Indirect Cost/FA Rate Negotiation

• NIH Office responsible for Negotiating Indirect
  Cost Rates With For-profit organizations
  receiving awards (Grants Contracts) from the
  Department of Health and Human Services is the
  Indirect Cost Branch, Division of Financial
  Advisory Services, OAMP, OD, NIH

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Negotiation Process

• Contact the NIH Division of Financial Advisory
  Services (DFAS) Indirect Cost Branch Ruth
  Bishop, Branch Chief
• When Notification Grant/Contract Is Going To Be
  Awarded
• How Via
• E-Mail rb17i_at_nih.gov
• Fax [phone]

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Negotiation Process

• Information Needed
• Representative Name E-Mail Address
• Company Name Address
• Grant/Contract Number
• Grant/Contract Specialists Name
• Indirect Cost Branch Requests Indirect Cost
  Proposal
• Letter Via E-mail

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Negotiation Process

• Indirect Cost Proposal Submitted
• Indirect Cost Branch Reviews Proposal
• Indirect Cost Branch Follows-up With Questions To
  Company
• Rates are Negotiated
• Typically By Telephone
• Rate Agreement Is Issued Or Rate Memo Is Sent To
  Grant Specialist
• May take up to 12 months to complete!!

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Negotiation Process

• First year of Phase II If rate will be
  negotiated with DFAS
• Restrict all FA except for 10 salary wages
• by term and condition of award Grantee must
  submit an indirect cost rate proposal to the
  DFAS Indirect Cost Branch no later than 3 months
  after the effective date of the grant.

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Non-Federal Audit Requirements

• For fiscal years beginning 1/1/04, if the
  grantee expends a total of 500,000 or more under
  one or more HHS awards and
• At least one of those awards is an HHS grant (as
  a direct grantee and/or under a consortium
  agreement)
• Choice in Type of Audit
• (1) a financial-related audit (in accordance
  with the Government Auditing Standards) or
• (2) an audit that meets the requirements of OMB
  Circular A-133
• Prior to 1/1/04 expenditures of 300,000 or more
  required audit.

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Audit Requirements

• 45 CFR 74.26(d) essentially incorporates the
  deadlines of OMB Circular A-133 - Audits shall be
  completed and submitted within
• 30 days after receipt of the auditors report
• or
• 9 months after the end of the organizations
  fiscal year
• Whichever is earlier

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Non-Federal Audit Requirements

• Submit Audit reports of for-profit organizations
  to
• National External Audit Review Center
• HHS Office of Audit Services
• Lucas Place Room 514
• 323 West 8th Street
• Kansas City, MO 64105
• There are frequently asked questions (FAQs)
  related to non-federal audit requirements for
  commercial (for-profit) organizations on the
  following web site
• http//ocm.od.nih.gov/dfas/faqforprofitaudits.htm

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Resources for Grants Managers

• Small Business Administration http//www.sba.gov/
  sbir/indexsbir-sttr.htm
• SBA Policy Directive
• http//www.sba.gov/sbir/sbirpolicydirective.html
• Securities and Exchange Commission
• http//www.sec.gov/edgar/searchedgar/webusers.
  htm

New
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Information Sources

• NIH Welcome Wagon Letter
• http//grants.nih.gov/grants/funding/welcomewagon.
  htm
• SBIR/STTR Solicitation
• http//grants.nih.gov/grants/funding/sbirsttr1
  /index.pdf
• PHS 398
• http//grants.nih.gov/grants/funding/phs398/phs398
  .html
• Chapter 5 specifically for SBIR/STTR

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Information Sources

• Federal Guides
• http//grants.nih.gov/grants/guide/index.html
• http//www.egrants.gov
• NIH SBIR/STTR Internet Guide
• http//grants.nih.gov/grants/funding/sbirsttr_site
  s.htm
• NIH Grants Policy Statement
• http//grants.nih.gov/grants/policy/nihgps/

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Information Resources

• NIDDK - Federal Financial and Business Management
  Systems - Sample documents relating to
  administration of federal grants, especially for
  small businesses, from the NIDDK web site.
• http//www.niddk.nih.gov/fund/crfo/ffbms/

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Questions?
http//grants1.nih.gov/grants/funding/sbirsttr_sit
es.htm
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Thank You

• Kathleen J. Shino, M.B.A.
• Acting NIH SBIR/STTR Program Coordinator
• 301 435-2689
• shinok_at_nih.mail.gov