Gail & Jim Greenwood, Greenwood Consulting Group, Inc.

Copyright © 2001 by Greenwood Consulting Group, Inc.

In this era of prime time TV quiz shows, we thought we'd give you a chance to test your knowledge of the SBIR program. If you answer most of these questions correctly, then you are showing an ability to compete successfully for an SBIR award. If you miss most of them, then you might want to memorize some insulting remarks in case they decide to hire a replacement for the emcee of the new Weakest Link game show.

True or False: SBIR stands for the Small Business Innovation Research Grant Program. The answer is FALSE. SBIR is not a grant program, with only four of the ten agencies (NIH, NSF, USDA and DOE) making awards as grants while the other agencies make SBIR awards as contracts. This is not just a trick question: granting agencies tend to have very different SBIR programs than do the contracting agencies. Granting agencies tend to have broader, open-ended topics whereas contracting agencies tend to have specific topics that you must address specifically and completely. By the way, only NIH has SBIR programs in which grants and contracts are awarded.

True or False: If you plan to include a university or federal lab in your project, you have to apply for STTR rather than SBIR. Again, the answer is FALSE. The Small Business Technology Transfer (STTR) program mandates that your small firm team with a university, federal lab, or other non-profit research entity, but it is perfectly acceptable to do so in an SBIR project, but it is not a requirement. If you are involving a university or federal lab, you can go either the SBIR or STTR route, but if you are not including such an entity in your project, then you can only apply under SBIR.

True or False: Phase I SBIR proposals are limited to 25 pages. TRUE and FALSE. Yes, all agencies require that the Phase I proposal not exceed 25 pages, but they differ radically in what is excluded from that page count. For example, a Phase I proposal submitted to NASA must include everything in the 25 pages, whereas one sent to NIH's grant program is allowed to exclude resumes/biographies from the page limit.

True or False: The Principal Investigator on a project cannot work full time for another employer and must work at least 20 hours per week on the SBIR project. Another TRUE and FALSE question! The PI cannot work full time for another employer, and in fact some agencies are even more restrictive on outside employment, so read the solicitation carefully. However, the amount of time that the PI spends with the SBIR company refers to the average number of hours per week that he/she works for that company, not necessarily how many hours per week spent on the SBIR project. Therefore, the PI may work 10 hours per week on three different SBIR projects and meet this criterion because collectively he/she is working more than 20 hours per week with the company (more than 30 hours, to be more precise, including 10 hours per week on each of three SBIR projects plus other direct or indirect activities).

True or False: Development of a commercialization plan or business plan can be one of your direct tasks in your Phase I workplan. FALSE. The workplan is reserved for technical tasks related to demonstrating the technical feasibility of your innovation. Business-related tasks, such as defining markets and writing commercialization plans, should be performed as part of the company's indirect budget. The one exception here is someone who has submitted a proposal under USDA's rural marketing topic.

True or False. Phase I awards are limited to $100,000. FALSE. Many agencies have set Phase I funding caps that are below the $100k limit; for example, Department of Education limits Phase I awards to $60,000 or less. Some of the military components also have lower caps and then offer options that, when proposed by the company and exercised by the military, bring the total Phase I funding to a higher level: for example, Navy will give you up to $70k for the basic, 6 month Phase I effort but will allow you to propose an option for an additional $30k for three months of additional work. Finally, NIH is willing to fund Phase I projects in excess of the $100k threshold.

True or False. All agencies allow you to receive fee or profit as part of your SBIR budget. TRUE. General guidelines are an amount of up to seven percent of total project costs (direct costs plus indirect costs) can be requested as a fee or profit, although EPA allows up to 10 percent.

True or False. All agencies allow you to recoup reasonable indirect costs as part of your budget. TRUE. Indirect costs are those expenses you incur by virtue of being in business--rent, telecommunications, office supplies, market analysis, accounting to name a few. But you have to request this indirect cost reimbursement, and you have to justify the rate. By the way, if you do not have an indirect rate approved by the federal government, NIH limits your indirect rate to only 40% of your total direct costs, which in most cases is far below what your actual indirect costs will be. No other agency has a rigid cap like NIH's.

True or False: SBIR is a great way to fund interesting R&D. FALSE. SBIR is designed to be a means of supporting the development of innovations that ultimately have some useful or commercial purpose, and you are expected to carry your work through to that end point unless it is not warranted to do so due to market conditions. This does not mean that you have to personally manufacture a product resulting from the innovation, but you are expected to work with other manufacturing firms, through licensing and similar arrangements, if you are not willing or able to do you.