SBIR PD 2002
PD Section-by-Section Analysis - Section 3
Section 3 of the Directive contains pertinent definitions for the program. SBA made several amendments to this section and received several comments. SBA added a definition for "additionally eligible state," which is consistent with the statutory definition. SBA adds this term because it is referenced in the Coordination of Technology Development Programs. SBA amends the Policy Directive and addresses this program in section 9 of the Directive.
SBA received two comments on the definition of "funding agreement," and amends that definition in response to the comments. One commenter stated that the proposed definition recognizes "other transaction" as a type of SBIR award and to therefore make sure it is listed every time "contract, grant or cooperative agreement" is mentioned. Another commenter believed that the proposed definition of "funding agreement" should not refer to an "entity," should not include "other funding transactions," and has been expanded to include services, but not products. The commenter recommend deleting "other funding transaction" and "other entity," and revising the definition to include all phases of SBIR work scope envisioned by law (performance of experimental, developmental, research, services, or production of technology).
SBA concurs with this last commenter. The Small Business Act, in defining "funding agreement," identifies the following three award instruments only: contract, grant, and cooperative agreement. Therefore, the Policy Directive is changed to remove "other transaction" as a type of award allowable under the SBIR Program. In addition, the final definition no longer refers to "other entity," and only refers to "small businesses." Finally, SBA believes that the definition, which includes awards for the performance of "experimental, developmental, or research work" funded in whole or in part by the Government, includes services and products within its ambit. SBA has stated so in the Directive.
Two commenters requested amendments to the definition of "joint venture." One commenter stated that a joint venture should be an entity that exists as a particular and discrete unit under the law, has its own Employer Identification Number (EIN), and qualifies as a SBC for eligibility under this program. Another commenter did not believe that a joint venture should have to be a totally new and separate legal entity with its own EIN. SBA considered these comments and this issue and believes that for purposes of the SBIR Program, a joint venture is an association of concerns with interests in any degree or proportion by way of contract, express or implied, consorting to engage in and carry out a single specific business venture for joint profit, for which purpose they combine their efforts, property, money, skill, or knowledge, but not on a continuing or permanent basis for conducting business generally. Further, for purposes of the SBIR Program, a joint venture is viewed as a business entity in determining power to control its management and is eligible under the SBIR Program provided that the entity created is small and each concern that is part of the joint venture qualifies as a SBC. This definition of joint venture is consistent with the definition of joint venture in the Federal Acquisition Regulations (FAR). SBA notes that joint ventures must meet the requirement that the principal investigator have his or her primary employment with the SBC at the time of a Phase I and II award and during the conduct of the SBIR project.
One commenter recommended changing the definition of "program solicitation" to a "formal solicitation of topics." SBA does not concur entirely with this comment, but has amended the definition of Program Solicitation to read: "A formal solicitation for proposals whereby a Federal agency 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 proposals from SBCs in response to these needs and interests."
SBA adds definitions for the terms "SBIR Technical Data" and "SBIR Technical Data Rights" and deletes the term "data rights." SBA provides these definitions because it received many inquires from SBCs concerning what data was actually protected under the SBIR Program, and what rights business concerns have regarding their SBIR developed technologies.
Two commenters expressed concern over the definition of "small business concern" because they believe the definition indicates that by simply paying taxes to the U.S., the requirement of a 51% U.S. ownership of the company securing the SBIR award has been met. This is not true. The definition of small business concern is a concern that is organized for profit, with a place of business located in the United States, which operates primarily within the United States or which makes a significant contribution to the United States economy through payment of taxes or use of American products, materials or labor; has, including its affiliates, not more than 500 employees, and is at least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States.
SBA adds a definition for the term "Technology Development Program," which is consistent with the statutory definition. SBA adds this term because it has addressed this program in section 9 of the Directive.