SBIR PD 2002
PD Section-by-Section Analysis - Section 9
Section 9 of the Policy Directive outlines the responsibilities of SBIR Participating Agencies and Departments. One commenter stated that it is not realistic for agencies to provide a report to SBA within 4 months of receiving their appropriations, as required by section 9(a)(1). SBA can not change this requirement or time period and notes that the Small Business Act specifically prescribes this time period.
SBA received several comments on reporting requirements of SBIR agencies. Two commenters queried whether, pursuant to section 9(a)(12) of the Policy Directive, participating agencies must report every Phase II effort that does not result in a Phase III award. Both commenters thought that the requirement was too broad and should be narrowed. A separate commenter supported this reporting requirement. Two commenters argued that SBIR Program Managers do not know when such a contract may have been issued to a non-SBIR awardee.
Another commenter stated that it interprets the reporting requirements of the Policy Directive to apply to cases where an agency wants to use the SBC's data/technology but does not want to use the original SBC. If the SBIR awardee is still in the four-year protection umbrella, the agency cannot release the data/technology. The Policy Directive is clear that agencies are required to report only those instances where a follow-on award with non-SBIR funds was issued to a concern other than the SBIR awardee that developed the technology to be pursued under that follow-on award. Finally, SBA believes that the satisfaction of this requirement calls for agency coordination of, at least, SBIR Program Managers/Coordinators with contracting activities.
SBA received one comment on section 9(a)(13). The commenter questioned who in the agency does the agency's annual performance plan and how different that report is from the annual data report. The Act requires each agency participating in the SBIR program to submit to SBA an annual report on the conduct of its SBIR Program. This is different from the Act's requirement that each agency also include a section on its SBIR Program as part of its annual performance plan required by 31 U.S.C. 1115(a) & (b), and must submit such section to the Senate Committee on Small Business and Entrepreneurship and to the House Committees on Science and Small Business.
SBA received several comments on the ``Coordination of Technology Development Programs,'' and concern that it was not addressed in the proposed Directive. Section 9(u) of the Small Business Act permits each agency that has established a Technology Development Program to utilize that program in furtherance of its SBIR Program. Specifically, the Act permits an agency that has established a Technology Development Program to review for funding under that program, in each fiscal year, any proposal to provide outreach and assistance to 1 or more SBCs interested in participating in the SBIR Program. This includes 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--(1) a State that is eligible to participate in that technology development program; or (2) an Additionally Eligible State. This also includes 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 (1) or (2) immediately above. The Policy Directive, in section 9(b), now includes this provision.
SBA received two comments seeking clarification on discretionary technical assistance. One commenter stated that this section suggests that the $4,000 of technical assistance will be in addition to the award and will count as part of the agency's SBIR funding. SBA has amended section 9(c)(1) of the Policy Directive to provide further guidance regarding discretionary technical assistance. The Act allows discretionary technical assistance to Phase I and II awardees. Agencies may provide up to $4,000 in Phase I for such assistance, in addition to the award amount. Each agency may allow Phase II awardees to expend up to $4,000 per year for such assistance, using funds available from the previously determined award amount. Statutory funding guidelines are not altered by this provision.
SBA received comments noting the ``gaps,'' or length of time between SBIR awards. SBA adds a provision addressing gap funding. According to section 9(d) of the Policy Directive, agencies are encouraged to develop programs to reduce the time period between the issuance of SBIR Phase I and Phase II awards. As appropriate, agencies should develop accelerated proposal and evaluation procedures designed to address the gap in funding these competitive awards.
SBA adds a provision at section 9(f) that states that each SBIR agency must expend 2.5 percent of its extramural budget on awards made to SBCs. Agencies may not make available for the purpose of meeting the 2.5 percent an amount of its extramural budget for basic research that exceeds 2.5 percent. Funding agreements with SBCs for R/R&D that result from competitive or single source selections other than an SBIR Program will not be considered to meet any portion of the 2.5 percent. This is a statutory requirement that agencies have been required to follow for several years, and although the extramural budget is discussed in section 2 of the Policy Directive, SBA believes it should be set forth in full in this section.
One commenter claimed that although section 9 of the Policy Directive bars use of any SBIR budget for administrative costs, there are agencies that do this. The Act and the Policy Directive, at section 9(f)(2), explicitly prohibit any agency from using any portion of its SBIR budget for administrative purposes. Any agency that is in violation should cease this practice immediately. SBA will monitor the allocations of the agencies SBIR budgets more closely in the future, and use the report submitted to SBA for calculating their extramural R/ R&D budgets to determine the actual annual SBIR expenditures each should allocate. SBA will report to Congress any agency that fails to meet the required annual expenditure.
SBA removes the provision that would have allowed agencies to subcontract portions of the SBIR funding agreement back to the issuing agency in all instances. SBA received several comments stating that agencies should not be allowed to subcontract portions of the SBIR funding agreements back to the funding agency or another agency because it creates a serious conflict of interest as the awarding agency would benefit directly from a proposal it may award. Some commenters believed this takes flexibility away from SBCs. One commenter thought this provision was a good idea because some of the best scientists work for the Government and SBA should not restrict SBIR awardees from working with them.
SBA amends the Policy Directive at section 9(f)(3) to specifically state that an agency must not be allowed to subcontract any portion of the SBIR award back to the issuing agency or to any other Federal governmental unit unless SBA determines, based upon information provided by the agency, that it would be helpful to the small business and it would not create a conflict of interest.
Similarly, SBA received two comments on this issue concerning Cooperative Research and Development Agreements (CRADAs). One commenter stated that it does not think that the subcontracting section should apply to CRADAs. Another commenter stated that collaboration between agencies and SBCs is possible without the transfer of funds through CRADAs. SBA believes that the prohibition on subcontracting should be interpreted to mean that no portion of an award financed under the SBIR Program may be returned to the issuing agency or to any other Governmental unit, unless approved by SBA. This, however, does not interfere with the use of a CRADA, or any other collaborative mechanism that does not have SBIR funds attached to it, in the performance of an SBIR project.
SBA received two comments on whether or not a Phase II can be funded by an agency that did not fund the Phase I award. One commenter thought SBA should not allow Phase II awards to be funded by a different agency because it encourages firms to shop a turned down Phase II. The other commenter thought SBA should allow a Phase II to be funded by another agency as long as there are uniform practices. SBA believes that allowing a different agency to fund a Phase II award will increase the likelihood of success for meritorious Phase II projects that would not receive funding otherwise. It is important to note that the SBIR Program has allowed the funding of Phase II proposals within an agency (for example, Department of Defense and its components, Department of Health and Human Services and its components, including the National Institutes of Health and its components, etc.) since the inception of the Program. In addition, SBA believes that the guidance provided for such transfers between agencies assures uniform practice.