Proposed STTR Policy Directive 2003
Section by Section Analysis
Section 4 - Competitively Phased Structure of the Program
Section 4 of the proposed Policy Directive sets forth information pertaining to Phases I, II and III of the STTR Program. SBA has amended the Policy Directive to state, at section 4(a)(2), that ``proposals will be evaluated on a competitive basis and that agencies must give consideration to the scientific and technical merit and feasibility of the proposal along with its potential for commercialization. The Policy Directive also allows agencies to consider program balance or critical agency requirements.
In section 4(b), SBA proposes a provision relating to novation and successor-in-interests for Phase II. Specifically, the proposed provision would allow STTR awardees in Phase I, including those identified via a novated or successor in interest agreement, to participate in Phases II and III. SBA proposes this change because it understands that many agencies already allow this to occur and agrees with the concept. However, SBA is also proposing to permit agencies ``to require the original awardee to relinquish its rights and interests in an STTR project in favor of another applicant as a condition for that applicant's eligibility to participate in the STTR Program for that project.'' In addition, all applicants and their proposed personnel and key supporting staff, must meet the eligibility and scientific and technical qualifications attendant to the STTR Program. Furthermore, SBA notes that it amends section 6(a)(4) to permit agencies to approve a change in principal investigator. Finally, although novated funding agreements are discussed in the proposed Policy Directive in the context of Phase II, the same applies to situations involving Phase I and III awards.
SBA proposes several amendments to the Policy Directive, set forth in section 4(c), which clarify the scope of Phase III. It is SBA's understanding that many agencies do not treat Phase III awards as STTR awards. Therefore, SBA proposes to further define a Phase III award as one that derives from, extends, or logically concludes efforts performed under prior STTR funding agreements, but is funded by sources other than the STTR Program. In addition, SBA proposes to clarify that a Phase III award is by its nature an STTR award and therefore the awardee must be accorded STTR data rights. In addition, SBA proposes to clarify that even if a competition is held, if the awardee was a Phase II STTR awardee and the contract is for work that derives from, extends, or logically concludes that concern's work, the contract has STTR Phase III status and must provide for STTR data rights.
SBA proposes amending section 4(c)(1)(i) of the Policy Directive to clarify the issue of the practical impact a Phase III designation would have in cases where no Federal funding is expended. SBA has proposed a revision that would explain that the guidance in this Policy Directive regarding STTR Phase III pertains to non-STTR federally-funded work described and does not address the nature of private agreements the STTR firm may make in the commercialization of its technology.
SBA has proposed clarification in the Policy Directive (at section 4(c)(2)), which provides that an agency official may determine, using the criteria set forth in the Policy Directive as guidance, whether a contract or agreement is a Phase III award. SBA understands that it is currently not clear whether such officials have his authority.
In section 4(c)(3), SBA proposes clarification of whether and when a Justification and Approval (J&A) should be issued during Phase III. SBA believes that a procuring agency may restrict competition under the STTR Program to small businesses or a small business (if that is all that can perform the award) and is not required by statute to prepare a J&A. Consequently, SBA proposes that a J&A is not required to fund an STTR Phase III project, but if an agency wishes to prepare one, ``it is sufficient to state for purposes of a Justification and Approval pursuant to FAR 6.302-5, that the project is a STTR Phase III award that is derived from, extends, or logically concludes efforts performed under prior STTR funding agreements and is authorized under 10 U.S.C. 2304(b)(2) or 41 U.S.C. 253(b)(2).''
Further, in section 4(c)(6), SBA proposes clarification that the small business size limits for Phase I and Phase II awards do not apply to Phase III awards. SBA believes that the intent of Congress and purpose of the program is that STTR firms should be encouraged, in Phase III, to develop and expand business applications of their STTR research with the desired outcome that new employment and income are generated. The purpose of Phase III is to commercialize the innovation and help the SBC grow. Restricting Phase III to only SBCs might hinder the growth of STTR participants.