OVERVIEW

DoD's SBIR and STTR Programs

The purpose of DoD's SBIR and STTR programs is to harness the innovative talents of our nation's small technology companies for U.S. military and economic strength.

The DoD SBIR program, funded at approximately $1.14 billion in FY 2008, is made up of 12 participating components: (see Figure 1): Army, Navy, Air Force, Missile Defense Agency (MDA), Defense Advanced Research Projects Agency (DARPA), Chemical Biological Defense (CBD), Special Operations Command (SOCOM), Defense Threat Reduction Agency (DTRA), National Geospatial-Intelligence Agency (NGA), Defense Logistics Agency (DLA), Defense Microelectronics Activity (DMEA), and the Office of Secretary of Defense (OSD).

The Small Business Innovation Research program funds early-stage R&D at small technology companies and is designed to:

• stimulate technological innovation
• increase private sector commercialization of federal R&D
• increase small business participation in federally funded R&D
• foster participation by minority and disadvantaged firms in technological innovation

To participate in the SBIR program:

• a firm must be a U.S. for-profit small business of 500 or fewer employees
• work must be performed in the United States
• during Phase I, a minimum of 2/3 of the effort must be performed by the proposing firm; a minimum of 1/2 of the effort in Phase II
• the Principal Investigator must spend more than 1/2 of the time employed by the proposing firm

For Further information regarding program eligibility, limitations, and definitions, review the SBIR solicitations.

The DoD STTR program, funded at approximately $132 million in FY 2008, is made up of 6 participating components: (see Figure 2): Army, Navy, Air Force, Missile Defense Agency (MDA), Defense Advanced Research Projects Agency (DARPA), and the Office of Secretary of Defense (OSD).

In 1992, Congress established the STTR pilot program. STTR is similar in structure to SBIR but funds cooperative R&D projects involving a small business and a research institution (i.e., university, federally-funded R&D center, or nonprofit research institution). The purpose of STTR is to create, for the first time, an effective vehicle for moving ideas from our nation's research institutions to the market, where they can benefit both private sector and military customers.

To participate in the STTR program:

• a firm must be a U.S. for-profit small business of 500 or fewer employees; there is no size limit on the research institution
• research institution must be a U.S. college or university, FFRDC or non-profit research institution
• work must be performed in the United States
• the small business must perform a minimum of 40% of the work and the research institution a minimum of 30% of the work in both Phase I and Phase II
• the small business must manage and control the STTR funding agreement
• the principal investigator may be employed at the small business or research institution

For Further information regarding program eligibility, limitations, and definitions, review the STTR solicitations.

Three Phased Program

Companies apply first for a phase I award of up to $100,000 to test the scientific, technical, and commercial merit and feasibility of a particular concept. If phase I proves successful, the company may be invited to apply for a two-year phase II award of up to $750,000 to further develop the concept, usually to the prototype stage. Proposals are judged competitively on the basis of scientific, technical, and commercial merit. Following completion of phase II, small companies are expected to obtain funding from the private sector and/or non-SBIR government sources (in "phase III") to develop the concept into a product for sale in private sector and/or military markets (see Figure 3 for program specifics).

SBIR is the largest source of early-stage technology financing in the U.S. Total Federal SBIR/STTR funding in FY 2007 is $2.315 billion. The DoD accounts for nearly half of the total SBIR/STTR program (see Figure 4).

Why participate in SBIR/STTR? You can receive up to $850,000 of seed capital, develop a working relationship and credibility with government R&D programs, and all data rights remain with your firm.

Who participates in SBIR/STTR? Small hi-tech firms from across the country. There have been proposals and awards in all 50 states. Firms are typically small and are new to the program (see Figure 5).

25% of Phase I awardees are first-time DoD winners. Even non-"first-times" are relatively new to the program (see Figure 6). Historically, about 15 percent of SBIR and STTR proposals are awarded a phase I contract; approximately 40 percent of phase I projects subsequently are awarded a phase II contract. (However, in recent solicitations, a much higher percentage of STTR phase I proposals was awarded a phase I contract.) See our statistical profile/history of the DoD SBIR and STTR programs.

SBIR is a small percentage of the total extramural R&D program (see Figure 7), but it's where small businesses are able to demonstrate their capability to meet federal R&D needs

The SBIR/STTR program reaches out to socially and economically disadvantaged firms. There is significant minority/women-owned firm participation in the SBIR/STTR program (see Figure 8).

For information on the twelve-agency federal SBIR program and six-agency STTR program, see our links to other SBIR/STTR web sites, or call the Small Business Administration at (202) 205-6450.

First, review the current solicitation --

The SBIR and STTR solicitations list all the research topics under which DoD is seeking phase I proposals, and also contain detailed information on the parameters of the SBIR and STTR programs and how to submit a proposal. DoD issues three SBIR solicitations and one STTR solicitation each year, according to the following schedule:

All solicitations are available electronically. If you want to be notified when a solicitation becomes available, please sign up for our listserv.

Second, to resolve any questions you may have --

If you have a general question about the SBIR or STTR programs, please contact the DoD SBIR/STTR Help Desk by telephone 866-SBIRHLP (866-724-7457) or by Email. We have also prepared a set of answers to commonly-asked questions about proposal preparation, contracting with the government, and getting paid in a timely manner.

If you have a technical question about a specific research topic listed in the solicitation, you may ask it in two ways:

• Talk by telephone with the Topic Author, whose name and phone number will be listed in the solicitation topic. Important: The Topic Authors will only be listed, and telephone questions will only be accepted, during the two months following public release of the solicitation on the Web Site and before DoD begins accepting proposals.
  
  
• Submit a written question through the SBIR/STTR Interactive Topic Information System (SITIS), in which the questioner and respondent remain anonymous and all questions and answers are posted electronically for general viewing until the solicitation closes.

Since October 1995, the Department's SBIR and STTR programs have featured a "Fast Track" process for SBIR/STTR projects that attract outside investors who will match phase II funding, in cash, contingent on the project's selection for phase II award. Projects that obtain such outside investments and thereby qualify for the Fast Track will (subject to qualifications described in the solicitation):

• Receive interim funding of $30,000 to $50,000 between phases I and II where applicable;
• Be evaluated for phase II award under a separate, expedited process; and
• Be selected for phase II award provided they meet or exceed a threshold of "technically sufficient" and have substantially met their phase I technical goals.

Consistent with DoD policy, this process should prevent any significant gaps in funding between phases I and II for Fast Track projects.

If you have other questions regarding Fast Track, please contact the SBIR/STTR Help Desk by Email or telephone 866-SBIRHLP (866-724-7457).

Since 2000, DoD Components have developed their own Phase II Enhancement policy to further encourage the transition of SBIR research into DoD acquisition programs as well as the private sector. Under this policy, the Component will provide a Phase II company with additional Phase II SBIR or STTR funding matching the investment funds the company obtains from non-SBIR/non-STTR sources such as DoD acquisition programs or the private sector. Phase II Enhancements (also called Phase II Plus) will:

• Extend an existing Phase II contract for up to one year; and
• Match up to $500,000 of non-SBIR/non-STTR funds.

If selected for Enhancement, the funds from the outside investor must be transferred to the company before the SBIR/STTR-matching funds will be added to the Phase II contract. It is possible for a phase II project to receive additional SBIR/STTR funds from both Fast Track and Phase II Enhancement as long as the outside investment for Fast Track is separate and distinct from the outside investment for Phase II Enhancement.

If you have other questions regarding Phase II Enhancement, please contact the SBIR/STTR Help Desk by Email or telephone 866-SBIRHLP (866-724-7457).

How SBIR Aligns with Program Development Phases

The research and technologies developed through the SBIR program contribute to system capability improvements at all stages of developmental and operational maturity. An essential attribute of SBIR technologies is that they be innovative. While innovation is routinely associated with early stage program development; SBIR can be a useful tool throughout the program’s life cycle.

Leap-ahead capability development can be addressed using SBIR during the concept refinement and technology development phases. For example, during concept refinement when mission capabilities are being aligned with candidate technologies, SBIR can provide additional options with leap ahead or disruptive potential.

SBIR can also provide risk mitigation alternatives during the technology development and system development and demonstration phases. Approaching Milestone C and during operational phases, SBIR offers program managers a source to seed and develop enabling technology.

The following diagram depicts SBIR contributions across the program phases: