(caution there will be many changes in this document due to the new 2012 Reauthorization Law.)

Table of Contents

             * adapted from the SBIR-Guide(TM), a software based tutorial product from the SBIR Resource CenterTM.


1) An opportunity to secure a sole-source, bid-advantaged marketing position with the federal government (with no time frame/graduation or $$$ limits as under the 8(a) Program).

2) An opportunity to develop technology based improvements in your operations, products or services using federal funds.

3) An opportunity to fund early stage, high-risk development projects that no one else will touch.

4) An opportunity to research ideas, reduce their risk and to gather the data/test information needed to bring the venture capitalist to the table with his funding.

5) The most advantageous entree to serious federal contracting ever devised.

6) Like venture capital for your startup or ongoing firm with NO equity dilution and NO pay back required (no pressure for a liquidity event).


The Small Business Innovation Research (SBIR) program was created in 1982 with the enactment of the Small Business Innovation Development Act. In 1992, it was strengthened and reauthorized by congress to continue until the year 2000. SBIR was designed to stimulate technological innovation among small private-sector businesses while providing the government new, cost-effective, technical and scientific solutions to challenging problems. At the same time, SBIR encourages small businesses to market the SBIR technology in the private sector which, in turn, helps stimulate the U.S. economy.

Small business has played an ongoing, highly successful role in developing critical technology innovations for the Department of Defense. The United States Air Force has benefited from this ongoing small business R&D "partnering" relationship in meeting challenges across the spectrum of aerospace technology requirements.

Over the years the SBIR program has compiled an enviable record of win-win success stories for both the government and small businesses located around the country. Under the SBIR program, qualified small businesses are provided a competitive opportunity to propose innovative concepts for meeting the R&D needs of the federal government. The results of the SBIR program have been important to national defense and to the work of other federal agencies.


Research and development are major factors in the growth and progress of industry. However, the expense of carrying on a serious R&D program is beyond the means of many small business concerns. This places such businesses at an immediate competitive disadvantage.

The SBIR program helps even-up the playing field. At the front end of the process the small R&D business is offered the opportunity to compete for contracts for federal research. The government's front-end funding of the high risk research allows the best ideas to surface. At the tail end of the process, the SBIR Program offers small business the encouragement and a special opportunity to commercialize the results of the SBIR project, while at the same time serving to lower the risk for most private investors interested in commercializing the technology. Hundreds of small businesses nationwide have already obtained public and private sector contracts through SBIR.


Eleven (11) federal agencies, including the Departments of Agriculture, Commerce, Defense, Energy, Education, Health and Human Services, Homeland Security, Transportation, EPA, NASA and National Science Foundation are each required to set aside a portion of their research and development budget exclusively for SBIR, and another, smaller, poriton for STTR awards.

Each year these agencies identify various R&D topics for pursuit by small businesses under the SBIR program. The topics represent scientific and technical problems requiring innovative solutions. These topics are bundled together into individual agency "solicitations" which are distributed to interested small businesses.

After reviewing the solicitation material, a small business can identify an appropriate topic it wants to pursue and, in response, offer a proposal/grant request. The required format for submitting a proposal/grant request (we will just use the term proposal) is different for each agency. However, all the necessary information can be found in each agency's solicitation.

The proposals are reviewed and evaluated on a competitive basis by technical experts in the federal laboratories or research centers. Each agency then selects the best proposals, awarding contracts or grants to the most highly qualified small businesses with the most innovative solutions.


The SBIR program was designed and developed as a "pro small business" engine for change and innovation. The SBIR Program, at least in theory, has four principal objectives:

1. To stimulate technological innovation by small business.

2. To increase small business participation in meeting federal research and development needs.

3. To increase the commercialization of technology developed through SBIR research and development.

4. To enhance outreach efforts to increase the participation of socially and economically disadvantaged small business concerns and the participation of small businesses that are at least 51 percent owned and controlled by women.


Phase I contracts are valued up to $150,000 (different at each agency) and are awarded for research efforts lasting approximately six months (more at some agencies). Each project addresses a topic area identified in an agency solicitation. Phase I awards are to help teh applicant to determine the feasibility of a new technology/concept.

The required proposal to win a Phase I SBIR contract is kept short and simple to help encourage participation. It is typically limited to 25-pages (some agencies different) and must comply with explicit formatting, content, and other instructions as spelled out in the solicitation.

Phase I winners are chosen competitively by an agency's technical and scientific experts.

Phase II contracts are only awarded to successful Phase I contract winners and are valued up to $1,000,000 (again, different at each agency). Awards for Phase II contracts are based on Phase l results and the scientific and technical merit of the Phase II proposal. Phase II is a Test & Evaluation phase where applicants are to demonstrate that their concept will work properly in the target environment.

Besides the scientific quality of the Phase II proposal, the potential of the concept for commercial application(s) is given careful consideration.

Phase III involves private sector or federal agency funding (outside of the SBIR program) to commercialize the technology. There is no such thing as "SBIR Phase III money", howerver. The law is specific, no SBIR set aside funds can be use to contract for Phase III work.

While small business is ultimately responsible for the commercial marketing and sale of the technology or product developed under SBIR, the government encourages commercialization efforts. In this role, the government makes every reasonable effort to ensure that any government follow up actions to do research, develop or produce technology developed under SBIR is awarded to the SBIR participant. This is usually through sole-source contracts with the same SBIR small business that originally worked on developing the technology.


To participate in the SBIR program a business must first qualify as a small business. As defined by the federal government an eligible small business is one that:

-- is independently owned and operated (changing with the new law);
-- is organized for profit;
-- has its principal place of business in the United States;
-- is at least 51 percent owned by U.S. citizens;
-- has no more than 500 employees.

For a small business to be eligible for an SBIR award the following criteria must be met:

-- the principal investigator involved in the research must be primarily employed by the proposing firm;

-- two-thirds of Phase I and one-half of Phase II work must be accomplished by the proposing firm (joint ventures and limited partnerships are permitted);

-- all work must be performed within the United States.


Winning SBIR proposals and grant requests have to provide answers to two primary questions: 1) What is so special about what you are proposing? and 2) Why should the reviewer believe that the technology will actually be commercialized, if you get the money? This usually requires the proposer to possess good, current technology and market planning data. SBIR contracts are awarded competitively based on scientific and technical merit. High standards have built the SBIR program into an ongoing success story.

Proposals are usually evaluated by teams that include scientists and engineers who are well versed in the topic area being considered. The majority of topics are very specific in their technology requirements. However, many are created as "generic" topics searching for innovative solutions to broad requirements. Examples: "Develop innovative ideas/concepts in the area of environmental engineering"; or "Develop new and improved materials for controlling the optical signature of aircraft"; "Improving life in Rural Communities"; or even "Innovative Methods for Reducing Costs in the US Army".

The evaluation process also considers the qualifications of the principal investigator and other key staff, the soundness and technical merit of the proposal approach, the potential for commercial applications and the adequacy of the proposed effort to fulfill the requirements expressed in the topic. And, as the SBIR program emphasizes innovation, special consideration is given to the originality of the proposal in solving technological challenges.

As in any business enterprise an essential element in "making the sale" involves early market research. Marketing research, i.e., getting to know the customer and their needs/ marketing requirements, is an important early step taken by a significant proportion of successful Phase I SBIR awardees.

There are a large number of government R&D organizations who submit solicitation topics to the SBIR program. Small businesses should initially determine the specific organization working with the business's basic line of research. An old SBIR solicitation can be used as a handy reference for this purpose. Find related topics that are of interest, match them to the laboratory listed, and call the SBIR manager shown for that lab. This manager should be able to direct you to the key players in your area of research. Discussions with the key scientists and technicians can be a valuable marketing tool. It allows the business to determine the laboratory's current research interests and its future needs while providing an excellent opportunity to discuss the business's research ideas. Additionally, each laboratory may offer specific briefings and brochures to industry that provide insight into SBIR topics that will appear in the next formal solicitation. As appropriate these are announced in the Commerce Business Daily (CBD).

According to both laboratory scientists/engineers and successful SBIR awardees, such marketing research is important. These early marketing discussions have often proven invaluable in preparing future SBIR proposals, and small businesses have often learned of other, non-SBIR types of solicitations (e.g., broad agency announcements) into which they can submit proposals.

Recognizing that small businesses may not have strong technical information service support, the Department of Defense provides special assistance to small businesses participating in the SBIR program.

The Defense Technical Information Center (DTIC) is the central source for scientific and technical information concerning research and development projects funded by DOD agencies.

Many successful SBIR Phase I and Phase II award winners believe DTIC provided them the necessary information in making correct bid/no bid decisions and in preparing technically stronger proposals.

Additional information on DTIC can be found in the DOD Solicitation.


The Small Business Administration (SBA) maintains a computerized mailing list for all SBIR Pre-Solicitation Announcements. These announcements are published quarterly (sometimes) and contain important early information on the SBIR program and details on SBIR solicitations that are about to be released.

To be added to that mailing list, contact: 

Office of Technology
U.S. Small Business Administration
409 3rd Street, S.W., 8th Floor,
Washington, D.C. 20416
(202) 205-7777


The STTR Program was authorized in 1992 by Congress as a pilot program to fund cooperative R&D projects. It is designed to join two powerful forces for technological progress: 1) the entrepreneurial talent of the high-tech small business and 2) the innovative ideas, science and engineering expertise, and facility resources of the nations' universities and research institutes. The new, 2012 REauthorization law will make this more permanant.

Although modeled substantially on the SBIR program, the STTR program is a separately funded program of the Federal government. The goals of STTR are to spur economic growth and strengthen industrial competitiveness. For the most part, the PMs for the STTR Program are also the same persons that manage the SBIR program at each of the STTR agencies (DOD, DOE, NASA, NSF and PHS).

Under STTR, contracts are competitively awarded to small businesses for research and development projects conducted in cooperation with research institutions. While the primary goal of this cooperative effort is to develop innovative solutions to challenging scientific and engineering problems, those proposals having the greatest potential for commercialization are of particular interest to the STTR program and are given priority.

STTR was established to provide a strong incentive for small businesses and technical experts at research institutions to join forces that would commercially tap into the vast storehouse of research being done at universities and independent research institutions. Congress felt that this powerful combination of entrepreneurial drive and technical talent could team up to move ideas from the laboratory to the marketplace and make our nation more competitive in the world marketplace.


Phase I: One year award of up to $100,000 to determine the scientific, technical and commercial feasibility of the proposed cooperative effort. Note: Special emphasis is given to a proposal's commercialization potential. Phase II: Up to $500,000 awarded for a 24 month period to further develop the concept of a Phase I effort. Contract award selections are based on results from Phase I work and the scientific, technical merit and commercial potential of the proposal. Phase III: As in the SBIR program, the small business is expected to pursue private sector or federal-agency funding (outside the STTR program) to commercialize Phase II STTR projects.


-- Must qualify as a small business:
-- A minimum of 40% of the STTR project must be carried out by the small business;
-- A minimum of 30% of the effort must be performed by the research institution;
-- A written agreement must be negotiated with the research institution apportioning intellectual property;
-- Phase I and Phase II research work must be performed by the small business and the research institution in the United States. Note: Joint ventures and limited partnerships are permitted for the small business provided the entity so created qualifies as a small business. -- A nonprofit university or college;
-- A nonprofit institution owned and operated exclusively for scientific or educational purposes;
-- A contractor-operated, federally funded, R&D center (FFRDC).


Throughout the year several national conferences are held around the United States to introduce/update the SBIR program to small businesses involved in research and development activities.

These conferences offer practical business seminars and elaborate on aspects of SBIR participation while assisting small businesses to gain insight into current and projected R&D requirements of the agencies. Seminar topics have included subjects such as procurement activities, audits, accounting, proposal preparations and marketing. Experts on commercializing R&D, technology transfer and minority and women owned businesses, etc., are regularly scheduled.

The SBIR and STTR programs, as well as several other small business oriented programs, will also be discussed in breakout sessions with the participating federal agencies. In addition, one-on-one discussion opportunities with agency officials and other firms that offer products and services to the SBIR and STTR communities are provided.


The Small Business Administration (SBA) is the primary Federal advisory and advocacy office for small businesses. They develop policies and procedures that encourage increased Federal contract awards to small business concerns. The SBA is responsible for providing oversight for the SBIR and STTR Programs. Through a central office in Washington, D. C., regional and district offices, and small business development centers, the SBA provides a wide range of services to assist small businesses with government contracting. Some of these areas include:

-- starting and managing a business
-- business development and marketing
-- loans and financial assistance
-- individual counseling and training.

For more information on SBA programs, contact the Answer Desk at 1-800-U-ASK-SBA (800/827-5722), or in the Washington, DC area call 202/205-7717.

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