1. Small Business Administration Office of Investment and Innovation SBIR/STTR Policy Directives 23 August 2012

2. Small Business Administration Todays Agenda Process overview Synthesis of key Policy Directive changes Funding Eligibility Streamlining / timelines Data & Reporting Fraud Waste & Abuse Commercialization support Review of Implementation Calendar 2

3. Small Business Administration Overview and Process Policy Directive SBA policy that guides how agencies administer the programs Separate from changes to SBA size rule Published on August 6, 2012 77 FR 46806 for SBIR (http://www.gpo.gov/fdsys/pkg/FR-2012-08- 06/pdf/2012-18119.pdf) 77 FR 46855 for STTR (http://www.gpo.gov/fdsys/pkg/FR-2012-08- 06/pdf/2012-18119.pdf) Effective immediately but request for comments for 60 days on provisions 3

4. Small Business Administration Funding Increase in set asides Award sizes STTR award sizes now same as SBIR ( Ph.I = $150,000 Ph.II = $1.0M ) New reporting requirements for awards exceeding guideline amounts (e.g: VC investment) 150% cap, unless receive waiver from SBA (rare and unusual circumstances) Technical Assistance $5000 per award per year (was $4000) In addition to award amount for both Ph.I and Ph.II Awardee may contract with provider other than vendor selected by agency 4

5. Small Business Administration Funding (contd) Admin funding pilot Agencies may use 3% of SBIR funds for program administration Each agency must submit plan of work to SBA for approval by 10/1/2012 (submit to SBA for approval 30 days prior to start of FY) Funds to be used for added support, not for replacing the non- SBIR funds formerly used. Work to focus on material improvements in performance on critical issues (e.g. streamlining award process) Funds to be used for administration of both SBIR and STTR (even though it comes from SBIR budget only) 5

6. Small Business Administration Eligibility VC-owned firms Firms majority-owned by multiple VCOCs, hedge funds, and/or private equity firms Proposed Rule (77 FR 28520, available at http://www.gpo.gov/fdsys/pkg/FR-2012-05-15/pdf/2012- 11586.pdf) http://www.gpo.gov/fdsys/pkg/FR-2012-05-15/pdf/2012- 11586.pdf Public comments through July 16, 2012 -- SBA is reviewing Final Rule in early 2013, changes become effective Until then, current regs (13 C.F.R. §121.702) remain in effect 6

7. Small Business Administration Eligibility (contd) Cross-program awards. Option to award Ph.II from the other program (SBIR–STTR). Implement at agency discretion. Cross-agency awards. Ph.II from a different agency. Report to SBA. Direct to Phase II pilot (FY2012-2017). NIH, DoD, Ed. may issue Ph.II SBIR to a firm without Ph.I, to pursue a Ph.I solicitation topic. Implement at agency discretion. Open Phase II competition Beginning 10/1/2012: (1) all Ph.I awardees allowed to apply for follow-on Ph.II (no invitation-only) (2) Ph.II application process info must go in Ph.I solicitations, Ph.I awardees notified Second Phase II. Agencies may award a second, sequential, Ph.II 7

8. Small Business Administration Eligibility (contd) Commercialization progress benchmarks Ph.I to Ph.II Transition Rate Minimum required ratio of Ph.II awards to Ph.I awards, over specified period Applies only to firms with at least 20 Ph.I awards in period Agency rates published in Fed. Reg. for comment by 10/1/2012 Beginning 1/1/2013, all Ph.I applicants must meet agency rate Ph.I to Ph.III Commercialization Rate Min level of Ph.III commercialization results from prior Ph.IIs over period Applies only to firms with at least 15 Ph.II awards in period Agency rates published in Fed. Reg. for comment by 7/1/2013 Beginning 10/1/2013, all Ph.I applicants must meet agency rate If applicant fails to meet both benchmarks, is ineligible for Ph.I from that agency for one year 8

9. Small Business Administration Streamlining the award process Goal: Reduce time between close of solicitation and notification of award. NIH and NSF must issue notice to each applicant as to whether it has been selected for an award within one year from the closing date of the solicitation. All other agencies must issue the notice within 90 days from the solicitation closing date. If agency cannot issue notice within required time, it must request extension of time from SBA. Agencies to implement measures as soon as practicable New agency reporting requirements to develop data to monitor and analyze time lags 9

10. Small Business Administration Data & Reporting Key Changes Significant changes in statute Central data system (www.SBIR.gov)www.SBIR.gov More program-wide reporting Additional requirements for small businesses Registration Commercialization results for past awards Core principles Enter once philosophy Keep data/update over time Centralized data, across agencies Phased approach to implementation 10

11. Small Business Administration Fraud, waste, abuse Company certifications Lifecycle certification Awardees may still complete award even when the firm no longer meets size and ownership/control requirements Information systems Agencies to post info on website and solicitations: phone hotline number or web-based method for reporting FW&A, successful prosecutions of FW&A Designate liaison to Office of Inspector General (OIG) and the agency Suspension and Debarment Official (SDO) Maintain procedures to enforce accountability (e.g., templates for referrals to OIG or SDO) 11

12. Small Business Administration Commercialization support Technical assistance. Amounts increased to $5000 Flexibility on use Applies to STTR as well DoD Commercialization Readiness Program (CRP) pilot is now permanent and includes the STTR program Civilian CRP pilot authorized up to 10% of SBIR/STTR funds Phase III preference: stronger support of awardee efforts to commercialize, including sole-source 12

13. Small Business Administration Implementation calendar Effective dateNew program element Already in effect SBIR set-aside share = 2.6%, STTR set-aside share = 0.35% STTR award guideline amounts raised to same as SBIR Immediately / with next solicitation Awards capped at 150%, addl reporting if exceed 100% Cross-program awards allowed: SBIR -- STTR Cross-agency awards allowed Technical assistance amount increased to $5000 Immediately / soon as practical Shorten time for application evaluation and award notification May subcontract portion of award to Federal laboratory 13

14. Small Business Administration Implementation calendar, contd Effective dateNew program element 10/1/2012SBIR Set-aside = 2.7% Admin Pilot Funding (3%) available to agencies Fraud, waste, abuse: final language in solicitations/agreements, policies & contact info on websites, begin life-cycle certification Ph.I to Ph.II Transition Rate benchmarks in Federal Register. 60-day comment period begins Ph.II competitions must be open to all Ph.I awardees New reporting requirements 14

15. Small Business Administration Implementation calendar, contd Effective dateNew program element 1/1/2013Ph.I – Ph.II Transition Rate benchmarks effective Size Rule final (expected: 1/1/2013) Company Registry (v 1.0): All applicants must register New eligibility requirements (ownership, affiliation) 7/1/2013Commercialization Rate benchmarks (Ph.II to Ph.III) in Fed.Reg. 60-day comment period begins 10/1/2013Commercialization Rate benchmarks (Ph.II to Ph.III) effective Commercialization data required from all awardees upon proposal submission Life-cycle certifications SBIR Set-aside share = 2.8%, STTR set-aside share = 0.4% 15