SBIR Proposal Writing Basics

SBIR Proposal Writing Basics: Who Can Be the RI on Your STTR

Gail & Jim Greenwood, Greenwood Consulting Group, Inc.

So let’s suppose you have decided to pursue a Small Business Technology Transfer (STTR) project. An STTR must be a collaborative R&D effort between a small business (presumably that’s you) and a non-profit research institution (RI). You must subcontract at least 30% of the STTR project to the RI, and the fraction can be as much as 60% of the project. Let’s talk about who can be that RI on your project.

Basically, there are four types of entities that can qualify as the RI.

The first is a non-profit college or university. The key term here is “non-profit.” It does not matter if it is a public or private institution, or even if there is a religious affiliation with the school, as long as it not one organized for profit.

The second type of entity is a Federal laboratory. It must be a certain type of Federal laboratory, known as a “Federally Funded Research and Development Center” or FFRDC. There are many Federal labs that do not qualify as an FFRDC, so be careful that you select one that is. One way to make sure they are an FFRDC is to find out if they are government- or contractor-operated. If they are government owned, government operated (GOGO), then they are not an FFRDC because the Lab’s employees are employed by the Federal government. In contrast, if it is government owned, contractor operated (GOCO), then the Lab’s employees actually work for a third-party contractor which operates the Lab on behalf of the Federal government and one of its agencies, like the Department of Energy. Too complicated? Then just look at the master list of FFRDCs, maintained by the National Science Foundation, at http://www.nsf.gov/statistics/ffrdclist/agency.cfm. Beware: some agencies suggest that you cannot use an FFRDC on an STTR project without getting a waiver from the Small Business Administration to do so. That simply is not true—the enabling legislation for STTR specifically calls out FFRDCs as one of the allowed categories of RIs on these projects.

The third type of entity that can serve as an RI on an STTR project is a non-profit hospital. Make sure you don’t confuse “non-profit” with a “for-profit hospital that isn’t profitable…”

The fourth type of entity that can serve as an RI on an STTR project is an entity that meets Section 4(5) of the Stevenson-Wydler Technology Innovation Act. OK… what does that mean? We interpret this to be a catch-all category of “other non profits” that you might want to team with on your STTR.

That section of the Act basically defines a nonprofit institution as "an organization owned and operated exclusively for scientific or educational purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual."

Regardless of the type of entity you decide to team with on your STTR, they must be located in the United States. This is more restrictive, you may note, than an SBIR project where you can subcontract work to a non-US entity as long as the actual R&D work they do on your project is performed in the US.

Once you’ve identified a potential RI, then we suggest that you get to know them before you decide to include them in your proposal. Spend some time on the phone, or even better, pay them a visit. Meet not only with their technical people who will work with you on the R&D, but also with their administrators/managers who will be involved in the contract and legal side of the agreement. Find out whether they have a standard agreement to handle industrial interactions like an STTR and, if so, decide if it acceptable to you (or if they willing to modify it so that it is). You also should be asking yourself this whole time, “is this an organization with which I can envision myself working for the next 3-5 years?” If it is, then great—hopefully it will be a marriage made in heaven. If it is not, then we urge you to seek out another RI—life’s too short to work with an entity that you aren’t comfortable with, especially when they are probably 1000 times your size (or more) and have more lawyers on maternity leave than you have employees.