Gail & Jim Greenwood, Greenwood Consulting Group, Inc.

Copyright © 2001 by Greenwood Consulting Group, Inc.

We recently saw something from the SBIR/STTR Program Coordinator at the Department of Energy that said the "chances of winning an award was greater for those grant applications in which there was substantial collaboration between a small business and a research institution." That would tend to make you think it is a good idea to include a university or federal lab in your SBIR/STTR proposal. With STTR, it is mandatory to include a non profit research institution in your proposal. If you do not, your proposal will be rejected without a technical review.

But in a more general sense, when is it a good idea to include a university or federal lab in your project?

One reason for including them is when you need to bolster the academic credentials of your team. Perhaps you are a creative, intelligent individual but do not have the academic degrees that might be expected of the principal investigator. By adding someone from a university or federal lab who has the appropriate degrees and has published papers in relevant technical areas, you gain credibility for your team.

Another reason is when you are transferring technology out of the university or federal lab. Often times you want to tap into the knowledge of the developers of the technology rather than just get the technology itself.

A third reason is to access unique capabilities and/or facilities at the university or federal lab. Most of us do not have nuclear reactors readily available to us; if you need one for your project, you probably will want to include in your proposal a federal lab that has one, as well as the cost of using that facility.

Finally, include a federal laboratory or university in your project to fill gaps in your technical capabilities. If the project involves both biology and chemistry and your strength is in chemistry, then find a lab or university that can bring the biology capabilities to the table.

As you can see, there are a number of instances in which it makes sense to include a university or federal lab in your SBIR/STTR proposal. But we want to offer some cautions and words of advice about doing so:

Avoid window dressing. This is a term used to describe a proposal in which a university or federal lab is included, but they have no significant role in the project.

Look out for inter-agency biases. It is unfortunate, but some agencies do not look favorably on proposals that include federal laboratories from other agencies. This is not always the case, but consider yourself forewarned.

Get the agreement in writing. Even if your old college buddy is the professor you want to tap at the university, you want a solid agreement between your company and the institution that carefully spells out the relationship. We’ve been involved in a couple of instances where a university was contracted to do some work, they failed to complete it, and then tried to walk away from their obligations. Also, you want to ensure that intellectual property rights are addressed, and you should get them to agree to comply with all the federal regs that you must follow in an SBIR/STTR project.

Don’t use their lawyer. Some small firms try to save money by just letting the university’s or federal lab’s lawyer do all the legal work. That’s false economy, because that lawyer is hired to protect the institution’s interest, not yours.

Start the process early. Don’t wait until the week before the proposal due date to contact the university or lab about participating in your project. Institutions need time to put such arrangements in place.

Work with experienced institutions. It’s easier to involve in your proposal a university or federal lab that has been a subcontractor on previous SBIR or STTR projects.

Clearly state their role. In the negotiations, agreement, and proposal, the role of the university or federal lab needs to be clear and justified.

Don’t let them do all the technical work. We see an occasional proposal where the university/federal lab is going to do all the R&D, and the small company is there to write reports and work on commercialization. That isn’t acceptable—the small firm must be a key participant in the R&D. That’s one reason why the small firm has to perform at least 67% of the Phase I and 50% of the Phase II in a SBIR project .

Don’t let them write the proposal. We can usually tell when the university was asked to write the SBIR/STTR proposal for the small firm because it talks in great depth about the institution and says very little about the company. Again, you must demonstrate that the small company has a key role in the R&D, and is qualified to do so.

Clarify what hat is being worn. It’s not always clear whether a faculty member is participating in an SBIR/STTR as an individual consultant or in their official capacity at the university. There is a major difference between the two: for example, in an STTR it must be the university that is participating, not just the professor wearing his or her consultant hat. Also, if the professor is participating as a consultant independent of their university, then they cannot pledge key university resources like laboratories, graduate students, etc.

Also, if you are a faculty member or federal laboratory employee who has a small business that is applying for an SBIR or STTR, you may run into a conflict of interest issue with the agency if you try to make your university/federal lab department a subcontractor on the project. Most agencies frown on such "insider" arrangements.

In conclusion, universities and federal labs can sometimes improve your chances of success in the SBIR/STTR programs. However, it is not true that you can’t win without them (except, of course, that a non-profit institution must be included in the STTR proposal). Include them when it makes sense to do so, and follow the cautions and suggestions listed above to make it a smoother relationship should your project get awarded.