SBIR Proposal Writing Basics: Principal Investigator Math

Gail & Jim Greenwood, Greenwood Consulting Group, Inc.  

Copyright © 2009 by Greenwood Consulting Group, Inc.  

 

“I will be the Principal Investigator on our SBIR/STTR projects. As the PI, I have to spend at least half time on each project. So how can I be the PI on more than 2 SBIR/STTR awards at once?”  

We hear that question quite frequently in our SBIR/STTR work.  There are several fallacies contained therein which makes the question irrelevant or (at least) not as important as other things one should be asking about using SBIR/STTR to further their company.  Let’s address some of those fallacies.  

First, there is an implicit assumption that the proposing company is going to win lots of SBIR/STTR awards, and they will all occur at the same time.  With the odds of a Phase I award being about 1 in 6 (i.e., for every 6 Phase I SBIR proposals that are submitted, only one will be awarded),  there’s no certainty that a company that submits 2 or 3 or even 7 proposals will win more than one of them.  And, with the agencies having proposal deadlines (and therefore award dates) all over the calendar, a company fortunate enough to win multiple SBIR/STTR projects likely will not be working on them at the same exact time. So have an idea how you would deal with this “problem,” (and the agency may want to know your plan), but the chances are it will not occur.  

Second,  the questioner seems to think that the PI could devote all of their time on project work, and not spend any on the time required to build and run a small business. You might be familiar with the government’s terminology of “direct” versus “indirect” activities or costs: a direct cost is one associated with work done for a client, while indirect is something you generally incur because you are in business.  No one can spend 100% of their time doing direct work: everyone spends some time doing general correspondence, marketing, proposal writing, filing, and the other indirect activities common in a business.  “Oh, but I do that ‘after hours:’ I spend 8 hours a day doing direct work, then do the indirect work afterwards.”  Well, the direct versus indirect determination is not made on the nominal 8 hours, but on the total sum of time you spend on your business.  

Third (and this is the most important of the fallacies in the question about being a PI on more than two projects at one time), there is no requirement that a PI spend at least 50% of his or her time on an SBIR/STTR project.  What is required of the PI is that he or she be “primarily employed” by the award receiving small company during the conduct of the SBIR/STTR project.  That means that the PI cannot work full time for any other employer.  Some agencies put greater restrictions on their definition of “primarily employed,” so you need to do a careful reading of that part of the agency’s solicitation or funding opportunity announcement: perhaps they define it to mean that the PI cannot work more than ¾ or ½ time at another employer.  And notice that this “primarily employed” criterion looks at the time spent by the PI at the proposing company versus elsewhere, not at how many hours the PI puts into a particular SBIR or STTR project.  

Finally, you should also look at that definition of the PI in the agency’s instructions to see if they put any additional limitations on the PI.  The US Department of Energy, for example, requires a PI on a 9-month Phase I SBIR award to devote at least 117 hours to the project (520 hours for a Phase II).  And some agencies require that a PI on a Phase I STTR to spend at least 10% of their time on the project.  

A few final thoughts about the restrictions put on SBIR/STTR PIs:  

  1. These restrictions apply when the SBIR/STTR award is made, not before. Therefore, it is possible to propose on your project a PI who CURRENTLY is not primarily employed by your small business, for example.  He or she would have to satisfy that requirement on the day the SBIR/STTR contract or grant is made, not the day you submit the proposal or even the day the agency tells you they want to negotiate an award with you.
  2. These employment requirements apply to the PI, not to others on the team.
  3. Do the agencies care if you lie about the PI’s employment?  Not any more than they care about failing to finish your contract or grant, or making up time sheets, or using SBIR funds for illegal purposes. SBIR/STTR applicants are not immune to prosecution for contractual “indiscretions” and there are people serving time who learned the hard way.
  4. As suggested earlier, the relevant measure is the total number of hours the PI is working anywhere (your company, another employer) on anything (direct or indirect).  Agencies are not amused by thinly disguised attempts to circumvent their requirements (e.g., your PI is working 80 hour weeks, including a full time job elsewhere that requires 40 hours, so he/she allegedly is not more than half time employed there).  If you are going to have problems meeting your agency’s PI requirements, talk to their SBIR/STTR program manager about your situation to see discuss options or to see if the agency ever makes exceptions to its requirements—but you better have a darn compelling reason why the agency should make an exception for you, when they likely have not done so for others asking for them.
  5. Do not propose one person as the PI, then switch to a less qualified, less senior person when the SBIR/STTR award is made.  The agencies do not tolerate this bait and switch tactic, so don’t try it.