The SBA (Small Business Administration) announced last week that it will launch a 16 city road tour connecting entrepreneurs working on advanced technology to the country's largest source of early state funding - the SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) programs. These programs, also known as Americ's "Seed Fund" is led by the SBA with eleven participating federal agencies.
These programs provide over $3 billion in early state funding to small business each year in a wide variety of technology areas such as unmanned systems, advanced materials, health, cybersecurity and defense. The SBIR/STTR programs execute over 4,000 new awards annually which allow innovators to advance new technologies. The SBA claims that these new technologies have contributed to the creation of thousands of jobs.
To read about how the Air Force is expediting SBIR awards, see 'The Inaugural Air Force Pitch Day was Considered a Success'.
The 2019 Road Tour begins in May and ends in November. Stops include Oklahoma City (OK), Kansas City (KS), Des Moines (IA), Sioux Falls (SD), Fargo(ND), Tucson (AZ), El Paso (TX), Albuquerque (NM), Boulder (CO), Burlington (VT), Albany (NY), New Brunswick (NJ), State College (PA), College Park (MD), Miami (FL), and Puerto Rico.
These events are great opportunities for small businesses performing innovative research to learn about the programs and determine whether such opportunities might be a good fit for them. Read more about SBA's Road Tour including instructions for registering here.
Showing posts with label SBIR. Show all posts
Showing posts with label SBIR. Show all posts
Monday, April 8, 2019
Monday, December 17, 2018
SBIR/STTR Contracts - Know Cost "Eligibility" Rules
We use these pages to keep readers up to date on FAR (Federal Acquisition Regulation) cost principles (i.e. FAR Part 31) and supplemental cost principle regulations from individual agencies (e.g. DFARS or DoD FAR Supplement). Contractors need to understand however that there are many other factors that affect the allowability and eligibility of costs. Contracts and grants often contain specific limitations while agencies themselves impose their own limitations. When it comes to SBIR/STTR programs, things can get very confusing and its necessary to fully understand allowability and eligibility criteria when negotiating contract prices. Here are some examples of competing or conflicting guidance pertaining to SBIR/STTR contracts.
The eligibility of costs is usually mentioned in the agency's SBIR/STTR solicitations but usually requires some "digging" to find them. Before entering into an SBIR/STTR contract, be certain that you fully understand any unique cost eligibility requirements and restrictions that apply and query the contracting officer for others that might not be evident. Phase 1 projects are usually fixed price while Phase 2 are typically cost-reimbursable. Once Phase 1 costs are negotiated, contractors can pretty much spend the contract amount as it sees fit. Not so with Phase 2 projects. Phase 2 projects can cause the most problems to contractors because those contracts become subject to audit.
For some free training resources from the SBIR/STTR folks, see New Resources for Small Businesses Seeking R&D Funding.
- Some agencies allow you to purchase equipment as a direct cost on a Phase 1 project while others do not.
- Some agencies prohibit travel in Phase 1 while others strongly encourage it and even others require it. This leads to "consistency" issues in estimating, recording, and reporting costs.
- NIH (National Institute of Health) limits Phase 1 indirect rate to 40 percent of all direct costs unless there is an approved rate on a recent Federal project. This 40 percent limitation can result in a significant hardship to small businesses.
- NSF (National Science Foundation) limits the combination of fringe benefits and indirect costs to not more than 150 percent of direct labor.
- All agencies allow profit and commonly refer to 7 percent of total cost. However, some agencies take that to mean that profit cannot exceed 7 percent, others say that means "normally" profit should not exceed 7 percent, while still others say 7 percent is an agency average.
The eligibility of costs is usually mentioned in the agency's SBIR/STTR solicitations but usually requires some "digging" to find them. Before entering into an SBIR/STTR contract, be certain that you fully understand any unique cost eligibility requirements and restrictions that apply and query the contracting officer for others that might not be evident. Phase 1 projects are usually fixed price while Phase 2 are typically cost-reimbursable. Once Phase 1 costs are negotiated, contractors can pretty much spend the contract amount as it sees fit. Not so with Phase 2 projects. Phase 2 projects can cause the most problems to contractors because those contracts become subject to audit.
For some free training resources from the SBIR/STTR folks, see New Resources for Small Businesses Seeking R&D Funding.
Monday, March 12, 2018
Company Pays $12 Million to Settle False Claims Suit
The Small Business Innovation Research (SBIR) program is a highly competitive program that encourages domestic small businesses to engage in Federal Research and Development that has the potential for commercialization. Through a competitive awards-based program, SBIR enables small business to explore their technological potential and provides the incentive to profit from its commercialization. By including qualified small businesses in the nation's R&D arena, high-tech innovation is stimulated and the US gains entrepreneurial spirit as it meets its specific research and development needs.
The SBIR program has been referred to as America's seed fund. Each year, Federal agencies with R&D budgets that exceed $100 million are required to allocate 3.2 percent of their R&D budgets to these program. That works out to about $4 billion per year. Currently, eleven Federal agencies participate in the program and there are more than 300 active companies in the program.
As the name suggests, these awards are set aside for small businesses. In the context of SBIRs, small business must be organized "for profit", have 500 or few employees, and must be owned at least 50 percent by individuals who are U.S. citizens. Also, work must be performed in the U.S.
There are plenty of companies who (try and) abuse the system. Recently, the Justice Department announced that one firm has agreed to pay more than $12 million to settle false claims allegations regarding its eligibility for SBIR contracts.
TrellisWare Technologies of San Diego agreed to pay $12 million to settle allegations that it was ineligible for numerous SBIR contracts it had entered into with the Defense Department. Although on the surface it appeared that TrellisWare was a small business, turns out that it was a majority owned subsidiary of ViaSat, Inc, a global telecommunications company (and decidedly not a small business).
TrellisWare falsely self-certified that it was a small business and was able to garner multiple SBIR contracts over a seven-year period. Someone caught on, the Government began an investigation, and discovered the relationship between TrellisWare and ViaSat. No one has questioned the value of TrellisWare's research. Obviously, the Government believed in its value because it continued to award the company additional SBIR work. The problem was that the funds were diverted from the SBIR's intended beneficiaries.
Companies need to exercise due diligence when self-certifying eligibility for any Government program. The consequences of falsely certifying eligibility can be severe.
The SBIR program has been referred to as America's seed fund. Each year, Federal agencies with R&D budgets that exceed $100 million are required to allocate 3.2 percent of their R&D budgets to these program. That works out to about $4 billion per year. Currently, eleven Federal agencies participate in the program and there are more than 300 active companies in the program.
As the name suggests, these awards are set aside for small businesses. In the context of SBIRs, small business must be organized "for profit", have 500 or few employees, and must be owned at least 50 percent by individuals who are U.S. citizens. Also, work must be performed in the U.S.
There are plenty of companies who (try and) abuse the system. Recently, the Justice Department announced that one firm has agreed to pay more than $12 million to settle false claims allegations regarding its eligibility for SBIR contracts.
TrellisWare Technologies of San Diego agreed to pay $12 million to settle allegations that it was ineligible for numerous SBIR contracts it had entered into with the Defense Department. Although on the surface it appeared that TrellisWare was a small business, turns out that it was a majority owned subsidiary of ViaSat, Inc, a global telecommunications company (and decidedly not a small business).
TrellisWare falsely self-certified that it was a small business and was able to garner multiple SBIR contracts over a seven-year period. Someone caught on, the Government began an investigation, and discovered the relationship between TrellisWare and ViaSat. No one has questioned the value of TrellisWare's research. Obviously, the Government believed in its value because it continued to award the company additional SBIR work. The problem was that the funds were diverted from the SBIR's intended beneficiaries.
Companies need to exercise due diligence when self-certifying eligibility for any Government program. The consequences of falsely certifying eligibility can be severe.
Monday, February 19, 2018
Pilot Program for Streamlining Awards for Innovative Technology Projects
The Defense Department, last month, issued a Class Deviation that should effectively reduce some of the paperwork associated with Government Contracting for small businesses and non-traditional contractors. It exempts from certified cost or pricing data requirements (see FAR 15.403-1(b)) contracts and subcontracts awarded pursuant to (i) the Small Business Innovation Research Program (SBIR), (ii) the Small Business Technology Transfer Program (STTR) and (iii) a technical, merit-based selection procedure, such as a broad agency announcement.
Further, for SBIR awards and technical merit-based selections (but not STTR awards), this Class Deviation also eliminates the audit and records examination clause (see FAR 52.215-2, Audit and Records - Negotiations).
In this context, nontraditional defense contractors are those that are not currently performing and have not performed any contracts or subcontracts for DoD that are subject to full coverage under the cost accounting standards (CAS) and the implementing regulations for at least one-year preceding the solicitation.
This is a pilot program required by the fiscal years 2016 and 2017 NDAAs (National Defense Authorization Act) and is currently set to expire on October 1, 2020 (call it a three-year trial).
While this pilot program may appear to benefit small businesses, the practical impact doesn't seem so great. In our experience, most SBIRs are already, for the most part, awarded without certified cost or pricing data being required and we haven't seen too many of these technical merit-based procurements. The exemption to the audit clause may seem like a tangible benefit but the auditors have all but written off those contracts anyway due to immateriality. One of the clauses that require a lot of effort on the part of contractors and subcontractors is the allowable cost and payment clause at FAR 52.216-7 which requires the submission of an annual incurred cost proposal. This contract clause is not eliminated by the Class Deviation.
The Pilot Program includes a provision that the contracting officer may still require certified cost or pricing data and may still require the audit clause based on some knowledge or suspicion that the clauses are necessary to protect the Government's interests.
You can read the full DoD Memorandum here.
Further, for SBIR awards and technical merit-based selections (but not STTR awards), this Class Deviation also eliminates the audit and records examination clause (see FAR 52.215-2, Audit and Records - Negotiations).
In this context, nontraditional defense contractors are those that are not currently performing and have not performed any contracts or subcontracts for DoD that are subject to full coverage under the cost accounting standards (CAS) and the implementing regulations for at least one-year preceding the solicitation.
This is a pilot program required by the fiscal years 2016 and 2017 NDAAs (National Defense Authorization Act) and is currently set to expire on October 1, 2020 (call it a three-year trial).
While this pilot program may appear to benefit small businesses, the practical impact doesn't seem so great. In our experience, most SBIRs are already, for the most part, awarded without certified cost or pricing data being required and we haven't seen too many of these technical merit-based procurements. The exemption to the audit clause may seem like a tangible benefit but the auditors have all but written off those contracts anyway due to immateriality. One of the clauses that require a lot of effort on the part of contractors and subcontractors is the allowable cost and payment clause at FAR 52.216-7 which requires the submission of an annual incurred cost proposal. This contract clause is not eliminated by the Class Deviation.
The Pilot Program includes a provision that the contracting officer may still require certified cost or pricing data and may still require the audit clause based on some knowledge or suspicion that the clauses are necessary to protect the Government's interests.
You can read the full DoD Memorandum here.
Monday, July 25, 2016
New Resource for Small Businesses Seeking R&D Funding
The SBA (Small Business Administration) has released a new set of online tutorials to help small businesses navigate the SBIR (Small Business Innovation Research) program. Small businesses can learn about the program through a combination of videos and text. Best of all, there is no registration, no fees and no restrictions on who can access the site.
Within the tutorials, there are ten courses comprised of more than fifty modules. The courses include:
Within the tutorials, there are ten courses comprised of more than fifty modules. The courses include:
- SBIR/STTR program basics
- Government agencies that use the program (including differences in implementations)
- Agency solicitations
- How to find R&D topics
- Registration requirements
- Preparing a responsive proposal (good topic for everyone, not just SBIR solicitations)
- Finding partners
- Accounting and finance (many companies find out too late their systems are not adequate)
- SBIR data rights
- Cybersecurity for small business
There are several modules under each course. The "Accounting and Finance" course, for example, includes the following four modules:
- FAQ regarding budgeting basics
- What are the requirements of an approved accounting system?
- What are indirect rates and how do I develop them?
- What are eligible and ineligible expenses?
While these modules tend to be somewhat basic, they are succinct descriptions and introductions to companies considering the opportunities afforded through the SBIR program. They at least set forth the Government's expectations of the business systems contractors will need before acceptance into the program. If you have innovative ideas from tinkering around in your garage but have no company or business infrastructure, you're probably not going to get too far. On the other hand, the barriers to entry are not too high so that with a modicum of organizational structure, you might attract some Government funding for your R&D ideas.
Monday, February 1, 2010
Accounting Systems for SBIR Phase II Contracts
There is a provision in most SBIR Phase I contracts cautioning contractors that if they intend to submit a proposal for Phase II work on a cost reimbursement basis,they must begin implementing a Government-approved accounting system if they do not already have an approved accounting system.
This is really poor wording. The Government does not approve or disapprove accounting systems or the software program that drives those systems. It reviews accounting systems to determine whether they are adequate to meet requirements for Government contracting purposes. For more on the myth of Government approval, see our earlier blog post here. Okay, so maybe you're thinking we're making too fine of a distinction here - "approved" or "adequate" - there are still certain expectations, right? Yes there are certain expectations. Those expectations are captured in the SF Form 1408, a form the Government uses to determine whether an accounting system is adequate for the type of contract contemplated. You can download a copy of the form here. SBIR contractors contemplating a Phase II proposal should download the form and use it to self-assess their systems.
Another great (and free) source of information is Information for Contractors published by DCAA. Although the current version is five years old and sorely needs updating, it remains a good resource for contractors trying to navigate the contracting environment. Chapter 2 of this Guide includes details on what the Government considers when using the SF Form 1408 to assess the adequacy of an accounting system. Where the form is lacking in information and detail, this Guide will help you understand what the Government requires and why it is important. You can download the Guide here.
This is really poor wording. The Government does not approve or disapprove accounting systems or the software program that drives those systems. It reviews accounting systems to determine whether they are adequate to meet requirements for Government contracting purposes. For more on the myth of Government approval, see our earlier blog post here. Okay, so maybe you're thinking we're making too fine of a distinction here - "approved" or "adequate" - there are still certain expectations, right? Yes there are certain expectations. Those expectations are captured in the SF Form 1408, a form the Government uses to determine whether an accounting system is adequate for the type of contract contemplated. You can download a copy of the form here. SBIR contractors contemplating a Phase II proposal should download the form and use it to self-assess their systems.
Another great (and free) source of information is Information for Contractors published by DCAA. Although the current version is five years old and sorely needs updating, it remains a good resource for contractors trying to navigate the contracting environment. Chapter 2 of this Guide includes details on what the Government considers when using the SF Form 1408 to assess the adequacy of an accounting system. Where the form is lacking in information and detail, this Guide will help you understand what the Government requires and why it is important. You can download the Guide here.
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