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Proposal and Award Policies and Procedures Guide
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Small Business Innovation Research (SBIR) & Small Business Technology Transfer (STTR) Program

SBIR


small business innovation research
seed money for high risk, high reward private sector ventures

Supplemental Funding Opportunities

Phase IIB Supplement Funding Opportunity (only applicable for SBIR and STTR Phase II grantees.)

The objective of Phase IIB funding is to provide additional R&D funds to further accelerate commercialization of the Phase II project, when a qualifying third party financial investment/commitment has been received as a direct consequence of the NSF funded Phase I/Phase II research outcomes. The third party funding should serve to accelerate commercialization activity of the NSF funded Phase II Program.

Phase IIB Overall Submission and Review Process

Phase IIB request timing
Phase II grantees are encouraged to start discussing any Phase IIB requests as early as possible with the Program Director on the Grant. The grantee may be invited to submit a formal Financial Package after initial review by the Program Director. The Financial Package must be submitted to the Program Director for review at least a month in advance of the expiry date of the grant to initiate formal NSF review. The Program Director may recommend that the Grantee request approval for a no-cost-extension (to extend the grant expiry date by up to 6 months) to allow NSF time to review the Phase IIB supplement request.

Process Overview
For companies requesting $250,000 or less of NSF Phase IIB matching funds:

  1. The PI is invited by the Program Director to submit a formal Phase IIB Financial Package along with an outline of what R&D will be done with a potential NSF Phase IIB match.
  2. The Financial Package is internally reviewed by NSF, and the PI receives feedback from the Program Director on what third party funds would qualify for the Phase IIB match.
  3. The PI receives permission from the Program Director to submit the Phase IIB proposal after NSF review of the Financial Package.
  4. The Phase IIB proposal is reviewed by NSF.
  5. The award may typically extend the expiry date of the grant by 12 months.

For companies requesting over $250,000 (not to exceed $500,000) of NSF Phase IIB matching funds:

  1. The PI is invited by the Program Director to submit a formal Phase IIB Financial Package along with an outline of what R&D will be done with a potential NSF Phase IIB match.
  2. The Financial Package is internally reviewed by NSF and the PI receives feedback from the Program Director on what third party funds would qualify for the Phase IIB match.
  3. The Program Director invites the company to make an on-site presentation at NSF for review of the proposed Phase IIB R&D program and the company's commercialization plans. The company is provided details on what should be covered in the on-site presentation.
  4. The grantee company (including a minimum of the PI and CEO) presents in person at NSF to an audience of NSF staff. A representative of the third party must be available at the meeting (in person or on the phone).
  5. The Program Director may have further discussions with the grantee after the on-site meeting.
  6. The PI receives permission from the Program Director to submit the Phase IIB proposal after NSF review of the Financial Package.
  7. The Phase IIB proposal is reviewed by NSF.
  8. The award may typically extend the expiry date of the grant by 24 months.

Review Criteria
All Phase IIB proposals will be reviewed in-house by a minimum of two NSF SBIR/STTR Program Officers. Each proposal will be reviewed based on the review criteria below.

Criterion: What is the intellectual merit of the proposed activity? Potential considerations: Will the completion of the proposed activity lead to a solid foundation of the scientific and engineering knowledge and understanding base? Has the firm progressed satisfactorily in the Phase II activity to justify a Phase IIB activity? Is the proposed plan a sound approach for establishing technical feasibility that could lead to commercialization?

Criterion: What are the broader impacts of the proposed activity? Potential considerations: Does the commercialization plan summary in the proposed activity show a clear path to commercial and societal benefits? Does the proposed activity reflect changes to the Phase II commercialization plan that further improves the chances of conversion of research in order to provide societal benefits? What are the expectations of the third party, and how effective will the third party funded activity lead to commercial and societal benefit? Evaluate the competitive advantages of this technology vs. alternate technologies that can meet similar market needs.

Third Party Funding Qualifications and Use

Qualifying Third Party Funds
Qualifying third party funds should meet these requirements:

  1. The company and the documentation provided (henceforth referred to as the “Financial Package") will need to clearly establish that the third party is making investments/financial commitments as a direct consequence of the outcomes of NSF funded Phase I and/or Phase II Grant activity and it is not contingent on the company receiving the Phase IIB grant.
  2. The Financial Package will need to include executed legal agreements signed by both the grantee company and the third party. The Financial Package must clearly specify the amount of the investments/financial commitments being made. The third party funding must be cash, but not in-kind or other "intangible assets". Loans and any forms of debt obligations, will not qualify.
  3. The Financial Package should involve money legally obligated to the grantee company with no attached contingencies or conditions that will result in the return of any funds back to the third party.
  4. The transfer of funds to the grantee could occur up-front or, over a clearly defined contracted date-certain payment schedule, and proof of receipt of the third party money will need to be provided to NSF to receive matching Phase IIB funds.
  5. The legal agreements in the Financial Package need to have been executed prior to formal NSF review of eligibility for Phase IIB supplemental funding.
  6. Funds from multiple unrelated third parties may be presented in a combined Financial Package. This may be particularly the case where the third party money is the result of sales, licensing, etc.
  7. Any third-party investment funds in excess of $500,000 must come from private-sector (non-governmental) sources. Definition of a Third party investor: http://www.nsf.gov/eng/iip/sbir/definitions.jsp#thirdparty

Amount of third party funds
The Financial Package must include a minimum of $100,000 of qualifying funds. NSF will match up to 50% of qualifying funds received. Phase IIB supplemental awards will be made for a minimum of $50,000 and a maximum of $500,000.

Use of third party funds
NSF does not place restrictions on how the grantee spends the third party funds. R&D, market research, advertising, intellectual property development, capital investment, business development, human resource development are some examples of typical uses for the third-party funds, with the overall goal of accelerating commercialization of the NSF funded technology being developed in the Phase II grant.

Use of NSF Phase IIB funds
NSF match funds shall only be used for research & development activities that further build on the Phase II program and catalyze acceleration towards commercialization.

Phase IIB Proposal Preparation

Phase IIB proposals MUST be submitted using FastLane. The Phase IIB proposal shall not exceed 15 pages. The additional work proposed should be an expansion of the technical work being performed in the Phase II project and must fall within the scope of the present Phase II project. The proposal will contain the following: 

The following sections count toward the 15 pages:

  • An Executive Summary of the Commercialization Plan
  • A discussion of the "New" R&D Activities (including how the third-party funding will be used to accelerate and/or expand commercialization
  • A summary of the third party investment

The following sections do not count toward the 15 pages:

  • Executed third party documentation for the investment match for Phase IIB SBIR funding
  • An updated milestone chart reflecting the additional year of effort.
  • A new Certificate of Current Cost Pricing Data
  • A new budget for the portion of the funds requested from NSF for the Phase IIB project and budget line item justification

The following are the steps for preparing the proposal using the FastLane system.

  • Go to the FastLane Home Page (www.fastlane.nsf.gov)
  • Select the "Proposals, Awards, & Status" link
  • Provide "Log in" information
  • Select Award and Reporting Functions
  • The next screen provides you with 6 Award and Reporting Functions.
    Select: "Supplemental Funding Request"
  • A List of Current Awards appears; highlight the award that you wish to prepare the supplement for; select: "Prepare Supplemental Funding Request.
  • The next screen Request for Supplemental Funding appears showing all the supplemental funding requests created for this award. Click on "Create New Supplemental Funding Request".
  • The Form Preparation Screen Appears (also note the supplemental request has a temporary proposal number assigned). Prepare the selected supplement using the "GO" buttons. The following information MUST be provided for each "GO Button":

Summary of Proposed Work

    • Executive Summary of the Commercialization
    • "New" R&D Activities Proposed

Justification for Supplement

    • Upload the "Executed Third-Party Documentation, Purchase Orders, Licensing Agreements, etc.

Supplementary Docs 

Upload the following documents (combine the two word documents and upload as one file). The Word templates for the Milestone Chart and the Certificate of Current Cost Pricing Data can be found at: http://www.nsf.gov/eng/sbir/forms.jsp

    • New Milestone Chart
    • Certificate of Current Cost Pricing Data


Revised Expiration Date:
 

Add 12 months (or 24 months for a Phase IIB over $250,000) to your current expiration date 

Budgets (including Justification) 

Prepare new budget for the Phase IIB activities (only the NSF funding). Make sure to budget one or two trips to the SBIR/STTR Phase II Grantees Conference depending on the length of the grant extension. Provide complete line item justification for ALL budget items The budget justification must include a statement that all budgeted rates do not exceed the rates awarded under the Phase II grant. Rates include salaries, indirect costs, fringe benefits, overhead, G&A, unit cost rates, etc. 

Add/Delete Non Co-PI Senior Personnel 
Use this module if personnel for the Phase IIB activities will change from the present Phase II project

  • Complete all required forms and then click on "Go Back"
  • At the "Request for Supplemental Funding" screen click on "Allow SRO Access"
  • At the "Sponsored Research Office (SRO) Access Control" screen, select "Allow SRO to view, edit and submit proposal"
  • A confirmation message stating that the SRO has access to the proposal will appear.
  • To actually submit the Phase IIB proposal the following steps will need to be performed. This can only be done by the individual that the company has designated as the "Authorized Organizational Representative" 
    • Go to the FastLane Home Page.
    • Select from the"Research Administration"tab
    • Provide Log in information.
    • From "Research Administration Functions" select the Submit Proposals to NSF GO button
    • In the Proposals in Progress Window, select "Submit" 

If you have problems or questions please contact the NSF FastLane Help Desk at 1-800-673-6188. Make sure to inform the Help Desk that you are submitting a Supplemental Funding Request.

Award and Payment Procedures

A Phase IIB applicant will be notified of the funding recommendation within 60 days of submission.

All third party investment funds upon which the Phase IIB supplement is made must be transferred to the company by the end of the Phase IIB supplement. Additionally, final payment for the original Phase II will be made at the end of the Phase IIB supplement.

The Phase IIB match will typically be released under the following schedule:

For Phase IIB supplements up to $250,000 (12 month extension) 50% will be released as the advance payment and 50% with an approved 6-month interim report.

For Phase IIB supplements greater than $250,000 (24 month extension) 25% will be released as the advance payment; 25% with an approved 6-month interim report; 25% with an approved 12-month interim report and 25% with an approved 18-month interim report.

* Payments will be released upon receipt of proof that the funds have been transferredfrom the third party to the NSF grantee, typically in the form of a bank statement. Therefore, the payment schedules above may be modified according to the details of the release schedule of the third party money if these funds are not provided up-front. That is, NSF funds (50% match) will only be disbursed at any given time according to the amount of third party funds for which NSF has been provided proof of receipt.

Reporting Requirements

In updating the milestone chart, the reports due during the Phase IIB supplement period should reflect the progress of both the Phase II and IIB programs using the standard progress report format. Upon completion of the Phase IIB, complete documentation, including initial Phase II as well as Phase IIB supplemental activities must be reported.

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