Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) - Phase IB Supplement

Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) – Phase IB Supplement

A. Phase IB Supplement Objectives
B. Eligibility for Phase IB
C. Phase IB Proposal Preparation
D. Review of Phase IB Proposals
E. Award Recommendation
F. Payment and Release of Funding
G. Reporting Requirements

AWARD INFORMATION

• Awards will be made as supplements to active SBIR/STTR Phase I awards (except those on a no-cost extension);
• The maximum supplemental award is $50,000 of NSF funding based on $100,000 of outside funding;
• For outside funding less than $100,000, the supplemental amount of NSF funding is determined on the basis of 50% of funding provided by the outside party;
• A minimum of $40,000 of outside funding is required to be eligible for the supplemental grant; and
• When the supplemental grant is awarded, the period of performance of this original grant is extended by up to six months. Note – a Phase IB does not extend the original eligibility dates for submission of the Phase II proposal.

A. Phase IB Supplement Objectives

Phase IB supplements to Phase I grantees are intended to foster partnerships between strategic partners and investors and the SBIR/STTR companies. NSF is offering a mechanism to advance Phase I research and bridge the gap between Phase I and Phase II funding while at the same time encouraging partnering as a means to increase the potential for SBIR/STTR grantees to successfully commercialize their technology.

Through this supplemental program, small businesses will be able to effectively leverage funding and investment from interested outside parties on the technology funded in Phase I that could lead to successful commercial products and processes and at the same time provide some of the gap funding required to carry the grantees' effort from Phase I to Phase II. It is anticipated that this research collaboration will not only benefit the small business enterprise but also provide a cost-effective, timely, and risk-reduced approach for large corporations and investors to participate in the development of new technologies, products and services having potentially high commercial impact.

The Phase IB Option is only available for current SBIR and STTR Phase I grantees. The Phase IB Option's aim is to bridge the gap funding between Phases I and II. The Phase IB Option will provide additional funds to Phase I grantees that are able to obtain third party investment to support the project. The objective of the Phase IB Option is to extend the R&D efforts beyond the current grant to meet the product/process/software requirements of a third party investor to accelerate the Phase I project to the commercialization stage and enhance the overall strength of the commercial potential of the subsequent Phase II project. The Phase IB Option extends the Phase I grant for six months and the combined Phase I and IB will typically not exceed one year in duration for the SBIR grant and one and one half years for the STTR grant. The Phase IB option only applies to Phase I grants that are active on the day these supplement proposals are due. There is no resubmission at a later date if a Phase IB proposal is declined. Phase I grantees on a no-cost extension are not eligible for a Phase IB award (for further information, contact your Program Officer). Both active SBIR and STTR Phase I grantees are eligible to apply for Phase IB funding but please note -- Eligible Phase I grantees have one option to submit a Phase IB in the SBIR case and one option but two potential submission dates in the case of a STTR. These are October 15th and April 15th of your current Phase I grant period.

B. Eligibility for Phase IB

The following two criteria must be met to qualify a company to participate in the Phase IB process:

1. Grantee has an active Phase I SBIR or Phase I STTR grant (not on a no-cost extension) and

2.Fully executed funding commitment (reference definition of third party investor) greater than $40,000.

Organization Limit: Only currently active SBIR/STTR Phase I grantees that are not in a no-cost extension period are eligible to submit proposals for supplemental funding under this Phase IB option.

PI Eligibility Limit: The Principal Investigator must be the PI of an active SBIR/STTR Phase I award.

Outside Funds Eligibility: The eligible outside funding consists of investment from industrial partners, venture capitalists, angel investors, and non-SBIR/STTR grants and contracts from State and Federal Governments directly tied to the research project envisioned by the Phase I application and its logical extension into Phase II and commercialization.

The third party investor must commit a minimum of $40,000. NSF will match up to 50% of the outside funds committed up to a maximum of $100,000. The maximum for the NSF portion of the Phase IB supplement is $50,000. The additional NSF funds can be used only for advancing research related to elements of the project. The third-party investor funds can be used for research or other business related efforts in order to accelerate the innovation to commercialization of this project. Market research, advertising, patent applications and refining of the business plan are good examples of uses for the third-party investor funds. A fully executed funding document(s) from the third party investor must specify the amount of the investment, the method by which the investor will provide the funding to the company, and that the funds will be dedicated to fund the technology developed in this project.

The third party funding can be cash, liquid assets, or tangible financial instruments. However, in-kind or other "intangible assets" cannot be used. Loans and investments with contingency clauses are also not acceptable. Self-funding does not qualify for the Phase IB option.

The following table provides a succinct way to describe to the NSF and reviewers the source of the outside funding being leveraged by the NSF Phase IB award. The Phase IB supplemental proposal is required to have the Phase IB data table as part of the IB application (see table below).

Limit on Number of Proposals: One per active Phase I grant.

C. Phase IB Proposal Preparation

Phase IB proposals MUST be submitted using FastLane ( www.fastlane.nsf.gov/fastlane ).

Proposals must be submitted according to the instructions for submitting supplemental funding requests found on the SBIR/STTR home page http://www.nsf.gov/eng/iip/sbir under Supplemental Requests.

Proposals must address two issues:

The research activities that will be funded by the NSF to strengthen the project's scientific and engineering feasibility; and

The business development and marketing activities that will be supported by the outside funds.

The Phase IB proposal shall not exceed 15 pages. The additional work proposed should be an expansion of the technical work being performed in the Phase I project and must fall within the scope of the present Phase I project and its logical path to commercialization.

The proposal will contain the following sections:

New R&D Activities Section – This section should not exceed the 15 pages limit. A discussion of the "New" R&D Activities (including how the third party funding will be used to accelerate and/or expand commercialization).

Project Information – Note: The following items do not count toward the 15 pages:

* A new budget for the portion of the funds requested from NSF for the Phase IB project and budget line item justification

* Phase IB Data Table

* Fully executed funding documents

Do not submit the proposals more than thirty days prior to the deadline.

Steps for preparing the proposal using the FastLane system:

1. Go to the FastLane Home Page (www.fastlane.nsf.gov)

2. Select from the left hand-side of the page the "Proposals, Awards and Status" link

3. Provide your Last Name, SSN, and Password. Click on "Login"

4. Select from the Principal Investigator (PI)/Co-Principal Investigator (Co-PI) Management Screen the option entitled "Award and Reporting Functions"

5. Select the "Supplemental Funding Request" link

6. A List of Current Awards will appear. Highlight the award you are preparing the Phase IB proposal for and then click "Prepare Supplemental Funding Request"

7. Highlight award number (it should already be highlighted) and then click on "Create New Supplemental Funding Request"

8. At the Form Preparation Screen, 6 "GO" buttons appear. The following information MUST be provided in each:

GO Summary of Proposed Work
- Executive Summary of the Commercialization
- "New" R&D Activities Proposed

GO Justification for Supplement
- Upload the “Third Party Commitment Letters, Purchase Orders, Licensing agreements, etc.

GO Supplementary Docs
- Phase IB Data Table. The word template for the Phase IB Data can be found at: http://www.nsf.gov/eng/iip/sbir/PhaseIBDataTable.doc

GO Revised Expiration Date:
- Add 6 months to your current expiration date

GO Budgets (including Justification)
- Prepare new budget for the Phase IB activities (only the NSF funding). 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 I grant. Rates include salaries, indirect costs, fringe benefits, overhead, G&A, unit cost rates, etc.
• All items listed under materials and supplies should be accompanied by price quotes and/or invoices. If the prices come from catalogs then identify the catalog. In the Phase IB, no capital equipment purchases are allowed.
• Trips should be broken down and conferences should be identified accompanied by the name of the person presenting research results. Only the person presenting results will be able to charge to this award.

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

9. Complete all required forms and then click on "Go Back"

10. At the "Request for Supplemental Funding" screen click on "Allow SRO Access"

11. At the "Sponsored Research Office (SRO) Access Control" screen, select "Allow SRO to view, edit and submit proposal" Common Error – All grantees have a SRO no matter how small. This step must be completed separately on FastLane from PI functions.

12. A confirmation message stating that the SRO has access to the proposal will appear.

13. To actually submit the Phase IB 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 left hand-side the "Research Administration" link

* Provide your Last Name, SSN, and Password.

* From the "Research Administration Functions for Your Company" select the

"Submit Proposals to NSF" GO button

* In the Proposals in Progress Window, highlight the proposal and then select "Submit"

14. 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.

D. Review of Phase IB Proposals

All Phase IB proposals will be reviewed by a minimum of three experts in the research and commercially related areas. Each proposal will be reviewed based on the review criteria below:

Criterion: What is the intellectual merit of the proposed activity?

1. Is the proposed plan a sound approach to strengthening the Phase I technology and to what extent does the proposal enhance the Phase I research (e.g., innovative measurements, methods, experiments, evaluation studies or further understanding of the technology)?

2. How well qualified are the research team and other key staff to conduct the proposed activity?

3. Is there sufficient access to resources (e.g., materials and supplies, analytical services, equipment, facilities, and etc.)?

4. Does the proposed research demonstrate a clear connection to the commercialization of the research?

Criterion: What are the broader impacts of the proposed activity?

1. Does the proposed research serve to enhance the commercial competitiveness of this Phase I technology?

2. Does the proposed research lead to enabling technologies (instrumentation, software, and etc.) for further discoveries?

3. What may be the societal benefits of the proposed activity?

4. Does the proposed project broaden the participation of under-represented groups?

E. Award Recommendation
It is the goal of the Division that Phase IB applicants be notified within 30 days from submission deadline of tentative award recommendation. Due to the rapid turnaround required, the applicant should provide all financial documentation on filing this supplement to support the NSF match. No award will be made without suitable financial documentation.

F. Payment and Release of Funding
The combined Phase I/IB award will be released under the following schedule:

1.100% of the Phase IB funds will be released when the supplement is awarded, by either Jan 1 or July 1.

2. The final payment on the original Phase I grant will be postponed and made at the end of the Phase IB supplement on the acceptance of a satisfactory final report.

G. Reporting Requirements

A single Final Report is due for the Phase I and its IB supplement that should reflect the progress of both the Phase I and IB programs using the standard progress report format, including updating of the milestone and expense charts. The final reporting documents will now be required at the end of Phase I/IB. Upon completion of the Phase IB, complete documentation, including initial Phase I as well as Phase IB supplemental activities must be reported.

Please note: Phase I grantees exercising the Phase IB option must provide an interim report for their original Phase I grant at the end of six months for a SBIR grant or at the end of twelve months for a STTR grant. This interim report provides a summary of accomplishments of the original Phase I grant that is acceptable for submission with the Phase II proposal in lieu of a formal final report. The final Phase I/IB report will include all Phase I and Phase IB activities.

Contact Personnel:

Questions about this letter should be directed to Errol Arkilic (703-292-8095, earkilic@nsf.gov), Thomas Allnutt (703-292-5332, tallnutt@nsf.gov) or Muralidharan S. Nair (703-292-7059, mnair@nsf.gov ), SBIR/STTR Program, Division of Industrial Innovation and Partnerships, Directorate for Engineering.