National Science Foundation
Small Business Innovation Research and Small Business Technology Transfer
1999 SBIR/STTR Phase I Program Solicitation and Phase II Instruction Guide

CHAPTER 3.0 Proposal Preparation Instructions and Requirements for SBIR Phase I

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3.1 Fundamental Considerations
3.2 General Requirements
3.3 Required Format
3.4 Proposal Cover and Project Summary Pages
3.5 Technical Proposal
3.6 Check List (Phase I)

3.1. Fundamental Considerations

3.1.1 Responsiveness to NSF Topics. Designate one, and only one, of the numbered topics listed in Chapter 8.0. The topic name and, if applicable, the appropriate subtopic letter, must be identified on the cover sheet. A firm may submit separate proposals on different topics or different proposals on the same topic under this Solicitation. Firms are encouraged to submit their best ideas in response to this Solicitation. Multiple submissions will not necessarily result in multiple awards.

Projects involving research on human subjects must ensure that subjects are protected from research risks in conformance with the Common Rule (Federal Policy for the Protection of Human Subjects). Awards involving human subjects will require grantee compliance with the NSF regulation, entitled, "Protection of Human Subjects," 45 CFR 690. Projects involving vertebrate animals will comply with the Animal Welfare Act (7 USC §§ 2131-59) and the regulations promulgated thereunder by the Secretary of Agriculture (CFR, Title 9, Subchapter A, Parts 1, 2, 3, and 4) pertaining to the care, handling and treatment of vertebrate animals held or used for research, teaching or other activities supported by Federal Grants. For more information reference the Grants Policy Manual at:

3.1.2 Phase I Proposal Objectives. A Phase I proposal must describe the research effort needed to investigate the feasibility of the proposed scientific or technical innovation. The objective of the Phase I effort must be to determine whether the innovation has sufficient technical merit for proceeding into Phase II.

3.1.3 SBIR/STTR Project Requirements. The deliverable item at the end of an SBIR/STTR Phase I grant shall be a professional quality report that justifies, validates, and defends the experimental and theoretical work accomplished. Furthermore, this report must demonstrate the basis for judgments about technical merit and feasibility of the innovation presented in the Phase I proposal, and it should connect the Phase I results to Phase II follow-on R/R&D and commercial applications.

The deliverable item for Phase II grants shall be a professional quality report that addresses the results of the project, validating the innovation and the potential for implementation of commercial applications.

3.1.4 Unacceptable Objectives. Proposed efforts directed toward systems studies; market research; commercial development of existing products or proven concepts; straightforward engineering design for packaging or adaptation to specific applications; studies, laboratory evaluations; incremental product/process improvements; and modifications of existing products without innovative changes are examples of projects that are not acceptable for SBIR/STTR.

3.1.5 Multiple Proposal Submissions. A proposer may submit any number of different proposals based on different unique innovations to any number of topics or to specific subtopics. Multiple proposals based on a single unique innovation is discouraged.

If duplicate proposals or equivalent proposals are submitted to different topics, all proposals but one will be deemed inappropriate and returned without further consideration.

3.2 General Requirements

3.2.1 Page Limitation. A Phase I SBIR/STTR proposal shall not exceed a total of 25 standard 8 1/2 inch X 11 inch (21.6 X 27.9 cm) pages, including cover page, budget, and all enclosures or attachments (except for the exempted documents noted below). Margins shall be 1.0 inch minimum (2.5 cm). All material submitted, except for the exempted documents, will be included in the page count. Samples, videotapes, slides, or other ancillary items will not be accepted. Proposals exceeding the 25-page limitation will be rejected and returned without consideration.

3.2.2 Type Size and Spacing. No type size smaller than 10 point is to be used for text or tables, except as legends on reduced drawings and for inserted letters of consultant support. Proposals prepared with smaller font sizes will be rejected and returned without further consideration.

If constant spacing is used, there should be no more than 12 characters per 2.5 cm, whereas proportional spacing should provide no more than an average of 15 characters per 2.5 cm.

3.3 Required Format.

The required format for a Phase I NSF SBIR proposal is described in the following paragraphs. All required items of information are to be covered fully in the prescribed "Part" order (shown below), but the space allocated to each will depend on the project chosen and the proposer's approach. Promotional and non-project-related material should not be included.

Each proposal submitted to the NSF SBIR program must contain the following parts in the order presented:

1. Proposal Cover Page and Certification Page (Attachment B and Certification Page).
2. Project Summary (Attachment C).
3. Information about Principal Investigator/Project Directors (Attachment A)
4. Technical Proposal (12 parts), including graphics, and starting at page 3 with a table of contents.
5. Summary Proposal Budget (Attachment D) and Budget Explanation Page (also required for each subawardee).
6. Company Commercialization History (Section 3.5, Part 12 ).

All of these parts must be presented within the 25-page limitation. The Certification Page, the Information about Principal Investigator/Project Directors, budget instruction page, and the Company Commercialization History do not count towards the page count.

Each proposal should be reviewed carefully by the proposer and by others knowledgeable on the subject to ensure inclusion of enough substantive information for evaluation of technical merit and commercial potential. NSF reserves the right not to submit to technical review any proposal that it finds to have insufficient scientific, technical, or commercial potential information; these proposals will be deemed inappropriate and returned without further review.

3.4 Proposal Cover Page and Project Summary. The Proposal Cover Page and the Project Summary are public information and the Government may disclose them. Do not include proprietary information on these pages.

3.4.1 Page 1: Proposal Cover Page and Certification (NSF Form 1207). A Proposal Cover Page is provided as Attachment B (for SBIR Phase I proposals). The second page is the Certification Page, and this MUST BE completed, fully signed and included only with the original copy of the proposal; it should not be included with any of the other copies of the proposal. The Certification Page is a required document for all NSF SBIR proposals; proposers not meeting this requirement will have all proposals returned without further consideration. The title shall be concise, technically valid, intelligible to the nonspecialist, and suitable for use in the public press. If acronyms are used in the title, they must be spelled out. NSF may edit the title of the project before making an award.

3.4.2 Page 2: Project Summary (NSF Form 1307). The Project Summary page is provided as Attachment C. The Project Summary should be written in the third person. The summary should begin as follows: "This Small Business Innovation Research Phase I project...." The technical abstract is limited to 200 words and should not reveal proprietary information. Include a brief identification of the problem or opportunity, the research objectives, a description of the research, and the anticipated results, and potential applications of the research. Complete the sections entitled Key Words and Potential Commercial Applications of the Research.

In the event of an award, the Project Summary page will become public information. NSF may edit the Project Summary before making it information public.

3.4.3 Information about Principal Investigator/Project Directors (NSF Form 1225). The Information about Principal Investigator/Project Directors is provided as Attachment A. Attach this form to the proposal marked "original" and it should follow the Certification Page in the original proposal. This form is not included in the page count nor does it go to reviewers.

3.5 Technical Proposal. The technical proposal shall contain the following parts in the following order. (Note: Parts that are not applicable must be included and marked "Not Applicable".)

Part 1: Table of Contents. Page 3 of the proposal shall begin with a brief table of contents indicating the page numbers of each of the sections of the proposal.

Part 2: Identification and Significance of the Innovation. The first paragraph of Part 2 shall contain (1) a clear and succinct statement of the specific innovation proposed and why it is an innovation, and (2) a brief explanation of how the innovation is relevant and important to meeting the need described in the topic narrative. Include anticipated benefits to the nation.

Part 3: Phase I Technical Objectives. List and explain a few measurable, specific objectives to be accomplished in the course of the Phase I research, including the questions that must be answered to determine the technical and commercial feasibility of the proposed concept. Briefly describe the relationship to Phase II and Phase III efforts.

Part 4: Phase I Research Plan. This section must provide a detailed description of the Phase I research approach. The description should indicate what is planned and how the research will be carried out. It should include a technical discussion of the proposed concept, the methods planned to achieve each objective or task, and the sequence of experiments, tests, and computations involved. The research plan should be linked to the objectives and the questions which the Phase I research effort is designed to answer.

Discuss problems or obstacles to be overcome which would determine whether or not the proposed concept is feasible. Also, anticipate the questions and concerns that reviewers may have with regard to your research plan and respond to these issues in this section.

Scheduling and staff activity charts are encouraged. Such charts may include tasks, scheduled completion dates, and decision points. They may also indicate which tasks are starting points for Phase II work. Proposers are advised to avoid including proprietary information if at all possible. See Chapter 5.0, Section 5.4 that deals with treatment of proprietary information.

Part 5. Commercial Potential. NSF will evaluate this section to assess the commercial potential of your concept. Based on the experience of a number of successful small business innovations, the following key questions can serve as a useful frame of reference to guide you at this stage in developing a strategy for commercialization. These include the following:

    · What are the potential customer needs that your type of product will fulfill?
    · Who are the customers?
    · How do customers satisfy those needs today and at what cost?
    · How big is the total market? (This is the number of customers with the needs times the cost for meeting the needs.)
    · What are the major trends affecting this market and what is the outlook?
    · What are the competing methods for fulfilling those needs?
    · Who are the competitors?
    · Why will customers choose your type of product over doing nothing or using competing approaches? (The answer should be made in the context of the economics of the customer's business.)
    · How will you make and deliver your products?

As these questions suggest, the central issue for commercialization of research results is how well and efficiently current and/or emerging customer needs might be fulfilled. Even if an innovation is likely to be more economical or effective, arguments still need to be made showing that a significant number of potential customers would indeed adopt the innovation. Thus, ultimately a careful description of the scope of the market is important for the evaluation. Such a description would include not only estimates of direct applications of the innovative technology, but also, where appropriate, imaginative applications which might be envisioned to emerge during the three-to-five year period when research and commercialization activities would take place.

One approach for organizing commercialization information would be to describe a set of future circumstances under which application of the innovation might be realized, while a second approach could focus on defined customer needs and the proposed product's ability to meet them. A plausible argument should be constructed about how the successful Phase I and Phase II research projects would mesh with the anticipated and/or current market needs, resulting in a highly successful commercial outcome. Either of these approaches could provide a coherent "story line" which will be useful not only in developing a strategy for commercialization, but also in the sections of the proposal describing significance, technical approach, research, and participants.

At the Phase I stage, the above questions should serve to direct and help you organize your thinking about the crucial issues of commercialization. By the time you get to Phase II, your strategy for commercialization should have evolved to a plan for commercialization with the answers to most of the above questions being well specified. A comprehensive assessment of the commercial potential of applications of research results based on the proposing organization's description of its commercialization plan, will take place at the Phase II stage.

Phase I awardees are encouraged to think early about potential commercial applications of their research with the same depth and creativity as they devote to the research problem itself. There may be diverse and distinct applications of the same research, which have excellent commercial potential. By identifying multiple product/process applications such as those in emerging technology areas, Phase I awardees can identify potential partners, sources of funding commitments, and new markets. "Market pull" is the factor for successful commercialization of SBIR/STTR projects.

Some of the strategies for commercializing your SBIR/STTR results are as follows:

    · Finance and do your own R&D, manufacturing, and marketing of the product;
    · Form a joint venture to do the R&D, manufacturing, and marketing of the product;
    · Subcontract the manufacturing to a competent company in the field but retain the marketing function;
    · Enter into a marketing agreement with a third party in the field but retain the manufacturing function; or
    · License to other companies for separate markets, geographical areas, specific product lines, or foreign markets.

A useful reference that a small company may use to develop a commercialization plan, is the Business Plan for Scientists and Engineers (this is a suggestion not an endorsement) offered by:

Dr. Jenny Servo, President
Dawnbreaker, Inc.
2117 Buffalo Road, Suite 193
Rochester, NY 14624
Phone: (716) 264-0510
Fax: (716) 264-0782

Part 6. Company Information and Management Team. Significant consideration is placed on a company's current technical and administrative posture and plans for future growth. As part of this section you are required to state the number of employees and the distribution into the following categories:

    · Technical
    · Administrative (including legal)
    · Management
    · Manufacturing (including sales)

Indicate number of full time and part time employees.

For young or newly formed companies please address future staffing plans.

Please state company's financial record for the past year specifying income for each of the following areas:

    · Sales
    · Licensing
    · Contracts and Consulting
    · Other

The management team is a very important element in bringing research to commercialization. Identify key personnel involved in Phase I activities including their directly related education, experience, and bibliographic information. Where vitae are extensive, summaries that focus on the most relevant experience or publications are desired and may be necessary to meet proposal page and font requirements. Key personnel are the principal investigator and other individuals whose expertise and functions are essential to the success of the project. The principal investigator and senior personnel must be employees of the small business concern.

This part shall also establish and confirm the eligibility of the principal investigator (see Chapter 1.0, Section 1.4.4), and indicate the extent to which other proposals recently submitted or planned for submission in 1999 and existing projects commit the time of PI concurrently with this proposed activity. Any attempt to circumvent the restriction on PIs working more than 49% for any other company or non-profit organization by substituting an ineligible PI will result in rejection of the proposal. Letters regarding employment releases and certifications of intent shall be required prior to an award and should be included with the proposal. It is important to start early on in determining who are the current and anticipated management team members. In Phase II the management plan becomes an important consideration in determining the company's ability to take Phase I results through Phase II and ultimately to commercialization.

Part 7. Consultants and Subawards. For SBIR Phase I project, a minimum of two-thirds of the research must be performed by the small business concern. Anticipated consultant services should be justified and information furnished on each individual's expertise, primary organizational affiliation, normal daily compensation rate, number of days of expected service, and how his or her efforts will contribute to the project. In addition, proposers must provide a signed statement from each consultant, whether paid or unpaid, confirming his/her availability and commitment, role in the project, and agreed consulting rate. Payment for a consultant's services, exclusive of expenses, may not exceed the consultant's normal rate or the daily maximum rate established annually by NSF, whichever is less. The NSF maximum consultant rate of $453 per day is the limit for personal compensation and is exclusive of any indirect costs, travel, per diem, clerical services, fringe benefits, and supplies.

Include signed statements from consultants which address the availability, time commitment, research role in the project, and daily rate of the consultant (not exceed $453 per day). The number of days on the project may be specified in the consultant's statement or by referencing the proposal. Failure to include the statements will result in return of the proposal.

If subawards (including contracts, subcontracts and other arrangements) are used for research, describe the tasks to be performed and how these are related to the overall project. No significant part of the research or substantive effort under a NSF grant may be contracted or otherwise transferred to another organization without prior NSF authorization (this excludes the procurement of items such as commercially available supplies, materials, equipment or general support services allowable under the grant). The intent to enter into such arrangements should be disclosed in the proposal.

Each subaward shall use a Summary Proposal Budget form (Attachment D), providing detail of subaward costs by cost category. The subawardee project director and an authorized subaward company representative must sign the subaward budget form. Also enter the total amount under Subawards (Line G.5) of the budget for the overall project.

Purchases of analytical or other routine services from commercial sources and the acquisition of fabricated components from commercial sources are not regarded as reportable subaward activity. Such items -- routine analytical or other routine services -- should be reported in the Budget under Other Direct Costs/Other (Item G.6). All research, including subaward and consultancy, must be carried out in the U.S.

Remember: Include Proposal Budget forms signed by both the subawardee project director and company representative for each subaward.

Part 8. Equipment, Instrumentation, Computers and Facilities. Provide a description that specifies significant equipment, instrumentation, computers, and physical facilities necessary to complete that portion of the research that is to be carried out by the proposing firm in Phase I. Do not list equipment, instrumentation, computers, and facilities that are not necessary for the proposed project.

If the equipment, instrumentation, computers, and facilities for this research are not the property (owned or leased) of the proposing firm, include a statement signed by the owner or lessor which affirms the availability of these facilities for use in the proposed research, reasonable lease or rental costs for their use, and any other associated costs. A statement confirming the availability of facilities for use necessary for the proposed effort should be submitted with the proposal.

When purchasing equipment or a product under the SBIR/STTR funding agreement, purchase only American-made items whenever possible.

Part 9. Equivalent or Overlapping Proposals to other Federal Agencies. A firm may elect to submit proposals for essentially equivalent work under other Federal program solicitations or may have received or expect to receive other Federal awards for essentially equivalent work. In these cases, the proposer MUST inform NSF of related proposals and awards and must first certify on the Proposal Cover page whether the proposer (a) has received Federal government awards for related work, or (b) has submitted currently active proposals for similar work under other Federal government program solicitations or intends to submit proposals for such work to other agencies during 1999. For all such cases, the following information is required:

    · The name, address and telephone contact of the sponsoring agency to which the proposal was or will be submitted;
    · Date(s) of proposal submission(s);
    · Title, number, and date of Solicitation under which the proposal was submitted or will be submitted;
    · Title and performance period of the proposal; and
    · Name and title of Principal Investigator (person-months (per year) (calendar-months) devoted by any personnel on the equivalent or overlapping project who overlap with PI and senior personnel on this proposal)

If no equivalent or overlapping proposals are under consideration, state none. NSF will not make awards that essentially duplicate research funded (or expected to be funded) by other agencies, although in some cases NSF may fund portions of work described in an overlapping proposal provided that the budgets appropriately allocate costs among the various sponsors. IF A PROPOSER FAILS TO DISCLOSE EQUIVALENT OR OVERLAPPING PROPOSALS AS PROVIDED IN THIS SECTION, THE PROPOSER COULD BE LIABLE FOR ADMINISTRATIVE, CIVIL, OR CRIMINAL SANCTIONS.

Part 10. Current and Pending Support of Principal Investigator and Senior Personnel. This section should show that the Principal Investigator and senior personnel have the time available to perform the proposed research during the grant period. The proposal should provide information about all research to which the Principal Investigator and other senior personnel either have committed time or have planned to commit time (in the event that other pending projects are supported during the SBIR/STTR Phase I period of performance), whether or not salary for the person involved is included in the budgets of the various projects. If none, state none.

For all on-going or proposed projects, excluding any proposals cited above in Section 3.5, Part 9, Equivalent or Overlapping Proposals to other Federal agencies, or proposals that will be submitted in the near future, involving the Principal Investigator or senior personnel, provide the following information:

    · Name of sponsoring organization;
    · Title and performance period of the proposal; and
    · Person-months (per year) (calendar months) devoted to the project by the Principal Investigator and each of the senior personnel.

A Current and Pending Support statement should be included in the proposal at the time of submission.

Part 11. Summary Proposal Budget. The NSF SBIR Summary Proposal Budget (Attachment D) must be used for SBIR/STTR Phase I and Phase II proposals. Read the Instructions for Use of Summary Proposal Budget on the reverse side of the budget page and provide the required explanation of budget items. Budget estimates must be shown in detail on a budget explanation page. The budget must be signed by both the Principal Investigator and an authorized company officer and may not exceed $100,000 (including a fee of up to 7%) for the SBIR Phase I proposal. The budget should reflect the cost for work to be done only after the effective date of the award. Note that an awardee may not expend funds for any costs associated with the project before the effective date of the award document signed by the NSF Grants Officer.

List the Principal Investigator and senior personnel by name with their time commitments budgeted in person-months (in the column headed by "CAL," which is an abbreviation for calendar, determine time to the nearest tenth of a person-month) and the dollar amount for the performance period. For example, the Principal Investigator for the SBIR Phase I award performance period (typically a 6-month effort), the PI must commit at least one person-month to the proposed effort.

The reimbursement rates for consultants are a direct cost that cannot exceed the maximum daily rate paid to an Executive Level IV or equivalent, currently $453 per day. Indicate the number of days proposed per consultant. Consultant travel should be shown under the travel category. Note, Consultant travel counts toward the one-third maximum effort not performed by the small business concern. Include details on travel locations, purpose, and per diem estimates.

The budget should indicate in general terms the type of expendable materials and supplies required with their estimated costs. The breakdown should be more detailed when the cost is substantial, i.e., more than $5,000.

Permanent equipment and foreign travel cannot be included in the SBIR Phase I budget. One trip to the National Science Foundation to attend Grantees Workshop and to discuss researchprogram with SBIR/STTR Program Manager must be included in the Phase I budget.

Reasonable fees (estimated profit) will be considered under both phases of the solicitation. The amount of the fee approved by NSF will not exceed seven percent (7%) of total indirect and direct project costs. Cost sharing is permitted; however, it is not required nor will it be a factor in the evaluation of a proposal.

Total NSF funding for the SBIR Phase I may exceed $100,000 only under the conditions described under Facilitation Awards for Scientists and Engineers with Disabilities.

Part 12. Prior SBIR/STTR Phase II Awards (this part of the proposal does not count towards the page limit). Firms that have received one or more SBIR/STTR Phase II awards from NSF or other Federal agencies must submit a report on Company Commercialization History. If a company has never received a SBIR/STTR Phase II award, under the Part 12 heading state zero awards. The following are necessary components for Part 12:

1. Firm Name:
2. Number of SBIR/STTR Awards Firm Received from the Federal Government:
3. Percentage of the Firm's Revenues the Last Fiscal Year from Federal SBIR and/or STTR funding:
4. Identify each Phase II SBIR/STTR project the firm has received (include award number)
5. Total revenue to Date From Resulting Sales of New Products to Government Agencies or Private Sector Customers.
6. Funding Received from Government Sources:
7. Funding Received from Private Sources:

Using the following definitions to determine your responses to this section. Sales - sales of products resulting from the technology associated with the Phase II project. Sales also include the sale of technology or rights. Specify the sales revenues in dollars (1) to government agencies (federal, state, local and/or foreign) and (2) to the private sector. Include sales made by your firm as well as by other firms that may have acquired the SBIR/STTR-developed technology. Non-SBIR/STTR funding - government or private sector funds to further develop the technology (including R&D, manufacturing, marketing, etc.) associated with this Phase II project. Apportion sales/funding - if two or more Phase II projects contributed to a single product or technology right that has been sold or received non-SBIR/STTR funding among the contributing projects. For example, Phase II projects A and B lead to the sale of a new product/process/software the DoD for a total of $10 million and to retail software stores for $12 million. Under the heading "Government Sales" put $5 million and under the heading "Private Sector Sales" put $6 million for both Phase II projects A and B.

8. Apportion Sales Revenue and Non-SBIR/STTR Funding Amount of the various Phase II projects without double counting:
    · Government Sales:
    · Private Sector Sales:

3.6 Check List

The proposal check list included in this Solicitation is provided to assist the proposer in completing a responsive proposal. It should not be submitted with the proposal. SBIR/STTR Phase I Check List