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 5.0 Considerations

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5.1 Awards
5.2 Reporting Requirements
5.3 Payment Schedule for SBIR/STTR Phase I and II
5.4 Accounting Systems (only used for SBIR/STTR Phase II Proposals)
5.5 Treatment and Protection of Proposal Information
5.6 Rights in Data Developed Under SBIR Grants
5.7 Copyrights
5.8 Patents
5.9 Supplemental Funding - Research Experiences for Undergraduates (REU)
5.10 Management Responsibility
5.11 Accuracy of Information
5.12 Audits
5.13 Changes in Organization or Principal Investigator Status
5.14 Inconsistencies

5.1 Awards

SBIR/STTR Phase I and Phase II awards are subject to availability of funds. NSF has no obligation to make any specific number of SBIR/STTR Phase I or Phase II awards based on this solicitation, and may elect to make several or no awards in any specific technical topic or subtopic.

SBIR/STTR Phase I awards are fixed-price grants and will not exceed $100,000. Typically, about one-third of those grantees that receive SBIR/STTR Phase I awards will apply for SBIR/STTR Phase II awards. The SBIR Phase II fixed-price grants typically will not exceed $400,000 per award and the STTR Phase II fixed-price grants typically will not exceed $450,000 per award. SBIR/STTR Phase II awards normally will be made for a 24-month period of performance.

Reasonable fees for profit will be considered under both phases of the solicitation. Cost-sharing is permitted, however, it is not required, nor will it be a factor in the evaluation of a proposal.

Prior to making an award, the Foundation may require certain organizational, managerial, and financial information for various administrative purposes. Ifa proposal is seriously being considered for Phase II funding, a pre-award budget review will be conducted by NSF. The submitting small business concern will be requested at that time to provide documentation which supports the costs proposed. This information should be returned to the requesting office as expeditiously as possible (see Chapter 5, Section 5.4.2, Certification of Current Cost or Pricing Data Supporting Documentation Requirements, for specific documentation requirements).

NSF is not responsible for any expenditures made by the offeror before award of any grant resulting from this Solicitation.

After a Phase II proposal has been recommended for award by the SBIR Program Office, approximately 60-90 days will be required for processing by the Division of Grants and Agreements (DGA) and the Division of Contracts, Policy, and Oversight, Cost Analysis and Audit Resolution Branch (CAARB).

5.2 Reporting Requirements. SBIR/STTR Phase I grantees must submit a Final Report; Phase II grantees also submit progress reports as discussed below. Both Phase I and Phase II Final Reports must carry the following acknowledgment and disclaimer on the cover page: "This material is based upon work supported by the National Science Foundation under award number ____________. Any opinions, findings, and conclusions or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the National Science Foundation." Acknowledgment of NSF support and the disclaimer also must appear in publications of any materials whether copyrighted or not, including software, product literature accompanying sales, and any written material about the product, technique, or process, based on, or developed under, NSF-supported projects. The disclaimer may be omitted from any articles or papers published in scientific, technical, or professional journals.

All reports should be sent to the following address:

National Science Foundation
Small Business Innovation Research Program
4201 Wilson Blvd., Room 550
Arlington, VA 22230
Attn: SBIR AWARD #

5.2.1 Phase I Reporting.

SBIR Phase I. The SBIR Phase I Final Report using the Cover Page (Attachment E) and electronically submitting a NSF Final Project Report (http://www.fastlane.nsf.gov/cgi-bin/NSF_PrjRpt) are required parts for a SBIR Phase I grant. Twelve (12) copies of a comprehensive SBIR Phase I Final Report, not to exceed 30 pages in length and the electronic submission of the NSF Final Project Report fulfills the NSF reporting requirements for a SBIR Phase I grant. The SBIR Phase I Final Report should be submitted by the 15th day of the month following the end of the SBIR Phase I six-month grant performance period.

STTR Phase I. The SBIR/STTR Phase I Final Report Cover Page (Attachment E) and electronically submitting a NSF Final Project Report (http://www.fastlane.nsf.gov/cgi-bin/NSF_PrjRpt are required parts for a STTR Phase I grant. Twelve (12) copies of a comprehensive STTR Phase I Final Report, not to exceed 30 pages in length and the electronic submission of the NSF Final Project Report fulfills the NSF reporting requirements for a STTR Phase I grant. The STTR Phase I Final Report should be submitted within 30 days after the end of the STTR Phase I 12-month grant performance period.

SBIR/STTR Phase I Final Report. Both the SBIR and STTR Phase I Final Report shall begin with a verbatim statement of Phase I objectives from the proposal followed by a summary description of the research carried out, the research findings or results, and the potential commercial applications of the research. The balance of the report should then describe in detail these same topics as well as the problems addressed and estimate of technical feasibility.

The Phase I Final Report, including technical data, may be made available to the public except for that portion of the report containing technical data properly identified and marked as set forth in Chapter 5, Section 5.5, Treatment and Protection of Proposal Information. To the extent permitted by law, except for evaluation purposes, the Government will not release properly identified and marked technical data outside the Government without the approval of the grantee for a period of four (4) years from the expiration of a Phase II grant or from the expiration of the Phase I grant, when no Phase II award is made. The Phase I Final Report will be sent by NSF to the National Technical Information Service (NTIS) four years following expiration of the Phase II grant or four years from the expiration of the Phase I grant when no Phase II award is made.

NSF Final Project Report. The final report should be submitted to NSF electronically (https://www.fastlane.nsf.gov.cgi-bin/NSF_PrjRpt) as part of the SBIR final reporting process. A SBIR/STTR Phase II proposal cannot be processed until the SBIR Phase I Final Report and the NSF Final Project Report have been received from the grantee and accepted by NSF.

5.2.2 SBIR/STTR Phase II Reporting. Phase II grantees must submit Semi-Annual Progress Reports. In addition the SBIR Phase II Final Report must contain two copies of the SBIR Phase II Final Report, the Commercialization Report (see below) as well as electronically submitting the NSF Final Project Report (see reference above). The SBIR Phase II Final Report and the Commercialization Report must be submitted together no later than 90 days following the expiration of the grant. Final payments will not be made and pending or future proposals will not be processed until the SBIR Phase II Final Report, the Commercialization Report and the NSF Final Project Report are on file.

Semi-Annual Progress Reports showing the results of your efforts under Phase II grants are a requirement and must be submitted using the SBIR/STTR Phase II Report Cover Page(Attachment I). The report is typically 3-5 pages in length. In addition, see theSBIR Phase II General Grant Conditions, Article 5, (https://www.nsf.gov/cgi-bin/getpub?sbirii). These reports provide information which justifies progress payments. Inadequate content, format, or time expenditure details will delay approval of progress payments.

Under the standard payment schedule for Phase II grants (24-months), one report is required within one month after the end of each respective progress period. The SBIR/STTR Phase II Progress Reporting Format can be found in Attachment J.

Each semi-annual progress report is required to contain an updated Project Milestone Chart as discussed in Chapter 10, Section 10.2, Part 13. Each chart should reflect the cumulative effort and expenditures. In addition to an updated milestone chart, these reports must include an attachment providing details about progress and/or completion of approved milestones.

In addition to providing a full technical report, not to exceed 35 pages in length, the SBIR/STTRPhase II Final Report shows the actual effort and expenditures (for the same items that appeared in the progress reports) for the entire 24-month period of performance. State the Phase II objectives from the Phase II proposal followed by (1) a summary description of the research carried out; (2) the extent to which the stated Phase II objectives were met (including any commercial prototype products, processes or devices that were produced); (3) identified markets for the research findings or results obtained; (4) problems remaining or unfulfilled research objectives; 5) the potential commercial applications as a result of achieved research findings; and (6) a highlighting of any surprising information or events that affected the project. All final reports must carry the acknowledgment found on the cover page (see Chapter 5.0, Section 5.2.1, Phase I Reporting).

Four years following expiration of the Phase II grant, the Phase II Final Report will be sent by NSF to the National Technical Information Service (NTIS).

A Commercialization Report is a requirement of all Phase II grantees as part of the Phase II Final Report package. Provide a commercialization report covering the entire grant performance period. It is also required that grantees continue reporting commercial results yearly, for up to 5 years after the award period ends. Two copies of the commercialization report should be submitted under the same cover with the SBIR/STTR Phase II Final Report and the NSF Final Project Report should be submitted electronically. The commercialization report will cover the amount and type of continuing investment obtained to pursue commercialization and any products, sales, royalties, patents, or spin-offs attributable to the SBIR project, as well as changes in the company's employment levels. The purpose of this report is to help assess the extent of the commercial application derived from SBIR-supported research. There is particular interest in whether the original follow-on funding commitment was/will be honored and/or whether additional and/or alternative agreements have been put in place. (For further information or clarification contact the cognizant SBIR Program Officer named in the Phase II award letter.)

5.3 Payment Schedules for SBIR/STTR Phase I and II.

5.3.1 SBIR Phase I Payment. No invoices are necessary under Phase I grants. Phase I payments will be made as follows: one-third approximately 3-4 weeks after the effective date of the award provided that a Request for Initial Payment and ACH Vendor/Miscellaneous Payment enrollment form are received by the NSF Division of Financial Management, one-third three months later, and the remainder upon acceptance of a satisfactory Phase I Final Report by NSF. The first two payments are automatic. The final payment will only be processed upon acceptance of the Phase I Final Report and the electronic submission of the NSF Final Project Report.

5.3.2 STTR Phase I Payment. No invoices are necessary under Phase I grants. Phase I payments will be made as follows: 40 percent approximately 3-4 weeks after the effective date of the award provided that a Request for Initial Payment and ACH Vendor/Miscellaneous Payment enrollment form are received by the NSF Division of Financial Management, 40 percent six months after the award, and the remainder upon acceptance of a satisfactory Phase I Final Report by NSF.

5.2.3 SBIR/STTR Phase II Payment. Unless otherwise stated in the grant letter, NSF will typically make payments as follows:

· Twenty-five percent (25%) advance payment will be made upon receipt of an SBIR/STTR Award Request for Initial Payment Form;
· Twenty percent (20%) upon acceptance by NSF of the first semi-annual progress report (usually about the 6th month of the grant performance period);
· Twenty percent (20%) upon acceptance by NSF of the second semi-annual progress report (usually about the12th month of the grant performance period);
· Twenty percent (20%) upon acceptance by NSF of the third semi-annual progress report (usually about the18th month of the grant performance period); and
· The remaining fifteen (15%) will be paid upon acceptance by NSF of the SBIR Phase II Final Report, NSF Final Project Report, and the Commercialization Report.

(See the SBIR Phase II General Grant Conditions, Articles 5 and 6, https://www.nsf.gov/cgi-bin/getpub?sbirii).

5.4  Accounting Systems (ESSENTIAL FOR SBIR/STTR Phase II proposals). Organizations receiving grant awards are required to have an adequate accounting system. Adequate accounting systems provide assurances to the Federal Government that organizations can account for expenditure of federal funds in accordance with applicable regulations, and terms and conditions of the award. At the very minimum, adequate accounting systems provide for:

· Detailed budget preparation with proposed costs based on actual historical cost data;
· Identification of costs (budgeted costs and actual expenses) by project/grant;
· Identification of costs as direct, indirect, and unallowable;
· Complete and accurate financial reports (including balance sheets and income statements); and
· Maintenance of adequate source documentation (purchase orders, invoices, canceled checks, etc.).

If the SBIR/STTR Program is considering a Phase II proposal for award, the proposing small firm will be required to support the existence of an adequate accounting system. If an organization has been audited by Defense Contract Audit Agency (DCAA), or has been audited by another Federal Agency, the organization should provide a copy of the review and/or audit report resulting from the audit or review.

All firms should complete and provide a copy of the Information Concerning Financial Management Systems form (Attachment K). This form will be reviewed by the Cost Analysis and Audit Resolution Branch. Possible accounting system deficiencies, and suggestions for correcting deficiencies will be discussed with the submitting organization.

CAARB will not request submission of Information Concerning Financial Management Systems or make recommendations for correcting deficiencies unless the SBIR Program has indicated that a proposal is seriously being considered for award.

5.4.1 Time and Effort Reporting. Time and effort records must be maintained for an organization's employees so that salary charges to a grant can be adequately supported. (See Article 5 of the SBIR Phase II Grant General Conditions, https://www.nsf.gov/cgi-bin/getpub?sbirii.) An adequate time and effort record contains the following information: (1) the name and signature of the employee; (2) the hours an employee worked each day during a given pay period; (3) the activities of the employee during the pay period (i.e., project, general and administrative, vacation, sick, leave without pay, etc.); and, (4) the name and signature of the employee's supervisor.

Corrections to a time and effort record should be in ink and initialed by the employee.

Organizations should provide a copy of their time and effort record as an attachment to the "Information Concerning Financial Management System" form. The following sample timesheet is provided to assist you in creating a time and effort record form should your organization not currently maintain these records.
 

5.4.2 Certification of Current Cost Or Pricing Data. If a proposal is seriously being considered for funding, a pre-award budget review will be conducted by NSF. The submitting small business concern will be requested at that time to provide documentation which supports the costs proposed. (See below, for specific documentation requirements.) Subsequent to this review, but prior to NSF making an award, the small business concern will be required to submit a second Certificate of Current Cost or Pricing Data (Attachment G) certifying that the supporting documentation submitted is based on accurate, complete, and current cost and pricing data.

Under each budget category below the cost/pricing data which will be requested for each cost category is shown. It should be noted that proposed costs which cannot be supported by adequate cost/pricing data will not be funded and will result in a reduction in the requested amount of funding.

It should also be noted that unallowable costs will not be funded (either as direct costs or as part of the indirect cost rate). Examples of unallowable costs are as follows: advertising (except when related to employment), bad debt, contributions, donations, entertainment, fines, penalties, interest, lobbying, losses on other contracts, pre-award costs, and Federal income taxes. More information on unallowable costs can be found in Subpart 31.2 of the Code of Federal Regulations Title 48, Federal Acquisition Regulations (FAR), Chapter 1 (Parts 1 though 51) which can be obtained by contacting the Government Printing Office at: (202) 512-1800 or at http://www.arnet.gov/far .

Current Cost Or Pricing Data Supporting Documentation Requirements:

Salaries and Wages - (1) For each named individual, who is presently employed by the organization, provide prior year's W-2 and/or current payroll register documenting current pay rate. (2) For each named individual who is not presently employed by the organization, provide an employment agreement stating the rate of payment and also a statement setting forth the organization's considerations in determining the rate of pay offered. (3) For positions where specific individuals have not been named, provide an explanation of how the rates were determined and any related documentation (i.e., W-2 of an individual presently employed by the organization in the same or in a similar position).

Fringe Benefits - If fringe benefits are not included in the indirect cost rate(s) and are instead proposed as a direct cost item, provide the categories of costs (FICA, health benefits, etc.) included and the related amounts.

Permanent Equipment - Permanent equipment is defined as an item of nonexpendable, tangible personal property, having a useful life of more than one year and an acquisition cost of $5,000 (five thousand) or more per unit. For each item, provide cost data from three sources which can be in the form of written quotations and/or copies of pricing information contained in catalogues, trade journals, etc. In situations where equipment can only be provided by one specific source provide a sole source justification and a written quote from this source.

Travel - Provide an itemization of travel which should include the destination, purpose of travel, number of days in travel status, and the estimated costs for items included in the amount (airfare, cab fare, car rental, per diem rates, hotel, and other incidentals).

Materials and Supplies - Provide an itemized listing of all items included in the proposed amount. (Additional supporting documentation could be requested when determined to be appropriate.)

Publication Costs/Documentation/Dissemination - Provide an explanation of items included in this amount and the per item cost (e.g., the estimated number of pages and the per page cost).

Consultant Services - For each consultant, provide an agreement which includes the following information: (1) the services to be provided; (2) the period of performance and the consultant's availability; (3) the qualifications of the consultant to perform the work; and (4) the rate of pay (not to exceed $453 per day). It will also be necessary to provide evidence that the consultant was chosen using a competitive selection process, in the form of other quotations for the same services, or a sole source justification where services cannot be provided by other consultants.

Subawards - For each subaward agreement, provide a subaward which includes the following information: (1) the services to be provided, the names of individuals expected to perform the work, and the expected level of effort for each individual; (2) cost information broken out by cost category (salaries, fringe, travel, equipment, materials and supplies, indirect costs, etc.). The organization will be requested to provide evidence that the subawardee was chosen using a competitive selection process, in the form of quotations for the same services, or a sole source justification where services cannot be provided by other subawardees.

Indirect Costs - Provide a current indirect cost rate agreement negotiated by a Federal Agency. In the absence of a current negotiated rate agreement, provide an indirect cost proposal and the related financial statements (income statement and balance sheet) for the two most recently completed annual accounting fiscal periods. If an organization has not had financial activity for these periods, indirect cost proposals should be based on what activities the organization expects during the proposed award period. (See sample indirect cost proposal contained in Attachment L). It should be noted that it is NSF's policy to treat Independence Research and Development as a direct cost. Questions relating to the indirect cost rate should be addressed to the Cost Analysis and Audit Resolution Branch (CAARB) of the NSF Division of Contracts, Policy, and Oversight at (703) 306-1244.

5.5 Treatment and Protection of Proposal Information. Proposals may contain proprietary information. However, proposers should limit proprietary information to that deemed essential to include for proper evaluation of the proposal. Proprietary information may be included in the body of the proposal or set apart from other text. Proprietary information submitted to NSF will be treated in confidence to the extent permitted by law if it is clearly identified, by sentence or paragraph in the proposal text, or on a separate page. Any proprietary information included in the body of the proposal must be clearly marked, by sentence or paragraph, as proprietary. Any proprietary information set apart from other text should be on a separate page and keyed to the text by numbers. Proposers should be selective and confine proprietary information to those critical items that, if disclosed, could jeopardize the obtaining of foreign or domestic patents or could reveal trade secrets or commercial or other financial information that could jeopardize the competitive position of the proposers. (Reference https://www.nsf.gov/cgi-bin/getpub?sbiri for Phase I and https://www.nsf.gov/cgi-bin/getpub?sbirii for Phase II.)

Without assuming any liability for inadvertent disclosure, NSF will limit dissemination of properly marked information to its employees, and, as necessary for the evaluation of the proposal, to outside reviewers on a confidential basis. However, proposals or reports that attempt to restrict dissemination of large amounts of information may be found unacceptable by NSF and may result in return of the proposal.

Phase II proposals and Phase I Final Reports may also contain technical data developed under the Phase I grant. The grantee must properly identify and mark such technical data as described in Section 5.6, Rights in Data Developed under SBIR/STTR Grants.

Information contained in unsuccessful proposals will remain the property of the proposer, but NSF will retain file copies of all proposals. Public release of information in any proposal or report delivered under a grant will be subject to existing statutory and regulatory requirements.

Because Final Reports by the Principal Investigator will be made available to the public, such reports should contain no restrictive language purporting to limit their use, except for technical data described below (see Section 5.2 Reporting Requirements).

5.6 Rights in Data Developed Under SBIR/STTR Contracts. The grantee may retain rights in technical data, including software, developed under the NSF grant, except that the Government shall have the right to use such data for governmental purposes. Final Reports delivered under the grant, including technical data, may be made available to the public by the Government except for that portion of the report containing technical data properly identified and marked as set forth below.

To the extent permitted by law, the Government will not release properly identified and marked technical data, such as data relating to an invention or software, outside the Government except for evaluation purposes for a period of four years from the expiration of a Phase II grant, or from the expiration of the Phase I grant when no Phase II award is made, without the approval of the grantee. The grantee must properly identify such technical data in the text or on a separate page keyed to the text by numbers in any submission to the Foundation. Such data must be clearly labeled as proprietary technical data and marked with a legend similar to the following:

"The following is proprietary technical data which (name of grantee) requests not be released to persons outside the Government, except for purposes of evaluation, for a period of four years from the expiration date of Grant No. ________ or, the expiration date of a follow-on Phase II grant if awarded, whichever is later."

In addition to the rights vested in the Government to use proprietary technical data during the four-year period mentioned above, the Government shall retain a royalty free, irrevocable, world-wide license to use the data right after the conclusion of the four-year period whether or not the grantee has sought or obtained patent protection or claimed copyright protection.

5.7 Copyrights. The grantee normally may copyright and publish (consistent with appropriate security considerations, if any) material developed with NSF support. The National Science Foundation receives a royalty-free license for the Federal Government and requires that each publication contain an acknowledgment and disclaimer statement as shown under Chapter 5.0, Section 5.2, Reporting Requirements.

5.8 Patents. Each award agreement will contain a patent rights clause under which small business firms normally may retain the principal worldwide patent rights to any invention made with NSF support. NSF receives a royalty-free license for Federal Government use, reserves the right to require the patent holder to license others in certain circumstances, and requires that anyone exclusively licensed to sell the invention in the United States must normally manufacture it domestically. To the extent authorized by 35 U.S.C. 205, NSF will not make public any disclosure by the grantee of a NSF-supported invention for a four-year period to allow the grantee a reasonable time to file a patent application. The time period for filing is specified in the patent rights clause and applicable Federal regulations (45 CFR § 650.4). Additional information may be obtained from the Office of the General Counsel, Room 1265, National Science Foundation, 4201 Wilson Boulevard, Arlington, VA 22230.

5.9 Supplemental Funding - Research Experiences for Undergraduates (REU). The SBIR can supplement a Phase II award to encourage undergraduate students to embark on research careers. NSF has expanded the REU program to allow K-12 science teachers to participate. Information on NSF's REU Program can be obtained by calling (703) 306-1601 and requesting that the REU Program Announcement (NSF 96-102) be sent to you or at https://www.nsf.gov/nsf/nsfpubs/nsf96102/nsf96102.htm .

Companies that receive a Phase II award from NSF may apply for REU support. They should send their applications to the cognizant SBIR Program Officer named in the Phase II award letter. If the REU proposal is awarded, it will be made as a separate identifiable supplement to an existing SBIR award. The REU supplement is typically for $5,000 per student or teacher and no more than 2 per year for each Phase II grant.

5.10 Management Responsibility. The responsibility for the performance of the Principal Investigator and other employees or consultants who carry out the proposed work lies with the management of the firm receiving an award.

5.11 Accuracy of Information. The proposing small business concern and the Principal Investigator are responsible for the accuracy and validity of all the administrative, fiscal, and scientific information in the proposal. Deliberate withholding, falsification, or misrepresentation of information could result in administrative actions such as declination of a proposal or the suspension and/or termination of an award, as well as possible civil or criminal penalties.

5.12 Audits. Both Phase I and Phase II awards are subject to Federal audit as specified in the applicable Grant Terms and Conditions. For Phase I reference: https://www.nsf.gov/cgi-bin/getpub?sbiri for Phase II reference: https://www.nsf.gov/cgi-bin/getpub?sbirii.

5.13 Changes in Organization or Principal Investigator Status. The SBIR Program must be notified promptly if there is any change in the name or address of the firm or if the firm no longer qualifies as a small business. Any change in the Principal Investigator under an active grant must be requested in writing to the SBIR Program as discussed in Chapter 1, Section 1.4.4, Principal Investigator.

5.14 Inconsistencies. This Program Solicitation is intended for informational purposes and reflects current planning. If there are any inconsistencies between the information contained herein and the terms of any resulting SBIR grant, the terms of the grant are controlling.