Grants and Funding

NIH Grants Policy Statement

(10/12)

Part II: Terms and Conditions of NIH Grant Awards
Subpart B: Terms and Conditions for Specific Types of Grants, Grantees, and Activities – File 10 of 11


18 GRANTS TO FOR-PROFIT ORGANIZATIONS

18.1 General

Some of the terms and conditions for grants to for-profit (commercial) organizations vary from the standard terms and conditions included in IIA. In addition, the terms and conditions of the SBIR and STTR programs vary from those otherwise applicable to for-profit organizations. This chapter addresses separately the policies applicable to for-profit organizations generally, and those that apply to SBIR and STTR awards specifically. It also highlights several policies in IIA that apply equally to for-profit and non-profit recipients. If an exception is not stated below or in the NoA, the terms and conditions specified in IIA apply, including requirements for the protection of human subjects and animal welfare.

18.2 Eligibility

For-profit organizations are eligible to apply under all NIH programs and support mechanisms unless specifically excluded by statute.

18.3 Allowable and Unallowable Costs

18.3.1 Cost Principles

There are no cost principles specifically applicable to grants to for-profit organizations. Therefore, the cost principles for commercial organizations set forth in the FAR (48 CFR 31.2) generally are used to determine allowable costs under NIH grants to for-profit organizations. As provided in those costs principles, allowable travel costs may not exceed those established by the FTR (available on-line at http://gsa.gov/portal/content/104790). The cost principles in 45 CFR 74, Appendix E, are used to determine allowable costs under NIH grants to proprietary hospitals.

18.3.2 Independent Research and Development Costs

As provided in 45 CFR 74.27(a), NIH does not allow for-profit organizations to be reimbursed for IR&D (self-sponsored) costs.

18.3.3 Facilities and Administrative Costs (Indirect Costs)

F&A costs are allowable under awards to for-profit organizations.

18.3.4 Profit or Fee

Except for grants awarded under the SBIR/STTR programs, under an NIH grant, no profit or fee will be provided to a for-profit organization, whether as a grantee or as a consortium participant. A profit or fee under a grant is not a cost, but is an amount in excess of actual allowable direct and F&A costs. In accordance with normal commercial practice, a profit/fee may be paid to a contractor under an NIH grant providing routine goods or services to the grantee.

18.4 Administrative Requirements

For-profit organizations generally are subject to the same administrative requirements as non-profit organizations, including those relating to personal property title and management. Exceptions to or elaboration of those requirements for for-profit organizations are indicated below.

18.4.1 Equipment Accountability

For-profit grantees of NIH grants are nonexempt and subject to the requirements in 45 CFR 74.34, as well as the conditions set forth in Administrative Requirements—Management Systems and Procedures—Property Management System Standards and Administrative Requirements—Management Systems and Procedures—Procurement Systems Standards and Requirements in IIA. Under the conditions specified in 45 CFR 74.34, for-profit grantees are permitted to retain title to equipment purchased under a research grant though NIH reserves the right to order the transfer of equipment, including title, to NIH or an eligible third party named by the NIH awarding office when such third party is otherwise eligible under existing statutes. In keeping with the provisions of 45 CFR 74.24, for-profit grantees must not use equipment acquired with NIH funds to provide services to non-Federal organizations for a fee to compete unfairly with private companies that provide equivalent services, unless the terms and conditions of the award provide otherwise, and any user charges shall be treated as program income and must be reported on the FFR. Conditions for the sale of equipment are specified at Administrative Requirements—Management Systems and Procedures—Sale of Real Property, Equipment, and Supplies in IIA.

18.4.2 Intellectual Property

Intellectual property requirements set forth in 37 CFR 401 apply to for-profit organizations, whether small businesses or large businesses. However, invention reporting requirements for for-profit organizations differ somewhat from those for non-profit organizations. When the grantee is a for-profit organization, assignment of invention rights to a third party does not require NIH approval, but ongoing reporting remains a requirement for each invention. (See Administrative Requirements—Availability of Research Results: Publications, Intellectual Property Rights, and Sharing Research Resources in IIA.) Additional information about the requirements of 37 CFR 401 may be obtained from the Division of Extramural Inventions and Technology Resources, OPERA, NIH (see Part III for address and telephone number).

To the extent authorized by law, the Federal government will not make public any information disclosing a Federal government-supported invention.

18.4.3 Program Income

Consistent with NIH Standard Terms of Award, for-profit grantees, including those under the SBIR/STTR programs, are subject to the additive alternative for the use of program income described in Administrative Requirements—Management Systems and Procedures—Program Income in IIA.

18.4.4 Operating Authorities

Awards to for-profit organizations are subject to NIH Standard Terms of Award; however, some mechanisms do not allow automatic carryover of unobligated balances of funds. Under those mechanisms, the NIH awarding IC will specify the disposition of the reported unobligated balance in the NoA. (See Administrative Requirements—Changes in Project and Budget in IIA).

18.4.5 Audit

The requirements for non-Federal audits of for-profit organizations are specified in 45 CFR 74.26(d). A for-profit organization is required to have a non-Federal audit if, during its fiscal year, it expended a total of $500,000 or more in Federal awards. 45 CFR 74.26(d) incorporates the thresholds and deadlines of OMB Circular A-133 but provides for-profit organizations two options regarding the type of audit that will satisfy the audit requirements. The grantee either may have (1) a financial-related audit (as defined in, and in accordance with, the Government Auditing Standards (commonly known as the "Yellow Book"), GPO stock 020-000-00-265-4, of a particular award in accordance with Government Auditing Standards, in those cases where the recipient receives awards under only one HHS program, or (2) an audit that meets the requirements of OMB Circular A-133.

OMB Circular A-133 is available electronically at http://www.whitehouse.gov/sites/default/files/omb/assets/a133/a133_revised_2007.pdf.

The Government Auditing Standards are available electronically at http://www.gao.gov/govaud/ybk01.htm. Audits must be completed and submitted to the National External Audit Review Center within 30 days after receipt of the auditor's report(s), or 9 months after the end of the audit period, i.e., the end of the organization's fiscal year, whichever is earlier. The address is found in Part III.

For-profit organizations expending less than $500,000 a year are not required to have an annual audit for that year but must make their grant-related records available to NIH or other designated officials for review or audit.

18.4.6 Labor Distribution Requirements for For-Profit Organizations

Salary and wage amounts charged to grant-supported projects for personal services must be based on an adequate labor distribution system that distributes payroll costs in accordance with generally accepted practices of like organizations. Standards for labor distribution systems are contained in the applicable cost principles (other than those for for-profit organizations).

NIH requires for-profit organizations to conform with industry standards to support salary and wage charges to NIH grants. Therefore, unless an alternate system is approved by the GMO, the grantee must maintain a time and-effort reporting system for both professional and other-than-professional staff reflecting daily after-the-fact reporting of hours expended on individual projects or indirect activities. The system must record both hours worked and hours absent. This information must be certified by an AOR no less frequently than every pay period.

18.5 Small Business Innovation Research and Small Business Technology Transfer Programs

NIH is required by statute to reserve a portion of its annual extramural budget for projects under the SBIR and STTR programs. These programs primarily are intended to encourage private-sector commercialization of technology and to increase small business participation in federally funded R&D.

The SBIR and STTR programs were reauthorized by Congress in P.L. 112-81, and signed on December 31, 2011. The reauthorization will modify several aspects of the programs, including small business eligibility requirements, upon implementation. Updates on reauthorization implementation will be posted on http://sbir.nih.gov. NIH will issue Guide Notice/s to advise the community about the impact on NIH's SBIR and STTR programs.

Both the SBIR and STTR programs consist of the following three phases:

  • Phase I. The objective of this phase is to establish the technical merit and feasibility of proposed research or R&D efforts and to determine the quality of performance of the applicant (small business concern or SBC) before providing further Federal support in Phase II.
  • Phase II. The objective of this phase is to continue the research or R&D efforts initiated in Phase I. Funding will be based on the results of Phase I and the scientific and technical merit and commercial potential of the Phase II application. Only Phase I grantees are eligible to receive Phase II funding. Unless submitted as a Fast-Track application (see below), Phase II applications may be submitted only after the Phase I award is made. NIH expects non Fast-Track Phase II applications to be submitted within the first six receipt dates following expiration of the Phase I budget period, i.e., normally 2 years beyond the expiration date of the Phase I award.
  • Phase III. The objective of this phase, where appropriate, is for the SBC to pursue, with non-SBIR/STTR funds, the commercialization of the results of the research or R&D funded in Phases I and II.

There are two major differences between the SBIR and STTR programs:

  • Under SBIR Program, the Project Director/Principal Investigator (PD/PI) must have his/her primary employment with the small business concern at the time of award and for the duration of the project period, however, under the STTR Program, primary employment is not stipulated in the SBIR and STTR policy directives so NIH permits the PD/PI to have his/her primary employment with either the small business concern or the collaborating research institution. On an STTR project, the PD/PI must devote at least 10 percent of his/her time to the STTR project
  • The STTR program requires for both phases I and II that the SBC formally partner with a single, non-profit research institution. At least 40 percent of the STTR research project is to be conducted by the SBC and at least 30 percent of the work is to be conducted by the single, "partnering" research institution through a formal, cooperative arrangement. Such organizations include universities, non-profit hospitals, and other non-profit research organizations as well as Federally Funded Research and Development Centers. STTR grants are awarded to the SBC, which will receive all of the funding for the project and disburse the appropriate funding to the research institution. The SBIR program allows subcontracting, it does not require it so the SBC may conduct the entire SBIR project without outside collaboration.

18.5.1 NIH Fast-Track Application Process

The NIH Fast-Track application process expedites award decisions and funding of SBIR and STTR Phase II applications for scientifically meritorious projects that have a high potential for commercialization. The Fast-Track process allows Phase I and Phase II grant applications to be submitted and reviewed together. Fast-Track applications receive a single rating. Before submitting applications for Fast-Track review, applicants are strongly encouraged to consult with cognizant NIH program staff. to assure Fast-Track is appropriate. For additional information on the submission of Fast-Track applications, see the SF424 (R&R) SBIR/STTR Application Guide available at http://sbir.nih.gov.

18.5.2 Eligibility

Only United States small business concerns (SBCs) are eligible to submit SBIR and STTR applications. A small business concern is one that, at the time of award for both Phase I and Phase II SBIR awards, meets all of the following criteria. If it appears that an applicant organization does not meet the eligibility requirements, NIH will request a size determination by the SBA. If eligibility is unclear, NIH will not make an SBIR or STTR award until the SBA provides a determination.

  1. For SBIR:
    1. Organized for profit, with a place of business located in the United States, which operates primarily within the United States or which makes a significant contribution to the United States economy through payment of taxes or use of American products, materials or
    2. In the legal form of an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust or cooperative, except that where the form is a joint venture, there can be no more than 49 percent participation by foreign business entities in the joint venture;
    3. At least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States, or it must be a for-profit business concern that is at least 51% owned and controlled by another for-profit business concern that is at least 51% owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States -- (except in the case of a joint venture);
    4. Has, including its affiliates, not more than 500 employees and meets the other regulatory requirements found in 13 CFR 121. Business concerns, other than investment companies licensed, or state development companies qualifying under the Small Business Investment Act of 1958, 15 U.S.C. 661, et seq., are affiliates of one another when either directly or indirectly, (a) one concern controls or has the power to control the other; or (b) a third-party/parties controls or has the power to control both.

    Control can be exercised through common ownership, common management, and contractual relationships. The term "affiliates" is defined in greater detail in 13 CFR 121.3-2(a). The term "number of employees" is defined in 13 CFR 121.3-2(t).

    Business concerns include, but are not limited to, any individual (sole proprietorship), partnership, corporation, joint venture, association, or cooperative. Further information may be obtained by contacting the Small Business Administration Size District Office at http://sba.gov/size.
  2. For STTR:
    1. Organized for profit, with a place of business located in the United States, which operates primarily within the United States or which makes a significant contribution to the United States economy through payment of taxes or use of American products, materials or labor;
    2. In the legal form of an individual proprietorship, partnership, limited liability company, corporation, joint venture, association, trust or cooperative, except that where the form is a joint venture, there can be no more than 49 percent participation by foreign business entities in the joint venture;
    3. At least 51 percent owned and controlled by one or more individuals who are citizens of, or permanent resident aliens in, the United States.
    4. Has, including its affiliates, not more than 500 employees and meets the other regulatory requirements found in 13 CFR 121. Business concerns, other than investment companies licensed, or state development companies qualifying under the Small Business Investment Act of 1958, 15 U.S.C. 661, et seq., are affiliates of one another when either directly or indirectly, (a) one concern controls or has the power to control the other; or (b) a third-party/parties controls or has the power to control both.

    Control can be exercised through common ownership, common management, and contractual relationships. The term "affiliates" is defined in greater detail in 13 CFR 121.3-2(a). The term "number of employees" is defined in 13 CFR 121.3-2(t).

    Business concerns include, but are not limited to, any individual (sole proprietorship), partnership, corporation, joint venture, association, or cooperative. Further information may be obtained by contacting the Small Business Administration Size District Office at http://sba.gov/size.

18.5.2.1 Place of Performance

For both Phase I and Phase II SBIR/STTR awards, the research or R&D project activity must be performed in its entirety in the United States . (The United States is defined as the 50 States, the territories and possessions of the United States , the Commonwealth of Puerto Rico, the Federated States of Micronesia , the Republic of Palau, the Republic of the Marshall Islands , and the District of Columbia.)

In those rare instances where the study design requires use of a foreign site (e.g., to conduct testing of specific patient populations), the investigator must provide compelling scientific justification in the application for the need/use of a foreign site. Similarly, in those rare instances where it may be necessary to purchase materials from other countries, investigators must thoroughly justify the request. NIH will consider these instances on a case-by-case basis, and they should be discussed with cognizant NIH staff before submitting an application. Approval will not be considered unless the application is being considered for an award. IC program officials have the authority to approve these waiver requests. Whether the request is approved or disapproved, it will be explicitly addressed in the NoA if an award is made. Whenever possible, work outside the United States , which is necessary to the completion of the project, should be supported by funding other than SBIR/STTR.

18.5.2.2 Change in Organization Status & Change of Grantee Institution Actions

Applicant organization eligibility is determined at the time of the initial SBIR/STTR award. If a legal action occurs such as a merger or successor-in-interest, that changes the organization status so that they are no longer eligible for the SBIR/STTR programs, existing SBIR/STTR grants can continue. However, the organization would no longer be eligible for any new SBIR/STTR grants.

When there is a desire to transfer an SBIR/STTR grant to a different organization, the new organization must continue to meet the SBIR/STTR program eligibility requirements. Grantees should contact the NIH awarding office to discuss options when considering a move to a new organization.

18.5.2.3 Minimum Level of Effort

Generally, under SBIR Phase I awards, a minimum of two-thirds or 67 percent of the research or analytical effort must be carried out by the SBC. Payments, in the aggregate, to consultants, consortium participants and contractors for portions of the scientific/technical effort generally may not exceed 33 percent of the total requested amount.

Generally under SBIR Phase II awards a minimum of one-half or 50 percent of the research or analytical effort must be carried out by the SBC. In addition, payments, in the aggregate, to consultants, consortium participants, and contractors for portions of the scientific/technical effort generally may not exceed 50 percent of the total requested amount.

For STTR awards (both Phase I and Phase II), at least 40 percent of the work must be performed by the SBC and at least 30 percent of the work must be performed by the single, non-profit research institution. These percentages are Congressionally mandated and waivers are not permitted. The basis for determining the percentage of work to be performed by each of the cooperating parties is the total of direct and F&A costs attributable to each party, unless otherwise described and justified in the "Consortium/Contractual Arrangements" portion of the of the grant application.

18.5.2.4 Multiple Program Director/Principal Investigator Applications and Awards

The Multiple Program Director/Principal Investigator (multiple PD/PI) option is available for NIH SBIR/STTR applicants for team science efforts. All of the policy and requirements described in Multi PD/PI apply to SBIR/STTR projects, with the exception of sections that are not relevant to the SBIR/STTR program (e.g., new investigators, multi-project applications). In addition, the following criteria apply to multiple PD/PI SBC applicants and awards:

  • The small business concern (SBC) is always the applicant/awardee organization. Organizations other than the SBC with PD/PIs participating in the multiple PD/PI project, including the STTR non-profit research institution partner, are subcontractors to the SBC.
  • For Phase I and Phase II SBIR projects, the Contact PD/PI must meet the primary employment requirement; other PD/PIs are not required to meet the requirement. Primary employment means that more than one half of the PD/PI's time is spent in the employ of the SBC at the time of award and during the conduct of the proposed project. Deviations from this requirement are rare and must be approved in writing by the grants management officer after consultation with the NIH SBIR/STTR Program Coordinator.
  • For Phase I and Phase II STTR projects, the PD/PI is not required to be employed by the SBC. However, the Contact PD/PI, the first PD/PI listed, must have a formal appointment with, or commitment to, the SBC, which must be in the form of an official relationship between the parties, but need not include a salary or other form of remuneration. Each PD/PI on a multiple PD/PI award must commit a minimum of 1.2 calendar months (10% effort) to the project.
  • An STTR applicant organization must officially affiliate a PD/PI with the SBC in the eRA Commons if the PD/PI is not an employee of the SBC.
  • A Phase II Competing Renewal submitted as a multiple PD/PI application requesting support for a project previously supported through a single PD/PI award should state the changes in the Project's direct and management that led to the proposed multiple PD/PI model.

18.5.3 Public Policy Requirements and Objectives

For-profit organizations receiving SBIR/STTR awards generally are subject to the same public policy requirements as non-profit organizations. However, the requirements concerning reporting of financial conflicts of interest (see Public Policy Requirements, Objectives, and Other Appropriation Mandates—Financial Conflict of Interest in IIA) do not apply to applications or awards under Phase I of the SBIR/STTR programs. The requirements do, however, apply to Phase II applications and awards.

18.5.4 Allowable Costs and Fee

18.5.4.1 Program Levels (Total Costs)

SBA SBIR and STTR Policy Directives provide program levels for SBIR and STTR programs based on statutory guidelines. However, these directives also give agencies discretion to exceed these levels when the proposed budget and requested period of support are fully justified and scientifically appropriate in relation to the proposed research. The Small Business Administration may adjust award guidelines annually. The current levels are:

  • SBIR Phase I: $150,000 Total Costs; 6 months
  • SBIR Phase II: $1,000,000 Total Costs; 2 years
  • STTR Phase I: $150,000 Total Costs; 1 year
  • STTR Phase II: $1,000,000 Total Costs; 2 years

Some ICs offer Phase II SBIR/STTR awardees the opportunity to apply for Phase IIB Competing Renewal awards. These are available for those projects that require extraordinary time and effort in the R&D phase and may or may not require FDA approval for the development of such projects, including drugs, devices, vaccines, therapeutics, and medical implants related to the mission of the IC. Only those small business concerns who have been awarded a Phase II are eligible to apply for the Phase IIB award. Program levels are:

  • SBIR Phase II Competing Renewals (Phase II "B"): $3,000,000; 3 years
  • STTR Phase II Competing Renewals (Phase II "B"): $3,000,000; 3 years

Applicants must request an appropriate level in the competing application; applications will not be adjusted after submission. See the NIH Special Announcements for Small Business Research Opportunities for a list of these unique SBIR funding opportunities.

18.5.4.2 Profit or Fee

A reasonable profit or fee may be paid to a SBC receiving an award under Phase I or Phase II of the SBIR and STTR programs. The profit or fee is not considered a "cost" for purposes of determining allowable use, program income accountability, or audit thresholds. The profit or fee may be used by the SBC for any purpose, including additional effort under the SBIR/STTR award. It is intended to provide a reasonable profit consistent with normal profit margins for for-profit organizations for R&D work; however, the amount of the profit or fee normally will not exceed seven (7) percent of total costs (direct and F&A) for each phase of the project. The profit or fee should be drawn from PMS in increments proportional to the drawdown of funds for direct and F&A costs. The profit or fee applies solely to the SBC receiving the SBIR/STTR award and not to any other participant; however, in accordance with normal commercial practice, the SBC may pay a profit or fee to a contractor providing routine goods or services to the SBC under the grant.

18.5.4.3 Facilities and Administrative Costs (Indirect Costs)

18.5.4.3.1 Phase I

If the applicant SBC has a currently effective F&A cost rate(s) with a Federal agency, such rate(s) should be used when calculating proposed F&A costs for an NIH application. NIH ICs use the term F&A costs for all types of applicants and recipients; however, for-profit organizations will find that DFAS and organizations external to NIH refer to these costs as indirect costs. (However, the rates(s) must be adjusted for IR&D expenses, which are not allowable under HHS awards.) If the applicant SBC does not have a currently effective negotiated indirect cost rate with a Federal agency, the applicant should propose estimated F&A costs at a rate not to exceed 40 percent of the total direct costs. However, SBCs are reminded that only actual F&A costs are to be charged to projects. (If awarded at a rate of 40 percent or less, the rate used to charge actual F&A costs to projects cannot exceed the awarded rate unless the SBC negotiates an indirect cost rate(s) with a Federal agency.) NIH will not negotiate indirect cost rates for Phase I awards.

18.5.4.3.2 Phase II

If the applicant SBC has a currently effective negotiated indirect cost rate(s) with a Federal agency, such rate(s) should be used when calculating proposed F&A costs for an NIH application. (However, the rates(s) must be adjusted for IR&D expenses, which are not allowable under HHS awards.) If the applicant SBC does not have a currently effective negotiated indirect cost rate with a Federal agency, the applicant should propose an estimated F&A rate in the application. If the requested F&A cost rate is 40 percent of total direct costs or less, no further justification is required at the time of award, and F&A costs will be awarded at the requested rate. However, SBCs are reminded that only actual F&A costs may be charged to projects. If awarded at a rate of 40 percent or less of total direct costs, the rate used to charge actual F&A costs to projects cannot exceed the awarded rate unless the SBC negotiates an indirect cost rate(s) with DFAS. DFAS—the office authorized to negotiate indirect cost rates with SBC's receiving NIH SBIR/STTR awards—will negotiate indirect cost rates for SBCs receiving Phase II awards that requested a rate greater than 40 percent of total direct costs.

Upon request, the applicant SBC should provide DFAS with an indirect cost proposal and supporting financial data for its most recently completed fiscal year. If financial data is not available for the most recently completed fiscal year, the applicant should submit a proposal showing estimated rates with supporting documentation. Further information about DFAS is available at its Web site or by telephone (see Part III).

18.5.5 Administrative Requirements

For-profit organizations that receive SBIR/STTR awards generally are subject to the same administrative requirements as non-profit organizations.

18.5.5.1 Market Research

NIH will not support market research, including studies of the literature that lead to a new or expanded statement of work, under the grant. For purposes of the SBIR/STTR programs, "market research" is the systematic gathering, editing, recording, computing, and analyzing of data about problems relating to the sale and distribution of the subject of the proposed research. It includes various types of research, such as the size of potential markets and potential sales volume, the identification of consumers most apt to purchase the products, and the advertising media most likely to stimulate their purchases. However, "market research" does not include activities under a research plan or protocol that include a survey of the public as part of the objectives of the project to determine the impact of the subject of the research on the behavior of individuals.

18.5.5.2 Intellectual Property

Rights to data, including software developed under the terms of any funding agreement resulting from an NIH award, shall remain with the grantee except that any such copyrighted material shall be subject to a royalty-free, nonexclusive and irrevocable license to the Federal government to reproduce, publish or otherwise use the material, and to authorize others to do so for Federal purposes. In addition, under the SBIR/STTR programs, in contrast to awards to for-profit organizations under other support mechanisms, such data shall not be released outside the Federal government without the grantee's permission for a period of 4 years from completion of the project.

Rights in Data Developed Under SBIR Funding Agreement. The Small Business Innovation Research Program Reauthorization Act of 2000, Public Law 106-554, amended section 9 of the Act (15 U.S.C. 638), referred to as the "Act" provides for "retention by an SBC of the rights to data generated by the concern in the performance of an SBIR award."

  1. Each agency must refrain from disclosing SBIR technical data to outside the Government (except reviewers) and especially to competitors of the SBC, or from using the information to produce future technical procurement specifications that could harm the SBC that discovered and developed the innovation.
  2. SBIR agencies must protect from disclosure and non-governmental use all SBIR technical data developed from work performed under an SBIR funding agreement for a period of not less than four years from delivery of the last deliverable under that agreement (either Phase I, Phase II, or Federally-funded SBIR Phase III) unless, subject to (b)(3) of this section, the agency obtains permission to disclose such SBIR technical data from the awardee or SBIR applicant. Agencies are released from obligation to protect SBIR data upon expiration of the protection period except that any such data that is also protected and referenced under a subsequent SBIR award must remain protected through the protection period of that subsequent SBIR award. For example, if a Phase III award is issued within or after the Phase II data rights protection period and the Phase III award refers to and protects data developed and protected under the Phase II award, then that data must continue to be protected through the Phase III protection period. Agencies have discretion to adopt a protection period longer than four years. The Government retains a royalty-free license for Government use of any technical data delivered under an SBIR award, whether patented or not. This section does not apply to program evaluation.
  3. SBIR technical data rights apply to all SBIR awards, including subcontracts to such awards, that fall within the statutory definition of Phase I, II, or III of the SBIR Program, as described in Section 4 of this Policy Directive. The scope and extent of the SBIR technical data rights applicable to Federally-funded Phase III awards is identical to the SBIR data rights applicable to Phases I and II SBIR awards. The data rights protection period lapses only: (i) Upon expiration of the protection period applicable to the SBIR award, or (ii) by agreement between the awardee and the agency.
  4. Agencies must insert the provisions of (b)(1), (2), and (3) immediately above as SBIR data rights clauses into all SBIR Phase I, Phase II, and Phase III awards. These data rights clauses are non- negotiable and must not be the subject of negotiations pertaining to an SBIR Phase III award, or diminished or removed during award administration. An agency must not, in any way, make issuance of an SBIR Phase III award conditional on data rights. If the SBIR awardee wishes to transfer its SBIR data rights to the awarding agency or to a third party, it must do so in writing under a separate agreement. A decision by the awardee to relinquish, transfer, or modify in any way its SBIR data rights must be made without pressure or coercion by the agency or any other party. Following issuance of an SBIR Phase III award, the awardee may enter into an agreement with the awarding agency to transfer or modify the data rights contained in that SBIR Phase III award. Such a bilateral data rights agreement must be entered into only after the SBIR Phase III award, which includes the appropriate SBIR data rights clause, has been signed. SBA must immediately report to the Congress any attempt or action by an agency to condition an SBIR award on data rights, to exclude the appropriate data rights clause from the award, or to diminish such rights.

The STTR program requires that the small business grantee and the single, non-profit research institution execute an agreement allocating between the parties intellectual property rights and rights, if any, to carry out follow-on research, development, or commercialization of the subject research. (A model agreement, entitled "Allocation of Rights in Intellectual Property and Rights to Carry Out Follow-On Research, Development, or Commercialization," is available at the NIH Web site at http://grants.nih.gov/grants/funding/sbir.htm.) By signing the face page of the grant application, the SBC's AOR certifies that the agreement with the research institution will be effective at the time the grant award is made. A copy of the agreement must be furnished upon request to the NIH awarding IC.

SBIR/STTR grantees are covered by 35 U.S.C. 200-212 and 37 CFR 401 with respect to inventions and patents (see Grants to For-Profit Organizations—Administrative Requirements—Intellectual Property in this chapter).

18.5.5.3 Data Sharing

Applicants for SBIR Phase II funding of $500,000 or more of direct costs in any single year must comply with the NIH policy on data sharing as modified by the Small Business Act. If the final data would not be amenable to sharing, e.g., proprietary data, the SBC should explain that in the application. In addition, as indicated under Intellectual Property in this chapter, whether or not the award meets the threshold for data sharing, NIH will not release data outside the Federal government without the grantee's permission for a period of 4 years from completion of the project. The entire policy may be found at http://grants.nih.gov/grants/policy/data_sharing.





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