REVISED OCTOBER 2019. This document applies to all NIH grants and cooperative agreements for budget periods beginning on or after October 1, 2019.

For-profit, for profit, eligibility, sbir, sttr, small business

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 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. SBIR Eligibility Requirements

  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;
  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 must be less than 50 percent participation by foreign business entities in the joint venture;
  3.  
    1. Be a concern which is more than 50% directly owned and controlled by one or more individuals (who are citizens or permanent resident aliens of the United States), other business concerns (each of which is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States), an Indian tribe, ANC (Alaska Native Corporation) or NHO (Native Hawaiian Organization) (or a wholly owned business entity of such tribe, ANC or NHO), or any combination of these; OR
    1. Be a concern which is more than 50% owned by multiple venture capital operating companies, hedge funds, private equity firms, or any combination of these. No single venture capital operating company, hedge fund, or private equity firm may own more than 50% of the concern; OR
    1. Be a joint venture in which each entity to the joint venture must meet the requirements set forth in paragraph c(i) or c(ii) of this section. A joint venture that includes one or more concerns that meet the requirements of paragraph (ii) of this section must comply with § 121.705(b) concerning registration and application requirements.
  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.

2. STTR Eligibility Requirements

  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;
  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 must be less than 50 percent participation by foreign business entities in the joint venture;
  3.  
    1. Be a concern which is more than 50% directly owned and controlled by one or more individuals (who are citizens or permanent resident aliens of the United States), other business concerns (each of which is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States), an Indian tribe, ANC (Alaska Native Corporation) or NHO (Native Hawaiian Organization) (or a wholly owned business entity of such tribe, ANC or NHO), or any combination of these; OR
    1. Be a joint venture in which each entity to the joint venture must meet the requirements set forth in paragraph c(i) of this section.
  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. ICThe NIH organizational component responsible for a particular grant program or set of activities. The terms "NIH IC," or "awarding IC" are used throughout this document to designate a point of contact for advice and interpretation of grant requirements and to establish the focal point for requesting necessary prior approvals or changes in the terms and conditions of award. GMOs have the authority to approve these waiver requests. Whether the request is approved or disapproved, it will be explicitly addressed in the NoANotice of Award: The official, legally binding document, signed (or the electronic equivalent of signature) by a Grants Management Officer that: (1) notifies the recipient of the award of a grant; (2) contains or references all the terms and conditions of the grant and Federal funding limits and obligations; and, (3) provides the documentary basis for recording the obligation of Federal funds in the NIH accounting system. 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 Recipient 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. Recipients 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 cost ( direct and F&A costsNecessary costs incurred by a recipient for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of F&A (indirect) costs. F&A (indirect) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived., and fee) 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 InvestigatorThe individual(s) designated by the applicant organization/recipient to have the appropriate level of authority and responsibility to direct the project or program to be supported by the award. The applicant organization may designate multiple individuals as program directors/principal investigators (PD/PIs) who share the authority and responsibility for leading and directing the project, intellectually and logistically. When multiple PD/PIs are named, each is responsible and accountable to the official(s) at the applicant organization/recipient, or as appropriate, to a collaborating organization for the proper conduct of the project, program, or activity including the submission of all required reports. The presence of more than one PD/PI on an application or award diminishes neither the responsibility nor the accountability of any individual PD/PI. (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 IIB 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.