Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs: “America’s Seed Fund”

Posted on August 25, 2020 SBIR / STTR

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are highly competitive programs that encourage domestic small businesses to engage in Federal Research/Research and Development (R/R&D) with the potential for commercialization. Through a competitive awards-based program, SBIR and STTR enable small businesses to explore their technological potential and provide the incentive to profit from its commercialization. By including qualified small businesses in the nation’s R&D arena, high-tech innovation is stimulated, and the United States gains entrepreneurial spirit as it meets its specific research and development needs.

The mission of the SBIR/STTR programs is to support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy.  To that end, agencies with more than $100 million per year in their extramural research budge are compelled to use 3% of those funds to fund their SBIR program.   In 2019, the overall SBIR/STTR spending was approximately $3.28 billion for the SBIR program and $453 million for the STTR program.   The two biggest contributing agencies are the Department of Defense ($1.8 billion) and the Department of Health and Human Services ($1.15 billion).  Currently, eleven agencies participate in the program and the Small Business Administration serves as the coordinating agency.

The program’s goals are to:

  • Stimulate technological innovation.
  • Meet Federal research and development needs.
  • Foster and encourage participation in innovation and entrepreneurship by women and socially or economically disadvantaged persons.
  • Increase private-sector commercialization of innovations derived from Federal research and development funding.

In addition, the STTR program aims to:

  • Foster technology transfer through cooperative R&D between small businesses and research institutions.

The SBIR/STTR program consists of three phases.

Phase I. The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II. SBIR/STTR Phase I awards are generally $50,000 – $250,000 for 6 months (SBIR) or 1 year (STTR).

Phase II. The objective of Phase II is to continue the R/R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II. Typically, only Phase I awardees are eligible for a Phase II award. SBIR/STTR Phase II awards are generally $750,000 for 2 years.

Phase III. The objective of Phase III, where appropriate, is for the small business to pursue commercialization objectives resulting from the Phase I/II R/R&D activities. The SBIR/STTR programs do not fund Phase III. At some Federal agencies, Phase III may involve follow-on non-SBIR/STTR funded R&D or production contracts for products, processes, or services intended for use by the U.S. Government.

Ultimately, agency preferences, requirements, and 15 U.S.C § 638– shape the phase award amounts and how they will be distributed.  SBIR opportunities can be found on the SBA website and websites of participating agencies such
Small Business Administration SBIR Overview, March 2020.
DARPA SBIR/STTR Contracting Questions