Background

Several federal agencies, including the National Science Foundation, the Department of Defense and the National Institutes of Health, sponsor Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, intended to stimulate technological innovation, increase private-­‐ sector commercialization of innovations derived from federal research funding and foster technology transfer through cooperative research and development between small businesses and research institutions. Each federal agency that sponsors SBIR and STTR programs has regulations that govern their programs.

SBIR Program Requirements

1. For both Phase I and Phase II proposals, the Principal Investigator (PI) must have primary employment with the SBE at the time of award and during the conduct of the proposed project (unless a waiver is granted by the funding agency). Primary employment means that more than one-­‐half of the PI’s time is spent as an employee of the SBE. This precludes full-­‐time employment with another organization; therefore, a full-­‐time USC faculty member cannot be the PI for an SBIR proposal.
2. The SBIR program encourages, but does not require, the SBE to partner with a research institution.
3. For Phase I proposals, a minimum of 67% of the research or analytical effort must be performed by the SBE. For Phase II proposals, a minimum of 50% of the research or analytical effort must be performed by the SBE. Deviations from these requirements may occur but must be approved in writing by the grant/contract officer.
4. The SBE must have the resources necessary to perform the work (e.g. facilities, equipment, personnel etc.) NOTE: This applies to both programs

STTR Program Requirements

1. The SBE must have in place a formal collaboration with a research institution (e.g. USC).
2. Not less than 40% of the R & D work must be performed by the SBE, and not less than 30% of the R & D work must be performed by the partnering research institution.
3. The primary employment of the Principal Investigator may be with either the SBE or the research institution.
4. The SBE PI (i.e. the PI submitting the proposal) must have a formal appointment with or commitment to the SBE.
5. The SBE and its partnering research institution are required to establish an intellectual property (IP) agreement detailing the allocation of IP rights and rights to carry out follow-­‐up research, development or commercialization activities.

Both the SBIR program and the STTR program are structured in phases. Phase I proposals are intended to establish the technical merit, feasibility and commercial potential of the proposed R & D efforts and to determine the quality of performance of the SBE prior to providing further support in Phase II. The objective of Phase II proposals is to continue the R & D efforts initiated in Phase I. Funding is based on the results achieved in Phase I. Only Phase I awardees are eligible for a Phase II award. Phase III projects are not funded by the SBIR/STTR programs. Typically, in Phase III, the SBE pursues commercialization of the work started under the Phase I and II programs.

Requirements Related to Participation in SBIR/STTR Programs

Entrepreneurial activity by USC faculty is encouraged; however, involvement with SBEs and participation in SBIR and STTR programs can create financial conflicts as well as conflicts of commitment with their USC obligations.  To assist faculty members to navigate these relationships and to ensure the University’s compliance with all federal, state and USC policies, the following are required.

1. The PI for the SBE and the PI for the subcontract to USC must be different individuals, unless approved by the sponsoring agency.
2. If a USC faculty member (or his/her spouse or dependent child) has a significant financial interest (including, but not limited to, an ownership interest, stock options or a proprietary interest), a leadership position in, or is employed by an SBE, the faculty member may serve as the PI on the USC subcontract from that SBE only after developing and adhering to a management plan that addresses his/her conflicts of interest, including the rationale for choice of PI. The plan must be approved by the faculty member’s supervisor and USC’s Reviewing Official.
3. Proposals to conduct research at USC under an SBIR or STTR subcontract must be reviewed and approved by the appropriate Department Chair and/or Dean to ensure that the proposed project has scientific merit, constitutes a good use of USC research space and that the project will not compromise the USC faculty member’s academic responsibilities.
4. USC must receive a copy of the SBE’s proposal and notice of award prior to accepting a subcontract from an SBE connected to a USC faculty member.
5. A faculty member with a financial interest in an SBE should have an approved Conflicts Management Plan. The Plan stipulates the terms to which the faculty member agrees to abide by when conducting his/her university responsibilities as they relate to the SBE.
6. The SBE grantee must have primary functioning space that it owns or controls. If use of USC facilities by the SBE is anticipated, such use must be approved by all responsible administrators and covered by a Facility Use Agreement (Lease or License).