Frequently Asked SBIR Questions

Note: Carl Nelson Consulting, Inc is not an investment adviser and may hold a financial interest or client relationship in companies discussed.
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Do I have a chance against the bigger SBIR companies? In principle, no; in practice, yes. Experienced SBIR firms (called "SBIR mills")  relate well to the government managers who write topics and bless proposals. They are NOT the smallest firms with the wide-eyed entrepreneurs, nor are they likely to present a stunning innovation. On the other hand, your proposition may not be as innovative as you think; those government guys have heard a zillion stories. To have a decent  chance, you need something that gets the government's attention.

Does government keep the rights to my technology?  Partly. The USG has the right to use your technology for whatever government purpose it chooses without paying you a royalty. You have no control over the USG's use. You own all commercial rights. The USG will not compete with you in the private market nor license any other private company to do so. You will have a slight advantage over the other vendors in selling your technology to the government because the SBIR law directs the USG to give you preference for both further development and for procurement. What’s likely is that you will be selling your technology to the government as a low tier subcontractor to an aerospace biggie like, say, Boeing who has the major contract that would use your technology. Note: a 2005 court decision allowed the government to invalidate a company's patent when a prototype was delivered without a big red label on it. See for the Night Vision case.

When will the government decide yes or no on my proposal? In 2-4 months from the solicitation’s closing date.

Can I ask for more than the published amount? You can ask for anything. The government can grant any such request although it is highly unlikely to do so. Bureaucrats like uniformity and mandated boundaries. Some agencies will throw your proposal out if you ask for more than the stated limit since they want to reduce their work load. 

Can I submit a proposal after the deadline? Not for SBIR. But. You can always talk to the agency’s Point of Contact for the SBIR topic without mentioning SBIR and find whether they are interested in seeing what you have. They have limitations on talk, you don’t.

Can I go straight to Phase 2? NO! You can, however, propose a simple short Phase 1 that shows the feasibility quickly. Some agencies will then let you propose Phase 2 earlier than usual. 

<Can I propose the same thing to more than one topic or more than one agency?Yes, as often as you like. But you can only accept one grant/contract for the same work, and you must tell them that you are proposing it elsewhere. But you don't have to tell them how many times it has been rejected before. Don't even think about double dipping and getting nailed for criminal fraud. 

Can I propose something for which I cannot find a topic? Maybe. Some agencies are looking for the best new technology and are open to ideas they hadn't thought to ask for. Look for general topics like "Surprises and Opportunities".  But you will need sonmething extra-ordinary.

Is there a limit on how many awards I can get?Nope, but like the chow hall in the Army, "Take all you can handle, but handle all you take." 

Will they tell me why I lost?Sorta. You might get the technical reviews, which are good for your own due diligence. But you are unlikely to discover the real reasons for the rejection mostly because that's a judgment call among priorities by bureaucrats who don't like publicity and controversy. 

Can I propose without actually having a company yet?Yes. You don't have to be a company until the day you sign the contract (a.k.a. funding agreement). BUT, most agencies require you to get a registration ID of some sort, like a DUNS number that may require you to pretend (legally) that you are company.  Read the agency's rules in its solicitation.

Can I propose Einstein and substitute Alfred E Newman for the actual work?. Only if the government thinks Fred is good enough to be a Principal Investigator. Government usually demands a Key Person clause for the PI, and often bases its fund-fail decision on the qualifications of the proposed PI. 

Do you help with NIH proposals?  Sorry, NIH's rules are too specialized for my physical sciences background. Nor do I have a good recommendation for a consultant. See the Links page for several candidates.

If I am non-degreed, but have a lifetime of diverse (applicable to topic) experience, do I have a chance to become a PI? Yes, certainly, if you are proposing development and not pure science. You need to show that your idea is the best idea for the topic and that you are eminently capable of executing it. And more valuable than diversity of experience is depth in the technology you are proposing. After all, depth is what the PhD's have most of.

Will the government steal my idea? Possibly. If a government lab sees an good idea they had not thought of, they will be anxious to try it. But they might not prevail in the internal competition to get an SBIR award for you. So they could go ahead and try to make it work in the government lab. Can you stop them? You'll never know they're doing it. How often does that happen? I don't know, but I think it is uncommon. Can you sue them? The government has more lawyers than you have. 

Where can I find a sample proposal?

SBHTI's $30 CD 

Beware of Sample Proposals

Must I complete every section of the proposal format? Usually. If your idea is not very competitive anyway, it hardly matters how meticulous you are in describing it. Some agencies check proposals administratively for crossing of  ts and dotting of is; be meticulous with them. Others just want the best ideas and pay little attention to administrative niceties. Unfortunately for everyone, the agency administrative nitpickers don't know a good proposal from a bad one and can deprive the technical people of something they might drool over. 

How do I get Phase 3?Kiss a bureaucrat who looks like a frog.  Since SBIR has NO money for Phase 3, only the regular department spending can fund Phase 3. In the mission agencies (the ones who actually use technology) you will have a slight advantage in the regular procurement because you know more about your stuff than anyone else and because the SBIR law directs the agency to be nice to you. 

Can I do SBIR by moonlight? NO. The Principal Investigator, the main operator, must be primarily employed by the small company. I considered tenured faculty ineligible for PI status.

If Agency A refuses my Phase 2 proposal, can I take it to Agency B? Yes, but don't be shocked if B also declines. Agencies are not enthusiastic about raising other people's children. To get B interested, you would have to find some government guy who really likes your idea and will fight for it inside. Tossing it over the transom will have no effect (unless it hits a government guy on the head). 

Does the government really care about commercialization prospects? A little sometimes in some agencies. But they are required to pretend to care and therefore demand that you write a commercialization plan. Almost any fantasy will suffice since the agency managers get nothing from your commercial success.

Will the government release my proposal outside the government?Probably not. They may use outside contractors sworn to secrecy for technical opinions.They will not release anything that you say is proprietary, nor any data you generate in the contract, until at least four years after your contract ends.  

Can I get a list of the companies who proposed but did not win?  No, that's "adverse business information" which the government does not release. Try your state SBIR support manager.

Can I get a copy of a proposal from my competitor who may be violating my patent?Probably not. The Freedom of Information Act requires the government to release any document in its possession that is not in one of the few exempt categories. An SBIR proposal is fair game except for the proprietary and business confidential portions IF the government still has possession. Agencies avoid that problem by destroying unfunded proposals which they have no requirement to keep. 

Will the government help me find a private sector partner? Not much. Not only is that not the government's job, they don't know all that much about private investment incentives. 

Will the agency fund at least one proposal in each topic? No. Sometimes they change their minds about what they want and sometimes the proposals are all poor, even yours.  

Would it help if my Congressional representative or Senator wrote a supporting letter? To say what? Members of Congress rarely have any specialized knowledge that would strengthen your proposal. And Congress has largely pulled itself out of  influencing agency decisions (except for large contributors). Only if you have been demonstrably abused by the agency process would it be worthwhile to recruit Congressional help. 

When can I start working and spending? When the government Contracting Officer says so by either signing a contract or telling you by phone (a rare happening). Until then, the government will NOT reimburse you for any money you spend. 

What if the work costs me more than the agreed amount? You can ask more, if a cost-plus phase 2 contract. but quite unlikely get it. principle, government only supplementing r&d would do anyway private investment. in" practice, especially for the mission agencies, you just doing what want and it is completely their call on how much they are willing to spend with you. ">

What if the work takes longer than I thought? For that, the government is normally forgiving as long as you don't want any more money. No-cost time extensions are common. But in Phase 1, that may cost you an opportunity for Phase 2 if the agency has a fixed window for submitting your Phase 2 proposal. Sure it's a dumb policy, but it keeps the trains on time.

Who reviews the proposals and decides? Varies by agency. In mission agencies (like DOD or NASA) the person who wrote the topic gets the loudest voice, sometimes alone. More usually, 3-4 technical experts review and create an order of merit list which then goes before a committee or before a more senior person. In the non-mission agencies (like NIH and NSF) a committee of outside peer experts, typically academics, review the proposals and recommend the order of merit. 

Can I have non-US citizens involved? Sometimes. After Sept 11, the government got a lot more nervous about aliens and US technology. Each agency has its own attitude. Technologies on the export control list have to be kept in the family. DOD can get very touchy about aliens in their workshops. Ask the agency for its latest attitude. 

What does the Defense Department do?  In support of its mission to kill people and destroy property in the name of the United States, almost everything. Everything you can imagine an American city doing, the DOD is doing someplace in the world. Its SBIR topics cover a wide field.

What should I use as an overhead rate? For your first Phase 1, anything reasonable that will cover your expenses not directly doing the project. If you don't know nuttin' about overhead, try 50%. You won't lose (or win) your proposal with a reasonable rate. If they like your technology but not your overhead rate, they'll negotiate and you'll do it their way (they have the gold). After your first contract/grant, you'll know better next time and you'll have some money to hire an accountant. 

Can I buy R&D or stuff from Germany? R&D only if the doer does it in the USA or affiliates; stuff if it is commercially offered on a price competitive basis. Your contract will have a Buy American clause under which you have to favor US suppliers. 

More later.......<

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