SBIR and STTR Grants

Often a small business applying for an SBIR or STTR award does not have all of the skills and capabilities in house that it needs and therefore may look for a subcontractor. Including a subcontractor with research expertise that supplements the small business' capabilities and qualifications can strengthen a grant proposal and may be particularly helpful to small businesses that have not previously received federal research awards.

A subcontract is an agreement between the small business applying for an SBIR or STTR award, and a third party that will help perform the research. Federal agencies encourage small businesses to take advantage of research expertise and facilities that may be available to them at universities and national laboratories.

When it comes to the STTR program, subcontracting is mandatory. An STTR is defined as a collaboration between the small business applicant and a nonprofit research entity, typically a university or federal laboratory.

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Contact the UC Berkeley Industry Alliances Office (IAO) for assistance with becoming a subcontractor on a company’s SBIR/STTR grant. An IAO contracting officer can:

1. review and officially submit the subcontract proposal to the company.
2. help shape, interpret, and implement the contract in compliance with UC procedures and policies.
3. negotiate the subcontract with the company if the proposal is accepted.

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Small, for-profit, U.S.-based businesses are eligible to apply for SBIR/STTR grants and contracts. The small business is always the applicant and awardee.

So how can university researchers access the funding? The company can subcontract some of the work to researchers at a university or other non-profit institution.

• In the SBIR program, the company awarded the grant is permitted to subcontract a portion of the R&D to faculty at a research institution.
• The STTR program requires the small business to formally collaborate with a research institution.

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Research expertise. Looking for a UC Berkeley researcher with expertise in a particular field? Search the UC Berkeley faculty expertise database.

Facilities. UC Berkeley has specialized equipment and laboratory space that can be useful in a company's SBIR or STTR grant application. Learn about the business-friendly agreements for making use of campus research facilities and services through the Berkeley Research Infrastructure Commons (RIC).

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There are several key differences between the SBIR and STTR programs.

1. An STTR project requires the small business to team with a non-profit research institution, typically a university or Federal Laboratory.
2. The STTR program is focused on the transfer of technology from UC Berkeley to the small business and ultimately to the marketplace through a Phase 1-2-3 sequence. This includes situations where the innovation belongs to the small business, but the small business wants to include important resources from UC Berkeley in the technology’s development. The STTR agreement requires the small business to establish an intellectual property agreement detailing the allocation of IP rights and rights to carry out follow-on research, development, or commercialization activities.
3. In the STTR program, the small business must perform at least 40% of the work, and a single partnering research institution must perform at least 30% of the work.

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Faculty. By working with a company on SBIR- or STTR-funded R&D, UC Berkeley researchers are able to move innovations that will benefit society toward commercialization.

Small businesses. Startup companies founded by campus innovators often seek SBIR and STTR funding to support the R&D necessary to bring breakthrough innovations to market.

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UC Berkeley employees can conduct research under a subcontract from a small business that has received an SBIR or STTR award. IAO contracting officers can assist PIs in initiating the subaward process. The department chair and academic dean should review the proposed research plans to ensure that the work:

1. has scientific merit,
2. constitutes a good use of UC Berkeley research facilities,
3. will not compromise the PI’s academic responsibilities,
4. is for a unique and specific scope of work distinct from research funded by other outside entities,
5. is for work that does not overlap with the investigator’s other research responsibilities, and
6. reflects full cost recovery (direct and indirect), including the PI’s time, in the project budget.

As an alternative a subcontracting agreement, companies can hire UC Berkeley researchers as consultants. A PI can work with a company as a consultant on grant-related activities, or under a subcontracting agreement the comnpany has signed with UC Berkeley, but not both.

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Eleven federal agencies currently award SBIR grants, and five award STTR grants. Federal agencies with research and development budgets exceeding $100 million are required to allocate a certain percentage to the SBIR program. Federal agencies with R&D budgets that exceed $1 billion are also required to reserve a certain percentage for STTR awards.

• Department of Agriculture
• Department of Commerce - National Institute of Standards and Technology
• Department of Commerce - National Oceanic and Atmospheric Administration
• Department of Defense (both SBIR and STTR)
• Department of Education
• Department of Energy (both SBIR and STTR)
• Department of Health and Human Services (both SBIR and STTR)
• Department of Homeland Security
• Department of Transportation
• Environmental Protection Agency
• National Aeronautics and Space Administration (both SBIR and STTR)
• National Science Foundation (both SBIR and STTR)

Although the federal regulations for these programs do not prohibit faculty from being both a principal in the company and the Principal Investigator (PI) for the campus subcontract, California State law and University of California policies restrict such a relationship, requiring stricter guidelines. The PI tor for the small business SBIR/STTR application and the PIO for the subcontract to Berkeley must be different individuals. Visit the UC Berkeley conflict of interest office website for more guidance.

• UC Berkeley conflict of interest disclosure requirements

• Bay Area NSF Innovation Corps (I-Corps) trains faculty, researchers, and students in commercializing university research, and will help you position your startup company for a successful SBIR/STTR grant application.
• QB3 SBIR/STTR grant writing support

One of the goals of the SBIR and STTR programs is to encourage participation in innovation and entrepreneurship by socially and economically disadvantaged small businesses and women-owned small businesses. IPIRA supports entrepreneurs from all backgrounds, especially people of color, women, and other groups that have been historically underrepresented in tech. We believe that diverse and inclusive teams identify and solve challenges that may otherwise get overlooked and a multitude of perspectives and experiences create more innovative and informed technology solutions.