The STTR Program
The Small Business Technology Transfer (STTR) is another program that expands funding opportunities in the federal innovation research and development (R&D) arena. Central to the program is expansion of the public/private sector partnership to include the joint venture opportunities for small businesses and nonprofit research institutions. The unique feature of the STTR program is the requirement for the small business to formally collaborate with a research institution in Phase I and Phase II. STTR’s most important role is to bridge the gap between performance of basic science and commercialization of resulting innovations.
STTR Mission and Program Goals
The mission of the STTR program 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.
The programs’ goals are to:
- Stimulate technological innovation.
- Foster technology transfer through cooperative R&D between small businesses and research institutions.
- Increase private sector commercialization of innovations derived from federal R&D.
STTR Participating Agencies
Each year, Federal agencies with extramural research and development (R&D) budgets that exceed $1 billion are required to reserve 0.45% of the extramural research budget for STTR awards to small businesses. These agencies designate R&D topics and accept proposals. Currently, five agencies participate in the STTR program:
Each agency administers its own individual program within guidelines established by Congress. These agencies designate R&D topics in their solicitations and accept proposals from small businesses. Awards are made on a competitive basis after proposal evaluation.
Three-Phase Program
The STTR Program is structured in 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 businesses prior to providing further Federal support in Phase II. STTR Phase I awards normally do not exceed $150,000 total costs for 1 year.
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 Phase II project proposed. Only Phase I awardees are eligible for a Phase II award. STTR Phase II awards normally do not exceed $1,000,000 total costs 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 STTR program does not fund Phase III. In some Federal agencies, Phase III may involve follow-on non-STTR funded R&D or production contracts for products, processes or services intended for use by the U.S. Government.
Dollar Amount of Awards Adjusted for Inflation
The SBIR/STTR Statute (15 U.S.C. §638) establishes a cap for the maximum dollar amount of SBIR and STTR awards, above which an agency must request a SBA-approved waiver. SBA shall adjust the maximum dollar amount every year for inflation. The adjusted cap is effective for all solicitations and corresponding topics issued on or after the date of the adjustment. Agencies may amend their solicitation and other program literature accordingly. Agencies have the discretion to issue awards for less than maximum dollar amount. For more information regarding a specific agency’s award guidelines, please visit their solicitation and website. Agencies may exceed this cap for a specific topic with approval from SBA prior to the release of the solicitation, award, or modification to the award for a topic issued on or after the date of adjustment.
As of November, 2019, agencies may issue a Phase I award (including modifications) up to $256,580 and a Phase II award (including modifications) up to $1,710,531 without seeking SBA approval. Any award above those levels will require a waiver. Agencies considering this authority should review §7(j)(5) for additional information.
Competitive Opportunity for Small Business
STTR is a highly competitive program that reserves a percentage of federal R&D funding for awards to small businesses and United States nonprofit research institutions. Small business has long been where innovation and innovators thrive. But the risk and expense of conducting R&D can be beyond the means of many small businesses. Conversely, nonprofit research laboratories are instrumental in developing high-tech innovations. But frequently, innovation advances theory, rather than the development of innovative practical applications. STTR combines the strengths of both entities by introducing entrepreneurial skills to high-tech research efforts. The technologies and products are transferred from the laboratory to the marketplace. The small business profits from the commercialization, which, in turn, stimulates the U.S. economy.
STTR Policy Directive
Note: SBA finalized an updated Policy Directive on May 2, 2019. SBA combined the SBIR and STTR Policy Directives into a single guidance document. Please see the preamble for a summary of the changes and comments from the review process.
Prior 2014 Version of the Policy Directive:
Proof of Concept Partnership Pilot Program
The Phase 0 Proof of Concept Partnership Pilot Program was created through the National Defense Authorization Act for Fiscal Year 2012 (P.L. 112-81), adding section 9(jj) of the Small Business Act (15 U.S.C. 638(jj)). This pilot program allowed the National Institutes of Health (NIH) to use STTR funds to make awards to research institutions to accelerate the creation of small businesses and the commercialization of research innovations. The pilot program was initially authorized through the end of FY 2017, but was subsequently reauthorized through FY 2022 in the John McCain National Defense Authorization Act for Fiscal Year 2019 (H.R. 5515 Sec 854).
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