NIH Implements an SBIR Direct-to-Phase-II Funding Option

On February 5, 2014, the NIH published a new Funding Opportunity Announcement (“FOA”), PAR14-088. See moreIf your small business already has research results validating a prototype, the Direct-to-Phase-II award is available to a successful applicant. This FOA eliminates the need for the applicant to propose small prototype/feasibility studies or to achieve interim milestones.

Background: The SBIR/STTR Programs were reauthorized by the United States Congress with the SBIR/STTR Reauthorization Act of 2011 (P.L. 112-81). Under the Act, through the year 2017, NIH, DOD and the Department of Education may issue a Phase II award to a small business concern that did not receive a Phase I award for research & development for the same project. DARPA has already started implementing this option. As of February 5, 2014, NIH is also starting the implementation.

Important Considerations/Reminders:

  • Under the Reauthorization Act, the set-aside of funds dedicated to grants under the SBIR is due to increase each year, through 2017, when it will reach 3.2% of extramural grant funds.
  • Recipients of SBIR Phase II funds may qualify for additional services from 3rd party service providers made available through some of the granting NIH Institutes or Centers (mostly but not exclusively through NIH-hired service providers), including technical services and business planning.
  • The Direct-to-Phase II authority is not available to the STTR program, only SBIR.
  • All participating NIH Institutes and Centers will accept Direct-to-Phase-II SBIR applications in this FOA foranybiomedical/behavioral technology areas within their mission or on specific other topics they occasionally list. One partial exception, NINDS will accept Direct-to-Phase II SBIR applications in this FOAonlyon specific topic areas listed in the FOA. Please see the FOA for a detailed list of participating Institutes and Centers and their mission technologies.
  • The mission of the participating NIH Institutes and Centers can be found in the NIH SBIR/STTR Program Descriptions and Research Topics See More.
  • This FOA willnotaccept ‘regular’ Phase II submissions from SBCs that have received a Phase I SBIR or STTR award from NIH or any other agency that participates in the SBIR/STTR programs for projects for which applicants now seek follow-on research and development funding.
  • Total funding support (direct costs and indirect costs) normally may not exceed $1,000,000 for Phase II awards. With appropriate justification from the applicant, Congress allows SBIR awards to exceed these amounts by up to 50%. NIH has received a waiver from SBA to further exceed the cap for awards related to specific topics. The list of approved topics can be found in Appendix A of PHS 2014-2 SBIR/STTR Program Descriptions and Research Topics for NIH, CDC, FDA and ACF. Furthermore, you should refer to information obtainable from your targeted Institute or Center to determine whether they will consider applications above these amounts.
    • NCI does not generally fund Phase II SBIR applications greater than $2,000,000 (regardless of topic).
    • NINDS does not generally fund Phase II SBIR applications greater than $3,000,000 total funding support, with no more than $1,500,000 total cost in any year, or project periods greater than 3 years.
    • As always with NIH grant applications, you should develop a habit of contacting program officers often and certainly prior to submitting any application in excess of the guidelines and early in the application planning process.
    • According to statutory guidelines, award periods normally may not exceed 2 years for Phase II.
  • On August 6, 2012, SBA published a final SBIR Policy Directive implementing the various provisions of the Reauthorization Act at 77 FR 46806. The directive made several key changes to the SBIR Program relating to eligibility, the SBIR award process, SBIR Program administration, and fraud, waste and abuse. You should consult the latest regulatory procedure as periodically announced in the Federal Register. Easier but less precise, you can ask questions from your program officer.

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