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The SBIR Program was created when Congress mandated that all federal agencies with an extramural research budget of $100 million or more must set aside a percentage of their research dollars for awards to small businesses and individuals. Consequently ten agencies participate in the Small Business Innovation Research program that allows for-profit small businesses to submit competitive proposals to address various solicitation topics that are unique to each agency. The SBIR program is administered under a three-phase concept. Phase I is designed to allow a recipient to prove the overall feasibility of a proposed concept. Depending on the agency, these awards can be up to $100,000 for work that typically spans a 6-month study period ($200,000 and two years for certain projects sponsored by the National Institutes of Health). If the agency deems the small business has satisfactorily completed the work they will consider a follow-on Phase II award. These awards, again depending on the agency, can be for up to $750,000 for two years of effort (in some cases more for NIH). All Phase II winners are then expected to enter Phase III and commercialize their technology. No additional awards are provided to support this work; rather, the agency intends for the small business to self-finance or line up an investor. In no case can a Phase II award be received without a preceding Phase I, but not all Phase I projects are successful in earning a Phase II.
Certain agencies offer FastTrack options that are designed to minimize funding gaps between Phases I and II. Availability and details can be found on the various websites for each agency.
The STTR Program is a sister program to the SBIR, with virtually the same structure and application process. However, only 5 agencies currently participate. The most significant difference between the two programs is that, while qualified non-profit research institutions or universities may cooperate in an SBIR project, they must collaborate on STTR projects.
As you would expect, each federal agency has their own rules for doing things, with different topics for bidding, different competition deadlines, different methods of preparing and accepting proposals, etc. Just because one agency does it one way, don't assume others will do it the same way.
To learn more about the SBIR and STTR programs go to http://www.sba.gov/sbir/indexsbir-sttr.html. Included in the helpful information on this site you will find a link to a comprehensive "SBIR Handbook for Proposal Preparation". Besides providing general guidance in preparing a proposal it also provides more insight into the workings of the programs.
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