Learn how NASA’s SBIR and STTR programs work under the Broad Agency Announcement, how to apply, and how to manage a NASA contract with audit-ready accounting.
What is the NASA SBIR Program?
NASA’s SBIR and STTR programs fund small businesses developing technology that supports NASA’s missions and has commercial potential. NASA awards are firm-fixed-price contracts, so a NASA SBIR brings both funding for research and development and federal contract requirements for how your company tracks labor and project costs.
Small businesses have contributed SBIR-funded technology to NASA missions for decades. Three SBIR companies supplied technology for the Phoenix Mars Lander, which confirmed water ice in Martian soil in 2008. Honeybee Robotics built the icy soil acquisition device, Yardney Technical Products provided lithium-ion batteries, and Starsys Research provided key elements of the wet chemistry laboratory.
This guide explains how NASA’s SBIR program works, how to apply under NASA’s Broad Agency Announcement, and how to set up accounting for a NASA Phase I or Phase II contract.
Eligibility and Phases
To apply for NASA SBIR or STTR funding, your company must:
- Be a for-profit business located in the United States
- Have 500 or fewer employees, including affiliates
- Be at least 51% owned and controlled by U.S. citizens or permanent residents
- Have the principal investigator primarily employed by the small business, for SBIR awards
Every proposal also includes a foreign affiliation disclosure.
NASA’s program runs in three phases. Phase I establishes feasibility, with awards of up to $225,000 and a performance period of up to six months for SBIR and SBIR Ignite, or up to 13 months for STTR. Phase II continues the research and development, with awards of up to $1,275,000 over up to 24 months. Phase III covers commercialization and is funded outside the SBIR and STTR programs. Each appendix sets the exact amounts and periods of performance for its opportunities.
NASA doesn’t issue a separate Phase II announcement or accept unsolicited Phase II proposals. Only companies that receive a Phase I award under the BAA can compete for Phase II. Once your company holds a Phase I award, it can also receive sole-source Phase III contracts from NASA programs, other agencies, or the private sector.
SBIR vs. STTR
STTR requires a formal partnership with a U.S. nonprofit research institution, while SBIR allows a research partner but doesn’t require one. The work-share rules also differ:
- SBIR: Your company must perform at least 67% of the effort in Phase I and at least 50% in Phase II.
- STTR: Your company must perform at least 40% of the effort, and the research institution at least 30%.
How to Apply for NASA SBIR Funding
Understanding the Broad Agency Announcement Process
NASA manages SBIR and STTR solicitations through a Broad Agency Announcement. The BAA sets the overall requirements, and NASA releases appendices throughout the year with the topics, subtopics, deadlines, and submission instructions for each opportunity. If an appendix and the BAA conflict, the appendix takes precedence. Read both carefully, track every deadline, and work backward to set internal milestones for narrative drafting, pricing, registrations, and final reviews.
NASA limits each company to two proposals per appendix. The limit resets with each new appendix, so your company can submit to more than one. Check each appendix for its limit before submitting.
Application Requirements
Each proposal responds to a single subtopic in an appendix, and NASA won’t move a proposal to a different subtopic, so choose the best fit carefully. Your company needs active SAM.gov and SBA Company Registry registrations before submitting electronically through the system named in the appendix.
A proposal package includes a technical proposal covering the technical approach and a commercialization and business plan, a proposal budget, and the required forms and certifications, including the foreign affiliation disclosure.
NASA reviews proposals in stages:
- Administrative compliance: The proposal is complete and meets the BAA and appendix requirements.
- Technical responsiveness: The proposal addresses the selected subtopic.
- Technical merit and commercial potential: Reviewers score the proposal against the evaluation rubric attached to each appendix.
- Cost and price: NASA reviews whether the proposed budget is reasonable.
Because NASA awards are firm-fixed-price contracts, the price you propose is the price NASA pays. Build the budget from your actual labor rates, indirect rates, and vendor quotes. Team 80 can review a proposal budget before submission so it reflects what the work will really cost.
Managing Your NASA SBIR Award
A firm-fixed-price NASA contract pays the agreed price on the terms set in the contract, even if the work costs more than planned. A fixed-price award may not require a formal DCAA review, but your company still needs records that show what the project costs, and later cost-reimbursement contracts with NASA or other agencies can require an adequate accounting system.
Required Financial Systems
Your accounting system should:
- Record every project cost in the general ledger and tie it to the contract
- Separate direct costs from indirect costs, with indirect rates calculated the same way each period
- Track time for every employee who works on the contract, recorded as the work happens
- Keep unallowable costs in separate accounts so they stay out of indirect rates
- Compare actual project costs with the budget every month
- Use internal controls such as bill approvals and regular transaction reviews
One space company Team 80 spoke with held a NASA Phase I contract and was negotiating a cost-reimbursement contract, which raised the bar for its accounting system. The company already used a corporate card and spend management tool it liked, so Team 80 suggested keeping that tool synced for card transactions while moving vendor bills into Team 80’s bill pay process.
Understanding NASA Cost Categories
NASA SBIR awards are contracts, so the cost principles in FAR Part 31 determine which costs are allowable.
- Direct costs: Expenses tied specifically to the project, such as project labor, materials, and subcontractor work.
- Indirect costs: Shared expenses such as fringe benefits, facilities, and administration, allocated to the project through your indirect rates.
- Unallowable costs: Expenses such as alcohol, entertainment, and lobbying that must be tracked separately and kept out of your price and indirect rates.
Patent costs deserve attention on a NASA proposal. Under FAR 31.205-30, patent costs are allowable only if the contract requires them, although general patent counseling can be an allowable indirect cost.
Staying Compliant Throughout Your Award
Steps for Compliance
- Set up the accounting before work starts. Timekeeping, the chart of accounts, and written accounting procedures should be in place before anyone charges time to the contract.
- Keep business and personal expenses separate. Founders who pay project costs from personal accounts, or run personal charges through the company, create gaps in the audit trail that take time to fix later.
- Keep contract records in one place. The contract, modifications, budget, deliverables, and supporting documents should be easy to find. Team 80 keeps each client’s contract and budget documents in a shared folder, so updates and supporting records stay together.
- Retain records after the contract ends. Keep financial records for at least three years after final payment, and longer if an audit, appeal, or claim is still open.
Reporting Requirements
- Technical reports: Submit them on the schedule and in the format your contract specifies.
- Invoices: Follow the payment schedule in the contract. Each invoice should match the deliverables or milestones it covers and reconcile to your general ledger.
- Commercialization updates: Update your commercialization planning when the contract calls for it.
Additional NASA SBIR Opportunities
TABA
Technical and Business Assistance (TABA) funds can support market research, intellectual property guidance, and commercialization activities. Companies may request up to $6,500 in Phase I and up to $50,000 in Phase II. NASA includes TABA within the total award amount, so any TABA request counts toward the Phase I or Phase II maximum rather than being added on top.
NASA runs I-Corps with the National Science Foundation to help Phase I teams test their business model through customer discovery. SBIR Phase I teams complete a seven-week program with about 50 customer interviews. STTR Phase I teams and some Post-Phase II companies complete the full National I-Corps program with about 100 interviews.
NASA funds I-Corps as a modification to your existing contract, with budgets capped at $23,000 for SBIR Phase I teams and $35,000 for National I-Corps teams. The budget can cover specific costs, including compensation for the team’s Entrepreneurial Lead, travel, program registration fees, and indirect costs, but it can’t include profit. The Entrepreneurial Lead’s I-Corps compensation also can’t cover time already charged to the Phase I or Phase II award, so timesheets need to keep the two efforts separate.
SBIR Ignite is designed for commercially focused, product-oriented startups and small businesses, including companies that haven’t worked with NASA before. Ignite offers the same Phase I and Phase II funding levels as the standard program, along with access to I-Corps and TABA. Its topics focus on emerging commercial aerospace markets, and the Phase II proposal is due earlier in the Phase I period, which moves companies to Phase II faster. Your accounting needs to be ready for a Phase II award sooner as a result.
Team 80’s NASA SBIR Accounting Services
Specialized NASA Grant Expertise
Team 80 manages the recurring accounting behind Phase I and Phase II NASA SBIR and STTR contracts. Each client works with a dedicated Chief Accounting Officer, has a monthly financial review call, and gets same-business-day responses to questions.
Accounting Support for NASA Contracts
Services include:
- Chart of accounts setup that separates direct, indirect, and unallowable costs
- Monthly bookkeeping, financial statements, and project cost reports
- Timekeeping and labor allocation
- Indirect rate calculations compared against the rates in your proposal
- Accounts payable, with the client approving each payment
- Subcontractor cost tracking against SBIR and STTR work-share requirements
- Contract invoicing, when included in your service agreement
- Payroll through Gusto, when included in your service agreement
- Support during audits and accounting system reviews
With more than 25 years of experience supporting SBIR and STTR awardees and government contractors, Team 80 sets up the accounting before Phase I work starts and adds the tracking a larger Phase II contract needs.
Sarah Sinicki
Team 80 CEO
Sarah is a leader focused on serving small businesses in various industries. She has worked with a multitude of companies over the last 25 years and loves helping business owners find success. Sarah is genuinely committed to unburdening Team 80 clients so that they have the freedom to focus on their business. In her free time, you can find her spending time with her husband, two kids, and her Yorkies, Marley and Ziggy. When she is not helping business owners, you can find her in a Reb3l Groove class dancing it out. Sarah is also an avid Colorado Avalanche fan, so if you ever want to talk about hockey, she’s your gal.
