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The Top 20 Questions People Ask About SBIR Phase 1

Learn as much as possible about SBIR Phase 1 before moving through the application process.

Innovation requires an agile mind that can pivot quickly from a dynamic speed to a more methodical pace. In the case of courting funds from the various Small Business Innovative Research (SBIR) federal programs, it pays to be slow, steady, and inquisitive. 

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Getting your hands on that sweet government funding takes time and a gauntlet of no less than three gated phases. Each phase bears its own unique requirements, and to increase your chances of successfully moving through the process, it’s essential to ask all the necessary questions along the way. 

This blog will review the most critical questions associated with Phase I of the SBIR program across all involved government agencies.

Table of Contents



  1. What is SBIR Phase I?

Kicking off the proceedings, Phase I is mainly the research component to the funding process. Phase I could have some prototyping involved, but it’s essentially a feasibility study to evaluate an idea’s scientific and technical merit. 

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  1. What is the Timetable for Phase I SBIR, and How Much Does it Award?

Depending on the government agency you’re working with, a Phase I award is typically six to nine months and awards $50,000 to $250,000.

  1. Who Qualifies for SBIR Phase I?

Small businesses that operate entirely in the U.S.—outside of a small number of subcontractors or consultants—with fewer than 500 employees qualify for SBIR Phase I. 

The company must also be majority-owned by U.S. citizens. These requirements are the same across all three phases and all government agencies.

  1. Can I Skip Phase I and Go Directly to Phase II?

No. The SBIR program was established to create new innovations that meet existing federal research and development needs. The results of Phase I determine whether or not there will be a Phase II award to continue your efforts.

  1. Can Nonprofits Participate in SBIR Phase I?

No. Because of the ultimate goal of commercialization, nonprofits are not eligible for SBIR Phase I or any other phase of the SBIR program. 

  1. What Government Agencies Participate in SBIR Phase I?

Eleven government agencies grant SBIR funding. These include: 

  • Department of Agriculture
  • Department of Commerce
  • Department of Defense
  • Department of Education
  • Department of Energy
  • Department of Health and Human Services
  • Department of Homeland Security
  • Department of Transportation
  • Environmental Protection Agency
  • National Aeronautics and Space Administration
  • National Science Foundation

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  1. Who is the SBIR Phase 1 Contact for Each Agency?

Each agency has multiple contacts that can help you navigate the application process. 

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  • Department of Agriculture





  • Department of Education


  • Department of Energy


  • Department of Health & Human Services
    • Stephanie Fertig, Small Business Program Lead
    • Email: seedinfo@nih.gov
    • Phone: 301-435-2688




  • Department of Transportation


  • Environmental Protection Agency


  • National Aeronautics and Space Administration (NASA)


  • National Science Foundation


  1. Does the Small Business Administration (SBA) Contribute Awards in SBIR Phase I?

No. While the SBA itself doesn’t award funds, the federal agency monitors and coordinates all activities of the SBIR program, reporting the results to Congress across all three phases. 

  1. Can I Submit an Unsolicited Proposal for SBIR Phase I?

No. SBIR programs across all agencies require you to respond to one of their current topics.

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  1. What are Appropriate Topics for SBIR Phase I?

All agencies that offer SBIR programs list appropriate topic opportunities in their solicitation or Funding Opportunity Announcement (FOA). The only exception to this rule is the Department of Energy, which publishes a separate topic list several weeks before it releases its FOA.

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  1. How Can I Find Funding Opportunity Announcements for SBIR?

Back in the day, you had to read actual paper copies of solicitations from beginning to end to see if there were any topics relevant to your field of expertise. 

Today, with the help of the internet, all solicitations are distributed electronically—making the entire process faster, easier, and more conducive to results. 

You can find topics via a collection of search engines set up by the federal government. Type in your keywords, and the search engine goes through the topics that are currently open or recently closed. 

  1. What Are the Best Search Engines for Finding SBIR Phase I Opportunities?

Grants.gov can be used to search across all federal agencies offering all types of awards, including SBIR. But remember, less than half of all SBIR awards are made as grants, with the rest made as contracts. 

To search SBIR contract opportunities, go to sam.gov. Along with these two resources, many individual government agencies have their own search engines associated with their SBIR program. 

Meanwhile, some cross-agency search engines focus strictly on the SBIR programs. Some of these search engines are free, while others are only available for a charge. Of the free search engines, the best is SBIR.gov.

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  1. What Are The Submission Dates For SBIR Phase I?

Submission dates for Phase I of SBIR programs vary depending on the agency. To stay on top of your SBIR potential, you must keep track of four sets of dates: Release Date, Open Date, Due Date, Close Date. 

These denote the period for the different stages of an SBIR Phase I lifecycle, giving you a timeline and a good old-fashioned motivational deadline. This searchable page on the SBIR website lists ALL upcoming submission dates for every federal agency. 

  1. How Can I Win SBIR Phase I?

There is a lot of competition for SBIR grants and contracts. As such, you need to set your small business up for success to have the best chances of winning. Follow these basic tips:

 

  • Study The Details.

    Know your innovation front to back, which agency would show the most interest, and what that specific agency requires in its applications. 

 

  • Communicate.

    Remember that list of contacts from question #7? Reach out to the appropriate agency contact and start a dialogue. These agencies want to award funding the best possible innovation. So let them know you exist! Eventually, you should prepare a 1-2 page summary of your idea and email it to your point of contact. 

 

  • Take Your Time.

    As we stated earlier, the SBIR program is highly competitive. Put in the necessary time to correctly complete the application. This is not a process that only takes an afternoon—it should represent hundreds of hours of hard work! Consider hiring an SBIR grant writer. 

 

  • Read Proposal Samples.

    No one dives into the complicated world of SBIR program applications without a healthy dose of research and know-how. Search for successful proposals from other companies and reverse engineer their results into manageable goals. 

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  1. What are the Performance Benchmark Requirements for SBIR Phase I?

Small businesses with multiple SBIR awards must meet minimum performance requirements to be eligible for a new Phase I award. This ensures that all Phase I applicants are working toward commercializing their work. There are two main requirements:

 

  • Phase I to Phase II Transition Rate:

    An awardee must have received an average of one Phase II for every four Phase I awards received during the most recent 5-year period.

 

  • Commercialization Benchmark:

    This applies to SBIR Phase I applications that have received more than 15 Phase II awards over the last ten fiscal years (excluding the last two years). It’s required that these companies achieve the minimum levels of commercialization actively from their past Phase II work to be eligible to submit a new Phase I proposal.

  1. What are the Consequences of Failing to Meet Phase I Benchmarks?

The consequences of failing to meet Phase I benchmarks are rather severe. On June 1 of each year, the Small Business Association identifies the companies that failed to meet the minimum performance requirements. These companies will lose eligibility to submit a Phase I proposal for one year from that date. 

  1. How Long do SBIR Phase I Contracts Last?

SBIR Phase I contracts last for six to nine months. 

  1. Are SBIR Phase I Proposals Public Record?

SBIR data is protected from disclosure by the participating agencies for no less than 20 years, with the protection period beginning at the time of the Phase I award. This is also true for phases II and III.

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  1. What If I Have Questions Specific to a Particular Government Agency?

You SHOULD have specific questions for the federal department that’s the object of your application.
You can contact the department using the directory we provided in question #7 or review the “Frequently Asked Questions” pages for each agency:

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  1. What Are The SBIR Phase I Accounting Requirements?

Before netting any awards or contracts, you’ll need an accounting professional to review the integrity of your financial statements. The terms and conditions of the SBIR Phase I program require that you use best accounting practices to track how you spend your Phase I funds. This includes keeping track of timesheets for all employees whose wages or salaries are charged to your SBIR award. 

The expectations for a small business’ accounting system changes between phases I and II. While you need to demonstrate that you have a robust and meticulous accounting system for Phase I, the drastic funding increase between phases—from $150,000 to $1 million—equals much higher expectations from the federal government. 

Assisting you in all aspects of your SBIR accounting system is part of Team 80’s mission to end small business failure. We know the policies inside and out, and we can provide a team of professionals to help you meet all the accounting requirements for any federal agency during any phase of the SBIR process.

If you’ve been awarded an SBIR Phase I Grant or you’re looking for exceptional small business accounting 

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Sarah Sinicki

Partner at Team 80 LLC

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Sarah Sinicki is a Partner and Director of Business Development with Team 80 in Colorado where she is able to apply her 20 years of experience to tailor an accounting solution for a business owner no matter what industry they might be in.


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Get Government Funding For Your Business Idea: SBIR Agency Guide

The Small Business Innovation Research (SBIR) program helps small businesses participate in federal research and development, develop life-saving technologies, and create jobs. 

While the mission is straightforward, the processes involved in landing a grant can be complicated for small businesses operating with skeletal teams and limited budgets. That’s why Team 80 wants to help as best we can. 

So, where do you start? First, let’s find out what agencies participate in the SBIR program.

What Agencies Participate in the SBIR Program?

Federal agencies that participate in SBIR range from the Department of Defense to the National Science Foundation. There are 11 agencies that deliver SBIR grants and one that acts as a coordinating agency. Let’s explore the role each one plays in this crucial program for small businesses. 

  1. Small Business Administration

    Start your journey here. More of a governing body than a participant, the U.S. Small Business Administration (SBA) is the coordinating agency for the SBIR program, directing the agencies’ implementation of SBIR, reviewing their progress, and reporting annually to Congress on its operation. SBA is also the information link to the SBIR program, meaning it distributes important details to small businesses looking to learn more and take part in the SBIR.

  2. Department of Agriculture

    The SBIR program at the U.S. Department of Agriculture (USDA) offers grants to qualified small businesses in support of research related to scientific problems and opportunities in agriculture, particularly those that significantly benefit the public. A grant from the USDA stimulates private-sector technological innovations in the agricultural field, funding a range of projects including rural development, conservation of natural resources, aquaculture, and more.

  3. Department of Commerce

    The U.S. Department of Commerce (DOC) engages with businesses, communities, universities, and workers to promote job creation, economic growth, sustainable development, and improved living standards. Endowed with a workforce that includes economists, Nobel-winning scientists, patent attorneys, law enforcement, and other specialists in various sectors (including aerospace engineering), the department has inspired several advancements in many different fields through the SBIR.

  4. Department of Defense

    Investing more than $1 billion annually in small business technology through the SBIR, the Department of Defense provides high-tech, small businesses with the opportunity to propose innovative research and development solutions in response to critical defense needs. DOD SBIR focuses on the many branches of national defense, awarding grant money to the few, the proud, the small businesses developing defense-minded technological advancements.

  5. Department of Education

    Housed within the Department of Education’s (ED) research arm, the Institute of Education Sciences (IES) funds for-profit technology firms to research, develop, and evaluate commercially viable education technology products. Awardees must demonstrate relevant student or teacher outcomes in education or special education; success stories from the department’s SBIR program run the gamut from online instructional platforms to math game apps.

  6. Department of Energy

    The SBIR program works collaboratively with offices throughout the Department of Energy (DOE). DOE technical program managers develop research topics selected for SBIR grants. At the same time, the department offers more than 60 technical topics and 250 subtopics, spanning the fields of energy production and use, fundamental energy sciences, energy storage, security, environmental management, and defense nuclear nonproliferation.

  7. Department of Health & Human Services

    The Department of Health & Human Services (HHS) deploys the National Institutes of Health (NIH) in search of innovative technologies in the world of biomedical research. Through the SBIR, the departments seek paradigm-shifting expertise that can be applied to enhance health, lengthen life, and reduce illness and disability. One fascinating success story comes from a Colorado-based company that developed medical devices that inhibit bacteria growth by mimicking shark skin.

  8. Department of Homeland Security

    The Department of Homeland Security (DHS) SBIR program provides qualified small businesses with opportunities to propose innovative ideas that meet specific homeland security research and development technology needs. Grants from the DHS SBIR tend to focus on particular areas of concern, including cybersecurity, first responders, chemical and biological defense, detecting bioterrorism, critical infrastructure, border security, and more.

  9. Department of Transportation

    The U.S. Department of Transportation’s (DOT) SBIR program awards contracts to domestic small businesses working on research and development for solutions to the country’s transportation woes. The main focus of DOT SBIR grants is to benefit both the department itself and the public at large. For example, one such awarded business used technology to stop invasive species from hitching a ride on construction vehicles that cross ecological biosystems.

  10. Environmental Protection Agency

    The Environmental Protection Agency (EPA) delivers SBIR grants in the search for entrepreneurs who utilize innovative technologies in the stewardship of the environment. With its stated mission of protecting human health and the environment, the EPA seeks to address a host of concerns with SBIR, including natural resources, public health, air quality, energy conservation, international trade, and more.

  11. National Aeronautics and Space Administration

    Much more well known as NASA, the National Aeronautics and Space Administration exercises the human spirit of exploration with the help of SBIR funds. NASA SBIR has inspired generations of geniuses to boldly go where none of us have gone before. For example, NASA SBIR companies supplied the technology necessary to develop the Phoenix Lander mission, which investigated the presence of water in the Mars arctic region.

  12. National Science Foundation

    The National Science Foundation (NSF) SBIR program takes scientific and engineering innovations and turns them into products and services with a societal impact. Dubbed America’s Seed Fund, the NSF’s SBIR program is housed within the Division of Industrial Innovation and Partnerships within the Directorate for Engineering. One awardee success story features a company that developed technology to recycle carbon dioxide into fuel.

Prominent Past SBIR Phase II Award Winners For Each Agency

SBIR Phase II can provide the necessary funds to research, develop, and produce innovative commercial products. 

Hundreds, if not thousands, of small businesses have benefited from SBIR Phase II Awards across the 11 agencies that grant them. Here’s one success story from each agency.


Department of Agriculture

Past SBIR Phase II Awarded to Precision Combustion, Inc.

Amount: $599,640

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Precision Combustion, Inc. (PCI), located in North Haven, CT, developed an innovative air purifier to reduce ammonia concentrations in poultry houses. The SBIR Phase II award gives PCI the boost it needs to see the project to fruition.

With poultry consumption in the U.S. at an all-time high (and expected to continue its upward trajectory), this SBIR Phase II award-winning project figures to have an immediate, positive effect on consumers. 

 

The solution enables improved poultry health while lowering operating costs through savings on propane for ventilation and other ammonia reduction methods. According to Precision Combustion, flushing out ammonia from animal agricultural operations is critical to the well-being of the animals, the workers, and the environment at large. While other efforts to reduce ammonia simply shift it elsewhere, Precision Combustion’s award-winning solution eradicates the ammonia. 

The SBIR Phase II award helps the project mature to the next level, optimizing components and improving the system’s cost-effectiveness.


Department of Commerce

Past SBIR Phase II Awarded to Robotic Materials Inc.

Amount: $400,000

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The SBIR Phase II Award moved Robotic Materials Inc. to the next level in developing an easy-to-use, autonomous bin-picking and assembly operation for the manufacturing industry.

Robotic Materials Inc. designed a series of object manipulation systems to pick up and assemble mechanical parts such as screws, gears, and pulleys—all configured without the need for any programming skills. 

The Boulder, CO-based tech innovation company started with an intelligent robotic gripper, 3D perception equipment, and machine-learning algorithms, then designed a graphical user interface that identifies assembly parts and issues pick-up and assembly commands. 

The SBIR Phase II Award extends the development to include more manufacturing possibilities and will lead to deploying the equipment to real users.


Department of Defense

Past SBIR Phase II Awarded to RAVN INC.

Amount: $1,106,363

Illustration of Augmented Reality Glasses

The Department of Defense SBIR Phase II Award (Navy branch) spearheaded the production of a new augmented reality vision system. Developed by Ravn Inc., the cost-effective helmet-mounted systems offer advanced sensor capabilities that can project a wide array of data piped in from various sources. It’s a real game-changer for troops in the field.

In Phase I of its SBIR, Ravn Inc. conceived of a High-tech Assaulter’s Virtual Command and Control (HAVOC) Interface. This multi-modal display-and-compute platform leverages a head-worn display and associated peripherals to provide an intermediate augmented reality capability to infantry forces. 

The display enables users to send, receive, view, and manage digital information in a platform that’s functional in the field of battle. Additionally, it increases situational awareness and the ability to interact with external technology platforms. 

With the SBIR Phase II award, Ravn proposes further development of its head-worn display for Odin, an intermediate augmented reality capability for infantry and special operations forces that enables a team-up between human and machine. 


Department of Education

Past SBIR Phase II Awarded to Parametric Studio, Inc.

Amount: $900,000

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The world of augmented reality also enhances learning, as demonstrated by Parametric Studio, Inc. A recipient of the Department of Eduction’s SBIR Phase II Award, Parametric Studio developed NEWTON-AR, an augmented reality application-based engineering, computer science, and STEM puzzle game for kindergarten to grade three.

Parametric Studio, an Iowa-based ed-tech company, specializing in engineering-centric, project-based STEM software, designed the project for use in classrooms, after-school programs, and at-home learning. 

NEWTON-AR combines augmented reality, engineering, simulation, and programming into a sandbox game where students create, modify, simulate, prototype, and test contraptions to solve puzzle challenges.

The SBIR Phase II Award furthers the development of supporting curricular materials for teachers, student workbooks, and online media resources.


Department of Energy

Past SBIR Phase II Awarded to Giner, Inc.

Amount: $249,999

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Greenhouse gases have devastated the environment, and reducing these emissions is vital to the planet’s long-term health. The Department of Energy’s SBIR Phase II Award looks to be part of the solution, recognizing Giner, Inc. for its development of a system to “capture” carbon dioxide (CO2) before it chokes the air we breathe. 

A large portion of the CO2 emitted by the U.S. is released from sources such as cars, smaller factories, and farms—which are known as distributed sources. Giner, Inc, based in Newton, MA, conceived of a system to “direct capture” CO2 from ambient air, contain it and transform it into a purified, concentrated CO2 stream that can be redirected for use as raw material to fuel a wide variety of industrial processes. 

The SBIR Phase II of this project will scale up the application, with no environmental limitations and virtually no waste generated, for an energy-efficient and low-cost strategy to remove carbon dioxide from ambient air.


Department of Health & Human Services

Past SBIR Phase II Awarded to DiamiR, LLC

Amount: $1,250,063

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According to the Centers for Disease Control and Prevention, an estimated 5.8 million Americans aged 65 years or older had Alzheimer’s disease in 2020. This number is projected to nearly triple to 14 million people by 2060. Since Alzheimer’s typically begins with a prolonged asymptomatic stage, DiamiR, LLC sought to develop a minimally invasive diagnostic tool for primary screening individuals with early stages of the disease. 

The Department of Health & Human Services SBIR Phase II Award helps DiamiR continue advancing such medical technology. The project involves a platform that detects and monitors different stages of Alzheimer’s based on targeted selection and analysis of brain-enriched and inflammation-associated microRNAs (miRNAs) circulating in blood plasma.

The SBIR Phase II Award will see the test broadly launched to gerontologists/neurologists and other medical professionals engaged in AD treatment and care.


Department of Homeland Security

Past SBIR Phase II Awarded to Karagozian & Case, Inc.

Amount: $999,644.84

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The Department of Homeland Security’s SBIR Phase II Award landed on Karagozian & Case, Inc., a science and engineering consulting firm that developed a capability to identify and mitigate threats toward Soft Targets and Crowded Places (ST-CPs) with a software application.

ST-CPs, such as sports arenas, shopping venues, schools, and transportation systems, are locations that are easily accessible to large numbers of people and that have limited security or protective measures in place. 

This vulnerability to attack makes ST-CPs a crucial area of concern to address. Karagozian & Case, Inc., located in Glendale, CA, incorporates advanced technologies such as augmented reality, machine learning, and artificial intelligence into an application to enable security professionals to view their environment through a mobile device to identify potential threats, assess vulnerabilities, and evaluate possible mitigation strategies.

The SBIR Phase II award enables a 1-year beta release of the Security Mitigation Assessment of Risks and Threats (SMART) software before a subscription model is licensed.


Department of Transportation

Past SBIR Phase II Awarded to SEA, Ltd.

Amount: $498,554.25

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While it seems like we’ve heard about self-driving cars forever, we might be on the precipice of it becoming a common sight in traffic. The main roadblock is the lack of traditional driving controls in autonomous vehicles, which presents a significant challenge for regulatory tests typically conducted manually or by driving robots. 

SEA, Ltd., based in Columbus, OH, sought to change everything by designing and producing a market-ready prototype for a test data interface (TDI). Consisting of a port installed on a vehicle that interfaces internally with the car’s driving systems, it allows manual control via standardized electronic command signal inputs.

The SBIR Phase II Award helps SEA, Ltd. move forward and develop the required safety and security measures, along with the communication protocol details. 


Environmental Protection Agency

Past SBIR Phase II Awarded to KWJ Engineering Inc.

Amount: $300,000

Illustration of Firefighter

With wildfires becoming more and more prevalent, we must look at the subsequent environmental impact of these devastating blazes. KWJ Engineering Inc. is doing just that with its Ultra-Low Power Sensor Package project. 

Wildfires produce significant air pollution, posing health risks to first responders, residents in nearby areas, and downwind communities. As such, KWJ developed technologies to measure air pollutants, including particulates, carbon monoxide, nitrogen dioxide, and carbon dioxide, over the wide range of levels expected in areas downwind of wildfires. 

In addition, the California-based engineering firm evaluated ultra-low-cost sensors, advancing technologies to measure such environmental hazards cost-effectively.

In SBIR Phase II, KWJ will assemble and field-test a sensor package that can be deployed in various ways. This includes devices worn by personnel, attached to stands located around the perimeter of the fire, and fixed to vehicles and drones. 


National Aeronautics and Space Administration

Past SBIR Phase II Awarded to Advanced Cooling Technologies, Inc.

Amount: $746,758

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If you’ve ever read about Europa, one of the 79 known moons of Jupiter, you know it’s one of the most mysterious and intriguing bodies in our solar system. NASA has always expressed interest in exploring the icy moon, which is why the administration awarded Advanced Cooling Technologies, Inc. for its Autonomous Melting Probe for Icy Planets Exploration.

The project developed a thermal probe that can penetrate the thick and cryogenic ice layer of Europa efficiently and reliably. A nuclear-powered probe, the technology consists of multiple features that minimize penetration time while mitigating a series of previously complex challenges. 

The SBIR Phase II award enables Advanced Cooling Technologies, Inc. to mature the proposed thermal technology and develop a full-scale thermal probe for an envisioned Europa mission.


National Science Foundation

Past SBIR Phase II Awarded to IngateyGen LLC

Amount: $996,698

Illustration of GENOME Scientists

Peanut allergies have confounded the medical and scientific community for decades. No one is 100 percent sure why this allergy occurs or has become increasingly prevalent among children. IngateyGen LLC took on this project to Development An Allergen-Free Peanut Using Genome Editing Technology.

Given the ubiquity of peanut products, peanut allergy is a significant medical and legal concern worldwide, with a rising incidence of this potentially fatal condition in children. An allergen-free peanut developed from this project has the potential to dampen the life-threatening reactions to peanuts significantly. The proposed project aims to develop and commercialize an allergen-free peanut devoid of all clinically documented allergens using a genome-editing tool.

The SBIR Phase II Award further funds IngateyGen LLC to study peanut allergies and to assess the possibility of developing an allergen-free peanut.


What Do You Need To Know Before Applying For SBIR Grants?

Filling out government paperwork is an arduous process—especially for an SBIR grant, as it combines peer-reviewed scientific papers, business proposals, and grant applications. To simplify things, you need to go through the preliminary steps.


Step 1: Confirm Your Eligibility

Review the eligibility criteria with a fine-tooth comb. And before you throw your hat into the ring, contact your local SBA district office to confirm you meet the basic requirements. 



Step 2: Review Relevant Topics

You’ve researched the program parameters, and you know you’re eligible. Now it’s time to search for SBIR funding opportunities. In this step, you must search for open, future, and closed topics to check out the calls for proposals. This search determines if your work aligns with any existing SBIR grant solicitations.



Step 3: Choose An Opportunity

When you find a grant that matches your project parameters, you can move on to the proposal phase. 

This involves another search to learn whether your project aligns with the specific government agency’s eligibility criteria. Find detailed information by visiting the SBIR portal or by contacting the agency in question for more details.


Are You Eligible For An SBIR Grant?

It’s important to remember that each government agency has its own set of standards for eligibility. However, some requirements are universal across all agencies. 

  • You must be a small business in the U.S. with no more than 500 employees, including affiliates.

  • You must be a for-profit business.

  • You must be more than 50 percent owned and controlled by U.S. citizens or permanent resident aliens.

  • The bulk of the ownership and work must reside with the grant recipient, though you may have business partners, and you can contract out a minor share of the work. 

Learn the complete SBIR eligibility requirements here, and research further details regarding eligibility and the difference between the agencies in this overview from the SBA.

Who Funds The SBIR?

All SBIR grants are federally funded. This means that funds ultimately come from the public in the form of taxpayer dollars. The congressionally mandated SBIR program requires every federal agency with an external research budget of more than $100 million to earmark between 1.5 to 3.2 percent of their budget for small businesses.

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How Hard Is It To Get SBIR Funding?

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Nothing worth having comes easy—and that’s certainly the case with SBIR grants. With the work needed to apply, the SBIR grant process can be exceedingly time-consuming and onerous for small businesses with limited staff and budgets. What’s more, the time between submission and receiving the funds can be a nerve-wracking, drawn-out process. 

 

This is precisely why you need an accounting partner that can crunch the numbers for you and relieve a measure of the burden.

After all, you’ve got enough work ahead of you. Team 80 manages all government-mandated accounting needs, allowing you to stay focused on researching and developing your SBIR program project.

Start your SBIR journey today.


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Jim Casart

CEO / Founder at Team 80 LLC

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Jim Casart is CEO and founder Team 80 in Colorado where he is able to apply his 45 plus years of experience in accounting to lead his team. He is passionate about turning good ideas into successful businesses.


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Overcoming Innovation Sabotage: 4 Common SBIR Accounting Mistakes to Avoid

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The price of non-compliance can cost you an SBIR award. Are you making any of these easily preventable mistakes?

Government contracting can be a challenge; when you’ve cleared one hurdle, another one awaits, like finding a government-approved accounting system.

When COVID-19 hit, North Carolina’s BioMedomics made a tremendous impact on the world by introducing their groundbreaking COVID-19 rapid test.

From their experience developing a rapid test to diagnose sickle cell disease through the SBIR program, BioMedomics was able to help combat the pandemic by slowing down the spread of contagion with their rapid COVID tests.

Doctor Holding BioMedomics COVID-19 rapid test

Now, we want you to picture a scenario where these rapid COVID tests didn’t exist because of an oversight. What if the folks at BioMedomics failed to seize the federal seed funding needed for their initial research and development? And what if it was all because of something as simple as having an inadequate accounting system?

If BioMedomics didn’t have their ducks in a row when they started their SBIR journey, this could have been the outcome. There are many pitfalls in traversing the SBIR program, and so many of them are easily avoidable.

There’s a good chance you’re reading this blog because you have a solution to today’s most pressing technological and scientific needs, and you don’t want to jeopardize your idea over something as trivial as accounting.

Let’s look at some of the most common mistakes SBIR awardees make to sabotage their hard work.

Mistake 1:
Not having an acceptable and compliant accounting system. 

If it feels like we’re constantly going on about the importance of government-approved accounting systems and Federal Acquisition Regulation (FAR) compliance, it’s because we are. And that’s for good reason.

Too often, we see dreams dashed because a small business owner’s accounting system wasn’t adequate. Unfortunately, oversight agencies, like the Defense Contract Audit Agency (DCAA) or the Defense Contract Management Agency (DCMA), aren’t forgiving for non-compliance among government contractors.

auditor working with SBIR financial statements

The real shame is how easily avoidable these failures are. Having a FAR-compliant accounting system means you are following the BEST accounting practices. And practicing excellent accounting should be second nature.

Awarded SBIR grants are cost-reimbursable, but your accounting system must be compliant with FAR Part 31. This particular regulation establishes cost principles and procedures and helps you determine which costs are reimbursable, and you’ve accounted for them.

Typically, the first phase of the SBIR program is a firm-fixed-price (FFP) contract which is not subject to any adjustments, so your chances of having the DCAA breathing down your neck about compliance are relatively slim.

However, this doesn’t mean you should wait until the last minute to ensure everything is in line with FAR requirements. These government watchdogs will check your accounting system before Phase II, and you can still lose an award for non-compliance no matter how much work you put into Phase I.

Mistake 2:
Proposing too low F&A or indirect rates.

You may think proposing a low, conservative estimate of your Facilities and Administrative (F&A) costs might give you a leg up when it comes to winning over the government. But, this kind of thinking could land you in hot water.

F&A, or indirect costs in a grant, can include electricity, internet, rent, and administrative services (and more). Unfortunately, we often watch small business owners create SBIR proposals with inaccurate indirect costs.

Incorrectly projecting indirect costs can lead to all sorts of cash flow nightmares. For example, if the amount you spend on indirect costs winds up exceeding the amount you projected, you’ll be responsible for paying the remainder out of pocket.

Not everyone has thousands of dollars lying around, which means grantees may have to tap into their bank accounts or take out a second mortgage. This, of course, can have devastating effects on your business.

On the flip side, if your rate is much lower than what you projected, you run the genuine risk of committing inadvertent fraud by overbilling the government.

Estimating indirect rates can be an uphill battle, but it is your responsibility to project these costs in your proposal accurately. You’ll need to know all of your company’s expenses (direct and indirect) and understand how to charge costs in your accounting system appropriately.

Here’s a great place to start: list all of your company’s costs (don’t worry about whether they’re direct or indirect at this point.); your profit/loss statement or your income statement can help.

Not only do you need to understand the differences between direct costs, indirect costs, and even unallowable costs, but you must also thoroughly track your indirect rates to avoid any nasty surprises that could spell financial ruin.

Mistake 3:
Improper timekeeping and uncompensated overtime issues.

Sometimes, the idea of having to fill out a timesheet can feel too micromanaging. You or your employees might find punching in for the workday an unnecessary task better suited for people working menial jobs. But this is far from the truth.

Timekeeping is a vital cog in the accounting machine. Payroll is one of your most significant expenses, and keeping track of the hours worked is crucial. By documenting the actual amount paid to you and your employees, you can allocate these costs to the various billable and non-billable tasks performed in your project.

Close-up Of A Businesswoman Filling Weekly Time Sheet On Laptop In OfficeEvery cost-reimbursable government award must be FAR and DCAA compliant, and this includes timekeeping. FAR 31.201-2(d) states:

“A contractor is responsible for accounting for costs appropriately and for maintaining records, including supporting documentation, adequate to demonstrate that costs claimed have been incurred, are allocable to the contract, and comply with applicable cost principles in this subpart and agency supplements. The contracting officer may disallow all or part of a claimed cost that is inadequately supported.”

Yes, once again, we stress the importance of being FAR compliant. And yes, once again, this means employing BEST practices.

An audit will heavily scrutinize your timekeeping procedures. To ensure things go smoothly, make sure your company has documented policies and procedures, a labor charging system for hourly time, specific accounting and billing system properties, and a staff trained in DCAA compliance.

Here is what you’ll need to do to get your timekeeping system up to speed:

  • Create a policy detailing the timekeeping requirements for ALL employees
  • Record EVERY hour of the workday, including leave
  • Have every employee track their time DAILY
  • Make sure you sign off and approve employee timesheets
  • Keep all timesheets (including timesheet corrections) for at least two years

Having a transparent, organized timekeeping system is one way to ensure you won’t lose that hard-fought SBIR award. It will also ensure you don’t run into the costly issue of uncompensated overtime. Uncompensated overtime is the excess hours worked by employees exempt from the Fair Labor Standards Act (FSLA) (salaried employees) in a 40-hour week without additional compensation, and it is an oversight that can cost you dearly.

Mistake 4:
Thinking you can do the books yourself.

The SBIR program is aggressively competitive, and the government’s expectations can seem insurmountable.

Having a detailed Excel spreadsheet and QuickBooks is beneficial, but there is only so much those tools can do. For example, they can’t cover things like rates, labor distribution, and accurate timekeeping.

Frustrated Businessman doing his own SBIR accounting and looking at laptopYou probably think you can’t afford the costs of accounting services to bring you into compliance. It’s understandable. But what are your innovations and ideas worth? You can’t afford to have your solutions shelved because of flimsy and inadequate accounting.

FAR compliant accounting systems are complex and unique. Your time is best spent focusing on the research and development of your project. Not tracking indirect expenses, reconciling books, monitoring job costs reports, developing timekeeping procedures, and keeping checks and balances.

Team 80 is on a mission to help innovators like you succeed. We’re also on a mission to eliminate SBIR failures. We understand the nuances of government-approved accounting and FAR requirements, and our outsourced accounting solutions are affordable so that you won’t be breaking the bank.

Why are you waiting? Let us take over the accounting aspects so you can focus on turning your vision into a reality! Get in touch today!

Ben Smith

Chief Accounting Officer at Team 80 LLC

LinkedIn

Ben Smith is a Chief Accounting Officer at Team 80 in Colorado where he is able to apply his accounting experience and passion helping small business owners make their companies successful in the SBIR industry.


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Everything You Need to Know About DCAA Compliance and Government Approved Accounting

DCAA Compliance and Government Approved Accounting

Your success depends on meeting DCAA (Defense Contract Audit Agency) compliance regulations when working with the government.

Government contracting can be a challenge; when you’ve cleared one hurdle, another one awaits, like finding a government-approved accounting system.

If you want to win defense contracts, you’ll need a DCAA-compliant financial system. Moreover, you’ll learn that responding to proposals without a DCAA compliant accounting system is impossible in some cases.

At Team 80, we ensure small business owners entering the SBIR/STTR program have an accounting system compliant with Federal Acquisition Regulation (FAR) and Defense Contract Auditing Agency (DCAA). If you’re one of those small business owners, this blog is for you.

“Accounting is hard enough without the government as your “partner.” That’s why government contractors should look for an accounting system that already strikes the right balance between ease of use and powerful capabilities.”
 – Sarah Sinicki, Director of Business Development, Team 80

Compare our Prices and Expertise Today.

When creating and pitching a dynamic SBIR proposal, it’s easy to overlook crucial details, like proving you can accurately (and quickly) show how you used their funds. The federal agency you’re working with needs to understand you have an approved system in place before they give you an award. They also want to feel confident you won’t misuse taxpayer dollars or engage in billing fraud (inadvertently or by design).

So, here’s what you’ll need to do: find a DCAA-compliant accounting system.

The government wants you to have an approved accounting system before giving you an SBIR or STTR contract. You also must comply with Federal Acquisition Regulations (FAR). You should familiarize yourself with FAR’s guidebook to learn more about what you can do to ensure everything runs smoothly before the DCAA shows up.

Worker sitting at table next to laptop with DCCA DCAA compliance Paperwork

What is the DCAA?

The Defense Contract Audit Agency is a federal agency under the Department of Defense (DoD); they’re “stewards of taxpayer dollars.” The DCAA delivers high-quality contract audits and services to ensure taxpayers and the military get what they pay for at a reasonable price. Their mission has remained the same since 1965.

In 2019, the DCAA examined nearly $365 billion in DoD contractor costs. Their audits saved taxpayers roughly $3.7 billion. The savings go back into the DoD’s pockets for essential military operations, or the government returns the excess cash to the Treasury.

The DCAA is primarily responsible for DoD contracts. However, they’re also often brought in by other federal agencies (like Nasa and the Department of Energy) for contract audits and financial services.

You’ll have the DCAA knocking on your door if a government agency, the Defense Contract Management Agency (DCMA), for example, requests the DCAAs help with an audit.

If you’re not DCAA-compliant, you’ll be answering their call. And that’s not something you want.

What is DCAA compliance?

When you’re DCAA compliant, you’re following their rules, recommendations, and best practices. If that sounds simple, it’s because it is! So stay on top of your record keeping, and use DCAA compliant accounting systems that’ll pass their audits, and you’re off to the races.

Here are some tips to help you stay DCAA compliant:

  • Establish and document your policies
  • Use a DCAA compliant system capable of tracking multiple cost categories separately
  • Make sure your timekeeping records and cost-accounting are fully integrated
  • Keep detailed records, and make sure your documents are easily accessible for the eventual audit

*You should note that the DCAA won’t give you a certificate of compliance.

What is the DCAA Pre-Award Survey?

Man in white shirt with a approved stamper

The DCAA conducts pre-award surveys when they’re about to award your small business with a government contract. You shouldn’t confuse the survey with an audit. The survey is simple; it’s an evaluation of your accounting system, and it validates your ability to carry out the government contract tasks.

If you meet the DCAA’s accounting system requirements, and you’re ready to see the contract through financially, you’ll pass. In order to give yourself the best chance of securing a contract, we suggest that you use the pre-award accounting system adequacy checklist. It’ll help you stay compliant and ready for a DCAA

What happens during a DCAA audit?

You shouldn’t fear a DCAA audit, though you should prepare yourself for that eventuality. During an audit, the DCAA will determine if your accounting system adheres to Generally Accepted Accounting Principles (GAAP). They’ll check to ensure you’re recording expenses when you provide a service. Small businesses usually have to overhaul their accounting and record-keeping procedures to comply with GAAP. (If we’ve already sold you on avoiding that headache, let’s talk about how we can help.)

According to the DCAA’s Form 1408 checklist, your accounting system must:

  • Properly segregate direct costs from indirect costs.
  • Correctly identify and accumulate direct costs by contract.
  • Have a logical and consistent method for allocating indirect costs to immediate and final objectives (a contract is considered a final cost objective).
  • Be able to accumulate the costs under a general ledger.
  • Have a timekeeping system that identifies employee’s labor by intermediate or final cost objectives.
  • Have a labor distribution system that charges direct and indirect labor to the appropriate cost objectives.
  • Determine costs charged to a contract through regular posting of books of account at least monthly.
  • Correctly identify, exclude, track allowable costs based on FAR 31 unallowable expenses.
  • Identify costs by contract line item (CLIN).
  • Segregate preproduction costs from production costs.

You’ll probably make it through an audit if your accounting system checks every box on this list. And if you’re feeling uneasy, it’s okay; the DCAA wants you to succeed, so they provide audit process overviews and let you see the checklists auditors use for assessments.

What accounting software is DCAA compliant?

Here’s a mind-bending truth. There’s no DCAA approved software, but there is software optimized for DCAA compliance. DCAA compliant software can include any commercial accounting package capable of tracking job costs. For example, Quickbooks provides accurate data, process flows, and reports that you’ll find helpful during an audit.

Still, your comprehensive, government approved accounting system is only one-half of the battle. Your accounting package is only as reliable as your information. In addition, you must establish policies and procedures for routine finance documentation.

And compliance is eternal. Once your software is compliant, it must remain compliant. With the help of a qualified accounting team (like Team 80), you can feel confident that you meet and exceed regulatory requirements.

You should let Team 80 manage your government-approved accounting needs. Here’s why:

You didn’t start your small business to manage tedious accounting tasks. Instead, we want to help you stay focused on researching and developing your SBIR program passion project. That’s why we offer affordable, turn-key accounting services – so you can stay focused on what matters most to your business.

“Federal accounting regulations are complex and ever-changing, both in their wording and how government auditors choose to interpret and enforce them. Team 80 can help you prosper in this challenging environment. When you’re serious about doing business with the federal government, you need an equally serious accounting partner.” – Sarah Sinicki, Director of Business Development, Team 80

We’ve been doing this for more than 20 years. We’ll ensure your system is DCAA compliant – today and into the future.

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Jim Casart

CEO / Founder at Team 80 LLC

LinkedIn

Jim Casart is CEO and founder Team 80 in Colorado where he is able to apply his 45 plus years of experience in accounting to lead his team. He is passionate about turning good ideas into successful businesses.


Coworkers looking at SBIR Ultimate Guide

The Ultimate Guide for SBIR

SBIR Ultimate Guide

You’re a small business owner with a brilliant idea that could turn into a marketable product or service. You know there’s funding available for research and development through the (SBIR) Small Business Innovation Research and (STTR) Small Business Technology Transfer programs.

But you don’t know how to set the wheels in motion.

Team 80, your SBIR accounting experts, have set up the ultimate guide for SBIR resources to help your small business along your journey to landing Phase I & II awards.

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SBIR FAQs

We understand the challenges small business owners face when it comes to doing business with the federal government. So we decided to pull together a list of frequently asked questions and resources to help you secure SBIR funding:

What is the SBIR Program?

SBIR stands for The Small Business Innovation Research program. It’s a highly competitive United States government program that awards grants and contracts to small businesses conducting early-stage research and development.

SBIR programs encourage domestic small businesses to engage in Federal Research/Research and Development (R&D) for innovative commercial ideas.

SBIR Application Process Illustration

What are the three phases of the SBIR program?

Phase I

Phase I establishes the technical merit, feasibility, and commercial potential of the proposed R&D efforts. The government generally awards $50,000 – $250,000 for six months or one year.

Phase II

Phase II continues the R/R&D efforts initiated in Phase I. The government bases Phase II funding on Phase I results. They also base funding on the scientific and technical merit and commercial potential of the project proposed in Phase II.

Phase III

Phase III helps small businesses pursue commercialization objectives resulting from the Phase I/II R/R&D activities. The SBIR/STTR programs do not fund Phase III. At some Federal agencies, Phase III may involve follow-on non-SBIR/STTR funded R&D or production contracts for products, processes, or services intended for use by the U.S. Government

Do you have to be a Phase I awardee to be eligible for Phase II?

Yes, you must be a Phase I awardee to become eligible for Phase II. Typically, only Phase I awardees are eligible for a Phase II award. SBIR/STTR Phase II awards are generally $750,000 for two years.

Two Asian Researchers in laboratory glassware for the development of medicine

How do I apply for SBIR?

You can follow this link to start your SBIR application process.

How do I find an appropriate topic?

You can find a list of available SBIR topics here at the official U.S. government website for people who make, receive, and manage federal awards.

You can go here to explore the topics currently under trial.

Who is eligible to receive SBIR awards?

Small businesses must meet the following eligibility requirements at the time of Phase I and Phase II awards:

  • Organized for profit, with a place of business located in the United States
  • More than 50% owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United States, or by other small business concerns that are each more than 50% owned and controlled by one or more individuals who are citizens or permanent resident aliens of the United States.
  • No more than 500 employees, including affiliates

Are non-profits eligible for SBIR awards?

No, but small businesses can use nonprofits as subcontractors.

What is an SBIR funding agreement?

An SBIR funding agreement is a contract, grant, or cooperative agreement between a small business and a Federal Agency participating in the SBIR program for research and development.

What are the performance benchmark requirements?

Small businesses must meet minimum performance requirements – you can familiarize yourself with those requirements here.

What agencies participate in the SBIR program?

There are currently eleven agencies participating in the SBIR program. Each agency accepts proposals from small businesses that match an opportunity from a list of designated R&D topics.

Here is a list of participating agencies:

Women in robotics laboratory working on project

SBIR Deadlines

  • Department of Agriculture
    1. USDA SBIR Phase I – November 2022
  • Department of Commerce
    1. NIST –  February 2022
    2. NOAA
    SBIR Phase I – 02/18/2022
  • Department of Defense:
    1. DoD 22.A & 22.1 BAA – 02/10/2022
    2. DoD 22.B & 22.2 BAA – June 2022
    3. DoD 22.C& 22.3 BAA – October 2022
    4. DOD SBIR 2022.2 – 06/15/2022
    5. DOD STTR 2022.B  – 06/15/2022
    6. DOD SBIR 2022.3 – 10/19/2022
    7. DOD STTR 2022.C – 10/19/2022
    8. AF X21.S CSO  STTR 02/17/2022
    9. DoD SBIR 2022.1 – 02/10/2022
    10. DoD STTR 2022.A  STTR – 02/10/2022
    11. Air Force X22.1 CSO SBIR – 02/10/2022
  • Environmental Protection Agency
    1. EPA SBIR Phase I – August 2022
  • Department of Transportation
    1. DOT – 22QSBIR1 – March 2022

  • NASA – 03/09/2022
  • Department of Education – 01/2022
    ED/IES SBIR Phase I & II – 02/01/2022
    ED/IES SBIR Phase II – 02/07/2022
  • Department of Energy
    2022 Phase 1 – 02/14/2022 & 06/26/2022
    2022 Phase 2 – 04/04/2022 & 08/22/2022
    DOE Phase I Release 2 – 02/22/2022
  • Department of Homeland Security 2021.1 – 01/19/2022
  • Department of Health & Human Services (NIH, CDC, FDA)
    1. 01/05/2022
    2. 04/06/2022
    3. 06/24/2022
    4. 09/03/2022
    5. 09/05/2022
    6. 09/06/2022
    7. 09/08/2022
    8. 09/30/2022
    9. 10/07/2022
    10. 10/08/2022
  • National Science Foundation (NSF)
    1. 01/06/2022
    2. March 2022
    3. June 2022
    4. September 2022
    5. December 2022


SBIR Grant Writers


SBIR Accountant

Navigating the SBIR program journey can be daunting and time-consuming.

With over 20 years of experience working with agencies that participate in the SBIR program, Team 80 is an SBIR-approved accounting team that offers remote SBIR accounting services to help you navigate your STTR / SBIR Phase I & II journey. Let us take over so that you can get back to focusing on what matters!

  1. Team 80

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SBIR Additional Resources

Department of Energy Lab Partnering Service – this is a resource for connecting investors with DOE experts to quickly answer innovation questions.

FLC Business-Your One-Stop Shop For U.S. Laboratory Information – this is a comprehensive list of federal laboratory resources.


Get in touch today to learn  more about how Team 80 can help with your SBIR accounting needs. There’s money out there for you – it’s time to take advantage of it.

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Sarah Sinicki

Partner at Team 80 LLC

LinkedIn

Sarah Sinicki is a Partner and Director of Business Development with Team 80 in Colorado where she is able to apply her 20 years of experience to tailor an accounting solution for a business owner no matter what industry they might be in.