SMALL BUSINESS ELIGIBILITY REQUIREMENTS FOR APPLICANTS TO THE SMALL BUSINESS 
INNOVATION RESEARCH (SBIR) AND SMALL BUSINESS TECHNOLOGY TRANSFER (STTR) 
PROGRAMS 

RELEASE DATE:  July 25, 2003

NOTICE:  NOT-OD-03-053

National Institutes of Health (NIH)

The purpose of this notice is to restate the eligibility requirements for a 
small business concern to participate in the NIH SBIR and STTR programs, and 
to express that NIH has not adopted any new policies concerning eligibility. 
NIH is following the program regulations outlined in the Small Business 
Administration (SBA) SBIR Policy Directive and clarified by the SBA. Federal 
agencies participating in the SBIR Program are obligated to follow the 
guidance provided by this Policy Directive. 

As stated in the Policy Directive and in the PHS 2003-2 Omnibus Solicitation 
for NIH, CDC and FDA SBIR/STTR Grant Applications 
(https://grants.nih.gov/grants/funding/sbirsttr1/index.doc), a small business 
concern is one that on the date of award for both Phase I and Phase II 
agreements, meets all of the following criteria:

1. Is organized for profit, with a place of business located in the 
United States, which operates primarily within the United States or 
which makes a significant contribution to the United States economy 
through payment of taxes or use of American products, materials or 
labor;

2. Is in the legal form of an individual proprietorship, partnership, 
limited liability company, corporation, joint venture, association, 
trust or cooperative, except that where the form is a joint venture, 
there can be no more than 49 percent participation by foreign business 
entities in the joint venture;

3. Is at least 51 percent owned and controlled by one or more 
individuals who are citizens of, or permanent resident aliens in, the 
United States, except in the case of a joint venture, where each entity 
to the venture must be 51 percent owned and controlled by one or more 
individuals who are citizens of, or permanent resident aliens in, the 
United States; and

4. Has, including its affiliates, not more than 500 employees. The term 
"affiliates" is defined in greater detail in 13 CFR 121.3-2(a) and the 
term "number of employees" is defined in 13 CFR 121.3-2(t).

In October 2002, SBA, in accordance with their Office of General Counsel, 
issued a notice clarifying the definition and eligibility requirements of a 
small business concern. In particular, it highlighted the requirement that 
owners of the SBIR participant be "individuals" who are citizens of, or 
permanent resident aliens in, the United States. 

Under the SBIR Program, the statute requires that the applicant must be 
eligible at the time of the award. NIH Grants management staff are 
responsible for ensuring that, for grants under their cognizance, both 
Federal staff and grantees fulfill applicable statutory, regulatory, and 
administrative policy requirements, both before and following award. As the 
responsible Federal Official for administering funds, Grants Management 
Officials must verify eligibility prior to issuing a notice of grant award.  
In large part, NIH, like other federal agencies, relies on the disclosures of 
the grantee, and few applications include information that describes 
ownership. Even where the information is provided, it must be verified as 
current prior to award. The business official is required to certify that 
they meet these requirements. As stewards of Federal funds, NIH strives to 
stay in compliance with the eligibility criteria set forth by the SBA. In 
cases where the company has revealed that it is not owned by "individuals" 
but is owned by a corporation, or in other circumstances in which eligibility 
is unclear, NIH  has made requests to the appropriate SBA Government 
Contracting Area Director to determine eligibility. NIH Grants Management 
Officials have done this for several years, even prior to the latest SBA 
Policy Directive clarification. 

The SBA recently submitted a proposed Rule Change to the Office of Management 
and Budget that proposes to modify the small business eligibility 
requirements.(The Federal Register Notice is available at 
http://www.sba.gov/size/sbir-pr.pdf). 

Questions regarding eligibility requirements for the SBIR program, can be 
directed to the SBA Government Contracting Area Director that has cognizance 
over the state in which your firm is located.  Please click on the following 
web link to find the appropriate SBA office: 
http://www.sba.gov/size/indexcontacts.html

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