Small Business Technology Transfer (STTR) Program

Small Business Technology Transfer (STTR) Program is sponsored by Various Federal Agencies (e.g., NSF, NIH, DOD, DOE, NASA, USDA, EPA, DOT, ED, NOAA, DHS, SBA). The Small Business Technology Transfer (STTR) program is similar to SBIR but requires the small business to formally collaborate with a non-profit research institution (e. g.

, a university) in the R&D effort.

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A service of the National Library of Medicine, National Institutes of Health. Committee on Capitalizing on Science, Technology, and Innovation: An Assessment of the Small Business Innovation Research Program—Phase II; Board on Science, Technology, and Economic Policy; Policy and Global Affairs; National Academies of Sciences, Engineering, and Medicine. STTR: An Assessment of the Small Business Technology Transfer Program.

Washington (DC): National Academies Press (US); 2016 Jan 13. STTR: An Assessment of the Small Business Technology Transfer Program. Show details Committee on Capitalizing on Science, Technology, and Innovation: An Assessment of the Small Business Innovation Research Program—Phase II; Board on Science, Technology, and Economic Policy; Policy and Global Affairs; National Academies of Sciences, Engineering, and Medicine.

Washington (DC): National Academies Press (US) ; 2016 Jan 13. Hardcopy Version at National Academies Press The Small Business Technology Transfer (STTR) program, partnered with the Small Business Innovation Research (SBIR) program, provides innovation awards that expand joint venture opportunities for small businesses and nonprofit research institutions.

Created in 1982 through the Small Business Innovation Development Act, 1 SBIR remains the nation's largest innovation program for small businesses. SBIR offers competitive awards to support the development and commercialization of innovative technologies by small private-sector businesses. At the same time, SBIR provides government agencies with technical and scientific solutions that address their different missions.

Created in 1992 by the Small Business Research and Development Enhancement Act of 1992, STTR seeks to bridge the gap between basic science and commercialization of resulting innovations. 2 Under the STTR program, a small business receiving an award must collaborate formally with a research institution (RI).

Both the SBIR and STTR programs share a three-phase structure: Phase I provides limited funding (up to $100,000 prior to the 2011 reauthorization and up to $150,000 thereafter) for feasibility studies. Phase II provides more substantial funding for further research and development (typically up to $750,000 prior to the 2011 reauthorization and $1 million thereafter).

3 Phase III reflects commercialization without providing access to any additional SBIR/STTR funding, although funding from other federal government accounts is permitted.

The SBIR program has four congressionally mandated goals: (1) stimulate technological innovation, (2) use small business to meet federal research and development (R&D) needs, (3) foster and encourage participation by minority and disadvantaged persons in technological innovation, and (4) increase private-sector commercialization derived from federal research and development.

4 By comparison, the statutory objective for the STTR program is “to stimulate a partnership of ideas and technologies between innovative small business concerns (SBCs) and Research Institutions through Federally-funded research or research and development (R/R&D).

” 5 However, the Small Business Administration (SBA) web site also lists additional STTR objectives that are largely aligned with the SBIR program: (1) stimulate technological innovation, (2) foster technology transfer through cooperative R&D between small businesses and research institutions, and (3) increase private-sector commercialization of innovations derived from federal R&D.

STTR is administered by the Department of Defense (DoD), National Institutes of Health (NIH), Department of Energy (DoE), National Science Foundation (NSF), and National Aeronautics and Space Administration (NASA). Each of these research agencies has the flexibility to administer SBIR and STTR in line with its own unique mission needs. 6 Although the SBIR and STTR programs have similar objectives, there are important differences.

Under SBIR the principal investigator (PI) must be primarily employed with the small business concern (SBC) at the time of award and for the duration of the project period. Under STTR, however, the PI “may be primarily employed by either the small business concern or the collaborating non-profit research institution at the time of award and for the duration of the project period.

” 7 The programs also differ in that STTR requires the SBC to formally collaborate with a nonprofit research institution. Research partnerships are permitted under the SBIR program, but the partnering research institution can complete no more than one-third of the Phase I work and no more than one-half of the Phase II work.

In contrast, “Under STTR, the small business must perform at least 40 percent of the work and the research institution must perform at least 30 percent. The remaining 30 percent may be … [completed by] the small business concern, the collaborating non-profit research institution, or an additional third party.

” 8 Adopting several recommendations from a 2008 National Research Council (NRC) 9 report, Congress reauthorized the SBIR and STTR programs in December 2011 for an additional 6 years. As a part of this reauthorization, Congress called for further studies by the National Academies of Sciences, Engineering, and Medicine of the SBIR and STTR programs. The findings and recommendations of the Academies committee are summarized below.

They are based on a complement of quantitative and qualitative tools including surveys, case studies of award recipients, agency data, public workshops, and discussions with agency managers. The methodology is described in Chapter 1 and Appendix A of this report. Appendix C displays the survey, and Appendix E presents 11 illustrative case studies.

These case studies humanize and illuminate the findings, and provide a richer feel for the subject and the people involved. The survey data presented in this report cover 1,400 STTR awards made by the five study agencies during the period FY1998-2010, which represents the preliminary survey population.

Awards made in FY2010 would only have started to generate commercial products by the time of the survey in FY2014; therefore, following established practice from prior Academies and Government Accountability Office (GAO) surveys, no awards were surveyed after FY2014.

Given the time period covered it is not surprising that many points of contact could not be reached: 807 of the 1,400 contacts were not reachable, leaving a population of 593. In all, 292 questionnaires were answered, generating a response rate of 20. 9 percent for the preliminary population and 49.

2 percent for the population. General conclusions about the STTR program must be viewed with caution. STTR programs are managed and operated differently by each agency and in some cases differently by separate components within DoD and NIH.

Therefore, individual agencies will need to consider the findings and recommendations provided herein within the specific context of their own programs. Not all findings will be relevant to all agencies. See Chapter 6 for the full list of findings.

A. STTR is meeting its congressional objective of fostering cooperation between small business concerns and research institutions, and does so in some respects to an extent that SBIR does not. 1.

Overall, the university connection is much deeper and richer for STTR awards than for SBIR, and STTR addresses its congressional mandate to stimulate partnerships between small business concerns and research institutions to an extent that SBIR does not. 2. STTR projects generate wider and deeper linkages between small businesses and research institutions than do SBIR projects, according to data from the Academies 2011-2014 Survey.

B. Perspectives on STTR use and management vary by agency. Some see it as a link between basic research and acquisition programs; others see STTR as having similar objectives to SBIR and therefore operate the two programs in tandem.

1. Program managers at NASA and DoD (in particular the Army and Navy) see STTR as filling a gap between basic research and acquisition programs. 2.

Program managers at NIH, NSF, and DoE do not see an additional value in the STTR program. They see STTR as having similar objectives to SBIR and therefore operate the two programs in tandem. C.

To a considerable extent, STTR fosters private-sector commercialization of innovations derived from federal R&D. D. The participation of women and minorities in the STTR program is low and not actively fostered.

1. Data from the Academies 2011-2014 Survey indicate that the participation of women in the STTR program is low. Survey respondents reported that woman-owned firms accounted for 8 percent of all STTR Phase II firms.

2. Data from the Academies 2011-2014 Survey indicate that the participation of Black, Hispanic, and Native Americans in the STTR program is extremely low. 3.

The SBA definition of socially or economically disadvantaged groups is inadequate to reflect congressional objectives. Data reported by the agencies obscures the extremely low level of participation from other disadvantaged groups by including Asian Americans. The Academies survey found that only 1.

1 percent of respondents were from Black- and Hispanic-owned firms respectively, and 0. 4 percent was from Native American-owned firms. E.

STTR is aligned with agency missions and the take-up of technologies within acquisition agencies. F. STTR awards require a formal partnership between the small business concern and the research institution, but they each can have different interests and needs.

This creates unique challenges within the STTR program. 1. In particular, research institutions see the development and widespread dissemination of technical knowledge as part of their core mission.

In contrast, small businesses see the commercialization of knowledge as a priority, which will likely require steps to limit the ability of others to use technical information, through the use of either trade secrets or patents. 2.

As university faculty participate in commercial activities outside the research institution, university administrators often seek to ensure that a dividing line exists between research inside the university and activities outside. 3. Research institutions have varied views on and approaches to licensing of university intellectual property (IP).

4. The bureaucracy at research institutions can be challenging. Research institutions are big organizations, typically with large overhead rates, and the transfer of technology often is not seen as a core part of their mission.

Unless there is a defined path to partnership, negotiating with research institutions can take considerable time and resources for a small business. G. Small business concerns in general see STTR as more onerous to use and thus less attractive than SBIR, in part because STTR awards require a formal partnership between the small business and the research institution.

H. STTR supports the development of innovative companies. The committee finds that STTR meets the specific congressional objective of increasing the linkages between small business concerns and research institutions.

To encourage more small businesses to collaborate with research institutions, the committee recommends: A. The five sponsoring agencies should address the following factors that may be discouraging some small businesses and research institutions from collaborating in the STTR and SBIR programs: Finding alternative templates for royalties and licensing agreements.

The complexity and variation in intellectual property terms and conditions among universities and laboratories can cause delays in developing contractual agreements between the research institution and small business concerns.

The potential partners in an STTR award should consult leading research institutions to learn what templates for royalty and licensing schemes have proven to be most effective and might be adapted for their project. Many different schemes have been used and should be reviewed in the context of the potential project and its participants.

One example, adopted at the University of Minnesota, offers a standard option along with an alternate “open negotiation” option that could be a useful template for some projects. Resolving unique challenges of cooperation.

Given the highly flexible nature of the STTR program, the sponsoring agencies should consider seeking SBA authority to act in special circumstances to protect participants from the effects of unexpected delays or related problems with contract agreements or deliverables. Maintaining a distinct strategy for STTR .

Each sponsoring agency should seek ways to ensure that the STTR program plays an identifiable role in the agency's R&D strategy that differs from that played by the SBIR program. A focus on projects with earlier technology readiness levels might be part of this strategic distinction. Relaxing the small business employment requirement .

Research institutions with personnel who seek to serve as Principal Investigators on SBIR awards while retaining their full-time positions might be allowed—under exceptional circumstances—to seek a waiver of the SBIR 51 percent small business employment requirement. Reporting on waiver requests .

If any waivers are to be considered, the sponsoring agencies should develop an appropriate mechanism for addressing these special requests and should report on the number of waiver requests and the number granted, as part of their annual program reporting. 3.

The overall impact of these proposed changes should be evaluated in future assessments of the SBIR and STTR programs to determine if they have been effective in strengthening the collaboration between small business concerns and research institutions in the STTR and SBIR programs. B. SBA should change its definitions to address congressional intent with regard to minorities.

1. SBA should act immediately to change its definitions to ensure that efforts in this area are focused on activities that meet congressional intent. 2.

SBA should also require that agencies collect data—and report annually—on the participation of each SBA subgroup in the SBIR and STTR programs. 1 Small Business Innovation Development Act of 1982, P. L.

97-219, S. 881, July 22, 1982. 2 Small Business Research and Development Enhancement Act, P.

L. 102-564, S. 2941, October 28, 1992.

3 All resource and time constraints imposed by the program are somewhat flexible and are addressed by different agencies in different ways. For example, the National Institutes of Health—and to a much lesser degree the Department of Defense—have provided awards that are much larger than the standard amounts. 4 Small Business Innovation Development Act of 1982, P.

L. 97-219, S. 881, July 22, 1982.

5 Small Business Administration, STTR Policy Directive, February 2014, p. 3. 6 An Academies committee commended this flexibility in a 2008 assessment of the SBIR program.

See Finding C, National Research Council, An Assessment of the SBIR Program , Washington, DC: The National Academies Press, 2008, p. 59. 7 See, for example, the NIH web site at https://sbir ​.

nih. gov/about/critical , accessed on July 9, 2015. 9 Effective July 1, 2015, the institution is called the National Academies of Sciences, Engineering, and Medicine.

References in this report to the National Research Council or NRC are used in an historic context identifying programs prior to July 1. Cite this Page Committee on Capitalizing on Science, Technology, and Innovation: An Assessment of the Small Business Innovation Research Program—Phase II; Board on Science, Technology, and Economic Policy; Policy and Global Affairs; National Academies of Sciences, Engineering, and Medicine.

STTR: An Assessment of the Small Business Technology Transfer Program. Washington (DC): National Academies Press (US); 2016 Jan 13. Summary.

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