Pursuit REvision
 topMarch 2015
Sub-award or Fee for Service: Know the Difference for Your SBIR/STTR Proposal
by Andrea Johanson, PhD, Principal Consultant, BBCetc
Whether preparing an SBIR/STTR proposal for the April 5 NIH deadline or for another agency, one of the most confusing issues that companies face in preparing their project budgets is whether a relationship with an external organization should be a sub-award or a fee-for-service. It's common in an SBIR, and required for an STTR, to have a sub-award to a non-profit research institution. In addition to a formal sub-award, there are other relationships the small business might have with outside entities.

Why do you care? Because these relationships are dealt with very differently in the proposal and in subsequent management of project funds. This is something you need to know in order to correctly fill in the application forms, and then to effectively (and legally!) manage the award.

Below are the official definitions, followed by a list of bullet points that will help you decide if a relationship should be a sub-award or a fee for service.

Sub-award (also called a consortium agreement)
A sub-award is an agreement between the recipient of a prime award (grant or contract) and another organization (educational institution or other entity) in support of a sponsored project in which any substantive programmatic activity is carried out by the other organization, which is a separate legal entity, administratively independent of the prime award recipient. The involvement of the sub-awardee organization is that of actually performing a portion of the programmatic activity, as opposed to simply providing a routine service to the prime award recipient.

The following factors indicate a sub-award. The other organization:
Supplemental Funding Opportunity for NSF Phase II Awardees
NSF awardees with active SBIR or STTR Phase II projects are eligible for supplemental R&D funding equal to 20% of their Phase II award. The Small Business/Engineering Research Center Collaborative Opportunity (SECO) aims to leverage the technology of NSF-supported Engineering Research Centers (ERC) to improve the competitive position of the proposing SBIR company.

Collaborative R&D projects funded under SECO are limited to 12 months duration with budgets up to 20% of the original Phase II award. ERCs would act as subawardees limited to 50% of the project budget.

The 17 ERCs are focused in four technical areas: Advanced Manufacturing; Energy, Sustainability and Infrastructure; Biotechnology and Health Care; and Microelectronics, Sensing, and Information Technology. Awardees should consult their Program Director about their interest in this supplemental funding opportunity. A SECO award does not limit the firm's eligibility for other NSF supplemental funding programs.

Are You Ready to Be Audited??
By Kris Bergman, Grants & Contracts Management Consultant, BBCetc

According to Jay Goltz in a New York Times blog post, the #4 reason why small businesses fail is Poor Accounting. You cannot be in control of a business if you don't know and control how the money is being spent. Makes sense, right? The government thinks so too. So if you're an SBIR/STTR awardee you need to get familiar with the particulars of a financial audit because your benefactor wants to know that your financial systems are on solid ground to ensure proper handling and reporting of their dollars.


The word "audit" can strike fear into the hearts many - upstanding or otherwise - but here are three reasons, SBIR/STTR awardees can actually appreciate audits:

  1. Being compliant is an important factor in your ability to secure future government funding.
  2. Having a tidy financial house paves the way for positive due diligence results when your company is evaluated by outside investors.
  3. Going through the process of preparing for an audit provides valuable information needed to manage your business successfully.

Each federal agency determines when, how and who will be audited. For example, NIH requires an audit when an organization under federal grants, procurement contracts or operating agreements expends $500,000 and at least one of your awards is a HHS grant. By contrast, NSF grants are only audited at the request of the program officer. Most agencies will request a pre-award survey to confirm that the company accounting system will comply with the required standards. Read on

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More Funding Opportunities

The National Eye Institute (NEI) announced an Administrative Supplement opportunity available to eligible NEI awardees with active SBIR Phase I/II grants. These administrative supplements provide funds so that grantees can procure the services of consultants who are knowledgeable in the Federal regulatory process for approval of new drugs and/or devices. More


The National Heart, Lung and Blood Institute (NHLBI) SBIR Phase IIB Bridge Award opportunity to accelerate the commercialization of technologies for heart, lung, blood, and sleep disorders and diseases. The award is to facilitate the capital-intensive steps required to transition SBIR/STTR Phase II projects to the commercialization by promoting partnerships between awardees and third-party investors and/or strategic partners. More


NIH BRAIN Initiative: Optimization of Novel Tools and Technologies for Neuroscience Research

This SBIR solicitation seeks optimization of existing and emerging technologies/approaches including 1) technologies and novel approaches for large scale recording and manipulation of neural activity and, 2) tools to facilitate the detailed analysis of complex circuits and provide insights into cellular interactions that underlie brain function. More


The Broad Agency Announcement (BAA) for the Foundational Science Research Unit (FSRU) of the U.S. Army Research Institute for the Behavioral and Social Sciences (ARI) solicits new proposals for its fiscal year 2015 program of basic research in behavioral science. The program supports research projects designed to expand fundamental knowledge and discover general principles in the behavioral and social sciences. More


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  training on tap
SBIR/STTR Proposal Prep for DOD
Apr 23 - Ann Arbor, MI
SBIR/STTR 101: Intro & Overview
Apr 20 - Newark, DE
Apr 28 - Ann Arbor, MI
SBIR/STTR Proposal Prep Workshops
Apr 14-16 - Blacksburg, VA
Proposal Prep Essentials-NSF,DOD,DOE, USDA
Apr 20-21 - Newark, DE

Mar 18 - Tips on Electronic Submission to NIH
Apr 15 - Commercialization Planning for NSF
Apr 16 - ABCs of SBIR/STTR Funding
Apr 23 - Policies & Procedures for SBIR/STTR Awardees

National SBIR/STTR Conference - June 14-17, Washington, D.C
Attend Lisa Kurek's Phase II Proposal Prep workshop at the Conference on June 15!

17th Annual NIH SBIR/STTR Conference(Registration opens in May.)
In case you haven't heard, the BBCetc website now offers a broad range of SBIR/STTR-related recorded webinars in the Pursuit Webinar Library. The webinars range from general topics like how to get registered and selecting the right agency to agency-specific topics on program specifics, planning a project and developing a competitive proposal. The library also includes grants and contract management and commercialization topics. Check it out!

HHS (NIH, FDA, CDC, ACF) PHS 2014-2 Omnibus
- Closes April 5 

NSF SBIR Ph I 15-546
Opens May 16, closes June 16
NSF STTR Ph I 15-545 - Opens May 18; closes June 18

Dept. of Commerce-Nat'l Institute of Standards & Technology 2015 NIST-SBIR-01 Closes May 5
  free webinar 
Hear agency experts from NIEHS SRP, EPA, and NSF 
highlight the unique characteristics of their environmental funding options, details of their SBIR/STTR programs, and tips on how to develop a successful proposal.
April 2, 1-3 p.m. ET. Register
who we are
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