Performance Benchmark Requirements for Phase I

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Companies with multiple SBIR/STTR awards must meet minimum performance requirements to be eligible to apply for a new Phase I or Direct-to-Phase II award.  The purpose of these requirements is to ensure that Phase I applicants that have won multiple prior SBIR/STTR awards are making progress towards commercializing the work done under those awards.  The Phase I to Phase II Transition Rate addresses the extent to which an awardee progresses a project from Phase I to Phase II.  The Commercialization Benchmark addresses the extent to which an awardee has moved past Phase II work towards commercialization. 

Phase I to Phase II Transition Rate

The Phase I to Phase II Transition Rate requirement applies only to SBIR and STTR Phase I applicants that have received more than 20 (21 or more) Phase I awards over the past 5 fiscal years, excluding the most recent year.  These companies must meet the required benchmark rate of transition from Phase I to Phase II.  The current Transition Rate requirement, agreed upon and established by all 11 SBIR agencies and published for public comment at 77 FR 63410 in October 2012 and amended at 78 FR 30951 in May 2013, is that an awardee must have received an average of one Phase II for every four Phase I awards received during the most recent 5-year time period (which excludes the most recently-completed fiscal year) to be eligible to submit a proposal for a new Phase I (or Direct-to-Phase II) award.  That is, the ratio of Phase II to Phase I awards must be at least 0.25.

For SBIR/STTR awardees that have received more than 20 Phase I awards during the time period, SBA calculates the company Transition Rate and displays it on the company registry page at www.sbir.gov.  Companies with less than that number of past Phase I awards will only see “N/A” because the benchmark requirement does not apply to them.  To calculate the company Transition Rate, SBA divides the total number of SBIR and STTR Phase II awards a company received from all agencies during the past 5 fiscal years by the total number of SBIR and STTR Phase I awards it received during the past 5 fiscal years excluding the most recently-completed year.  The 5-year period over which Phase I awards are counted excludes the most recently completed fiscal year because not all Phase II awards can occur within the same year as the Phase I award.

Commercialization Benchmark

The Commercialization Benchmark requirement applies only to SBIR and STTR Phase I applicants that have received more than 15 (16 or more) Phase II awards over the past 10 fiscal years, excluding the last two years.  These companies must have achieved at least the minimum required levels of commercialization activity, resulting from their past Phase II work, in order to be eligible to submit a proposal for a new Phase I (or Direct-to-Phase II) award.  The current Commercialization Benchmark requirement, agreed upon and established by all 11 SBIR agencies and published for public comment at 78 FR 48537 in August 2013 with a reopening of the comment period at 78 FR 59410 in September 2013, is that the awardee applicant must have received, to date, an average of at least $100,000 of sales and/or investments per Phase II award received, or have received a number of patents resulting from the SBIR work equal to or greater than 15% of the number of Phase II awards received during the period.

SBA is re-evaluating the Commercialization Benchmark requirement and working with SBIR agencies to support agency implementation of the requirement. See agency solicitations for specific information related to that agency.

At this time, SBA is not compiling a list of companies that will be deemed ineligible to submit a proposal for a new Phase I (or Direct-to-Phase II) award due to failure to meet the Commercialization Benchmark requirement.

SBIR and STTR awardees are still required to update and maintain their organization’s Company Registry Commercialization Report, accessible when logged in to the Company Registry profile as an authorized user under the “My Dashboard” section. Commercialization information is required upon completion of the last deliverable under the funding agreement. SBIR and STTR awardees are requested to voluntarily update the information in the database annually thereafter for a minimum period of 5 years.   

Example

In June of 2014, the SBA database of SBIR and STTR awards shows that Company A won 22 Phase I awards during the 5 year period 2008-2012 and 8 Phase II awards during the 5 year period 2009-2013.  The company must meet the transition rate benchmark because it won more than 20 Phase I awards during this period and the rate of 0.36 is therefore displayed on the company registry at www.sbir.gov.  The company meets or exceeds the required benchmark rate of 0.25.

Consequence of failure to meet the benchmarks

SBA will identify, on June 1 of each year, the companies that fail to meet minimum performance requirements.  These companies will be not be eligible to submit a proposal for a Phase I (or Direct- to- Phase II) award for a period of one year from that date.  SBA will notify the companies and the relevant officials at the participating agencies.  The information on the companies will not be available to the public.  Because this requirement only affects a company’s eligibility for new Phase I (or Direct- to- Phase II) awards, a company that fails to meet minimum performance requirements may continue working on its current or ongoing SBIR/STTR awards and may apply for and receive new Phase II and Phase III awards.

To provide companies with advance warning, SBA notifies companies on April 1st if they are failing the benchmark(s).  If a company believes that the information used was not complete or accurate, it may provide feedback through the Company Registry at www.sbir.gov.

At this time, SBA is not identifying companies that will be deemed ineligible to submit a proposal for a new Phase I (or Direct-to-Phase II) award due to failure to meet the Commercialization Benchmark requirement. Companies that fail to meet the Phase I to Phase II Transition Rate benchmark will be identified and notified as described above.

SBIR and STTR awardees are still required to update and maintain their organization’s Company Registry Commercialization Report, accessible when logged in to the Company Registry profile as an authorized user under the “My Dashboard” section. Commercialization information is required upon completion of the last deliverable under the funding agreement. SBIR and STTR awardees are requested to voluntarily update the information in the database annually thereafter for a minimum period of 5 years.  

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