Many commentators have written about the Small Business Innovation Research (SBIR) program SBIR.gov and relaying information on patents and basics of the company’s patent rights and program background. What has not been discussed is the time and expense of either the program proposal submission and the agency compliance mechanisms after an award, or what type of companies can best benefit from the program. I hope to provide general guidance in these areas and follow up in Part II with some best practice ideas before and after an award.
You must be a US-based company of fewer than 500 people. But what surprises people most is the commitment in time and money to properly develop a winning proposal. From the time you decide to bid on an agency’s SBIR topic to the award could easily be 12-15 months. Further, you either spend the time developing the proposal yourself or hire a professional to assist you with the proposal. These professionals usually charge $5,000 to $10,000 to develop the proposal for you. But even creating the proposal yourself will take that much staff time. Agency outlines for SBIR proposals run 25 pages. But you can use the same template to bid a handful of SBIR programs. Self-written proposals have a win rate of just less than 10%, professionally-written proposals usually average about twice that.
Post award you need to be aware of compliance mechanisms such as reporting or accounting functions the government expects you to implement. You are spending taxpayers money so there will be auditing capability on behalf of the agency. You need to be aware of these compliance mechanisms before you sign the contract to be sure you can comply, and afford to do so. You will not be able to “catch up” on your paperwork when an audit looms; establish accounting and reporting rules from the start.
Principle Investigator/Research Questions
One of the most important sections of the proposal, and concern post-award, is the company having an appropriate Principle Investigator (PI) to conduct the research studies with the government agency. Within the proposal you will define various research questions your team, led by the PI, will investigate over the course of the program. Remember, SBIR’s are for furthering research, not for helping companies learn how to sell their invention or development. Be prepared to identify this PI and provide their background/resume as part of the proposal.
Government Rights to Your Invention
There are three product/innovation rights levels the government can claim to your invention, depending on their level of investment: All the money coming from the agency; mixed funding from your company (such as previously invested development money) and the agency; or all the investment from your company. The discussion is too involved for this blog; the point is to have a professional review what rights in your innovation you are giving up in return for the government investment.
About the Author: David Blackledge is a recent attorney practicing at Quarles & Brady but previously spent 30 years in various non-legal roles in venture-backed startups. His prior professional focus was primarily contracting, and managing programs, with the federal executive agencies, as well as state and local governments. His current practice includes government contracts consulting and capital formation focusing on startups.
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