January 01, 2024

This page is not an exhaustive list of program updates and changes. Instead, we have tried to curate the most important information to keep the community informed. If we've missed something you think is important, please let us know!

House Committee on Small Business

Congressman Dan Meuser (PA-09), Chairman of the Subcommittee on Economic Growth, Tax, and Capital Access, gaveled in a subcommittee hearing titled “Exploring SBA Programs: Reviewing the SBIC and SBIR Programs' Impact on Small Businesses.” Witnesses: Mr. Angelo Valletta, President & CEO, Ben Franklin Technology Partners of Northeastern PA Ms. Amanda Bresler, Chief Strategy Officer, PW Communications Mr. Brett Palmer, President, Small Business Investor Alliance Mr. Jere W. Glover, Executive Director, Small Business Technology Council

In 2008, the General Accountability Office (GAO) ruled that the small-business Rule of Two applies to orders off of multiple-award IDIQ contracts. Under FAR Part 19 and 13 CFR, an acquisition shall be set aside for small business concerns whenever there is reasonable expectation that offers will be obtained from at least two responsible small business concerns and award will be made at fair market prices.

Since 2008, that issue has been hotly disputed--continuously at GAO and the Federal claims court, and even all the way to the U.S. Supreme Court. Under a new ruling, the White House and Office of Management and Budget issued a resolution:

Section 4068 of the 2024 National Defense Authorization Act (NDAA) requires each military secretary to designate five (5) Small Business Innovation Research (SBIR) technologies as Entrepreneurial Innovation Projects. Congress will then include the designated SBIR technologies as programs of record for future funding.

Use of generative AI in proposal preparation. Proposers are encouraged to indicate in the project description the extent to which, if any, generative AI technology was used and how it was used to develop their proposal. The National Science Founation (NSF) is examining the use of Generative AI (GAI) in proposal preparation and seeks to first understand how it is used by the community to minimize administrative requirements and build appropriate processes and resources for the merit review process. NSF may publish further guidelines for use as needed.

Proposers are responsible for the accuracy and authenticity of their proposal submission in consideration for merit review, including content developed with the assistance of generative AI tools. NSF's Proposal and Award Policies and Procedures Guide (PAPPG) addresses research misconduct, which includes fabrication, falsification, or plagiarism in proposing or performing NSF-funded research, or in reporting results funded by NSF. Generative AI tools may create these risks, and proposers and awardees are responsible for ensuring the integrity of their proposal and reporting of research results. This policy does not preclude research on generative AI as a topic of study.

Implementation and guidance on appropriate use. NSF will update the 2025 PAPPG to align with the requirements stipulated in this memorandum or with additional guidance and requirements as necessary. NSF will also continuously evaluate future applications of generative AI technology for use by staff and the research community.

The SBIR and STTR Extension Act seeks to rein in such practices by raising the minimum performance benchmarks for firms that receive multiple Phase I or Phase II awards. Phase I supports six-to-twelve month feasibility studies of a technology’s commercialization potential with funding from $50,000 up to $295,000, depending on the project and funding agency. Standard Phase II awards are about $750,000, but can reach up to $1.9 million over two years for further development and demonstration of a technology, including prototyping, testing, and market research.

Companies receiving large numbers of initial Phase I awards are currently screened based on their success in transitioning into follow-on Phase II awards. Awardees with large numbers of Phase II grants are screened based on their sales and attraction of private investment. The extension act ratchets up the transition and commercialization success rates necessary for multiple award winners to receive future grants, with the new standards due to go into effect by this April.

Companies with more than 50 SBIR Phase I awards in the past five years must have a transition success rate to Phase II of at least 50%, meaning that the company must on average win one Phase II award for every two Phase I awards, up from the current one-to-four ratio. Companies with more than 50 Phase II awards over the preceding 10 years must average $250,000 of sales and investments per Phase II award received, up from the current requirement of $100,000. This requirement increases to $450,000 for companies with more than 100 Phase II awards.

The legislation also mandates a Government Accountability Office study of businesses that have won more than 50 Phase II awards to assess factors such as their impact on the program, their ability to commercialize technology, and their ability to produce technologies that meet agency needs. The study will also examine the effectiveness of the modified performance standards.

By this June, agencies must create due-diligence programs mandated by the legislation to better screen SBIR and STTR applicants. It also prohibits agencies from making SBIR or STTR grants to applicants that have certain ties to countries of concern, defined as including China, Russia, North Korea, Iran, and any additional country designated by the Secretary of State.

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