January 23, 2024
National Security Innovation Capital (NSIC) is a new DoD initiative that enables dual-use hardware startups to advance key milestones in their product development by addressing the shortfall of private investment from trusted sources. NISC awards Other Transaction (OT) agreements to accelerate your productization efforts.
NSIC is focused on next-generation hardware technologies for application to connected mobile and edge systems that support distributed operations in land, sea, air, and space domains. Particular interest is in dual-use technologies and solutions that offer significant performance improvements; realize low size, weight, power, and cost; improve safety, support secure supply chains, adapt to austere environments, are resilient to full-spectrum threats, and enable scalable deployment.
The DPA Title III office works in partnership with the Uniformed services, other government agencies, and industry to identify areas where critical industrial capacity is insufficient to meet U.S. defense and commercial needs. The office partners with U.S. private industry to mitigate gaps in the domestic supply chain through the use of grants, purchase commitments, loans, or loan guarantees.
Focus Areas
The Defense Production Act (DPA) Title III program is one of two investment programs in Industrial Policy. The DPA Title III program targets investments that create, maintain, protect, expand, or restore domestic industrial base capabilities that are critical to the DOD and the American Warfighter.
Phase II/IIB Programs
Some federal agencies offer funding beyond Phase I/II SBIR/STTR awards. The objective funding is to provide additional Research and Development (R&D) funds to further accelerate transitioning the innovation from lab-to-market, when a qualifying third party financial investment/commitment has been received as a direct consequence of the a funded Phase I/Phase II research outcomes.
In an effort to help bridge the “Valley of Death” between Phase II and Phase III, the AFVentures program has developed the Strategic Funding Increase (STRATFI) and Tactical Funding Increase (TACFI) Programs. Small businesses that have been awarded a Phase II contract within the last two years are eligible to apply for this annual notice of opportunity. The program requires various levels of matching funding and avenues for Defense and/or Industry matching, depending on the program sought.
ELIGIBILITY REQUIREMENTS
Small Business Concerns (SBCs) must meet ALL of the following criteria.
Company is considered a SBC and is eligible for a SBIR/STTR award
SBC is on an active SBIR/STTR PII or completed their SBIR/STTR PII within two years of Capability Package submission.
The subject PII effort has not already been awarded a second (AKA “sequential”) PII
At least 90 days have passed since the beginning of the associated SBIR/STTR PII execution.
SBC is not executing a prior STRATFI effort at the time of submission.
Anticipated work is to be performed in the United States.
Additional Resources by the US Air Force:
Centers for Research Excellence Science and Technology and Underrepresented Groups (Phase IIA)
Funding to foster partnerships between small business and minority-serving institutions that have a funded Center for Research Excellence in Science and Technology (CREST) or Historically Black Colleges and University (HBCU) Research Infrastructure for Science and Engineering (RISE) awards.
Max funding: 20% of the Phase II award amount for no more than one year
Suggested deadline: At least 90 days prior to Phase II award expiration
Community Colleges (Phase IICC)
Partnership funding between small businesses and community college researchers and students.
Max funding: $40,000 per year
Suggested deadline: At least 90 days prior to Phase II award expiration
Engineering Research Center Collaboration Opportunity (SECO)
Collaborative research opportunity to provide a beneficial research and commercialization platform between SBIR/STTR companies with Engineering Research Center (ERC) faculty, researchers, and graduate students.
Max funding: 20% of the Phase II award amount for no more than one year
Supplemental funding opportunity applicable for SBIR and STTR Phase II awardees.
The objective of Phase IIB funding is to provide additional R&D funds to further accelerate commercialization of the Phase II project, when a qualifying third party financial investment/commitment has been received as a direct consequence of the NSF funded Phase I/Phase II research outcomes. The third party funding should serve to accelerate commercialization activity of the NSF funded Phase II Program.
Overall Submission and Review Process
Request timing
Phase II awardees are encouraged to start discussing any Phase IIB requests as early as possible with the Program Director on the Grant. The awardee may be invited to submit a formal Financial Package after initial review by the Program Director. The Financial Package must be submitted to the Program Director for review at least a month in advance of the expiry date of the grant to initiate formal NSF review. The Program Director may recommend that the awardee request approval for a no-cost extension (to extend the grant expiry date by up to 6 months) to allow NSF time to review the Phase IIB supplement request.
Process overview
For companies requesting $250,000 or less of NSF Phase IIB matching funds:
The PI is invited by the Program Director to submit a formal Phase IIB Financial Package along with an outline of what R&D will be done with a potential NSF Phase IIB match.
The Financial Package is internally reviewed by NSF, and the PI receives feedback from the Program Director on what third party funds would qualify for the Phase IIB match.
The PI receives permission from the Program Director to submit the Phase IIB proposal after NSF review of the Financial Package.
The Phase IIB proposal is reviewed by NSF.
The award may typically extend the expiry date of the grant by 12 months.
For companies requesting over $250,000 (not to exceed $500,000) of NSF Phase IIB matching funds:
The PI is invited by the Program Director to submit a formal Phase IIB Financial Package along with an outline of what R&D will be done with a potential NSF Phase IIB match.
The Financial Package is internally reviewed by NSF and the PI receives feedback from the Program Director on what third party funds would qualify for the Phase IIB match.
The Program Director invites the company to make an on-site presentation at NSF for review of the proposed Phase IIB R&D program and the company’s commercialization plans. The company is provided details on what should be covered in the on-site presentation.
The awardee company (including a minimum of the PI and CEO) presents in person at NSF to an audience of NSF staff. A representative of the third party must be available at the meeting (in person or on the phone).
The Program Director may have further discussions with the awardee after the on-site meeting.
The PI receives permission from the Program Director to submit the Phase IIB proposal after NSF review of the Financial Package.
The Phase IIB proposal is reviewed by NSF.
The award may typically extend the expiry date of the grant by 24 months.
Review criteria
All Phase IIB proposals will be reviewed in-house by a minimum of two NSF SBIR/STTR Program Officers. Each proposal will be reviewed based on the review criteria below.
Criterion: What is the intellectual merit of the proposed activity? Potential considerations: Will the completion of the proposed activity lead to a solid foundation of the scientific and engineering knowledge and understanding base? Has the firm progressed satisfactorily in the Phase II activity to justify a Phase IIB activity? Is the proposed plan a sound approach for establishing technical feasibility that could lead to commercialization?
Criterion: What are the broader impacts of the proposed activity? Potential considerations: Does the commercialization plan summary in the proposed activity show a clear path to commercial and societal benefits? Does the proposed activity reflect changes to the Phase II commercialization plan that further improves the chances of conversion of research in order to provide societal benefits? What are the expectations of the third party, and how effective will the third party funded activity lead to commercial and societal benefit? Evaluate the competitive advantages of this technology vs. alternate technologies that can meet similar market needs.
Third Party Funding Qualifications and Use
Qualifying third party funds
Qualifying third party funds should meet these requirements:
The company and the documentation provided (henceforth referred to as the “Financial Package”) will need to clearly establish that the third party is making investments/financial commitments as a direct consequence of the outcomes of NSF funded Phase I and/or Phase II Grant activity and it is not contingent on the company receiving the Phase IIB grant.
The Financial Package will need to include executed legal agreements signed by both the awardee company and the third party. The Financial Package must clearly specify the amount of the investments/financial commitments being made. The third party funding must be cash, but not in-kind or other “intangible assets”. Loans and any forms of debt obligations, will not qualify.
The Financial Package should involve money legally obligated to the awardee company with no attached contingencies or conditions that will result in the return of any funds back to the third party.
The transfer of funds to the awardee could occur up-front or over a clearly defined contracted date-certain payment schedule to occur during the proposed Phase IIB project period (not to exceed 2 years), and proof of receipt of the third party money will need to be provided to NSF to receive matching Phase IIB funds.
The legal agreements in the Financial Package need to have been executed prior to formal NSF review of eligibility for Phase IIB supplemental funding.
Funds from multiple unrelated third parties may be presented in a combined Financial Package. This may be particularly the case where the third party money is the result of sales, licensing, etc.
Any third-party investment funds in excess of $500,000 must come from private-sector (non-governmental) sources. Definition of a Third party investor:https://seedfund.nsf.gov//how-to-submit/definitions/#third-party-investor
Amount of third party funds
The Financial Package must include a minimum of $100,000 of qualifying funds. NSF will match up to 50% of qualifying funds received. Phase IIB supplemental awards will be made for a minimum of $50,000 and a maximum of $500,000.
Use of third party funds
NSF does not place restrictions on how the awardee spends the third party funds. R&D, market research, advertising, intellectual property development, capital investment, business development, human resource development are some examples of typical uses for the third-party funds, with the overall goal of accelerating commercialization of the NSF funded technology being developed in the Phase II grant.
Use of NSF Phase IIB funds
NSF match funds shall only be used for research & development activities that further build on the Phase II program and catalyze acceleration towards commercialization.
Phase IIB Proposal Preparation
Phase IIB proposals MUST be submitted using Research.gov. The Phase IIB proposal shall not exceed 15 pages. The additional work proposed should be an expansion of the technical work being performed in the Phase II project and must fall within the scope of the present Phase II project. The proposal will contain the following:
The following sections count toward the 15 pages
An Executive Summary of the Commercialization Plan
A discussion of the “New” R&D Activities (including how the third-party funding will be used to accelerate and/or expand commercialization
A summary of the third party investment
Add/delete non Co-PI senior personnel
Log into Research.gov and access the Account Management system. The system includes pages for Administrators to manage user and organization information and pages for users to self-manage their roles and profile information. Access these pages and the updated functionality by signing in to Research.gov and clicking on the “My Profile” link in the top right.
Visit the Research.gov Account Management About page to download instructions and for navigating the system.
Summary of proposed work
Executive Summary of the Commercialization
“New” R&D Activities Proposed
Supplementary docs
Upload the following documents (combine the two word documents and upload as one file).
Revised expiration date:
You may add 12 months (or 24 months for a Phase IIB request over $250,000) to the duration of your existing Phase II project. Please contact your cognizant PD to discuss if needed.
Budgets, budget justifications, and certifications
Prepare new budget for the Phase IIB activities (only the NSF funding). Provide complete line item justification for ALL budget items.
Include the following statements/certifications (as part of the budget justification):
NSF SBIR/STTR Funding Agreement Certification Form OR a statement that “The certifications made under the Phase II award remain true and current, and the signed Funding Agreement Certification for the Phase II award was submitted with award XXXXXXX”, OR an updated NSF SBIR/STTR Funding Agreement Certification Form.
A statement that “The budget rates in the Phase IIB budget are identical or lower than those in the Phase II budget approved by NSF.” Rates include salaries, indirect costs, fringe benefits, overhead, G&A, unit cost rates, etc.
Only individuals that the company has designated as the “Authorized Organizational Representative” can submit the Phase IIB proposal.
Award and Payment Procedures
A Phase IIB applicant will be notified of the funding recommendation within 60 days of submission.
All third-party investment funds upon which the Phase IIB supplement is made must be transferred to the company by the end of the Phase IIB supplement. Additionally, the final payment for the original Phase II award will be held back and made only when the Phase II and Phase IIB projects are completed.
The Phase IIB match will typically be released under the following schedule:
For Phase IIB supplements up to $250,000 (12-month projects): 50% will be released as the advance payment and 50% with an approved 6-month interim report.
For Phase IIB supplements greater than $250,000 (24-month projects): 25% will be released upon Phase IIB award; 25% with an approved 6-month interim report; 25% with an approved 12-month interim report and 25% with an approved 18-month interim report.
If the Phase IIB financial package included transactions for which some of the funds had not yet been received by the company. Payments will be released upon receipt of proof that the funds have been transferred from the third party to the NSF awardee, typically in the form of a bank statement. Therefore, the payment schedules above may be modified according to the details of the release schedule of the third party money if these funds are not provided up-front. That is, NSF funds (50% match) will only be disbursed at any given time according to the amount of third party funds for which NSF has been provided proof of receipt.
Budgets, budget justifications, and certifications
Prepare new budget for the Phase IIB activities (only the NSF funding). Make sure to budget one or two trips to the SBIR/STTR Phase II Awardees Conference depending on the length of the grant extension. Provide complete line item justification for ALL budget items.
NSF SBIR/STTR Funding Agreement Certification Form OR a statement that “The certifications made under the Phase II award remain true and current, and the signed Funding Agreement Certification for the Phase II award was submitted with award XXXXXXX”, OR an updated NSF SBIR/STTR Funding Agreement Certification Form.
A statement that “The budget rates in the Phase IIB budget are identical or lower than those in the Phase II budget approved by NSF.” Rates include salaries, indirect costs, fringe benefits, overhead, G&A, unit cost rates, etc.
SBIR Phase IIb Awards
NIMH will accept Phase IIb SBIR grant applications from Phase II SBIR awardees to continue the process of developing technologies that ultimately require federal regulatory approval. Such technologies include, but are not limited to, pharmacologic agents and drugs, biological products, devices, vaccines, etc., related to the mission of NIMH. In addition, NIMH will accept Phase IIb SBIR grant applications from Phase II SBIR awardees to continue the process of developing complex instrumentation, clinical research tools, or behavioral interventions and treatments. The Phase IIb grants should allow small businesses to get to a stage where interest and investment by third parties is more likely, and/or the technology has advanced to the commercialization phase.
Companies engaging in drug development for the treatment of mental health disorders may be eligible to submit competing renewal applications through the specific funding opportunity announcement “Complex Technologies and Therapeutics Development for Mental Health Research and Practice (R43/R44).” NIMH strongly encourages cost sharing.
Companies that are developing technologies that do not focus on drug development, but that require federal regulatory approval prior to commercialization, may be eligible to submit a competing renewal application through the Reissue PHS 2013-02 Omnibus Solicitation of the NIH, CDC, FDA and ACF for Small Business Innovation Research Grant Applications (Parent SBIR [R43/R44]) . Cost sharing is strongly encouraged.
Companies that are developing technologies that do not require federal regulatory approval prior to commercialization, may be eligible to submit a competing renewal application through the funding opportunity announcement “Competing Renewal Awards of SBIR Phase IIb Grants for Brain and Behavior Tools (R44). ” For this opportunity, budget limits of up to $800,000 total costs per year and time periods up to 3 years may be requested. As in the cases above, cost sharing is strongly encouraged.
In all cases, Phase IIb grant applications are expected to include major developments that will bring the technology significantly closer to commercialization. Adaptations to existing technologies would not be appropriate for this program, unless NIMH concurred that the adaptation required significant research and development work and would make the technology unique.
Please contact your Program Director or Dr. Margaret Grabb (contact information provided below) before beginning the process of putting an application together. Prospective applicants are strongly encouraged to contact NIH staff prior to submission of a type 2 competing continuation application. In addition, prospective applicants are strongly encouraged to submit to the program contact a letter of intent that includes the following information:
Descriptive title of the proposed research
Name, address, and telephone number of the Principal Investigator
Names of other key personnel
Participating institutions
Grant # for the original Phase II grant
Direct your questions about scientific/research issues to:
Margaret C. Grabb, Ph.D.
National Institute of Mental Health
6001 Executive Boulevard, Room 7201, MSC 9645
Bethesda, MD 20892-9645
(Rockville, MD 20852 for express/courier service)
Telephone: 301-443-3563 Fax: (301) 443-1731
E-mail: [email protected]