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Phase II Proposal Information

Important Documents to Support the Phase II Proposal:

Milestone Chart Example

Cooperative Agreement Example

Commitment Letter Examples

Proposal Preparation Instructions and Requirements for SBIR/STTR

ALL PHASE II PROPOSALS MUST BE SUBMITTED THROUGH FASTLANE -- Reference the SBIR/STTR Web Page for Step-by-step Instructions in Preparing a Phase II Proposal, using FastLane (FL).

A.  Phase II Objectives

B.  Phase II Proposal Contents


A. Phase II Objectives. The objective of Phase II is to continue the R/R&D effort from Phase I. Only NSF Phase I awardees may compete for NSF Phase II projects. The SBIR Phase II proposals have fixed submission dates, reference the Proposal Submission Dates for SBIR/STTR.
 

B.  Phase II Proposal Contents.   All proposals are prepared in FastLane.  For step-by-step instructions reference the SBIR/STTR Phase II Proposal Preparation Help Page.

A Phase II proposal consists of the following parts:

Cover Sheet (consists of the NSF Cover sheet, Certification, and SBIR Addendum page)

Project Summary: The summary should begin as follows:  "This SBIR or STTR Phase II project . . ."  The summary must have the following components:

1.  a summary limited to 200 words addressing the Intellectual Merits of the proposed activity.  No proprietary information should be included in the summary.  Include a brief identification of the problem or opportunity, the research objectives, a description of the research, and the anticipated technical results 
2.  a summary limited to 200 words addressing the Broader Impacts of the proposed activity.  Include information on how the innovation will enhance scientific and technological understanding. Describe the potential societal and commercial impact of the project.
3.  a listing of "key" words.  The key words/phrases should identify the areas of technical expertise in science, engineering, or education which are to be invoked in reviewing the proposal; and the areas of application that are the initial target of the technology.
4.  state the topic name and subtopic letter(s) that the Phase I proposal was submitted under in Phase I
 

Table of Contents (automatically generated by FastLane):

Project Description (cannot exceed 15 pages, all parts must be labeled as presented below). Upload this section (Parts 1-5) as one file. You must first create this file with an editor that outputs Adobe compatible PDF files. The following subsections should be labeled in the following manner:

Part 1. Results of the Phase I Project. Briefly describe how Phase I has established  the feasibility of the innovation, provide justification for NSF support and intended commercial applications, and demonstrated the ability of the proposer to conduct R/R&D.

Part 2. Phase II Technical Objectives, Approach, and Work Plan. Define the specific technical objectives of the Phase II research and technical approach to meet these objectives; and provide a work plan defining specific tasks, performance schedules, milestones, and deliverables. STTR proposals need to specifically address the amount and type of work to be performed both by the small business concern and by the research institution and describe the necessary cooperation, coordination, and complementarity.

Part 3. Organizational Information. Consideration is given to the company structure and resources available to successfully complete the Phase II project and to commercialize the results. 

Provide a company income statement for the past year detailing revenue from

  • Sales
  • Licensing
  • Contracts
  • Consulting
  • Other

Provide a current staffing profile noting full and part time employees in the following categories:

  • Technical
  • Management
  • Administrative
  • Marketing and Manufacturing

Briefly summarize future staffing plans.

Identify the key members of the Phase II project team and confirm their specific availability.  Specific biographical information should be provided in the Biographical Sketches section of FastLane.

Part 4. Consultant and Subaward Agreements. The proposing firm must perform a minimum of 50% of the research and/or analytical effort as determined by budget expenditures during Phase II.  Biographical information is required for all consultants and key members of subawards; place this information in the Biographical Sketches section of FastLane.

Consultant:  Anticipated consultant services should be justified and information furnished on each individual's expertise, primary organizational affiliation, normal daily compensation rate, number of days of expected service, and how his or her efforts will contribute to the project. In addition, proposers must provide a signed statement from each consultant, whether paid or unpaid, confirming his/her availability and commitment, role in the project, and agreed consulting rate. Payment for a consultant's services, exclusive of expenses, may not exceed the consultant's normal rate or the daily maximum rate established annually by NSF, whichever is less. The NSF maximum consultant rate per day is the limit for personal compensation and is exclusive of any indirect costs, travel, per diem, clerical services, fringe benefits, and supplies.

The signed consultant statements must be scanned into the proposal and placed under Part 4.  A statement of the number of days and the daily compensation rate (which will not exceed the NSF maximum consultant rate) must be specifically stated.

Subaward (a.k.a. subcontract): A SBIR Phase II subaward cannot exceed 50% of the total budget.  A STTR Phase II subaward to other than the cooperating research institution cannot exceed 30% of the total budget. If subawards (including contracts, subcontracts and other arrangements) are used for research, describe the tasks to be performed and how these are related to the overall project. No significant part of the research or substantive effort under a NSF grant may be contracted or otherwise transferred to another organization without prior NSF authorization (this excludes the procurement of items such as commercially available supplies, materials, equipment or general support services allowable under the grant). The intent to enter into such arrangements should be disclosed in the proposal.

Each subaward shall use a Proposal Budget, providing detail of subaward costs by cost category. Enter the total amount under Subawards (Line G.5) of the company budget for the overall project.  Each subawardee budget can be prepared in FastLane.

Purchases of analytical or other routine services from commercial sources and the acquisition of fabricated components from commercial sources are not regarded as reportable subaward activity. Such items -- routine analytical or other routine services -- should be reported in the Budget under Other Direct Costs/Other (Item G.6). All research, including subaward and consultant activities, must be carried out in the U.S.

Part 5. Equivalent or Overlapping Proposals to Other Federal Agency. A firm may elect to submit proposals for essentially equivalent or overlapping work under other Federal program solicitations or may have received or expect to receive other Federal awards for essentially equivalent or overlapping work. In these cases, the proposer MUST inform NSF of related proposals and awards and must first certify on the Proposal Cover page whether the proposer (a) has received Federal government awards for related work, or (b) has submitted currently active proposals for similar work under other Federal government program solicitations or intends to submit proposals for such work to other agencies during the same year. For all such cases, the following information is required:

* The name, address, and telephone contact of the sponsoring agency to which the proposal was or will be submitted;

* Date(s) of proposal submission(s);

* Title, number, and date of Solicitation under which the proposal was submitted or will be submitted;

* Title and performance period of the proposal; and

* Name and Title of the Principal Investigator (person-months (per year) (calendar-months) devoted by any personnel on the equivalent or overlapping project who overlap with PI and personnel on this proposal)

If no equivalent or overlapping proposals are under consideration, state, NONE. NSF will not make awards that essentially duplicate research funded (or expected to be funded) by other agencies, although in some cases NSF may fund portions of work described in an overlapping proposal provided that the budgets appropriately allocate costs among the various sponsors. IF A PROPOSER FAILS TO DISCLOSE EQUIVALENT OR OVERLAPPING PROPOSALS AS PROVIDED IN THIS SECTION, THE PROPOSER COULD BE LIABLE FOR ADMINISTRATIVE, CIVIL, OR CRIMINAL SANCTIONS.

References Cited. Provide a comprehensive listing of relevant reference sources, including patent citations.

Biographical sketches. Provide relevant biographical information for the Principal Investigator and key personnel from the company as well as consultant and key subawardee personnel. Include information on present and past employment, education (highest degree and year), and professional experience. Provide a listing of relevant publications and summarize other contributions to the technical literature not directly pertinent to this proposal.

Proposal Budget. The NSF Summary Proposal Budget is generated in FastLane. Prepare a budget for each year. The system will automatically generate a cumulative budget for the entire project. Provide the required budget justification on all line items. Please reference the NSF web site for clear direction on how to document budget line item expenses, following the directions will help expedite processing if a proposal is recommended for support.

FastLane provides budget justification pages. The proposed costs indicated on the proposal budget should be consistent with the scope of the research effort and must be based on accurate, complete, and current cost or pricing data. SBIR/STTR Phase II awards are typically up to $500,000 and for up to 24 months. A STTR Phase II proposal requires a minimum of 40 percents of the budget be allocated to the small business and a minimum of 30 percent allocated to the research institution.

Tuition costs are not supported costs under a SBIR/STTR grant. NSF does not consider tuition costs research or research and development.

NSF requires that you budget travel (for each year of your project) to attend the annual DMII Conference, typically held each year in January. A good estimate for this travel is $2,000 per year for this conference.

NOTE: Travel Costs for attending professional conferences are generally NOT considered directly related to research and should be included in the "indirect" cost pool. Reasonable travel costs for presentation of your project findings at professional conferences are acceptable.

For guidance on budget documentation -- reference the Cost Analysis and Audit Resolution Branch web page. Some key components to pay close attention to when preparing the SBIR/STTR Phase II budget are as follows:

1. Salaries and Wages. Research effort is to be estimated in calendar person-months.

2. Principal Investigator. The commitment of the PI must be for at 2 months per year. Enter the estimated number of NSF-funded person-months (not in hours) in the column headed by "CAL".

3. Key Personnel. Enter the estimated number of NSF-funded person-months (not in hours) in the column headed by "CAL".

4. Permanent Equipment. (Reference the definition of Permanent Equipment.) Individual items must be justified in terms of their specific importance to the proposed research. List permanent equipment on line D of the budget form. Requests should not be made for routine equipment that a business in the field should be expected to have available.

5. Consultants. (Reference the definition of Consultant.) The proposal must include a "signed" statement from each consultant confirming availability and commitment, research role in the project, and agreed consultant rate. The number of days on the project MUST be specified in the consultant's statement. Costs proposed for a consultant's services, excluding expenses, may not exceed the NSF maximum daily rate.

6. Subawards (a.k.a. subcontracts). (Reference the definition of Subaward.) For each subaward, a Proposal Budget is required. Provide details of subaward costs by cost category. The electronic signature policy eliminates the requirement of providing a signed paper copy of the subaward budget. The total amount of subawards should be shown on Line G.5 on the cumulative budget for the project. NOTE -- under SBIR, a minimum of one-half of the research and/or analytical effort, as measured by the budget, must be performed by the proposing small business concern.

Purchases of routine analytical or other routine services from commercial sources are not regarded as reportable subcontract activities. No letter is required for such activity. Routine analytical or other routine services should be reported on the proposal budget under "Other Direct Costs/Other" (line item G.6) and describe on the budget justification page.

7. Indirect Costs. Indirect costs may be requested. The amount proposed should be based on the application of substantiated indirect costs rates (see Indirect Costs). Note that Independent Research and Development (IR&D) costs must be treated as direct costs when calculating indirect cost rates for use under NSF grants (see NSF Grant Policy Manual Chapter 6).

Note: NSF does not fund Independent Research and Development (IR&D) as part of an indirect cost rate under its grants. IR&D, as defined at FAR 31.205-18(a), includes cost of effort that is not sponsored by a grant or required in performance of a contract and that consists of projects falling within the four following areas:

1. Basic Research;
2. Applied Research;
3. Development; and
4. Systems and other concept formulation studies.

NSF's primary purpose is to support and advance independent research within the scientific and engineering community. NSF has well recognized and established procedures for supporting research through competitive grant awards based on merit review of proposed projects. Reimbursement for independent research and development costs through the indirect cost mechanism could circumvent this competitive process. Accordingly, NSF does not fund IR&D as part of an indirect cost rate under its programs including the SBIR and STTR programs.

To ensure that all projects receive similar and equal consideration, eligible organizations may compete for direct funding of independent research projects they consider worthy of support by submitting proposals for those projects to NSF. Since proposals for these project may be submitted for direct funding, costs for IR&D projects are not allowable as indirect costs under NSF grants.

Current and Pending Support. This section should show that the Principal Investigator and senior personnel have the time available to perform the proposed research during the grant period. The proposal should provide information about all research to which the Principal Investigator and other senior personnel either have committed time or have planned to commit time (in the event that other pending projects are supported during the SBIR/STTR Phase II period of performance), whether or not salary for the person involved is included in the budgets of the various projects. If none, state NONE.

For all ongoing or proposed projects, excluding any proposals cited in the Equivalent and Overlapping Proposals subsection to other Federal agencies, or proposals that will be submitted in the near future, involving the Principal Investigator or senior personnel, provide the following information:

* Name of sponsoring organization;
* Title and performance period of the proposal; and
* Person-months (per year) (calendar months) devoted to the project by the Principal Investigator and each of the senior personnel.

A Current and Pending Support statement should be included in the proposal at the time of submission.

Facilities and Equipment. Discuss requirements for and the availability of equipment, instrumentation, and facilities required for Phase II. If a proposer wants to arrange the use of unique or one-of-a-kind Government facilities, a waiver must be obtained from the Small Business Administration.

Supplementary Doc. Consists of the following components:

A. Payment Schedule and Project Milestone Chart. A payment schedule and project milestone chart are required components for all Phase II proposals.

Based on the expected utilization of resources and expenditures of funds, if the standard payment schedule as described in the SBIR Phase II General Conditions, Article 6, (http://www.nsf.gov/cgi-bin/getpub?sbirii) is not appropriate, provide a list of the number of payments, the percentage amount of each payment, and a brief justification for the departure from the standard schedule. The standard schedule is an initial payment of 25% of the total budget, followed by 3 payments of 20% and a final payment of 15%. A deviation from the standard payment schedule must be approved by NSF (the final payment of on a payment deviation but be 15% of the total budget).

The milestone (Grantt type) chart must show the duration and timing of major component tasks that are required to implement the research plan. Milestone markings indicating the initiation and completion of tasks should appear clearly in the 24-month time line and in relation to other tasks.

Briefly define each task in terms of how it contributes to the research plan, and describe each milestone event in terms of a concrete accomplishment that marks significant technical progress towards your proposed research objectives.

A sample of a Phase II Milestone Chart is provided for guidance (Milestone Chart).

The original milestone chart should have projected expenditures for each interim reporting period of the project. Resources are defined as follows:

* Level of effort (in person-months) by the PI and/or key personnel (including consultants and subawardees).

* Level of effort (in dollars) by PI and/or key personnel (including consultants and subawardees).

* Permanent equipment (leased or purchased) and/or major purchases of supplies.

The total expenditures should include "Other", i.e. all project costs including indirect costs.

For each interim reporting period, enter certain key resource expenditures that will be charged against the grant milestones. Reference the Phase II Reporting Requirements for Interim Progress Reports.

The original milestone chart should show a complete overview of the proposed project schedule. Actual progress on achieving the milestones along with the person-month effort, and expenditures for each interim reporting period will be required for each reporting period. Each succeeding interim reporting period will show the progress and expenditure data for all preceding periods.

B. Commercialization Plan ( Cannot exceed 15 pages, including letters of support.) The commercialization plan offers the opportunity to present a compelling value proposition for the proposed Phase II project. The commercialization plan should provide qualitative and quantitative information directly relating to Phase III; the time interval between the completion of Phase II work and the launching of the innovative product, process, or service into the marketplace. For Phase III, the company must secure funding from sources other than SBIR/STTR. The commercialization plan should provide a description, illustrated with tables and charts as appropriate, in each of the following areas:

1. Introduction of the SBIR Project, Expected Outcomes, and Impact. Describe, in layperson's terms, the proposed project and its key technology objectives. Clarify the need addressed, specifying weaknesses in the current approaches to meet this need. In addition, describe the commercial applications of the research and the innovation inherent in this application(s). Be sure to also specify the potential societal, educational, scientific benefits of this work. Explain the non-commercial impacts to the overall significance of the project.

2. The Company. Give a brief description of your company including corporate objectives, core competencies, present size (annual sales level and number and types of employees), and any current products/services that have significant sales. Clarify your plans to have an appropriate management team in place to see the Phase II project through to commercialization. Indicate your vision for the future and how you will grow/maintain a sustainable business entity. Include a short description of the origins of the company.

3. The Market, Customer, and Competition. Describe the market and/or market segments you are targeting and provide a brief profile of the potential customer. Tell what significant advantages your innovation will bring to the market, e.g., better performance, lower cost, faster, more efficient or effective, new capability. Explain the hurdles you will have to overcome in order to gain market/customer acceptance of your innovation. Elaborate briefly upon the plans you have for approaching your potential customers – that is, your marketing and sales strategy. Give an overview of the current competitive landscape and any potential competitors over the next several years. (N.B., it is very important that you understand and know the competition.)

4. Intellectual Property (IP) Protection. Describe how you are going to protect the IP that results from your innovation. Also note other actions you may consider taking that will constitute at least a temporal barrier to others aiming to provide a solution similar to yours.

5. Financing. Once you have finished a Phase II project, you are on your own to raise the necessary financing for Phase III, to launch your innovation, and to begin the revenue stream . By the time you prepare your Phase II proposal, it is already important to have a clear idea of how you are going to get this financing. How you plan to obtain financing is a critical review consideration. Please provide a listing of estimated funds needed for Phase III by the year, for each of the 5 years following the completion of the Phase II project, and the potential sources of funding as well as amounts from each source for a given year. In addition, you must show that you have a plan for this funding in one or more of the following ways:

A letter (or letters) of commitment for Phase III funding; A letter (or letters) of intent or evidence of negotiations to provide Phase III funding, should the Phase II project be successful and the market need still exists; A letter of support for the project and/or some in-kind commitment, e.g. to test or to evaluate the innovation; A statement, detailing the specific roadmap of the steps you are going to take to secure Phase III funding from one or more sources; the progress of this procedure must be commented upon in the Phase II progress reports.

See Financial Support and Commitments for a suggested example of commitment letters. Your Phase III funding may be from any of a number of different sources including:

SBIR/STTR firm itself
Private investors or "angels"
Venture capital firms
Investment companies
Joint ventures
R&D limited partnerships
Strategic alliances
Research contracts
Sales of prototypes (built as part of this project)
Public offering
State finance programs
Phase III may also involve non SBIR-funded R&D or production commitments from a Federal agency with the intention that the results will be used by the United States government.
Other industrial firms

N.B., Small businesses with NSF SBIR/STTR Phase II awardees should also actively pursue funding commitments. As an incentive to the awardees, supplemental Phase IIB funding is available to those companies who secure and receive third party (private or non-SBIR government) funding during Phase II. The main objective of the Phase IIB Option is to extend the R&D efforts beyond the Phase II grant to meet the requirements of a third party investor, to accelerate the Phase II project to the commercialization stage, and/or to enhance the overall strength of the commercial potential of the Phase II project. For more information, please refer to the Phase IIB web page. Commitments for a third party to spend the money directly or to provide in-kind services are not acceptable. However, instruments, computers, software, equipment, etc., provided to the awardee firm at fair market value are acceptable.

6. Revenue Stream. Explain how you are going to generate a revenue stream for your company should this project be a success. Examples of revenue stream generation include, but are not limited to, manufacture and direct sales, sales through value added resellers or other distributors, joint venture, licensing, service. Please clearly indicate if your company will be the manufacturing entity (or directly providing a service), or if you expect to commercialize the technology and the product through third parties (for example, through a licensing or royalties agreement). In either case, using a table or other appropriate format, please provide estimates for the revenue stream, by the year, for each of the 5 years following the completion of the Phase II project, for your company and for the licensee, if applicable. Please make sure that all of your assumptions for the revenue stream estimates are clearly stated. Examples of pertinent financial information relevant to these estimates are total sales revenues , the market share basis for these revenues, the cost of goods sold (or the cost of services provided), the gross income, the operating expenses and the operating income. In addition, please provide the breakdown for the cost of goods (or cost of services) estimates.

Sources for Researching Phase III Funding

There are numerous sources for researching Phase III funding. Browsing the World Wide Web (WWW) could be a starting point. The Small Business Administration (SBA) is an excellent resource; their web address is http://www.sbaonline.sba.gov. The SBA also has a service that matches entrepreneurs with "angel" investors at http://ace-net.sr.unh.edu/.

To acquire directories of venture capital companies, contact one or all of the following:

National Venture Capital Association
Phone: 703-524-2549
web: http://www.nvca.org/

National Association of Small Business Investment Companies
Phone: 202-628-5055
web: http://www.nasbic.org/

State Science & Technology Institute (SSTI)
Phone: 614-901-1690
web: http://www.ssti.org/

To obtain a list of large industrial companies that have indicated an interest in SBIR/STTR companies in specific areas, you may contact:

Commercialization Matching System SBA-SBIR
409 Third Street, SW 8th Floor
Washington, DC 20416
Phone: 202-205-6450

Information on state agencies and programs that provide assistance to SBIR companies is contained in the Missile Defense Agency (MDA) Outreach Notebook that is updated annually. It may be obtained from MDA by calling 1-800-937-3150.

Some of the state economic development organizations that can be contacted are as follows:

* The Ben Franklin Partners Program in Pennsylvania: http://www.benfranklin.org

* Massachusetts Technology Development Corporation: http://www.mtdc.com

* Connecticut Innovations, Inc.: http://www.ctinnovations.com/

* Utah Technology Finance Corporation: http://www.utfc.org

C. Company Commercialization History. NOTE -- Please read carefully and respond to questions. This section is a requirement for any proposer who has ever received a Phase II award (from any Federal agency)! Failure to provide complete answers to ALL questions will render the proposal as "non-responsive" and the proposal will be returned without review!

Firms that have received one or more SBIR/STTR Phase II awards from any Federal agency must submit a report on Company Commercialization History. The following are necessary components for this section:

1. Firm Name

2. Identify any name change your firm has gone through within the past 5 years.

3. List the parent company if you are a subsidiary of a spin-off.

4. Percentage of the Firm's Revenues for each of the past THREE Fiscal Years from Federal SBIR and/or STTR funding (including Phase I and Phase II awards).

5. Number of SBIR/STTR Phase II Awards Firm Received from the Federal Government.

6. Identify each of the Phase II SBIR/STTR Awards the firm has received by agency, award amount, and award number.

7. Total revenues to Date From the Commercialization Results of these Awards.

D. Phase I Final Report. Upload a complete copy of your Phase I Final Report associated with the Phase II proposal.

E. Cooperative Agreement (for STTR Proposals Only). If the plan from Phase I is still valid, have the Research Institution provide a letter stating this fact.

The agreement between the small business concern and the research institution must cover the allocation of intellectual property rights, if any, to carry out follow-on research development, or commercialization.

A model agreement relating to these issues is provided. This model is for guidance only and may be modified by the parties. The agreement must contain the signatures of an official of the small business concern and an appropriate official of the research institution.

By electronically signing the proposal, the official of the small business concern certifies that the agreement negotiated with the research institution is satisfactory to the small business concern.

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Last updated:
16-Sep-2004

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