11256 Federal Register / Vol. 62, No. 47 / Tuesday, March 11, 1997 / Proposed Rules

DEPARTMENT OF AGRICULTURE

Cooperative State Research,

Education, and Extension Service

7 CFR Part 3403

Small Business Innovation Research

Grants Program; Administrative

Provisions

AGENCY: Cooperative State Research,

Education, and Extension Service,

USDA.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Cooperative State

Research, Education, and Extension

Service (CSREES) proposes to amend its

regulations relating to the

administration of the Small Business

Innovation Research (SBIR) Grants

Program, which prescribe the

procedures to be followed annually in

the solicitation of research grant

proposals, the evaluation of such

proposals, and the award of competitive

research grants under this program. This

rule amends those regulations by

identifying information that will be

specified in the annual solicitation as

opposed to this rule. CSREES is

republishing these regulations in their

entirety with the proposed amendments

in order to enhance their use by the

public and to ensure expeditious

submission and processing of grant

proposals.

DATES: Written comments are invited

from interested individuals and

organizations. To be considered in the

formulation of a final rule, all relevant

material must be received on or before

April 10, 1997.

ADDRESSES: Written comments should

be sent to Sally J. Rockey, Deputy

Administrator, Competitive Research

Grants and Awards Management,

Cooperative State Research, Education,

and Extension Service, U.S. Department

of Agriculture, STOP 2240, 1400

Independence Avenue, SW.,

Washington, DC 20250–2240.

FOR FURTHER INFORMATION CONTACT:

Sally J. Rockey at (202) 401–1766.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction

Under the provisions of the

Paperwork Reduction Act of 1980 (44

U.S.C. Chapter 35), the collection of

information requirements contained in

this proposed rule have been approved

under OMB Document Nos. 0524–0022,

0524–0025, and 0524–0026.

Classification

This proposed rule has been reviewed

under Executive Order 12866, and it has

been determined that it is not a

‘‘significant regulatory action’’ rule

because it will not have an annual effect

on the economy of $100 million or more

or adversely and materially affect a

sector of the economy, productivity,

competition, jobs, the environment,

public health or safety, or State, local,

or tribal governments or communities.

This proposed rule will not create any

serious inconsistencies or otherwise

interfere with any actions taken or

planned by another agency. It will not

materially alter the budgetary impact of

entitlements, grants, user fees or loan

programs and does not raise novel legal

or policy issues arising out of legal

mandates, the President’s priorities, or

principles set forth in Executive Order

No. 12866. In addition, the Department

certifies that the proposed rule will not

have a significant impact on a

substantial number of small entities as

defined in the Regulatory Flexibility

Act, Pub. L. 96–534 (5 U.S.C. 601 et

seq.).

Regulatory Analysis

This proposed rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. All State and local laws

and regulations that are in conflict with

this rule are preempted. No retroactive

effect is to be given to this rule. This

rule does not require administrative

proceedings before parties may file suit

in court.

Environmental Impact Statement

This proposed regulation does not

significantly affect the environment.

Therefore, an environmental impact

statement is not required under the

National Environmental Policy Act of

1969, as amended.

Catalog of Federal Domestic Assistance

This program is listed in the Catalog of

Federal Domestic Assistance under No.

10.212, Small Business Innovation Research

(SBIR Program). For the reasons set forth in

the Final Rule-related Notice to 7 CFR part

3015, subpart V, 48 FR 29115, June 24, 1983,

and pursuant to the Notice found at 52 FR

22831, June 16, 1987, this program is

excluded from the scope of Executive Order

12372 which requires intergovernmental

consultation with State and local officials.

Background and Purpose

On June 10, 1988, the Department

published a Final Rule in the Federal

Register (53 FR 21966–21972), which

established part 3403 of title 7, subtitle

B, chapter XXXIV of the Code of Federal

Regulations, for the purpose of

administering the U.S. Department of

Agriculture’s Small Business Innovation

Research (SBIR) Grants Program

conducted under the authority of the

Small Business Innovation Development

Act of 1982, as amended (15 U.S.C. 638)

and section 630 of the Act making

appropriations for Agriculture, Rural

Development, and Related Agencies’

programs for fiscal year ending

September 30, 1987, and for other

purposes, as made applicable by section

101(a) of Pub. L. 99–591, 100 Stat. 3341.

This rule established and codified the

procedures to be followed in the

solicitation of competitive small

business innovation research proposals,

the evaluation of such proposals, and

the award of grants under this program.

On September 20, 1991, the Department

published a Final Rule in the Federal

Register (56 FR 47882–47889), which

amended the Cooperative State Research

Service (CSRS) regulations relating to

the Small Business Innovation Research

Grants Program. On December 30, 1994,

the Department published a Final Rule

in the Federal Register (59 FR 68072)

which amended 7 CFR chapter XXXIV

to reflect the abolishment of CSRS and

the establishment of CSREES. On May

15, 1996, the Department published a

Final Rule in the Federal Register (61

FR 25366) amending 7 CFR Chapter

XXXIV by encouraging the individuals

who are principally responsible for the

scientific or technical direction of the

proposed work to be designated as the

principal investigator, making it a

condition that Federal funds remain for

an extension of a Phase I grant and that

an extension will not normally exceed

12 months, requiring that when

purchasing equipment or products with

agreement funds that only Americanmade items are purchased to the extent

possible, and making a few additional

changes. These regulations are proposed

to be amended as follows:

Authority: CSREES proposes to amend the

authority citation from ‘‘5 U.S.C. 638’’ to ‘‘15

U.S.C. 638’’ to correct a technical error.

Section 3403.2. CSREES proposes to

correct ‘‘in behalf of’’ to read ‘‘on behalf

of’’ in the definition of ‘‘awarding

official.’’ In addition, CSREES proposes

to revise the definition of ‘‘funding

agreement’’ to include ‘‘concern’’ after

‘‘small business’’ and the definition of

‘‘Socially and economically

disadvantaged individual’’ by removing

the ‘‘or’’ before ‘‘Subcontinent Asian

Americans’’ to be in accordance with

the language of the January 1993 SBIR

Policy Directive.

Section 3403.3. CSREES proposes to

change references of a ‘‘firm’’ to

‘‘organization’’ in order to be consistent

throughout the document. In addition,

CSREES proposes to include ‘‘concern’’

after ‘‘small business’’ to be in
Federal Register / Vol. 62, No. 47 / Tuesday, March 11, 1997 / Proposed Rules 11257

accordance with the language of the

January 1993 SBIR Policy Directive.

Section 3403.6(d). CSREES proposes

to delete the language in this section

and replace it with a statement that the

information will be identified in the

annual solicitation.

Section 3403.7. CSREES proposes to

add paragraph (a) and redesignate

paragraphs (a) through (m) as

paragraphs (1) through (13), paragraphs

(c) (1) through (6) as subparagraphs (3)

(i) through (vi), paragraphs (g) (1) and

(2) as subparagraphs (7) (i) and (ii),

paragraphs (h) (1) through (6) as

subparagraphs (8) (i) through (vi),

paragraphs (k) (1) through (3) as

subparagraphs (11) (i) through (iii), and

paragraphs (l) (1) and (2) as

subparagraphs (12) (i) and (ii).

Furthermore, CSREES proposes to add

language to identify that further

instructions or descriptions of the phase

I proposal items as well as additional

items will be provided in the annual

solicitation, as necessary. As such,

much of the instructions and

descriptions of the phase I items are

deleted from this section.

Section 3403.7(g). CSREES proposes

to add an item (iii) to require the

applicant to identify whether and by

what means the proposed research will

satisfy the public interest. This will

assist in determining the potential

success of potential commercial

application.

Section 3403.7(j). CSREES proposes to

add language to explain that if an

Institutional Review Board (IRB) review

is required that USDA must receive and

accept the IRB approval before grant

funds will be released to the grantee.

Section 3403.8. CSREES proposes to

add paragraph (a) and redesignate

paragraphs (a) through (h) as paragraphs

(1) through (8) and paragraphs (h) (1)

and (2) as subparagraphs (8) (i) and (ii).

In addition, see proposed change

described for § 3403.7. The same

changes are proposed for phase II

proposals as are proposed for phase I

proposals.

Section 3403.10(b). CSREES proposes

to add language to explain that the

evaluation criteria will be identified in

the annual solicitation.

Section 3403.11. CSREES proposes to

delete this section due to the proposed

change identified for § 3403.10(b).

Section 3403.12. CSREES proposes to

delete paragraph (a) and add paragraph

(b) to § 3403.10(e) due to the proposed

change identified for § 3403.10(b).

Section 3403.13. CSREES proposes to

redesignate § 3403.13 as § 3403.11.

Section 3403.14. CSREES proposes to

redesignate § 3403.14 as § 3403.12.

Section 3403.15. CSREES proposes to

redesignate § 3403.15 as § 3403.13.

Section 3403.16. CSREES proposes to

redesignate § 3403.16 as § 3403.14. In

addition, CSREES proposes to change

references of ‘‘Department’’ to

‘‘Authorized Departmental Officer’’ to

be more specific.

Section 3403.16(c). CSREES proposes

to change the reference to a specific

phase I dollar amount with ‘‘the

approved award amount’’ since the

phase I award amount may vary from

one year to the next.

Section 3403.17. CSREES proposes to

redesignate § 3403.17 as § 3403.15. In

addition, CSREES proposes to add ‘‘9

CFR Parts 1, 2 , 3, and 4—USDA

Laboratory Animal Care Regulations’’

after the reference to 7 CFR part 3407

and before the reference to 48 CFR part

31.

Section 3403.18. CSREES proposes to

redesignate § 3403.18 as § 3403.16.

CSREES proposes to republish title 7,

subtitle B, chapter XXXIV, part 3403, in

its entirety with the proposed

aforementioned changes. This action

will preclude making a separate

amendment to these regulations and

allow the regulations to appear in one

document for easy access and reference

by the public and CSREES.

List of Subjects in 7 CFR Part 3403

Grant programs—Agriculture, Grant

administration. For the reasons set out

in the preamble, title 7, subtitle B,

chapter XXXIV, part 3403 of the Code of

Federal Regulations is revised to read as

follows:

PART 3403—SMALL BUSINESS

INNOVATION RESEARCH GRANTS

PROGRAM

Subpart A—General Information

Sec.

3403.1 Applicability of regulations.

3403.2 Definitions.

3403.3 Eligibility requirements.

Subpart B—Program Description

3403.4 Three-phase program.

Subpart C—Preparation and Submission of

Proposals

3403.5 Requests for proposals.

3403.6 General content of proposals.

3403.7 Proposal format for phase I

applications.

3403.8 Proposal format for phase II

applications.

3403.9 Submission of proposals.

Subpart D—Proposal Review and

Evaluation

3403.10 Proposal review.

3403.11 Availability of information.

Subpart E—Supplementary Information

3403.12 Terms and conditions of grant

awards.

3403.13 Notice of grant awards.

3403.14 Use of funds; changes.

3403.15 Other Federal statutes and

regulations that apply.

3403.16 Other Conditions.

Authority: 15 U.S.C. 638.

Subpart A—General Information

§ 3403.1 Applicability of regulations.

(a) The regulations of this part apply

to small business innovation research

grants awarded under the general

authority of section 630 of the Act

making appropriations for Agriculture,

Rural Development, and Related

Agencies’ programs for fiscal year

ending September 30, 1987, and for

other purposes, as made applicable by

section 101(a) of Pub. L. 99–591, 100

Stat. 3341, and the provisions of the

Small Business Innovation Development

Act of 1982, as amended (15 U.S.C.

638). The Small Business Innovation

Development Act of 1982, as amended,

mandates that each Federal agency with

an annual extramural budget for

research or research and development in

excess of $100 million participate in a

Small Business Innovation Research

(SBIR) program by reserving a statutory

percentage of its annual extramural

budget for award to small business

concerns for research or research and

development in order to stimulate

technological innovation, use small

business to meet Federal research and

development needs, increase private

sector commercialization of innovations

derived from Federal research and

development, and foster and encourage

the participation of socially and

economically disadvantaged small

business concerns and women-owned

small business concerns in

technological innovation. The U.S.

Department of Agriculture (USDA) will

participate in this program through the

issuance of competitive research grants

which will be administered by the

Office of Competitive Research Grants

and Awards Management, Cooperative

State Research, Education, and

Extension Service (CSREES).

(b) The regulations of this part do not

apply to research grants awarded by the

Department of Agriculture under any

other authority.

§ 3403.2 Definitions.

As used in this part:

Ad hoc reviewers means experts or

consultants, qualified by training and

experience in particular scientific or

technical fields to render expert advice

on the scientific or technical merit of
11258 Federal Register / Vol. 62, No. 47 / Tuesday, March 11, 1997 / Proposed Rules

grant applications in those fields, who

review on an individual basis one or

several of the eligible proposals

submitted to this program in their area

of expertise and who submit to the

Department written evaluations of such

proposals.

Awarding official means any officer or

employee of the Department who has

the authority to issue or modify research

project grant instruments on behalf of

the Department.

Budget period means the interval of

time into which the project period is

divided for budgetary and reporting

purposes.

Commercialization means the process

of developing markets and producing

and delivering products or services for

sale (whether by the originating party or

by others); as used here,

commercialization includes both

government and commercial markets.

Department means the Department of

Agriculture.

Funding agreement is any contract,

grant, or cooperative agreement entered

into between any Federal agency and

any small business concern for the

performance of experimental,

developmental, or research work funded

in whole or in part by the Federal

Government.

Grantee means the small business

concern designated in the grant award

document as the responsible legal entity

to whom a grant is awarded under this

part.

Peer review group means experts or

consultants, qualified by training and

experience in particular scientific or

technical fields to give expert advice on

the scientific and technical merit of

grant applications in those fields, who

assemble as a group to discuss and

evaluate all of the eligible proposals

submitted to this program in their area

of expertise.

Principal investigator means a single

individual designated by the grantee in

the grant application and approved by

the Department who is responsible for

the scientific or technical direction of

the project. Therefore, the individual

should have a scientific and technical

background.

Program solicitation is a formal

request for proposals whereby an agency

notifies the small business community

of its research or research and

development needs and interests in

selected areas and invites proposals

from small business concerns in

response to those needs.

Project means the particular activity

within the scope of one of the research

topic areas identified in the annual

solicitation of applications, which is

supported by a grant award under this

part.

Project period means the total length

of time that is approved by the

Department for conducting the research

project as outlined in an approved grant

application.

Research or research and

development (R&D) means any activity

which is:

(1) A systematic, intensive study

directed toward greater knowledge or

understanding of the subject studied;

(2) A systematic study directed

specifically toward applying new

knowledge to meet a recognized need;

or

(3) A systematic application of

knowledge toward the production of

useful materials, devices, and systems

or methods, including design,

development, and improvement of

prototypes and new processes to meet

specific requirements.

Research project grant means the

award by the Department of funds to a

grantee to assist in meeting the costs of

conducting for the benefit of the public

an identified project which is intended

and designed to establish, discover,

elucidate, or confirm information or the

underlying mechanisms relating to a

research topic area identified in the

annual solicitation of applications.

Small business concern means a

concern which at the time of award of

phase I and phase II funding agreements

meets the following criteria:

(1) Is organized for profit,

independently owned or operated, is

not dominant in the field in which it is

proposing, has its principal place of

business located in the United States,

has a number of employees not

exceeding 500 (full-time, part-time,

temporary, or other) in all affiliated

concerns owned or controlled by a

single parent concern, and meets the

other regulatory requirements outlined

in 13 CFR part 121. Business concerns,

other than licensed investment

companies, or State development

companies qualifying under the Small

Business Investment Act of 1958, 15

U.S.C. 661, et seq., are affiliates of one

another when directly or indirectly one

concern controls or has the power to

control the other or third parties (or

party) control or have the power to

control both. Control can be exercised

through common ownership, common

management, and contractual

relationships. The term ‘‘affiliates’’ is

defined in greater detail in 13 CFR

121.401(a) through (m). The term

‘‘number of employees’’ is defined in 13

CFR 121.407. Business concerns

include, but are not limited to, any

individual, partnership, corporation,

joint venture, association, or

cooperative.

(2) Is at least 51 percent owned, or in

the case of a publicly owned business at

least 51 percent of its voting stock is

owned, by United States citizens or

lawfully admitted permanent resident

aliens.

Socially and economically

disadvantaged small business concern

is one that is:

(1) At least 51 percent owned by:

(i) An Indian tribe or a native

Hawaiian organization, or

(ii) One or more socially and

economically disadvantaged

individuals; and

(2) Whose management and daily

business operations are controlled by

one or more socially and economically

disadvantaged individuals.

Socially and economically

disadvantaged individual is a member

of any of the following groups: Black

Americans, Hispanic Americans, Native

Americans, Asian-Pacific Americans,

Subcontinent Asian Americans, other

groups designated from time to time by

the Small Business Administration

(SBA) to be socially disadvantaged, or

any other individual found to be

socially and economically

disadvantaged by the SBA pursuant to

section 8(a) of the Small Business Act,

15 U.S.C. 637(a).

Subcontract is any agreement, other

than one involving an employeremployee relationship, entered into by a

Federal Government funding agreement

awardee requesting supplies or services

required solely for the performance of

the funding agreement.

United States means the fifty States,

the territories and possessions of the

United States, the Commonwealth of

Puerto Rico, the Trust Territory of the

Pacific Islands, and the District of

Columbia.

Women-owned small business

concern means a small business concern

that is at least 51 percent owned by a

woman or women who also control and

operate it. Control as used in this

context means exercising the power to

make policy decisions. Operate as used

in this context means being actively

involved in the day-to-day management

of the concern.

§ 3403.3 Eligibility requirements.

(a) Eligibility of organization. (1) Each

organization submitting a proposal must

qualify as a small business concern for

research purposes, as defined in

§ 3403.2. Joint ventures and limited

partnerships are eligible to apply for

and to receive research grants under this

program, provided that the entity

created qualifies as a small business
Federal Register / Vol. 62, No. 47 / Tuesday, March 11, 1997 / Proposed Rules 11259

concern in accordance with section 2(3)

of the Small Business Act (15 U.S.C.

632) and as defined in § 3403.2 of this

part. For both phase I and phase II the

research must be performed in the

United States.

(2) A minimum of two-thirds of the

research or analytical work, as

determined by budget expenditures,

must be performed by the proposing

organization under phase I grants. For

phase II awards, a minimum of one-half

of the research or analytical effort must

be conducted by the proposing

organization. The space used by the

SBIR awardee to conduct the research

must be space over which it has

exclusive control for the period of the

grant.

(b) Eligibility of principal investigator.

(1) It is strongly suggested that the

individual responsible for the scientific

or technical direction of the project be

designated as the principal investigator.

In addition, the primary employment of

the principal investigator must be with

the proposing small business concern at

the time of award and during the

conduct of the proposed research.

Primary employment means that more

than one-half of the principal

investigator’s time is spent in the

employ of the small business concern.

Primary employment with the small

business applicant precludes full-time

employment with another organization.

(2) If the proposed principal

investigator is employed by another

organization (e.g., university or another

company) at the time of submission of

the application, documentation must be

submitted with the proposal from the

principal investigator’s current

employer verifying that, in the event of

an SBIR award, he/she will become a

less-than half-time employee of such

organization and will remain so for the

duration of the SBIR project.

Subpart B—Program Description

§ 3403.4 Three-phase program.

The Small Business Innovation

Research Grants Program will be carried

out in three separate phases described

in this section. The first two phases are

designed to assist USDA in meeting its

research and development objectives

and will be supported with SBIR funds.

The purpose of the third phase is to

pursue the commercial applications or

objectives of the research carried out in

phases I and II through the use of

private or Federal non-SBIR funds.

(a) Phase I is the initial stage in which

the scientific and technical merit and

feasibility of an idea related to one of

the research areas described in the

program solicitation is evaluated,

normally for a period not to exceed 6

months. In special cases, however,

where a proposed research project

requires more than 6 months to

complete, a longer grant period may be

considered. A proposer of a phase I

project with an anticipated duration

beyond 6 months should specify the

length and duration in the proposal at

the time of its submission to USDA in

order for it to be considered at the time

of award. (See § 3403.14(c) for changes

in project period subsequent to award).

(b) Phase II is the principal research

or research and development effort in

which the results from Phase I are

expanded upon and further pursued,

normally for a period not to exceed 24

months. Only those small businesses

previously receiving phase I awards are

eligible to submit phase II proposals.

For each phase I project funded the

awardee may apply for a phase II award

only once. Phase I awardees who for

valid reasons cannot apply for phase II

support in the next fiscal year funding

cycle may apply for support not later

than the second fiscal year funding

cycle.

(c) Phase III is to stimulate

technological innovation and the

national return on investment from

research through the pursuit of

commercial objectives resulting from

the work supported by SBIR funding

carried out in phases I and II. This

portion of the project is performed by

the small business concern and

privately funded or Federally funded by

a non-SBIR source through the use of a

follow-on funding commitment. A

follow-on funding commitment is an

agreement between the small business

concern and a provider of follow-on

capital for a specified amount of funds

to be made available to the small

business concern for further

development of their effort upon

achieving certain mutually agreed upon

technical objectives during phase II.

Subpart C—Preparation and

Submission of Proposals

§ 3403.5 Requests for proposals.

(a) Phase I. A program solicitation

requesting phase I proposals will be

prepared each fiscal year in which

funds are made available for this

purpose. The solicitation will contain

information sufficient to enable eligible

applicants to prepare grant proposals

and will include descriptions of specific

research topic areas which the

Department will support during the

fiscal year involved, forms to be

completed and submitted with

proposals, and special requirements. A

notice will be published in the Federal

Register informing the public of the

availability of the program solicitation.

(b) Phase II. For each fiscal year in

which funds are made available for this

purpose, the Department will send a

letter requesting phase II proposals from

the phase I grantees eligible to apply for

phase II funding in that fiscal year. The

letter will be accompanied by the

solicitation which contains information

sufficient to enable eligible applicants to

prepare grant proposals and includes

forms to be submitted with proposals as

well as special requirements.

§ 3403.6 General content of proposals.

(a) The proposed research must be

responsive to one of the USDA program

interests stated in the research topic

descriptions of the program solicitation.

(b) Proposals must cover only

scientific/technological research

activities. A small business concern

must not propose product development,

technical assistance, demonstration

projects, classified research, or patent

applications. Many of the research

projects supported by the SBIR program

lead to the development of new

products based upon the research

results obtained during the project.

However, projects that seek funding

solely for product development where

no research is involved, i.e. the funds

are needed to permit the development of

a project based on previously completed

research, will not be accepted.

Literature surveys should be conducted

prior to preparing proposals for

submission and must not be proposed as

a part of the SBIR phase I or phase II

effort. Proposals principally for the

development of proven concepts toward

commercialization or for market

research should not be submitted since

such efforts are considered the

responsibility of the private sector and

therefore are not supported by USDA.

(c) A proposal must be limited to only

one topic. The same proposal may not

be submitted under more than one

topic. However, an organization may

submit separate proposals on the same

topic. Where similar research is

discussed under more than one topic,

the proposer should choose that topic

whose description appears most

relevant to the proposer’s research

concept. Duplicate proposals will be

returned to the applicant without

review.

(d) The limitation on the length of

phase I and phase II proposals, text

instructions, and the formatting

instructions will be identified in the

annual solicitation.
11260 Federal Register / Vol. 62, No. 47 / Tuesday, March 11, 1997 / Proposed Rules

§ 3403.7 Proposal format for phase I

applications.

(a) The following items relate to phase

I applications. Further instructions or

descriptions for these items as well as

any additional items to be included will

be provided in the annual solicitation,

as necessary.

(1) Proposal cover sheet. Photocopy

and complete Form CSREES–667 in the

program solicitation. The original of the

proposal cover sheet must at a

minimum contain the pen-and-ink

signatures of the proposed principal

investigator(s) and the authorized

organizational official.

(2) Project summary. Photocopy and

complete Form CSREES–668 in the

program solicitation. The technical

abstract should include a brief

description of the problem or

opportunity, project objectives, and a

description of the effort. Anticipated

results and potential commercial

applications of the proposed research

also should be summarized in the space

provided. Keywords, to be provided in

the last block on the page, should

characterize the most important aspects

of the project. The project summary of

successful proposals may be published

by USDA and, therefore, should not

contain proprietary information.

(3) Technical content. The main body

of the proposal should include:

(i) Identification and significance of

the problem or opportunity.

(ii) Background and rationale.

(iii) Relationship with future research

or research and development.

(iv) Phase I technical objectives.

(v) Phase I work plan.

(vi) Related research or research and

development.

(4) Key personnel and bibliography.

Identify key personnel involved in the

effort, including information on their

directly related education and

experience.

(5) Facilities and equipment. Describe

the types, location, and availability of

instrumentation and physical facilities

necessary to carry out the work

proposed. Items of equipment to be

purchased must be fully justified under

this section.

(6) Consultants. Involvement of

university or other consultants in the

planning and research stages of the

project is permitted and may be

particularly helpful to small firms

which have not previously received

Federal research awards. If such

involvement is intended, it should be

described in detail.

(7) Potential post application. Briefly

describe:

(i) Whether and by what means the

proposed research appears to have

potential commercial application;

(ii) Whether and by what means the

proposed research appears to have

potential use by the Federal

Government; and

(iii) Whether and by what means the

proposed research will satisfy the public

interest.

(8) Current and pending support. If a

proposal, substantially the same as the

one being submitted, has been

previously funded or is currently

funded, pending, or about to be

submitted to another Federal agency or

to USDA in a separate action, the

proposer must provide the following

information:

(i) Name and address of the agency(s)

to which a proposal was submitted, or

will be submitted, or from which an

award is expected or has been received.

(ii) Date of actual or anticipated

proposal submission or date of award,

as appropriate.

(iii) Title of proposal or award,

identifying number assigned by the

agency involved, and the date of

program solicitation under which the

proposal was submitted or the award

was received.

(iv) Applicable research topic area for

each proposal submitted or award

received.

(v) Title of research project.

(vi) Name and title of principal

investigator for each proposal submitted

or award received. USDA will not make

awards that duplicate research funded

(or to be funded) by other Federal

agencies.

(9) Cost breakdown on proposal

budget. Photocopy and complete the

budget form in the program solicitation

only for the phase under which you are

currently applying. (An applicant for

phase I funding should not submit both

phase I and II budgets.)

(10) Research involving special

considerations. If the proposed research

will involve recombinant DNA

molecules, human subjects at risk, or

laboratory animal care, the proposal

must so indicate and include an

assurance statement (Form CSREES–

662) as the last page of the proposal.

The original of the assurance statement

must at a minimum contain the penand-ink signature of the authorized

organizational official. In order to

complete the assurance statement, the

proposer may be required to have the

research plan reviewed and approved by

an appropriate ‘‘Institutional Review

Board’’ (IRB) prior to commencing

actual substantive work. If an IRB

review is required, USDA will not

release funds for an award until proper

documentation of the IRB approval is

submitted to and accepted by USDA. It

is suggested that proposers contact local

universities, colleges, or nonprofit

research organizations which have

established such reviewing mechanisms

to have this service performed.

(11) Proprietary information. (i) If a

proposal contains proprietary

information that constitutes a trade

secret, proprietary commercial or

financial information, confidential

personal information, or data affecting

the national security, it will be treated

in confidence to the extent permitted by

law, provided the information is clearly

marked by the proposer with the term

‘‘confidential proprietary information’’

and provided the following legend

appears in the designated area at the

bottom of the proposal cover sheet

(Form CSREES–667): The following

pages (specify) contain proprietary

information which (name of proposing

organization) requests not be released to

persons outside the Government, except

for purposes of evaluation.

(ii) USDA by law is required to make

the final decision as to whether the

information is required to be kept in

confidence. Information contained in

unsuccessful proposals will remain the

property of the proposer. However,

USDA will retain for one year one file

copy of all proposals received; extra

copies will be destroyed. Public release

of information for any proposal

submitted will be subject to existing

statutory and regulatory requirements.

Any proposal which is funded will be

considered an integral part of the award

and normally will be made available to

the public upon request except for

designated proprietary information that

is determined by USDA to be

proprietary information.

(iii) The inclusion of proprietary

information is discouraged unless it is

necessary for the proper evaluation of

the proposal. If proprietary information

is to be included, it should be limited,

set apart from other text on a separate

page, and keyed to the text by numbers.

It should be confined to a few critical

technical items which, if disclosed,

could jeopardize the obtaining of foreign

or domestic patents. Trade secrets,

salaries, or other information which

could jeopardize commercial

competitiveness should be similarly

keyed and presented on a separate page.

Proposals or reports which attempt to

restrict dissemination of large amounts

of information may be found

unacceptable by USDA. Any other

legend than that listed in paragraph

(a)(11)(i) of this section may be

unacceptable to USDA and may

constitute grounds for return of the
Federal Register / Vol. 62, No. 47 / Tuesday, March 11, 1997 / Proposed Rules 11261

proposal without further consideration.

Without assuming any liability for

inadvertent disclosure, USDA will limit

dissemination of such information to its

employees and, where necessary for the

evaluation of the proposal, to outside

reviewers on a confidential basis.

(12) Rights in data developed under

SBIR funding agreement. The SBIR

legislation provides for ‘‘retention of

rights in data generated in the

performance of the contract by the small

business concern.’’

(i) The legislative history clarifies that

the intent of the statute is to provide

authority for the participating agency to

protect technical data generated under

the funding agreement, and to refrain

from disclosing such data to competitors

of the small business concern or from

using the information to produce future

technical procurement specifications

that could harm the small business

concern that discovered and developed

the innovation until the small business

concern has a reasonable chance to seek

patent protection, if appropriate.

(ii) Therefore, except for program

evaluation, participating agencies shall

protect such technical data for a period

of not less than 4 years from the

completion of the project from which

the data were generated unless the

agencies obtain permission to disclose

such data from the contractor or grantee.

The government shall retain a royaltyfree license for government use of any

technical data delivered under an SBIR

funding agreement whether patented or

not.

(13) Organizational management

information. Before the award of an

SBIR funding agreement, USDA requires

the submission of certain organizational

management, personnel and financial

information to assure the responsibility

of the proposer. This information is not

required unless a project is

recommended for funding, and then it is

submitted on a one-time basis only.

However, new information should be

submitted if a small business concern

has undergone significant changes in

organization, personnel, finance, or

policies including those relating to civil

rights.

§ 3403.8 Proposal format for phase II

applications.

(a) The following items relate to phase

II applications. Further instructions or

descriptions for these items as well as

any additional items to be included will

be identified in the annual solicitation,

as necessary.

(1) Proposal cover sheet. Follow

instructions found in § 3403.7(a)(1) of

this part.

(2) Project summary. Follow

instructions found in § 3403.7(a)(2) of

this part.

(3) Phase I results. The proposal

should contain an extensive section that

lists the phase I objectives and makes

detailed presentation of the phase I

results. This section should establish

the degree to which phase I objectives

were met and feasibility of the proposed

research project was established.

(4) Proposal. Since phase II is the

principal research and development

effort, proposals should be more

comprehensive than those submitted

under phase I. However, the outline

contained in § 3403.7(a)(3) of this part

should be followed, tailoring the

information requested to the phase II

project.

(5) Cost breakdown on proposal

budget. For phase II, a detailed budget

is required for each year of requested

support. In addition, a summary budget

is required detailing the requested

support for the overall project period.

(6) Organizational management

information. Each phase II awardee will

be asked to submit an updated

statement of financial condition (such as

the latest audit report, financial

statements or balance sheet).

(7) Follow-on funding commitment. If

the proposer has obtained a contingent

commitment for phase III follow-on

funding, it should be forwarded with

the phase II application.

(8) Documentation of multiple phase

II awards. (i) An applicant that submits

a proposal for a funding agreement for

phase I and has received more than 15

phase II awards during the preceding 5

fiscal years, must document the extent

to which it was able to secure phase III

funding to develop concepts resulting

from previous phase II awards. This

documentation should include the name

of the awarding agency, date of award,

funding agreement number, topic or

subtopic title, amount and date of phase

II funding and commercialization status

for each phase II award.

(ii) USDA shall collect and retain the

information submitted under paragraph

(a)(8)(i) of this section at least until the

General Accounting Office submits the

report required under section 106 of the

Small Business Research and

Development Enhancement Act of 1992.

§ 3403.9 Submission of proposals.

The program solicitation for phase I

proposals and the letter requesting

phase II proposals will provide the

deadline date for submitting proposals,

the number of copies to be submitted,

and the address where proposals should

be mailed or delivered.

Subpart D—Proposal Review and

Evaluation

§ 3403.10 Proposal review.

(a) All research grant applications will

be acknowledged.

(b) Phase I and phase II proposals will

be judged competitively in a two-stage

process, based primarily upon scientific

or technical merit. First, each proposal

will be screened by USDA scientists to

ensure that it is responsive to stated

requirements contained in the program

solicitation. Proposals found to be

responsive will be technically evaluated

by peer scientists knowledgeable in the

appropriate scientific field using the

criteria identified in the annual

solicitation, as appropriate. Proposals

found to be nonresponsive will be

returned to the proposing firm without

review.

(c) Both internal and external peer

reviewers may be used during the

technical evaluation stage of this

process. Selections will be made from

among recognized specialists who are

uniquely qualified by training and

experience in their respective fields to

render expert advice on the merit of

proposals received. It is anticipated that

such experts will include those located

in universities, Government, and nonprofit research organizations. If possible,

USDA intends that peer review groups

shall be balanced with minority and

female representation and with an

equitable age distribution.

(d) Technical reviewers will base their

conclusions and recommendations on

information contained in the phase I or

phase II proposal. It cannot be assumed

that reviewers are acquainted with any

experiments referred to within a

proposal, with key individuals, or with

the firm itself. Therefore, the proposal

should be self-contained and written

with the care and thoroughness

accorded papers for publication.

(e) Final decisions will be made by

USDA based upon the ratings assigned

by reviewers and consideration of other

factors, including the potential

commercial application, possible

duplication of other research, any

critical USDA requirements, and budget

limitation. In addition, the follow-on

funding commitment will be a

consideration for phase II proposals. In

the event that two or more phase II

proposals are of approximately equal

technical merit, the follow-on funding

commitment for continued development

in phase III will be an important

consideration. The value of the

commitment will depend upon the

degree of commitment made by nonFederal investors, with the maximum

value resulting from a signed agreement
11262 Federal Register / Vol. 62, No. 47 / Tuesday, March 11, 1997 / Proposed Rules

with reasonable terms for an amount at

least equal to the funding requested

from USDA in phase II.

§ 3403.11 Availability of information.

Information regarding the peer review

process will be made available to the

extent permitted under the Freedom of

Information Act (5 U.S.C. 552), the

Privacy Act (5 U.S.C. 552a), the SBIR

Policy Directive, and implementing

Departmental and other Federal

regulations. Implementing Departmental

regulations are found at 7 CFR part 1.

Subpart E—Supplementary

Information

§ 3403.12 Terms and conditions of grant

awards.

Within the limit of funds available for

such purpose, the awarding official

shall make research project grants to

those responsible, eligible applicants

whose proposals are judged most

meritorious in the announced program

areas under the evaluation criteria and

procedures set forth in the annual

solicitation. The beginning of the project

period shall be no later than September

30 of the Federal fiscal year in which

the project is approved for support. All

funds granted under this part shall be

expended solely for the purpose for

which the funds are granted in

accordance with the approved

application and budget, the regulations

of this part, the terms and conditions of

the award, the Federal Acquisition

Regulation (48 CFR part 31), and the

Department’s Uniform Federal

Assistance Regulations (7 CFR part

3015).

§ 3403.13 Notice of grant awards.

(a) The grant award document shall

include, at a minimum, the following:

(1) Legal name and address of

performing organization.

(2) Title of project.

(3) Name(s) and address(es) of the

Principal Investigator(s).

(4) Identifying grant number assigned

by the Department.

(5) Project period, which specifies

how long the Department intends to

support the effort.

(6) Total amount of Federal financial

assistance approved for the project

period.

(7) Legal authorities under which the

grant is awarded.

(8) Approved budget plan for

categorizing project funds to accomplish

the stated purpose of the grant award.

(9) Other information or provisions

deemed necessary by the Department to

carry out its granting activities or to

accomplish the purpose of a particular

research project grant.

(b) The notice of grant award, in the

form of a letter, will provide pertinent

instructions and information to the

grantee which are not included in the

grant award document described in

paragraph (a) of this section.

§ 3403.14 Use of funds; changes.

(a) Delegation of fiscal responsibility.

The grantee may not in whole or in part

delegate or transfer to another person,

institution, or organization the

responsibility for use or expenditure of

grant funds.

(b) Change in project plans. (1) The

permissible changes by the grantee,

principal investigator(s), or other key

project personnel in the approved

research project grant shall be limited to

changes in methodology, techniques, or

other aspects of the project to expedite

achievement of the project’s approved

goals. If the grantee and/or the principal

investigator(s) are uncertain as to

whether a change complies with this

provision, the question must be referred

to the Authorized Departmental Officer

(ADO) for a final determination.

(2) Changes in approved goals, or

objectives, shall be requested by the

grantee and approved in writing by the

ADO prior to effecting such changes. In

no event shall requests for such changes

be approved which are outside the

scope of the original approved project.

(3) Changes in approved project

leadership or the replacement or

reassignment of other key project

personnel shall be requested by the

grantee and approved in writing by the

ADO prior to effecting such changes.

(4) Transfers of actual performance of

the substantive programmatic work in

whole or in part and provisions for

payment of funds, whether or not

Federal funds are involved, shall be

requested by the grantee and approved

in writing by the ADO prior to effecting

such transfers.

(c) Changes in project period. The

project period may be extended by the

ADO to complete or fulfill the purposes

of an approved project provided Federal

funds remain. The extension shall be

conditioned upon a prior request by the

grantee and approval in writing by the

ADO. In such cases the extension will

not normally exceed 12 months, the

phase I award will still be limited to the

approved award amount, and the

submission of a Phase II proposal will

be delayed by one year. The extension

allows the grantee to continue

expending the remaining Federal funds

for the intended purpose over the

extension period. In instances where no

Federal funds remain, it is unnecessary

to approve an extension since the

purpose of the extension is to continue

using Federal funds. The grantee may

opt to continue the Phase I project after

the grant’s termination and closeout,

however, the grantee would have to do

so without additional Federal funds. In

the latter case, no communication with

USDA is necessary. However, the

maximum delay for submission of a

Phase II proposal remains as specified

in § 3403.4(b).

(d) Changes in approved budget.

Changes in an approved budget shall be

requested by the grantee and approved

in writing by the ADO prior to

instituting such changes if the revision

will:

(1) Involve transfers of amounts

budgeted for indirect costs to absorb an

increase in direct costs;

(2) Involve transfers of amounts

budgeted for direct costs to

accommodate changes in indirect cost

rates negotiated during a budget period

and not approved when a grant was

awarded;

(3) Result in a need or claim for the

award of additional funds; or

(4) Involve transfers or expenditures

of amounts requiring prior approval as

set forth in the Departmental regulations

or in the grant award.

§ 3403.15 Other Federal statutes and

regulations that apply.

Several other Federal statutes and/or

regulations apply to grant proposals

considered for review or to research

project grants awarded under this part.

These include but are not limited to:

7 CFR part 1.1—USDA implementation of

Freedom of Information Act.

7 CFR part 1c—USDA implementation of

the Federal Policy for the Protection of

Human Subjects;

7 CFR part 3—USDA implementation of

OMB Circular A–129, Managing Federal

Credit Programs.

7 CFR part 15, subpart A—USDA

implementation of Title VI of the Civil Rights

Act of 1964, as amended.

7 CFR part 3015—USDA Uniform Federal

Assistance Regulations, implementing OMB

directives where applicable (i.e., Circular

Nos. A–102, A–110, A–87, A–21, and A–122)

and incorporating provisions of 31 U.S.C.

6301–6308 (formerly the Federal Grant and

Cooperative Agreement Act of 1977, Pub. L.

95–224), as well as general policy

requirements applicable to recipients of

Departmental financial assistance.

7 CFR part 3017, as amended—USDA

implementation of Governmentwide

Debarment and Suspension

(Nonprocurement) and Governmentwide

Requirements for Drug-Free Workplace

(Grants), as amended.

7 CFR part 3018—USDA implementation

of New Restrictions on Lobbying. Imposes

new prohibitions and requirements for

disclosure and certification related to

lobbying on recipients of Federal contracts,

grants, cooperative agreements, and loans.
Federal Register / Vol. 62, No. 47 / Tuesday, March 11, 1997 / Proposed Rules 11263

7 CFR part 3407—CSREES procedures to

implement the National Environmental

Policy Act.

9 CFR parts 1, 2, 3, and 4—USDA

implementation of the Act of August 24,

1966, Pub. L. 89–544, as amended

(commonly known as the Laboratory Animal

Welfare Act).

48 CFR part 31—Contract Cost Principles

and Procedures of the Federal Acquisition

Regulation.

29 U.S.C. 794, section 504—Rehabilitation

Act of 1973, and 7 CFR part 15B (USDA

implementation of statute), prohibiting

discrimination based upon physical or

mental handicap in Federally assisted

programs.

35 U.S.C. 200 et seq.—Bayh-Dole Act,

controlling allocation of rights to inventions

made by employees of small business firms

and domestic nonprofit organizations,

including universities, in Federally assisted

programs (implementing regulations are

contained in 37 CFR part 401).

§ 3403.16 Other conditions.

The Department may, with respect to

any research project grant, impose

additional conditions prior to or at the

time of any award when, in the

Department’s judgment, such conditions

are necessary to assure or protect

advancement of the approved project,

the interests of the public, or the

conservation of grant funds.

Done at Washington, DC, this 4th day of

March 1997.

B. H. Robinson,

Administrator, Cooperative State Research,

Education, and Extension Service.

[FR Doc. 97–5914 Filed 3–10–97; 8:45 am]

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