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§ 263108. Phase flexibility 
During fiscal years 2012 through 2017, the National Institutes of Health, 
the Department of Defense, and the Department of Education may each 
provide to a small business concern an award under phase II of the SBIR 
program with respect to a project, without regard to whether the small busi-
ness concern was provided an award under phase I of an SBIR program 
with respect to the project, if the head of the applicable agency determines 
that the small business concern has completed the determinations described 
in section 261101(17)(A) of this title with respect to the project despite not 
having been provided a phase I award. 
§ 263109. Participation of small business concerns that are 
majority-owned by venture capital operating com-
panies, hedge funds, or private equity firms in the 
SBIR program 
(a) IN GENERAL.—On providing a written determination described in 
subsection (b) to the Administrator, the Committee on Small Business and 
Entrepreneurship of the Senate, and the Committee on Small Business and 
Committee on Science, Space, and Technology of the House of Representa-
tives, not later than 30 days before the date on which any such award is 
made— 
(1) the Director of the National Institutes of Health, the Secretary 
of Energy, and the Director of the National Science Foundation may 
award not more than 25 percent of the funds allocated for the SBIR 
program of the applicable Federal agency to small business concerns 
that are majority-owned by multiple venture capital operating compa-
nies, hedge funds, or private equity firms through competitive, merit- 
based procedures that are open to all eligible small business concerns; 
and 
(2) the head of an SBIR participating agency other than a Federal 
agency described in paragraph (1) may award not more than 15 per-
cent of the funds allocated for the SBIR program of the Federal agen-
cy to small business concerns that are majority-owned by multiple ven-
ture capital operating companies, hedge funds, or private equity firms 
through competitive, merit-based procedures that are open to all eligi-
ble small business concerns. 
(b) DETERMINATION.—A written determination described in this sub-
section is a written determination by the head of a Federal agency that ex-
plains how the use of the authority under subsection (a) will— 
(1) induce additional venture capital, hedge fund, or private equity 
firm funding of small business innovations; 
(2) substantially contribute to the mission of the Federal agency; 
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(3) demonstrate a need for public research; and 
(4) otherwise fulfill the capital needs of small business concerns for 
additional financing for SBIR projects. 
(c) REGISTRATION.—A small business concern that is majority-owned by 
multiple venture capital operating companies, hedge funds, or private equity 
firms and qualified for participation in the program authorized under sub-
section (a) shall— 
(1) register with the Administrator on the date on which the small 
business concern submits an application for an award under the SBIR 
program; and 
(2) indicate in any SBIR proposal that the small business concern 
is registered under paragraph (1) as being majority-owned by multiple 
venture capital operating companies, hedge funds, or private equity 
firms. 
(d) COMPLIANCE.—The head of a Federal agency that makes an award 
under this section during a fiscal year shall collect and submit to the Ad-
ministrator data relating to the number and dollar amount of phase I 
awards, phase II awards, and any other category of awards by the Federal 
agency under the SBIR program during that fiscal year. 
(e) ENFORCEMENT.—If a Federal agency awards more than the percent-
age of the funds allocated for the SBIR program of the Federal agency au-
thorized under subsection (a) for a purpose described in that subsection, the 
head of the Federal agency shall transfer an amount equal to the amount 
awarded in excess of the amount authorized under that subsection to the 
funds for general SBIR programs from the non-SBIR and non-STTR re-
search and development funds of the Federal agency not later than 180 
days after the date on which the Federal agency made the award that 
caused the total awarded under that subsection to be more than the amount 
authorized under that subsection for a purpose described in that subsection. 
(f) FINAL DECISIONS ON APPLICATIONS UNDER THE SBIR PROGRAM.— 
(1) DEFINITION OF COVERED SMALL BUSINESS CONCERN.—In this 
subsection, the term ‘‘covered small business concern’’ means a small 
business concern that— 
(A) was not majority-owned by multiple venture capital oper-
ating companies, hedge funds, or private equity firms on the date 
on which the small business concern submitted an application in 
response to a solicitation under an SBIR program; and 
(B) on the date of the award under the SBIR program, is ma-
jority-owned by multiple venture capital operating companies, 
hedge funds, or private equity firms. 
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(2) IN GENERAL.—If a Federal agency does not make an award 
under a solicitation under an SBIR program before the date that is 
9 months after the date on which the period for submitting applications 
under the solicitation ends— 
(A) a covered small business concern is eligible to receive the 
award, without regard to whether the covered small business con-
cern meets the requirements for receiving an award under the 
SBIR program for a small business concern that is majority- 
owned by multiple venture capital operating companies, hedge 
funds, or private equity firms, if the covered small business con-
cern meets all other requirements for such an award; and 
(B) the head of the Federal agency shall transfer an amount 
equal to any amount awarded to a covered small business concern 
under the solicitation to the funds for general SBIR programs 
from the non-SBIR and non-STTR research and development 
funds of the Federal agency, not later than 90 days after the date 
on which the Federal agency makes the award. 
(g) EVALUATION CRITERIA.—A Federal agency shall not use investment 
of venture capital or investment from hedge funds or private equity firms 
as a criterion for the award of contracts under the SBIR program or STTR 
program. 
(h) ASSISTANCE IN DETERMINING AFFILIATION 
(1) CLEAR EXPLANATION REQUIREMENT.—The Administrator shall 
post on the SBA website (with a direct link displayed on the homepage 
of the SBA website or the SBIR and STTR websites of the SBA)— 
(A) a clear explanation of the SBIR and STTR affiliation rules 
under part 121 of title 13, Code of Federal Regulations (or any 
successor regulation); and 
(B) contact information for SBA officers or employees who— 
(i) on request, shall review an issue relating to the rules 
described in subparagraph (A); and 
(ii) shall respond to a request under subparagraph (A) not 
later than 20 business days after the date on which the re-
quest is received. 
(2) INCLUSION OF AFFILIATION RULES FOR CERTAIN SMALL BUSI-
NESS CONCERNS.—On and after the date on which the final regulations 
under subsection (i) are prescribed, the Administrator shall post on the 
SBA website information relating to the regulations, in accordance with 
paragraph (1). 
(i) REGULATIONS.— 
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319 
(1) STATEMENT OF CONGRESSIONAL INTENT.—It is the intent of 
Congress that the Administrator should prescribe regulations to carry 
out this section that— 
(A) permit small business concerns that are majority-owned by 
multiple venture capital operating companies, hedge funds, or pri-
vate equity firms to participate in the SBIR program in accord-
ance with this section; 
(B) provide specific guidance for small business concerns that 
are majority-owned by multiple venture capital operating compa-
nies, hedge funds, or private equity firms with regard to eligibility, 
participation, and affiliation rules; and 
(C) preserve and maintain the integrity of the SBIR program 
as a program for small business concerns in the United States by 
prohibiting large businesses or large entities or foreign-owned 
businesses or foreign-owned entities from participation in the 
SBIR. 
(2) REGULATIONS.—The regulations at sections 121.103 and 
121.702 of title 13, Code of Federal Regulations (or any successor reg-
ulations), shall provide for participation in the SBIR program, solely 
under authority of this section, by small business concerns that are ma-
jority-owned by multiple venture capital operating companies, hedge 
funds, or private equity firms in the SBIR program. 
(3) CONTENTS.— 
(A) IN GENERAL.—The regulations shall permit participation by 
an applicant that is majority-owned by multiple venture capital op-
erating companies, hedge funds, or private equity firms in the 
SBIR program in accordance with this section unless the Adminis-
trator determines— 
(i) in accordance with the size standards established under 
subparagraph (B), that the applicant— 
(I) is a large business or large entity; or 
(II) is majority-owned or controlled by a large busi-
ness or large entity; or 
(ii) in accordance with the criteria established under sub-
paragraph (C), that the applicant— 
(I) is a foreign-owned business or a foreign entity or 
is not a citizen of the United States or alien lawfully ad-
mitted for permanent residence; or 
(II) is majority-owned or controlled by a foreign-owned 
business, foreign entity, or person who is not a citizen 
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of the United States or alien lawfully admitted for per-
manent residence. 
(B) SIZE STANDARDS.—Under the authority to establish size 
standards under paragraphs (1) through (4) of section 101103(b) 
of this title, the Administrator shall, in accordance with paragraph 
(1) of this subsection, establish size standards for applicants seek-
ing to participate in the SBIR program solely under the authority 
under this section. 
(C) CRITERIA FOR DETERMINING FOREIGN OWNERSHIP.—The 
Administrator shall establish criteria for determining whether an 
applicant meets the requirements under subparagraph (A)(ii), and, 
in establishing the criteria, shall consider whether the criteria 
should include— 
(i) whether the applicant is at least 51 percent owned or 
controlled by citizens of the United States or domestic ven-
ture capital operating companies, hedge funds, or private eq-
uity firms; 
(ii) whether the applicant is domiciled in the United States; 
and 
(iii) whether the applicant is a direct or indirect subsidiary 
of a foreign-owned firm, including whether the criteria should 
include that an applicant is a direct or indirect subsidiary of 
a foreign-owned entity if— 
(I) any venture capital operating company, hedge 
fund, or private equity firm that owns more than 20 per-
cent of the applicant is a direct or indirect subsidiary of 
a foreign-owned entity; or 
(II) in the aggregate, entities that are direct or indi-
rect subsidiaries of foreign-owned entities own more than 
49 percent of the applicant. 
(D) CRITERIA FOR DETERMINING AFFILIATION.—The Adminis-
trator shall establish criteria, in accordance with paragraph (1), 
for determining whether an applicant is affiliated with a venture 
capital operating company, hedge fund, private equity firm, or any 
other business that the venture capital operating company, hedge 
fund, or private equity firm has financed and, in establishing the 
criteria, shall specify that— 
(i) if a venture capital operating company, hedge fund, or 
private equity firm that is determined to be affiliated with an 
applicant is a minority investor in the applicant, the portfolio 
companies of the venture capital operating company, hedge 
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fund, or private equity firm shall not be determined to be af-
filiated with the applicant, unless— 
(I) the venture capital operating company, hedge fund, 
or private equity firm owns a majority of the portfolio 
company; or 
(II) the venture capital operating company, hedge 
fund, or private equity firm holds a majority of the seats 
on the board of directors of the portfolio company; 
(ii) subject to clause (i), the Administrator retains the au-
thority to determine whether a venture capital operating com-
pany, hedge fund, or private equity firm is affiliated with an 
applicant, including establishing other criteria; 
(iii) the Administrator shall not determine that a portfolio 
company of a venture capital operating company, hedge fund, 
or private equity firm is affiliated with an applicant based 
solely on 1 or more shared investors; and 
(iv) subject to clauses (i), (ii), and (iii), the Administrator 
retains the authority to determine whether a portfolio com-
pany of a venture capital operating company, hedge fund, or 
private equity firm is affiliated with an applicant based on 
factors independent of whether there is a shared investor, 
such as whether there are contractual obligations between the 
portfolio company and the applicant. 
§ 263110. Assistance for administrative, oversight, and con-
tract processing costs 
(a) IN GENERAL.—Subject to subsection (c), until September 30, 2017, 
the Administrator shall allow an SBIR agency to use not more than 3 per-
cent of the funds allocated to the SBIR program of the SBIR agency for— 
(1) administering the SBIR program or STTR program of the SBIR 
agency; 
(2) providing outreach and technical assistance relating to the SBIR 
program or STTR program of the SBIR agency, including technical as-
sistance site visits, personnel interviews, and national conferences; 
(3) implementing commercialization and outreach initiatives that 
were not in effect on December 31, 2011; 
(4) carrying out the program under section 263314(a) of this title; 
(5) carrying out activities relating to oversight and congressional re-
porting, including waste, fraud, and abuse prevention activities; 
(6) carrying out targeted reviews of recipients of awards under the 
SBIR program or STTR program of the SBIR agency that the head 
of the SBIR agency determines are at high risk for fraud, waste, or 
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abuse to ensure compliance with requirements of the SBIR program or 
STTR program, respectively; 
(7) implementing oversight and quality control measures, including 
verification of reports and invoices and cost reviews; 
(8) carrying out section 263109 of this title; 
(9) paying contract processing costs relating to the SBIR program 
or STTR program of the SBIR agency; and 
(10) providing funding for additional personnel and assistance with 
application reviews. 
(b) OUTREACH AND TECHNICAL ASSISTANCE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), an SBIR 
agency participating in the program under this section shall use a por-
tion of the funds authorized for uses under subsection (a) to carry out 
the policy directive required under section 263104(b)(12)(A) of this 
title and to increase the participation of States with respect to which 
a low level of SBIR awards have historically been awarded. 
(2) WAIVER.—An SBIR agency may request the Administrator to 
waive the requirement under paragraph (1). Such a request shall in-
clude an explanation of why the waiver is necessary. The Administrator 
may grant the waiver based on a determination that— 
(A) the SBIR agency has demonstrated a sufficient need for the 
waiver; 
(B) the outreach objectives of the SBIR agency are being met; 
and 
(C) there is increased participation by States with respect to 
which a low level of SBIR awards have historically been awarded. 
(c) PERFORMANCE CRITERIA.—A Federal agency shall not use funds as 
authorized under subsection (a) until after the effective date of performance 
criteria, which the Administrator shall establish, to measure any benefits of 
using funds as authorized under subsection (a) and to assess continuation 
of the authority under subsection (a). 
(d) COORDINATION WITH INSPECTOR GENERAL.—The head of an SBIR 
agency shall coordinate the activities funded under paragraph (5), (6), or 
(7) of subsection (a) with the Inspector General of the SBIR agency, when 
appropriate. An SBIR agency that allocates more than $50,000,000 to the 
SBIR program of the SBIR agency for a fiscal year may share that funding 
with its Inspector General when the Inspector General performs those activi-
ties. 
(e) RULES.—The Administrator shall issue rules to carry out this section. 
(f) REPORTING.—The Administrator shall collect data and provide to the 
Committee on Small Business and Entrepreneurship of the Senate and the 
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Committee on Small Business, Committee on Science, Space, and Tech-
nology, and Committee on Appropriations of the House of Representatives 
a report on the use of funds under this section, including funds used to 
achieve the objectives of subsection (b)(1) and any use of the waiver author-
ity under subsection (b)(2). 
§ 263111. Reports by Federal agencies 
(a) ANNUAL REPORT.—An SBIR agency shall annually submit to the Ad-
ministrator and the Office of Science and Technology Policy a report on the 
Federal agency’s SBIR program. 
(b) REPORTING OF AWARDS MADE FROM SINGLE PROPOSALS, AWARDS 
TO MULTIPLE AWARD WINNERS, AND AWARDS TO CRITICAL TECHNOLOGY 
TOPICS.— 
(1) SINGLE PROPOSAL.—If an SBIR agency makes an award with 
respect to an SBIR program solicitation topic or subtopic for which the 
Federal agency received only 1 proposal, the SBIR agency shall provide 
written justification for making the award in its next quarterly report 
to the Administrator and in the SBIR agency’s next annual report re-
quired under subsection (a). 
(2) MULTIPLE AWARDS.—An SBIR agency shall include in its next 
annual report required under subsection (a) an accounting of the 
awards that the SBIR agency has made for phase I of its SBIR pro-
gram during the reporting period to entities that have received more 
than 15 awards for phase II of the SBIR program during the pre-
ceding 5 fiscal years. 
(3) CRITICAL TECHNOLOGY AWARDS.— 
(A) IN GENERAL.—An SBIR agency shall include in its next an-
nual report required under subsection (a) an accounting of the 
number of awards that the SBIR agency has made to critical tech-
nology topics described in section 263102(a)(3) of this title. 
(B) CONTENTS.—An accounting under subparagraph (A) 
shall— 
(i) include an identification of the specific critical tech-
nologies topics; and 
(ii) disclose the percentage by number and dollar amount 
of the SBIR agency’s total SBIR awards to critical tech-
nology topics. 
(c) NUMBER AND DOLLAR AMOUNT OF AWARDS.— 
(1) IN GENERAL.—A Federal agency required by section 263101 of 
this title to have an SBIR program or to establish goals shall annually 
submit to the Administrator a report that discloses— 
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(A) the number of awards (including awards under section 
263314 of this title) pursuant to grants, contracts, or cooperative 
agreements over $10,000 in amount; and 
(B) the dollar value of all such awards. 
(2) CONTENTS.—A report under paragraph (1) shall identify SBIR 
awards and compare the number and amount of those awards with 
awards to other than small business concerns. 
(3) CALCULATION OF EXTRAMURAL BUDGET.— 
(A) METHODOLOGY.—Not later than 4 months after the date 
of enactment of each appropriations Act for an SBIR agency, the 
SBIR agency shall submit to the Administrator a report that in-
cludes a description of the methodology used for calculating the 
amount of the extramural budget of that SBIR agency. 
(B) ADMINISTRATOR’S ANALYSIS.—The Administrator shall in-
clude an analysis of the methodology received from each SBIR 
agency in the report required by section 107110(a) of this title. 
§ 263112. Termination 
The authorization to carry out an SBIR program under this chapter ter-
minates on September 30, 2022. 
Subchapter II—STTR Programs 
§ 263201. Required expenditure amounts 
(a) STTR PROGRAM BUDGET.— 
(1) IN GENERAL.—With respect to each fiscal year through fiscal 
year 2022, a Federal agency that has an extramural budget for re-
search or research and development in excess of $1,000,000,000 for the 
fiscal year shall expend with small business concerns not less than the 
percentage of the extramural budget specified in paragraph (2), specifi-
cally in connection with an STTR program that meets the requirements 
of this division (including any policy directive under section 263203 of 
this title). 
(2) EXPENDITURE AMOUNTS.—The percentage of the extramural 
budget required to be expended by an agency in accordance with para-
graph (1) shall be— 
(A) 0.35 percent for each of fiscal years 2012 and 2013; 
(B) 0.40 percent for each of fiscal years 2014 and 2015; and 
(C) 0.45 percent for fiscal year 2016 and each fiscal year there-
after. 
(b) LIMITATIONS.—An STTR agency shall not— 
(1) use any of its STTR program budget established under sub-
section (a) for the purpose of funding— 
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