Agency Requirements

To be eligible for a Phase II in the SBIR program, the applicant must have first won a Phase I award and must still be a for-profit entity with 500 or fewer employees (including affiliates).  The business must also still be 51% owned by individual US citizens or legally admitted permanent resident aliens. The Principal Investigator (PI) must be primarily employed (at least 51% of his/her time) by the firm during the period of performance.  Note that this is a measurement of employment status-NOT time committed to the SBIR project.  For an STTR at DOD, NIH, or NASA, the Principal Investigator may be from the collaborating non-profit research entity.
 
For a large number of the Phase I awards (e.g., at DOD), the Phase II proposals MUST BE OFFICIALLY INVITED before they can be submitted.  For most other agencies, all Phase I winners are eligible to submit Phase II proposals without an invitation. 

For a Phase II SBIR project, up to one-half of the work may be done outside of the company using collaborators and consultants.    The agencies often encourage such collaboration and teaming.  For an STTR project, a minimum of 40% of the work must be done by the small business, and a minimum of 30% must be done under a formal subcontract with a non-profit research institution. Although personnel from outside the United States may be used in one of these projects, typically, all work by the small business and any consultants or subcontractors (including the research institution in an STTR) must be physically performed in U.S.