The line, and which side of it you are on
Most faculty PIs approach a first STTR expecting the administrative load to split down the middle with the small business. It does not split, and it should not. The small business is the prime on every STTR award. It holds the contract, carries the federal registrations, builds the cost volume, signs the certifications, sets up the subaward and clicks submit. The research institution owns the science it is best at and one packet from its sponsored programs office. Everything else sits on our side of the line, and a partner who tries to hand it back to you has misread the program.
That division is not a courtesy. It follows from how the program is written. Under 15 U.S.C. § 638 and the SBA SBIR and STTR Policy Directive, an STTR is a formal collaboration between a small business concern and a single research institution, with a minimum work split of 40 percent to the small business and 30 percent to the institution. The remaining 30 percent can go either way or to a third party. The award instrument itself, the contract or grant, runs to the small business alone. Your institution is a subrecipient, which means the federal compliance surface lands on us and reaches you only through the subaward terms.
The one line that matters most to a PI weighing whether to participate: in an STTR, the principal investigator may be primarily employed by either the small business or the research institution. That is the structural difference from SBIR, where the PI must spend more than half of working time with the small business. You keep your appointment, your lab, your students and your title, and you can serve as the PI of record on a federal award without moving anything.
Who Carries It — Small-Business Share of the Non-Technical Packet
Editorial weighting of packet workload by owner. Illustrative of the working split, not a measured statistic.
1. Federal registrations, and how long they really take
Nothing submits until a chain of federal accounts is live, and every one of them belongs to the small business. Lead times run in weeks, which is why this is the most common reason a first-time collaboration misses a close date.
SAM.gov. Entity registration produces the Unique Entity ID and a CAGE code, and it must be active and error-free at proposal and again at award. Entity validation, where SAM matches legal name and physical address against third-party records, is the step that stalls. It renews every twelve months, and the annual representations and certifications under FAR 52.204-8 renew with it. Ours is active. CAGE 1AYQ0.
The SBA company registry. Every SBIR and STTR applicant needs an SBC Control ID issued through SBA's registry, and the agency portals validate it at upload. It is fast to obtain and easy to forget.
The agency portal. Defense components submit through DSIP. NIH runs through eRA Commons plus Grants.gov, NSF through Research.gov, and DOE through PAMS. Each requires its own institutional profile, its own role assignments and its own signing authority mapping, and several will not let a PI be added on the day of submission.
Identity and access. Login.gov with multi-factor, plus an entity administrator with notarized authority on the SAM side. Unglamorous plumbing, and a frequent cause of a package that cannot be uploaded at 4:45 p.m. on close day.
Lead Times From Cold Start
2. The allocation of work agreement
Every STTR proposal carries a document showing how the effort divides between the two parties and proving the 40 and 30 percent floors are met. Agencies read it closely because it is the one place where the collaboration is either real or decorative.
The recurring failure is arithmetic. Firms compute the small-business share on one denominator and the institution's share on another, so the two percentages do not sum against the same base, and a contracting officer who recalculates gets a number below the floor. We build the allocation table off the same denominator as the cost volume, usually total direct labor plus the subaward, and we print the denominator on the page so the reviewer never has to guess. The narrative then maps each task in the statement of work to one party, so the percentage and the technical plan tell the same story.
You do not draft this. You tell us which tasks your lab is best positioned to own, and we write the table, the narrative and the crosswalk to the work plan, then send it back for a read.
3. The intellectual property agreement
STTR is the only part of the program that requires a written IP agreement between the small business and the research institution, and most agencies want it in place before award. This is where university technology transfer offices get nervous, usually because a small business hands them a one-sided draft and asks for a signature in three days.
We send the first draft to your sponsored programs and technology transfer offices early, built on terms those offices already recognize. Background IP stays with whoever brought it. Foreground IP made with federal funds is subject to Bayh-Dole at 35 U.S.C. §§ 200 through 212 and its implementing rules at 37 CFR Part 401, which means your institution keeps its election-of-title rights on subject inventions it conceives. The small business takes a license path to commercialization rather than demanding assignment. Publication rights are preserved with a short sponsor review window, typically 30 to 60 days, purely to allow a filing decision.
Data developed under the award carries SBIR and STTR data rights, protected for twenty years from award and asserted on the defense side through DFARS 252.227-7018. Marking that data correctly at delivery is a small-business obligation and an easy thing to get wrong. Written properly at the start, none of this touches your students' theses.
4. The cost volume and the rate build
Two cost regimes meet inside one budget, which is why STTR cost volumes get rejected more often than technical volumes do. The small business prices under the FAR Part 31 cost principles, with reasonableness judged under FAR 31.201-3. Your institution prices under the Uniform Guidance at 2 CFR Part 200, using its negotiated facilities and administrative rate agreement. The two regimes use different vocabulary for the same ideas, and someone has to translate.
| Cost element | Who owns it | What we need from your side |
|---|---|---|
| Direct labor and fringe | Each party for its own staff | Names, roles, person-months, and your institution's salary and fringe policy |
| Indirect rates | Small business builds and defends its own; institution applies its negotiated rate | A copy of the current F&A rate agreement, or a note that the de minimis rate under 2 CFR 200.414(f) applies |
| Subaward line | Small business carries it in the prime budget | Sponsored programs budget and justification in your office's own format |
| Materials, tuition, participant costs | Whichever party incurs them | Quotes or the standing tuition remission policy |
| Travel | Both, priced separately | Conference or site-visit plan for your personnel |
| Fee or profit | Small business only | Nothing. Nonprofit subrecipients do not take fee |
Two details worth knowing before your first budget conversation. If your unit has no negotiated F&A rate for a given activity, the de minimis indirect rate under 2 CFR 200.414(f) is available at 15 percent of modified total direct costs, raised from 10 percent in the 2024 revision to the Uniform Guidance. And most agencies allow a reasonable fee to the small business, commonly around 7 percent, which never applies to the subaward's own indirect costs. Cost sharing is not required on SBIR or STTR awards, and volunteering it usually creates an accounting obligation with no scoring benefit.
We build the whole thing, reconcile it to the work allocation percentages, write the justification narrative, and hand your office a subaward budget that already matches its template.
5. The subaward packet your sponsored programs office expects
Your office has a standing list. If a small business shows up asking what is needed, that is a signal about how the rest of the award will go. The packet is predictable, and we assemble it before the first request.
- Scope of work for the institution, task-numbered to the prime work plan
- Subaward budget and justification in your office's format, with your F&A rate applied correctly
- Subrecipient commitment form and FDP clearinghouse profile reference
- Signed letter of intent to enter a subaward, naming the PI and the period of performance
- Prime entity information: UEI, CAGE, SAM status, small-business size representation
- Draft allocation of work and IP agreements for institutional review
- Human or animal subjects determination, IRB or IACUC status where applicable
- Export-control and data-handling expectations stated up front, not discovered at award
One item that saves time later: the single audit threshold under 2 CFR 200.501 moved to $1,000,000 in federal awards expended per fiscal year in the 2024 revision. Saying so in the first email defuses a question your office will otherwise raise on its own schedule.
6. Certifications and disclosures
The small business signs a stack of representations that most PIs never see, and each one has teeth. Size and ownership under 13 CFR 121.702: fewer than 500 employees counting affiliates, organized for profit in the United States, and more than 50 percent owned by individuals who are U.S. citizens or permanent residents, or by other qualifying small businesses. The majority venture-ownership authority that some agencies apply to SBIR does not extend to STTR, which is a detail worth knowing if your collaborator has taken institutional capital.
Then the SBIR and STTR funding agreement certification, executed at award, again at the interim payment point and once more at final payment, attesting that the work split, the place of performance and the PI arrangement are what the proposal said. The SBIR and STTR Extension Act of 2022 adds disclosures covering foreign ownership, funding and control relationships of the applicant firm. Those are corporate facts about the business entity, filed by us, and they do not reach into your lab.
Add the standard federal set: certification regarding debarment and suspension, drug-free workplace, lobbying restrictions, and the previous-award and duplicate-funding representations that catch firms proposing the same work to two agencies.
7. Submission and the last 72 hours
The final stretch is mechanical and it is entirely ours. Page counts and margin rules checked against the solicitation instructions rather than last cycle's memory. Fonts and figure legibility verified in the rendered PDF, not the source document. Every required volume present and named the way the portal expects. Every form field populated with a real value.
Then the upload, well before the deadline hour, followed by a downloaded copy of the submitted package read page by page to confirm the portal did not drop an attachment or compress a figure. You get a confirmation email and a copy of exactly what went in. You are not asked to be available on close day.
8. What we actually need from you
Short list, and it is genuinely short.
- Your AoR contact. Name and email of the authorized organizational representative who signs for your institution.
- Two pages of science. The research approach for the institution's portion, in your own voice.
- Your people. Who works on it, at what effort, plus biosketches in the agency format.
- Your rate agreement. The current F&A rate document, or confirmation that the de minimis rate applies.
- A read of two drafts. The allocation of work table and the IP agreement, before they reach your office.
- Facilities and equipment. A paragraph on what your lab brings, often the strongest page in the proposal.
That is roughly six to ten hours of faculty time on a Phase I package. Everything itemized above this section is ours.
9. What happens after Phase I
Phase I values run from roughly $150,000 to $350,000 depending on the agency and component, over six to twelve months. Phase II is the larger award and the reason to build the relationship carefully now, because the same 40 and 30 percent structure carries forward. The commercialization obligation, the market evidence, the customer conversations and the transition plan all stay with the small business.
Phase III is where the structure pays off. Work deriving from an SBIR or STTR award can be sole-source awarded without further competition, at any dollar value, by any federal agency. That authority follows the small business as the awardee, and a research institution that has been in the technical lineage since Phase I stays in the work as the technology moves toward a program of record.
Common questions from sponsored programs offices
Does our institution have to be registered in SAM?
Your institution is a subrecipient, not the applicant, so the prime's SAM registration is what the agency validates. Your institution already holds a UEI for its own federal awards and will be asked for it in the subaward, but no new registration is created for an STTR.
Who owns inventions made in our lab under the subaward?
Bayh-Dole governs. Your institution retains its election-of-title rights on subject inventions conceived or first reduced to practice by its personnel. The IP agreement sets the license path to commercialization rather than moving title, and the federal government retains its standard nonexclusive license.
Can our PI publish?
Yes. A short sponsor review window, typically 30 to 60 days, allows a filing decision before publication. That term is written into the agreement at the start rather than negotiated after a paper is drafted. Theses and dissertations are handled the same way.
What if the solicitation closes in three weeks?
That is workable when the prime's registrations are already active, which removes the longest pole. The binding constraint becomes your office's internal routing time. Tell us your institutional deadline and we work backward from it, delivering the subaward packet early rather than on the last day.
Frequently asked questions
At least 40 percent of the work goes to the small business and at least 30 percent to the single partnering research institution, under the SBA SBIR and STTR Policy Directive. The remaining 30 percent may go to either party or to a third party. The percentages must be computed on a consistent denominator and shown in the allocation of work document.
Yes. STTR allows the PI to be primarily employed by either the small business or the research institution. This is the main structural difference from SBIR, where the PI must be primarily employed by the small business. Faculty keep their appointments and serve as PI of record.
The institution's federally negotiated F&A rate applies to its portion. Where no negotiated rate covers the activity, the de minimis rate under 2 CFR 200.414(f) is available at 15 percent of modified total direct costs. The small business prices its own indirect costs separately under FAR Part 31.
Six to ten hours across a Phase I package when the small business carries the administrative load properly: the research approach, biosketches, effort levels, the F&A rate document and a read of two draft agreements. Registrations, cost volume, certifications, subaward assembly and submission belong to the prime.
At the start, not at award. Most agencies require a written IP agreement between the small business and the research institution before award, and technology transfer offices need review time. Sending the draft in the first week of the collaboration is the single best predictor of a clean close.
The ask
If you are a faculty PI considering an STTR, or a sponsored programs officer with a PI who needs a small-business partner, send the name and email of your authorized organizational representative to [email protected], along with the solicitation you are looking at and its close date. Within one business day you get back the starter packet already filled in: the institutional scope of work, a subaward budget shell with your F&A rate applied, the allocation of work table with the math shown, and the draft IP agreement for your technology transfer office. If the fit is wrong, you get a clear no in the same window and no follow-up sequence.