SBIR and STTR COI Guidance

No. Although many SBIR and STTR applications include subcontracts to universities, under federal regulations, only small businesses may apply for SBIR and STTR funding. STTR guidelines require the small business applicant to formally collaborate with a university or non-profit research institute. SBIR guidelines indicate that this is optional. Such collaborations generally take the form of subcontracts issued by the small business to the university. 

Typically, this is done by conducting research at UCSB under a subcontract from a small business that has received an SBIR or STTR award. SPO staff can provide information which will assist UCSB PIs and Departmental Staff in completing and submitting proposal paperwork needed to initiate the subaward process. However, UCSB cannot help the small business with their proposal submission. 

Plans for proposed research to be conducted at UCSB under an SBIR or STTR subcontract from a small business must follow the same review process as any other extramurally funded research. This review should ensure that the proposed work (a) has scientific merit, (b) constitutes a good use of UCSB research facilities, (c) will not compromise the PI’s academic responsibilities, (d) is for a unique and specific scope of work distinct from research funded by other outside entities, (e) is for work that does not overlap with the investigator’s other research responsibilities, and (f) reflects full cost recovery (direct and indirect), including the PI’s time, in the project budget. From a conflict of interest and conflict of commitment perspective, it is best for an individual to act either as a consultant to the company on grant-related activities, or as a researcher on a subcontract to UCSB, but not both. 

The circumstances and details associated with each situation will help determine whether a company founded/owned by a UCSB faculty member can apply for an SBIR or STTR Award. However, there are some key points to keep in mind: 

• Faculty may not hold a full-time appointment at UC and concurrently serve as the Principal Investigator (PI) of an SBIR or STTR grant for a company. 
• The PI for the company and the PI for the UCSB subcontract must be separate individuals. 
• In general, the PI for the small business applicant should not be a UCSB employee. 
• The company should have adequate resources and facilities to perform its portion of the research, without the use of UCSB facilities and resources, including human resources. 

Please see the FAQs below for additional discussion. 

Possibly. Acceptance of managerial or salaried positions requires prior approval from the UCSB Chancellor or Chancellor’s Designee. These requests need to be endorsed by the faculty member’s chair and dean in accordance with APM-025. Additionally, this arrangement may require disclosure to, and review by, the UCSB Conflict of Interest Committee (COIC) and approval by the Vice Chancellor for Research or designee. UCSB faculty are encouraged to proactively contact the COI Administrator to discuss the proposed SBIR/STTR project and the potential COI concerns in anticipation of the COIC review. 

Yes. Faculty may engage in these types of activities, subject to the time limits and reporting requirements of APM-025. 

In general, no. Under federal SBIR guidelines the small business applicant must be the PI’s primary employer by the time an award is made and must remain the PI’s primary employer for the duration of the project period. Although STTR program guidelines permit University employees to serve as the applicant company’s PI, submission of applications for research support through any organization other than The Regents requires an exception to UC policy. See: http://policy.ucop.edu/doc/2500500/ReqSubmitProp-Awar. 

This policy has also been incorporated into the UC Policy on Conflict of Commitment. See: https://www.ucop.edu/academic-personnel-programs/academic-personnel-policy/policy-issuances-and-guidelines/apm-025-issuance.html. Typically, exceptions have been made when the faculty member agrees to take a temporary leave (part time or full time) from the University to conduct research as the small business’s PI. Please note that the conduct of research is generally not considered the kind of outside professional activity allowed under the UC Policy on Conflict of Commitment.

As indicated in the preceding section, permission to submit applications for funding through any organization other than The Regents requires an exception to UC policy and the Conflict of Interest Administrator should be notified prior to submitting a funding application. Exceptions for postdoctoral scholars are typically considered only when an individual’s training is virtually finished and they are in the job market. Approval is subject to the postdoctoral scholar’s agreement to sever their UCSB appointment to become an employee of the small business when the SBIR or STTR award is made. 

Please note: Exceptions cannot be made for individuals on H1-B visas because changes in work conditions are not permitted. 

Possibly. The potential benefits of being involved in a faculty member’s outside activities should be weighed against other considerations such as the student’s ability to concurrently work and effectively engage in their academic activities. While there are no express policies that prohibit a student from working outside the University, student employment should not eclipse educational activities or hinder progress toward a degree. Additionally, under APM-025 faculty must obtain prior approval from their department chair before involving students in companies in which they have financial interests. In this context, involvement means any substantive activity, whether compensated or not. Students who are UCSB employees should also refer to the question below regarding staff employees who wish to take on outside responsibilities for an SBIR or STTR applicant. 

Graduate students should be aware of the Graduate Division’s Policy on Conflicts of Interest and follow its procedures.

According to UC Personnel Policies for Staff Members, non-faculty employees (such as staff and appointees in the research series) are not permitted to engage in activities which create a conflict of interest between their University responsibilities and other interests or obligations, nor should outside employment interfere with the performance of their University duties. The University has consistently interpreted this policy to mean that an employee should not devote any of their UCSB working time or use any University resources, including their office or office equipment, to conduct non-University business. 

A number of factors, including the employee’s UCSB responsibilities and proposed company responsibilities, the nature of the company, and the company’s relationship to the University need to be considered. Staff employees (including students who also hold staff titles), and non-faculty academic employees who (a) are considering taking on outside responsibilities for a small business SBIR or STTR applicant or (b) are already involved in a small business that wants to apply for an SBIR or STTR grant should contact the COI Administrator for guidance. Seeking guidance can help to ensure that these outside activities conform to UC policy.

The small business should contact UCSB’s Technology & Industry Alliances office before submitting its grant proposal to discuss the availability of the intellectual property and whether an option or license is needed. Doing so may prevent potential claims of intellectual property infringement resulting from the company’s use of University-owned intellectual property under the SBIR/STTR award.

Possibly. These situations are subject to review by the COIC before the University can accept the research support. If the COIC determines that the situation creates a financial conflict of interest, it will work with the company and the UCSB employee to find ways of managing the conflicts. The COI Administrator is available to discuss specific situations prior to formal committee review. In addition, the details and circumstances for each situation must be carefully analyzed to ensure that the research can be carried out in compliance with the SBIR and/or STTR program guidelines, as well as UC and UCSB policies and procedures. 

Unless this program eligibility requirement is expressly waived in writing by the federal government, the company must conduct a significant portion of the research in facilities that it owns or controls. The company must conduct at least 67% of the work under an SBIR Phase I grant, at least 50% under an SBIR Phase II grant, and at least 40% under an STTR grant (Phase I or II). By the time of award, the company must either have its own facilities or control research facilities that will be used to conduct its portion of the proposed research. The small business’s portion of the research under an SBIR or STTR grant may not be conducted in a UCSB laboratory unless the space is in an officially designated UCSB incubator space. Leasing of space in an official incubator provides the company with research facilities that it controls. 

Faculty may only use their UCSB laboratory to conduct the portion of the work that is subcontracted to UCSB. As indicated above, review by the COIC is required before the University can accept such research support when the PI (or Co-PI) has financial interests in the small company that has received the SBIR or STTR Phase I grant. If the COIC determines that the situation creates a conflict of interest, it will make recommendations for managing or eliminating the conflict so that the research support can be accepted. UCSB recharge facilities (sales and service activities) with UCSB Office of Budget & Planning established and approved rates for external users can provide goods and services to small businesses conducting research under SBIR and STTR grants per the facility’s standard operating procedures. However, the circumstances and details of each situation should be carefully analyzed, especially in those situations where a UCSB employee who has a financial interest in the small business that wants to access a recharge facility that they are responsible for managing, supervising or directing. 

To avoid possible violation of the California Political Reform Act, no one with a UCSB appointment (including faculty, staff, students who also hold staff or academic appointments, and non-faculty academic appointees) may influence or participate in making business decisions between that outside entity and The Regents.