SBIR


BUDGET SECTION AND ACCOUNTING


SOME RECENT
WINNERS

NSF: Predicting Healthcare Fraud, Waste and Abuse by Automatically Discovering Social Networks in Health Insurance Claims Data through Machine Learning

Ag: Precise Location Tracking of Livestock using RFID

NSF: Pre-filled Cartridges for Personalized Medicine

DHS: Practical Alternatives for Population-Scale Remote Identity Proofing

NSF: Power Management Integrated Circuits

NSF: Poultry Vaccination and Recognition and Removal of Unhealthy Chicks

DHS: Portable Linear Accelerator

NSF: Point of care diagnosis for pneumonia and sepsis

NSF: Plasma Actuators for Wind Turbines

HHS: Plant alkaloid compounds for drug production and discovery


One of the most stressful parts of buiding a proposal is the budget section, and if you are serious about winning I highly recommend having an accountant that has experience building government grant applications help you. But here is some information that should make you an informed customer.

WHAT CAN YOU BILL TO THE GOVERNMENT (include in your budget):  The government breaks expenses into three categories:

GENERALLY ALLOWABLE: These tend to be things that are directly connected to the cost of creating your product and conducting your research. So things like manufacturing costs.

GENERALLY UN-ALLOWABLE: These tend to be things that the government doesn't want to pay you for, like alcohol and charitable donations. So they can't appear in your budget

ALLOWABLE WITH LIMITATIONS: These tend to be things that are directly connected to the cost of creating your product and conducting your research, but which can be abused. So things like wages, rent and travel costs. For these items you will have to show that the amount you are spending is "reasonable."

FURTHER RESTRICTIONS: Each agency has their own rules about what you can spend SBIR dollars on (even in the Generally Allowable category) so read the solicitation but generally they don't want you spending money pre-maturely, so for example they probably won't let you buy expensive equipment that you need to run your research and instead they'd rather you rent it for the duration of the SBIR.

THE ELEMENTS OF YOUR BUDGET: Each agency has their own rules here so read the proposal, but in general you have two types of budget items:

DIRECT: These are the direct costs of doing the work. So, if you weren't doing the work you wouldn't have the expense. So for example:
1) The cost of the people you hire to do the work (including their benefits and other fringe costs)
2) The cost of equipment you rent for this work
3) The cost of subcontractors to help with this work

INDIRECT: These are the costs of being in business, so your utilities, internet access, rent, etc. They tend to be pretty fixed, so you'd be spending the money regardless of whether you win the SBIR or.

These rates are unique to you so don't "borrow" someone elses

WHAT ARE REASONABLE SALARIES: Your biggest expense will probably be your people, and you are going to have to demonstrate that the rates you are paying them are reasonable. To do this go to salary.com or the Bureau of Labor Statistics and see what other people with a similar role are being paid. You can also do a little survey of people in your industry to ask what they are getting paid, but if you do that keep your survey data and be prepared to share it with the government.  
 
Suggestion: Set your rates on an hourly basis so that you can scale them up or down depending on the amount of work a given person ends up doing.

PROFIT: You can include up to (generally) 7% of the total award value as profit. This is the most flexible money you can get so ask for the full 7%.

FOR MORE INFORMATION: see FAR part 31.2 HERE

RATIOS: The government has ideas about what the ratios between each of the above should be (e.g. NIH limits your indirect costs to 40% of your direct costs) s o be sure to check the solicitation


BUILDING A BUDGET: There are a million ways to do this, but here's our recommendation:

1) Take the total award amount
2) Remove 7% for profit
3) Use the Indirect Rate that you developed for your company and remove that

  EXAMPLE: If you find that for every $1 of Direct Costs you have $0.40 of Indirect Costs     and that you have $100k of budget remaining (after removing profit) then you'd divide $100K by 140 and find that you have $71.4k available for direct costs and $28.6k available for Indirect costs

4) Figure out how you will meet your research goals with the budget that is remaining


ACCOUNTING:  Government accounting is tricky so please talk to a professional, but here is a little overview so you can ask the right questions:

IN PHASE I:  Generally you just need basic controls and justifications for how you developed your direct and indirect costs

IN PHASE II:  Once you get the larger Phase II award you are going to have to show a much more rigorous process for developing rates (e.g. what is in your Direct and Indirect buckets). And many agencies use the Defense Contract Auditing Agency (DCAA) standard which includes an audit to check:

1) Assess whether your company is financialy stable enough to complete a 2 year grant
2) Evaluate the suitability of your accounting system.
3) (Optional) Evaluate your Phase II proposed indirect rates
4) (Optional) Confirm that you are current on your payroll taxes


SOME RECENT
WINNERS

NSF: Predicting Musculoskeletal Injury Risk of Material Handling Workers

DHS: Prediction for Embedded Malware

HHS: Predicting noise emission from mining machines

HHS: Predictive Biomarkers Of Adverse Reactions To Radiation Treatment

Ag: Prevent musculoskeletal disorders among women livestock farmers

DHS: Preemptive Cyber Defense and Situational Understanding Through Memory Oriented Cyber Genomics and Physiology

HHS: Prevention and Treatment of Infected Wounds

Commerce: Probabilistic subseasonal weather forecasts

DHS: Privacy Protecting Conversation Recorder

DHS: Process Level Security for Mobile System Assurance