The SBA is proposing to change the SBIR and STTR Policy Directives in a series of clarifying amendments that provide a new layer of certainty regarding the future of SBIR contractors’ data rights and potential Phase III awards.

SBIR contractors are currently entitled to an “SBIR/STTR protection period” of four years (five years for DoD SBIR contracts) from the last deliverable during which the awardee retains the rights in data. This protection period is extended upon each subsequent related award, which can leave the contractor and the government (and potential acquiring entities) unsure of the actual length of the protection period. To provide clarity around the time period, SBA is proposing an SBIR/STTR protection period of 12 years without extensions. This is a suggested minimum, and agencies would have the discretion to adopt a longer period. Under a proposed fixed period, the value of a SBIR contractor’s data is more readily determined without an ever-changing timeframe of data rights.

On the other hand, the government has helped itself to greater rights in data. SBIR contractors currently enjoy exclusive rights in data during the four-year renewable protection period, during which the government is unable to use the data for any purpose. Under SBA’s proposed regime, the government would have some limited rights during the 12-year protection period, which include use within the government and disclosure to non-government entities upon the execution of a non-disclosure agreement. Awardee consent would not be required in this case. The proposed definitions do limit the instances in which it is appropriate to disclose data during the protection period outside the government, but this is markedly different than current policy.

Further, the SBA has proposed the government take unlimited rights in SBIR data after the expiration of the protection period. The current directives allow use within the government after the protection period expires. The proposed unlimited rights would allow the government to use SBIR data for any purpose, commercial or government, including in competitive procurements. So, potential buyers should be aware that the real value of the SBIR data rights will be limited to the fixed protection period.

SBA also proposes to highlight Congressional authority given to agencies to award Phase III work to the SBIR awardees that developed the technology. The NDAA of FY12, at Section 5108, included a provision to require sole source Phase III awards to those SBIR awardees, to the greatest extent practicable, upholding the policy of the SBIR program in supporting innovative small business technology. The proposed changes to the SBIR directives now require agencies to first consider whether a sole source award to the Phase I or II awardee can be made for Phase III awards. This proposed requirement and commitment to keeping follow-on awards with the awardees that developed the technology has the potential to increase valuation of SBIR contractors as they can point to an enhanced preference that is not available in traditional federal government contracts.

While the valuation of SBIR contractors may increase with a fixed protection period and enhanced direction for sole source Phase III awards, buyers will need to balance these proposals with the changes in the government’s SBIR data rights. Comments on the proposed changes are due before June 6, 2016.