SBIR/STTR Related Conflicts of Interest

The SBIR and STTR programs are congressionally-mandated set-aside programs for U.S. small businesses to engage in R&D that has a strong potential for commercialization.  SBIR and STTR programs provide an important source of capital for early stage U.S. small businesses that are creating innovative technologies to improve health. These programs help small businesses break into the federal research and development (R&D) arena, create life-saving technologies, and stimulate economic growth.

SBIR/STTR Program Basics – Tutorial

While there are standard federal-wide requirements for the SBIR and STTR programs, each agency issues its own implementation guidelines and separate calls for proposals. For example, under the NIH guidelines for Principal Investigators, it is possible that an ECU faculty member could receive SBIR or STTR funding as:

  1. An SBIR subawardee acting as a collaborating (not primary) PI on an SBIR;
  2. As an STTR subawardee acting as the primary or collaborating PI on an STTR; or 
  3. Through a facilities use or technical services agreement for the faculty member’s lab.

    Participation of faculty in SBIR/STTR programs through a small business concern (SBC) often has the potential to create a conflict of interest on the part of the faculty member.  This happens when the faculty member is the co-founder or owner of the SBC applying for the funding and engages in research on a subcontract between the SBC and ECU.  These conflicts can be created in terms of the following:

    1. Lack of control over ECU facilities and other resources (i.e., is the PI using his or her lab to support their own company);
    2. Blurring of the non‐profit/for‐profit boundary (i.e., use of ECU’s tax‐exempt facilities in a way that competitively advantages a for‐profit entity); and
    3. COI in the research since the investigator may want to produce certain results for financial reasons, to advance the company’s profit rather than to advance science.

    To ensure research integrity and avoid or mitigate conflicts of interest, each faculty member receiving SBIR or STTR funding as an awardee should have a conflict of interest management plan.

    Guidance has been developed to help navigate the challenging conflicts associated these complex relationships with faculty start-up companies.

    Navigating COI Issues when Faculty Start-Up Companies Engage in University Research

    Institutional Conflicts of Interest is another potential problem with SBIR/STTRs grants awarded to start‐ups.  For instance, ECU may have a relationship with the SBC, i.e., licensed its intellectual property to the SBC in trade for equity.  It could be perceived that ECU would be less assertive in its oversight of the research if the Institution stood to profit financially from the research.

    While there are compliance risks associated with such endeavors, ECU encourages and expects that faculty will want to be involved in an SBC and the SBIR/STTR proposal process.  In light of this, ECU faculty must notify proper university officials when the SBC in which they have a financial interest or relationship applies for SBIR/STTR funding and the faculty member expects to work on the subcontract between ECU and the SBC.  This can be accomplished by disclosing the relationship in COI Risk Manager as part of a project specific disclosure process. More than likely, several departments within the university as well as the COI Committee will be involved in the review of the relationship and implementation of an appropriate management plan.  In addition to IP licenses, contracts between ECU and the SBC should also address contracting costs and any anticipated use of ECU resources.