Navigating the requirements for securing a Department of Defense (DOD) Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) contract can feel like deciphering a complex puzzle. One of the most common questions we receive at Sightline Ventures pertains to company eligibility criteria. Understanding whether your business qualifies as a “small business concern” is crucial for successfully applying for these contracts.
In short – the eligibility criteria for DOD SBIR and STTR contracts are broken into three areas which include organizational requirements, equity ownership, and company size. Does your company qualify? Let’s take a look at each requirement more closely.
Type of Firm Requirement:
To qualify for a DOD SBIR/STTR contract, your business must be organized as a for-profit entity and meet all the criteria outlined in 13 C.F.R. § 121.105. This means nonprofit organizations are ineligible to be a prime contractor. If your application involves a joint venture, each participant must individually satisfy all eligibility requirements.
Ownership Requirement:
A significant portion—more than 50%—of your firm’s equity must be directly owned and controlled by U.S. citizens or permanent resident aliens. This can include individuals, other for-profit small businesses owned by eligible individuals, or a combination of these entities. There’s also a specialized provision allowing ownership by certain venture capital firms, hedge funds, or private equity entities, provided no single entity controls more than half of the equity. This option is particularly nuanced and applies only under specific circumstances outlined in the SBIR/STTR Reauthorization Act.
Size Requirement:
Your business, together with any affiliated entities, must employ fewer than 500 individuals to qualify for SBIR/STTR funding. This employee count includes all affiliated companies, so understanding the definition of affiliation is crucial.
If you’re unsure about your firm’s classification, ownership structure, or size eligibility, our team is ready to answer your questions and guide you through the application process. Contact us today to discover how we can help turn your innovative ideas into impactful solutions with the support of DOD funding.