November 30, 1999 in SBIR/STTR News

Money Money Money

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OK, let’s be honest, the reason you’re taking the time to write an SBIR/STTR proposal is because you’re interested in receiving money.  Well, an agency isn’t just going to give you the money.  You must first prepare a budget (also known as a cost proposal) which will tell the agency how you plan to use their money.

Your budget will have Direct Costs –costs that you can say are specific to this SBIR/STTR (the actual hours worked on this project, the materials acquired, consumed, or expended specifically for the purpose of this awards, etc.), and Indirect Costs—costs your company will have, whether you receive the SBIR/STTR award or not (rent, utilities, office supplies, etc.).  This budget is the budget for THIS SBIR/STTR project—not the budget for your entire company.  You will be able to claim only a portion of the company’s Indirect Costs in your SBIR/STTR budget.

Keep in mind, just because it is an expense (whether Direct or Indirect), it doesn’t mean the government will reimburse you for it.  You must take into account that there are “allowable” and “unallowable” costs.  The FAR (Federal Acquisition Regulation) is the standard set of rules that all federal agencies must abide by when determining expenses, so you need to learn these rules: FAR Subchapter E (General Contracting Requirements), Part 31 (Contract Cost Principles and Procedures).

Examples of unallowable costs:

·      Interest and other financial costs

·      Fines and penalties

·      Lobbying costs

·      Most advertising

·      Federal income taxes

NOTE: Even within the allowable limits outlined in the FAR, some agencies will have further restrictions for SBIR/STTR, so be sure to read your solicitation and any cost proposal preparation materials provided by the agency.

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