SBIR grants vs. contracts

When researching different options to secure non-dilutive SBIR/STTR funding for your company, you have probably noticed that SBIR/STTR funding can be categorized into two types: grants and contracts. In this post, we will help you understand how these are different and where to find out which agency and award type are the best fit for your company.

Which Agencies Give Grants and Contracts?

Twelve federal agencies participate in the SBIR and STTR programs, but not all offer both grants and contracts. A broad overview of the twelve agencies is shown below:

Most of these agencies award either contracts or grants under their respective SBIR and STTR programs, while only the Department of Health and Human Services awards both grants and contracts in their programs. The National Institute of Standards and Technology makes its awards as a Cooperative Agreement. Cooperative Agreements are similar to grants, but with substantial sponsor involvement. They facilitate the transfer of something of value from federal executive agencies to states, local governments, and private recipients for a public purpose or benefit.

Why Choose Grants?

The federal government utilizes grants to fund proposals that are advancing a national objective, addressing a public problem, serving a public purpose, or stimulating an activity that is of interest to the awarding agency. Therefore, grants tend to be very flexible in what you can apply for and how you can use your money – within reason. This gives Principal Investigators (PIs, or you) considerable freedom in designing studies and projects that align with the federal agency’s priorities. It also allows PIs to set and define the scope of the proposed work and pitch their application to the applicable agency. As such, most grant-funded research projects are investigator initiated. In terms of expectations and deliverables, PIs on research grants should do their best to complete the proposed research and aims, but there are no legal requirements to achieve and deliver the proposed outcomes. Of course, successfully completing all your milestones will set your company up for future SBIR and private funding!

All available federal grant opportunities are compiled and searchable on the central federal database, and search results can be easily filtered to your company’s needs.

Why Choose Contracts?

Contract awards are constructed as a binding agreement between the government (buyer) and your company (seller), and you are expected to return goods or services in exchange for compensation. While this is a more rigid funding mechanism than grants, a customer is directly built into your contract!

Agencies that award contracts are generally looking to procure a technology or service that will solve a pre-specified agency need. Therefore, companies are expected to submit research proposals that are responsive to the specific topic indicated in the Funding Opportunity Announcement (FOA). As such, the scope of work in a contract award submission is fairly inflexible, and your company does not have a lot of leeway in supporting development outside of the deliverables described in the FOA.

Federal contracting opportunities are listed on the new platform, where you can search by keyword, solicitation ID (if known), or agency name. Several filter options are available to further narrow down your search results.

What Types of Topics are Available for Each Agency?

Agencies will release one or more SBIR FOAs each year, and these will be your best source to evaluate which agencies may be interested in funding your technology development. In general, agencies will solicit proposals that align with their missions, but sometimes agencies may have topics of interest that you might not expect. For example, NASA has released topics for medical-related technologies, and DOE has released topic areas in cybersecurity.   

To make sure you identify all possible funding opportunities relevant to your technology, it is best to do several keyword searches on both the contract and grant databases detailed above and subscribe to relevant funding listservs.

How are Grants and Contracts Reviewed and Managed?


Grants are reviewed by panels of experts that generally consist of a mix of government scientists, industry experts, and research scientists. The exact make-up of the review panels differs by agency and even between different funding opportunities within the same agency. Be sure to research the review process for your intended agency and funding mechanism before submission, so that you can tailor your proposal to the review criteria and increase your chance of obtaining funding. The review process for the National Science Foundation is detailed here and for the National Institutes of Health here. SBIR/STTR review processes for other agencies can be found on their respective websites.

Once you receive a grant, you have a lot of flexibility in how you conduct the studies. You will generally need to provide regular progress reports as well as a final report on the results of your work.


As proposals for contract funding are written in response to a specific agency need, the review process is heavily focused on whether your application will be able to adequately address the challenges and needs outlined in the announcement within a pre-set timeline and budget. Similar to grants, contracts are reviewed by experts in the field. However, the specific review process differs between agencies considerably. Depending on the agency, you may or may not receive detailed feedback on their review decision, potentially making it more challenging to address any shortcomings for a resubmission. It is always a good practice to build a relationship with your Program Director (PD), as they often make the final funding recommendations. The contract review process for the National Institutes of Health can be found here.

As contracts are more demanding in their deliverables, they typically require frequent reporting during the performance period, and payments are often based on deliverables and pre-defined milestones. Keep in mind that this award mechanism will require you to enter into a legally binding agreement with the agency or institute, and you are responsible for successfully completing all of the proposed work. As such, contract awards impact your company’s cash flow quite differently than grant funding. But they can also help you to get your technology market-ready with an interested customer base once you have completed your SBIR/STTR project!


The type of award – contract or grant – has major implications for the type of research and development you can fund through the SBIR/STTR programs. If your technology can be used for a variety of use-cases, pursuing grant awards might be the best option for you as they allow you to develop your technology with more flexibility. On the other hand, if your technology has specific use cases that align with the needs of certain government agencies, a contract might help you to fully commercialize your innovation. This decision will be unique to each technology and company. If you have any more questions, you can always post on an agency-specific Forum on SBIRLand!