The Next Steps
Phase III SBIR Contracts
A three-phased program, SBIR begins with a short white paper to determine the merit and feasibility of an innovation, leading to a major R&D effort that funds the prototyping and demonstration of the most promising projects. Next step? Commercialization. Phase III SBIR projects derive from, extend or complete work conducted under prior SBIR|STTR funding agreements but receive funding from sources other than the SBIR Program.
Phase III awards are commercial applications of a company’s products, tools or services that receive funding from non-Army SBIR|STTR Program sources, such as the government or private sector.They can receive funding from any type of agency funds and can be any type of contract, with no limit on the number, duration, type or dollar value of the award. These characteristics create significant flexibility and opportunity for companies who have completed a Phase I or Phase II SBIR|STTR contract.
How Do I Get to Phase III?
The competitions for SBIR/STTR Phase I and Phase II awards satisfy any competition requirement of the Armed Services Procurement Act, the Federal Property and Administrative Services Act, and the Competition in Contracting Act. An agency that wishes to fund an SBIR/STTR Phase III award, which is an extension of prior Phase I and/or Phase II awards, is not required to conduct another competition for the Phase III award in order to satisfy those statutory provisions. Therefore, the contract file documentation should demonstrate that the Phase III award derives from, extends, or logically concludes efforts made under prior SBIR/STTR Funding Agreements and is authorized pursuant to 15 U.S.C. 638(r)(4). It is recommended that the contracting office work with the requiring activity to ensure the Phase III effort meets this criteria and document it as such in the contract file. Further justification is not needed to satisfy competition concerns (i.e., no sole source justification is required).
To begin the SBIR Phase III contract process, a government program manager (PM) will need to prepare requirement package documentation, as required by the designated contracting office, including but not limited to the following:
- Statement of Work / Performance Work statement
- Contract Data Requirements List (CDRL) / DD Form 1423
- Justifications as applicable (options, government property, etc.)
- Security Requirements / DD Form 254
- Request for Civilian Hire (Services)
- Agency-designated Contracting Office required documentation
- Quality Assurance Surveillance Plan (QASP)
- Contracting Officer Representative COR and/or Technical Point of Contact (TPOC)
- Statement/Memorandum for Record (MFR) in which the Government technical expert will document how the work to be performed on the Phase III contract derives from, extends or completes prior SBIR / STTR efforts. The TPOC and/or SBC must provide the narrative and lineage to prior SBIR / STTR PH I/II/III efforts.
Once successfully concluded with small business concern concurrence, the PM or contracting officer’s representative completes a procurement request and submits it to the contracting officer for contracting.
SBIR Phase III Frequently Asked Questions
Can a SBIR|STTR Phase III contract be awarded to a company which has either outgrown the small business size standard or which has been acquired by a large business?
Yes, per the SBA policy directives, a Phase III contract may be awarded to a firm that has outgrown the small business size standard, or to a novated awardee, or to a successor in interest, such as an acquiring company.
If a company receives a Phase III contract based on work done in a Phase I SBIR|STTR before they have been awarded the Phase II, is that company disqualified for applying for the Phase II award?
No, while a federal agency may enter into a Phase III SBIR agreement at any time with a Phase I awardee, no follow-on prohibition precludes the Phase III recipient from then submitting a proposal for the Phase II. The effort proposed must meet the intent of a Phase II and cannot duplicate the effort being performed under the Phase III.
How do companies go about extending their data rights from Phase I to Phase II to Phase III?
The small business is primarily responsible for ensuring that its data rights are correctly reported and maintained. SBIR|STTR contractors should always ensure that any data or software delivered is correctly marked, IAW DFARS 252.227-7018, and maintain records sufficient to justify the validity of any restrictive markings on data, computer software, or computer software documentation delivered under the contract. Small businesses should assert data rights from previous SBIR|STTR efforts when proposing follow-on efforts. This incorporates such data rights into the new award, which will extend the data rights for five years under the new contract.
SBIR Data Rights Tutorial: https://www.sbir.gov/tutorials/data-rights/tutorial-4
Must the Army SBIR|STTR Program Office approve a Phase III contract?
No. The Army SBIR/STTR Program Office does not approve Phase III contracts, though the program office should be informed of the procurement and may provide support. The contract must be correctly reported as Phase III in FPDS-NG, under the “Competition Information” category.
Must an RFP or BAA be issued for a Phase III effort?
No, a Phase III contract could result from an unsolicited proposal, simplified acquisition announcement, an ordering process allowed under Indefinite Delivery/Indefinite Quantity (ID/IQ) contracts, multiple award contracts, or a non-competitive award. No J&A is required if the award is based on any competitive announcement (RFP, BAA, etc.). In all cases (competitive and non-competitive), the contract award must include the SBIR|STTR data rights clause.
Can a Phase III contract be initiated before the Phase II effort is complete?
Yes, the SBA policy directive indicates that a federal agency may enter into a third-phase agreement at any time with a Phase I or Phase II awardee.
What funding should be used for Phase III contracts?
Phase III monies can come from the government — except SBIR|STTR funds — and/or the private sector.
What are some best practices that SBIR|STTR awardees can implement in order to obtain a Phase III contract?
There are several steps SBIR|STTR awardees can implement in order to obtain a Phase III contract, including:
a. Locate a buyer for your SBIR|STTR-derived services and products. This responsibility rests primarily with the SBIR|STTR firm. Do your best to identify potential buyers to aid in establishing the ceiling value.
b. Provide a clear description of how your proposed Phase III work derives from, extends or completes prior SBIR|STTR-funded work. When possible, provide a picture or some sort of illustration that the contracting organization can understand. The technical breadth and complexity of SBIR|STTR efforts often make it difficult for non-technical contracting personnel to see the path from Phase I/II work to the Phase III work.
c. Show how your Phase III work supports the SBIR|STTR program’s commercialization objectives, including sales in the private sector when possible.
How do I identify the correct Procurement Office for a SBIR|STTR Phase III requirement?
Because SBIR|STTR Phase III contracts are funded by other than SBIR|STTR funding, the Requirements Office (PEO/PM) shall utilize its supporting Army Contracting Command (ACC)/Mission and Installation Contracting Command (MICC) for support. If you have any questions regarding which ACC/MICC office supports your PEO/PM, please reach out to ACC via https://acc.army.mil/visitors/.
General Services Administration has the ability to award SBIR|STTR Phase III contracts for the Army. If your Requirements Office is interested in participating or partnering with GSA, please visit https://aas.gsa.gov/sbir/ or email gsasbir-sttr@gsa.gov.