Small Business Innovation Research (SBIR) Small Business Technology Transfer (STTR)

Desk Reference

XIII. Phase III

  • General

    SBIR Phase III refers to work that derives from, extends, or logically concludes effort(s) performed under prior SBIR funding agreements, but is funded by sources other than the SBIR Program. Phase III work is typically oriented towards commercialization of SBIR research or technology. A Federal agency may enter into a Phase III SBIR agreement at any time with a Phase II awardee. Similarly, a Federal agency may enter into a Phase III SBIR agreement at any time with a Phase I awardee.

  • Competition

    SBIR Phase III awards may be made without further competition. The competition for SBIR Phase I and Phase II awards satisfies any competition requirement when processing Phase III awards. Therefore, an agency is not required to conduct another competition in order to satisfy any statutory provisions for competition. Contract file documentation should demonstrate that the proposed Phase III award is derived from, extends or logically concludes efforts performed under prior SBIR funding agreements and is authorized under 10 U.S.C. 2304(b)(2) or 41 U.S.C. 253(b)(2). A separate J&A document is not required, pursuant to 10 U.S.C. 2304(b)(3) or 41 U.S.C. 253(b)(3).

  • Phase III Limitations

    There is no limit on the number, duration, type, or dollar value of Phase III awards made to a business concern. There is no limit on the time that may elapse between a Phase I or Phase II award and Phase III award or between a Phase III award and any subsequent Phase III award. Also, the small business size limits for Phase I and Phase II awards do not apply to Phase III awards.

  • Data Rights

    A Phase III award is, by its nature, an SBIR award, has SBIR status, and must be accorded SBIR data rights. If an SBIR awardee wins a competition for work that derives from, extends, or logically concludes that firm's work under a prior SBIR funding agreement, then the funding agreement for the new competed work must have all SBIR Phase III status and data rights.

  • Property

    SBIR legislation directs that an agency allow an SBIR awardee participating in the third phase of the SBIR Program continued use, as a directed bailment, of any property transferred by the agency to the Phase II awardee. A federally funded Phase III award (normally a government contract) would include appropriate property clauses. However, a non-federally funded Phase III agreement would not address government property. A separate bailment agreement would need to be made between the Government and the contractor. A suggested Bailment agreement format is provided.

  • Preference for follow-on Awards to SBIR Contractor and SBA Notification Requirement

    The SBIR Program Policy Directive points out that Congress intends that agencies that pursue R/R&D or production developed under the SBIR Program, give preference, including sole source awards, to the awardee that developed the technology. Agencies that intend to pursue R/R&D, production, services, or any combination thereof of a technology developed by an SBIR awardee of that agency, with an entity other than that SBIR awardee, must notify SBA in writing prior to such an award. This notice requirement also applies to technologies of SBIR awardees with SBIR funding from two or more agencies where one of the agencies determines to pursue the technology with an entity other than that awardee. This notitication must include, at a minimum: (a) the reasons why the follow-on funding agreement with the SBC is not practicable, (b) the identity of the entity with which the agency intends to make an award to perform research, development or production; and (c) a description of the type of funding agreement under which the research, development, or production will be obtained. SBA may appeal the decision to the head of the contracting activity. If SBA decides to appeal the decision, it must file a notice of intent to appeal with the contracting officer no later than 5 business days after receiving the agency's notice of intent to make award. Upon receipt of the SBA's notice of intent to appeal, the contracting officer shall suspend further action on the acquisition until the head of the contracting activity issues a written decision on the appeal. However, the contracting officer may proceed with award if he or she determines in writing that the award must be made to protect the public interest.

  • Indefinite Delivery/Indefinite Quantity (ID/IQ) Contracts in Phase III

    In order to facilitate the rapid transition of SBIR technologies from Phase II to Phase III, the Navy has pioneered the use of the ID/IQ type contract for Phase III efforts. See also FAR subpart 16.5. This approach allows multiple sponsors to contract with SBIR companies for Phase III follow-on efforts in an efficient and expedited manner through the use of individual task or delivery orders. This approach eliminates the necessity of writing multiple contracts with the same contractor for a particular technology. The basic ID/IQ contract can be written for a maximum 10 year term (5 years basic plus options). See DFARS 217.204(e)(i). This contracting approach can save a significant amount of procurement administrative lead time over the life of the contract. Contracting officers are reminded of the enhanced competition requirements for individual large dollar value task or delivery orders as outlined in FAR Subparts 16.504 and 16.505 (FAC 2005-27).

  • Item Identification and Valuation

    SBIR contracting officers should be aware of the DFARS requirement for marking and valuing items delivered to DoD with a unit acquisition cost of $5,000 or more. See DFARS 211.274-2 for policy on unique item identification, and DFARS 211.274-3 for policy on valuation. This requirement was instituted to provide more effective accountability of items in the DoD supply chain. While this requirement generally would not apply to most SBIR Phase I and Phase II procurements (since R&D prototypes and not supply items are delivered), the marking and valuing requirement potentially could apply to those follow-on Phase III acquisitions where items for the DoD inventory are delivered. In such cases, contracts should be structured to provide for line, subline or exhibit line items reflecting deliverables having a unit acquisition cost of $5,000 or more. In addition, contract clauses DFARS 252.211-7003, Item Identification and Valuation (June 2011) and 252.246-7006, Warranty Tracking of Serialized Items (June 2011) should be included in the contract.

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Last Updated: Friday, 07-Oct-2011 09:31:44 EDT