The Small Business Innovation Research (SBIR) program was established by Congress in 1982 with a statutory purpose to strengthen the role of innovative small business concerns (SBCs) in Federally-funded research or research and development (R/R&D).Through the Department of the Navy's Small Business Innovation Research (SBIR) Program, small businesses of 500 employees or less have the opportunity to address naval needs in more than thirty science and technology areas. The SBIR Program provides the fleet with the innovative advances in technology developed by small firms that have the courage, drive, and flexibility to assume risks, develop niches, and generally compete in areas less attractive to larger firms. SBIR Program participants benefit both from the program awards as well as the further development and commercialization of the resulting products.
Specific program purposes are to:
Similar to the SBIR Program, the Navy Small Business Technology Transfer (STTR) Program fosters transitions of joint efforts between qualified small businesses and research institutions to the Navy and Marine Corps. A major difference in the two programs is that the STTR requires the small business to have a research partner consisting of a University, Federally Funded Research and Development Center (FFRDC), or a qualified non-profit research institution. In STTR, the small business must be the prime contractor and perform at least 40% of the work, with the research partner performing at least 30% of the work. The balance can be done by either party and/or a third party.
Although the Navy's SBIR and STTR programs are a component of the overall Department of Defense (DoD) SBIR/STTR program, the Navy's program is targeted at addressing the needs and areas of interest to the Navy and its System Commands (SYSCOMS).
On a schedule coordinated by DoD, the Navy issues SBIR solicitations, usually 3 per year, that contain a series of "Technical Topics" that describe the areas of interest and needs of the Navy and its SYSCOMS. Small businesses are invited to submit proposals targeted at one or more of the technical topics listed in the solicitation. The STTR program works in the same manner, but has only 2 solicitations per year.
Solicitation schedules and proposal guidance is posted at http://www.dodsbir.com. For application for the DoD SBIR solicitation mailing list and related mailing lists, call 703-696-0342 or the DOD SBIR/STTR Help Desk at 866-724-7457.
This DON Phase III Guidebook will support acquisition management compliance with Interim DoD I 5000.02 requirements regarding SBIR/STTR by describing why and how SBIR/STTR technology products may be contracted or subcontracted, citing current and recommended future policies, procedures and references for contracting and subcontracting. Below are some frequently asked questions with corresponding answers, from DONs Program Managers, Contracting Officers and Small Business Professionals.
Download the DON SBIR/STTR Guidebook (updated April 2016)
In collaboration with the DON SBIR/STTR Program, the DON Office of Small Business Programs (OSBP), has developed the SBIR/STTR Phase III Guidebook: Quick Reference Guide. This guide was designed to be a helpful, simple and concise reference to the important and pertinent information located in the SBIR/STTR Phase III Guidebook that Program Managers, Contracting Officers and Small Business Professionals will need to know when incorporating SBIR/STTR Phase III firms in DON contracts. This 2-sided document can be used as a desk guide to provide quick tips to better understand roles and responsibilities in the SBIR/STTR Phase III Process.
Download the DON SBIR/STTR Phase III Guidebook: Quick Reference Guide (QRG)
The Navy SBIR/STTR solicitations are released as part of the DoD SBIR/STTR solicitation process. On average, the DoD releases 3 SBIR solicitations per fiscal year, and 2 STTR solicitations. The Navy participates in all 3 SBIR solicitations, and generally 1 STTR solicitation per year.
View Current Solicitations
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. There are no NAICS code size limits applicable to Phase III, and no limits on company or contract size, contract duration, type/color of money or number of Phase III awards on a Topic. In cases of successor in interest or novation, an original awardee may be required to relinquish its rights and interests in an SBIR/STTR project in favor of another applicant as a condition for that applicant's eligibility to participate in the SBIR/STTR program for a particular project.
Are non-profit concerns eligible for SBIR/STTR awards?
No, the prime contractor must be a small business. However, non-profit concerns (i.e. universities, federal funded research and development centers, or research institutions) are required participants as subcontractors on STTR awards and may be subcontractors on SBIR awards.
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.
Can the Phase III effort be added to an existing Phase II contract?
Yes, it may be possible to add non-SBIR/STTR funds to a Phase II contract to accomplish additional work. If the new work would significantly increase the value of the contract or is outside the scope of the tasks proposed under the competitive Phase II contract, a new contract would be more appropriate. A separate Phase III contract is preferred so that DON receives credit for the Phase III award.
Can a Phase III requirement be procured using simplified acquisition techniques?
Yes - if the dollar value of the Phase III effort is below the Simplified Acquisition Threshold or if the procurement meets the requirements of FAR 13.5 for commercial items, the simplified process may be utilized.
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 solicitation, an ordering process allowed under IDIQ or multiple award contracts, or a non-competitive award. No J&A is required if the award is based on any competitive solicitation (RFP, BAA, etc.). In all cases (competitive or non-competitive), the contract award must include the SBIR/STTR data rights clause (DFARS 252.227-7018).
Can a Phase III contract include options for additional work or additional quantities?
Yes, however, the use of options needs to be justified in accordance with FAR 17.205.
Must a Phase III contract be approved by the SBIR/STTR Program Office?
No, the DON SBIR/STTR Program Office does not approve Phase III contracts, though the SBIR/STTR Program Office should be informed of the procurement, and may provide advice and support. However, the contract must be correctly reported as a Phase III in FPDS-NG, under the "Competition Information" category.
How do I know if a proposed effort is an SBIR/STTR derived product or process?
The product must extend, derive from, or complete efforts developed under a previously awarded Phase I or Phase II funding agreement, described in Chapter III below. The SYSCOM SBIR/STTR Program Office for the topic/award for Phase I/II can assist you in determining whether or not the work is appropriate for Phase III.
How long after the completion of a Phase I or Phase II contract can a Phase III be issued?
There is no statutory time limit for the issuance of a Phase III contract. However, under DFARS24 the DoD SBIR/STTR awardee retains exclusive data rights for only five years after the completion of the Phase II effort. After that period of time, it would be reasonable to question whether the technology is exclusive to the SBIR/STTR firm. Also, given the rapid pace of technological development in many industries, it is possible that SBIR/STTR technology that is more than five years old may no longer be the most advanced technology available.
As a general rule, the longer the period of time since the completion of the Phase II, the more carefully you should review the status of the technology and other products available in the open market. As a minimum guideline, if five years have passed since the completion of the Phase II effort, a market survey should be performed to ensure that other sources are not available. However, there are cases where the innovation was far ahead of the technology to implement it practically. Even if five years have passed, it should not be presumed that the SBIR/STTR is not a viable source.
Can multiple Phase III contracts be awarded to the same firm?
Yes. There is no limit in the number of Phase III contracts awarded to the same firm.
What data rights issues need to be addressed in a Phase III contract?
Data rights issues will vary. In some cases, the Phase III contract will be for the procurement of a commercialized product. In that case, the data rights provisions used in commercial contracts would apply. (See FAR 12.211 for data rights provisions under commercial contracts.) The most recent Congressional reauthorization of the SBIR program includes provisions clarifying that Congress intends to have the special "Rights in Data - SBIR Program" clause at FAR 52.227-20 apply to all three phases of the program. The SBA addresses this in the revised SBIR Policy Directive and clearly indicates that SBIR data rights apply to Phase IIIs as well as the first two phases of the program.
Is use of a Phase III contract mandatory if I am aware of other firms with similar capabilities as the former SBIR/STTR contractor?
No, use of a Phase III contract is not mandatory if you are aware of other firms with capabilities similar to the former SBIR/STTR contractor. If multiple sources are available for an item or if similar technologies are available on the open market, the Government's needs may best be met through a competitive procurement. In general, the longer the period of time since the completion of the Phase II, the greater the likelihood that the technology is no longer unique. If more than five years have passed since the completion of the Phase II, a market survey should be performed to determine if the same or similar technology is available from multiple sources. The contract file should be documented regarding market survey results.
Are Phase III sole source awards permissible?
Yes, because the competition for SBIR/STTR Phase I and Phase II awards satisfies any competition requirement of the Armed Services Procurement Act, the Federal Property and Administrative Services Act, and the Competition in Contracting Act. The Phase III award is made directly to the SBIR/STTR firm, but not made under the Sole Source provisions of part FAR 6. Therefore, an agency that wishes to fund an SBIR/STTR Phase III project is not required to conduct another competition in order to satisfy those statutory provisions. As such, in conducting actions relative to a Phase III SBIR award, in accordance with NMCARS 5206.302-5 (b), contracting officers may use the streamlined SBIR Phase III Justification & Approval template in Annex 13 of the NMCARS25.
Phase III provides an opportunity for a directed award, which will bypass formal solicitation, evaluation, and award procedures. While a protest may be filed against such an award, it challenges clear authority in the SBIR/STTR statute and Policy Directives. Many DON acquisition program offices have successfully used directed Phase III awards as an efficient and cost effective way to deliver innovative technologies. An unusual aspect of Phase III is that no size limits apply to the awardee, unlike Phase I and II. As a result, these directed award rights accrue to acquirers of SBIR/STTR firms, or firms that receive SBIR/STTR technology rights through novation.
Do SBIR/STTR data rights make it difficult to get out of a SBIR/STTR engagement?
No, you can conduct a competition using a performance-based specification and not using the SBIR/STTR Technical Data Package to predefine a specific implementation. A build-to-print award is not allowed unless agreed to by the SBIR/STTR company within five years or can be open after five years upon completion of the project. One can develop a second source for production competition by paying the SBIR/STTR company to qualify a second source similar to what has been done by a large business, to keep prices low or to ensure a surge production capacity. Creative methods for introducing competition include selecting a second source and paying the SBIR/STTR company to qualify them, and having the SBIR/STTR company find and qualify a second source and then compete between the SBIR/STTR and the second source in 50-50 or 60-40 splits based on price and performance.
Must a Phase III contract be a fixed price effort?
No, any type of contract can be used. The contracting officer makes the final determination regarding selection/negotiation of contract type.
What happens if the government is not happy with the performance of the company?
Treat the company like any poor performing contractor: document the problem and terminate the contract if not resolved. CPARS applies to Phase III contracts. Cost, schedule, and performance are all measures applied to SBIR/STTR contracts. In the event of contract termination or follow on award to another company, SBA should be notified and a justification provided, following a procedure detailed in the aforementioned Policy Directives.
What funding should be used for Phase III contracts?
Phase III monies can come from the government - any color of money except SBIR/STTR funds -- and/or the private sector.
How does a DON KO perform a Phase III status evaluation?
Phase III candidacy is rooted in statute language: "Federal agencies, to the greatest extent practicable, shall issue Phase III awards to the SBIR/STTR awardee that developed the technology."27 Although an SBIR/STTR awardee is eligible for contract work that "derives from, extends, or completes prior SBIR effort and is funded with non-SBIR funds" - if that firm developed the subject SBIR/STTR technology - there is no right to a contract. Rather, that firm's Phase III eligibility imposes an obligation to engage in a J&A process whereby a DON KO, supported by the PM, determines whether the SBIR firm is 1) available to perform the requirement and 2) capable of doing so. The pre/post-business clearances for negotiation with an SBIR/STTR firm should contain a documented assessment, based on price comparisons, past performance and related evidence of competency needed to support a Phase III contract.28 Although an SBIR/STTR awardee may request Phase III preference prior to or after an RFP, RFI or BAA has been issued, it is the KO's responsibility to determine Phase III status and execute contracts, with full documentation.
In one conceptual Phase III assessment scenario, the first step is to determine if the work that the SBIR/STTR firm would do to achieve a solicitation's requirement set meets the Phase III definition. If it does, the second step is to evaluate whether the firm could meet all or part of the requirement set. It is possible to split the requirement if the SBIR/STTR firm can only complete a portion, but that may not be an acceptable approach. (If it's determined that a single contract is needed and the SBIR/STTR firm is not proposing an approach that would meet the entire requirement, such as teaming or subcontracting, a KO would move forward with the open solicitation and notify bidders of the SBIR/STTR firm's capability as a potential subcontractor.)
The third step is to determine whether the firm has the capability to perform the work. (It would not need to have the capability prior to award, but would need to be able to show how it would develop that capability.)
The KO should evaluate whether the proposal is competitive through rate comparisons, reviewing past performance, and executing market assessments. If the proposal meets required performance parameters, it can be approved. A solicitation to receive other bids for comparison could be published, but this should be a last resort and the KO must be extremely careful not to release any SBIR/STTR protected data. If it is determined that the requirement is not a Phase III, or that the firm is not available or capable, that would end a SBIR/STTR firm's assertion of Phase III rights. All of this must be clearly documented in the DON SBIR/STTR Program Managers Database and the Federal Procurement Data System (FPDS-Next Generation).
Finally, agencies are required to report to SBA all instances in which an agency pursues research, development, or production of a technology developed by an SBIR awardee, with a business concern or entity other than the one that developed the SBIR technology.