January 01, 2024
Note: see also our 8 steps to award a Phase III sole source contract.
Air Force, Army, Navy and Marine Corps memorandum for the record/Determination and Finding (DNF) template for a Sole Source Phase III SBIR (this replaces a J&A or SSJ which are not required for Phase III SBIRs)
Drafting note (delete after reading): To initiate a Phase III sole source contract, the Government technical expert or Program Manager (PM) and/or the SBIR company must document how the work to be performed on the Phase III contract derives from, extends or completes prior SBIR/STTR efforts. The Government Expert or PM, and/or the Company, must provide the narrative and lineage to prior SBIR/STTR PH I/II/III efforts (see https://www.armysbir.army.mil/phase/phase-iii/). Below is a template for the memorandum for the record.
CUI
Forward Edge-AI, Inc. was awarded a Phase [enter Phase I or Phase II], [SBIR or STTR] Contract# or Award # [enter contract or award number] on [insert effective date of award], resulting from Solicitation [insert solicitation number], Topic Number [Topic number]. Topic [enter Topic number] was titled “[enter title]”. Forward Edge-AI was subsequently awarded a [SBIR or STTR or not applicable] Phase II [contract number or not applicable] on [date of award].
Topic [enter Topic number] sought the development of [enter brief description of the project from Forward Edge-AI Market Survey]. This Phase III effort [insert brief description of the Phase III project or what is being acquired]. This proposed funding agreement [enter brief explanation] and as a result has been deemed to [enter derive from, extend, or conclude] the Phase I/II effort.
This funding agreement is for [enter product, service, research, production, or combination of].
Drafting note (delete this after reading): Please insert in the bullets below, a brief paragraph for each Phase describing very briefly the technology advancement in each phase. This draws the progression of the development from Phase I to Phase III.
Lineage to prior SBIR/STTR PH I/II/III efforts:
Phase I -
[Contract Number],[description]Phase II -
[Contract Number],[description]Phase III –
[Contract Number],[description]
Drafting Note (delete after reading): The Air Force refers to this as a "Determination and Finding (DNF)." The Army refers to this as a "Statement/Memorandum for Record (MFR)." The format may vary from agency to agency.
Definitions (delete after reading): An agency that wishes to fund an SBIR/STTR Phase III award, which derives from, extends, or concludes a prior Phase I and/or Phase II award, is not required to conduct another competition for the Phase III award in order to satisfy those statutory provisions. Phase III contracts “incorporate original concepts, findings, ideas, or research results that a contractor generated through performance of a contract or grant” awarded in prior SBIR/STTR phases. The following are examples of the types of activities that constitute SBIR Phase III work:
Commercial application including R/R&D, testing and evaluation of services or technologiesSBIR-derived commercial or modified commercial products or services intended for use by the Federal GovernmentContinuation of Phase I or Phase II SBIR work (includes research, feasibility studies, further development, experiments, integration, implementation, production, maintenance, operations, or support services)
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NASA's Template
CUI
JUSTIFICATION FOR A PHASE III
Forward Edge-AI, Inc.
NASA Shared Service Center (NSSC) will negotiate with the above firm a Phase III contract.
DESCRIPTION:
[Provide a description of the research requested to meet the agency’s needs].
The estimated value of this effort is $[ estimated value ]. RELATED WORK:
[Explain the relevance of this research to this NASA Program (or to other programs)].
Forward Edge-AI, Inc. first introduced the technology in a Phase [enter I / II / III, or any combination] titled “[ enter the title of the previous Phase I, II, or III ]” on [enter the previous Phase I, II or III Agency's name ] Contract No. [enter the prior contract or award numbers].
Pursuant to FAR 13:106-l(b) and 13.106-3(b)(3)(i), the acquisition of the above referenced research is determined to be available from only one source. Competition is not required for the following reason:
JUSTIFICATION:
The competition for SBIR – 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. Therefore, an agency that wishes to fund an SBIR Phase III project is not required to conduct another competition in order to satisfy those statutory provisions. As a result, in conducting actions relative to a Phase III SBIR award, it is sufficient to state for purposes of a Justification and Approval pursuant to FAR 6.302-5, that the project is an SBIR Phase III award that 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).
COR/TM Signature
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Department of Homeland Security's Template
Drafting Note: Tailor all aspects of this template to the individual acquisition and ensure that any template areas providing sample language or instructions (e.g. italicized and/or red language) are deleted prior to submission.
CUI
MEMORANDUM FOR RECORD
DATE: [Drafting note: Customer to enter Month, Day, Year]
SUBJECT: Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) Program Phase III Award
CONTRACT NUMBER: [Drafting note: customer to enter Contract Number]
This project is an SBIR/STTR Phase III award that is derived from, extends, or completes efforts made under prior SBIR/STTR Funding Agreements and is authorized pursuant to 15 U.S.C. 638(r)(4). An agency that wishes to fund an SBIR/STTR Phase III award, is not required to conduct another competition for the Phase III award as competitions for SBIR/STTR Phase I and Phase II awards satisfy competition requirements.
A review of prior SBIR/STTR Funding Agreement(s) [Insert Phase I and II Contract Numbers] has been conducted. [Insert description of the current effort and the basis for the determination that the work derives from, extends or completes the prior funding agreements.] Therefore, this award [enter derives from, extends, or concludes] efforts made under the following prior SBIR/STTR Funding Agreements to Forward Edge-AI, Inc.
The Phase III work to be performed under this award applies to the following type(s) of activities: [enter derive from, extend, or conclude] the Phase I/II effort. This award is for [enter product, service, research, production, or combination of].
Pursuing Phase III work with the awardee was found to be practicable, and the firm was awarded a non-competitive contract, funded by the following source(s):(Insert source of funding that is not the SBIR/STTR program).
This award adheres to the Phase III guidelines set forth in the SBIR and STTR Program Policy Directive and includes the required SBIR/STTR Data Rights Clause.
__________________________
Name
Contracting Officer
Appendix B:
DHS SBIR/STTR Phase III Award Form
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Phase III Awardee – Company Name | City | State | Awarding Agency (subcomponent, prime or subcontractor) | Funding Agreement or Contract Number | Amount Obligated | FY for Obligation |
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| Associated Phase I/II Information (Can list more than one) |
Associated Phase I and/or II Topic Number | Associated Phase I and/or II Topic Title (can list more than one) | Primary Phase I or II Awarding Agency (or subcomponent) | Primary Phase II Funding Agreement or Contract Number | FY Awarded |
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CUI
Department of Commerce/NOAA's Template
PHASE III NOTIFICATION FORM
To be completed by procurement initiator:
TO: [Enter NOAA SBIR PROGRAM OFFICE] FROM: [ Enter Name of PROCUREMENT INITIATOR]
SUBJECT: PROPOSED SBIR PHASE III PROCUREMENT
The following SBIR Phase III procurement action is being initiated by this office:
Contractor Name: Forward Edge-AI, Inc.
Title/Description of Procurement: [enter description of Phase III project]
Estimated Dollar Amount of Procurement: [enter contract dollar amount]
Purchase Request Number/Date Initiated: [enter PR number]
Date Initiated: [enter date initiated]
Title/Proposal Number of Phase I and Phase II SBIR award: Date of completion of Phase I and Phase II SBIR awards: [enter title, proposal number, contract number, and date of completion of the Phase I/II awards]
To be completed by Contracting Officer at time of Award:
TO: [Enter NOAA SBIR PROGRAM OFFICE]
FROM: [Enter CONTRACTING OFFICER]
SUBJECT: AWARD OF SBIR PHASE III PROCUREMENT
The Phase III effort described above has been awarded. Contract/Order Number:
Award Amount: [Enter contract number and award amount of the Phase III SBIR contract]
Date of Award: [Enter date]
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February 04, 2024
Small Business Innovation and Research (SBIR) Phase III Derives, Extends, Completes (DEC) Statement
Project Title: [Insert Project Title] SBIR Phase III
Contract Structure: [Insert Indefinite Delivery Indefinite Quantity/Stand-alone] Contract
Acquisition ID: [Insert Acquisition PIID]
Requiring/Client Organization: [Insert Client Organization Name]
Statement Prepared By: [Insert Preparer Name]
1.0 Scope of Work
This SBIR Phase III effort will…[Insert contract scope – May use/adapt PWS/SOO/SOW scope]
The tasks which derive from, extend, and/or complete the Phase I and/or Phase II SBIR efforts are: [Insert applicable requirements/tasks – May use/adapt headings or language from Requirements/Tasks of PWS/SOO/SOW]
2.0 Acquisition History
Contract Number | SBIR/STTR and Phase # | PoP/ Delivery Date | Total Value | Contract Type(s) | SBIR/STTR Topic # |
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3.0 DEC from Phase I and/or Phase II Work
This SBIR Phase III award will derive from, extend and/or complete the efforts funded in the SBIR Phase I/II contract(s) listed in Section 2.0.
[Insert language demonstrating how the Phase III contract scope detailed in Section 1.0 derives from, extends, and/or completes the work in the Phase I/II efforts listed in Section 2.0.]
The following table crosswalks Phase I/II topic scope items to contract objectives and focus areas:
Phase I Topic Scope Items | Contract Objectives | Contract Focus Areas |
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Forward Edge-AI is the identified industry partner performing under the SBIR topic(s) in Section 2.0 and resulting contract(s). The Phase I/II(s) was/were awarded to [Insert Contractor Name] and under the applicable SBIR and Small Business Technology Transfer (STTR) Program Policy Directive for work that derives from, extends, or completes efforts made under prior SBIR/STTR Funding Agreements.
4.0 Client Approval
Based on the information above, I approve the scope of work for this SBIR Phase III contract and concur that the scope derives from, extends, or completes the efforts made under the prior SBIR/STTR Funding Agreements listed in Section 2.0.
_______________________________ ________________
[Insert Client Name] Date
[Insert Client Job Title] [Insert Client Organization]
Email: [Insert Client Email Address] Phone: [Insert Client Phone Number]
5.0 Contracting Officer Concurrence
Based on the information above, I concur that the SBIR Phase III contract will derive from, extend, and/or complete the efforts made under the prior SBIR/STTR Funding Agreements listed in Section 2.0 and is authorized pursuant to 15 U.S.C. 638.
_______________________________ ________________
[Insert CO Name] Date
Contracting Officer
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Note:
Note also in a Bid Protest Decision, General Accountability Office (GAO) determined that the Government (technical and contracts) has broad discretion on determining what extends, derives, or completes a SBIR Phase I/II.
Department of Transportation - SBIR/STTR Phase III Award Memorandum for Record Template
MEMORANDUM FOR RECORD
DATE: (Month, Day, Year)
SUBJECT:
Determination and Findings: Small Business Innovation Research (SBIR) Phase III Award to _____________ (the Contractor).
CONTRACT NUMBER:
(Insert Contract Number)
I. Determination
The Contracting Officer (CO/KO) has determined that:
[Agency] is eligible to issue a SBIR award in accordance with 15 USC 638(j)(1)(G).
The award meets the criteria set forth within in 15 U.S.C 638(e)(4)(c) to issue SBIR Phase III award.
It is practicable to issue a Phase III award to the Contractor for the work proposed.
The award, having been determined to meet the criteria for Phase III, and the practicality test, satisfied all applicable competition requirements.
The award is required to be issued to the Contractor on a sole source basis in accordance with 15 U.S.C 638(r)(4).
The award is exempt from the written justification in accordance with 15 U.S.C 638(r)(4)(b).
The award is exempt from publication requirements in accordance with Federal Acquisition Regulation (FAR) 5.202(a)(7).
Solicitation will be issued to [the Contractor] for the [sentence summarizing work]
II. Background
1. Legislative History
The SBIR program was established under the Small Business Innovation Development Act of 1982 (P.L. 97-219) with the purpose of strengthening the role of innovative small business concerns in Federally-funded research and development (R&D). The SBIR program has been reauthorized and extended multiple times since its creation, including in 1992 when Congress passed the Small Business Research and Development Enhancement Act (P.L. 102-564), in 2000 when the program was reauthorized by the Small Business Reauthorization Act of 2000 (P.L. 106-554), and in 2011 through the National Defense Authorization Act for Fiscal Year 2012 (P.L. 112-81). Subsequently, Congress has further modified and extended the program, the most recent of which extends the SBIR program through 2025.
2. SBIR Overview
The Small Business Innovation Research (SBIR) is a competitive program that encourages small businesses to engage in Federal Research/Research and Development (R/R&D) that both meets agencies specific research and development requirements and has the potential for commercialization. Through a competitive awards-based program, SBIR small businesses explore their technological potential and provide the incentive to profit from its commercialization.
3. SBIR Phases
The SBIR Program is structured into three (3) Phases:
Phase I: The objective of Phase I is to establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II.
Phase II: The objective of Phase II is to continue the R/R&D efforts initiated in Phase I. Funding is based on the results achieved in Phase I and the scientific and technical merit and commercial potential of the project proposed in Phase II.
Phase III: The objective of Phase III, where appropriate, is for the small business to either pursue commercialization objectives or follow-on R&D or production contracts for products, processes or services intended for use by the U.S. Government, or both, that stem from the Phase I/II R/R&D activities.
4. SBIR Policy Directive
The Small Business Administration is required to issue a policy directive (PD) in accordance with 15 U.S.C 638(j)(1). The SBIR/STTR PD outlines how agencies must generally conduct their programs. Agencies, when implementing PD, may develop agency specific regulations and procedures. However, a Participating Agency may not develop and apply policies and procedures that weaken or conflict with the PD.
III. Findings:
The findings below align to each determination in section I above.
1. Agency Participation
15 USC 638(j)(1)(G) states agencies that are not required to establish a SBIR Program may voluntarily participate [in the SBIR Program].
2. Criteria:
a. SBIR Phase III work is defined in 15 USC 638(e)(4)(c) as work that is derived from, extends, or completes efforts made under prior funding agreements under the SBIR Program.
This effort is derived from, extends, or completes efforts made under the following agreements awarded under the SBIR Program.
Phase I Contract No.: []
Phase I Period of Performance: []
Phase I Value: []
Phase I: Summary []
If applicable:
Phase II Contract No.: []
Phase II Period of Performance: []
Phase II Value: []
Phase II: Summary: []
If applicable:
Phase IIB Contract No.: []
Phase IIB Period of Performance: []
Phase IIB Value: []
Phase IIB: Summary:
Derived From Example:
The Phase I and Phase II efforts were to develop light weight armor plating for military vehicles. The lightweight plating developed has applications to the protection of liquid hazardous materials during transport. This effort will adapt the armor plate to fit rail tanker cars. The armor plate may be able to be applied to tanker trucks.
Extends Example:
The Phase I and Phase II efforts were to develop light weight armor plating for military vehicles. The lightweight plating developed has applications to the protection of liquid hazardous materials during transport. This effort is to extend testing of the armor plate under both extreme winter and summer conditions.
Completes Example:
The Phase I and Phase II efforts were to develop light weight armor plating for military vehicles. The Phase I and II efforts resulted in prototype armor plates. The objective of this Phase III effort is to complete the development beyond the prototype stage.
b. The definition of SBIR Phase III within in 15 USC 638(e)(4)(c) further states that the Phase III award can be for products or services intended for use by the Federal Government, by follow-on non-SBIR Federal funding awards.
Example SBIR Phase III for products or services:
The funding source is _____. This is not a portion of the SBIR set-a-side. The product when fully (developed, tested, completed) will be applied to Federally owned rail cars.
And/or
The definition of SBIR Phase III within in 15 USC 638(e)(4)(c) further states that the Phase III award can be for or the continuation of research or research and development that has been competitively selected using peer review or merit-based selection procedures and awarded from non-SBIR funding sources.
Example SBIR Phase III for products or services:
The funding source is_______. This effort research and development of armor plates for their application to tanker rail cars. A government team while conducting market research found that armor plates had been developed under the [fill in agency’s] SBIR Program. See market research report for details. Based on the market research the government team concluded that the technology developed under a prior SBIR award(s) could be further developed to meet current requirements. The basis for the team’s determination is summarized below.
The panel’s current weight being half that of comparable steel plate.
The panel currently has the same impact resistance properties as steel plate.
The panel can be further developed to lower the weight to potentially provide cost effective commercial solutions for rail tanker car operators.
The government team consisted of materials engineer and a rail safety engineer. The rail safety program manager concurred with the team’s conclusion on _____.
c. The SBIR PD mirrors the language in the statute. The PD further states that Phase III work is typically oriented towards Commercialization of SBIR/STTR research or technology, including through further R/R&D work. The term “commercialization” as defined in 15 U.S.C. 638(e)(10) means— (A) the process of developing products, processes, technologies, or services; and (B) the production and delivery (whether by the originating party or by others) of products, processes, technologies, or services for sale to or use by the Federal Government or commercial markets.
Example: This award is for development of a new product based on armor plating, developed by the Contractor under the SBIR Program. See item 2.a. for details. The armor plating to be developed under this award is intended for use by both the Federal Government and commercial markets. The Federal Government will use the plating for tanker cars owned by the logistics command. The plating can be sold to commercial markets for rail freight operators.
Example: This award is for the commercial purchase of armor plating which was developed by the Contractor under the SBIR Program. See item 2.a. for details. The Federal Government will use the plating for tanker cars owned by the logistics command.
3. Practicable:
a. Market Research:
The results of market research were that Contractor’s armor plating, developed under the SBIR Program, can meet the Government’s requirements. Market research was also conducted at a strategic level, looking at the marketplace overall and potential substitute products. The strategic market research results showed that there have not been significant technical developments between the completion of the prior SBIR efforts and present as to make the technology being acquired obsolete. The strategic market research also showed that there are no known substitute products that can meet the Government’s requirements. The lack of significant technical change and the fact no other commercially available products are available make it practical for the Government to proceed with a sole source Phase III SBIR approach.
b. Duplication of Effort:
While conducting market research the Government found that the Contractor’s armor plating can meet the Government’s requirements. Acquiring ________ that has already been developed under the SBIR Program is more practicable than starting work with basic research. Using existing research saves both time in development and the costs of that research.
c. Acquisition Efficiencies:
A Phase III sole source award is more practicable than conducting a competition for a product or research that already exists. The efficiencies include not having to conduct evaluations of multiple offers and publication requirements. The process is also more efficient because the sole source can be made without further justification. See item 6. There is also potential cost and time savings resulting from the elimination of the risk of protest.
d. Reporting:
The risk of protest is potentially greater for SBIR Phase III awards because Agencies must report to SBA instances where an award was not practicable to make a Phase III award. A protest against the SBA was recently made. GAO found in favor of SBA. The ruling was based on the fact that SBA was unaware of the small business’s ability to provide the required services.
15 USC 638(j)(3)(c) requires agencies to report all instances where agency pursued research, development, or production of a technology developed by a small business concern using an award made under the SBIR program of that agency and determined that it was not practicable to enter into a follow-on non-SBIR program funding agreement with the small business concern.
Agencies are required to report the reasons why the follow-on funding agreement with the small business concern was not practicable. Based on the items above, this case cannot be made. Making this case would be impractical use of Agency resources.
4. Competition Requirements
15 U.S.C 638(r)(1) states that agencies shall consider an award under the SBIR program or the STTR program to satisfy the requirements under sections 3201 through 3205 of title 10 and any other applicable competition requirements.
The SBIR/STTRPD, Section 4(c)(3) states that 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. The section further states that agencies are not required to conduct another competition for the Phase III award.
5. Sole Source
15 U.S.C 638(r)(2) states that agencies shall issue Phase III awards, including sole source awards, to the SBIR and STTR award recipients that developed the technology. The use of the word ‘shall’ means that agencies are required to issue Phase III awards to a specified source.
The PD mirrors the statute with the inclusion of a special acquisition requirement. The requirement states that agencies who R/R&D or production of technology developed under the SBIR/STTR program shall issue Phase III awards relating to the technology, including sole source awards, to the Awardee that developed the technology under an SBIR/STTR award.
Both the statute and the PD specify a source as underlined above. The fact that statute specifies a source means a CO has the authority to issue a sole source award under FAR 6.302-5(b). FAR 6.302-5(b) states the authority may be used when statutes, such as the following, expressly authorize or require that acquisition be made from a specified source. The language within the clause states ‘such as’. Therefore, 15 U.S.C 638(r) is included within the authority.
15 U.S.C 638(r)(2) refers to SBIR awardees in the plural and says including sole source awards. This leaves open the possibility for competition. The possibility of competition for this award does not exist. The Contractor was the only award made for the topic from solicitation no. XXXX. Therefore, there are not any technologies that were developed to compete against. Additionally, market research focused on SBIR awards did not find any similar or substitute technologies. Other factors for why the Contractor is the only source are data rights and/or other intellectual property rights. Only the Contractor has the data rights to the work conducted under Phase I and Phase II. Additionally, the Contractor has filed/received a patent for its prior SBIR effort.
6. Sole Source Justification
15 U.S.C 638(r)(4) and the PD states that agencies shall issue Phase III awards without further justification. Therefore, justification beyond showing work award is for derives from, extends or completes a previous effort and that is not impractical to award a Phase III, is not necessary. This memorandum documents both requirements for this Phase III award.
Any further justification within this file will follow the guidance of the PD. The PD states that it is sufficient state that the project is an SBIR/STTR Phase III award that is derived from, extends, or completes efforts made under prior SBIR/STTR Funding Agreements and is authorized pursuant to 15 U.S.C. 638(r)(4). The PD also states, “further justification is not needed.”
7. Publication
FAR 5.202(a)(7) exempts SBIR awards from publication requirements. The SBIR PD, Section 2(j)(4) exempts Phase II and Phase III from publication requirements.
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