January 01, 2024

Introduction

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are highly competitive programs that encourage domestic small businesses to engage in Federal Research/Research and Development (R/R&D) with the potential for commercialization. Through a competitive awards-based program, SBIR and STTR enable small businesses to explore their technological potential and provide the incentive to profit from its commercialization. By including qualified small businesses in the nation's R&D arena, high-tech innovation is stimulated, and the United States gains entrepreneurial spirit as it meets its specific research and development needs.

The SBIR/STTR programs may be utilized by all DHS Components. To ensure compliance with SBIR/STTR program policy and reporting requirements, Contracting Activities shall coordinate with the DHS SBIR/STTR Program Office ([email protected]) to issue an SBIR/STTR Phase I or II solicitation. It is highly recommended Contracting Activities coordinate in advance of the pursuit of a Phase III effort.

Overview of Phase I, II and III Awards

Phase I and Phase II awards are executed by means of a structured competitive process, using SBIR/STTR funding, managed by the SBIR/STTR Program, resulting from SBIR/STTR solicitations compliant with the SBIR/STTR rules and polices. Phase III SBIR/STTR awards are funded using Non-SBIR/STTR funding and can be done through a directed (non-competitive award, as the competitive requirements are satisfied by Phases I and II). SBIR/STTR Policy allows Federal Agencies to award subsequent Phase III awards from other Federal Agencies’ SBIR/STTR awards. There is no limit on the number, duration, type, or dollar value of Phase III awards made to a business concern. In addition, 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.

Phase III Award Authorities and Requirements

Contracting Activities that pursue 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 SBIR/STTR awardee, or the successor in interest, that developed the technology under prior SBIR/STTR Funding Agreements authorized pursuant to 15 U.S.C. 638(r)(4), to the greatest extent practicable, consistent with an Agency’s mission and optimal small business participation. When implementing this requirement, the contracting officer shall evaluate the work for consistency with its documented mission requirements, and shall consider the practicality of pursuing the work with the awardee through a direct follow-on award by performing market research to determine whether the firm was available, capable and willing to perform the work.

If pursuing Phase III work with the awardee on a sole source or non-competitive basis does not meet the requirements set forth regarding availability, practicality and capability, the contracting officer shall contact the DHS SBIR/STTR Program Office prior to the release of a solicitation in order to properly document the contract file and provide a copy of the decision, including the rationale, to the Small Business Administration. (SBA).
If the contracting officer does pursue a non-competitive, sole source award, the award may only be made (1) to the SBIR/STTR awardee (or the successor in interest) that developed the technology under the prior SBIR/STTR Funding Agreement; and (2) for a product or effort that is derived from, extends, or completes efforts made under a prior SBIR/STTR Funding Agreement. In this case, the contracting officer shall include a completed DHS SBIR Phase III Award Memorandum for Record (see Appendix A) in all Phase III contract files to document why the Phase III award is not required to be competed.

Intellectual Property (IP) and Data Rights

The SBIR/STTR awardee owns, and has full right and title to, the data it develops under an SBIR award. (For an STTR award, the SBC and research institution must, prior to award, sign an IP agreement identifying the sharing of rights to data.) The SBIR Data Rights cannot be negotiated prior to award nor can the award be contingent on a change in Data Rights. SBIR Data Rights apply in all Phase I, II and III SBIR awards.

Applicable Clauses

Contracting officers shall include all appropriate information (such as SBIR/STTR Topic number) and clauses regarding SBIR/STTR Phase III status and SBIR/STTR Data Rights protection in the contract.

Examples of applicable clauses include:

FAR 52.227-20, Rights in Data-SBIR Program
FAR 52.227-11 Patent Rights – Ownership by the Contractor (when appropriate)

Annual Phase III Reporting Requirements

Legislation and SBIR/STTR Policy Directive requires that the agency SBIR Program Director provide detailed information, including Phase III awards, via an annual report submission, to the SBA. Therefore, Contracting Activities shall notify the DHS SBIR Program Office ([email protected]) of all Phase III awards upon execution, by submitting a DHS SBIR/STTR Phase III Award Information Form (see Appendix B).

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.

Conclusion

This document is intended to provide insight into the information commonly required to execute a Phase III SBIR/STTR contract. It is not an extensive compilation of all the potential requirements, processes or considerations in the legislation, policy directive, or DHS acquisition or SBIR/STTR Program policies.

Points of Contact:

DHS SBIR/STTR Program Office for additional guidance on DHS’s SBIR/STTR Program and Policies.
The Office of the Chief Procurement Officer (OCPO)/Office of Acquisition Policy and Legislation (APL) for questions about Department-wide acquisition policy.

Appendix A:

DHS SBIR/STTR Phase III Award Memorandum for Record 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.

MEMORANDUM FOR RECORD

DATE: [Month, Day, Year]

SUBJECT: Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) Program Phase III Award

CONTRACT NUMBER: [Insert 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 is derived from, extends, or completes efforts made under the following prior SBIR/STTR Funding Agreements to the awardee.

The Phase III work to be performed under this award applies to the following type(s) of activities : (SBIR/STTR-derived products or services intended for use by the Federal Government, funded by non-SBIR/STTR sources of Federal funding or; Continuation of SBIR/STTR work, funded by non-SBIR/STTR sources of Federal funding including R/R&D).

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

						Phase III
Phase III Awardee – Company Name	City	State	Awarding Agency (subcomponent, prime or subcontractor)	Funding Agreement or Contract Number	Amount Obligated	FY for Obligation

				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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