The Small Business Administration establishes policy and procedures for SBIR Program by publishing and updating the SBIR/STTR Policy Directive and promulgating regulations.

The government has invested heavily in small business innovation to bring new technologies to the government. Even with these efforts, the SBIR Phase III remains underserved by the greater Government community. Currently, there is no common

contract vehicle or methodology to effectively transition SBIR Products and Services in an efficient manner. The General Services Administration is seeking to address that through its Research, Innovations, and Outcomes (RIO) Government Wide Acquisition Contract (GWAC) vehicle.

Nevertheless, agencies may not promulgate any policy, rule, regulation, or interpretation that is inconsistent with the Act, this Policy Directive, or SBA’s regulations relating to the SBIR/STTR program. This page provides excerpts of important provisions of the Policy Directive as they relate to Phase III sole source contracts.

Page 3

(3) Phase III awards where commercial applications of SBIR/STTR program-funded R/R&D are funded by non-Federal sources of capital; or where products, services or further research intended for use by the Federal Government are funded by non-SBIR/STTR sources of Federal funding.

Page 5

The following are exemptions from the notice publication requirements:

(i) In the case of agencies intending to solicit Phase I proposals for contracts in excess of $25,000, the head of the agency may exempt a particular solicitation from the notice publication requirements if that official makes a written determination, after consulting with the Administrator of the Office of Federal Procurement Policy (OFPP) and the SBA Administrator, that it is inappropriate or unreasonable to publish a notice before issuing a solicitation.

(ii) The SBIR/STTR Phase II award process.

(iii) The SBIR/STTR Phase III award process.

Page 22

Phase II awards may not necessarily complete the total research and development that may be required to satisfy commercial or Federal needs beyond the SBIR/STTR program. The Phase II Funding Agreement with the Awardee may, at the discretion of the awarding agency, establish the procedures applicable to Phase III agreements. The Government is not obligated to fund any specific Phase II proposal.

Page 24

(c) Phase III. Phase III refers to work that derives from, extends, or completes an effort made under prior SBIR/STTR Funding Agreements, but is funded by sources other than the SBIR/STTR programs. Phase III work is typically oriented towards Commercialization of SBIR/STTR research or technology, including through further R/R&D work.

(1) Phase III work: Each of the following types of activity constitutes SBIR/STTR Phase III work:

(i) Commercial application (including R/R&D, testing and evaluation of products, services or technologies for use in technical or weapons systems) of SBIR/STTR-funded R/R&D that is financed by non-Federal sources of capital. (Note: The guidance in this Policy Directive regarding SBIR/STTR Phase III pertains to the non-SBIR/STTR federally-funded work described in (ii) and (iii) below. It does not address private agreements an SBIR/STTR firm may make in the Commercialization of its technology, except for a subcontract to a Federal contract that may be a Phase III.).

(ii) SBIR/STTR-derived products or services intended for use by the Federal Government, funded by non-SBIR/STTR sources of Federal funding.

(iii) Continuation of SBIR/STTR work, funded by non-SBIR/STTR sources of Federal funding including R/R&D.

(2) Data Rights. A Phase III award is, by its nature an SBIR/STTR award, has SBIR/STTR status, and must include SBIR/STTR Data Rights protection. If an SBIR/STTR Awardee receives a Funding Agreement (whether competed, direct award, sole sourced or a subcontract) for work that derives from, extends, or completes efforts made under prior SBIR/STTR Funding Agreements, then the Funding Agreement for the new work must have all SBIR/STTR Phase III status and SBIR/STTR Data Rights.

(3) Competition Requirement. 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. As a result, in conducting actions relative to a Phase III SBIR/STTR award, it is sufficient to state for purposes of a Justification and Approval, if one is deemed required by the agency, 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). Further justification is not needed.

(4) Phase III work may be for products, production, services, R/R&D, or any such combination.

(5) 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. A Federal Agency may enter into a Phase III SBIR/STTR agreement at any time with a Phase II Awardee. Similarly, a Federal Agency may enter into a Phase III SBIR/STTR agreement at any time with a Phase I Awardee. A subcontract to a Federally-funded prime contract may be a Phase III award.

(6) Size. The small business size limits for Phase I and Phase II awards do not apply to Phase III awards.

(7) Special acquisition requirement. Agencies or their Government-owned, contractor-operated (GOCO) facilities, Federally-funded research and development centers (FFRDCs), or Government prime contractors 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 Awardee that developed the technology under an SBIR/STTR award, to the greatest extent practicable, consistent with an Agency’s mission and optimal small business participation.

(i) Implementing the requirement. In recognition of the prior merit-based competitive selection of, and subsequent commitment of agency funds to SBIR/STTR Awardees and the broad intent of the program to promote the commercial success of these small businesses, Agencies must make a good faith effort to negotiate with such Awardees regarding the performance of the new, related, work and to issue Phase III awards for the work. When implementing this requirement, the agency will evaluate the work for consistency with its documented mission requirements and must 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 is available, capable, and willing to perform the work. If an award is made, the Agency must identify the funding agreement as an SBIR or STTR Phase III. The Agency must act in ways consistent with the Congressional intent to support the Commercialization of an SBIR/STTR-developed technology by the SBIR/STTR Awardee, and all parties must proceed along these steps in good faith.

(ii) Sole Source Awards. If pursuing the Phase III work with the Awardee is found to be practicable, the agency must award a non-competitive contract to the firm.

(iii) Other Preference. If pursuing Phase III work with the Awardee on a sole source/non-competitive basis does not meet the requirements set forth in the above sections regarding availability, practicality and capability, the Agency must document the file and provide a copy of the decision, including the rationale, to the SBA. The agency should also use other means of affording preference for the Phase III work, especially when the request is for a large acquisition program, which may not be best suited for an SBIR/STTR Award. Examples include reference to the SBIR/STTR Awardee’s brand-name as a required deliverable in the request for proposals, requiring the prime awardee to use evaluation factors favoring subcontracting to SBIR/STTR concerns, or providing other incentives to the prime contractor for utilizing SBIR/STTR Awardees as subcontractors, as referenced in 15 U.S.C. § 638(y).

Page 28

(iv) Agency Notice of Intent to Award. An agency, or its GOCOs or FFRDCs, that intends to pursue Phase III work (which includes R/R&D, production, services, or any combination thereof of a technology developed under an SBIR/STTR award), with an entity other than the Phase I or Phase II SBIR/STTR Awardee, must notify SBA in writing prior to such an award. This notification must include, at a minimum:

(A) The steps the agency has taken to fulfill the special acquisition requirement (e.g., a good faith effort to make the award to the SBIR/STTR Awardee).

(B) The reasons why a follow-on Funding Agreement with the SBIR/STTR Awardee is not practicable (e.g., SBIR/STTR Awardee was not willing or interested in the work, not capable of doing the work or functioning as a prime and subcontracting the work, or no longer in business).

(C) The identity of the entity with which the agency intends to make an award to perform the research, development, or production; the type of Funding Agreement to be used; and the amounts of the agreement.

(v) SBA Notice of Intent to Appeal. SBA may appeal a decision by an agency (or its GOCOs or FFRDCs) to pursue Phase III work with a business concern other than the SBIR/STTR Awardee that developed the technology to the head of the contracting activity.

(A) If SBA receives an agency’s notice of intent to make an award under (iv) above, SBA may file a notice of intent to appeal with the Funding Agreement officer no later than 5 business days after receiving the agency's notice of intent to make award.

(B) If an agency is pursuing work that SBA has determined is Phase III work and has not complied with either of the reporting requirements above, SBA may notify the agency at any time of its intent to appeal the decision to proceed with the work. SBA makes such determinations based on all information it receives, including information presented directly to SBA by an SBIR/STTR Awardee.

(vi) Suspension of Work. Upon receipt of SBA's notice of intent to appeal, the Funding Agreement officer must suspend further action on the funding agreement until the head of the contracting activity issues a written decision on the appeal. The Funding Agreement officer may proceed with award only if he or she determines in writing that the award must be made to protect the public interest. The Funding Agreement officer must include a statement of the facts justifying such a determination and provide a copy of its determination to SBA.

(vii) SBA Appeal. Within 10 business days of SBA’s notice of intent to appeal, SBA may file a formal appeal with the head of the agency. SBA's appeal will state with specificity SBA's conclusion that the agency's obligation to make a Phase III award "to the greatest extent practicable" has not been fulfilled.

(viii) Agency Decision. Within 30 business days of receiving SBA's appeal, the head of the agency’s contracting or grant-making activity must render a written decision setting forth the basis of his or her determination. During this period, the agency should consult with SBA and review any case-specific information SBA believes to be pertinent.

(ix) SBA Case Report to Congress. SBA notifies Congress of all instances in which an agency pursued Phase III R/R&D, or production of a technology developed under an SBIR/STTR award, with a business or entity other than the SBIR/STTR Awardee.

SBA will notify Congress of such instances, of any agency determination or decision justifying an award to other than the Phase III SBIR/STTR Awardee, and of any SBA appeals of agency decisions under this section.

Page 94

(xv) Phase III appeals. Descriptive information on any appeals filed on Phase III awards pursuant to § 4(c)(7) of this Policy Directive and notices of noncompliance with the SBIR/STTR Policy Directive filed by SBA.

(xvi) Phase III awards. Information relating to each Phase III award made by that agency either as a prime or subcontract, including the name of the business receiving the Phase III award,

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.

Our Knowledge Academy is integrated with Generative AI (GAI) technology to answer your questions directly. Access it by tapping the purple button on the bottom right of your screen:

© 2024 Forward Edge-AI, Inc. All rights reserved.