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Small Business Set-Asides vs. Phase III SBIR/STTR Sole Source Awards
Small Business Set-Asides vs. Phase III SBIR/STTR Sole Source Awards

What is the difference between an 8(a) set aside and a SBIR Phase III sole source award?

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Written by Eric Adolphe
Updated over a week ago

January 19, 2024

The right to receive sole-source funding agreements is a key Phase III SBIR right. This right is expressly provided in the SBIR Reauthorization Act as well in the SBA SBIR/STTR Policy Directive.

The right to receive sole-source awards is a real benefit to the government as well. The sole-source award avoids the arduous process the government must go through to compete a requirement – planning the procurement, developing the solicitation, soliciting proposals and evaluating them, sending out questions to offerors, making an award decision and then having it protested and held up in litigation. The entire process can take years. A sole-source award can be made in a matter of weeks or even days.

Below is comparison between Phase III SBIRs and 8(a) set asides. A detailed discussion related to Other Transaction Authorities (OTA) is provided in the Knowledge Academy. Note that an SBIR can be awarded as an OTA.

PROGRAM

ADVANTAGES

DISADVANTAGES

8(a) - Socioeconomic Set Aside Program

  • Set-asides increase opportunity to meet mandatory agency small business goals

  • Small businesses provide culture of flexibility and innovation offering acquisition programs unique solutions to solving capability gaps

  • Ability to award directly to an 8(a)-program qualifying vendor within FAR threshold reduces procurement lead time

  • Increasing number of court challenges to socio-economic set asides

  • Ceiling on contract value

  • Justification and public announcement required

  • Inflexibility, requiring contract modifications as requirements evolve

  • Subject to bid protests

  • 8(a) prime contractor must perform 51% of the work

Phase III SBIR Sole Source Awards to Commercialize and Transition Innovations

  • Ability to uniquely negotiate terms and conditions, and pricing arrangements enables improved mission outcomes

  • Ability to award sole source to SBIR Phase I/Phase II vendors for Phase III work reduces procurement lead time

  • Phase III SBIR award procedures provide opportunity for acquisition programs to deliver capability quickly

  • Small business size standards do not apply

  • Phase III prime does not have do 51% of the work

  • SBIR/STTR data rights protection limits Government’s IP strategy

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