Executing SBIR Phase III Contracts

Overview (What):

The SBIR program enables small businesses to explore their technological potential with the goal of commercializing the technology. The SBIR program has 3 phases: Phase I is focused on establishing feasibility. Phase II is for prototype development. Phase III is for commercialization of the technology. Phase III contracts may be awarded to any company who has completed Phase I or II. Phase III work may be for such things as products, production, services, R/R&D, or any such combination. Unlike Phase I or II, SBIR funding may not be used for Phase III. Phase III contracts allow any Air Force unit to purchase technology developed through the SBIR program.

Objectives (Why):

  • Flexible/agile method to obtain warfighter capabilities
  • Faster than traditional contracting methods
    • No additional competition required (solicitations for Phase I & II satisfy competition requirements) per 15 U.S.C. 638(r)(1) and (r)(4).
    • Fewer documents required (DD2579, J&A, Pre/Post Award Synopsis not required)
    • Contract award in as little as two months
  • Any type of funds appropriate for the requirement except SBIR/STTR funding
  • Any commercial contract type and any contract vehicle as appropriate
  • No limit on # of awards (per company)/$ amount/period of performance

How to Guide:

Stakeholders (Who):

  • User
  • Spark Cell Lead
  • Company Rep
  • Contracting
  • Legal
  • Finance

Resources (Time/Money):

  • Must be funded by the user’s organization (non-SBIR)
  • Funding amount depends on requirement, but no max ceiling
  • Contract award in as little as two months from identifying technology or end of Phase II
  • No limitations on period of performance

Execution Plan/Timeline (How):

The process starts when an end user identifies SBIR-developed technology that is ready for commercialization. AFWERX is developing a database of Phase I and II contractors who are eligible for a Phase III contract.

End users start the acquisition process by:

  • Securing non-SBIR funding
  • Defining the requirement (SOO/SOW) (start with SBIR II SOW)
  • Providing Requirements Package to the Contracting Officer, which may include:
    • Period of Performance
    • Type of Government Funds
    • CDRLs
    • GFP/GFI/Base Support
    • Data Rights
    • DD 254
    • International Traffic in Arms Regulations (ITAR)
    • Other docs as necessary

Solicitations of Phase I and II satisfies competition requirements for the Phase III contract. No J&A required under FAR 6.302-5 (see 10 U.S.C 2304 (f)(6)) & 15 U.S.C. 638(r)(1) and (r)(4). CO prepares memo for the file (with input from end user) on how the Phase III “derives from/extends/completes” a previous SBIR/STTR award. The memo addresses how the contract is appropriate for Phase III, meeting the requirements of 15 U.S.C. 638(r)(1) and (r)(4).

The following definitions apply:

  • “Derives from” is a broad test that refers to work that traces back to efforts performed under prior SBIR/STTR funding agreements
  • “Extends” means the work can be for other application not researched or performed in prior SBIR/STTR efforts
  • “Completes” means commercialization of the prior SBIR/STTR research into a commercial product or application

Once the Contracting Officer (CO) has all the information needed, the CO will issue a letter RFP requesting a technical and cost proposal from the contractor.

Technical and cost proposals are evaluated by the end user:

  • Do not have standard technical evaluation criteria (Phase I/II criteria are provided in DoD BAA or AF CSO)
  • Cost reviewed against proposed technical effort (FAR 15.404-1(d) & (e))
    • Contractor has clear understanding of the requirement
    • Proposed costs consistent with various elements of technical proposal
    • Proposed costs realistic for proposed technical approach and POP

CO evaluates proposed price (dollar value), ensures all required documentation are received from contractor and user, negotiates any outstanding issues, prepares contract for contractor signature, completes required reviews and makes award.

Data Rights must be considered: DFARS 227.7014(a) prescribes DFARS 252.227-7018, Rights in Noncommercial Technical Data and Computer Software-Small Business Innovation Research (SBIR) Program.