Phase III efforts include products, services, Research/Research and Development (R/R&D) or any combination
thereof, including testing and evaluation of products, services or technologies
for use in technical or weapon systems. 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 program. Although
no government SBIR/STTR set-aside funds are involved, Phase III funding can come
from the government (e.g., 6.2 or 6.3 mission dollars) and/or private sector.
This phase’s purpose is to transition a company’s SBIR/STTR effort into hardware
or software products, processes or services that benefit the Air Force
acquisition community or the private sector.
A key SBIR/STTR component is that, once a company has received a Phase I or
II award, sole-source Phase III awards may be made to the company, since competition requirements were
satisfied under Phase I and II.
Air Force SBIR/STTR program managers and deputy program managers play an
influential role in the Air Force SBIR/STTR program in topic development,
technical oversight of Phase I and Phase II projects and planning Phase III
actions to help integrate a new technology into a Program of Record or other
The Phase III vehicle provides a powerful tool to address key affordability,
innovation and other Air Force strategic asset objectives. Phase III, as
discussed in the SBIR and STTR Policy Directives, aligns with many Air Force
technology transition functions and meets Air Force mission needs, from research
and services to production. Importantly, a Phase III contract may be awarded to
a firm which has outgrown the small business size standard, to a novated
awardee, or to a successor in interest, such as a large company that acquired
the small business.
In the Phase III description: “Work that derives from, extends or completes
an effort made under prior SBIR/STTR funding agreements[…], but is funded by
sources other than SBIR/STTR set-aside funding,” the following meanings
The SBIR/STTR Reauthorization Act of 2011 states Congress’ intent that Phase
III awards be made to the SBIR/STTR firms that created the technology so that
these small businesses can commercialize it.
“Federal agencies, to the greatest extent practicable, shall issue Phase
III awards to the SBIR/STTR awardee that developed the technology.”
Agencies are required to report to the SBA all instances in which an agency
pursues research, development or production of a technology to be developed by
an SBIR/STTR awardee, with a business concern or entity other than the one that
developed the SBIR/STTR technology.
The Under Secretary of Defense, Acquisition Technology and Logistics
(USD)(AT&L) first issued guidance recommending acquisition program use of
Phase III in December 2008, with the requirement appearing in DoDI 5000.02 in
The following types of activities constitute SBIR/STTR Phase III work:
DFARS 252.227-7018 describes the use of an assertions table to
specifically identify intellectual property. This clause requires the small business contractor to identify its intellectual property assertions in an attachment to their proposal for any technical data or software to be furnished to the government with restrictions on use, release or disclosure. The assertions table identifies the data the contractor or subcontractor will furnish to the government with restrictions, the basis for assertion, the type of rights being asserted and who is making the assertion.
The DoDI 5000.02 (January 7, 2015) requires PMs to establish goals for
applying SBIR and STTR technologies in programs of record and incentivize primes
to meet those goals. For contracts with a value at or above $100 million, PMs
will establish goals for the transition of Phase III technologies in
subcontracting plans and require primes to report the number and dollar amount
of Phase III SBIR or STTR contracts. At each milestone, the PM will provide a
detailed plan for the use of SBIR/STTR technologies and associated planned
funding profile (Phase I, II and III).