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What is SBIR Phase III?

Posted by Ed Bard on

SBIR Phase III   Moon Phases

A Look Into the Phase III Process

The SBIR Phase III is often referred to as the commercialization phase.  It refers to any work that is funded without SBIR and STTR funding.  It includes work that is somehow connected to an effort under a prior SBIR funding agreement but the work is funded by a source outside the SBIR program.  Phase III occurs in one of three ways: 

  1. The SBIR contractor receives additional non-SBIR follow-on funding to a current SBIR contract
  2. The contractor receives a subcontract from a major defense prime
  3. The contractor receives commercial funding in product sales, service delivery, or debt/equity funding.

There is no limit on the number, duration, type, or dollar value of Phase III awards made to a business concern.  Additionally, there is no limit on the time that can elapse between a Phase I/II award and Phase III award, or between a Phase III award and any subsequent Phase III award.  A Federal agency can enter into a Phase III agreement at any time with a Phase I or II awardee.

Finding Non-SBIR Sources of Funding

Small businesses can receive Department of Defense (DoD) funding through broad agency announcements, or BAAs.  Although there is competition with larger businesses through the program BAA, small businesses are likely to find significantly more funding for technology through it.   Task-specific proposals through BAAs are ways to propose a few tasks separately in the case you cannot propose a full solution to a BAA problem.  Additionally, an “open office” or “office-wide” BAA is where a technical office issues a BAA that is good for a year containing the technology that the office focuses on.  The office then asks for solutions in that technological area.  This is a good way for small businesses to introduce a new idea to a program manager, essentially creating your own project.  The most important thing about the program BAA and the “open office/office-wide” BAA is to know your audience.  It is imperative to find out who will be evaluating your proposal and to understand their needs and where they seem to be going with their technology.  It is recommended to reach out to program managers if you are proposing to the office-wide BAA.

The Rapid Innovation Fund (RIF) was introduced as the Rapid Innovation Program in 2011 as a merit-based program with a goal of transitioning small business technologies into defense acquisition programs.  The selection process is competitive and proposals must meet certain requirements.  The proposal must satisfy an operational or national security need in support of major defense acquisition program or accelerate military capability.  It must also reduce acquisition costs and stimulate innovative technologies.  It must cost less than $3 million and be completed within 24 months of the award.  Finally, the proposal must address a technical risk and improve timelines. 

RIF is implemented into a two-step process.  The first step starts with an issue of BAA with DoD component requirements.  The industry responds with a three-page white paper and quad chart that is then evaluated with a “go” or “no go”.  The second step invites the highest rated “go” offerors to submit full proposals.  The highest rated proposals go through negotiations before receiving a contract award.

To learn about program requirements and network with program managers, Industry Days are held.  Industry Days allow businesses to create relationships with the primes for teaming opportunities, networking opportunities, or to even work on other projects.  For example, DARPA Industry Days are usually held a week before the release of the BAA and give program managers the opportunity to shed a little more light on their plans beyond the actual text of the BAA.  One-on-one opportunities are given with program managers and small business representatives to discuss approaches and technological strong points.  Industry Days are helpful to attend even if you do not plan on proposing to the BAA as they provide excellent networking opportunities to develop relationships for future projects.

Non-Traditional Contracting   

C5 Business Development Innovations (C5BDI) is a business development consulting firm and contract solutions provider that serves as a liaison between the government and industry.  The term C5 stands for command, control, communications, computers, and combat systems.  C5BDI provides the C5ISR Process™, which is an innovative and proven business development platform.  C5BDI helps government customers with traditional and non-traditional government procurements.  C5BDI focuses on Other Transaction Authorities (OTA) and SBIRs. 

Other Transaction Authorities or OTAs are typically for situations where there is at least one non-traditional defense contractor not under a CAS-compliant contract.  While larger CAS-compliant defense contractors can participate in OTAs, they must either pay at least a third of the total cost of the prototyping OTA with funds provided by the larger entity or have a senior procurement executive write an exception to the OTA, justifying the use of that contract vehicle to expedite. 


The SBIR Phase III process is very detailed and requires a lot of preparation and research.  Seeking non-SBIR funding for the commercialization process may by time-consuming but there are many funding opportunities and resources that small businesses may utilize to receive proper funding.


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