SBIR/STTR Phase III: What It Allows and How to Team Around It
Phase III lets agencies award follow-on work without a new competition, but only for work derived from a firm’s SBIR or STTR projects. How the phases work, the limits, data rights and teaming steps.
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The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs fund small companies to research and prototype technology the Government needs. The prize most firms are chasing is Phase III: follow-on work that an agency can award without a new competition. Phase III is powerful, but it is narrower than many capability statements suggest, and primes who understand the limits can team with SBIR firms to reach work that competitors cannot.
How the three phases work
The programs are set out in 15 U.S.C. 638 and run by each participating agency under a Policy Directive issued by the SBA.
| Phase | Purpose | How it is funded |
|---|---|---|
| Phase I | Feasibility: show that the idea can work | SBIR or STTR program funds, awarded competitively |
| Phase II | Research and development: build and test a prototype | SBIR or STTR program funds, usually limited to Phase I awardees |
| Phase III | Commercialize: production, integration or further development | Any non-SBIR money: agency program funds, a prime contract, private capital |
STTR works the same way but requires a formal partnership with a nonprofit research institution, such as a university or federally funded research center, which must perform a minimum share of the work.
What Phase III really allows
Phase I and Phase II awards are made through competitive solicitations. Because that competition already happened, an agency may award Phase III work to the firm without further competition, and the statute directs agencies to do so to the greatest practicable extent when they pursue the technology.
The limit is in the definition. Phase III covers work that derives from, extends or completes an effort made under a prior SBIR or STTR funding agreement. That means:
- The eligibility belongs to the technology and its line of work, not to the company as a whole
- A firm with one Phase II award in sensor fusion is not Phase III eligible for an unrelated help desk contract
- There is no dollar ceiling or expiration date on Phase III, as long as the work truly flows from the earlier projects
- A contracting officer still documents why the new work derives from the earlier award
Pitfall: "Phase III sole-source eligible" printed across a whole company overstates the rule. Say what the eligibility covers: work derived from named SBIR or STTR projects.
Data rights travel with the technology
SBIR and STTR awardees keep strong rights in the technical data and software they generate. In defense contracts those rights are implemented through DFARS 252.227-7018, and the SBA Policy Directive sets a protection period of 20 years from the award. During that period the Government generally may not disclose the data outside the Government. Primes that integrate an SBIR firm's technology should plan for those markings in their own deliverables instead of asking the small business to give them up.
Teaming with an SBIR firm
Phase III does not have to be a direct award to the small business. A prime can bring derived technology into a larger program and subcontract the related work to the SBIR firm, which is often how a prototype reaches production scale. To make that work:
- Confirm the awards. Look up the firm's Phase I and Phase II projects (agency, topic, contract number and dates) on SBIR.gov and in the award record.
- Map the derivation. Write down how your requirement derives from, extends or completes those specific projects. If you cannot explain it in two sentences, the contracting officer will struggle too.
- Talk to the program office early. Phase III is a tool for the agency; the program manager and contracting officer decide whether to use it.
- Protect the data rights. Agree in the teaming agreement how SBIR data is marked, delivered and licensed.
- Check the usual partner basics: SAM.gov registration, exclusions, size under the NAICS code and the cyber requirements of the work.
How TeamingIndex helps
- The SBIR/STTR filter lists companies with Phase I or II awards on SBIR.gov. Profiles say "SBIR/STTR awardee: Phase III-eligible for work derived from its SBIR/STTR projects", never a blanket sole-source claim.
- Each profile's SBIR/STTR portfolio shows the agency, phase, award year and project title, with SBIR.gov named as the source and the date of our last sync. We do not store researcher names or contact details.
- When you post a research or technology need on the Teaming Board, SBIR awardees with related work get a small boost in matching, and you can compare plans to unlock the full capture tools.
Read the OTA guide for another fast path from prototype to production, and the teaming agreement guide before you sign with a research partner.
Not legal advice. TeamingIndex guides are general information to help you plan, not legal advice. Regulations, clauses and program rules change and solicitations can tailor them: always work from the current regulation and the clauses in your solicitation, and confirm decisions with your contracting officer or counsel.
Official sources
Primary regulations and program pages this guide was checked against on . Read them for the authoritative text.