SBIR Phase III Lament
NO ONE UNDERSTANDS ME!
I hear this over and over again. Government contracting folks just don't understand what Phase III is. For that matter, most Phase I and Phase II SBIR awardees don't understand it either!
SBIR Phase III is an incredibly misunderstood concept. The biggest problem, and the ONLY absolute, is this: AN SBIR PHASE III PROJECT IS NOT AN SBIR PROJECT! Huh?
A client recently asked me to help her in discussions with an Army contracting officer regarding a new contract being negotiated. This was not an SBIR award, just a contract for some new work. But, the work actually derived directly from an SBIR Phase I/II project that had been successfully completed. Per my advice, she requested that this be designated an SBIR Phase III project.
The Army contracting officer balked at that, assuming that the funds for this "SBIR contract" would have to come from the agency component's SBIR allocation. My client's attempts to explain fell on deaf ears. She encountered the "Don't confuse me with facts, my mind is made up!" syndrome. In frustration, she asked me to provide some very clear explanation (with citations). Here's what I provided:
Your new contract is most definitely NOT an "SBIR contract". What it is, is a new Army Contract where the work to be done happens to derive from work previously funded under SBIR.
According to The SBA's SBIR Policy Directive of 2002 (in the Federal Register with the force of Law), in Section 4(c): SBIR Phase III refers to work that derives from, extends, or logically concludes effort(s) performed under prior SBIR funding agreements, but is funded by sources other than the SBIR Program.
So, "SBIR Phase III" is merely a DESIGNATION placed on a non-SBIR contract to acknowledge the fact that some SBIR-funded work is continuing.
That's all it is. A designation. Why bother? Because there are very important benefits for both the Government and the Contractor.
For the Government, there are two benefits:
1. There's a considerable savings in both cost and time, as there's no need to compete the work. The provisions of FAR Part 6 (Fairness in Competition), are deemed satisfied by the original SBIR Phase I competitive activity. See Section 4(c)(3) of the Policy Directive:
4(c)(3) The competition for SBIR Phase I and Phase II awards satisfies any competition requirement of the Armed Services Procurement Act, the Federal Property and Administrative Services Act, and the Competition in Contracting Act. Therefore, an agency that wishes to fund an SBIR Phase III project is not required to conduct another competition in order to satisfy those statutory provisions. As a result, in conducting actions relative to a Phase III SBIR award, it is sufficient to state for purposes of a Justification and Approval pursuant to FAR 6.302-5, that the project is a SBIR Phase III award that is derived from, extends, or logically concludes efforts performed under prior SBIR funding agreements and is authorized under 10 U.S.C. 2304(b)(2) or 41 U.S.C. 253(b)(2).
2. The quality of the Government's SBIR selection process is ultimately measured by how much follow-on work (commercialization) results from the SBIR-funded projects. This follow-on contract will be a feather in the Army SBIR Office's cap. A success story they can tout.
For the Contractor, the primary benefit of the "SBIR Phase III" designation is the extension (per Section 8(b)(3) of the Policy Directive) of the SBIR Data Rights that protect the small business's proprietary information:
8(b)(3) SBIR technical data rights apply to all SBIR awards, including subcontracts to such awards, that fall within the statutory definition of Phase I, II, or III of the SBIR Program, as described in Section 4 of this Policy Directive. The scope and extent of the SBIR technical data rights applicable to Federally-funded Phase III awards is identical to the SBIR data rights applicable to Phases I and II SBIR awards.
The "designation" is primarily indicated by the inclusion in the contract of the wording from Section 4(c)(3) (above) and the appropriate contract clause for SBIR Rights in Technical Data - DFARS 252.227-7018.
This approach seems to have worked. The Army contracting officer finally understood what my client was asking for, and (keep your fingers crossed) is preparing the contract with the appropriate language to make it a Phase III SBIR!
A very interesting factoid here, is that it matters not what Agency did the original SBIR funding. The Phase III designation can be applied to follow-on work contracted by ANY Federal agency.
This subject is so important that a session will be dedicated to it at the 2011 Spring SBIR National Conference in Madison, Wisconsin, April 11-13. The respected attorney, Dave Metzger (THE authority on SBIR Data Rights) and I will be conducting this session.
Excerpted from Fred Patterson’s “The SBIR Coaches Newsletter” www.sbircoach.com_