What is a Phase III?

Let’s talk about the fun stuff. Phase IIIs are the whole reason Long Capture believes SBIR should be pursued in the first place.  But what is a Phase III? Why is it a tremendous opportunity?  Let’s outline the basics.. 

The biggest misnomer about the SBIR program is the term “Phase III.” Too many small businesses think they have to finish their Phase I and II before they can jump into Phase III. That is completely wrong. Per the SBIR Policy Directive, which governs this program, a small business can begin a Phase III as soon as they win a Phase I. It could literally be the same day! 

Back to the basic question though, what does this “Phase III” thing mean? A Phase III is a contract that’s funded with money outside of the SBIR program. The SBIR program is run from a big pot of money that’s been specifically set aside for small businesses under the SBIR umbrella. A Phase III means it’s funded from any other federal source. So it could be:

  • Research and Development money? Absolutely.
  • Procurement dollars from a large Program Office? Yup!
  • Operations and Maintenance funding from a military base? Oh yea!

Essentially, it’s any funding type (the government has all kinds of “colors” of money, but that’s a discussion for another time) and more importantly, it can be any dollar amount. For example, it could be a 1 month $20K project. Or it could be a 5 year, $70M contract ceiling, with minimal upfront funding that sets you up for long term availability and spending from multiple customers. The possibilities are endless!

The key point about Phase IIIs is that they get around the normal, painful, and lengthy acquisition process. Because of this, they provide a tremendous amount of flexibility for the government. The way the Policy Directive is written, Phase IIIs have the authority to avoid competition and the exception is authorized by law. Anyone familiar with government acquisitions knows the exceptions to competition are few and are often very hard to justify. This program has it written in black and white and that’s why it’s such a big deal.

The only limitation on the Phase IIIs is that they must extend, derive from, or complete work from a Phase I or II. This definition is very broad and the changes we’re seeing from AF and Navy SBIR topics allow a ton of flexibility and opportunity to leverage a Phase I SBIR for Phase III follow ons. 

In the next several blog posts we’ll break down the challenges, jump in depth on the flexibility, discuss our routes to Phase III, and outline the benefits to the government. You won’t want to miss it!