November 2008          
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To My SBIR Clients and Friends,

Starting with this issue, my Newsletter will be a regular monthly event, with special FLASH ISSUES when events warrant it.  Each issue will feature a Special Topic as well as heads-up reminders of new SBIR or STTR solicitations and upcoming deadlines.


If I had a nickel for every time I was asked "What is Phase III?" I'd have a really big pile of nickels! 

It's absolutely amazing how little is actually known about the "Phase III rules", not only among the small business community but inside the Agencies as well.  I've had many a conversation with Agency officials to correct misinformation about what is "allowed" under SBIR policy that carries the force of law. 

There's very little confusion about what an SBIR Phase I is all about - demonstrating the feasibility of your proposed innovation to solve a problem.  Phase II is proving that it will work by building an appropriately configured prototype.  But what is Phase III?  We know it's called "commercialization", but what does that mean? More development?  Testing and evaluation?  Configuring for manufacturing?  Actually producing the product?  Maintaining and servicing installed products? 
You may be surprised to learn that the answer is "YES" - any and all of the above, as long as it is (and I'm quoting from Section 4(c) of the SBIR Policy Directive) "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."  This work can be funded by any arrangement where the deliverables are intended for use by the Federal government.  And, the wording "under prior funding agreements" has been interpreted to mean that you can skip Phase II and go directly from Phase I to Phase III! 
Essentially, what we're talking about as "commercialization" is transitioning the technology to suitability for, and accomplishment of, an end use.  Get someone to pay you for their right to sell it, use it, deploy it, insert it into a functioning system, etc. 
Note, of course, that the "Phase III" designation is only meaningful with regard to Federal government contracts or grants.  A commercial contract is just that - a commercial contract.  The reason you want the Phase III designation on a Federal contract is to extend your SBIR Data Rights (that restrict what the government can do with what you've created) and preserve your Federal sole source status.  We'll address the importance of these in subsequent newsletters.  But, if you just can't wait, there's a presentation called "The SBIR Awardee's Strategic Advantage" on my website that has more details of the IP implications of Phase III.  Click HERE to view or download it.
Now, hold on to your hats. There are NO RULES that restrict Phase III agreements in any way (other than the ubiquitous Federal Acquisition Regulations (FAR)).  In fact,
  • There's no limit on the number of Phase IIIs you can have
  • There's no limit on the duration of the funding agreement
  • There's no limit on dollar value of any funding agreement
  • There's no restriction on the type of funding agreement  (it can be a grant, contract, cooperative agreement, "other transaction," subcontract, or anything else you can negotiate under the FAR)
  • Phase III may be funded by a different agency that funded Phases I or II
  • There is no limit on the time that may elapse between the Phase I or Phase II award and a Phase III *
  • There is no limit on the time that may elapse between one Phase III and a follow-on Phase III *
  • The small business eligibility rules do not apply to Phase IIIs, so the 500 employee size limit does not apply, the "affiliation rule" has no practical application, there's usually no PI needed, and foreign involvement is only a matter of ITAR or other generally applied restrictions.
(* but SBIR Data Rights may expire if the period between awards is too long.)
My current Blog posting is all about how an SBIR company can get some assistance in securing Phase III contracts.  Now that you know what a Phase III award is all about, read this to identify some sources of help to get one:  New Help for Transitioning SBIR-Funded Technology to Commercialization (Phase III)
The government is under no requirement to issue you a Phase III contract, of course.  But if you do secure a follow-on contract to your SBIR work you most definitely want to get the Phase III designation assigned to it (via a contract clause) for extension of your SBIR Data Rights and sole source justification.

Hope this has been helpful!  Write me if you have any questions.


The Department of Homeland Security (DHS) and the Department of Commerce's National Institute of Standards and Technology (NIST) both recently announced their 2009 SBIR topics in pre-solicitation mode.  That means that you can query a Technical Point of Contact (TPOC) -- in many cases the actual topic author -- to get clarifications of topic requirements until the solicitation officially opens, in both cases on November 12th. 

Don't underestimate the importance of making these calls to the TPOCs.  In addition to allowing you to ask questions, it gets you on the "radar screen" of a potential evaluator of your proposal.  Avoid the temptation to market your solution (that's a no-no) but you may glean some important information that will give you valuable insight on how to focus your proposal on what's important for the Agency.  Remember an SBIR proposal is about what's important to THEM not to YOU.  The more you know about what their priorities are the better.

NIST has 47 new topics, DHS has 7.  For more details, especially when the solicitations officially open on November 12th, monitor the News Items on the SBIR Gateway.  Remember, the Agencies can can add, delete, and change the Topics prior to the release date.


November 12th will be a busy SBIR day.  In addition to the DHS and NIST official openings, a due date for DOEd, and the official opening day for the National SBIR Conference, that's the day the DOD plans to announce it's first SBIR round of the 2009 fiscal year, in pre-release mode.  Watch the SBIR Gateway for the announcement, and call those TPOCs!


All of these November and December dates shown below are what I call "imminent".  In my opinion, based in over 20 years of experience doing this, If you haven't already begun your proposal preparation, it's probably too late to get into this round of the game.  Not impossible (I've done successful last minute efforts myself), but the odds are against producing a winner.  I'm providing this list as a reminder to those of you who are submitting proposals to NOT BE LATE!

Three Agencies have November closing dates for their SBIR/STTR solicitations:

November 3rd -  NIH/CDC (PHS Contracts)
November 12th - Department of Education (NIDRR)
November 20th - Department of Energy

Two Agencies have closing dates in December:

December 4th - National Science Foundation
December 5th - NIH/FDA/CDC (Non AIDS-related Grants)

For planning purposes, I recommend that you take a look now at the SBIR proposal due-date schedule for the first couple months of 2009.  It takes a couple of months to develop a competitive proposal.  Start now if you're intending to submit.


It's November 11-14 in Hartford CT.  The Conference website link is on the SBIR Gateway.  If you've never submitted an SBIR proposal and are seriously contemplating doing it, I really recommend that you attend.  All of the Agencies have representatives there (usually their SBIR Program manager) and they put on dog-and-pony shows highlighting their current policies and offerings.  And you get to talk to folks like me, who help folks like you get through the process with less fear, trepidation, and hassle!

Even if you are an SBIR "veteran" there are new things being done by the Agencies, especially with regards to Phase II enhancements and add-ons, and on Phase III support, and this is where you find out what's in the wind.

If you can't be there but would like to have me address an issue for you with one of the agency SBIR Program Managers, please call me.

Best regards,

Fred Patterson
The SBIR Coach

PS:  If you're receiving this in Text mode (vs HTML) I'm sorry that it's so hard to read.  If you'd like a clean copy, write to me and I'll send you a PDF version.

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