Overview of the SBIR Program

The Small Business Administration’s (SBA’s) Small Business Innovation Research (SBIR) Program is a highly competitive three-phase award system that provides qualified small businesses with opportunities to propose innovative ideas that meet the Federal Government's specific research and development needs. SBIR is a congressionally mandated program and the big payoff of the program is ownership of SBIR derived technologies and sole source rights in Phase III. For example, the Air Force reported total SBIR Phase III (sole source) sales of $14.7 billion, including $4.4 billion in military product sales. The SBA oversees the program, but each agency manages its own program with slight variations. Below is a general overview:

In a recent study, Govini reported a significant increase in SBIR sole source contracts in 2020. The Department of Defense also revised its Periodic Table of Acquisition Innovations to reflect SBIR preferences mandated under the 2020 National Defense Authorization Act. Furthermore, a National Impact Study describes benefits to federal agencies and their industry partners.

◆ 15 U.S. Code §638 and §638(r)(1), SBIR Reauthorization Law

◆ PL 112-81 and the SBA’s 2012 SBIR Policy Directive

◆ 10 U.S.C. 2304(c)(5), as implemented by FAR 6.302-5: Authorized or Required by Statute

◆ FAR 5.202(a)(7) (proposed contract action does not require public notification)

◆ Rights in SBIR data - FAR 27.409(h)

◆ There is no limit on the size, scope or duration of a Phase III sole-source contract

◆ In accordance with FAR 5.202(a)(7), neither a formal solicitation nor synopsis are required

◆ No market survey, sources sought or other beta.SAM announcements are needed. It is sufficient for agencies to state that the procurement/acquisition arises from, extends or concludes a Phase I/II SBIR effort

◆ Acquisition of a small business with SBIRs means the large business acquirer enjoys the same sole source rights

◆ Sole source contracting requirements apply to government agencies and prime contractors

◆ Prime contractors may integrate with or license SBIR technologies and enjoy the same sole source rights

◆ Five-year $150M award for financial management and logistics support

◆ $9M award Blockchain Messaging System

Key to success in Phase III is getting ahead of a solicitation to shape the requirement towards a Phase III designation. Many strategic prime contractors are active supporters of the SBIR program working as a subcontractor to the small business with an Subject Matter Expert (SME) to advise the technology advancement or provide additional analysis, research, and implementation into their technical solutions. By doing so, prime contractors enjoy sole source rights: Northrop Grumman, Lockheed Martin, Boeing.

Companies such as Genentech, Qualcomm, Lasik, Symantec, Z-Corporation, and iRobot were seed-funded by SBIRs and have since gone on to tremendous success.