Common Objections & Responses

The questions Contracting Officers actually ask about Phase III — answered with statutory and case-law authority. Useful both for COs building a defensible record and for awardees anticipating what their CO will need to address.

1. Won't a sole-source Phase III look like a workaround for competition?

No — and the statutory authority is explicit on this point. 15 U.S.C. §638(r)(4) grants Phase III its own award authority distinct from FAR Part 6 competition rules. FAR 6.302-5(a)(2)(i) recognizes statutory-authority awards as a separate basis. The SBA Policy Directive at §4(c)(3) states that "further justification is not needed" beyond the SBIR connection documentation.

The record that protects against the "workaround" perception is the logical connection narrative itself. When that narrative cleanly demonstrates how the proposed work derives from, extends, or completes the prior SBIR effort, the award is exactly what Congress intended — not a workaround.

(Authority: 15 U.S.C. §638(r)(4); FAR 6.302-5; SBA Policy Directive §4(c)(3).)

2. What if a competitor protests the award?

GAO's standard of review for Phase III protests is highly deferential to the agency. Synergy Enterprises (B-419161, 2020) held that agencies have "broad discretion" and "relatively limited requirements to justify a phase III award." The burden falls on the protester to "clearly demonstrate" the award fails statutory requirements.

The most common protest theories — "the work isn't really connected to the SBIR" and "this should have been competed" — both fail when the contracting record contains a credible logical connection narrative. The agency does not need to win a debate about which contractor is best; it needs to show its connection conclusion was rational.

(Authority: Synergy Enterprises, Inc., B-419161, Dec. 20, 2020.)

3. How tight does the SBIR connection actually need to be?

Broader than most reviewers assume. The statute uses "derives from, extends, or completes" — three different relationships. Common methodologies, technology concepts, or capabilities that originated in the SBIR effort and now apply to a new mission area satisfy the connection. Synergy Enterprises confirmed that Phase III work need not address identical requirements to the Phase I/II contract.

Digital Force Technologies (B-423319, 2025) went further: not every component of a Phase III solution must be SBIR-derived. SBIR-developed technology constituting a material component of the proposed solution suffices, even when combined with non-SBIR (including COTS) components.

(Authority: 15 U.S.C. §638(r)(4); Synergy Enterprises; Digital Force Technologies.)

4. Can the scope grow significantly via post-award modifications?

Yes, within the original general scope of SBIR-derived work, and without a separate J&A. SBA Policy Directive §4(c)(5) states that modifications and extensions do not require additional justification. There is no statutory dollar or duration cap on Phase III awards (§4(c)(1)).

The constraint is "general scope" under FAR Part 42 — modifications must remain within the scope of work that derives from, extends, or completes the SBIR effort. A modification that introduces entirely unrelated work would require its own contracting authority.

(Authority: SBA Policy Directive §4(c)(1), §4(c)(5); FAR Part 42.)

5. Is a services-only Phase III really eligible — even if no SBIR product is delivered?

Yes. 15 U.S.C. §638(r)(4) explicitly includes "services" within the scope of Phase III. The SBIR-developed technology can serve as an enabling component of professional services delivery; the Government does not need to receive the technology as a standalone product.

Digital Force (B-423319) is the clearest precedent for technology-enabled services: SBIR-developed technology as a material component of a broader services solution is sufficient. The contractor's personnel using SBIR-developed technology to deliver the services is the model.

(Authority: 15 U.S.C. §638(r)(4); Digital Force Technologies.)

6. What documentation survives an IG or oversight review?

The defensible record for an IG review typically includes:

• Contractor's prior SBIR Phase I or II contract number(s) (and any novation documents)
• The logical connection narrative — explicit "derives from / extends / completes" framing
• Memorandum-for-file documenting the J&A exception under FAR 6.302-5(c)(2)(ii)
• SBIR data rights clauses (DFARS 252.227-7018) in the contract
• Confirmation of small business status in SAM at the time of award
• Program funding source documentation (not SBIR set-aside funds — SBA Policy Directive §4(c)(2))

The Reference page contains a pre-award checklist that maps to each of these items.

7. Does the contractor need to have completed Phase II?

No. SBA Policy Directive §4(c)(6) states that an SBIR awardee is eligible for Phase III without completing Phase I or II. A prior Phase I award is sufficient. American Systems Corporation (B-418257, 2020) confirms the prior-award requirement but does not impose a completion requirement.

(Authority: SBA Policy Directive §4(c)(6); American Systems Corporation, B-418257.)

8. Can a Phase III be awarded after a long gap from Phase I/II?

The statute contains no time limit between Phase I/II and Phase III. SBA Policy Directive §4(c)(1) reiterates: "no dollar or time limitations." A multi-year gap is not, on its own, a defect.

What matters is that the logical connection narrative still credibly demonstrates the "derives / extends / completes" relationship. A longer gap often makes the narrative harder to draft — the connection has to be specific enough to survive scrutiny — but it is not a categorical bar.

(Authority: SBA Policy Directive §4(c)(1).)