programs. Small businesses are critically important to technology development at DoD. According to Michael Caccuitto, DoD SBIR program administrator, after assessing 255 industrial capabilities, DoD concluded that 36 percent of the companies with relevant products have less than 100 employees.1

“Phase III” is not funded by any line item. It is a phrase that describes post-Phase II commercialization or agency acquisition of SBIR-sponsored technology. There is no formal program or budget for “Phase III.”

In the early years of the SBIR program, Phase III was not a very high priority. SBIR topics were defined and awards were made largely in line with the interests and activities of the wider R&D programs—for example, the Army Research Labs. During the 1990s, following the renewal of the program, growing pressure from Congress, and changes in priorities of the leadership in the Pentagon, gradually shifted the SBIR program’s emphasis toward serving the warfighter more directly, and specifically to the issue of Phase III.


Over the past fifteen years, Congress has repeatedly directed SBIR programs generally, and DoD in particular, to emphasize commercialization and to promote the use of SBIR-sponsored technologies in acquisition programs.

Congress has considered the Phase III component of SBIR at the time of each reauthorization. In 1992 the SBIR Reauthorization2 increased the emphasis on commercialization. In 1999, Sec 818 of Defense Authorization Act required “favorable consideration [for SBIR projects] in acquisition planning process.”3 More recently, the 2005 Defense Authorization Act, House Armed Services Committee (HASC) report “directs USD (AT&L) to encourage DoD acquisition managers and prime contractors to make significantly more SBIR Phase III contract awards … and to report on DoD Phase III contracts during last three years.”4

The 2002 SBIR law reauthorization directed the SBA to strengthen SBIR guidelines by mandating Phase III commercialization “whenever possible.”

House Report 108-491 accompanying the National Defense Authorization Act—FY2005, directed the Under Secretary of Defense for Acquisition, Technology & Logistics to encourage acquisition program managers and prime contractors to make significantly more SBIR Phase III contract awards and to report to the congressional defense committees on actions taken by March 31, 2005.


Presentation by Michael Caccuitto, DoD SBIR/STTR Program Administrator, at National Research Council Symposium on SBIR: The Phase III Challenge, June 14, 2005.


PL 102-564.


Sec 812 of the 2000 Act, House Report 106-244, and Senate Report 106-50 all emphasized increased use of Phase III contracts by acquisition programs.


Presentation by John Williams, Navy SBIR Program Manager, October 15, 2005. Available at <>.

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