Phase III contracts are sole-source eligible, unlimited in size, and open to any federal agency. Most SBIR winners never pursue them.
A startup wins an SBIR Phase II award. They celebrate—rightfully. A million dollars in non-dilutive funding to develop their technology. Twelve months later, the project wraps up. They file their final report, update their website, and move on.
They just walked away from the most valuable provision in federal contracting.
The SBIR program awards roughly $4 billion annually across Phase I (feasibility, ~$250K) and Phase II (development, ~$1M). Most startups treat Phase II as the endpoint. It's not. It's the on-ramp to Phase III—where SBIR-funded technology transitions into production contracts.
Phase III comes with a provision that changes everything: sole-source eligibility. No competition required.
Any federal agency—not just the one that funded your Phase I or II—can award a Phase III contract to procure your technology. Any size. Any duration. No competitive solicitation needed.
This isn't a loophole. It's statutory. The SBA's SBIR Policy Directive explicitly states that Phase III work should go to the SBIR awardee without further competition.
Most contracting officers have never done a Phase III award. They won't come looking for you. Phase III only works if you drive it—and most companies don't know they should.
It's like having a VIP pass to a concert but never walking up to the VIP entrance because nobody pointed it out.
Protect the paper trail. Maintain a clear record linking your current product to the original SBIR-funded research. Contracting officers need this lineage to justify sole-source authority. If the connection is fuzzy, the legal basis weakens.
Educate the buyer. Come prepared with the relevant FAR citations (FAR 6.302-5, the SBIR Policy Directive) and examples of successful Phase III awards. You're not just selling your product—you're teaching the CO how to buy it.
Look beyond your original sponsor. The Army funded your Phase II, but the Navy has the bigger operational need? Pitch the Navy. Phase III authority crosses agency lines.
Use existing vehicles. Phase III authority can ride on IDIQs, BPAs, and GWACs. This gives contracting officers a familiar procurement mechanism—removing one more barrier between your technology and a signed contract.
Billions in SBIR-funded technology sits unused because the companies that built it stopped after Phase II. The pathway to production-scale revenue exists. It's statutory, it's sole-source, and it's available to every SBIR awardee.
Most companies just don't walk through the door.
Outrider helps SBIR awardees identify the agencies and programs most likely to need their technology—so Phase III becomes a revenue strategy, not a footnote.
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