Cross-Agency Phase III SBIR: When a Different Agency Can Buy Your Technology

One of the most useful and underused features of the SBIR Phase III pathway is that the awarding agency does not have to be the agency that funded the underlying Phase I or Phase II. The Air Force can issue a Phase III on Navy SBIR work. NASA can issue one on DoD SBIR work. The Department of Homeland Security can issue one on Air Force work. The statute does not care who paid for the original R&D — it only cares that the new work derives from, extends, or completes it.

Where the cross-agency authority comes from.

15 U.S.C. § 638(r) is written in terms of federal agencies — not the specific funding agency. The SBIR/STTR Policy Directive reinforces this. The intent is to maximize the chance that SBIR-funded technology actually gets used somewhere in government, even if the agency that funded the original research has no operational need for the result.

This matters because the agency that funded your Phase I/II often is not the agency that has the operational need for your technology. The funding agency was running a research solicitation. The using agency has the mission and the budget. Cross-agency Phase III is the bridge between the two.

Why cross-agency awards are underused.

The mechanism is well-established. The usage is rare. Three reasons:

• Program offices don't know they're allowed. Most operators in a using agency assume Phase III is something the funding agency manages. They don't realize they have the authority themselves.
• Contracting officers default to their own agency's portfolio. A CO at Agency X is used to seeing SBIR awards from Agency X. They may not initially understand they can build on Agency Y's portfolio.
• The DEC statement has to do more work. A cross-agency DEC needs to make the technical nexus visible to a reviewer who has no familiarity with the original agency's program. That's solvable, but it takes more care.

What makes a cross-agency Phase III work.

Three practical conditions tend to determine whether a cross-agency Phase III actually closes:

1. The new agency has a clear, named mission need. A general interest in the technology is not enough. A specific operator with a specific problem is.
2. The new agency has funding identified. Phase III is funded out of non-SBIR appropriations. Without a budget pot to draw from, the award cannot move.
3. The DEC statement is written for the new agency's reviewer. Don't assume the reviewer at Agency B knows what Agency A's SBIR program produced. Spell it out.

A practical pattern.

The cleanest cross-agency Phase III pattern is: the awardee identifies a new-agency operator who needs the capability, helps that operator make the budget case internally, then provides the operator's contracting officer with a clean award package (Statement of Work, DEC statement, market research, suggested D&F). The originating agency typically has no role in the award and no approval rights. The new agency issues the contract.

Done well, this can take months to set up but very little time to actually execute once the customer and the contracting officer are both ready. Done badly — with no clear customer, no identified budget, and a generic DEC — it can run for years without closing.