Small Business Innovation Research  
Small Business Technology Transfer  
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Frequently Asked Questions

  1. What is the SBIR Program?
        The Small Business Innovation Research (SBIR) Program is a highly competitive three-phase award system which provides qualified small business concerns with opportunities to propose innovative ideas that meet the specific research and development needs of the Federal Government.

    The Phase I is typically a study phase to evaluate the scientific merit of the idea and or perform small scale testing.

    The Phase II is typically a demonstration phase in which prototypes are built and tested. Refer to individual Syscom phase II guidelines at

    The Phase III is for production units or additional R&D for a DoD Program. It can be for any amount of money and time period, but can not use SBIR dollars.

  2. Why is there a Phase I option?
        The Phase I Base amount shall not exceed $140,000 and the Phase I Option amount shall not exceed $100,000. The Base and Option Periods of Performance shall not exceed six (6) months each.

    The Option will typically only be awarded if the company is selected for a Phase II award. The Option is used to provide the contractor with bridge funding between the end of the Phase I and start of the Phase II. It will not bridge the entire gap, but will reduce the time the company is without funding while waiting for the Phase II award. It is very important to include the Option funding in your original proposal so that it can be awarded as part of the Phase I contract. If it is not, your company will not receive the Phase I option funding.

  3. Can I submit a Phase I proposal with a base higher than the amounts listed above?
        No. The Navy will reject proposals with a base effort higher than the amounts listed.

  4. What is Phase III?
         Phase III is work that derives from, extends, or logically concludes efforts performed under SBIR but is funded by sources other than the SBIR Program (e.g. Government program funds or private sector funding). The success of the Navy SBIR Program is measured by companies using Phase III to transition their SBIR efforts into products, tools or services that benefit the Navy acquisition community.

    One important strength of the SBIR program is that once a company has received a Phase I award, follow-on Phase III awards can be awarded in a non-competitive process since the competitive process took place under Phase I.

  5. Do you have to be a Phase I awardee in order to be considered for Phase II of a project?

  6. What is the small business size standard for purposes of the SBIR Program?
        A small business concern for purposes of award of any funding agreement under the SBIR Program is one which, including its affiliates, has a number of employees not exceeding 500. [More information]

  7. Are foreign based firms eligible for SBIR awards?
        No. To be eligible for award of SBIR funding agreements, a small business concern has to meet the following qualifications:
    • be independently owned and operated
    • principal place of business is located in the United States
    • at least 51 percent owned or in the case of a publicly owned business, at least 51% of its voting stock is owned by United States citizens or lawfully admitted permanent resident aliens.

  8. Are non-profit concerns eligible for SBIR awards?
        No, but they can be subcontractors to a small business.

  9. May a portion of an SBIR award be subcontracted?
        For Phase I, a minimum of two thirds of the research and/or analytical effort must be performed by the proposing firm, and for Phase II, a minimum of one-half of the research and/or analytical effort must be performed by the proposing firm.

  10. What is the difference between an SBIR announcement and the SBIR Pre-release Announcement?
        During the Pre-release phase the companies can review the topics that most likely will be included in the announcement and contact topic authors to further discuss the topics with them. Once the announcement opens, no direct (oral or written) conversations with the topic authors are allowed.

  11. What is the process to get paid in a timely manner?
        Complete payment instructions are located in the Getting Paid section at