The SBIR/STTR program is designed to assist companies working with the government for the first time ease into the federal market. The path from a Phase I to a Phase II to a Phase IIB or Phase II+ (known in Air Force and Space Force SBIR/STTR as a TACFI or STRATFI) is a path that slowly increases in complexity and responsibility both in terms of proposal expectations and execution or delivery requirements.
However, the contrast between the early SBIR/STTR program and a Phase III contract or other post-transition contract vehicle is often less measured. This is often because the government shows considerable leniency towards small businesses in several key areas on early SBIR/STTR awards, that other offices do not once those companies begin working outside of the SBIR/STTR program (in the “real world” of GovCon, so to speak). The change for many companies can be abrupt and oftentimes shocking, so it is wise to use your TACFI/STRATFI time to prepare. Let’s hit some of the top areas where companies feel this shift and where you can find the most efficiency in shifting your attention now.
Contract Terms and Conditions (T&Cs): Mature your review process.
- Start reading your contract clauses–Yes, all of them. This includes examining cross-references and noting any current or potential/future requirements. For example, if you have clause that requires training, that is a requirement now, so your company needs to comply once the contract is awarded (which means signed by the Government Contracting Officer). If, however as is more common, the clause says that training is required if Labor Law X applies, you’ll need to go look up that labor law. If that labor says it applies to companies with 50 full-time employees, you’ll need to verify what full-time means by state (likely check with your business attorney and HR team) and check your FTE count. If you are not at 50 FTEs yet, then this is a future compliance requirement, that you’ll need to note with your HR team, so that they can enforce it the moment you do hit 50 FTEs. You can see why this can quickly become quite a task to manage.
- Learn which T&Cs are negotiable.
- For Other Transactions (OTs), unless mandated by law, both the clause and their language are open to negotiation, albeit subject to varying degrees depending on internal agency policies or regulations.
- For Federal Acquisition Regulation (FAR) clauses, the prescription or clause matrix will tell you whether a clause is Required, Applicable, or Optional (If you cheat and use the matrix, it will use these letters to note which it is, the prescriptions required a more practiced reader to determine in many cases).
- Be aware that some FAR clauses are Incorporated by Reference (IBR), while others are included full-text or with blanks that must be filled in. Read the language the government inserts in fill-in clauses. This language may be negotiable (such as notification requirements for option clauses).
- Additionally, some agencies use custom-written clauses, often referred to as “H-clauses,” which may include local procedures or clauses tailored for specific programs–these, too, can often be negotiated.
- Lastly, make sure that you have copies of and have reviewed all attachments, whether incorporated directly or by reference into the contract. Attachments are part of the contract, so read them carefully. Common attachments include the Requirements document (Statement of Work (SOW), Performance Work Statement (PWS), etc.), Contract Data Requirements List (CDRLs), DD254 or equivalent, and/or Government Furnished Property (GFx) List, among others.
Intellectual Property: Have a strategy and be ready to fight for your rights (in technical data and software).
The SBIR/STTR program is very generous with IP compared to rest of USG, as they are allowing you to retain rights for work paid for and performed under a government contractor for very little in return. They cover both technical data and software and cannot be less than 20 years. This is not the norm in government contracts, and you must educate yourself on how government IP works outside of the SBIR/STTR program.
- Read the definition of technical data. It is very specific, and it is different than proprietary data. Technical data notably does NOT include “financial, administrative, cost or pricing, or management data or other information incidental to contract administration.” This means that if you developed a unique management style or pricing model under a SBIR award, it is NOT protected under SBIR data rights. Keep that in mind going forward in your government market plan.
- If you intend to use any pre-existing technical data or software (excluding commercial software–we’ll get to that) in the performance of your contract, FILL OUT THE DATA ASSERTIONS TABLE. Fill it out correctly and make sure you have an expert review it. Also verify that it is included before signing the final contract.
- If you are using commercial software as part of performance under a contract, ensure that your commercial software license agreement is incorporated into the contract. I highly encourage you to use an expert to ensure that the license agreement itself aligns with both your IP strategy and your contract (and its attachments) AND that it is incorporated correctly into your final contract.
- After contract award, it's critical to correctly label all software and technical data deliverables in accordance with contractual requirements before submission to the government. Deliverables cannot be marked as proprietary; they must adhere to the negotiated terms outlined in the Data Assertions Table and marking instructions within the contract.
- If you are delivering something to the government that is NOT a deliverable under the contract, you should mark it proprietary, or it is theirs to do with as they please.
When it comes to government IP, I’d strongly encourage you to consult with an attorney who has experience in both commercial AND government IP, as government IP is very different than commercial.
Proposal Quality Standards: It’s time to up your game.
Many contractors may become complacent due to the minimal review process for SBIR/STTR proposals. However, transitioning to Phase III or vehicles using non-SBIR authorities, particularly in sole-source scenarios or at certain funding thresholds, necessitates adhering to higher proposal standards, both in your technical proposal and in your price proposal. The primary driver of this is the government’s requirement to determine vendor responsibility and that your final price or cost is “fair and reasonable.”
However, evaluating separate cost elements for price fair and reasonableness isn't always required. Commerciality and adequate price competition are common alternative methods, especially pertinent for dual-use companies.
Regardless of whether a company operates in a dual-use, federal-only, direct-sales, or competitive government market, it's crucial for your team to understand the correlation from the requirements document to your unique technical proposal, basis of estimate (BOE), price proposal, and ultimately, back to the contract itself.
If you do not currently have the data to write a fully-compliant proposal, it is critical to implement the controls necessary to start gathering that data now. You can start by checking out Haley’s blog on BOEs from earlier this week (link here), and stay tuned for her workshops on other products that feed into this process.
Additionally, if you aren’t sure if your offering meets the definition of commerciality, the FAR definition for both a commercial product and a commercial service can be found here ļ https://www.acquisition.gov/far/part-2 (Note that computer software can use either depending on the acquisition.)
Deliverables: What’s a CDRL and what it DID?
When it comes to deliverables post-SBIR/STTR, there are a few things to keep in mind:
- Not all milestones require deliverables and not all deliverables qualify as milestones. This paradigm is common in early SBIR/STTR contracts, but most contracts use the Contract Data Requirements List construct or CDRLs, to outline deliverable requirements and standards.
- This is typically accomplished via a DD1423 or equivalent document, which delineates the data to be delivered by the contractor, including the submittal, approval, and distribution requirements. This document also provides general instructions applicable to all CDRLs within the contract, unless otherwise specified.
- CDRLs should be linked to specific requirements in the SOW or PWS, and each deliverable type should have its own form. The 1423 is a standard form, and it needs to be filled out correctly by the government prior to inclusion in the contract.
- Additionally, deliverables and/or milestones don’t necessarily come with payment, unless you stipulate that in the negotiation. Depending on the contract type, you’ll need to discuss either the payment plan or contract financing arrangement with the Contracting Officer as part of the negotiation (if sole source) or make sure you understand those requirements in the solicitation (if competitive).
General relationship expectations: How to talk to the government as a Contractor.
- Know your role–No matter how well you work with your government counterpart, you are still a contractor, so do not speak ill of other government members or ask if you can speak “off the record.” Unless you are sharing something that can be shared with the entire government team—don’t. They are not a journalist, and you are not a source.
- Get it in writing–Do NOT accept any verbal promises from government team members. Also, government team members are not interchangeable. Be sure to measure promises from government team members against what's within the bounds of their individual authority. If you aren't sure, it's best to loop in the Contracting Officer. Always remember that the Contracting Officer retains certain unuqie rights within the government and oftentimes needs to be your focal point for the majority of contract-related determinations.
- ALWAYS be professional–Oftentimes the government will interact differently with contractors outside of the SBIR/STTR program. No matter how frustrated you may be, not matter how wronged you may feel–always be professional in response to government–especially in writing.
Was this helpful? Let us know in the comments below and good luck in TACFI/STRATFI season!