SBIR Phase II — Department of Defense

Who qualifies

• Must have received a DoD SBIR Phase I award from the same DoD component — Phase II must be with the same component that funded Phase I
• Phase I must be satisfactorily completed (or in completion) — Phase I awardees with significant technical challenges or missed milestones may not receive a Phase II invitation
• Company must still qualify as a small business (fewer than 500 employees including affiliates) at time of Phase II award
• More than 50% owned and controlled by US citizens or permanent legal residents
• New 2026 requirement: mandatory foreign national/ownership screening (FOCI disclosure) effective for all awards issued after April 13, 2026
• PI must be primarily employed (more than 50% of working time) at the small business at time of Phase II award — PI should ideally be the same individual as Phase I PI; changes require component approval
• Active SAM.gov registration with valid UEI required (annual renewal — verify before Phase II submission)
• SBA SBIR Company Registry registration current
• DSIP account active at dodsbirsttr.mil
• No cost-sharing required for Phase II (AFWERX STRATFI requires co-investment matching for its Phase II bridge program — separate from standard Phase II)
• Work must be performed primarily in the United States

Hard requirements

• Must be incorporated
• 51%+ US ownership required
• Requires a prior Phase I award
• Max 500 employees

What it covers

How to apply

1. 1

   Engage your Phase I Program Manager (PM) at 3 months before Phase I end

   Do not wait for your PM to reach out. Contact your Phase I TPOC or contracting officer 3 months before your Phase I contract end date. Discuss Phase I results, whether they justify Phase II, and what the PM's interest in your technology is for Phase II. Many Phase II awards are effectively decided through PM conversations before the formal Phase II application — if the PM is enthusiastic about your Phase I results and wants to champion your Phase II proposal, your odds improve substantially.

   ~5 hrs

2. 2

   Receive Phase II invitation and confirm component-specific Phase II requirements

   Phase II invitations come from the component contracting office. Confirm: (a) Phase II award cap for your component and topic area, (b) whether your component uses standard Phase II or a specialized mechanism (AFWERX STRATFI/TACFI for Air Force; DARPA PM-negotiated for DARPA), (c) Phase II application format and page limits, and (d) any updated FOCI screening requirements. Get the Phase II BAA number or solicitation reference.

   ~4 hrs

3. 3

   Write the Phase II technical and commercialization narrative

   DoD Phase II technical proposals (typically 20–40 pages) must include: (1) Phase I results summary — what was demonstrated and why it justifies Phase II; (2) Phase II technical plan with specific milestones and deliverables; (3) Phase III transition plan — the most critical section, describing exactly which DoD program of record, program executive office, or acquisition program will integrate or test the Phase II deliverable; (4) commercialization plan — dual-use commercial market opportunity. Phase III transition narrative should name specific DoD programs, PMs, or program offices with whom you have relationships.

   ~60 hrs

4. 4

   Prepare the Phase II cost volume

   Phase II cost proposals are more complex than Phase I — larger budgets, longer periods, often more subcontractor involvement. Include: direct labor (hours × fully-loaded rates for all key personnel), subcontract costs (typically still capped at 33% of total unless approved otherwise), materials and equipment, travel (Phase II often includes more DoD lab coordination), and indirect costs. Army, Navy, and Air Force will each negotiate final amounts — your proposed amount becomes the ceiling for negotiations.

   ~15 hrs

5. 5

   Submit via DSIP and execute Phase II contract

   Submit through DSIP (for most DoD components) within the invitation window. Phase II contract negotiations typically take 60–120 days after proposal submission. Phase II contracts are Firm Fixed Price (FFP) with milestone-based payments. Prepare a detailed Milestone chart for contract negotiations — contracting officers use it to structure payment milestones. Phase II contracts include SBIR Data Rights (4-year protection), IP ownership at the small business, and FAR Part 31 cost allowability requirements.

   ~15 hrs

SBIR / STTR details

NAICS codes: 541715, 541714, 541511, 541512, 336411, 336412, 541330, 334511, 334220, 325411

Deadline & timing

DoD SBIR Phase II timing varies substantially by component. Army Phase II: applications submitted through DSIP during a defined Phase II evaluation window, typically 30–90 days post-Phase-I completion. Navy Phase II: invitation from the TPOC, submitted through DSIP. Air Force Phase II: AFWERX uses its own STRATFI/TACFI process separate from traditional Phase II applications — companies apply through a separate pitch-based process. DARPA Phase II: PM-driven invitation after Phase I milestones met; highly individualized. The SBIR/STTR reauthorization (April 13, 2026) applies to Phase II as well — foreign national screening required for all new Phase II awards. Phase I awardees should not wait for an official invitation letter — proactively engage your Phase I PM about Phase II 3 months before Phase I ends.

Programs that stack well

• Research & Development Tax Credit (Section 41)
• SBIR Phase I — Department of Defense
• STTR Phase I — Department of Defense
• DoD Mentor-Protégé Program (DFARS 219.7100)
• NIST Manufacturing Extension Partnership (MEP)
• Sba Sbic

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