Are SBIR Phase II’s always awarded if a Phase I solicitation is Issued?

Of course when you get your Phase I, you know that your company isn’t guaranteed Phase II funding for your concept.  But, can you assume that there will be at least SOME Phase II’s awarded for a given Phase I topic? Isn’t Phase II the carrot for doing a Phase I? The answer is No.

Can you assume there will be at least some Phase II funding for a given Phase I Topic? The answer, sad but true, is No.

A number of years ago, when the DHS, the Department of Homeland Security was new (hard to imagine but true!), and their SBIR program was even newer, one of my clients submitted, and was awarded, two Phase I awards.  However, only ONE of the topics progressed to a Phase II (which my client was also awarded).  Despite our team’s great work, they just decided that they weren’t going to pursue a Phase II on the second topic.  Since it involved requiring all small watercraft to buy and install a monitoring device this was probably a good idea.  Boaters are independent souls and it seemed unlikely to succeed in the RW (*Real World*).

Just this week, one of our VentureWrench clients, who was doing AMAZING work on a very complex Phase I award, received an email from the agency that they were simply not going to award ANY Phase II’s for this client’s topic.

It was crushing!  They were told they could submit a Phase II proposal, and it would be evaluated, but that NO Phase II funding would be awarded.

Here’s an excerpt of the email with a few details removed for our client’s protection. And note that although the email was sent directly to our client, the agency didn’t even bother with their name….

Sir or Ma’am,

[AGENCY] is not currently planning to pursue the technology identified in [AGENCY] SBIR topic [NUMBER]. Therefore, [AGENCY] will not fund any Phase II proposals submitted against this topic. Any Phase II proposal submitted against this topic will still be evaluated, but no awards will be made.

So, what happened? It’s hard to tell at this time and our client is working to get a little clarification.  However, the original program director retired shortly after the Phase I started.  (And, I will note, he didn’t send out an email or anything to the Phase I awardees before leaving! Our client had to reach out to several people to get a new contact!  I’ve seen this before, people just disappear, so always stay in tight communication with your PD/TPOC!).  Our client got a meeting with the “replacement”, who was really a new agency head – NOT an SBIR person.  It was clear that they had not replaced the SBIR PD. It is not clear that they have done so now, several months later.

Now, let me note that this is UNLIKELY to be the situation at the NSF or NIH. Basically, if you complete your Phase I, you can submit your Phase II and be seriously considered for funding.  Why?  Because NSF, and NIH, are PI or Investigator-led agencies – they want YOUR best ideas. So they will look at your Phase I Work (Did you Demonstrate Feasibility?) and then genuinely consider your Phase II proposal.

However, DoD as a whole, as well as NASA and DHS are much more directed in their topics. They are trying to move certain technologies forward or solve certain problems.  And sometimes, in the middle of YOUR work, they decide it’s not a priority any longer.

So, what to do? You’ve done great work, you were ready to submit your Phase II (or at least were working on it) and you get told, no Phase II money for your topic.  Here are some suggestions:

  1. First, be clear that the work you’ve done is worth pursuing.  Sometimes Phase I effort doesn’t cross the feasibility bar.  If it doesn’t, then let it go.  If it does and your TABA team has helped you find some appealing markets, then don’t give up!
  2. Look for other agencies which might be interested in picking up either the Phase II, or expanded (new) work on another Phase I that builds on the work you’ve already done that puts you in line for a Phase II. has a search engine that can be a starting point.
  3. Remember, if you’ve done what I recommend to our clients, you should have a funding pipeline, that includes multiple SBIR agencies, as well as private capital.
  4. There are a number of new models emerging under the SBIR model that are shorter fuse in terms of proposal evaluation as well as award duration and which want proposing teams to have “something to build on” such as AFWERX, SOFWERX and others.
  5. An agency like DHS actually steers potential SBIR proposing teams to their Long Range BAA (DHS LRBAA) because that’s their mechanism for “give us your best ideas to solve these big problems in homeland security”.
  6. If you’ve got private sectore market opportunities that have been made clear (and your TABA team should have helped you here, including creating a commercialization plan that should transfer easily to an investor worthy business plan!), consider if there is an opportunity to raise private capital.
  7. If you’ve received interest in potential partners, such as those important letters of support, make sure to reach out to them and see if they continue to be interested.  It’s at least worth a conversation.

The short answer is don’t give up!

If you haven’t gone through our SBIR course, Develop a Winning SBIR Strategy – Insights From The Review Process, I invite you to do so.  Remember that my perspective as a reviewer of many, many proposals gives you an advantage as you prepare your Phase I and/or your Phase II proposal.

If you want more in depth help, either a proposal review or help developing your proposal, you can apply for a spot in our one-on-one VentureWrench SBIR Coaching after you’ve gone through the course.  Email us at venturewrenchcommunity [at] with questions.

And if you need help with any part of your SBIR process – proposal (Phase I or II), TABA, proposal management, or contract finalization, just email us at venturewrenchcommunity [at]!

Don’t forget, if you need more help, check out our online course, Develop a Winning SBIR Strategy, and don’t forget your free guide below!  It is truly unique in the industry, make sure to grab your copy!

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