Jackson SenczyszynA Phase III award is any follow-on contract that derives from, extends, or completes prior SBIR or STTR work, funded with money other than SBIR, and awardable without further competition. Two September 2026 Navy awards show what that means in practice. One, $10.7 million to IERUS Technologies for 190 F-35 inspection probes, came from an Air Force topic more than a decade old and was paid with foreign military sales funds. The other, $47.8 million to Integrated Solutions for Systems for expeditionary maintenance facilities, was a sole-source production buy. The signal in both: Phase III follows the technology, not the office or the year that funded it.
Most of what gets written about Phase III is about how hard it is. That is fair. Most SBIR work never reaches it. But a steady trickle of Phase III awards appears in the Department’s daily contract announcements, and reading them is one of the most useful things a Phase II company can do. They show what transition actually looks like when it works, and it rarely looks like the diagram in the pitch deck.
Two awards announced in September are worth reading closely.
What were the two awards?
IERUS Technologies, Huntsville, Alabama. A $10.7 million firm-fixed-price SBIR Phase III contract (N68335-26-C-1067) from the Naval Air Warfare Center Aircraft Division, Lakehurst, for 190 electromagnetically hardened handheld nondestructive inspection probes for the F-35 program. The award traces to Air Force SBIR topic AF141-154, “Conformal Conductivity Probe,” from the Air Force’s 2014 solicitation cycle. It is funded with foreign military sales money and was not competed.
Integrated Solutions for Systems, Huntsville, Alabama. A $47.8 million firm-fixed-price, sole-source SBIR Phase III contract (N5005426C0002) from the Mid-Atlantic Regional Maintenance Center, Norfolk, for production of expeditionary maintenance and repair facilities: five facilities built from 90 container units plus four variants, with work running through September 2027.
What does each one signal?
Phase III crosses services
An Air Force topic became a Navy contract. That is not a loophole. Phase III rights attach to the technology developed under the SBIR work, and any agency can award a Phase III based on it. The office that funded your Phase I is not the only possible buyer, and it may not be the best one.
For a founder, that widens the transition search. The question is not only “will my topic sponsor buy this?” It is “who else in the Department has this problem?”
Phase III does not expire on a schedule
The IERUS topic designator dates to 2014. The production contract came in 2026. Phase III status does not lapse after a fixed period. What it requires is that the new work genuinely derives from, extends, or completes the earlier SBIR effort.
That is useful to know and easy to misuse. Having a Phase III claim is not the same as having a buyer. The IERUS award happened because a program needed a specific hardened probe, not because the topic was old enough.
Phase III is paid with other people’s money
Neither award used SBIR funds. One used foreign military sales money; the other used a Navy program’s own funds. That is the definition of Phase III, and it is the part companies most often forget during Phase II. Someone has to own a budget line that can pay for the thing, and it will not be the SBIR office.
Phase III can skip the competition
Both awards were made without further competition. This is Phase III’s most valuable feature to a program office: once the SBIR work is done, the office can buy the resulting technology directly, without running a new competition. For a contracting officer under schedule pressure, that is a real reason to choose you.
Phase III authority makes you easy to buy. It does not make anyone want to buy. Every one of these awards started with an office that had a problem, a budget, and a reason to act this year.
What should you not read into them?
Be careful with the word “production.” A $10.7 million order for 190 inspection probes is a meaningful contract for a small company, and it is a single contract for a specific need, not a program of record. The $47.8 million facilities award is closer to what people mean by production scale, and it is still one buy with a defined end date.
Do not treat an award announcement as a template, either. You are reading the outcome, not the eighteen months of work before it. The announcements do not show who championed the effort, how the requirement was written, or how long the company waited.
How should a Phase II company use these?
Read the contract announcements weekly. Search for “Phase III.” Note which contracting activities award them, how they are funded, and what kinds of technology they buy. Over a quarter, a pattern forms.
Map your technology beyond your sponsor. Make a list of every program that might have the problem your Phase II solves, across services. The IERUS path, from an Air Force topic to a Navy contracting activity supporting a joint aircraft, is a reminder that the list is usually longer than founders assume.
Be able to explain your Phase III claim in two sentences. Which SBIR award, which technology, and how the proposed work derives from it. A contracting officer should be able to repeat it back.
Find the budget line early. For each potential buyer, ask what money would pay for it and in what year. If the answer is SBIR money, that is not Phase III.
Three questions for your team
Can you name a program outside your original sponsor that has the problem your technology solves? Do you know which of your SBIR awards a Phase III would derive from, and could you explain it to a contracting officer in two sentences? Is there a budget line, not a person, that could pay for it next year?
If you can answer all three, you are building toward an announcement like these. If you cannot, the work is not the proposal. It is the map.
For the fuller picture of why most companies stall between Phase II and Phase III, see what most companies miss.
Sources: Department of Defense contract announcements, September 3, 2026 (Integrated Solutions for Systems, N5005426C0002) and late September 2026 (IERUS Technologies, N68335-26-C-1067).