An Article from Nicole Tripputi

Former USAF Government Contracting Officer

Excluding Your SBIR Vendor Is Sabotaging Phase III

“If they help write the PWS, that’s an OCI.”

Almost every acquisition professional has heard that sentence. Many have said it. Most have watched it quietly derail Phase III planning.

What struck me wasn’t disagreement. It was how many acquisition professionals messaged me privately to say, “I’ve seen this happen,” or “I thought that was the rule,” or “we just did this on a program.”

That reaction matters because it reveals something bigger than a misunderstanding of SBIR rules. It reveals a pattern in how acquisition teams think, how they were trained, and how those instincts are being applied in the wrong place.

This is not about whether teams know the rules. Most of the people who do this are experienced, careful, highly competent professionals trying to do the right thing.

This is about why smart teams, acting in good faith, consistently sabotage their own Phase III efforts without realizing it.

And it almost always starts the same way.

A government team sits down to plan a Phase III contract. The technology has already proven itself. The mission need is real. Phase I and Phase II delivered meaningful results. There is optimism that this part should be straightforward: define the work, write the Performance Work Statement, and move the capability toward operational use.

Then someone says it.

“If the vendor helps write the PWS, that’s an OCI.”

And the company that built the solution is quietly removed from the room.

This is the moment Phase III starts to go sideways.

Not because of policy. Not because of ethics. But because of habit.

The meeting keeps going. Slides come up. Someone pulls up notes from Phase II. People begin describing the system the best they can. Words like “it basically does…” and “I think it also…” start appearing in the conversation. The Performance Work Statement begins to form from secondhand understanding rather than firsthand knowledge. No one realizes it yet, but the requirement is already drifting away from the reality of the technology it is meant to describe.

On paper, the document that eventually comes out of this process looks structured and professional. It checks the right boxes. It feels thorough. But it is missing something critical: the perspective of the only people who fully understand how the system actually works.

What should have been a clean transition from research to execution quietly turns into a setup for misalignment.

This is where the problem begins, and it has nothing to do with bad intent. It has everything to do with applying the wrong acquisition instincts to a situation that was never meant to follow normal acquisition rules.

The Mental Model That Causes the Problem

The instinct to exclude the SBIR firm is not irrational. It is the result of years of correct training applied in the wrong context.

In most acquisitions, contracting officers are taught to protect the integrity of competition by maintaining strict separation between vendors and requirement development. Requirements must be vendor-neutral. Communication with industry must be controlled. Any appearance that a company shaped the requirement it will later compete for is treated as a serious risk.

This mindset is appropriate in competitive acquisitions. It is a cornerstone of fairness in federal procurement.

But Phase III is not competitive.

The competition already occurred during Phase I and Phase II. The government already evaluated the market. The government already selected the firm. The firm already delivered the capability. Congress created Phase III so agencies would not be forced to restart the acquisition process when the goal is to continue, scale, or deploy what has already been built.

Yet teams continue to apply competitive acquisition behavior to a non-competitive authority.

Treating a Phase III like a full-and-open procurement is not caution. It is misalignment between the rule set and the situation.

The purpose of the PWS in Phase III is not to invite bids from unknown vendors. It is to accurately describe the next stage of work for a known solution created by a known company. The most accurate source of that information is the firm that built it.

Acquisition Conditioning: Why Smart Teams Keep Making This Mistake

This pattern repeats itself not because teams lack knowledge, but because they are deeply conditioned by experience.

For years, acquisition professionals are trained to create distance between vendors and requirement development. That training is reinforced through policy, protest decisions, ethics briefings, legal reviews, and lived experience. Contracting officers learn to recognize phrases like “biased ground rules” and “unequal access to information” almost reflexively. Over time, this becomes second nature. When planning begins, the instinct to create separation feels responsible and professionally sound.

The problem is not that this instinct is wrong. The problem is that it is being applied in a situation where the underlying conditions no longer exist.

In Phase III, there is no competitive field to protect. There is no unknown vendor population that might be disadvantaged. There is no future source selection that could be influenced by early technical discussions. Yet the reflex remains. The moment someone suggests that the SBIR firm participate in planning, acquisition conditioning takes over. Teams respond not to the structure of Phase III, but to habits built from years of operating in competitive environments.

What feels like caution is actually a misapplication of training. What feels like compliance is a failure to adjust to the statutory context. The team is behaving exactly as it was taught to behave, just not in the environment those lessons were meant for.

Where OCI Fear Enters and Why It Doesn’t Fit

The phrase “OCI” is usually what stops the conversation. Organizational Conflict of Interest under the Federal Acquisition Regulation is deeply ingrained in acquisition culture for good reason. In competitive environments, vendors shaping requirements they will later bid on creates real risk.

But Phase III is structured differently at a statutory level.

Under 15 U.S.C. §638, agencies are permitted to award follow-on work to the SBIR awardee without further competition because the relationship between the government and that firm is already established through prior phases. The government is not seeking a new source. It is continuing work with the original one.

That distinction changes what vendor involvement means.

The SBIR firm is not participating in acquisition planning to gain an unfair advantage. The advantage already exists by design of the program. The firm is involved because it holds the most complete technical understanding of the capability the government is attempting to transition.

Their participation does not shape competition. There is no competition to shape.

What their involvement does shape is accuracy.

What Happens After the PWS Is Written Without the Vendor

The consequences of exclusion do not show up while the PWS is being drafted. They show up later, after the document is complete and the contract action begins.

At first, everything appears to be on track. The PWS is reviewed internally. It looks structured and thorough. Leadership signs off. Legal reviews it and finds no obvious issues. The requirement moves forward.

Only when discussions with the vendor begin does the misalignment surface.

Clarification emails start arriving. Questions arise about scope that the government assumed was clear but the vendor interprets differently based on how the technology actually works. Dependencies that were never captured in the PWS suddenly matter. Capabilities that were assumed to be simple require far more effort than anticipated because the original context was missing from the description.

This is where delays begin. Negotiations stretch. Modifications become necessary. The COR struggles to reconcile what the contract says with what the system requires. Frustration grows quietly on both sides, often accompanied by the unspoken realization that much of this could have been avoided if the vendor had simply been part of the early conversations.

Excluding the vendor did not protect the acquisition. It made the acquisition harder to execute.

The Purpose of Phase III That Often Gets Forgotten

SBIR is not simply a research program. It is an acquisition pathway intentionally designed to move innovation into operational use without forcing the government to relearn what it already funded.

Phase III is the capstone of that design. It exists to carry knowledge forward.

It allows agencies to leverage prior technical understanding, preserve continuity with the original developer, and define requirements based on reality rather than reconstruction. Bringing the SBIR firm into technical planning is not bending procurement rules. It is the practical expression of why the authority exists.

What Effective Phase III Planning Looks Like

In effective Phase III efforts, the SBIR firm participates in technical planning as a subject matter expert, not as an acquisition decision-maker. The government retains control of the requirement, the contract structure, and the procurement strategy. But the government does not pretend the vendor is a stranger to the system.

The vendor informs the technical truth.

The government defines the acquisition truth.

A vendor shut out of planning becomes a liability. A vendor brought into planning becomes a source of alignment.

Teams that do this well document discussions, separate technical input from procurement decisions, and ensure stakeholders understand the capability before drafting the PWS. What emerges is not a riskier contract, but a more accurate one.

What Is Really at Stake

By the time teams reach Phase III, institutional memory has faded. Personnel have rotated. Lessons from Phase I and II are no longer fresh. Context is incomplete.

Excluding the vendor accelerates that loss of memory.

Phase III is not a shortcut. It is a completion authority designed to remove friction from transitioning technology that already works. But it only works when teams understand what the authority allows.

It requires a shift from defensive acquisition posture to informed planning posture.

I used to say, “Don’t talk to vendors.”

That was correct in competitive acquisitions.

In Phase III, the opposite is true.

If you want a clean, aligned, executable contract, talk to the people who built the thing.

You are not violating procurement rules.

You are using Phase III exactly the way Congress intended it to be used.

If you want a clean, aligned, executable contract, talk to the people who built the thing. You are allowed to. The authority was created for exactly that purpose.