United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

 

Decision

Matter of: Complere Inc. 

File: B-406553

Date: June 25, 2012

Dr. F. Kevin Owen for the protester.

Richard J. McCarthy, Esq., National Aeronautics and Space Administration, for the 

agency.

Gary R. Allen, Esq., and Guy R. Pietrovito, Esq., Office of the General Counsel, 

GAO, participated in the preparation of the decision.

DIGEST

GAO will not review an agency’s decision not to enter into a noncompetitive 

phase III funding agreement under the Small Business Innovation Research

Program.

DECISION

Complere Inc., of Pacific Grove, California, protests the decision of the 

National Aeronautics & Space Administration (NASA) not to enter into a Small 

Business Innovation Research (SBIR) program phase III funding agreement with 

the firm. Complere also complains that NASA will violate the firm’s intellectual 

property rights.

We dismiss the protest.

NASA awarded Complere contracts under SBIR phases I and II for research 

involving the National Transonic Facility, one of NASA’s wind tunnels. Following 

Complere’s successful completion of its phase II contract, Complere submitted an 

unsolicited proposal to continue its research under phase III of the SBIR program. 

NASA reviewed Complere’s proposal, but decided not to enter into a phase III 

funding agreement with the firm. NASA instead decided to do its own research on 

this topic within the agency. Contracting Officer’s Statement at 3-5, 7, 8.

Complere challenges the agency’s decision not to enter into a phase III funding 

agreement with the firm. Complere complains that the agency will violate its 

intellectual property rights by using its research in-house. Protest at 8.
Page 2 B-406553 

The statutory authority of our Office to decide bid protests is set forth in the 

Competition in Contracting Act of 1984 (CICA). Under CICA, and our Bid Protest 

Regulations, we review protests concerning alleged violations of procurement 

statutes or regulations by federal agencies in the award of contracts for 

procurement of property or services. See 31 U.S.C. §§ 3551(1), 3552 (2006); 

4 C.F.R § 21.1(a) (2012). Here, we find, as explained below, that we do not have 

jurisdiction to review an agency’s decision declining to enter into a noncompetitive 

phase III funding agreement.

Congress created the SBIR program to assist small business concerns in obtaining 

and performing research and development work. See Small Business Innovation 

Research Program Act of 1982, 15 U.S.C. § 638 (2006). Pursuant to this authority,

certain federal agencies (such as NASA) with research and development (R&D)

“extramural” budgets in excess of $100 million are required to provide a program 

under which a portion of the agency’s research or R&D effort is reserved for award 

to small business concerns through a three-phased process. See 15 U.S.C. 

§§ 638(e)(4), 638(f). Under phase I, small businesses are invited to submit 

proposals to conduct research on one or more topics specified in the annual SBIR 

program solicitation. Under phase II, firms that received phase I awards may 

submit proposals for further development work on the topic. The Act provides that, 

“where appropriate,” there may be a phase III for work that derives from, extends, or 

logically concludes efforts performed under phases I or II. Unlike phases I and II,

phase III work does not receive SBIR funds; rather the Act contemplates that 

phase III work will be funded by commercial sources or non-SBIR federal funding. 

15 U.S.C. § 638(e)(4)(C). Funding agreements under the Act may be contracts, 

grants, or cooperative agreements. 15 U.S.C. § 638(e)(3).

The Act requires the Small Business Administration (SBA) to provide policy 

guidance for the SBIR program within the federal government. 15 U.S.C. 

§ 638(j)(1)-(3). Pursuant to this requirement, SBA issued the SBIR Program Policy 

Directive. See 67 Fed. Reg. 60,072 (Sept. 24, 2002). For phases I and II, this 

directive extensively addresses specific eligibility and proposal requirements, the 

funding process, considerations for agencies’ award decisions, and the terms of any 

agreements under awards made. Id. at 60,084-089. The policy directive provides 

little guidance, however, with respect to phase III funding agreements.

We conclude from our review of the SBIR Program Act and SBA’s policy guidance 

that an agency decision not to enter into a phase III funding agreement is generally 

not subject to our bid protest review, given the broad discretion accorded agencies 

to determine whether, and with whom, to enter into phase III funding agreements. 

Unlike phases I and II of the program which provide a process under which small 

business concerns compete for a portion of the agency’s SBIR funds, a phase III
Page 3 B-406553 

funding agreement, if an agency chooses to enter into one, does not make use of 

SBIR funds.1 See 15 U.S.C. §§ 638(e) and 638(f); 67 Fed. Reg. at 60,084. In this 

respect, an agency is not required to enter a phase III funding agreement with a 

phase II awardee, see 67 Fed. Reg. at 60,075, and may even enter into a phase III 

funding agreement with an entity other than the phase II awardee, requiring only 

that the agency notify the SBA of such action. See id. at 60,085. The Court of 

Federal Claims and the Court of Appeals for the Federal Circuit have found that the 

SBIR Program Act imposes no duty upon an agency to make a phase III award to a 

concern that successfully completed a phase II contract. See Night Vision Corp. v. 

United States, 68 Fed. Cl. 368 (2005); aff’d, 469 F.3d 1369 (2006), cert. denied, 550 

U.S. 934 (2007).

Our view that we have no jurisdiction to review NASA’s decision not to enter a 

phase III funding agreement in the absence of a competitive procurement is not 

altered by the fact that NASA considered Complere’s unsolicited proposal for 

phase III funding. We have long held that an agency’s decision not to make a 

noncompetitive award based upon an unsolicited proposal is within the agency’s 

discretion, which we will not review. See S. T. Research Corp., B-231752, Aug. 16, 

1988, 88-2 CPD ¶ 152 at 1-2.

We also dismiss Complere’s speculation that NASA may violate the firm’s 

intellectual property rights. Unsupported allegations that amount to mere 

speculation do not establish a valid a basis of protest. See Medical Serv. Corp. Int’l, 

B-252801, Apr. 19, 1993, 93-1 CPD ¶ 335 at 2-3. Moreover, to the extent that 

Complere complains that NASA will violate the terms of its phase I or phase II 

contracts with respect to the firm’s intellectual property, Complere’s complaint

concerns a contract dispute, which is not reviewed by our Office but is for review by 

a cognizant board of contract appeals or the Court of Federal Claims under the 

Contract Disputes Act of 1978. 4 C.F.R. § 21.5(a). 

We dismiss the protest.

Lynn H. Gibson

General Counsel

 1 We recognize that the SBIR Program Act allows an agency to use non-SBIR 

federal funds to enter into a phase III funding agreement, and make no comment 

regarding our jurisdiction if an agency chooses to conduct a competition to 

determine who to select for such funding.