Introduction
If you’re approaching the end of your Phase I contract, preparing a strong Department of Defense (DoD) SBIR Phase II proposal is your next critical move. Unlike Phase I, which tests feasibility, Phase II is about building a functional prototype or demonstrator—something tangible the DoD could eventually adopt or procure.
While each DoD branch has its own timelines and instructions, they all expect Phase II proposals to be more comprehensive and strategically focused. That means demonstrating both technical excellence and a clear plan to transition your innovation into real-world use.
In this guide, we’ll break down the essential elements of a winning DoD SBIR Phase II proposal—regardless of which branch you’re working with—and give you the practical steps to meet expectations and stand out in a competitive field.
Understanding DoD-Wide Requirements
While each DoD component—Army, Navy, Air Force, DARPA, and others—has its own proposal format and submission window, the fundamental expectations for a Phase II proposal are strikingly similar across the board. These shared criteria reflect what the Department values most: technical rigor, clear planning, and potential for operational impact.
At a high level, your proposal will be judged on:
- Technical Merit: Does your solution build logically from Phase I results? Is the R&D approach well-defined and feasible?
- Commercialization Potential: Have you identified a real DoD application, potential end-user, or transition path to Phase III?
- Team and Resources: Does your team have the expertise to carry out the work, and are the right facilities and partners in place?
Another universal requirement is formatting compliance. Most DoD Phase II proposals must be submitted through the Defense SBIR/STTR Innovation Portal (DSIP), and they follow a multi-volume structure: typically including a Cover Sheet, Technical Volume, Cost Volume, Company Commercialization Report, and Supporting Documents. Each volume has specific content and page limits that must be followed precisely.
Core Elements of a Competitive Proposal
A successful DoD Phase II proposal must do more than describe what you plan to build—it must demonstrate a coherent, technically sound, and commercially viable path forward. Here’s how to structure your core volumes for maximum impact.
Show Results from Phase I
Start with a concise summary of your Phase I accomplishments. Focus on how you met or exceeded your objectives and reduced technical risk. If there were setbacks, be transparent—acknowledge them and explain how they’ve been resolved or factored into your Phase II design. Agencies appreciate when applicants show responsiveness and adaptation based on feedback.
Present a Detailed Technical Plan
Your technical volume is the centerpiece of the proposal. This is where you explain what you’ll do in Phase II and how. Break the plan into defined tasks with clear objectives, methods, timelines, and deliverables. Highlight risk areas and mitigation strategies. The more specific and feasible your plan, the more confidence reviewers will have in your ability to execute.
Emphasize Team Capabilities
The strength of your team is a major factor in evaluation. Describe who will lead the project, who supports them, and why they are qualified. If you’ve added team members since Phase I—such as engineers, program managers, or business advisors—briefly explain what they bring to the effort. Include résumés as required, typically in the Supporting Documents volume.
Build a Justifiable Cost Proposal
Your Phase II budget may range from $1M to $1.7M depending on agency guidance. Use the DSIP Cost Volume structure to detail all costs—labor, equipment, subcontractors, indirect rates, and optional profit. Every item must be explained and justified. Keep in mind that DoD evaluators will look for budget realism and alignment with technical objectives.
Start building your budget early
DoD will reject proposals with missing or unjustified cost items.
Commercialization Strategy & Transition Planning
Phase II proposals aren’t just judged on technical quality—they’re also evaluated on how likely your solution is to make it beyond the lab. That’s why a thoughtful commercialization strategy is essential.
Create a Targeted Commercialization Plan
Most DoD agencies require a separate commercialization volume or embedded strategy. This section should explain:
- Which DoD program or unit would use your technology
- The problem it solves and how it fills a known capability gap
- Your path to Phase III, including customer engagement and procurement opportunities
Be specific. If you’ve had conversations with DoD stakeholders, include summaries or letters of interest if allowed. If prime contractors or integrators have shown interest, mention them by name.
Identify Non-Defense Applications
Although the primary market is defense, dual-use potential strengthens your proposal. Define how the technology could apply to the private sector or other federal agencies. Support these claims with data—such as market size, competitors, or existing demand.
Address Intellectual Property and Revenue Models
Explain how you’ll protect your IP and generate future revenue. Will you license the technology, manufacture it in-house, or partner with a prime? Include any patents or applications filed, and describe your overall business model.
Consider Technical and Business Assistance (TABA)
TABA funds can be requested in your cost volume to support commercialization. These can be used for market analysis, IP strategy, regulatory support, or transition planning.
TABA funding is optional but can significantly strengthen your commercialization planning.
Timeline, Deadlines, and Internal Readiness
The process of moving from Phase I to Phase II isn’t just about proposal quality—it’s also about timing. Agencies often give only a narrow submission window, and internal missteps can cost you the chance to compete. Here’s how to stay ahead of the clock.
Proposal Packaging and Submission
By the time you’re assembling your DoD SBIR Phase II proposal, every detail counts. Even a small formatting error or missing document can derail months of hard work. To avoid disqualification, treat the packaging process with the same rigor as your technical planning.
Follow the Volume Structure
Most DoD components require proposals to be submitted in multiple volumes via DSIP. The typical structure includes:
- Volume 1 – Cover Sheet: Basic administrative data, abstract, and key identifiers.
- Volume 2 – Technical Volume: The core narrative (often capped at 20–25 pages).
- Volume 3 – Cost Volume: Line-item budget and justifications.
- Volume 4 – Company Commercialization Report: History of past SBIR/STTR awards and outcomes.
- Volume 5 – Supporting Documents: Résumés, letters of support, technical appendices (as permitted).
Each component may add specific requirements, such as a slide deck (Air Force) or mandatory customer memoranda (certain Navy topics). Always refer to the latest solicitation instructions for your branch.
Avoid Common Pitfalls
Proposals are frequently rejected for easily avoidable reasons—exceeding page limits, missing required forms, or placing documents in the wrong volume. Double-check every instruction. Pay special attention to formatting rules like font size, margin width, and file type.
Prepare a Submission Checklist
Before uploading to DSIP, verify that each volume is complete, compliant, and properly labeled. Many applicants benefit from using a pre-submission checklist to confirm that no required elements are overlooked.
Submitting without required volumes or over page limits can lead to automatic disqualification. (See 13 CFR § 121.702)
Conclusion
Writing a competitive DoD SBIR Phase II proposal takes more than just technical expertise. It demands early planning, strategic thinking, and strict adherence to agency guidelines. Whether you’re targeting the Army, Navy, Air Force, or another branch, the core principles remain the same: demonstrate what you accomplished in Phase I, lay out a clear and feasible plan for Phase II, and make the case for how your innovation will transition to real-world use.
Use this opportunity not just to win funding, but to position your business for long-term growth through defense and dual-use markets. And remember, the most successful applicants treat the proposal process as a team effort, plan well ahead of the deadline, and never leave compliance details to chance.