This section of the policy directive sets forth various programs, including a new pilot program that seeks to enhance the commercialization efforts of small businesses. These programs include the Federal and State Technology Partnership (FAST) Program, the DoD Commercialization Program, the Commercialization Readiness Pilot Program for Civilian Agencies and the Technology Development Programs of the different agencies.

Section 5122 of the Reauthorization amended the DoD Commercialization Program by converting it from a pilot program into an authorized program [also see 15 USC 638(y)]. The purpose of this program is for DoD to accelerate the transition of technologies, products and services developed under the SBIR Program to Phase III. The Reauthorization amended the program by creating an incentive requirement for any contract with a value of at least $100 million. For those contracts, DoD may establish goals for the transition of SBIR technologies into the prime contractor's subcontracting plan and require the prime to report the number and value of subcontracts entered into for Phase III work with a prior SBIR awardee.

Section 5141 of the Reauthorization Act also amended the DoD Commercialization Program by stating that for FY 2013 through FY 2015, the Secretary of Defense and each Secretary of a military department may use no more than 3% of its SBIR funds for administration of this Commercialization Program. This means that the only SBIR funds that can be used for the administration of the DoD Commercialization Program must come from the Pilot to Allow for Funding of Administrative, Oversight, and Contract Processing Costs, discussed above. When that pilot program expires, which is the end of FY 2015, DoD may use not more than 1% of its SBIR funds available to DoD or the military departments to administer the Commercialization Program. Section 12 of the directive addresses this DoD program.

Section 12 of the directive also sets forth the new Commercialization Readiness Pilot Program for the civilian agencies. This new program is authorized by section 5123 of the Reauthorization Act and terminates on September 30, 2017, unless otherwise extended.

This Commercialization Readiness Pilot Program is different from the DoD Commercialization Program. Under this program, civilian agencies participating in the SBIR Program may allocate not more than 10% of its SBIR funds: (1) For follow-on awards to small businesses for technology development, testing, evaluation, and commercialization assistance for SBIR or STTR Phase II technologies; or (2) for awards to small businesses to support the progress of research, research and development, and commercialization conducted under the SBIR or STTR programs to Phase III.

Before establishing this pilot program, an SBIR agency must submit a written application to SBA not later than 90 days before the first day of the fiscal year in which the pilot program is to be established. The written application must set forth a compelling reason that additional investment in SBIR or STTR technologies is necessary, including unusually high regulatory, systems integration, or other costs relating to development or manufacturing of identifiable, highly promising small business technologies or a class of such technologies expected to substantially advance the mission of the agency. SBA must make its determination regarding an application submitted not later than 30 days before the first day of the fiscal year for which the application is submitted and will publish its determination in the Federal Register.

Under this pilot program, SBIR agencies may make an award to a SBC up to three times the dollar amount generally established for Phase II awards under section 7(i)(1) of this directive. When making an award under this pilot program, the agency is required to consider whether the technology to be supported by the award is likely to be manufactured in the United States.