GAO Denies Protest Over SBIR Phase III Award to Clear Align for Air Force Tactical Security System
In a May 19, 2025, decision authored by the Comptroller General of the United States, the Government Accountability Office (GAO) denied a protest brought by Digital Force Technologies, Inc. (Digital Force), concerning a Small Business Innovation Research (SBIR) Phase III procurement by the Department of the Air Force. The protest challenged the sole-source solicitation issued to Clear Align, LLC, for the development and provision of a Tactical Security System (TSS), arguing that Clear Align was ineligible and that the procurement circumvented fair competition requirements. GAO found that the agency had acted within its discretion and authority under the SBIR statute and policy directive, providing important guidance for future SBIR Phase III acquisitions.
Digital Force’s central argument was that the Air Force had improperly invoked SBIR Phase III authority in issuing a sole-source solicitation to Clear Align. The protester claimed that the agency’s requirement for the TSS did not derive from, extend, or complete work from any prior SBIR award. Moreover, they argued that even if such a link could be drawn, the prior SBIR contracts were not awarded to Clear Align, but to Computer Optics, Inc., and that Clear Align did not qualify as a successor-in-interest. GAO disagreed on both counts.
GAO clarified that under the SBIR statute and policy directive, Phase III awards are evaluated based on whether the work to be performed derives from, extends, or completes prior SBIR-funded efforts—not whether the agency’s stated requirement does. The Air Force had issued the solicitation for a modular, lightweight ground-based surveillance system, and Clear Align proposed a solution—the “Mamba” system—incorporating a medium-wave infrared (MWIR) camera based on two previous SBIR Phase II contracts completed by Computer Optics. Clear Align, having acquired Computer Optics in 2013 through an asset purchase agreement that included all relevant intellectual property, was deemed a proper successor-in-interest.
GAO reviewed the record and found the Air Force’s decision to issue a Phase III award to Clear Align was reasonable and supported. The agency had conducted extensive market research, issued multiple RFIs, and collected adequate documentation, including Clear Align’s proposal and SBIR Phase III Determination and Findings (D&F) document, which explained how the Z 320 MWIR camera incorporated technology from prior SBIR contracts. The fact that other components of the proposed TSS were commercial off-the-shelf (COTS) items did not, in GAO’s view, disqualify the procurement from SBIR Phase III eligibility. The statute requires only that the work derive from prior SBIR efforts, and there is no requirement that every component be SBIR-derived.
On the question of Clear Align’s eligibility, GAO again sided with the agency. The record included a detailed asset purchase agreement demonstrating that Clear Align acquired all of Computer Optics’ intellectual property and operations. The Air Force reasonably relied on this agreement to determine that Clear Align was a proper successor-in-interest, consistent with the SBIR/STTR policy directive. Digital Force’s assertions that Computer Optics still existed and that the agreement lacked specificity were found unpersuasive. GAO held that the agency was not required to produce additional documentation, such as technical analyses beyond what was submitted in the proposal and D&F, particularly in the absence of a legal obligation to do so.
This decision underscores the broad discretion federal agencies have in structuring SBIR Phase III procurements and reaffirms that sole-source awards can be appropriate when the offeror’s work is linked to prior SBIR efforts. It also clarifies that eligibility for Phase III is not limited strictly to the original awardee, but may extend to successor-in-interest entities where sufficient documentation of ownership and IP transfer exists. For contractors seeking to challenge SBIR Phase III awards, the burden is high: mere disagreement with the agency’s technical or legal conclusions will not suffice absent clear evidence of error or violation of procurement law.
The protest was denied in full.
Disclaimer: This blog post provides a summary of a GAO decision and is for informational purposes only. It is not guaranteed to be accurate, complete, or up to date, and does not constitute legal advice.
