How Small Businesses Can Partner With Prime Contractors to Win SBIR and OTA Funding

What Is a Prime Contractor, and Why Does It Matter for SBIR and OTA Awards?

A prime contractor is a company that holds a contract directly with the federal government and is responsible for delivering on it, often by managing a network of subcontractors underneath. In defense, the largest primes by federal contract dollars include Lockheed Martin, RTX, General Dynamics, Boeing, and Northrop Grumman, with other major primes like BAE Systems, Huntington Ingalls Industries, and L3Harris not far behind, each holding billions of dollars in federal contracts across air, land, sea, and space programs.

But the prime landscape doesn’t stop at the highest tier primes. There are dozens of mid-tier and smaller prime contractors across defense and dual-use markets, each managing their own contracts and subcontractor networks. What’s perhaps surprising is that primes at every tier, not just the giants, are often actively looking to partner with innovative small businesses on SBIR and OTA work. It isn’t a favor they’re doing you, it’s something they genuinely want.

Why Partnering With a Prime Increases Your Odds of Winning

It Signals You Can Deliver

Partnering with a prime can increase your odds of winning an SBIR or OTA award. It helps to view your proposal from the vantage point of the reviewers themselves. They want assurance that the companies they fund have the highest likelihood of actually performing on their R&D plan, not just producing an interesting idea. To get there, they look for signs of validation: a history of doing something similar before, a track record of working with the DoW, and, perhaps the biggest signal of all, the support and interest of a trusted prime. A prime’s backing tells reviewers that a company with deep technical and programmatic experience has already looked closely at you and believes you can deliver.

Primes Hold the DoW Relationships That Move You From Phase I to Phase III

Primes are in direct contact with the actual DoW end-user, the customer who will ultimately use your technology. They hold the relationships and contacts that can help convert a Phase I award into a Phase II, and eventually into a Phase III.

Working as Their Sub Builds a Track Record

Serving as a prime’s subcontractor builds a track record and relationship with them that can lead to bigger opportunities: more SBIR funding, larger OTAs, and eventually contracts. Primes typically don’t subcontract on Phase I, the dollar amounts are usually too small to justify their involvement at that stage. It’s more common to start with a letter of support on your Phase I application, which signals legitimacy to the DoW, and then move into an actual subcontracting relationship once you reach Phase II. Some companies skip Phase I entirely and apply directly to Phase II, several agencies offer a Direct to Phase II option for companies that can demonstrate equivalent feasibility work on their own, which can put a prime in position to come on as a subcontractor from the very start. Either way, that deeper Phase II collaboration is where the real trust gets built, and where the door starts to open toward bigger opportunities down the line.

The Real Purpose of Phase I and Phase II Is Phase III

SBIR and STTR awards are structured in phases for a reason, and losing sight of that structure is one of the more common mistakes small businesses make. Phase I funds initial research and feasibility, typically a modest award over a few months to prove a concept is worth pursuing further. Phase II funds development of a working prototype and demonstration, a larger, longer award that builds on what Phase I proved out. Neither phase is actually the goal, they’re on-ramps.

Phase III is the goal. In SBIR and STTR terms, Phase III means commercialization and deployment, where the technology you developed gets delivered to an actual customer, often through a sole-source contract with the federal government, most commonly the DoW.

Importantly, the SBIR and STTR program itself does not fund Phase III. That work is funded by other sources, government or private, with no limit on the number, duration, or dollar value of the award, and the competition your company already went through for Phase I or Phase II satisfies the competition requirement for the related Phase III award.

This is exactly where a prime contractor’s relationships matter most. They’ve spent years building trust with the actual DoW end-user and understand how to deliver against a sole-source contract, and they have a very large defense network of stakeholders and decision makers at the highest level. That network is what can help move a Phase I into a Phase II, and a Phase II into a Phase III or a contract.

Why Prime Contractors Actually Want Small Business Partners

It’s worth understanding both sides of this relationship. Primes aren’t partnering with small businesses as a favor. Primes need small business partners for a number of reasons.

Direct Access to Fast-Moving Innovation

Small businesses move faster and take on more technical risk than large primes typically can internally. Primes can’t fund every area of technology development themselves, so they lean on small businesses and universities to cover that broad landscape of need, especially at the earliest, lowest technology readiness level (TRL) stages, where the risk of failure is highest, and they’re happy to let the U.S. federal government help foot that early-stage bill through SBIR and other non-dilutive funding. Ultimately, this lets a prime pair its own technology with a small business’s technology to deliver more complete solutions to the federal customer. As a technology matures and starts to show real feasibility, a prime partner can help advance that promising idea toward a fielded solution on a major platform, whether that means acting as a subcontractor on the small business’s own SBIR award, or later, with the roles reversed, bringing the small business on as a subcontractor for a larger prime-led program.

Delivering on Complex, Long-Term Contracts

Major programs like Lockheed Martin’s F-35 and BAE Systems’ Armored Multi-Purpose Vehicle (AMPV) integrate many different technologies into a single platform, small business partners help primes deliver on that complexity over the life of the program. Primes simply cannot do everything on their own, they need the ingenuity and specialized systems that small businesses can offer.

A Pipeline for M&A, Corporate Venture Investment, and Development of New Business

Working with small businesses gives primes early visibility into promising companies and technologies, which can open the door to M&A, corporate venture investment, or new business opportunities beyond the original SBIR or OTA. It’s also worth remembering that the DoW is often the primary partner and client of the primes themselves, so when a small business pursues new development through an SBIR, the government is effectively paying for the development of a new solution that the prime can eventually sell back to the government.

How to Get a Prime Contractor’s Attention for an SBIR or OTA Award

If you’re pursuing an SBIR or OTA and want a prime contractor as a partner, here’s where to start, based on Grant Engine’s experience advising small businesses through this process.

• Do your homework first. Not every prime wants every technology, and even within a single prime there are multiple business areas or sectors, each with its own focus. Figure out which specific business unit is the right fit before reaching out.
• Use their small business engagement platforms. Most primes maintain dedicated pages or portals on their websites specifically for small business and technology partnership inquiries, that’s often the most direct entry point.
• Find the technology scouts. Many primes have dedicated technology scouting teams, sometimes described as matchmakers, and many of these scouts focus specifically on SBIR partnerships. Reach out by email, and look for them on LinkedIn as well.
• Engage the technical point of contact (TPOC) behind a specific solicitation. This isn’t a prime contact, it’s a government one, but it still matters here. Going in to genuinely understand the government’s technical challenge, rather than pitching for funding, builds a level of technical fluency that primes notice. It signals you understand the mission as well as they do, which makes you a far more attractive partner than a generic pitch.
• Pitch a specific, component-level solution. Solicitations usually signal a specific technical problem the government wants solved. Approach it that way, rather than positioning your technology as the answer to an entire platform, that also creates space for the prime to own the larger platform-level solution, which is exactly the kind of partnership dynamic they’re looking for.
• Understand how primes actually engage. Most primes don’t invest directly in small businesses, though a few maintain separate corporate venture arms that do. Their support usually comes through a letter of support or an actual subcontracting role, not equity.
• Tailor your ask to the phase of funding. What you ask a prime for should match where you are in the process. For a Phase I award, ask for a letter of support, there typically isn’t enough financially at stake for a prime to take on a formal subcontracting role this early, but a letter of support starts the relationship and signals credibility to the government. For a Phase II award, or a Direct to Phase II award, ask for a subcontracting relationship, this is where a prime has real skin in the game, and where the deeper trust-building actually begins.
• Come prepared. Have a clear, one-page technical summary ready, and expect a technical interface meeting to evaluate fit before anything more formal happens.
• Don’t wait for certifications. Formal credentials like CMMC aren’t required to start a conversation, but basic cybersecurity and IP hygiene matter from your very first outreach.
• Show up in person. Industry conferences and prime-hosted outreach events are real venues for building these relationships, not just cold email.
• Treat it as relationship-building, not a single pitch. Pursue multiple well-fitted opportunities in parallel rather than betting everything on one.

Frequently Asked Questions

What’s the difference between SBIR Phase I, II, and III?

Phase I funds initial feasibility research, typically a modest award over a few months. Phase II funds development of a working prototype, a larger award building on what Phase I proved out. Phase III is commercialization and deployment, delivering the finished technology to an actual customer, often through a sole-source contract with the federal government, most commonly the DoW.

Does the SBIR program fund Phase III?

No. The SBIR and STTR program itself does not fund Phase III. That work is funded by other sources, government or private, with no limit on the number, duration, or dollar value of the award. The competition your company already went through for Phase I or Phase II satisfies the competition requirement for the related Phase III award.

Can a prime contractor subcontract on a small business’s SBIR award?

Yes, and it’s one of the more common ways small businesses build a relationship with a prime. Since SBIR awards go to the small business as the prime recipient, a large defense company shows up as a subcontractor rather than the lead. Primes generally prefer this at Phase II rather than Phase I, since Phase I dollar amounts are usually too small to justify their involvement.

What is an OTA, and how is it different from SBIR?

An Other Transaction Authority (OTA) is a DoD contracting mechanism for research, prototyping, and production that isn’t subject to standard federal acquisition regulations (FAR and DFARS), which gives the government more flexibility to negotiate terms closer to commercial practice. An SBIR, by contrast, is a standard contract governed by those regulations. Structurally, SBIR is a program that can lead to multiple transactions across its phases, while an OTA is typically a single transaction.

Do prime contractors accept unsolicited partnership pitches?

Generally yes, especially through dedicated SBIR-focused technology scouts, but a generic pitch rarely lands. A targeted approach, matched to the right business unit and backed by real homework on what that prime actually needs, performs far better than a broad outreach blast.

Will a prime contractor take my company’s technology or IP if we work together?

This is one of the most common concerns small businesses raise, and it’s a fair one, but reputable primes have strong legal, ethical, and business incentives not to do this. Early conversations typically stay high level, enough to gauge mutual interest without exposing sensitive details, and a nondisclosure agreement gets signed before anything more specific is shared. From there, legal teams get involved to make sure IP and licensing terms are spelled out clearly. A prime with a reputation for taking a small partner’s IP wouldn’t stay in business long, the legal and reputational risk isn’t worth it.

Does a prime contractor invest directly in my company?

Usually not. Most primes engage through non-equity means, letters of support, joint pursuit of SBIR or OTA funding, and subcontracting, rather than taking equity. Some do maintain separate corporate venture arms that make direct investments, but that’s typically a distinct part of the company from the technology scouting team you’d first engage with.

Do I need CMMC or other certifications before approaching a prime?

Not to start a conversation. Formal certifications like CMMC generally become relevant later, as a relationship matures toward contract execution, not at the initial outreach stage. Basic cybersecurity and IP hygiene still matter from your very first conversation, regardless of formal certification status.