SBIR/STTR Reauthorization Remains Stalled in Congress
The reauthorization of the SBIR/STTR programs remains in legislative limbo, with no new progress reported. The U.S. House calendars for February 23, 2026, list the programs under “unfinished business,” with bills pending further action. A review of congressional history confirms the legislative freeze, perpetuating uncertainty for small tech firms seeking government R&D funding.
- The legislative stalemate is primarily a debate between stability and reform, pitting two main proposals against each other: the SBIR/STTR Reauthorization Act of 2025, which seeks to make the programs permanent and increase funding, and the INNOVATE Act, which proposes a three-year extension with significant structural changes. - A central point of contention is the handling of "SBIR mills"—a small number of firms that win a large volume of awards. The INNOVATE Act, championed by Senator Joni Ernst, seeks to address this by proposing lifetime caps on awards and creating "Phase 1A" awards to encourage new entrants. - Conversely, a recent National Academies of Sciences, Engineering, and Medicine (NASEM) study warns that restricting these experienced firms could harm the Department of Defense's ability to quickly access cutting-edge technology, highlighting their vital role in the innovation ecosystem. - The legal authority for federal agencies to issue new awards under the programs expired on September 30, 2025. This has halted new solicitations, freezing access to what is annually more than $4 billion in non-dilutive research and development funding for small businesses. - The Department of Defense is the largest participant in the programs, with its SBIR/STTR funding accounting for nearly one-third of the department's entire extramural R&D base. A 2019 DoD study covering a 23-year period found that its SBIR Phase II awards generated a 22-to-1 return on investment. - Proposed reforms in the INNOVATE Act include reducing the Small Business Technology Transfer (STTR) program's budget from 0.45% to 0.2% of an agency's extramural R&D budget. It would also create new "Strategic Breakthrough Awards" to help Phase II winners transition their technology into the defense market. - An alternative proposal from Senator Ed Markey and Representative Nydia Velázquez would make the programs permanent and substantially increase the set-aside over seven years to 7% for SBIR (up from 3.2%) and 1% for STTR (up from 0.45%). - Following the program's lapse, the Pentagon directed its components to stop collecting or executing SBIR/STTR funds from their R&D budgets until Congress passes a reauthorization, directly impacting the flow of innovation funding.
