Restart Headwinds After Lapse
The six-month lapse in SBIR/STTR created administrative and financial disruption, and regulators now face a multistep restart that won’t be simply flipping a switch. Legal and contracting advisers warn agencies and awardees will need to clear backlogs, reconcile paused actions, and rebuild confidence among early-stage firms. (crowell.com, federalnewsnetwork.com)
Congress restored the Small Business Innovation Research and Small Business Technology Transfer programs on April 13, but agencies now have to restart after a six-month shutdown. (crowell.com, whitehouse.gov) President Donald Trump signed S. 3971, the Small Business Innovation and Economic Security Act, after the Senate passed it on March 3 and the House approved it on March 17. The law extends both programs through September 30, 2031. (congress.gov, crowell.com) The lapse began when the prior authorization expired on September 30, 2025, halting new awards across agencies. Crowell said the law lets agencies carry unused fiscal 2026 program funds into fiscal 2027 to help resume operations. (crowell.com) These programs are the federal government’s startup research pipeline: small firms compete for early contracts or grants to test ideas in Phase I, then scale them in later phases. The Small Business Administration said the two programs have invested more than $81 billion in more than 34,000 small businesses since 1982. (sba.gov) The damage from the lapse showed up most clearly at the front end. Federal News Network, citing the SBIR.gov awards database, said annual awards averaged 6,713 from fiscal 2020 through 2024 but fell to 4,729 in fiscal 2025, a gap of about 1,984 awards worth roughly $490 million. (federalnewsnetwork.com) Phase I awards, which bring in first-time companies and first-round research, dropped by about 1,571 from the 2020-2024 baseline. Federal News Network said that decline meant thousands of small firms lost a first federal contract and the data those awards often provide for private fundraising. (federalnewsnetwork.com) The disruption was uneven across agencies. Federal News Network reported that NASA fell from 437 awards in 2024 to 8 in 2025, while the Energy Department dropped from 554 to 209; the Defense Department declined 11% overall, though the Air Force fell 37.5% even as the Navy and Army increased awards. (federalnewsnetwork.com) Restarting will also mean implementing new rules, not just reopening old solicitations. Congress.gov says the law expands security-risk reviews for applicants, and Crowell said agencies must begin setting their own proposal caps starting in fiscal 2027 to limit how many Phase I and Phase II bids a company can file. (congress.gov, crowell.com) The law also adds a new “strategic breakthrough” Phase II award for agencies with more than $100 million in required Small Business Innovation Research spending. Crowell said those awards can reach $30 million over as long as 48 months, with agencies required to execute contracts within 90 days of receiving a proposal. (crowell.com) Some agencies have already started telling applicants to get ready. The National Institutes of Health said on April 14 that eligible United States small businesses can again compete for up to $1.4 billion a year through its seed-fund programs and should watch Grants.gov for updated opportunities under the new law. (nih.gov) The programs are back in law, but the restart runs through contracting offices, funding notices, security checks, and agency backlogs built since October 2025. For small firms that missed a cycle, the next test is whether those steps move fast enough to reopen the pipeline. (federalnewsnetwork.com, crowell.com)
