AI-Driven Tools Fuel New SBIR/STTR Awards
The DoD continues to fund AI-focused projects through its small business research programs. The Air Force Research Laboratory (AFRL) awarded Midgard Ai an SBIR contract to use AI for generating synthetic training data. In a separate STTR award, Stratin is developing the “Wild Dog,” a long-range tactical loitering munition.
- The statutory authority for the SBIR and STTR programs expired on September 30, 2025, and as of January 2026, Congress is still negotiating a reauthorization, with competing proposals differing on the length of the extension and whether to cap the number of awards a single firm can receive. - From fiscal year 2022 to 2024, the Air Force was the top agency for AI-related SBIR/STTR awards, with a total of $667 million in spending, representing a 108% increase over the period. - Midgard Ai's synthetic data generation platform, "Alchemy," is designed to create photorealistic, programmable 3D worlds for simulations, addressing a need for advanced training for the 526th Intelligence Squadron at Nellis AFB. The use of synthetic data is a growing trend in defense to train AI models for ISR, autonomous navigation, and target recognition without using sensitive real-world data. - The Air Force Research Laboratory (AFRL) is pursuing AI through multiple initiatives, including the Autonomy Capability Team (ACT3), a "start-up" like organization to scale AI, and a $99 million project called Advanced Tracking Architecture Using AI (ATA-AI) for next-generation target tracking. - Stratin's "Wild Dog" is a modular loitering munition designed to be launched from larger unmanned aircraft (Group 3 to 5) or manned planes, and can engage a moving target up to 20 km away without human input after target selection. - The global market for loitering munitions is projected to grow from $1.3 billion in 2025 to $2.5 billion in 2035, driven by their effectiveness in recent conflicts. Key technology trends include the use of AI for swarm capabilities and operation in GPS-denied environments. - The Department of Defense's 2023 Data, Analytics, and AI Adoption Strategy, which supersedes the 2018 AI Strategy, focuses on achieving "decision advantage" through superior battlespace awareness and faster, more resilient kill chains. To guide this, the DoD released a Responsible AI (RAI) Toolkit and established an AI Rapid Capabilities Cell (AI RCC) to accelerate adoption. - The Army is also leveraging the SBIR program for AI, with a recent solicitation offering up to $250,000 for companies to develop "Context-Aware Decision Support" tools that use generative AI to help commanders manage data overload.
