Small Business Innovation and Economic Security Act
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The Small Business Innovation and Economic Security Act reauthorizes the federal SBIR and STTR small-business research grant programs through fiscal year 2031 and requires agencies to screen applicants for security risks, including ties to Chinese military or sanctioned-entity lists.
It also caps how many proposals a business can submit per year, creates a new 'strategic breakthrough' funding track for advanced technology, and expands training for federal officials who manage the programs' commercialization phase.
What this law does
What it does
The law reauthorizes the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs and related pilot programs through fiscal year 2031. It requires federal agencies to evaluate applicants for security risks, including connections to entities on U.S. government lists tied to China's military-industrial complex, forced-labor concerns, or export restrictions, and requires notice to businesses denied awards on security grounds. Agencies must also cap how many proposals a business may submit per year, expand training for contracting officers on Phase III commercialization awards, and improve data tracking of award types. The law creates a new "strategic breakthrough allocation," letting agencies award up to $30 million to a small business that has already won a Phase II award and secures matching private or other government funds for an especially promising technology. It does not change eligibility requirements for the base SBIR/STTR programs beyond the new security screening, and the new funding track and security provisions themselves expire on September 30, 2031.
Key provisions
- 1Reauthorizes the SBIR and STTR programs and related pilot programs through September 30, 2031
- 2Requires agencies to evaluate SBIR/STTR applicants for security risks, including ties to Chinese military, sanctions, or export-control lists, and to notify businesses denied awards on that basis
- 3Creates a strategic breakthrough allocation allowing agencies to award up to $30 million to a small business with matching funds for advanced technology, subject to Defense Department-specific conditions
- 4Requires each agency to set an annual limit on how many proposals a small business may submit for Phase I and Phase II solicitations, with limited waiver authority
- 5Expands training requirements for contracting officers and the acquisition workforce on Phase III commercialization awards
- 6Directs simplified, standardized Phase III contracting procedures and requires procurement center representatives to advocate for more Phase III award transitions
- 7Requires updated data collection distinguishing award types (direct Phase II, strategic breakthrough, Phase III prime/subcontract) in federal databases
Who is affected
Small businesses that apply for or hold SBIR and STTR research awards, particularly those in defense and advanced-technology fields; the federal agencies that run these programs (including the Small Business Administration, Defense Department, and other research agencies); their contracting officers and acquisition staff; and businesses with foreign ownership or investment ties subject to the new security screening.
Why it matters
Small businesses gain continued access to billions of dollars in federal research funding through 2031 and a new large-dollar funding track for breakthrough technologies, but companies with foreign financial or business ties—especially to China-linked entities—face new scrutiny and possible denial. Agencies also gain new proposal limits meant to reduce burden but that could restrict serial applicants.
What changed
Changes to existing law
Amends Small Business Act, Section 9 (15 U.S.C. § 638) (Secs. 2-8)
Adds security-risk evaluation criteria, notification requirements, proposal limits, strategic breakthrough awards, and Phase III training and simplification provisions.
Reauthorizes Small Business Act, Section 9(m) and 9(n) (Sec. 9)
Extends SBIR and STTR program authorization from September 30, 2025 to September 30, 2031.
Reauthorizes Small Business Act, Section 9(cc), (gg), (hh), (jj), (mm), (qq), (uu), (vv), (yy), (zz) (Sec. 10)
Extends multiple SBIR/STTR pilot programs (phase flexibility, commercialization readiness, accelerated awards, due diligence, etc.) through fiscal year 2031.
Amends SBIR and STTR Extension Act of 2022 (Public Law 117-183) (Sec. 2(b))
Extends a GAO study reporting deadline from 3 years to 8 years.
Reauthorizes National Defense Authorization Act for Fiscal Year 2020 (10 U.S.C. 4901 note) (Sec. 10(k))
Extends the Special Operations Command SBIR pilot program to September 30, 2031.
Repeals National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81) (Sec. 10(l))
Strikes section 5142 (15 U.S.C. § 638a), ending a Government Accountability Office reporting mandate.
Agencies directed to act
Effective dates
- Strategic breakthrough allocation authority and related security amendments terminate
- SBIR/STTR proposal limit requirement begins
- Agencies must brief Congress on strategic breakthrough allocation plans
- SBA must modify procurement center representative policy directives on Phase III advocacy
- SBIR and STTR program authorization extension
Funding and costs
- $30,000,000
maximum single strategic breakthrough allocation award to a small business for advanced technology
- 0.50 percent
maximum share of an agency's extramural research budget that may be set aside as a strategic breakthrough allocation
- $6,500
per-project technical and business assistance funds for Phase I SBIR/STTR award recipients
- $50,000
per-project technical and business assistance funds for Phase II SBIR/STTR award recipients
How it works
Agencies must build security screening into their SBIR/STTR review process, checking applicants against specified government lists and coordinating with intelligence and law-enforcement agencies, then notify businesses denied on security grounds. Program directors must set annual proposal limits, document any waivers, and report methodology to congressional small-business committees. Agencies wishing to make strategic breakthrough awards must brief Congress within 60 days and periodically thereafter, complete contract awards within 90 days of a proposal, and verify matching-fund and milestone requirements. The General Services Administration must update federal procurement data systems to track award types, and the SBA must revise policy directives on Phase III award advocacy within a year.
Legislative status & sources
Latest action
Became Public Law No: 119-83.
Official CRS summary
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This act reauthorizes through FY2031 and modifies the Small Business Innovation Research (SBIR) program, the Small Business Technology Transfer (STTR) program, and related pilot programs. (The SBIR and STTR programs are administered by various federal agencies and provide competitive awards for domestic small businesses to conduct research and development projects that have the potential for commercialization.)
Specifically, the act expands the requirements for federal agencies administering these programs to evaluate the security risks of the small businesses that apply for awards under the programs. If an agency denies an application for security reasons, the agency must provide the small business with the basis for such determination.
Further, each agency must set a maximum number of proposals per fiscal year that a small business concern may submit in response to Phase I and Phase II solicitations.
The act expands the training requirements for agencies' contracting officers and acquisition workforce with respect to Phase III (commercialization of technologies) awards under the SBIR and STTR programs.
The act also establishes strategic breakthrough allocations for critical technology areas. These are additional Phase II SBIR and STTR awards to small businesses that demonstrate an effective technology and receive matching funds.
Legislative subjects
Advanced technology and technological innovations; Asia; China; Commerce; Computer security and identity theft; Computers and information technology; Data collection, sharing, protection; Government lending and loan guarantees; Intellectual property; Military assistance, sales, and agreements; Performance measurement; Public contracts and procurement; Research administration and funding; Research and development; Small Business Administration; Small business; Subversive activities; Technology assessment; Technology transfer and commercialization