Congress likely to punt on SBIR reauthorization

As the end of the fiscal year approaches, Congress is again at a critical juncture in reauthorizing the SBIR and STTR programs. With only two hearings (one each in the House and Senate Small Business Committees) held so far this year on the topic, Congressman Roger Williams (R-TX), Chairman of the House Committee on Small Business, introduced  H.R.5100 on September 3 to extend the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, set to expire on September 30, 2025, for one year, “as is.”

This is known as a “clean” extension, meaning it includes no policy changes, preserves continuity for small businesses, avoids a funding gap, and gives the Committees involved time to work towards long-term reauthorization. Just before the August recess, Williams introduced H.R.4777, a modified version of the INNOVATE Act (S.853), introduced in March by Sen. Joni Ernst (R-IA). It’s described as a compromise between the GOP leadership of the House and Senate Small Business Committees. While both H.R. 4777 and S.853 extend SBIR/STTR and address recurring concerns about program integrity, award concentration, and commercialization, they differ in several areas. With less than a month to go in the fiscal year, it was going to be difficult to reconcile those differences and gain any needed minority support.  

Both GOP bills introduce a $75 million lifetime cap on combined Phase I and II awards per company (including affiliates and subsidiaries). The Ernst bill says that once a firm reaches $75 million in SBIR awards, it is ineligible to apply for future grants. In contrast, the Williams bill allows agencies to waive the cap for national security or mission-critical needs. This waiver means that firms heavily engaged with DoD, DOE, or NASA may continue receiving awards beyond the $75 million threshold. Note that current rules have no statutory lifetime cap, only agency-specific limits on proposal volume.  

Both bills also introduce submission throttles, a diversion from the current rules. The Williams bill limits firms to 10 proposals per solicitation and 25 per agency per year, while the Ernst bill is considerably stricter at three proposals per solicitation and 25 per year. Lifetime caps and annual limits could potentially free up funds for new applicants but may negatively affect the best R&D receiving funding, close out successful long-time SBIR companies, and encourage workarounds such as creating new “paper-only” startups when the threshold is close.  

The Williams bill, H.R. 4777, includes other measures designed to increase participation by new applicants. One provision seeks to broaden geographic participation by requiring agencies and SBA to strengthen outreach to rural areas and engage Small Business Development Centers to provide technical assistance, proposal support, and training to small firms. Note: In broadening participation, there is no mention of FAST awardees specifically designed to help SBIR companies or other innovation-focused support mechanisms.  

Another provision expands the DoD’s “open topic” model across all agencies. Open topics allow firms to propose broadly applicable technologies without fitting into narrow solicitations, potentially creating new entry points for startups and firms unfamiliar with agency-specific technical missions. Also, both House and Senate bills include a Phase 1A program that would permit firms to submit short, two-page pitches instead of full proposals, effectively lowering the entry barrier for first-time applicants and giving agencies a quicker way to identify promising new firms with nominal grants to prove their concepts.

H.R.4777 directs SBA to build formal connections between SBIR/STTR awardees and Small Business Investment Companies (SBICs) and other investors. This represents a new development not in current law or proposed in S.853. While traditional SBIC work is an awkward vehicle for startup innovation financing, the House bill seeks to address the persistent commercialization gap and could create new pathways for SBIR-backed startups to access growth capital.

Importantly, neither bill reauthorizes FAST (the Federal and State Technology Partnership Program), which was proposed in the minority bills. And the House appropriations bill for FY26 sets FAST funding at zero. This funding cut represents a major change from current policy and states’ approaches to supporting SBIR participation; FAST has provided innovation-centered technical assistance resources for states and helped to expand the number of research-focused companies applying successfully for SBIR/STTR awards. Both bills preserve and extend the foreign influence restrictions adopted in the 2022 reauthorization, which bar participation by firms tied to “countries of concern.” The Ernst bill proposed strengthening enforcement and requiring agency reporting on due diligence, while the Williams version largely maintains the current law.  

If passed, the one-year extension via H.R.5100 removes the short-term risk of SBIR/STTR being interrupted. The extra time avoids an emergency compromise and provides flexibility for reconciliation to occur either through a formal conference committee or through informal negotiations in which one chamber amends and passes the other’s bill.