Published Wednesday, April 1, 2026
Congress has passed S. 3971, the Small Business Innovation and Economic Security Act, a five-year reauthorization of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which are administered by the U.S. Small Business Administration (SBA) in coordination with participating federal agencies. The Senate passed the bill by voice vote on March 3, 2026, and the House approved it on March 17, 2026, by a vote of 345 to 41. The approximately $6 billion measure has been sent to President Trump for his signature.
The SBIR and STTR programs, which provide federal research and development funding to small businesses, expired on September 30, 2025, following a lapse after Congress did not complete reauthorization beforethe deadline.
Participating agencies in the SBIR and STTR programs include the Department of Defense, Department of Health and Human Services, Department of Energy, National Aeronautics and Space Administration, and National Science Foundation, as well as other federal agencies with qualifying research and development budgets.
S. 3971 would reauthorize both programs through September 30, 2031, and extend required funding levels through fiscal year 2031. It would also allow agencies to carry over unobligated fiscal year 2026 funds into fiscal year 2027.
Key provisions include:
- National security reviews: Would require federal agencies to assess whether applicants pose national security risks and would prohibit awards to small businesses with certain foreign ties or other identified security concerns
- Due diligence requirements: Would require agencies to strengthen review processes, including cybersecurity practices, patent analysis, employee background checks, and risks related to foreign countries of concern, and extend related GAO reporting requirements from three to eight years
- Strategic Breakthrough Allocation program: Would allow agencies with SBIR budgets exceeding $100 million to allocate up to 0.5 percent of their extramural research budgets to awards of up to $30 million per project, with a 48-month performance period for Department of Defense projects and required 100 percent non-federal matching funds
- Eligibility for breakthrough funding: Would require recipients to have previously received a Phase II SBIR or STTR award, demonstrate commercial viability, and meet additional criteria, including Department of Defense specific requirements for technology readiness and funding sources
- Award timelines and oversight: Would require agencies to make award decisions within 90 days and brief Congress within 60 days of enactment on whether they plan to use the Strategic Breakthrough Allocation program, with ongoing updates until implementation
- Proposal limits: Would require agencies to establish limits on the number of Phase I and Phase II proposals a small business may submit annually, with waivers allowed for up to 5 percent of topics for urgent needs and required notification to Congress
- Small Business Administration responsibilities: Would direct SBA to establish training for contracting and acquisition personnel and update procurement guidance, while requiring agencies and prime contractors to develop standardized procedures and model contracts for SBIR and STTR awards
- Technical and business assistance: Would allow award recipients to use funds for technical assistance, cybersecurity support, and workforce development, with caps of $6,500 per Phase I award and $50,000 per Phase II award
- Commercialization and training: Would require agencies with Innovation Corps programs to offer participation to SBIR and STTR recipients and allow use of award funds for commercialization training
- Data tracking and transparency: Would direct the General Services Administration to update the Federal Procurement Data System to improve tracking of SBIR and STTR awards, including Phase III contracts and use of funded technologies
- Program extensions: Would extend multiple SBIR and STTR program authorities and activities through September 30, 2031, with certain provisions, including the Strategic Breakthrough Allocation program, set to sunset at that tim