The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs have played a critical role in channeling federal R&D resources to small businesses, fueling innovation and technological growth across the nation. These programs provide a structured pathway for small firms to develop, scale, and commercialize novel technologies with federal support. They are designed to serve agency priorities while cultivating entrepreneurship and innovation.
The SBIR and STTR programs are scheduled to sunset on September 30, 2025. While the House of Representatives passed H.R. 5100 on September 16, 2025, which would extend the programs for one year, the Senate has not yet acted. As a result, the programs are still set to expire today, pending further congressional negotiations over how best to sustain and potentially reshape them.
Here’s a breakdown of what we know.
The Push for Stability: The SBIR/STTR Reauthorization Act of 2025
Two competing pieces of proposed legislation have emerged. The first is the SBIR/STTR Reauthorization Act of 2025, which aims to cement the programs as a permanent fixture of federal R&D. In proposed versions, the Reauthorization Act’s sponsors and supporters emphasize the stability that permanence would provide to small businesses, agencies, and investors. By removing the recurring uncertainty of periodic sunsets, advocates argue that the programs would be better positioned to encourage long-term planning, deeper commercialization efforts, and broader participation.
The Reauthorization Act also proposes to expand the percentage of federal R&D dollars reserved for SBIR and STTR, increase support for commercialization, and reduce barriers to entry for new firms. The proposed Act refrains from capping the number of awards a single firm may receive.
The Case for Reform: The INNOVATE Act
A contrasting perspective is captured in the INNOVATE Act, a proposal that extends the programs for three years, while layering in a series of reforms. In proposed versions, INNOVATE reflects growing concerns that SBIR and STTR have been dominated by a small subset of multiple award winners, or “SBIR mills” (firms that repeatedly win awards but deliver little commercialization), who secure significant funding but do not always deliver results. In response, the proposed Act sets participation caps, disqualifying firms that exceed lifetime Phase I and II funding limits and restricting how many proposals a firm and its subsidiaries can submit annually.
In some drafts, the Act also creates a new Phase IA award, designed as a small entry point for first-time applicants. This pre–Phase I stage would provide up to $40,000 in funding to help companies refine their ideas, conduct preliminary feasibility work, and prepare stronger proposals for the more competitive Phase I process. By lowering the barrier to entry, lawmakers hope Phase IA will diversify the applicant pool and encourage broader participation from entrepreneurs who might otherwise lack the resources to break into the program.
Commercialization and Security: Diverging Priorities
The Reauthorization Act proposes an emphasis on designating Commercialization Officers within agencies and improving training to bridge the gap between research outputs and federal procurement. It leans toward oversight and reporting rather than structural overhaul.
INNOVATE, by contrast, emphasizes large “strategic breakthrough” awards designed to scale critical technologies more quickly, while also tightening rules around fixed-price contracts and increasing scrutiny of firms’ business practices. On research security, both acts acknowledge the growing threat of foreign influence. However, INNOVATE proposes to take a more aggressive stance by broadening definitions of “foreign risk” and expanding due diligence requirements that would screen companies for problematic affiliations or licensing arrangements.
The Clash of Perspectives
The two proposals underscore the challenge of balancing different visions for how the programs should evolve. Supporters of the SBIR/STTR Reauthorization Act emphasize the benefits of continuity and openness, noting that permanence could encourage long-term planning and broader participation. Advocates of INNOVATE stress the importance of accountability, national security, and fiscal restraint, arguing that reforms are needed to prevent over-concentration of awards and to ensure stronger outcomes.
Stakeholders in the SBIR and STTR programs are similarly split among companies that have successfully leveraged SBIR for multiple awards see the Reauthorization Act as protecting their business model, while opponents warn that without INNOVATE’s reforms, the programs risk becoming stagnant and open to abuse.
Extension or Overhaul?
The debate over SBIR/STTR’s future is reaching a pivotal moment. The programs’ legal authority is set to expire on September 30, 2025. While the House passed H.R. 5100 on September 16, 2025, which would extend the programs for one year, the Senate has not yet acted. As a result, the programs remain on track to expire today unless further congressional negotiations produce a last-minute deal.
The uncertainty highlights the stakes for small businesses and agencies alike. Beyond the immediate question of keeping the programs alive, lawmakers must still decide whether to pursue permanent authorization or adopt reforms aimed at accountability, commercialization, and security. The outcome will shape the competitiveness, accessibility, and long-term impact of SBIR and STTR in the years ahead.
