The U.S. Senate has unanimously passed legislation introduced by Senator Joni Ernst (R-Iowa), chair of the Senate Committee on Small Business and Entrepreneurship, to reform the SBIR-STTR programs. These programs, designed as a “seed fund” for American small businesses, will now implement new measures intended to ensure that funds prioritize genuinely small businesses and reduce foreign influence.
Senator Ernst highlighted concerns that the programs have historically favored larger companies over smaller ones, resulting in what she described as misallocation of tax dollars and inadequate protection against foreign interests. “I will always fight to put small businesses first,” said Ernst. “When confronted with the status quo of the SBIR program, I knew I could no longer let China win, allow waste to run rampant, fail our warfighters, or let large companies crowd out actual small businesses. After working across the aisle, these necessary reforms will strengthen the integrity of America’s seed fund while unlocking new innovation, and I look forward to working with this administration to make sure taxpayers’ investments are turned into a reality. Now, with these commonsense changes, America’s seed fund can serve our truly small businesses.”
Key provisions in the legislation include enhanced due diligence requirements aimed at protecting technology from Chinese espionage and holding award recipients accountable for developing technologies relevant to national defense. For the first time, all SBIR offices must set an annual limit on applications to help ensure that truly small businesses are prioritized over larger firms that may have previously dominated funding opportunities.
The bill also introduces Strategic Breakthrough awards allowing agencies to expand promising technologies with matching contributions from both business and government entities. Transparency is another focus area; improved data collection and reporting measures are intended to provide greater insight into how tax dollars are used.
Senator Ernst addressed her colleagues before passage: “I rise today as the Senate puts small businesses first in America’s innovation program and gives them the certainty they need to build and grow.
“For too long, our nation’s seed fund programs, SBIR and STTR, have been allowed to prioritize a few large companies over truly small businesses.
“Until now, these programs received blank checks to squander tax dollars meant to advance innovation in our national interest and have not protected taxpayer-funded technologies from foreign influence.
“When confronted with this unacceptable status quo, I knew Congress could work together to find a solution for our truly small businesses.
“After working across the aisle and with our small businesses, we now have the necessary reforms to strengthen America’s seed fund while unleashing small businesses to deliver for taxpayers and our warfighters.
“Together, our bipartisan, bicameral legislation will ensure awardees safeguard tech against Chinese espionage; hold recipients accountable to actually producing cutting-edge technologies and capabilities – no more blank checks; require for the first time an annual limit on applications to prioritize truly small businesses over large companies who know how to game the system; establish the first-of-its-kind strategic breakthrough awards; and finally, provide taxpayers with transparency into who receives these awards.
“These changes were necessary and worth taking the time to absolutely get it right.
“And tonight, I am proud the Senate is unanimously passing these long-overdue updates for innovators.”
The Senate Small Business and Entrepreneurship Committee plays a role in supporting informed decisions on national fiscal priorities through its oversight activities (official website). The committee provides policy options regarding federal budget matters (official website) and contributes nonpartisan analysis via its supervision of related agencies such as the Congressional Budget Office (official website). Established under law in 1974 (official website), it also participates in budgetary processes through resolutions and reconciliation instructions (official website).
