On September 29, 2022, a day before the SBIR/STTR program was set to expire, Congress announced the reauthorization of the program for the next three years. The reauthorization comes with some new reforms attached to curb abuse of the program from so-called “SBIR mills” and establish safeguards against unwanted international intervention.
The government has a dedicated budget allocated specifically for partnerships with American small businesses. This dedicated budget goes to the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which are grant program developed to accelerate American innovation and connect commercial solutions with government opportunities. Through SBIR and STTR, small businesses have the opportunity to explore their technological potential and provide the incentive to profit from its commercialization.
These grant programs have been the topic of debate in a long legislative process leading up to their expiration date. There were many concerns that Congress would not be able to agree on the terms of the reauthorization bill before SBIR/STTR expired. This new bill is the final product of an official bi-partisan agreement.
The updates to some of the SBIR program requirements follow the concerns that Sen. Rand Paul and other Republican lawmakers have been voicing about their hesitation to reauthorize the program. This new bill addresses issues of security due diligence efforts and program grant abuse.
The new security efforts outlined in the bill require SBIR/STTR applicants to disclose whether their company has ties to “any foreign country of concern.” If they do have connections, federal agencies are then required to deny awards to these applicants. Federal agencies that award SBIR/STTR grants are also required to create a security risk assessment program in coordination with the Small Business Administration.
On top of these security updates, businesses will also see changes to Phase I and Phase II benchmarks in an attempt to curb companies relying entirely on SBIR/STTR grant awards without creating new businesses or products. Companies that do not meet these new benchmarks when applying for a new Phase I or Phase II award will be subjected to a cap of 20 Phase I or Phase II awards per year. These increased transition and commercialization criteria will really benefit small businesses in that they will limit companies that are abusing the program and create more opportunity for entrepreneurs genuinely seeking R&D and commercialization support.
While this new reauthorization bill might create a few more hoops for small businesses to jump through, it is still great news for small businesses. The Outpost believes that the continuation of the SBIR/STTR program is critical for advancing domestic commercialization of innovative technologies. This program allows innovative U.S. companies to further develop their high-tech innovation while also providing the nation with solutions that meet its specific research and development needs. As Sen. Ben Cardin, chairman of the Senate Committee on Small Business and Entrepreneurship, put it in a September 21 press release following the Senate’s vote to pass the SBIR reauthorization bill, “This bill will keep SBIR and STTR going for an additional three years, increase commercialization of technology developed through the programs, and protect our nation’s intellectual property. . . Passing this important bill gives our nation’s innovative small businesses and research institutions the certainty they need to continue developing the technology that will power the economy of tomorrow.” We are thrilled to have the opportunity to continue helping companies Do Good and Make Money through the support of the SBIR/STTR program.
President Joe Biden is expected to sign the bill by the end of the week and ensure the program’s continuation to 2025.
