Small Business Research Programs: Selected Issues for Reauthorization

Congress established two programs that support small business research and development (R&D): the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program. The SBIR and STTR programs have been modified several times since their initial enactments. On September 30, 2025, the authority for the programs expired. The SBIR program was established in 1982 by the Small Business Innovation Development Act (P.L. 97-219) to increase the participation of small, innovative companies in federally funded R&D. The act requires each federal agency with an extramural R&D budget above $100 million to set aside a portion of these funds to finance an agency-run SBIR program. As of the publication of this report, 11 federal agencies operate SBIR programs. A complementary program, the STTR program, was created by the Small Business Research and Development Enhancement Act of 1992 (P.L. 102-564) to facilitate the commercialization of university and federal R&D by small companies. Each agency with an extramural R&D budget in excess of $1 billion is required to set aside a portion of these funds to finance an agency-run STTR program. As of the publication of this report, six federal agencies operate STTR programs. Both the SBIR and STTR programs have three phases. Phase I awards fund feasibility-related R&D. Phase II awards fund the development of prototypes or other R&D that advances work initiated in Phase I that meets a particular agency program need or exhibits the potential for commercial application. Phase III is focused on commercialization of the results of Phase I and Phase II awards; the SBIR and STTR programs do not provide funding in Phase III but offer other incentives for federal procurement (i.e., sole source contracting). This report discusses selected policy issues Congress may consider as it debates reauthorization of the programs, including the effectiveness of efforts to mitigate foreign influence and interference in the SBIR and STTR programs; program eligibility, in particular the participation of multiple award recipients in the programs; and the commercialization of SBIR- and STTR-derived technologies and services. In examining these issues, the report describes various provisions included in legislation introduced in the 119th Congress—in particular, the Investing in National Next-Generation Opportunities for Venture Acceleration and Technological Excellence (INNOVATE) Act (S. 853 and H.R. 4777) and the SBIR/STTR Reauthorization Act of 2025 (S. 1573 and H.R. 3169)—and how this legislation would reauthorize and modify the SBIR and STTR programs. Alternatively, Congress may decide to extend the authority for the programs without making any policy modifications. On September 15, 2025, the House passed H.R. 5100, a bill that would reauthorize the SBIR and STTR programs, including related pilot programs, through September 30, 2026.