On February 25, Sen. Ed Markey (MA) and Sen. Joni Ernst (IA) released a compromise bill on SBIR/STTR reauthorization. The Small Business Innovation and Economic Security Act reauthorizes SBIR/STTR through September 30, 2031, and makes substantial updates that would benefit SBIR recipients. The bill has yet to become law, but has substantial bipartisan support. The SBIR/STTR program lapsed on October 1, 2025 and needs to be reauthorized in order to continue. Click here for a link to the bill text. Below are key features of the recently-released compromise reauthorization bill:
1. Reauthorization: The bill would authorize the SBIR/STTR program through September 30, 2031.
2. Strategic Breakthrough: The bill creates the Strategic Breakthrough pathway (modeled after STRATFI), and creates a much larger, faster path for SBIR companies that already have a working technology and a real government customer to scale into an actual program.Instead of being limited to small Phase II awards, an agency can now use a dedicated portion of its RDT&E budget to give a company up to $30 million over about four years to finish development, integrate into a program, and movetoward production.
Toqualify, a firm must have completed at least one Phase II, show that a program office intends to buy the technology, and bring (100%) matching funds fromprivate investment or non-SBIR government sources (for DoD, part of that match must already be coming from a DoD program). In other words, this money is for technologies that are beyond the research stage, and are on a real acquisition/commercialization path.
The statute would also push agencies to treat these companies as part of their normal budgeting and acquisition process. This means that SBIR technologies that win these awards are much more likely to be written into future program budgets andtransitioned to Phase III contracts.
3. National Security / Foreign-Risk Due Diligence: Participating agencies would be required to formally evaluate the security risk of every SBIR company, including its cybersecurity practices, ownership,investors, key personnel, foreign relationships, supply chain, and whether it is connected to any restricted or adversarial entities.
In practical terms, this means awards could be denied if a firm cannot demonstrate a clean, secure, U.S.-aligned posture. For SBIR recipients, this is acompetitive advantage: if your cap table, data environment, and partnershipsare defensible and mission-aligned, weaker or foreign-exposed competitors willbe screened out and program offices would have a much easier time transitioningyour technology.
4. Integration Into Agency Budgets (POM /RDT&E build): Participating agencies would be required to analyze promising SBIR companies during their normal programming and budgeting process and report to Congress how those technologies are being inserted into future RDT&E funding lines. This shifts SBIR from a side innovation program into something that feeds directly intoacquisition funding.
5. Direct Access to Program and RequirementsOffices: The bill would require agencies to create a mechanism that gives SBIR firms direct access to the program offices/federal customers that actually purchaseand deploy the technology/capabilities. This would remove one of the biggest historical barriers, where small companies were stuck dealing only with SBIR program managers.
6. Phase III Training for WorkforceAcquisition: Contracting officers and acquisition staff would be required to train onhow Phase III works, including data rights and sole-source authorities. In thepast, many transitions stalled simply because the contracting side did not understand the rules. This provision reduces that friction, shortens timelines,and makes it more routine for program offices to award follow-on production or deployment contracts to SBIR companies.
7. Standardized & Simplified Phase I–IIIContracting: Participating agencies are directed to create model contracts and standardized procedures forSBIR awards across all phases. That means less custom legal work, fewer delays, and a more repeatable path from prototype to production. For SBIR recipients, this makes it easier to scale across multiple programs because each transition would not require reinventing the contracting process.
8. Limits on High-Volume Proposal “SBIR Mills”: Beginning in FY2027, agencies would be required to set a cap on the number of SBIR proposals a single company can submit each year (no single government-wide figure). Each participating agency would choose how the cap would be applied. Agencies would also be allowed to issue mission-need waivers. This is aimed at creating guardrails for firms that currently flood the system with large numbers of early-stage proposals, but rarely commercialize. The intent is to shift funding toward companies pursuing real technology deployment and commercialization.
9. Tracking of Phase III and SBIR-Derived Procurement in Federal Data Systems: Federal procurement systems would be required to identify Phase III awards and even non-SBIR contracts that use SBIR-funded technology. This creates visibility and identifies companies that are actually transitioning and generating operational capability. Over time, this drives congressional and agency pressure to fund the proven performers, which benefits companies on a real acquisition/commercialization path.
10. Extension of Key Transition & Commercialization Authorities Through 2031: Multiple SBIR transition tools, including accelerated awards, commercialization readiness programs, and flexible phase structures, are extended for six more years.
The Saxa Innovation team will continue to track as this process evolves. For questions, please reach out to info@saxainnovation.com