The United States stands at a defining moment in its technological future. As geopolitical rivals aggressively invest in next-generation technologies, and private-sector innovation continues to outpace government acquisition and R&D timelines, America risks falling behind in both national security and global competitiveness. We must act now.
The INNOVATE Act (bill text here) was introduced by Senator Joni Ernst (IA) and released by the Senate Small Business Committee on March 5th. The bill represents the most consequential update to the federal government’s innovation infrastructure in over a decade. At its core, the bill modernizes and reauthorizes the Small Business Innovation Research (SBIR) and Small BusinessTechnology Transfer (STTR) programs, before they expire on September 30, 2025.
For over 40 years, SBIR and STTR have driven remarkable returns for taxpayers, creating hundreds of thousands of jobs, fueling breakthroughs from biotech to aerospace, and supporting companies that now anchor critical defense supply chains. These programs have empowered small businesses to solve some of the government’s hardest technical challenges, all while creating commercially viable products.
Yet, structural inefficiencies, delays in procurement, and the growing threat of adversarial foreign influence demand urgent reform. The INNOVATE Act delivers exactly that.
The INNOVATE Act isn’t just an SBIR reauthorization, it is a necessary overhaul that will:
- Catalyze domestic manufacturing and onshore critical supply chains;
- Grow regional innovation ecosystems and broaden geographic participation; and
- Equip the next generation of technologists and engineers with tools to solve national challenges.
Key Benefits of the INNOVATE Act
- Bridging the “Valley of Death” with Strategic Breakthrough Awards
Modeled on the Air Force’s highly successful STRATFI initiative, the INNOVATE Act creates a dedicated Strategic Breakthrough funding stream. Strategic Breakthrough offers up to $30 million per small business concern, for scale-up, manufacturing, and delivery. Strategic Breakthrough requires a 100% funding match with new outside capital or other DOD funds (excluding SBIR Phase I or II capital). The program also institutes a period of performance of no more than 48 months. These resources are laser-focused on transitioning technologies that matter, ensuring innovations don’t die in limbo between lab and field.
- Lowering Barriers to Entry with the Phase 1A Pilot
A two-page application process for first-time applicants tears down the walls that have long excluded commercial startups and university spinouts. It democratizes access and ensures the next major technology can emerge from anywhere, not just from established defense circles.
- Startup-Speed Decisions with the 90-Day Shot Clock
The bill imposes a mandatory 90-day award decision window for Strategic Breakthrough awards, aligning government action with commercial timelines. This gives entrepreneurs certainty and prevents innovation flight to foreign markets.
- Commercial Discipline in Government Contracts
Firm-fixed-price contracts are made the default for Phases I and II, simplifying federal engagement for commercial firms and aligning government funding mechanisms with private-sector norms. This reduces risk and cost overruns while enhancing accountability.
- Ending the Era of “SBIR Mills”
With lifetime award cap of $75 million, limits on annual submissions, and commercialization thresholds, the bill closes the loopholes that have allowed some firms to exploit the program without delivering results. This re-focuses SBIR and STTR as engines of real-world impact, not perpetual R&D pipelines.
- Clarity and Accountability on Open Topics
Agencies will now have a clear and enforceable definition for “Open Topics,” protecting the program’s original intent to fund high-risk, high-reward concepts - not just variations of existing solicitations.
The Stakes Could Not Be Higher
America’s adversaries are building their innovation ecosystems with a strategic purpose: to surpass us militarily, economically, and technologically. Meanwhile, 95% of global R&D now occurs outside the traditional defense industrial base. Without agile, accountable tools like SBIR & STTR, the U.S. will continue to struggle to harness commercial innovation for public-sector missions. Congress must act now to pass the INNOVATE Act.