Small Business Innovation and Economic Security Act

Small technology businesses retain access to SBIR and STTR funding, including a temporary pathway to awards of up to $30 million. Agencies also gain stronger tools to screen security risks and manage proposal volume.

What the law does ​

• Extends the SBIR and STTR programs through September 30, 2031.
• Requires reviews of applicants’ cybersecurity, foreign ties, ownership, investments, licensing arrangements, and connections to specified federal security lists.
• Allows agencies to deny awards for security risks without barring applicants from future award cycles.
• Creates strategic breakthrough awards of up to $30 million over 48 months, generally with prior Phase II experience and at least matching private funds.
• Caps each small business’s Phase I and Phase II proposal submissions beginning in fiscal year 2027, with limited urgent-topic waivers.
• Expands Phase III training, contracting help, award tracking, and technical and business assistance.

Who it affects ​

• Small businesses applying for or receiving SBIR and STTR awards.
• Federal agencies administering small-business research and technology funding.
• Department of Defense applicants subject to added readiness, transition, and matching-fund requirements.

Breakdown ​

Small Business Innovation and Economic Security Act ​

This law extends the federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs through September 30, 2031. It strengthens security screening, creates a temporary pathway for larger Phase II awards, limits proposal volume, improves support for commercialization, and expands program data collection and assistance.

Key takeaways

• Federal agencies must assess applicants for cybersecurity, foreign ownership, foreign ties, investment relationships, licensing arrangements, and connections to people or entities on specified federal security lists.
• Agencies may deny awards based on security risks, but may notify affected businesses of the reason when appropriate and must clarify that a denial does not prevent the business from applying in a later award cycle.
• Beginning in fiscal year 2026, qualifying agencies may use a limited share of SBIR funds for strategic breakthrough awards of up to $30 million over no more than 48 months, generally requiring prior Phase II experience and at least 100 percent matching funds.
• The strategic breakthrough award authority ends after September 30, 2031, and includes additional readiness, transition, and matching-fund requirements for Department of Defense awards.
• Beginning in fiscal year 2027, each agency must apply equal limits on how many Phase I and Phase II proposals a small business may submit, with narrowly limited waivers for urgent topics and required reports to Congress.
• The law expands Phase III training and contracting support, increases allowable technical and business assistance to $6,500 for Phase I and $50,000 for Phase II, improves award tracking, and extends related pilots and activities through September 30, 2031.