NEWS | NSBA, SBTC Support Congress' Efforts to Protect Small Business Access to DOE Research Funding
- NSBA
- Jan 31
- 2 min read
Updated: Feb 11
At an urging from NSBA and our Small Business Technology Council (SBTC), this week, Congress stepped in to stop a policy that would have quietly shut small businesses out of DOE research funding, restoring fairness, predictability, and access for America’s innovators.
ANALYSIS | Congress’ reversal of the DOE indirect cost cap preserves long-standing practices that allow small businesses to recover the true costs of federally funded research, ensuring continued participation by innovators who might otherwise be priced out of vital R&D funding.
JAN. 31, 2026 | In a significant win for small businesses engaged in research and development, Congress has moved to reverse a policy that threatened to make working with the U.S. Department of Energy (DOE) financially untenable for many innovators.
Last year, the DOE issued a policy memorandum that capped indirect cost recovery on grant awards to for-profit entities, including small-business participants in the SBIR and STTR programs, at just 15 percent of the total award. For small, research-intensive firms without large reserves or external financial backing, that cap would have forced many awards to operate at a loss, effectively shutting the door to DOE funding for many promising technologies.
NSBA, our Small Business Technology Council (SBTC), and our partners raised concerns that the cap undermined decades-old federal practices that allow organizations to recover the real costs associated with conducting federally funded research, including administration, facility support, and other necessary infrastructure.
Thanks to language included in the recently enacted Commerce, Justice, Science; Energy and Water Development; and Interior and Environment Appropriations Act, 2026 (H.R. 6938), DOE’s current approach to calculating and reimbursing indirect costs has now been reset back to the way it was applied in fiscal year 2024.
Specifically, the law directs DOE to continue applying negotiated indirect cost rates under 2 CFR §200.414, including the ability to approve deviations from those rates, in the same manner as before the 15 percent cap was implemented. It also prohibits the department from using funds to develop, modify, or implement new indirect cost rate changes.
For small businesses, particularly those participating in DOE’s SBIR and STTR programs, this legislative action delivers much-needed stability and predictability. It ensures that indirect costs, which encompass essential operational and administrative expenses intrinsic to research activity, will continue to be covered based on negotiated agreements rather than arbitrary caps.
NSBA and SBTC applaud Congress for recognizing the importance of maintaining fair cost recovery policies that help small businesses compete and innovate. This outcome underscores the value of advocacy in shaping federal policy and protecting the interests of America’s small business community.
