NEWS | NSBA Small Business Technology Council Shares Analysis of SBIR, STTR Reauthorization
- NSBA
- 1 day ago
- 5 min read
NSBA and our Small Business Technology Council (SBTC) are continuing the fight for SBIR/STTR permanency - critical programs driving life-saving research and technology development.
MAY 06, 2026 | After months of uncertainty, Congress delivered long-term stability for small business research and technology development with passage of the Small Business Innovation and Economic Security Act (S. 3971).
The SBIR/STTR Reauthorization Act of 2026 was signed into law on April 13, 2026, officially extending the Small Business Innovation Research Program and Small Business Technology Transfer Program (SBIR/STTR) through September 30, 2031.
The 5.5-year reauthorization provides much-needed certainty for small businesses, federal agencies, and the broader innovation ecosystem, while introducing a series of targeted reforms aimed at strengthening program integrity, improving commercialization outcomes, and reducing administrative friction.
To keep small businesses updated, review NSBA's Small Business Technology Council (SBTC) overview report here.
At a glance:
The new law extends SBIR/STTR authorization through 2031 and continues associated pilot and temporary programs over the same timeframe. This eliminates the risk of program lapse and allows for longer-term planning, hiring, and investment for small businesses reliant on early-stage federal R&D funding.
A major focus of the legislation is standardizing foreign risk and due diligence requirements across participating agencies. Building on policies first introduced in 2022, the law requires agencies to evaluate whether applicant firms have ties to entities listed on designated national security watchlists.
Importantly, the bill also introduces transparency safeguards. For instance, if a proposal is rejected due to security concerns, agencies must notify the small business, explain the basis for the determination, and clarify that the decision does not bar future participation. This aims to reduce confusion and inconsistency that previously varied across agencies.
One of the most notable additions is the creation of a new post-Phase II funding pathway, often described as a formalized “Phase III bridge.” Known as the Strategic Breakthrough initiative, the program allows agencies to issue awards of up to $30 million to help promising technologies transition from research to commercialization.
These awards require 100 percent matching funds from private or non-SBIR government sources, ensuring market validation and shared investment. While participation is voluntary for agencies and capped at a small portion of SBIR funding, the initiative directly targets the long-standing “valley of death” that many small businesses face between development and deployment.
The legislation also includes provisions aimed at improving program efficiency without broadly disrupting access:
Proposal Caps: Agencies must establish limits on the number of proposals a single company can submit, beginning in FY2027. This is expected to primarily affect only the largest, most frequent applicants rather than the typical small business.
TABA Flexibility: Changes to Technical and Business Assistance (TABA) funding give small businesses more control over how support dollars are used. Companies can now allocate funds toward cybersecurity, compliance, or internal staffing, and are no longer required to use agency-selected vendors.
Several additional provisions focus on strengthening outcomes beyond early-stage research:
Federal procurement officials will receive training on Phase III awards, including sole-source contracting and data rights.
Agencies are encouraged to standardize contracting processes and expand use of Phase III opportunities.
Enhanced data collection requirements will improve transparency, tracking metrics such as direct-to-Phase II awards and commercialization outcomes.
For the small-business community, the SBIR/STTR reauthorization ensures a continued flow of critical innovation funding, while new provisions aim to improve fairness, accountability, and the likelihood that federally funded research ultimately reaches the marketplace.
NSBA and SBTC will continue to track rollout and advocate for policies that ensure SBIR/STTR remains accessible, efficient, and effective for the small businesses driving American innovation.
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S.3971 | The Small Business Innovation and Economic Security Act
A Review of the 2026 SBIR/STTR Reauthorization Act
Alec Orban
Small Business Technology Council
S. 3971 Overview
CURRENT STATUS: Congress passed S.3971 on March 17 and sent it to the President on April 2. The bill was signed on April 13, becoming Public Law 119-83
Reauthorizes SBIR/STTR 5.5 Years
Termination date extended to September 30, 2031
Also extends all associated pilot/temporary programs to Sep 30 2031
Standardizes Foreign Risk/Due Diligence Program
Creates New Post-Phase II Jumbo Award initiative with matching funds – Strategic Breakthrough
Requires agencies to set a cap on number of proposals a small business can submit to SBIR/STTR
Increases flexibility on how small businesses can use TABA funds
https://www.congress.gov/bill/119th-congress/senate-bill/3971/text
Sec. 2 BOLSTERING RESEARCH SECURITY OF SBIR AND STTR AWARDS
This section standardizes procedures for the foreign risk/due diligence program under SBIR/STTR
Intent is to address disparities between agencies over how these 2022 requirements were implemented
Requires agencies to determine if any small business has a connection or affiliation with an entity appears on any of eight separate lists of entities of concern (see pg 4-5 for list)
Requires agencies to establish a process to notify small businesses that have had their proposal rejected due to this provision:
That their proposal has been flagged due to a security risk
Identifying the basis for this determination
Advising the small business that the determination does not disqualify the small business from future award cycles
Sec. 3 PHASE II STRATEGIC BREAKTHROUGH FUNDING
Establishes a new post-Phase II program that allows agencies to make awards of up to $30 million
This program is voluntary for agencies, and capped at 0.5% of the 3.2% total SBIR allocation
Awards require 100% matching funds consisting of new private capital and/or non-SBIR government funding
Awards at DOD require at least 20% government matching funds
Intent is to create a “formalized Phase III” program, to move more funding into the valley of death between the lab and market
Sec. 4 REDUCING ADMINISTRATIVE BURDEN
Requires each agency to set a limit on the number of proposals a small business can submit to the SBIR/STTR program.
The specific limit is set at the discretion of the Director of the SBIR/STTR office at each agency and must be either by fiscal year, by solicitation, or by topic
Agencies required to implement beginning in FY2027
This provision will likely only affect the biggest SBIR winning firms, most small businesses are unlikely to notice a difference in how the program is administered
Sec. 7 TECHNICAL AND BUSINESS ASSISTANCE IMPROVEMENTS (TABA)
TABA is an existing provision that allows SBIR/STTR recipients to use up to $6,500 for Ph1 or up to $50,000 of Ph2 for technical or business assistance
The new law gives agencies the flexibility to either give additional TABA funding on top of SBIR/STTR award money, or as a portion of award dollars
New language allows small businesses to use TABA for cybersecurity and foreign risk/due diligence work
Removes the requirement that agencies must select third party vendors and leaves selection instead up to the small business
Allows small business to use TABA funds to hire new staff or pay current staff to perform relevant work.
Other Provisions
Sec. 5 Phase III Award Education
Requires federal acquisition and procurement employees to receive training on Phase III awarding, including sole source and data rights
Sec. 6 Phase III Improvements
Encourages Procurement center reps to advocate for utilizing Phase III, and requires agencies to establish simplified and standardized procedures and model contracts for Phase I, II, III, and establish standardized solicitation and contract clauses
Sec. 8 Improving SBIR and STTR Data Collection
Requires government databases to track more data, including direct to Phase II, subcontracts, and Prime Phase III awards
Learn more about SBTC, and join our fight for SBIR/STTR permanency.
