President Donald Trump has signed into law S. 3971, the Small Business Innovation and Economic Security Act, reauthorizing the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs through September 30, 2031. The Senate passed the bill by voice vote on March 3, 2026, and the House approved it on March 17, 2026, by a vote of 345 to 41. The law authorizes approximately $6 billion in funding. 

What are the SBIR and STTR programs? 

The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are federal initiatives that provide competitive research and development funding to small businesses. SBIR focuses on supporting early-stage innovation and technological research, while STTR requires collaboration between small businesses and nonprofit research institutions, such as universities, to support the commercialization of federally funded research. Both programs are administered by the U.S. Small Business Administration (SBA) in coordination with participating federal agencies and are designed to increase small business participation in federal research and development and support commercialization of new technologies. 

The SBIR and STTR programs provide federal research and development funding to small businesses. Participating agencies include the Department of Defense, Department of Health and Human Services, Department of Energy, National Aeronautics and Space Administration, National Science Foundation, Department of Agriculture, and Environmental Protection Agency, among others with qualifying research and development budgets. 

The programs expired on September 30, 2025, prior to enactment of this legislation. 

The reauthorization extends both programs through fiscal year 2031 and continues required funding levels through that period. It also allows agencies to carry over unobligated fiscal year 2026 funds into fiscal year 2027. 

Key provisions include: 

• National security reviews: Requires federal agencies to assess whether applicants pose national security risks and prohibits awards to small businesses with certain foreign ties or identified security concerns 
• Due diligence requirements: Requires agencies to strengthen review processes, including cybersecurity practices, patent analysis, employee background checks, and risks related to foreign countries of concern, and extends related GAO reporting requirements from three to eight years 
• Strategic Breakthrough Allocation program: Establishes a mechanism for agencies with SBIR budgets exceeding $100 million to allocate up to 0.5 percent of their extramural research budgets to awards of up to $30 million per project, with a 48-month performance period for Department of Defense projects and required 100-percent non-federal matching funds 
• Eligibility for breakthrough funding: Requires recipients to have previously received a Phase II SBIR or STTR award, demonstrate commercial viability, and meet additional criteria, including Department of Defense specific requirements for technology readiness and funding sources 
• Award timelines and oversight: Requires agencies to make award decisions within 90 days and brief Congress within 60 days of enactment on participation in the Strategic Breakthrough Allocation program, with ongoing updates until implementation 
• Proposal limits: Requires agencies to establish limits on the number of Phase I and Phase II proposals a small business may submit annually, with waivers allowed for up to 5 percent of topics for urgent needs and required notification to Congress 
• Small Business Administration responsibilities: Directs SBA to establish training for contracting and acquisition personnel and update procurement guidance, while requiring agencies and prime contractors to develop standardized procedures and model contracts for SBIR and STTR awards 
• Technical and business assistance: Allows award recipients to use funds for technical assistance, cybersecurity support, and workforce development, with caps of $6,500 per Phase I award and $50,000 per Phase II award 
• Commercialization and training: Requires agencies with Innovation Corps programs to offer participation to SBIR and STTR recipients and allows use of award funds for commercialization training 
• Data tracking and transparency: Directs the General Services Administration to update the Federal Procurement Data System to improve tracking of SBIR and STTR awards, including Phase III contracts and use of funded technologies 
• Program extensions: Extends multiple SBIR and STTR program authorities and activities through September 30, 2031, with certain provisions, including the Strategic Breakthrough Allocation program, set to sunset at that time