S. 1573 — SBIR/STTR Reauthorization Act of 2025

This section extends indefinitely the Small Business Innovation Research (SBIR) program—under which federal agencies with extramural R&D budgets exceeding $100 million reserve at least 3.2% of those funds for phased innovation awards to small businesses—by striking its sunset provision (subsection (m)) and the Small Business Technology Transfer (STTR) program—under which agencies with R&D budgets exceeding $1 million reserve at least 0.45% for small business-university or -nonprofit research partnerships—by striking "through fiscal year 2025" from Section 9(n)(1)(A).

This section increases the minimum percentages of participating agencies' extramural research budgets that must be allocated to the Small Business Innovation Research (SBIR) program and Small Business Technology Transfer (STTR) program—set-aside programs that provide competitive grants and contracts to small businesses for high-risk R&D with commercialization potential—as follows: (1) for SBIR, to 4 percent for FY2026 and 2027 (from 3.2 percent), 5 percent for FY2028 and 2029, 6 percent for FY2030 and 2031, and 7 percent for FY2032 and each fiscal year thereafter; and (2) for STTR, to 0.5 percent for FY2026 and 2027 (from 0.45 percent), 0.65 percent for FY2028 and 2029, 0.8 percent for FY2030 and 2031, and 1 percent for FY2032 and each fiscal year thereafter.

This section authorizes Federal agencies to provide grants or awards, either directly or in partnership with third parties, to small business concerns that received phase II awards under the Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) programs to offer fellowships and internships at undergraduate, baccalaureate, graduate, and postdoctoral levels in agency-relevant fields. Agencies must conduct enhanced outreach to increase participation by women, socially disadvantaged individuals (as defined in section 8(a)(5) of the Small Business Act), and economically disadvantaged individuals (as defined in section 8(a)(6)(A)); agencies may partner with or fund nonprofit organizations with relevant expertise for this outreach. Agencies may fund these activities using (1) funds authorized under subsection (mm), if applicable, or (2) for other agencies, no more than 3% of SBIR or STTR funds required under subsection (f)(1) or (n)(1), respectively. (As background, SBIR and STTR require agencies with significant extramural R&D budgets to reserve funds—currently 3.2% for SBIR and 0.45% for STTR—for small business R&D grants across three phases, with phase II supporting prototype development.)

This section expands the duties of the Small Business Administration (SBA) under the Small Business Act to broaden participation in federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs—i.e., competitive grant programs that fund R&D by small businesses with commercialization potential—by (1) requiring SBA to provide small business concerns with application assistance for SBIR and STTR programs, including to increase participation by states historically receiving low levels of such awards; (2) directing SBA, not later than 90 days after enactment, to modify SBIR policy directives to require enhanced outreach to individuals conducting research at minority institutions (as defined in section 365 of the Higher Education Act of 1965) and Hispanic-serving institutions (as defined in section 502(a) of such Act); and (3) requiring STTR policy directives to include procedures for outreach to increase participation by individuals at such institutions.

This section revises technical and business assistance for Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs by (1) requiring federal agencies to authorize award recipients to select such assistance (adding cybersecurity assistance as an eligible service), (2) permitting use of funds to hire new staff, augment staff, or conduct staff training consistent with program goals, (3) authorizing Phase I awards to expend up to $6,500 per project and Phase II awards up to $50,000 per project—included in or additional to the award—for such assistance through agency-selected vendors, other vendors, staff activities, or combinations thereof, and (4) permitting agencies to conduct targeted reviews of such funding. This section further requires federal agencies participating in the Innovation Corps (I-Corps) program—providing entrepreneurial training for technology commercialization—to offer SBIR and STTR recipients optional participation in I-Corps teams courses, bootcamps, or equivalent training, with costs fundable via I-Corps grants, SBIR/STTR awards, recipient funds, other sources, or combinations thereof.

This section expands public website reporting requirements under the Small Business Innovation Research (SBIR) program to cover Phase III awards and requires disclosure, for each subcontracted research institution performing research or R&D on Phase I, II, or III awards, of the institution's name and location; its type (institution of higher education, nonprofit institution other than an institution of higher education, or federally funded R&D center); and, if an institution of higher education, whether it is a minority-serving institution (i.e., part B institution, Hispanic-serving institution, Tribal College or University, Alaska Native- or Native Hawaiian-serving institution, Predominantly Black Institution, Asian American and Native American Pacific Islander-serving institution, or Native American-serving nontribal institution). It makes parallel expansions to website reporting for the Small Business Technology Transfer (STTR) program, which covers Phase I and II awards only. The section further revises the interagency SBIR/STTR database to include Phase III awards and the same subcontracted research institution information.

This section directs the Small Business Administration (SBA) Administrator, in coordination with the Secretary of Defense, the Administrator of General Services, and heads of other appropriate federal agencies, to establish training activities for federal contracting officers and agency acquisition workforce on all aspects of Phase III acquisitions under the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. (As background, SBIR and STTR provide federal R&D funding to small businesses across three phases, with Phase III enabling sole-source government procurement of commercialized technologies developed in prior phases.) The required training covers (1) the missions, goals, and authorities of SBIR and STTR; (2) the use of Phase III agreements; (3) Phase III data rights; and (4) execution of Phase III sole-source award contracts. It defines agency acquisition workforce as federal employees with procurement responsibilities (including those under 41 U.S.C. §1703 and 10 U.S.C. §101(a)) and Phase III acquisition as procurement of goods or services from SBIR/STTR Phase III participants that have commercialized or are seeking to commercialize them.

This section requires the Secretary of Defense to report to the Small Business Administration (SBA) Administrator, not later than 30 days after denying a small business concern a Phase III agreement under the Small Business Innovation Research (SBIR) program. (Phase III enables commercialization of SBIR-developed technologies, typically through noncompetitive federal procurement contracts.)

This section requires the head of each Federal agency required to conduct a Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) program—i.e., programs providing phased grants to small businesses for high-risk R&D with commercial potential—to designate an existing official as Technology Commercialization Official (or identify an official with substantially similar duties). The official must (1) have commercialization experience and provide guidance to SBIR and STTR awardees on commercializing and transitioning technologies; (2) coordinate with the Small Business Administration (SBA) administrator and other agencies' officials to identify markets and pathways; (3) submit annual reports to the SBA administrator on commercialization progress (including data from a specified assessment) and on actions and results to simplify and expedite Phase III processes; and (4) identify and advocate for technologies ready for Phase III awards or non-SBIR/STTR contracts.

This section requires procurement center representatives under the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs—federal initiatives that fund small-business R&D with potential for commercialization (Phases I and II) and transition to federal procurement without SBIR/STTR funding (Phase III)—to advocate for maximum practicable use of SBIR/STTR-developed products, services, and technologies in Phase III awards to small businesses. The section further directs the Small Business Administration (SBA) Administrator to modify relevant policy directives within one year of enactment; requires federal agencies to report to the SBA Administrator on developing simplified, standardized procedures and model contracts for Phase I, II, and III SBIR awards; and requires agencies to issue standardized solicitation provisions and contract clauses clarifying information small businesses must provide for Phase III eligibility or market research.

This section extends through September 30, 2030 (from September 30, 2025), the authority for federal agencies to use up to 3.3 percent (from 3 percent) of their Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) program funds for administrative, oversight, and contract processing costs (i.e., 12 specified uses such as program management and outreach). (As background, SBIR and STTR programs reserve portions of federal extramural R&D budgets—generally 3.2% for SBIR and 0.3% to 0.45% for STTR, depending on the agency—for Phase I, II, and III awards to small businesses.) It further requires the Departments of Defense and Energy, the Department of Health and Human Services, NASA, and NSF to transfer at least 10% of such funds to the Small Business Administration within 60 days of annual appropriations (prohibiting use for Small Business Investment Company programs); revises agency outreach authorities to support the SBIR/STTR policy directive and increase participation by states with historically low SBIR awards; and makes conforming changes to related reporting requirements.

This section extends through 2030 (from 2025) and expands to all federal agencies with Small Business Innovation Research (SBIR) programs (from the National Institutes of Health, Department of Defense, and Department of Education) the authority to provide direct-to-Phase II awards (i.e., SBIR Phase II grants without a prior Phase I award to small businesses demonstrating prior proof-of-concept work). It further (1) limits the total value of such awards in a fiscal year to 10% of an agency's SBIR funds (15% for NIH) and (2) requires agencies exercising the authority to report the number and amount of such awards in their next annual SBIR report under subsection (g)(9).

This section revises the Commercialization Readiness Program for civilian agencies under the Small Business Innovation Research (SBIR) program (15 U.S.C. 638(gg))—which enables participating civilian agencies to use SBIR funds to provide up to $100,000 per Phase II awardee for activities accelerating technology commercialization—by (1) changing the subsection heading to "Civilian agencies commercialization readiness" (from including "Pilot"), (2) replacing each reference to "pilot program" with "covered program," and (3) extending the program through FY2030 (from FY2025).

This section extends two Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) pilot programs through September 30, 2030 (from September 30, 2025). (1) the Phase 0 Proof of Concept Partnership Program, which supports early-stage feasibility studies for SBIR/STTR Phase I applicants; (2) the Commercialization Assistance Pilot Programs, which provide technical and business assistance to SBIR/STTR awardees to accelerate commercialization.

This section revises annual reporting requirements for the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs—federal initiatives that reserve portions of agencies' extramural R&D budgets for competitive awards to small businesses—by (1) requiring each participating agency to submit its annual SBIR report under subsection (g)(9) and STTR report under subsection (o)(10) to the Senate Committee on Small Business and Entrepreneurship and House Committee on Small Business, in addition to existing recipients, and to publish each report on the agency's website as soon as practicable; (2) making minor punctuation corrections in subsections (g)(10) and (o)(8); and (3) requiring reports under subsection (gg)(6) to be submitted to Congress as well as the relevant agency.

This section directs the Comptroller General to submit to the Senate Committee on Small Business and Entrepreneurship and the House Committee on Small Business, not later than three years after enactment, a report assessing the effectiveness of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs—which provide federal R&D funding to small businesses in three phases to support technological innovation and commercialization—with respect to diversification of participants and commercialization success. The report must include, to the extent practicable, an assessment of (1) demographics of award recipients, including new entrants (i.e., small businesses without prior SBIR or STTR awards) and underrepresented groups (i.e., firms in low-award states, women-owned small businesses, and those owned by socially and economically disadvantaged individuals); (2) participating agencies' efforts to increase participation by new entrants and underrepresented groups; (3) agencies' processes for developing solicitation topics and attracting applicants; (4) agencies' commercialization support efforts; (5) alignment of awards with agencies' research priorities and technology needs; and (6) other matters the Comptroller General deems appropriate, in consultation with the committees.

This section revises the Small Business Administration's (SBA) annual report to Congress on Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs by (1) extending the required historical data period to 11 years (from 3 years), and (2) requiring the report to include, for each federal agency with an SBIR or STTR program, the average and median time to review proposals and make final award decisions. (SBIR and STTR provide grants to small businesses for federal research, development, and technology transfer.)

This section establishes a pilot program at the National Institutes of Health (NIH) to accelerate awards under its Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs—federal initiatives that provide grants to small businesses for research, development, and technology transfer—requiring the NIH Director to implement simplified, standardized award procedures across relevant offices to reduce the time between award notice and funding release to approximately 90 days, not later than one year after enactment, with the program terminating on September 30, 2030. (Thus, the pilot authorizes flexible peer review procedures—including consultation with scientific experts—for assessing scientific merit and commercialization potential, deemed to satisfy peer review requirements under sections 406(a)(3)(A) and 492 of the Public Health Service Act (42 U.S.C. 284a(a)(3)(A), 289a).) Additionally, this section requires the NIH Director to submit an evaluation report on the pilot—including its peer review procedures and effects on award times—to the Senate Committee on Small Business and Entrepreneurship and the House Committees on Small Business and on Science, Space, and Technology not later than three years after enactment.

This section revises eligibility rules under the Small Business Innovation Research (SBIR) program for small business concerns majority-owned by multiple venture capital operating companies, hedge funds, or private equity firms by adding new paragraph (8) to section 9(dd) of the Small Business Act. Under the new rules, such concerns are ineligible for SBIR awards if the Small Business Administration Administrator determines the concern is owned and controlled in majority part by a covered foreign entity (i.e., a foreign entity of concern such as designated terrorists or SDN-listed parties; governments or persons from covered nations including China; or other entities engaged in espionage, export control violations, or detrimental national security activities, as defined, including subsidiaries, agents, or 25%+ owners); the Administrator must consider subsidiary status of foreign-owned firms and establish size standards for such concerns; the changes apply to awards after enactment. (As background, the SBIR program provides federal R&D funding to small businesses to foster technological innovation.)

This section establishes a new subsection (ccc) to Section 9 of the Small Business Act requiring the Small Business Administration (SBA) Administrator to coordinate annually with heads of federal agencies participating in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs—competitive grant programs that fund small-business R&D for federal needs with commercial potential—to conduct a commercialization impact assessment. The assessment measures, for each small business concern that has received not less than 50 Phase II awards (i.e., prototype development grants) on or after October 1 of the ninth full fiscal year beginning before the fiscal year in which the assessment is carried out, the following metrics over the preceding nine fiscal years: (1) total dollar value of federal awards, subgrants, contracts, and subcontracts other than SBIR or STTR; (2) total dollar value of SBIR and STTR Phase I and Phase II awards; (3) average annual gross revenue; (4) total revenue from sales or licensing of SBIR- or STTR-derived products or services, disaggregated by sales and licensing; (5) additional non-Phase I or II SBIR or STTR investments; (6) mergers and acquisitions during or after Phase II awards; (7) new spin-out companies and third-party revenues from SBIR- or STTR-funded research; (8) year and employee count at first Phase II award; (9) current employee count; and (10) total number and value of Phase III awards (i.e., commercialization contracts). The Administrator must prepare a report on the findings, include it in the annual SBIR and STTR report under subsection (b)(7), and submit it to the Senate Committee on Small Business and Entrepreneurship and the House Committees on Science, Space, and Technology and Small Business.

This section includes small business investment companies (SBICs)—as defined in section 103 of the Small Business Investment Act of 1958 (15 U.S.C. 682)—in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs by (1) inserting "private equity firm, or SBIC investment" for "or private equity firm investment" and "private equity firms, or SBICs" for "or private equity firms" each place they appear; (2) adding a definition of SBIC as new subsection (e)(20); and (3) revising the heading of subsection (dd) to "Private Equity Firms, or SBICs." (Thus, SBIC investments are treated equivalently to private equity firm investments for SBIR/STTR eligibility and participation rules.)

This section modifies headings in the Phase III awards provision of the Small Business Act (15 U.S.C. 638(r)) by (1) inserting "Sole Source and Other" after "Justification for" in the subsection heading and (2) inserting "sole source and other" after "justification for" in the paragraph (4) heading.