SBIR Advances U.S. Innovation
The Small Business Innovation Research (SBIR) program enables small businesses to develop cutting-edge technologies that might otherwise struggle to secure funding in traditional markets. By providing early-stage capital and a structured pathway to commercialization, SBIR has catalyzed some of the most important technological advancements in U.S. history, from medical breakthroughs to critical defense capabilities. SBIR also serves as an entry point for additional federal funding programs that contribute to U.S. defense capabilities - including the Air Force's STRATFI & TACFI programs. Only U.S.-based and U.S - controlled businesses, with fewer than 500 employees may apply.
SBIR has been a cornerstone of American technological advancement for decades, driving groundbreaking research and fostering innovation across industries.
Congress must reauthorize the SBIR program by September 30, 2025.
It is imperative that Congress act swiftly to ensure that this critical program continues to support small businesses and fuel national security, economic growth, and technological leadership.
Reauthorizing the SBIR program ensures that:
- America remains a global leader in innovation.
- Small businesses have the resources needed to develop and transition new technologies.
- The Department of Defense (DoD) and other agencies can access agile, high-impact solutions from non-traditional defense contractors.
Recommendations for Strengthening SBIR
While the SBIR program has consistently delivered immense value, there are opportunities for improvement. By implementing key reforms, we can streamline the program, accelerate commercialization, and ensure that taxpayer-funded research transitions into real-world applications that strengthen our defense industrial base and economic competitiveness.
The Alliance for Commercial Technology in Government
The Alliance for Commercial Technology in Government has been leading the way on this important topic. The Alliance represents startups and the commercial tech sector, advocating for policies that can improve our government services and maintain our competitive advantage by bringing more tech into government programs. Below are some of the creative and effective improvements that they recommend and that the team at Saxa Innovation endorses:
1. Establish a Formal Phase III Program, Modelled on STRATFI
The Air Force’s STRATFI (Strategic Funding Increase) program has been a game-changer, helping small businesses bridge the gap between prototype development and full-scale commercialization. A formalized Phase III SBIR program should be implemented across all federal agencies to ensure promising technologies successfully transition to operational use.
2. Diversify Funding Sources for Phase III Contracts
Phase III contracts should be supported through a mix of:
- Transition Dollars (funds set aside specifically for scaling SBIR-developed technology)
- End-user procurement dollars (ensuring real-world adoption)
- Private capital sources (venture capital, private equity, commercial loans, and revenue from past and future commercial sales)
This approach will enable sustainable commercialization and reduce reliance on government funding.
3. Incentivize Prime Contractors to Invest in Commercial Tech
Major defense contractors should be encouraged to transition their in-house R&D spending toward external commercial technology purchases from small businesses. This will increase competition, accelerate innovation adoption, and strengthen the supply chain.
4. Require 50% of SBIR Funding to Go Through Open Topics
Open Topic solicitations have proven highly effective in attracting top-tier commercial startups into the defense ecosystem. Mandating that at least 50% of SBIR funding go through Open Topics will ensure broader participation and faster technology transitions.
5. Implement & Enforce a “Shot Clock” for Award Notifications &Contract Issuance
Long delays in contract awards discourage participation and slow innovation. We propose:
- Phase I: 30 days for notification, 60 days for contract issuance.
- Phase II: 60 days for notification, 60 days for contract issuance.
- Accountability: If an agency fails to meet these deadlines, its funding should be reallocated to agencies that comply.
6. Standardize Foreign Malign Influence Assurance Across the Industrial Base
Ensuring clear, consistent standards for foreign ownership and influence is critical. The same rules should apply across all DoD and intelligence community contractors, ensuring fairness and security without unnecessary bureaucratic barriers.
7. Direct the FAR Council to Codify SBIR Phase III Authority
The Federal Acquisition Regulation (FAR) should formally include SBIR Phase III authority, ensuring a clear, permanent procurement pathway for technologies developed under SBIR.
8. Enforce Market Research Requirements in Federal Acquisition Law
The Federal AcquisitionStreamlining Act of 1994 (FASA) - 10 USC 3453 and FAR Part 10 already require agencies to conduct market research before developing new solutions. Strengthening enforcement will prevent waste and encourage agencies to adopt existing SBIR-developed technologies.
9. Eliminate “SBIR Mills”
Some companies exploit SBIR funding asa perpetual R&D grant rather than transitioning their technology into real-world applications. Agencies should prioritize funding recipients with a proven track record of commercialization and deployment.
10. Implement a Standardized DoD-Wide Proposal Format
A uniform SBIR proposal format across the DoD would streamline application processes, reduce administrative burdens, and make it easier for small businesses to participate.
Secure the Future of Innovation
The SBIR program has been instrumental in driving U.S. innovation, but without congressional action, its future is uncertain. Reauthorizing SBIR by September 30, 2025, alongside these critical reforms, will ensure that small businesses remain at the forefront of technological advancement and national security.
We urge lawmakers, industry leaders, and entrepreneurs to support SBIR reauthorization and advocate for these improvements. By doing so, we can build an industrial base that is agile, competitive, and capable of delivering the next generation of break through technologies.
Let’s work together to ensure the continued success of SBIR and secure America’s innovation leadership for decades to come.