An Eye On Reauthorization: Exploring The SBIR/STTR Reauthorization Bills

Blue Haven Grant Consultants closely monitors changes in the SBIR/STTR program. As the current legislation approaches its expiration, the U.S. Congress has begun proposing and debating the future of these programs. While the debate is ongoing, this post offers a high-level overview of the current proposals and what the future of the SBIR/STTR program might entail.

Here is a breakdown of the key issues we are paying attention to in the reauthorization debate, highlighting the various proposals and their potential impact on the thousands of innovative small businesses that rely on this funding.

Length of Authorization

One of the most significant points of contention is the duration of the reauthorization. After decades of relying on temporary extensions, some proposals aim to provide long-term stability by making both the SBIR and STTR programs permanent. Proponents of this approach argue that it would give small businesses and government agencies the certainty needed to plan for years to come, encouraging more durable partnerships and strategic investments.

Conversely, other legislative versions suggest a shorter extension, such as a three-year term. This approach would grant immediate continuity to the programs, ensuring no lapses in funding, while also giving Congress more time to debate more granular changes without the pressure of a looming deadline.

Funding Levels and Focus

The future of SBIR and STTR funding is also a major point of discussion, with proposals presenting a wide range of possibilities.

For the SBIR program, some proposals substantially increase the budget. For example, one bill proposes a gradual ramp-up from the current 3.2% set-aside to as high as 7% over seven years. This would funnel significantly more capital into small business R&D. Other proposals are more conservative, suggesting a more modest increase to 3.45%.

The STTR program is at the heart of the funding debate. While some versions of the bill would grow the STTR set-aside to 1%, reflecting a continued investment in university-industry partnerships, other proposals would do the opposite by cutting its funding to 0.20%. These changes reflect disagreement over the program's purpose and its role in the innovation ecosystem.

Programmatic Improvements to Watch

Beyond the high-level budget debates, a number of specific proposals are being considered that could directly impact how you apply for and manage a grant. Lawmakers are discussing:

●      Direct-to-Phase-II Authority: Some proposals seek to expand Direct-to-Phase-II authority to all participating agencies, allowing more companies to bypass Phase I and move straight into Phase II R&D if they have already proven their technology's feasibility. This could significantly accelerate the path to commercialization for many firms.

●  A New Phase IA: Lawmakers are also discussing a potential new "Phase IA" program. This would be a simplified application for new entrants seeking small initial awards to help them prepare for a full-scale Phase II proposal.

Bias Toward Commercialization

Another key element of the discussion is how to address what some call "SBIR mills” firms that are successful at winning a large number of awards but have a poor commercialization record. While some lawmakers propose maintaining the program's competitive, merit-based fundamentals with no limits on awards, others are pushing for stricter measures. These include proposals for performance benchmarks that would require multiple-award firms to demonstrate a successful transition from Phase I to Phase II and prove that they are not solely dependent on government funding. The goal is to ensure the program serves as a steppingstone to commercial success, not a permanent subsidy.

BHGC will continue to monitor these developments, and we are ready to help you navigate through any of the possible outcomes that Congress settles upon. With our history of helping companies get the funding they need to move toward commercialization success, we are confident that our collaborative efforts will yield results regardless of the legislative landscape.

Want to explore your BHGC options? Schedule a free consultation with us to get started on your path toward SBIR/STTR success.