February 2026: What Has Changed
When we last updated this page in January, the January 30 government funding deadline was the next realistic vehicle for reauthorization. That deadline passed. The continuing resolution signed into law did not include SBIR or STTR provisions. The FY2026 NDAA, signed by President Trump on December 18, 2025, also did not include reauthorization. The Armed Services Committees required sign-off from the bipartisan leadership of the House and Senate Small Business Committees plus the House Science Committee before adding the language. No agreement was reached. The programs have now been lapsed for approximately four and a half months. This is the first time in the programs' 40-plus-year history that they have actually expired for a sustained period. Previous reauthorizations always came through at the last minute, sometimes literally on the final day before expiration. That pattern has broken. Senator Joni Ernst (R-Iowa), Chair of the Senate Small Business Committee, remains the key figure blocking a clean extension. She has stated publicly that she will not allow a simple renewal to pass the Senate without structural reforms to the programs. Negotiations between Ernst and Senator Edward Markey (D-Massachusetts) are ongoing. A bipartisan compromise draft circulated in December, but as of mid-February, no final deal has emerged.
Three Bills, Three Visions for the Programs
Three distinct legislative proposals define the current debate. Each reflects a fundamentally different view of what the SBIR and STTR programs should be. H.R. 5100 is the simplest option. Introduced by House Small Business Committee Chairman Roger Williams (R-Texas), it is a clean one-year extension through September 30, 2026 with no programmatic changes. The House passed it unanimously on September 15, 2025. Senator Ernst blocked it in the Senate. The INNOVATE Act (S. 853), introduced by Ernst in March 2025, proposes a three-year reauthorization with significant structural changes. The centerpiece is a $75 million lifetime cap on combined Phase I and Phase II funding per organization, designed to address what Ernst calls "SBIR mills" - companies that win large numbers of awards without demonstrating commercial outcomes. The bill also creates Phase IA, a new streamlined $40,000 award category reserved for first-time applicants, using 2.5 percent of the SBIR allocation. It increases the SBIR set-aside modestly from 3.25 to 3.45 percent but reduces the STTR set-aside from 0.45 to 0.20 percent, redirecting the difference to larger follow-on awards. It includes provisions eliminating diversity, equity, and inclusion preferences in the award process and strengthens intellectual property theft prevention requirements. The SBIR/STTR Reauthorization Act of 2025 (S. 1573 / H.R. 3169), introduced by Markey and Representative Nydia Velazquez (D-New York), takes the opposite approach. It would make the programs permanent, eliminating the recurring reauthorization cycle entirely. It would more than double the SBIR set-aside from 3.2 to 7 percent and increase the STTR set-aside from 0.45 to 1 percent over seven years, with NSF and NIH excluded from the increases. It requires each participating agency to designate a technology commercialization official and establishes internship and fellowship programs targeting women and socially or economically disadvantaged individuals. A compromise draft circulated by Markey in December 2025 attempts to bridge the gap. It retains permanent authorization and the funding increases from S. 1573 but incorporates several of Ernst's reform demands. Instead of a $75 million lifetime cap, it uses commercialization benchmarks: companies winning 50 or more Phase I awards in a three-year period must demonstrate that at least 25 percent of their revenue comes from Phase III or non-SBIR sources. Non-compliant firms would be restricted to one-third of their previous submission volume. The compromise also creates Phase II-plus Strategic Breakthrough Awards of up to $30 million for critical technologies, requiring dollar-for-dollar matching, and extends foreign adversary screening through 2045.
🔍 Search related opportunities now
The Core Disagreements
The debate centers on several substantive questions about the programs' future. Repeat winners and lifetime caps: A GAO study found that 22 companies received 50 or more Phase II awards between 2011 and 2020, accounting for roughly 10 percent of Phase II dollars despite being less than 1 percent of awardees. Ernst argues these firms have become dependent on SBIR funding without demonstrating commercial outcomes. Critics respond that many repeat winners produce valuable defense and biomedical technologies and that hard caps would penalize success and drive experienced firms out of the program. The Markey compromise attempts a middle path with commercialization benchmarks rather than absolute caps. Program size: The proposals reflect fundamentally different views on how large the programs should be. Democrats want to more than double the set-asides over seven years. Republicans favor a modest increase to SBIR paired with a reduction to STTR. The difference is billions of dollars annually in small business R&D funding. Permanent versus temporary authorization: Making the programs permanent would end the cycle of last-minute reauthorizations that creates uncertainty for small businesses and agency program offices. But sunset clauses give Congress periodic leverage to review and reform the programs. The current lapse demonstrates both sides of this argument - the expiration is causing real harm, but it is also the only reason Congress is having a serious reform conversation. Venture capital participation: Since 2011, some agencies have allowed small businesses majority-owned by venture capital, hedge funds, or private equity firms to receive SBIR awards. This remains contentious. Supporters say it broadens the applicant pool and improves commercialization. Critics argue it increases foreign influence risk and diverts funding from genuinely small companies. Foreign influence screening: This is the area of greatest bipartisan agreement. All proposals strengthen screening for ties to China, Russia, North Korea, and Iran. A May 2025 Senate investigation found that 10 agencies either failed to flag risky applications or denied very few relative to the number flagged. The proposals differ mainly in how long screening authority should last - 2029, 2030, or 2045 depending on the bill. First-time applicant access: All sides acknowledge that the programs can be difficult for newcomers to break into. The INNOVATE Act addresses this with Phase IA streamlined awards. The Democratic proposals use fellowship programs and outreach initiatives. The question is whether structural set-asides for new applicants or programmatic support is the better approach.
Current Status by Agency
Federal agencies are handling the lapse differently, but the trend is consistent: the pipeline is drying up. NIH has fully suspended SBIR and STTR applications. Their official notice (NOT-OD-26-006) states that the agency is not accepting applications because the legislative authority has expired. Current awardees should contact their Program Officer. NSF's America's Seed Fund program is on hold. No current solicitations are available. DoD remains the most active, though only for solicitations issued before October 1, 2025. Their rolling submission model means some topics may still be open. Check defensesbirsttr.mil for current windows. NASA had planned a significant shift to a Broad Agency Announcement format for 2026, with multiple submission windows throughout the year. That plan is on hold pending reauthorization. DOE has delayed its 2026 topic release indefinitely. DHS has clarified that Phase III work - follow-on funded by non-SBIR sources - remains available regardless of the lapse. This is an important distinction for companies with existing SBIR or STTR awards. HHS non-NIH agencies have standard application dates scheduled, but these depend entirely on reauthorization. USDA, EPA, DOT, Commerce (NOAA, NIST), and other participating agencies have no 2026 solicitations.
Impact on the Innovation Ecosystem
The programs collectively represent over $5 billion annually in small business R&D funding. In fiscal year 2022, agencies obligated approximately $4.4 billion in SBIR awards and $662 million in STTR awards across 11 participating agencies. The immediate effects are straightforward: thousands of small businesses that depend on SBIR as a primary R&D funding source have no new opportunities to apply for. Companies that were preparing applications for fiscal year 2026 solicitations have no submission targets. Small R&D firms that plan staffing around expected SBIR awards face hiring freezes or reductions. The longer-term effects are harder to quantify but potentially more significant. SBIR Phase I and Phase II awards serve as critical bridge funding for technologies between basic research and commercialization - the so-called "valley of death." Without new awards, that gap widens. The Defense Department relies heavily on SBIR to access cutting-edge small business technologies, and a prolonged lapse weakens the defense innovation pipeline. Academic spinouts that typically transition to SBIR funding after initial research grants face a broken pathway. There is also an institutional knowledge concern. Agency SBIR program offices staff up around solicitation cycles. A sustained lapse risks losing experienced program managers and technical reviewers who move to other roles. Rebuilding that capacity takes time even after the programs resume. The lapse does not affect existing awards. Companies with active Phase I, II, or III awards continue under their current terms. Phase III commercialization work, funded by non-SBIR sources, also continues.
What Comes Next
The next likely legislative vehicles for reauthorization are appropriations bills or a continuing resolution. No standalone vote is scheduled. The Ernst-Markey negotiations are the critical factor. If the two reach a deal, it could move quickly through both chambers. If they don't, the clean extension (H.R. 5100) could potentially bypass Ernst through a procedural workaround, but Senate leadership has not signaled willingness to do so. The FY2026 appropriations process remains unfinished. A bipartisan spending package covering Energy, Commerce, Justice, Interior, NASA, and NSF was released in January with SBIR-adjacent workaround provisions - giving some agencies flexibility to reprogram innovation funds through alternative mechanisms. But these workarounds cannot substitute for formal reauthorization and do not restore the SBIR and STTR programs themselves. Some observers expect a resolution by the end of the current fiscal quarter (March 2026). Others note that Congress has little structural incentive to rush: the programs' absence does not trigger a government shutdown or visible crisis, so it risks being deprioritized against other legislative deadlines. Regardless of which bill ultimately passes, the reauthorization debate has surfaced several changes likely to appear in any final legislation: strengthened foreign adversary screening, some form of commercialization accountability for repeat winners, larger follow-on awards to bridge the valley of death, and provisions for first-time applicant access.
What Small Businesses Should Do Now
The situation is frustrating but not without options. If you have an existing SBIR or STTR award, your funding continues. Phase III follow-on work remains available. Contact your Program Officer for guidance specific to your award. If you were planning to apply, shift your focus to alternatives while monitoring the legislative situation. Federal contracts with small business set-asides remain fully available - over 4,800 opportunities are currently listed on SAM.gov with 8(a), HUBZone, SDVOSB, and WOSB designations. State innovation programs, foundation grants, and non-SBIR federal grants from agencies like DOE, EPA, and USDA also remain open. For R&D-focused companies specifically, Broad Agency Announcements, Other Transaction Authorities, and direct agency research contracts continue to operate. DARPA, NASA, ARPA-H, and DOE all have active non-SBIR research funding programs. See our companion guide on R&D contracts beyond SBIR for details. Prepare your materials now. When the programs resume, agencies will likely fast-track new solicitations. Companies with polished proposals, current SAM.gov registrations, and ready budgets will be first in line. Draft your technical approach, commercialization plan, and budget while waiting. Verify your SAM.gov registration is current. Renewals take time, and an expired registration blocks all federal applications. Engage with advocacy. Organizations like the Small Business Technology Coalition (SBTC) and the National Small Business Association (NSBA) are actively lobbying for reauthorization and provide regular updates on legislative progress. Search Funding Landscape for open opportunities that match your technology area. We track SBIR/STTR alongside thousands of other federal, state, and foundation funding programs.