This bill primarily extends the SBIR and STTR programs through September 30, 2031, and makes several policy changes focused on (1) research/security screening, (2) larger “breakthrough” Phase II funding, (3) reducing proposal/admin burden, (4) improving Phase III transition and contracting workforce awareness, and (5) improving data collection and procurement tracking.

Key sections:

• Sec. 2 - Bolstering research security

  • Expands and formalizes agencies’ authority/requirements to evaluate “security risk” for applicants/awardees, including via:

    • the due diligence program (cross-referenced as subsection (vv)),

    • disclosures, and

    • coordination with the intelligence community and law enforcement/counterintelligence.

  • Adds/expands specific “list-based” risk triggers, tying risk to connections with entities/individuals on several U.S. government lists (e.g., UFLPA Entity List, OFAC Non‑SDN Chinese Military‑Industrial Complex Companies List, Section 889 list, BIS Entity List, Military End User List, FCC equipment/services list, CBP Withhold Release Orders list, etc.).

  • Requires agencies to have a process to notify a small business when an application is denied (or determined risky) on security grounds, to the extent possible without compromising national security, and clarifies that denial doesn’t permanently bar future eligibility.

  • Expands what “due diligence” can assess (risk-based), including cybersecurity practices, patent analysis, employee analysis, foreign ownership/financial ties, foreign affiliations, investment relationships, licensing/joint ventures, and relationships to those listed entities.

• Sec. 3 - Phase II “Strategic Breakthrough” funding

  • Creates a Strategic Breakthrough Allocation/Award concept for agencies with SBIR required expenditure > $100M:

    • Up to 0.50% of the agency’s extramural R/R&D budget (FY2026 onward) can be used for these awards.

  • Allows very large Phase II-scale awards up to $30,000,000 total to a small business (including affiliates), potentially as a series of milestone-based awards, with up to 48 months total period of performance.

  • Requires the awardee to:

    • have at least one prior Phase II (SBIR or STTR),

    • provide 100% matching funds from new private capital and/or new non‑SBIR/STTR government funding triggered by the award,

    • show the tech is an effective solution (via market research).

  • Special DoD-only extra conditions, including a commitment for inclusion in a program objective memorandum (POM) and that at least 20% of the matching funds come from new non‑SBIR/STTR DoD funding.

  • Requires agencies to complete contract awards using these funds within 90 days of receiving a proposal.

  • Ties this to Commercialization Readiness Program expectations and requires briefings to Congress about whether agencies will use this authority.

  • Sunsets this “Strategic Breakthrough” authority on September 30, 2031 (reverting the law as if not enacted).

• Sec. 4 - Reducing administrative burden

  • Starting FY2027, each agency’s SBIR/STTR program director must set a maximum proposal submission limit per firm per fiscal year (applies equally), using one of several methods (per year / per solicitation / per topic).

  • Allows topic-by-topic waivers only for urgent, time-sensitive topics, with tight rules:

    • written justification,

    • approval within 15 days by the agency undersecretary overseeing SBIR/STTR and SBA Administrator,

    • waiver topics capped at 5% of topics per year,

    • reporting to Congress.

• Sec. 5–6 - Phase III education and improvements

  • Defines “agency acquisition workforce” and requires SBA (with DoD/GSA/etc.) to create training so contracting/acquisition staff understand:

    • Phase III authorities,

    • Phase III data rights,

    • executing Phase III sole source awards.

  • Updates SBA procurement center representative directives to advocate for maximum practicable Phase III transition.

  • Directs development of simplified/standardized procedures and model contracts for Phase I/II/III and clearer standardized clauses about what firms must provide for Phase III eligibility.

• Sec. 7 - Technical & business assistance changes + I‑Corps

  • Shifts assistance so awardees can select assistance (instead of agencies “entering into an agreement with vendors” as the main model).

  • Explicitly includes cybersecurity assistance and screening for potential foreign involvement in tech development/commercialization.

  • Allows using assistance funds to hire/augment staff for training/activities consistent with program goals.

  • Sets/keeps assistance caps as:

    • Phase I: up to $6,500 per project

    • Phase II: up to $50,000 per project

  • Requires agencies with an I‑Corps program to offer SBIR/STTR awardees an option to participate, and allows multiple funding sources to cover participation.

• Sec. 8 - Data collection & procurement tracking

  • Adds new SBIR database fields to tag awards as classified or as specific award types (direct-to-Phase II, subsequent Phase II, strategic breakthrough, Phase III prime/subcontract).

  • Requires GSA to update the Federal Procurement Data System (or successor) to track:

    • whether awards are those types,

    • whether a contract is designated Phase III,

    • whether non‑SBIR contracts/subcontracts are using SBIR/STTR-funded tech, and to reference prior SBIR/STTR contract IDs when a Phase II/III follows on from prior work.

• Sec. 9–10 - Extension and related program extensions

  • Extends overall authorization from 9/30/2025 to 9/30/2031 and similarly extends several pilots/authorities that were set to end in 2025.

  • Allows agencies to carry over remaining FY2026 required-expended funds into FY2027 for SBIR/STTR use.

  • Also extends dates for items like phase flexibility authority, CRP civilian pilot, accelerated awards, Phase 0 pilot, administrative assistance, due diligence program sunset, etc., generally changing 2025 → 2031 throughout.

[Credit: Simone Tramonte/WaterBear and CIWEM - Bioreactor facility run by the Icelandic company Algalif, 2021]

The Small Business Innovation and Economic Security Act

Because this bill is written as amendments to the existing SBIR/STTR statute (Small Business Act section 9), the “differences” are essentially the deltas it introduces. The biggest shifts vs. prior structure are:

1. Much more explicit and expansive “research security” screening

   • Prior SBIR/STTR had growing due-diligence and foreign risk focus in recent reauthorizations; this bill further hardens it by:

     • explicitly authorizing/mandating broader security-risk evaluation,

     • explicitly referencing coordination with the intelligence community,

     • adding detailed named lists as risk linkage triggers,

     • expanding due diligence factors (cyber + patent/employee + foreign ties + licensing/JVs + investments),

     • adding a notification process when denied for security reasons (without compromising national security), and clarifying denials don’t automatically bar future cycles.

2. A new “Strategic Breakthrough” Phase II funding pathway

   • Historically, Phase II awards are much smaller; this bill creates a way (for large agencies) to make up to $30M Phase II awards funded from up to 0.50% of the agency’s extramural R&D budget (starting FY2026).

   • Adds hard matching requirements (100%) and, for DoD, additional transition-to-program requirements and 20% DoD new-funding match requirement.

3. New agency-wide proposal submission caps (FY2027+)

   • This is a major operational change: each agency must implement a maximum number of proposals per firm per year (with narrowly-controlled waivers).

   • That’s framed as “reducing administrative burden,” but it also changes applicant strategy and agency intake volume.

4. More emphasis on Phase III execution through training + standardization

   • Requires structured training for contracting/acquisition workforce on Phase III (including data rights and sole source execution).

   • Directs simplified procedures/model contracts and standardized clauses, more prescriptive than a purely agency-by-agency approach.

5. More robust government-wide tracking of Phase III and SBIR-tech use

   • The bill pushes Phase III visibility into FPDS (or successor) and requires cross-referencing SBIR/STTR contract IDs, this is a meaningful change for measuring transition outcomes.

6. Straight extension: 2025 → 2031 (plus carryover)

   • The prior authorization end-date in statute was September 30, 2025; this bill moves it to September 30, 2031, and extends multiple pilots/authorities accordingly.

   • Adds a specific carryover allowance for leftover FY2026 required funds into FY2027.