Senate Bipartisan Deal Would Restart SBIR/STTR With Major New Rules
February 26, 2026 · 2 min read
Claire Cummings
A bipartisan Senate deal announced February 25 would restart the expired Small Business Innovation Research and Small Business Technology Transfer programs — but with sweeping new rules that will reshape how startups compete for federal R&D dollars.
Sens. Edward Markey (D-MA) and Joni Ernst (R-IA) reached a compromise on the "Small Business Innovation and Economic Security Act," which has been hot-lined in the Senate, signaling leadership believes it can pass without procedural objections. The programs expired on September 30, 2025, leaving thousands of small businesses in limbo.
What the Bill Changes
The draft extends SBIR/STTR authorization through September 30, 2031, but adds several provisions that firms will feel immediately.
First, proposal caps: beginning in FY2027, each agency's SBIR/STTR director must set an equal submission limit for all firms — per year, per solicitation, or per topic, at the agency's discretion. Waivers are limited to 5% of topics annually for "time-sensitive and urgent" needs.
Second, security gates: every application will face a new foreign-risk evaluation covering cybersecurity practices, patent activity, employee backgrounds, and financial ties to countries of concern. Denial doesn't permanently bar a company, but the screening adds a new compliance layer.
Third, a new Strategic Breakthrough Phase II track with awards up to $30 million over 48 months, funded from up to 0.50% of each agency's extramural R&D budget. Eligibility requires a prior Phase II award and 100% matching funds (200% at DoD).
What Grant Seekers Should Do Now
Small businesses that paused SBIR/STTR planning should resume immediately. The hot-line procedure suggests the Senate could vote within days. Companies should audit their foreign-entity disclosures and cybersecurity documentation now, before the security screening provisions take effect.
The proposal cap means firms that previously submitted large volumes of applications will need to be more strategic about which topics they target. Quality over quantity becomes the law, not just good advice.
For deeper analysis of how the new SBIR rules affect your submission strategy, the Granted blog tracks federal funding policy developments as they unfold.