INNOVATE Act
Sponsored By: Senator Joni Ernst
Introduced
Summary
This bill reorganizes and raises funding floors for the SBIR/STTR programs while creating a new DoD-focused "strategic breakthrough" funding stream to push small-business technologies toward defense acquisition and manufacturing.
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- Small businesses and new entrants get clearer entry paths. Agencies must set aside at least 2.5 percent of SBIR funds for a new Phase 1A entrant track that targets firms that never had SBIR/STTR awards and funds proposals up to $40,000 with streamlined two-page applications.
- The Department of Defense gets a dedicated strategic breakthrough allocation to move mature projects toward production. DoD may award up to $30 million to a single small business for awards lasting up to 48 months and must speed decisions and provide direct access to program offices.
- Access and security rules change how awards are made. The bill shifts preference rules toward ‘‘emerging States’’ and rural areas and bans consideration of race, gender, or ethnicity. It also tightens national-security due diligence with a 10-year foreign-risk lookback and restricts overseas transfers of SBIR/STTR intellectual property.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 2 benefits, 0 costs, 3 mixed.
Large DoD awards to scale production
If enacted, the Department of Defense would set aside at least 0.25% of its extramural research or R&D budget each year starting in FY2026 for a new 'strategic breakthrough' pool. DoD could give one award per small business of up to $30 million for up to 48 months. Awards must be paid from that pool and be completed quickly after a proposal is received. Winners must meet prerequisites like a prior SBIR Phase II, 100% matching new outside capital or allowed DoD funds, and not have more than $50 million in cumulative DoD awards.
New SBIR eligibility, caps, and preferences
If enacted, firms that have received more than $75 million in past SBIR/STTR Phase I/II awards could not apply to Phase I or II solicitations. A firm with more than $40 million in annual receipts could not apply for a Phase I award. A small business could submit no more than 3 proposals to a single solicitation and no more than 25 Phase I/II proposals to a single agency in one fiscal year; an individual cannot be the primary investigator on more than one proposal to the same solicitation at once. Repeat winners must meet commercialization ratios (at least 0.25 Phase II per Phase I after 10 Phase I awards and 0.5 after 25) and firms with over 25 Phase II awards must show lifetime non-SBIR receipts exceed lifetime SBIR awards and at least 65% of the last three years' receipts are non-SBIR; agencies may bar or limit firms until they meet these rules. Agencies may no longer consider race, gender, or ethnicity for awards and could give preference to owners who live in 'emerging States' or rural areas.
IP and security rules for startups
If enacted, SBIR/STTR contracts funded from program allocations would be firm-fixed-price by default unless an agency head writes a case-by-case exception. The SBA and agencies would publish best practices to help awardees avoid accidental investor disclosures to foreign parties. Agencies would check for 'foreign risk' using a 10-year lookback and could deny awards for covered ties, and they may not tell applicants before formal award that a denial was for foreign risk. Awardees could not transfer SBIR/STTR-funded IP to most foreign countries for 5 to 10 years, with limited NATO exceptions.
More STTR funding, early-stage focus
If enacted, agencies would have to use STTR money for fundamental research done with research institutions. DoD and NASA STTR funds would be limited to projects at technology readiness levels 1, 2, and 3. Starting in fiscal year 2026, agencies would also have to allocate at least 3.45% of the applicable budget to SBIR and at least 0.20% to STTR each year.
Small grants for new SBIR entrants
If enacted, each agency would have to set aside at least 2.5% of its SBIR funds for Phase 1A awards for new entrants. Each Phase 1A award would be no more than $40,000 and an applicant could get only one. Agencies must run these as open-topic notices and notify applicants of decisions within 90 days after the solicitation closes.
Sponsors & CoSponsors
Sponsor
Joni Ernst
IA • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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