SBIR Reauthorization at an Impasse: Why a Middle-Ground “Pass Now, Fix Later” Approach Is Necessary

The lapse in authorization of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs has exposed a fundamental challenge in federal innovation policy: how to restore continuity for American small businesses while ensuring meaningful, enforceable reform.

For decades, SBIR has played a central role in U.S. innovation, national security, and early-stage commercialization. Yet persistent challenges — including uneven commercialization outcomes, administrative barriers that deter commercial firms, and recurring award concentration — have fueled growing debate over SBIR reauthorization and reform.

The current SBIR lapse does not reflect disagreement over whether the program matters. It reflects a deeper conflict over leverage, strategy, and incentives — and the consequences of that conflict are being borne by small businesses, not policymakers.

This need not be a binary choice. Congress can reauthorize SBIR now and still fix what is broken — but only if reform efforts shift from obstruction to execution.

What Actually Happened

In September 2025, the House passed a clean SBIR/STTR extension through H.R. 5100 to prevent a lapse while longer-term reforms were debated. When the bill reached the Senate, it was advanced via unanimous consent — a standard procedure allowing broadly supported legislation to pass without debate if no senator objects.

A single objection halted the measure, and SBIR/STTR authority expired on October 1, 2025.

In the months that followed, responsibility for resolution became diffuse. Congressional staff across multiple offices indicated that the House had already acted and that progress depended on Senate negotiations. Yet no structured negotiation framework emerged, and direct engagement between the principal Senate offices involved was limited.

The result was paralysis rather than progress — with no shared timeline, no enforceable process, and no relief for small businesses caught in the middle.

Why “Fix It Later” Has Lost Credibility — and Why Delay Is Not the Wrong Tool

Skepticism toward “reauthorize first, reform later” is understandable. Past reauthorizations have often deferred reform, allowing structural issues to persist once urgency faded.

However, the current strategy of blocking reauthorization to force reform has created a different and equally damaging problem: it has placed American small businesses in a holding pattern, unable to plan, hire, or invest while Washington debates leverage.

The author believes that some backers of Senator Ernst’s approach oppose permanent SBIR authorization because recurring expiration cycles preserve leverage and influence in the policy debate. Permanent authorization would eliminate repeated crises — and with them, the justification for ongoing intervention by advocacy organizations.

Some reform advocates, including the Alliance for Commercial Technology in Government, have suggested that prolonged disruption is an acceptable cost of forcing reform. The author believes this posture reveals a troubling misalignment of incentives: elevating visibility, influence, and policy positioning ahead of the practical needs of small businesses. When advocacy organizations appear more focused on sustaining leverage and attention than restoring program continuity, reform ceases to serve its stated beneficiaries.

A Middle-Ground Path: Reauthorize Now, Reform with Structure

A sustainable solution requires moving beyond absolutist positions. The effort currently being used to block reauthorization would be far more productive if applied to fixing the program after reauthorization — through enforceable mechanisms rather than brinkmanship.

A credible middle-ground approach would include:

Immediate reauthorization to restore certainty for small businesses
Statutory deadlines requiring specific reforms within a defined timeframe
Mandatory commercialization metrics and transparent reporting
Automatic accountability triggers if reforms are not implemented

This approach preserves reform leverage while eliminating unnecessary harm to innovators and federal missions.

Targeting the Right Problems

Not all proposed reforms address the underlying issues. Award caps or proposal limits risk incentivizing fragmentation rather than commercialization, as high-volume participants adapt structurally without changing outcomes.

Evidence suggests that topic design, open-topic expansion, and Phase III transition incentives are more effective tools. These mechanisms reward companies with real products and customers rather than simply reshaping proposal behavior.

Reform should be judged by outcomes — not by how disruptive it is.

Why This Matters

SBIR and STTR remain essential to U.S. competitiveness and national security. But continuity without reform is insufficient — and reform without continuity is irresponsible.

American small businesses should not be treated as bargaining chips in a policy standoff. A durable solution requires a middle ground: reauthorize the program, then apply sustained, structured pressure to fix what is broken.

About the Author

American Defense Innovation Forum (AMDEF), focuses on advancing U.S. innovation policy that bridges commercial technology strengths with national defense priorities.