This piece was originally published in the Techno-Industrial Policy Playbook.
Summary
The Small Business Innovation Research (SBIR) program, established in 1982, is a powerful tool for the federal government to commercialize innovative research and assist in turning startups into major companies. But despite meaningful reforms in recent years, problems persist that limit its ability to commercialize critical technologies. Companies earn hundreds of awards despite being mediocre at commercializing research, and malign foreign actors continue to take advantage of the SBIR program. Both harm the program's effectiveness at enhancing American competitiveness.
Senator Joni Ernst (R-IA), Chair of the Senate Small Business Committee, which oversees the SBIR program, has introduced S. 853, the INNOVATE Act, to reauthorize the SBIR program and address these problems. The bill enhances commercialization requirements to ensure that companies with dozens of awards do not rely on SBIR dollars as their principal source of revenue, strengthens the due diligence process that agencies undertake to evaluate SBIR companies for foreign risk, and reforms SBIR awards to increase the applicant pool and help companies cross the "valley of death."
Problem
At the inception of the program, Congress intended SBIR to provide early-stage seed funding to help the best startups attract private capital. The SBIR program counts among its success stories companies such as Qualcomm and Anduril, both of which used SBIR awards to scale up their operations.
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