S. 3971, the Small Business Innovation and Economic Security Act, became Public Law 119-83 on April 13, 2026. Its ten sections do three kinds of work. Sections 9 and 10 push the expiry dates of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grant programs from September 30, 2025 to September 30, 2031. Section 2 makes a connection to any of eight named federal watchlists a ground on which an agency must deny an application, and strikes the second half of the test that ground sits in. Sections 3 through 8 change how the programs run.

How It Passed

Sen. Joni Ernst (R-IA) introduced S. 3971 on March 3, 2026, with one cosponsor. The Senate disposed of it the same day. The Congress.gov action record reads: "Introduced in the Senate, read twice, considered, read the third time, and passed without amendment by Voice Vote."

The House took it up thirteen days later. On March 16 the chamber "proceeded with forty minutes of debate on S. 3971" under suspension of the rules, and at the end of that debate "the Yeas and Nays were demanded and ordered." The vote came the next day: "On motion to suspend the rules and pass the bill Agreed to by the Yeas and Nays: (2/3 required): 345 - 41 (Roll no. 89)." It was presented to the President on April 2 and signed on April 13.

Neither chamber used unanimous consent to pass it. A voice vote is a vote, and Congress records it as a separate category: across all 1,622 nominations the Senate confirmed in the 119th Congress, its own records read "Confirmed by Voice Vote: 1034", "Confirmed by Yea-Nay Vote: 588", "Confirmed by Unanimous Consent: 0". On S. 3971 the only disposition in the entire action record taken "without objection" is the House motion to reconsider, laid on the table. Forty-one members voted no.

What SBIR and STTR Are

SBIR.gov, the Small Business Administration's site for both programs, describes them as "an important source of early-stage technology funding for small businesses," coordinated by SBA and "funded through 11 participating federal agencies."

The set-aside behind that funding is statutory. Under 15 U.S.C. 638(f)(1), a federal agency with an extramural budget for research or research and development over $100,000,000 must spend "not less than 3.2 percent of such budget in fiscal year 2017 and each fiscal year thereafter" with small business concerns through SBIR. Under 638(n)(1), an agency with an extramural budget for research over $1,000,000,000 must spend not less than 0.45 percent through STTR, a rate set "for fiscal year 2016 and each fiscal year thereafter." SBIR.gov names the eleven participating agencies as the Departments of Agriculture, Commerce, Education, Energy, Health and Human Services, Homeland Security and Transportation, the Environmental Protection Agency, NASA, the National Science Foundation, and the department it lists as the Department of War — which both the Small Business Act and S. 3971 call the Department of Defense.

Section 638(e) sets the shape of each program. SBIR runs through "a first phase for determining, insofar as possible, the scientific and technical merit and feasibility of ideas that appear to have commercial potential"; a second phase that "will further develop proposals which meet particular program needs"; and, "where appropriate, a third phase for work that derives from, extends, or completes efforts made under prior funding agreements," in which commercial applications "are funded by non-Federal sources of capital or, for products or services intended for use by the Federal Government, by follow-on non-SBIR Federal funding awards."

STTR is the same three-phase structure applied to "cooperative research and development," which the statute defines as work "conducted jointly by a small business concern and a research institution in which not less than 40 percent of the work is performed by the small business concern, and not less than 30 percent of the work is performed by the research institution." A research institution is a nonprofit institution as defined in 15 U.S.C. 3703(5), and the definition "includes federally funded research and development centers."

There is no single dollar ceiling. Section 638(j)(2)(D) tells the SBA to write award guidelines with "an increase to $150,000 in the amount of funds which an agency may award in Phase I of an SBIR program, and to $1,000,000 in Phase II of an SBIR program, and an adjustment of such amounts every year for inflation." The STTR guideline at 638(p)(2)(B)(ix) is the same pair of figures, on "1-year awards for Phase I" and "2-year awards for Phase II," with "greater or lesser amounts to be awarded at the discretion of the awarding agency, and shorter or longer periods of time to be approved at the discretion of the awarding agency where appropriate for a particular project." Agencies use that discretion, and the spread is wide: the per-agency Phase I amounts SBIR.gov states run from $50,000 to $300,000, and the Phase II amounts from $400,000 to $2 million. One of the eleven does not state a Phase I ceiling at all: Health and Human Services lists "$275,000+".

The agency budgets behind those awards are listed the same way. The largest is $2.3 billion, at the department SBIR.gov lists as the Department of War; Health and Human Services follows at $1.2 billion and the Department of Energy at $349 million. The smallest listed is the Environmental Protection Agency's, at $5 million.

The Extension to September 30, 2031

Before this Act, 15 U.S.C. 638(m) read in full: "The authorization to carry out the Small Business Innovation Research Program established under this section shall terminate on September 30, 2025." The STTR expenditure requirement at 638(n)(1)(A) ran on the same clock, "with respect to each fiscal year through fiscal year 2025." Without action the authority lapsed and the set-asides went with it.

Section 9 of S. 3971 strikes "September 30, 2025" in subsection (m) and inserts "September 30, 2031," and strikes "2025" in subsection (n)(1)(A) and inserts "2031" — six more fiscal years, FY2026 through FY2031. Section 9(b) also lets an agency carry SBIR or STTR money left unspent at the end of fiscal year 2026 into fiscal year 2027. Section 10 runs to twelve subsections; eleven of them move a 2025 date to 2031 across named pilot programs and activities — phase flexibility, the commercialization readiness program for civilian agencies, accelerated awards, the Phase 0 pilot, administrative assistance, minimum performance standards, commercialization assistance, the due diligence program, the STTR military-institution pilot, the budget calculation pilot, and a Special Operations Command pilot in the FY2020 NDAA. The twelfth, section 10(l), repeals a Government Accountability Office mandate outright, striking section 5142 of the FY2012 NDAA (Public Law 112-81).

Sections 3 through 8 are where the program mechanics change: a Phase II "strategic breakthrough allocation" of not more than $30,000,000 per small business, drawn from not more than 0.50 percent of the extramural budget at agencies whose required SBIR expenditure exceeds $100,000,000, capped at a 48-month period of performance and conditioned on a prior Phase II award and "not less than 100 percent matching funds" (section 3); a limit, set by each agency's program director and "equally for all small business concerns," on how many Phase I and Phase II proposals one business may submit in a fiscal year, from fiscal year 2027 on (section 4); training activities "for contracting officers and the agency acquisition workforce" on Phase III awards, run by the SBA Administrator with the Secretary of Defense and the Administrator of General Services (section 5); a directive to procurement center representatives to "advocate for the maximum practicable use and transition" of SBIR and STTR products to Phase III, plus "simplified and standardized procedures and model contracts" for all three phases (section 6); technical and business assistance of "not more than $6,500 per project" in Phase I and "not more than $50,000 per project" in Phase II, with the recipient choosing the provider (section 7); and new award-type fields in the SBIR database (section 8).

The Eight-Watchlist Ground for Denial

Section 2 writes the same requirement twice: once into the SBIR agency duties at 15 U.S.C. 638(g), once into the STTR duties at 638(o). Each agency must "evaluate whether a small business concern presents a security risk for any reason," through the due diligence process at subsection (vv), through the disclosures applicants already file, or through "coordination with the intelligence community, as defined in section 3 of the National Security Act of 1947 (50 U.S.C. 3003), Federal law enforcement, and other counterintelligence capabilities of the Federal Government."

It then changes the denial paragraph in two ways. It adds three grounds, and it strikes the second half of the test the existing grounds sat in. Before the Act, an agency could "not make an award under the SBIR program of the Federal agency to a small business concern if the head of the Federal agency determines that" the applicant had one of three listed foreign relationships and that those relationships "interfere with the capacity for activities supported by the Federal agency to be carried out," created duplication, presented "concerns about conflicts of interest," "were not appropriately disclosed," violated federal law or agency terms, or "pose a risk to national security." Section 2 strikes that second subparagraph. What remains is a single list of grounds, any one of which is enough.

The first of the new grounds is a risk "connecting the small business concern to an entity, including any affiliates of the entity, or individual on" one of eight lists, which the Act names and attributes:

  • the UFLPA Entity List, maintained by the Department of Homeland Security;
  • the Non-SDN Chinese Military-Industrial Complex Companies List of the Office of Foreign Assets Control, maintained by the Department of the Treasury;
  • the Section 889 Prohibition List, established under section 889 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (Public Law 115-232) and maintained by the Department of Defense;
  • the list of Chinese Military companies required under section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (10 U.S.C. 113 note) and maintained by the Department of Defense;
  • the Military End User List, maintained by the Bureau of Industry and Security of the Department of Commerce;
  • the Entity List, maintained by the Bureau of Industry and Security of the Department of Commerce;
  • the List of Equipment and Services, maintained by the Federal Communications Commission; and
  • the Withhold Release Orders and Findings List, maintained by U.S. Customs and Border Protection.

The other two grounds are a security risk "with a primary source that is classified" and a security risk "that the Federal agency determines warrants a denial." The two versions of the paragraph are identical except for one word: the SBIR text says "security risk," the STTR text says "foreign risk."

The Act never uses the phrase "foreign adversary." The term the underlying statute defines is "foreign country of concern," which 15 U.S.C. 638(e)(17) gives as "the People's Republic of China, the Democratic People's Republic of Korea, the Russian Federation, the Islamic Republic of Iran, or any other country determined to be a country of concern by the Secretary of State." That term governs the due diligence provisions section 2 rewrites. The eight-list ground carries no country condition at all — it turns on whether the applicant is connected to something on one of the lists.

An agency that denies an application on any of those grounds must, "as appropriate pursuant to the discretion of the Federal agency and in a manner that does not compromise national security," notify the business of the determination and identify its basis. The STTR version of that clause says "security" where the SBIR version says "national security." The Act also requires each agency to adopt "a policy that clarifies that receipt of an award decision denying an application does not prohibit the small business concern from being eligible for an award in a subsequent award cycle."

What the Screen Sits On

The disclosure regime it draws on was already in the statute. Section 638(g)(13) requires every applicant to disclose seven things in its proposal: owners and covered individuals who are party to "any foreign talent recruitment program of any foreign country of concern"; any joint venture or subsidiary "based in, funded by, or has a foreign affiliation with any foreign country of concern"; "any current or pending contractual or financial obligation or other agreement specific to a business arrangement, or joint venture-like arrangement with an enterprise owned by a foreign state or any foreign entity"; whether the business "is wholly owned in the People's Republic of China or another foreign country"; "the percentage, if any, of venture capital or institutional investment by an entity that has a general partner or individual holding a leadership role in such entity who has a foreign affiliation with any foreign country of concern"; any technology licensing or intellectual property sales to a foreign country of concern "during the 5-year period preceding submission of the proposal"; and "any foreign business entity, offshore entity, or entity outside the United States related to the small business concern."

Section 2 also rewrites the due diligence program at 638(vv)(2)(A). That program already covered cybersecurity practices, patent analysis, employee analysis and "foreign ownership of a small business concern seeking an award, including the financial ties and obligations (which shall include surety, equity, and debt obligations) of the small business concern and employees of the small business concern to a foreign country, foreign person, or foreign entity." The Act adds four items, each tied to a foreign country of concern: foreign affiliations of "a covered individual, owner, or other key personnel"; "investment relationships"; "technology licensing agreements or joint ventures (including joint venture-like agreements)"; and "business relationships between a covered individual, owner, or other key personnel of a small business concern and an individual or entity in a foreign country of concern." A new subparagraph requires the program to "examine any relationship of a small business concern seeking an award to any entity or individual included on" the eight lists.

Who It Affects

Nothing in S. 3971 changes who may apply: both programs are reserved, in the statute's words, for award to "small business concerns." What changes is what an agency must examine before it awards, and what it must do when it finds something. The word "certify" does not appear anywhere in the Act; the obligations it creates run to the agencies, and the applicant-facing requirement it leans on — disclosure under 638(g)(13) — was already law before it.

The one deadline the Act moves outside the programs belongs to the Government Accountability Office. Section 2(b) amends section 4(b)(4) of the SBIR and STTR Extension Act of 2022 (Public Law 117-183) by striking "3 years" and inserting "8 years."

Key Sources

Drafted from primary source documents by LegislationPatch's automated research pipeline, then reviewed, verified, and edited by , Editor. Every figure and citation is checked against the official text before publication. See our editorial standards and AI disclosure.