Small Business Innovation and Economic Security Act
What does the Small Business Innovation and Economic Security Act do?
S 3971 is a Senate bill sponsored by Sen. Joni Ernst (R-IA). The SBIR and STTR programs are the federal government's primary mechanism for funding early-stage technology research at small businesses — agencies with large R&D budgets must set aside a percentage for competitive grants to startups, covering everything from initial feasibility through full development and commercialization. This law extends those programs through fiscal year 2031 and adds a significant national security layer: agencies must now screen all applicants against eight federal watchlists for foreign adversary connections, can deny grants based on classified intelligence, and must notify rejected applicants of the basis for denial when doing so won't compromise national security.
Did S 3971 pass? Where it stands
As of July 17, 2026, S 3971 has been signed into law on April 13, 2026.
Status: Signed into Law
Latest vote: House Passed 345–41 on March 17, 2026
Outlook: Enacted
Enacted: Signed into law on April 13, 2026
Key provisions
- Extended Through FY2031
- SBIR and STTR programs reauthorized through fiscal year 2031
- New strategic breakthrough allocations added — Phase II awards for critical technology areas requiring matching funds
- Eight-Watchlist Security Screen
- Applicants checked against UFLPA, OFAC Chinese Military-Industrial Complex, Section 889, Chinese Military Companies, Military End User, Entity, FCC Equipment, and CBP Withhold Release Orders lists
- Classified security risks are also a basis for denial; rejected applicants must be notified of the basis unless doing so would compromise national security
- Caps and Commercialization
- Maximum number of proposals per small business per fiscal year established for Phase I and Phase II
- Expanded Phase III commercialization training required for agency contracting officers
Last updated June 10, 2026