What does Preamble of INNOVATE Act do?

This bill aims to improve the SBIR and STTR programs under the Small Business Act

What does DEFINITIONS. of INNOVATE Act do?

This section defines terms used in the Act. Terms are defined based on the Small Business Act.

What does ENHANCING SMALL BUSINESS SUCCESS IN THE STTR PROGRAM. of INNOVATE Act do?

This section amends Section 9 of the Small Business Act. Amendments are made to subsection (e) regarding eligibility criteria and follow-on funding opportunities within the STTR program. Subsection (e)(6) is modified to include opportunities for follow-on funding in Phases II and III of the SBIR program. Subsection (e)(7) adjusts percentages related to the STTR program. Subsection (f)(1) modifies funding allocations, requiring a minimum of 3.45 percent of the budget in fiscal year 2026 and subsequent years. Subsection (n) revises funding percentages and adds a purpose clause for the STTR program. The purpose of the STTR program, as stated, is to fund small business concerns conducting scientific research that can benefit from partnerships with research institutions. The Department of Defense and NASA are required to solely fund research at technology readiness levels 1, 2, and 3 using their STTR budgets.

What does PHASE II STRATEGIC BREAKTHROUGH FUNDING. of INNOVATE Act do?

This section amends Section 9 of the Small Business Act to establish a 'Phase II Strategic Breakthrough Funding' mechanism. The Department of Defense is not required to waive requirements to award up to $30,000,000 to small businesses using strategic breakthrough allocations. A 'strategic breakthrough allocation' is defined as a minimum 0.25% of the Department of Defense’s extramural research budget, starting in fiscal year 2026. Awards under this program require the small business to have prior Phase II award experience, demonstrate matching funds, and have a product meeting certain readiness and military requirement criteria. Eligible activities include design for manufacturing, establishing manufacturing facilities, and testing/certification of production units. The Department of Defense must complete contract awards using strategic breakthrough allocation funds within 90 days of receiving a proposal.

What does IMPLEMENTATION BRIEFINGS. of INNOVATE Act do?

The Secretary of Defense must brief certain committees on implementation Briefings are required 60 days after enactment and until implementation is complete The briefings concern paragraph (3) of section 9(ff) of the Small Business Act

What does FIXED-PRICE CONTRACTS. of INNOVATE Act do?

This section amends the Small Business Act to require fixed-price contracts for SBIR and STTR programs. Funding agreements must be firm-fixed-price contracts unless a written determination is made to use a different structure. The head of the awarding Federal agency can make exceptions on a case-by-case basis.

What does ENCOURAGING NEW SBIR AND STTR ENTRANTS. of INNOVATE Act do?

This section amends the Small Business Act to encourage new entrants into the SBIR and STTR programs. It establishes limitations on funding received by existing businesses applying for Phase I or Phase II awards, capping it at $75,000,000. It restricts primary investigators from concurrently leading more than one proposal for a single Phase I or Phase II solicitation. It sets a $40,000,000 annual receipts limit for small businesses applying for Phase I awards. A new Phase 1A program is created to increase accessibility to the program for new entrants, utilizing open topic announcements. Each agency with an SBIR program is required to allocate at least 2.5% of its funding to Phase 1A awards. Phase 1A proposals are limited to a two-page report outlining the problem, proposed solution, impact, differentiation, and commercialization strategy. A small business concern is eligible for no more than one Phase 1A award, with a maximum award amount of $40,000. Agencies must notify applicants of award decisions within 90 days of the solicitation closing date.

What does COMBATING DISCRIMINATORY PRACTICES IN THE SBIR AND STTR of INNOVATE Act do?

This section amends Section 9 of the Small Business Act to modify eligibility criteria for the SBIR and STTR programs. The definition of 'emerging State' is established as the 25 states with the fewest combined SBIR and STTR award recipients who received their first Phase I award in the previous 10 fiscal years. The definition of 'rural area' is established as a county or political subdivision defined as mostly or completely rural by the Bureau of the Census. References to 'socially and economically disadvantaged individuals' are replaced with references to 'individuals who reside in emerging States or rural areas' in several subsections. Certain clauses within subsections (g)(8)(A), (k)(1)(F), and (o)(9)(A) are struck and redesignated. Subsections (j) and (mm) are adjusted to modify policy directives and eligibility requirements for agencies utilizing SBIR program funds. An agency is ineligible to utilize SBIR program funds if it considers race, gender, or ethnicity in award decisions, requires diversity/equity statements, or offers supplemental funds based on those factors.

What does DEFINITION OF OPEN TOPICS. of INNOVATE Act do?

This section amends the Small Business Act to define 'open topic announcement' An open topic announcement is a solicitation for SBIR or STTR proposals with a generalized problem statement The solicitation does not require specific technological specifications

What does REDUCING ADMINISTRATIVE BURDEN. of INNOVATE Act do?

This section amends the Small Business Act to reduce administrative burden. Small business concerns are limited to 3 proposals per Phase I or Phase II solicitation. Small business concerns are limited to 25 combined proposals per year to a single agency.

Back to bills

INNOVATE Act

Last updated: 7/23/2025 · Introduced: 3/5/2025

Author: Joni Ernst (R-IA)

TL;DR (AI)

The INNOVATE Act modifies eligibility criteria for the Small Business Technology Transfer (STTR) program, prioritizing funding for early-stage research and establishing specific funding percentages for different agencies.
The bill creates a 'Phase II Strategic Breakthrough Funding' mechanism within the Department of Defense, allocating funds for small businesses demonstrating advanced technology readiness and requiring matching funds.
To encourage participation from new businesses, the Act introduces limitations on funding received by existing businesses and establishes a new Phase 1A program with a streamlined application process.
The bill restricts federal agencies from considering factors like race, gender, or ethnicity in SBIR and STTR award decisions and prohibits supplemental funding based on such factors.
The Act extends the authorization for the SBIR and STTR programs to 2028 and mandates improved data collection and reporting on award classifications and performance metrics.

119th Congressin committeeOfficial page

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