Hearings to examine reforming SBIR-STTR for the 21st century

Small Business Administration OversightSenate Small Business and Entrepreneurship · March 5, 2025 · 119th Congress
The Senate Committee on Small Business and Entrepreneurship held this hearing to examine reforms needed before the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs expire at the end of the fiscal year. Begins at ▶ 0:21:20
Transcript
Highlights

Title

Reauthorizing and reforming the SBIR-STTR small business research programs

Purpose

The Senate Committee on Small Business and Entrepreneurship held this hearing to examine reforms needed before the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs expire at the end of the fiscal year. Chair Joni Ernst used the hearing to unveil her INNOVATE Act, a reauthorization bill adding award caps, streamlined applications, and new foreign-influence safeguards, while Ranking Member Ed Markey and several witnesses argued against capping funding to the most productive companies. Three witnesses testified for the majority (a small business development center director, a startup CEO, and a venture capitalist) and one for the minority (a Massachusetts SBIR company executive). Begins at▶ 0:21:20

Who spoke

• Chair Joni Ernst (R-IA)▶ 0:21:20: Opened the hearing on SBIR/STTR reauthorization and introduced her INNOVATE Act▶ 0:22:40, which imposes a $75 million lifetime award cap▶ 0:24:28, creates $30 million Strategic Breakthrough Awards requiring 100% matching funds▶ 0:25:25, and adds new foreign-risk definitions and clawback authority▶ 0:26:18; later pressed Dr. Mahmud on Triton Systems' 902 awards and entered open-source data on the company's China-tied spinoffs into the record▶ 1:46:18▶ 1:47:58.

• Sen. Ed Markey (D-MA), Ranking Member▶ 0:27:55: Touted Massachusetts's SBIR track record, including more than 24,000 awards and roughly 70 Alzheimer's-related awards▶ 0:28:25▶ 0:30:51; cited a $20-to-$30 return per federal dollar and 65,000 jobs created annually▶ 0:31:19; argued against capping funding to successful firms, comparing it to never limiting Lockheed or Raytheon's contracts▶ 0:32:17.

• Mr. Austin Strawhacker, America's SBDC Iowa▶ 0:37:36: Described serving roughly 5,000 clients a year, launching 225 businesses, creating 1,795 jobs, generating $174 million in sales, and securing $57 million in capital in 2024, for a 3.7 ROI▶ 0:38:31; proposed a smaller Phase I award and more application feedback▶ 0:41:05; noted just five states received 46% of SBIR awards and dollars▶ 0:41:32.

• Dr. Ken Mahmud, Triton Systems (minority witness)▶ 0:42:58: Said Triton components save the Air Force an estimated $550 million on the F-35 and $280 million on the F-22▶ 0:44:26, and that its sensor technology enabled the world's smallest heart pump▶ 0:45:52; recommended incentives for Phase 3 transition, streamlined contracting, and permanent reauthorization▶ 0:47:01; was later questioned by Chair Ernst about 902 awards worth over $300 million and ties between Triton spinoffs and Chinese firms▶ 1:46:18.

• Mr. Caleb Carr, Vita Inclinata CEO▶ 0:48:36: Recounted founding his company after a friend died during a botched helicopter rescue▶ 0:48:36; said an SBIR open-topic award led to a $50 million Army transition and deployment in Ukraine, wildfire response, and the National Guard▶ 0:50:04▶ 0:50:29; opposed treating SBIR as a "welfare program" and backed firm fixed-price contracts and award limits for repeat non-commercializing recipients▶ 0:52:40▶ 1:28:52.

• Mr. David Rothzeid, Shield Capital▶ 0:54:06: Said venture investment in defense tech grew from $8 billion in 2016 to $42 billion last year▶ 0:55:07; cited a Naval Postgraduate School study finding the top 25 SBIR recipients captured 18% of DOD Phase I/II funding ($2.3 billion, 2012–2021), while only 16% of Phase II winners progress further▶ 0:56:01▶ 0:56:59; urged generalizing solicitation topics and capping serial recipients▶ 1:02:31.

• Sen. Jacky Rosen (D-NV)▶ 1:04:00: Noted Nevada ranked in the bottom third of states for SBIR awards in 2023, versus a national average of 118 awards per state▶ 1:04:58; asked Strawhacker how to help rural and underserved businesses navigate the program▶ 1:07:34.

• Sen. Jon Husted (R-OH)▶ 1:09:19: Questioned how SBIR selects award recipients compared with real market discipline▶ 1:09:44; asked witnesses whether prime contractors box in small businesses through restrictive IP and bidding terms▶ 1:13:33.

• Sen. Jeanne Shaheen (D-NH)▶ 1:22:42: Apologized for missing earlier testimony due to an Armed Services hearing▶ 1:22:42; highlighted a New Hampshire company's aircraft-carrier helmet system addressing hearing loss▶ 1:25:49; said she saw no reason to cap good ideas but heard arguments for caps from witnesses▶ 1:28:48; asked about a reform commission's proposal to build cost-savings analysis into the budget process▶ 1:35:19.

• Sen. Todd Young (R-IN)▶ 1:50:45: Noted his work chairing the National Security Commission on Emerging Biotechnology, whose report will flag China outspending the U.S. on critical technology▶ 1:51:26; argued the U.S. must leverage private capital markets rather than direct government funding, citing that government labs' share of R&D spending fell from 24% in 1960 to under 1% today▶ 1:51:56; raised a proposal to preserve R&D tax deductions and expand SBIR's open-topic approach▶ 1:52:52▶ 1:54:19.

Key moments

• Chair Ernst's INNOVATE Act would impose a $75 million lifetime SBIR/STTR award cap and create $30 million Strategic Breakthrough Awards requiring 100% matching funds▶ 0:24:28▶ 0:25:25.

• Markey directly disputed capping awards, arguing Congress never limits contracts to Lockheed Martin or Raytheon and shouldn't limit small businesses either▶ 0:32:17.

• Rothzeid cited a Naval Postgraduate School study: the top 25 SBIR recipients captured 18% of all DOD Phase I/II funding ($2.3 billion between 2012–2021), and only 16% of Phase II winners ever transition further▶ 0:56:01▶ 0:56:59.

• Carr described how an SBIR-funded harness let a helicopter-crash survivor "walk away... with only bumps and bruises" after his best friend died on impact in the same accident▶ 0:50:48▶ 0:51:14.

• Ernst said only 10% of DOD SBIR/STTR funding over the past five years went to companies without prior government contracts, calling the program skewed toward entrenched players▶ 1:01:41.

• Ernst confronted Dr. Mahmud over Triton Systems' 902 awards totaling more than $300 million and entered open-source data into the record on Triton-linked spinoffs tied to a Chinese financial services firm and a $22 million Chinese joint venture▶ 1:46:18▶ 1:47:22.

• Mahmud said Triton components are projected to save the Air Force roughly $550 million on the F-35 and $280 million on the F-22▶ 0:44:26.

• Strawhacker said just five states received 46% of all SBIR awards and dollars nationally▶ 0:41:32.

• Rosen noted Nevada fell in the bottom third of states for 2023 SBIR awards against a national average of 118 awards per state▶ 1:04:58.

• Rothzeid said venture capital investment in defense technology rose roughly sevenfold, from $8 billion in 2016 to $42 billion last year▶ 0:55:07.

Metadata

CommitteeSenate Small Business and Entrepreneurship
Chamber / CongressSenate · 119th Congress
DateMarch 5, 2025
TypeMeeting
Witnesses
(none listed in event metadata)
Videosenate-isvp
Transcript215 caption blocks · 9,630 words · 1:56:44 runtime
EventCongress.gov 336687