INNOVATE Act

The INNOVATE Act is a broad reform package intended to reshape the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. Its core aims are to boost participation by new entrants, accelerate the transition of defense-relevant technologies into military use, strengthen national security screening of SBIR/STTR awards, simplify and speed up program administration, and expand opportunities for American small businesses across the country (including rural and “emerging” states). The bill also shifts contracting toward firm-fixed-price arrangements, increases DoD involvement in strategic Phase II funding (with substantial caps and requirements), and adds new reporting and oversight provisions. A notable theme is a greater emphasis on national security considerations, geographic equity, and streamlined pathways from Phase I/Phase II to Phase III (deployment/transition). If enacted, the law would reorganize and expand several SBIR/STTR provisions (including new open-topic pathways, a Phase 1A entry path for first-time applicants, numeric funding targets, and new DoD funding authorities) while limiting certain competitive advantages based on prior awards or demographic characteristics. It also introduces more rigorous due diligence on foreign risk and requires agencies to use fixed-price contracts for SBIR/STTR funding agreements unless an agency head approves a different contract structure.