Congress handed a bipartisan invoice to reauthorize the Small Enterprise Innovation Analysis and Small Enterprise Know-how Switch packages (SBIR/STTR) practically six months after the packages’ authorization expired. President Donald Trump signed that laws on April 13. Now, don’t count on federal businesses to easily flip a swap again to regular. They may inherit a backlog amid a shrinking contracting workforce.
An evaluation of the SBIR.gov award database, which accommodates all 219,000 awards issued for the reason that program’s founding in 1983, exhibits the dimensions of disruption this funding lapse has precipitated, and the place the restart stress will hit hardest.
| 6,713 Avg Annual Awards FY20–FY24 | 4,729 Awards Truly Made in FY25 | ~1,984 Estimated Award Deficit in FY25 |
From fiscal 2020-2024, federal businesses averaged 6,713 SBIR and STTR awards yearly, with that common dropping to 4,729 awards in 2025. This hole of roughly 1,984 awards represents an estimated $490 million in funding. On the common Section I award dimension of $197,000, that shortfall represents greater than 1,500 analysis tasks that by no means acquired off the bottom.
NASA and the Vitality Division have been most affected by the lapse. NASA dropped from 437 awards in 2024 to simply 8 in 2025, or a 98% drop. Moreover, Vitality’s awards fell by 63%, from 554 awards to 209. Each businesses collectively contributed to the majority of funding lapses throughout the shutdown interval.
The Protection Division fared comparatively higher, declining 11% total. Nevertheless, information for the navy companies reveals a extra sophisticated image. The Air Pressure, traditionally the only largest SBIR funder inside DoD, dropped 37.5%, from 1,665 awards to 1,041. In the meantime, the Navy and Military elevated their award counts, suggesting these companies have been extra aggressive about processing current pipelines via Section III mechanisms that remained open throughout the lapse.
FY2025 Award Change vs. FY2024 Baseline — by Company
| NASA −98.2% (437 → 8 awards) |
| DoE −63.2% (554 → 209 awards) |
| DHS −35.3% (31 → 22 awards) |
| NSF −23.9% (419 → 319 awards) |
| HHS −14.1% (1,226 → 1,125 awards) |
| DoD −11.0% (3,440 → 2,944 awards) |
Supply: SBIR.gov award database. FY2025 awards counted via Dec. 31, 2025. Fiscal 2024 used as baseline.
Essentially the most consequential injury is to this system’s entrance door: Section I awards. Section I awards fell by roughly 1,571 awards in comparison with the 2020–2024 baseline. In distinction, Section II awards declined by solely about 412 in comparison with the baseline. That asymmetry has a direct impact on the innovation pipeline. Section I is the place new firms and new applied sciences enter this system. A 32% drop from the prior 12 months’s 3,811 awards represents hundreds of small companies that didn’t obtain a primary federal contract, didn’t generate the information wanted to draw personal co-investment and will have moved on to different pursuits solely. The businesses that didn’t get a Section I in 2025 received’t be eligible for Section II till they do, and when this system restarts, businesses will likely be processing a compressed queue of functions from companies at various phases of improvement.
| Fiscal Yr | Complete Awards | Section I | Section II | Vs. Avg |
| 2020 | 7,316 | 4,753 | 2,563 | +9.0% |
| 2021 | 6,881 | 4,495 | 2,386 | +2.5% |
| 2022 | 6,638 | 3,888 | 2,750 | −1.1% |
| 2023 | 6,325 | 3,790 | 2,535 | −5.8% |
| 2024 | 6,404 | 3,811 | 2,593 | −4.6% |
| 2025 (lapse) | 4,729 | 2,576 | 2,153 | −29.6% |
The Navy, which has been probably the most publicly clear about its restart preparations, presents a template. In line with Andrew Magliochetti, director of small enterprise packages for the Division of the Navy, the service has spent the previous six months consolidating its SBIR contract execution, centralizing 70% of actions that have been beforehand unfold throughout the division right into a single “center of excellence.” The Navy has additionally launched a commercialization assist program for current Section II awardees and is exploring mechanisms to just accept personal matching funds alongside SBIR contracts, a function that the reauthorization invoice formalizes via its new strategic breakthrough award construction.
Different businesses have been quieter. The info suggests NASA and DoE will face the steepest restart curves amid proposed price range cuts below the administration’s 2026 discretionary request. DOE’s ARPA-E program, which remained lively throughout the lapse, can soak up a few of that stress, but it surely operates in another way than the SBIR pipeline.
For contracting officers throughout the federal government, the extra speedy problem is the brand new compliance structure the reauthorization invoice introduces. Businesses should now set up and implement per-firm proposal submission caps, whereas concurrently clearing a backlog of proposals that collected throughout the freeze. The invoice additionally mandates further contracting officer coaching on Section III commercialization authorities, an space that GAO and inspectors common have repeatedly flagged as inconsistently carried out throughout businesses.
The packages will reopen. The query is whether or not the federal acquisition workforce, already strained by retirements and reorganizations, can course of the backlog on the tempo the market expects, and whether or not the startups that couldn’t wait six months will nonetheless be there when solicitations go dwell.
Methodology: Award counts and greenback figures derived from the SBIR.gov full award database (award_data_no_abstract.csv, downloaded March 2026, 219,000 data). FY2025 figures embody awards with proposal award dates from Oct. 1, 2024, via Dec. 31, 2025. Baseline averages calculated from FY2020–FY2024. Section I deficit estimate makes use of per-year averages from the identical baseline interval. Greenback deficit calculated utilizing common award quantities by part from the FY2020–FY2024 baseline. Company figures mirror all SBIR and STTR packages mixed.
Zachary Berenson is a product supervisor at Management Join, masking tendencies in federal expertise spending, protection acquisition and public sector innovation.
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