The Small Business Innovation Research (SBIR) program expired at the end of September due to a disagreement between Senator Ernst (R-IA) and Senator Markey (D-MA), the chair and ranking member of the U.S. Senate Committee on Small Business and Entrepreneurship. They disagree about the status of “SBIR mills” within the U.S. Department of Defense, companies that receive the majority of their contracting revenue from SBIR awards, with limited commercialization. Senator Ernst believes they should be removed from the program; Senator Markey believes they play an important role in the innovation ecosystem. But while this debate plays out, future innovation suffers.
The SBIR program, established in 1982, is a powerful tool for the federal government to commercialize scientific research—turning theoretical ideas into technologies that can help millions of people and boost economic growth. Major companies that received SBIR funding when they started include Qualcomm, ViaSat, and Ginkgo Bioworks. These companies found commercial needs for products that fulfilled government needs.
With the SBIR program currently unauthorized, this innovation pipeline is dead. In 2024, $4.3 billion was spent on SBIR awards. That is billions of dollars that founders and academics who want to turn their research into useful technologies now cannot access. The end of the SBIR program is bad for American technical competitiveness. For example, the Air Force has used SBIR awards in recent years to fund the development of technologies such as Synthetic-aperture radar, hypersonics, and autonomous satellite docking operations.
While the current end of the SBIR program will mostly affect innovation coming out of three U.S. military departments, civilian agencies such as the National Science Foundation and the National Institutes of Health also spend hundreds of millions on SBIR per year. The end of the SBIR program negatively impacts research in many more fields than people expect. For example, the pause of the SBIR program at the Department of Education (ED) will close down a path for commercializing research-informed educational technologies.
While ED has one of the smallest programs, it also has an excellent rate of return, similar to how SBIR programs in other departments perform. From 2012 to 2022, ED’s SBIR program had a 9:1 rate of return on investment. It helped fund startups like PresenceLearning, a teletherapy startup, and Learning Ovations, a startup bought by Scholastic that helps students read at grade level.
The SBIR program at ED is a bright spot within the Institute of Education Sciences (IES), the division of ED that handles education data, research, and evaluation. SBIR spending within IES is a very small portion of IES spending overall. The FY 2024 budget for IES was $793 million. Yet in 2024, only $14 million was spent on ED’s SBIR awards.
ED SBIR spending is much more tangible compared to IES’s investments in education research. To start, the results of successful ED SBIR work are more obvious. Awards can easily be found on the SBIR website. Success can be measured in concrete ways. For example, did they get a follow-up SBIR award? Did their product receive traction from investors? IES often highlights these stories publicly. In contrast, when IES conducts oversight on education research funds, it takes years to understand if the grant for education research created positive outcomes.
For example, the National Center for Education Evaluation (NCEE) in 2025 published a review of one of ED’s largest research learning programs, the i3 program, and its successor, the Education Innovation and Research program. It took eight years for IES to review the impact of the $1.4 billion i3 program. The long timeline between spending and evaluation harms education research by increasing the odds that the federal government does not fund the most effective programs.
Unfortunately, this scenario occurred in the i3 program. NCEE found that only fifteen “development” grants to test new approaches to learning had a positive impact. In contrast, in a similar timeframe, ED SBIR funding produced $800 million in product sales, private investment, and acquisition value. Furthermore, there is far more accountability with SBIR spending, with progress and commercialization reports built into the requirements for an organization to get an SBIR award, along with market interest.
But with the SBIR program currently frozen because of a lack of reauthorization, funding will instead go to projects that may be slower to take effect and are less likely to deliver high-impact results for students. To ensure money is given to organizations that will produce research and innovation that scale successfully, the SBIR program needs to be reauthorized.
