U.S. Senator Joni Ernst, chair of the Senate Committee on Small Business and Entrepreneurship, addressed the Senate regarding her efforts to reform federal programs aimed at supporting small businesses and protecting national security interests.
Ernst criticized the current structure of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. She argued that these initiatives, which are intended to help American startups develop critical technology using $5 billion in annual research and development funds, often benefit larger companies rather than truly small businesses. According to Ernst, "In practice, however, too many large companies —not truly small businesses — drain millions of taxpayer dollars by churning out white papers, white papers – instead of turning the taxpayer’s investments into reality."
She highlighted that over the past decade, 25 companies in the Pentagon’s SBIR program received 18 percent of total funding. Ernst noted that a single company was awarded $650 million—more than all companies in 26 states combined. She cited findings from the Pentagon’s Defense Innovation Board indicating consistent over-investment in a limited number of firms that fail to deliver scalable solutions for military needs.
Ernst also raised concerns about foreign influence and risks related to intellectual property developed with taxpayer funds. She said, "Additionally, companies linked to our adversaries funnel taxpayer-funded intellectual property into Communist China and beyond." In 2023 and 2024 alone, 835 applications for SBIR-STTR funding were flagged for foreign risks; only 303 were denied. Ernst pointed out inconsistencies among federal agencies in handling these cases: "Some agencies denied 100% of flagged applications, while other agencies denied less than 1% of those flagged applications!"
Emphasizing the need for reforms before extending these programs further, Ernst stated: "I have been crystal clear that I cannot support a one-year clean extension of the SBIR-STTR programs unless meaningful reforms are included to ensure every dollar serves America’s investments." Her proposed amendment to H.R. 5100 would extend SBIR and STTR by thirty days while implementing changes such as establishing a lifetime limit on SBIR funding—affecting only a small percentage of participants—and standardizing definitions related to foreign risk across federal agencies.
Ernst concluded her remarks by expressing willingness to collaborate on solutions but maintained her opposition to maintaining current practices without reforms: "However, as the proposal stands, on behalf of our warfighters, our national security, and our truly SMALL businesses, I cannot let the status quo continue."
