Major SBIR reboot finally moving after months of uncertainty

Guest:	Emilly Murphy
Title:	Senior fellow at the George Mason University Baroni Center for Government Contracting
Summary:	The Senate has advanced a bill that would reauthorize the SBIR and STTR programs through 2031 after a long lapse, and it comes with some notable changes for small R&D firms. The package adds tougher foreign‑risk screening and introduces new “Strategic Breakthrough” phase 2 awards that can reach up to $30 million. Here's a look at what those shifts mean for innovators and contracting officers.

The Federal Drive with Terry Gerton provides expert insights on current events in the federal community. Read more interviews to keep up with daily news and analysis that affect the federal workforce. Reach out to Terry and the Federal Drive producers with feedback and story ideas at FederalDrive@federalnewsnetwork.com.

Interview transcript:

Terry Gerton We have some perhaps good news to start with this morning. It looks like a reauthorization for the SBIR/STTR program is going to finally make it through. What are you hearing about that? And what are you noticing about the current proposals?

Emily Murphy We do have good news. The Senate came to a compromise position and they passed S.3971 last week. So they’ve sent it over to the House. It’s being held at the desk. And that suggests that after five months of no SBIR authority, we’re going to get a reauthorization through. Fingers crossed.

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Terry Gerton And what is the process then for moving it through the House to finalization?

Emily Murphy It appears that it’s being held at the desk in the House, which suggests that they might be bringing it to the floor on suspension of the rules, which means it could be a fairly quick process. And we can have reauthorization done by the end of March. If they don’t, if they refer it to committee, obviously the House and the Senate have to pass identical pieces of legislation before it can be sent to the president, and that could add more time. But it looks like they came to a good compromise around the security issues around SBIR, around the SBIR mill issue and frankly, giving us five more years of the program rather than a two-year reauthorization or one-year reauthorization.

Terry Gerton One of the provisions that looks interesting is the creation of a Strategic Breakthrough phase 2 award. How do you think that will play out?

Emily Murphy I think it’s really interesting because it only applies to agencies that have over $100 million in extramural R&D already. So most of the agencies that do SBIR aren’t going to be affected, but agencies like the Department of Energy, Department of Homeland Security, Department of War will absolutely; this will apply to them. And it allows for companies that have received at least one successful phase 2 receive basically a follow-on phase 2, up to $30 million. But it also requires more matching funds outside of the SBIR program. So it’s a way of trying to make sure to put more funds towards a phase 2, allow it some time to succeed, but then also make sure that there is really a use for it afterwards. In particular, what’s interesting is that within the Department of War, it requires that it actually be a POM’d program already. So it’s got to be part of a program of record that’s going to be moving forward. So, it’s trying to bridge that valley of death that we talk about a lot in the SBIR program.

Terry Gerton I think people will be looking forward to that. There’s also a feature proposed that agencies would have the authority to limit the number of proposals a single firm can submit. Do you see that as an improvement in program integrity?

Emily Murphy Well, I think it’s an attempt to deal with what’s been called the SBIR mill problem. Some members of Congress have been concerned that companies proposed multiple times without commercializing. Personally, I’ve always thought that the way to address this was to actually look at past performance. There’s a story that it took Thomas Edison over a thousand times of failing before he invented the light bulb. So I’m always reluctant to say, you know, we’re going to cap the number of times someone fails at X number. But this seems to be instead an attempt to say, all right, agency by agency, with the ability to have waivers inserted, you can say how many times a company can propose per year, per opening, per topic that is out there, and limit it so that you’re getting a diverse group of companies making offers, and it’s not the same companies again and again. I do think, though, that it would be wonderful if we started looking at the past performance and whether or not a phase 1 and a phase 2 actually advance the agency’s understanding of a topic, using that more as a measure of success. But I think that this is a good proxy and it’s a good compromise that moves the ball forward.

Terry Gerton I’m speaking with Emily Murphy. She’s senior fellow at the George Mason University Barone Center for Government Contracting and a former GSA administrator. Emily, let’s change topics a little bit because OMB and GSA have stood up a new acquisition QSMO, Quality Service Management Office, in case folks aren’t familiar with that acronym. And it says their goal is to consolidate roughly 230 acquisition systems across the government. Let’s start first with how this fits with the administration’s other acquisition reform efforts.

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Emily Murphy We’ve already seen the administration come out with several executive orders around acquisition, including one on consolidation of acquisition within GSA of commercial type-acquisitions. This is not about actually consolidating the purchases themselves, but the systems that are used for those purchases. And GSA has received now a pre-designation with the idea that they will be later designated as the official QSMO for acquisition systems. It actually makes a lot of sense considering that GSA houses the integrated award environment already, IAE and SAM, that pulls all the data and it has to talk to all those acquisition systems. If successful, this will also give them the ability to do much better data analytics and understanding of where the government has the ability to do more leverage buying, where there are true commercial purchases that are being made across agencies where you could be aligning requirements better. But it’s a tough challenge for GSA because we’ve seen even across other agencies, when agencies try to reduce the number of systems they use internally, that’s been a challenge in the past.

Terry Gerton Well, this administration has not been shy about saying it wants to consolidate systems. It’s made the same announcement regarding HR systems and it’s looking kind of across the board. You’ve sat in the GSA seat before. Where would you start if you had to consolidate all of these systems?

Emily Murphy The first thing I’d want to do is make sure that the FIBF, or the Federal Integrated Business Framework — I will say there are some really good acronyms that come into shared services — but making sure that the FIBIF is really up-to-date, that we’ve got a very good understanding of the 80% solution for agencies and that that is aligned, and then making sure the right owner exists within GSA, the right champions, the right sponsorship. I think it’s a wonderful sign, though, that Administrator Forst and Deputy Director Ueland are partnering together to work on shared services. When GSA and OMB work together on shared services, you get a lot of progress made.

Terry Gerton It does sort of make sense as GSA is looking to consolidate all of the acquisition rules that you might also be able to consolidate the systems that support them.

Emily Murphy Yes, and the fewer deviations you’ve got, the fewer exceptions to the rules that you have, the easier it is to have a standard set of systems. That said, one of the challenges is going to be how does assisted acquisition play in this? How do things like multiple-award schedules or SEWP play in this? How does GSA’s new OCAS, Office of Centralized Acquisition Solutions, how does that play? Because they all have very different models for taking work in. GSA uses a different acquisition system within the Public Buildings Service than it does within the Federal Acquisition Service, because construction acquisition looks very different than commercial commodity acquisition, so trying to make sure they figure out how to align all of those is going to be challenging. There’s great potential there and it’s definitely worth pursuing, and I’m excited to see what they do with it. But they’ve got a lot of work cut out for them.

Terry Gerton Along these lines, GSA’s Technology Transformation Services now has a new director. Will this fall on his plate?

Emily Murphy It remains to be seen who is going to be designated. I suspect, though, that it’s going to be the systems and strategy branch within FAS. There’s an assistant commissioner there. And that tends to be where GSA puts a lot of its acquisition system launch. It is fascinating to see that the federal CIO coming over and taking over and being co-hatted as the second deputy within FAS, as the director of the Technology Transformation Service. It gives us another indication that we’re going to be aligning policy and implementation, and that’s an exciting thing to see as well. Because that’s where you get progress.

Terry Gerton Well, so this combination of digital services leadership across the GSA efforts, what will you be watching for to see that they’re all moving sort of in the same direction at the same pace?

Emily Murphy The first thing we’re going to be looking for is, is there is an updated FIBF? Then, does the designation follow? Does this pre-designation happen? Where are we by the end of September, and has the designation been officially made at that point in time? Is there any direction that’s coming out to agencies about spending on acquisition systems? What shows up in the 2027 budget request? Is there anything around the systems there? Is there in the ’28 budget request? Because a lot of the question also comes down to, how are you going to not just develop the requirements for the systems themselves, but if you want agencies to transition to a system, how are you going to fund that transition?

        Read more: Acquisition Policy

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