NIH Hits Pause: The SBIR/STTR Freeze Shaking America’s Innovation Pipeline

What NIH Actually Did

The National Institutes of Health (NIH) ended all active Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) funding opportunities.  (see NIH’s Notice NOT-OD-26-006).

According to the notice:

• No new SBIR/STTR applications can be submitted,
• No new solicitations will be released, and
• All open opportunities are closed.

Existing SBIR/STTR awards are not rescinded.  NIH explicitly states that active awards can continue.

However, NIH will NOT issue continuation funding for existing awards.  “NIH will not issue noncompeting continuation awards for existing projects until the SBIR/STTR program is reauthorized.”

As a consequence:

• Phase I → Phase II transitions are blocked.
• Year 2 or Year 3 continuation funding is paused.
• Multi year awards are stuck mid-stream.

Lastly, the NIH has stopped all new SBIR/STTR funding due to Congressional inaction.

This includes:

• No new Phase I awards
• No new Phase II awards
• No supplements
• No bridge awards

So why is there Congressional inaction?

The House has passed a reauthorization bill, however, such action is stalled in the Senate.  One group of Senators is seeking to revise the law to stop SBIR/STTR mills – companies that live off of SBIR/STTR grants and produce no commercial products.  On the other hand, another group does not want to make any changes.  

Assuming Congress comes to some reasonable agreement, funding should resume.

What should Founders do?

The first thing Founders (small business owners or entrepreneurs who are involved in these programs) should do is adjust their burn rate to protect cash.  Subsequently, they should inform all stakeholders and seek alternative funding sources (e.g., state-level innovative grants, other federally funded grants such as ARPA-H, BARDA, DARPA, and corporate partnerships). Lastly, Founders should be prepared for rapid resubmission of their applications when/if Congress reauthorizes SBIR/STTR funding.  Moreover, there is an opportunity for direct advocacy with Members of the Senate who are interested in reforming the program to ensure that they understand the benefit to their districts and home states that the program delivers. Please reach out if you believe you will be negatively impacted to see how WBD can assist.