To revive defense innovation, Congress must raise the SBIR admin cap—unlocking transition support, private capital, and real outcomes.
Pentagon leaders and lawmakers want more innovation, faster. It’s a righteous mission. The latest prescriptions, the SPEED Act and the INNOVATE Act, are big steps forward. Both aim to cut red tape to make way for emerging defense technology. But the biggest obstacle isn’t red tape; it’s a self-inflicted wound. We are actively starving the government personnel responsible for cultivating the next generation of defense technology.
Policymakers Want Speed, but Starving Program Managers Slows the Mission
This isn’t a mystery. In the last decade, the Defense Industrial Base (DIB) shed 40% of its small business suppliers. Most of these companies die in the so-called “Valley of Death” between a great idea and a real-world military capability. Policymakers often think the answer is to simply fund more startups. Yet velocity, not volume, wins innovation races. The real problem isn’t too few awards, it’s that we don’t support the startups and small businesses we’ve already funded.
Supporting Startups Requires More Than Just Writing More Checks
Consider the Small Business Innovation Research (SBIR) program, which helped grow defense tech unicorns like Anduril and Shield AI because program managers (PMs) stayed engaged, users kept testing, and private investors saw a signal worth backing. Replicate that process 100 times, and the DIB revives itself. Unfortunately, while we expect SBIR PMs to act like venture capitalists, spotting and nurturing high-potential companies, we give them the resources of a community bank. We must correct this imbalance.
A Simple, No-Cost Fix Can Unlock Game-Changing Results
Senator Ernst’s INNOVATE Act rightly targets long-needed reforms to improve commercialization and accountability. To ensure these vital reforms achieve their full potential, Congress should make one more simple, no-cost fix: raise the cap on SBIR administrative funds.
The percentage of an SBIR program budget that can be allocated for program administration is currently set at 3%. Raising it requires no new appropriations. The administrative funds are used by SBIR PMs to coach small businesses, connect them with end-users, and guide them toward commercialization and operational use. By comparison, traditional acquisition programs spend 15% of their budget on management and support.
To ensure the funds are spent on meaningful outcomes, Congress could require that a significant percentage (70%) of the SBIR administrative budget be used for documented services that help companies transition their technology to the warfighter or commercial markets. We already require commercialization plans. Without the right support, those plans don’t survive first contact with ruthless markets.
This isn’t a theoretical problem. The evidence is clear in SBIR programs that practice this today. For example, in the Navy’s SBIR program, hands-on support converts promising Phase I ideas into fielded tech at a rate Congress and DoD wished was standard. The pattern is obvious: where SBIR PMs meaningfully support small businesses, they grow into suppliers. Where they don’t, talent and tech walk away from the Arsenal of Democracy.
Achieving SBIR parity with large acquisition programs would transform SBIR program managers into true portfolio managers, yielding dramatic results. It would create a level playing field, enabling startups to compete more effectively with major defense contractors and their extensive capture management resources. This shift would also lead to higher Phase III transition rates, ensuring that more innovative capabilities make it to the field rather than being abandoned midstream. Additionally, it would unlock significantly greater private investment, as every dollar of targeted SBIR support typically attracts around six dollars in private capital—often more when companies successfully enter commercial markets.
To Win the Innovation Race, Follow-Through Matters More Than Funding Volume
Lawmakers are right to chase speed and scale, but cranking out more small checks without follow-through is the acquisition equivalent of handing out participation trophies. Startups don’t fail over a small Phase I award. They fail while waiting for their first real production contract.
To make reform count, Congress should make this simple fix. The cost is negligible. The strategic upside is decisive.
About the Author: Brian Miller
Brian Miller is SVP at BMNT, leading federal acquisition and go-to-market strategy across business development, product, and government affairs. He is a former national security advisor and professional staff member for the Senate Select Committee on Intelligence.
Image: Shutterstock
