U.S. SBIR Program Targeted: Pentagon Report Finds Foreign Entities Exploit Research Investments

Concerns are mounting over foreign influence within the U.S. Small Business Innovation Research (SBIR) program, a critical government initiative funding small businesses in research and development. Lars Schönander recently highlighted this issue, stating in a tweet, "> Talked about the SBIR program and the several unfortunate cases of malign foreign influence that have affected the program." This statement underscores growing anxieties about the integrity and security of federally funded research.

An April 2021 internal report by the Department of Defense (DoD) revealed that companies receiving funds through the DoD's SBIR program have been targeted by state-sponsored Chinese firms. The study, while based on a limited sample, concluded that "nearly all cases show that China, not the U.S., is the ultimate beneficiary of DoD and other U.S. government research investments." This finding has intensified calls for robust reforms to safeguard U.S. technological advancements.

The SBIR program, established by Congress in 1982, is designed to help small businesses conduct early-stage, high-risk research and development by allocating a fixed share of federal agencies' annual R&D spending. It operates in three phases, progressing from feasibility studies to full R&D and ultimately commercialization. The program is vital for bridging the "Valley of Death" for innovative technologies, enabling small businesses to de-risk investments and bring cutting-edge solutions to market.

In response to these threats, federal agencies are implementing stricter measures. The Department of Energy (DOE) has amended its review processes for SBIR/STTR Funding Opportunity Announcements to address foreign risks, requiring applicants to disclose foreign relationships. Similarly, the National Science Foundation (NSF) has focused on combating "Malign Foreign Talent Recruitment Programs" (MFTRPs), defining them broadly to include activities that could lead to unauthorized intellectual property transfer or conflicts of interest.

The CHIPS and Science Act of 2022 mandates federal funding agencies to prohibit participation in MFTRPs, and the NSF now requires Principal Investigators and co-Principal Investigators to annually certify they are not involved in such programs. These actions reflect a concerted effort by the U.S. government to protect its research ecosystem from undue foreign interference and ensure that taxpayer-funded innovations primarily benefit American interests. The ongoing debate over SBIR reauthorization in Congress further highlights the urgency of these security enhancements.