{"id":70173,"date":"2025-01-28T18:30:00","date_gmt":"2025-01-28T18:30:00","guid":{"rendered":"https:\/\/staging.sightlinemg.com\/defensenews\/uncategorized\/2025\/01\/28\/pentagon-says-small-business-programs-not-part-of-grant-funding-pause\/"},"modified":"2026-08-08T01:18:27","modified_gmt":"2026-08-08T01:18:27","slug":"pentagon-says-small-business-programs-not-part-of-grant-funding-pause","status":"publish","type":"post","link":"https:\/\/staging.sightlinemg.com\/defensenews\/pentagon\/2025\/01\/28\/pentagon-says-small-business-programs-not-part-of-grant-funding-pause\/","title":{"rendered":"Pentagon says small business programs not part of grant funding pause"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Two key Pentagon small business innovation programs that award technology funding to nontraditional firms have not yet been impacted by the White House budget office\u2019s order to pause and review federal grant disbursement, according to a Defense Department spokesman.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Office of Management and Budget on Monday issued a memo directing federal agencies to temporarily pause \u201call activities related to obligation or disbursement of all federal financial assistance,\u201d according to <a href=\"https:\/\/www.washingtonpost.com\/business\/2025\/01\/27\/white-house-pauses-federal-grants\/\" target=\"_blank\">multiple news reports<\/a>. The order appears to pause any new grant awards and exempts programs like Social Security and Medicare that provide assistance directly to individuals.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Pentagon has several initiatives to aid small businesses looking to make inroads with the Defense Department, most notably the Small Business Innovative Research, or SBIR, and Small Business Technology Transfer, or STTR,<b> <\/b>programs. These congressionally mandated efforts require all federal agencies \u2014 not just DOD \u2014 to set aside funding to incentivize small companies to engage in early-stage research and development.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">During a Senate Armed Services Committee hearing Tuesday, several lawmakers expressed concern that the White House\u2019s grant funding pause could impede these efforts. But a Pentagon spokesman told Defense News the department does not believe the programs fall within the scope of the memo.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cSBIR\/STTR programs are funded through contracts,\u201d the spokesman said. \u201cThey are not considered grants or financial assistance. As such, we have not been applying the OMB memo to the SBIR\/STTR program.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Funding for <a href=\"https:\/\/www.defensenews.com\/congress\/2022\/09\/29\/congress-reauthorizes-dod-innovation-grants-with-new-china-safeguards\/\" target=\"_blank\">SBIR and STTR was last reauthorized in 2022<\/a> and that authority is set to expire this September.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While these initiatives are <a href=\"https:\/\/crsreports.congress.gov\/product\/pdf\/IF\/IF12874#:~:text=Given%20the%20perceived%20importance%20of,research%20and%20development%20(R%26D)%20performed\" target=\"_blank\">largely supported in Congress and in the Pentagon<\/a> and offer small companies a chance to use DOD\u2019s interest to woo investors, there are ongoing efforts to reform the programs. In a report released last fall, the <a href=\"https:\/\/www.gao.gov\/products\/gao-24-105470\" target=\"_blank\">Government Accountability Office reviewed 34 incidents of fraud in SBIR\/STTR programs<\/a> and found that most agencies do not conduct fraud risk assessments.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In one case study, a business owner who misrepresented his companies received seven awards from the Army, Air Force, Defense Advanced Research Projects Agency, Missile Defense Agency, NASA and the Energy Department.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sen. Joni Enrst, R-Iowa, said during Tuesday\u2019s hearing that while she thinks SBIR and STTR are important tools for small businesses, she\u2019s concerned that a subset of funding recipients are abusing the mechanism.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cIn the past decade, 25 companies \u2014 they\u2019re notoriously known in my circles as SBIR mills \u2014 received 18% of all award dollars at DOD, amounting to about $2.3 billion,\u201d Ernst said. \u201cThat\u2019s a $92 million windfall per company in a program meant for small businesses.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Nathan Diller, the former director of the Air Force\u2019s AFWERX innovation hub and a witness at the hearing, said one option for reforming the programs is to make the awards available to a wider pool of companies. That may mean issuing smaller dollar contracts initially that can be followed up with larger awards to firms with promising technology.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u201cWe also need to be very deliberate about scaling \u2014 and scaling quickly \u2014 to those best companies,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The department does not believe SBIR and STTR programs fall within the scope of an Office of Management and Budget order to halt federal grant funding.<\/p>\n","protected":false},"author":7,"featured_media":116767,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":19,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":{"9":{"categories":["industry","home"],"primary_category":"industry"}}},"categories":[8,160,33,12,36,19],"tags":[],"coauthors":[3468],"class_list":["post-70173","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-congress","category-daily-news-roundup","category-home","category-industry","category-newsletters","category-pentagon"],"acf":{"subheadline":"","legacy_arc_id":"HLLTONLYVFD3JAWFCJ3KWVI4HY","arc_canonical_url":"\/pentagon\/2025\/01\/28\/pentagon-says-small-business-programs-not-part-of-grant-funding-pause\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented 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