Ernst Works to Protect Tax Dollars for Truly Small American Businesses

"We shouldn't be serving as a subsidy for Beijing when we are unleashing the Golden Age of America."

WASHINGTON - U.S. Senate Committee on Small Business and Entrepreneurship Chair Joni Ernst (R-Iowa) today spoke on the Senate floor about her work to stand up to Beijing, protect American intellectual property, and put our warfighters first.

She pointed out how, even though the SBIR-STTR programs are supposed to be America's seed fund for small businesses, in their current form, they prioritize a few large "mills" over truly small businesses, waste tax dollars that should be producing innovation for our nation's defense, and fail to protect taxpayer-funded technologies from foreign influence. She continued by stating that without necessary reforms, these set-aside dollars may be better off restored to agencies' research and development budgets.

Watch her full remarks here.

Ernst's Remarks:

"The status quo will not work.

"I cannot continue to let China win, allow waste to run rampant, or fail our warfighters.

"When it comes to foreign influence in the SBIR-STTR programs - the fox is in the hen house, and my colleague wants to shut the door and check back in a year.

"America's seed fund is in trouble: $5 billion dollars of agencies' R&D budgets are set aside each year for American startups to develop critical technology.

"In practice, however, too many large companies -not truly small businesses - drain millions of taxpayer dollars by churning out white papers, white papers - instead of turning the taxpayer's investments into reality.

"In the past decade, 25 companies alone in the Pentagon's SBIR program received 18 percent of the funding.

"A single company has received $650 million - more award dollars than the total issued to all companies in 26 states combined.

"Even the Pentagon's Defense Innovation Board concluded that the SBIR program has consistent over-investment in a small number of companies that fail to deliver scalable capabilities to warfighters, warranting direct corrective action.

"In short, our warfighters are not properly benefiting from the billions of dollars being invested into SBIR mills.

"Additionally, companies linked to our adversaries funnel taxpayer-funded intellectual property into Communist China and beyond.

"I have been crystal clear that I cannot support a one-year clean extension of the SBIR-STTR programs unless meaningful reforms are included to ensure every dollar serves America's investments.

"In just 2023 and 2024, we know 835 applications for SBIR-STTR funding were flagged for foreign risks.

"835. Yet only 303 of those applications were denied.

"Even worse, a lack of foreign due diligence standards across government has opened the door for exploitation.

"Some agencies denied 100% of flagged applications, while other agencies denied less than 1% of those flagged applications!

"When I shared my report with the Pentagon, they AGREED that there are significant threats to our national security that MUST be addressed.

"If this program is to be extended, our taxpayers deserve to know that their representatives are, at a minimum, stopping wasteful spending to unproductive firms and implementing urgent safeguards to protect technology from our adversaries.

"That's why my amendment to H.R. 5100 would provide a 30-day extension of the SBIR and STTR programs, with necessary reforms.

"Simply, this measure would:

"Number one, root out waste and prioritize our truly small businesses by establishing a reasonable lifetime limit on SBIR funding - which would affect only 0.2 percent of participants in the program.

"And two: Counter Chinese espionage by standardizing the foreign risk definition across our federal agencies.

"It's common sense, folks.

"We shouldn't be serving as a subsidy for Beijing when we are unleashing the Golden Age of America.

"But that risk is real and present today, and additional taxpayer dollars cannot go out the door unless we secure this program now.

"Our country cannot and should not delay these reforms any longer.

"If my colleagues truly oppose even basic safeguards, then this SBIR set-aside charade should end, and taxpayer dollars should be restored to the agency's R&D budgets where they will better serve our warfighters and strengthen our nation's competitiveness.

"Instead of recklessly extending the status quo for another year, these set aside dollars would simply be returned to each agency.

"And small businesses can continue to compete for those awards.

"I believe President Trump has assembled a world-class administration that is more than ready to deploy these R&D dollars.

"Unburdened by additional layers of bureaucracy, agencies can execute awards to small businesses in line with both the taxpayers' interests and our national security.

"I am willing to work with you to find a commonsense solution - one that works for both sides, and ultimately, the American people.

"However, as the proposal stands, on behalf of our warfighters, our national security, and our truly SMALL businesses, I cannot let the status quo continue."

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Permalink: https://www.sbc.senate.gov/public/index.cfm/2025/9/ernst-works-to-protect-tax-dollars-for-truly-small-american-businesses