Small Business Innovative Research

The Small Business Innovative Research (SBIR) Program is a key element of the Army's Research, Development, Test & Evaluation (RDT&E) budget, specifically captured under Program Element (PE) 0605502A. The primary goal of this program is to stimulate technological innovation by leveraging the capabilities of small businesses across the United States. The SBIR program is coordinated by the Small Business Administration (SBA) and mandates that a percentage of the total extramural research budgets of federal agencies with significant research expenditures be reserved for contracts or grants to small businesses. This approach is designed to foster innovation, support economic growth, and ensure the Department of Defense (DoD) has access to cutting-edge technologies developed by the private sector.

Within PE 0605502A, there are two main budget lines: Project 861 and Project M40. Each project supports the overarching objectives of the SBIR program but may focus on different aspects or phases of research and development. The Army uses these projects to account for SBIR and the related Small Business Technology Transfer (STTR) program funding during the year of execution, as there is no advance-year budget programming for these initiatives. Instead, funds are redistributed from across the Army's RDT&E portfolio as needed to meet statutory requirements.

Project 861 is allocated to support Army Materiel Command (AMC) efforts in engaging small businesses for innovative research and technology development. The objective of this project is to identify and fund promising small business research initiatives that align with Army modernization priorities. These efforts typically focus on early-stage research and proof-of-concept activities, aiming to transition innovative solutions into Army programs of record or operational use.

By targeting high-potential technologies, Project 861 seeks to enhance the Army's technological edge and address specific capability gaps. Project M40 represents a larger portion of the SBIR funding and is also managed under the Army Materiel Command. This project is intended to support a broader range of small business research and development activities, including more advanced phases of technology maturation and integration. The goal is to facilitate the transition of successful SBIR projects from initial concept through prototyping and, ultimately, into fielded systems.

Project M40 emphasizes the importance of commercialization and the practical application of small business innovations to meet Army operational needs. The Small Business Technology Transfer (STTR) Program is closely related to SBIR and is also accounted for within this program element. The STTR program specifically encourages collaboration between small businesses and nonprofit U.S. research institutions, with the aim of bridging the gap between basic science and practical application. A portion of relevant agencies' extramural research budgets is allocated to STTR, supporting public/private sector partnerships that can accelerate technology transfer and innovation.

Both SBIR and STTR are justified by their ability to drive technological advancements that might not otherwise be pursued by larger defense contractors or within traditional government research channels. These programs are seen as critical for maintaining the Army's technological superiority, supporting the national innovation base, and ensuring a diverse supplier ecosystem. The flexible, execution-year funding model allows the Army to rapidly respond to emerging requirements and technological opportunities as they arise.