The INNOVATE Act modernizes the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs by increasing small business participation in STTR awards to 50 percent, creating new "Strategic Breakthrough" funding of up to $30 million per company for advanced defense technologies, and establishing a new Phase 1A program with $40,000 awards to encourage first-time applicants. The bill shifts program focus from diversity-based criteria to supporting businesses in emerging states and rural areas, imposes new national security screening to evaluate foreign connections, prohibits agencies from considering race or gender in funding decisions, and caps cumulative funding at $75 million per business while requiring most companies to eventually graduate from federal support by generating at least 65 percent of revenue from non-federal sources. The legislation also mandates firm-fixed-price contracts as the default, expands agency authority to recover awards if intellectual property is transferred to foreign entities, and requires the Government Accountability Office to report annually on security risks for three years, with both programs authorized through 2028.
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