This bill adds a new section to chapter 303 of title 10, U.S. Code that requires each military department to designate at least five eligible SBIR or STTR Phase III programs each fiscal year as "Entrepreneurial Innovation Projects." Designated programs must be treated as part of the Department of Defense planning, programming, budgeting, and execution (PPBE) process and the Secretary of Defense must show estimated expenditures for those programs in the next Future-Years Defense Program (FYDP).
The law also mandates department-level advisory panels—largely private-sector plus limited federal membership—to identify candidate programs, review five-year program plans, and recommend nominations. The bill aims to accelerate transition of small-business-developed technologies into formal DoD plans, but it raises implementation questions about transparency, conflicts of interest, budget discipline, and how Phase III projects will be funded and prioritized alongside existing acquisition priorities.
At a Glance
What It Does
The bill requires each military department to designate at least five Phase III SBIR/STTR programs each fiscal year as 'Entrepreneurial Innovation Projects' and treat those programs as integral to PPBE. Designated programs must be included with estimated expenditures in the next FYDP and highlighted as separate programming line items.
Who It Affects
Directly affects SBIR/STTR Phase III awardees, military department acquisition and budget offices, and members of new advisory panels (three private-sector appointees, one senior acquisition official, and one service member per panel). It also impacts the Office of the Secretary of Defense for FYDP reporting.
Why It Matters
This creates a formal pathway for small-business transition projects to appear in DoD multi-year planning documents—raising visibility and potentially easing transition to acquisition programs. It also changes who reviews and recommends transition candidates by institutionalizing private-sector-heavy advisory panels.
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What This Bill Actually Does
The heart of the bill is a new statutory mechanism to spotlight SBIR/STTR Phase III work that a military department believes has transition potential. Each Secretary must, in consultation with service chiefs, pick at least five eligible Phase III programs as "Entrepreneurial Innovation Projects" in the first fiscal year after enactment and every year after.
Eligibility is limited to work performed under a Phase III agreement, so earlier-stage (Phase I/II) efforts are outside this pathway.
Candidate programs apply to their military department and may be reviewed by a department-level advisory panel. Those panels serve two roles: (1) make an initial shortlist of at least ten applicants, and (2) take program plans from shortlisted teams—five-year goals, execution schedules, and funding needs—and recommend at least five for formal designation.
The Secretary retains final authority to designate and may revoke a designation if the program cannot reasonably meet its stated objectives.Once designated, a program receives three statutory effects: the department must include the program under a separate heading in programming proposals to the Secretary of Defense; the program must be treated as part of the PPBE process; and the Secretary of Defense must show estimated expenditures for that program in the next FYDP submitted to Congress. The bill does not appropriate funds for designated projects; it changes how the programs are represented in planning and budgeting documents and creates reporting obligations back to Congress.Advisory panels are tightly specified: each military department panel will have five members—three private-sector appointees with entrepreneurial or commercialization experience, one Senior Executive Service acquisition official, and one service member appointed by the service chief.
Private-sector members serve staggered three-year terms; federal members serve shorter terms. The panels can draw on department administrative and technical support, may be funded in part from the Acquisition Workforce Development Account, and are explicitly excepted from the Federal Advisory Committee Act (FACA).
The Five Things You Need to Know
Each Secretary must designate not less than five eligible SBIR/STTR Phase III programs as Entrepreneurial Innovation Projects in the first fiscal year after enactment and every fiscal year thereafter.
Designation triggers a statutory requirement that the Secretary of Defense include estimated expenditures for each designated program in the next Future-Years Defense Program (FYDP) submitted to Congress.
Each military department must establish an advisory panel of five members (three private-sector entrepreneurial appointees, one Senior Executive Service acquisition official, and one service member) to shortlist and recommend candidates.
Advisory panels are exempted from the Federal Advisory Committee Act (FACA) and may be supported using amounts from the Department of Defense Acquisition Workforce Development Account.
The statute limits eligibility to work performed under a Phase III agreement (as defined in 15 U.S.C. 638(r)(2)) and gives Secretaries authority to revoke designations if objectives become unattainable or irrelevant.
Section-by-Section Breakdown
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Short title
Establishes the Act's name as the "DOD Entrepreneurial Innovation Act." This is purely nominal but signals legislative intent to use DoD planning authorities to accelerate small-business transitions.
Designation requirement and program benefits
Subsection (a) obligates each military department Secretary to designate at least five eligible programs per fiscal year. Subsection (d) creates three concrete benefits for designation: separate presentation of the program in programming proposals, inclusion as an "integral" PPBE element, and an FYDP line that displays estimated future expenditures. Important practical result: designation elevates program visibility within planning documents but does not itself provide appropriation authority or guaranteed funding.
Application and designation criteria
The bill leaves application timing and form to each Secretary's discretion but requires consideration of national security impact, technology novelty, and potential cost savings. Advisory-panel recommendations are a formal consideration under the criteria, but Secretaries retain discretion to apply 'other criteria' they find appropriate—introducing flexibility but also potential variability across services.
Advisory panels: composition, duties, and support
Mandates a panel per military department with five members: three private-sector entrepreneurial experts (non-federal), one SES-level acquisition workforce member, and one service chief appointee. Panels must initially select at least ten applicants, solicit program plans, and recommend at least five programs for designation. The statute requires department support (staff, admin, technical) and permits use of Acquisition Workforce Development Account funds to help run panels.
Revocation and congressional reporting
Secretaries may revoke a designation if the program cannot reasonably meet its objectives or the objectives are no longer relevant. The Secretary of Defense must submit an annual report to Congress describing each designated program and progress toward objectives—creating a new layer of oversight and a predictable reporting cadence for lawmakers.
Definitions and statutory placement
Defines key terms, notably restricting 'eligible program' to Phase III work as defined in the Small Business Act; this constrains the pathway to mature, transition-ready projects. The bill also amends the chapter table of sections to add the new statutory entry.
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Explore Defense in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- SBIR/STTR Phase III awardees — They gain a formal pathway to be elevated into DoD multi-year planning documents, improving visibility to budget planners and program offices and increasing the chance of transition into acquisition-funded efforts.
- Military program managers with transitionable technologies — Those managing Phase III efforts get prioritized attention during PPBE and a clearer forum to present five-year plans and funding needs.
- Service acquisition offices — The statute creates structured touchpoints (advisory panels and program plans) that can streamline technology transition decision-making and surface candidate projects earlier in programming cycles.
- Congressional defense oversight — Lawmakers receive an annual report and FYDP line estimates that make it easier to track small-business transition candidates and hold DoD accountable for transition progress.
Who Bears the Cost
- Military department budget and acquisition offices — They must integrate additional designated programs into PPBE, prepare separate programming headings, respond to advisory panels, and support reporting obligations, increasing workload without tied appropriations.
- Department of Defense Acquisition Workforce Development Account — The bill authorizes use of these funds to support advisory panels, potentially diverting limited workforce development dollars to panel operations.
- Private-sector advisory panel members — While intended to be compensated reasonably for service, entrepreneurs will incur opportunity costs and must navigate disclosure and conflict mitigation obligations tied to panel membership.
- Small businesses not yet at Phase III — By restricting eligibility to Phase III work, earlier-stage firms may see reduced pathways for elevation and face pressure to accelerate commercialization timelines to qualify.
Key Issues
The Core Tension
The bill balances two legitimate objectives—speeding commercialization of small-business innovations into defense programs versus preserving disciplined, accountable budgeting and procurement. Elevating projects into PPBE improves visibility and transition prospects but risks politicizing or crowding the budget cycle with non‑funded priorities and invites conflict-of-interest pressures by institutionalizing private-sector influence without full FACA safeguards.
The statute elevates Phase III projects within planning documents but does not appropriate funds or guarantee budget execution. Inclusion in the FYDP is a visibility and planning tool, not an appropriation; programs still must compete for resources during subsequent budget and execution phases.
That creates a recurring implementation question: how will services prioritize these designated projects against legacy programs when designations can flood PPBE pipelines without matched funding?
The advisory panel design is a double-edged sword. Requiring three private-sector entrepreneurial members increases commercialization expertise in selection, but excluding FACA raises transparency and oversight concerns.
The statute directs conflict-of-interest disclosure and mitigation 'to the extent practicable,' which is a softer standard than some procurement ethics regimes and could invite scrutiny if private members later contract with the Department. The use of Acquisition Workforce Development Account funds to run panels also risks reallocating limited training and development resources to administrative activities.
Narrowing eligibility to Phase III limits the pathway to relatively mature projects but leaves earlier-stage innovations outside this statutory fast-track. That preserves some gating for readiness but may incentivize rushed Phase III arrangements or create discontinuities between Phase II maturation timelines and annual PPBE cycles.
Secretaries retain broad discretion—'other criteria' and revocation authority—so designation outcomes and standards are likely to vary across services unless the Department issues tight implementing guidance.
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