SBA Sets a Hard Non-SBIR Revenue Test for Frequent Phase II Winners. Comments Close 31 October.

What changed

On 2 September 2026 the Small Business Administration published a notice and request for comment setting updated minimum performance standards for commercialization for firms funded through the SBIR and STTR programs (91 FR 56536, FR Doc. 2026-17987). The standards take effect 15 November 2026 and when published on sbir.gov. Comments are due on or before 31 October 2026, addressed to the Associate Administrator, Office of Investment and Innovation. The revised benchmark supersedes the benchmark announced at 78 FR 48537 and 78 FR 59410, and SBA states it has approved the benchmark for all 11 participating agencies.

The trigger. A small business concern is subject to the benchmark if it received more than 25 Phase II awards, SBIR and STTR combined across all participating agencies, during the five most recently completed fiscal years, excluding the current fiscal year.

The measure. Non-SBIR revenue share is the percentage of the firm's total revenue not derived from Phase I or Phase II SBIR or STTR award funding. Revenue from awards made under Phase III authority at 15 U.S.C. 638(r) counts as non-SBIR revenue, as does other government contract revenue and private commercial revenue. The denominator is total company revenue from all sources across the three most recent fiscal years, excluding the current fiscal year.

The thresholds, phased. For the FY2027 assessment, a covered firm must show a non-SBIR revenue share of at least 33 percent. For the FY2028 assessment and each year after, at least 50 percent.

The consequence. A firm that fails the applicable threshold is not eligible to submit a proposal for a new Phase I or Direct-to-Phase-II award from any participating agency for the one-year period beginning on the date of the determination.

What a contractor has to do differently

Any firm near the 25-award trigger should run the calculation now rather than at the determination date. SBA's own worked example makes the arithmetic concrete: a firm with 30 Phase II awards across FY2022 through FY2026 would be assessed on 1 June 2027; with $4,000,000 in total three-year revenue and $1,200,000 in combined non-SBIR revenue, its 30 percent share would fail the 33 percent FY2027 threshold and it would lose a year of new Phase I and Direct-to-Phase-II eligibility. The same firm would need 50 percent at the FY2028 assessment.

Two details are easy to get wrong. The award-count lookback is five years while the revenue lookback is three, and both exclude the current fiscal year. And Phase III revenue counts on the non-SBIR side, which is the whole point of the measure: it is a test of whether a firm has moved work out of the SBIR pipeline, not a test of total federal revenue. Firms whose commercialization case rests on Phase III transitions should make sure that revenue is captured and traceable in their accounting records well before an assessment.

This is a request for comment, not a final requirement. SBA states it will review comments and issue the final commercialization benchmark within the timeframe in the notice, published at sbir.gov consistent with 15 U.S.C. 638(qq)(4)(A). The 15 November 2026 effective date and the comment deadline sit close together, so the final text should be checked when it appears.

Primary sources

Notice and request for comment, Updated Minimum Performance Standards for Commercialization for Firms That Receive Funding Through the SBIR and STTR Programs, 91 FR 56536 (2 September 2026), FR Doc. 2026-17987: https://www.federalregister.gov/d/2026-17987

Statutory authority: section 9 of the Small Business Act, 15 U.S.C. 638(qq)(2), (4) and (5). Superseded benchmark at 78 FR 48537 and 78 FR 59410.