H.R. 4775: SBIR/STTR Foreign Interference Safeguard Act

This bill, known as the SBIR/STTR Foreign Interference Safeguard Act, aims to enhance security measures related to certain small business grants under the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. Here are the main provisions of the bill:

1. Extension of Due Diligence Program

The bill extends the due diligence program designed to assess security risks for small businesses applying for SBIR or STTR awards. The deadline for this program has been moved from September 30, 2025, to September 30, 2030.

2. Safeguards for Majority-Owned Ventures

The legislation aims to codify certain safeguards to ensure that small businesses which are majority-owned by venture capital firms, hedge funds, or private equity firms are ineligible for SBIR awards if they are significantly owned or controlled by foreign entities identified as risks to national security.

• The small business must be majority-owned by multiple venture capital firms or similar entities to be affected.
• The Small Business Administration (SBA) will assess if a small business is an indirect subsidiary of a foreign-owned firm.
• The SBA will establish size standards specifically for small businesses impacted by this provision.

3. Definition of Covered Foreign Entities

The act provides definitions for what constitutes a "covered foreign entity." Such entities include:

• A foreign entity of concern, defined as organizations or individuals associated with malicious activities.
• Governments or political parties from foreign countries considered to be a concern.
• Individuals who are not lawful permanent residents or citizens of the U.S.
• Businesses organized under the laws of foreign countries of concern.

4. Participation Limits

Small business concerns found to be majority-owned by covered foreign entities, as defined above, will be declared ineligible for SBIR funding. The bill provides the SBA with authority to make these determinations, focusing on both direct and indirect ownership.

5. Impact of Non-Compliance

Any small business applying for SBIR or STTR awards will face ineligibility if it is found that they are owned or controlled in significant part by covered foreign entities, based on the Administrator’s assessment. This includes entities potentially identified due to national security concerns or violations of specific laws.

6. Applicability

The provisions of this bill will apply only to awards made under the SBIR program after the legislation is enacted.

Relevant Companies

• TSLA (Tesla, Inc.) - As a major player in technology and innovation, any affiliations with foreign entities could impact its eligibility for federal funding.
• AMZN (Amazon.com, Inc.) - Involvement in various technology ventures could lead to scrutiny under these new definitions.
• MSFT (Microsoft Corporation) - The company could be indirectly affected if any of its subsidiaries are deemed ineligible due to foreign ownership.