Pentagon Agrees with Ernst Effort to Safeguard Innovation from China

Read the release on Sen. Ernst's website HERE.

WASHINGTON - A key portion of U.S. Senate Committee on Small Business and Entrepreneurship Chair Joni Ernst's (R-Iowa) INNOVATE Act, which reforms the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs to safeguard critical innovation from China, earned support from the Pentagon.

After conducting a thorough analysis of Ernst's report exposing that critical technology is vulnerable to China, the Pentagon confirmed to Ernst that reforms need to be made to the programs by establishing consistent due diligence standards across government, as the INNOVATE Act does.

"The Department understands any variance in due diligence results or award decisions across the DoD for a single small business concern can be confusing to the defense industrial base. To address these variances, the Department agrees that standardizing the definition of foreign risk would mitigate the discrepancies identified by this investigation. The Department is committed to working with your office on this important issue," wrote Emil Michael, Pentagon Under Secretary for Research and Engineering and Pentagon Chief Technology Officer.

"The Pentagon recognizes that the current state of the SBIR-STTR programs is falling short of its potential," said Ernst. "Loopholes and a lack of a consistent due diligence standard across government are benefiting China on the taxpayer's dime. The INNOVATE Act creates strong and enforceable due diligence requirements to ensure that tax dollars are used to unleash the Golden Age in America and not subsidize research in Beijing."

Click here to view the letter.

Background:

Ernst's report revealed loopholes and a lack of a consistent due diligence standards that are exposing billions of dollars in sensitive American intellectual property to China:

• The National Institutes of Health (NIH) denied all 144 applications flagged for foreign ties.
• The National Aeronautics and Space Administration (NASA) denied just one of the 125 applications flagged for foreign ties on the basis of that risk.
• In 2023 and 2024, while 835 applications across government for SBIR-STTR funding were flagged for having foreign risks, just 303 were denied for their ties to adversaries.

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