U.S. Agencies Urged to Standardize Definitions for Small Business Innovation Funding

The U.S. Government Accountability Office (GAO) has identified inconsistencies in how federal agencies categorize research and development funding opportunities for small businesses, potentially hindering the effective oversight and assessment of innovation programs. In a report released September 23, 2025, the GAO found that a significant portion of Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) program awards in fiscal year 2023 were issued under “open topics,” but the lack of clear definitions for these and “conventional topics” leads to disparate data categorization across agencies. This makes it difficult for the Small Business Administration (SBA) to track and analyze program outcomes effectively.

In fiscal year 2023, approximately half of all SBIR and STTR awards, totaling about $2.2 billion, were designated as “open topics.” These types of awards allow small businesses to identify research needs and propose their own solutions within broad agency-defined areas, fostering innovation and potentially increasing competition. In contrast, “conventional topics” involve agencies predefining specific research needs that small businesses then respond to with proposed solutions. The GAO’s analysis of fiscal year 2023 data from 11 participating agencies revealed that four exclusively used open topics, four exclusively used conventional topics, and three employed both approaches.

Despite the significant investment in open topic awards, the GAO found that agencies are not consistently classifying these opportunities. More than a third of solicitations labeled as conventional topics by three agencies were as broad in scope as those labeled as open topics by other agencies. This inconsistency stems partly from current SBA guidance, which does not provide formal definitions distinguishing between open and conventional topics. Without clear, government-wide definitions, agencies are left to interpret and apply these labels differently. This variation in categorization compromises the comparability of data across different agencies and limits the overall usefulness of the data collected by the SBA.

Consequently, the SBA’s ability to accurately assess the performance and outcomes associated with different types of research funding may be impaired. This, in turn, could affect Congress’s capacity to provide effective oversight of the SBIR and STTR programs. The SBIR and STTR Extension Act of 2022 mandated that the SBA collect and report data on both open and conventional topics, highlighting the growing importance of these programs in driving economic growth and technological advancement. The GAO’s report underscores the need for standardized definitions to ensure that the data gathered accurately reflects program activities and contributes to informed decision-making.

To address these issues, the GAO is recommending that the SBA develop formal definitions for both open and conventional topics. This guidance should then be disseminated to all participating agencies to encourage consistent categorization practices in SBIR and STTR solicitations. The SBA has concurred with this recommendation, indicating a commitment to improving the clarity and utility of the data collected on these crucial small business research programs.

Article by Mel Anara, based upon information from the U.S. Government Accountability Office.

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