Welcome to A Capitol View!
In an eventful few weeks, SMI has organized a series of Capitol Hill fly-ins for clients, hosted policy and technical workshops for government and industry, and kicked into high gear for budget season and the annual appropriations process, now getting underway for Fiscal 2027.
Re-opening soon? We were pleased to see a bipartisan compromise pass the Senate to reauthorize the Small Business Innovation Research (SBIR) and Small Business Technology Transfer programs (STTR) after a five-month lapse.
SMI has been actively engaged in the discussions on behalf of a range of small businesses and research universities.
The Small Business Innovation and Economic Security Act passed the Senate earlier this month after tough negotiations between Sen. Joni Ernst and Sen. Ed Markey on the Senate Small Business & Entrepreneurship Committee. The two camps were able to narrow a series of divides on how to best modernize and expand the programs without losing the merit-based principles that have made them so effective in meeting government needs and fueling America’s innovation pipeline.
The bill, which is set to be voted on by the House in the coming days, would reauthorize the programs through 2031, giving small business innovators and research universities much-needed stability.
Breaking through: The current version strengthens safeguards to protect awardees from foreign adversaries, but it also requires that recipients be informed and have a chance to respond to government concerns and not simply be blacklisted. It creates a “Strategic Breakthrough” program to propel the best ideas more quickly into real-world capabilities and also expands the “direct to Phase II” pathway to fast track the most promising new technologies.
Under the new legislation, no small businesses would be automatically removed from the programs, as proposed under revenue caps contained in earlier versions of the legislation. That will ensure that experienced firms with a strong track record of meeting and exceeding government requirements can continue to compete, particularly to address the unique needs of the armed forces.
SMI will continue to defend SBIR by working with the small business community, universities, Congress, and the executive branch to ensure the proposed reforms are implemented effectively.
Learn more about the new provisions.
TO THE EXTREME: SMI co-hosted a workshop on “Next Generation Harsh Environment Materials and Manufacturing”organized by the United States Advanced Ceramics Association and Oak Ridge National Laboratory.
The collaboration was part of a longer-term effort by the Departments of War and Energy, the advanced materials industry, and academia to develop a national strategy for materials and manufacturing designed to operate in extreme environments, from hypersonic missiles and spacecraft to nuclear power systems.
Breakout sessions focused on aerospace, defense, energy, nuclear, and space, and covered a host of industry-wide challenges on supply chains, manufacturing, testing and qualification, and workforce development.
The Oak Ridge workshop also kicked off the Spring Technical Meeting of the United States Advanced Ceramics Association, which included two days of discussions and a Capitol Hill advocacy day.
BUDGET
GAMESMANSHIP: President Trump is threatening not to sign any legislation until the Senate passes the Save America Act, a partisan bill to institute voting restrictions. But it won’t apply to any legislation to fund the still-shuttered Department of Homeland Security.
Negotiations between Democrats and Republicans have yet to reach a breakthrough to reopen the agency and its varied components, which have been without annual funding for nearly a month.
There is some renewed optimism about the potential for a deal following the departure of Homeland Security Secretary Kristi Noem, whose ouster Democrats have sought for months over the Administration’s crackdown on illegal immigration.
The White House threat to hold up other legislation is also not likely to have a measurable impact on other bills; short of a veto, any legislation adopted by Congress would become law in 10 days.
Read more: Are we still in a shutdown? Here’s how DHS disruptions impact Americans
ANOTHER DEFENSE BOOM? The U.S.-Israeli attack on Iran has also complicated the federal spending picture, as the cost of the air campaign mounts and critical munitions stocks, including missile defense systems, are depleted. By some estimates, the conflict is costing taxpayers at least $1 billion a day. The New York Times reported that Pentagon officials told lawmakers the war cost $11 billion in the first six days alone.
But ironically, it may also help solve a budget conundrum, according to SMI VPDavid Bortnick, a federal budget and appropriations veteran.
In January, President Trump announced he would request $1.5 trillion in defense spending for Fiscal 2027, a 50 percent increase from Fiscal 2026, considering annual appropriations and the additional defense spending contained in the One Big Beautiful Bill (OBBB). But determining how to allocate such an enormous increase on the order of half a trillion dollars has reportedly proven challenging as the White House puts together its budget request.
‘Strong incentives’: “Enter the conflict with Iran, which will run into billions of dollars in operation and maintenance costs, replenishment of U.S. munitions, and possibly support for Israel,” according to Bortnick. “That creates strong incentives for the Administration to request an emergency supplemental package this year. Unlike regular appropriations, supplementals are designed for unforeseen events and typically move quickly through Congress outside the standard annual process.”
“In this case, a supplemental would allow those who favor higher defense spending to support additional resources, while allowing those concerned about annual deficits to treat it as a one-off rather than a permanent increase in defense spending,” said Bortnick. “This war will cost money. That should not be overlooked or minimized. But in this case, it may also have created a path that would have otherwise been difficult to advance through the regular process during an election year.”
Meanwhile, there are reports that the regular budget request is expected to arrive at the end of March or early April, roughly two months after its statutory deadline,. Some lawmakers have discussed the possibility of using the expedited process of budget reconciliation to advance additional defense spending, particularly given the scale of the proposed increase. Last year’s reconciliation bill included over $150 billion for defense. But reconciliation would face procedural and political issues as well.
Read more: Pentagon Tells Congress First Week of Iran War Cost More Than $11.3 Billion
Related: Defense companies to quadruple production of ‘exquisite’ weapons: Trump
Go deeper: FY2026 Defense Budget: Funding for Selected Weapon Systems
MANUFACTURING
‘UNIQUE CAPABILITIES’: SMI was proud to support the development and rollout of Michigan Governor Gretchen Whitmer’s Defense and Aerospace Strategic Plan, as the state re-positions itself as a hub for defense, aerospace, maritime, and space innovation.
“From our skilled workforce and world-class universities to our robust supply chains, advanced testing environments, and manufacturing infrastructure, Michigan has unique capabilities, and we want these industries to see what we have to offer,” Governor Whitmer wrote in the five-year blueprint.
“This strategic plan gives Michigan a focused, coordinated roadmap to compete — and lead — nationally and globally,” added Col. John Gutierrez, U.S. Marine Corps (Ret.), executive director of the Michigan Office of Defense and Aerospace Innovation. “It aligns our industry, universities, workforce, and defense assets so companies can innovate here, build here, and win here, creating lasting economic growth across the state.”
ICYMI: America’s Maritime Action Plan
STEPPING UP: SMI also organized policy summits and Capitol Hill meetings for the United States Footwear Manufacturers Association and the Battery Advocacy for Technology Transformation ( BATT) Coalition, as we step up our advocacy efforts on behalf of domestic manufacturers and leading innovators who are revitalizing critical supply chains.
SMI has played an instrumental role in expanding USFMA and helping secure new investment and incentives to reignite a domestic industry that is critical to outfitting the military and strengthening national preparedness.
Forward march: More than 30 footwear manufacturers and suppliers pressed lawmakers to take up the bipartisan Better Outfitting Our Troops, or BOOTS Act. The legislation would close loopholes in the Berry Amendment that allow military personnel to wear foreign-made combat boots. The association also advocated for more federal investment in footwear R&D in Fiscal 2027.
MISSION CRITICAL: The BATT Coalition pressed its legislative agenda for strengthening the battery supply chain with additional tax incentives, including the newly proposed Critical Minerals and Manufacturing Support Act 2.0.
The bipartisan bill would boost tax credits for U.S. battery makers and bar federal support for companies that are relying on critical minerals from prohibited foreign nations.
The coalition of battery makers and component producers also advocated for additional appropriations for the Departments of War and Energy to establish a “Dual-Use Battery Innovation and Scale-up Initiative” and to boost DOE’s Critical Material and Energy Innovation Manufacturing Deployment Office to support battery supply chain innovations.
BATT in the news: Bipartisan bills target DNA bioweapons, battery supply chain
Plus: Bipartisan bill aims to charge up U.S. battery supply chain, cut foreign reliance
TECHNOLOGY
‘HIGH CONFIDENCE’: SMI client Rank One Computing (ROC) notched several milestones as the domestic provider of biometric solutions for national security and intelligence agencies expands its leadership position.
ROC announced the closing of its Initial Public Offering for total gross proceeds of $24 million. The company said it intends to use the investment “to hire key resources that enable growth and support market share capture” and “update and expand our neural-processing infrastructure to accelerate the pace in which we train and deploy Vision AI algorithms.”
Meanwhile, ROC’s latent fingerprint algorithm was ranked #1 in performance by the National Institute of Standards and Technology (NIST), with the lowest False Negative Identification Rate (FNIR) on a dataset provided by the Department of Defense.
“Latent fingerprint identification is one of the most challenging problems in biometrics,” said Dr. Joshua Engelsma, ROC Principal Scientist. “Our goal is not just to perform well in controlled settings, but to deliver consistent, high-confidence matching under real operational conditions.”
ENERGY
NORTHWEST PASSAGE: SMI VP Jeff Leahey keynoted a tax workshop hosted by the National Hydropower Association in Las Vegas, where he delivered a call to action for the industry to take advantage of the unprecedented level of tax benefits, including clean energy credits and direct payments, established under the Inflation Reduction Act (IRA) and the Trump Administration’s OBBB spending bill.
Leahey, who has over 20 years of lobbying on tax policy for the industry and is an NHA board member, believes the current tax policy environment will spur a reinvestment in existing hydropower assets, as well as new development in hydro, pumped storage, and marine energy projects.
Leahey also shared his perspective at the Northwest Hydroelectric Association (NWHA) annual conference in Vancouver, Washington on how to leverage recent tax laws to expand the hydropower industry. And he moderated a panel discussion at the event on how new Trump Administration priorities, staffing adjustments, and budget changes are influencing project timelines and outcomes.
LIFE SCIENCES
‘BROAD RANGE’: Anticipated funding opportunities are now out for the Congressionally Directed Medical Research Programs.
The competitive biomedical research grants, funded by Congress in the annual appropriations process, are overseen by the U.S. Army Medical Research and Development Command and the Defense Health Agency.
“It’s a fairly broad range of life science topics, including cancer, ALS, MS, arthritis, and tick-borne diseases,” reports SMI VP Dr. Travis Taylor. “Each program has different award mechanisms with separate budget and performance requirements.”
Go deeper: Congressionally Directed Medical Research Programs Funding for FY2026
STRATEGIC COMMUNICATIONS
FIRED UP: SMI is pleased to be supporting theAmerican Institute of Aeronautics and Astronautics in the upcoming centennial events to mark the 100th anniversary of Robert Goddard’s pioneering launch of a liquid-fueled rocket on March 16, 1926, in Auburn, Massachusetts.
The anniversary offers a unique opportunity to engage schools, youth groups, and the public in the possibilities for the future as personified by the physicist and inventor who is widely regarded as one of the fathers of the space age – and increase support for new investments in STEM education and workforce training.
Read all about it from SMI VP Bryan Bender: Countdown to Goddard Centennial with New Model Rocket for Launches
Check out all the centennial events.
CLIENTS IN THE NEWS
US Navy taps Fincantieri to build Marine Corps landing vessels
Siemens to Help Build AI-Ready Scientific Infrastructure as Part of DOE’s Genesis Mission
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