Every year, as the budget and appropriations process plays out, the White House and Congress haggle over their priorities for myriad federal R&D programs. But one of the biggest of those programs gets an automatic raise. Now in its 26th year, the Small Business Innovation Research program will distribute about $2 billion in grants this year to US small businesses that propose to meet the government’s technology needs, and hopefully commercialize as well. Taken together, the SBIR budgets of the 11 participating federal agencies are bigger than the total R&D portfolios of all but six of them.

But the SBIR program operates like an entitlement program, certain to grow steadily if slowly as federal spending for R&D inches up each year. No explicit intervention or approval from the president or lawmakers is necessary; the SBIR funding mechanism skims 2.5% off the participants’ annual outlays for all research that is...

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