Fast Facts

Federal agencies awarded small businesses almost $4 billion in FY 2019 to perform research and development and commercialize technologies. The Small Business Administration oversees the programs for making these awards, which are carried out by 11 agencies.

SBA established 10 requirements to prevent fraud, waste, and abuse in these programs. For instance, SBA requires that agencies verify eligibility and certifications of ownership from businesses that receive awards. However, a number of federal agencies did not fully implement SBA's requirements.

We recommended that federal agencies fully implement all 10 of SBA's requirements.

Small Business Administration Building

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Highlights

What GAO Found

The 11 agencies participating in the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs largely implemented the Small Business Administration's (SBA) 10 minimum requirements for preventing fraud, waste, and abuse in the programs. Most agencies fully implemented at least eight of the 10 requirements and partially implemented the others; one agency, NASA, fully implemented all 10. The agencies used differing approaches to implement the requirements. For example, prior to making awards, agencies used different approaches to verify applicants' or awardees' eligibility to receive federal funds, including SBIR and STTR awards, and to avoid funding duplicative or essentially equivalent work.

Multiple agencies did not fully implement certain requirements, such as ones to collect eligibility certifications and to have a process for tracking referrals to Offices of Inspector General (OIG). Agency officials gave various reasons for partially implementing requirements, such as their belief that they had met a requirement's intent through other actions. However, because agencies did not fully implement all 10 requirements, they may face difficulties. For example, by not collecting program eligibility certifications, agencies may find it complicated to hold individuals and businesses accountable if they misrepresent their eligibility for SBIR and STTR awards. Further, agencies could miss opportunities to implement leading practices GAO identified in 2015 for managing fraud risks in federal programs, which align with some of SBA's requirements.

OIGs seek to mitigate risks of fraud, waste, and abuse in the SBIR and STTR programs by establishing, sharing, and using fraud detection indicators and by conducting investigations. As required under the Small Business Act, as amended, OIGs or military investigative offices at the 11 participating agencies established indicators specifically for use by the SBIR and STTR programs (see figure). OIGs or military investigative offices of all the participating agencies initiate investigations in response to referrals. Most also initiate investigations in response to information shared by investigative partners or signs of suspicious activity. Officials at most OIGs stated that they also use the indicators to train program officials and awardees and share information with other OIGs on cases undergoing investigation or prosecution for fraud.

Figure: Examples of Indicators Agencies Use to Identify Potential Fraud in SBIR and STTR Programs

Figure: Examples of Indicators Agencies Use to Identify Potential Fraud in SBIR and STTR Programs

Why GAO Did This Study

Federal agencies awarded small businesses almost $4 billion in SBIR and STTR awards in fiscal year 2019 to perform research and development and commercialize technologies. SBA oversees the programs, which are carried out by officials in 11 participating agencies.

SBA established 10 minimum requirements for participating agencies to prevent fraud, waste, and abuse in the programs. The Small Business Act, as amended, also requires efforts by the 11 agencies' OIGs to mitigate the programs' fraud risks. The Act also includes a provision that GAO study fraud, waste, and abuse in the programs and report to Congress every 4 years.

This GAO report, its third, examines (1) the extent to which the 11 agencies have implemented SBA's minimum requirements and (2) the efforts OIGs have taken to mitigate fraud, waste, and abuse in SBIR and STTR programs.

GAO reviewed agency SBIR/STTR documents and interviewed officials from SBA, the 11 participating agencies, and from the agencies' OIGs and military investigative offices.

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Recommendations

GAO is making 21 recommendations that 10 agencies take steps to fully implement all 10 of the minimum requirements established by SBA. Eight of the agencies concurred with the recommendations. DOD concurred with four recommendations, partially concurred with one, and did not concur with two. USDA did not state whether it concurred. GAO continues to believe the recommendations are warranted.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture The Secretary of Agriculture should ensure the SBIR program collects the required certifications from new SBIR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 1)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
National Oceanic and Atmospheric Administration The Administrator of NOAA should ensure that the SBIR program collects the required certifications from new SBIR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 2)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Army The Secretary of the Army should ensure that the SBIR/STTR program has, and communicates, a policy for reporting suspected, fraud, waste, or abuse to the Army Office of Inspector General or other designated authorities. (Recommendation 3)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Army The Secretary of the Army should ensure that the SBIR/STTR program provides information on its program website on how to report suspected fraud, waste, and abuse to the Army Office of Inspector General or other designated authorities. (Recommendation 4)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that the SBIR/STTR program collects the required certifications from new SBIR and STTR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 5)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Navy The Secretary of the Navy should ensure that the SBIR/STTR program tracks referrals to the Office of Inspector General or Naval Criminal Investigative Service. (Recommendation 6)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Air Force The Secretary of the Air Force should ensure that the SBIR/STTR program collects the required certifications from new SBIR and STTR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 7)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Air Force The Secretary of the Air Force should ensure that the SBIR/STTR program has, and communicates, a policy for reporting suspected, fraud, waste, or abuse to the Air Force Office of Inspector General or other designated authorities. (Recommendation 8)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of the Air Force The Secretary of the Air Force should ensure that the SBIR/STTR program tracks referrals to the Air Force Office of Inspector General and the suspension and debarment officials. (Recommendation 9)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Education The Secretary of Education should ensure that the SBIR program collects the required certifications from new SBIR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 10)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Energy The Secretary of Energy should ensure that ARPA-E's SBIR/STTR program collects the required certifications from new SBIR and STTR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 11)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Energy The Secretary of Energy should ensure that the Office of Science's SBIR/STTR program collects the required certifications from SBIR and STTR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 12)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Energy The Secretary of Energy should ensure that the Office of Science's SBIR/STTR program tracks SBIR and STTR fraud, waste, and abuse referrals to the Office of Inspector General. (Recommendation 13)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Health and Human Services The Secretary of Health and Human Services should ensure that the National Institutes of Health's SBIR/STTR program collects the required certifications from new SBIR and STTR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 14)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Homeland Security The Secretary of Homeland Security should ensure that the SBIR program collects the required certifications from new SBIR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 15)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Homeland Security The Secretary of Homeland Security should ensure that collaboration occurs between the SBIR program office and the Office of Inspector General to establish fraud indicators and train applicants. (Recommendation 16)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Transportation The Secretary of Transportation should ensure that the SBIR program collects the required certifications from new SBIR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 17)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Department of Transportation The Secretary of Transportation should ensure that collaboration occurs between the SBIR program office and the Office of Inspector General to establish fraud indicators and provide required training on fraud, waste, and abuse for SBIR awardees. (Recommendation 18)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Environmental Protection Agency The Administrator of the Environmental Protection Agency should ensure that the SBIR program collects the required certifications from new SBIR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 19)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Environmental Protection Agency The Administrator of the Environmental Protection Agency should ensure that collaboration occurs between the SBIR program office and the Office of Inspector General to establish fraud indicators and train applicants. (Recommendation 20)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
National Science Foundation The Director of the National Science Foundation should take appropriate steps to ensure that the SBIR/STTR program collects the required certifications from new SBIR and STTR awardees, beginning in future funding opportunity announcements, without material differences from the language in the SBIR/STTR Policy Directive. (Recommendation 21)
Open
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

Full Report

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