The Small Business Administration (SBA) is in charge of administering the disbursement of funds by 11 federal agencies under the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.  These programs are intended to increase technological innovation for small businesses and minority and disadvantaged persons as well as support the development and commercialization of new technologies from businesses that receive federal research and development funds. In fiscal year 2019, a total of $4 billion in grants were provided by the two programs.  In an effort to minimize waste, fraud, and abuse, the SBA has set 10 minimum standards and guidelines. 

The Government Accountability Office (GAO) is required to report on compliance with these standards every four years.  The June 30, 2021 report found that, while all 11 government agencies “largely implemented” the minimum guidelines, only the National Aeronautics and Space Administration (NASA) achieved full implementation.  Every agency improved its compliance since GAO issued its last report in 2017. 

GAO found that all 10 agencies that were not in full compliance had problems with certification from the grant awardees, including failure to collect them to assure the legitimacy of the claims of companies requesting grants and using the wrong language in their request for information.  Three agencies, the Department of Homeland Security, the Department of Transportation, and the Environmental Protection Agency did not implement the proper procedures to coordinate with the relevant offices of inspector generals in identifying and raising awareness of fraud.  The Department of Defense and the Department of Energy failed to put into practice the necessary policies to report fraud to the agency inspector general and track those reports.

While it is a positive development that most agencies have agreed to take steps to implement the GAO’s 21 recommendations to fully prevent waste, fraud, and abuse, full adherence to the SBA’s standards are essential to stop more of the $4 billion spent on the SBIR and STTR from being wasted.  Since all agencies made progress from the 2017 GAO report, taxpayers should expect that all will be fully compliant by the next report in 2024.

-- Christopher Pellegrino