HHS OIG’s Assessment of Continuing Vulnerabilities in HHS’s Small Business Innovation Research Program

By Published On: April 4, 2019

Last Monday, March 25, 2019, the U.S. Department of Health and Human Services (“HHS”) Office of the Inspector General (“OIG”) issued a report addressing vulnerabilities in HHS’s implementation of its Small Business Innovation Research (“SBIR”) program.  This report is a follow up to a 2014 OIG report describing improvements the OIG then asserted that HHS should make to its SBIR program.

The SBIR program is a federal grant and contract program that provides federal funding to for-profit small businesses to conduct research and development.  HHS is the second largest SBIR awarding agency behind the Department of Defense.  According to the OIG, HHS has awarded nearly $13 billion in SBIR grants and contracts since its program began in 1982.  In 2017 alone, HHS awarded nearly $870 million.  HHS has also implemented a Small Business Technology Transfer (“STTR”) program, which is similar to SBIR but requires the small businesses to partner with a non-profit research institution.

In 2014, the OIG evaluated HHS’s SBIR program and recommended that HHS take four actions to protected against fraud and abuse: 1) create a central office to oversee its SBIR program; 2) collect information to track the commercialization of SBIR-funded projects; 3) ensure awardee compliance with SBIR eligibility requirements; and 4) improve procedures to identify duplicative awards.

The OIG’s most recent report evaluated the extent to which HHS had implemented these recommendations, finding that, although HHS created a central office to oversee its SBIR program, such steps were proving inadequate to ensure compliance with SBIR eligibility requirements or to avoid duplicative awards.

HHS notably seems to disagree with the OIG’s conclusions, stating that its polices are consistent with the minimum applicable SBIR obligations.  Whether HHS moves to further enhance its SBIR oversight policies or the HHS OIG elects to apply greater scrutiny to SBIR and STTR awards in coming years will be interesting to observe.  Certainly, attention to compliance, including not just the issues of eligibility and duplication of research, but also with more routine matters of grants management, will continue to be a matter of considerable importance for recipients of that funding.

For questions regarding SBIR or STTR awards or other general grant management questions, you may contact Scott S. Sheffler (ssheffler@ftlf.com) or Christopher J. Frisina (cfrisina@ftlf.com).


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