SBA’s Implementation of the SBIR and STTR Extension Act of 2022

The Small Business Innovation Research (SBIR) program was established under the Small Business Innovation Development Act of 1982 and the Small Business Technology Transfer (STTR) program was established under the Small Business Technology Transfer Act of 1992. These programs encourage domestic small businesses to engage in federal research/research and development (R/R&D), with the potential for commercialization. The Office of Inspector General (OIG) is issuing this management advisory in accordance with requirements in the SBIR and STTR Extension Act of 2022 (the Act) for the U.S. Small Business Administration’s Office of Inspector General (OIG) to conduct an audit related to small business verification of sales and investments. Specifically, we address our ability to determine whether small businesses are verifying sales and investments in the program and how the Act’s requirements were established. We found limited assurance that small businesses verified sales and investments as outlined in the Act. According to SBA, to determine whether small businesses met increased minimum performance standards, it reviewed the business’ self-reported information on the SBIR website. SBA then performed “spot checks,” or limited reviews, of federal sales against two publicly available databases, Federal Procurement Data System (fpds.gov) and USAspending.gov. The combination of SBA spot checking supporting documentation, along with the Act excluding supporting documentation for federal sales and not requiring supporting documentation for investments, was not sufficient to make such a determine whether small businesses subject to increased minimum performance standards verified covered sales and investments. To address concerns with procedures for assessing whether small businesses are verifying sales and investments in the SBIR and STTR programs and to address risks associated with SBA’s reliance on self-certifications, we recommended the agency establish formal procedures for obtaining and reviewing appropriate supporting documentation to ensure sales and investments are accurately reported. The agency agreed with our recommendation.