Reporting Fraud

What types of fraud are found in the Small Business Innovation Research/Small Business Technology Transfer (SBIR/STTR) Programs?

• During Application Process:
  • Submitting a plagiarized proposal
  • Providing false information regarding the company, the Principal Investigator or work to be performed
  • Seeking funding for the work that has already been completed
• During Award:
  • Using award funds for personal use or for any use other than the proposed activities
  • Submitting plagiarized reports or reports falsely claiming work has been completed
  • Claiming results for an award that were funded by a different source

Which SBIR rules should you be particularly familiar with?

• • Duplicate or overlapping proposals may not be submitted to multiple agencies without full disclosure to all agencies.
  • The company must meet the Small Business Administration’s (SBA’s) requirements for a small business, including being majority American-owned and have 500 employees or fewer.
  • The Principal Investigator’s primary employment must be with the company during the award period and he or she may not be employed full time elsewhere.
  • For Phase I SBIR, a minimum of two thirds of the research effort must be performed by the company; for Phase II SBIR, a minimum of one-half of the research effort must be performed by the company. Work performed by a university research lab is NOT work completed by the company/small business concern.
  • University employees participating on a SBIR award should disclose their involvement to the university as well as their use of university facilities.
  • Research and development (R&D) must be performed in the United States.

What happens if you break the rules?

• If you commit fraud or other wrongdoing in applying for or carrying out an SBIR/STTR award, HHS will investigate.
• HHS refers violations of civil or criminal law to the Department of Justice (DOJ). If DOJ prosecutes you for fraud or false statements, you may be sentenced to prison and required to pay full restitution.
• If DOJ pursues a civil action under the False Claims Act, you may have to pay treble (triple) damages and $11,000 for each false claim.
• HHS may terminate your awards and debar you from receiving grants or contracts from any federal agency.