Small Business Research Programs: Information Regarding Subaward Use and Data Quality

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What did the GAO find?

According to the Federal Funding Accountability and Transparency Act, which primary subsections determine which recipients of Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) awards must be reported. These factors include the cost of subdivisions, applicable exemptions, and different definitions of primary subdivisions. A lack of awareness and understanding by small businesses can also affect reporting rates, according to small business representatives that GAO interviewed. Based on GAO’s review of USAspending.gov, a minority of SBIR/STTR awards (about 10 percent) show substandards. Limitations on primary subpart reporting are a government-wide issue, not just for SBIR/STTR awards (see GAO-24-106237).

SBIR/STTR award recipients may collaborate with other entities, including subcontractors or consultants, for contracts, grants, and cooperative agreements to assist with a specific portion of the work. Based on a sample of fiscal year 2019 awards, GAO found that approximately 70 percent of SBIR/STTR Phase II awards—which are used to advance concepts after a feasibility assessment—include the use of subcontractors or consultants. In addition, GAO estimates that in all Tier 2 awards, about 16 percent of the total award value went to subcontractors and about 2 percent to consultants.

Estimated Percentage of Small Business Innovative Research (SBIR) and Small Business Technology Transfer (STTR) Awards that Served Subcontractors or Consultants, Fiscal Year 2019

SBIR/STTR award recipients use private sector entities, academic institutions, and non-profit organizations for a variety of grants. GAO estimates, for example, that 29 percent of awards include one or more subcontracts to private sector entities, and 24 percent include one or more subcontracts to academic institutions. Awardees use subcontractors and consultants for various purposes, such as providing technical insights and expertise. Assisting with design tasks; develop systems, products or software; and conducting testing and evaluation of technological innovations.

Why did the GAO do this study?

Small businesses are important drivers of economic growth, but they can face challenges in accessing capital to fund research and development (R&D). Congress established the SBIR/STTR programs to enable small businesses to conduct and obtain R&D benefits. Agencies make SBIR/STTR awards as contracts, grants, and cooperative agreements. The awardees may enter into agreements with other parties to perform part of the work or provide necessary materials, supplies or services.

The SBIR and STTR Extension Act of 2022 includes provisions for GAO to review the subcontracting practices of SBIR/STTR award recipients. This report (1) examines factors affecting the reporting of SBIR/STTR primary subprime data on USAspending.gov; and (2) estimates of how many SBIR/STTR award recipients used subparts, the general purposes of these subparts, and which types of organizations received them.

GAO reviewed a sample of 198 FY 2019 SBIR/STTR awards and interviewed officials from the Small Business Administration agencies and 11 agencies participating in SBIR/STTR programs. GAO also interviewed a total of 10 SBIR/STTR award recipients to obtain their views on the substandard reporting requirements.

For more information, contact Candice N. Wright at (202) 512-6888 or WrightC@gao.gov.



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