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Fraud Indicators

The Division of Program Integrity (DPI) is responsible for reviewing allegations of waste, fraud, abuse, and mismanagement of NIH programs and activities, including the NIH Small Business Innovation Research (SBIR) and Small Business Technology (STTR) programs.  NIH SBIR/STTR programs have achieved great success and established valuable partnerships between public and private industry.  A recent National Research Council (NRC) study states that approximately 40 percent of NIH SBIR projects reach that marketplace, which NRC characterizes as an "impressive figure" that is "likely to rise significantly over time."​

Despite these successes, there is a risk that certain individuals may seek opportunities to misuse federal funds. To the extent that the NIH budget grows and available funding for SBIR/STTR programs increases commensurately, there is a greater opportunity to fulfill programmatic objectives of engaging small businesses in federal research and development and commercialization of technology, and, conversely, a heightened risk for potential misuse. 

The SBIR and STTR Policy Directives state that each agency that participates in the SBIR/STTR programs shall create and implement policies and procedures o prevent fraud, waste, and abuse in SBIR/STTR programs.  NIH, in partnership with the Department of Health and Human Services (HHS) Office of Inspector General and Operating Divisions (OPDIVS), developed this document to identify the following list of possible fraud risk indicators to consider when processing and administering SBIR and STTR grants and contracts. 

SBIR/STTR Fraud Indicators: Pre-Award:

 

  • Appearance of inflated pricing for salaries, consultants, or equipment.
  • Maintains eligibility requirements just below specified thresholds.
  • Principals have established multiple companies to obtain the same or similar funding.
  • Apparent or actual conflicts of interest with federal officials involved in making the award.
  • Failure to submit required application and award verification information, funding agreement certifications, or SBIR VCOC and Life Cycle certifications.
  • Small Business Concerns (SBCs)/principals that are on excluded parties list.
  • Evidence that the SBC is being used as a shell​
  • Consortium agreements with organizations that employ relatives of the SBC's principals.
  • SBC has no physical address or shares physical address with another business or personal residence.
  • No Internet presence or information obtained from internet searches contradicts information on application.
  • Multiple SBIR/STTR awards to a single SBC from a single agency, indicating potential improper relationships with or influence over the funding process.
  • Multiple SBIR/STTR awards to a single SBC from multiple agencies to maximize access to funds.
  • Multiple long-term (>2 years) awards.
  • PI employed by other companies or organizations and may not be primarily employed by applicant company.
  • SBC lacks internal controls or financial stability, has poor quality management systems; or has a poor history of managing federal awards.

 

 


 

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Contacting DPI

Division of Program Integrity

Director, Deborah Kearse

National Institutes of Health,

Office of Management Assessment

6011 Executive Blvd., Suite 601, MSC 7669

Rockville, MD 20852

Phone: (301) 496-5586

Fax: (301) 480-1204

Want to know more about allegations?

DPI has the authority to conduct reviews using certain rules and acts.

Learn More About Allegations
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