Small Business Innovation Research Program
The Small Business Administration (SBA) administers a program entitled the Small Business Innovation Research (SBIR) Program which directs all federal agencies with extramural research budgets over $100 million to reserve 2.5% of their annual budget for contracts or grants with small businesses doing research. The purpose pf this program is to promote technological innovation and economic growth through the investment of Federal research funds in small U.S. businesses. In order to qualify for the program, a business must be organized as a for-profit business based in the U.S., have 500 employees of less, including affiliates, and be at least 51% U.S.-owned by individuals and independently operated; OR be at least 51% owned and controlled by another for-profit business concern that is at least 51% owned and controlled by individuals.
The following federal agencies participate in the program:
- Department of Agriculture
- Department of Commerce
- Department of Defense
- Department of Energy
- Department of Education
- Department of Health and Human Services (National Institute of Health)
- Department of Homeland Security
- Department of Transportation
- Environmental Protection Agency
- National Aeronautics and Space Administration (NASA)
- National Science Foundation
Duplicative proposal fraud and false billing/false representations are the two most common types of fraud within the SBIR Program.
SBIR regulations do allow a company to submit the same proposal to multiple federal agencies. However, the regulations prohibit accepting payment from more than one agency for the same work. Despite this prohibition, companies have proven successful in defrauding multiple agencies into paying them for identical work. Submitting claims for payment to multiple agencies for the same work may be a violation of the FCA.
Moshe Lavid, a Princeton scientist and owner of M. L. Energia, a scientific research company specializing in advanced light sources and matters, agreed to settle an FCA case against him for $1.1 million. Mr. Lavid allegedly lied about the preparedness of his company to handle the research, and accepted payments for the same research from multiple federal agencies including the Air Force, NASA, the National Science Foundation, and the Department of Energy. The whistleblower received an award of approximately $240,000.
Companies also defraud the SBIR by simply fabricating grant applications or statements regarding the work as it was being completed. This may include falsifying the qualifications of company researchers, or plagiarizing research that had already been paid for and completed. Once the work on the contract begins, companies also can wrongly bill the government for work not performed, or lie about the number of hours worked or resources spent on the research. Any false information submitted to the government that results in overpayment may be a violation of the FCA.
Recently, the federal government has filed an FCA complaint against University of Florida researcher Samim Anghaie and his family. Mr. Anghaie’s company, New Era Technology (known as NETECH) allegedly falsified information on SBIR grant applications to NASA, the Air Force, and the Department of Energy to obtain millions of dollars in grant money. Anghaie then allegedly diverted hundreds of thousands of dollars from corporate bank accounts to his personal accounts. Grant money was supposedly used for personal items such as cars and vacation homes. In fact, the government has filed a motion to seize six cars and six pieces of real estate which allegedly were purchased with government funds.