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Audit Report: IG-0876

November 6, 2012 

The Department of Energy's Small Business Innovation Research and Small Business Technology Transfer Programs

The Department of Energy's (Department) Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs award grants to encourage scientific effort leading to the application of new ideas and technology.  The combined annual funding available for these two programs grew from $116.8 million in Fiscal Year (FY) 2006 to $175.5 million in FY 2012.  In addition, the programs received $92 million in American Recovery and Reinvestment Act of 2009 funding.  The audit found that the Department had not always effectively managed the SBIR and STTR programs.  Specifically, we identified problems with grant financial management and grant award scoring; and substantiated an allegation that potential conflicts of interest had not been identified and properly mitigated.  In the area of financial management, we found that grant closeouts continued to be an issue and the Department had not fully addressed prior concerns regarding questioned costs.  During the audit, we also identified an additional $534,000 in erroneous and unsupported costs involving bid and proposal costs, costs not allocable to the grant, excess labor charges not in compliance with Federal cost principles, and costs that lacked documentation.  A Chicago Office official told us the closeout backlog was due to an increasing workload and insufficient resources.  Also, we noted that neither topic managers nor merit reviewers were required to certify for each funding opportunity announcement that they were free from conflicts of interest.  In response to our finding, management generally concurred with the recommendations and proposed corrective actions to address issues identified in the areas of financial management and grant awards. 

Topic: Financial Assistance