Report sheds light on SBIR subcontracting behavior

A new report by the Government Accountability Office (GAO) studies a sample of 198 Phase II Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) awards from FY 2019 to identify subcontracting activity. SBIR recipients are generally allowed to subcontract up to 50% of their award value, and STTR recipients must contract at least 30% with a nonprofit research institution. GAO found that 30% of Phase II awards included no subcontract, 24% included at least one subcontract with an academic institution, and 23% included at least one subcontract with a large business (including many defense contractors). The study also found marked differences between the Department of Defense, with 55% of Phase II awards including at least one subcontract, and civilian agencies, which saw subcontracts in 82% of awards. The purpose of GAO’s study was to determine the share of SBIR/STTR recipients reporting subcontractors in the Federal Funding Accountability and Transparency Act of 2006 (FFATA) Subaward Reporting System (FSRS). While the agency estimates that only 10% of awards reported subcontracts, GAO notes that compliance is low across all federal programs and did not estimate what portion of awards are obliged to report under FSRS guidance.