USEFULNESS OF THE 


SMALL BUSINESS INNOVATION RESEARCH 


TECH-NET DATABASE 


Report Number: 11-02 


Date Issued: November 12,2010 


Prepared by the 


Office of Inspector General 


U. S. Small Business Administration 

u.s. 

Office 

Small 

of Inspector 

Business 

General 

Administration Memorandum

Date: To: Sean Greene November 12, 2010 

Associate Administrator for Investment 

lsi Original Signed 

From: Debra S. Ritt 

Assistant Inspector General for Auditing 

Subject: 	 Usefulness of the Small Business Innovation Research Tech-Net Database, 

Report No. 11-02 

This report summarizes the results of our limited-scope review of the usefulness of 

the Small Business Administration's (SBA) Small Business Innovation Research 

(SBIR) Tech-Net database. The database, which is publicly available, contains 

data on SBIR grants and contracts. SBA plans to expand Tech-Net to include a 

government-use section that would capture the data on the commercialization of 

SBIR results needed for better evaluation of the SBIR program. A prior review by 

the Government Accountability Office (GAO) in 2006 and reports from various 

Offices of Inspectors General (OIG) have identified data gaps and weaknesses in 

Tech-Net that have prevented agencies participating in the SBIR program from 

using it to identify duplicative awards. 

The purpose of the review was to assess SBA's progress in completing 

enhancements and expanding the Tech-Net database to allow agencies to: 

(1) identify duplicate awards and or other potential fraud; and (2) better evaluate 

the performance of the SBIR program. 

To determine whether previously identified weaknesses in Tech-Net had been 

addressed, we reviewed prior GAO and OIG reports and testimony, and feedback 

from two SBIR working groups that were established to recommend database 

improvements. We also interviewed personnel from SBA's Office of Technology 

and the National Science Foundation's (NSF) Office of Inspector General (OIG). 

We examined Tech-Net data fields and discussed with SBA changes that had been 

made or were planned for the system. 

To assess SBA's progress in developing the government-use portion of Tech-Net, 

we interviewed officials in SBA's SBIR program office and obtained relevant 

documents. We also reviewed the Small Business Innovation Development Act of 
2 

1982 and amendments to the Act, Federal Register publications, and SBA's Policy 

Directive for the SBIR program to identify database requirements, guidance 

provided participating agencies, and SBA program responsibilities. We conducted 

our review between March 2010 and August 2010, in accordance with 

Government Auditing Standards prescribed by the Comptroller General of the 

United States. 

BACKGROUND 

Congress established the SBIR program in 1982 to increase the use of small 

businesses to meet Federal research and development needs, to foster and 

encourage participation by minority and disadvantaged persons in technological 

innovation, and to commercialize results from the research. Participatingagencies - all Federal departments or agencies with extramural research and 

development budgets greater than $100 million - are required to set aside no less 

than 2.5 percent of their overall extramural research and development budget for 

SBIR awards. 

Congress designated SBA as the SBIR program administrator and tasked it with 

developing and maintaining a publically available database of searchable up-todate information on each SBIR award to assure qualified and interested small 

businesses have the opportunity to participate in the SBIR program. This publicuse database, referred to as "Tech-Net," is currently in operation and contains 

58 data elements that are to be reported for each SBIR award, ofwhich18 are 

mandatory. These elements are listed in Appendix I. The data collected includes: 

(1) award-specific information, such as the date and amount of the award, an 

abstract of the project funded by the award, and a unique tracking number for each 

award; (2) award recipient information, such as gender and socio-economic status; 

and (3) information about the type of firms that received the awards, such as the 

number of employees and geographic location. Subsequently, the Small Business 

Reauthorization Act of2000 (Act) mandated that SBA develop, by mid-2001, a 

more comprehensive database available only to the Federal government or other 

authorized persons for SBIR program evaluation purposes. 

Prior reviews by GAO and agency OIGs have identified data gaps and other 

weaknesses with Tech-Net that have made assessment of the SBIR program a 

challenge and have impeded use of the data to prevent funding of identical 

research projects. 1 In 2006, GAO reported that (1) agencies did not consistently 

enter the data elements within Tech-Net, resulting in incomplete sections of the 

lGAO-07-38, Small Business Innovation Research - Agencies Need to Strengthen Efforts to Improve the Completeness, 

Consistency ofAward Data, October 2006; Department of Energy Office of Inspector General, OAS-M-08-09, 

Management Controls over Monitoring and Closeout ofSmall Business Innovation Research Phase II Grants, 

July 2008; National Aeronautics and Space Administration Office of Inspector General, Management Alert: Concerns 

Relating to NASA Small Business Innovation Research Contracts, April 2004. 
3 

database, (2) SBA limited corrections on format errors to only key data elements, 

thereby limiting the quality of comprehensive program evaluations to the quality 

of the data within the fields, and (3) SBA was 5 years behind schedule in 

implementing the restricted government-use database. 

Since that report, SBA has revised the way that agencies submit SBIR award 

information. Previously, agencies were expected to provide the data to SBA in a 

preselected computer language format. SBA, in tum, converted the data which 

often led to incomplete data entry or transfer errors that went uncorrected. 

Currently, participating agencies electronically transmit SBIR award data directly 

to Tech-Net. 

In a 2009 Congressional hearing, GAO and the NSF OIG reported that the 

growing number of duplicate awards for the same work and duplicative 

deliverables was attributed to SBA's failure to provide the mandated database 

allowing SBIR award information to be shared between awarding agencies. To 

address concerns with the quality and usefulness of SBIR data and to strengthen 

the completeness, accuracy, and consistency of its data collection efforts, SBA 

established a working group of SBIR participating agencies. It also became a 

participant in a fraud working group, lead by the National Aeronautics and Space 

Administration (NASA) and NSF Offices of Inspector General. The fraud 

working group, which was established to identify ways to prevent fraud in the 

SBIR program, has recommended improvements to Tech-Net to guard against 

fraud, waste, and abuse. 

RESULTS IN BRIEF 

SBA had made limited progress in enhancing Tech-Net since the 2006 GAO audit. 

Participating agencies were still experiencing difficulty in searching the database 

for duplicative awards and other indicators of fraud because information in the 

Tech-Net database was incomplete, and the search capabilities of the system were 

limited. The database did not capture all mandatory data as one field was missing 

from the database and two others were not designated as mandatory. Further, all 

awards were not captured in Tech-Net to guide funding decisions because many 

participating agencies did not enter SBIR data timely. Additionally, SBA had not 

developed the government-use component of Tech-Net to capture information on 

the commercialization of SBIR research and development projects. However, 

SBA recently allocated $1.25 million and has begun the acquisition process to 

enhance and expand the Tech-Net database. While these enhancements could 

fulfill the statutory requirement for a government-use database and significantly 

improve the search features of Tech-Net, SBA will still need to take steps to 

ensure the completeness of award data. 
4 

To address the issues noted in our review, we recommended that the Associate 

Administrator for the Office of Investment: add the missing data field to Tech-Net; 

designate two other data fields as mandatory and inform participating agencies of 

these designations; add a database control that prevents participating agencies 

from submitting their award data when any of the mandatory data fields are left 

blank; and require that award information be submitted at the time of award. 

Management concurred with two recommendations and is taking actions to 

address two other recommendations. Management also commented that it has 

been undertaking a comprehensive upgrade of the Tech-Net database, which will 

address a number of concerns raised in the audit report. Therefore, we consider 

management's comments to be fully responsive to all four recommendations. 

RESULTS 

Tech-Net Has Not Been an Effective Tool for Monitoring and Preventing 

Duplicative Funding 

Despite database changes made by SBA since the 2006 GAO report, agencies 

participating in the SBIR program still find the Tech-Net database oflimited 

usefulness as a tool for identifying duplicative funding of research projects. 

Specifically, Tech-Net lacks complete and up-to-date information and is difficult 

to search because of inconsistencies in data formats, the lack of a single identifier 

for companies receiving awards, and limited query and data linking capabilities. 

Completeness ofthe Database 

Participating agencies reported that Tech-Net did not contain complete 

information for all SBIR awards. SBA's Small Business Innovation Research 

Program Policy Directive, issued on September 24,2002, requires that the Tech-Net 

database include 18 mandatory data fields for each SBIR award. Despite this 

requirement, the database was established without one of the mandatory fields, 

"Minority Code," which is needed to identify and report on the number of awards 

made to minority finns. Additionally, participating agencies did not always enter 

data in two other mandatory fields, "Principal Investigator" and "Agency 

Solicitation Topic Code," which are key fields used for identifying duplicate 

awards. This occurred because while these two fields are required by the policy 

directive, they are not designated as mandatory in the Tech-Net database structure 

and no controls exist in Tech-Net to prevent agency submissions when mandatory 

fields have not been completed. 

In addition to the mandatory fields, SBA has identified 40 other items of 

information that agencies should report on. These items, which are identified in 

Appendix I, include information that would be useful in identifying duplicative 
5 

awards, such as the contact official for the recipient company. However, because 

this information is not mandatory, it is not reported by all agencies. The working 

groups believe that this information would assist in their efforts to identify 

research proposals that duplicate existing awards, and therefore, should be 

designated as required. 

Also, according to SBA's Office of Technology, all recent awards are not in TechNet because agencies record award information at different times. Although 

SBA's policy directive for the program requires participating agencies to submit 

award information to SBA at the time the award is funded, some agencies do not 

report their awards until the time of their annual data submissions to SBA. This 

has hampered the ability of participating agencies to use the database to determine 

whether similar research proposals have been funded when making award 

decisions. Without the ability to identify recent awards, agencies may be 

awarding SBIR grants or contracts to companies that received funding for the 

same research. 

Limited Search/Sort Capability 

To facilitate analysis of the program and to identify similarities in research 

proposals, Tech-Net users must be able to search and sort the data captured in the 

database. According to one of the SBIR working groups, the database is difficult 

to search because awardees are not uniquely identified, technical abstracts lack 

searchable plain language, grants cannot be distinguished from contracts, the 

system lacks advanced sorting capabilities, and search results cannot be tallied. 

More specifically: 

• 	 There is no single identifier for companies receiving awards. For example, 

a company may be entered as "ABC, Inc.," "ABC Inc.," "ABC," or any 

other iteration, which would make these companies appear as separate 

entities. 

• 	 Technical abstracts lack searchable plain language and are difficult for a 

layperson to understand. According to one of the working groups and NSF 

OIG testimon/, abstract information placed in Tech-Net varies by agency 

in content, length, and technical complexity. As a result, reviews for 

duplicate proposals are difficult and labor intensive as it is difficult to 

identify similarities in research proposals. 

• 	 SBIR contracts cannot be distinguished from grant awards. Because each 

funding vehicle has a different set of regulations and requirement, users 

find it difficult to identify potential deviations from program requirements 

2 NSF OIG Testimony, Waste, Fraud, and Abuse in the SBIR Program, August 6, 2009. 
6 

and performance measurements and are unable to accurately report program 

performance by funding vehicle. 

• 	 Tech-Net lacks advance sorting and linking capabilities needed for 

analyses. For example, the number of searchable fields is limited, multilevel searches cannot be performed, and custom reports of user-selected 

search fields cannot be created. As a result, agencies are unable to use the 

database to obtain specific information or generate detailed reports meeting 

their analytical and reporting needs. Further, identifiers linking related 

entities are limited to basic demographics, such as address and phone 

number. As a result, relationships between related companies (i.e. affiliates 

or subsidiaries), principle investors, or research topics are difficult to 

identify. 

• 	 Summary totals for search results are not available. As a result, agencies 

cannot readily identify the total number and value of awards made to 

individual companies to assess program performance. 

Government-Use Component of Tech-Net Needed for Program Evaluation 

Has Not Been Developed 

The Small Business Reauthorization Act of 2000 required that SBA, within 

6 months of the Act's enactment, develop a database to collect and maintain 

information from SBIR applicants and awardees necessary to assess the SBIR 

program. The Act also required that SBA maintain two databases, one for the 

public and another for authorized government users. According to the Act, the 

government-use database was to be used solely for SBIR program evaluation and 

was to capture information on: 

• 	 sales revenue earned by awardees from new products or services resulting 

from SBIR funded research; 

• 	 any additional non-SBIR investments that awardees received to further 

their research and development projects; 

• 	 narrative information on second phase awards voluntarily submitted by 

awardees; 

• 	 applicants that did not receive SBIR awards; and 

• 	 any other information determined useful, relevant and appropriate for SBIR 

program evaluation. 

Despite the mandate that SBA develop the database within 6 months of the Act's 

enactment, a 2006 GAO report stated, among other things, that SBA had not 

implemented the mandated government-use database. We determined that as of 

August 2010, SBA still had not developed the mandated government-use database 
7 

to capture information on the commercialization of SBIR-funded research and 

development projects. According to SBA officials, a lack of funding had 

prevented it from expanding Tech-Net to meet the government-use requirements. 

However, as of July 2010, SBA allocated $1.25 million to enhance and expand the 

Tech-Net database, including the implementation of the required government-use 

component. 

Planned Tech-Net Database Enhancements and Expansion 

According to SBA's Office of Technology, it is actively working with the SBIR 

working groups and SBA's Office of the Chief Information Officer to revamp the 

Tech-Net database and awarded a contract to develop a new Tech-Net database on 

September 21, 2010. Planned enhancements to the system include: 

• 	 creating a unique "business key" field for each submitting entity; 

• 	 increasing the number of searchable data fields; 

• 	 increasing the number of sort capabilities including allowing multi-level 

searches; and 

• 	 adding the ability to subtotal search results. 

SBA also plans to use a portion of the $1.25 million to develop the governmentuse component of the Tech-Net database. This expansion would provide 

information on the commercialization of SBIR-funded research and development 

projects and allow SBA and other authorized users a vehicle to perform a proper 

evaluation of the SBIR program's performance. While the expansion and 

enhancements will fulfill the statutory requirement of the government-use 

database and significantly improve the search features of Tech-Net, SBA will still 

need to take steps to ensure the completeness of award data. 

RECOMMENDATIONS 

We recommended that the Associate Administrator for Investment: 

1. 	 Add the mandatory "Minority Code" data field to Tech-Net. 

2. 	 Designate the "Principal Investigator" and "Agency Solicitation Topic 

Code" as required data fields and inform participating agencies of these 

designations. 

3. 	 Add a database control that prevents participating agencies from submitting 

their award data when any of the mandatory data fields are left blank. 
8 

4. 	 Require that participating agencies submit award information to SBA and 

other participating agencies at the time of award, as required by SBIR 

Policy Directive, Section 7(a)(iii). 

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE 

On September 22, 2010, we provided a draft of this report to SBA's Office of 

Investment for comments. On November 5,2010, the Associate Administrator for 

Investment provided formal comments, which are contained in their entirety in 

Appendix II. Management agreed with recommendations 1,2, and neither agreed 

nor disagreed with recommendations 3 and 4. The Agency's comments and our 

evaluation of them are summarized below. 

Recommendation 1 

Management Comments 

Management agreed with the recommendation and stated that several years ago 

SBA changed the terminology from "Minority Code" to "Economically 

Disadvantaged." However, management noted that the two terms are not identical 

in meaning and agreed to change the term back to "Minority Code" and to make it 

a mandatory field. 

DIG Response 

We believe management's comments are responsive to the recommendation. 

Recommendation 2 

Management Comments 

Management agreed with the recommendation and stated that it will add "Principal 

Investigator" and "Agency Solicitation Topic Code" as required fields. It will also 

advise participating agencies of these designations. 

DIG Response 

We believe management's comments are responsive to the recommendation. 
9 

Recommendation 3 

Management Comments 

Management stated that as part of the current Tech-Net upgrade, it was working 

with its contractor to implement controls allowing agencies to submit award data 

only when all mandatory data fields were completed. 

DIG Response 

We believe management's comments are responsive to the recommendation. 

Recommendation 4 

Management Comments 

Management stated that it was taking steps to have agencies submit award 

information to SBA at the time of award. These steps included adding an edit 

function to Tech-Net allowing agencies the capability to revise award information 

after submission. This capability would entice agencies to submit their award data 

as soon as possible after award by alleviating their concerns that correcting records 

would be difficult and time consuming. 

DIG Response 

We believe management's comments were responsive to the recommendation. 

ACTIONS REQUIRED 

Please provide your management decision for each recommendation on the 

attached SBA Forms 1824, Recommendation Action Sheet, within 30 days from 

the date of this report. Your decision should identify the specific action( s) taken 

or planned for each recommendation and the target date( s) for completion. 

We appreciate the courtesies and cooperation of the Small Business 

Administration during this audit. If you have any questions concerning this report, 

please call me at (202) 205_[FOIAeX2]or Riccardo R. Buglisi, Director, Business 

Development Programs Group at (202) 205- [FOIAex.2] 
10 

APPENDIX I. Tech-Net Data Fields for Public Database 

Mandatory Fields 

1. Program Identification 

2. Company 

3. - 6. Address: Streetl, City, State and Zip 

7. Minority Code 

8. Women 

9. Agency Code 

10. Phase 

11. Award Year 

12. Award Amount 

13. -14. PI First/ PI Last 

15. Topic Code 

16. Tracking Number 

17. TIN/EIN 

18. Title 

Non-Mandatory Fields 

1. Street2

2. Zip4

3. - 5. Contact First, Last, & Middle Init 

6. Contact Title 

7. Contact Phone 

8. Contact Email Address 

9. Employees 

10. Branch 

11. PI Middle Init 

12. PI Title 

13. PI Phone 

14. PI Email Address 

15. RIType 

16. RIName 


17.-22. RI Address: Streetl, Street2, City, State, 


Zip, & Zip4 

23. - 25. RI Official First, Last, & Initial 

26. RI Official Phone 

27. Contract/Grant Number 

28. Solicitation Number 

29. Solicitation Year 

30. Proj ect Initiator 

31. Technology Used (YIN) 

32. Time to establish license agreement (months) 

33. STIR Proceeds Distribution to SBC (%) 

34. STIR Proceeds Distribution to RI (%) 

35. Abstract 

36. Abstract Sequence Number 

37. Results 

38. Comments 

39. Industry Share Amount 

40. Cost Share Tracking 
11 

APPENDIX II. Management Comments 

U.S. SMALL BUSINESS ADMINISTRATION 


WASHINGTON, DC 20416 


November 5, 2010 

Ms. Debra Ritt 

Assistant Inspector General 

Auditing Division 

Office ofInspector General 

U. S. Small Business Administration 

409 3rd Street, S. W., 5th Floor 

Washington, D. C. 20416 

Dear Ms. Ritt: 

This letter is in response to the Office ofInspector General's (OIG) request for comment on 

its recent draft report entitled, "Usefulness ofthe Small Business Innovation Research TechNet Database". Outside ofthe framework ofthe OIG audit, SBA has been undertaking a 

comprehensive upgrade ofthe Tech-Net database. This effort aims to improve data collection 

and management program wide and will address a number ofthe concerns raised in the report. 

After review ofthe draft report and conversations with the OIG staff conducting the audit, 

SBA has the following comment: 

Recommendations: 

1) Add the mandatory 'Minority Code" data field to Tech-Net. 

SBA concurs with the recommendation. Several years ago, SBA changed the terminology on 

the form from "Minority Code" to "Economically Disadvantaged." However, we note that the 

two terms are not identical in meaning and will make plans to change the term back to 

"minority code" and make it a mandatory field. 

2) Designate the "Principal Investigator" and "Agency Solicitation Topic Code" as 

required data fields and inform participating agencies of these designations. 

SBA concurs with the recommendation and will take steps to inform participating agencies to 

add "Principal Investigator" and "Agency Solicitation Topic Code as required fields. SBA 

anticipates incorporating these mandatory fields as part ofthe current Tech-Net upgrade, 

which should take place over the next six to nine months. 

3) Add a database control that prevents participating agencies from SUbmitting their 

award data when any of the mandatory data fields are left blank. 

SBA is working with its contractor to put in controls so that agencies will only be able to 

submit award data when all mandatory data fields are completed. This addition is part ofthe 

current Tech-Net upgrade. While SBA's goal is to have all agencies complete all mandatory 

fields, we are concerned that a system that prevents all data from being compiled due to a few 

fields being incomplete and SBA anticipates changes being made over the next six to nine 

months. 
12 

4) Require that participating agencies submit award information to SBA and otber 

participating agencies at the time of award, as required by SBIR Policy Directive, 

Section 7(a)(iii). 

SBA is taking steps to have agencies submit award infOlmation to SBA at the time of award. 

SBA is working with its contractor (Tech-Net upgrade) to make it viable for all agencies to 

submit their award information as soon as possible after award. Part of the issue has been the 

concern by agencies that if there are changes in their award information, that it would be 

difficult and time consuming to go back and correct individual records. As part of the TechNet upgrade, mechanisms will be put in place that will allow the agencies to edit awardees 

information post submission. SBA is working toward getting this portion of the upgrade 

completed in the next six to nine months. ,It must be noted, that of the 01G recommendations, 

this one is the most challenging because of the different infrastructures and resources 

available to the varying SBIR agencies. So, while SBA will strive to make this a short term 

reality, we must factor in legacy and other issues. 

Thank you for the opportunity to provide comment on the draft report. Our office looks 

forward to working with you. If you have any questions please contact Edsel Brown of my 

'staff at (202) 205-7343. 

Sincerely 

[FOIA ex. 6] 

Se<IDrJ. Greene 

Associate Administrator 

Investment Division