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U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

EPA Office of Inspector General's
Report on Reducing Fraud, Waste,
and Abuse in the Small Business
Innovative Research Program,
as Required by the National
Defense Authorization Act for
Fiscal Year 2012, Pub. L. 112-81
(2012)

September 28, 2012

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SEP 28 2012

THE INSPECTOR GENERAL

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C. 20460

The Honorable Ralph Hall
Chairman

Committee on Science, Space, and Technology
U.S. House of Representatives
Washington, D.C. 20515

Dear Mr. Chairman:

The U. S. Environmental Protection Agency (EPA) Office of Inspector General (OIG) is
required by Section 5143 of the National Defense Authorization Act for Fiscal Year 2012, Pub.
L. No. 112-81 (2012), to report on reducing vulnerability to fraud, waste and abuse in the Small
Business Innovative Research (SBIR) program. This letter constitutes the EPA OIG's report.

The Act requires Inspectors General to report on:

(1)	the number of cases referred to the Inspector General in the preceding year
that related to fraud, waste, or abuse with respect to the SBIR program.

(2)	the actions taken in each case described in paragraph (1) if fraud, waste, or
abuse was determined to have occurred.

(3)	if no action was taken in a case described in paragraph (1) and fraud, waste, or
abuse was determined to have occurred, the justification for action not being
taken.

(4)	an accounting of the funds used to address fraud, waste, and abuse, including
a description of personnel and resources funded and funds that were recovered
or saved.

Forthe period October 1, 2011 to September 1,2012,EPA did not refer any cases
involving SBIR to the OIG. For the same time period, EPA OIG spent $10,235 in salaries for
coordination with the agency and on proactive investigations of SBIR applications.

EPA OIG has worked with EPA's SBIR program staff to reduce vulnerabilities to fraud,
waste, and abuse. On March 30, 2011, EPA OIG issued a report on the certifications SBIR
recipients are required to provide, EPA's Small Business Innovative Research Awards Should
Include Additional Certifications to Reduce Risk, Report No. 1 l-N-0199. The report found that
EPA was using most of the certifications recommended by the Council of Inspectors General on
Integrity and Efficiency. Based on the recommendations in the report, EPA has begun requiring

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additional certifications from SBIR recipients to deter fraudulent use of funds and assist in
prosecution should such fraud occur.

We have also met with EPA SBIR program officials to discuss a format for making
referrals to the OIG and including OIG hotline information in future solicitations for the SBIR
program. The OIG is also developing training for SBIR program staff and recipients starting in
fiscal year 2013.

A similar letter is being sent to Chairman Landrieu, Senate Committee on Small Business
and Entrepreneurship, and Chairman Graves, House Committee on Small Business. If you or
your staff have any questions regarding this report, please contact Eileen McMahon, Assistant
Inspector General for Congressional and Public Affairs, at mcmahon.eileen@epa.gov or
(202) 566-2391.

Sincerely,

Arthur A. Elkins, Jr.

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