Over the past year, we’ve seen a few excellent SBIR/STTR applications on the path toward funding, only to be surprisingly rejected for failing the foreign risk assessment. This happens late in the review process as one of the last gates to pass, which is particularly unfortunate, because of the progressively positive feedback the companies are getting towards funding, only to have them rejected at the last minute for failing this test.
Often the reasons for failing the foreign risk assessment are nebulous and hidden from the applicant. This results in frustration for our clients in that they often don’t know what ‘red flags’ triggered the rejection and can’t address or fix the issue. It appears that this foreign risk assessment continues to be in flux as to how onerous it has become and we do expect better resources to become available so our clients can negotiate through the process effectively and prepare for it even before they submit a proposal.
To that end, NIH has developed some of the best resources that all applicants (even if not submitting to NIH) can use to better learn about what triggers a failure and how to address any potential issues before submission. NIH has created a webpage that assists in this area. One of the key points of the assistance is to always be forthcoming and disclose any potential foreign risk concerns for your team, your collaborators and your consultants. Not disclosing something that is later found will result in an automatic rejection.
The NIH resource also includes “Case Studies” to assist in understanding some of the factors that have triggered denials of awards including ‘honorary professorships in a foreign country of concern,’ patent filings and ownership of other companies in a foreign country of concern, or IT services from a company that is controlled by another entity in such a country.
Additional Concerns:
- Applicants will be automatically rejected if they have a connection to any of the companies listed within the Uyghur Forced Labor Prevent Act (UFLPA) Entity list.
- Entities identified as Chinese Military Companies Operating in the United States will also trigger an automatic rejection.
We suggest that our clients and applicants look carefully through this NIH resource and the concomitant links to better understand and prepare for the foreign risk assessment. Note: This hurdle is a bit fluid so new information and policies changes are likely to occur in the future.
