Financial Management

Pursuant to a congressional request, GAO provided information on issues related to the National Institutes of Health's (NIH) licensing of inventions developed under intramural research projects, focusing on the: (1) extent of and reasons for the differences between the number of research inventions licensed under cooperative research and development agreements (CRADA) compared to inventions licensed under other intramural research projects; and (2) internal controls that ensure proper accountability for royalty income resulting from these licenses.

GAO noted that: (1) for a number of reasons, the number of licenses granted for the use of federal inventions is not an appropriate measure for comparing CRADA and non-CRADA research projects; (2) the licensing information provided by NIH's Office of Technology Transfer for the period January 1994 through June 1999 did not present comparable data for CRADA and non-CRADA projects; (3) the 8 CRADA licenses were related to the 538 CRADAs established during this period, while the 1,021 non-CRADA licenses were related to research projects begun years or even decades earlier; (4) while the information provided appears to show that NIH licensed more inventions developed under non-CRADAs than it did under CRADAs, licensing opportunities are different; (5) according to NIH officials, less federal funding is involved in CRADA research than in non-CRADA research; (6) GAO performed limited testing of the internal controls over royalty income and found some deficiencies that could impact the completeness and accuracy of royalty income; (7) for example, NIH did not always promptly reconcile receipts, nor did it have integrated systems to track the royalty receipts; (8) further, while NIH had system documentation for the Invention Tracking System as implemented in 1992, that documentation had not been updated to reflect changes; and (9) therefore, if the system fails, it would be more difficult to make necessary repairs, thus potentially affecting normal operations and increasing the risk of lost royalty income.