Thermacore and K Technology: Duplicate Research Allegations and a Split Settlement

The Thermacore and k Technology settlement totaled $965,000 to resolve allegations of duplicate SBIR research proposals and false certifications to NASA and the Air Force. The agreement covered proposals submitted before Thermacore bought k Technology’s assets and later research awards operated by Thermacore’s k Technology Division. If you worked on the proposals, research or funding, the question will be familiar: what did each agency believe it was paying for?

The Justice Department announced the settlement on October 20, 2014. Thermacore, a Pennsylvania corporation based in Lancaster, denied the allegations. The settlement combined a payment to the government with a commitment to spend money on the company’s own compliance work.

Duplicate SBIR Proposals to NASA and the Air Force

The government alleged that k Technology sought funding from NASA and the Air Force for the same or essentially equivalent research while failing to disclose the duplicate proposals. This form of defense research contract fraud turns on the work each agency was asked to fund and the certifications attached to those requests. NASA and the Air Force required nonduplication certifications and barred funding the same or essentially equivalent work more than once.

The Small Business Innovation Research program uses competitive awards to help small businesses develop technology with commercial potential. As the settlement agreement explains, Phase I tests the proposed research’s technical merit, feasibility and commercial potential. Phase II continues that research, with funding based on the earlier results and the proposed project’s scientific and commercial promise. That progression makes what the company accomplished under the first award relevant to the next funding decision.

k Technology submitted its NASA Phase I proposal on September 4, 2008, and its Air Force Phase I proposal on September 24, 2008. Both agencies issued awards early the following year. The government alleged that submissions under those projects were identical, substantially similar or reflected duplicate efforts, and that the submissions and accompanying certifications contained false statements.

The allegation therefore extended beyond the initial requests for funding. It also concerned what the company submitted while carrying out the projects. A researcher who worked on those projects can connect each submission to the work behind it.

Thermacore’s Acquisition and the Phase II Awards

Thermacore purchased k Technology’s assets on August 7, 2009, and began operating the k Technology Division. The agreement’s account of the later proposals puts that purchase between the NASA and Air Force Phase II submissions. The case reached research funding on both sides of the acquisition.

k Technology submitted the NASA Phase II proposal on July 22, 2009, before the purchase. Thermacore’s division submitted the Air Force Phase II proposal on September 2, 2009, and disclosed the NASA submission in it. Both agencies issued Phase II awards in 2010, and the government alleged that additional submissions and certifications under those awards violated the program’s requirements and contained false statements.

The later Air Force proposal identified the NASA submission, while the government still challenged subsequent submissions and certifications. Thermacore disputed that the work was duplicative and contended that the agencies knew about and did not object to any overlapping efforts. If two agencies pay for the same research, taxpayers buy the same answer twice.

NASA’s SBIR Fraud Initiative Prompted the Investigation

NASA’s initiative to identify potential fraud in its SBIR contracts prompted the investigation. The Justice Department’s announcement names NASA, the Air Force and the Defense Department as the investigating agencies. The inquiry concerned representations made to separate government customers about allegedly equivalent research, a connection someone working across the projects could recognize from inside the business.

The Settlement’s Government Payment and Compliance Budget

Thermacore agreed to pay $500,000 to the United States in five installments and allocate $465,000 to compliance efforts. We see a headline doing double duty: a government payment and the company’s own compliance budget. Both under the settlement banner.

The agreement required Thermacore to retain a contract administrator for at least the five-year payment period. That person’s responsibilities included checking outgoing bids, proposals and supporting paperwork, and ensuring that annual representations and certifications were accurate, current and signed by the appropriate company official. The remedy put a person at the point where a research proposal becomes a statement to the government. Thermacore also had to report its compliance activity and use of the compliance funds to the U.S. Attorney’s Office.

A 2022 study in the International Journal of Management and Humanities found higher penalties relative to contract dollars among the defense contractors with compliance and ethics programs in its sample than among those without them. For us, the useful question is what the program does: Thermacore’s agreement assigned someone to check the proposals and required the company to account for its compliance activity.

The Government Could Not Be Billed for the Fix

Thermacore agreed to keep settlement-related costs out of its federal contract charges. The agreement’s cost provisions covered the settlement amount, investigation and defense expenses, corrective actions, and the negotiation and performance of the agreement. Thermacore had to account for those costs separately and could not charge them directly or indirectly to government contracts.

For someone in contract accounting, that commitment reaches how the expenses are recorded and allocated. We would examine whether a settlement-related expense reached a federal contract on its own or through a broader allocation of costs. Taxpayers were supposed to receive the settlement payment without financing the company’s response through another contract’s bill.

What Evidence Is Needed to Prove Fraud?

For alleged duplicate SBIR funding, the useful evidence connects the proposals and certifications to the research awards and payment requests. The comparison starts with what each agency was told it would fund and what work the company represented it had performed. We work with the person who knows the project to explain how the technical overlap connects to the government’s money.

The Thermacore agreement shows why that comparison needs to follow the project beyond its first proposal. The government challenged submissions under both phases, while the later Air Force proposal disclosed the NASA submission. Proposal records, agency communications and the work behind later submissions address different parts of that story. Your knowledge of the research can explain how those pieces fit together.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work with people who know the proposals, project work or accounts to assess a defense contractor whistleblower case built around those representations and the payments they supported.

You Know the Work Behind the Proposals

If you know how the same research appeared in different funding requests, speak with our whistleblower experts about the SBIR work you saw. We develop the case with you and bring in defense research fraud whistleblower lawyers who understand research awards and the certifications behind them. We stay beside you through the whole journey to build your strongest research fraud whistleblower case.