Federal prosecutors in the Eastern District of New York say a New York City ed-tech startup has agreed to a civil settlement after investigators concluded some of its federally funded research work was carried out overseas, in violation of small business award rules. The office’s announcement on Wednesday ties the conduct to a Small Business Innovation Research (SBIR) award and frames the case as part of a broader federal push to scrutinize where and how small firms perform taxpayer-funded R&D.
Prosecutors say award rules were flouted
In its public statement, the U.S. Attorney's Office for the Eastern District of New York said LangInnov "improperly conducted federally funded work overseas" tied to its SBIR award. United States Attorney Joseph Nocella emphasized that SBIR recipients are required to perform their research and development in the United States in order to safeguard taxpayer dollars and protect national security interests. The office said the settlement reflects its commitment to holding participants in federal programs accountable when they violate program requirements.
LangInnov’s background
LangInnov develops the BLAST bilingual literacy assessment and describes its work as focused on tools for emergent bilingual learners. According to company materials and a 2021 announcement, the startup received a National Science Foundation SBIR award to support development of the project. LangInnov has publicly highlighted both the award and its broader mission in language education.
SBIR rules require domestic R&D
The National Science Foundation’s SBIR program guidance states that small businesses must conduct their SBIR-funded research and development activities within the United States, with only narrow exceptions that require advance written approval from the funding agency. The National Science Foundation spells out this domestic-performance rule along with the limited circumstances under which work abroad can be authorized.
Enforcement trend and prior settlements
The LangInnov settlement fits into a pattern identified by the National Science Foundation’s Office of Inspector General, which has cited SBIR awardees for performing substantial portions of project work overseas and then reached civil settlements or required repayment of funds. In some instances, NSF has withheld payments while inquiries were under way. The NSF Office of Inspector General has summarized those earlier investigations and outcomes in its public reports.
The Eastern District of New York’s announcement did not disclose the settlement amount or the complete terms. Federal enforcement can also intersect with agency-level remedies, including efforts to recover payments, withhold or suspend awards, or pursue other administrative sanctions, depending on the specific facts. Any formal court filings or agency notices related to the LangInnov matter would contain additional detail on the resolution and any follow-on consequences.
