Cost Associated with NSF's Use of Intergovernmental Personnel Act Assignees

Published by the National Science Foundation, Office of Inspector General on 2013-03-20.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 National Science Foundation • Office oflnspector General
                 4201 Wilson Boulevard, Suite 1-1135, Arlington, Virginia 22230


DATE:                 March 20, 2013

TO:                   Dr. Cora B. Marrett
                      Deputy Director, National Science Foundation


SUBJECT:             Audit of Cost Associated with NSF 's Use of Intergovernmental
                     Personnel Act Assignees, Report No. 13-2-008

Attached please find the final report of our audit ofNSF's use oflntergovernmental
Personnel Act assignees. The report contains one finding on the need for NSF to take
appropriate action to evaluate ways the cost of using IP As can be reduced. We have
included NSF ' s response as an appendix to the final report.

To comply with Office of Management and Budget Circular A-50 requirements for audit
followup, please provide within 60 calendar days a written corrective action plan to
address the report recommendation. This corrective action plan should detail specific
actions and milestone dates.

We appreciate the courtesies and assistance provided by so many NSF staff during the
audit. If you have any questions, please contact Marie Maguire, Director of Performance
Audits, at (703) 292-5009.


cc:           Subra Suresh                    Allison Lerner
              Eugene Hubbard                  Marie Maguire
              Judith Sunley                   Kelly Stefanko
              Pam Hammett                     Emily Franko
              Clifford Gabriel                Karen Scott
              G. P. Peterson                  Michael Van Woert
Audit of Cost Associated with NSF's Use of
Intergovernmental Personnel Act Assignees

        National Science Foundation
         Office of Inspector General

               March 20, 2013
           OIG Report No. 13-2-008
Results In Brief
NSF uses the Intergovernmental Personnel Act of 1970 as its primary way to bring in
top scientists, engineers, and educators from universities and industry as temporary
staff, called IPAs, to maintain its world-class scientific workforce. The Act's authority
frees NSF from the usual hiring constraints on federal employees' pay and benefits,
thus NSF can compensate IPAs more than permanent employees in the same
positions. NSF also hires temporary staff, who are federal employees and thus subject
to federal limitations on pay and benefits, under the Visiting Scientists, Engineers and
Educators (VSEE) program.

IPAs remain employees of their home institution while at NSF and NSF matches their
home salaries. Also, NSF can pay for temporary living expenses, provide paid time and
travel expenses for IPAs to continue research activities at their home institutions,
replace lost consulting income, and reimburse IPAs for state taxes they would not have
had to pay if they remained at their home institution. Because NSF pays IPA costs out
of program funds, reducing these costs could free up more money for research grants.
In 2012, we estimated that NSF's additional annual cost for using IPAs instead of
permanent employees was approximately $6.7 million for 184 full-time IPAs, an average
of $36,000 per IPA.

All three parties- NSF, IPAs and their home institutions- benefit from IPA
assignments. NSF gains new ideas and expertise from the research community. IPA
assignees learn about NSF programs and the merit review process. Finally, the IPAs'
home institutions benefit from the knowledge of and experience with NSF and its
processes that IPAs bring back when they return. While we recognize the benefits that
come from having IPAs at NSF, we did not find evidence that NSF has examined the
additional costs incurred as a result of using IPAs and sought ways to reduce those
costs. We recommend that NSF evaluate ways to reduce IPA costs, including
expanded use of telework and greater cost sharing by IPA home institutions.

We also noted that NSF has not designated anyone responsible for measuring and
documenting the impact of rotating personnel, including IPAs, on the agency. As a
result, NSF misses opportunities to assess the rotator programs' overall contribution to
NSF's mission and goals. As part of enhancing the management and oversight of the
IPA program, NSF could consider incorporating a champion responsible for overseeing
and managing the rotators programs.

Rotator Programs
To further the agency's mission of supporting science and engineering research and
education, the National Science Foundation (NSF) draws on scientists, engineers, and
educators on rotational assignment from academia, industry, or other eligible
organizations. All of the non-permanent appointments are federal employees, except
for Intergovernmental Personnel Act (IPA) assignments, who remain employees of their
home institution. NSF also has a program for employing Visiting Scientists, Engineers
and Educators (VSEE), and together, these are known as "rotator" programs. Because
IPAs are the most significant and prominently used component of the rotator programs,
we focused our audit on the IPA program.

Intergovernmental Personnel Act Mobility Program
The Intergovernmental Personnel Act of 1970 provides authority for the temporary
assignment of skilled personnel to or from federal, state, local or tribal governments, or
institutions of higher education and other eligible organizations without the loss of
employee rights and benefits. It permits individuals to serve in a temporary capacity for
a period of up to 4 years. IPA assignments are voluntary and must have the agreement
of the participating employee. NSF obtains most of its temporary scientists, engineers,
and educators using the IPA Act. NSF believes using IPAs in its directorates and
offices strengthens its ties with the research community and provides the talent and
resources that are critical to meeting NSF's mission. Using the Visiting Scientists,
Engineers and Educators (VSEE) program, NSF obtains a smaller number of individuals
who become temporary NSF employees for up to 2 years.

IPAs remain employees of their home institutions, and the home institutions administer
the IPAs' pay and benefits. Accordingly, IPAs are not subject to federal pay and
benefits limitations. It is important to note that NSF's source of funding for IPAs is
different from the appropriation that funds its employees. NSF reimburses the home
institution for an IPA's salary and benefits using grants funded through its program-
related appropriations. Appendix C outlines how benefits and salaries are funded and
paid for IPAs and federal employees.

A branch in NSF's Division of Human Resource Management provides recruitment and
employment support services for IPAs, such as calculating compensation and
coordinating with the IPA's home institution. Although the frequent turnover associated
with temporary assignments may create an additional workload beyond what is required
in hiring permanent employees, we did not attempt to quantify the additional costs NSF
incurs in administering the IPA program.

NSF's Use of IPAs
In August 2012, IPAs comprised approximately 12 percent of NSF's overall workforce,
including approximately 31 percent of all program director positions and 17 percent of
NSF's executive positions, such as Assistant Directors who lead NSF's science
directorates. IPAs comprised less than one percent of the workforce for all five of the

other science-centric federal agencies we contacted. 1 In addition, IPAs at those federal
agencies were generally used in research related positions, such as science advisors,
and did not typically fill management positions.

While our audit was underway, NSF Office of the Director prepared a white paper
(Appendix D) to elaborate on the value and benefits of IPAs. This document articulated
how IPAs contribute to NSF's mission and how the flexibilities afforded by the IPA Act
help it attract leading scientists, engineers, educators and others. The document also
stated that it is a "constant challenge" for NSF to attract top level talent and stated that
even with the additional flexibility provided by the IPA Act, "NSF still struggles to attract
the Nation's leading researchers to temporary public service".

As shown in the chart that follows, the number of IPAs NSF uses annually has
increased from 126 in 2004 to 190 in 2012, with IPAs growing from 9 to 12 percent of
the NSF workforce over that period.

                                                             t I W orkforce2
                  Tren d 0 f IPAs as a p ercen tage of NSF Toa

          Year    Number of IPAs       Total NSF Workforce       % IPA of Total NSF Workforce
          2004        126                      1,372                          9%
          2006           149                    1,407                           11%
          2008           160                    1,468                           11%
          2010           167                    1,530                           11%
          2011           178                    1,528                           12%
          2012           190                    1,545                           12%

We obtained from NSF's Division of Human Resource Management a list of aiiiPAs
and related costs as of August 1, 2012. We removed 14 part-time IPAs from the
population to avoid skewed data, for a total of 184 full-time IPAs as of August 1, 2012 to
use for our audit scope.

Results of Audit- Additional Cost of Using /PAs
NSF strives to make IPAs "whole" by providing the salary and fringe benefits they were
earning at their home institutions, as well as reimbursing them for travel to NSF,
temporary living expenses, lost consulting income and state income taxes if the IPA is
from a state that does not have an income tax.

  Department of Energy, the National Aeronautics and Space Administration, the Department of Health and Human
Services National Institutes of Health, the Environmental Protection Agency, and the Department of Defense Army
Research Laboratory.
  Source: NSF workforce profile reports prepared by NSF's Division of Human Resource Management, Workforce
Planning and Analysis Branch.

The additional cost of using IPAs in lieu of hiring permanent federal employees is
significant. We found that NSF paid an annual, additional cost of approximately $6.7
million or an average of over $36,000 per IPA, for the 184 IPAs we examined. The
chart that follows shows the cost in greater detail.

     Annual Additional Cost of Using IPAs vs. Permanent Federal Employees
                                          Total Additional Cost for  Additional
                                              184 full-time IPAs      Cost per
            Additional Cost                 (at NSF as of 8-1-12)       IPA
Salaries+                                                 $3,021,205    $16,420
Fringe Benefits+                                                                      787,147                4,278
Lost Consulting                                                                       337,823                1,836
Relocation/Temporary Living Expenses                                                1,438,696                7,819

Independent Research and                                                            1,077,468                5,856
Development Travel
State Tax Reimbursement                                                                 44,000                  239
            Total Annual Additional Cost                                          $6,706,339              $36,448

+The amounts shown for salary and frmge benefits are the amounts NSF patd, whtch are net of any cost
share received from /PAs' home institutions.

Salaries: For one year, NSF incurred an additional cost of slightly over $3 million for
IPA salaries. 3 We considered additional cost to be the cumulative amount an IPA's
salary exceeded the average salary for a permanent federal employee in the same or a
comparable position.

In August 2012, NSF had 21 IPAs at the executive level and 163 non-executive IPAs,
154 of which were program directors. NSF paid 54 IPAs salary exceeding the federal
executive pay limit of $179,700, which is the highest salary earned by a federal
employee at NSF, including presidential appointees. NSF paid 34 of these IPAs an
annual salary of $200,000 or more, with the highest annual salary of $301,247 paid to
an Assistant Director.

The following graph illustrates the number and range of IPA salaries that NSF paid in
2012 that exceeded the maximum salary for federal executives at NSF.

 To estimate the additional salary paid to IPAs, we calculated the average annual salary actually paid to permanent
employees in positions equivalent to those filled by IPAs by position-type (i.e., $161,325 for Program Directors and
$172,408 for Senior Executive Service staff). For each IPA that was paid more than the average salary of his or her
permanent employee counterpart, we considered the difference to be an incremental salary cost, for a total of

                            IPA Annual Salaries Exceeding Top SES Pay ($179,700)

    $280,001 to $301,247
                                                                                        1111 Non··executive I PAs (38 of 163 IPA
    $260,001 to $280,000

                                                                                          Executive-leveiiPAs (16 of 211 PA
    $240,001 to $2.60,000                                                                 executives)

    $220,001 to $240,000

    $200,001 to $220,000

    $180,000 to $200,000

                            0       5         10          15          20          25

Fringe Benefits:
IPAs continue to receive fringe benefits (such as retirement and health and life
insurance) from their home institution. We calculated that NSF paid nearly $800,000 in
additional fringe benefit cost for IPAs. 4

NSF does not know the individual components (health insurance, retirement, child care,
etc.) or cost comprising the fringe benefit packages it pays for IPAs. NSF reimburses
the home institution for its contribution to the IPA's fringe benefit package based on a
percentage or dollar amount provided by the institution. Because of the wide variety of
fringe benefits that can be provided by an employer, cost of fringe benefits for IPAs
varies widely. For the 184 IPAs we examined, NSF paid employer contributions for the
IPA fringe benefits at rates ranging from 8 to 60 percent of salary, with an average rate
of 31 percent of compensation. In comparison, NSF paid its permanent employees an
average fringe benefit rate of 26 percent of compensation.

The following graph provides a side-by-side comparison of NSF-paid fringe benefits (net
of cost-share) for both IPAs and comparable permanent federal employees by position

  To estimate the additional cost of fringe benefits paid to IPAs, we calculated the average annual salary paid to all
permanent employees, both Program Directors and Senior Executive Service staff combined, in positions equivalent
to those filled by I PAs ($162,604), We multiplied this average salary by the average fringe benefit rate NSF paid its
permanent employees (26.2%), for average fringe benefits of approximately $42,602 for a federal employee. We
then multiplied this $42,602 by 184 full-time IPAs for a total of $7,838,768, an estimated annualized total fringe
benefit amount NSF would have paid its 1841PAs had they instead been federal employees. We then subtracted this
amount from the total annualized fringe benefits paid to IPAs ($8,625,915) to obtain the additional fringe benefits paid
to IPAs of $787,147.

                  Average Annual NSF-Paid Fringe Benefit Cost of IPAs and Employees by Position Type



 .5 $40,000                                                                                    • Federal Employee

 8                                                                                             0 IPA
 '1V    $30,000
 u::    $20,000


                                  Executive                        Program Director
                                                   Position Type

Lost Consulting: IPAs can receive up to $10,000 annually to replace consulting
income they had been earning if they agree to discontinue consulting activities while on
assignment at NSF and can provide tax records to support the amount earned.
Permanent federal employees do not receive payments for lost consulting income;
therefore, all lost consulting paid is an additional cost to NSF. NSF paid 58 of the 184
IPAs (or 32 percent) lost consulting payments at a total annual cost of $337,823. The
average amount NSF paid to IPAs that received lost consulting was $5,726, with
payments ranging from $500 to one IPA to $10,000 to 13 IPAs.

Temporary Living Expenses: IPAs can receive a household move or partial
reimbursement for lodging, meals and incidental expenses (i.e., per diem) for
temporarily relocating to NSF for the duration of their assignment. Ninety-two percent of
the 1841PAs we examined (169 of 184) came from outside of the Washington, DC
metropolitan area and all opted to receive temporary living expenses (per diem paid at a
maximum of $22,507 for each year of their assignment) instead of relocation expenses
to move their household, costing NSF approximately $3.8 million annually.

In comparison, over the most recent 2 year period, NSF hired a total of 77 permanent
federal employees, for an average of 39 per year, in positions similar to those held by
IPAs (such as in science directorates and the Office of the Director). Of these 77 new

hires, 51 percent were paid relocation expenses, which cost NSF an average of
$501,274 in the period we examined. 5

     Annual Additional Cost for Relocation/Temporary Living Expenses
                                             IPA      Fed     Difference
Total people                                             184             39
Annual total cost                                3,803,683        501,274
Per person cost                                      20,672         12,853              7,819
    x the number of IPAs                                                                   184
Additional cost for IPAs                                                           1,438,696

To determine the added cost of using IPAs, we calculated the difference between the
per-person cost of temporary living expenses paid to an IPA, and the per person cost of
relocating a permanent federal employee. We then multiplied that amount by the total
number of IPAs to estimate the incremental cost of using IPAs.

As shown in the chart above, we estimate that NSF paid an additional cost of $7,819
per IPA, for a total of over $1.4 million for the 184 IPAs in 2012. It is important to note
that employee relocation costs are paid one time, while IPA per diem is paid annually.

Independent Research and Development Program: The Independent Research and
Development (IR/0) program provides IPAs paid time and travel to return to their home
institution and continue their research while working at NSF. NSF allows IR/D
participants to spend up to 50 work days a year on IR/0. While this opportunity is
available to all NSF staff, IPAs are its primary users. Of the 184 IPAs we examined,
171 (93 percent) participated in the IR/0 program in 2012.

A 2012 NSF OIG audit found that most IR/D travel in 2010 was taken by IPAs, typically
travelling to and from their home institution and spanning the weekend.

Because IPAs are much more likely to participate in IR/0 and to travel as part of their
IR/0, than permanent employees, NSF incurs additional cost in providing the IR/0
benefit for IPAs. For the one-year period ending 8/1/2012, we estimated 6 that
NSF spent nearly $1.3 million in travel cost to support IPAs' IR/0 activities as compared
to $183,631 for permanent federal employees' IR/0 activities. Therefore, we consider
the $1,077,468 difference an additional cost of IPAs.

  We used an average of the last 2 FYs of relocation expenses because the amounts varied significantly: relocation
costs in FY 2011 were $702,217, while such costs in FY 2012 (through September 14, 2012) totaled $300,332.
  Beginning in May 2012, NSF instituted new program element and object class codes to better track the costs of IR/D
activities. In the future, the travel costs of IPAs and government employees can be readily compared. Since these
codes were not in place at the time of our audit to capture a full year's expenses, we alternatively estimated IPA and
permanent employee IR/D travel costs using costs captured by the NSF travel system.

State Tax Reimbursement: NSF will reimburse IPAs for state tax paid on income
earned while on assignment at NSF if they are from one of the 9 states that does not
have a personal state income tax. NSF estimates it has between 5 and 10 IPAs from
those states each year. Because NSF does not pay this cost for its permanent
employees, the total $44,000 NSF paid for this cost in Fiscal Year (FY) 2012 was
considered an additional cost of using IPAs. Since state income taxes had not been
assessed for 2012, we used the amount NSF paid for this cost in FY 2012 ($44,000) as
an estimate.

Finding - Opportunities Exist to Reduce Cost of /PAs
As noted previously, all parties- NSF, the IPA, and home institutions- benefit from the
authorities in the IPA Act. The standard language in aiiiPA agreements that NSF,
IPAs, and home institutions all sign acknowledge this mutually beneficial arrangement
and state that assignments "serve a mutual public purpose."

A January 2013 white paper on the value of IPAs prepared at the request of the
National Science Board, confirms that, "NSF benefits greatly by relying on the up-to-
date expertise of leading external researchers to help shape its funding programs to
support transformational advances across the frontiers of all fields of science,
engineering, and education." Through their assignment, IPAs learn about NSF,
including the merit review process. The paper confirms NSF's expectation that, when
researchers conclude their IPA assignments, knowledge of NSF policies and practices
is transferred to their home institution and the broader scientific community.

We do not question the fact that IPAs bring benefits to NSF, but there are costs
associated with those benefits. During the period we examined, NSF expended
approximately $6.7 million more in using IPAs in lieu of hiring permanent federal
employees. In a time of austerity, it is important to evaluate all costs and identify
opportunities for savings. Costs for federal employees are currently being carefully
examined and controlled. Federal pay has been frozen for two years and strict limits
have been placed on bonus pools for the same period. At the same time, close
attention is also being paid to funds for travel and training. Under the circumstances,
NSF should be carefully examining costs associated with IPAs, in particular, since
savings there free up funds for additional research.

While we recognize the benefits that come from having IPAs at NSF, we did not find
evidence that NSF has examined the additional costs incurred as a result of using IPAs
and sought ways to reduce those costs. In fact, in some instances, the agency is
routinely deviating from policies that were instituted to lessen the financial impact of
using IPAs.

We identified several possible ways that costs associated with IPAs could be reduced.
We recommend that the NSF Director take appropriate action to evaluate these and any
other actions which could lessen the cost of IPAs.

Increase Use of Telework from Home Institution for IPAs
NSF spends a substantial amount of money to bring and keep IPAs on site at its
Arlington, VA headquarters for the duration of their assignments, which can last up to
four years. Two of the largest incremental costs that NSF incurs in using IPAs in lieu of
permanent employees (temporary living expenses estimated at $1.4 million annually
and travel for IR/D estimated at almost an additional $1.1 million annually) are largely a
result of IPAs relocating for their assignment. Reducing IPAs' time spent on-site could
provide NSF opportunities to reduce these costs.

Reducing IPAs' time spent on site could also help the agency deal with space
constraints. Office space at NSF's current headquarters is already limited and it is
uncertain whether the situation will be improved when the agency executes a new lease
after the expiration of the current one in 2013. If the space available for federal
employees' offices declines, it is possible that NSF will have to increase the use of
telework for all staff, including IPAs. To avoid the prospect of paying IPAs to come to
NSF to work, then having to have them telework from their new home in Virginia, it is
important that NSF consider how much time IPAs need to be physically present at NSF
to effectively fulfill the duties of their assignments.

In the time since 1970 when IPAs were first authorized, there has been an evolution in
remote- working options. In light of these advancements in working off site, NSF should
examine how often IPAs need to be at NSF during their assignments. NSF already
utilizes a number of technologies that enable remote participation, such as
teleconferences, videoconferences, and online meetings that could enable IPAs to work
primarily from their home institutions. Increased IPA usage of these technologies could
reduce IPAs' time on site. For example, NSF could decide that IPAs only need to be at
NSF for an initial training period to get acclimated to the federal work environment
before allowing them to work primarily from their home location, with infrequent travel to
NSF headquarters.

Some IPAs, especially those at the executive level, may need to be on-site more than
others. However, of the 184 IPAs at NSF during the period we examined, only 21 were
at the executive level while 163, or 89 percent, were at non-executive staff levels.
Given the large number of IPAs below the executive level, in addition to the availability
of tools to enhance remote working, an increased use of telework for IPAs seems to be
a realistic option.

Increase Cost Sharing by IPA Home Institutions
As previously stated, IPA assignments benefit NSF, IPAs, and the home institution. In
this vein, NSF's policy is to request IPAs' home institutions to voluntarily share at least
15% of salary and fringe benefit cost.

We found NSF only received cost sharing for 32 of 184 IPAs in 2012, including some
institutions that shared at rates as low as 3 and 4 percent. NSF's receipt of cost sharing
has declined from 33 percent of IPAs in the mid-1990s to 17 percent as of August 1 ,
2012. The $668,655 institutions paid toward salaries of the 184 IPAs we examined

reduced NSF's cost for those IPAs on a dollar-for-dollar basis. If NSF increases the
amount and frequency of home institutions sharing the cost of IPA salary and fringe
benefits, the agency has the potential to achieve substantial savings.

                                                                           Financial Cost Share of IPA Salary and
        • Number of IPAs with cost sharing                                            Fringe Benefits
        0 Number of IPAs without cost sharing                            • Home Institutions (Cost-Share)   0 NSF (Agency Cost)

                                         Includes sa!at'/                                                         P6rcerli:ages   ~-:re
                                         0ind/or fringe                                                           tot,?d f!narc!<?l <:est.
                                         b<::neflt co5.t :;.hare.

NSF could also consider expanding the types of costs it requests institutions to share.
As noted, NSF currently seeks cost share only for IPAs' salary and fringe benefits. For
example, NSF could ask institutions to share in the cost of IPAs' participation in IR/D.
Ninety-three percent of IPAs participated in the program and typicaiiR/D activities, such
as IPAs returning to continue research and to serve as a thesis advisor for students,
benefit the home institutions as well as the IPAs. Sharing the cost of such activities with
the IPAs' institutions could yield additional savings.

Limit Salary Annualization to the Maximum Federal Pay Rate for the Position
IPAs' salaries at NSF are calculated based on the salaries IPAs receive at their home
institutions. When IPAs are paid on a 9 month, academic calendar basis at their home
institutions, NSF annualizes that salary to cover the 12 months IPAs will be working at
NSF. By annualizing the 9 month salary on a straight basis, NSF makes the IPA's
salary equal to what he or she would earn if they received a 12-month, rather than a 9-
month, salary from their home institution. Under this process, an IPA earning
$10,000/month at his home institution for 9 months, receives an annual salary of
$120,000 (12 x $10,000) at NSF.

In 1998, NSF developed a modified formula to annualize IPA academic salaries which
limited the amount NSF paid for the 3-month summer period to the maximum federal
pay rate for that position. Unless the Deputy Director grants a waiver, NSF should use
this modified formula. We found that for higher paid IPAs, individual science
directorates and offices responsible for salary negotiations rarely used the modified
formula in annualizing IPA salaries and routinely requested and received waivers. The
financial impact of such waivers is significant given the number of IPAs making over the
maximum federal amount (54 out of 184). For example, in 2012, NSF only used the
modified formula to set the salary of less than half (39 percent) of applicable IPAs. NSF
did not use the modified formula to annualize the salary of any IPAs at the executive
level and many of the highest paid IPA program directors.
According to the human resource staff who provide administrative support for IPAs,
NSF generally pays the higher salary amount as the IPA may not accept the
assignment otherwise. We did not see any evidence that NSF had attempted to
negotiate salary with IPAs. Greater use of the modified formula could result in cost
savings as illustrated below.

            c ompanson o f NSF' s Meth o ds f or A nnuaI".
                                                        1zmg_ A ca d em1c
                                                                       . S aIanes
Example: Executive leveiiPA earning 9-month salary of $225,935 at home institution

Federal maximum salary for executive level: $179,700/12 months= $14,975/month

Home salary of IPA:                         $225,935/9 months=      $25,1 04/month

Straight Annualization of IPA Salary   Mod.ified IPA Salary Calculation

Monthly home salary x 12 months        Monthly home salary x 9 months
                                       + monthly fed max x 3 months

$25,104 X 12 = $301,248                 $25,104 x 9 months+ $14,975 x 3 months= $270,861

       Difference in using modified calculation = reduced annual cost to NSF of $30,387

Review IPAs with High Fringe Benefit Rates
The average fringe benefit rate for permanent employees is 26 percent, while the
average IPA fringe benefit rate is 30 percent for the 184 IPAs we examined. While NSF
relies on the home institution's certification that the information provided is truthful,
complete, and complies with NSF requirements on the types of fringe benefits NSF will
reimburse to the institution, NSF generally does not know the specific components
included in an IPA's fringe benefit amount.

We found that NSF paid fringe benefits at a rate of 50 percent or more of salary to 11 of
the 184 IPAs we examined. NSF should examine the components of fringe benefits for
those IPAs whose fringe benefits rate exceeds a certain percentage determined by
NSF. This examination would ensure that the fringe benefits do not include items that
NSF does not permit. Further, NSF could consider requesting cost sharing for those
IPAs with a fringe benefit rate that exceeds a certain percentage.

We recommend that the NSF Director take appropriate action to evaluate ways the cost
of using IPAs can be reduced. Such actions could include studying expanded use of
telework, greater cost sharing, limiting annualization of IPA salaries to the federal pay
rate for the position, and reviewing fringe benefit rates that exceed an amount
determined by NSF.

Other Matters
Long Term Vision and Overarching Champion for Rotator Programs
As this report makes clear, NSF invests a significant amount of time and money into
bringing IPAs into the agency. While our audit was underway, the agency prepared a
whitepaper to describe the value and benefits of IPAs to NSF (see Appendix D). The
document produced details at a high level how IPAs contribute to NSF's mission and
how the flexibilities afforded by the Intergovernmental Personnel Act help NSF attract
leading scientists, engineers, educators, and others. It did not demonstrate, nor did we
find during the course of our audit, that anyone at NSF was responsible for measuring
and documenting the impact of rotating personnel, including IPAs, on the agency as a
whole. As a result, the agency misses opportunities to assess the rotator programs'
overall contribution to NSF's mission and goals. Given the number of IPAs at NSF at
any given moment, their prevalence in the highest ranks of the agency and the added
costs that result from their use, it would be helpful if NSF designates a champion
responsible for overseeing and managing the rotator programs as a whole. Such a
person could, among other things:

   •   Establish long-term goals for the programs and measure progress toward them,
   •   Examine IPAs' experiences at NSF in order to identify ways to improve the
       program and make it more attractive to potential candidates,
   •   Track and examine the cost of the programs to ensure that they are consistent
       across directorates and identify opportunities for savings, and
   •   Study the impact of having IPAs on federal employees and identify any actions
       that should be taken to minimize negative impacts.

Because our audit focused on the cost of IPAs, we are not making a specific
recommendation to this effect. We include the suggestion in other matters for the
agency's consideration.

NSF Policy for IPAs
Also during our audit, we noted that NSF's practices related to IPAs, such as the length
of time IPAs are entitled to per diem, are not reflected in its policy on the administration
of IPAs. NSF should revise its policy to reflect its practice of administering IPAs.

Manual Computation of IPA Salary and Fringe Benefits
The manual computation of IPA salary and fringe benefit, previously cited in our 2004
audit remains a concern. NSF agreed with the OIG's recommendation to develop a
system to automate the IPA salary and benefits computation process; however, citing
budgetary constraints and its inability to find a suitable system, NSF did not implement
the recommendation. Although we did not specifically test for manual computational
errors, we maintain that an automated tool could more accurately compute IPA salaries
and other payments.

Summary of Agency Response and OIG Comments
NSF management concurs with our recommendation to evaluate ways the cost of IPAs
can be reduced. NSF management agreed that all parties- NSF, the IPA and the
home institution- benefit from authorities in the IPA Act. NSF responded that it
routinely scrutinizes costs associated with the IPA program and that it agrees it is
prudent to see if cost reductions can be achieved, especially in light of the austere
budget environment. NSF also responded that it must balance cost reductions with
possible effects on recruitment efforts.

We consider management's comments to be responsive to our recommendation. We
look forward to receiving the Corrective Action Plan and working with NSF officials to
confirm implementation.

We have included NSF's response to this report in its entirety as Appendix A.

OIG Contact and Staff Acknowledgements
Marie Maguire- Director of Performance Audits
(703) 292-5009 or mmaguire@nsf.gov

In addition to Ms. Maguire, Kelly Stefanko and Emily Franko made key contributions to
this report.

Appendix A: Agency Response

                                      NATIONAL SCIENCE FOUNDATION
                                           4201 WILSON BO ULEVAR D
                                          ARLINGTON , VIRG INIA 22230

              NSF                                March 11, 2013

         OFFICE OF THE


      TO:           Ms. Allison Lerner
                    Inspector General, NSF Office of Inspector General

      FROM:         Dr. Cora B. Marrett C·~ I~ . ) \, '-''V'....::LL.
                    Deputy Director, NSF

      SUBJECT:      Audit of Cost Associated with NSF's Use of Intergovernmental Personnel Act

      NSF appreciates receiving the findings and recommendations contained in the draft report
      Audit of Cost Associated with NSF's Use of Intergovernmental Personnel Act Assignees. I PAs
      contribute greatly to NSF' s mission by providing up-to-date expertise and an influx of new
      ideas, helping to shape NSF's funding programs to support transformational advances across
      the frontiers of all fields of science, engineering and education. As noted in the report, all
      parties-NSF, the IPA, and the home institution-benefit from authorities in the IPA Act.

      NSF routinely scrutinizes costs associated with the IPA program, particularly questioning
      unusual expenses or costs. NSF also agrees it is prudent to see if cost reductions can be
      achieved, especially in light ofthe austere budget environment that NSF and all Federal
      agencies currently face. Thus, NSF concurs with OIG's recommendation to evaluate ways the
      cost of IPAs can be reduced, fully realizing that we must also balance that consideration with
      the possibility that certain reductions might adversely affect our recruitment efforts or serve as
      a disincentive for IPAs to come to NSF .

      NSF will submit a Corrective Action Plan after receipt of the final report. Please let me know if
      you have any questions.

      Cc:     Subra Suresh
              Gene Hubbard
              Marty Rubenstein
              Larry Rudolph
              Judy Sunley
              Kay Rison
              Clifford Gabriel

Appendix 8: Objective, Scope and Methodology
We performed this audit to determine the additional costs of IPAs as compared to
federal employees in equivalent positions. Our scope included all (184) full-time IPAs
on-board at NSF as of August 1, 2012 and related costs. Auditors judgmentally
selected August 1, 2012, as a current date at the time of fieldwork. We did not include
NSF's approximately 40 Visiting Scientists, Engineers and Educators, who are also
rotating personnel, in our audit scope.

To complete our objective, we utilized data on the costs of IPAs and permanent federal
employees from a variety of NSF sources to calculate the additional costs NSF incurred;
reviewed NSF and federal criteria to understand the rules governing IPA compensation;
interviewed staff administering NSF's IPA program in NSF's Division of Human
Resource Management to gain an understanding of their procedures with respect to
administering IPA assignments; and confirmed this understanding by examining a
judgmental sample of IPA files maintained by NSF.

We reviewed NSF's compliance with applicable provisions of pertinent laws and
guidance, including:
   • 5 CFR PART 334- Temporary Assignments Under the Intergovernmental
      Personnel Act
   • The U.S. Office of Personnel Management, Provisions of the IPA Mobility
   • NSF Manual 14, Personnel Manual
We did not identify any instance of noncompliance with these laws and regulations.

Through interviewing NSF staff and reviewing documentation, we also obtained an
understanding of the management controls over the administration of IPA assignees.
We identified ways that cost associated with IPAs could be reduced. However, we did
not identify any significant internal control deficiencies or instances of fraud, illegal acts,
violations, or abuse.

During the course of this audit, we relied on information and data received from NSF in
electronic format that had been entered into a computer system or that resulted from
computer processing. We tested the reliability of NSF's computer-processed data
through a variety of means including manually reperforming calculations, matching
numbers against original source documents, and corroborating results with NSF officials
independent of the computer system. Based on our assessment, we concluded the
computer-processed data was sufficiently reliable to use in meeting the audit's

We conducted this performance audit between June 2012 and February 2013 in
accordance with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient, appropriate evidence to
provide a reasonable basis for our finding and conclusions based on our audit objective.

We believe that the evidence obtained provides a reasonable basis for our finding and
conclusions based on our audit objective.

We held an exit conference with NSF management on February 7, 2013.

Appendix C: Flowchart Comparing IPA to Permanent Federal
Employee Funding and Payment

            IPA vs. Permanent Federal Employee Funding (Payment} Flowchart

   Assignment or                        Funding Source            Compensation/Cost Category     Funding Recipient
  Employment Type

                                                                        Salaries and Fringe

                                         Research and                Temporary Living Expenses
                                        Related Activities                  (Per Diem) *
                    are funded by the    and Education
                                           and Human
                                                                      Individual Research and
                                                                      Development and Other
                                        (Program Funds)

                                                                         Lost Consulting •

                                                                     State Tax Reimbursement•

                                                                       Salaries and Fringe
                                        Operations and
                    are funded by the
                                            Award                          Relocation"'
                                        account (AOAM
                                            Funds)                    Individual Research and
                                                                      Development and Other

                                                                                                        "'If applicable

Appendix D: NSF Paper on the Importance of I PAs

                                             NATIONAL SCIEN(;E FOUNDATION
                                       AND THE INTERGOVERNMENTAL IPERSONNEl ACT

     The m ission o·f the National Sdence Foundation (NSf) i5 "to promote tile progress ofsdence; to
     adva nc.e the national health, prosperity, and welfare; to serure the nationa I defense; and for other
     purposes." NSF achieves this vital mission by f unding programs that .support world-class n~seardl and
     education activities_ To help guide and manage these programs, NSf ,r,elies upon the expertise of
     some of the Nation's leading SC!ientiists, engineers, and educators, thereby eruuring our Nation
     remains at l!he foref ront of scienti:fJC and engineering discovery_

     NSF attracts many of these oU15tilnding leaders to government service through the authorities
     prov,ided by the Intergovernmental Personnel Act liPAI, passed by Congress in 1971. I PAs (individuals
     who come to NSF under this authority! bring a constant innux of new ideas and fresh approaches to
     o ld problems_ They help assess and fund higtrrisk/transformative proj ects and enable NSF to obtain
     the benefit o·f new and innovative research and management directions.. NSF has other authorities 1
     to hir e staff on a rotating basis, but only the authorities under the lntergovemmental Personnel Act
     prOVIide NSF with enough cost reimbu rsement capability to allow many of the Nation's most
     prominent scienti5ts, engineer s and educators to commit to ,p ublic service for a shan period of time_

     While NSF's permanent staff are highly knowledgeable and capable, the ever changing global science,
     engineering. and education landscape requires NSF to continually complement its permanent staff
     with the expertise of individuals firom the broader research and education community (mostly from
     academe)_ llihis is espedally true for NSF, since it is tile only major federal R&D fiunding agency
     without its own cadre of intramural (in-house! researchers_ As a result, NSF benefits greatly by
     relying on the up-to-date expenise of leading external researchers to, help shape !its funding 1p rograms
     to support transformational advances across the frontiers of all fields of science, engineering, and
     education. NSF maximizes the programmatic strength of its staff through a mix of permanent and
     rotating staff_ Gurrently, IPAs constitute roughly 30% of NSF's Program Directors_ (See f igurel

                   NSF Program Directors by Appolnimerrt Type
                   mF En1,oloyef'li (e-:~~cJ I«ks r.ISB' ~d OIG)

     1 In addition to the use ,a.f authoritiies provided through the lntergovemmenllll Personnel Act, NSF also us.es other hiri~:~g
     aUihorities to attrart r~ SICientim, engjneers, and eWI:illors (e.f:., Federal Tempor.uy Employees and Visffing
     sdentim and EngjneeJs andl'Edu~- All these authorities provide a suite of tools to ensure NSf has aues:s to the
     Nation's, siGnificant pool of talent that can be brougJit ID bear on,adlii!Ving NSf's mis,simJ_

A 2004 reportz by the National .Academy of Public Adm inistrntion fNAflA) recommends NNSf continue
to use rotators [!PAs and other categories ofte,mpora'F'\' hires] in the positions of progrnm officers,
managers, and assistant directors."' In this report, NAPA clearly articulates and re,affirms NSf's need
for a steady infusion of new ideas from the research community to support NS:F's. unique role in the
Nati'On's science and engineering enterprise.

White NSF benefits greatly from the infusion of new ideas from !PAs, NSF's outreach activities also
benefit by having such prominent researchers serve as NSF "ambassadors." Experience shows that
the best way to gain familiarity with an institution, its practices, and its culture is to spend time within
the institutiorL By working side-by-side with other rotating staff and with the permanent workforce,
lPAs team al:l'out NSF, including th,e rigorous merit review process used to evaluate tens of thousands
of grant applications_ Consequently, when thes.e leading researchers conclude their !PA assignments
and return to their home institutions, krtow~edge of NSF policies and practices is not only transferred
to their home institution, but also to the broader scientific.. engineering a,nd education community.
Such knowledge transfer is cmical!y important to retaining th.e. community's trust in NSF's merit
review procedures and in recruiting others to serve the Foundation as future staff, reviewers and

Attracting top l'evel talent from our universities and elsewhere is a constam: challenge. As identifted
in the 2004 NAPA report, NSF rotatof5 often must rna intain two households.• interrupt research and
education activities, and forego consulting income_ in addition, the current federal pay ceiling at NSF
is: well l:l'elow the salaries of many• reading researchers that NSF needs to attract. This is es~Jedalh1•
true for tPAs serving NSF in an executive capacity. The statutory authorities governing the
recruitment of !PAs provide options to lessen the economic impact of tempora,ry service to NSF.
Under the authoriti.es ofthe Act, the IPA's home institution can be reimbursed by NSf to cover the
lPA's full salary. Also, through NSF's Independent Research/Development (lR/D) program, !IPAs have
access to a limited a mourn: of funding to support the continuation of some of their research-related
actillities. Even with the additiooa I flexibility provided by the Act and the additional support
provid'ed by the IR{D pmgra,m, NSf still struggles to attract the Nation's leading researchers to
temporary public service.

;Jn summary, the authorities under the Intergovernmental Personnel Act enable NSF to attract and
utilize' the expertise of the Nation's very best researchers and managers_ Through the use of I PAs, as
a complement to NSF's career staff and other rotating staff, the foundation's programs have
remained at the forefront of science, engineering,, and education.

>National AGademy of Public Administr.rtioo. 2:004. National srience.l'atmdation: Gavemaru:e and Management for the
Furure. 14ll P!P-