oversight

                                                  NATIONAL SCIENCE FOUNDATION
                . O
                Prn                               OFFICE OF INSPECTOR GENERAL

      o                                              OFFICE OF INVESTIGATIONS



11                                 CLOSEOUT MEMORANDUM

     Case Number: A03110066                                                                    Page 1of 1



          In P03060131, we wrote the grantee to ask about program income generated under
          one of our awards, which was used to publish conference proceedings.1 The grantee
          responded2 it had generated no program income under this award and provided
          supporting documentation. However, it did not specifically address whether it sold
          any of the conference proceedings3 prior to the expiration of the award. Thus, in
          November 2003, the P-file was converted to this case to ask the grantee if it sold
          books before the award closed, thus generating program income.
          Our legal analysis of the relevant section of the GC-14 concluded program income
          derived from fees or royalties for copyrighted material is exempt from being added
          to the grant funds and expended toward the project. Therefore, even if the grantee
          sold some of the conference proceedings prior to the expiration of the award, the
          program income earned was not required to be spent in accordance with Federal
          grant conditions. As the statements and documentation the grantee provided raise
          no other issues, this case is closed.




               (footnote redacted).
               Through [redacted], Office of Sponsored Research.
               (footnote redacted).
               The relevant part of GC-1, section 19.b. Standard Treatment. Unless otherwise specified in the
          award, program income (except as noted in (1)below) received or accrued to the awardee during the
          period of this award shall be retained and added to the funds committed to the project by NSF and
          used to further project objectives. Also, unless otherwise specified, the awardee shall have no
          obligation to NSF with respect to: (1) license fees and royalties for copyrighted material, patents,
          patent applications, trademarks, and inventions received or accrued a t any time; or (2) program
          income received beyond the period of this award.
                                                  NATIONAL SCIENCE FOUNDATION
                                                   OFFICE OF INSPECTOR GENERAL
                                                     OFFICE OF INVESTIGATIONS

                                     MEMORANDUM OF INVESTIGATION
                                                  ,

Case Number: A03110066                                                           11           Page 1 of 1



      The relevant part of GC-1 states:

                19.b. Standard Treatment. Unless otherwise specified in the award, program income
                (except as noted in (1) below) received or accrued to the awardee during the period of
                this award shall be retained and added to the funds committed to the project by NSF
                and used to further project objectives. Also, unless otherwise specified, the awardee
                shall have no obligation to NSF with respect to: (1) license fees and royalties for
                copyrighted material, patents, patent applications, trademarks, and inventions
                received or accrued at any time; or (2) program income received beyond the period of
                this award. [Emphasis added.]

      At the time of this closeout, we interpreted "royalties" to include any income received for the sale of
      copyrighted items, regardless of who actually sold the items or how the grantee received the income.
       Since then, in consultation with NSF's OGC, we have concluded that the exclusion is limited to
      circumstances in which the grantee receives a royalty payment from a publisher who sells the items,
      and does not include circumstances (such as in this case) in which the grantee pays the costs of
      publication and receives all of the proceeds of sales of the items.




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