oversight

Admin. Financial Violations (PI/PS) Grant Fraud

Published by the National Science Foundation, Office of Inspector General on 2007-06-29.

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

                               --                    NATIONAL SCIENCE FOUNDATION
                                                      OFFICE OF INSPECTOR GENERAL                                I

                                                        OFFICE OF INVESTIGATIONS

                                               CLOSEOUT MEMORANDUM

     Case Number: 1-02-11-0031                                                                  Page 1 of 1


                                                                                                            ,I

          This investigation was initiated based on a qui tam received by the U.S. Attorney's Office,
          Baltimore, MD. The qui tam alleged that a social science research firm1 shifted labor costs from
          private contracts to government contracts, and charged government contracts for unallowable
          costs such as the preparation of bids and proposals, administrative labor, and overhead. ,

          Our investigation confirmed the allegations and revealed that the firm submitted false claims2 to
          NSF as well as three other federal agencies3 in connection with federal grants and contracts. The
          firm entered into a monetary settlement agreement4. The firm was also required to enter into a
          four-year compliance plan with the NSF OIG. (The settlement agreement and compliance plan
          are attached to this closeout).

          In light of the above, no further investigative effort is necessary in this matter.
                                                                                                       I,


          Accordingly, this case is closed.




I'
NSF 01G Form 2 (1 1/02)                                                                            I
                                  SETTLEMENT AGREEMENT


        This Settlement Agreement ("Agreement") is entered by and among the United Statesof

America - on behalf of its agencies (1) the Department of Justice, (2) the Department of

Education, (3) the Department. of Commerce, (4) the Department of Health and Human Services,
                                                                                                          l

and (5) the National Science Foundation - the relator Jennifer Hanbury-Pobiak ("relator" or               I



"Pobiak"), COSMOS GROUP CORPORATION a/k/a COSMOS CORPORATION

("COSMOS"), Robert Yin ("Yin"), and Karen Kaufman-Yin ("Kaufman-Yin"), all collectivdly
                                                                                                              I
hereinafter .referred to as "the Parties."


                                             PREAMBLE


        A.      WHEREAS on or about October 24,2002, Relator Pobiak filed a qui tam acGon

in the United States District Court for the District of Maryland entitled United States ex rel.

Jennifer H. Pobiak v. COSMOS Corporation, Civil Action No. AMD-02-3478 ("the Civil

Action") alleging that COSMOS Corporation violated the False Claims Act, 31 U.S.C. sections
                                                                                                      I


3729-3733;
                                                                                                  I




        B.      WHEREAS the United States investigated the allegations in the relator's

complaint;.                                                                                       I




        C.      WHEREAS, as a result of its investigation, the United States contends that
                                                                                                  I


COSMOS, Yin, and Kaufman-Yin violated the False Claims Act, 3 1 U.S.C.         $9 3729-3733,
and/or common law doctrines by submitting claims for payment under the contracts identified
                                                                                         II
                                                                                            on

the list attached hereto as Exhibit 1 that were false because they included as direct charges costs
that should have been charged either to other contracts or to overhead accounts (the "Covered

Conduct");


       D.      WHEREAS the United States contends that the Covered Conduct resulted in the
                                                                                                      I/



knowing submission of false billing claims to the government which enabled COSMOS, Yin,

and Kaufman-Yin to collect federal payments improperly;


       E.      WHEREAS COSMOS, Yin, and Kaufman-Yin deny any wrongdoing or liability

based upon the contentions of the United States in paragraphs C and D above; and


       F.      WHEREAS the Parties mutually desire to reach a full and final compromise of

all civil claims the United States has or may have against COSMOS, Yin, and Kaufinan-Yin ,

based on the Covered Conduct, and further wish to avoid the delay, expense, inconvenience and    11



uncertainty of protracted litigation.


                                  TERMS AND CONDITIONS


        NOW, THEREFORE, in consideration of the mutual promises, covenants, and
                                                                                             '1
obligations in this Agreement, and for good and valuable considerations as stated herein, receipt

of which is hereby acknowledged, the Parties agree as follows:


                1.      COSMOS, Yin, and Kaufman-Yin agree to pay the United States the sum
                                                                                             I
of One Million Five Hundred Fifty Thousand Dollars ($ 1,550,000.00) ("Settlement Amount"),

and this sum shall constitute a debt immediately due and owed to the United States on the date

that this Agreement is fully executed. The Settlement Amount shall be electronically transferred

no later than the fifth (5h) business day following the date on which this Agreement is fully11
    executed by the Parties, pursuant to written instructions provided to David Bodenheimer, counsel

    for COSMOS, Yin and Kaufman-Yin, by the U.S. Department of Justice.

                   2.     Subject only to the conditions specified in Paragraph 3 below, on receipt
                                    \

    of the payment described in Paragraph 1 above, the United States fully and finally releases add

    will be deemed to have released COSMOS, Yin and Kaufman-Yin from any civil monetary

    claims that the United States has or may have under the False Claims Act, 3 1 U.S.C. $8 3729i

    3733 (as amended); the Contract Disputes Act, 41 U.S.C. $9 601-613; or the common law

    theories of payment by mistake, unjust enrichment, breach of contract, and fraud for the Covered

    Conduct.

                                                                                                    I
                   3.     The United States specifically does not release COSMOS, Yin, and

    Kaufman-Yin from (a) any potential criminal liability; (b) any criminal, civil or administrative

    claims arising under Title 26, U.S. Code (Internal Revenue Code); (c) any liability to the Unifed

    States (or any agencies thereof) for any conduct other than the Covered Conduct; (d) any

    obligations created by this Agreement; (e) any claims for defective or deficient services that F e

    not part of the Covered Conduct; (f) any claim for personal injury or property damage or for

    other consequential damage arising from the Covered Conduct; and (g) any administrative
                                                                                                   I
    liability except as referenced in Paragraphs 2 and 4. The United States does not release any
'
    claims based on the Covered Conduct against individuals other than Yin and Kaufman-Yin,

    including officers, directors, agents, employees, and shareholders of COSMOS.


                   4.      In consideration of the obligations of COSMOS, Yin, and Kaufman-Yin in
                                                                                                   I/

    this Agreement and the Compliance Program ("CP") entered into between the Off~ceof the

    Inspector General for the National Science Foundation (OIG-NSF) and COSMOS, and
                                                                                                   li
                                                                                                       li

conditioned upon full payment of the Settlement Amount as set forth in Paragraph 1 above, a d
                                                                                                       Il

COSMOS'S full compliance with the CP, which is herein incorporated by reference and attached
                                                                                                       '1
hereto as Exhibit 2, the OIG-NSF agrees to release and refrain from instituting, directing, or

maintaining any administrative action seeking debarment or suspension (as set forth in 48 C.F.R.

subpart 9.4) of COSMOS based upon the Covered Conduct, except as otherwise reserved in                 ,

Paragraph 3 above, and as reserved in this Paragraph. Nothing in this Paragraph precludes the

OIG-NSF fiom taking action against entities or persons, or for conduct and practices, for which

claims have been reserved in Paragraph 3 above.


               5.      Pobiak agrees and represents that this settlement of the Civil Action is pir,

adequate, and reasonable under all the circumstances, pursuant to 31 U.S.C. $ 3730(c)(2)(B).

The United States agrees to pay Pobiak the sum of Two Hundred Sixty Three Thousand Five 11

Hundred Dollars ($263,500.00) from the payment described in Paragraph 1 above within a

reasonable time after receipt by the United States of such payment pursuant to written

instructions provided to the Department of Justice by relator's counsel. On receipt of this
                                                                                                  'I
payment, Pobiak, for herself, for her heirs, successors, and assigns, releases and will be deemed
                                                                                                  'I
to have released and forever discharged the United States, its officers, agents and employees,
                                                                                                 /I         3


from any claims arising from or relating to the filing of the Civil Action, or pursuant to 3 1 U.S.C.
                                                                                                 11



$ 3730(d)(1), for a share of the proceeds of the settlement of claims under this Agreement; and
                                                                                                 II


COSMOS, Yin, and Kaufman-Yin from any claims she has or may have, including all claims

that were or could have been asserted in relator's complaint. This Agreement does not resolye,

or in any manner affect, any claims the United States has or may have against the relator arising

under Title 26, U.S. Code (Internal Revenue Code), or any claims arising under this Agreement.
                                                                                                          I/


               6.      Coincident with the full execution of this Agreement, counsel for the

relator will, pursuant to Rule 4, provide counsel for the United States with a fully executed

stipulation of dismissal with prejudice. Counsel for the United States shall file the said

stipulation with the Court promptly upon notification that the government has received the

payment referenced in paragraph 1 above.


               7.      COSMOS, Yin, and Kaufinan-Yin fully and finally release the United

States, its agencies, employees, servants and agents, and relator, her heirs, successors, and
                                                                                                     11


assigns, from any claims (including attorneys fees, costs and expenses of every kind and

however denominated) which COSMOS, Yin, and Kaufinan-Yin now have and could have                     ll




asserted or could in the future assert against the United States, its agencies, employees, servants,

and agents, and relator, her heirs, successors, and assigns, related to the Covered Conduct an'U the

United States' inirestigation and prosecution thereof.
                                                                                                 i

               8.      COSMOS, Yin, and Kaufman-Yin agree that all costs (as defined in the

Federal Acquisition Regulations ("FAR) 3 1.205-470 incurred by or on behalf of COSMOS; Yin

and Kaufman-Yin in connection with (I) the matters covered by this Agreement and the CP

entered into by COSMOS, Yin, and Kaufman-Yin with the OIG-NSF; (2) the government7si

investigation of the matters covered by this Agreement; (3) COSMOS', Yin's, and Kaufman-

Yin's investigation, defense and corrective actions, including the costs associated with the OIG-

NSF CP, with respect to matters covered by this Agreement; (4) the negotiation of this

Agreement; and (5) the payment made to the United States pursuant to this Agreement, shail be

unallowable costs for purposes of government contracts and awards. These amounts shall be
                                                                                                I/



separately accounted for by COSMOS, Yin, and Kaufman-Yin.
               9.      Each party to this Agreement will bear its own legal and other costs

incurred in connection with this matter, including the preparation and performance of this

Agreement.


               10.     COSMOS, Yin and Kaufman-Yin waive and will not assert any defenges

they may have to any criminal prosecution or administrative action relating to the Covered

Conduct, which defenses may be based in whole or in part on a contention that, under the Double
                                                                                              :I
Jeopardy Clause in the Fifth Amendment of the Constitution, or under the Excessive Fines

Clause in the Eighth Amendment of the Constitution, this Settlement bars a remedy in such

criminal prosecution or administrative action. COSMOS, Yin, and Kaufman-Yin agree that !his

settlement is not punitive in purpose or effect.


               11.     This Agreement is made as a compromise to avoid the expense of

litigation and to extinguish civil monetary claims as described in Paragraph 2 above. By entering

into this Agreement, COSMOS, Yin, and Kaufman-Yin do not admit to any impropriety,

wrongdoing, or liability of any sort.


               12.     COSMOS, Yin, Kaufman-Yin, and Pobiak represent that this Agreement

is freely and voluntarily entered into without any degree of duress or compulsion whatsoever.
                                                                                               'I



                13.    This Agreement is governed by the laws of the United States. The Parties

agree that the exclusive jurisdiction and venue for any dispute arising between and among the
                                                                                               Il
P,artiesunder this Agreement will be the United States District Court for the District of

Maryland.
               14.     This Agreement constitutes the complete agreement between the Parties.

The Parties agree that this Agreement does not constitute evidence, and is not an admission by

any person or entity, and shall not be construed as an admission by any person or entity, with            i




respect to any issue of law or fact.                                                                 f!




               15.     This Agreement shall be .binding upon the Parties, their successors,

assigns, and heirs.


                16.    This Agreement shall become final and binding only upon signing by each

respective party hereto.                                                                             !!




                17.    This Agreement may not be changed, altered, or modified, except in
                                                                                                    9
writing signed by all undersigned parties. This Agreement may not be discharged except by
                                                                                                    /I

performance in accordance with its terms or by writing signed by all parties.


                18.    All Parties consent to the United States' disclosure of this ~~reernent,'and
                                                                                                11


information about this Agreement to the public.


                19.    This Agreement may be executed in counterparts, each of which shall,

constitute an original and all of which shall constitute one and the same Agreement.
                                                                                                1

                20.     This Agreement is effective on the date of the last signatory to it.

Facsimiles of signatures shall constitute acceptable, binding signatures for purposes of this

Agreement.
                         THE UNITED STATES OF AMERICA



      ROD J. ROSENSTEIN
      United States Attorney
      District of Maryland

By:                                             Dated:
      Allen ~ . d & c k s
      Assistant United States Attorney


By:    3&;4         61    bJ7ic~1)2,            Dated:
      David B. Wiseman
      Trial Attorney                                      I
                                                         1,
      Department of Justice                              I!
                                                         /I
      Civil Division
      Commercial Litigation Branch                        I
                                                         I,




                               COSMOS CORPORATION

By:                                             Dated:
      Robert Y in, President

                                         ROBERT YIN

                                                Dated:
      Robert Yin

                                 KAREN KAUFMAN-YIN

                                                Dated:
      Karen Kaufman-Yin

                                          RELATOR

                                                Dated:
      Jennifer Hanbury-Pobiak, Relator

                                                Dated:
      William Hardy, Esq.
      Counsel for Relator
                         THE UNITED STATES OF AMERICA




      ROD J. ROSENSTEIN                                                        1

      United States Attorney
      District of Maryland

By:                                                 Dated:
      Allen F. Loucks
      Assistant United States Attorney


By:                                                 Dated:
      David B. Wiseman
      Trial Attorney
      Department of Justice
      Civil Division
      Commercial Litigation Branch       '




                               COSMOS CORPORATION

By:   w*
       Y%,
      Robert       President
                                                    Dated:   d l 3 ,\0?


                                             ROBERT YIN
       w . ~                                        Dated:   I/ (310 7
                                                             I    -
      Robert Yin

                                 KAREN KAUFMAN-YIN

                                                    Dated:       //hh7
                                                                      #




                                                    Dated:
      Jennifer Hanbury-Pobiak, Relator

                                                    Dated:
      William Hardy, Esq.                                                 'I
      Counsel for Relator
                                       MlWWWD HOME d A L d   PAGE 02




      ROD J. ROSENSTBW
      umtcd swea Aa#ncy
      District of Matyland




BY;                                     Ikted:
      IkvidB. Wsemaa                                          I


      rid Attoraey                                            i
      -ofhutice
      Civil Division
      c4mlmdLi*Brarch

                             COSMOS CORPOIW"I'0N




                                 ROBERT W N



                             KAREN K A m - Y I N



                                  RELATOR
                                                                                                      !I
                             COSMOS Compliance Program Requirements

    I,             Preamble

             1.     COSMOS agrees, as a term of its [date] Settlement Agreement (the Settlement
    Agreement) with the United States to which this Compliance Program is attached and incodorated
    by reference, to implement a Compliance Program (the "Program") to ensure compliance with the
    terms and conditions, General Grant Conditionr/FAR, and any Special Grant conditions,
    applicable to any National Science Foundation (NSF) Award; to ensure compliance yith all
    relevant laws and regulations governing NSF Awards as provided for in 45 CFR Parts 601 to 690,
    as applicable, as now or hereafter amended, and to demonstrate COSMOS'S commitment to the
    prevention of fiaud, false statements, and misspending of funds related to NSF Awards by
    COSMOS, its officers, relevant employees, and relevant independent contractors, sub-contractors,
    and sub-recipients. The Program shall be based upon an assessment of the risk of such unlawful
    activities, have adequate financial and human resources, and shall be maintained so as tollensure
    that COSMOS and each of its officers, relevant employees, and relevant independent contractors
    and sub-recipients maintain the integrity required of a recipient of NSF funds. Relevant embloyees
    and relevant independent contractors are those individuals with a material role or responsibility in
    the application for, receipt of, and administration of NSF Awards and those individuals who
                                                                                                             .
    conduct projects supported by NSF Awards, including independent contractors, sub-contractors,
    and sub-recipients.

    11.            Terms and Conditions
I
            2.      The period of future compliance obligations assumed by COSMOS under this
    Compliance Program shall be four (4) years from the effective date of the Settlement ~grkement.
    The "effective date" shall be the date on which the final signatory to the Agreement execrtes the
    Agreement. The scope of this Compliance Program shall be limited to NSF funds that are received
    or claimed during the aforesaid four-year period. IVSF Office of Inspector General (OIG) shall
    monitor compliance with the requirements of this Compliance Program on behalf of the United
    States Attorney's Office for the District of Maryland. All reports and notifications required under
    this Compliance Program shall be sent to the NSF OIG Associate Inspector General for
                                                                                                I
    Investigations, via email to oig@nsf.gov.
I




           3.      COSMOS agrees to implement the following measures within one hundred twenty
    (120) days of the effective date of the Settlement Agreement, unless otherwise specified below:

                   A.      Compliance
                                                                                                 !I
                           (1) Compliance Officer

           4.     A senior level administrator, who shall be neither Karen ~ a u f r n a n - ~ i n ' n Dr.
                                                                                                       or
    Robert Yin, reporting to the President of COSMOS, shall be chosen as Compliance,,Officer.
    COSMOS shall be permitted to select either a company employee or an outside consultant or entity
    to perform the Compliance Officer responsibilities under this Compliance Program. The
Compliance Officer shall be responsible for the Compliance Program operations including, where          I
appropriate, the review of NSF Awards, the development of training programs, and the submission
of comprehensive written annual reports to the President and to NSF OIG on the status of
compliance at COSMOS as set forth below.


                      (2) Compliance Program                                                ti
                                                                                                        I
        5.      The Compliance Program shall include identification of the positions throughout
COSMOS that have roles and responsibilities in the conduct and administration of NSF Awards.
Each of those roles and responsibilities shall be described so that their relationship to COSMOS'S
responsibilities under NSF Awards is clear. The lines of responsibility shall be clearly established
from each individual position up to and including COSMOS'S responsible signatory officJ?ls. All
individuals in such positions will be provided with (or have electronic access to) written 'policies
andlor procedures applicable to their positions, i.e.:

                      a code of conduct holding COSMOS personnel to high ethical standards of
                      professional conduct and integrity, including addressing conflicts of interest;
                       accurate time and effort reporting under NSF Awards to meet the standards
                      of the cost principles specified in the Office of Management and Budget
                      (OMB) Circular A-1 10, (2 C.F.R. part 21 5) or others as appropriate;
                      accurate charging of costs under NSF Awards;
                      accurate monitoring, managing and reporting of cost sharing;
                      proper monitoring of sub-recipients and consultants and sub-recipient and
                      consultant charges;                                                   /I
                      accurate reconciliation of accounting records; and
                      document management and retention.


       6.      The Compliance Officer shall periodically monitor COSMOS'S internal controls to
ensure compliance with all applicable Federal laws and regulations regarding the use and 1
expenditure of NSF Award funds.


                      (3) Written Policies

        7.      Within one hundred twenty (120) days of the effective date of the Seftlement
Agreement, COSMOS shall implement written policies regarding its commitment to ensure
compliance with all laws and regulations related to the receipt of NSF Awards. These policies
shall be adopted and electronically provided by email to COSMOS officers and relevant
employees. To meet its obligations hereunder, Cosmos shall be permitted to provide copies of such
policies to senior management of any sub-recipient, independent contractor, or subcontractor, in
lieu of making available such policies available individually to employees of such entitips. Such
policies shall be updated to reflect any changes in COSMOS'S policies or practices. COSMOS'S
compliance policies shall include disciplinary procedures for dealing with employees who fail to
meet the terms and conditions of NSF Awards. Copies of such policies will be provided to NSF
OIG. The contents of such policies shall be covered in any annual training of COSMOS employees
as provided in paragraph 13. Any policy modified during the terms of this compliance piogram
shall be included as part of the annual report sent to NSF OIG under paragraphs 10-12.

               B.     Audit Requirements

        8.      In addition to the single audit requirements contained in OMB Circular ,A-133.
COSMOS shall have conducted, on an annual basis, no later than 30 days after the annual
anniversary of the Settlement Agreement, a comprehensive independent audit of COSMOS's
compliance with all applicable Federal laws and regulations regarding the use and expenditure of
NSF Award funds, including the applicable NSF Award conditions, FAR provision, and OMB
                                                                                             1
Circulars, where the scope includes a representative sample of NSF Awards ("independent annual
audit"). Cosmos shall be permitted to engage either the firm conducting the OMB Circular A-133
audit or any other qualified person or entity to perform the independent annual audit, including the
Compliance Officer, so long as the Compliance Officer is not an employee of COSMOS.
Furthermore, the independent annual audit shall include each component of COSMOS that
receives or has oversight responsibility with respect to NSF Awards and where appropriate shall be
conducted in accordance with Generally Accepted Auditing Standards with a statistically-valid
sample of NSF Awards. Special attention shall be devoted to risk assessment and internal controls
designed to ensure compliance with NSF Award requirements, including the certifications made on
applications, progress reports, financial reports, and other reports related to NSF Awards. Taking
into consideration the size and resources of COSMOS' operations, the independent annulal audit
shall also assess the efficacy of COSMOS's compliance program relative to whether:

       (a) COSMOS has established compliance standards and procedures to prevent
           and detect violation of law;                                                   'I
       (b) COSMOS's leadership is knowledgeable about such standards and
           procedures and whether a high level person is assigned or retained to direct, ,,
           overall responsibility to ensure the implementation and effectiveness of the
           standards and procedures;                                                           I


       (c) COSMOS has made reasonable efforts to exclude from substantial authority
           any individual whom COSMOS knew or should have known through
                                                                                         I1
           exercise of due diligence, has a history of engaging in violations of law or
           other conduct inconsistent with an effective program to prevent and detect
           violations of law; however, NSF acknowledges and agrees that COSMOS "
           intends to retain Dr. Robert Yin as President and Karen Kaufinan-Yin as
                                                                                           I
           CFO during the term of this Compliance Program ;
       (d) COSMOS has made reasonable steps to communicate its compliance
           standards and procedures to relevant employees through effective training       I!

           programs and otherwise disseminating information appropriate to such
           individuals' respective roles and responsibilities;
       (e) COSMOS took reasonable steps to ensure that its program to prevent and
           detect violations of law is followed, to evaluate the effectiveness of the ,
           compliance standards and procedures, and to provide a system whereby
           COSMOS's employees and agents may report or seek guidance regarding,,
           potential or actual violations of law without fear of retaliation, including
           mechanisms that allow for anonymous reporting;
        (f)   COSMOS'S program to prevent and detect violations of law was enforced
              consistently through appropriate incentives and as necessary disciplinary
              measures for employees engaging in violations of law and for failing to take   1
              reasonable steps to prevent or detect violations of law; and
       (g)    COSMOS has taken reasonable steps, if a violation of law was detected, to
              respond appropriately and to prevent future violations of law, including           I


              making any necessary changes to the program for preventing and detecting
              violations of law.

COSMOS will provide NSF OIG with a copy of the written report and findings of the annual
independent audit. COSMOS waives the right to claim that any final reports resulting from the
independent annual audits as described above constitute attorney work product.

        9.     Any and all reviews and audits conducted at COSMOS, which reveal situations that
might constitute or indicate noncompliance with NSF Award requirements, are to be timely
disclosed to the entity or individual conducting the annual independent audit and the Compliance
Officer.                                                                                i


               C.      Annual Written Reporting

        10.    COSMOS will annually provide NSF OIG with a written report identifying
deficiencies discovered by internal audits or any other audit or review related to NSF Awards and
the corrective actions that COSMOS has undertaken to address such deficiencies. Such reports
shall be due one (1) year after execution of the Settlement Agreement and for each of the three (3)
years thereafter. This report on COSMOS'S corrective actions related to NSF Awards shall
include a certification by COSMOS'S Compliance Officer that all deficiencies have been
addressed to ensure COSMOS'S compliance with all requirements of Federal law, regulations,
related to NSF Awards and this Compliance Program.

        11.    All audit work papers or other supporting documents for audits or reviews of
compliance with this Compliance Program shall be retained by COSMOS for three (3) years
following the expiration of obligations under the Settlement Agreement and shall bl'e made
available to NSF and NSF OIG upon request.                                          ?
         12.     A "material violation" is one that has a significant adverse impact on the
administrative, financial, or programmatic aspects supported by NSF Awards. Cosmos shall report
to the NSF OIG within thirty (30) days of determining that a material violation has occurred when
a material violation has been discovered during any audit, review or otherwise. The report shall
also contain the corrective action that COSMOS has taken andlor plans to take to remedy the
material violation. If COSMOS cannot cure any such material violation within thirty (30) days of
its initial report, COSMOS will so inform NSF OIG of such within the thirty (30) days following
COSMOS'S knowledge of such violation and provide regular status reports thereafter until such
material violation has been resolved or otherwise cured. For all material violations, COSMOS will
report its findings concerning the material violation, its actions to correct such material violation,
and any further steps COSMOS plans to take to address such material violation and prevent it from
recurring in the future.

                                                  4                                          !
                 D.      Training

          13.     COSMOS shall institute and maintain a comprehensive training program designed
  to ensure that each officer and relevant employee is aware of all applicable laws, regulation, grant
  conditions and standards of conduct that such individual is expected to follow when participating
  in any way with NSF Awards, and any relevant independent contractor, sub-contractor, and sub-
                                                                                                   I1
  recipient, and relevant employees thereof, is aware of all applicable laws, regulations, and
  standards of conduct that such individual is expected to follow in reporting to NSF on Awards, and
  the consequences both to the individual and COSMOS that will ensue from any violation of such
  requirements. Each officer and other relevant employee or independent contractor or sub-recipient
  shall receive at least two (2) hours of initial training that shall include a discussion of the dontents
, of this Compliance Program as well as the relevant Award requirements, and shall receive

  additional compliance training of at least two (2) hours on an annual basis. A schedule and topic
  outline of the training shall be included in the annual report submitted to NSF OIG under
  paragraphs 10-12 above. To meet its obligations hereunder, COSMOS shall be                            to
  provide copies of its training materials to senior management of any sub-recipient, independent
  contractor, or subcontractor, in lieu of conducting training for employees of such entities.

                 E.      Confidential Disclosure Program

 14.    To the extent permitted by the laws of the State of Maryland, COSMOS shall establish a
 confidential disclosure mechanism enabling COSMOS'S employees and employees of COSMOS'S
 independent contractors, sub-contractors, and sub-recipient to disclose anonymously to
 COSMOS's Compliance Officer any practices, procedures, or acts considered by the employee to
 be inappropriate or a potential violation of law, regulation, or other NSF Award requirement.
 COSMOS shall make the confidential disclosure mechanism known to each relevant empl"oyeeas
 part of the training described above. COSMOS shall require the internal review of all such
 credible disclosures and ensure that proper follow-up is conducted. COSMOS shall include in its
 annual report to NSF OIG, under paragraphs 10-12 above, a summary of communications received
 under the confidential disclosure program, and the results of the internal review and follob-up of
 such disclosures. To meet its obligations hereunder, COSMOS shall be permitted to provide
 information about its confidential disclosure program to senior management of any sub-recipient,
 independent contractor, or subcontractor.

                 F.      Subcontractors and Subrecipients

 15.     COSMOS confirms its commitment to adhere to the NSF's General Grant Conditions and
                                                                                            I/
 other requirements incorporated therein by reference (including, but not limited to, the
 procurement standards identified in 2 CFR ยง 21 5). COSMOS hrther confirms its commitment to
 incorporate all required flowdown provisions in its agreements with any sub-recipient, independent
 contractor, or subcontractor. The Compliance Officer shall be responsible for monitoring        ,
 COSMOS's compliance with these requirements and will address the status of COSMOS's
 compliance in the annual reports to NSF.
111.           NSF OIG Inspection, Audit, and Review Rights

        16.    In addition to any other right that NSF OIG has pursuant to NSF Award conditions
or other authority, NSF OIG may examine and copy COSMOS's records for the purpose of
verifying and evaluating: (a) COSMOS'S compliance with the terms of this Compliance Program;
and (b) COSMOS's compliance with any NSF requirements. COSMOS shall make theirecords
available at any reasonable time for inspection, audit, andlor reproduction. Furthenribre, for
purposes of this provision, NSF OIG may interview any relevant COSMOS emplbyee at
COSMOS's place of business during normal business hours or at such other place and time as may
be mutually agreed upon between the employee and NSF OIG. NSF OIG recognizes and
acknowledges that COSMOS does not have the authority or power to compel any employee to
consent to an interview with the NSF OIG or anyone else, but COSMOS does agree to make
available company work space and time during normal business hours for any interview agreed to
by an employee.

        17.    In the event that NSF OIG believes COSMOS has breached any of its obligations
under this Compliance Program, NSF OIG shall notify COSMOS of the alleged breach by email
and certified mail (return receipt requested) to both COSMOS's Authorized Organizational
Representative ("AOR") and its Compliance Officer, specifying the nature and extent of the
alleged breach. COSMOS will have thirty (30) days from receipt of the notice to: (a) cure said
breach; or (b) otherwise satisfy NSF OIG that ( I ) it is in full compliance with this ~ o d ~ l i a n c e
Program or (2) the breach cannot be reasonably cured within thirty (30) days, but that COSMOS
has taken action to cure the breach and is pursuing such action with diligence.

        18.    If, at the end of the thirty (30) day period described above, NSF OIG determines
that COSMOS continues to be in breach of any of its obligations under this Compliance Program,
NSF OIG may, by email sent to COSMOS's AOR and the Compliance Officer, state its position
that COSMOS is in default and refer the matter for NSF to initiate proceedings to undertake
appropriate administrative action, including but not limited to the suspension or termination of any
or all NSF Awards and/or suspension or debarment of COSMOS. COSMOS shall have all of the
rights of any other federal contractor or grantee under law or regulation to respond to, address, or
dispute any such action.                                                                    t


       19.    Should any action to enforce or interpret this Compliance Program or to resolve any
dispute hereunder be required, COSMOS acknowledges the jurisdiction of the federal courts.
COSMOS further agrees that, absent a breach of this Compliance Program and the Settlement
Agreement to which it is attached and incorporated by reference, the execution of the said
Settlement Agreement shall be final as to all matters alleged in the said Agreement.

IV.            Costs

        20.   COSMOS shall bear its own costs, expenses, and fees in relation to implementation
of this Compliance Program.
          21.    All costs, whether direct or indirect, incurred by or on behalf of COSMOS in
    connection with the following are unallowable costs under the cost principles applicable to
1
    government Awards (hereafter, "unallowable costs"):

                   (1) the matters covered by this Compliance Program;
                   (2) the negotiation of this Compliance Program and the Settlement Agreement
                       (including attorney's fees) and,
                   (3) any payments made pursuant to the Settlement Agreement.                   I)



I
           22.   These unallowable costs will be separately estimated and accounted for by
I   COSMOS and COSMOS will not charge such unallowable costs directly or indirectly to any
    Federal Awards.

    V.             Modification

         23.     Any modification to this Compliance Program shall not be effective until a written
                                                                                                      I
    amendment is signed by representatives duly authorized to execute such amendment.       II



    VI.            Integration Clause

            24.     This Compliance Program and the Settlement Agreement to which it is attached and
    incorporated by reference, embodies the entire agreement and understanding of the Parties with
    respect to the subject matter contained herein. There are no restrictions, promises, representations,
    warranties, covenants, or undertakings other than those expressly set forth or referred to in this
    Compliance Program and the Settlement Agreement. This Compliance Program, together with the
I   Settlement Agreement, supersedes any and all prior agreements and understandings between the
I   Parties with respect to this subject matter, except for the terms and conditions of individual
I   Awards.
I                                                                                                         I
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            25.    This Agreement will be deemed effective on the date that the Settlement Agreement
    is fully executed and expire after four (4) years and NSF's receipt of the final annual report,
    whichever is later.                                                                                   [I