NSF Employee Misconduct

Published by the National Science Foundation, Office of Inspector General on 2004-06-08.

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

                                                 NATIONAL SCIENCE FOUNDATION
                                                  OFFICE OF INSPECTOR GENERAL                  i
                                                    OFFICE OF INVESTIGATIONS                   I

                                             CLOSEOUT MEMORANDUM                               '/


Case Number: I03120069

         A proactive review of various Conference Grants identified several issues requiring additional
         review regarding an NSF ward.' The companJ that received the award was contacted and

         asked to provide some additional information regarding the use of the award funds. The initial
         response from the company indicated that the award funds had been used to supplemeAt the cost
         of preparing and producing the conference proceedings as originally stated in its proposal.
         However this response did not identify any specific costs charged to the grant nor did lit supply
         any financial documentation to support the company's response. Additionally, the initial review
         identified that the proceedings were published on CD ROM and these CD ROMs werJ offered
         for sale, raising questions about income generated by the sale of the CD ROMs and if {he income
         should be treated as Program Income.                                                   /j
         We requested additional clarification and documentation from the company to suppod the
         expenses funded by the award. We received the response from the company includini financial
         documentation identifying the total cost of preparing the CD ROMs.                !I
         Additional research was conducted to determine if the income generated by the sale of;the CD
         ROMs, since meeting the definition of program income, falls under the requirements df the
         award. A review of the General Grant Conditions (GC-I), dated 04101,Section 18 (b)(l), found
         that, "unless othewise specified, the awardee shall have no obligatioh to NSF with d.espect to:
         (I) licensefees and royaltiesfor copyrighted material.. ." This statement was also found in

         OMB Cirrcular A-1 10, Section 24 (h). We concluded that though profits fiom the sald of CD
         ROMs constitute program income, the exemption discussed above applies, and the prdfit need
         not be used in accordance with the terms of the award.
         Based on the supporting documentation submitted by the company, we were satisfied that the
         grant funds were used in accordance with the terms of the award, and fkrther, that the bantee had
         no obligation to NSF with regard to piofit received fiom the sale of the CD ROMs prolduced.
         Thus, it is our conclusion that the company met the conditions of the award and that no1 further
         investigation is warranted.                                                            I1
         Accordingly, this case is closed.

          ' Redacted                                                                          11
           Redacted                                                                           /i
VSF OIG Form 2 (1 1102)
                                                     NATIONAL SCIENCE FOUNDATION
                                                      OFFICE OF INSPECTOR GENERAL
                                                       OFFICE OF INVESTIGATIONS
                                        MEMORANDUM OF INVESTIGATION

    Case Number: I03120069
                                                                                     11          Page 1 of 1

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 awarde&
                    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 thk 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 fiom 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.

1                     I                     Agent                      I                      Date         li

      Sign / date

                                                                                                     OIG Form 4 (2102)