Published by the National Science Foundation, Office of Inspector General on 1998-10-15.

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

                                                                        P                   loseout
                                                                                         age 1 o f 4


        Date:         6    1      9   9   8

        To:            File No.   fi@fm<
        From:                                                Audit ~dvisors,Audit Section

        Through:                                 ent-in-Charge, Investigations Section



        Informal Notification

        While at
        reviews, #spoke
        related that

        operation in
                                      &                                     a
                          n August 1998 articipating in the South Pole Station Modernization
                                  with         Quality Assurance Manager,
                            had received an allegation (he did not say who made the a egation)
        regarding one of its employees, the "second in command" at its shippinglreceiving

                                                       The allegation was that this employee had
        received gifts from a freight forwarding company with whichv            s business at
        some of the examples he gave were color TV,satellite dish, and tic ets to sporting events.
        Apparently, though, the employee is not directly involved in awarding contracts to the
        company in question.

                 tated that he and            nternal auditor
                   and that they
        extent of the investigation - i.e., with whom they spoke or what evidence they
        uncovered). The allegation was disclosed to -contracting     Officer, NSFICPO).

    l              o stated that the employee in question had been put on administrative leave
        very soon after the allegation was made, and he believed that the employee would be

        Formal Notification
                                                                               m : ; y ;
    t         o add information re: conversations with CPO and     0
        Initial Steps

        We requested and received documentation from_

        1. Copies of trip reports written by
        d-                    Human Resou                                                     h
                                                                               , Internal Audit
                                                                              s contained notes om
           interviews conducted with:
                    the       employee alleg
                       ays-* the vendor alleged
                                            --      - ---_-
                                                to have        - - gifts.
                                                        given the
                                                                   _ _ _--There

                                                                            - - were
                                                                                  gifts from a ven or;
                                                                                 -_            -_-- _ from
                                                                                        also -notes
                                                                                                          _-- _   - -
           visits to some ofo t h e r transportation vendors.                                                           --

        2. Vendor payment histories for all vendors with w h i c h d o e s business at its

        After reviewing the documentation provided in Item 1 above, we briefed OIG Legal
                          on the facts of the case.                     the applicable law and
                          -Kickback Act of 1986,41                           to the facts of our
        case and we determined that an OIG investigation was warranted.


                                                                    steps after we had been notified
                                       traveled to        nd secured all files. He also, along with a

.       At various times throughout the day we also met with the following individuals -
        Manager, Finance                           Quality Assurance                    and
        Manager, Human                                   with these personnel did not reveal
        anything not

    At our request, O p r o v i d e d copies of invoices selected from the vendor payment
    histories referenced in Item 2 above. We reviewed these and other invoices, but the
    invoice review process was not an efficient use of time as all back-up documentation
    remains at w      d is not forwarded         with the invoices for payment; we noted that
    some invoices were not approved              payment, but did not see anything else of

                                                                                   Yage 3 of 4

             ember 1998 we met with
             bout the m e r a t i o                          and job duties,
               with            and                                    Other than using
           edEx account for
                                                                          a            s
               any improprieties and no evidence t h a k n e w of or approved of
  w l l e g e d activities with           -il         r e i m b u r s e o r personal use
  of the account.)
                                   -                   --       -

  We reviewed the flow o f goods and documentation throughout the receiving/shipping
  operation and concluded that there are sufficient controls in place to make it highly
  unlikely that          paying more for services received than it should, that
  for services not received, or that u s i n e s s was inappropriately

  We did note some administrative weaknesses in t h e e p e r a t i o n : freight forwarding
  services are procured without having been subject to a competitive bid process; freight
                                                                                                 .   .
  forwarding invoices are approved for payment without having been verified against back-
  up documentation, and employees may not have been aware of                       policy re:
  accepting gifts. These were discussed with -     d    o
  handled by OIG Audit.

             Distribution Services, Inc.

  O n 2 September 1998 we interviewed the princi als of               s,
             regarding their relationship w i t h e ) and
w            for           freigbt forwarding, and his biggest customer is
  handles         s' domestic triicking and has little or no relationship with

  It is common practice in the transportation industry for vendors to give gifts to their

  customers (e.g., hats and t-shirts, notepads and pens, Christmas gifts). Both partners
  admitted that they had given gifts to                  they had received gifts in return.
              ifts a l h y s                          nd were of relatively minor value.
                Christmas gifts to                              years; each gift was worth
                                                evidenced a great deal of interest in the
  USAP and a high                                             its needs, he claimed that he
  did not know that his company had violated any federal laws by giving gifts in excess of
  allowable amounts to an employee of a government contractor.

  Based on what we learned in our interview h'w
                                              ti             and our review of t h e m
  operation, we did not believe that                           from the giving of gifts.
  Rather, it was our impression                  got "carried away" in his efforts to

  acknowledge the amount of business       gave his company, and that he lacked any
  intent to influence
                                                                                                                -   rage 4 or 4

                            On 3 September 1998 we interviewed                    We discussed b
                            responsibilities a t h e influence he had over the selection of vendors, and the
                            allegations regarding soliciting/accepting gifts from   and personal use of-
                            assets and accounts.

                           e o n f i r m e d that he had no influence over vendor selection. He denied that he had
                            ever solicited gifts, but was fairly forthcoming regarding the gifts he received.
    -   -   -   -   --   ----scaated-chat-he-knew-he-was
                            characterized his relationship with
                            a gift exchange, which he did                                        gift policy.

                            We did not believe that a                  s being completely truthful, and thought that his

                            consequences of his actions.   d
                            characterization of the relations

                            of the events and his interpretation o-fit
                                                                       and the gifts was an attempt to deflect the legal
                                                                       greed to swear out an affidavit describing his version


                            We referred our investigative findings to the AUSA, which declined the case. We are in
                            agreement with the AUSA because: k          i      d not incur additional costs on account
                            of the actions                       we do not believe that            was acting with the .
                            intent to influ                and-          no longer employed by
                            This case is closed.