oversight

Semiannual Report - March 2012

Published by the National Science Foundation, Office of Inspector General on 2012-03-01.

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

National               Office of
Science               Inspector
Foundation              General




         March 2012
About The National Science Foundation...                                                           About the Cover...

                                                                                                   Photograph entitled “Sand Waves” by Investigative Scientist, Scott J. Moore.
The National Science Foundation (NSF) is charged with supporting and strengthening all
research discplines, and providing leadership across the broad and expanding frontiers of
science and engineering knowledge. It is governed by the National Science Board which sets
agency policies and provides oversight of its activities.


NSF invests approximately $7 billion per year in a portfolio of more than 35,000 research and
education projects in science and engineering, and is responsible for the establishment of
an information base for science and engineering appropriate for development of national and
international policy. Over time other responsibilities have been added including fostering and
supporting the development and use of computers and other scientific methods and
technologies; providing Antarctic research, facilities and logistic support; and addressing
issues of equal opportunity in science and engineering.


And The Office of the Inspector General...


NSF’s Office of the Inspector General promotes economy, efficiency, and effectiveness in
administering the Foundation’s programs; detects and prevents fraud, waste, and abuse within
the NSF or by individuals that recieve NSF funding; and identifies and helps to resolve cases of
misconduct in science. The OIG was established in 1989, in compliance with the Inspector
General Act of 1978, as amended. Because the Inspector General reports directly to the
National Science Board and Congress, the Office is organizationally independent from the
agency.
                                                                          Table of Contents
From the Inspector General...............................................................3

Report Highlights...............................................................................5

Audits and Reviews........................................................................... 7
Audits of NSF Operations ..................................................................................................7
Audits of NSF Awardees ...................................................................................................9
Evaluation of NSF’s Facebook site .................................................................................. 11
Audit Resolution .............................................................................................................. 11
Financial Statements Audit Reports................................................................................. 12
A-133 Audits .................................................................................................................... 13


Investigations ................................................................................. 17

Research Misconduct Investigations................................................................................ 17
Civil and Criminal Investigations ...................................................................................... 24
Administrative Investigations............................................................................................ 27
Management Implication Reports ....................................................................................28


OIG Management Activities ........................................................... 31
Congressional Testimony ................................................................................................ 31
Outreach ..........................................................................................................................32


Statistical Data ................................................................................ 35

Appendix ......................................................................................... 43

Peer Reviews .................................................................................................................. 43
[Blank Page]
                From the Inspector General

This Semiannual Report to Congress highlights the activities of the National
Science Foundation, Office of Inspector General (OIG) for the six months
ending March 31, 2012. During this period, sixteen audits and reviews were
issued which identified more than $865,000 in questioned costs. In addition,
our investigative staff closed 48 investigations, had eight research misconduct
cases result in findings by NSF, and recovered nearly $1.4 million for the
government.

The OIG values, and is firmly committed to, its mission to detect and prevent
fraud, waste, and abuse within the NSF or by those who receive NSF funding.
These are challenging times to be in federal public service as budgets tighten
and the actions of a few federal employees erode the public’s confidence in
government’s ability to use taxpayer dollars prudently. Yet, every day I witness
the commitment of OIG auditors, investigators, and others to doing work that
leads to recommendations to improve NSF’s ability to exercise strong steward-
ship over the taxpayer dollars intended to advance scientific research.

Scientific research and discovery are the building blocks of the technological
advances that are essential for our nation’s economy to grow and to meet the
challenges of the future, and NSF has an essential role to play in promoting
scientific discovery. For the agency to achieve its mission, NSF must spend its
research funds in the most effective and efficient manner while maintaining the
highest level of accountability over taxpayer dollars.

Audits of proposal budgets for three of NSF’s large construction projects have
identified $226 million in unallowable contingency costs and have recommend-
ed that NSF stop awarding millions in unallowable contingency costs. It is also
imperative that expenses for NSF’s own operations and activities are scrutinized
to identify opportunities for cost savings. Our reviews for NSF’s expenditures
for such things as wireless devices and plans and staff retreats have recom-
mended actions that can result in more efficient purchasing practices and cost
savings. We have also recommended that NSF explore more effective ways to
conduct oversight of awardees with its existing staff.

Our investigations have recovered nearly $1.4 million from those who fraudu-
lently sought to obtain funds intended for scientific research. We continue to
aggressively pursue cases of research misconduct which undermines citizens’
trust in government-funded research and referred eight research misconduct
cases to NSF.
We are also actively involved in government-wide initiatives to reduce fraud in the Small Busi-
ness Research Innovation program and to expand the use of suspension and debarment to
protect federal funds.

Our work reflects my office’s sustained commitment to helping NSF be an effective steward of
taxpayer dollars and benefits from the support of NSF management across the Foundation. We
look forward to our continued partnership with NSF and the Congress to fulfill this goal.
                                                    Report Highlights
•	   Our audit of NSF’s Independent Research/Development (IR/D)
     program which allows employees and non permanent staff such
     as IPAs to be reimbursed for travel expense such as attending
     related conferences and returning to their home institution
     to pursue their research, found that NSF did not know the
     program’s annual total cost and did not prevent individuals from
     exceeding the program’s 50-day limit on IR/D activities.

•	   An audit of five awards questioned more than $451,000 and
     found significant internal controls weaknesses in the Interna-
     tional Computer Science Institute’s financial management of
     NSF funds.

•	   Based on our recommendation, NSF immediately suspended
     an award because an assistant professor plagiarized substan-
     tive text into the awarded proposal.

•	   Our investigation led to a Texas university returning over
     $477,000 to NSF after a PI improperly subcontracted work
     on his NSF grant to a company in which he had a 25 percent
     ownership, in violation of conflict of interests restrictions.




                                                                        5
Report Highlights




               6
                                                                Audits & Reviews
Sixteen audit reports and reviews were issued during the past six
months. Three audits of NSF’s awardees identified more than
$865,000 in questioned costs, and a review of a $386 million
proposed budget for a large construction project confirmed that the
budget included $88 million in unallowable contingency costs. Our
audits of NSF programs and operations recommended improve-
ments in management controls to monitor Independent Research/
Development travel and stronger internal controls to ensure
compliance with requirements pertaining to staff retreats. We also
recommended that with existing staff, NSF explore more effective
ways to conduct oversight of awardees. Finally, during this period,
NSF sustained more than $900,000 of costs questioned in prior
audits.

NSF Needs to Strengthen Management Controls over its
Independent Research/Development Program

NSF’s Independent Research/Development (IR/D) program allows
employees and non permanent staff, such IPAs,1 to maintain their
scientific research and expertise by continuing their research at
their home institutions and attending related conferences, and be
reimbursed for the travel expenses. In 2010, the total costs for
IR/D trips as reported on expense reports were approximately
$1.8 million, and the range per traveler varied from approximately
$225 to $45,000. Of 250 working days in a year, NSF allows IR/D
participants to spend up to 50 days (20 percent) a year on IR/D
activities.

Based on a referral from our Office of Investigations,2 we conducted
an audit of NSF’s IR/D program. Our audit found that NSF did not
have sufficient management controls to monitor the IR/D program.
For example, NSF management had not determined the program’s
total annual cost nor did it prevent individual travelers from exceed-
ing the 50-day limit. Further, NSF has not identified IR/D program
goals or quantified the program’s outcomes. As a result, NSF did
not have the performance measures necessary to evaluate the
value of the program to the agency’s mission.
                                                                                              HIGHLIGHTS
NSF has started to improve controls over the IR/D program in                                  Audit of NSF Operations
response to an OIG Management Implication Report and its own                                    Resolution.........................7
task force, but IR/D travel costs and time were not being monitored                           Audit of NSF Awardees........9
consistently across the agency.                                                               Evaluation of NSF’s
                                                                                                Facebook Site...................11
                                                                                              Audit Resolution...................11
                                                                                              Financial Statement Audit
                                                                                                Reports ............................12
                                                                                              A-133 Audits.........................13
1. Non permanent staff appointed under the Intergovernmental Personnel Act.
2. September 2010 Semiannual Report, pp.14-15, and March 2011 Semiannual Report, p. 30.

                                                                                          7
Audits & Reviews


                   We recommended that NSF strengthen management controls over the IR/D
                   program and re-evaluate its current IR/D policy and processes to consider such
                   things as how to reduce IR/D travel costs and whether the 50-day travel allow-
                   ance should be reduced. NSF agreed to our recommendations.

                   Internal Controls Over NSF Staff Retreats Could Be Improved

                   The Office of Management and Budget directed all Federal agencies to review
                   their policies and controls associated with conference-related activities and
                   expenses. Concurrent with NSF’s own internal review, we audited the internal
                   controls governing staff retreats, a subset of conference-related spending.

                   It is important to note that we did not identify any instances of retreat partici-
                   pants inappropriately claiming reimbursement for meals that were provided.
                   Further, it appeared that retreat planners generally attempted to be cost con-
                   scious. However, our review of nine NSF staff retreats held in Fiscal Years 2010
                   and 2011 disclosed several areas in which NSF could improve its internal control
                   to better ensure cost containment and compliance with applicable standards.
                   First, we identified a lack of support to ensure that retreat sites selected were
                   the most cost effective as required by the Federal Travel Regulation (FTR). As
                   a result, NSF may have overspent on staff retreats. Second, because NSF had
                   not set a standard for how much should be spent on refreshments at retreats,
                   the amount that could be spent varied across the agency and was left to the
                   discretion of individual retreat organizers. We also found that NSF did not have
                   an internal policy to ensure compliance with the FTR and adequate manage-
                   ment control over retreat costs. Finally, we were concerned that planners for
                   six of the eight retreats were unable to provide an invoice from the hotel where
                   retreats were held. This was particularly troubling as hotel costs were generally
                   the largest amount of retreat expenses.

                   Absent sufficient internal controls such as guidance and monitoring, NSF
                   risks overpaying for staff retreats. We recommended that NSF develop policy
                   incorporating the conference planning requirements of the FTR and reevaluate
                   the practice of traveling outside of the Washington metropolitan area for staff
                   retreats. NSF concurred with our recommendations. NSF stated that it is
                   reviewing the results of its internal control study of NSF conference activity and
                   anticipates including the Federal Travel Regulation conference planning guid-
                   ance as part of the materials.

                   NSF Could Use Staffing Assessments to Change Processes to
                   Provide More Cost Effective Oversight

                   NSF’s Office of Budget, Finance, and Award Management (BFA) is responsible
                   for issuing the thousands of awards NSF makes each year and for monitoring
                   how awardees manage the funds they receive. We examined assessments
                   that NSF conducts to determine the staffing level BFA needs to fulfill these
                   responsibilities.

                   While we identified a few areas in which improvements could be made in the
                   staffing assessment processes NSF and BFA used, it became clear that even if
                   the processes were perfect, with the current fiscal environment, gaps between


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                                                            OIG Semiannual Report    March 2012


the number of staff needed and the number funded would continue. Thus, we
examined the need for NSF to use those processes to seek alternative methods
to accomplish its mission and provide oversight in a more streamlined way
within its current staffing limits.

Our audit found that BFA did not use the staffing assessments to change its pro-
cesses to create more cost-effective ways to manage its workload or to prioritize
work that adds value and eliminate work that did not advance its mission. In the
current environment of increased concern about both accountability of Federal
funds and budget constraints, BFA needs to find new and cost-effective ways to
ensure that NSF recipients, especially high-risk ones, have the financial capabil-
ity to properly manage federal funds.

As a result of not having sufficient staffing, BFA reduced the number of site
visits to monitor high-risk awardees. Additionally, the number of audits with
unresolved questioned costs grew from zero in FY 2003 to 26 in FY 2010. It is
important for questioned costs to be resolved swiftly so funds can be returned
to the Federal government and financial management deficiencies can be
addressed before additional funds are placed at risk.

We recommended that BFA integrate its identification and evaluation of oppor-
tunities to streamline its operations into its annual workforce planning process
to ensure sound financial management and oversight of awardees based on
staffing levels. BFA concurred with the recommendation, stating that it would
address the use of streamlining, including risk-based methodologies, in its
annual workforce planning process.

Additional Audit Work Confirms $88 Million of Unallowable
Contingency Costs in Construction Budget

Auditors conducted additional work to determine how contingency costs
were estimated in the Consortium for Ocean Leadership’s (COL) $386 million
proposed budget for Ocean Observatories Initiative (OOI). COL disagreed with
the conclusion of the original audit which questioned $88 million in contingency
costs. COL also asserted that it was directed by NSF to include the contingency
amount as allowable equipment costs in its proposed budget.

The additional work confirmed the auditors’ original conclusion that the entire
$88 million in contingencies was unallowable. DCAA found no evidence that
COL can support its contingencies as required by OMB “with certainty as to
time, intensity, or with an assurance of their happening.” DCAA stated that while
contingencies may be included in Government developed budgets, awardees
are not allowed to include unallowable contingencies as allowable costs in the
proposal they submit to the Government. COL’s costs for pricing, administration,
and settlement of awards must comply with OMB cost principles for nonprofit
organizations, and there is no exception to how applicable cost principles are
determined for an awardee.

In total, $226 million in unallowable contingency costs have been identified in
the proposed budgets for NSF’s three large construction projects – the Ocean
Observatories Initiative project, the Advanced Technology Solar Telescope and


                                                                                     9
Audits & Reviews


                   the National Ecological Observatories Network. We continue to recommend
                   that NSF cease to award unallowable contingency costs. NSF should hold the
                   contingency portion of the budget until the awardee can demonstrate a bona
                   fide need and submit verifiable cost data to support its request for the funds.

                   The OIG is continuing to work with the Foundation to resolve the recommenda-
                   tions in the three proposal reviews.

                   Weaknesses in Financial Management Result in $451,189 in
                   Questioned Costs

                   An audit of five awards totaling $5.2 million at the International Computer Sci-
                   ence Institute (ICSI) questioned $451,189 and disclosed significant compliance
                   and internal control deficiencies in ICSI’s financial management of NSF grant
                   funds. As of December 31, 2010, ICSI had 32 awards totaling over $18.9 million
                   that included two Recovery Act awards over $600,000. If the compliance and
                   internal control deficiencies contributing to these questioned costs are not
                   corrected, unsupported and unallowable costs could continue to be claimed on
                   current and future NSF awards.

                   The auditors identified three major deficiencies: inadequate sub-award monitor-
                   ing, inadequate controls over the timely review and certification of effort reports,
                   and inadequate controls over foreign travel restrictions.

                   We recommended that ICSI develop risk-based subawardee evaluation and
                   monitoring procedures, develop policies that mandate the timely review and
                   certification of labor effort, and establish written policies and procedures to
                   address foreign travel restrictions. ICSI agreed with the recommendations.

                   $169,532 in Questioned Costs Found at Johns Hopkins University

                   An audit at Johns Hopkins University questioned $169,532 primarily for unsup-
                   ported sub-grantee costs. As of March 2010, the university had 319 active NSF
                   awards totaling $195 million. The audit found that Johns Hopkins could improve
                   sub-grantee monitoring of its low risk sub-grantees, including ten sub-grantees
                   amounting to over $8 million in claimed costs. The auditors believe that the
                   same deficiencies may exist on other Johns Hopkins sub-grantee awards, which
                   could lead to additional unallowable costs being claimed on other NSF awards.

                   Recommendations included that the Johns Hopkins University return the
                   $169,532 in claimed costs and establish greater sub-grantee monitoring
                   controls. The university disagreed with the questioned costs and the recom-
                   mendations.

                   More Than $244,000 in Questioned Costs in Five Awards to
                   University of Notre Dame

                   An audit of five awards made to the University of Notre Dame questioned
                   $244,430 of claimed costs.  The questioned costs consisted of $119,330 in
                   unsupported participant support and travel costs; $44,300 for unsupported
                   and unallowable subaward costs; and $80,800 in participant support costs that

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                                                             OIG Semiannual Report   March 2012


were re-budgeted without the required prior approval from NSF. The auditors
also identified several compliance and internal control deficiencies in financial
practices at Notre Dame and its subawardees that, if not corrected, could impact
current and future NSF awards.

Notre Dame is taking steps to address these deficiencies including revising its
subawardee monitoring and participant support procedures.

Evaluation of NSF’s Facebook Site Identifies Several Concerns

Our evaluation of NSF’s use of its official Facebook site identified three primary
concerns: lack of content control; lack of disclaimers; and lack of a policy to
“like” external entities. As a result, third parties are able to post comments and
links to sites that may include inappropriate content and there is a potential
implied endorsement when NSF “likes” certain external parties. We made
several recommendations consistent with best practices identified in other
federal agencies’ Facebook sites including that NSF limit the “like” status to
other government agencies and that NSF post a visible disclaimer on its Face-
book site. NSF was receptive to our recommendations and has stated that it is
developing a policy to address the issues we identified.



Audit Resolution

NSF Sustains more than $630,000 in Questioned Costs at the
Louisiana Board of Regents

In response to our recommendations, NSF sustained $631,852 in questioned
costs at the Louisiana Board of Regents (LBR). In addition, LBR agreed to
expand monitoring of its sub-awardees and to strengthen its policies and proce-
dures for time and effort reporting.

Field Museum Audit Results in $123,663 Returned to Treasury

In response to our recommendations, NSF sustained $123,663 in questioned
costs at the Field Museum of Natural History and returned these funds to the
U.S. Treasury. In addition, the Field Museum agreed to revise its policy to
prevent future claims against expired appropriations and revise its property
management policy to ensure proper segregation of duties regarding property
management.

NSF Sustains More than $150,000 in Questioned Costs at Ohio State
University

In response to our recommendations, NSF sustained $150,995 in questioned
costs at Ohio State University. In addition, Ohio State is strengthening
monitoring of costs claimed by subawardees and developing new cost sharing
documentation standards to address internal control deficiencies identified in
the audit.


                                                                                     11
Audits & Reviews


                   Financial Statement Audit Reports

                   Establishing and maintaining sound financial management is a top priority
                   for the Federal government because agencies need accurate and timely
                   information to make decisions about budget, policy, and operations. The Chief
                   Financial Officer’s Act requires agencies to prepare annual financial statements
                   which must be audited by an independent entity.

                   NSF Receives Unqualified Opinion on Financial Statements for the
                   Fourteenth Consecutive Year, but Monitoring of Construction Type
                   Cooperative Agreements Should be Strengthened

                   Under a contract with the OIG, Clifton Gunderson LLP conducted an audit of
                   NSF’s FY 2011 financial statements. Clifton Gunderson issued an unqualified
                   opinion on the financial statements; however, it identified a significant deficiency
                   in monitoring of construction- type cooperative agreements which had been
                   reported in FY 2010 as a component of a significant deficiency related to the
                   monitoring of cost reimbursement contracts.

                   As of September, 30, 2011, NSF had 14 active cooperative agreements totaling
                   about $1.9 billion that included about $334 million in contingency funds, or 18
                   percent of the total award amount. For FY 2011, cooperative agreement award-
                   ees had received NSF funds of approximately $151 million in contingency costs,
                   which are at heightened risk to be disallowed once subject to audit.

                   Specifically, the auditors noted issues in the following areas:

                   •	   DCAA issued inadequacy memoranda for two awardees with unallowable
                        contingency costs.
                   •	   DCAA audited the supporting documentation of proposed contingency
                        costs and identified eight deficiencies in an awardee’s accounting system
                        and estimating practices that could result in misstated costs, and therefore
                        deemed the awardee’s accounting system and estimating practices unac-
                        ceptable for award.
                   •	   There are no systemic barriers to prevent awardees from drawing down on
                        the contingency funds budget without prior NSF approval.

                   In summary, the DCAA’s audits and other internal control testing collectively
                   indicate that there is significant risk concerning cooperative agreements with
                   budgeted contingency funds in terms of the validity of cost proposals, the allow-
                   ability of contingency funds budgeted, and the adequacy of NSF’s control over
                   the use of contingency funds. Although NSF does not concur with the significant
                   deficiency, it is committed to developing a mutually acceptable solution.

                   The auditors also issued a Management Letter in conjunction with the financial
                   statement audit report. The purpose of this document is to communicate
                   findings that are not included in the audit report but are important to ensuring a
                   sound overall internal control structure and require management’s attention.




             12
                                                                                OIG Semiannual Report          March 2012


The FY 2011 Management Letter identified six findings, some of which incorpo-
rated elements of prior years’ findings related to NSF’s operations and financial
reporting controls. The Management Letter reported that NSF’s policies for
awarding and administering grants and cost reimbursement contracts continue
to need improvement. The auditors made several recommendations, including
that NSF fully implement its cost surveillance oversight procedures and continue
improving its control over cost reimbursement contracts, and continue to evalu-
ate the effectiveness of its internal control procedures over processing grant
transactions.

NSF generally concurred with the recommendations in the Management Letter
and is working to resolve the findings. The FY 2012 financial statement audit
will evaluate NSF’s actions in response to the recommendations.

Annual Evaluation of NSF’s Information Security Program Completed

NSF Corrects Weakness from 2010 FISMA Review, but Improve-
ments Needed in IT Operating Environment and Disaster Recovery
Plans for Antarctic Program

The Federal Information Security Management Act (FISMA) requires an annual
independent evaluation of an agency’s information security program. Under
a contract with the OIG, Clifton Gunderson LLP conducted this independent
evaluation for FY 2011. Clifton Gunderson reported that NSF has an es-
tablished information security program and has been proactive in reviewing
security controls and in identifying areas to strengthen its controls; however,
some improvements are needed. NSF concurred with the report and has made
progress in addressing the findings. The agency’s corrective action plan will be
reviewed as part of the FY 2012 evaluation.



A-133 Audits

64 Percent of Single Audit Findings Identify Significant Concerns
with Awardees’ Ability to Manage NSF Funds

OMB Circular A-133 provides audit requirements for state and local govern-
ments, colleges and universities, and non-profit organizations receiving federal
awards. Under this Circular, covered entities that expend $500,000 or more
a year in federal awards must obtain an annual organization-wide audit that
includes the entity’s financial statements and compliance with federal award
requirements. Non-federal auditors, such as public accounting firms and state
auditors, conduct these single audits. The OIG reviews the resulting audit
reports for findings and questioned costs related to NSF awards, and to ensure
that the reports comply with the requirements of OMB Circular A-133.

The 114 audit reports reviewed and referred3 to NSF’s Cost Analysis and Audit
Resolution (CAAR) Branch this period covered NSF expenditures of $1.01
billion during audit years 2008 through 2011, and resulted in 77 findings at 43

3. We also reviewed and rejected one report based on audit quality deficiencies. Upon receipt of the revised
report, the Federal Audit Clearinghouse determined that another federal agency had oversight, and there was
no need for us to conduct additional review.                                                                   13
Audits & Reviews


                   NSF awardees. Four awardees received qualified or adverse opinions on their
                   compliance with federal grant requirements, including 1 awardee who received
                   a qualified opinion on compliance for a program which included NSF Recovery
                   Act expenditures. Forty-nine of the 77 findings (64 percent) were identified as
                   material weaknesses or significant deficiencies in internal control over compli-
                   ance, calling into question the awardees’ ability to adequately manage their NSF
                   awards. Six findings identified by the auditors, including 2 material weaknesses,
                   resulted in $191,639 in questioned costs to NSF awards, of which $181,191 was
                   caused by lack of adequate supporting documentation of the amounts charged
                   to NSF awards.

                   Awardees’ lack of internal controls and noncompliance with federal requirements
                   included: untimely and/or incorrect reporting of time and effort; inadequate
                   support for salary/wages, equipment, travel, and indirect costs charged to
                   awards; inadequate monitoring of subrecipients; inability to prepare the financial
                   statements; and late submission of financial and/or progress reports.

                   We also examined 37 management letters accompanying the A-133 audit
                   reports and found 16 deficiencies that affected NSF. Auditors issue these
                   letters to identify internal control deficiencies that are not significant enough to
                   include in the audit report, but which could become more serious over time if
                   not addressed. The deficiencies included inadequate tracking, managing, and
                   accounting for NSF costs, ineffective segregation of duties, and inadequate
                   subrecipient monitoring. These deficiencies affected control processes that are
                   essential to ensuring stewardship of NSF funds and preventing fraud and abuse.

                   Desk Reviews Find Audit Quality and Timeliness Issues in More
                   than One-Third of Single Audits

                   The audit findings in A-133 reports are useful to NSF in planning site visits and
                   other post-award monitoring. Because of the importance of A-133 reports to this
                   oversight process, the OIG reviews all reports for which NSF is the cognizant
                   or oversight agency for audit, and provides guidance to awardees and auditors
                   for the improvement of audit quality in future reports. In addition, OIG returns
                   reports that are deemed inadequate to the awardees to work with the audit firms
                   to take corrective action.

                   We reviewed 51 audit reports4 for which NSF was identified as the cognizant
                   or oversight agency for audit, and found that 31 fully met federal reporting
                   requirements. Twenty reports (39 percent), including 6 of the 17 reports with
                   ARRA expenditures, contained audit quality and timeliness issues. The quality
                   issues we identified included 6 reports in which the Schedule of Expenditures of
                   Federal Awards did not provide sufficient information to allow for identification of
                   awards received from non-federal “pass-through” entities or did not adequately
                   describe the significant accounting policies used to prepare the schedule. Of
                   the 6 reports which included audit findings related to compliance with federal
                   requirements, 3 reports (50 percent) failed to adequately present the required
                   elements of the finding to assist auditee management in correcting the reported
                   deficiency, and 3 reports failed to adequately present the required elements of

                   4. The audits were conducted by 45 different independent accounting firms.


             14
                                                             OIG Semiannual Report   March 2012


management’s plan to correct the deficiencies reported. In addition, 4 reports
failed to include all of the report language required by the American Institute of
Certified Public Accountants (AICPA) and OMB Circular A-133, and 3 reports
were submitted after the due date required by OMB Circular A-133. Finally, 4 of
the reports repeated errors which we had identified to the awardees and audi-
tors during reviews of prior years’ reports.

We contacted the auditors and awardees, as appropriate, for explanations of
each of the potential errors. In most cases, the auditors and awardees either
provided adequate explanations and/or additional information to demonstrate
compliance with federal reporting requirements, or the error did not materially
affect the results of the audit. However, we rejected one report due to substan-
tial non-compliance with federal reporting requirements. We issued a letter to
each auditor and awardee informing them of the results of our review and the
specific issues on which to work during future audits to improve the quality and
reliability of the report.

OIG Quality Control Review Finds Significant Audit Deficiencies In
Single Audit by Public Accounting Firm

Quality Control Reviews consist of on-site reviews of auditor documentation
in support of Single Audits. Quality control reviews are an important tool for
determining whether Single Audits met government auditing and reporting
requirements, and for helping to improve future audit quality.

During this period, we issued a report of our quality control review of the Single
Audit of an NSF awardee. We found significant audit quality deficiencies in the
audit and instructed the auditors to conduct additional work. The audit quality
deficiencies in the single audit performed at WNET.ORG and Subsidiaries
(WNET) resulted in a failure to appropriately identify and test for compliance
with the requirements applicable to Allowable Costs, Subrecipient Monitoring,
and the Schedule of Expenditures of Federal Awards. The auditors agreed with
our recommendation to conduct additional test work in these areas. We will
review the additional work during the next period.

OIG Follow-up Actions on Quality Control Reviews

Our follow-up review of the audit of Drilling, Observation and Sampling of the
Earth’s Continental Crust (DOSECC)5 found that the additional work performed
by the auditors generally met applicable Federal requirements.




5. September 2011 Semiannual Report, pp. 29-30.


                                                                                     15
Audits & Reviews




             16
                                                        Investigations
Research Misconduct Investigations
Research misconduct damages the scientific enterprise, is a
misuse of public funds, and undermines the trust of citizens in
government-funded research. It is imperative to the integrity of
research funded with taxpayer dollars that NSF-funded researchers
carry out their projects with the highest ethical standards. For
these reasons, pursuing allegations of research misconduct by
NSF-funded researchers continues to be a focus of our investiga-
tive work. In recent years, we have seen a significant rise in
the number of substantive allegations of research misconduct
associated with NSF proposals and awards. The NSF definition of
research misconduct encompasses fabrication, falsification, and
plagiarism.

NSF takes research misconduct seriously, as do NSF’s awardee
institutions. During this reporting period, institutions took actions
against individuals found to have committed research misconduct,
ranging from letters of reprimand to delayed promotions and loss
of salary. During this period, NSF’s actions in research misconduct
cases ranged from letters of reprimand to three years of debar-
ment.

We referred eight cases to NSF, which are summarized below. In
every case, we recommended that NSF make a finding of research
misconduct, send the subject a letter of reprimand, require the
subject to complete a Responsible Conduct of Research training
program, and other actions as described below. NSF’s decisions
are pending in all eight cases.

Principal Investigator Plagiarized Text and Figures in
Multiple Proposals

A California Principal Investigator’s (PI’s) documentation practice
was so poor that it resulted in a pattern of plagiarism. The PI was
the Authorized Organizational Representative and President of a
small company without the resources to complete an independent
investigation; therefore, we conducted our own investigation. We         HIGHLIGHTS
found substantial copying of text and figures without appropriate
attribution, as well as numerous embedded references. The PI             Research Misconduct
told us the practice among the company employees was to use               Investigations ................ 17
                                                                         Civil and Criminal
material from any “company documents.” The PI considered all
                                                                          Investigations................. 24
documents in his company’s possession, as well as any past or
                                                                         Administrative
current employee’s notes from conferences and conversations, to           Investigations.................27
                                                                         Management Implication
                                                                          Reports ..........................28


                                                                        17
Investigations


                 be company documents. Indeed, the PI marked material in his proposal as
                 proprietary that had been copied from publicly available papers, because it was
                 in the company’s possession and he was unaware of the true source of the text.

                 The PI’s methodology for obtaining and maintaining reference materials is the
                 sloppiest we recall seeing in the history of this office. The PI admitted he is un-
                 able to determine the source of much of the plagiarized text we identified. We
                 concluded the PI’s practices, coupled with the amount of plagiarism, warrants
                 a one-year debarment to protect the government until the PI can improve the
                 process by which written materials are produced at the company. Additionally,
                 we recommended NSF: require the PI to certify that proposals he submits to
                 NSF, for three years after his debarment ends, contain no plagiarized, falsified,
                 or fabricated material; and bar the PI from serving as a reviewer, advisor, or
                 consultant on an NSF proposal for three years after his debarment ends.

                 PI Presents Material from a Previously Awarded NSF Proposal as
                 His Own

                 A New Jersey PI plagiarized text into his proposal from a previously awarded
                 NSF proposal. The PI had received the source proposal from his colleague and
                 co-PI, who had received the proposal from NSF for merit review and gave it to
                 him as an example of a successful proposal. The PI’s institution investigated
                 and concluded that the PI knowingly committed plagiarism and placed a formal
                 letter of reprimand in the PI’s personnel file; made him ineligible to apply for full
                 professorship until January 2015; and required that he serve on the institution’s
                 academic integrity committee for two years.

                 We concurred with the institution’s assessment and recommended that NSF:
                 debar the PI for one year; require that he provide certifications and assurances
                 for three years following the debarment period; and bar him from participating
                 as an NSF reviewer for four years.

                 NSF Suspends Award After Intentional Plagiarism Found in One
                 Funded and Two Declined Proposals

                 An assistant professor at an Illinois institution plagiarized text into three propos-
                 als. The professor acknowledged copying material without citation, but she
                 argued that: the text included basic, common information in her field; she acted
                 in “honest error;” she misunderstood the rules of plagiarism as they apply to
                 proposals; and she was under time pressure. She also “state[d] unequivocally”
                 that the proposals did not contain any additional inadequately cited text.

                 The institution’s investigation found a number of contradictions in the assistant
                 professor’s statements and identified additional plagiarized material in her NSF
                 proposals. The assistant professor plagiarized text and misrepresented data
                 in a written statement she submitted to the institution’s investigation committee
                 – and in that statement she asserted that she now has “a clear understanding
                 of the definition of research misconduct as well as the consequence of any
                 deviation from the applicable standards.”



           18
                                                              OIG Semiannual Report    March 2012


The institution concluded that the professor intentionally committed plagiarism
and required her to: inform her co-PI of the investigatory findings; complete a
course on Responsible Conduct of Research and ensure each of her graduate
students also completes a course; submit to a university administrator for
review all publication manuscripts and proposals she intends to submit to
external entities; and encourage the use of plagiarism detection software for
both her work and the work of her students. We concurred with the institution’s
assessment.

The NSF program officer who recommended one of the plagiarized proposals
for funding told us the plagiarized text in the section was material to his decision
to recommend the proposal for funding, which meant the plagiarism amounted
to fraud. We referred the violation to an Assistant United States Attorney, who
declined prosecution in lieu of administrative action.

Based on our recommendation, NSF immediately suspended the award. We
subsequently issued our report of investigation and recommended that NSF
require the professor to provide certifications and assurances for three years,
and terminate her NSF award, which will make $11,000 available to NSF to put
to better use.

University Terminates Two Faculty Members for Plagiarism

Our office concluded that a PI and co-PI at a Georgia university committed
research misconduct when they plagiarized into two NSF proposals. Their
university’s investigation found that the PI and co-PI intentionally plagiarized.
They were recommended for termination, but both chose to retire instead.

We concurred with the university’s assessment and recommended that NSF,
for three years: require both the PI and co-PI to: provide certifications stating
all documents submitted to NSF are free from plagiarism, falsification, and
fabrication; require both to obtain assurances from an appropriate official that
documents they submit to NSF are free from plagiarism, falsification, and
fabrication; and bar both from serving as a reviewer, advisor, or consultant on
an NSF proposal.

Assistant Professor Plagiarizes in Two NSF Proposals

An assistant professor at a Mississippi university plagiarized a substantial
amount of text and a figure from 19 sources into two NSF proposals. The
professor admitted to the copying, but said he believed the embedded refer-
ences in the copied text were sufficient to attribute the original source of the
intellectual content. His university’s investigation found that the professor com-
mitted plagiarism intentionally that was part of a pattern that started as early
as his doctoral dissertation. The university declined renewal of the professor’s
contract and placed limitations on his access to research funding in the interim.
The professor subsequently resigned.

We concurred with the university’s assessment and recommended that NSF,
for three years, require certifications and assurances, and ban the subject from
serving NSF as a reviewer, advisor, or consultant.

                                                                                       19
Investigations


                 Faculty Member Accepts Responsibility for Plagiarizing from an
                 Awarded Proposal

                 An assistant professor at a New York university submitted a proposal to NSF
                 that contained a large amount of material plagiarized from a previously awarded
                 NSF proposal authored by a PI at another university. The university’s inves-
                 tigation determined that the professor received a copy of the awarded NSF
                 proposal from the PI, which he gave to a graduate student who was drafting the
                 professor’s NSF proposal. The professor said that he told the student merely
                 to use the awarded proposal as guidance, and although he said the student did
                 the actual copying, the professor accepted full responsibility. The university
                 concluded that he was guilty of reckless plagiarism due to improper oversight of
                 the graduate student and insufficient care with the content of the draft proposal.
                 We concurred and recommended that NSF, for two years, require certifications
                 and assurances, and ban the PI from serving NSF as a reviewer, advisor, or
                 consultant.

                 University Identifies a Pattern of Plagiarism by PI

                 A PI at an Illinois university plagiarized in an NSF proposal, which he attributed
                 to his writing style, computer problems, and physical illness. During the univer-
                 sity’s investigation, the PI provided the committee with what he claimed was the
                 “final” proposal he had intended to submit to NSF. While there was no copied
                 text within the final proposal, the committee could not determine with confi-
                 dence when that document had been created and, most significantly, noted that
                 the only editorial changes that document contained were in the paragraphs our
                 office had flagged.

                 The university concluded that the PI recklessly committed plagiarism in his
                 NSF proposal. It also found instances of plagiarism in nine non-NSF proposals
                 prepared by the PI, which constituted “a clear and ongoing pattern of plagia-
                 rism.” The university reduced the assistant professor’s salary by one-ninth;
                 prohibited him from applying or receiving a university-level grant for one year;
                 required him to take an academic integrity course; and required him to develop
                 resource material related to academic integrity.

                 We concurred and recommended that NSF, for two years, require certifications
                 and assurances, and bar him from participating as an NSF reviewer, advisor, or
                 consultant.

                 Co-PI Confuses Public Domain with Common Knowledge

                 A Puerto Rico university co-PI committed research misconduct when she
                 plagiarized from multiple documents in an NSF proposal. The co-PI argued
                 that much of the text she copied did not require attribution because it was found
                 on government web pages. The committee explained the difference between
                 information that is common knowledge, which does not require citation, and
                 information that is in the public domain, such as on a government web site,
                 which requires citation.




           20
                                                                         OIG Semiannual Report   March 2012


The university concluded the co-PI committed research misconduct and
reprimanded her, required monitoring of her proposals and publications for
three years, and required her to take a research ethics course. We agreed and
recommended that NSF, for two years, require her to provide certifications and
assurances, and bar her from serving as a reviewer, advisor, or consultant on
NSF proposals.

PI Plagiarized Text and Figures in Multiple Proposals

A PI from an Ohio university plagiarized text and figures into multiple NSF
proposals. The PI’s university’s investigation concluded that the PI intentionally
plagiarized and required the PI to withdraw all pending grant applications from
NSF and will prohibit the PI from submitting proposals to NSF for three years;
allowed the PI to submit proposals to other funding agencies only under the
supervision of a dean following a one-year suspension; and prohibited the
PI from taking on additional graduate students and participating in graduate
student committees. The PI is required to review the progress of her current
graduate students with a dean and it is up to the dean’s discretion as to whether
the PI can continue to mentor students.

We concurred with the university and recommended that NSF, for two years,
bar the PI from serving as a reviewer, advisor, or consultant on an NSF pro-
posal, and require certifications and assurances.

Actions by NSF Management on Previously Reported Research
Misconduct Investigations

NSF has taken administrative action to address our recommendations on
nine research misconduct cases reported in previous semiannual reports. In
each case, NSF made a finding of research misconduct and issued a letter
of reprimand. NSF also took additional significant actions in response to our
recommendations as summarized below.

NSF debarred for one year a Louisiana university administrator who knowingly
copied from a funded NSF proposal into his own proposal.6 The one-year
debarment will be followed by certifications, assurances, and a ban from serv-
ing as a reviewer, advisor, or consultant for three years following the debarment
period.

In the case of a faculty member at an Illinois university who plagiarized text
into six NSF proposals,7 NSF required certifications and assurances for four
years, barred service as an NSF reviewer for four years, and required that the
faculty member complete a course in the Responsible Conduct of Research.
The faculty member appealed all of these actions to the NSF Director, whose
decision is pending.




6. March 2011 Semiannual Report, pp.25-26; September 2011 Semiannual Report, p.16.
7. September 2011 Semiannual Report, p.12.


                                                                                                 21
Investigations


                 In the case of a researcher at a small research firm who copied hundreds of
                 lines of text into six proposals submitted to NSF’s Small Business Innovation
                 Research (SBIR) program,8 NSF required three years of certifications and
                 assurances, barred service as an NSF reviewer for three years, and required
                 the researcher to complete a course in the Responsible Conduct of Research.
                 The researcher appealed the imposition of assurances to the NSF Director, who
                 rescinded the requirement.

                 In the case of a faculty member at an Illinois university who plagiarized text into
                 seven NSF proposals,9 NSF required certifications and assurances for three
                 years, barred service as an NSF reviewer for three years, and required the
                 faculty member to complete a course in the Responsible Conduct of Research.

                 In the case of a professor at a South Dakota university who plagiarized from
                 a proposal he received from his mentor, who had been asked to review the
                 proposal for NSF,10 NSF required certifications and assurances for two years,
                 required completion of a Responsible Conduct of Research course, and barred
                 him from serving NSF as a reviewer, advisor, or consultant for two years.

                 In the case of a new research faculty member at a New York university who
                 plagiarized in an NSF proposal,11 NSF required certifications and assurances
                 for two years, required completion of a Responsible Conduct of Research
                 course, and barred him from serving NSF as a reviewer, advisor, or consultant
                 for two years.

                 In the case of a department chair at a Michigan university who plagiarized text
                 and figures into three NSF proposals,12 NSF required two years of certifications,
                 banned service as an NSF reviewer for two years, and required the chair to
                 complete a course in the Responsible Conduct of Research. The chair member
                 appealed the training requirement to the NSF Director, who upheld it.

                 In the case of a CEO/PI of a small business who submitted an SBIR proposal
                 containing a significant amount of plagiarized text,13 NSF required certifications
                 for two years, and required certification of attending an ethics class within one
                 year.

                 In the case of a researcher in Texas who plagiarized text into a paper provided
                 to NSF,14 NSF required him to attend a Responsible Conduct of Research
                 course, and required him to provide certifications for one year. The researcher
                 appealed NSF’s finding, arguing he did not physically copy the text (his consul-
                 tant did) and he was more of an editor than author of the paper. NSF’s Director
                 denied his appeal, concluding that, as author, he is responsible for the content
                 of the paper.




                 8. September 2011 Semiannual Report, pp.12-13.
                 9. September 2011 Semiannual Report, pp.11-12.
                 10. September 2011 Semiannual Report, p.14.
                 11. September 2011 Semiannual Report, p.13.
                 12. September 2011 Semiannual Report, p.14.
                 13. September 2011 Semiannual Report, p.13.
                 14. September 2011 Semiannual Report, pp.14-15.


           22
                                                             OIG Semiannual Report   March 2012


Missing Laboratory Notebooks Result in Hawaii University
Receiving Questionable Administrative Practices Letter

We received multiple complaints about possible research misconduct and
misuse of NSF funds by a PI at a Hawaii university. Based on our request, the
university conducted an inquiry and found that the research misconduct allega-
tions were not substantiated. However, the laboratory notebooks were missing,
and the university stated that it would address this questionable practice of
post-production data storage.

We reviewed the financial documents for all expenditures incurred by the grant,
and concluded that the misuse of funds allegation was also unsubstantiated.
We issued a questionable administrative practices letter to the university to
emphasize the importance of maintaining proper data storage, asking it to
ensure its faculty are aware of the requirement to keep all grant records, includ-
ing original data, for three years after the close of the NSF grant.


 Maintaining Laboratory Records

 Research laboratory records can vary widely between scientific disciplines
 and even between laboratories within the same discipline. Publications exist
 that describe methods for maintaining accurate and detailed laboratory
 records. Absent adequate records, the validity of any subsequently presented
 or published data can be called into question. In the course of our investiga-
 tions into allegations of research misconduct, we typically assess the quality
 of laboratory records by considering the following:

     Completeness: The record should describe all the activities of the
     researcher, not just the successful experiments. Corrections to the
     record are to be expected, and should be fully documented. A laboratory
     notebook can contain anything, and should contain everything related to
     the research effort.

     Linkage: A written laboratory notebook should reference electronic
     records by name and location in sufficient detail to enable the electronic
     records to be located. A clear link between the electronic data files and
     the lab notebook, along with the experimental methods used, should be
     adequately documented. Notebooks should also reference the appropri-
     ate instrument logs and billing records if appropriate.

     Accuracy: Records should display a contemporaneous chronology of
     laboratory activity and results. The record must facilitate the reconstruc-
     tion of activities by another competent researcher.

 In addition, we believe the following should be considered best practices in
 the maintenance of research notebooks:

     Review: A regular (weekly or monthly) documented review of laboratory
     notebooks by a supervisor or a faculty advisor ensures consistency and
     quality.

                                                                                     23
Investigations



                      Safekeeping: All laboratory records should be backed up with copies
                      stored in an alternate location. Sensitive records should be access-
                      restricted, or in read-only form.

                  Several recent investigations of alleged data falsification and/or data fabrica-
                  tion have been complicated by the poor quality or absence of laboratory
                  notebooks and original data, both hardcopy and digital. In addition to being
                  contrary to accepted research practices, failure to maintain data is a violation
                  of NSF’s award conditions, which state that awardees “must retain financial
                  and programmatic records for a period of 3 years from the date the [final
                  financial report] is submitted.15 Data acquired during experiments and the
                  subsequent analyses are part of these programmatic records, and it is the
                  awardee’s legal obligation to retain these records even if the researcher
                  leaves the institution. Failure to maintain data is considered a departure from
                  accepted research practices and is an indicator of possible research miscon-
                  duct. Furthermore, failure to retain data also prevents sharing of data with the
                  research community, which is also expected under NSF’s award conditions.16


                 Civil and Criminal Investigations

                 Texas University Returns Over $477,160 to NSF

                 As previously reported,17 a PI at a Texas university improperly subcontracted
                 work on his NSF grant to a company in which he had 25 percent ownership, in
                 violation of conflict of interests restrictions. The university cancelled the sub-
                 contract and credited the $30,000 that had been charged to the grant, and the
                 PI agreed to resign from the university. After the PI submitted a progress report
                 that reflected no work attributable to the funded project, the university reviewed
                 the PI’s work on the grant and concluded that it did not justify the funds that had
                 been expended. The university decided it should return the full grant amount
                 totaling $386,200 to NSF, as well as $90,960 remaining on the PI’s other NSF
                 grant.

                 NSF to Recover $164,000 from North Carolina Small Business
                 Owner

                 A North Carolina small business owner reached a settlement agreement with
                 the United States Attorney’s Office to repay $164,000 to NSF, in addition to the
                 $225,000 that was retained by NSF upon termination of the award. The small
                 business received four NSF SBIR awards totaling $653,500, of which $362,500
                 had been distributed. During our investigation, NSF suspended a Phase II
                 SBIR award to the company and ultimately terminated the award, retaining
                 $225,000 of the remaining funding.




                 15. Research Terms and Conditions § 53(a).
                 16. NSF Agency-Specific Requirements § 30.
                 17. September 2011 Semiannual Report, p.9.


           24
                                                            OIG Semiannual Report    March 2012


Our investigation concluded that the owner misrepresented company personnel
in proposals and reports he submitted to NSF, requested more NSF funds
than necessary to complete the proposed projects, and retained profit beyond
what is permissible under the SBIR program. While the settlement agreement
requires the company to pay $164,000, neither the company nor the owner
admitted to any wrongdoing.

PI Pleads Guilty to Wire Fraud, False Statements, and Money
Laundering

We previously reported18 on the termination of a duplicative NSF award, result-
ing in $261,509 put to better use. The PI has now pled guilty to wire fraud, false
statements, and money laundering in our joint investigation with the Department
of Energy, the Department of Health and Human Services, and the Internal
Revenue Service. The charges relate to fraud involving a National Institutes of
Health SBIR award to the PI’s company, as well as duplicative funding between
the Department of Energy and NSF at his former university. The PI is sched-
uled to be sentenced in July 2012.

Former School Superintendent Pleads Guilty to Mail Fraud Charges
Related to NSF and Department of Education Grants

We previously reported the indictment of a former superintendent of an elemen-
tary school district and two former university professors in California for fraud
related to NSF and Department of Education grants to support elementary
school science and math education.19 On March 12, 2012, the former superin-
tendent pled guilty to one count of mail fraud for seeking and obtaining multiple
duplicate travel reimbursements totaling $59,882.

With this plea, he admitted that he presented inaccurate and unreliable data
to show the results of standardized science testing of students validated his
teaching methods. He also pled guilty to one count of mail fraud related to a
scheme involving the two former university professors that diverted NSF and
Department of Education grant funds to their personal benefit. The former
superintendent is scheduled to be sentenced in June 2012.

Conviction for Small Business Technology Transfer Fraud Leads to
More than $56,000 in Restitution to NSF

We previously reported20 on the indictment and arrest of the owner of a South
Dakota company for false claims involving a Small Business Technology
Transfer (STTR) award, which were uncovered in the course of investigating an
allegation of plagiarism in the award proposal. The false claims involved false
statements about the employment of the PI by the company, and about the use
of the initial $100,000 payment of award funds, most of which was spent to pay
balances on personal credit cards.



18. September 2011 Semiannual Report, p.9.
19. March 2011 Semiannual Report, pp.20-21.
20. September 2011 Semiannual Report, p.8.

                                                                                     25
Investigations


                 The owner pled guilty to one count of making false claims and agreed to pay
                 restitution of $56,700 to NSF and $32,485 to the South Dakota university that
                 performed subcontract work under the award. The owner will be sentenced in
                 June 2012.

                 Former NSF Senior Executive Service Employee Debarred For 10 Years

                 As previously reported,21 a former NSF employee pled guilty to felony charges
                 for filing a false financial disclosure to NSF and a false federal tax return
                 and was sentenced to six months home detention, $15,393 restitution, and
                 a $100,000 fine. Based on our recommendation, NSF debarred the former
                 employee for ten years, and proposed to debar for ten years the Maryland
                 nonprofit organization that facilitated his crime.

                 Former University Employee Debarred

                 We previously reported22 on the conviction of a former employee at an Arizona
                 university who charged nearly $17,000 for personal items to an NSF award.
                 Subsequent to the conviction, NSF accepted our recommendation and de-
                 barred the former employee for three years.

                 School District Repays NSF Over $79,000

                 An investigation of a Missouri public school district’s financial administration of
                 an NSF award indicated that the school district submitted false certifications in
                 violation of the civil False Claims Act. The school district entered into a settle-
                 ment agreement with the Department of Justice, under which it agreed to repay
                 NSF $79,486, as well as abide by a five-year compliance plan.

                 PI and His Company Suspended Government-Wide

                 Our investigation substantiated that a company improperly received funding
                 based upon false effort information in project reports submitted to NSF by
                 the PI. During the investigation, the PI formed a new company and sought
                 additional NSF funding. Based on our recommendations, NSF terminated the
                 award and suspended the PI and his new company government-wide pending
                 the conclusion of our investigation.

                 Company Returns $7,300 to NSF

                 Our investigation of a company that obtained an SBIR grant from NSF found
                 that the company failed to comply with NSF SBIR grant conditions regarding
                 use of the funds. As a result, the company refunded $7,300 to NSF.

                 Two Companies and Individuals Suspended Government-Wide and
                 $75,000 of Funds to Better Use

                 An investigation identified two related companies that may have improperly
                 received federal funding based upon misrepresentations of PI eligibility and
                 overlapping funding. Based on our recommendation, NSF suspended the
                 21. March 2011 Semiannual Report, p.20; September 2011 Semiannual Report, p.10.
           26    22. September 2010 Semiannual Report, p.8.
                                                            OIG Semiannual Report    March 2012


companies and two associated individuals government-wide pending the
conclusion of our investigation. NSF also terminated a current award to one of
the companies, leaving $75,000 of funds put to better use.

Florida Businessman Pleads Guilty to Misuse of NSF Logo

We previously reported on the indictment and arrest of the owner of a company
in Florida who used the NSF name and logo fraudulently for commercial gain.23
The company owner has since pled guilty to falsely making, forging, and using
the NSF seal and he is scheduled to be sentenced in May 2012.



Administrative Investigations

Former Program Officer Shares Confidential Documents with
Colleagues

Our investigation concluded a former NSF program officer and Intergovern-
mental Personnel Act employee shared confidential NSF proposals, reviews,
a panel summary, and annual reports with a colleague upon her return to
her home institution. We received an allegation that the program officer had
provided the documents to her colleague to use in their research. We were
particularly concerned about documents that would not have been publically
available, even through a Freedom of Information Act request. When inter-
viewed, the program officer offered different accounts of the circumstances
through which her colleague could have obtained the documents, none of which
was consistent with the evidence. During our investigation, we also learned that
NSF was considering bringing the program officer back to NSF as a permanent
program officer.

Based on our investigation we recommended that NSF consider appropriate
actions to protect the integrity of its operations, and consider under what condi-
tions, if any, it would permit the program officer to return to NSF in a trusted
position such as program officer, reviewer or panelist. We also recommend
that NSF bar the program officer from serving as a reviewer or advisor for three
years. NSF agreed with our recommendations and said it had no plans to hire
the program officer, it would not use her as a reviewer for three years, and it
would emphasize the importance of confidential documents to program staff.

More than $310,000 Recovered by NSF Due to Human Subjects
Research Concerns

As previously reported,24 NSF suspended awards for a PI at a Texas university
due to concerns about violations of human subjects regulations and manage-
ment of grant funds. The PI’s noncompliance included poor record keeping,
unapproved protocol or consent form modifications and the over-enrollment of
human subjects in research studies. Following our evaluation, the university
instituted a revision of its Institutional Review Board (IRB) review processes and
additional oversight and education regarding occurrences of IRB noncompli-

23. September 2011 Semiannual Report, p.8.
24. September 2011 Semiannual Report, p.20.
                                                                                     27
Investigations


                 ance. The university imposed several corrective measures upon the PI, and the
                 PI subsequently left the institution. The suspended NSF grants were terminated
                 and the remaining obligations cancelled with $310,454 recovered by NSF.

                 Researcher Changed Research Activities Without NSF Approval,
                 Resulting in More than $170,000 Recovered by NSF

                 As previously reported,25 a PI at a California university performed human
                 subjects research activities which, although within IRB approval, were outside
                 the scope of the NSF award and were conducted without NSF’s prior approval.
                 NSF suspended the award and required the PI to submit an erratum for a recent
                 publication, removing the acknowledgement of NSF funding for studies related
                 to the out-of-scope activities.

                 The university identified $50,309 to be returned to NSF for the costs related
                 to the out-of-scope research activities. In addition, following completion of the
                 work, NSF will deobligate $120,847 of unexpended award funds to be put to
                 better use. Several remedial training sessions were imposed on the PI and
                 faculty on responsible grants management topics such as effort reporting,
                 scientific/methodological scope changes, multiple award administration, IRB
                 protocol documentation, annual progress reporting and appropriate citation
                 practices in research publications.



                 Management Implication Reports

                 Review of NSF Employee Use of Transit Subsidy Program Finds
                 Significant Abuse

                 Our review of NSF’s Transit Subsidy Benefit Program, which provides a tax-free
                 subsidy to be used solely for commuting, found that almost half of the partici-
                 pants in the sample misused the subsidy by using it to pay for parking or for
                 apparent personal trips. Two-thirds of the misuse involved paying for parking,
                 while the remaining third involved travel that was not related to commuting.

                 We issued a subpoena to the Washington Metropolitan Area Transit Authority
                 (WMATA) for records of use of the subsidy by 750 NSF employees participating
                 in the program. Because retrieving records from its system is burdensome,
                 WMATA provided records for a fourth of the employee participants covering a
                 period of just eight months. We found that the amount misused ranged from
                 $111 to $658 over eight months, and was more than $100 for approximately a
                 third of the employees in the sample. We estimated that a review of all records
                 of subsidy users would reveal misuse totaling nearly $120,000 annually if the
                 findings from this random sample were representative of all NSF subsidy users.

                 While our review was underway, the subsidy program was modified and, as
                 of October 2011, employees are not able to use the subsidy for parking, and
                 employees cannot build up large balances of unused subsidy funds (which


                 25. September 2011 Semiannual Report, pp.19-20.


           28
                                                                         OIG Semiannual Report   March 2012


facilitated misuse). As a result, misuse of the subsidy for parking will no longer
be an issue, and the potential for misuse for non-commuting travel is greatly
reduced.

We also found that some NSF employees in our sample misused the Pre-Tax
Parking Benefit program. Under this program, employees do not have to pay
taxes on the portion of their income they use for parking when they commute
to work. Our review revealed that sixteen of the employees who used $3,600
of their transit subsidy to pay for parking appear to have also received almost
$12,000 in pre-tax parking benefit over eight months.

When employees apply for the transit subsidy, they certify to knowledge of the
program’s restrictions, and that making a false certification may make them
ineligible for the program, but they are not warned that making false statements
or using subsidy funds for personal use is a federal crime. When they apply
for the Pre-Tax Parking Benefit program, NSF employees do not have to certify
that they will use the tax-exempt money for parking, and they are not warned
that failure to use the benefit properly constitutes tax evasion.

We referred the employees who appeared to be misusing the Transit Subsidy
Program and/or Pre-Tax Parking Benefit program to NSF for appropriate action
(including recovery of the misused funds), and encouraged NSF to evaluate
other employee participants’ usage as well. Prospectively, we recommended
that NSF:

•	   Require annual certifications of participants in the Public Transportation
     Subsidy Program that they: will comply with all the requirements of the
     program; understand that providing false information to obtain benefits and
     using benefits for personal travel are crimes.

•	   Require annual certifications of participants in the Pre-Tax Parking Benefit
     Program that they: will use the tax-exempt funds for work parking only;
     will adjust the amount of tax-free income they receive according to actual
     parking costs incurred; understand that providing false information to obtain
     benefits is a crime; and understand that failing to report as income withheld
     funds that were not used for parking constitutes tax evasion.

NSF Implements Recommended Changes to Improve Oversight
Plans for Projects Involving International Subawardees

We reviewed Oversight Plans for institutions collaborating with international
subawardees in an NSF program.26 The lead institutions were required to
submit and implement Oversight Plans to ensure subawardee compliance with
a variety of requirements, and our review determined that the Plans generally
did not substantively address all of the requirements.

Based on our recommendations, NSF modified its solicitation for the next round
of proposals for the program to clearly require Oversight Plans that address all
of the program’s requirements, and it asked the current grantees to describe

26. September 2011 Semiannual Report, p.21; March 2011 Semiannual Report, p.30; September 2010
Semiannual Report, p.14.

                                                                                                 29
Investigations


                 how they would address RCR training and research misconduct enforcement.
                 Because most of the awardees did not substantively improve their Plans in this
                 regard, we conducted a follow-up review.

                 We found that the majority of the original awardees’ Plans, as well as three
                 of the four new awardees’ Plans, were deficient regarding RCR training and
                 research misconduct. In response to our recommendations, NSF agreed to:

                 •	   Determine how to bring the current program awardees’ Oversight Plans in
                      line with the requirements for RCR training and research misconduct report-
                      ing and enforcement; and

                 •	   Make no future awards for proposals that do not provide comprehensive
                      Oversight Plans that were demonstrably developed in collaboration with
                      the international subawardees, including strong plans for RCR training and
                      research misconduct reporting and enforcement.

                 NSF and NSB Improve Special Handling of National Science Board
                 Member and Nominee Proposals

                 Our office received information that two proposals submitted by current
                 National Science Board (NSB) members did not undergo the special handling
                 process detailed in NSF’s Proposal and Award Manual. We reviewed these
                 proposals as well as other proposals submitted by NSB members. We
                 determined that, while no misconduct occurred, there were procedural lapses
                 in implementing the Manual’s stated process. NSF and NSB were receptive to
                 our recommendations for improvement and have outlined a plan to implement
                 our recommendations.

                 NSF Implements Recommended Changes to the SBIR/STTR Programs

                 We previously discussed our review of recent investigations related to SBIR/
                 STTR programs, and our recommendations to help NSF reduce the risk of
                 fraud by requesting additional information from awardees.27 NSF agreed to
                 all of our recommendations and now requires awardees to provide additional
                 documentation to support use of outside facilities, a list of all company owners
                 and officers and their current employers, and disclosure of relationships be-
                 tween the PI and any subcontractor, consultant, lessor, owner or other position
                 in the awardee company prior to the award.




                 27. September 2011 Semiannual Report, p.18.


           30
                               OIG Management Activities
Congressional Testimony
In November 2011, the Inspector General testified before the
Senate Homeland Security and Government Affairs Committee
at a hearing titled, “Weeding out Bad Contractors: Does the
Government have the Right Tools?” The testimony focused on the
Suspension and Debarment (S&D) Working Group’s September
2011, report, Don’t Let the Toolbox Rust: Observations on Suspen-
sion and Debarment, Debunking Myths, and Suggested Practices
for Offices of Inspectors General, which built upon OIG survey
information.

The overarching purpose of the report was to raise the profile of
suspension and debarment within the IG community and to identify
practices that could assist OIGs in utilizing these tools. Based
on the report, factors that may adversely influence the pursuit of
suspension and debarment include a general lack of awareness
or full understanding about these tools and concerns about their
potential impact on contemporaneous civil or criminal proceedings.

As a step toward addressing these challenges, the report discusses
and attempts to dispel some common misconceptions about
suspension and debarment, namely:

1.	 that contemporaneous civil or criminal proceedings will be
    compromised if suspension or debarment is pursued,
2.	 that suspension and debarment actions must be tied to judicial
    findings (conviction, civil judgment, or indictment), and
3.	 that referrals may not be based on OIG audits or inspections.

Finally, the report identified a number of suspension and debarment
practices that could help boost the overall use and effectiveness
of these tools within the IG community. These practices included
assigning dedicated personnel within OIGs; identifying and recom-
mending improvements to agency suspension and debarment
programs; using investigative, audit, and inspection reports to
identify suspension and debarment candidates; enhancing OIG
referral practices; and developing strong OIG S&D policies.	

An agency’s vigorous and appropriate use of suspension and
debarment protects not just the integrity of that agency’s programs,
but the integrity of procurements and financial assistance awards
across the entire federal government. Through its various efforts,      HIGHLIGHTS
the Working Group has actively sought to raise the profile of sus-
                                                                        Congressional Testimony.31
pension and debarment as integral tools to help protect taxpayer
                                                                        Outreach...........................32
dollars.


                                                                       31
Management Activities


                        Also in November, the Inspector General testified before the House Committee
                        on Science, Space, and Technology Subcommittee on Investigations and Over-
                        sight about the OIG’s continuing efforts to monitor the $3 billion in Recovery
                        Act funds provided to the National Science Foundation. The OIG’s approach
                        to ARRA oversight has consisted of two phases: 1) an initial proactive phase
                        for risk mitigation activities that was accomplished primarily during the funding
                        stage to help prevent problems and prepare for more substantive work; and 2)
                        an operational phase during which we planned to undertake more traditional
                        audits, investigations, and other types of reviews.

                        Our work during the proactive phase consisted of real-time reviews of NSF’s
                        ARRA-related activities, identifying high-risk ARRA awardees, and recom-
                        mending ways to make NSF’s award process more accountable and transpar-
                        ent. Now that NSF’s $3 billion in ARRA funding has been fully obligated, our
                        focus has shifted to an operational phase during which we are conducting more
                        traditional audits, investigations, and other types of reviews.

                        Therefore, we are directing significant oversight resources to NSF’s three major
                        construction projects: the Alaska Region Research Vessel, the Ocean Obser-
                        vatories Initiative (OOI), and the Advanced Technology Solar Telescope (ATST)
                        due to the large amounts of ARRA funding they received, the complexity of the
                        projects, and the management challenges inherent in such projects.

                        We began this oversight activity with audits of the cost proposals for OOI,
                        which had a total projected cost of $386 million (including $106 million in ARRA
                        funds), and for ATST, which had total projected costs of $298 million, (with
                        $146 million in ARRA funds). We reviewed these cost proposals because they
                        constitute the basis upon which the awardees can draw down funds over the
                        course of their awards.

                        DCAA also found that there is a lack of meaningful controls over the contin-
                        gency funds provided to recipients. While awardees are supposed to seek
                        NSF approval before drawing down contingency funds in excess of a certain
                        threshold, DCAA found that at present there are no effective technical barriers
                        to prevent them from being drawn down in advance and used for purposes
                        other than a contingent event. Accordingly, there is a heightened risk of fraud
                        or misuse of these funds.


                        Outreach
                        Outreach remains an essential component of our mission to prevent and detect
                        fraud, waste, and abuse and to promote economy, efficiency, and effectiveness
                        in NSF programs and operations. The numerous proactive activities under-
                        taken by OIG staff have addressed programmatic and financial responsibilities
                        of NSF awardees, education of NSF awardees about fraud recognition and
                        prevention, and research misconduct and responsible conduct of research.

                        The Inspector General continues to lead the SBIR working group under the
                        auspices of the Council of Inspectors General on Integrity and Efficiency
                        (CIGIE). Pursuant to the National Defense Authorization Act which reautho-

                 32
                                                           OIG Semiannual Report    March 2012


rized the SBIR program, this group has been working with SBA to develop the
certifications called for in the SBIR/STTR Reauthorization and to strengthen
the anti-fraud provisions in the certifications. Our office has urged uniform
certifications, modeled on those at NSF, as an effective weapon against fraud
in SBIR/STTR programs and as a means to improve the government’s ability to
prosecute such fraud when it does occur.

With the Federal Housing Finance Agency Inspector General the NSF
Inspector General also continues to lead a Suspension and Debarment (S&D)
Working Group, under the auspices of the CIGIE Investigations Committee. In
October 2011, the group hosted an S&D workshop aimed at increasing under-
standing and effective use of S&D to protect government funds against fraud,
waste, and abuse. The workshop was attended by more than 450 investiga-
tors, auditors, Inspectors General, and S&D officials from over 60 agencies and
organizations.

The IG is also leading the Grant Reform Initiatives Working Group which is
focused on several areas including the Single Audit threshold and changes in
time and effort reporting. The group’s overarching concern is ensuring that
meaningful controls and robust accountability are maintained.

The NSF Inspector General led a presentation to the Japanese ministry
responsible for formulation of science and technology policy and with the
Assistant Inspectors General for audit and investigations, explained our policies
and procedures for oversight of NSF programs and operations. The Inspec-
tor General and OIG staff also provided information to representatives from
Korea’s National Research Foundation about our efforts to identify and prevent
waste and fraud.

Our office has extensive knowledge and experience in both investigating grant
fraud and research misconduct, and in monitoring financial compliance with
grant conditions and accounting principles and we are often requested by uni-
versities and others in the research community to participate in meetings, make
presentations, and provide instruction. For example, in the past six months,
the IG and staff gave presentations for new grant recipients and to a number
of organizations including the Society of Research Administrators International;
the Association of Government Accountants; the College Cost Accounting
Conference; the National Council of University Research Administrators; and
the Society of Corporate Compliance and Ethics.

We also participated in meetings of the National Single Audit Coordinators,
Federal Audit Executive Council, and the Financial Statement Audit Network.
The Assistant Inspector General for Audit continues to serve as the chair of the
Federal Audit Executive Council and has been instrumental in providing peer
review training in the IG community. Finally, we provided research misconduct
briefings at six universities and provided instructors to FLETC for grant fraud-
related courses.




                                                                                    33
Management Activities


                        New Assistant Inspector General for Investigations

                        Alan Boehm assumed the duties of Assistant Inspector General for Investiga-
                        tions in March 2012. Mr. Boehm comes to the OIG with over forty years of
                        experience in the federal investigative community. Most recently he served
                        as the Assistant Director for Accountability at the Recovery Accountability and
                        Transparency Board where he was instrumental in re-engineering the Recovery
                        Operations Center into a premier tool for identifying potential fraud risks.




                 34
                                              Statistical Data
                        Audit Data
     Audit Reports Issued with Recommendations
               for Better Use of Funds

                                              Dollar Value
A.   For which no management decision has     $226,238,105
     been made by the commencement of
     the reporting period
B.   Recommendations that were issued                    $0
     during the reporting period
C.   Adjustments related to prior                        $0
     recommendations
Subtotal of A+B+C                             $226,238,105
D.   For which a management decision was                 $0
     made during the reporting period
     i)    Dollar value of management                    $0
           decisions that were consistent
           with OIG recommendations
     ii)   Dollar value of recommenda-                   $0
           tions that were not agreed to by
           management
E.   For which no management decision had     $226,238,105
     been made by the end of the reporting
     period
For which no management decision was made     $226,238,105
within 6 months of issuance




                                                              35
Statistical Data



                              Audit Reports Issued with Questioned Costs

                                                                    Number of            Questioned            Unsupported
                                                                     Reports               Costs                  Costs
 A.        For which no management decision                               37             $30,247,504            $6,029,095
           has been made by the commence-
           ment of the reporting period
 B.        That were issued during the reporting                           9              $1,056,790             $1,026,555
           period
 C.        Adjustment related to prior recom-                            4 28              $129,736                  $319
           mendations
 Subtotal of A+B+C                                                                       $31,264,498            $6,899,362
 D.        For which a management decision was                            26              $5,478,698            $3,804,061
           made during the reporting period
           i) dollar value of disallowed costs                           N/A              $2,154,256                  N/A
           ii) dollar value of costs not disallowed                      N/A              $3,324,442                  N/A
 E.        For which no management decision                               20             $25,955,332             $3,251,908
           had been made by the end of the
           reporting period
 For which no management decision was                                     12             $24,898,766            $2,225,353
 made within 6 months of issuance




28. Additional questioned costs were identified during audit resolution for one OIG-performed audit and three A-133 audits.



             36
                                                                           OIG Semiannual Report          March 2012



  Status of Recommendations that Involve Internal NSF Management Operations

 Open Recommendations (as of 09/30/2011)
   Recommendations Open at the Beginning of the Reporting Period                                             52
   New Recommendations Made During Reporting Period                                                          32
   Total Recommendations to be Addressed                                                                     84
 Management Resolution of Recommendations                   29


   Awaiting Resolution                                                                                       28
   Resolved Consistent With OIG Recommendations                                                              56
 Management Decision That No Action is Required                                                                0
 Final Action on OIG Recommendations               30


   Final Action Completed                                                                                    36
 Recommendations Open at End of Period                                                                       48




                                    Aging of Open Recommendations

 Awaiting Management Resolution
  0 through 6 months                                                                                         28
  7 through 12 months                                                                                          0
  More than 12 months                                                                                          0
 Awaiting Final Action After Resolution
  0 through 6 months                                                                                           7
  7 through 12 months                                                                                          1
  More than 12 months                                                                                        12




29. “Management Resolution” occurs when OIG and NSF management agree on the corrective action plan that will be implemented
in response to the audit recommendation.
30. “Final Action” occurs when management has completed all actions it agreed to in the corrective action plan.


                                                                                                          37
Statistical Data


                                                   List of Reports
                                     NSF and CPA-Performed Reviews 31
   Report                           Subject                 Questioned    Unsupported    Better Use
   Number                                                     Costs          Costs        of Funds
  12-1-001         ICSI International Computer Science         $451,189       $444,551            $0
                   Institute
  12-1-002         Johns Hopkins University – MD               $169,532       $156,607            $0
  12-1-003         University of Notre Dame – IN               $244,430       $244,430            $0
  12-2-002         NSF’s FY 2011 Financial Statement                 $0            $0             $0
                   Audit
  12-2-003         NSF FY 2011 Special Purpose                       $0            $0             $0
                   Financial Statement
  12-2-004         FISMA 2011 Independent                            $0            $0             $0
                   Evaluation
  12-2-005         FY 2011 FISMA Independent                         $0            $0             $0
                   Evaluation
  12-2-006         NSF’s FY 2011 Management Letter                   $0            $0             $0
  12-2-007         NSF’s Financial and Administrative                $0            $0             $0
                   Staffing Needs
  12-2-008         NSF’s Independent Research and                    $0            $0             $0
                   Development Program
  12-2-009         NSF Funded Conference Activities                  $0            $0             $0
  12-3-001         Request of Specific Cost Information              $0            $0             $0
                   Related to Contingencies on COL
  12-6-007         QCR of Marks Paneth and Shron,                    $0            $0             $0
                   LLP (WNET.org)
  12-7-001         SIGAR Peer Review of Special                      $0            $0             $0
                   Inspector General for Afghanistan
                   Reconstruction
  12-7-002         IQCR of #11-2-006 Workforce                       $0            $0             $0
                   Management
  12-7-005         IQCR CPE Review 4-1-2001 to                       $0            $0             $0
                   3-31-2011
                   Total:                                      $865,151       $845,588            $0




31. The office issued 16 reports this semiannual period.



             38
                                                              OIG Semiannual Report    March 2012


                                   NSF-Cognizant Reports

Report                               Subject                           Questioned     Unsupported
Number                                                                   Costs           Costs
12-4-001   12-10 Astrophysical Research Consortium – WA                         $0               $0
12-4-002   12-10 American Association of Community Colleges – DC                $0               $0
12-4-003   12-10 Boyce Thompson Institute for Plant Research – NY               $0               $0
12-4-004   12-10 Stroud Water Research Center – PA                              $0               $0
12-4-005   12-10 American Association of Physics Teachers – MD                  $0               $0
12-4-006   12-10 Woods Hole Oceanographic Institution – MA                      $0               $0
12-4-007   12-10 Triangle Coalition for Science & Technology – VA               $0               $0
12-4-008   12-10 AIM American Institute of Mathematics – CA                     $0               $0
12-4-009   12-08 DOSECC Drilling Observation and Sampling of the          $179,779          $179,779
           Earth’s Continental Crust – UT
12-4-010   3-10 Decision Research – OR                                          $0               $0
12-4-011   12-10 CUAHSI Consortium of Universities for the                      $0               $0
           Advancement of Hydrologic Science – DC
12-4-012   12-10 DOSECC Drilling Observation and Sampling of the                $0               $0
           Earth’s Continental Crust – UT
12-4-013   12-10 Space Science Institute –CO                                    $0               $0
12-4-014   12-10 USMFS George E. Brown US-Mexico Foundation                     $0               $0
           for Science – DC
12-4-015   12-10 Shodor Education Foundation, Inc. – NC                         $0               $0
12-4-016   12-10 REJECTED Larta Institute – CA                                  $0               $0
12-4-017   6-11 GSU Georgia Southern University Research and                    $0               $0
           Service Foundation – GA
12-4-018   5-11 Oregon Museum of Science & Industry                             $0               $0
12-4-019   6-11 New Mexico Consortium                                           $0               $0
12-4-020   6-11 Cal Poly Corporation – CA                                       $0               $0
12-4-021   6-11 Viewpoints Research Institute, Inc. – CA                        $0               $0
12-4-022   6-11 Woods Hole Research Center, Inc. – MA                           $0               $0
12-4-023   6-11 NISS National Institute of Statistical Sciences – NC            $0               $0
12-4-024   6-11 CBIA Education Foundation, Inc. – CT                            $0               $0
12-4-025   6-11 Cary Institute of Ecosystem Studies, Inc. – NY                  $0               $0
12-4-026   6-11 California Academy of Sciences                                  $0               $0
12-4-027   6-11 Science Museum of Minnesota                                     $0               $0
12-4-028   6-11 University Enterprises, Inc. – CA                               $0               $0
12-4-029   6-11 Public Radio International, Inc. – MN                           $0               $0
12-4-030   6-11 Queens Borough Public Library – NY                              $0               $0
12-4-031   6-11 Exploratorium – CA                                              $0               $0
12-4-032   6-11 Pacific Science Center Foundation – WA                          $0               $0
12-4-033   12-10 Detroit Area Pre-College Engineering Program – MI              $0               $0
12-4-034   6-11 Maine Mathematics and Science Alliance – ME                     $0               $0



                                                                                       39
Statistical Data


 12-4-035          6-11 Bigelow Laboratory for Ocean Sciences – ME                 $0            $0
 12-4-036          3-11 Berkeley Geochronology Center – CA                         $0            $0
 12-4-037          9-11 ARCUS Arctic Research Consortium of the US – AK            $0            $0
 12-4-038          8-11 Association of American Geographers – DC                   $0            $0
 12-4-039          6-11 IRIS Incorporated Research Institutions for                $0            $0
                   Seismology – DC
 12-4-040          6-11 Maryland Academy of Sciences                               $0            $0
 12-4-041          6-11 National Alliance for Partnerships in Equity               $0            $0
                   Education Foundation – PA
 12-4-042          9-11 Concord Consortium – MA                                    $0            $0
 12-4-043          6-11 Paleontological Research Institution – NY                  $0            $0
 12-4-044          6-11 NEON National Ecological Observatory Network,              $0            $0
                   Inc. – CO
 12-4-045          9-11 UCAR University Corporation for Atmospheric                $0            $0
                   Research – CO
 12-4-046          12-08 World Technology Evaluation Center, Inc. – PA             $0            $0
 12-4-047          6-11 CORD, Inc. – TX                                            $0            $0
 12-4-048          6-11 Institute for Advanced Study – NY                          $0            $0
 12-4-049          9-11 Museum of Science and Industry, Inc. – FL                  $0            $0
 12-4-050          9-11 KQED, Inc. – CA                                            $0            $0
 12-4-057          9-11AUI Associated Universities, Inc. – DC                      $0            $0
                   Total:                                                    $179,779       $179,779



                                            Other Federal Reports

  Report                                   Subject                        Questioned    Unsupported
  Number                                                                    Costs          Costs
 12-5-002      9-10 Institute for Defense Analyses – VA                         $224
 12-5-025      6-11 St. Joseph’s College – ME                                   $188           $188
 12-5-031      5-11 Augsburg College – MN                                       $424             $0
 12-5-033      6-11 Howard University – DC                                     $1,268         $1,000
 12-5-048      6-11 Clark Atlanta University – GA                              $9,756            $0
               Total:                                                         $11,860         $1,188




            40
                                                               OIG Semiannual Report   March 2012



                    Audit Reports With Outstanding Management Decisions

This section identifies audit reports involving questioned costs, and funds put to better use
where management had not made a final decision on the corrective action necessary for report
resolution with six months of the report’s issue date. At the end of the reporting period there
were 15 reports remaining that met this condition. The status of recommendations that involve
internal NSF management is described on page 37.

 Report                              Subject              Questioned Unsupported       Better Use
 Number                                                     Costs       Costs           of Funds
 05-1-005      RPSC Costs Claimed FY2000 to 2002          $12,334,824             $0            $0
 06-1-023      RPSC 2003/2004 Raytheon Polar Services     $6,860,500              $0            $0
 07-1-003      Triumph Tech, Inc.                             $80,740         $1,192            $0
 07-1-019      ABT Associates                                 $22,716             $0            $0
 09-1-011      Wisconsin Ice Core Drilling Services        $2,475,308        $27,308            $0
 09-1-014      University of Michigan                      $1,604,713     $1,418,889            $0
 09-5-048 8-07 College of the Mainland – TX          32
                                                             $110,629             $0            $0
 10-1-012      COL OOI Proposed Budget                            $0              $0    $88,118,848
 10-1-014      JOI 20 Month Incurred Cost                   $392,309       $324,500             $0
 10-1-015      COL 4 Month Incurred Cost                    $195,937        $80,000             $0
 11-1-001      REVISED ATST Price Proposal                        $0              $0   $62,338,903
 11-1-011      NCCU Internal Control Review for North       $351,340       $268,628             $0
               Carolina Central University
 11-1-012      Trustees of Boston University                $412,400         $47,486            $0
 11-1-021      NEON National Ecological Observatory               $0              $0    $75,780,354
               Network
 11-5-154      6-10 University of Illinois                    $57,350        $57,350            $0
               Total:                                     $24,898,766    $2,225,353    $226,238,105




32. This report was on hold at the request of OIG.


                                                                                       41
Statistical Data


                                        INVESTIGATIONS DATA
                                   (October 1, 2011 – March 31, 2012)
Civil/Criminal Investigative Activities

Referrals to Prosecutors                                                6
Criminal Convictions/Pleas                                              4
Arrests                                                                 0
Civil Settlements                                                       2
Indictments/Information                                                 2
Investigative Recoveries                                                $1,397,041.51

Administrative Investigative Activities

Referrals to NSF Management for Action                                  18
Research Misconduct Findings                                            7
Debarments                                                              8
Administrative Actions                                                  69
Certifications and Assurances Received33                                0



                                        Investigative Case Statistics

                                                    Preliminary         Civil/Criminal                  Administrative

Active at Beginning of Period                                 62                   90                             93
Opened                                                        96                   23                             45
Closed                                                        04                   14                             35
Active at End of Period                                       54                   99                             103



               Freedom of Information Act and Privacy Act Requests
Our office responds to requests for information contained in our files under the freedom of
Information Act (“FOIA,” 5 U.S.C. § 552) and the Privacy Act (5 U.S.C. § 552a). During this
reporting period:

Requests Received                                   38
Requests Processed                                  38
Appeals Received                                    5
Appeals Upheld                                      5

Response time ranged between 5 days and 20 days, with the median around 16 days and the
average around 15 days.




33. NSF accompanies some actions with a certification and/or assurance requirement. For example, for a specified period,
the subject may be required to confidentially submit to OIG a personal certification and/or institutional assurance that any newly
submitted NSF proposal does not contain anything that violates NSF regulations.


              42
                                                                        Appendix
                       PEER Reviews
               October 1, 2011 – March 31, 2012
Audit organizations that perform audits and attestation engage-
ments in accordance with the Controller General’s Government
Audits Standards (GAS) must have external peer reviews every
three years by independent reviewers. During this reporting period
the NSF OIG completed a peer review of the Special Inspector
General for Afghanistan Reconstruction (SIGAR) Office of Audit for
the year ending September 30, 2011; the system report contained
no recommendations. Peer reviews focus on quality control, which
includes organizational structure and policies and procedures that
help ensure compliance with GAS. A copy of the NSF OIG peer
review report is available on the SIGAR website.34

In addition, the Corporation for National Community Service
(CNCS) completed a peer review of the NSF OIG Office of Audit for
the year ending September 30, 2011; the system report contained
no recommendations.

In accordance with peer review guidelines, we have provided
copies of the CNCS peer review report to the Director of NSF, the
chairs of the National Science Board and its Audit and Oversight
Committee, and the chairs of the Councils of Inspectors General
on Integrity and Efficiency and its Audit Committee. We have also
posted a copy of the final peer review report on our OIG website.35




34. The SIGAR Office of Audit peer review is at:
http://www.sigar.mil/pdf/peerreview/2012-03-26-system-review-rpt.pdf.
35. The NSF OIG Office of Audit peer review report is at:
http://www.nsf.gov/oig/2012auditpeerreview.pdf.

                                                                            43
About The National Science Foundation...                                                           About the Cover...

                                                                                                   Photograph entitled “Sand Waves” by Investigative Scientist, Scott J. Moore.
The National Science Foundation (NSF) is charged with supporting and strengthening all
research discplines, and providing leadership across the broad and expanding frontiers of
science and engineering knowledge. It is governed by the National Science Board which sets
agency policies and provides oversight of its activities.


NSF invests approximately $7 billion per year in a portfolio of more than 35,000 research and
education projects in science and engineering, and is responsible for the establishment of
an information base for science and engineering appropriate for development of national and
international policy. Over time other responsibilities have been added including fostering and
supporting the development and use of computers and other scientific methods and
technologies; providing Antarctic research, facilities and logistic support; and addressing
issues of equal opportunity in science and engineering.


And The Office of the Inspector General...


NSF’s Office of the Inspector General promotes economy, efficiency, and effectiveness in
administering the Foundation’s programs; detects and prevents fraud, waste, and abuse within
the NSF or by individuals that recieve NSF funding; and identifies and helps to resolve cases of
misconduct in science. The OIG was established in 1989, in compliance with the Inspector
General Act of 1978, as amended. Because the Inspector General reports directly to the
National Science Board and Congress, the Office is organizationally independent from the
agency.
National Science Foundation
 Office of Inspector General
4201 Wilson Blvd., Suite 1135
     Arlington, VA 22230
         703.292.7100




   http://www.nsf.gov/oig
   To report fraud, waste,
  or abuse, call our hotline
       1.800.428.2189