oversight

Semiannual Report - September 2012

Published by the National Science Foundation, Office of Inspector General on 2012-09-01.

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

National             Office of
Science             Inspector
Foundation            General




Semiannual Report
  to Congress
       September 2012
                                                                                             Table of Contents
Audits and Reviews............................................................7
Accountability over Cooperative Agreements for Large Facility Projects....... 7
Public Advocacy in Climate Change Education Program Grants................. 13
Recovery Accountability and Transparency Board Project . ........................ 14
A-133 Audits ................................................................................................ 14
Audit Resolution........................................................................................... 17


Investigations................................................................... 19
Civil and Criminal Investigations................................................................... 19
Research Misconduct Investigations ........................................................... 21
Administrative Investigations........................................................................26
Management Implication Reports................................................................. 28



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


FY 2013 Top Management Challenges............................ 35

Statistical Data. 47




                                                                                                                     1
    About The National Science Foundation...

    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.



    About the Cover...
    Original photograph by Mary Pully, OIG.




2
                                                          From the Inspector General



This Semiannual Report to Congress highlights the activities of the National
Science Foundation (NSF), Office of Inspector General for the six month period
ending September 30, 2012. During this reporting period, 12 audit reports
and reviews were issued, four of which questioned $6.6 million, and one of
which found more than $154 million of unallowable costs in a proposal for a
major construction project. Our investigative staff closed 63 administrative and
criminal/civil investigations, had 11 research misconduct cases result in findings
by NSF, and recovered $1,188,265 for the government.

Our work reflects our robust and sustained commitment to helping NSF
strengthen its stewardship and accountability over the millions in taxpayer
dollars dedicated to advancing scientific research. To attain the level of
accountability necessary to safeguard these funds and to ensure that they
are spent appropriately, NSF cannot limit its attention solely to scientific
efforts—it must also focus on enabling sound financial management of the
taxpayer money entrusted to the Foundation. In some instances, achievement
of this second goal can require changes in long-held processes and
business approaches. We recognize that change of this magnitude presents
formidable challenges and we appreciate NSF’s ongoing efforts to address our
recommendations.

In the past six months, we issued an Alert Memo that underscored serious
weaknesses in NSF’s cost surveillance measures for awarding and managing
cooperative agreements for high-risk, high-dollar large facility projects Given
the critical importance of these projects and the billions of dollars at stake, it is
vital that NSF strengthen its end-to-end cost monitoring processes over high-
risk cooperative agreements.

Through the use of computer assisted auditing techniques and data analytics,
our audit at the University of California, Santa Barbara, questioned more than
$6 million in claimed costs including nearly $2 million of overcharged summer
salaries and approximately $500,000 of inappropriate costs transfers into
NSF awards, among other things. Also, during this reporting period an audit
involving a non-profit managing three awards valued at approximately $3.2
million questioned more than $527,000, including costs for fringe benefit rates
that exceeded the rate approved by NSF and payroll costs that lacked adequate
supporting documentation.

Our investigative work recovered over $1 million for the government from
individuals and entities that attempted to fraudulently obtain funds intended
for scientific research. We also referred nine cases of research misconduct to
NSF, including an assistant professor who exhibited a pattern of plagiarism, a
small business official who plagiarized in numerous NSF proposals, and a PI
who plagiarized in two NSF proposals.



                                                                                        3
    This report also contains the top management challenges we have identified
    for NSF in FY 2013. In the wake of the Blue Ribbon Panel Report on Antarctic
    logistical support and the awarding of the new contract for such support, we
    have added NSF’s management of the U.S. Antarctic Program (USAP) to that
    list. The panel found that the USAP logistics system is badly in need of repair
    and that failure to upgrade the system will increase the cost of logistics until
    these costs squeeze out funding for science. NSF faces the challenge of
    ensuring that logistical improvements are made and that the systems necessary
    to support scientific research are sound.

    My office is focused on making recommendations to help ensure that NSF
    spends its research funds in the most effective and efficient manner while
    maintaining the highest level of accountability, and we are committed to working
    with the Foundation to strengthen its processes to reach this goal. We look
    forward to our continued partnership with NSF and with Congress toward the
    mutual goal of safeguarding taxpayer dollars and advancing vital scientific
    research.




4
                                                                        Highlights
•	   We issued an Alert Memo to NSF to bring attention to serious weaknesses
     in the Foundation’s cost surveillance measures for awarding and managing
     its nearly 700 open Cooperative Agreements (CAs), totaling nearly $11
     billion. Among other things, NSF uses Cooperative Agreements to
     construct and fund operations and maintenance of its large facility projects.
     Since NSF has chosen to use CAs for these high-dollar, high-risk projects,
     it is imperative that it exercise strong cost surveillance controls over the
     lifecycle of such ventures. We found that NSF was not conducting audits
     of awardees’ proposed budgets and accounting systems at the pre-award
     stage, nor was it routinely requiring incurred cost audits post-award. While
     none of these actions is required by law or regulation, they are essential
     tools for ensuring accountability in high-risk, high-dollar projects. In
     their absence, unallowable costs may go undetected. Given the critical
     importance of the projects NSF funds through Cooperative Agreements and
     the billions of taxpayer dollars at stake, it is vital that NSF strengthen end-
     to-end cost monitoring over high-risk Cooperative Agreements.

•	   An audit of the National Ecological Observatories Network’s $433.7
     million proposed construction budget disclosed more than $154 million
     in questioned and unsupported costs. Based on the severity of these
     deficiencies, an adverse opinion was issued stating that the proposal was
     not prepared in accordance with OMB requirements and did not form an
     acceptable basis for the negotiation of a fair and reasonable price.

•	   An audit of NSF awards at the University of California, Santa Barbara,
     (UCSB) questioned more than $6.3 million of the costs claimed by the
     University to NSF because UCSB did not comply with Federal and NSF
     award requirements. The questioned costs included nearly $2 million of
     overcharged summer salaries; over $2.8 million because UCSB did not
     fulfill its grant cost share requirements; and approximately $500,000 of
     inappropriate cost transfers into NSF awards for costs such as salary
     incurred after the awards had expired.

•	   Our investigation involving fraud related to NSF and Department of
     Education grants led to a former school superintendent in California being
     ordered to pay more than $325,000 and being sentenced to prison.

•	   Our investigative work has identified several areas where the Small
     Business Innovation Research program is vulnerable to fraud, waste,
     and abuse, and we have provided a Management Implication Report to
     NSF based on this work. NSF has acted on a number of the report’s
     recommendations to reduce the risk of fraud in the program




                                                                                       5
Highlights




6
                                                               Audits and Reviews
During this reporting period, we issued an Alert Memo and seven audit reports
that included $6.6 million of questioned costs and more than $154 million
of unallowable costs in a proposal for a major construction project. As we
worked with NSF to resolve audits that had disclosed millions in unallowable
contingency costs, we identified serious weaknesses in NSF’s cost surveillance
measures for awarding and managing cooperative agreements that the
Foundation uses to construct and fund the operations and maintenance of its
large facility projects.

NSF currently has nearly 700 open cooperative agreements, totaling nearly
$11 billion. To bring the serious weaknesses in NSF’s processes for these
high-risk high dollar awards to its immediate attention, we issued the Alert
Memo. Without improving end-to-end processes over cooperative agreement
monitoring, NSF cannot ensure that it receives reasonable value for taxpayer
dollars and that those dollars are not misused.

NSF Needs to Establish Greater Accountability over Cooperative
Agreements for its Large Facility Projects

A federal agency can use a Cooperative Agreement (CA) when entering into a
relationship with a recipient when the primary purpose of the relationship is to
transfer a thing of value to carry out a public purpose of support or stimulation,
and substantial involvement between the federal agency and the recipient
when carrying out the agreement is expected. NSF currently has 685 open
cooperative agreements, totaling nearly $11 billion; thirty-eight of these CAs
are for over $50 million each. Among other things, NSF uses CAs to construct
large facility research projects and to fund their operations and maintenance.
Since NSF has chosen to use CAs for the construction, operation, and
maintenance of high-risk, high-dollar large facility research projects, it is
imperative that it exercise strong cost surveillance controls over the lifecycle of
such projects.

Over the last two years, audits of the proposed construction budgets for three
large facility research projects valued at $1.1 billion questioned approximately
$305 million (almost 28 percent) in unallowable or unsupported costs.
The audits found that all three of the awardees’ proposals had significant
unallowable contingency costs, and two proposals were initially found
unacceptable for audit. After much work, one of these proposals was audited,
and the auditors issued an adverse opinion, finding that the proposal did not
form an acceptable basis for the negotiation of a fair and reasonable price.
The third proposal, which was submitted by an awardee found to have an
inadequate accounting system, remains unaudited.

As we worked with NSF to resolve these audits, we identified serious
weaknesses in NSF’s post-award monitoring processes for high dollar, high-risk
projects that compounded our concern that unallowable costs could be charged
to awards, thereby placing federal funds awarded under CAs at further risk.
NSF does not routinely obtain incurred cost submissions or audits of costs
claimed on its largest CAs to determine the allowability of direct and indirect
costs claimed on federal awards. While not required by law or regulation,
                                                                                      7
Audits and Reviews
                     such submissions and audits are important tools for ensuring accountability in
                     high-risk, high-dollar projects. In the absence of such submissions and audits,
                     unallowable costs charged to these awards may go undetected because NSF
                     lacks sufficient visibility over incurred costs.

                     Given the critical importance of the projects funded through cooperative
                     agreements and the billions of dollars at stake, it is vital that NSF strengthen
                     its end-to-end cost monitoring processes over high-risk CAs from the
                     proposal stage to close out. Thus, we issued an Alert Memo to bring these
                     weaknesses and our recommendations for improving the processes to NSF’s
                     attention.

                     Pre-Award

                     NSF’s pre-award process includes a limited review of awardees’ cost estimates
                     and budgets by a panel, comprised of scientific and technical experts as well
                     as individuals with administrative, cost, and project management experience.
                     Based on these reviews, panels provide reports to NSF that assess whether,
                     in the panel’s view, the project can be completed within the estimated cost and
                     contingency, in light of NSF’s no cost overrun policy. The panel reviews do not
                     reference or apply the OMB cost principles in their evaluations. Consequently,
                     panels do not review cost proposals for overstated costs with the same level of
                     scrutiny required in an audit. In fact, the final report from the panel reviewing
                     one of NSF’s largest CAs, noted that NSF policy does not require detailed,
                     independent cost reviews and recommended that NSF consider having such
                     a review performed. Despite this recommendation, NSF approved the cost
                     estimates and made the award without an audit.

                     At the pre-award stage, our main concern is ensuring that, in high-risk, high-
                     dollar projects, the agency is taking proper steps to ensure that proposals
                     provide an adequate basis for the negotiation of project costs, and that potential
                     recipients are capable of appropriately managing federal funds. Such steps
                     should include (1) obtaining proposal audits for large CAs prior to award to
                     ensure that cost estimates are reasonable; (2) obtaining audits of prospective
                     awardees’ accounting systems and estimating practices to determine whether
                     these systems are capable of properly managing federal funds, and (3) using
                     Form 424C or an equivalent form or process which displays allowable and
                     unallowable costs for each budget item.

                     Post-Award

                     NSF receives certain financial reports on its large facility CAs, but these
                     reports do not contain the level of detail needed to perform adequate cost
                     surveillance. NSF only receives sufficient cost details from a few awardees that
                     also have large contracts and are therefore required to provide annual incurred
                     cost submissions. Large CA awardees that do not also have contracts are not
                     required to provide NSF with annual incurred cost submissions.

                     Incurred cost submissions, or their equivalent, are important for proper cost
                     monitoring because they provide visibility over awardees’ claimed costs since
                     they include certified schedules of direct costs by award (identified by cost

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                                                          OIG Semiannual Report    September 2012
element), and applied indirect expenses. Absent incurred cost submissions
or their equivalent, NSF cannot adequately monitor awardees’ expenditure of
government funds during the post-award stage, compounding our concern that
unallowable costs could be charged to awards and go undetected.

In addition, because NSF does not have incurred cost submissions, the OIG
must work with NSF and awardees to obtain submissions before an audit
starts, thus excessively prolonging our audit process. For example, it took us
ten months (end of June through end of April 2012) to receive one awardee’s
(Associated Universities Inc.) incurred cost submissions for three years. This
was despite NSF’s cooperation in requesting its awardee to provide the
submissions.

Audits of incurred cost submissions are also critical for proper monitoring, and
would reveal instances of noncompliance with federal regulations as well as
costs claimed that are unallowable, unallocable, or unreasonable. The audits
will provide vital information and also prevent recurrence of any infractions in
future periods of the awards. NSF does not routinely require such audits for
high-dollar, high-risk CAs.

Without improving end-to-end processes over CA monitoring from the proposal
stage to award close-out, NSF cannot affirm that it has received reasonable
value for taxpayer dollars and that those dollars are not misused. NSF needs
to institute a strengthened control environment together with additional pre-and
post-award cost surveillance measures to properly administer high-risk, high-
dollar CAs in a manner that protects federal funds.

We recommended that NSF strengthen cost surveillance policies and
procedures to ensure adequate stewardship over federal funds and that it
implement increased monitoring for its largest CAs valued over $50 million.

More than $154 Million in Questioned and Unsupported Costs in
NEON’s Proposed Budget

An audit of the National Ecological Observatories Network’s (NEON) $433.7
million proposed construction budget disclosed more than $154 million
in questioned and unsupported costs. Based on the severity of these
deficiencies, the auditors issued an adverse opinion stating that the proposal
was not prepared in accordance with OMB requirements and did not form an
acceptable basis for negotiation of a fair and reasonable price.

The audit disclosed that NEON could not provide adequate supporting
documentation for $52.3 million of proposed cost categories including labor,
materials, and equipment. Other significant deficiencies included escalation
based on unreasonable and inappropriate factors; consultant costs that violated
OMB cost principles; unallowable food and alcohol costs; and questioned travel
costs. In addition, the entire $72.6 million in proposed contingency costs was
questioned because there was a lack of evidence to support that the amounts
budgeted were for events that could be “foretold with certainty as to time,
intensity or an assurance of their happening” as required by OMB. The audit


                                                                                                9
Audits and Reviews
                     also found that NEON did not provide adequate supporting documentation for
                     the values and factors that were used as the basis for proposed contingency
                     costs.

                     NEON stated that NSF’s technical panels reviewed the proposal in accordance
                     with NSF procedures. The fact that the panels accepted the proposed costs
                     in light of the significant deficiencies cited in the audit raises serious concerns
                     about the adequacy of NSF’s process. If the review process worked as it
                     should and was providing accountability over federal tax dollars, awardees
                     could readily produce the necessary supporting documentation to auditors and
                     that documentation would be sufficient to withstand independent scrutiny.

                     It is noteworthy that prior to this report, auditors issued three inadequacy
                     memos over a four-month period between June and September 2011. The
                     inadequacy memos were issued because of significant deficiencies in the
                     cost proposal, and the inclusion of approximately $76 million in unallowable
                     contingency and honoraria costs. In February 2012, NEON submitted its
                     revised proposal for audit. Completion of this audit resulted in finding an
                     additional $78 million of questioned and unsupported proposed costs.

                     We recommended that NSF require NEON to submit a revised proposed
                     budget with adequate supporting documentation for all costs and that it have
                     that proposal audited before additional funds are provided to NEON.

                     NSF’s Management of Contingency in EarthScope Award Did Not
                     Safeguard Federal Funds

                     In recent years, NSF instituted a policy of ensuring large facility construction
                     projects do not exceed their planned budgets by requiring that “contingency”
                     costs be included in the initial proposed budget. Previous audits of three of
                     NSF’s large facility construction projects have questioned over $223 million in
                     unallowable contingency costs out of total proposed costs of over $1.1 billion.

                     Because of the large dollar amounts associated with contingencies in NSF
                     awards, the risk posed by NSF’s current process of funding these costs, and
                     the complexity of the issue, we conducted an audit of the construction portion
                     of EarthScope, a closed award, to examine NSF’s management and use of
                     contingencies. This project was awarded in 2003 for approximately $197.4
                     million, including an estimated $10.5 million for contingency.

                     Consistent with the three proposal audits discussed, we found that the
                     proposed contingencies for the EarthScope projects were not supported by
                     cost data and did not comply with the OMB cost principles. NSF and the
                     awardees used flat percentages to determine the contingency amounts for
                     EarthScope. We were unable to find, and project officials were unable to
                     provide, any supporting evidence to show how these estimates were calculated,
                     therefore, there was no evidence that they met the cost principle’s “with
                     certainty” requirement.




10
                                                           OIG Semiannual Report      September 2012
Without that evidence, we concluded that the budgeted contingencies were
unallowable based on OMB Circulars, which state that “contributions to a
contingency reserve or any similar provision made for events the occurrence
of which cannot be foretold with certainty as to time, intensity, or with an
assurance of their happening are unallowable.”

Further, NSF’s policies and procedures did not reflect the OMB cost principles.
Some defined contingency differently and none of the contingency definitions
distinguished between forseeable and unforeseeable events as the cost
principles do. NSF’s definition of contingency should be consistent with the
OMB cost principles to ensure NSF’s compliance with OMB requirements,
and should be consistently articulated in NSF guidance. A lack of clarity as to
what constitutes contingency could undermine the agency’s ability to oversee
contingency funds.

In 2011, NSF revised its contingency guidance document. The revised
guidance stated that NSF expects awardees to apply estimates of the likelihood
of risk factors occurring and their impact on the project budget, which should
prevent awardees from using flat percentages to estimate contingency.
However, verifiable support sufficient to meet OMB requirements is still
necessary in order for the contingency to be allowable.

In addition, we found that a weak management control environment
undermined NSF’s ability to manage contingencies. Most importantly, two
of the EarthScope awardees expended nearly $7.9 million, or 75 percent, of
awarded contingency funds, but did not separately track these expenditures
in their accounting systems. Thus, neither we nor NSF could confirm that
the awardees spent the contingency funds for items requested in the change
control board actions. This lack of clarity makes it very difficult, if not
impossible, for us to determine if contingency amounts were used appropriately.

Also, NSF initially lacked visibility over EarthScope’s expenditure of contingency
funds because its process, prior to centrally managing contingencies in FY
2006, permitted the awardees to execute most change control board actions
without NSF’s review or approval. We found that the awardees had executed
all of the existing change orders (which totaled over $1 million), thereby limiting
NSF’s ability to ensure that requests for and approval of the use of contingency,
were appropriate.

Finally, in some instances NSF approved the use of contingency funds for
matters that did not appear to represent the materialization of contingent events.
For example, one project used $728,875 to fund an increase in the general and
administrative rate, a large portion of which was due to the awardee retaining
space NSF told them it would not support. Using contingency funds for such
expenses increases the risk that sufficient funds will not be available if true
contingent events occur, and that project cost overruns will be obscured.

We recommended that the NSF improve its award, management, and oversight
of contingency funds by strengthening its guidance, processes and internal
controls. Among other things, the agency should require awardees to support



                                                                                                  11
Audits and Reviews
                     contingency estimates in budget proposals with adequate cost data and
                     release contingency funds for unforeseeable events only when the awardee
                     demonstrates a bona fide need supported by verifiable cost data.

                     NSF agreed with our recommendation to require awardees to use OMB’s
                     Form 424C. However, NSF asserted that it was already in compliance
                     with the recommendations that contingency estimates in budget proposals
                     be adequately supported and with OMB cost principles pertaining to
                     contingencies. We look forward to receiving NSF’s Corrective Action Plan and
                     working with NSF officials to resolve the recommendations.

                     More than $6.3 Million of Questioned Costs at the University of
                     California, Santa Barbara

                     The University of California, Santa Barbara (UCSB) is among the top 30 largest
                     NSF award recipients with 603 active awards. Through the use of computer
                     assisted auditing techniques and data analytics, the audit questioned more than
                     $6.3 million of the costs claimed by the University to NSF because UCSB did
                     not comply with Federal and NSF award requirements.

                     Nearly $2 million of overcharged summer salaries resulted from UCSB’s use
                     of a complex series of mathematical calculations to maximize salary budgeted
                     for those awards regardless of the labor effort worked by employees; we
                     also found over $2.8 million of excess Federal Cash disbursements because
                     UCSB did not fulfill its grant cost share requirements. Additionally, we found
                     approximately $500,000 of inappropriate cost transfers into NSF awards for
                     costs such as salary incurred after NSF awards expired, unrelated equipment
                     purchases, and budget overruns from other awards transferred into awards with
                     available funds.

                     We determined that UCSB overcharged NSF for over $473,000 of indirect costs
                     that were not in compliance with the negotiated indirect cost rate agreement
                     or with NSF policy. We also found that the UCSB charged approximately
                     $440,000 in unallowable costs to NSF grants for items such as equipment not
                     related to the award and equipment purchased after the grant expired.

                     Our audit concluded that the University had a practice of charging untimely and
                     unrelated costs into its NSF awards. This practice continued at the University
                     throughout our audit period and resulted in these significant amounts of
                     questioned costs.

                     We recommended that NSF direct UCSB to repay the $6.3 million of
                     questioned costs and strengthen controls and processes over its federal
                     awards. UCSB disagreed with the audit findings.

                     More than $527,000 in Questioned Costs identified at DOSECC, Inc.

                     An audit of three awards valued at approximately $3.2 million made to the
                     Drilling, Observation and Sampling of the Earth’s Continental Crust, Inc.
                     (DOSECC) identified $527,5041 of questioned costs The questioned costs
                     1  Included in the $527,504 of questioned costs are $263,754 of costs reported in OMB A-133
12                   reports that are being resolved by NSF.
                                                          OIG Semiannual Report      September 2012
consisted of indirect and fringe benefit costs that exceeded the rates approved
by NSF; payroll costs based on documentation that was not adequate to
support the charges to the NSF awards; and purchases for items that were
unsupported by adequate documentation and were not allowable under federal
cost principles, or were not related to the award.

We recommended that NSF resolve the questioned costs and ensure that
DOSECC implements procedures to correct the problems that led to the
questioned costs. DOSECC stated that it has taken corrective action to
address the audit’s findings.

Nearly $30,000 in Questioned Costs for Awards to University
Corporation for Atmospheric Research

As of September 30, 2011, the University Corporation for Atmospheric
Research (UCAR) reported expenditures for 121 NSF awards, totaling $949
million. An audit at UCAR questioned nearly $30,000 of costs claimed on
awards for items such as food and beverages for staff meetings and parties,
and expenses for retirement parties. The audit included a review of 13
American Recovery and Reinvestment Act (ARRA) awards and concluded that
ARRA funds had been properly accounted for and segregated, as required.

Recommendations included that UCAR return the questioned costs and closely
monitor conference-related expenditures. UCAR agreed to repay over half of
the questioned costs.

Concerns about Use of Climate Change Education Program Grants
for Public Policy Advocacy

In response to a request from Senator Enzi, we begin an audit to evaluate the
sufficiency of NSF’s controls for ensuring that funds are not used for advocacy
in grants under the Climate Change Education Program (CCEP). We first
attempted to identify any requirements that prohibit advocacy in CCEP. We
found that while there are government-wide requirements prohibiting the use of
federal funds for lobbying, there are no such restrictions pertaining to the use
of federal funds for public policy advocacy that fall short of affirmative efforts
aimed at influencing legislation. Further, NSF does not have any Foundation-
wide restrictions pertaining to public policy advocacy. While we closed the audit
due to a lack of policy and criteria on public advocacy, we provided findings and
suggestions to NSF.

We found that grant solicitations for the Climate Change Education Program
contained language intended to address the issue of advocacy such as
statements that projects should not “delve into advocacy” or “prescribe a
specific policy position.” We did not find statements pertaining to advocacy
in award solicitations for any other NSF program. The statements for CCEP
solicitations were vague and unclear and make it difficult for proposers to
appropriately respond, for merit reviewers to accurately evaluate, and for NSF
to properly enforce them.



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Audits and Reviews
                     We made several suggestions to NSF including that if it decides to retain
                     this language in award solicitations, it should clearly articulate what the
                     language means and provide examples of the types of activities it considers
                     inappropriate. We further suggested that if NSF’s intent is to prohibit such
                     activity in all its programs, it should clearly and formally articulate that position
                     and communicate it to stakeholders.

                     OIG Participates in Recovery Accountability and Transparency
                     Board Project

                     We participated in a Recovery Accountability and Transparency Board review
                     with 15 other OIGs to identify which actions and processes have been either
                     beneficial or posed challenges to agencies or their respective OIGs in meeting
                     the requirements of the American Recovery and Reinvestment Act (ARRA).
                     NSF plans to continue with some aspects of new practices implemented
                     as a result of ARRA including monitoring awardee expenditure rates and
                     developing interim performance measures. Likewise, the OIG will continue to
                     utilize new auditing and outreach techniques we implemented during ARRA
                     implementation such as data analytics.

                     The NSF’s approach to meeting its requirements for ARRA included funding
                     highly-rated proposals that were previously declined due to lack of available
                     funding. This was one of the tools that enabled NSF to award most of its
                     ARRA funds by September 30, 2009. In addition, according to NSF’s Office
                     of Budget, Finance, and Award Management staff, increased monitoring and
                     oversight of ARRA awards, agency cross collaboration, and outreach to the
                     scientific community led to a high rate of awardee compliance with recipient
                     reporting requirements, program staff’s increased awareness of stewardship,
                     and improved relations between the OIG and NSF.



                     A-133 Audits

                     One third of Single Audit Findings are Repeated from Previous
                     Audits

                     OMB Circular A-133 provides audit requirements for state and local
                     governments, 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 163 audit reports reviewed and referred2 to NSF’s Cost Analysis and
                     Audit Resolution (CAAR) Branch this period covered NSF expenditures of
                     $6.8 billion during audit years 2008 through 2012, and resulted in 154 findings
                     2  We also reviewed and rejected one report based on audit quality deficiencies. We will report
                     on the opinions and findings for this audit upon receipt of the revised report.
14
                                                                   OIG Semiannual Report   September 2012
at 67 NSF awardees. Seven awardees received qualified opinions on their
compliance with federal grant requirements. Fifty-one of the 154 findings
(33 percent), including 15 material weaknesses, were repeated from previous
audits, calling into question the awardees’ ability to adequately improve their
management of NSF awards. Twenty findings identified by the auditors,
including 6 material weaknesses, resulted in $4.1 million in questioned costs
to NSF awards, of which nearly $1 million 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 58 management letters accompanying the A-133 audit
reports and found 38 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 Half 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 72 audit reports3 for which NSF was identified as the cognizant
or oversight agency for audit, and found that 34 fully met federal reporting
requirements. Thirty-eight reports (53 percent), including 9 of the 19 reports
with ARRA expenditures, contained audit quality and timeliness issues.
The quality issues we identified included 18 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. Twelve reports were submitted after the due
date required by OMB Circular A-133. Of the 13 reports which included audit
findings related to compliance with federal requirements, 6 reports (46 percent)
failed to adequately present the required elements of the finding to assist
auditee management in correcting the reported deficiency, and 7 reports failed
to adequately present the required elements of the auditees’ management’s
plan to correct the deficiencies reported. In addition, 7 reporting packages
3  The audits were conducted by 53 different independent accounting firms.

                                                                                                      15
Audits and Reviews
                     contained Data Collection Forms (Form SF-SAC) that failed to accurately reflect
                     the results of the audit. Finally, 9 of the reports repeated errors which we had
                     identified to the awardees and auditors 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
                     substantial 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 Unacceptable 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 meet 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 material audit quality deficiencies in
                     the audit which in total resulted in an unacceptable audit, and instructed the
                     auditors to conduct additional work. Further, due to the serious nature of the
                     deficiencies we referred the audit firm to the Professional Ethics Division of the
                     American Institute of Certified Public Accountants.

                     The audit quality deficiencies in the single audit performed at Chabot Space
                     and Science Center resulted in a failure to appropriately identify the separate
                     nature of the two major programs. The auditors also failed to adequately
                     identify and test for compliance with the requirements applicable to Activities
                     Allowed or Unallowed, Allowable Costs / Cost Principles, Period of Availability,
                     Procurement and Suspension and Debarment, and Reporting for both major
                     programs, as well as the requirements applicable to Davis-Bacon Act and
                     Equipment and Real Property Management for one of the major programs.
                     Further, the auditors failed to properly test the Schedule of Expenditures of
                     Federal Awards. The auditors generally concurred with our recommendation
                     to conduct additional test work in these areas, and anticipate completion of the
                     additional work during the next period. We will review the additional work within
                     3 months of notification that the additional work has been completed.

                     OIG Follow-up Actions on Quality Control Review

                     Our follow-up review of the audit of WNET.ORG and Subsidiaries4 found that
                     the additional work performed by the auditors generally met applicable federal
                     requirements. As a direct result of the additional work performed in response to
                     our QCR, the auditors identified $525,655 in questioned costs on NSF awards,
                     determined that the two original instances of noncompliance were in
                     4  March 2012 Semiannual Report, p.15.
16
                                                              OIG Semiannual Report   September 2012
fact material weaknesses in internal control over federal awards, identified two
new material weaknesses in internal control over federal awards, and qualified
their opinion on compliance with requirements applicable to all major programs.



Audit Resolution

University of Wisconsin Required to Fund $405,587 in Overruns on
NSF Ice Coring and Drilling Services Contract

In response to audit findings, the University of Wisconsin was required to pay
$405,587 for cost overruns on NSF’s Ice Coring and Drilling Services contract
for 2006-2008. The cost overruns resulted from a lack of proper internal
controls.

NSF Sustains more $166,130 in Questioned Sub-awardee Costs
under the Trustees of Boston University Audit Report

In response to audit recommendations, NSF sustained $166,130 in questioned
costs for two sub-awards under an award to the Trustees of Boston University,
and the University agreed to strengthen its sub-awardee monitoring. The
sustained questioned costs included management and consultant fees.

Non-Profit Improves Travel Policies and Strengthens Internal
Controls

In response to audit recommendations, the Institute for Defense Analyses,
a non-profit corporation which operates a Federally Funded Research and
Development Center, improved its travel policies and internal controls to help
ensure that claimed costs are reasonable and adequately supported.

NSF Issues Guidance for Large Facilities, which Closes Final
Recommendations of Gemini Audit

In response to outstanding audit recommendations from 2001, NSF has
issued policies for large facility projects that include financial, risk, and cash
management guidance for project managers overseeing those facilities
currently under construction. During this reporting period, NSF conducted
training for its project managers and other interested staff, which resulted in
closing the final remaining recommendation from the Gemini Audit.

NSF Addresses Concerns Identified in Evaluation of its Facebook
Site

In response to our recommendations, NSF has acted to implement suggestions
with regard to content control, disclaimers, and potential conflicts of interest on
its Facebook site.



                                                                                                  17
Audits and Reviews




18
                                                                    Investigations
Civil and Criminal Investigations

Former NSF Program Officer Convicted of Submitting False
Statements on Financial Disclosure Forms

A former NSF program officer was ordered to pay a $5,000 fine and $1,601 in
restitution after he pled guilty to making false statements on his annual financial
disclosure reports submitted to NSF from 2006 through 2010. He retired while
under investigation after 36 years of employment at NSF. The program officer
failed to disclose that he received gifts and travel-related reimbursements,
such as lodging, transportation, and food, from a restricted source, a professor
at a university who received NSF grants. He disguised some of the gifts
and reimbursements as false invoices submitted to the university from a
company owned by a second professor at a different university. Both of these
professors regularly traveled with the program officer to international scientific
conferences. The program officer also concealed that he received money for
international travel from a university while receiving reimbursements from NSF
for that same travel.

Former School Superintendent Sentenced to Prison and Ordered to
Pay More than $325,000 in Restitution

We previously reported the indictment of a former school superintendent
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.5 The former superintendent pled guilty to mail fraud
charges,6 and the two former university professors pled guilty to submitting
false statements. The former superintendent was ordered to pay $325,282
in restitution and was sentenced to five months in prison followed by five
months in a residential reentry center. Upon release, he will be on supervised
release for three years. Both former professors were sentenced to five years of
probation.

Florida Businessman Sentenced to Prison for Misuse of NSF Logo

We previously reported on a Florida business owner’s guilty plea to falsely
making, forging, and using the NSF seal.7 During this reporting period, he was
sentenced to a year and a day in prison, followed by two years of supervised
release, and ordered to pay a $25,000 fine.

Nonprofit Organization Debarred For Ten Years

We previously reported on a former NSF Senior Executive Service employee
who pled guilty to filing a false financial disclosure to NSF and a false tax
return,8 and was sentenced to six months home detention, $15,393 restitution

5    March 2011 Semiannual Report, pp.20-21.
6    March 2012 Semiannual Report, p.25.
7    March 2012 Semiannual Report, p.27.
8    March 2012 Semiannual Report, p.20.
                                                                                      19
Investigations
                 and a $100,000 fine.9 Based on our recommendation, NSF previously debarred
                 the former employee for ten years,10 and in this reporting period debarred the
                 Maryland non-profit organization that facilitated his crime for ten years.

                 Proposed Debarment of a Former PI at a Georgia College

                 We previously reported on a PI at a Georgia college who charged an NSF
                 grant for travel costs, personal purchases, and other expenses unrelated to the
                 grant.11 In this reporting period, we recommended that the PI be debarred for
                 five years; NSF’s decision is pending.

                 PI and his Company Suspended Government-Wide

                 A PI for a Maryland company that received a Small Business Technology
                 Transfer (STTR) award from NSF falsely certified to NSF that he was primarily
                 employed by the company when he was employed full-time at a university.
                 The PI also falsely asserted that he had a mandatory outside investment to
                 support a Phase IB application for supplemental funding, and he failed to issue
                 a required subaward to the company’s partnering research institution in the
                 Phase IB STTR award. Based on our recommendation, NSF suspended the PI
                 and his company government-wide pending the conclusion of our investigation.

                 University Returns $330,460 After Professor Falsely Certified Effort

                 An Indiana university put $160,529 back into two active NSF awards and
                 returned $169,930 to NSF for a third closed award after the university’s
                 internal audit and our investigation confirmed that a tenured professor at the
                 university held an undisclosed paid teaching position at a foreign university
                 while simultaneously serving as PI for the three NSF awards. The PI charged
                 travel and summer salary to the NSF awards, certifying 100% effort on his NSF
                 awards for time during which he was teaching at the foreign institution. Our
                 investigation is ongoing.

                 NSF Terminates Remaining $230,000 of a Small Business
                 Innovation Research (SBIR) Phase II Award

                 During an ongoing investigation, we determined that a company used award
                 funds on expenses unrelated to NSF work and overcharged indirect costs to
                 the NSF award. Based upon our recommendation, NSF terminated the award,
                 resulting in $230,144 of funds put to better use.

                 Awardee Violates Grant Terms and Returns $98,500 to NSF

                 As a result of our investigation, a New York university returned $98,500 to NSF
                 after making scholarship payments to ineligible students under an NSF award.
                 The university also instituted new processes to confirm student eligibility and to
                 track scholarship payments.

                 9  September 2011 Semiannual Report, p.10.
                 10  March 2012 Semiannual Report, p.26.
                 11  September 2011 Semiannual Report, p. 8.
20
                                                            OIG Semiannual Report     September 2012
Attorney General Grants Statutory Law Enforcement Authority to
Office of Investigations Special Agents

On 11 September 2012, the Attorney General approved statutory law
enforcement authority for the NSF OIG Office of Investigations. This authority
relieves OIG from the administrative burden of repeated requests for special
deputation from the U.S. Marshals Service and broadens the law enforcement
powers of our Special Agents. For example, it allows them to work with other
law enforcement agencies without establishing concurrent jurisdiction in an
investigation, and permits them to independently apply for and execute search
and arrest warrants. It also enhances agent safety by providing authority to
carry weapons on a 24/7 basis throughout the United States. We welcome
approval of statutory law enforcement authority and are confident this authority
will enhance our ability to investigate wrongdoing that puts federal funds at risk.



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 investigative 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 termination of employment. During this period, NSF’s actions in research
misconduct cases ranged from letters of reprimand to one year of debarment.

We referred nine cases of research misconduct 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 eight of the nine
cases.

NSF-Supported Graduate Student Plagiarizes from Lab Partner’s
Dissertation

A former doctoral student at a Texas university copied over 1,200 lines of
text as well as numerous embedded objects and supporting data into his
dissertation from the dissertation of a lab partner who graduated a few years
earlier. The university conducted an investigation during which the student
attempted to explain the common materials as a natural consequence of
working closely with the graduating lab partner in order to keep the long-
                                                                                                 21
Investigations
                 term project going. The university investigation committee rejected this
                 explanation and found that the student committed intentional plagiarism. The
                 committee noted in its report that the student “faced difficult circumstances
                 when completing his dissertation” given that his original advisor departed
                 the university and the department failed to provide a new formal advisor until
                 one year later. However, the committee concluded these conditions were
                 “conducive to plagiarism, but did not excuse” the student’s actions and the
                 university rescinded the student’s doctoral degree.

                 We concurred with the university’s findings and recommended that NSF
                 debar the former student for three years. After the debarment period, we
                 recommended that for five years NSF bar the student from serving NSF as a
                 reviewer, advisor, or consultant; and require certifications and assurances for all
                 proposals or reports submitted to NSF.

                 Faculty Member Claims Copied Text was Public Knowledge

                 A faculty member at an Ohio university plagiarized approximately 500 lines of
                 text into four proposals submitted to NSF. He admitted that he copied most of
                 the material, which he said he did because English was not his native language.
                 He also asserted that citations and quotation marks were unnecessary
                 because the text was copied from a public source, or was public knowledge.
                 The university investigation concluded that the faculty member’s actions were
                 reckless and he should have known of the need for citation.

                 The university placed a formal letter of reprimand in the faculty member’s
                 permanent record, with an admonition that further plagiarism may result in
                 termination of his employment. It further required, for two years, the faculty
                 member and the Sponsored Research Office to certify that any proposals
                 submitted contain no plagiarism, and required that the faculty member enroll in
                 a course on research ethics. We recommended that NSF require certifications
                 and assurances for three years and bar the faculty member from participating
                 as a peer reviewer, advisor, or consultant for NSF for three years.

                 Two Professors Resign Due to Plagiarism

                 A PI and co-PI at a university in Georgia who plagiarized in three NSF
                 proposals, acknowledged they copied, but asserted that they gave full credit to
                 the authors from whom they copied. The university investigation concluded the
                 PI’s and co-PI’s plagiarism constituted research misconduct and recommended
                 their dismissal. The co-PI resigned, but the PI appealed the decision. After a
                 faculty hearing, the university allowed the PI to resign in lieu of removal.

                 We concurred with the university that the PI and co-PI committed research
                 misconduct and recommended NSF require certifications and assurances
                 for three years, and bar both from serving NSF as a reviewer, advisor, or
                 consultant for three years.




22
                                                          OIG Semiannual Report    September 2012
Assistant Professor at New Jersey University Exhibits a Pattern of
Plagiarism

A New Jersey university investigation concluded that an assistant professor
knowingly committed plagiarism in eleven unfunded NSF proposals. It took
no further action because the assistant professor was no longer a university
employee.

The assistant professor admitted to us that he copied material into his
proposals, but asserted that the university had made procedural mistakes.
We concluded that the university followed reasonable procedures during
its investigation, and that four of the eleven proposals contained significant
plagiarism. He plagiarized the majority of the copied text in one proposal from
other proposals previously submitted to the same NSF program by other PIs,
who had posted them online.

We recommended that NSF require certifications and assurances from him for
three years and bar him from serving NSF as a reviewer for three years.

PI Plagiarized in Papers and Proposals

A PI at a university in Florida plagiarized in two funded NSF proposals, one
unfunded NSF proposal, and a manuscript submitted for publication. During
our inquiry, the PI was hired by a North Carolina university. The Florida
university investigated and concluded that the PI’s copying in the manuscript
was plagiarism and made a finding of research misconduct. However, its
investigation addressed only two of the PI’s four NSF proposals.

Following our own investigation, we concluded the PI’s copying in two of the
NSF proposals was plagiarism, and his plagiarism in a third, declined NSF
proposal and the manuscript was evidence of a pattern of plagiarism. NSF
concurred, required the PI to provide certifications and assurances for two
years, and barred the PI from serving NSF as a reviewer, advisor, or consultant
for two years.

New Assistant Professor Plagiarizes in NSF Proposal

A faculty member at a Maryland university plagiarized large amounts of text
into an NSF proposal. He claimed that he did not realize that citations alone
were not sufficient. While his education occurred outside the U.S., he has held
various research and teaching positions in the U.S. over a fourteen-year period.
We agreed with the university’s finding that he knowingly plagiarized the text
and recommended that NSF require certifications and assurances for two
years.

Small Business Official Plagiarizes in Numerous NSF Proposals

A PI plagiarized in numerous SBIR proposals and final project reports between
June 2004 and June 2010. The PI said she “did not intentionally use any other
person’s words without giving appropriate credit,” and argued the sources were
either properly cited, contributions from collaborators, or common or technical
                                                                                              23
Investigations
                 language. She added that “all the innovations, ideas, research, processes and
                 results are mine and of people I worked with for the proposals submitted to
                 NSF.”

                 Our investigation focused on three awarded proposals and on one declined
                 proposal that contained significant plagiarism. We found that the copied
                 material either was not cited at all or was cited inadequately. We concluded
                 that the PI knowingly committed plagiarism, and recommended that NSF
                 require certifications from her for two years.

                 Plagiarism Uncovered in Two NSF SBIR Proposals

                 Our office concluded that a PI from a company in Virginia plagiarized a modest
                 amount of text in an NSF SBIR proposal, which was later funded. The PI
                 subsequently submitted a second proposal that also contained a modest
                 amount of plagiarized text. The PI acknowledged he did not properly cite
                 references and took responsibility for his actions. We concluded that the PI
                 knowingly committed plagiarism, and we recommended that NSF: make a
                 finding of research misconduct; send a letter of reprimand; require certifications
                 and assurances for two years and bar the PI from serving NSF as a reviewer,
                 advisor or consultant for two years.

                 Assistant Professor at Texas University Accepts Responsibility for
                 Plagiarism

                 An assistant professor at a Texas university plagiarized in two NSF proposals.
                 He admitted copying the text and said that he was “professionally embarrassed
                 and grateful that NSF identified the mistakes so that [he] could immediately
                 withdraw” a similar proposal submitted to another agency.

                 The university’s investigation concluded that the assistant professor recklessly
                 committed plagiarism, but took no action against him because he was no
                 longer an employee of the university. We determined that the university did
                 not address whether the subject’s actions were a significant departure from
                 accepted practices and the university never interviewed the subject regarding
                 the allegation.

                 Our investigation concluded that the assistant professor knowingly plagiarized
                 material into two NSF proposals as well as a non-NSF proposal. We
                 recommended that NSF require that he provide certifications and assurances
                 for one year.

                 Actions by NSF Management on Previously Reported Research
                 Misconduct Investigations

                 NSF has taken administrative action to address our recommendations on eight
                 research misconduct cases reported in previous semiannual reports. In each
                 case, NSF made a finding of research misconduct, issued a letter of reprimand,
                 and required the subject to complete a Responsible Conduct of Research
                 training program. NSF also took additional significant actions in response to
                 our recommendations as summarized below.
24
                                                                 OIG Semiannual Report   September 2012
•	    In the case of a pattern of plagiarism by a California PI,12 NSF debarred the
      PI for one year, required the PI to provide certifications for three years after
      the debarment, and barred the PI from serving NSF as a reviewer, advisor,
      or consultant for three years.

•	    In the case of a New Jersey associate professor who knowingly committed
      plagiarism by copying from a previously awarded NSF proposal,13 NSF
      debarred the PI for one year, required that he provide certifications and
      assurances for three years following the debarment period, and barred him
      from participating as an NSF reviewer for four years.

•	    In the case of an Illinois faculty member who plagiarized text into six NSF
      proposals submitted over a three-year period,14 NSF required the PI to
      provide certifications and assurances for four years, and barred service as
      an NSF reviewer for four years. The faculty member appealed all of these
      actions to the NSF Director, who denied the appeal.

•	    In the case of an Indiana assistant professor who plagiarized in three
      proposals to NSF, one of which was awarded,15 NSF required the PI provide
      certifications and assurances for three years, and terminated the professor’s
      NSF award, resulting in $13,832 available for NSF to put to better use.

•	    In the case of an assistant professor at a Mississippi university who
      knowingly plagiarized text and a figure into two NSF proposals,16 NSF
      required certifications and assurances for three years, and barred him from
      serving NSF as a reviewer, advisor, or consultant for three years.

•	    In the case of a co-PI at a Puerto Rico university who plagiarized from
      multiple documents,17 NSF required certifications and assurances for two
      years, and barred the co-PI from serving NSF as a reviewer, advisor, or
      consultant for two years.

•	    In the case of an assistant professor PI at an Illinois institution who
      plagiarized material within a collaborative NSF proposal,18 NSF required that
      he provide certifications and assurances for two years, and barred him from
      participating as an NSF reviewer, advisor, or consultant for two years. The
      PI appealed the finding to NSF’s Director, and his decision is pending.

•	    In the case of a PI at an Ohio university who plagiarized text and figures
      into multiple NSF proposals,19 NSF required the PI to provide certifications
      and assurances for two years, and barred the PI from serving NSF as a
      reviewer, advisor, or consultant for two years.




12    March 2012 Semiannual Report, pp.17-18.
13    March 2012 Semiannual Report, pp.7-18.
14    March 2012 Semiannual Report, p.18.
15    September 2011 Semiannual Report, p.12 and March 2012 Semiannual Report, p.21.
16    March 2012 Semiannual Report, pp.18-19.
17    March 2012 Semiannual Report, p.19.
18    March 2012 Semiannual Report, pp.20-21.
19    March 2012 Semiannual Report, p.20.
                                                                                                    25
Investigations
                 •	   In the case of a faculty member at a New York university who plagiarized
                      from an awarded proposal he received from a PI at another university,20
                      NSF required certifications and assurances for two years, and barred him
                      from serving NSF as a reviewer, advisor, or consultant for two years.



                 Administrative Investigations

                 PI and Co-PI Falsify Education and Experience Credentials

                 While assessing an allegation of extensive plagiarism in multiple proposals
                 submitted to NSF by a Missouri company, we discovered that neither the
                 PI nor the co-PI had any of the claimed academic credentials — including
                 bachelor’s, master’s, and doctoral degrees — and the PI’s claim of relevant
                 employment experience overlapped periods of time when he was incarcerated.
                 We referred the case to a U.S. Attorney’s Office, which declined the case for
                 criminal prosecution. Based on the false statements regarding academic and
                 employment experience and the extensive plagiarism, we recommended that
                 NSF debar the PI, the co-PI, and the organization for five years. NSF’s decision
                 is pending.

                 NSF Panelist Breaches Confidentiality by Revealing Another
                 Panelist’s Identity

                 Our investigation determined that an NSF merit review panelist from Michigan
                 revealed a fellow panelist’s identity to the PI of a declined proposal in violation
                 of his written agreement “not to divulge or use any confidential information,”
                 including the identity of the other panelists. In an email to the PI, the panelist
                 offered to provide the PI with information about the “inner workings” of the
                 panel. The panelist disclosed the identity of the panelist who had given the
                 proposal the lowest rating. Based on our recommendation, NSF prohibited
                 the panelist who violated the confidentiality agreement from serving NSF as a
                 reviewer, advisor, or consultant for 11 months.

                 NSF Reviewer Posts Confidential Proposals on the Web

                 An NSF reviewer from Massachusetts had twenty-two NSF proposals posted
                 on his personal webpage within his company’s public website. The Google
                 search engine discovered and cached copies of the proposals, making these
                 confidential proposals accessible to the general public via internet search. NSF
                 staff subsequently worked with Google to remove the confidential material from
                 the cache and search index. The reviewer claimed that he believed that the
                 webpage was private and not discoverable; however, at least one of the PIs
                 became aware that his/her proposal was accessible online when contacted by
                 an unrelated third party to discuss the confidential research. We recommended
                 that NSF bar the reviewer from participating as a peer reviewer, advisor, or
                 consultant for NSF for two years, and NSF’s decision is pending.



                 20  March 2012 Semiannual Report, p.22.
26
                                                           OIG Semiannual Report    September 2012
Human Subjects Research Concerns Due to Protocol
Noncompliance

Based on our recommendation, NSF suspended the award for a PI at a
Texas university due to serious and continuing noncompliance with an
Institutional Review Board (IRB) protocol, including an unapproved expansion
of participants. Following suspension of the award, the PI implemented
several corrective actions and the IRB lifted its suspension of the PI’s research
activities. NSF also rescinded the suspension of the PI’s NSF award.

NSF Rotator Fails to Address the Appearance of a Conflict of
Interests

We raised concerns about a new NSF rotator’s participation in handling a
proposal submitted by a PI with whom she was engaged in ongoing proposal
preparations. This participation included the rotator contacting program
officers at NSF and NIH to determine whether the proposed work fit within their
programs, drafting an abstract for the collaborative work, and expressing a
commitment to carry on the collaboration with the PI after a third member of the
team withdrew.

Federal employees have an obligation to “avoid any actions creating the
appearance that they are violating” applicable ethical standards, and the
existence of such an appearance is evaluated from “the perspective of a
reasonable person with knowledge of the relevant facts.”21 In our view, even
though the collaboration had not yet proceeded to substantive work before the
program officer handled the PI’s proposal, a reasonable person with knowledge
of the relevant facts would perceive the appearance of an ethical violation.

Although the rotator returned to her home institution before NSF received our
report, we made several recommendations to NSF to help prevent such issues
in the future, including that NSF require new staff to complete a full ethics
briefing prior to conducting proposal review activities. NSF responded that
it will consider whether to implement merit review basics training within three
months of arrival.

Employee Who Abused NSF’s Electronic Systems Resigns

Our investigation found that an employee misused NSF’s time and attendance
and email systems, and committed other acts of misconduct.22 NSF conducted
its own review and the employee resigned.

NSF Employee Referred for Administrative Action for Falsifying
Application for Federal Health Benefits

An NSF employee falsified information on his federal employee health benefits
application to obtain benefits for his ineligible girlfriend and her child. There
was no financial loss to the government because the employee paid the same
rate to obtain benefits for his son; however, the employee’s fraud resulted in
21  5 C.F.R. § 2635.101(b)(14).
22  September 2011 Semiannual Report, p.16.
                                                                                               27
Investigations
                 a loss totaling over $11,000 from the insurance company. We referred this
                 matter to the U.S. Attorney’s Office, which declined prosecution in lieu of
                 administrative action. We referred the matter to the employee’s supervisor for
                 action, which is pending.



                 Management Implication Reports

                 Recommended Changes to the SBIR / STTR Program

                 NSF’s SBIR and STTR programs provide funding for small businesses to
                 conduct research and development. Our investigative work has identified
                 several areas where the SBIR/STTR programs are vulnerable to fraud, waste,
                 and abuse, and based on this work we provided a Management Implication
                 Report to NSF. To reduce the risk of fraud, we recommend that NSF:

                 •	   Provide clarification of the requirement that the “primary employment” of the
                      PI must be with the company at the time of the award, by defining a fulltime
                      workweek.

                 •	   Require awardees to notify NSF when any significant changes to the budget
                      or research are planned.

                 •	   Require companies to affirm that they will comply with the rules of the SBIR
                      and STTR programs when submitting proposals for supplemental funding.

                 •	   Require Phase II awardees to certify to the accuracy of the information
                      provided in their financial management systems questionnaire and
                      supporting financial documentation prior to receiving the Phase II award,
                      and to include actual expenditures in their project reports.

                 •	   Require Phase I awardees to provide a summary of actual expenses with
                      their final report, and require companies to report any unspent funds over
                      a set threshold prior to approval of the final report and release of the final
                      payment, reduced by the unspent amount.

                 NSF has agreed to all but the last of these recommendations, and
                 implementation is pending. Rather than require a summary of expenses for
                 Phase I awards, NSF will require the company to state that all of the funds were
                 fully expended as designated in the grant budget, or provide an explanation if
                 not. The program will review the information that will be provided by grantees
                 going forward on actual expenditures under Phase I and Phase II awards,
                 and if it finds significant disparities it will reevaluate implementing the last
                 recommendation. These are reasonable responses to our recommendations.




28
                                                           OIG Semiannual Report     September 2012
NSF Addresses Employee Misuse of Transit Subsidy Program

We previously reported23 that our review of NSF’s Transit Subsidy Benefit
Program disclosed significant misuse by a sample of participants using it to
pay for parking or apparent personal trips. We also found that some NSF
employees in our sample misused the Pre-Tax Parking Benefit program. We
referred the employees who appeared to be misusing the Transit Subsidy
Program and/or Pre-Tax Parking Benefit program to NSF and recommended
appropriate action (including recovery of the misused funds), and encouraged
NSF to evaluate other employee participants’ usage as well.

While the subsidy program has been modified in a manner that limits such
misuse, we recommended that NSF require annual certifications of participants
in both programs that they will use the programs properly and not for personal
gain, and NSF agreed.

NSF determined that it was not practical or cost-efficient to evaluate all usage
for all employee participants to take action against misuse involving personal
trips, and given the number involved and the complexity of the review process,
we agree. However, NSF will seek recovery from employees who were found in
our review to have repeatedly used transit subsidy funds for parking. If all forty
employees repay the transit subsidy funds they misused for parking, NSF will
recover approximately $10,000.

NSF addresses Contractor Employee Background Investigation
Process

We previously reported24 that our review of NSF’s contractor employee
background process determined numerous vulnerabilities in physical security
policies and procedures.

In response to our recommendations, NSF will take the following steps:

•	   Update its on-boarding guidance and procedures to ensure that the policies
     and procedures were current, employee and contractor responsibilities were
     clearly defined, and background investigations are completed in a timely
     manner.

•	   Enhance its training for Contracting Officer Technical Representatives
     (COTRs) regarding the on-boarding and exit clearance of contractors,
     and implement a Contractor Security Clause in all new solicitations and
     contracts to enhance contractors’ education and accountability regarding
     the security responsibilities and requirements of their staff.

•	   Review the processes around designation of positions requiring security
     clearances, initiation of the clearance, and timely renewal where warranted
     to be completed by November 2012.



23  March 2012 Semiannual Report, pp.28-29.	
24  September 2011 Semiannual Report, p.16.
                                                                                                29
Investigations




30
                                                       OIG Management Activities
Congressional Testimony
In May 2012, the Inspector General testified before the House Science
Research and Science Education Subcommittee at a hearing titled, “Ensuring
the Best Stewardship of American Taxpayer Dollars at the National Science
Foundation.” The Inspector General’s testimony focused on the key issues
facing effective stewardship of taxpayer dollars at NSF and the areas
the OIG has identified as being at most risk for fraud, waste, abuse and
mismanagement.

Since NSF’s primary mission activity is accomplished through funding external
awardees, the success of the agency’s overall mission and the achievement of
its goals are largely dependent on effective grant and contract administration.
OIG audits of NSF’s operations have found that NSF needs to continue to
improve its grant management activities, including the oversight of awardees’
financial accountability, programmatic performance, and compliance with
applicable federal and NSF requirements.

With regard to contract administration, adequate monitoring of cost
reimbursement contracts remains a significant challenge for NSF, and we have
focused on the agency’s ability to manage these contracts. Monitoring of cost
reimbursement contracts was identified as a significant deficiency in NSF’s
FY 2009 and FY 2010 financial statement audits. While the finding fell to a
management letter comment in the FY 2011 audit, challenges remain.

Another area of ongoing concern is NSF’s management and use of
contingencies in budgets for its large Major Research Equipment and Facilities
Construction projects. Audits of the proposed budgets of three of NSF’s large
facility construction projects — the Ocean Observatories Initiative (OOI), the
Advanced Technology Solar Telescope (ATST), and the National Ecological
Observatory Network (NEON) disclosed significant problems with the proposed
use and management of contingency funds because the applicable OMB cost
principles do not allow “[c]ontributions to a contingency reserve or any similar
provision made for events the occurrence of which cannot be foretold with
certainty as to time, intensity, or with an assurance of their happening.”

For example, the proposed $386 million budget in OOI contained a total of $88
million in unallowable contingency funds because there was a lack of evidence
to support that the amounts budgeted were for events that were consistent
with the cost principle. Follow-up work failed to surface evidence to support
the contingency amounts, confirming the original finding that the $88 million
proposed is unallowable. Similar reviews of the budget proposals for the
ATST and NEON projects identified an additional $136 million in unallowable
contingency costs.

Identifying funds needed for uncertainties that arise during the conduct of
complex projects is an important part of project management; however,
there are significant risks associated with NSF’s approach of awarding all


                                                                                   31
Management Activities
                        contingency funds to awardees, without regard to whether they are consistent
                        with the cost principle and supported by verifiable data. Simply stated, placing
                        unallowable contingency funds into awardees’ hands is not prudent financial
                        management.

                        The Inspector General’s testimony also addressed the OIG’s work examining
                        how NSF spends money internally for its own operations and activities. In this
                        vein, the OIG has examined NSF’s expenditures for wireless plans and devices,
                        refreshments for panelists, and the Independent Research/Development travel
                        program. The agency has been receptive to our recommendations and, among
                        other things, has taken actions to enhance the cost-effectiveness and efficiency
                        of its purchasing practices.

                        Finally, the Inspector General noted some of the OIG’s investigative results
                        including investigative recoveries for fines, restitutions, and other actions
                        totaling $21.6 million for the past three years. The OIG has also directed
                        significant investigative attention on fraud in the Small Business Innovation
                        Research program, and since 2009 our SBIR cases have resulted in over $1.2
                        million in restitution, funds returned to NSF, and funds put to better use.

                        The OIG’s work reflects a sustained commitment to helping NSF be an effective
                        steward of taxpayer dollars, and benefits from the support of NSF management
                        across the Foundation.



                        Outreach

                        OIG staff have engaged in numerous proactive activities to address
                        programmatic and financial responsibilities of NSF awardees, and to educate
                        awardees about fraud recognition and prevention, research misconduct, and
                        the responsible conduct of research. Our Outreach program 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 Inspector General continues to lead the Council of Inspectors General
                        on Integrity and Efficiency (CIGIE) Grant Reform Initiatives Working Group
                        to ensure accountability for financial assistance funds and to maintain robust
                        tools by which OIGs oversee the use of these funds. In addition, the Inspector
                        General continues to lead the SBIR Working Group. Since its inception in
                        2009, this group has worked toward establishing strong, uniform certifications,
                        modeled on those at NSF that can be used by all SBIR/STTR funding agencies
                        as an effective weapon against fraud in these programs, and as a means to
                        improve the government’s ability to prosecute such fraud when it does occur.
                        The Working Group’s effort culminated in revisions to the Small Business
                        Administration’s SBIR/STTR policy directives, which include requirements for
                        such certifications. SBA posted the revised directives in the Federal Register
                        on August 6, 2012, and the comment period ended on October 5, 2012.



32
                                                          OIG Semiannual Report   September 2012
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.
Through the Working Group, we continue our efforts to increase understanding
and effective use of S&D throughout the community in order to better protect
government funds against fraud, waste, and abuse.

The NSF Inspector General participated in a panel discussion at the national
conference of the Association of College and University Auditors and
emphasized the essential role auditors — both inside the government and
at universities play — in the identification and prevention of waste and fraud
involving federal grant funds.

Recognized throughout the research community for our efforts to identify
and prevent waste and fraud, OIG staff participated in meetings, made
presentations, and provided instruction in numerous forums. In the past six
months, we gave presentations before, among others, the Society of Research
Administrators International; the Association of Government Accountants;
the CIGIE/GAO Financial Statement Audit Conference; the Association of
Certified Fraud Examiners, and the Misconduct in Research Working Group.
We also participated in meetings of the National Single Audit Coordinators,
Federal Audit Executive Council, and the Financial Statement Audit Network.
We provided research misconduct briefings at four universities and provided
instructors to FLETC for grant fraud-related courses and programs.




                                                                                             33
Management Activities




34
                                                                  FY 2013 Top
                                                             Management Challenges
CHALLENGE: Establishing Accountability over Large Cooperative
Agreements

Overview: NSF currently has 685 Cooperative Agreements (CAs), totaling
nearly $11 billion; thirty-eight of these CAs are for over $50 million each and
comprise $5.5 billion of the total number of CAs. A federal agency can use a
cooperative agreement when entering into a relationship with a recipient when
the primary purpose of the relationship is to transfer a thing of value to carry
out a public purpose of support or stimulation, and substantial involvement
between the federal agency and the recipient when carrying out the agreement
is expected.25

A Cooperative Agreement is not subject to the same rigor and reporting
mechanisms as a contract, and does not have the same level of transparency
over transactions as a contract. Among other things, NSF uses CAs to
construct and fund the operations and maintenance of large facility projects.
Since NSF has chosen to use CAs for the construction, operation, and
maintenance of high-risk, high-dollar large facility projects, it is imperative that it
exercise strong cost surveillance controls over the lifecycle of such projects.

Over the last two years, audits of the proposed construction budgets for three
of these non-competitive proposals valued at $1.1 billion found approximately
$305 million (almost 28 percent), in unallowable or unsupported costs. All three
of the awardees’ proposals had significant unallowable contingency costs, and
two proposals were initially found unacceptable for audit. After much work, one
of these proposals was audited, and the auditors issued an adverse opinion,
finding that the proposal did not form an acceptable basis for the negotiation
of a fair and reasonable price. The third proposal, which was submitted by an
awardee found to have an inadequate accounting system, remains unaudited.

Inadequate proposals which contain large amounts of unallowable and
unsupported costs undermine NSF’s ability to serve as a proper steward
of federal funds. Consequently, there are serious questions about NSF’s
accountability over the $11 billion in cooperative agreements in its portfolio.

We have also identified serious weaknesses in NSF’s post-award monitoring
processes for high-risk projects that compound our concern that unallowable
costs could be charged to awards, thereby placing federal funds awarded under
CAs at further risk. NSF does not routinely obtain incurred cost submissions
or audits of costs claimed on its largest CAs to determine the allowability of
direct and indirect costs claimed on federal awards. While not required by law
or regulation, such submissions and audits are essential tools for ensuring
accountability in high-risk, high-dollar projects. In their absence, unallowable
costs charged to these awards may go undetected because NSF lacks
sufficient visibility over incurred costs. The failure to regularly obtain incurred
cost submissions also has a negative impact on our office’s ability to conduct
incurred cost audits.



25  31 United States Code §3605.
                                                                                          35
Management Challenges
                        Challenge for the Agency: It is an ongoing challenge for NSF to establish
                        accountability for the billions of federal funds in its large cooperative
                        agreements. Proper accountability requires cost surveillance measures that
                        include strong pre- and post- award monitoring, especially for high-risk, high
                        dollar facility projects. NSF does not require pre-award audits of awardees’
                        proposals for such projects to ensure that they have reasonable budgets and
                        adequate accounting systems in place before the award is made. Further,
                        NSF does not require the use of OMB’s Form 424C (or an equivalent form), for
                        submitting proposals to provide greater visibility and segregate allowable and
                        unallowable proposed costs.

                        Similarly, NSF does not have a strong post-award monitoring process. NSF
                        does not routinely obtain awardees’ incurred cost submissions or initiate audits
                        of costs claimed on its largest CAs, and therefore lacks detailed information
                        necessary to properly oversee these expenses. As a result, there is an
                        increased risk of unallowable costs being charged to these awards and going
                        undetected.

                        Another ongoing challenge for NSF is the management and oversight of
                        contingency costs in proposed budgets for its large construction projects. In
                        total, audits have identified more than $224.6 million in unallowable contingency
                        costs out of total proposed costs of over $1.1 billion. NSF’s cooperative
                        agreement award and monitoring process was also cited as a significant
                        deficiency in the FY 2011 financial statement audit.

                        Without improving end-to-end processes over CA monitoring from the proposal
                        stage to award close-out, NSF cannot affirm that it has received reasonable
                        value for taxpayer dollar and that those dollars are not misused. We
                        recommended that NSF strengthen cost surveillance policies and procedures
                        to ensure adequate stewardship over federal funds.

                        OIG’s Assessment of the Agency’s Progress: During the past year,
                        the agency has participated in ongoing discussions with OIG regarding the
                        resolution of audit findings and recommendations related to NSF’s management
                        of its large cooperative agreements. NSF has agreed to require the use of
                        Form 424C or an equivalent and has stated that it plans to re-examine its
                        procedures related to requiring support for contingency estimates in budget
                        proposals.

                        CHALLENGE: Improving Grant Administration

                        Overview: NSF receives approximately 51,600 proposals each year for
                        research, education and training projects. Each year the Foundation funds
                        approximately 11,000 new awards, and as of June 2012, it had a portfolio of
                        over 43,000 active awards totaling $27 billion. In light of the fact that most
                        of these awards are made as grants, it is vital that NSF’s grant management
                        processes ensure the most stringent level of accountability.

                        Challenge for the Agency: Oversight and management of awards that is
                        sufficient to safeguard federal funds invested in scientific research has been
                        an ongoing challenge for NSF. The FY 2011 financial statement audit noted

36
                                                           OIG Semiannual Report     September 2012
several areas of concern about SF’s processes for awarding and administering
grants, including a lack of follow-up to determine whether awardees acted to
correct problems identified in desk reviews and delays in resolving open audit
recommendations. Insufficient sub-recipient monitoring, which has led to
inadequately supported and unallowable costs being charged to awards, has
also been a challenge for NSF.

Additionally, in recent years, budgetary constraints have placed increased
pressure on NSF’s ability to maintain strong oversight, as the Foundation
has had fewer staff than staffing assessments indicated were needed. For
example, NSF planned to conduct 30 Award Monitoring and Business
Assistance Program (AMBAP) visits in FY 2011, but completed only 26 visits.
This situation underscores NSF’s challenge to properly make and oversee
awards.

OIG’s Assessment of the Agency’s Progress: NSF’s Award Monitoring
and Business Assistance Program was designed in part to provide advanced
monitoring to ensure that awardee institutions have adequate policies and
systems to manage their NSF awards. NSF reported that it completed its
annual risk assessment to prioritize AMBAP site visits in FY 2012 and that it
completed the 30 AMBAPs that it had planned to conduct.

As part of its efforts to innovate and improve its oversight activities, NSF
conducted a virtual site visit pilot program as an enhancement to the AMBAP
program. NSF stated that benefits of the program included reduction in travel
costs, better use of resources, and more time for documentation review. NSF
indicated that it plans to calculate the savings associated with the pilots it
conducted; formally solicit awardee feedback; and, develop training on using
technology associated with virtual site visits. NSF has also reported that it
has started to implement its new financial system and has staffed the project
management office that will oversee the system’s implementation.

In addition, in response to our audit of NSF’s staffing needs for management
and oversight of grants, which found among other things, that not having
sufficient staffing resulted in NSF reducing the number of planned AMBAP site
visits. NSF plans to include the identification and evaluation of opportunities to
streamline its operations into its annual workforce planning process to ensure
sound financial management and oversight of awardees.

CHALLENGE: Strengthening Contract Administration

Overview: For two consecutive years (2009-2010), the monitoring of cost
reimbursement contracts was identified as a significant deficiency in NSF’s
annual financial statement audit. During this past year, the finding was reduced
to a management letter comment as a result of actions the agency has taken to
correct the situation. Cost reimbursement (CR) contracts are inherently risky
because the government assumes much of the risk that poor performance
on the part of the contractor will result in cost overruns. In FY 2012, NSF
obligated $402 million for all contracts. Of that amount, $282 million were for
CR contracts, including $123 million in advance payments issued before work
was done.

                                                                                                37
Management Challenges
                        But concerns with contract administration remain, especially with regard to
                        the U.S. Antarctic Program (USAP). As NSF transitions to a new contractor,
                        significant issues with its prior contract have yet to be resolved. In particular,
                        NSF has not had an adequate and compliant CAS Disclosure Statement (DS-1)
                        for its USAP contract with Raytheon since 2005. In May, NSF decided to halt
                        an audit by DCAA to determine the adequacy of Raytheon’s DS-1, a decision
                        that is likely to further delay closing out this contract. An approved DS-1 is
                        required by Federal Acquisition Regulations and is needed to complete close-
                        out audits and final settlement of costs on the contract. Without an approved
                        DS-1, NSF lacks an agreement with Raytheon on the accounting practices to
                        be used in closing out the contract, such as distinguishing between direct and
                        indirect costs. Such issues are typically settled before a contract begins or at
                        an early stage.

                        The FY 2011 management letter presented seven recommendations for
                        strengthening NSF’s contract monitoring practices, reemphasizing that more
                        attention must be paid to basic monitoring procedures such as the review of
                        incurred cost audits, cost disclosure statements, and incurred cost submissions
                        to ensure the contractor’s compliance with contract terms and federal
                        regulations. Contracting weaknesses, though mitigated during the past year,
                        continued to come to light as the agency awarded its largest contract, which
                        provides logistical support to the USAP over 13 years. Following several delays
                        in the procurement process, the award was finally made in December 2011.

                        Challenge for the Agency: NSF’s challenge is to correct the deficiencies
                        in contract administration that have been identified by NSF’s financial
                        statement audit, to increase the use of firm-fixed price type contracts, and to
                        continue to improve the effectiveness of its contracting policies, practices and
                        professionals. In their most recent management letter, the financial statement
                        auditors recommended that NSF fully implement its cost surveillance oversight
                        procedures and continue improving its controls over cost reimbursement
                        contracts. NSF management must continue to implement its remaining
                        planned corrective actions to ensure that it maintains adequate control over CR
                        contracts.

                        Cost incurred audits necessary to determine compliance with financial terms
                        and conditions of the contract are critical to meeting this challenge. For large
                        contracts subject to Cost Accounting Standards (CAS), a cost incurred audit
                        can only be effectively performed with an approved CAS disclosure statement
                        and incurred cost submissions. The agency is still in the process of obtaining
                        audits of millions of dollars in costs incurred from 2008 – 2012 by the former
                        USAP contractor and several other of its largest contracts. Incurred cost audits
                        of all open years and of the final close-out voucher are needed. NSF also
                        needs to decide which DS-1 the auditors should use as criteria in performing
                        these audits. An important objective of the final audits should be to ensure
                        the recovery of $10.4 million in unallowable costs that previous audits have
                        determined the contractor owes NSF.

                        As a matter of policy, NSF should obtain disclosure statements, incurred cost
                        submissions and incurred cost audits of its largest contracts on a regular
                        basis and promptly resolve any questioned costs that arise. Regarding its

38
                                                           OIG Semiannual Report    September 2012
largest contracts, NSF must also review and verify the disclosure statement to
determine if it is adequate and compliant with CAS, prior to or shortly after the
award is made.

OIG’s Assessment of the Agency’s Progress: In FY 2012, NSF made
progress in addressing some of the problems in its management of contracts.
NSF has taken steps to strengthen its guidance, and is receiving some audits
of costs incurred. However, the most recent management letter indicates that
work remains to be done to strengthen NSF‘s contract monitoring and cost
surveillance procedures, particularly as it relates to CR contracts. Although
the Contracting Manual was updated to require cost incurred submissions
every 6 months from its largest contractors, in FY 2011 two of three contractors
transmitted the submissions late and the third did not submit one at all. The
agency must continue its focus on obtaining adequate disclosure statements
and obtaining and reviewing or auditing incurred cost submissions on its largest
contracts. The agency also should continue to identify cost reimbursement and
advance payment contracts for audits of costs incurred based on materiality
and risk, and to fund those audits to verify the validity of costs.

CHALLENGE: Ensuring Proper Stewardship of ARRA Funds

Overview: The American Recovery and Reinvestment Act (ARRA) provided
$3 billion for the National Science Foundation (NSF) as an investment in
research that would produce economic benefits and growth. NSF staff worked
diligently to obligate and administer the reporting requirements associated
with over 4,000 ARRA-funded awards. NSF awardees have registered a
99.5 percent, or higher, compliance rate each quarter with ARRA’s enhanced
reporting requirements.

On September 15, 2011, OMB issued a memorandum to the heads of federal
agencies urging them to spend remaining ARRA funds, and to recapture
discretionary grant funds not spent by the end of FY 2013 “to the fullest extent
of the law.” The memo further explained that federal agencies could request
waivers from the end of FY2013 deadline for discretionary grants in extenuating
circumstances. According to NSF, as of August 2012, just $2.1 billion, or 70
percent, of NSF’s ARRA funds have been expended; and 474 awards were
either less than 50 percent complete or had not started at all. NSF programs
have requested waivers for 449 ARRA awards. As of October 1, 2012 OMB
has not made any waiver decisions and has extended the deadline for filing
final waiver requests through November 2012.

Challenge for the Agency: The challenge for the agency remains to: 1)
assure that ARRA funds are not subject to fraud, waste and abuse; and 2)
continue to press those awardees that are able to accelerate spending within
the next year to do so. As ARRA awardees spend down their funds, NSF
program managers and administrative staff must be attentive to indications
of fraud, waste and abuse, and intervene when appropriate, especially in
situations when the deadline to expend funds is accelerated. ARRA funds were
intended to provide an immediate stimulus to the economy, and a significant
number of NSF’s ARRA awards will not expire until after 2013. The agency
should take all actions necessary to ensure that those funds are spent as
prudently and quickly as possible.
                                                                                               39
Management Challenges
                        OIG’s Assessment of the Agency’s Progress: NSF indicates that current
                        ARRA expenditures do not yet reflect the impact of its effort to accelerate
                        spending, and that the rate of completed ARRA awards will increase
                        significantly in the 4th quarter of FY 2012, with 1,228 awards set to expire. The
                        agency also continues to actively monitor recipient reporting and the spending
                        of grantees. It has enforced its burn rate grant condition requiring recipients to
                        expend ARRA funds within one year, and implemented report review logic to
                        identify under- or over-reporting of jobs created by ARRA.

                        The agency has also worked cooperatively with OIG to identify potential
                        occurrences of fraud, waste and abuse associated with ARRA funds. Due to
                        their high visibility, NSF assigns a higher risk adjusted rating to ARRA awards
                        than others and provides them additional oversight. Currently, OIG has 13
                        active investigations related to Recovery Act funds underway.

                        CHALLENGE: Management of the U.S. Antarctic Program

                        Overview: Antarctica is the coldest, driest, windiest, most remote continent
                        on earth. The weather changes frequently and abruptly; temperature drops
                        of as much as 65 degrees F in 12 minutes have been recorded. Since 1956,
                        Americans have been studying the Antarctic and conducting research to better
                        understand Antarctica and its effects on global processes such as climate.

                        NSF funds and manages the U.S. Antarctic Program (USAP) through its
                        Office of Polar Programs. The program has three year-round research
                        stations—McMurdo, Amundsen-Scott South Pole, and Palmer. The population
                        at McMurdo, the largest station, ranges from approximately 1,100 contractors,
                        staff, and researchers in the summer months from early October through
                        February, to about 265 during the winter. The population at Amundsen, the
                        second largest station, is around 250 in summer and about 50 in the winter.
                        Palmer is the smallest permanent station housing between 15 to 45 people.
                        There are also more than 50 temporary field sites during the summer months.
                        In addition, the program operates two research vessels.

                        The extreme Antarctic environment and the short period of time during which
                        access to the continent is possible strains the effort to provide logistical support
                        for the USAP. Logistical support activities include communications, health and
                        safety programs, and vehicle and equipment maintenance.

                        NSF relies on heavy icebreakers operated by the Coast Guard to resupply its
                        Antarctic research stations. Currently, none of those icebreakers is operational
                        and NSF has contracted with a Russian company for an icebreaker for the 2012
                        and 2013 seasons.

                        In response to Administration requests, two independent reviews have recently
                        been conducted on the USAP. The first review, headed by the National
                        Research Council, focused on future scientific research and the second
                        conducted by a Blue Ribbon Panel, focused on logistical and infrastructure
                        needs.




40
                                                           OIG Semiannual Report     September 2012
Challenge for the Agency: Establishing and maintaining a world-class
scientific research program in Antarctica’s remote and harsh environment is
a formidable logistical challenge. In terms of person-days in Antarctica, the
logistics effort represents nine times the number devoted to research activity.
The Blue Ribbon Panel report issued in July 2012 stated that the USAP
logistics system is badly in need of repair and that failure to upgrade the system
will increase the cost of logistics until these costs squeeze out funding for
science.

The report identified eight major logistical issues: capital budgeting,
alternatives to McMurdo station, icebreakers, transportation on the continent, a
hard surface ice runway at the South Pole, energy, communications, and safety
and health. In addition, the panel found a number of single point failure risks-
-circumstances in which the failure of one element of a system would render
the entire system incapable of performing its function. Examples of these risks
include icebreaking capacity, broadband communications, and fire suppression
systems requiring electric power.

Some of these issues are longstanding concerns. For example, an August
2005 report by an OPP advisory committee stated that the resupply system
was inherently risky due to a single point of failure condition created by
the increasing deterioration of the polar icebreakers. The 2005 report was
conducted at the request of the OPP Director after OPP initiated an internal
preliminary study in 2004 of several resupply alternatives related primarily to
the McMurdo and South Pole stations. The report recommended that NSF
further investigate the means and costs associated with the report’s findings
and continue to evaluate their risks and impacts to science. The 2012 Blue
Ribbon Report did provide such further investigation but also indicates that NSF
has not acted on the 2005 recommendations.

It is a challenge for NSF to ensure that the icebreakers necessary to resupply
the research stations are available, other logistical support to enable research
is sound, and programs to ensure the health and safety of the researchers and
contractors in Antarctica are adequate. We recognize that these challenges
are substantial, particularly under current budget constraints. However,
as noted by the Blue Ribbon Panel, failure to address these issues could
undermine and ultimately halt certain research efforts. It is imperative that NSF
prioritize logistical support needs; develop contingency plans; and establish a
long range strategy to address these critical needs.

OIG’s Assessment of the Agency’s Progress: We understand that NSF
plans to respond to the Blue Ribbon Panel Report and to develop an associated
action plan later this year. NSF indicated that it had a contingency plan that
would have enabled the USAP to operate at a reduced level for two years if
an icebreaker was not available; however, in July the agency contracted for a
Russian icebreaker that will resupply the 2012 and 2013 seasons.




                                                                                                41
Management Challenges

                        CHALLENGE: Implementing Recommendations to Improve
                        Workforce Management and the Workplace Environment

                        Overview: The National Science Foundation is recognized nationally and
                        internationally for its preeminent role in funding scientific research. To
                        maintain its high caliber work force and to strengthen its ties with the research
                        community and provide critical talent and resources, NSF supplements its
                        permanent, career workforce with a variety of non-permanent staff. All of
                        the non-permanent appointments are federal employees except for those on
                        Intergovernmental Personnel Act (IPA) assignments; IPAs remain employees of
                        their home institution.

                        As of August 1, 2012, there were 198 IPAs at NSF, 2126 of which were in
                        managerial or executive positions. Assistant Directors head each of NSF’s
                        seven science directorates and provide leadership and direction to their
                        respective directorates. As of the same date, five of the seven Assistant
                        Directors and one of the Office Heads were IPAs. Assistant Directors are
                        also responsible for planning and implementing programs, priorities, and
                        policy. Similarly, NSF has four science offices led by Office Heads. Within
                        each science directorate are multiple divisions. Fourteen IPAs were division
                        directors. As a result of its reliance on IPAs, NSF experiences a great deal of
                        turnover in its executive ranks.

                        Challenge for the Agency: Because IPAs’ salaries are not subject to federal
                        pay limitations, NSF can incur additional salary cost in using them, above
                        what it would incur for in hiring federal employee in the same position. Other
                        additional costs associated with IPAs can be fringe benefits, lost consulting
                        fees, and travel and relocation expenses.

                        IPAs generally have not worked in the federal government and therefore,
                        are often not familiar with government rules and administrative processes in
                        the federal workplace. Effectively preparing IPA executives for the federal
                        workplace has been a challenge for NSF.

                        In addition to the challenges to effective personnel management performance
                        and oversight posed by its use of IPAs, NSF has also faced challenges in
                        implementing recommendations for workforce management change. In
                        response to concerns from the Congress, the OIG, and NSF staff, the
                        Foundation assembled working groups of NSF staff to assess the issues and
                        make recommendations. Between September 2009 and August 2012, these
                        groups made 102 recommendations to NSF management. NSF continues to
                        grapple with prioritizing, tracking, and implementing these recommendations. It
                        is a continuing challenge for NSF to move beyond discussion of issues to acting
                        on workforce management issues, some of which are longstanding and have
                        been made by more than one working group.

                        OIG’s Assessment of the Agency’s Progress: NSF has taken several
                        steps to orient IPAs and other rotating executives through its New Executive
                        Transition Program, which includes a pilot for executive coaching and
                        development of knowledge transfer tools. NSF has instituted mandatory

                        26  Remaining IPA executive was in a position of “science advisor”	
42
                                                            OIG Semiannual Report     September 2012
training for all new and continuing executives. Additionally, NSF now requires
IPAs to receive annual performance ratings just as career employees do.
NSF reported that it had resolved 73 of the 102 recommendations for workforce
management change.

CHALLENGE: Encouraging the Ethical Conduct of Research

Overview: Congress passed the America COMPETES Act in 2007 to
increase innovation through research and development, and to improve the
competitiveness of the United States in the world economy. With regard to
NSF, the Act mandates new proposal requirements to advance the professional
and ethical development of young scientists, such as mentoring plans for
all postdoctoral positions, and plans to provide training on the responsible
conduct of research to undergraduates, graduate students, and postdoctoral
researchers. However, information collected from our site visits and
investigations suggests that many institutions are not taking these requirements
seriously, thereby undermining the public’s confidence in the research
enterprise and potentially placing NSF funds at risk. NSF is challenged to
provide more oversight on institutional implementation of these requirements
and to provide meaningful guidance regarding Responsible Conduct of
Research (RCR) training.

Challenge for the agency: NSF’s primary challenge is to ensure that
awardees implement credible RCR programs, thereby creating a top-down
culture of academic integrity that extends to all levels of the university. At
a time when opinion surveys indicate that more Americans are becoming
distrustful of science, it is important that the conduct of scientific research not
be tainted by instances of misrepresentation or cheating. Affirmative steps
are necessary to counter the trends of increasing integrity-related violations.
Recent surveys suggest that 75% of high school students and 50% of college
students admit to cheating, and 30% of researchers admit to engaging in
questionable research practices. Consistent with these survey results, OIG
has seen a dramatic increase in substantive allegations of plagiarism and data
fabrication, especially as it relates to junior faculty members and graduate
students. Over the past 10 years, the number of allegations received by
our office has more than tripled, as has the number of findings of research
misconduct NSF has made based on OIG investigation reports.

Only 10% of the science and engineering workforce hold PhD’s. For this
reason the NSF Act places responsibility on NSF to “strengthen scientific
[and engineering] research potential at all levels in ... various fields.” NSF’s
research and training programs reach individuals who are ultimately employed
by academia, industry, and government, and could have a broad and positive
impact on the US science, engineering and education workforce. While NSF
has been responsive to the recommendations contained in our research
misconduct investigation reports, those actions only address incidents after
the fact. Extrapolating the number of allegations OIG has received across
the 45,000 proposals NSF receives annually, suggests 1300 proposals could
contain plagiarism and 450-900 proposals could contain problematic data.
Since NSF funds research in virtually every non-medical research discipline,
the agency is in a unique position to lead the government response to
addressing these disturbing trends at all levels of education.
                                                                                                 43
Management Challenges
                        OIG’s Assessment of the Agency’s Progress: The agency responded to
                        the America COMPETES Act by instituting a requirement that grantees submit
                        mentoring plans for all NSF-supported “post-docs” and have an RCR training
                        plan for NSF-funded students. The NSF guidance was very limited and offered
                        great flexibility to grantee institutions to develop plans tailored to their needs.
                        OIG has observed a wide disparity among grantee RCR programs ranging
                        from high quality mentoring programs to those that simply refer students to
                        web-based or computer-based training. Early intervention remains critical to
                        any effort to ensure that students understand proper professional practices and
                        the implications of misconduct. Anecdotally, we continue to receive substantive
                        data fabrication/falsification allegations involving students and post-docs; we
                        currently have 20 active investigations regarding such allegations. Therefore
                        we continue to believe that more needs to be done and NSF should expand
                        its influence with institutions regarding this important issue. Accordingly,
                        OIG is developing a plan to systematically review RCR plans after the
                        America COMPETES RCR requirements have been given sufficient time for
                        implementation throughout the research community. We intend to conduct a
                        review of institutional efforts in FY 2013.

                        Research is also an increasingly global enterprise that includes collaborations
                        among countries. OIG’s review of the Basic Research to Enable Agricultural
                        Development (BREAD) program proposals and awards highlighted a significant
                        failure of the US PIs to develop comprehensive oversight programs with foreign
                        subawardees. The most poorly developed aspects of these plans were in RCR
                        training and research misconduct reporting. Based on recommendations in
                        our report, 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 how they would
                        address RCR training and research misconduct enforcement.

                        An OIG follow-up review 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: (1) determine how to bring the current program awardees’ oversight
                        plans in line with the requirements for RCR training and research misconduct
                        reporting and enforcement; and (2) 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.

                        CHALLENGE: Managing Programs and Resources in Times of
                        Budget Austerity

                        Overview: More than ever, Federal agencies and managers are expected
                        to maximize the value of every dollar spent or risk losing the confidence of
                        their stakeholders. Responsible managers across government are reviewing
                        their operational activities in light of increased public anger over waste and
                        mismanagement to determine where and how money might be saved. During
                        the past year, the administration issued an executive order requiring agencies
                        to establish a plan for reducing specific types of administrative costs by at least
                        20 percent below FY 2010 levels. Travel and conference costs have been
                        singled out for even greater scrutiny and cost savings. While government
44
                                                           OIG Semiannual Report    September 2012
budgets are developed long in advance, there are numerous discretionary
expenditures in every organization that occur on a weekly or monthly basis and
present real opportunities for savings.

OIG has performed several audits over the past few years to examine some of
the agency’s regular expenditures and identify potential cost savings, as well
as changes to the procurement process, that could lead to efficiencies and
reduced opportunities for fraud waste and abuse. Our audit of Independent
Research/Development (IR/D) travel policies and practices determined that
travel costs and time were not being monitored consistently across the agency.
Expenditures of approximately $1.8 million were incurred in FY 2010 under the
IR/D program, which allows some NSF staff to spend up to 50 work days a year
at their home institutions and attend related conferences. We recommended
that the agency consider establishing an annual limit for individual IR/D travel
costs, encouraging participants to take fewer trips of longer duration, or to
combine NSF telework with IR/D travel. Since the annual cost of IR/D-related
trips per traveler ranged from $225 to $45,000, reducing IR/D travel costs
would help the agency meet the requirements of the administration’s executive
order.

OIG’s audit of NSF staff retreats, a subset of conference-related spending,
recommended that the agency reevaluate the practice of traveling outside of
the Washington metropolitan area and improve its internal controls to better
ensure cost containment and compliance with applicable standards. Without
controls such as clear policy guidance and adequate monitoring, NSF may be
overpaying for staff retreats. NSF held a total of 95 staff retreats in FYs 2010
and 2011, which the OIG estimated cost the agency at least $361,000.

Challenge for the Agency: There are many opportunities to conserve money
within a $7 billion dollar organization like NSF without undermining the agency’s
core mission. The agency is therefore challenged to identify opportunities
to streamline processes and cut costs where it can, in order to send a clear
message to its employees and stakeholders that strong, sound management
practices are being applied; reasonable ideas to reduce spending are welcome
and will be implemented; and at a time of hardship for so many Americans, the
public’s continued financial support for science is not taken for granted.

OIG’s Assessment of the Agency’s Progress: NSF responded positively to
the two OIG reports described in the overview. In June, a staff memorandum
from the Director promised that NSF would identify opportunities for savings
in spending on travel and conferences, and that new guidelines and goals
associated with cost savings are forthcoming. It also reported that it was on
track during FY 2012 to reduce agency travel by 9 percent below its 2010
baseline. With regard to the IR/D program, the agency agreed that additional
steps are needed to strengthen management controls and implemented
changes to improve program oversight and accountability in May. NSF is
considering further actions and should encourage new ideas that save the
government money and foster a culture of economy and efficiency.




                                                                                               45
Management Challenges




46
                                                                  Statistical Data
                                           Audit Data
                     Audit Reports Issued with Recommendations
                               for Better Use of Funds

                                                                                     Dollar Value
A.      For which no management decision has been made by the                         $226,238,105
        commencement of the reporting period
B.      Recommendations that were issued during the reporting period                   $78,657,394
C.      Adjustments related to prior recommendations                                                $0
Subtotal of A+B+C                                                                     $304,895,499
D.      For which a management decision was made during the reporting period                        $0
        1.	 Dollar value of management decisions that were consistent with                          $0
            OIG recommendations
        2.	 Dollar value of recommendations that were not agreed to by
            management                                                                              $0
E.      For which no management decision had been made by the end of the              $304,895,499
        reporting period
For which no management decision was mde within 6 months of issuance                  $226,238,105



                      Audit Reports Issued with Questioned Costs

                                                     Number of      Questioned       Unsupported
                                                      Reports         Costs             Costs
A.    For which no management decision has               20            $25,955,332      $3,251,908
      been made by the commencement of the
      reporting period
B.    That were issued during the reporting period       20            $10,734,340       $1,161,138
C.    Adjustment related to prior recommendations                              $0                   $0
Subtotal of A+B+C                                                      $36,689,672      $4,413,046
D.    For which a management decision was made           11             $3,919,940        $876,326
      during the reporting period
      1.	 dollar value of disallowed costs              N/A             $1,842,743              N/A
      2.	 dollar value of costs not disallowed          N/A             $2,077,197              N/A
E.    For which no management decision had               29            $32,769,732      $3,536,720
      been made by the end of the reporting period
For which no management decision was made                10            $22,062,349      $2,378,690
within 6 months of issuance




                                                                                                         47
Statistical Data


           Status of Recommendations that Involve Internal NSF Management Operations

          Open Recommendations (as of 09/30/2012)
             Recommendations Open at the Beginning of the Reporting Period                                     48
             New Recommendations Made During Reporting Period                                                   5
             Total Recommendations to be Addressed                                                             53
          Management Resolution of Recommendations*
             Awaiting Resolution                                                                                8
             Resolved Consistent With OIG Recommendations                                                      45
             Management Decision That No Action is Required                                                     0
          Final Action on OIG Recommendations**
             Final Action Completed                                                                             9
          Recommendations Open at End of Period                                                                44

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



                                         Aging of Open Recommendations

          Awaiting Management Resolution
                0 through 6 months                                                                         5
                7 through 12 months                                                                        3
                More than 12 months                                                                        0
          Awaiting Final Action After Resolution
                0 through 6 months                                                                         0
                7 through 12 months                                                                        24
                More than 12 months                                                                        12




48
                                                                 OIG Semiannual Report           September 2012


                                               List of Reports

                                 OIG and CPA-Performed Reviews27

   Report                         Subject                  Questioned      Unsupported    Better Use of
   Number                                                    Costs            Costs          Funds
 12-1-004       Institute for Defense Analysis (IDA)             $26,957         $3,108             $0
 12-1-005       University of California-Santa Barbara      $6,325,483               $0             $0
 12-1-006       Drilling, Observation and Sampling           $263,754          $247,650             $0
                of the Earth’s Continental Crust, Inc.
                (DOSECC)
 12-1-007       University Corporation for Atmospheric           $29,384             $0             $0
                Research (UCAR)
 12-1-008       National Ecological Observatory                       $0             $0    $78,657,394
                Network Inc. (NEON) Proposal Audit
 12-1-009       Associated Universities, Inc. (AUI)                   $0             $0             $0
                Internal Controls-Program Income
 12-2-010       Audit of NSF’s Management of Contin-                  $0             $0             $0
                gency in the EarthScope Awards
 12-3-002       ARRA: Lessons Learned Review                          $0             $0             $0
 12-6-001       Alert Memo: NSF’s Management of                       $0             $0             $0
                Cooperative Agreements
 12-6-002       QCR of Lautze & Lautze (Chabot Space                  $0             $0             $0
                & Science Center
 12-7-003       IQCR of #09-6-003 Alert Memo Source                   $0             $0             $0
                Selection
 12-7-006       IQCR of #11-2-009 Conflict of Interest                $0             $0             $0
                Total:                                      $6,645,578         $250,758    $78,657,394




27  The Office issued 12 reports this semiannual period.
                                                                                                            49
Statistical Data


                                             NSF-Cognizant Reports

            Report                             Subject                          Questioned    Unsupported
            Number                                                                Costs          Costs
          12-4-051    9-11Museum of Science, Inc. dba Miami Science                     $0             $0
                      Museum & Museum of Science - FL
          12-4-052    6-11 QEMN Quality Education for Minorities Network - DC           $0             $0
          12-4-053    6-11 Association for Women in Science - VA                        $0             $0
          12-4-054    6-11 Computing Research Association, Inc.- DC                     $0             $0
          12-4-055    6-11 American Museum of Natural History -NY                       $0             $0
          12-4-056    9-11 Virtual Astronomical Observatory LLC - DC                    $0             $0
          12-4-058    6-11 New York Hall of Science - NY                                $0             $0
          12-4- 059   6-11 Museum of Science - MA                                       $0             $0
          12-4-060    6-11 Kalispell School District - MT                               $0             $0
          12-4-061    8-11 WGBH Educational Foundation - MA                             $0             $0
          12-4-062    12-11 American Statistical Association - DC                       $0             $0
          12-4-063    6-11 New York Botanical Garden - NY                               $0             $0
          12-4- 064   6-11 Ecological Society of America - DC                           $0             $0
          12-4-065    9-10 REVISED AURA Association of Universities for                 $0             $0
                      Research in Astronomy - DC
          12-4- 066   12-10 REJECTED ScienceFriday, Inc. - CT                           $0             $0
          12-4- 067   12-11 American Physical Society - MD                              $0             $0
          12-4-068    9-11 Fermi Research Alliance - IL                                 $0             $0
          12-4-069    12-11 Horizon Research, Inc. - NC                                 $0             $0
          12-4- 070   7-11 MSRI Mathematical Sciences Research Institute - CA           $0             $0
          12-4-071    12-11 Missouri Botanical Garden - MO                              $0             $0
          12-4-072    6-11 MPC Corporation - PA                                         $0             $0
          12-4-073    8-11 San Jose Children’s Discovery Museum - CA                    $0             $0
          12-4-074    12-11 Chicago Zoological Society - IL                             $0             $0
          12-4-075    12-11 BIOS Bermuda Institute of Ocean Sciences - NY               $0             $0
          12-4-076    9-11 COL Consortium for Ocean Leadership - DC                     $0             $0
          12-4- 077   0-11 IODP Management International, Inc. - DC              $1,650,961            $0
          12-4-078    9-11 California Institute of Technology - CA                      $0             $0
          12-4-079    12-11 Botanical Research Institute of Texas, Inc. - TX            $0             $0
          12-4-080    12-11 DOSECC Drilling, Observation & Sampling of the              $0             $0
                      Earth’s Continental Crust - UT
          12-4-081    12-11 Hopa Mountain Foundation - MT                               $0             $0
          12-4-082    12-11 National Geographic Society - DC                            $0             $0
          12-4-083    12-11 Portland VA Research Foundation - OR                        $0             $0
          12-4-084    9-11 Teachers Development Group - OR                              $0             $0
          12-4- 085   12-11 Denver Museum of Science and Nature - CO                    $0             $0
          12-4-086    12-11 Santa Fe Institute - NM                                     $0             $0

50
                                                            OIG Semiannual Report       September 2012



12-4-087    12-11 Science Foundation Arizona - AZ                               $0         $0
12-4-088    6-11 SoundVision Productions - CA                                   $0         $0
12-4-089    6-10 Jackson Public School District – MS                            $0         $0
12-4-090    12-11 American Mathematical Society - RI                            $0         $0
12-4-091    12-11 Institute for Broadening Participation - ME                   $0         $0
12-4-092    12-11 New England Wild Flower Society, Inc. - MA                    $0         $0
12-4-093    12-11 Association for Institutional Research – FL                   $0         $0
12-9-094    12-11 Carnegie Institute – PA                                       $0         $0
12-4-095    12-11 Field Museum of Natural History - IL                          $0         $0
12-4-096    12-11 Institute of Global Environment & Society, Inc. -MD           $0         $0
12-4-097    12-11 ICSI International Computer Science Institute – CA            $0         $0
12-4-098    6-11 New Jersey Academy for Aquatic Sciences – NJ                   $0         $0
12-4-099    12-11 TERC Technical Education Research Centers, Inc. - MA          $0         $0
12-4-100    9-11 The Algebra Project – MA                                       $0         $0
12-4-101    12-11 Samuel Roberts Noble Foundation – OK                          $0         $0
12-4-102    6-10 Tupelo Public School District – MS                             $0         $0
12-4-103    12-09 WTEC World Technology Evaluation Center, Inc. - PA            $0         $0
12-4-104    12-10 WTEC World Technology Evaluation Center, Inc. - PA            $0         $0
12-4-105    12-11 American Educational Research Association – DC                $0         $0
12-4-106    12-11 Biological Sciences Curriculum Study – CO                     $0         $0
12-4-108    12-11 Marine Biological Laboratory - MA                             $0         $0
12-4-109    6-11 The Filmmakers Collaborative, Inc. – MA                        $0         $0
12-4-110    12-11 Youth Radio – CA                                              $0         $0
12-4-112    9-11 Northwest Association for Biomedical Research – WA             $0         $0
12-4-113    12-11 Pisgah Astronomical Research Institute – NC                   $0         $0
12-4-114    12-11 AAPT American Association of Physics Teachers – MD            $0         $0
12-4-115    12-11 UNAVCO, Inc. – CO                                      $1,349,296        $0
12-4-116    12-11 CUREE Consortium of Universities for Research in              $0         $0
            Earthquake Engineering – CA
12-4-117    12-11 Mathematical Association of America – DC                      $0         $0
12-4-118    12-11 AIM American Institute of Mathematics – CA                    $0         $0
12-4-119    12-11 Academy of Natural Sciences of Philadelphia – PA              $0         $0
12-4-120    6-11 REVISED Science Museum of Minnesota – MN                       $0         $0
12-4-121    6-10 REVISED WNET.org/Educational Broadcasting                $525,655    $525,655
            Corporation - NY
12-4 122    3-12 ASTC Association of Science-Technology Centers – DC            $0         $0
12-4-123    12-11 Detroit Area Pre-College Engineering Program – MI             $0         $0
12-4-124    12-11 SCOR Scientific Committee on Oceanic                          $0         $0
            Research – DE
12-4- 128   12-11 WHOI Woods Hole Oceanographic Institution - MA                $0         $0
            Total:                                                       $3,525,912   $525,655


                                                                                                   51
Statistical Data


                                                Other Federal Reports

           Report                                Subject                          Questioned    Unsupported
           Number                                                                   Costs          Costs
          12-5-072   5-11 Chapman University - CA                                     $73,147            $0
          12-5-089   6-11 Universidad Interamericana de Puerto Rico, Inc. - PR       $35,016             $0
          12-5-096   6-11 University of Medicine & Dentistry of New Jersey - NJ       $2,034             $0
          12-5-102   6-11 University of Illinois - IL                                    $13             $0
          12-5-103   8-11 State of Texas - TX                                        $44,102             $0
          12-5-107   6-11 Columbia University - NY                                       $76            $76
          12-5-110   6-11 Miles College - AL                                         $38,416         $38,416
          12-5-116   6-11 State of Connecticut – CT                                  $32,125         $32,125
          12-5-122   6-11 WNET.org - NY                                              $24,061         $11,418
          12-5-123   6-11 Georgetown University – DC                                  $2,551          $2,551
          12-5-132   6-11 Dillard University - LA                                   $275,480        $275,480
          12-5-137   12-11 American Meteorological Society – MA                      $10,486             $0
          12-5-143   9-11 Fort Berthold Community College – ND                       $25,343         $24,659
                     Total:                                                         $562,850        $384,725




52
                                                             OIG Semiannual Report              September 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 13 reports remaining that met this condition. The status of recommendations that involve
internal NSF management is described on page 48.


   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             $6,860,500                $0            $0
                 Services
 07-1-003        Triumph Tech, Inc.                           $80,740         $1,192               $0
 07-1-019        ABT Associates                               $22,716                $0            $0
 09-1-014        University of Michigan                    $1,604,713     $1,418,889               $0
 09-5-048        8-07 College of the Mainland – TX    *      $110,629                $0            $0
 10-1-012        COL OOI Proposed Budget                          $0                 $0    $88,118,848
 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
 11-1-021        NEON National Ecological Observatory             $0                 $0    $75,780,354
                 Network
 12-1-001        ICSI International Computer Science         $451,189      $444,551                $0
                 Institute
 12-1-003        University of Notre Dame - IN              $244,430       $244,430                $0
 12-5-033        6-11 Howard University - DC                   $1,268         $1,000               $0
                 Total:                                   $22,062,349     $2,378,690      $226,238,105

* This report is on hold at the request of the OIG.




                                                                                                           53
Statistical Data


                                                  Investigations Data
                                        Civil/Criminal Investigative Activities

         Referrals to Prosecutors		            6
         Criminal Convictions/Pleas		          8
         Arrests		                             0
         Civil Settlements		                   0
         Indictments/Information		             0
         Investigative Recoveries		$1,188,265.97




                                       Administrative Investigative Activities

         Referrals to NSF Management for Action		                                            26
         Research Misconduct Findings		                                                      11
         Debarments		                                                                         4
         Administrative Actions		                                                            82
         Certifications and Assurances Received28		                                          14




                                              Investigative Case Statistics

         		 Preliminary			Civil/Criminal			Administrative
         Active at Beginning of Period		 55			  99			 103
         Opened		                        76			  53			  44
         Closed		                        98			  19			  44
         Active at End of Period		       33			 133			 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		                                                            22
         •	   Requests Processed		                                                           22
         •	   Appeals Received		                                                              1
         •	   Appeals Upheld		                                                                1

         Response time ranged between 5 days and 81 days, with the median around 18 days and the
         average around 20 days.

         28  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.

54
                                                          OIG Semiannual Report            September 2012


                  Recovery Act Retaliation Complaint Investigations

Section 1553 of the American Recovery and Reinvestment Act of 2009 requires OIGs to include
in their semiannual reports to Congress the retaliation complaint investigations that they decided
not to conduct or continue during the reporting period. Section 1553 also requires OIGs to
provide a list of those investigations for which the inspector general received an extension. OIG
did not discontinue or decline to conduct any Recovery Act whistleblower retaliation complaint
investigations during this reporting period. Regarding extensions, OIG received one extension
in a pending investigation involving a Georgia institution.




                                                                                                      55
 National Science Foundation
  Office of Inspector General
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      Arlington, VA 22230
          703.292.7100




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