oversight

Semiannual Report - March 2013

Published by the National Science Foundation, Office of Inspector General on 2013-03-01.

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

National               Office of
Science               Inspector
Foundation              General




Semiannual Report
  to Congress
         March 2013
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 foster-
ing and supporting the development and use of computers and other scientific methods and
technologies; providing Antarctic research, facilities and logistic support; and addressing
issues of equal opportunity in science and engineering.

And The Office of the Inspector General...

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

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

Audits and Reviews................................................................................ 7
NSF’s Use of IPAs .......................................................................................................7
Final Project Reports from NSF Grantees....................................................................8
Questioned Costs at Two NSF Awardees....................................................................9
Information Technology Security at NSF....................................................................11
Sunshine Act Compliance..........................................................................................13
Improper Payments Reporting...................................................................................14
Financial Statement Audit Reports.............................................................................14
NSF’s Response to Large Cooperative Agreements Alert Memo...............................15
Audit Resolution.........................................................................................................17
A-133 Audits...............................................................................................................18

Investigations....................................................................................... 21
Civil and Criminal Investigations................................................................................21
Research Misconduct Investigations..........................................................................25
Administrative Investigations......................................................................................33

OIG Management Activities................................................................. 37
Congressional Testimony...........................................................................................37
Outreach.....................................................................................................................38

Statistical Data...................................................................................... 41
               From the Inspector General

This Semiannual Report to Congress highlights the activities of the Na-
tional Science Foundation (NSF), Office of Inspector General for the six
month period ending March 31, 2013. During this reporting period, ten
reports and reviews were issued, two of which questioned more than $3
million. Our investigative staff closed 72 civil/criminal and administrative
investigations, had seven research misconduct cases result in findings
by NSF, and recovered $1,661,928.88 for the government.

The audits, investigations, and other work presented in this report reflect
my office’s attention to oversight issues that have a direct impact on
the Foundation’s ability to carry out its mission of advancing scientific
research, which is accomplished primarily through funding external
awardees. It is essential that NSF rely on robust processes and proce-
dures for awarding the taxpayer dollars entrusted to the Foundation as it
works to fulfill this mission.

For more than two years, we have been recommending that NSF impose
stronger cost surveillance measures for high-risk, high-dollar coopera-
tive agreements used in large facility projects. NSF’s February 2013
response to our September 2012 alert memo on this subject asserted
that its existing practices were sufficient to ensure adequate oversight for
such cooperative agreements and disagreed with our recommendations
to strengthen accountability. The response heightened our concerns
about NSF’s accountability and monitoring over these cooperative agree-
ments.

In March, we received NSF’s assessment of the processes and policies
for supporting large research facilities from conception to construction
to operation, which was conducted at the request of then NSF Director,
Dr. Subra Suresh. We view this plan as a step in the right direction, but
it is just a start. Implementing the vision articulated in this document will
require commitment across the Foundation and leadership from the top.
We continue to work with NSF to address the systemic problems relating
to oversight of cooperative agreements.

We are also encouraging NSF to closely examine ways that it can
reduce spending that could free up more money for research grants.
Our audit of NSF’s use of the Intergovernmental Personnel Act to bring
in scientists and other others as temporary staff found that NSF paid an
annual additional cost of approximately $6.7 million for 184 IPAs in 2012.
In that year, NSF paid 54 IPAs an annual salary exceeding the federal
executive pay limit of $179,700. We recognize the value IPAs bring to
the Foundation and are not suggesting that NSF discontinue its use of
IPAs. However, in a time of austerity, it is particularly important to evaluate all costs and
identify opportunities for savings. We recommended that NSF evaluate ways to reduce
IPA costs, including expanded use of telework, greater cost sharing by IPA home institu-
tions, and reviewing fringe benefit rates. NSF concurred with our recommendation.

Our investigations continue to aggressively pursue those who seek to fraudulently
obtain and use funds intended for scientific research. During the past six months, for
example, a former professor was sentenced for using over $160,000 in NSF grant funds
to purchase items for personal use including cameras and binoculars, and a university
that failed to adequately document and account for salary and stipends repaid $530,000
to NSF.

We referred eleven cases of research misconduct to NSF in the past six months
and had seven findings of research misconduct for data falsification fabrication and
plagiarism. 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.

My office’s work is guided by a firm and consistent commitment to help ensure that
taxpayer money intended to promote science is used properly. We will continue to work
with NSF to see that our recommendations to safeguard federal funds are implemented
and to keep Congress fully informed of our progress. It is through this partnership and
our shared mission of strengthening oversight of federal funds that greater account-
ability will be achieved.
                                              Report Highlights
•	 Our audit of NSF’s use of the Intergovernmental Person-
   nel Act (IPA) to bring scientists, engineers, and educators
   to NSF as temporary staff, found that NSF paid an addi-
   tional cost of approximately $6.7 million, or an average of
   over $36,000 per IPA, for 184 IPAs in FY 2012. We also
   found that in FY 2012, NSF paid 54 IPAs salary at levels
   exceeding the federal executive pay limit of $179,700.
   While we do not question NSF’s authority to use IPAs,
   we did not find any evidence that the Foundation had
   examined the additional costs incurred as a result of using
   IPAs or sought ways to reduce those costs.

•	 An audit of $218 million of direct costs claimed on three
   cooperative agreements identified more than $2.1 million
   in questioned costs. The audit also disclosed significant
   non-compliance with Federal Cost Accounting Standards.

•	 A joint investigation found that a public broadcasting
   company had submitted inadequate financial reports for
   four years and had an inadequate accounting system for
   tracking grant expenditures. Following a civil settlement,
   the company is required to repay more than $273,000
   to NSF and enter into a five-year compliance plan to
   strengthen its oversight of federal funds.

•	 Our investigation led to a Principal Investigator (PI) of
   an NSF Small Business Technology Transfer program
   awardee company being indicted on several charges
   based upon proposals, reports, and payment requests he
   submitted which contained false information. In addition,
   the PI fabricated timesheets and altered financial records
   to conceal personal expenditures.

•	 A PI who charged personal purchases to NSF awards
   resigned from his university and returned more than
   $160,000 to NSF. He pled guilty to theft and has been
   sentenced to two years probation.




                                                                 5
Report Highlights




               6
                                                Audits & Reviews
NSF’s Use of IPAs Estimated to Cost an
Additional $6.7 Million Annually

NSF uses the Intergovernmental Personnel Act (IPA) as its
primary way to bring top scientists, engineers, and educators
from universities to NSF as temporary staff to maintain its
world-class scientific workforce. IPAs remain employees of
their home institution, and they are not subject to federal pay
and benefits limitations. As a result, IPAs can cost substan-
tially more than federal employees in equivalent positions.

Our audit to determine the additional costs of IPAs estimated
that NSF paid an annual, additional cost of approximately
$6.7 million, or an average of over $36,000 per IPA, for 184
full-time IPAs in 2012.

We found that in 2012, NSF paid 54 IPAs salary exceeding
the federal executive pay limit of $179,700. NSF paid 34 of
these IPAs an annual salary of $200,000 or more with the
highest annual salary of $301,247 for an Assistant Director.
In addition to these salary costs, we calculated that NSF paid
nearly $800,000 in additional fringe benefit costs for IPAs and
that it paid 58 IPAs $337,823 in lost consulting in one year.
Additional costs for temporary living expenses for IPAs came
to $1,438,696.

Because NSF pays IPA costs out of program funds, reducing
these costs could free up more money for research grants.
We do not question the fact that IPAs bring benefits to NSF,
nor do we question NSF’s authority to use IPAs. However,
in a time of austerity, it is important to evaluate all costs and
identify opportunities for savings. We did not find evidence
that NSF has examined the additional costs incurred as a
result of using IPAs or sought ways to reduce those costs.              HIGHLIGHTS
We recommended that NSF evaluate ways to reduce IPA                     NSF’s Use of IPAs
costs, including expanded use of telework, greater cost                   Estimated to Cost an
sharing by IPA home institutions, and reviewing fringe benefit            Additional $6.7 Million
rates. NSF concurred with our recommendation.                             Annually .........................7
                                                                        Information Technology
                                                                          Security at NSF............. 11
In addition, we did not find that anyone at NSF was respon-             NSF’ Response to Large
sible for measuring and documenting the impact of rotating                Cooperative Agreements
personnel, including IPAs, on the agency as a whole. As a                 Alert Memo ................... 15

                                                                    7
Audits & Reviews


                   result, the agency misses opportunities to assess these programs’ overall
                   contribution to NSF’s mission and goals. Given the number of IPAs at
                   NSF at any given moment, their prevalence in the highest ranks of the
                   agency, and the added costs that result from their use, it would be helpful
                   if NSF designated a champion responsible for overseeing and managing
                   the rotator programs as a whole.

                   NSF Has Made Significant Improvements but More Effort is Needed
                   to Ensure That Grantees Submit Required Project Reports in a
                   Timely Manner

                   We conducted an audit to determine if NSF had implemented effective
                   controls over grantee project reporting since our 2004 audit. NSF uses
                   project reports from Principal Investigators (PIs) to monitor the progress
                   and accomplishments of funded projects. We reviewed all annual and/
                   or final project reports, approximately 55,500, which were due or overdue
                   between October 1, 2010 and March 31, 2012.

                   We found that the percentage of final reports submitted late declined
                   from 53 percent in the 2004 audit to 20 percent, and the percentage
                   of final reports not submitted declined from 8 percent to 5 percent.
                   Similarly, the percentage of annual reports not submitted declined from
                   42 percent to 2 percent. While the percentages of late and not submitted
                   reports have declined significantly, they nonetheless represent almost
                   12,000 final and annual reports submitted late and over 1,500 reports not
                   submitted.

                   When reports are submitted late or not at all, NSF cannot fully assess
                   the extent to which grantees have met their project goals. Without
                   timely annual reports, NSF program officers may not be able to address
                   potential problems that could impair satisfactory performance of a project.
                   Finally, if NSF does not receive final reports in a timely manner, NSF
                   management may not be informed fully about the results and accomplish-
                   ments of the research it funded.

                   Some NSF program officers we interviewed were not aware that the
                   required reports for some of their awards were overdue several months
                   or were submitted several months late because they were not monitoring
                   the status of overdue reports. According to some NSF program officers,
                   NSF systems do not easily identify awards with project reports that were
                   overdue for a prolonged period. Finally, we found that NSF’s key control
                   to withhold additional funding to any PI with a past due project report
                   could be circumvented if the PI transferred to a different institution and
                   obtained a new NSF identification number.




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                                                        OIG Semiannual Report   March 2013


We recommended that NSF ensure that all performance reports are
submitted on time and that it improve procedures to prevent assigning a
second identification number to PIs. NSF agreed with our recommenda-
tions and stated that it is planning actions to address them.

In addition, during the course of this audit we identified a number of
individual PIs who have repeatedly failed to comply with NSF’s reporting
requirements, including individuals with multiple missing final reports.
In our view, such repeated non-compliance indicates a possible lack of
present responsibility to handle federal funds and we are exploring ways
to address these situations, and potential government-wide suspension
or debarment, as appropriate.

Noncompliance with Cost Accounting Standards Leads to More than
$2.1 Million of Questioned Costs on Cooperative Agreements at the
University of Wisconsin-Madison

An audit of $218 million of direct costs claimed on three cooperative
agreements at the University of Wisconsin to build the IceCube Neutrino
Observatory in Antarctica, found that the University’s claimed costs were
unacceptable as submitted because the University did not comply with
Federal Cost Accounting Standards (CAS). While the audit identified
more than $2.1 million in questioned costs, the full impact of the noncom-
pliance is not yet known.

Following is a description of the four areas where Wisconsin did not
comply with CAS and did not consistently follow accounting practices in
its CAS Disclosure Statement.

1.	 The University reclassified two proposed subawards without proper
    documentation or authorization from NSF. As a result, NSF was
    charged an additional $2.1 million in indirect Facility and Administra-
    tion (F&A) costs.

2.	 The University’s accounting records did not segregate actual
    contingency costs (i.e., those costs arising out of expenditures of the
    proposed $44 million in contingency funds) from other accumulated
    costs as required by CAS. When contingency funds were expended,
    Wisconsin commingled these expenditures among several direct cost
    accounts such as labor and equipment, and did not identify or main-
    tain visibility of actual contingency costs or associated indirect costs
    that resulted from the expenditure of contingency funds. As a result,
    this significant budgeted cost element could not be tracked or com-
    pared to actual costs. Such comparisons are a critical tool for financial
    control over costs during award performance and aid in establishing
    accountability for costs in the manner agreed to at the time of award.



                                                                                9
Audits & Reviews


                      In addition, the university proposed contingency costs under the
                      category “Other Direct Costs” on the proposal summary form submit-
                      ted to NSF, but did not apply its indirect F&A rate to these contingency
                      costs. However, while UW did not maintain visibility of actual contin-
                      gency costs in its accounting records, the audit found that as much
                      as $13.7 million of the $44 million of contingency costs, presented
                      to NSF on the proposal summary form as “Other Direct Costs,” may
                      have been charged to NSF as indirect costs. As a result, NSF lacked
                      knowledge of the proposed direct and indirect costs at the summary
                      level which is necessary for it to make informed award decisions.

                   3.	 Wisconsin commingled indirect F&A costs in a direct cost account,
                       using manual calculations rather than the University’s automated
                       indirect cost charging process. As a result, budgeted F&A costs could
                       not be compared with actual F&A costs as required by CAS. Accord-
                       ing to the University, it charged nearly $30 million of F&A costs to the
                       project. However the auditors could not determine if the University
                       correctly applied its fixed F&A rate and whether indirect costs were
                       only claimed on eligible direct costs.

                   4.	 Wisconsin charged $6,785 in employee relocation costs as direct
                       costs without providing the justification required by NSF and its CAS
                       Disclosure Statement.

                   The full impact of Wisconsin’s noncompliance cannot be determined until
                   the University submits revised incurred cost statements and NSF has
                   those statements audited. Such statements and audits are essential
                   accountability tools which the OIG has consistently recommended that
                   NSF require and obtain.

                   The audit recommended that Wisconsin obtain proper documentation
                   and NSF approval prior to reclassifying subawards; use its automated
                   method of calculating and recording F&A costs; segregate contingency
                   costs in its accounting records; clearly identify direct and indirect
                   contingency costs in its proposals to NSF; and revise its CAS Disclosure
                   Statement to accurately and completely describe its accounting practices
                   related to contingency costs; and repay all disallowed costs and comply
                   with its disclosed accounting practices.

                   Additionally, we recommended that NSF require the University to submit
                   a cost impact proposal and revised incurred cost statements to determine
                   how much F&A costs should have been charged and make any neces-
                   sary adjustments in the claimed costs. Wisconsin disagreed with the
                   questioned costs and noncompliance findings.




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                                                        OIG Semiannual Report   March 2013


$943,475 in Questioned Costs Found at Jackson State University

An audit of thirty-one NSF awards totaling $19.4 million at Jackson State
University (JSU) questioned $943,475 in costs claimed by the University.
More than $843,000 was questioned due to lack of or inadequate docu-
mentation to support payroll charges and vendor purchases. More than
$83,000 was questioned because JSU over-claimed indirect costs on five
NSF awards. The audit also identified equipment costs of over $15,000
that were charged to an NSF award but had no value in accomplishing
the NSF award objectives.

Recommendations included that NSF resolve the questioned costs and
ensure that Jackson State implements stronger policies and procedures
to address the deficiencies identified in the audit. Jackson State agreed
with the questioned indirect costs but disagreed with the questioned
equipment costs.

NSF Needs to Strengthen Information Technology Controls

It is essential for NSF to ensure that its information systems are secure.
These systems contain vital sensitive information that is central to the
Foundation’s mission. The FY 2012 independent evaluation of NSF’s
information technology security programs and practices, required by the
Federal Information Security Management Act (FISMA), included four
new findings and four repeat findings with respect to IT security at NSF.
Chief among the new findings were challenges associated with timely
action to protect IT systems from newly discovered vulnerabilities. As
the number of “hacking” attempts from external sources increases, along
with the sophistication of such efforts, the challenges of identifying and
addressing vulnerabilities grow. In the face of growing attacks, it is an
ongoing challenge for systems administrators to keep abreast of new
security updates and to deploy them in a timely manner.

A second significant challenge relates to NSF’s high-speed research
network (HSN), which is a limited-purpose research network located at
NSF that is used for high speed connectivity to universities and research
institutions on Internet 2. NSF has stated that the HSN is separated
from its primary network; however, our FY 2011 FISMA testing found a
previously unidentified physical connection between the two networks. In
addition, in 2012 NSF experienced a breach of a video teleconferencing
unit connected to the HSN. Over the course of approximately 11 days
in July 2012, numerous international phone calls were placed from the
unit to various foreign countries, including, but not limited to El Salvador,
Myanmar, Cuba, Congo, Somalia, Jordan, and Bosnia. These events
and other incidents have raised a question as to whether critical NSF




                                                                                11
Audits & Reviews


                   data may be at risk through inadvertent or unauthorized connections
                   between the HSN and NSF’s primary network. As a result, we recently
                   initiated a review of NSF’s high-speed research network.

                   With respect to the repeat findings, IT systems are vulnerable to a variety
                   of disruptions such as short-term power outages as well as severe condi-
                   tions such as natural disasters. The audit continued to recommend that
                   NSF develop contingency planning and disaster recovery plans for its
                   Antarctic program. Since FY 2006, the FISMA audit has reported that the
                   program lacked back-up for mission network communications and gen-
                   eral support systems. Additionally, NSF needs to remove IT accounts in
                   a timely manner for employees who have left the agency. Ensuring that
                   such accounts are closed is particularly important in light of the nature
                   of NSF’s workforce, which includes a number of temporary staff, such
                   as visiting scientists and those employed under the Intergovernmental
                   Personnel Act. Employees or contractors who retain access to NSF
                   systems after leaving the agency have the opportunity to make malicious
                   changes resulting in potential loss of confidentiality, integrity, and avail-
                   ability of NSF IT resources.

                   Finally, NSF has not revised its policies pertaining to incident response
                   since August 2005, nor has it formally developed an incident response
                   plan. Weaknesses in such controls increase the risk that incidents may
                   not be reported or resolved in a timely manner, which could lead to unau-
                   thorized access to sensitive information and/or malicious modification or
                   deletion of data or transactions.

                   Public Reports of Results of Funded Research Should be Clear and
                   Transparent

                   The America Competes Act added a public dimension to project reporting
                   by requiring that research outcomes of NSF-funded research be avail-
                   able to the public in electronic format. To implement this requirement,
                   NSF instituted the Project Outcomes Report (POR) which is intended
                   to “provide the general public with a complete picture of the results of
                   funded research.”

                   Based on a limited review of result information for three programs
                   within the Division of Undergraduate Education, we suggested that NSF
                   provide specific, up-front guidance to grantees to help ensure that project
                   results are presented to the public and other stakeholders in a clear and
                   understandable manner in the PORs. In tough economic times, federal
                   programs must make every dollar count and the public should be able to
                   see that funded programs are meeting their intended goals.




             12
                                                        OIG Semiannual Report   March 2013


National Science Board Generally Complies with Government in the
Sunshine Act Requirements

The Government in the Sunshine Act aims to improve transparency for
the public during the government’s deliberation process of important
matters. The Act applies to the National Science Board and requires
that the Board’s meetings be open to the public, with the exception of
meetings that qualify for ten narrow exemptions. Our inspection, which
covered Board meetings held during the three-year period of August 7,
2009, through July 31, 2012, found that the Board complied with the vast
majority for all meetings during this time.

While we found minor exceptions to the Act’s requirements for both open
and closed meetings, we did not identify any such exceptions that had a
significant impact on the public’s ability to follow the Board’s operations.
The small number of minor exceptions identified reflects the Board’s
continued commitment and attention to openness, transparency, and
public access to proceedings. The Board’s recent decision to webcast
open meetings will further advance these goals.

NSF Partially Complies with Improper Payments Elimination and
Recovery Act Reporting Requirements

The Improper Payments Elimination and Recovery Act (IPERA) requires
agencies to periodically review and identify programs and activities that
may be susceptible to significant improper payments and to report on
their actions to reduce or recover improper payments. The Act also
requires Offices of Inspector General to review the improper payments
section of their agency’s Annual Financial Report. Our audit found that
NSF did not fully comply with IPERA reporting requirements in the FY
2012 Annual Financial Report and had five specific findings.

First, NSF did not publish improper payment rates for each program
and activity for which an improper payment estimate was obtained, as
required by OMB. Second, NSF has not prepared a statistically valid
estimate of improper payments, as required in IPERA. Third, NSF did
not properly report on its efforts to recapture improper payments. Fourth,
NSF’s statistical sampling process for computing its improper payment
estimate did not cover all the elements of program outlays identified as
susceptible to significant risk of improper payments. Finally, NSF did not
perform testing procedures over the sample population in a consistent
manner and did not retain sufficient documentation to verify the criteria it
followed to identify improper payments.

NSF stated that that it agreed with some of the recommendations to
improve its IPERA reporting and that it is considering alternative proce-
dures to address recommendations where it disagreed.

                                                                                13
Audits & Reviews


                   Financial Statement Audit Reports

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

                   NSF Receives Unqualified Opinion on Financial Statements for the
                   Fifteenth Consecutive Year, but Needs to Strengthen Monitoring of
                   Cooperative Agreements for Large Construction Projects

                   Auditors issued an unqualified opinion on NSF’s FY 2012 financial state-
                   ments; however, they reported a significant deficiency in the monitoring of
                   cooperative agreements for large construction projects. This significant
                   deficiency was also reported in the FY 2011 audit.

                   The auditors noted that NSF had been working with the OIG to address
                   the deficiencies throughout FY 2012 but the majority of issues had not
                   been resolved. Specifically, the FY 2012 audit noted:

                   •	 Contingency costs of approximately $226 million in cost proposals for
                      three NSF awardees were unallowable and were not supported by
                      adequate documentation;

                   •	 Awardees could draw down contingency funds without prior approval
                      by NSF; and

                   •	 One awardee’s accounting system was deficient.

                   As the OIG worked with NSF to resolve these deficiencies, the OIG
                   surfaced broader concerns with regard to NSF’s management of its $11
                   billion in cooperative agreements, and issued an alert memo in Sep-
                   tember 2012. The alert memo reiterated concerns about the adequacy
                   of NSF’s review of proposed costs, awardees’ financial management
                   capabilities and the adequacy of NSF’s post-award monitoring.

                   NSF stated that it concurs with the overall need to strengthen its controls
                   for awarding and managing construction type cooperative agreements.
                   And, while it disagrees with key aspects of the significant deficiency, it is
                   committed to working with the OIG to reach agreement and resolve the
                   audit findings. A copy of NSF’s full response is published in its FY 2012
                   Agency Financial Report.




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                                                        OIG Semiannual Report   March 2013


Financial Statement Management Letter

The auditors also issued a Management Letter to communicate findings
that were not included in the audit report but are important to ensuring a
sound overall internal control structure and require management’s atten-
tion.

The FY 2012 Management Letter identified thirteen internal control find-
ings. The Management Letter reported that NSF’s policies for awarding
and administering grants and cost reimbursement contracts continue
to need improvement. The auditors made several recommendations,
including that NSF fully implement its cost surveillance oversight
procedures, continue improving its control over cost reimbursement
contracts, and continue to evaluate the effectiveness of its internal control
procedures over processing grant transactions.

NSF generally concurred with the recommendations in the Management
Letter and is working to resolve the findings. The FY 2013 financial
statement audit will evaluate NSF’s actions in response to the recom-
mendations.

NSF’s Response to Alert Memo on Management of Large
Cooperative Agreements Heightens Accountability Concerns

We issued an alert memo in September 2012 to bring to NSF’s attention
serious weaknesses in the Foundation’s cost surveillance measures for
awarding and managing cooperative agreements for its large facilities
and recommended several changes to strengthen accountability. We
received NSF’s response to the memo on February 28, 2013. The
response heightened our concerns about NSF’s accountability and moni-
toring over its high-risk, high-dollar cooperative agreements.

We recommended that NSF, using a risk-based approach, develop end-
to-end cost surveillance policies for its cooperative agreements to ensure
adequate stewardship over federal funds. At a minimum, NSF should
implement such increased monitoring for its largest cooperative agree-
ments valued at more than $50 million. At the pre-award stage, cost
surveillance measures should include audits of proposal budgets and
accounting systems before awarding funds and the use of OMB Form
424C or an equivalent form, to segregate allowable and unallowable
costs.

At the post-award stage, such measures should include incurred submis-
sions and cost incurred audits after awards are made to help ensure that
federal funds are being spent appropriately.




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Audits & Reviews


                   NSF agreed to require the use of Form 424C, but disagreed with the
                   other three recommendations. In its response, NSF stated that such
                   actions are not required by federal law or regulation and asserted that
                   its current practices provide sufficient accountability. NSF’s response
                   repeatedly emphasized that determinations as to what should be done at
                   the pre and post-award stages should be at the discretion of the Grants
                   Officer, who will make such decisions on a case-by-case basis. Although
                   such actions are not required, they provide critical information that NSF
                   can use to ensure that claims made to NSF are only for costs that are
                   allowable and can be supported by adequate documentation. Obtaining
                   such information at the pre-award stage for high-risk, high-dollar coop-
                   erative agreements is especially important as the proposed budget, once
                   approved by NSF, creates the basis upon which awardees can draw
                   down advanced funds over the course of the award. Obtaining incurred
                   cost submission and audits post-award provides critical insights into how
                   funds were actually used.

                   We continue to work with NSF to address the systemic problems relating
                   to oversight of cooperative agreements. In December 2012 the NSF
                   director charged a senior advisor in his office with coordinating a major
                   assessment of processes, policies, and mechanisms for supporting
                   large research facilities from conception to construction to operation and
                   sun-setting. The stated goal of this endeavor was to create a vision and
                   framework with recommendations, pathways and timelines for NSF to
                   foster the best research infrastructure for decades to come.

                   NSF’s plan, which we received in March, offers opportunities for more
                   robust oversight. We view this plan as a step in the right direction, but it
                   is just a start. Implementing the vision articulated in this document will
                   require commitment across the Foundation and leadership from the top.

                   Since this effort was spearheaded by the Director, we are concerned
                   about NSF’s ability to maintain the momentum needed to address
                   oversight of its high-risk, high-dollar cooperative agreements after the
                   Director’s departure from the Foundation at the end of March.




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                                                       OIG Semiannual Report   March 2013


Audit Resolution

NSF Sustains $55,348 Questioned Costs at North Carolina Central
University

In response to our audit recommendations, NSF sustained $55,348 of
questioned costs for travel, equipment, and salary, among other things, at
North Carolina Central University. Further, the University agreed to take
several actions including strengthening controls in its accounting system
and improving its procedures for charging indirect costs to NSF awards.

NSF Sustains $25,297 of Questioned Costs at University
Corporation for Atmospheric Research

NSF sustained $25,297 of questioned costs for food and beverages for
workshops and retirement parties among other things, at the University
Corporation for Atmospheric Research.

NSF Takes Steps to Improve its Processes for Assessing Staffing
Needs

In response to our recommendation, NSF’s Budget, Finance, and Award
Management office has identified opportunities to streamline its opera-
tions as part of its annual workforce planning process and is seeking
alternative methods to provide oversight.

NSF Addresses Concerns Regarding Support for Priority Goal
Attainment

In response to our recommendation, NSF plans to provide information to
support achieving its priority goal of improving the STEM workforce. Our
audit found that a lack of support made it difficult for NSF and stakehold-
ers to verify the agency’s progress toward meeting its priority goal.

NSF Implements Actions to Strengthen Controls over the
Independent Research and Development Program

In response to our recommendations, NSF has taken several steps to
strengthen management controls over use of the Independent Research
and Development Program, including establishing an agency-wide
process to track information about IR/D plans, activity, and travel costs.




                                                                               17
Audits & Reviews


                   A-133 Audits

                   Single Audit Findings Identify Lack of Internal Controls at Awardee
                   Institutions over Federal Funding

                   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 102 audit reports reviewed and referred1 to NSF’s Cost Analysis and
                   Audit Resolution (CAAR) Branch this period covered NSF expenditures
                   of $3.9 billion during audit years 2009 through 2012, and resulted in
                   110 findings at 42 NSF awardees. One awardee received a qualified
                   opinion on its financial statements, and three awardees received qualified
                   opinions on their compliance with federal grant requirements. Seventeen
                   of the 110 findings (15 percent), including 11 significant deficiencies and
                   material weaknesses, were repeated from previous audits. Although the
                   repeat nature of the findings calls into question the awardees’ ability to
                   adequately manage their NSF awards, the number and percentage of
                   repeat findings has decreased dramatically from the prior period.2 Award-
                   ees’ lack of internal controls and noncompliance with federal require-
                   ments included: untimely and/or incorrect reporting of time and effort;
                   inadequate support for salary/wages, equipment, travel, and indirect
                   costs charged to awards; inadequate monitoring of subrecipients; inability
                   to prepare the financial statements; and late submission of financial and/
                   or progress reports.

                   We also examined 37 management letters accompanying the A-133
                   audit reports and found 21 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, lack of adequate
                   policies and procedures, and inadequate segregation of duties. These
                   deficiencies affected control processes that are essential to ensuring
                   stewardship of NSF funds and preventing fraud and abuse.


                   1 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.
                   2 September 2012 Semiannual Report, p. 14.


             18
                                                                            OIG Semiannual Report   March 2013


Desk Reviews Find Audit Quality and Timeliness Issues in Fewer
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 qual-
ity 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 61 audit reports3 for which NSF was identified as the cog-
nizant or oversight agency for audit, and found that 32 fully met federal
reporting requirements. Twenty-nine reports (48 percent), contained
audit quality and timeliness issues.

The quality issues we identified included 15 reports in which the Sched-
ule of Expenditures of Federal Awards did not provide sufficient informa-
tion 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. Ten reports were submitted after
the due date required by OMB Circular A-133. Of the 12 reports that
included audit findings related to compliance with federal requirements,
3 reports (25 percent) failed to adequately present the required elements
of the finding to assist auditee management in correcting the reported
deficiency, and 5 reports failed to adequately present the required ele-
ments of the auditees’ management’s plan to correct the deficiencies
reported. In addition, 7 reporting packages contained Data Collection
Forms (Form SF-SAC) that failed to accurately reflect the results of the
audit, and 4 reports did not correctly identify the major programs.

We contacted the auditors and awardees, as appropriate, for explana-
tions of each of the potential errors. In most cases, the auditors and
awardees either provided adequate explanations and/or additional infor-
mation 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.




3 The audits were conducted by 49 different independent accounting firms.


                                                                                                    19
Audits & Reviews


                   Quality Control Review on Single Audit Work Performed by Public
                   Accounting Firm Discloses Serious Deficiencies

                   As noted above, OMB Circular A-133 requires colleges, universities and
                   other entities that expend $500,000 or more in federal awards to obtain
                   an annual organization-wide audit that includes the auditor’s opinion on
                   financial statements and compliance with federal award requirements.
                   Non-federal auditors, such as public accounting firms, conduct such
                   audits. The OIG reviews these audit reports and supporting documenta-
                   tion to determine whether they were conducted in accordance with
                   applicable standards; any follow-up work was needed; and there were
                   any issues that may require management’s attention.

                   Our quality control review of the audit documentation and report prepared
                   for the Single Audits of an NSF awardee for which the auditor issued
                   unqualified opinions on the financial statements and on compliance with
                   federal requirements, disclosed serious deficiencies in the documentation
                   provided. Additionally, the auditor did not provide some key documenta-
                   tion including evidence of internal control testing and evidence of the
                   auditor’s compliance with CPE requirements. Due to the serious nature
                   of these deficiencies, we referred the auditor to the North Carolina State
                   Board of Certified Public Accountant Examiners as well as Professional
                   Ethics Division of the American Institute of Certified Public Accountants.

                   OIG Follow-up Actions on Quality Control Review

                   Our follow-up review of the audit of Chabot Space and Science Center4
                   found that the auditors’ additional work performed in response to our
                   quality control review, generally met applicable federal requirements. As
                   a result of this work, the auditors identified two new significant internal
                   control deficiencies over federal awards.




                   4 September 2012 Semiannual Report, p. 16.


             20
                                                  Investigations
Civil and Criminal Investigations

University Repays $530,000 and Enters into a Compliance
Plan to Resolve Misuse of NSF Funds

A university in the District of Columbia failed to adequately
document and account for salary and stipends paid to faculty
and students, and spent funds specifically dedicated to par-
ticipant support on other expenses without the requisite prior
written approval. Following our investigation, the university
entered into a settlement agreement with the U.S. Attorney’s
Office under which it will repay $530,000 to NSF. The univer-
sity also agreed to a four-year compliance plan to strengthen
its oversight of NSF funds.

Joint Investigation of Public Broadcasting Company
Results in Repayment of over $300,000 and Five-Year
Compliance Plan

Our joint investigation with the OIGs of the National Endow-
ment for the Arts and the National Endowment for the
Humanities found that a Massachusetts public broadcasting
company had submitted inaccurate financial reports for four
years and had an inadequate accounting system for tracking
grant expenditures.

The U.S. Attorney’s Office entered into a civil settlement
requiring the company to repay a total of $300,170—of which
$273,157 was NSF funds—and entered into a five-year com-
pliance plan to strengthen its oversight of federal funds.

PI Ordered to Pay over $190,000 for Making Fraudulent
Purchases with NSF Award Funds

As previously reported, a former PI pled guilty after making
fraudulent purchases with NSF grant funds.5 The U.S.
Attorney’s office then filed a civil complaint against the PI
for violations of the False Claims Act. The former PI did not
respond to the lawsuit, and the court granted default judgment    HIGHLIGHTS
for $194,301. We recommended that NSF debar the former
                                                                  Civil and Criminal
PI for three years, and NSF’s decision is pending.                  Investigations ............... 21
                                                                  Research Misconduct
                                                                    Investigations ...............25
                                                                  Administrative
5 September 2011 Semiannual Report, p.9.                            Investigations ...............33

                                                                 21
Investigations


                 Company Agrees to Repay $100,000 of Wrongfully Obtained NSF
                 ARRA Funds

                 A Connecticut company will return $436,050 under a settlement agree-
                 ment following an investigation which found that the company had
                 misused federal funds from several agencies, including $100,000 in NSF
                 ARRA funds from an NSF Small Business Technology Transfer (STTR)
                 award.6 As part of the settlement the government received security
                 interests in the company’s assets and a signed stipulated judgment to
                 file if the company defaults. NSF imposed an administrative agreement
                 requiring the company to implement a program to ensure compliance
                 with federal administrative and ethical requirements.

                 Michigan Business Owners Who Used NSF Logo to Commit Fraud
                 Are Arrested and Plead Guilty

                 Two business owners, who were husband and wife, used the NSF seal
                 to represent that NSF laboratories had been used to test products adver-
                 tised for home use. They used the NSF logo fraudulently for commercial
                 gain and shipped products to customers through the mail. The husband
                 pled guilty to misuse of the NSF logo and mail fraud, and is scheduled to
                 be sentenced in June 2013. His wife pled guilty to one count of conceal-
                 ment of a felony and was sentenced to two years’ probation.

                 Investigations Involving Awards to Small Businesses Continue to
                 Find Wrongdoing

                 NSF’s Small Business Innovation Research (SBIR) and STTR programs
                 provide grants for small businesses to “undertake research and develop-
                 ment with high technical risk and high commercial reward.” In order to
                 obtain such grants, companies and their PIs must certify that they meet
                 eligibility criteria that remain in effect for the duration of the awards.
                 While the vast majority of the companies tell the truth in their proposals
                 and reports, and spend their funds properly, our investigations continue
                 to find companies that committed fraud or other wrongdoing.

                 PI on STTR Award Indicted for Fraud and Falsification of Records

                 The PI of an NSF STTR awardee company in Maryland was indicted
                 based upon proposals, reports, and payment requests he submitted
                 which contained false information. Our investigation concluded that the
                 PI falsely certified that he was primarily employed by the STTR awardee
                 when he was a full-time employee elsewhere, and that he fabricated a
                 third-party investment to receive supplemental award funds. In addition,

                 6 We previously discussed NSF’s termination of the award and issuance of a notice of proposed debarment
                 to the company because the company accepted and spent NSF award funds while it was an excluded party,
                 March 2011 Semiannual Report, p.21.


           22
                                                         OIG Semiannual Report   March 2013


the PI fabricated timesheets and altered financial records to conceal
personal expenditures. He was indicted on five counts of wire fraud,
one count of mail fraud, and one count of falsification of records. Trial is
scheduled to begin in July 2013.

SBIR Award PI and Company Owner Indicted for False
Certifications and Duplicative Funding

Our joint investigation with the NASA OIG and the IRS Criminal
Investigation Division found that the owner and PI of a company that
had an SBIR award falsely certified that the PI was primarily employed
by the company when the PI was employed elsewhere, falsely certified
that there were no overlapping proposals to and awards from NSF and
NASA, and received funding from NASA for work that overlapped with
the NSF awards. The owner and the PI were indicted on multiple counts
of wire fraud, conspiracy to commit wire fraud, money laundering, and
forfeiture for wire fraud.

SBIR Awards to a Company Terminated Because of Duplicative
Funding

In response to our recommendation, NSF terminated two awards to a
company for multiple instances of duplicative awards from other agen-
cies, resulting in $348,156 in funds put to better use. Our investigation is
ongoing.

NSF Retains $72,000 SBIR Award Final Payment Because of PI’s
False Representations

A joint investigation with the NASA and DOE OIGs and the Defense
Criminal Investigative Service found evidence of false statements and
false claims submitted by the PI of a small business in Texas. Based on
our recommendation, NSF retained the final payment on the SBIR Phase
II award, providing NSF with $72,059 to put to better use. Our investiga-
tion continues.

Company Owner Who Made False Certifications in SBIR
Proposal Returns over $20,000 and Agrees to Pretrial Diversion

The owner of a company falsely certified in his SBIR proposal that the
PI was primarily employed by the company at the time of the award, and
subsequently the replacement PI (the owner’s wife) included results in
the final report that had been previously reported under another award.
In response to our request for company financial information, the com-
pany owner created backdated employment agreements and timesheets
to support salary paid to him and company employees.



                                                                                 23
Investigations


                 The matter was presented to the U.S. Attorney’s Office, and accepted
                 for prosecution. Under the terms of the pretrial diversion, the owner
                 agreed to report monthly to the probation office for a year and agreed to
                 not apply for NSF funding for two years. The owner returned $20,718 to
                 NSF, which represented the salary payments to him and his wife under
                 the company’s award.

                 Former Professor Pleads Guilty and is Sentenced for Theft of
                 Award Funds

                 A former professor at an Indiana university used NSF grant funds to
                 purchase items for personal use. We previously reported that, based on
                 our recommendation, NSF suspended the former professor government-
                 wide pending the conclusion of our investigation,7 and he was subse-
                 quently indicted.8 The former professor pled guilty to one count of theft
                 and was sentenced to two years of probation and six months of home
                 confinement, and ordered to pay $32,542 in restitution to NSF. We
                 recommended that NSF debar this individual and his company for ten
                 years, and NSF’s decision is pending.

                 Purchase Card Fraud by PI Results in Return of over $160,000 to
                 NSF

                 A PI charged purchased items to NSF awards and returned the items
                 for refunds that he kept. The PI resigned and the university returned
                 $160,435 to NSF, which included the fraudulent as well as additional
                 questionable charges. He pled guilty to one count of theft and was
                 sentenced to two years’ probation and payment of $2,525. We recom-
                 mended that NSF debar the PI for three years, and NSF’s decision is
                 pending.

                 NSF Debars PI for Fraud and Misuse of Award Funds

                 We previously reported that a PI at a Georgia college charged an NSF
                 grant and two NASA grants for personal travel costs, personal pur-
                 chases, and expenses unrelated to the grants.9 The college reimbursed
                 the federal government $1.2 million and agreed to a five-year compliance
                 plan. The college did not renew the PI’s employment contract, and NSF
                 followed our recommendation to debar the PI for five years.




                 7 March 2011 Semiannual Report, p.22.
                 8 September 2011 Semiannual Report, p.9.
                 9 September 2011 Semiannual Report, p.8, and September 2012 Semiannual Report, p.20.


           24
                                                                                OIG Semiannual Report           March 2013


NSF Suspends Two Companies, the PI, and Former Controller
Government-Wide Pending Further Investigation

Our investigation revealed a Connecticut for-profit company filed false
financial reports and cash requests with NSF and that the PI misused
NSF award funds. Based on our recommendation, NSF suspended the
PI, the company’s former controller, the company, and the associated
non-profit company government-wide pending the conclusion of our
investigation. The U.S. Attorney’s Office accepted this case and is pursu-
ing appropriate remedies.



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 associ-
ated 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 reporting
period, NSF’s actions in research misconduct cases ranged from letters
of reprimand to one year of debarment.

We referred eleven cases of research misconduct to NSF, which are
summarized below. In every case except the first one, 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 nine of the eleven cases.10




10 Pursuant to NSF’s regulation, NSF strives to issue decisions on allegations of research misconduct within
120 days of receiving the OIG’s recommendations. 45 C.F.R. § 689(c)(2)(iii). NSF is still within this 120-day
timeframe in each of the nine pending cases.


                                                                                                                25
Investigations


                 Professor Enters into a Voluntary Exclusion Agreement to Resolve
                 Data Falsification Allegations Spanning More than a Decade

                 A former professor at a Massachusetts university agreed to voluntarily
                 exclude himself from federal funding for eighteen months as a result of a
                 university investigation that concluded that he had falsified data in eight
                 different projects. The university report described the professor’s pattern
                 of falsifying data and misrepresenting his methodology in published and
                 unpublished manuscripts since the late 1990s, some of which involved
                 NSF funding. The resulting changes either enhanced the significance of
                 the statistics supporting his hypotheses or increased the credibility of his
                 reported results. The university investigation concluded with the retrac-
                 tion of one NSF-supported publication and the publication of corrections
                 to two others. The professor took a one-year leave of absence from the
                 university and later resigned.

                 During our investigation, the professor negotiated a voluntary exclusion
                 agreement with NSF under which he acknowledged that NSF has suf-
                 ficient evidence to make a finding of research misconduct and excluded
                 himself from federal funding for eighteen months. He agreed to complete
                 training in the responsible conduct of research, and for three years after
                 the exclusion period to provide certifications, assurances, and detailed
                 data management plans for any NSF-funded work in which he partici-
                 pates.

                 Graduate Student, Given a Second Chance, Falsifies and Fabricates
                 Additional Data

                 A doctoral student at a Minnesota university intentionally fabricated and
                 falsified data used by his dissertation advisor in an NSF proposal. The
                 student previously admitted to his advisor that he had fabricated appar-
                 ently successful data, and the advisor gave the student a second chance
                 to complete the work. Several months later the student again reported
                 successful results, which the advisor included in proposals to NSF and
                 NIH, conference presentations, and two published articles. When an-
                 other member of the advisor’s group was unable to replicate the results,
                 the student admitted that he had fabricated and falsified the data. The
                 advisor immediately dismissed the student from his group and began an
                 investigation outside of the formal university process, with the assistance
                 of the student’s peers.

                 Shortly after the university investigation began, the student alleged that
                 the advisor had knowingly used the fabricated data in the NSF proposal,
                 but the university found no evidence to support this allegation. In addition
                 to the admission the student made to his advisor and two others, copies




           26
                                                        OIG Semiannual Report   March 2013


of spectra and chromatographs in the student’s desk showed manual
manipulation of the data. The university concluded the student commit-
ted research misconduct when he intentionally fabricated and falsified
data.

We were concerned about the advisor’s dismissal of the student and ad
hoc investigation, but concluded that the university’s formal investigation
was fair, and we concurred with the university’s findings. We recom-
mended NSF debar the student for five 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 certifica-
tions and assurances for all proposals or reports submitted to NSF.

NSF-Supported Graduate Student Admits to Data Fabrication and
Falsification

A former graduate student who conducted NSF-funded research at
an Illinois university admitted that he fabricated and falsified data in a
publication and his Ph.D. dissertation. Based upon the admission, the
university revoked the student’s Ph.D. and requested the publication
be retracted. The student accepted responsibility for the fabricated and
falsified data.

We concluded that he intentionally fabricated and falsified data, a sig-
nificant departure from accepted practices. We recommended that NSF
debar the student for three years. After the debarment period, we recom-
mended that for three years NSF require certifications and assurances
for all proposals or documents submitted to NSF, require submission of
a detailed data management plan with annual certifications of adher-
ence for any resulting awards, and bar him from participating as a peer
reviewer, advisor, or consultant for NSF.

PI and Co-PI Plagiarize Almost Entire Project Description in NSF
Proposal

Our inquiry determined that a declined NSF proposal submitted by a
New York PI and two co-PIs contained text apparently copied from
twelve sources comprising nine of the nearly fourteen pages of the
project description. The university investigation concluded that the PI and
one of the co-PIs committed plagiarism—and that while the second co-PI
did not commit plagiarism, he was careless because he did not identify
the extensive plagiarism in a proposal bearing his name. The university
required the PI and both co-PIs to complete online training and attend a
responsible conduct of research workshop. It also assigned a mentor to
the PI and first co-PI to assist them with grant proposals for at least three
years.



                                                                                27
Investigations


                 Our investigation concluded that the first co-PI, who wrote the proposal
                 and carried out the copying, plagiarized intentionally, and that the PI
                 acted knowingly, because he was aware of the co-PI’s copying but did
                 nothing to address it. We also concluded that both exhibited a pattern of
                 plagiarism in a published article and an internal university proposal. We
                 recommended that NSF: debar them for one year; require certifications
                 and assurances from them for three years following the debarment; and
                 bar them from participating as NSF peer reviewers, advisors, or consul-
                 tants for three years following the debarment.

                 Plagiarism Follows PI from Company to Company

                 Our investigation determined that a PI submitted multiple SBIR propos-
                 als from two companies that contained substantive plagiarism. The PI
                 denied that she plagiarized, claiming that her proposals had been edited,
                 changing her words to match text in the source documents. However,
                 most of the plagiarized text was in a proposal on which she was sole PI
                 and there was evidence of direct copying-and-pasting from the sources.
                 We recommended NSF require two years of certifications and assur-
                 ances and bar the PI from participating as a peer reviewer, advisor, or
                 consultant for NSF for two years.

                 Faculty Member Plagiarizes in Multiple NSF Proposals

                 A PI at a Texas university plagiarized in multiple NSF proposals. The
                 PI admitted to copying in one proposal, asserting that he had believed
                 citation alone was sufficient. The university’s investigation did not make
                 a finding of research misconduct because the sources were cited and
                 quotation marks or other demarcation of verbatim text is “a matter of
                 style”, commonly omitted. We disagreed and conducted our own investi-
                 gation.

                 We determined that only one of the three source documents was cited,
                 and that citation was not proximal to the text copied from it. We also
                 found that the style guide of a major journal in which the PI publishes
                 clearly requires verbatim text to be quoted or offset, demonstrating that
                 the standards of his research community are the same as other science
                 disciplines. In addition, we consulted two experts in the PI’s discipline
                 who independently concluded that the proposal text was inappropriately
                 copied, lacking both correct citation and demarcation.

                 During our investigation, we found two other proposals submitted to NSF
                 by the PI that contained significant plagiarism, establishing a pattern of
                 plagiarism. We recommended that NSF require certifications and assur-
                 ances for two years and bar the PI from participating as a peer reviewer,
                 advisor, or consultant for NSF for one year.



           28
                                                       OIG Semiannual Report   March 2013


Assistant Professor Blames Software for Deleting Attribution

An assistant professor at an Arizona university plagiarized text in two
NSF proposals. The assistant professor stated that the software he
used deleted quotation marks, citations, and other punctuation. After the
university investigation revealed unattributed copying in a second NSF
proposal, he asserted that he was unaware of the need for quotation
marks, despite having two doctoral degrees. The university determined
that he committed research misconduct.

Our review of previous drafts of the first proposal, in which the assistant
professor had appropriately cited and quoted a statement that was
deleted during editing demonstrated his awareness of proper citation
methods. More importantly, none of the previous drafts properly demar-
cated the plagiarized passages in question or contained the supposedly
deleted citations/punctuation. We concluded that he committed research
misconduct and recommended that NSF, for two years, require certifica-
tions and assurances, and ban him from serving NSF as a reviewer,
advisor, or consultant.

PI Plagiarizes in Two NSF proposals

Our investigation found that a PI at a company in Virginia plagiarized
more than 150 lines of text from eighteen different sources in two
proposals, one of which NSF awarded. In response to our recommenda-
tions, NSF required the PI to submit certifications and assurances for his
NSF proposals for two years, and barred him from serving as an NSF
reviewer, advisor, or consultant for one year.

Professor’s Incomplete Citation Practices Result in Plagiarism

A professor at a Colorado university recklessly plagiarized in his
CAREER proposal that NSF awarded with ARRA funds. The professor
cited most of the published papers, but did not distinguish the copied
text by quotation marks or indentation. Additionally, he did not cite his
colleagues’ unpublished manuscripts from which he also copied text.

The university investigation found that the professor committed plagia-
rism, but because the university concluded that the professor was merely
careless, it did not make a finding of research misconduct. However, the
university implemented corrective action including a training requirement
and internal certifications for two years.

We agreed that the professor committed plagiarism but disagreed with
the university’s finding with respect to intent, because such extensive
plagiarism from so many sources could not be less than reckless. We



                                                                               29
Investigations


                 recommended that for one year NSF: bar the professor from serving
                 NSF as a reviewer, advisor, or consultant; and require certifications and
                 assurances for all proposals or reports submitted to NSF.

                 Professor Plagiarizes in Two Proposals

                 Our investigation determined that a PI at an Ohio university recklessly
                 committed plagiarism in his NSF proposal. The PI admitted that he
                 plagiarized, but asserted that in his native culture plagiarism is, in certain
                 circumstances, encouraged, and that persons who plagiarize in such
                 circumstances are considered well-educated and knowledgeable. We
                 concluded that, regardless of whether his statement accurately reflected
                 the practice in his native culture, when submitting a proposal to NSF he
                 is required to abide by U.S. standards of scholarship and NSF policy. We
                 recommended that NSF require certifications for one year.

                 PI Falsifies Letters of Collaboration

                 Our investigation concluded that an owner of a small business in Georgia
                 submitted a proposal that included falsified letters of collaboration. The
                 owner falsified five letters he had received for a previous SBIR project
                 by removing the text related to the original project and subsequently
                 submitted them in a proposal to a different program. He did not add text
                 relevant to the new program, but just left white space in the letters, which
                 led to inquiries from merit reviewers.

                 We contacted the authors of the letters and learned that the PI had not
                 informed them of the alterations or sought permission from them to alter
                 and reuse their letters for the second proposal.

                 We concluded the alteration of the letters meets NSF’s definition of
                 falsification since the PI intentionally altered them to more broadly
                 support his research. We recommended that NSF: require for one year
                 that the PI certify that any documents submitted to NSF do not contain
                 plagiarism, falsification, or fabrication; and bar the PI from serving as a
                 reviewer, advisor, or consultant for NSF for one year.

                 PI from a Small Business Accepts Responsibility for Plagiarism

                 Our investigation found that a PI at a small business in Maryland know-
                 ingly plagiarized text in an awarded NSF SBIR proposal. We recom-
                 mended that NSF require certifications for one year and bar him from
                 serving NSF as a reviewer, advisor, or consultant for one year.




           30
                                                                              OIG Semiannual Report   March 2013



  The Importance of Accurate Information in Biosketches and
  Letters of Collaboration or Support

  An NSF proposal consists of multiple sections, and PIs have a
  responsibility to ensure that each section contains accurate informa-
  tion. Our office regularly receives allegations where key information
  was omitted, or information was fabricated, in the proposal’s
  biographical sketch (“biosketch”) and letters of collaboration or
  support. NSF instructions for preparing a biosketch state that the
  section should contain a “list, in reverse chronological order, of all
  the individual’s academic/professional appointments beginning
  with the current appointment.” This includes foreign appointments,
  non-salaried appointments, or appointments of limited term. In a
  case reported herein, a professor resigned his position after it was
  discovered that he failed to acknowledge his appointments at foreign
  universities on his conflict of interests forms.

  NSF also provides clear instructions about relevant publications that
  can be included in the biosketch:

  A list of: (i) up to five products most closely related to the proposed
  project; and (ii) up to five other significant products, whether or not
  related to the proposed project. Acceptable products must be citable
  and accessible including but not limited to publications, data sets,
  software, patents, and copyrights.11

  Unpublished documents, manuscripts described as “to be submitted”
  or “in preparation” should not be listed, and publications listed as
  “submitted” or “in press” must actually exist.

  Similarly, NSF states that letters of support “must be unique to
  the specific proposal submitted and cannot be altered without the
  author’s explicit prior approval.”12 We have seen several cases where
  PIs recycled old letters of collaboration or support and either put a
  new date on the letter or simply removed the original date. In a case
  discussed herein, a PI went a step further and removed several
  sentences from letters of collaboration because they related to a
  program to which a proposal had previously been submitted.

  Padding one’s biosketch and altering letters of collaboration or
  support are a violation of the standards of scholarship; in an NSF
  proposal, such actions may constitute civil and criminal false state-
  ments and false claims.


11 NSF Proposal & Award Policies & Procedures Guide, Grant Proposal Guide, II.C.2.f(i)(c).
12 NSF Proposal & Award Policies & Procedures Guide, Grant Proposal Guide, II.C.2.j.


                                                                                                      31
Investigations


                 Former University Official Wrote Plagiarized Proposals for Staff

                 We ascertained that two proposals nominally submitted by different PIs
                 from the same institution contained nearly identical text, and both pro-
                 posals contained text apparently copied from an awarded NSF proposal
                 submitted by another institution. Based on statements from the PIs, we
                 determined a university official no longer employed by the first institution
                 wrote and submitted the two proposals. We contacted the university offi-
                 cial, who accepted responsibility for writing and submitting the proposals.
                 Because her university was very small and had no procedures in place
                 for handling research misconduct investigations, we investigated this
                 matter and concluded that she committed plagiarism and recommended
                 that NSF make a finding of research misconduct, require certifications for
                 one year and bar her from serving as a reviewer, advisor, or consultant
                 for one year.

                 Actions by NSF Management on Previously Reported Research
                 Misconduct Investigations

                 NSF has taken administrative action to address our recommendations on
                 six 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 signifi-
                 cant actions in response to our recommendations as summarized below.

                 •	 In the case of a doctoral student at a Texas university who copied
                    over 1,200 lines of text and supporting data into his dissertation from
                    another student’s dissertation,13 NSF debarred the student for three
                    years, followed by five years of certifications and assurances. NSF
                    also barred him from serving NSF as a reviewer, advisor, or consul-
                    tant for five years.

                 •	 In the case of an Ohio university faculty member who copied almost
                    500 lines of text into four proposals,14 NSF required certifications
                    and assurances for three years, and barred the faculty member from
                    participating as a peer reviewer, advisor, or consultant for NSF for
                    three years.

                 •	 In the case of an assistant professor at a New Jersey university who
                    committed plagiarism in eleven unfunded NSF proposals,15 NSF
                    required certifications and assurances for three years, and barred
                    him from serving as a reviewer for three years.


                 13 September 2012 Semiannual Report, pp.21-22.
                 14 September 2012 Semiannual Report, p.22.
                 15 September 2012 Semiannual Report, p.23.



           32
                                                       OIG Semiannual Report   March 2013


•	 In the case of a small business official who plagiarized in eighteen
   proposals and four final project reports,16 NSF required certifications
   for two years.

•	 In the case of an assistant professor at a Texas university who copied
   text in two NSF proposals,17 NSF required certifications and assur-
   ances for one year.

•	 In the case of an assistant professor at a Maryland university who
   plagiarized large amounts of text into an NSF proposal,18 NSF
   required the PI to provide certifications and assurances for one year.


Administrative Investigations

PI Alleges Retaliation for Whistleblowing under ARRA Award

ARRA provides whistleblower protections to awardee employees who
reasonably believe that they are being retaliated against for reporting
allegations of misuse of ARRA funds received by their non-federal
employers. Under the Act, we investigate such allegations and submit
a report to NSF management, the complainant, the awardee, and the
Recovery Accountability and Transparency Board (RATB). NSF then
determines whether there is sufficient basis to conclude that the awardee
subjected the complainant to a prohibited reprisal.

We investigated an allegation that a professor had been removed as
PI by an Arizona university from an NSF recovery act award, in retali-
ation for filing a complaint with the university alleging misuse of ARRA
award funds. The allegations included inappropriate travel expenses
and fraudulent undergraduate intern hours charged to the award by the
graduate student who ran the program under the supervision of the PI.
The university conducted a full financial audit of the award and deter-
mined that there had been no misuse of award funds. The university also
determined that, in his role as supervisor of the graduate student, the PI
was not engaged in the award to the extent expected by the university
of a PI, and therefore the university decided to remove him as PI and
replace him with the co-PI.

As required by ARRA, we submitted a report of investigation and NSF’s
decision is pending.




16 September 2012 Semiannual Report, pp.23-24.
17 September 2012 Semiannual Report, p.24.
18 September 2012 Semiannual Report, p. 23.


                                                                               33
Investigations



                 Small Business Officers Plagiarized, Submitted Duplicative SBIR
                 Proposals, and Made False Statements

                 Our investigation concluded that officers of a California small business
                 plagiarized and provided false information to NSF. The PI, who was one
                 of the officers, blamed other individuals for the copied text. However, we
                 concluded the PI was responsible, that he acted knowingly, and therefore
                 committed research misconduct.

                 The company previously submitted essentially the same proposal to
                 DOE. In addition, the Authorized Organizational Representative (AOR),
                 who was also the PI’s wife, twice falsely certified to NSF that the
                 proposal had not been submitted elsewhere. We found that the company
                 falsely claimed to own four laboratories and have access to two universi-
                 ties’ facilities. Also, the PI, who was employed by a university, used that
                 university’s students and facilities to support the company’s NSF-funded
                 SBIR research. The university found that the PI improperly used its
                 facilities for the benefit of the company and dismissed him. We also
                 found that he charged the NSF SBIR award for facilities, students, and
                 salary costs that could not be justified or substantiated, and the company
                 reimbursed $5,235 to NSF for these charges.

                 DOJ declined prosecution in lieu of administrative action. We recom-
                 mended NSF make a finding of research misconduct for the plagiarism,
                 require the PI to take a responsible conduct of research training course,
                 and require certifications and bar the PI from serving as a reviewer for
                 three years. We also recommended that NSF debar the PI, the AOR, and
                 the company for three years for the false statements made to NSF, the
                 improper expenditures and lack of consistent financial records. NSF’s
                 action is pending.

                 PI and Co-PI Unaware of Proposal Submitted in Their Names by
                 Their Dean

                 A California institution informed us that NSF declined a proposal that
                 had been submitted without the knowledge of its listed PI and co-PI.
                 Our investigation revealed that the proposal was written at the behest of
                 the institution’s acting Dean without contributions from the PI or co-PI.
                 The Dean directed a subordinate to prepare the proposal, which he then
                 caused to be submitted in the names of the PI and co-PI by circumvent-
                 ing the institution’s procedures. In response to our recommendations,
                 NSF sent a letter of reprimand to the Dean and a letter to the acting
                 provost of the institution, and helped rehabilitate the PI’s and co-PI’s
                 academic reputations by notifying the reviewers that the PI and co-PI
                 did not submit the proposal and annotating this fact in the NSF proposal
                 management system.


           34
                                                                         OIG Semiannual Report   March 2013



Professor Resigns After Failing to Report External Appointments

Our investigation determined that a Louisiana professor failed to ac-
curately report external appointments and grants at foreign institutions
in eight of his NSF proposals, including one awarded NSF proposal. We
referred an inquiry to the cognizant institution which confirmed that the
professor’s biosketchs and current/pending support forms were inac-
curate. It also determined the professor, for several years, failed to report
his external appointments on his university conflict of interests forms.
The professor subsequently resigned from the institution.

A review by the cognizant NSF program determined the scope of the
professor’s NSF award did not overlap with any of his foreign grants.
We wrote to the professor admonishing his failure to provide accurate
information.


Previously Reported Cases

In two cases previously reported, NSF took the following actions:

•	 In the case of a Missouri PI and co-PI who submitted two NSF
   proposals while claiming false academic credentials,19 NSF debarred
   both individuals for five years.

•	 In the case of a reviewer who posted twenty-two NSF proposals on a
   webpage,20 NSF sent the reviewer a warning letter.


Management Implication Report

NSF Recovers Transit Subsidy Money Used by Employees for
Parking

We previously reported that our review of NSF’s Transit Subsidy Benefit
Program revealed significant misuse by a sample of participants using it
to pay for parking or apparent personal trips.21 NSF agreed to implement
our recommendation to require participants in the Program to provide
annual certifications that they will use the program properly and not for
personal gain. However, NSF did not agree with our recommendation
that it implement the same requirement for participants in the Pre-Tax
Parking Benefit Program, asserting that compliance with the IRS rules
and regulations of the Program is the responsibility of the employee and

19 September 2012 Semiannual Report, p.26.
20 September 2012 Semiannual Report, p.26.
21 March 2012 Semiannual Report, pp.28-29, and September 2012 Semiannual Report, p.29.


                                                                                                 35
Investigations


                 enforcement of potential misuse is the responsibility of the IRS.
                 NSF sent letters to forty employees demanding that they to repay sub-
                 sidy money improperly spent for parking. This should result in recovery
                 of $10,238 of misused government funds.

                 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 an Arizona institution.




           36
                             OIG Management Activities
In February, the Inspector General testified before the House
Science Investigations Subcommittee at a hearing titled, ‘Top
Challenges for Science Agencies: Reports from the Inspec-
tors General”. The Office of Inspector General (OIG) has
identified eight top management challenges facing NSF and
the testimony focused on three of these challenges—account-
ability over cooperative agreements for NSF’s large facility
construction projects, grant administration, and contract
monitoring.

With regard to the first challenge of accountability over
cooperative agreements for NSF’s large facility construc-
tion projects, there are serious weaknesses in NSF’s cost
surveillance measures for its high-risk, high-dollar cooperative
agreements. We have recommended that NSF, using a
risk-based approach, develop end-to-end cost surveillance
policies for its cooperative agreements to ensure adequate
stewardship over federal funds. At a minimum, NSF should
implement such increased monitoring for its largest coopera-
tive agreements valued at more than $50 million.

At the pre-award stage, cost surveillance measures should
include audits of proposal budgets and accounting systems
before awarding funds. At the post-award stage, such mea-
sures should include incurred submissions and cost incurred
audits after awards are made to help ensure that federal
funds are being spent appropriately. While these actions are
not required by law or regulation, they are essential tools for
ensuring accountability in high-risk, high-dollar, projects. In
their absence, unallowable costs charged to these awards
may go undetected.

With regard to the second challenge, oversight and manage-
ment of awards that is sufficient to safeguard federal funds
invested in scientific research has been an ongoing challenge
for NSF. The Foundation’s FY 2011 financial statement audit
noted several areas of concern about its processes for award-
ing 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. The FY 2012 audit stated that while                HIGHLIGHTS
improvements had been made in this area, improvements
                                                                    Congressional Testimony.37
in internal controls over processing grant transactions were        Outreach...........................38
necessary and follow-up remained a concern.
                                                                   37
Management Activities



                        Finally, contract monitoring, particularly for cost reimbursement contracts
                        which pose a greater risk to government, continues to be a challenge
                        for NSF. While NSF’s FY 2012 financial statement audit no longer cited
                        monitoring of cost reimbursement contracts as a significant deficiency
                        as a result of strengthened procedures, it stated that NSF management
                        must continue to implement corrective actions to ensure that it maintains
                        adequate control over such contracts.

                        Taxpayers expect government managers to be prudent custodians of
                        agency funds in both good times and bad, but expectations are even
                        higher when federal deficits are large and budgets are tight. The IG
                        assured Congress that we will continue to target our work and to direct
                        our resources to areas that pose the highest risk of misuse of taxpayer
                        dollars and can lead to funds used inappropriately being returned to the
                        government.


                        Outreach

                        The purpose of our outreach is to educate awardees, research adminis-
                        trators, and others about how to recognize and prevent waste, fraud, and
                        abuse. Outreach is 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 SBIR and the Suspension
                        and Debarment Working Groups under the auspices of the Council of
                        Inspectors General on Integrity and Efficiency. A particular focus of the
                        first group has been promoting the government-wide use of standardized
                        life-cycle certifications to prevent fraud and to facilitate prosecution
                        of fraudulent activities in the SBIR program. This effort culminated in
                        revisions that are being made to the SBA’s SBIR policy directives, which
                        include requirements for such certifications. The draft policy directive
                        has also incorporated a number of other working group suggestions to
                        prevent and detect fraud, waste, and abuse in this program. We under-
                        stand that SBA is finalizing this directive.

                        Suspension and debarment are valuable administrative tools that
                        agencies can use to protect scarce funds from fraud, waste, abuse,
                        poor performance, and noncompliance with contract provisions or ap-
                        plicable law. The Suspension and Debarment working group sponsored
                        a workshop in November 2012 focusing on fact-based suspension and
                        debarment actions (those that are not based on a judicial finding). The




                 38
                                                      OIG Semiannual Report   March 2013


workshop provided interaction between key communities involved in the
suspension and debarment process: Suspension and Debarment Of-
ficials, Offices of Inspectors General, and the U.S. Department of Justice
and was attended by more than 200 people.

OIG staff participated in meetings, made presentations, and provided
instruction to the National Council of University Research Administrators,
the National Conference on College Cost Accounting, the Information
Security and Privacy Advisory Board, among others. We provided
research misconduct briefings at six universities. We also participated in
meetings of the National Single Audit Coordinators, Federal Audit Execu-
tive Council, and the Financial Statement Audit Network.




                                                                              39
Management Activities




                 40
                                                  Statistical Data
                           Audit Data

      Audit Reports Issued with Recommendations
                for Better Use of Funds

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




                                                                      41
Statistical Data



                              Audit Reports Issued with Questioned Costs

                                                               Number of              Questioned               Unsupported
                                                                Reports                 Costs                     Costs
 A.    For which no management decision has                          29               $32,769,732                $3,536,720
       been made by the commencement of
       the reporting period
 B.    That were issued during the reporting                          4                $3,092,819                 $859,153
       period
 C.    Adjustment related to prior                                                   $(1,643,562)22                    $0
       recommendations
 Subtotal of A+B+C                                                                    $34,218,989                $4,395,873
 D.    For which a management decision was                           19                $3,516,792                $1,847,550
       made during the reporting period
       Dollar value of disallowed costs                              N/A                $705,976                      N/A
       Dollar value of costs not disallowed                          N/A               $2,810,816                     N/A
 E.    For which no management decision had                          13               $30,702,197                $2,548,323
       been made by the end of the reporting
       period
 For which no management decision was                                 9               $27,609,378                $1,689,170
 made within 6 months of issuance



   Status of Recommendations that Involve Internal NSF Management Operations

      Open Recommendations (as of 09/30/12)
         Recommendations Open at the Beginning of the Reporting Period                                                44
         New Recommendations Made During Reporting Period                                                             44
         Total Recommendations to be Addressed                                                                        88
      Management Resolution of Recommendations                  23


         Awaiting Resolution                                                                                          51
         Resolved Consistent With OIG Recommendations                                                                 37
      Management Decision That No Action is Required                                                                   0
      Final Action on OIG Recommendations              24


         Final Action Completed                                                                                       14
      Recommendations Open at End of Period (03/31/13)                                                                74




22 On report No. 12-4-077, $1,650,961 was resolved in a prior period. On report No. 11-1-011, $4,193 classified as cost share
at risk in the audit was resolved as questioned cost share, and $3,206 of additional costs were questioned during audit resolution
(-1,650,961+ 4,193+ 3,206 = -1,643,562).
23 “Management Resolution” occurs when the OIG and NSF management agree on the corrective action plan that will be imple-
mented in response to the audit recommendation.
24 “Final Action” occurs when management has completed all actions it agreed to in the corrective action plan.



             42
                                                                        OIG Semiannual Report    March 2013




 Aging of Open Recommendations
  Awaiting Management Resolution:
  0 through 6 months                                                                               44
  7 through 12 months                                                                                 5
  More than 12 months                                                                                 2
 Awaiting Final Action After Resolution
  0 through 6 months                                                                                  0
  7 through 12 months                                                                                 0
  More than 12 months                                                                              23



                                                    List of Reports25

                                      OIG and CPA-Performed Reviews

  Report                            Subject                    Questioned       Unsupported     Better Use of
  Number                                                         Costs             Costs           Funds
 13-1-001        REVISED University of Wisconsin –               $2,134,379               $0              $0
                 Ice Cube Incurred Cost
 13-1-002        Jackson State University                          $943,475         $844,241              $0
 13-1-003        University of Wisconsin Ice Cube CAS                      $0             $0              $0
                 Noncompliance
 13-2-001        NSF’s FY2012 Financial Statement                          $0             $0              $0
                 Audit
 13-2-002        NSF FY2012 Special Purpose                                $0             $0              $0
                 Financial Statement
 13-2-003        FISMA 2012 Independent Evaluation                         $0             $0              $0
 13-2-004        FY2012 FISMA Independent                                  $0             $0              $0
                 Evaluation Summary (OMB Database
                 Report)
 13-2-0 05       NSF FY2012 Management Letter                              $0             $0              $0
 13-2-006        Audit of Project Reporting on NSF                         $0             $0              $0
                 Awards
 13-2-007        FY12 IPERA Improper Payments                              $0             $0              $0
                 Elimination and Recovery Act
 13-2-008        Audit of Cost Associated with NSF’s                       $0             $0              $0
                 Use of Intergovernmental Personnel
 13-6-001        QCR of Eugene Nicholas’ 2007 & 2008                       $0             $0              $0
                 Audits of NSBP
                 Total:                                          $3,077,854         $844,241              $0




25 The office issued 12 reports this semiannual period.


                                                                                                 43
Statistical Data


                                          NSF-Cognizant Reports

   Report                                    Subject                           Questioned Unsupported
   Number                                                                        Costs       Costs
  13-4-001         9-11 LSST, Inc. – AZ                                               $0           $0
  13-4-002         12-11 Mobile Area Education Foundation – AL                        $0           $0
  13-4-003         6-11 REVISED Kalispell School District – MT                        $0           $0
  13-4-004         12-11 Institute for Learning Innovation – MD                       $0           $0
  13-4-005         3-11 Decision Science Research Institute – OR                      $0           $0
  13-4-006         12-11 AAAS American Association for the Advancement                $0           $0
                   of Science – DC
  13-4-007         12-11 Boyce Thompson Institute for Plant Research – NY             $0           $0
  13-4-008         12-11 CUAHSI Consortium of Universities for the                    $0           $0
                   Advancement of Hydrological Science – DC
  13-4-009         12-11 Stroud Water Research Center, Inc. – PA                      $0           $0
  13-4-010         12-11 The Franklin Institute – PA                                  $0           $0
  13-4-011         12-11 Astrophysical Research Consortium – WA                       $0           $0
  13-4-012         12-11 North American Association for Environmental                 $0           $0
                   Education – DC
  13-4-013         12-11 The Historymakers, Inc. – IL                                 $0           $0
  13-4-014         12-11 The Shodor Education Foundation – NC                         $0           $0
  13-4-015         5-12 Oregon Museum of Science and Industry – OR                    $0           $0
  13-4-016         6-12 Cal Poly Corporation – CA                                     $0           $0
  13-4-017         6-12 Museum of Science – MA                                       $53           $0
  13-4-018         6-12 Maryland Academy of Sciences – MD                             $0           $0
  13-4-019         6-12 The New Mexico Consortium – NM                                $0           $0
  13-4-020         12-11 Center for Severe Weather Research – CO                      $0           $0
  13-4-021         12-10 REVISED ScienceFriday, Inc. – CT                             $0           $0
  13-4-022         9-09 The Young People’s Project – MA                               $0           $0
  13-4-023         6-12 Old Dominion University Research Foundation – VA              $0           $0
  13-4-024         6-12 Viewpoints Research Institute – CA                            $0           $0
  13-4-025         6-12 CBIA Education Foundation – CT                                $0           $0
  13-4-026         6-12 Exploratorium – CA                                            $0           $0
  13-4-027         12-11 Triangle Coalition for Science and Technology – VA           $0           $0
  13-4-028         12-11 START International, Inc. – DC                               $0           $0
  13-4-029         12-11 American Geophysical Union – DC                              $0           $0
  13-4-030         6-12 REVISED CBIA Education Foundation – CT                        $0           $0
  13-4-031         6-12 IRIS Incorporated Research Institutions for                   $0           $0
                   Seismology – DC
  13-4-032         6-12 REVISED Maryland Academy of Sciences – MD                     $0           $0
  13-4-033         6-12 NISS National Institute of Statistical Sciences – NC          $0           $0
  13-4-034         6-12 Oregon Public Broadcasting – OR                               $0           $0




             44
                                                               OIG Semiannual Report   March 2013




13-4-035   6-12 The Science Museum of Minnesota – MN                              $0            $0
13-4-036   8-12 Twin Cities Public Television – MN                                $0            $0
13-4-037   7-12 MSRI Mathematical Science Research Institute – CA                 $0            $0
13-4-038   6-12 California Academy of Sciences – CA                               $0            $0
13-4-039   6-12 The Queens Borough Library – NY                                   $0            $0
13-4-040   6-12 University Enterprises – CA                                       $0            $0
13-4-041   6-12 Maine Mathematics & Science Alliance – ME                         $0            $0
13-4-042   6-12 Pacific Science Center Foundation – WA                            $0            $0
13-4-043   6-12 The Adler Planetarium – IL                                        $0            $0
13-4-044   9-12 ARCUS Arctic Research Consortium of the                           $0            $0
           United States – AK
13-4-045   6-12 Institute for Advanced Study – NJ                                 $0            $0
13-4-046   6-12 REJECTED Kennesaw State University Research &                     $0            $0
           Science Foundation – GA
13-4-047   6-12 The Academy of Natural Sciences of Philadelphia – PA              $0            $0
13-4-048   3-12 Berkeley Geochronology Center – CA                                $0            $0
13-4-049   6-12 Bigelow Laboratory for Ocean Science – ME                         $0            $0
13-4-050   6-12 Woods Hole Research Center – MA                                   $0            $0
13-4-051   9-10 REVISED Chabot Space & Science Center – CA                        $0            $0
13-4-052   6-12 National Alliance for Partnerships in Equity                      $0            $0
           Education Foundation – PA
13-4-053   6-12 Cary Institute of Ecosystem Studies – NY                          $0            $0
13-4-054   6-12 Corporation for Education for Education Network                   $0            $0
           Initiatives in California – CA
13-4-055   6-12 National Collegiate Inventors & Innovators Alliance – MA          $0            $0
13-4-056   6-12 Island Institute – ME                                             $0            $0
13-4-058   9-12 NEON National Ecological Observatory Network – DC                 $0            $0
13-4-060   12-11 WTEC World Technology Evaluation Center – PA                     $0            $0
13-4-062   8-12 Association of American Geographers – DC                          $0            $0
13-4-063   9-12 UCAR University Corporation for Atmospheric                       $0            $0
           Research – CO
13-4-073   9-12 AUI Associated Universities, Inc. – DC
           Total:                                                                $53            $0




                                                                                       45
Statistical Data


                                           Other Federal Reports

    Report                                 Subject                             Questioned     Unsupported
    Number                                                                       Costs           Costs
 13-5-047           4-12 Catholic University of America and Affiliates – DC        $14,912         $14,912
                    Total:                                                         $14,912         $14,912



                     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 neces-
sary 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 pages 42 - 43.

   Report                          Subject                      Questioned     Unsupported Better Use of
   Number                                                         Costs           Costs       Funds
 05-1-005        RPSC Costs Claimed FY2000 to 2002              $12,334,824             $0              $0
 06-1-023        RPSC 2003/2004 Raytheon Polar Services           $6,860,500            $0              $0
 07-1-003        Triumph Tech, Inc.                                  $80,740         $1,192             $0
 07-1-019        ABT Associates                                      $22,716            $0              $0
 09-1-014        University of Michigan                           $1,604,713     $1,418,889             $0
 09-5-048        8-07 College of the Mainland – TX   26
                                                                    $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
 11-1-021        NEON National Ecological Observatory                     $0            $0      $75,780,354
                 Network
 12-1-003        University of Notre Dame – IN                     $244,430        $244,430             $0
 12-1-005        UCAL – Santa Barbara                             $6,325,483            $0              $0
 12-1-008        NEON Proposal Audit                                      $0            $0      $78,657,394
 12-5-143        9-11 Fort Berthold Community College – ND27         $25,343        $24,659             $0
                 Total:                                         $27,609,378      $1,689,170    $304,895,499




26 This report is on hold.
27 This report is on hold.


             46
                                                                                OIG Semiannual Report            March 2013


                                    Civil/Criminal Investigative Activities

Referrals to Prosecutors 	   7
Criminal Convictions/Pleas 	 12
Arrests	3
Civil Settlements	           2
Indictments/Information	     4
Investigative Recoveries	    $1,661,928.88


                                   Administrative Investigative Activities

Referrals to NSF Management for Action	  31
Research Misconduct Findings	            7
Suspensions/Debarments/Exclusions	       10
Administrative Actions	                  51
Certifications and Assurances Received 	27
                                      28




                                           Investigative Case Statistics

		                                           Preliminary	 Civil/Criminal	Administrative

Active at Beginning of Period	                    33	                           133		                          103
Opened			                                         70	                           41		                           70
Closed			                                         79	                           25		                           47
Active at End of Period		                         24	                           149		                          126


                      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	                                                                         18
Requests Processed	                                                                        18
Appeals Received	                                                                          1
Appeals Upheld	                                                                            1

Response time ranged between 1 day and 20 days, with the median around 15 days
and the average around 14 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.


                                                                                                                 47
About the Cover...

Erika Buchtel (daughter of OIG auditor, Dan Buchtel) took the photo as an assignment for
her digital photography class. Erika is a freshman in high school.
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