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 49,400 research
and education projects in science and engineering, and is responsible for the establishment
of an information base for science and engineering appropriate for development of national
and international policy. Over time other responsibilities have been added including
fostering and supporting the development and use of computers and other scientific
methods and technologies; providing Antarctic research, facilities and logistic support; and
addressing issues of equal opportunity in science and engineering.
And The Office of the Inspector General...
NSF’s Office of the Inspector General promotes economy, efficiency, and effectiveness in
administering the Foundation’s programs; detects and prevents fraud, waste, and abuse
within the NSF or by individuals that recieve NSF funding; and identifies and helps to
resolve cases of misconduct in science. The OIG was established in 1989, in compliance
with the Inspector General Act of 1978, as amended. Because the Inspector General
reports directly to the National Science Board and Congress, the Office is organizationally
independent from the agency.
About the Cover...
Front Cover: Photograph of The Einstein Memorial on the grounds of the National
Academies of Science in Washington, D.C., taken in early Spring 2013 by Investigative
Scientist Scott J. Moore.
Back Cover: The quotation attributed to Albert Einstein appears on the outer wall of The
Einstein Memorial.
Table of Contents
From the Inspector General................................................................... 3
Audits and Reviews................................................................................ 7
Opportunities for Cost Savings on U.S. Antarctic Program
Medical Screenings..................................................................................................7
Audits of NSF Awards................................................................................................8
A-133 Audits................................................................................................................9
Audit Resolution.......................................................................................................12
Investigations....................................................................................... 15
Civil and Criminal Investigations............................................................................15
Research Misconduct Investigations.....................................................................19
Administrative Investigations.................................................................................25
Management Implication Reports...........................................................................26
Management Activities........................................................................ 29
FY 2014 Top OIG Management Challenges........................................ 31
Statistical Data...................................................................................... 45
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From the Inspector General
This Semiannual Report to Congress highlights the activities of the
National Science Foundation Office of Inspector General (NSF OIG)
for the six months ending September 30, 2013. During this period, our
investigative staff closed 86 investigations, had six research misconduct
cases result in findings by NSF, and recovered over $504,095 for
the government. In addition, we issued six audits and reviews which
identified more than $1.1 million in questioned costs.
This report reflects my office’s work to promote the efficiency and
effectiveness of the National Science Foundation’s programs and
operations and to safeguard their integrity. The OIG is committed
to providing rigorous, independent oversight of NSF. To that end, in
the past six months our audit of NSF’s management and oversight
of contingencies in a major construction project disclosed more than
$339,000 in questioned costs. Another audit recommended that
an awardee return nearly $800,000 in NSF funds that were spent
improperly. Our investigations found fraudulent use of funds intended for
grants to support innovative research by small businesses; mischarges
to NSF awards for travel and unallowable costs; and research
misconduct, including falsification of data and plagiarism in proposals to
obtain NSF funds.
As budgets tighten and Federal resources are strained, it is vital that
every taxpayer dollar allocated to support scientific research be used for
its intended purpose. To help meet this critical objective, we are focused
on providing robust oversight to strengthen NSF’s financial controls and
processes.
Our office is not unaffected by these difficult budgetary times. In fiscal
year 2013 we lost five auditors, investigators, and attorneys and did not
replace any staff. In addition, under the sequester the amount available
to fund our audits, investigations and other operational needs was cut in
half. Despite these challenges, our staff have continued to produce high
quality, thorough audits, investigations and reviews.
While our investment in data analytics has paid off, enabling us to work
more efficiently and effectively, the most valuable asset we have in these
challenging times is our staff. Across the organization, people have
willingly shouldered the work of colleagues who have left and not been
replaced. They have worked diligently to identify low- or no-cost training
that enables us to meet mandatory continuing education requirements
at a time when the funds for such activities have been slashed. And
they continue to maintain our office’s lead role in the OIG community’s
efforts to combat fraud in the Small Business Innovation Research program, to expand
the use of suspension and debarment to protect Federal funds, and to ensure that
critical accountability tools are not lost or watered down as part of the process to reform
Federal grant management.
Their dedication to this work during these challenging times reflects the office’s
sustained commitment to helping NSF be an effective steward of taxpayer dollars and
benefits from the support of NSF management across the Foundation. We look forward
to our continued partnership with NSF and the Congress to fulfill this goal.
Report Highlights
• Our audit of the United States Antarctic Program medical
screening process found that NSF may have missed
opportunities to reduce the cost of this process because
it has not implemented certain recommendations
from its medical review panel. For at least five years,
the panel has recommended that NSF base required
medical tests on factors such as how long an individual
will be in Antarctica, and the assigned duty station and
job responsibilities, rather than require all applicants to
undergo the same tests. Revising the number of medical
tests performed based on these criteria could lower costs,
which are approximately $860 per person.
• An audit covering over $113 million charged by a
university to NSF awards between 2008 and 2011 found
that an estimated $794,221 in unallowable costs were
charged to these awards. The unallowable costs included
more than $660,000 in direct costs for supplies such as
laptops, monitors, and toner cartridges that should have
been treated as facilities and administrative costs.
• Investigations involving fraud in the Small Business
Innovation Research Program (SBIR) resulted in a
Principal Investigator (PI) being indicted for false
claims, false statements, and theft; a proposed five-year
debarment for a small business owner who improperly
spent more than half of his SBIR award funds; and the
government-wide suspension of a PI and his company
due to false statements and false claims with respect to an
SBIR award.
• We referred thirteen cases of research misconduct to NSF
including a post-doctoral fellow who admitted falsifying
data, a graduate student who was expelled for fabricating
data, and a PI who plagiarized text in two awards.
5
Report Highlights
6
Audits & Reviews
Opportunities May Exist for Cost Savings on USAP
Medical Screenings
Before going to the Antarctic through the United States
Antarctic Program (USAP), potential travelers must pass
a number of medical and dental examinations based on
factors such as gender and age. With minor exceptions, this
physical qualification testing is “one size fits all,” meaning
that all candidates, regardless of their deployment duration,
job responsibilities, season of travel, or duty station, must
undergo the same medical tests.
Our audit of the USAP medical screening process found that
NSF may have missed opportunities to reduce the cost of the
medical screening process because it has not implemented
certain recommendations from its medical review panel. For
example, for at least five years, the panel has recommended
that NSF base required medical tests on factors such as how
long an individual will be in Antarctica, duty station, and job
responsibilities, rather than require all applicants to undergo
the same tests. Revising the number of medical tests
performed based on these criteria could lower costs, which
are approximately $860 per person.
We also noted that nearly 20 percent of applicants withdraw
each year before completing the medical screening process,
constituting significant time and effort for staff as well as
incurring medical examination costs. To reduce these costs,
NSF should identify the reasons why applicants withdraw
from the process and address these causes.
The Antarctic Support Contractor (ASC) and its
subcontractors prepare, process, and pay as many as 1,600 HIGHLIGHTS
individual reimbursement requests each year for costs related
to medical screening. We found that guidance about what Opportunities May Exist for
Cost Savings on USAP
medical expenses will be reimbursed by the contractor is
Medical Screenings ........7
unclear. As a result, applicants may be submitting claims for Improper Use of NSF
expenses that are not eligible for reimbursement. Award Funds Leads to
More than $339,000
We also found that the contractor does not have policies in Questioned Costs....... 8
More than $794,000 in
and procedures for reviewing ASC invoices, including those
Unallowable Costs
for medical processing. The Contracting Officer told us that Charged to NSF
NSF cannot tell if it is being accurately invoiced by Lockheed Awards............................9
Martin (LM) for medical processing costs and is reliant on
7
Audits & Reviews
the contractor to charge them correctly and on one contractor employee
to examine LM invoices, including those for medical processing, more
closely. While we recognize medical processing costs only amount to
$1 million out of the first full year’s contract value of $173 million, finding
a less than robust internal control system over relatively small costs
raises the possibility that a similar level of control could exist over larger
contractor costs. NSF should consider increasing its investment in the
oversight of invoiced costs until it is better assured of the contractor’s
internal controls.
We recommended that NSF establish a process to address and track
medical panel recommendations in a timely manner and identify and
address the reasons why applicants withdraw during the medical
screening process. We also recommended that NSF require the
contractor to document its internal controls over ASC invoicing for the
medical screening process. NSF agreed with our recommendations and
stated that it is taking steps to implement them.
Improper Use of NSF Award Funds Leads to More than $339,000 in
Questioned Costs
Our 2012 audit of NSF’s management and oversight of contingencies
in the construction portion of the EarthScope project1 found that
contingency expenditures in a cooperative agreement to Stanford
University for the San Andreas Fault Observatory at Depth (SAFOD)
portion of the project increased from the initial estimate of $1.5 million to
over $4.9 million. We also found that Stanford did not separately identify
these contingency expenditures in its accounting system.
As a result of these findings, we conducted an audit of Stanford’s
expenditures for the SAFOD project, which totaled nearly $24.6 million,
90 percent of which was awarded to eight subawardees. In turn,
one of these subawardees contacted portions of its work to several
subcontractors. Due to the many levels of subcontracting used, the
details of both the work completed and the corresponding expenditures
were not readily visible to us. We selected a sample of $16.3 million
of transactions for review; however, because of the significant amount
of subawarded work, we were able to review only $753,541 of SAFOD
expenditures.
Of the $753,541 reviewed, we identified $333,024 of payments to a
subawardee and $6,253 of other direct costs as questioned costs.
Specifically, $290,000 was improperly used to replace a subcontractor’s
uninsured lost equipment and another $43,024 was spent in excess
1 Audit of NSF’s Management of Contingency in the EarthScope Awards, Report No. 12-2-010, dated
September 28, 2012.
8
OIG Semiannual Report September 2013
of the subaward agreement ceiling prices. Of the remaining $420,517
reviewed, we found that Stanford spent $6,253 on unallowable costs,
such as sales taxes, promotional items, and alcohol.
We recommended that the NSF request Stanford University to repay
NSF the $339,277 of questioned costs.
More than $794,000 in Unallowable Costs Charged to NSF Awards
Based on statistical sampling, an audit covering over $113 million
charged by Cornell University to NSF awards between 2008 and 2011
estimated that more than $794,000 in unallowable costs was charged
to these awards. The estimated unallowable costs included more than
$660,000 in direct costs for supplies such as laptops, monitors, and toner
cartridges that should have been treated as facilities and administrative
costs. In addition, Cornell improperly charged costs for services at
facilities such as computer centers and supply stores which should have
been treated as facilities and administrative costs. Further, Cornell
charged NSF awards for foreign travel that exceeded the maximum
allowable per diem rate and was not adequately documented.
The audit recommended that Cornell refund the $794,221 to the
government and that Cornell adhere to its procedures for charging
costs to NSF awards. Although Cornell agreed that some of the costs
identified in the audit were unallowable, it disagreed with the audit
recommendations.
A-133 Audits
Single Audits Identify Repeat Findings at One-Third of Awardees
with Findings
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.
9
Audits & Reviews
The 149 audit reports reviewed and referred2 to NSF’s Cost Analysis and
Audit Resolution (CAAR) Branch this period covered NSF expenditures
of $6.4 billion as reported in the Single annual Audits during audit years
2011 and 2012, and resulted in 128 findings at 62 NSF awardees.
One awardee received an adverse opinion on its financial statements,
and eight awardees received qualified opinions on their compliance
with Federal grant requirements. Forty-seven of the 128 findings (37
percent), at 20 of the 62 awardees with findings (32 percent), were
repeated from previous audits, calling into question the awardees’ ability
to adequately manage their NSF awards. The auditors also identified
$227,819 in questioned costs.
Awardees’ lack of internal controls and noncompliance with Federal
requirements included: untimely and/or incorrect reporting of time and
effort; inadequate support for salary/wages, equipment, travel, and
indirect costs charged to awards; inadequate monitoring of subrecipients;
inability to prepare the financial statements; and late submission of
financial and/or progress reports.
Desk Reviews Continue to Find Audit Quality and Timeliness Issues
in Nearly Half of Single Audits
The audit findings in A-133 reports are useful to NSF in planning
site visits and other post-award monitoring efforts. Because of the
importance of A-133 reports to this oversight process, the OIG conducts
desk reviews on all reports for which NSF is the cognizant or oversight
agency for audit, and provides guidance to awardees and auditors for the
improvement of audit quality in future reports. In addition, OIG returns to
the awardees reports that are deemed inadequate so that the awardees
can work with the audit firms to take corrective action.
During the period, we conducted desk reviews of 79 audit reports3 for
which NSF was identified as the cognizant or oversight agency for audit,
and found that 46 fully met Federal reporting requirements. Thirty-three
reports (43 percent) contained audit quality and timeliness issues.
The quality issues we identified included 17 reports in which the
Schedule of Expenditures of Federal Awards did not provide sufficient
information to allow for identification of awards received from non-Federal
“pass-through” entities or did not adequately describe the significant
accounting policies used to prepare the schedule. Ten reports were
submitted after the due date required by OMB Circular A-133. Seven
2 We also reviewed and rejected two reports based on audit quality deficiencies. We will report on the
opinions and findings for these audits upon receipt of the revised reports.
3 The audits were conducted by 48 different independent accounting firms.
10
OIG Semiannual Report September 2013
reports did not use reporting language required by AICPA4 standards,
and six reporting packages contained Data Collection Forms (Form SF-
SAC) that failed to accurately reflect the results of the audit. In addition,
three of the 11 reports that included audit findings related to compliance
with Federal requirements failed to adequately present the required
elements of the finding to assist auditee management in correcting the
reported deficiency, and four reports failed to adequately present the
required elements of the auditee managements’ plan to correct the
deficiencies reported.
For those errors which potentially impacted the reliability of the audit
reports, we contacted the auditors and awardees, as appropriate,
for explanations of each of the potential errors. In most cases, the
auditors and awardees either provided adequate explanations and/or
additional information to demonstrate compliance with Federal reporting
requirements. However, we rejected two reports due to substantial
non-compliance with Federal reporting requirements. After completion of
all 79 reviews, 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.
Quality Control Review on Single Audit Work Performed by Public
Accounting Firm Discloses Serious Deficiencies
OIG uses a risk assessment process to identify single audits which
merit further review to determine whether the audits were conducted
in accordance with applicable standards. These Quality Control
Reviews involve in-depth examinations of the auditors’ supporting
documentation. Our quality control review of the audit documentation
and report prepared for the Single Audit 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 work performed. The auditors did not identify one of the direct
and material compliance requirements in effect for the major program,
and did not adequately plan and perform testing related to several
Federal requirements that were identified as direct and material to the
major program, including a failure to select a sample size large enough
to meet AICPA standards (as well as the firm’s policy) for testing of one
compliance requirement. The auditors agreed with our recommendation
to conduct additional testing and reissue the audit report. We will report
on our review of the additional work during the next semiannual period.
4 American Institute of Certified Public Accountants.
11
Audits & Reviews
Audit Resolution
More Than $248,000 in Questioned Costs in Five Awards to
University of Notre Dame
An audit of five awards made to the University of Notre Dame questioned
$248,983 of claimed costs. The questioned costs consisted of $119,330
in unsupported participant support and travel costs; $44,300 for
unsupported and unallowable subaward costs; $80,800 in participant
support costs that were re-budgeted without the required prior approval
from NSF; and $4,553 of indirect costs associated with questioned
direct costs. The auditors also identified several compliance and
internal control deficiencies in financial practices at Notre Dame and its
subawardees that, if not corrected, could impact current and future NSF
awards.
According to NSF, the University of Notre Dame has made improvements
to its subrecipient monitoring process. In addition, NSF said that it has
recommended that the subawardees develop formal methodologies for
documenting participant support costs under NSF awards.
NSF Takes Steps to Help Ensure that Project Reports are Submitted
on Time
In response to our recommendations, NSF stated that it will implement a
report for use by NSF Program Officers that will list awards with annual
and/or final project reports that are at least 90 days overdue. NSF also
agreed to provide additional training on how to identify late reports.
Debarment Considered for Failure to Comply with Final Reporting
Requirements
OMB Circular A-110 requires recipients of Federal funds to submit
performance reports at least annually and at the end of a project. NSF
has implemented this requirement through its Grant General Conditions
(GC-1 § 15), which obliges awardees to “submit annual project reports 90
days prior to the end of the current budget period and final reports.” The
agency uses the reports from Principal Investigators (PIs) to monitor the
progress and accomplishments on funded projects.
During the course of this audit, we identified a number of individual PIs
who had repeatedly failed to comply with the reporting requirement,
including eight individuals with multiple missing final reports. In our
view, repeated non-compliance with the final reporting requirement (in
particular) indicates a lack of present responsibility to handle federal
funds, and we opened a dialogue with the agency about the possibility of
government-wide debarment in these instances. To support debarment
12
OIG Semiannual Report September 2013
consideration, we provided NSF officials with relevant information
gathered and assembled by our audit staff, such as the number and
amount of active awards, the length of time the final reports were
overdue (all were at least a year past due), the amount of the relevant
awards, verification that notices had been sent to the PIs about the
delinquent reports, and whether the PIs had also failed to submit annual
reports.
NSF responded by issuing letters to the institutions and PIs requiring
submission of the reports or an action plan within 30 days. The
letters further indicated that failure file a report or action plan would
result in administrative action. NSF’s prompt action in this regard is
consistent with practice known as a “show cause” letter, whereby an
awarding agency provides an opportunity for individuals or entities
being considered for suspension or debarment to demonstrate present
responsibility before formal action is taken. In this instance, 6 of the 8
PIs ultimately complied with the requirement after NSF issued its letter.
We are following up with the agency concerning the remaining two cases.
13
Audits & Reviews
14
Investigations
Civil and Criminal Investigations
NSF’s Small Business Innovation Research (SBIR) and Small
Business Technology Transfer (STTR) programs provide
grants for small businesses to “undertake research and
development 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 Indicted for SBIR Fraud
We previously reported5 that a PI and his company were
suspended government-wide after our investigation
determined that the PI had provided false effort information
in official project reports submitted to NSF to obtain grant
payments. During this reporting period, the PI was indicted
for false claims, false statements, and theft for significantly
inflating the amount of effort he and other company
employees spent on the NSF project.
$275, 000 in Funds Put to Better Use from STTR Award
As a part of an ongoing investigation, we recommended that
NSF withhold final payments associated with a Phase II STTR
award that had expired, after finding that: (1) the company
had misrepresented its accounting and timekeeping systems
to NSF in order to obtain the award, and (2) the mandatory
milestone reports submitted by the company to NSF provided
false information regarding salary payments to the PI. NSF
financially closed the award and withheld the final payments,
resulting in $275,000 in funds put to better use.
Proposed Five Year Debarment for SBIR Company Owner HIGHLIGHTS
and $49,986 in Funds Put to Better Use
Civil and Criminal
Our investigation found that the owner of a small business Investigations ............... 15
in Oklahoma spent 57 percent of his SBIR award funds on Research Misconduct
Investigations ............... 19
expenses unrelated to the award project, primarily for a Administrative
Investigations ...............25
5 March 2012 Semiannual Report, p.26.
15
Investigations
subsidiary company engaged in a separate business. Based on our
recommendation, NSF terminated the award, resulting in $49,986 in
funds put to better use. The company went into bankruptcy and its
assets were sold. After DOJ declined prosecution, we recommended
NSF debar the businessman for five years. NSF’s decision is pending.
NSF Suspends PI and SBIR Company Government-wide Due to PI’s
False Representations
We previously reported6 that NSF followed our recommendation to
retain the final payment on an SBIR Phase II award as a result of false
statements and false claims submitted by the PI of a small business in
Texas. Based on our recommendation, NSF also suspended the PI and
the small business government-wide pending the conclusion of our joint
investigation with the NASA and DOE OIGs and the Defense Criminal
Investigative Service.
STTR PI Indicted on Additional Count of Federal Program Fraud
We previously reported7 that the PI of an NSF STTR awardee company
was indicted for wire fraud, mail fraud and falsification of records based
upon a variety of grant-related documents he submitted to NSF, which
contained false information. Based on additional information uncovered
in our investigation, the Grand Jury issued a superseding indictment
against the PI to add one count of theft from a federal program arising
from an additional fraud scheme in which he authorized students to
receive federally-funded stipends and required the students to pay him
significant portions of the stipend funds.
Unsupported Expenditure of ARRA Funds Results in
Recommendation for PFCRA Recovery
Our investigation of a California small business that received an
SBIR award funded under ARRA disclosed that the company failed
to segregate and track costs as required for ARRA awards, and did
not properly document expenditure of more than half of the $99,077 it
received. In addition, the company falsely certified that it had complied
with the ARRA award requirements. We referred the case to DOJ,
which declined to accept the matter for FCA action. We therefore
recommended that NSF pursue a PFCRA action against the small
business to recover the funds paid as a result of the submission of the
false report, as well as penalties and damages, totaling $76,052. NSF’s
decision is pending.
6 March 2013 Semiannual Report, p.23.
7 March 2013 Semiannual Report, p.22.
16
OIG Semiannual Report September 2013
The Program Fraud Civil Remedies Act (PFCRA)
When an OIG investigation reveals that a grantee submitted false
claims to NSF, we have generally referred the matter to DOJ for civil
action under the False Claims Act (FCA), which provides up to treble
damages and penalties up to $11,000 for each false claim. However,
an FCA action requires DOJ to proceed to trial in federal court or
engage in settlement negotiations, and not all referrals are accepted,
sometimes due to the damages falling below DOJ’s monetary loss
threshold. PFCRA provides an agency administrative remedy to
recover money from grantees when the amount of each false claim
does not exceed $150,000. Under NSF’s PFCRA regulation, our
office refers the case to NSF for action, and NSF can recover up to
twice the amount of each false claim, as well as a penalty of $5,000
for each false claim. PFCRA can also be used subsequent to a
criminal conviction to seek funds not recovered by the criminal action.
As discussed above, we recently made our first PFCRA
recommendation to NSF, and we are now considering the use of
PFCRA as a possible remedy in all substantiated fraud investigations.
NSF Debars Former PI for Purchase Card Fraud
We previously reported8 that a PI at a Missouri university used his
university purchase card to buy items charged to several NSF awards
and then returned the items in exchange for gift cards. The PI pled guilty
and was sentenced to two years’ probation and payment of $2,525.
Based on our recommendation, NSF debarred the PI for three years.
Theft of Equipment at an NSF-Funded Research Facility
A former employee of an NSF-supported research facility in Louisiana
was convicted of theft in state court and sentenced to five years’
probation and restitution of $14,925. We recommended that NSF debar
the individual for three years; NSF’s decision is pending.
University Returns Over $6,000 for Mischarging Travel Costs
Our investigation found that an Oklahoma university wrongly charged
participant travel expenses under an NSF award to a domestic travel
account, thus incorrectly incurring indirect cost charges. The university
returned $6,201 to NSF.
8 March 2013 Semiannual Report, p.24.
17
Investigations
Company Returns Misspent Participant Support Costs
Our investigation of a Rhode Island company uncovered $5,267 in
misspent participant support costs under an NSF award, which the
company repaid.
Debarment Recommendation Based on Professors’ False
Statements and Non-Disclosure of Dual Employment
We previously reported9 that NSF terminated an NSF award, resulting
in $295,933 funds put to better use, based on our investigation into
allegations that two professors were receiving duplicate salaries from
NSF grants awarded to their Georgia university and from a foreign
university. Our investigation revealed that the professors, who held
tenured faculty positions at the Georgia university and served as PIs or
co-PIs on NSF awards, simultaneously held full-time faculty positions
at a university located in Israel. The PIs charged salary and foreign
travel expenses associated with trips and time spent working in Israel
to the NSF awards. They failed to disclose their dual employment to
NSF, the U.S. university, and the foreign university, and they made
false statements regarding their dual employment. The U.S. university
conducted an internal investigation, which resulted in the professors’
resignations.
We referred the matter to the State of Georgia’s Attorney General’s
Office for consideration, but it declined criminal action. We
recommended that NSF debar the PIs for five years, and NSF’s decision
is pending.
Debarment Recommended for PI and an NSF Center Director Based
on Diversion of Program Income
Our investigation of a former PI on multiple NSF awards and a former
director of an NSF Center revealed that they diverted program income
earned as a result of sales of curriculum products developed under
active NSF awards, without the Texas awardee institution’s knowledge.
They sold the products through two non-profit corporations they formed
and deposited the program income into bank accounts to which the
awardee institution did not have access. As a result, the awardee
institution was unable to either report the program income to NSF
or to determine how to use the program income to further the NSF
award purposes, as required. After DOJ declined prosecution, we
recommended that NSF debar the PI, the former director, and their
affiliated companies for five years. NSF’s decision is pending.
9 September 2011 Semiannual Report, p.9.
18
OIG Semiannual Report September 2013
Non-Profit Improperly Spends NSF Funds
Our investigation of an NSF cooperative agreement with an Alaskan
non-profit organization revealed that the PI and the organization
spent NSF funds on expenses incurred by other Arctic researchers on
non-NSF research, requested duplicative reimbursement of the same
expenses, and failed to maintain adequate documentation of expenses.
We recommended that NSF debar the PI and the non-profit organization
for three years, and NSF’s decision is pending.
Former Professor and His Company Proposed for Debarment for
Ten Years for Theft of Award Funds
We previously reported10 that a former professor of an Indiana university
used NSF grant funds to purchase items for personal use, and as
a result he was: suspended government-wide by NSF; indicted and
pled guilty to criminal conversion; sentenced to probation and home
confinement; and ordered to make restitution to NSF due to his misuse
of NSF grant funds. Based on our recommendation, NSF proposed
debarment of the individual and his company for ten years. NSF also
prohibited the individual from serving as an NSF reviewer, advisor, or
consultant to NSF during the period of debarment.
Research Misconduct Investigations
Research misconduct damages the scientific enterprise, is a misuse
of public funds, and undermines the trust of citizens in government-
funded research. It is imperative to the integrity of research funded
with taxpayer dollars that NSF-funded researchers carry out their
projects with the highest ethical standards. For these reasons, pursuing
allegations of research misconduct by NSF-funded researchers
continues to be a focus of our investigative work. In recent years, we
have seen a significant rise in the number of substantive allegations
of research misconduct associated with NSF proposals and awards.
The NSF definition of research misconduct encompasses fabrication,
falsification, and plagiarism.
NSF takes research misconduct seriously, as do NSF’s awardee
institutions. During this reporting period, institutions took actions against
individuals found to have committed research misconduct, ranging from
letters of reprimand to termination of employment. During this reporting
period, NSF’s actions in research misconduct cases ranged from letters
of reprimand to one year of debarment.
10 March 2011 Semiannual Report, p.22, September 2011 Semiannual Report, p.9, and March 2013
Semiannual Report, p.24.
19
Investigations
We referred thirteen cases of research misconduct to NSF, which are
summarized below. In every case, we recommended that NSF make a
finding of research misconduct, send the subject a letter of reprimand,
require the subject to complete a Responsible Conduct of Research
training program, and other actions as described below. NSF’s decisions
are pending in all cases.
Post-Doctoral Fellow Admits Falsifying Data
A post-doctoral fellow who conducted NSF-funded research at a
Washington university admitted that he manipulated images in a
manuscript submitted to a journal. The university’s investigation
determined that he intentionally committed falsification, but found that
the image manipulations did not affect the conclusions of the manuscript.
The university issued a research misconduct finding and terminated
the fellow’s employment. The journal rescinded its acceptance of the
manuscript for publication.
We concurred with the university’s findings and recommended that NSF
debar the fellow for one year. We further recommended that, for three
years after the debarment period, NSF: bar him from participating as
a peer reviewer, advisor, or consultant for NSF; require certifications
and assurances for all proposals or documents submitted to NSF; and
require submission of a detailed data management plan with annual
certifications of adherence for any resulting awards.
Graduate Student Fabricates Microscope Images
A graduate student at an Illinois university twice fabricated microscope
images, misrepresenting his research abilities. The student admitted to
his actions and was expelled from the university. We recommended that
NSF debar the student for one year, require two years of certifications
and assurances after the period of debarment, and bar him from serving
as a consultant or reviewer for NSF for two years.
Graduate Student Expelled for Fabricating Data
A graduate student at a university in Kentucky committed research
misconduct when he fabricated research data. The student’s advisor
became suspicious when the student provided new data so soon after
returning from vacation. The advisor checked the lab equipment on
which the student supposedly conducted the experiments and found
it had not been used. When the advisor confronted the student,
the student admitted he fabricated the data. The department chair
conducted an investigation, concluded the student fabricated, and
dismissed him from the program.
20
OIG Semiannual Report September 2013
We concurred with the university’s conclusions and recommended that
NSF debar the student for one year, require him to submit certifications
and an assurances for one year following the debarment period, and bar
the student from serving as a reviewer, advisor, or consultant for NSF.
Research Team Omission of Experimental Details and
Overstatement of Results Constitutes Falsification
Our investigation determined two faculty members and a graduate
student at a North Carolina university recklessly omitted experimental
details and overstated their experimental results in a published article, to
an extent that constituted falsification.
The university’s investigation concluded that at least one of the faculty
members had falsified but had done so carelessly, which did not
constitute research misconduct. Nevertheless, the university requested
that the authors retract the article. When the authors disregarded that
request, the university sent the request directly to the journal — which
did not retract the article.
We continued our investigation with additional interviews and examined
the laboratory records. The student’s lab notebooks, which described
some experiments in great detail, lacked documentation to support the
pertinent claim discussed in the article. Although both faculty members
claimed to have reviewed the raw data, we concluded that the minimal
raw data that existed in fact contradicted the pertinent claim in the article.
We also reviewed subsequent articles that the coauthors asserted
constituted corrections to the original paper, but we found that these
articles did not address the deficiencies in the original article.
We concluded that collectively the coauthors recklessly falsified their
work in the original article. We recommended that NSF require retraction
of the article and three years of certifications and assurances for each
author, and bar each author as an NSF reviewer, advisor, or consultant
for three years.
Extensive Plagiarism Found in PI’s Proposal
Our investigation found plagiarism in a proposal submitted by a PI.
The PI and the president of the Idaho company did not dispute that the
proposal contained copied text, but explained that the PI neglected to
finish the proposal because of “extenuating circumstances,” specifically
a visit from his fiancé, whom he had not seen in a year. Subsequently,
another company employee submitted the proposal without consulting
the PI.
21
Investigations
Our investigation, however, also found extensive plagiarism in a proposal
submitted to another federal entity, casting doubt on the claim the NSF
plagiarism was due to “extenuating circumstances.” We concluded that
the PI knowingly committed plagiarism and recommended that NSF
require certifications and assurances for three years.
Professor Copies from NSF Proposal She Reviewed
Our investigation determined a North Carolina professor retained copies
of NSF proposals she reviewed and shared them with her students
without approval by the NSF program officer. She also copied a figure
from one of the proposals and used it in a conference presentation
without attribution to its author. Our investigation concluded that the
professor committed plagiarism and violated NSF reviewer rules. We
recommended that NSF require that the professor provide certifications
and assurances for three years, and be barred from service as a
reviewer or consultant to NSF for three years.
Small Business Owner Plagiarizes in Two NSF Proposals
A small business owner plagiarized in an NSF proposal but claimed
the plagiarism was a result of computer software. Our investigation
found that the owner had submitted another NSF proposal a year
earlier, contrary to his contention, and that this proposal also contained
plagiarism.
The owner ultimately accepted responsibility for the copied text while
claiming he misunderstood the definition of plagiarism. This claim was
not plausible in light of his extended experience at large U.S. research
institutions and U.S. research companies. We concluded that the owner
knowingly committed plagiarism and recommended that NSF require the
owner to provide certifications for two years.
Proactive Review Identifies Two Incidents of Plagiarism
We routinely carry out proactive reviews to identify fraud, research
misconduct, and other wrongdoing in NSF awards. As a part of an
ongoing proactive review, we have been looking for plagiarism by
reviewing all proposals funded by NSF in 2011. In one case that arose
from that review, a South Carolina PI plagiarized in his NSF proposal.
The university investigation found additional plagiarism, concluded
the PI intentionally plagiarized, and took several actions in response.
Our investigation identified more plagiarism, revealing a pattern. We
concurred with the university’s findings, and we recommended that NSF
require the PI to submit certifications and assurances, and bar the PI
from participating as a peer reviewer, advisor, or consultant for NSF for
two years.
22
OIG Semiannual Report September 2013
In a second case, we determined that a South Carolina co-PI plagiarized
in an NSF proposal. During our investigation, we found no additional
instances of copied text. We recommended that NSF require the co-PI
to provide certifications for one year.
PIs Submit Proposals without Noticing Plagiarism by Others
In two cases we recommended that PIs be found to have committed
plagiarism because they submitted proposals in their names which
had been significantly plagiarized by others. In the first case, a PI at
an Ohio institution submitted a collaborative proposal in which almost
nine of twelve pages were plagiarized. The NSF U.S.-Egypt program
announcement states that proposals “should be jointly developed ... and
reflect a true intellectual collaboration,” and it includes explicit language
about plagiarism. The PI admitted that his collaborator, an Egyptian
scientist with whom the PI was unfamiliar, prepared virtually all of the
proposal.
Our investigation concluded that the PI recklessly committed plagiarism.
Although the PI authored only one small section of the proposal, he
submitted a document provided to him by a foreign scientist, whom he
admittedly did not know professionally or personally, without performing
any due diligence such as carefully reviewing the document — despite
having engaged in email correspondence in which it was clear the
Egyptian scientist has a very limited command of English. We
recommended that NSF require certifications and assurances for one
year.
In the second case, an associate professor at an Illinois university
recklessly plagiarized material into an NSF proposal. An inexperienced
graduate student wrote the proposal and the professor submitted it with
minimal review. He claimed that family matters affected his ability to
exercise due diligence and compromised his judgment when deciding to
submit the proposal. We recommended that NSF require certifications
and assurances, and bar the professor from serving NSF as a reviewer,
advisor, or consultant for one year.
PI Plagiarizes in Two Awards
A PI at an Illinois university plagiarized text in two awards from ten
sources. The PI claimed he paraphrased and prominently referenced
sources to support the text; however, the identified text was not
demarcated by quotation marks or indentation. The university inquiry
determined the PI committed plagiarism, but the university did not
conduct an investigation because the PI subsequently obtained
employment elsewhere. We agreed with the university’s findings that
23
Investigations
the PI plagiarized and recommended that for one year NSF require
certifications for all proposals or documents submitted to NSF and bar
him from participating as a peer reviewer, advisor, or consultant for NSF.
Assistant Professor Blames Software for Deleting Citations
A Pennsylvania professor plagiarized text into an NSF proposal and
claimed that the software he used to merge components of the proposal
somehow caused citations to disappear. A university committee
with expertise in the same software examined the original proposal
components and found no indication that attribution was ever present.
The committee also noted that the professor made slight modifications
to the copied text to fit his subtly different research area, and that
copying such a large amount of text would be inappropriate for quotation
marks or even a large indented block. The committee concluded
that his actions constituted research misconduct, and we agreed and
recommended that NSF require certifications and assurances, and bar
him from serving NSF 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 nine research misconduct cases reported in previous semiannual
reports. In each case, NSF made a finding of research misconduct,
issued a letter of reprimand, and required the subject to complete a
Responsible Conduct of Research training program. NSF also took
additional significant actions in response to our recommendations as
summarized below.
• NSF proposed a five-year debarment for a former doctoral student
at a Minnesota university who intentionally fabricated and falsified
data.11 NSF will then require certifications and assurances and bar
him from serving as a consultant or peer reviewer for five years.
• NSF debarred a former graduate student at an Illinois university, who
fabricated and falsified data in a publication and his Ph.D. thesis
dissertation,12 from participating as a peer reviewer, advisor, or
consultant, for three years, followed by three years of certifications
and assurances as well as certifications of adherence to a data
management plan. NSF also required him to retract the publication.
• NSF proposed a three year debarment for an ex-professor and
co-owner of a small business, and the business itself, in California
for plagiarism,13 submitting duplicative proposals, misrepresenting
research capabilities, and providing false certifications to NSF
11 March 2013 Semiannual Report, pp.26-27.
12 March 2013 Semiannual Report, p.27.
13 March 2013 Semiannual Report, p.34.
24
OIG Semiannual Report September 2013
• NSF debarred three New York professors14 for one year, required
certifications and assurances from them for three years following
the debarment, barred them from participating as NSF peer
reviewers,advisors, or consultants for three years following the
debarment, and required certification of compliance with the
requirements imposed by their institution.
• NSF barred a PI who plagiarized in proposals submitted from two
SBIR companies15 from participating as a peer reviewer, advisor, or
consultant for NSF, and required certifications and assurances, for
two years.
• NSF barred a Texas PI who copied text without citation or quotation16
from participating as a peer reviewer, advisor, or consultant for NSF
for one year, and required certifications and assurances for two
years.
• NSF required a research scientist at a small business in Maryland,
who plagiarized text into an awarded NSF proposal,17 to submit
certifications, and barred him from participating as a reviewer,
advisor, or consultant, for one year.
• NSF required a professor at a Colorado university, who recklessly
plagiarized in the proposal for his ARRA-funded CAREER award,18
to provide certifications, and barred him from serving NSF as a
reviewer, advisor, or consultant, for one year.
• NSF required an Ohio PI, who recklessly plagiarized in his NSF
proposal,19 to provide certifications for one year.
Administrative Investigation
Significant Abuse of Transit Subsidy
Our investigation found that an NSF employee used her transit benefit
938 times for personal trips and 51 times for parking over three years.
During this period, the employee replaced her Metro card four times but
did not transfer the subsidy balance to the new card, thereby leaving
almost $1,000 of federal funds on the old card accounts. She also
applied for and received an almost $1,000 cash reimbursement for
transit expenses that she had not incurred.
During our interview, the employee admitted that she had given her son
the cards, obtaining new cards as he lost or broke them and registering
them with NSF to continue the subsidy. Because the employee’s
14 March 2013 Semiannual Report, pp.27-28.
15 March 2013 Semiannual Report, p.28
16 March 2013 Semiannual Report, p.28.
17 March 2013 Semiannual Report, p.30.
18 March 2013 Semiannual Report, pp.29-30.
19 March 2013 Semiannual Report, p.30.
25
Investigations
actions were fraudulent, we referred this matter to the U.S. Attorney’s
Office, which declined criminal prosecution in lieu of administrative
action by NSF. We referred the matter to the employee’s supervisor
and recommended that NSF recover the approximately $4,000 of
inappropriately used funds, and take appropriate personnel action. NSF
has proposed a 20-day suspension, and its final decision is pending.
Management Implication Reports
Recommendations to Improve NSF’s Award Management System
NSF’s web-based application, eJacket, is the agency’s system for
performing many functions for awards and proposal processings, and is
a critical tool to enable NSF personnel to manage awards effectively and
to maintain the official record for awards. In addition, OIG uses eJacket
routinely in investigations, financial reviews, and audits. Proposals,
reports, and peer reviews are uploaded to eJacket automatically, as well
as some information about the institution, PI, and co-PIs. Additional
award information that should be stored in eJacket includes relevant
emails and other documentation pertaining to the progress of the
proposal and award.
As the primary means for maintaining the official NSF record, eJacket
should present a clear and accurate picture of each proposal and award,
including a straightforward and comprehensible record of the proposal’s
and award’s history. This would help NSF program and grants officers
manage their awards efficiently, and also facilitate review by others
(including OIG). Due to the large number of personnel who rotate
through NSF, and the potential for multiple program and grants officers to
oversee a given award at different points in time, it is critical to be able
to sort eJacket information into a meaningful arrangement in order to
understand and manage their workload.
We found numerous instances in which significant award information
was missing from eJacket. For example, we found an award for which
it appeared that a PI changed the project scope without approval
from NSF, as required. The NSF program officer told us that in fact
he approved the change and had exchanged numerous emails with
the PI, but he had not uploaded those emails into eJacket. In another
award, we found that a program officer approved a no-cost extension
but had not entered either the PI’s request or NSF’s approval into
eJacket. These examples also illustrated another issue, which arises
when program officers upload the missing documents: eJacket displays
documents in order of the date they were uploaded, so if documents are
not uploaded chronologically (as in these cases) it can be very difficult
later to determine what transpired.
26
OIG Semiannual Report September 2013
We also found that progress reports that are rejected by NSF for any
reason are expunged from eJacket and are unavailable. Rejected
progress reports can provide useful information to program officers as
well as OIG investigators, such as by demonstrating a PI’s submission of
inadequate, inconsistent, misleading, or even fraudulent information.
Further, like employees everywhere, NSF staff come and go, and it is
important to be able to ascertain who was responsible for an award at
a particular time. Similarly, designated PIs and co-PIs also sometimes
change in the course of an award, or their institutions or contact
information can change. eJacket does not keep track of such changes,
and NSF would benefit from comprehensive record of such information
stored in eJacket.
We made eight recommendations to NSF to make eJacket more
effective and useful by addressing these and related issues, and NSF’s
response to our recommendations is pending.
Concerns About Accelerated Spending Under ARRA Awards
In March 2013, NSF sent emails to all ARRA awardees that were not
granted a waiver of the September 30, 2013, deadline for expending
ARRA award funds. The emails reminded awardees of the September
deadline; encouraged them to “responsibly accelerate expenditures”;
and, stated that “expenditures must be allowable pursuant to applicable
cost principles and terms of the award.” As of the end of May 2013,
according to NSF records, more than 450 ARRA awards had balances
above $100,000, and for 87 of those, the amount unexpended was 40%
or more of the award amount. We were concerned about the risk that
some awardees may focus on accelerating spending at the expense of
spending responsibly. In light of this risk, we recommended that NSF
write again to its ARRA awardees with significant unexpended funds to
emphasize that (1) remaining ARRA funds can be used only for the direct
benefit of the award project; and (2) funds that cannot be spent properly
should be left to expire, for return to the Treasury and reduction of the
deficit. NSF agreed with the first recommendation but not the second.
27
Investigations
28
Management Activities
Outreach
The OIG’s outreach program 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. To this end, OIG staff addressed
programmatic, financial, and compliance issues with the
awardee community to educate them about fraud recognition
and prevention, research misconduct, and the responsible
conduct of research. We have provided instruction and
shared insights based on our oversight to the National
Council of University Research Administrators, the American
Association of State Colleges and Universities, and the
Association of College and University Auditors, among others.
A particular focus of our outreach has been educating
awardee institutions about our use of data analytics in
oversight to supplement traditional auditing techniques. The
use of automated techniques enhances our oversight and
permits us to identify high-risk awardees and target work; to
focus limited audit resources on questionable expenditures;
and to expand oversight from a random sample of
transactions for a few awards to 100 percent coverage of all
transactions for all awards. Thus, these techniques provide
transparency over recipient spending that was difficult to see
using traditional methods. In April, the OIG hosted a Data
Analytics Webinar on the use of automated techniques to
enhance grant oversight. Over 300 registrants from the OIG
community and universities participated in the webinar.
We have also enhanced oversight and accountability through
leadership within the IG community. In particular, NSF OIG is
leading three high-profile IG community working groups under
the auspices of the Council of the Inspectors General on
Integrity and Efficiency aimed at protecting government funds
on a broad scale. One of these is focused on suspension and
debarment remedies, the other concerns the SBIR and STTR
programs.
29
Management Activities
The Suspension and Debarment Working Group is dedicated to
enhancing the IG community’s understanding and use of government-
wide suspension and debarment. These tools protect taxpayer funds
by ensuring that the government only does business with responsible
parties.
The SBIR/STTR Working Group has worked to combat fraud, waste,
and abuse in these programs. A key aspect of this effort has been the
development of program-wide certifications modeled on those long in
use at NSF. Strong certifications can be an extraordinarily effective
means of deterring program fraud and bolstering the government’s ability
to prosecute fraud when it does occur. Another area of working group
activity has involved a sub-group of Special Agents from SBIR/STTR
funding agencies. Agents participating in this group meet periodically
to share information about ongoing cases, lessons learned, and best
practices related to SBIR/STTR investigations. Such cooperation has
greatly enhanced efforts to combat fraud in these programs
Finally, the Grant Reform Initiatives Working Group, composed of OIGs
that oversee grant programs at twenty Federal agencies, has provided
comments on the impact of proposed guidance on our mission of
ensuring accountability over Federal funds. Collectively, the agencies
overseen by the working group members fund 94 percent of the
approximately $1.2 trillion in direct federal award dollars covered by
Single Audits each year.
30
FY 2014 Top OIG
Management Challenges
CHALLENGE: Establishing Accountability over Large
Cooperative Agreements
Overview: A federal agency can use a cooperative
agreement (CA) when entering into a relationship with a
recipient when the primary purpose is to transfer a thing of
value to carry out a public purpose of support or stimulation,
and substantial involvement between the federal agency
and the recipient when carrying out the agreement is
expected. A CA is not subject to the same rigor and reporting
mechanisms as a contract, and does not have the same level
of transparency over transactions as a contract.
NSF reported that as of August 28, 2013, it had 480 active
cooperative agreements, totaling nearly $10.2 billion.
Among other things, NSF uses CAs to construct and fund
the operations and maintenance of large facility projects.
Since NSF uses CAs for the construction, operation, and
maintenance of high-risk, high-dollar large facility projects, it
is imperative that it exercise strong cost surveillance controls
over the lifecycle of such projects.
Over the last three years, audits of the proposed construction
budgets for three of these non-competitive proposals valued
at $1.1 billion found that they contained approximately $305
million (almost 28 percent), in unallowable or unsupported
costs. Inadequate proposals which contain large amounts of
unallowable and unsupported costs undermine NSF’s ability
to properly monitor and administer the CAs. Consequently,
there are serious questions about NSF’s accountability over
the $10.2 billion in cooperative agreements in its portfolio.
OIG has also identified serious weaknesses in NSF’s
post-award monitoring processes for high-risk projects
that increase the prospect that unallowable costs could be
charged to awards. NSF does not routinely obtain incurred
cost submissions or audits of costs claimed on its largest
CAs to determine the allowability of direct and indirect
costs claimed on federal awards. While not required, such
submissions and audits help to ensure accountability in
high-risk, high-dollar projects. In addition, our audits have
determined that NSF’s awardees do not separately track
the expenditure of contingency funds in their accounting,
memorandum, or subsidiary records. Therefore, unallowable
31
Management Challenges
costs charged to large cooperative agreements may go undetected
because they are not visible to those responsible for oversight.
NSF’s cooperative agreement award and monitoring process was also
cited as a significant deficiency in the FY 2011 and FY 2012 financial
statement audits. Without improving end-to-end processes over CA
monitoring from the proposal stage to award close-out, NSF cannot
affirm that it has received reasonable value for taxpayer dollars and that
those dollars are not misused. The audit reports recommended that
NSF strengthen cost surveillance policies and procedures to ensure
adequate stewardship over federal funds.
Challenge for the Agency: It is an ongoing challenge for NSF to
establish accountability for the billions of federal funds in its large
cooperative agreements. Proper accountability requires cost
surveillance measures that include strong pre- and post- award
monitoring, especially for high-risk, high-dollar facility projects. With
regard to pre-award processes, NSF does not require audits of
awardees’ proposals for such projects to ensure that they have
reasonable budgets and adequate accounting systems in place before
the award is made. NSF should establish a clear threshold above which
it would require price proposal and accounting system audits prior to
awarding new high-dollar, high-risk cooperative agreements.
During the post-award monitoring process, NSF does not routinely obtain
awardees’ incurred cost submissions (a list of award expenditures) or
initiate audits of costs claimed on its largest CAs, and therefore lacks
detailed information to effectively oversee these expenses. As a result,
there is an increased risk of unallowable costs being charged to these
awards and going undetected. Further, OIG continues to encounter
significant delays in obtaining incurred cost submissions from awardees
selected for audit that compromise the timeliness and effectiveness
of these reviews. NSF should either require annual incurred cost
submissions in major awards (at least for awardees in which it has
cognizance); or, notify its recipients of high-dollar, high-risk awards
to expect periodic audits and require them to produce incurred cost
submissions in a timely manner.
Another ongoing challenge for NSF is the management and oversight of
contingency costs in proposed budgets for its large construction projects.
Contingency comprises a significant portion (up to 30%) of the budget of
most large construction CAs. In total, recent audits have identified more
than $223 million in unallowable contingency costs out of total proposed
costs of over $1.1 billion. More than any other category of the budget,
contingency funds are prone to being improperly used as discretionary
reserve funds, if not properly overseen. Because NSF’s awardees are
not required to separately track the expenditure of contingency funds,
32
OIG Semiannual Report September 2013
these funds are vulnerable to unauthorized use without detection. The
challenge for NSF is to correct this management control weakness
by placing the requirement to track contingency expenditures in all
applicable awards.
OIG’s Assessment of the Agency’s Progress: Over the past three years,
the agency has participated in ongoing discussions with OIG regarding
the resolution of audit findings and recommendations related to NSF’s
management of its large cooperative agreements. To its credit, NSF
recognized the need to provide additional rigor to the review of costs
for large facilities, as documented in the Report to the National Science
Foundation Director on Major Multi-User Research Facilities (March 18,
2013). NSF has also agreed to strengthen its internal control (pre-award
and post-award) processes over future NSF construction projects.
However, NSF has not yet provided us with a plan that adequately
addresses our most important concerns for establishing accountability
over current large cooperative agreements as stated above.
CHALLENGE: Improving Grant Administration
Overview: In FY 2012, NSF competitively reviewed approximately
48,600 proposals for research, education and training projects. Each
year the Foundation funds approximately 11,500 new awards, and as of
June 2013, it had a portfolio of over 49,400 active awards totaling $32.5
billion. In light of the fact that most of these awards are made as grants,
it is vital that NSF’s grant management processes ensure the most
stringent level of accountability.
Challenge for the Agency: Oversight and management of awards that
is sufficient to safeguard federal funds invested in scientific research
has been an ongoing challenge for NSF. For FY 2012, the Foundation’s
financial statement auditors found that while NSF had made
improvements in its processes for awarding and administering grants,
improvements in internal controls over processing grant transactions
were necessary and that follow-up on awardee corrective action plans
remained a concern.
Oversight of grants is also challenging because, unlike contractors, grant
recipients request payments as an aggregate dollar amount and are not
required to present supporting documentation, such as invoices and
receipts, to receive payment from the agency.
Recent proposed changes by OMB could further challenge NSF’s
ability to exercise adequate grants management. Single Audits are an
important oversight tool in part because they identify internal control
weaknesses that warrant additional scrutiny. If enacted, the proposed
increase from $500,000 to $750,000 in the threshold to trigger a Single
33
Management Challenges
Audit means that NSF will have to do more to ensure appropriate
oversight of awards from $500,000 to $750,000 as they will no longer
be subject to Single Audits. In addition, proposed changes to the labor
effort reporting requirements could make it more difficult to determine the
allowability of salaries and related costs. Collectively, these and other
changes could contribute to an increased workload for NSF’s Division of
Grants and Agreements staff.
OIG’s Assessment of the Agency’s Progress: NSF’s Award Monitoring
and Business Assistance Program (AMBAP) was designed in part to
provide advanced monitoring to ensure that awardee institutions have
adequate policies and systems to manage their NSF awards. NSF
reported that it eliminated the backlog of AMBAP site visits in FY 2012.
Additionally, NSF has created an AMBAP Site Visit Activity Status Report
to keep appropriate senior management apprised of the status of all
open AMBAP Site Visit reports with major concerns. In FY 2013, NSF
increased the number of virtual site visits from four the previous year to
seven. As of September 30, 2013, NSF has substantially completed all
of the 30 AMBAPs planned for FY 2013.
CHALLENGE: Strengthening Contract Administration
Overview: Cost reimbursement contracts represent a significant portion
of NSF’s portfolio of contracts. In FY 2013, NSF reports that it obligated
$437 million for all contracts: $259 million were for CR contracts and $65
million of that amount applied to contracts that allow advance payments
for services on programs with two contractors. Cost reimbursement
contracts are inherently risky because the government assumes much of
the responsibility that poor performance on the part of the contractor will
result in cost overruns. NSF has implemented a number of corrective
actions aimed at strengthening its controls over cost reimbursement
contracts since the agency’s financial statement audit first identified their
handling as a significant deficiency in 2009.
However, concerns with contract administration remain, especially with
regard to the U.S. Antarctic Program (USAP), the largest NSF contract
awarded worth nearly $2 billion. NSF has worked with a new contractor
since December 2011, and audits of the new contractor’s incurred costs
in FY 2011 and 2012 are needed to identify any potential problems in the
early years of the contract. Periodic audits of the contractor’s accounting
system and timely reviews of disclosure statement revisions are also
important to adequately monitor the contract. These audits will identify
whether costs are being claimed and accounted for properly. Finally, in
December 2012 the USAP contractor transferred the NSF contract to a
different business segment within the company, which could potentially
increase costs to the agency.
34
OIG Semiannual Report September 2013
In addition, there are significant issues outstanding with NSF’s prior
USAP contract issued in 1999 that have yet to be resolved. Annual
incurred cost audits of the prior USAP contract are currently in process;
however, the annual revenues from the USAP stores have not been
credited in the incurred costs submitted by the contractor. NSF’s full
recovery of questioned costs sustained and uncredited revenues will
depend on the completion of the audits that are currently ongoing. Final
settlement of all contract claims may be some years in the future.
The FY 2012 management letter that accompanies NSF’s financial
statement audit recognizes the progress NSF has made in this area,
but presents four recommendations for strengthening NSF’s contract
monitoring practices. They emphasize the importance of having
incurred cost and disclosure statement audits completed; implementing
NSF’s Acquisition Manual; and ensuring use of accurate object class
codes for accounting transactions. These recommendations were
made to ensure NSF’s contractors’ compliance with contract terms and
federal regulations. In March 2013, the Government Accountability
Office (GAO) issued an audit report on contracting practices, also noting
that the agency implemented improvements during the past decade.
However, GAO found that NSF needs to supplement its guidance to
focus on the early stages of acquisition planning, and arrange for audits,
not funded by OIG, of major NSF contracts.
Challenge for the Agency: NSF’s challenge is to strengthen controls
over cost reimbursement contracts in order to reduce the risk of fraud,
waste, and abuse. The agency should obtain disclosure statements,
incurred cost submissions and incurred cost audits of its largest
contracts on a regular basis and promptly resolve any questioned
costs that arise. NSF should also review and verify the contractor’s
disclosure statement to determine if it is adequate and compliant with
Cost Accounting Standards, prior to or shortly after awards are made
and whenever the contractor submits major revisions. NSF must also
continue to improve its contract oversight relating to: timely receipt of
incurred cost submissions and procurement of audits, when needed;
and the determination of adequacy of contractor’s accounting systems
during the post award period. With regard to the current USAP contract,
NSF should request that the Defense Contract Audit Agency determine
if the new USAP contractor’s transfer of the NSF contract to a different
segment within the company results in any increased costs to the
agency.
Finally, NSF management should continue to implement its remaining
planned corrective actions to ensure that it maintains adequate control
over cost reimbursement contracts. The agency is still obtaining audits
of its largest contracts, including millions of dollars in costs incurred
from 2009 – 2012 by the former USAP contractor. These final audits
35
Management Challenges
will determine the resolution of at least $10.4 million in unallowable
sustained costs that previous audits have found that the contractor owes
NSF, and should determine whether or not USAP revenues totaling $24
million were properly credited against contract costs.
OIG’s Assessment of the Agency’s Progress: In FY 2013, NSF
made progress in addressing some of the problems with contract
administration. It has taken steps to strengthen its guidance and is
receiving some audits of costs incurred on its two largest contracts.
However, the most recent management letter indicates that work
remains to be done to strengthen NSF‘s monitoring procedures,
especially relating to cost reimbursement contracts. While the agency
has made progress, the financial statement auditors indicate that the
conditions identified in the previous management letter are only partially
corrected.
As a result of the GAO report on NSF contracting, the agency is
also working to develop new guidance for increasing lead times for
acquisition, but the agency’s draft response doesn’t indicate how long it
will need to prepare or implement the guidance. In response to GAO’s
second recommendation to fund audits of major contracts, NSF has
placed the responsibility on the individual Program Offices to determine
if an audit is needed and to provide the funding. However we are
concerned that Program Offices may not take the initiative to request an
audit, particularly if they must fund it.
CHALLENGE: Management of the U.S. Antarctic Program
Overview: Antarctica is the coldest, driest, windiest, most remote
continent on earth. The weather changes frequently and abruptly;
temperature drops of as much as 65 degrees F in twelve minutes have
been recorded.
Scientific investigators and supporting personnel make up the U.S.
Antarctic Program (USAP), which implements the nation’s goals
of exerting an active and influential science presence in support of
Antarctica, including fostering cooperative research with other nations,
and protecting the Antarctic environment in accord with the U.S.
Antarctic Conservation Act. The USAP mission is accomplished largely
through the support of peer-reviewed research conducted by scientists
from universities and other research agencies often in collaboration with
scientists from other nations. Operations and logistics are supported
with contracts with commercial and government entities. NSF funds and
manages the program through its Office of Polar Programs.
The extreme Antarctic environment and the short period of time
during which access to the continent is possible, strain the effort to
provide logistical support for the USAP. Logistical support activities
36
OIG Semiannual Report September 2013
include communications, health and safety programs, and vehicle
and equipment maintenance. In July 2012, a Blue Ribbon Panel,
commissioned by the Office of Science and Technology Policy and
NSF, issued its report on infrastructure and logistical challenges in the
Antarctic.
Challenge for the Agency: Establishing and maintaining a world-
class scientific research program in Antarctica’s remote and harsh
environment is a formidable logistical challenge. The Blue Ribbon
Panel report stated that U.S. activities in Antarctica are well-managed,
but suffer from an aging infrastructure, lack of a capital budget, and the
effects of operating in an extremely unforgiving environment. To address
these pressing challenges, the Panel made recommendations pertaining
to ten topic areas and provided 84 implementing actions to support these
overarching recommendations.
In March 2013, NSF responded to the recommendations with a
summary report and a working matrix describing the status of the 84
implementing actions. We recognize the challenges facing NSF in
implementing the Panel recommendations and understand that some of
these challenges are compounded because NSF has limited control over
some of the necessary actions and others will require additional funding.
Nevertheless, it is important for NSF to work toward implementation in a
well-organized and structured manner, and we issued a memorandum
to NSF making several suggestions to improve the usefulness of its
working matrix, such as including timelines for action and identifying a
responsible person for each action.
Cost containment issues are also a challenge for NSF. The Antarctic
Support Contract, which was awarded to Lockheed Martin in December
2011 is the agency’s largest contract, valued at approximately $1.925
billion over 13 years, and is a cost reimbursement contract. Such
contracts are inherently risky because the government assumes much
of the risk that poor performance on the part of the contractor will result
in cost overruns. In addition, the contract includes a provision for the
contractor to receive an award fee for performance of the science
support. An NSF official in the Office of Polar Programs makes the
final decision about whether the contractor receives an award fee and
then also determines the amount of the award fee based on a panel
recommendation. Absent input from an external, independent entity,
it may be a challenge for NSF to objectively evaluate the contractor’s
performance.
Another challenge for NSF is to control the cost of the USAP and to
ensure adequate oversight of payments to the USAP contractor. Our
audit of the medical screening process for travelers to Antarctica found
that NSF’s medical review panel has made recommendations that
37
Management Challenges
could reduce the cost of this process, but NSF has not implemented
these recommendations. For example, for the last five years the panel
recommended that NSF base required medical tests on factors such as
how long an individual will be in Antarctica, and what their duty station
and job responsibilities will be. Revising the number of medical tests
performed to reflect these criteria could lower costs of the screening
process, which currently totals approximately $860 per person.
Although the cost of the USAP medical screening process constitutes
approximately $1 million out of the first full year’s contract value of
$173 million, NSF is largely reliant on the contractor to provide accurate
invoices. We found that the contractor does not have policies and
procedures for reviewing Antarctic support contract invoices. Our audit
also found that NSF has limited oversight to ensure accuracy of medical
screening costs billed to it by the contractor. As a result, NSF may be
paying unallowable costs.
OIG’s Assessment of the Agency’s Progress: NSF’s summary report
responding to the Blue Ribbon Panel report and its creation of a matrix
document for the 84 implementing actions are steps in the right direction.
In response to our audit on reducing costs of the medical screening
process, NSF concurred with the OIG’s recommendations and agreed
to formalize its process for addressing and tracking medical panel
recommendations. Further, NSF will direct Lockheed Martin to document
its internal controls over subcontractor management regarding receipt
and flow-through of subcontractor’s invoices costs for medical screening.
CHALLENGE: Moving NSF Headquarters to a New Building
Overview: On June 7, 2013, the General Services Administration (GSA)
and representatives of the Hoffmann Company executed a 15-year lease
for a new NSF headquarters in Alexandria, Virginia. The Alexandria
facility has not been built yet, and it is estimated that construction will
take three to four years. Because the current Arlington leases expire
before NSF can move, GSA negotiated temporary lease extensions
for the two Arlington office buildings, to enable NSF to stay in those
buildings through December 30, 2017. NSF is currently planning to
move at the end of 2016 and has the option to terminate the Arlington
leases early.
Challenge for the Agency: NSF has major scheduling, design, cost,
operational, and communications challenges associated with the
move. In terms of scheduling, key milestones need to be met for
the construction to be completed by 2016. According to NSF, the
construction schedule is very aggressive and will be difficult to achieve;
therefore, it will be a challenge for NSF to complete the move before
December 30, 2017.
38
OIG Semiannual Report September 2013
The primary challenge for NSF will be planning and managing the
details of its space requirements and relocation. The Alexandria
building has to meet the requirements set out in the lease agreement;
but that agreement does not specify detailed design specifications that
may be needed by individual directorates. Thus, NSF, GSA, and the
building owner must negotiate a number of design issues that are not
included in the original space requirements. The agency will need to
make timely and prudent decisions to ensure the building meets its
objectives with minimal delay and cost. If NSF’s requested changes
will cost more money, the agency will have to determine whether to use
part of the move allowance, make a trade off, or forego the change.
Unused portions of the allowance may be applied to the rent to save the
government money.
NSF stated that all computers, chairs and tables will be moved to the
new buildings and that its primary cost will be for workstations that
cannot be moved. NSF will need to control its moving expenses tightly.
It will also need to plan how it will move successfully if it does not receive
additional funding to cover moving costs.
During the move, NSF plans dual operations in Arlington and Alexandria,
which will be an operational challenge. The agency has to ensure that
the move does not disrupt its mission. For example, NSF told us that it
will hold panel reviews during the move and may hold them in Alexandria
before NSF staff begins to move from Arlington. As such, it will have
to ensure operational capabilities in two places simultaneously. NSF
indicated that it will consider more virtual panels during this transition.
In addition to the scheduling, design, and operational challenges,
NSF has overarching communications challenges: Collaboration and
communication internally within NSF and with external stakeholders
including GSA, the Alexandria building owner, Congress, and OMB will
be critical to the success of the NSF move.
OIG’s Assessment of the Agency’s Progress: NSF has been planning
for a possible move since 2008, when it hired the project director. NSF
created the Future NSF Headquarters Office (FNSF) to coordinate and
manage the move. That office currently has five employees and a team
of eight contractors, including a relocation manager, design specialist,
interior designer, technology manager, budget specialist, and support
and communications liaison. The FNSF’s senior advisor and project
director are the same staff who directed NSF’s last move in 1993 from
Washington DC to Arlington.
39
Management Challenges
In addition, the agency created a Future NSF internal website, and has
conducted a survey, feasibility study, and more than 300 meetings with
NSF staff. To facilitate internal collaboration, FNSF meets regularly
with Directorate and Division liaisons, union representatives, a FNSF
relocation executive advisory group, and a relocation working team.
CHALLENGE: Managing Programs and Resources in Times of
Budget Austerity
Overview: Fiscal Year 2013 presented significant financial challenges
for NSF and other federal agencies, as sequestration pinched budgets
and increased the pressure for managers to ensure that expenditures
are cost-effective, and that investments in programs have real impact.
While government budgets are developed long in advance, there are
numerous discretionary purchases in every organization that occur on a
weekly or monthly basis and offer real opportunities for savings.
Recently OIG has initiated several reviews to identify possible cost
savings. For example, OIG is currently performing an audit of purchase
cards and has found that NSF’s controls over the purchase card
program needed to be strengthened to uncover and, if possible, prevent
inappropriate purchases. During our audit, NSF issued a revised
purchase card policy and improved training for cardholders. The
Government Charge Card Abuse Prevention Act of 2012 requires all
federal agencies to implement internal controls to prevent waste, fraud,
and abuse of purchase cards, travel cards, and centrally billed accounts.
In FY 2012, NSF incurred expenditures of approximately $5.5 million for
its purchase cards, $1.0 million for its individually billed travel cards, and
$13.7 million for its centrally billed travel card account.
OIG’s audit of costs associated with NSF’s use of Intergovernmental
Personnel Act (IPA) assignees found no indication that NSF has
examined the additional costs incurred as a result of using IPAs or
sought ways to reduce those costs. Because NSF pays IPA costs out
of program funds, reducing these costs could free up more money
for research grants. Our audit 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 as compared to federal
employees in equivalent positions. During a time of national austerity,
it is important that NSF do its part in identifying all opportunities for
savings.
Challenge for the Agency: There are many opportunities to conserve
money within a $7 billion dollar organization like NSF without
compromising the accomplishment of the agency’s core mission. The
agency is therefore challenged to identify opportunities to streamline
processes and cut costs where it can, in order to send a clear message
40
OIG Semiannual Report September 2013
to its employees and stakeholders that strong, sound management
practices are being applied; reasonable ideas to reduce spending are
welcome and will be implemented; and at a time of hardship for so many
Americans, the public’s continued financial support for science is not
taken for granted.
OIG’s Assessment of the Agency’s Progress: NSF has generally
contained and in some cases reduced its operational costs during FY
2013. It has also been receptive to considering and implementing more
value-added business practices. The agency concurred with OIG’s
audit recommendation to evaluate ways the costs of using IPAs can be
reduced. NSF has also been piloting the use of technology to cut costs
related to its merit review process, and reports that it increased the
share of virtual merit review panels over the past year from five to 20
percent. Due in part to those efforts, the agency has realized savings
of $9.4 million compared to what it spent on travel in 2010. Other cost
cutting initiatives are being introduced or contemplated for conferences,
printing, and telecommunications. It appears that NSF has made
progress this year in fostering a culture of economy and efficiency and
should continue to identify ways to reduce costs.
CHALLENGE: Ensuring Proper Stewardship of ARRA funds
Overview: Under the American Recovery and Reinvestment Act of 2009
(ARRA), NSF received $3 billion of funding, with which it made more
than 5,000 awards with a duration of two to five years. On September
15, 2011, the Office of Management and Budget (OMB) directed federal
agencies to accelerate the spending of ARRA funds consistent with
existing laws and regulations and the objectives of the programs. OMB
stated that if those funds were not spent by September 30, 2013,
agencies “shall reclaim them to the extent permitted by law.”
At the time, NSF had about 700 awards expiring in FY 2013 that could
be extended past September 30, 2013, using no-cost extensions. In
response to OMB’s directive, NSF amended those awards to remove
awardees’ ability to unilaterally grant no-cost extensions past the new
deadline. NSF subsequently obtained waivers from OMB from the
deadline for 512 other awards. As of October 21, 2013, the remaining
active awards with OMB waiver requests have collectively expended
74.1% of their ARRA funding. There are also 1,886 awards without OMB
waiver requests that are still active that have thus far expended 97.3% of
their ARRA funding.
Challenge for the Agency: At each stage of the award administration
process, the additional ARRA funds that NSF received in 2009 have
posed significant challenges for NSF’s business model. Even as most
ARRA awards wind down, post-award administration challenges remain.
41
Management Challenges
They include: 1) ensuring awardees’ timely, complete, and accurate
reporting on Federal Reporting.gov and; 2) monitoring the awards,
especially those made to high-risk institutions, to ensure the funds
are not subject to fraud, waste, and abuse. Assessing the accuracy
of recipients’ reporting has been a particular challenge, as it requires
independent reviews or audits of additional corroborating data from
ARRA awardees.
OMB’s directive to accelerate funding required that NSF closely monitor
ARRA spending rates during FY 2013 to ensure that awards without
waivers completed all spending necessary for their projects by the new
deadline. However, the agency must also pay attention to the increased
risk of fraud, waste, and abuse that arises when a project’s timeline
is prematurely shortened. Specifically, there is an increased risk of
unallowable cost transfers (e.g., spending ARRA funds on non-ARRA
awards), and expenditures of ARRA funds for purposes unrelated to an
ARRA award, as awardees rush to spend remaining funds prior to award
expiration. In addition, there may be additional temptation for awardees
to submit inflated claims during a period when science funding in general
is declining.
Therefore, the primary management challenge is to determine if
awardees have spent their ARRA funds in accordance with applicable
federal and NSF requirements, including the special terms and
conditions of their ARRA awards. Ongoing OIG audits of institutions that
received ARRA money also address this issue, but do not replace NSF’s
responsibility and challenge to monitor its awardees’ use of ARRA funds.
OIG’s Assessment of the Agency’s Progress: Each quarter NSF reports
the results and trends for eight data elements including: the number of
jobs created/retained, total ARRA funding obligated, and total reported
ARRA expenditures. To determine if awardees used ARRA funds, as
required, NSF has conducted 253 ARRA desk reviews, although of only
one ARRA award in each review. It has used the results of the desk
reviews as risk factors in conducting about 30 more comprehensive
reviews annually. NSF appears to have adequate processes in place
to monitor awardees’ continuing and final reports on FederalReporting.
gov and to close out ARRA awards in the NSF system. As the number of
active awards decreases, NSF’s vigilance should be maintained.
CHALLENGE: Encouraging the Ethical Conduct of Research
Overview: Congress passed the America COMPETES Act in 2007
to increase innovation through research and development, and to
improve the competitiveness of the United States in the world economy.
Amid indications of a decline in the ethics of those new to research,
one important aspect of the law was to promulgate new proposal
42
OIG Semiannual Report September 2013
requirements that advance the professional and ethical development of
young scientists, such as mentoring plans for all postdoctoral positions,
and plans to provide training on the responsible conduct of research
to undergraduates, graduate students, and postdoctoral researchers.
However, information collected from our site visits and investigations
suggests that many institutions are not implementing these requirements
effectively, thereby undermining the public’s confidence in the research
enterprise and potentially placing NSF funds at risk. At a time when
opinion surveys indicate that more Americans are becoming distrustful
of scientific findings, it is important that the conduct of research not be
tainted by instances of misrepresentation or cheating.
Challenge for the agency: NSF is challenged to provide more
meaningful guidance regarding institutional administration of
Responsible Conduct of Research (RCR) training. Successful RCR
programs should help foster a culture of academic integrity that extends
to all levels of the university. Recent surveys suggest that significant
numbers of high school and college students admit to cheating, and 30%
of researchers admit to engaging in questionable research practices.
In its research misconduct work, OIG has noted a dramatic increase in
substantive allegations of plagiarism and data fabrication, especially as it
relates to junior faculty members and graduate students. Over the past
10 years, the number of allegations received by our office has more than
doubled, and the number of findings of research misconduct NSF has
made based on OIG investigation reports has more than quadrupled.
Effective RCR programs give institutions the means to address this issue
and reverse the increasing rate of integrity-related violations.
The NSF Act places responsibility on NSF to “strengthen scientific [and
engineering] research potential at all levels in ... various fields”. NSF’s
research and related training programs reach individuals at all levels of
academic pursuit who are ultimately employed by academia, industry,
and government, and could have a broad and positive impact on the US
science, engineering and education workforce. Based on our focused
proactive reviews, we believe that over 2,000 of the 45,000 proposals
NSF annually receives are at risk for containing plagiarism and/or
falsified data. While NSF has been responsive to the recommendations
contained in our research misconduct investigation reports, those
actions only address incidents that occur after the fact. Since NSF funds
research in virtually every non-medical research discipline, the agency is
in a unique position to lead the government response addressing these
disturbing trends at all levels of education.
OIG’s Assessment of the Agency’s Progress: The agency responded to
the America COMPETES Act by instituting a requirement that grantees
submit mentoring plans for all NSF-supported “post-docs” and have an
RCR training plan for NSF-funded students. The NSF guidance was
43
Management Challenges
very limited and offered great flexibility to grantee institutions to develop
plans tailored to their needs. OIG has observed a wide disparity among
grantee RCR programs ranging from high quality mentoring programs
to those that simply refer students to web-based or computer-based
training. Early intervention remains critical to any effort to ensure that
students understand proper professional practices and the implications
of misconduct. Anecdotally, we continue to receive substantive data
fabrication/falsification allegations involving students and post-docs;
we currently have 15 active investigations regarding such allegations.
Therefore, we continue to believe that more needs to be done and NSF
should expand its influence with institutions regarding this important
issue. In the coming year, OIG plans to systematically review a sample
of institutional RCR plans to assess how the grantee community has
implemented their training programs. We intend to initiate this review of
institutional efforts in FY 2014.
EMERGING CHALLENGE: Implementing a New Financial
Management System
In September 2012, NSF awarded a $24.4 million contract to Accenture
Federal Services LLC to implement iTRAK, a new financial management
system that will replace its current accounting system. The new system
is designed to improve tracking and reporting of financial information
across NSF systems and to enhance financial accountability and
compliance. iTrak is expected to provide a number of new capabilities,
including access to financial information and reports in real-time and the
ability to link financial information to performance objectives.
The NSF Director at the time of the award, Dr. Subra Suresh,
commented that “[t]his is one of the most complex projects NSF has
undertaken. It is necessary to ensure that the agency has the tools it
needs for informed operational and programmatic decision-making, and
that it has superior financial and business accountability, integrity and
compliance.”
This complex undertaking involves risks, such as the lack of clear
requirements and agency reluctance to change established business
processes. NSF has developed a risk management strategy to address
such concerns, and at this point the agency appears to be on schedule
for iTrak implementation by October 1, 2014. The OIG is monitoring
NSF’s transition to iTrak and is bringing questions and concerns to the
agency’s attention as issues arise.
44
OIG Semiannual Report September 2013
Statistical Data
Audit Data
Audit Reports Issued with Recommendations
for Better Use of Funds
Dollar Value
A. For which no management decision has been made by the commencement $304,895,499
of the reporting period
B. Recommendations that were issued during the reporting period $0
C. Adjustments related to prior recommendations $0
Subtotal of A+B+C $304,895,499
D. For which a management decision was made during the reporting period $0
i) Dollar value of management decisions that were consistent with OIG $0
recommendations
ii) Dollar value of recommendations that were not agreed to by $0
management
E. For which no management decision had been made by the end of the $304,895,499
reporting period
For which no management decision was made within 6 months of issuance $304,895,499
Audit Reports Issued with Questioned Costs
Number of Questioned Unsupported
Reports Costs Costs
A. For which no management decision has been 13 $30,702,197 $2,548,323
made by the commencement of the reporting
period
B. That were issued during the reporting period 13 $1,373,368 $221,178
C. Adjustment related to prior recommendations 1 $4,553 20
$4,55320
Subtotal of A+B+C $32,080,118 $2,774,054
D. For which a management decision was made 5 $439,054 $416,285
during the reporting period
i) Dollar value of disallowed costs N/A $180,944 N/A
ii) Dollar value of costs not disallowed N/A $258,110 N/A
E. For which no management decision had been 21 $31,641,064 $2,375,769
made by the end of the reporting period
For which no management decision was made 9 $30,420,086 $2,288,981
within 6 months of issuance
20 On report no. 12-1-003, an additional $4,553 was questioned during audit resolution.
45
Statistical Data
Status of Recommendations that Involve Internal NSF Management Operations
Open Recommendations (as of 03/31/2013)
Recommendations Open at the Beginning of the Reporting Period 74
New Recommendations Made During Reporting Period 2
Total Recommendations to be Addressed 76
Management Resolution of Recommendations 21
Awaiting Resolution 12
Resolved Consistent With OIG Recommendations 64
Management Decision That No Action is Required 0
Final Action on OIG Recommendations 22
Final Action Completed 12
Recommendations Open at End of Period (09/30/2013) 64
Aging of Open Recommendations
Awaiting Management Resolution
0 through 6 months 2
7 through 12 months 6
More than 12 months 4
Awaiting Final Action After Resolution
0 through 6 months 0
7 through 12 months 38
More than 12 months 14
21 “Management Resolution” occurs when the OIG and NSF management agree on the corrective action plan that will be
implemented in response to the audit recommendation.
22 “Final Action” occurs when management has completed all actions it agreed to in the corrective action plan.
46
OIG Semiannual Report September 2013
List of Reports
OIG and CPA-Performed Reviews23
Report Subject Questioned Unsupported Better Use
Number Costs Costs of Funds
13-1-004 ARRA Cornell University $794,221 $19,703 $0
13-1-005 EarthScope (SAFOD) San Andreas Fault $339,277 $0 $0
Observatory at Depth
13-2-009 USAP United States Antarctic Program’s $0 $0 $0
Medical Screening Process
13-6-002 QCR of Lindquist, von Husen & Joyce, LLP $0 $0 $0
13-7-001 IQCR of #12-2-002 & #12-2-004 $0 $0 $0
13-7-002 IQCR of #12-1-007 $0 $0 $0
Total: $1,133,498 $19,703 $0
NSF-Cognizant Reports
Report Subject Questioned Unsupported
Number Costs Costs
13-4-057 12-11 Rocky Mountain Biological Laboratory - CO $0 $0
13-4-059 6-12 New York Hall of Science - NY $0 $0
13-4-061 6-12 Association for Women in Science - VA $0 $0
13-4-064 12-11 Association of Public & Land-Grant Universities - DC $0 $0
13-4-065 9-12 Fermi Research Alliance LLC - IL $0 $0
13-4-066 6-12 Pacific Northwest Gigapop - WA $0 $0
13-4-067 6-12 QEMN Quality Education for Minorities Network - DC $0 $0
13-4-068 6-12 The Computing Research Association - DC $0 $0
13-4-069 9-12 The Concord Consortium - MA $0 $0
13-4-070 6-12 Tupelo Public School District - MS $0 $0
13-4-071 8-12 WGBH Education Foundation - MA $0 $0
13-4-072 6-12 Los Angeles County Museum of Natural History $0 $0
Foundation - CA
13-4-074 6-12 Paleontological Research Institution - NY $0 $0
13-4-075 6-12 REJECTED The Filmmakers’ Collaborative - MA $0 $0
13-4-076 6-12 Oakland Museum of California Foundation - CA $0 $0
13-4-077 9-12 Virtual Astronomical Observatory LLC - DC $0 $0
13-4-078 12-11 National Council for Science and the Environment - DC $0 $0
13-4-079 12-11 Space Science Institute - CO $0 $0
13-4-080 9-12 The Algebra Project - MA $0 $0
13-4-081 6-12 The American Museum of Natural History - NY $0 $0
23 The Office issued 6 reports this semiannual period.
47
Statistical Data
13-4-082 6-12 Toyota Technological Institute at Chicago - IL $0 $0
13-4-083 12-12 Council of Graduate Schools - DC $0 $0
13-4-084 6-12 The New York Botanical Garden - NY $0 $0
13-4-085 6-12 Five Colleges Incorporated - MA $0 $0
13-4-086 9-12 COL Consortium for Ocean Leadership - DC $0 $0
13-4-087 12-12 American Physical Society - MD $0 $0
13-4-088 12-12 Denver Museum of Nature & Science - CO $0 $0
13-4-089 6-12 REVISED Kennesaw State University Research & $0 $0
Service Foundation - GA
13-4-090 9-12 LSST, Inc. - AZ $0 $0
13-4-091 6-12 MPC Corporation - PA $0 $0
13-4-092 12-12 Portland VA Research Foundation - OR $0 $0
13-4-093 12-12 Chicago Zoological Society - IL $0 $0
13-4-094 12-12 Horizon Research, Inc. - NC $0 $0
13-4-095 12-12 Missouri Botanical Garden - MO $0 $0
13-4-096 12-12 Santa Fe Institute - NM $0 $0
13-4-097 6-12 SoundVision Productions - CA $0 $0
13-4-098 6-12 Ecological Society of America - DC $0 $0
13-4-099 8-12 American Bar Foundation - IL $0 $0
13-4-100 12-12 BIOS Bermuda Institute of Ocean Science - NY $0 $0
13-4-101 12-12 Institute of Global Environment and Society - MD $0 $0
13-4-102 12-12 REJECTED Institute of Broadening Participation - ME $0 $0
13-4-103 9-12 IODP Management International, Inc. - DC $152,390 $152,390
13-4-104 12-12 National Geographic Society - DC $0 $0
13-4-105 12-12 New England Wild Flower Society - MA $0 $0
13-4-106 12-12 Samuel Roberts Noble Foundation, Inc. - OK $0 $0
13-4-107 12-12 American Mathematical Society - RI $0 $0
13-4-108 6-12 KanREN, Inc. - KS $0 $0
13-4-109 12-12 AAAS American Association for the Advancement of $0 $0
Science - DC
13-4-110 12-12 Field Museum of Natural History - IL $0 $0
13-4-111 12-12 Pisgah Astronomical Research Institute - NC $0 $0
13-4-112 12-12 START International, - DC $0 $0
13-4-113 12-12 TERC Technical Education Research Centers, Inc. - MA $0 $0
13-4-114 12-12 AAPT American Association of Physics Teachers - MD $0 $0
13-4-115 12-12 Marine Biological Laboratory - MA $0 $0
13-4-116 12-12 Mobile Area Education Foundation - MS $0 $0
13-4-117 6-12 Rancho Santa Ana Botanic Garden - CA $56 $0
13-4-118 6-12 REVISED The Filmmakers’ Collaborative - MA $0 $0
13-4-119 12-12 Association for Institutional Research - FL $0 $0
48
OIG Semiannual Report September 2013
13-4-120 12-12 Carnegie Institute - PA $0 $0
13-4-121 9-12 California Institute of Technology - CA $0 $0
13-4-122 12-12 CUAHSI Consortium for the Advancement of $0 $0
Hydrologic Science - MA
13-4-123 12-12 Hope Mountain Foundation - MT $0 $0
13-4-124 12-12 AIM American Institute of Mathematics - CA $0 $0
13-4-125 12-12 American Educational Research Association - DC $0 $0
13-4-126 12-12 American Geophysical Union - DC $0 $0
13-4-127 12-12 Astrophysical Research Consortium - WA $0 $0
13-4-128 12-12 Biological Sciences Curriculum Study - CO $0 $0
13-4-129 6-12 New Jersey Academy for Aquatic Sciences, Inc. - NJ $0 $0
13-4-130 12-12 Rocky Mountain Biological Laboratory - CO $0 $0
13-4-131 12-12 Boyce Thompson Institute for Plant Research - NY $0 $0
13-4-132 12-12 SCOR Scientific Committee for Oceanic Research - DE $0 $0
13-4-133 12-12 UNAVCO, Inc. - CO $9,000 $0
13-4-134 9/12 Aleut International Association - AK $0 $0
13-4-135 12-12 CUREE Consortium of Universities for Earthquake $0 $0
Engineering - CA
13-4-136 12-12 American Chemical Society - DC $0 $0
13-4-137 12-12 The Franklin Institute - PA $0 $0
13-4-138 12-12 The Mathematical Association of America - DC $0 $0
13-4-139 12-12 REVISED Institute for Broadening Participation - ME $0 $0
13-4-140 6-12 REVISED Rancho Santa Ana Botanic Garden - CA $0 $0
Total: $161,446 $152,390
Other Federal Reports
Report Subject Questioned Unsupported
Number Costs Costs
13-5-086 6-12 Case Western Reserve University - OH $5,920 $0
13-5-089 6-12 Georgetown University - DC $16 $0
13-5-094 6-12 FBCC Fort Berthold Community College - SD $36,344 $36,344
13-5-095 6-12 University of Chicago - IL $23,075 $0
13-5-100 6-12 Princeton University - NJ $328 $0
13-5-102 6-12 Bunker Hill Community College - MA $390 $390
13-5-117 8-12 Northwestern University - IL $300 $300
13-5-132 6-12 State of Connecticut $12,051 $12,051
Total: $78,424 $49,085
49
Statistical Data
Audit Reports With Outstanding Management Decisions
This section identifies audit reports involving questioned costs, and funds put to better
use where management had not made a final decision on the corrective action necessary
for report resolution within six months of the report’s issue date. At the end of the
reporting period there were 13 reports remaining that met this condition. The status of
recommendations that involve internal NSF management is described on page 48.
Report Subject Questioned Unsupported Better Use
Number Costs Costs of Funds
05-1-005 RPSC Costs Claimed FY 2000 to 2002 $12,334,824 $0 $0
06-1-023 RPSC 2003/2004 Raytheon Polar $6,860,500 $0 $0
Services
07-1-003 Triumph Tech, Inc. $80,740 $1,192 $0
09-1-014 University of Michigan $1,604,713 $1,418,889 $0
09-5-048 8-07 College of the Mainland - TX 5
$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 $0 $0 $75,780,354
Observatory Network
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 $25,343 $24,659 $0
13-1-001 REVISED University of Wisconsin – $2,134,379 $0 $0
Ice Cube
13-1-002 Jackson State University $943,475 $844,241 $0
Total: $30,420,086 $2,288,981 $304,895,499
24 This report was on hold at the request of OIG.
50
OIG Semiannual Report September 2013
Investigative Data
Civil/Criminal Investigative Activities
Referrals to Prosecutors 3
Criminal Convictions/Pleas 3
Arrests 1
Civil Settlements 0
Indictments/Information 1
Investigative Recoveries $504,095.71
Administrative Investigative Activities
Referrals to NSF Management for Action 40
Research Misconduct Findings 7
Suspensions/Debarments/Exclusions 4
Administrative Actions 44
Certifications and Assurances Received25 14
Investigative Case Statistics
Preliminary Civil/Criminal Administrative
Active at Beginning of Period 24 149 126
Opened 27 31 32
Closed 41 38 48
Active at End of Period 10 142 109
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 11
• Requests Processed 9
• Appeals Received 2
• Appeals Upheld 2
Response time ranged between 4 days and 20 days, with the median around 19 days
and the average around 17 days.
25 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.
51
Semiannual Report - September 2013
Published by the National Science Foundation, Office of Inspector General on 2013-09-01.
Below is a raw (and likely hideous) rendition of the original report. (PDF)