oversight

Semiannual Report - March 2014

Published by the National Science Foundation, Office of Inspector General on 2014-03-01.

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

   OFFICE OF INSPECTOR GENERAL




    SEMIANNUAL
REPORT TO CONGRESS




        March
About the National Science Foundation...

The National Science Foundation (NSF) is charged with supporting and strengthening all
research disciplines, and providing leadership across the broad and expanding frontiers of
science and engineering knowledge. It is governed by the National Science Board which
sets agency policies and provides oversight of its activities.

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

And the Office of 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 receive NSF funding; and identifies and helps to
resolve cases of research misconduct. The OIG was established in 1989, in compliance
with the Inspector General Act of 1978, as amended. Because the Inspector General
reports directly to the National Science Board and Congress, the Office is organizationally
independent from the agency.
                                                                    Table of Contents
Audits and Reviews ....................................................................................... 7


NSF’s Oversight of its Purchase Card Program ................................................................... 7

NSF’s Calculation of its Administrative Cost Recovery Rate................................................. 7

Financial Statement Audit Reports ........................................................................................ 8
	
NSF’s FY 2013 Federal Information Security Management Act Report .............................. 10
	
A-133 Audits .........................................................................................................................11
	
Audit Resolution .................................................................................................................. 13
	

Investigations ................................................................................................15


Civil and Criminal Investigations.......................................................................................... 15
	
Research Misconduct Investigations ................................................................................... 21
	
Administrative Investigations ............................................................................................... 28
	
Management Implication Reports........................................................................................ 31
	

OIG Management Activities......................................................................... 33


Total Accountability: Suspension, Debarment and Beyond ................................................ 33


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

               From the Inspector General


The Semiannual Report to Congress highlights the activities of the Office
of Inspector General (OIG) for the six months ending March 31, 2014.
During this period our investigative staff closed 48 investigations, had 11
research misconduct cases result in findings by NSF, and recovered over
$1.2 million for the government. In addition, six audits and reviews were
issued, including the audit of the agency’s financial statements.

The OIG is firmly committed to its mission to detect and prevent fraud,
waste, and abuse in the National Science Foundation’s (NSF) programs
and operations and by those who receive NSF funding. We target our
work and direct our resources to areas that pose the highest risk of
misuse of taxpayer dollars and can lead to funds used inappropriately
being returned to the government.

To that end, our audit of NSF’s controls to prevent and detect
unauthorized purchases on government purchase cards found a
heightened risk that inappropriate or fraudulent transactions could occur
without detection because, among other things, some purchases were
not pre-approved and card managers did not always review bank activity
reports for improper purchases.

Based on information from that audit, which disclosed an NSF
employee’s suspicious purchases using his government card, we
conducted an investigation which revealed that the employee had
purchased nearly $95,000 in items and services for personal use on his
government card. He admitted buying cell phones, computers, and other
electronic devices for himself and his family and friends for several years.
During this semiannual report period, the employee pled guilty in federal
court to one count of theft of government property; was sentenced to ten
months in prison; and ordered to pay restitution of $77,803. He no longer
works at NSF.

We continue to pursue fraud in the Small Business Innovation Research/
Small Business Technology Transfer programs. During this semiannual
period, an investigation originated by our office culminated in a trial that
resulted in a Principal Investigator (PI) being convicted on seven felony
counts including wire fraud, mail fraud, falsification of records, and theft.
The PI, a full-time professor at a Maryland university, created a company
and applied to NSF’s STTR program. He falsely certified on his STTR
proposals and reports that he was primarily employed by the small
business during the award, while he continued as a full-time university
professor.
The PI also created fraudulent company time sheets, which he backdated and falsely
represented as timekeeping records, and a fraudulent expenditure ledger in which he
recorded fictitious expenses to conceal that he spent the STTR funds on his home
mortgage and personal credit cards.

Our work 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 our mission.
                                               Report Highlights
•   Our audit of NSF’s purchase card program found
    that some purchases were not pre-approved and that
    cardholders did not consistently maintain receipts
    for transactions as required. NSF agreed with our
    recommendation to strengthen oversight of its purchase
    card program and has committed more resources to
    perform targeted reviews of purchase card activity.

•   The annual Federal Information Security Management Act
    report included eight new findings. In addition, the report
    repeated or reissued 11 findings from prior years, some
    from as early as FY 2006. NSF stated that it will develop
    an action plan to address recommendations to strengthen
    information technology controls.

•   A PI, who was also a full-time professor, fraudulently
    obtained $200,000 in grant funds from NSF’s Small
    Business Technology Transfer program and converted the
    funds to personal use to make payments on his mortgage
    and personal credit cards and to authorize approximately
    $11,000 in salary payments to his wife, who did not
    perform NSF-related work. A federal jury convicted him of
    seven counts including wire fraud, falsification of records,
    and theft of government property.

•   We referred 13 cases of research misconduct to NSF
    including a graduate student who admitted fabricating
    data, a professor who plagiarized in eight NSF proposals,
    and a PI who plagiarized in a CAREER proposal.




                                                                   5

Report Highlights




               6

                                               Audits & Reviews

NSF Needs to Strengthen Oversight of its Purchase Card
Program

NSF participates in the General Services Administration’s
government-wide purchase card program, which provides
Federal agencies with the means to purchase general
supplies and services. From April 1, 2010 through March 31,
2013, the period covered by our audit, 233 NSF employees
used purchase cards for approximately 34,300 transactions
totaling almost $17 million.

We found that: 1) Some purchases were not pre-approved;
2) Cardholders did not consistently maintain receipts for
transactions as required; 3) Some purchase card bank
statements had not been reviewed by approving officials; and
4) Card managers did not always review bank activity reports
and merchant category codes for improper purchases.

As a result, there was a heightened risk that inappropriate or
fraudulent transactions could occur and not be detected. We
identified several minor inappropriate purchases including
17 transactions that were split purchases. We also referred
three cardholders’ activity to our Office of Investigations, and
one of those individuals pled guilty to stealing more than
$94,000 by using his purchase card to buy electronics, music,
and movies for himself and his family.

We recommended that NSF strengthen oversight of its
purchase card program including NSF periodically reviewing
merchant codes to determine if additional codes should be
blocked to prevent improper purchases, and ensuring that
approving officials review cardholders’ transactions. NSF
agreed with our recommendations and has committed more
resources to perform targeted reviews of purchase card
activity.

NSF Should Assess its Administrative Cost Recovery
Rate to Ensure it Accurately Reflects the Level of Effort
Involved in Interagency Agreements

In response to a Congressional request, the OIG examined
how NSF calculates its administrative cost recovery
(ACR) rate and applies it to interagency agreements with


                                                                   7
Audits & Reviews


                   other federal agencies. Federal agencies can enter into interagency
                   agreements with other agencies for goods and services and recoup their
                   administrative costs by charging an ACR fee.

                   We identified two types of incoming interagency agreements that
                   appeared to involve very different levels of effort by NSF. For one type
                   of interagency agreement, NSF may issue a grant on another agency’s
                   behalf which involves conducting merit review, overseeing the research
                   performed, and financially monitoring the costs, just as NSF does for
                   awards it issues. For the other type, NSF’s effort consists primarily
                   of transferring funds from the requesting agency to another entity.
                   However, regardless of the level of effort required by NSF, the agency
                   charges the same ACR rate based on the dollar value of the interagency
                   agreement.

                   NSF’s use of the same ACR rate calculation of all interagency
                   agreements suggests that NSF could be overcharging on some
                   agreements and undercharging on others. We recommended that NSF
                   assess its administrative cost recovery process to ensure that the fees
                   charged reflect the level of effort involved. NSF stated that it will consider
                   any additional capabilities of its new financial accounting system to refine
                   its ACR rate.


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

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

                   Auditors issued an unqualified opinion on NSF’s FY 2013 financial
                   statements; however, they reported a significant deficiency in the
                   monitoring of cooperative agreements for large construction projects.
                   This significant deficiency was also reported in the FY 2010 – FY 2012
                   audits. The auditors stated that the causes of these prior year conditions
                   remain largely uncorrected at September 30, 2013, either due to NSF’s
                   continued disagreement with the severity of the conditions, its late
                   implementation of new procedures to rectify the conditions, or the fact
                   that management has not identified specific corrective actions that would
                   apply to existing cooperative agreements.



              8
                                                       OIG Semiannual Report   March 2014


While the auditors noted that in FY 2013 some progress was made by
NSF in designing procedures to rectify certain of the weaknesses noted
in prior years as they pertain to future awards of cooperative agreements,
little progress has been made by NSF in addressing the issues
concerning active cooperative agreements that received contingency
funding prior to September 30, 2013. In addition to the conditions noted
in the FY 2012 audit, the FY 2013 audit noted:

The audit of a large NSF cooperative agreement at a major university
showed that the university’s contingency costs were not accumulated
and tracked in a manner consistent with how such costs were originally
estimated and the university did not separately track and account for
these funds in its formal accounting, memoranda, or subsidiary records.

NSF’s accounting system shows the cooperative agreement award
amount in total, without separate identification of the contingency funding
portion of such award. Also, NSF does not track the expenditure of
contingency funds to ensure that they are in line with the amount of
contingency funds budgeted in the award; and

Awardees continued to be able to draw down contingency funds without
prior approval by NSF.

NSF stated that it continues to work to strengthen its controls for
awarding and managing construction type cooperative agreements. And,
while it continues to disagree with the significant deficiency, NSF stated
that it is committed to continuing the progress made in FY 2013 into the
future. A copy of NSF’s full response is published in its FY 2013 Agency
Financial Report.

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

The FY 2013 Management Letter identified seven internal control
findings, some of which incorporated elements of prior years’ findings
related to NSF’s operations and financial reporting controls. The
Management Letter reported continued improvements were needed
in NSF’s policies for awarding and administering grants and cost
reimbursement contracts.

The auditors made several recommendations, including that NSF fully
implement its cost surveillance oversight procedures, continue improving
its control over cost reimbursement contracts, and continue to evaluate
the effectiveness of its internal control procedures over processing grant
transactions.
                                                                               9
Audits & Reviews


                   NSF generally concurred with the recommendations in the Management
                   Letter and is working to resolve the findings. The FY 2014 financial
                   statement audit will evaluate NSF’s actions in response to the
                   recommendations.

                   NSF Needs to Strengthen Information Technology Controls

                   It is essential for NSF to ensure that its information systems are secure
                   since these systems contain vital sensitive information that is central to
                   the Foundation’s mission. NSF has become increasingly dependent on
                   computerized information systems to execute its scientific research and
                   operations and to process, maintain, and report essential information. As
                   a result, the reliability and security of these systems is a major priority.

                   NSF’s 2013 Federal Information Security Management Act (FISMA)
                   report included eight new findings, six for the U.S. Antarctic Program
                   (USAP) and two for NSF. The USAP findings included the need to
                   improve account management, and assessment and authorization
                   controls. NSF findings included the need to identify all assessed risks
                   consistently in Security Assessment Reports. In addition, the report
                   repeated or reissued 11 findings from prior years. The prior year findings,
                   from as early as FY 2006, included the need for USAP to develop and
                   implement a disaster recovery plan, and to enforce NSF’s password and
                   account management policies consistently. A reissued FY 10 finding
                   relating to NSF pertained to the need to remove timely the IT accounts of
                   separated employees and contractors. The status of all 19 findings in the
                   FY 13 FISMA report will be assessed during the performance on the FY
                   14 FISMA evaluation, which is on-going.

                   Recommendations included development of a disaster recovery plan for
                   Antarctic operations, ensuring that system accounts for terminated users
                   are deactivated in a timely manner, and addressing weaknesses in IT
                   security awareness and training. NSF stated that it will develop an action
                   plan to address the recommendations.

                   NSF’s High-Speed Network

                   NSF operates and maintains a High-Speed Network (HSN) at its
                   headquarters in Arlington, Virginia. The HSN provides access to a
                   collaborative environment for researchers and educators focused on the
                   development of innovative technology solutions.

                   We conducted an inspection to determine if NSF’s assessed level of
                   risk for the HSN was appropriate and to determine whether NSF had
                   implemented adequate security controls for its high-speed network. We
                   found that NSF has not determined the appropriate level of security
                   controls for the HSN. We recommended that NSF evaluate its existing


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                                                                                 OIG Semiannual Report        March 2014


controls to ensure that it is providing adequate network and information
security for the HSN. NSF agreed with our recommendation and intends
to develop a plan to address the issues we identified.

NSF Complies with Sustainability Requirements

In response to a request from the Bicameral Task Force on Climate
Change, we examined NSF’s compliance with sustainability requirements
at its Arlington, Virginia headquarters buildings. We found that NSF
generally appeared to be complying with the requirements in our sample.
For example, NSF has submitted annual Strategic Sustainability Plans
and has indicated that it has expanded the purchase of environmentally
sound goods and services. As part of its effort to increase employees’
awareness of the importance of environmental goals and sustainability,
NSF is providing information in its weekly online news publication.
Finally, NSF intends to comply with a number of other requirements when
it moves to its new headquarters building.


A-133 Audits
Single Audits Identify Repeat Findings at One-Half 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.

The 21 audit reports reviewed and referred1 to NSF’s Cost Analysis and
Audit Resolution (CAAR) Branch this period covered NSF expenditures
of $261 million as reported in the annual Single Audits during audit year
2012, and resulted in 15 findings at eight NSF awardees.

One awardee received a qualified opinion on its compliance with Federal
grant requirements. Six of the 15 findings (40 percent), at four of the
eight awardees with findings (50 percent), were repeated from previous
audits, calling into question the awardees’ ability to adequately manage
their NSF awards. One awardee had a finding which had been repeated
for six consecutive years.

1 The number of audits reviewed is much lower than in previous periods due to technical difficulties at the
Federal Audit Clearinghouse, which prevented us from obtaining reports pertaining to awardees’ 2013 audit
years.                                                                                                        11
Audits & Reviews


                   Awardees’ lack of internal controls and noncompliance with Federal
                   requirements included: untimely and/or incorrect reporting of time and
                   effort; failure to verify that vendors had not been suspended or debarred;
                   inadequate monitoring of subrecipients; 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 11 audit reports2 for
                   which NSF was identified as the cognizant or oversight agency for audit,
                   and found that six fully met Federal reporting requirements. Five reports
                   contained audit quality and timeliness issues. One report inadequately
                   presented the elements of the audit findings as well as the elements
                   of the auditee management’s plan to correct the deficiencies reported.
                   In addition, two reports did not use reporting language required by
                   AICPA3 standards. For one of these reports, the auditor also did not
                   accurately prepare the Summary of Audit Results and the Data Collection
                   Form (Form SF-SAC). Finally, two reports were filed after the deadline
                   established in OMB Circular A-133.

                   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. After completion of all 11
                   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.

                   OIG Follow-up Actions on Quality Control Review

                   Our follow-up review of the audit of Berkeley Geochronology Center4
                   found that the auditors’ additional work performed in response to our
                   quality control review, generally met applicable Federal requirements.




                   2 The audits were conducted by 11 different independent accounting firms.
                   3 American Institute of Certified Public Accountants
                   4 September 2013 Semiannual Report, p. 11


             12
                                                      OIG Semiannual Report   March 2014


Audit Resolution

NSF Takes Steps to Improve Workforce Management and the Work
Environment for Employees

In response to our recommendation, NSF has made progress in
several areas including developing a systematic approach to address
human capital management issues. NSF stated that as of September
2013, it had implemented 85 of 102 recommendations for workplace
management change.

NSF Sustains $11 Million of Questioned Costs on Raytheon Contract
for U.S. Antarctic Program

In response to our recommendations, NSF sustained $11 million of
questioned costs including direct charges, fringe benefits, overhead,
and general and administrative costs claimed from FY 2000-FY 2004 by
Raytheon, the logistical support contractor for NSF’s Antarctic Program.




                                                                              13
Audits & Reviews




             14
	
                                                     Investigations

CIVIL AND CRIMINAL INVESTIGATIONS
Federal Jury Finds PI Guilty on Seven Counts in Scheme
to Defraud Small Business Program

We previously reported that a PI was indicted for wire fraud,
mail fraud, falsification of records, and theft.5 A two week trial
was initiated during this semiannual period, and the PI was
convicted on all seven felony counts.

The PI, a full-time professor at a Maryland university,
created a company and applied to NSF’s Small Business
Technology Transfer (STTR) program. The PI falsely certified
on his STTR proposals and reports that he was primarily
employed by the small business during the award, while he
continued as a full time university professor, and included
misrepresentations in his proposals and budgets about the
number of company employees. He also misrepresented the
existence of a $100,000 investment from a third party in order
to qualify for matching supplemental funds from NSF’s STTR
Phase IB program.

This case arose from our proactive review of STTR and
SBIR companies. In response to our request for financial
documents, the PI created fraudulent company time
sheets, which he backdated and falsely represented as
contemporaneous timekeeping records. In addition, he
created an expenditure ledger which was fraudulent in which
he recorded fictitious expenses to conceal that he spent the
STTR funds on his home mortgage and personal credit cards.
The PI had also paid his wife over $10,000 for work she did
not do.

During the investigation, we found that the PI had also
engaged in a fraudulent scheme involving funds under two
subcontracts funded by the Department of Defense. He
submitted requests for stipend payments for his students
under the subcontracts, and when the students received their
payments, the PI instructed them to pay him a portion of their
stipends. The PI received approximately $36,000 through this
scheme.

His sentencing is scheduled for July 2014.
5 September 2013 Semiannual Report, p.16.
                                                                     15
	
Investigations


                 NSF Employee Sentenced to Ten Months in Prison for Purchase
                 Card Theft

                 Based on information from the Office of Audit about an NSF employee’s
                 suspicious purchases using his government purchase card, we reviewed
                 the purchases, interviewed the employee’s supervisor, and obtained and
                 executed search warrants at the employee’s residence and NSF office
                 space. The employee admitted that he had used the purchase card to
                 make personal purchases, including cell phones, cell phone voice and
                 data service, iTunes purchases, and various electronic devices and
                 computing equipment, for himself and his family and friends.

                 Our investigation determined that over the course of several years
                 he purchased $94,493 in items and services for personal use. The
                 employee resigned from NSF, and pled guilty in federal district court
                 to one count of theft of government property. He was sentenced to ten
                 months in prison followed by three years of supervised release, and
                 ordered to pay restitution of $77,803. NSF recovered $10,263 of the
                 restitution immediately through offset from a separation payment for his
                 accumulated annual leave, and he will pay the rest over time.

                 University Professor / Company Owner Convicted of False
                 Statements, Returns Funds to NSF

                 A university professor in Iowa owned an outside company that received
                 four SBIR Phase I awards from NSF. In the course of our investigation,
                 the professor admitted that he used SBIR award funds to pay for a
                 personal rental property, his daughter’s education expenses, and his own
                 living expenses. Our investigation also determined that the professor
                 mischarged funds under NSF and other agencies’ awards for which he
                 was PI at his university.

                 The professor pled guilty to two counts of false statements and repaid
                 $134,084. Sentencing is scheduled for April 2014.

                 NSF Program Officer Resigns Following Investigation into Conflicts
                 of Interests and Bribery

                 We investigated a complaint alleging that an NSF program officer
                 violated conflict of interests rules and was making award decisions
                 based on personal and professional relationships, rather than on the
                 merits of the proposals. Our investigation revealed that the program
                 officer, who was the principal and founder of an outside business,
                 created conflicts of interests by misusing his NSF position to benefit
                 himself, his family, and his friends financially. Further, he did not seek
                 the required supervisory approval for his outside activities and did not




           16
                                                       OIG Semiannual Report   March 2014


disclose them on his annual financial disclosure forms, which prevented
NSF from identifying and taking action to address his misconduct. The
misconduct included:
•	 approving an NSF award supplement to employ his stepson;
•	 facilitating the employment of his girlfriend by one of his awardees;
•	 soliciting work from NSF awardees to benefit his private company;
•	 receiving a “finder’s fee” as a result of setting up a business venture
   for an NSF awardee;
•	 entering into an outside contract between his private company and
   a Texas university, facilitated by the president of one of his awardee
   companies;
•	 making introductions to and/or intervening with his NSF colleagues
   for the purpose of aiding his private business and its clients, and in
   one instance getting paid for it; and
•	 receiving a personal benefit for reviewing patents for an individual
   whose company had an active NSF award on which he served as
   program officer.

When NSF learned about this last item, it deprived him of all of his
responsibilities for representing NSF and handling proposals and
awards, having him perform other duties.

We referred this matter for criminal prosecution, which was declined.
We then referred our findings to NSF management, after which the
program officer resigned—after nearly nine months without performing
program officer responsibilities. We recommended that NSF debar him
governmentwide, and NSF’s decision is pending.

NSF Employee Indicted for Embezzlement

Our investigation determined that an NSF employee misused
government funds. The employee was in charge of a program that
provides tuition assistance for NSF employees to take classes toward an
undergraduate degree, and she used her position of authority to pay for
graduate level classes for herself, which is prohibited under the program.

The case was accepted for prosecution by the Virginia Commonwealth’s
Attorney for Arlington County, which resulted in the employee being
indicted for three counts of embezzlement. When she failed to appear at
her initial court hearing, a bench warrant was issued. She turned herself
in after a month, was arrested, and spent five days in jail.

NSF Employee Admits to Using Government Purchase Card to Buy
Electronics for Personal Use

Our investigation determined that an NSF employee, who maintained
an inventory of government-owned electronic equipment for her office,
used her government purchase card to buy government mp3 players,

                                                                               17
Investigations


                 headphones, and other items for her personal use. She was also unable
                 to account for multiple pieces of other equipment including smartphones,
                 tablets, and computers. The case has been referred for prosecution by
                 the Virginia Commonwealth’s Attorney for Arlington County.

                 University Repays $338,910 for Duplicate and Improper Charges

                 Our investigation of allegations of mischarging and mismanagement
                 related to two awards to an Alabama university determined that most of
                 the financial issues were attributable to a change of accounting systems.
                 However, we also determined that two legitimate $164,455 expenditures
                 to one of the awards had been erroneously double-charged, and that
                 student stipends were improperly paid to two students; as a result the
                 university returned $338,910 to NSF.

                 Company Returns Funds to NSF for Underspent SBIR Phase I
                 Awards

                 Our multi-agency investigation of the accuracy of proposals, reports,
                 and timekeeping records associated with multiple SBIR awards to a
                 company determined that the company received the full award amounts
                 but underspent two SBIR Phase I awards by significant amounts. The
                 company failed to notify NSF of the unused funds or return excess funds
                 to NSF associated with the SBIR Phase I awards. We recommended
                 that NSF take action to recover those funds, and the company returned
                 $152,811 to NSF.

                 Federal Employee Misrepresented His Employment Status in NSF
                 Proposals

                 An individual received NSF funds for two proposals in which he had
                 not disclosed that he was an employee of the U.S. Forest Service.
                 Such information is important because NSF provides grants to federal
                 employees only under certain circumstances and when this individual
                 failed to disclose his federal employment, he circumvented procedures
                 designed to ensure that awards to federal employees meet NSF’s
                 criteria. Our investigation and review by the Forest Service resulted in
                 his termination from federal employment for several reasons, including
                 his work on the NSF projects during his federal duty hours. Based on
                 our recommendation, NSF terminated his ongoing NSF award, which
                 resulted in $57,880 put to better use.

                 Violations Result in NSF Withholding Nearly $50,000 from SBIR
                 Award

                 As a part of an ongoing investigation, we recommended that NSF
                 withhold the final payment associated with an expired Phase I SBIR
                 award after our investigation determined that: (1) the company issued a
                 $30,000 subcontract without NSF approval; (2) the company overstated

           18
                                                                         OIG Semiannual Report         March 2014


the amount of hours reported in its final report; and (3) the PI spent
significantly less time on the project than required by the award terms.
NSF financially closed the award and withheld the final payment,
resulting in $49,991 put to better use.

University Returns $26,905 to NSF for Summer Salary
Overpayments

We previously reported that a Georgia university entered into a five-year
compliance agreement as part of a civil settlement.6 During our review
of the university’s annual compliance report, we identified an issue
with summer salary charged to an NSF award and recommended the
university conduct a review of all NSF-funded summer salary payments.
As a result, the university identified $26,905 in overpayments and
returned those funds to NSF.

Former Professor Debarred for Theft of Grant Funds

We previously reported 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 pay restitution to NSF.7 We recommended that NSF debar the
former professor and his company for ten years. Since the company and
the former professor had already been suspended for three years, NSF
debarred them for seven years. NSF also prohibited the former professor
from serving as an NSF reviewer, advisor, or consultant to NSF during
the debarment period.

NSF Debars PI for Making Fraudulent Purchases with NSF Award
Funds

As previously reported, a former PI at a New Jersey university pled guilty
after making fraudulent purchases with NSF grant funds.8 Subsequently,
the court granted the motion by the Department of Justice (DOJ) for
default judgment against the PI for violations of the civil False Claims
Act.9 NSF followed our recommendation and debarred the PI for three
years.

NSF Debars Oklahoma Man for Three Years

Previously we reported the case of an Oklahoma businessman who
spent more than half of his company’s SBIR award funds on non-award
related expenditures.10 Based on our recommendation, NSF debarred
the businessman for three years.
6 March 2010 Semiannual Report, p.25.
	
7 March 2011 Semiannual Report, p.22; September 2011 Semiannual Report, p.9; March 2013 Semiannual 

Report, p.24; and September 2013 Semiannual Report, p.19.
	
8 September 2011 Semiannual Report, p.9.
	
9 March 2013 Semiannual Report, p.21.
	
10 September 2013 Semiannual Report, pp.15-16.
	
                                                                                                       19
Investigations


                 University Repays Excess Summer Salary to NSF

                 We determined that a Vermont university overcharged for PI summer
                 salary under an NSF award in violation of the award conditions. The
                 university returned $14,930 to NSF.

                 Small Business Repays Excess Student Salary

                 A Minnesota small business failed to correctly account for student hours
                 worked under a supplement to an NSF SBIR Phase II award. Our
                 investigation found that one student was ineligible under the terms of the
                 supplement and the business had charged the time for two students to
                 unrelated projects. The small business returned $10,633 to NSF.

                 Small Business Fails to Track Time under SBIR Phase II Award

                 Our investigation determined that a Massachusetts small business
                 failed to maintain timekeeping records for the last six months of an SBIR
                 Phase II award. Pending the outcome of our ongoing investigation, NSF
                 followed our recommendation to suspend the final payment of $75,000
                 under the award.

                 NSF Suspends Six Awards and Suspends PI and Company
                 Government-wide

                 Based on our recommendation, NSF suspended four awards to a
                 research institution and two awards to a company, and suspended the PI
                 and the company government-wide. The issues involve possible fraud
                 in obtaining and reporting on NSF and other federal awards, as well as
                 mischarging of federal funds. The matter has been accepted by DOJ for
                 possible criminal prosecution.

                 NSF Suspends PI and Company Government-wide

                 We previously reported11 that a PI had been indicted for false claims,
                 false statements, and theft as a result of significantly inflating the amount
                 of effort he and other company employees expended on an NSF SBIR
                 project. Based on our recommendation, NSF suspended the PI and his
                 new company government-wide.




                 11 September 2013 Semiannual Report, p.15.


           20
                                                         OIG Semiannual Report   March 2014


RESEARCH MISCONDUCT INVESTIGATIONS

Research misconduct damages the scientific enterprise, is a potential
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 (plagiarism, data fabrication and data
falsification) 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.

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 a proposed five-year of debarment. In every case, we
recommended that NSF make a finding of research misconduct, issue a
letter of reprimand, and require the subject to complete a Responsible
Conduct of Research training program. We also recommended
additional significant actions as summarized below.

Postdoc and Mentor Perpetuate Data Falsification and Fabrication
In a Series of Published Articles

A former postdoctoral researcher and his mentor at a Colorado university
perpetuated the apparent validity of research data after the postdoc had
intentionally falsified and fabricated the original study. After coauthors on
the original study were unable to replicate the postdoc’s research results,
the mentor’s college—without informing university-level administration—
conducted an informal inquiry and recommended that the issue be
worked out in the literature rather than through a formal investigation.
Although the mentor’s lab members had been able to repeat the results
when the postdoc was there, after he left they could not do so.

As a result of the inadequacy of the college’s informal inquiry, we
conducted our own on-site inquiry. We recommended that the
university conduct an investigation, which it agreed to do. The
university investigation focused on the postdoc’s reported isolation of
four compounds and the mentor’s continued use of the resulting data
over several years, despite mounting evidence of research misconduct
presented by lab members and other faculty members.

The mentor’s failure to require lab notebooks or to maintain instrumental
data in his own lab complicated the investigation; however, his
coauthors, students, and other university collaborators maintained
                                                                                 21
Investigations


                 sufficient records to enable the investigation to proceed. The university
                 ultimately concluded that the postdoc had intentionally fabricated data
                 with respect to the four compounds he claimed to have isolated as
                 natural products. Because the postdoc was no longer an employee, the
                 university could take no direct actions against him.

                 The university also concluded that the mentor was “reckless in his use of
                 highly suspect data” in the face of the “loud chorus of voices challenging
                 the original” work. The investigation committee recommended the
                 retraction of eight publications and required that the mentor receive
                 instruction “in proper scientific laboratory protocols to document
                 techniques and procedures.”

                 We agreed with the university’s findings and recommended that
                 NSF: debar the postdoc for five years and the mentor for three years;
                 terminate the former postdoc’s active NSF awards; and require retraction
                 of the papers identified by the university and completion of training.

                 Additionally, until five years after the end of their respective debarment
                 periods, we recommended NSF require certifications and assurances;
                 require submission of detailed data management and mentoring plans
                 with annual certifications of adherence to those plans for new NSF
                 awards; and bar both from serving NSF as a peer reviewer, advisor, or
                 consultant.



                  Certifications and Assurances

                  In many of our research misconduct cases, we recommend that NSF
                  require the subjects to submit certifications and/or assurances with
                  every proposal and report they submit to the agency. Certifications
                  are letters from the subject stating that they certify that the document
                  they submit does not violate NSF’s research misconduct regulation.
                  Assurances are letters from a responsible official of the subject’s
                  employer assuring NSF that they have reviewed the document and
                  that its contents do not violate NSF’s research misconduct regulation.



                 Graduate Student Admits Fabricating Data

                 A graduate student who conducted NSF-funded research at a Michigan
                 university fabricated the existence of biological sample collections and
                 the performance of experiments, and also fabricated and falsified data.
                 The student admitted to the research misconduct and the university
                 dismissed her from the graduate program.


           22
                                                        OIG Semiannual Report   March 2014


When we interviewed the student, she accepted responsibility for the
research misconduct. We concluded that she intentionally fabricated
and falsified data and the research record, and recommended that NSF
debar her for three years. After the debarment period, we recommended
that for three years NSF: require certifications and assurances;
require submission of a detailed data management plan with annual
certifications of adherence for any resulting awards; and bar her from
participating as a peer reviewer, advisor, or consultant for NSF.

Finding of Research Misconduct and Debarment Recommended
for Professor

Our investigation identified copied text in three NSF proposals submitted
by a professor from a Tennessee university. A university investigation
found that the professor committed plagiarism, but that his actions were
careless and did not constitute a significant departure from the standards
of his research community. Our investigation concluded that the
professor acted recklessly and that his actions did constitute a significant
departure from the standards of his research community, and therefore
that he did commit research misconduct.

Our investigation also determined that between 2004 and 2011 the
professor served as an NSF review panelist six times. On each
occasion, NSF provided him a flat rate to cover expenses for lodging and
meals; nonetheless, he also requested and received duplicate lodging
and meal reimbursements from his university. Based on his plagiarism
and deceptive conduct, we recommended that the professor be debarred
for two years and that NSF require him to complete an ethics course
within one year.

Florida Professor Plagiarizes in Eight NSF Proposals

A Florida university determined that a professor intentionally committed
extensive plagiarism in several proposals, including two proposals he
submitted to NSF as PI. Despite the professor’s claim that no other
proposals contained copied text, our investigation found substantial
plagiarism in six additional NSF proposals. We recommended that NSF
debar the professor for one year, followed by three years barring the
professor from serving as a reviewer, advisor, or consultant; and three
years of certifications and assurances.

Lab Director Commits Plagiarism

A lab director in Illinois plagiarized text, ideas, and structure from an
awarded NSF proposal she had obtained from the proposal’s PI. During
our inquiry, she told us she thought the PI had given her permission to
copy text and ideas from the proposal, which was aimed at the same
NSF program as hers. Her institution investigated, found that she
violated its code of ethics, and imposed sanctions.
                                                                                23
Investigations


                 The awarded proposal’s PI told us she had voluntarily offered the director
                 a copy of her proposal, but had not given permission for the director
                 to use her text or ideas. We concluded that the lab director knowingly
                 plagiarized and we recommended that NSF debar the lab director for
                 one year, require three years of certifications and assurances, and bar
                 her from serving as a consultant or reviewer for NSF for three years.

                 PI Plagiarizes in Funded Faculty Early Career Development
                 (CAREER) Proposal

                 A professor at a Tennessee university plagiarized in a CAREER
                 proposal submitted to NSF. The professor asserted that he was rushed
                 in preparing the proposal and did not have time to properly edit his
                 submission. However, the same copied text appeared in proposals he
                 later submitted to other federal agencies, seeking support for the same
                 research that was already funded by the NSF CAREER award. The
                 university made a finding of research misconduct, required training in
                 the responsible conduct of research, and placed the professor under the
                 mentorship of a senior faculty member. We agreed with the university’s
                 conclusions, and recommended that NSF impose a three-year period of
                 certifications and assurances, and a concurrent prohibition from service
                 to NSF as a reviewer, consultant, or advisor.

                 Professor Asserts that Rushed Deadline Resulted in Extensive
                 Plagiarism

                 A professor from a Texas university plagiarized about three pages of
                 material in his NSF proposal. Claiming that he was rushed by deadlines,
                 the professor accepted full responsibility for his actions. His university
                 determined that he committed research misconduct in failing to properly
                 attribute the work of others within his proposal. We concurred with
                 the university’s assessment and recommended that NSF require
                 certifications and assurances for three years and bar the professor from
                 serving as a reviewer for two years.

                 Professors and Postdoctoral Researcher Plagiarize in Two NSF
                 Proposals

                 Two Washington professors and their postdoctoral researcher
                 plagiarized materials from ten separate sources into two NSF proposals.
                 Based on its investigation, the university required that the professors’
                 grant proposals be reviewed for five years, that they develop an ethics
                 workshop within three years, and that their dean and department chair
                 be responsible for monitoring their work. The university concluded
                 there was sufficient evidence to substantiate the postdoc’s direct
                 involvement in the plagiarism, but in lieu of a full investigation it entered
                 into a settlement agreement that precludes the postdoc from seeking
                 employment from the university for seven years.

           24
                                                       OIG Semiannual Report   March 2014


Based on our further investigation, we determined that the postdoc was
responsible for a large portion of the plagiarized text. While the actions
taken against the professors adequately protected the interests of the
federal government, we recommended that NSF require the postdoc to
provide certifications and assurances for three years.

Professor Plagiarizes from Graduate Students’ Dissertations

A professor at a Pennsylvania university plagiarized material from the
dissertations of two former students, and from an article by another
author summarizing the professor’s own work, into four NSF proposals.
The university investigation revealed that the professor copied text from
the dissertation of one former student, which itself contained plagiarized
text. The university accepted the professor’s assertion that no other
proposals contained improperly copied text and the university found that
no research misconduct occurred.

Our investigation determined that the professor had submitted two
more NSF proposals with text copied from a second former student’s
dissertation, which also contained plagiarized text, as well as from
an article by another author summarizing the professor’s research.
We concluded that the professor knowingly committed plagiarism
and recommended that NSF require two years of certifications
and assurances, and bar the professor from serving NSF as a
reviewer, advisor, or consultant for two years. NSF accepted our
recommendations.

Graduate Student Plagiarizes in NSF-Funded Dissertation

A graduate student working under an NSF award at a Pennsylvania
university plagiarized a large amount of text into his dissertation.
The university concluded it was plausible that the student, who had
been educated in another country, was unaware of proper citation
or paraphrasing standards for reviewing other research. Further,
the student admitted that he was in a hurry and reckless in putting
his dissertation together. The university determined he recklessly
plagiarized and required him to replace the official version of his
dissertation with a revised version.

We concurred with the university’s conclusions, and we recommended
that NSF require two years of certifications and assurances, and bar the
student from serving NSF as a reviewer, advisor, or consultant for two
years.




                                                                               25
Investigations


                 Team Leader Recklessly Plagiarizes in NSF Proposal

                 A university team leader in Illinois both contributed to and compiled
                 two NSF proposals in which plagiarized text appeared. The university
                 determined that the team leader recklessly plagiarized “since proper
                 checking of citations and appropriate attributions were not provided.”
                 We agreed with the university’s assessment and recommended that
                 NSF require certifications and bar the professor from serving NSF as a
                 reviewer, advisor, or consultant for one year.

                 Professor Plagiarizes From Four Sources Into an NSF Proposal

                 A North Carolina professor plagiarized a modest amount of text from
                 multiple sources into his NSF proposal. Because the professor claimed
                 that he placed the copied text into his draft proposal as a place holder,
                 the university concluded that he had no structured process to prevent the
                 insertion of plagiarized text into his proposals. We concurred with the
                 university that the professor plagiarized recklessly and recommended
                 that NSF require the professor to submit certifications for one year.

                 Actions by NSF Management on Previously Reported Research
                 Misconduct Investigations

                 NSF has taken administrative action to address our recommendations
                 on fifteen research misconduct cases reported in this semiannual
                 and 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.

                 •	 In the case of a former doctoral student at a Minnesota university who
                    intentionally fabricated and falsified data on which his dissertation
                    advisor relied in an NSF proposal, NSF finalized the five-year
                    debarment proposed previously.12
                 •	 NSF took action against a graduate student in Kentucky who
                    fabricated data 13 by proposing a one-year debarment, imposing
                    one year of certifications, and barring the student from serving as a
                    reviewer, advisor, or consultant for NSF for one year.
                 •	 In the case of a former postdoctoral fellow at a Washington
                    university who intentionally falsified data,14 NSF proposed a one-year
                    debarment, barred him from participating as a reviewer, advisor, or
                    consultant for three years, and required three years of certifications
                    and assurances as well as certifications of adherence to a detailed
                    data management plan in each new proposal.


                 12 September 2013 Semiannual Report, p.24.
                 13 September 2013 Semiannual Report, p.20.
                 14 September 2013 Semiannual Report, p.20.


           26
                                                       OIG Semiannual Report   March 2014


•	 In the case of a professor who plagiarized from a proposal that she
   reviewed for NSF,15 NSF imposed certifications and assurances for
   three years, and prohibited the professor from serving as a reviewer,
   consultant, or advisor to NSF for three years.
•	 In the case of the assistant professor at an Arizona university who
   plagiarized text in two NSF proposals and blamed it on software,16
   NSF required certifications and assurances for approximately two
   years, and barred him from participating as a reviewer, advisor, or
   consultant for NSF for approximately two years.
•	 NSF required a small business owner who knowingly plagiarized text
   in two NSF proposals to submit certifications for two years.17
•	 NSF required a PI employed by an Idaho company, who knowingly
   plagiarized material in an NSF proposal, to submit certifications and
   assurances for two years.18
•	 In the case of a PI in South Carolina who plagiarized into three NSF
   proposals,19 NSF required that for two years the PI: certify compliance
   with his university-imposed sanctions; provide certifications and
   assurances; and be barred from serving as a reviewer, advisor, or
   consultant for NSF.
•	 NSF required a PI, formerly at an Illinois university,20 who plagiarized
   text into two grant proposals, to provide certifications for one year.
   We also identified $42,641 of inappropriate expenditures that were
   returned by the university during the last semiannual period and the
   current one.
•	 In the case of a PI in Georgia who falsified five letters of
   collaboration, NSF required certifications for one year and prohibited
   the PI from serving as a reviewer, advisor, or consultant for NSF for
   one year.
•	 In the case of an associate professor at an Illinois university who
   plagiarized material into an NSF proposal,21 NSF required one year of
   certifications.
•	 In the case of an assistant professor at a Pennsylvania university who
   knowingly plagiarized in a proposal,22 NSF required that he certify
   compliance with his university’s sanctions and required certifications
   and assurances for one year.
•	 In the case of a PI at an Ohio institution who submitted a
   collaborative proposal containing extensive plagiarism, NSF required
   certifications and assurances for one year.23 The Ohio institution
   subsequently terminated the award, resulting in $50,000 put to better
   use.


15   September 2013 Semiannual Report, p.22.
16   March 2013 Semiannual Report, p.29.
17   September 2013 Semiannual Report, p.22.
18   September 2013 Semiannual Report, p.21-22.
19   September 2013 Semiannual Report, p.22.
20   September 2013 Semiannual Report, pp. 23-24.
21   September 2013 Semiannual Report, p.23.
22   September 2013 Semiannual Report, p.24.
23   September 2013 Semiannual Report, p.23.

                                                                               27
Investigations


                 NSF required a South Carolina co-PI who plagiarized to provide
                 certifications for one year.

                 •	 NSF declined to make a finding of research misconduct against a
                    professor at a Colorado university who plagiarized in his CAREER
                    proposal that NSF awarded with ARRA funds.24 We recommended a
                    finding of reckless plagiarism, but NSF concluded that the professor
                    acted carelessly.


                 ADMINISTRATIVE INVESTIGATIONS
                 Panelist Violates NSF’s Conflict of Interests Rule in Reviewing
                 Proposal

                 A panelist submitted a written review for a proposal, with which he had a
                 conflict of interests (COI), even though he was not one of the panelists
                 assigned to provide a written review of that proposal. We verified the
                 panelist was a recent collaborator and co-author with both the PI and
                 co-PI of the proposal. The panelist acknowledged that although he had
                 a conflict of interests with both the PI and co-PI, he rated the proposal
                 “Excellent” and was a strong oral advocate of the proposal during the
                 panel discussion.

                 He claimed that he did not recognize the PI’s and co-PI’s names
                 because he had not physically met with them and wrote the manuscript
                 with them via email. NSF requires panelists to disclose potential
                 COIs, so the program officer can make informed decisions about the
                 objectiveness of reviewers’ opinions. Therefore, we recommended NSF
                 ban the panelist from participating as a reviewer, advisor, or consultant
                 for NSF for two years. NSF’s decision is pending.

                 NSF Panelist Breaches Confidentiality by Asking His Staff to
                 Review Proposals for Him

                 A Texas professor knowingly breached reviewer confidentiality by
                 sharing six NSF proposals assigned to him for panel review with
                 subordinates at his institution. Panelists reviewing proposals for NSF
                 sign a non-disclosure form and agree not to disclose material from any
                 proposal they are asked to review. During our investigation, the panelist
                 admitted that he shared the confidential proposals with his postdoctoral
                 researchers, but asserted he had not done this before.

                 Concurrent with our investigation, the National Institutes of Health
                 (NIH) reviewed a similar allegation involving the panelist’s disclosure of
                 proposals during his participation on NIH study sections. NIH’s


                 24 March 2013 Semiannual Report, pp.29-30.


           28
                                                       OIG Semiannual Report   March 2014


documentation established a pattern of conduct which was contrary
to the panelist’s assertion that the NSF panel was an exception to his
standard practice.

We recommended that NSF ban the panelist from serving NSF in an
advisory capacity, including as a panelist or ad hoc reviewer, for an
appropriate period of time. NSF’s response is pending.

We also recommended that NSF emphasize its requirement of
confidential treatment of proposals by including a watermark on
proposals that are printed or downloaded. NSF agreed to implement this
recommendation.

Two Institutions Terminate Awards Resulting in Over $220,000 of
Funds Put to Better Use

As part of our investigation into allegations of research misconduct
involving plagiarism in an NSF proposal, a Massachusetts institution
terminated the award early, resulting in $162,288 of funds put to better
use. The investigation into research misconduct is ongoing.

In a second case, after completing its investigation into allegations of
plagiarism in an NSF proposal, a university in Maine terminated the
award. As a result, approximately $40,000 of unexpended funds was
put to better use. The university also refunded approximately $26,000 to
NSF.

Awardee Violates Grant Terms and Returns Nearly $48,000 to NSF

As a result of our investigation of a Maryland community college
identified during a proactive review of NSF scholarship awards, the
community college returned $47,970 in scholarship and tutoring funds
to NSF, after making scholarship payments to ineligible students under
an NSF award. The community college also implemented new practices
to monitor student eligibility and assure compliance with grant terms of
future awards.

Government-wide Suspension Recommended for Researcher Who
Used NSF-Funded Supercomputers to Mine Bitcoins

We received reports describing a researcher’s abuse of NSF-funded
supercomputing resources at two universities to conduct bitcoin mining
activities. Bitcoin is a virtual currency that is independent of national
currencies, but it can be converted into traditional currencies through
exchange markets. It is generated or “mined” through a process that is
by design computationally intensive.




                                                                               29
Investigations


                 The researcher misused over $150,000 in NSF-supported computer
                 usage at two universities to generate bitcoins valued between $8,000
                 and $10,000. Both universities determined that this was an unauthorized
                 use of their IT systems. The researcher asserted that he was conducting
                 tests on the computers, but neither university had authorized him to
                 conduct such tests -- both university reports noted that the researcher
                 accessed the computer systems remotely and may have taken steps to
                 conceal his activities, including accessing one supercomputer through a
                 mirror site in Europe.

                 The researcher’s access to all NSF-funded supercomputer resources
                 was terminated. In response to our recommendation, NSF suspended
                 the researcher government-wide.

                 NSF Decision in Significant Abuse of Transit Subsidy

                 We previously reported that, following our review of NSF’s Transit
                 Subsidy Benefit Program,25 we opened an investigation of an NSF
                 employee, who we determined had inappropriately used approximately
                 $4,000 of transit benefit funds. Her misuse involved a combination
                 of personal trips, requesting and accepting an almost $1,000 cash
                 reimbursement for expenses that she had not incurred, $974 left on
                 old transit cards, and parking.26 We had recommended that NSF itself
                 recover the funds remaining on the employee’s old transit cards, and
                 recover the rest of the money from the employee. NSF management
                 first proposed to suspend her for 20 days, but reduced the suspension to
                 14 days, in part because her supervisor thought that she had repaid all
                 $2,881 of the misused funds.

                 However, when we requested documentation to confirm that the funds
                 had been repaid, NSF discovered the employee had previously repaid
                 only the $67 of her parking mischarges identified in our review of the
                 Program, but had not repaid any money from the other misuse identified
                 in this investigation. The employee was aware that she had not repaid
                 the $2,814 she owed for her transit abuse; nevertheless, she did not
                 clarify the facts for her supervisor but instead signed the decision letter
                 and did not attempt to pay back the $2,814.

                 Further, we gave the employee our draft report of investigation,
                 which made it clear that, although she had repaid $67 for her parking
                 mischarges, she still owed $2,814 for her misuse of the transit benefit.
                 However, NSF is not requiring her to repay more than $500 of the money
                 she misused.



                 25 March 2012 Semiannual Report, pp.28-29; September 2012 Semiannual Report, p.29; and March 2013
                 Semiannual Report, pp. 35-36.
                 26 September 2013 Semiannual Report, pp 25-26.


           30
                                                        OIG Semiannual Report   March 2014


MANAGEMENT IMPLICATION REPORTS
NSF Implements Recommendations to Improve Its Award
Management System

NSF’s web-based application, eJacket, is the agency’s system for
performing many functions for award and proposal processing, and is a
critical tool to enable NSF personnel to manage awards effectively and
maintain the official record for awards. We previously discussed our
MIR with recommendations for NSF to improve the utility and integrity of
eJacket.27

NSF has implemented several of our recommendations to improve
eJacket including revising policies and practices to ensure that all
relevant proposal and award decisions and documents are stored within
eJacket, in consistent locations with informative titles and correct dates.

NSF has also agreed to assess the feasibility of including the following
information within eJacket for each award: the ability to see all relevant
information about the award in chronological order; the identity of current
and all former NSF program and grant officers and awardee PIs and
co-PIs; and current and historical full contact information for awardees,
PIs, and co-PIs. NSF intends to complete this assessment within the
next semiannual period.

Finally, NSF determined that its systems retain information about the
Internet Protocol addresses for most submissions by applicants and
awardees; this practice has already proven useful in our investigations.

In addition, since we issued our MIR in June 2013, we made two related
recommendations to NSF:

1.		 When NSF users log into the NSF computer network, they see a
     banner informing them that the use of NSF computers and networks
     is restricted to official use only, and users have no expectation of
     privacy therein. We recommended that NSF implement similar
     banners on smartphones and tablets and NSF agreed to install
     suitable banners to the extent practical on current and future
     smartphones and tablets.

2.	 NSF recently implemented a web-based “Award Cash Management
    $ervice” (ACM$) to handle institutions’ reporting of charges to their
    NSF awards. ACM$ provides a greatly enhanced level of detail about
    awardee charges to each award, which could be very useful to NSF
    program officers. Accordingly, we recommended that NSF assess
    the feasibility of providing direct linkage to ACM$ from within eJacket.
    NSF’s response to this recommendation is pending.
27 September 2013 Semiannual Report, pp.25-26.

                                                                                31
Investigations


                 Recommendation to NSF to Implement the Winning Submission of
                 the 2012 Presidential SAVE Award

                 The winning submission for the 2012 Presidential SAVE Award28
                 suggested that participants in the Public Transportation Subsidy Program
                 switch from regular fares to half-price senior fares as soon as they
                 become eligible. The U.S. CFO Council issued an Alert stating that all
                 agencies “should be actively working to implement two initiatives that
                 were finalists for the 2012 SAVE Award,” including the switch to senior
                 transit subsidy fares.29 We recommended that NSF issue an annual
                 bulletin encouraging eligible participants to switch to Senior SmarTrip
                 cards, pointing out to staff that they will save not only federal funds,
                 but their own as well, since the discount applies to personal as well as
                 commuting use. NSF’s response to this recommendation is pending.




                 28 http://www.whitehouse.gov/blog/2012/12/21/2012-save-award-winner
                 29 https://cfo.gov/controller-alert-save-award


           32
                             OIG Management Activities

Total Accountability: Suspension, Debarment,
and Beyond

Suspension and debarment are valuable administrative tools
that agencies can use to protect scarce funds from fraud,
waste, abuse, poor performance, and noncompliance with
contract provision or applicable law. The IG community is
committed to enhancing suspension and debarment use to
protect taxpayer funds by ensuring that the government only
does business with responsible parties. The Suspension and
Debarment Working Group, under the auspices of the Council
of Inspectors General for Integrity and Efficiency, is dedicated
to enhancing the IG community’s understanding and use of
government-wide suspension and debarment.

The working group sponsored its fourth suspension and
debarment workshop, “Total Accountability: Suspension,
Debarment, and Beyond” on March 28. The event was
attended by nearly 250 auditors, investigators, attorneys,
procurement personnel, and others representing 40 agencies
and sub-agencies and 33 Offices of Inspector General.
Topics discussed at this year’s workshop included legislative
developments, audit and performance-based actions,
and coordination of remedies. The workshop facilitated
conversations and collaborative relationships across the
OIG, suspension and debarment, and Department of Justice
communities that will enhance our mutual efforts to protect
government resources.




                                                                   33

Management Activities




                 34
	
                                                  Statistical Data
                          Audit Data

     Audit Reports Issued with Recommendations
               for Better Use of Funds

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




                                                                  35

Statistical Data



                             Audit Reports Issued with Questioned Costs*

                                                                      Number of           Questioned            Unsupported
                                                                       Reports              Costs                  Costs
   A.       For which no management decision has                           21              $31,641,064              $2,375,769
            been made by the commencement of the
            reporting period
   B.       That were issued during the reporting                           0                           $0                        $0
            period
   C.       Adjustment related to prior                                    230                   -$8,001                -$8,190
            recommendations
   Subtotal of A+B+C                                                                       $31,633,063              $2,349,579
   D.       For which a management decision was                            10              $17,312,537                  $12,351
            made during the reporting period
            Dollar value of disallowed costs                               N/A             $11,547,247                       N/A

            Dollar value of costs not disallowed                           N/A               $5,765,290                      N/A
   E.       For which no management decision had                           12              $14,320,526              $2,337,228
            been made by the end of the reporting
            period
   For which no management decision was made                               12              $14,320,526              $2,337,228
   within 6 months of issuance

*On Report No. 14-2-006, there were no questioned costs; however, as a result of a referral from the OIG Office of Audit to the
OIG Office of Investigations based on audit work, a former NSF employee was ordered to pay $77,803 in restitution for theft of
government property. See p. 16.




   Status of Recommendations that Involve Internal NSF Management Operations

   Open Recommendations (as of 09/30/2013)
     Recommendations Open at the Beginning of the Reporting Period                                               64
     New Recommendations Made During Reporting Period                                                            50
     Total Recommendations to be Addressed                                                                       114
   Management Resolution of Recommendations                      31


     Awaiting Resolution                                                                                         60
     Resolved Consistent With OIG Recommendations                                                                54
   Management Decision That No Action is Required                                                                 0
   Final Action on OIG Recommendations                 32


     Final Action Completed                                                                                      16
   Recommendations Open at End of Period (03/31/2014)                                                            98




30 On prior semiannual reports, $8,190 of double-counted questioned and unsupported costs were included for Report No. 13-5-094.
On Report No. 13-5-100, $189 of additional questioned (but not unsupported) costs were reported during audit resolution.
31 “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.
32 “Final Action” occurs when management has completed all actions it agreed to in the corrective action plan.


             36
                                                                        OIG Semiannual Report   March 2014



                                      Aging of Open Recommendations

  Aging of Open Recommendations
    Awaiting Management Resolution:
       0 through 6 months                                                                       50
       7 through 12 months                                                                      0
       More than 12 months                                                                      10
  Awaiting Final Action After Resolution
       0 through 6 months                                                                       2
       7 through 12 months                                                                      0
       More than 12 months                                                                      36

                                                     List of Reports


                                     OIG and CPA-Performed Reviews33


   Report                           Subject                     Questioned      Unsupported      Better Use
   Number                                                         Costs            Costs          of Funds
  14-2-001        NSF’s FY 2013 Financial Statement                       $0              $0             $0
                  Audit
  14-2-002        NSF 2013 Closing Package Audit                          $0              $0             $0
                  Report
  14-2-003        FISMA 2013 Independent Evaluation                       $0              $0             $0
  14-2-004        FY 2013 FISMA Cyberscope Report                         $0              $0             $0
  14-2-005        NSF FY2013 Management Letter                            $0              $0             $0
  14-2-006        Purchase Card Audit                                     $0              $0             $0
  14-3-001        High Speed Network Inspection                           $0              $0             $0
  14-2-007        IT Management Letter (Information                       $0              $0             $0
                  Technology)
  14-6-001        Alert Memo: Administrative Cost                         $0              $0             $0
                  Recovery Rate
  14-7-001        IQCR of TeamMate 13-F-2-001 High                        $0              $0             $0
                  Speed Network Evaluation
                  Total: 10                                               $0              $0             $0




33 The Office issued 10 reports this semiannual period.


                                                                                                37
Statistical Data



                                        NSF-Cognizant Reports

   Report                                Subject                         Questioned   Unsupported
   Number                                                                  Costs         Costs
   14-4-001        12-12 Center for Severe Weather Research - CO                 $0            $0
   14-4-002        3-12 Decision Science Research Institute - OR                 $0            $0
   14-4-003        12-12 Stroud Water Research Center - PA                       $0            $0
   14-4-004        12-12 Bay Area Video Coalition - CA                           $0            $0
   14-4-005        12-12 National Council for Science and the                    $0            $0
                   Environment - DC
   14-4-006        12-12 The Shodor Education Foundation, Inc. - NC              $0            $0
   14-4-007        12-12 Triangle Coalition for Science and Technology           $0            $0
                   Education - VA
   14-4-008        12-12 Woods Hole Oceanographic Institution - MA               $0            $0
   14-4-009        12-12 The Historymakers, Inc. - IL                            $0            $0
   14-1-010        12-12 WTEC World Technology Evaluation Center - PA            $0            $0
   14-1-011        12-12 openairboston.net - MA                                  $0            $0
                   Total: 11                                                     $0            $0

                                         Other Federal Reports

   Report                                Subject                         Questioned   Unsupported
   Number                                                                  Costs         Costs



                    No reports containing questioned costs were received from
                     other federal agencies having oversight or cognizance.




            38
	
                                                                                 OIG Semiannual Report            March 2014



                     Audit Reports with Outstanding Management Decisions

This section identifies audit reports involving questioned costs, and funds put to better
use where management had not made a final decision on the corrective action necessary
for report resolution with six months of the report’s issue date. At the end of the
reporting period there were 16 reports remaining that met this condition. The status of
recommendations that involve internal NSF management is described on pages 36-37.

   Report                           Subject                         Questioned           Unsupported            Better Use of
   Number                                                             Costs                 Costs                  Funds
  05-1-005         RPSC Cost Claimed FY2000 to                        $1,933,722                        $0                     $0
                   2002
  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           34
                                                                        $110,629                        $0                     $0
  10-1-012         COL OOI Proposed Budget           35
                                                                                 $0                     $0        $88,118,848
  11-1-001         REVISED ATST Price Proposal            36
                                                                                 $0                     $0        $62,338,903
  11-1-021         NEON National Ecological                                      $0                     $0        $75,780,354
                   Observatory Network37
  12-1-005         UCAL - Santa Barbara                               $6,325,483                        $0                     $0
  12-1-008         NEON Proposal Audit38                                         $0                     $0        $78,657,394
  12-5-143         9-11 Fort Berthold Community                           $25,343               $24,659                        $0
                   College - ND
  13-1-001         REVISED University of Wisconsin                    $2,134,379                        $0                     $0
                   - Ice Cube Incurred Cost
  13-1-002         Jackson State University                             $943,475               $844,241                        $0
  13-1-004         ARRA Cornell University                              $794,221                $19,703                        $0
  13-1-005         EarthScope (SAFOD) San                               $339,277                        $0                     $0
                   Andreas Fault Observatory at
                   Depth Expenditures
  13-5-094         6-12 FBCC Fort Berthold                                $28,154               $28,154                        $0
                   Community College -
                   |ND 9-month audit39
  13-5-102         6-12 Bunker Hill Community                                 $390                  $390                       $0
                   College - MA
                   Total:                                           $14,320,526              $2,337,228         $304,895,499




34 This report was on hold at the request of OIG.
	
35 This report is on hold due to OIG request for an extension to respond to NSF’s proposed resolution. In addition, OIG Report 

No. 12-3-001 Review of Specific Cost Information Related to Contingencies on Consortium for Ocean Leadership’s (COL) Ocean 

Observatories Initiative Cost Proposal, issued 3/26/12, restated the finding in Audit Report No. 10-1-012, which found $88,118,848 

of “Better Use of Funds” in the Ocean Observatories Initiative proposal. Thus, Report No. 12-3-001 is also on hold.
	
36 This report is on hold due to OIG request for an extension to respond to NSF’s proposed resolution.
	
37 This report is on hold due to OIG request for an extension to respond to NSF’s proposed resolution. 

38 This report is on hold due to OIG request for an extension to respond to NSF’s proposed resolution. 

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


                                                                                                                  39
	
Statistical Data



                                               Investigative Activities

Referrals to Prosecutors                                                                   7

Criminal Convictions/Pleas                                                                 2

Arrests                                                                                    1
Civil Settlements                                                                          0

Indictments/Information                                                                    3

Investigative Recoveries                                                       $1,236,750.78
Referrals to NSF Management for Action                                                    29
Research Misconduct Findings                                                              11
Suspensions/Debarments/Exclusions                                                         13
Administrative Actions                                                                    59
Certifications and Assurances Received40                                                  13


                                           Investigative Case Statistics

                                                  Preliminary               Civil/Criminal                Administrative

Active at Beginning of Period                           10                      142                           109
Opened                                                   9                       15                            29
Closed                                                  13                       27                            21
Active at End of Period                                  6                      130                           117


                      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                                                                                13
Requests Processed                                                                               16
Appeals Received                                                                                  4
Appeals Upheld                                                                                    2

Response times ranged between 5 days and 5141 days, with the median around 22 days
and the average around 25 days.




40 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.
41 Some FOIA response times were affected by the government closure.




             40
About the Cover...

Photograph of Victoria Falls at the border of Zambia and Zimbabwe taken by Jeff Stitz,
OIG.
   OFFICE OF INSPECTOR GENERAL




    SEMIANNUAL
REPORT TO CONGRESS




       National Science Foundation
       Office of Inspector General        http://www.nsf.gov/oig

        March
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       Arlington, Va 22230
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