oversight

Semiannual Report - September 1997

Published by the National Science Foundation, Office of Inspector General on 1997-09-01.

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

               Semiannual Report to the Congress
                                           Number 17
              April 1, 1997 Through September 30, 1997




Office of Inspector General
                      National Science Foundation
Printed on recycled paper
Semiannual Report to the Congress

                             Number 17
April 1, 1997 Through September 30, 1997
              Letter to the National Science Board
                                 and the Congress


This report describes our activities and accomplishments for the second half of FY 1997.
Section 5 of the Inspector General Act of 1978, as amended, requires that the National Science
Board transmit this report to the Congress within 30 days of its receipt, along with any
comments the Board may wish to make.

Over the last 6 months, both OIG and NSF made significant efforts to comply with the Chief
Financial Officers and Government Performance and Results Acts. NSF's strategic plan was
submitted, on time, to the Office of Management and Budget and has been rated better than most
other agencies by congressional evaluators. NSF is endeavoring to express its achievements
using the measurable and observable reporting structure established by these laws.

This effort has not been easy, but it has provided NSF with a new framework for self-evaluation.
The resulting introspection has also served, in many instances, to help NSF better explain why
federally funded research as well as science and engineering education is a critical investment in
the nation's future. My staff and I feel privileged to serve in an agency with such a vital mission.
We look forward to continuing to work with management to promote the most effective and
efficient use of federal funds to strengthen research and education in American science and
engineering.




Linda Sundro
Inspector General
September 30, 1997
                                                  Executive Summary
FINANCIAL AUDITS
                                                 INVESTIGATIONS
We reviewed costs associated with logistical
support for the U.S. Antarctic Program. We       We referred five cases to prosecutorial
verified that NSF should save $13 million by     authorities involving the diversion of NSF
transferring support functions from the Navy     grant funds for personal use (page 24). NSF
to the Air National Guard and a civilian         management took action on an investigative
contractor. We also recommended, and NSF         report from an earlier period involving NSF
management generally agreed to effect $2.8       employees, and we issued two additional
million in additional savings (page 2).          investigative reports involving conflicts
                                                 violations (page 28). Investigative recoveries
We reviewed the formula used to determine        totaled $400,000 (page 31).
the level of funding for research under the
Small Business Innovation Development Act,       MISCONDUCT IN SCIENCE
and we concluded that the formula incorrectly
relied upon expenditures for scientific          We referred four investigation reports with
education and program support. NSF agreed        recommendations for findings of misconduct
to redirect $13 million over 5 years to fund     in science to NSF’s Acting Deputy Director
other research priorities (page 7).              for adjudication (page 36). The Acting
                                                 Deputy Director issued notices of proposed
When reviewing the methods used by NSF to        debarment in three matters we forwarded in
employ temporary scientists, we                  an earlier period (page 42).
recommended the implementation of cost
controls that would reduce program costs by      INSPECTIONS
more than $10 million over 5 years (page 11).
                                                 In an inspection of NSF’s Europe Office, we
We found that the fund created for the           recommended the development of a
“enhancement of the intellectual                 performance plan tied to strategic goals.
infrastructure of the Internet” will total $77   Three inspections of organizations that
million by September 30, 1998 (page 15).         receive NSF funding identified deficiencies in
                                                 the procedures used to disclose and resolve PI
Our audit reports identified $57 million in      financial conflicts of interests (page 52).
funds that can be put to better use, $10
million in questioned costs, and $15 million
in cost sharing that may not be realized
(page 61).
                       Table Of Contents

1   Audit

23 Investigations

33 Oversight

61 Audit Reports Issued With Recommendations for
   Better Use of Funds
62 Audit Reports Issued With Questioned Costs

63 Additional Performance Measures

67 List of Reports

71 Audit Reports With Outstanding
   Management Decisions
Acronyms
CFO      Chief Financial Officer
CPO      Division of Contracts, Policy and Oversight
DHHS     Department of Health and Human Services
DoC      Department of Commerce
EERC     Earthquake Engineering Research Center
EPSCoR   Experimental Program to Stimulate Competitive Research
ESIE     Division of Elementary, Secondary and Informal Education
FAS      Faculty of Arts and Sciences
FASAB    Federal Accounting Standards Advisory Board
FFRDC    Federally Funded Research and Development Center
FTE      Full-Time Equivalent
GAO      General Accounting Office
GMRA     Government Management Reform Act
GPRA     Government Performance and Results Act
HRM      Division of Human Resource Management
INT      Division of International Programs
IPA      Intergovernmental Personnel Act
NIH      National Institutes of Health
NSB      National Science Board
OGC      Office of the General Counsel
OMB      Office of Management and Budget
OPP      Office of Polar Programs
ORI      Office of Research Integrity
PD       Project Director
PHS      Public Health Service
PI       Principal Investigator
PP&E     Property, Plant, and Equipment
RAA      Research and Administrative Assistant
R&D      Research and Development
SBIR     Small Business Innovation Research
SBE      Directorate for Social, Behavioral and Economic Sciences
SSN      Social Security Number
STTR     Small Business Technology Transfer Program
VSEE     Visiting Scientists, Engineers, and Educators
                                                Reporting Requirements
This table cross-references the reporting requirements prescribed by the Inspector General Act of 1978, as
amended, to the specific pages in the reports where they are addressed.

 Requirements                                                                                   Page

 Section 4(a)(2)        Review of Legislation and Regulations                                Throughout
 Section 5(a)(1)        Significant Problems, Abuses, and Deficiencies                       Throughout
 Section 5(a)(2)        Recommendations With Respect to Significant Problems,                Throughout
                        Abuses, or Deficiencies

 Section 5(a)(3)        Prior Significant Recommendations on Which Corrective
                        Action Has Not Been Completed                                           45, 71

 Section 5(a)(4)        Matters Referred to Prosecutive Authorities                               24
 Section 5(a)(5)        Summary of Instances Where                                         None to Report
                        Information Was Refused                                             This Period

 Section 5(a)(6)        List of Audit Reports                                                     67

 Section 5(a)(7)        Summary of Each Particularly Significant Report                      Throughout

 Section 5(a)(8)        Statistical Table Showing Number of Reports and Dollar Value
                        of Questioned Costs                                                       62

 Section 5(a)(9)        Statistical Table Showing Number of Reports and Dollar Value
                        of Recommendations That Funds Be Put to Better Use                        61

 Section 5(a)(10)       Summary of Each Audit Issued Before This Reporting Period
                        for Which No Management Decision Was Made by the End of
                        the Reporting Period                                                      71

 Section 5(a)(11)       Significant Management Decisions That Were Revised                 None to Report
                                                                                            This Period

 Section 5(a)(12)       Significant Management Decisions With Which the Inspector          None to Report
                        General Disagrees                                                   This Period
                                                        AUDIT
           The Office of Audit is responsible for auditing grants,
   contracts, and cooperative agreements funded by NSF’s programs.
          It reviews agency operations and ensures that financial,
      administrative, and program aspects of agency operations are
        examined. It conducts the annual audit of NSF’s financial
      statements, which encompass over $3.3 billion, and evaluates
     internal controls and data processing systems. The Office also
   assists in the financial, internal control, and compliance portions of
   OIG inspections. All audit reports are referred to NSF management
                          for action or information.
       The Office of Audit advises and assists NSF in resolving audit
     recommendations. The Office also acts as a liaison between NSF
    and audit groups from the private sector and other federal agencies
        by arranging for special reviews, obtaining information, and
    providing technical advice. The Office of Audit provides speakers
    and staff assistance at seminars and courses sponsored by NSF and
           other federal agencies and at related professional and
                              scientific meetings.




Semiannual Report Number 17       1         NSF Office of Inspector General
BETTER USE OF RESEARCH AWARDS
Functional Review and Cost                          Coincident with these transitions, the National
Analysis for the U.S. Antarctic                     Science and Technology Council formed an
Program                                             Ad Hoc Working Group to review the U.S.
                                                    Antarctic policy. The Working Group’s
The U.S. Antarctic Program is the nation’s
                                                    1996 report noted that significant savings had
program for maintaining an active and
                                                    been realized from previous transitions, and
influential presence in Antarctica. Through
                                                    that further savings could be realized from the
its Office of Polar Programs (OPP), NSF
                                                    two transitions described above. The
funds meritorious scientific research that is
                                                    Working Group recommended that an
aimed at increasing our understanding of the
                                                    external panel of experts be convened to
Antarctic region and its relationship to the
                                                    examine cost savings potentials and options
rest of the planet. With assistance and co-
                                                    and their consequences.
operation from federal agencies, commercial
contractors, and other Antarctic Treaty             In response to this recommendation, NSF
countries, OPP plans, develops, manages, and        convened the U.S. Antarctic Program
funds the infrastructure and logistics required     External Panel (the Augustine Panel). One of
to support year-round and seasonal land- and        the Augustine Panel’s conclusions was that
sea-based research platforms.                       the transition of support functions away from
                                                    military providers offered opportunities to
The magnitude of spending for logistical
                                                    “reinvent” U.S. operations. The Augustine
support—over 60 percent of OPP’s
                                                    Panel recommended that functions provided
$195 million budget in FY 1997—provides
                                                    by the Navy be reviewed with attention to
opportunities for us to identify ways of
                                                    transferring or eliminating functions.
improving the efficiency and cost-
effectiveness of the Antarctic Program. As a        OPP anticipated that the transition of support
result, we are conducting a series of reviews       functions would result in cost savings, but it
of OPP’s logistical support programs.               had not conducted a thorough, cost-based
                                                    analysis. We offered our assistance to OPP
The Navy currently provides logistical sup-
                                                    for this task, and we worked closely with OPP
port for the Antarctic Program and is reim-
                                                    managers in planning our review. A
bursed by NSF for those costs. In 1993, the
                                                    summary of our review and cost analysis of
Navy advised OPP that it would discontinue
                                                    the transition of support functions now
its logistical support services for the Antarctic
                                                    performed by the Naval Antarctic Support
by the end of FY 1999. Currently, two major
                                                    Unit in Christchurch, New Zealand, follows.
transition efforts are underway: (1) transition
                                                    We are currently conducting a similar review
of flight operations from the Navy to the Air
                                                    for the flight operations transition.
National Guard (the Guard) and (2) transition
of support functions from the Naval Antarctic
Support Unit to OPP’s contractor and the
Guard. Our most recent review focused on
the second transition program.


Semiannual Report Number 17                    2          NSF Office of Inspector General
One of OPP’s most important logistical tasks     Our review and analysis verified the cost
is maintaining a year-round presence at the      savings OPP will realize because of the
Amundsen-Scott South Pole Station, one of        transition of Navy support functions in
three U.S. Stations in Antarctica (McMurdo       Christchurch. We noted significant
and Palmer are the other two U.S.-sponsored      efficiencies and cost savings achieved by the
Stations). The Augustine Panel recom-            organizations providing services to the
mended that the existing South Pole Station      Antarctic Program. We also identified ways
be replaced for economic, safety, and            in which the Antarctic Program can operate
operational reasons and estimated that           more efficiently and cost-effectively and
replacement would cost $130 million. A           made recommendations that will result in
portion of the cost must be funded through       additional savings. Management generally
reductions in the cost of Antarctic logistical   agreed with our recommendations, and steps
support. As OPP plans for modernization of       are being taken to implement them. We
the South Pole Station, it needs to track the    estimated cost savings of nearly $3.0 million
amount and timing of transition-related          in the first full year after the transition and
logistics support savings.                       $16.0 million over a 5-year period (the 5-year
                                                 projection includes a 5-percent increase per
                                                 year), as illustrated below.


                                        TABLE I
                                PROJECTED COST SAVINGS

                                                                           FYs 1999
          Description                                FY 1999             Through 2003
                                      Transition Savings
          Personnel Savings                             $1,574,600             $8,700,800

          Other Direct Cost Savings                         926,500              5,119,700

          One-Time Transition Costs                        (628,900)             (628,900)

          Net Transition Savings                           1,872,200           13,191,600

                                   OIG Recommendations
          Annual Savings                                    413,000              2,282,300

          One-Time Savings                                  505,700               505,700

          Net OIG Recommended Savings                       918,700              2,788,000

                   TOTAL SAVINGS                        $2,790,900            $15,979,600



Semiannual Report Number 17                  3         NSF Office of Inspector General
Transition Savings                                OPP reimburses the Navy $6.6 million
Personnel and Other Direct Cost Savings           annually for the support it provides in
The Navy operates and maintains a cargo and       Christchurch: $2.4 million for personnel and
personnel staging base in Christchurch, New       $4.2 million for other direct costs. We
Zealand, that serves as the logistics pipeline    estimated that the Antarctic Program will save
to and from U.S. operations in Antarctica. In     $2,501,100 per year as a result of the
addition to providing services for the            transition: $1,574,600 from reductions in
Antarctic Program, the Navy operates a small      personnel costs and $926,500 from reductions
military base in Christchurch to support          in other direct costs. These significant
military personnel participating in the           savings are achieved by discontinuing some
Antarctic Program.                                services, contracting with local providers for
                                                  other services, and making more extensive
We assisted OPP by cataloging the services        use of seasonal employees.
the Navy currently provides, helping decide       One-Time Transition Costs
which of those services should continue after
                                                  We identified and quantified costs that would
the Navy withdraws from the program, and
                                                  be incurred in carrying out the transition. We
determining whether the Navy’s withdrawal
                                                  estimate one-time costs to be $628,900.
will result in the need for new or different
                                                  These costs include
services. We worked with OPP to determine
the most efficient way of obtaining those         • severance and annual leave benefits for
services, analyzed which entity would have          New Zealand citizens employed by the
operational budgetary responsibility for them,      Navy ($523,700);
and determined how much they would cost.
                                                  • building modifications and markings
We quantified the baseline of services              ($35,000);
currently provided and their cost. We also
reviewed the services proposed by alternate       • permanent change of station costs for the
providers and estimated the cost of those           contractor’s U.S. citizen employee
services. We validated the necessity of the         ($32,000);
proposed services and the reasonableness of
cost estimates, and we determined whether         • site visits by contractor personnel
additional economies could be achieved              ($23,900);
through alternate means of providing or
obtaining necessary services and/or               • temporary duty pay for the Air Post Office
eliminating unnecessary services.                   supervisor ($7,000);

                                                  • local employment law advice ($4,000); and

                                                  • antenna upgrade and maintenance costs for
                                                    the Armed Forces Radio and Television
                                                    Service ($3,300).




Semiannual Report Number 17                   4         NSF Office of Inspector General
OIG Recommendations                                    Billeting—Grantees. The contractor
                                                  reserves hotel rooms for scientists, but
Our recommendations would result in
                                                  scientists pay their own expenses and are later
additional savings of $918,700: $413,000 in
                                                  reimbursed from their research grants. The
annual savings and $505,700 in one-time
                                                  indirect costs associated with hotel funding
savings. Management generally agreed with
                                                  are approximately $131,250 per year.
our recommendations, including those
                                                  We recommended that OPP remove hotel
described below.
                                                  funding from research grants and task the
Annual Savings                                    contractor to reserve and pay for scientists’
     Billeting—Military. All Navy personnel       hotel rooms. The contractor estimates that to
participating in the Antarctic Program are        perform this function, it would need to add
billeted—temporarily housed—in local hotels       one position to its Christchurch operation, but
under Navy contracts. These contracts ensure      even so, the net annual savings to OPP will be
that rooms will be available and lower the        approximately $116,200.
cost of rooms because they are paid for
whether they are used or not. Guard                    Airline Ticketing. Airline tickets that
personnel are billeted in the same hotels, but    are purchased 14 days in advance or earlier
rather than using contracts, they use “blanket    generally cost one-third less than otherwise.
purchase agreements,” which are usually           If an additional 10 percent of scientists
more expensive because they are paid for          purchased their tickets 14 days in advance of
only when used. We recommended that hotel         their travel, the Antarctic Program would save
requirements for the Guard be secured by          $42,000 per year. We recommended that
contract, which would save $68,600 per year.      OPP ensure that tickets are purchased 14 days
We also recommended that OPP authorize            before deployment.
only 1 night in Christchurch upon arrival
from McMurdo Station, rather than the 2
nights the Guard has budgeted for, because all
other participants are authorized only 1 night.
The annual savings from hotel costs and meal
and incidental expense costs will be
approximately $183,700.




Semiannual Report Number 17                 5           NSF Office of Inspector General
One-Time Savings                                  Next Phase of Our Review
     Extreme Cold Weather Clothing. The           In the current review, we verified the savings
Guard’s proposed budget includes $275,600         that OPP will realize because of the
to purchase extreme cold weather clothing for     withdrawal of the Naval Antarctic Support
its personnel. An inventory of excess military    Unit from Christchurch, New Zealand. We
clothing conducted at our request showed that     also made recommendations to improve the
there was enough clothing to meet the             efficiency and cost-effectiveness of Antarctic
Guard’s needs. We recommended that the            support operations in Christchurch. Our work
excess clothing be made available for use by      has enabled OPP to confidently incorporate
the Guard instead of purchasing new clothing.     the anticipated savings into its budget plans
                                                  for the future.
     Severance Pay and Annual Leave. The
Navy planned to charge OPP the severance          The next phase of our review will concentrate
pay and annual leave costs for employees not      on the transition of flight operations. The
paid by OPP. We recommended that the              Guard will assume responsibility for flight
Navy deduct the $138,900 associated with          operations from the Navy in March 1998.
these employees. We also recommended that         The Navy will be involved in the Antarctic
the Navy refrain from hiring additional or        Program for 1 more year, assisting the Guard
replacement personnel; make efforts to assist     during the 1998/1999 season.
personnel in obtaining alternate positions; and
encourage the use of accumulated annual           We worked collaboratively with OPP to
leave, especially during the off-season.          define the scope of our next review, and we
                                                  agreed to conduct a functional review and
     Space Available Income. The Navy             cost analysis of the transition of flight
rents barracks on a “space available” basis.      operations from the Navy to the Guard. We
Although OPP pays most of the costs to            have begun our review and analysis and are
support the barracks, the net income—             scheduled to conduct a site visit to Antarctica
$91,200—has not been credited to OPP. We          during the upcoming austral summer. We
recommended that OPP direct the Navy to           will verify the costs and savings and identify
transfer the net income to OPP or apply it to     ways of improving the efficiency and cost-
offset other expenses.                            effectiveness of Antarctic flight operations.
                                                  Because of the high costs associated with
                                                  flight operations, we are hopeful that this
                                                  phase of the review will identify additional
                                                  issues that will prove to be important to OPP
                                                  in planning and budgeting for future logistics
                                                  support and construction.




Semiannual Report Number 17                  6          NSF Office of Inspector General
Budget for Small Business                        to calculate the funds to be set aside.
Innovation Research and Technology               Although research, training, and education are
Transfer Programs                                tightly linked in all NSF programs, these
                                                 activities do not conform to the statutory
NSF is a participant in the federal Small
                                                 definition of R&D and should not be
Business Innovation Research (SBIR)
                                                 characterized as R&D. Similarly, we found
program, which provides funds to small
                                                 that “program support costs,” which include
businesses to develop innovative technologies
                                                 payments for scientists temporarily working
with commercial potential. The SBIR
                                                 for NSF under the Intergovernmental Person-
program is funded with a specific percentage
                                                 nel Act, travel by panelists, and other admin-
set-aside of each agency’s extramural
                                                 istrative expenses, are also included in NSF’s
research and development (R&D) budget, in
                                                 R&D budget. These costs are also inconsis-
agencies with extramural R&D budgets that
                                                 tent with the statutory definition of R&D and
exceed $100 million. In 1983, the set-aside
                                                 should be excluded from the budget used in
was 0.2 percent, and it has increased
                                                 determining the SBIR and STTR set-asides.
gradually to reach 2.5 percent in FY 1997.
Congress also authorized a smaller set-aside,    Accordingly, we recommended that, for the
currently 0.15 percent of the extramural R&D     purpose of calculating the SBIR and STTR
budget, for the Small Business Technology        set-asides, NSF exclude $100.61 million
Transfer (STTR) program, which was               ($58.36 million in education and training
designed to stimulate cooperative research       funds and $42.25 million in program support
and development between small businesses         costs) from the R&D budget amount used to
and research institutions.                       calculate the set-asides. By so doing, NSF
                                                 would more accurately allocate funds to the
To determine the amount of the set-aside
                                                 SBIR and STTR programs. As a result of
from the R&D budget, Congress defined
                                                 these exclusions, the annual SBIR and STTR
“research” or “research and development” as
                                                 set-asides would be reduced by approximately
“systematic, intensive stud[ies] directed
                                                 $2.5 million and $150,000 (2.5 percent and
toward greater knowledge or understanding of
                                                 0.15 percent of $100.61 million),
the subject studied,” or a systematic
                                                 respectively. Over a 5-year period,
application of that knowledge to produce new
                                                 $13.25 million that would have been used for
technologies. We found that many of the
                                                 these set-asides would be available for NSF to
expenditures included in NSF’s R&D budget
                                                 use for the highest priority programs to
did not fit this definition.
                                                 further scientific research and education.
Specifically, some of NSF’s education and
                                                 NSF’s Director “concur[red] with [our]
training activities, for example,
                                                 recommendations regarding the exclusion of
undergraduate, graduate, and postdoctoral
                                                 items from the extramural R&D budget base
education and training designed to support
                                                 used to calculate the SBIR and STTR set-
“educational creativity,” maintain the “supply
                                                 asides,” and stated that “this will lead to
of scientists and engineers,” and help
                                                 better utilization of NSF resources.” NSF
“develop a scientifically literate populace,”
                                                 staff is now defining the new base for SBIR
are included in the R&D budget that is used
                                                 and STTR calculations.

Semiannual Report Number 17                 7          NSF Office of Inspector General
Analysis of Research Center                       The Center was funded by NSF on
Proposal Identifies Excessive                     September 30, 1997. Foundation staff
                                                  recognized the need to address the
Costs
                                                  administrative and clerical costs questioned
We reviewed proposed costs submitted in           in our review. Accordingly, NSF withheld
response to NSF’s new Earthquake Engine-          final approval of these costs in the
ering Research Center (EERC) program              cooperative agreement supporting the Center
solicitation by the research foundation that      until the allowability of these costs is
administers federal awards for a large north-     determined in accordance with NSF’s audit
ern state university. Three research centers      resolution process.
will be funded under the new EERC program.
The research centers will seek to complement      We believe the Center should reduce those
and build on the research and educational ac-     administrative and clerical costs that are less
tivities of individual research awards by em-     crucial to its mission so that more projects are
phasizing a multidisciplinary, team approach.     available for research. The Center can reduce
                                                  non-research related expenditures by
NSF has tentatively selected this proposal for    reviewing and reducing such costs that are not
continued support of the research center (the     typically found at other NSF research centers.
Center), which is one of the three centers        We identified several opportunities to reduce
under the EERC program. We assisted NSF           costs of this type by as much as $2.355
management by analyzing the Center’s cost         million over 5 years.
proposal to recommend the amount of funds
the Center needs to accomplish the award’s        • The Center proposed 21 administrative and
objectives. We analyzed the proposed costs          clerical positions. We compared this total
to determine whether they were necessary and        with the number of administrative staff at
reasonable and whether less costly means of         other NSF-funded research centers. We
accomplishing the objectives could be               found that the Center proposed 16 more
adopted.                                            administrative positions than we identified
                                                    at other NSF research centers. If the Center
The Center’s proposed administrative costs,         phased-out administrative functions that are
as a percentage of total project costs, will be     not typically found at other NSF research
14 percent higher than proposed costs under         centers, administrative and clerical costs
its current award. Administrative and clerical      could be reduced by as much as $1.708
costs are higher because the Center intends to      million over 5 years.
maintain the same number of administrative
positions despite a 47-percent reduction in       • The Center produces an informational
total funding over the next 5 years. We             newsletter that it mails free-of-charge to
estimated that a proportionate reduction in         subscribers four times a year. Since the
administrative costs to the same level as the       newsletter is already available free-of-
1991 award (25 percent of the total project         charge on the Internet, we recommended
costs) would increase the funds available for       that the Center discontinue the paper
research by as much as $2.8 million over            version, publish the newsletter
5 years.                                            semiannually rather than quarterly, or begin


Semiannual Report Number 17                  8          NSF Office of Inspector General
  charging a subscription fee to recover          • $5 Million in Sales Tax. We recently
  publication costs. For example, over 5            recommended that significant NSF funds
  years, discontinuing the paper version of         could be saved by taking steps to avoid
  the newsletter would save $142,500,               payment of state sales taxes on equipment
  publishing the newsletter semiannually            purchased by awardees with federal funds
  would save $116,250, or charging a                (OIG 96-2115, Recommended Amendments
  subscription fee could increase project           to NSF Procedures to Avoid Paying Costs
  income by as much as $232,500.                    Associated With State Taxes, September 27,
                                                    1996). NSF management agreed with two
• The Center provides earthquake                    of our three recommendations and agreed
  engineering information services to               to direct awardees to take advantage of all
  research and practicing engineers. Many of        applicable exemptions. One of the
  the information services the Center               potential awardees is located in a state that
  provides are duplicated by a second NSF-          imposes a sales tax on equipment purchased
  funded information service. We                    with federal funds. Based on the value of
  recommended that the Center coordinate its        purchases to be made by this awardee, NSF
  activities with other earthquake engineering      could save nearly $5 million if sales tax
  research centers and information services to      exemptions could be secured.
  reduce the duplication of these costs. This
  action could reduce the Center’s costs by as    • $2 Million in Salaries and Fringe
  much as $414,900 over 5 years.                    Benefits. Both proposals budgeted annual
                                                    percentage increases that we believe are
NSF management is reviewing our                     excessive. One proposal includes a
recommendations.                                    5-percent increase for all staff, while the
Preaward Analysis of Two                            other includes increases of 4.6 percent for
                                                    senior staff and 3.6 percent for other staff;
Proposals Identifies $8 Million in
                                                    “staff” includes administrative personnel
Potential Savings                                   and faculty. Federal employees, on the
We assisted an NSF division by analyzing            other hand, receive approximately
proposals from two supercomputing centers           3-percent increases annually, and a survey
that had been selected by a technical review        conducted by the Chronicle of Higher
panel for funding. We reviewed the proposal         Education revealed that professors receive
materials and interviewed staff at both             average annual increases of 3 percent. We
universities to help NSF complete its               recommended that NSF limit annual
financial review of these proposals before          increases to 3 percent, leading to a savings
issuing the awards.                                 of approximately $2 million.

     Potential Savings. We identified more        • $1,125,000 in Fees. One proposal included
than $8 million in administrative costs over        a subcontract valued at $45 million with a
the 5 years of the awards to the two                5-percent fee. Fees are not prohibited, but
supercomputer centers that can be used to           NSF does not usually pay a fee on awards.
directly support scientific research.               We recommended that NSF require that the
                                                    subcontractor justify its request for a fee

Semiannual Report Number 17                   9         NSF Office of Inspector General
  and that NSF negotiate to reduce the fee.
                                                   NSF managers reported that they met with
  If, for example, NSF negotiated to reduce
                                                   Institution representatives and recalculated
  the fee to 2.5 percent, it would
                                                   the indirect cost rate excluding the cost of
  save $1,125,000.
                                                   honoraria, publications, and program director
     Cost Sharing. Both sites proposed             compensation expenses from the indirect cost
significant cost sharing. In the current budget    pool. NSF’s adjustments resulted in a revised
climate, this leveraging of funds is critical to   indirect cost rate of 53 percent, an 11-percent
NSF’s mission in that it allows NSF to fund        reduction for all new awards.
additional projects than would otherwise be
                                                   We had previously reported savings to NSF
possible. We recommended that NSF ensure
                                                   of $800,000 over 5 years. Based on the new
that the promised cost sharing is identified in
                                                   indirect cost rate approved by NSF, we
the award documents as a requirement.
                                                   estimate that NSF should realize additional
NSF management is reviewing our                    savings of $784,000 over 5 years. Additional
recommendations.                                   savings to the government as a whole should
                                                   be about $2.76 million over 5 years.
Other Funds Put to Better
Use Reviews
Review of Indirect Costs Results in
Substantial Cost Savings
In Semiannual Report Number 14 (page 60),
we reported on our inspection at a private,
nonprofit research institution (the Institution)
in the northeast. The Institution conducts                   Funds to be Put
economic research on issues relevant to the                   to Better Use
federal government and industry. NSF is the
Institution’s cognizant audit agency and sets        Funds the Office of Inspector
its indirect cost rate. Our review of the             General has identified in an
Institution’s costs that indirectly support           audit recommendation that
research identified several cost items that we
                                                    could be used more efficiently
believed should be classified as direct costs
and excluded from the indirect cost pool. We             by reducing outlays,
recommended that NSF’s financial and                 deobligating funds, avoiding
program managers recalculate the                     unnecessary expenditures, or
Institution’s indirect cost rate.                  taking other efficiency measures




Semiannual Report Number 17                  10          NSF Office of Inspector General
ASSESSMENT OF INTERNAL FUNDS
Hiring Scientists in Temporary                   this would result in the availability of $4.2
Positions                                        million that can be used to hire additional
                                                 personnel or fund additional scientific
To make “cutting edge” decisions about           research and education.
which research and education projects to
fund, NSF supplements its permanent pool of           Annualization of Academic Year
scientists with highly qualified researchers     Salaries. In both the IPA and VSEE
and educators borrowed from universities,        programs, it has been NSF’s policy to ensure
industry, or other organizations. NSF uses       that the total compensation of a temporary
two special programs for employing               scientist at NSF is equivalent to the compen-
temporary scientists: the Intergovernmental      sation the scientist would have received at his
Personnel Act (IPA) Mobility Program and         or her home institution. To achieve this goal,
the Program for Visiting Scientists, Engineers   NSF attempts to match salaries that temporary
and Educators (VSEE). It is both appropriate     scientists would have received at their home
and necessary for NSF to use these legislated    institutions. However, for scientists who
programs as a source for personnel because       come to NSF from 9-month academic ap-
they enable NSF to constantly refresh its        pointments, NSF “annualizes” the salaries to
permanent pool of scientists with individuals    12 months, assuming that the scientists could
from the nation’s finest institutions. We        have earned 3 months of summer salary.
reviewed these programs and identified cost
controls that, if implemented, would result in   Although the idea of annualization is to put
over $10 million in savings over 5 years that    scientists on 9-month appointments on a par
could be used to support additional personnel    with those with full year salaries, we found
or scientific research and education.            that NSF’s current method of annualizing to
                                                 12 months increases the compensation of
     Salaries Comparable to Federal              those scientists who come to NSF from
Levels. Because IPAs remain employees of         9-month appointments relative to those from
their home institutions, their salaries,         12-month appointments. After their salaries
particularly when annualized, may be             were annualized to 12 months, IPAs and
considerably above the levels that would be      VSEEs with academic year salaries at their
paid to permanent federal employees in           home institutions earned an average of
comparable positions. We found that 32           about $17,000 (20 percent) more than those
percent of IPAs had salaries above the range     who come to NSF from positions with
available for federal employees in comparable    12-month salaries.
positions. Indeed, 24 IPAs, 16 of whom were
program directors, had salaries above the pay
level of a presidentially appointed Deputy
Director ($123,100). We recommended that
NSF not contribute more to an IPA’s salary
than it would pay a federal employee in a
comparable federal position. Over 5 years,


Semiannual Report Number 17                11          NSF Office of Inspector General
A more equitable result is obtained by annual-          Length of IPA Service. During our
izing to 11 months using NSF’s current rule       review, we also found certain circumstances
for summer salaries on NSF awards. Individ-       under which IPAs remained at NSF longer
uals awarded summer salaries under NSF            than the 4 years specified by the
awards receive a maximum of 2 month’s pay,        Intergovernmental Personnel Act. IPAs are
not 3—this is referred to as the “two-ninths      intended to supplement the skills and
rule.” Annualization to 11 months would           knowledge of permanent federal staff by
give a temporary scientist about the same         bringing in highly qualified individuals—
salary that he or she would have received by      temporarily—from outside the government.
staying at the home institution and working       If a position requires continuity of more than
during both the academic year and the             4 years, NSF should make the individual
summer. We learned that the two-ninths rule       filling that position a permanent federal
was used to annualize the salaries of             employee, not an IPA. Accordingly,
temporary scientists at NSF until 1984, but       consistent with the statutes and regulations on
was apparently changed because of certain         IPA service, we recommended that IPAs be
restrictions on cost-of-living adjustments that   limited to 4 years of service during any
are no longer in place. We recommended that       10-year period.
NSF return to the two-ninths rule for                  Overall Savings. We estimate that, if
annualizing the salaries of IPAs and VSEEs        NSF implements all of our recommendations,
who come to NSF from academic year                the total savings would be at least $2.1
appointments. Over 5 years, this would result     million, annually. Over 5 years, this would
in the availability of $3 million that can be     amount to at least $10.5 million available to
used to fund additional personnel or other        fund additional personnel or scientific
aspects of scientific research and education.     research and education.
     Cost Sharing. Current NSF policy             NSF management is reviewing our
requires that IPAs’ home institutions             recommendations.
contribute 15 percent of their salary and
fringe benefits as cost sharing. However, we
found that, on average, IPAs’ home
institutions contributed only about 5 percent
of the costs of IPAs. We recommended that
NSF adhere to its existing cost-sharing policy,
requiring a minimum 15-percent contribution
from the home institution to IPA salary and
fringe benefits, by establishing a preference
for IPA assignments in which cost-sharing
standards are met and enforcing strict criteria
for approving variances from the
cost-sharing policy.




Semiannual Report Number 17                 12          NSF Office of Inspector General
Agency Financial Statement Issues                During this reporting period, NSF manage-
We are working with NSF management to            ment and the OIG sought guidance from the
comply with the Chief Financial Officer          Federal Accounting Standards Advisory
(CFO) and Government Management Reform           Board (FASAB), the Office of Management
(GMRA) Acts, which are intended to bring         and Budget (OMB), and the General Ac-
more effective general and financial             counting Office (GAO) to determine whether
management practices to the government by        the NSF-owned assets held by grantees and
improving systems of accounting, financial       contractors should be treated as research
management, and internal controls. In Semi-      investments and reported as expenditures in
annual Report Number 16 (pages 2 through         the year of acquisition rather than identified
9), we reported that we had completed the        as assets in NSF’s balance sheet.
audit of NSF’s first agency-wide financial
statements for FY 1996.                          FASAB, OMB, and GAO have reviewed the
                                                 issues and facts presented. FASAB has
Our FY 1996 audit resulted in a “qualified”      advised us that it expects to soon issue
opinion. A “qualified” opinion indicates that,   formal, interim guidance to NSF.
except for one or more significant problems,
the statements fairly present the entity’s       In addition to concerns about PP&E, our audit
financial position. We “qualified” our           identified material weaknesses in NSF’s
opinion because NSF had not maintained an        internal control systems. These weaknesses
adequate system to accurately and completely     included the way the agency reported accrued
account for its approximately $920 million in    liabilities and advances between federal
capitalized property, plant, and equipment       agencies. We were also concerned about
(PP&E). The PP&E under discussion                reportable conditions related to systems for
includes NSF-owned assets in the hands of        reporting performance measures and contin-
grantees in three categories: the U.S.           gent liabilities. We performed follow-up
Antarctic Program, Federally Funded              reviews of these areas and met with NSF
Research and Development Centers (FFRDC)         management to discuss its plans to incorpor-
that are principally funded by NSF, and          ate additional procedures to address these
colleges and universities.                       concerns in the FY 1997 financial statement
                                                 compilation process.




Semiannual Report Number 17                13          NSF Office of Inspector General
One of the outcomes of our audit was the
identification of an area in which we could
improve our operations. That resulted in a
recommendation focused on the requirements
of OMB Circulars A-50, Audit Follow-up,
and A-133, Audits of Institutions of Higher
Education and Other Non-Profit Institutions,
for more timely review and resolution of
audit reports. We are required to maintain
follow-up systems that assign a high priority
to timely resolution of all NSF audit recom-
mendations. As a result, we improved our
Audit Resolution Tracking System during this
reporting period.

We reviewed our requirements and
redesigned the Audit Resolution Tracking
System using an “off-the-shelf” software
application package. The new Audit Resolu-
tion Tracking System will provide electronic
preparation of all current audit reports and
provide for future reporting requirements
with greater accuracy, timeliness, and ease.
This upgraded software, coupled with revised
procedures for reviewing audit reports, will
satisfy all of the audit recommendations.




Semiannual Report Number 17               14    NSF Office of Inspector General
ONGOING ISSUES
Fund for Internet Infrastructure                     In this reporting period, we reviewed the
Should Total More Than                               company’s financial practices concerning the
$77 Million                                          fund. We found that the company did not
                                                     apply its cash management practices
In Semiannual Report Number 16 (page 10),
                                                     consistently to itself and to the fund. The
we described NSF’s cooperative agreement
                                                     company deposited receipts into its own
with a commercial company that authorizes
                                                     interest-bearing bank account on a daily basis.
the company to allocate Internet addresses.
                                                     However, before depositing the fund’s share
The company registers names used to direct
                                                     of fees, the company held the fees in its own
communications traffic on the Internet. The
                                                     interest-bearing accounts for an average of 30
registrants can choose a unique Internet
                                                     days. Transfer of these fees in a more timely
name—a domain name—as a distinctive and
                                                     manner to the fund’s interest-bearing bank
easily remembered name.
                                                     account would have earned an additional
Under the terms of the cooperative                   $81,400 for the period examined. We
agreement, the company charges a $100                projected that, if the company continues its
registration fee for each domain name issued         current practices, the fund will lose another
for the initial 2-year period, and it charges        $175,000 of interest income by
$50 per year thereafter. The company is to           September 30, 1997. The company argued
retain 70 percent of the revenue collected for       that monthly deposits are in accordance with
operating expenses. The remaining 30                 generally accepted business practices. How-
percent is to be set aside in a separate interest-   ever, we believe the company should deposit
bearing account “for the preservation and            the appropriate share of fees in the fund’s
enhancement of the ‘Intellectual                     account on a daily basis because that is the
Infrastructure’ of the Internet.”                    practice the company uses for its own funds.

Based on registration statistics through             Indirect costs of $42,307 were also incor-
December 1996 and a rough estimate of the            rectly charged to NSF. The company believes
company’s collection rates, we estimated in          the indirect costs charged more accurately
our previous report that the fund will grow to       reflect its true indirect costs. However, we
$60 million by September 30, 1998. Using             found that the company had agreed to a lower
renewal and initial registration statistics          indirect cost rate when it entered into the
through the first half of 1997, as well as more      cooperative agreement with NSF. We also
recent estimates of the company’s collection         questioned $39,678, which was used to
rates for registration fees, we now estimate         purchase equipment. Although the company
that over $77 million will be deposited in the       believes the equipment was a reasonable cost
fund through the period ending September 30,         of the project, it acknowledges it had agreed
1998 (including at least $3 million in               not to charge equipment costs to the award.
interest earnings).
                                                     NSF management will make the final decision
                                                     concerning the questioned costs identified in
                                                     our audit.

Semiannual Report Number 17                    15          NSF Office of Inspector General
Potential Savings Identified at                      NSF could total $162,423 annually or
Nonprofit Atmospheric Research                       $812,115 over 5 years as a result of NSF
                                                     restricting the use of negotiated separation
Organization
                                                     agreements.
We identified over $2.9 million in savings
over 5 years related to excessive costs for        • The nonprofit organization charged
employee separations and facility operations         severance costs directly to NSF-funded
at a nonprofit atmospheric research organi-          programs. The organization did not follow
zation. We also followed up on a prior issue         established federal cost principles that
related to federal agencies unnecessarily            require that severance costs be recovered
providing management fees to the nonprofit           through indirect cost rates. The required
organization.                                        method equitably allocates the costs to all
                                                     of the organization’s programs in which
Current Issues
                                                     employees worked. Average annual
     Savings in Employee Separation Costs.           savings to NSF would be about $297,000 or
NSF could reduce costs by requiring that the         $1,485,000 over 5 years.
nonprofit organization reduce the negotiated
separation benefits paid to employees, reallo-     • At the time employees departed, the
cate severance costs that were incorrectly           organization charged NSF $314,690 by
charged to NSF programs, and reduce the              applying its full-fringe benefit rate, which
fringe-benefit rate applied to severance costs.      included vacation, holiday, and sick leave,
Discussions of these findings follow.                even though these employees did not
                                                     receive such benefits at the time of their
• The nonprofit organization can avoid costs         departures. We recommended that NSF
  by limiting the use of negotiated agree-           recover these funds.
  ments to pay separation benefits. The
  organization negotiated and paid employees            Other Savings in Facility Operations.
  a separation benefit, which was in lieu of its   NSF could reduce costs for the use of a
  severance pay and termination procedures         building, airplane hangar, vehicles, and a
  for inadequate job performance. The              condominium. Discussions of these
  organization negotiated and paid, without        findings follow.
  reasonable justification, amounts that were
  more than the amount the employees were          • The government will overpay for a newly
  entitled to as severance pay. The                  purchased building because the
  organization also negotiated and paid              organization does not plan to reduce its
  employees’ separation benefits when                building costs by the salvage value. The
  employees were not entitled to severance           organization’s officials decided not to
  pay because the employees were not                 deduct salvage value from the building
  meeting performance standards. The                 costs because the organization believes the
  organization should have avoided paying            building will have no value at the end of its
  any benefit to these employees by                  depreciation period. However, the
  terminating their employment through its           organization maintains its buildings in
  discipline and probation process. Savings to       excellent condition, and three of the four


Semiannual Report Number 17                  16          NSF Office of Inspector General
  commercial real estate appraisers that we       Prior Issues
  contacted established salvage value for this
                                                       Management Fees. In Semiannual
  building at about one-half of the building’s
                                                  Report Number 15 (page 14), we explained
  purchase price. We estimated that if this
                                                  that federal agencies pay approximately
  salvage value is used, the building’s
                                                  $900,000 annually in management fees to this
  depreciation costs will be reduced, and NSF
                                                  nonprofit organization. The organization
  could save about $52,000 annually or
                                                  stated that it needs these fees “to cover
  $260,000 over the next 5 years.
                                                  legitimate expenses which are not reimbursed
• The organization included as part of the        in connection with its grants and cooperative
  charges for airplane hangar costs, bond         agreements with federal agencies.” Contrary
  principal and interest on buildings that were   to our recommendation, both NSF and other
  not related to the support of the hangar. If    federal agencies decided to continue paying
  the organization discontinues allocating        these fees.
  these costs to the hangar, NSF could put to
                                                  Federal funds paid as fees are treated as the
  better use about $13,000 a year or $65,000
                                                  organization’s funds and may be used in any
  over 5 years.
                                                  manner the organization considers
• The organization underutilized several          appropriate. Some of the funds were used to
  vehicles and should reduce the number of        purchase equipment. The depreciation of the
  vehicles in its fleet. The organization also    equipment was subsequently included in the
  underutilized its condominium in                calculation of indirect costs that apply to
  Washington, D.C., by allowing only top-         federal awards. In this reporting period, NSF
  level management, such as the president         management decided that it did not agree with
  and vice-presidents, to use the facility.       our recommendation to exclude the
  Savings in correcting these situations would    depreciation of the equipment from the
  be, at a minimum, $9,200 annually or            calculation of indirect costs.
  $46,000 over 5 years.
                                                  NSF management also decided in this
The organization generally disagreed with         reporting period that, because fees are not
our recommendations, but NSF’s                    governed by federal cost principles, NSF will
management will make the final decision           not require that the organization account for
regarding these matters.                          their use.




Semiannual Report Number 17                 17          NSF Office of Inspector General
     Acquisition of Supercomputer                  DoC subsequently determined that the
Postponed. In May 1996, the organization           Japanese company’s pricing for its bid to the
announced, following a procurement                 organization constituted a case of “dumping,”
competition for additional computer support,       meaning that the Japanese company had set
that it intended—with NSF funds and pending        its price artificially low to gain a market
NSF approval—to enter into a lease agree-          advantage. The International Trade
ment to obtain a Japanese supercomputer.           Commission determined that the DoC’s
Questions arose immediately as to whether          investigation was fair and conducted in
the Japanese supercomputer was being               compliance with the rules and procedures of
provided below the manufacturer’s cost and         the U.S. antidumping law, and it subsequently
might be subject to antidumping duties. In         determined that the U.S. supercomputer
response to NSF’s request, the organization        industry had been injured or threatened with
provided NSF with information obtained             injury. Following this ruling, DoC is set to
from the suppliers of the Japanese super-          impose substantial antidumping duties on the
computer purporting to demonstrate that the        import of Japanese supercomputers. Attempts
offer was not priced at less than fair value. In   by the Japanese manufacturers to prevent
June 1996, NSF forwarded this information to       DoC’s investigation, through an action filed
the Department of Commerce (DoC) as the            in the Court of International Trade and a
agency that addresses trade issues. NSF            complaint filed with DoC’s OIG, were
asked DoC to notify NSF “in the near future”       unsuccessful.
if DoC was going to initiate a formal
investigation.                                     Following DoC's announcement of its
                                                   determination, NSF's Director announced
In July 1996, a U.S. manufacturer of               that, because NSF “is deeply committed to the
supercomputers filed an antidumping petition       principle of fair and open procurement
with DoC and the International Trade               practices,” it would not approve the
Commission. In August 1996, DoC initiated          organization's procurement of the Japanese
an investigation to determine whether              supercomputer. NSF's Director said that
Japanese supercomputers were being offered         “NSF will work closely with the
for sale at less than fair value. NSF’s            [organization] on how to proceed to obtain
Director then announced that NSF would not         the additional supercomputing capacity it
act on the organization’s proposed                 needs.”
procurement until the DoC concluded its
investigation.




Semiannual Report Number 17                  18         NSF Office of Inspector General
National Science Board to Address
Non-Competition Policy
In Semiannual Report Number 16 (page 75),
we reported that, at the request of the
Chairman of the House Committee on
Science, we reviewed a number of allegations
of violations of NSF Important Notice 91.
Important Notice 91 prohibits the use of NSF-
supported research instrumentation or
facilities to provide services for a fee in direct
competition with private companies that
provide equivalent services. In a report dated
October 30, 1996, we reported our finding
that NSF and its awardees have policies and
practices inconsistent with Important Notice
91 and recommended that NSF develop a
consistent and enforceable policy regarding
the use by the for-profit sector of different
types of NSF-funded equipment and facilities
and procedures to evaluate and resolve
complaints of violations of the policy. NSF’s
                                                         Questioned Cost
Director advised us that he planned to refer
the issue of inconsistent policies governing
                                                        A cost resulting from an
the use of NSF-funded equipment to the                  alleged violation of law,
National Science Board (NSB) for its                 regulation, or the terms and
consideration. More recently, NSF                       conditions of the grant,
management noted that the NSB “should be              cooperative agreement, or
informed of the present situation” and
accordingly contemplates “making a
                                                      other document governing
recommendation to the NSB on this subject            the expenditure of funds. A
for consideration at an upcoming Board                      cost can also be
meeting.”                                             “questioned” because it is
                                                      not supported by adequate
                                                      documentation or because
                                                      funds have been used for a
                                                      purpose that appears to be
                                                     unnecessary or unreasonable




Semiannual Report Number 17                    19       NSF Office of Inspector General
FINANCIAL AUDIT RESULTS
Audits of School Systems Identify                 • We also identified $768,425 that was
$1.8 Million in Questioned Costs                    related primarily to personnel compensation
and $13.9 Million in Cost-Sharing                   and benefits, subcontracts, and consultant
Commitments That May Not                            costs for which grantees could not provide
Be Met                                              adequate documentation (unsupported
                                                    costs). We found, for example, that two
In a continuation of our audits of school           grantees claimed salaries and benefits for a
systems and educational organizations               project director, instructors, and contract
(Semiannual Report Number 16, pages 26 and          employees, but did not have evidence of the
27), we completed audits of eight additional        time charged to the projects. One grantee
school systems and one educational                  did not have documentation showing that
organization during this reporting period.          subcontract costs charged to the award were
                                                    consistent with the award’s terms and
Our audits included 24 awards to 4 grantees
                                                    conditions. Another grantee could not
from the Directorate for Education and Hu-
                                                    provide supporting documentation proving
man Resources, the NSF directorate primarily
                                                    costs charged to NSF awards for logistics,
responsible for promoting mathematics,
                                                    student identification, and video services
engineering, and technology education. We
                                                    were necessary and reasonable activities
questioned $1,823,967 of the claimed costs.
                                                    related to the projects.
Our findings included the following.
                                                  • We found that one grantee claimed costs of
• We identified $849,513 in unallowable or          $206,029 in excess of costs actually
  inappropriately claimed costs for salaries        incurred.
  and wages, participant support, sub-
                                                  We also identified cost-sharing commitments
  contracts, fringe benefits, consultants, and
                                                  related to ongoing projects totaling
  other cost categories. We found, for
                                                  $13,897,753 that are “at risk.” These
  example, that one grantee charged salaries
                                                  awardees have not participated in the cost of
  and wages to an award for several
                                                  the projects to the extent expected at this
  employees, who the project director
                                                  stage of the awards, and there is no evidence
  confirmed, did not participate in the project
                                                  that the awardees are likely to meet these
  and should not have been charged to the
                                                  commitments before the projects are
  award. Another grantee charged tuition
                                                  completed. We are concerned that the scope
  costs and teacher stipends for graduate
                                                  of the awards as originally proposed to NSF
  course work that had been proposed as part
                                                  may significantly change when grantees fall
  of the grantee’s cost-sharing contribution.
                                                  short of meeting their cost-sharing
  A third grantee charged expenses to NSF
                                                  commitments. Under these circumstances, we
  awards related to consultant costs that had
                                                  advised NSF management to work with the
  not been incurred and consultant services in
                                                  awardee to ensure that the projects’ objectives
  excess of the maximum rate established by
                                                  are met by either revising the projects or
  federal regulations.


Semiannual Report Number 17                 20          NSF Office of Inspector General
obtaining assurances that the awardees will        Summary of Questioned Costs
meet their financial commitments.                  From Other Audits and Surveys
Although four of the directorate’s divisions       Before conducting an audit, we usually
provided support to the institutions audited,      perform preaudit surveys. The preaudit
42 percent of the questioned costs and 22          survey is a limited review of an institution’s
percent of the audited expenditures were           accounting system and grant expenditures to
related to awards supporting teacher develop-      determine whether further auditing is
ment activities administered by one of the         required. Based on the results of our preaudit
divisions. These awards fund professional          surveys, we may conduct a full financial audit
development projects that are intended to          or an audit that focuses on specific cost
increase teacher competence and develop a          categories. Questioned costs can result both
supportive school culture that empowers            from audits and preaudit surveys.
teachers to engage students in enriched and
more challenging science, mathematics, and         In addition to those audits mentioned
technology education programs.                     elsewhere in this report, we conducted 11 pre-
                                                   audit surveys covering 47 awards, 4 of which
Our analysis of these audit results indicates      resulted in audits. These activities yielded
that the systems used by institutions receiving    $141,655 in questioned costs and revealed
these awards may not be adequate to ensure         several compliance issues. Some of the
that awards are administered in compliance         findings are highlighted below.
with NSF and other federal requirements or
that award funds are used for their intended       • An audit of a southwestern nonprofit
purpose. These grantee institutions need             organization yielded questioned costs of
additional guidance and oversight from the           $38,681 because costs were incurred and
cognizant NSF program and administrative             billed to NSF after the project was
officers in administering their federal awards.      completed and the organization fell short of
                                                     its cost-sharing commitment.
NSF management will resolve these audit
issues.                                            • An audit of a northeastern laboratory
                                                     yielded $4,312 in questioned costs related
                                                     to indirect costs, travel, and expenses
                                                     charged to NSF awards in excess of
                                                     recorded costs.

                                                   • An audit of a small southwestern
                                                     communications company yielded $49,194
                                                     in questioned costs for unsupported
                                                     consultant fees, travel, salaries and
                                                     equipment, and for equipment and travel
                                                     costs that were not related to the audited
                                                     awards.



Semiannual Report Number 17                   21         NSF Office of Inspector General
The Single Audit Act of 1984, Public Law
98-502, and OMB Circular A-133 require that
recipients of federal grant funds have audits
covering federal assistance conducted by an
independent audit organization and submit
such audits to their cognizant or oversight
federal agency. In addition to conducting
preaudit surveys and audits, we review these
single audit reports. During this reporting
period, we reviewed 144 single audits from
institutions for which NSF is the oversight
agency. Of these reports, 15 contained
questioned costs totaling $207,440 related to
NSF awards. We also received 392 single
audit reports from institutions for which NSF
is not the oversight agency. Of these, nine
contained questioned costs totaling $47,001
related to NSF awards.

NSF management will resolve identified
questioned costs.




Semiannual Report Number 17               22    NSF Office of Inspector General
                              INVESTIGATIONS
          The investigations section is responsible for investigating
            violations of criminal statutes or regulations involving
              NSF employees, grantees, contractors, and other
           individuals conducting business with NSF. The results
             of these investigations are referred to federal, state,
        or local authorities for criminal prosecution or civil litigation,
                 or to NSF’s Office of the Director to initiate
                     administrative sanctions or penalties.




Semiannual Report Number 17         23          NSF Office of Inspector General
   EMBEZZLEMENT OR DIVERSION OF
   NSF GRANT FUNDS
   We place a high priority on allegations in-     Mischarging/Diversion Cases
   volving embezzlement, diversion of grant or
   contract funds for personal use, or other       False Statements and False Salary
   illegal use of NSF funds. Deliberate diver-     Charges
   sion of NSF funds from their intended pur-      A core element of NSF’s Strategic Plan is the
   pose is a criminal act that can be prosecuted   promotion of partnerships between private
   under several statutes. We encourage            industry and the academic community.
   universities and other grantees to notify NSF   Accordingly, many NSF programs require
   of any significant problems relating to the     that research projects involve substantial
   misuse of NSF funds. Early notification of      collaboration with, and participation by,
   significant problems increases our ability to   private companies. The number of industrial
   investigate allegations and take corrective     participants is one of the key factors NSF
   action to protect NSF and its grantees.         managers use in evaluating these projects,
                                                   both when deciding which projects to fund
                                                   and in considering which projects should
                                                   continue to be funded.
               TABLE 2                             We received allegations of mismanagement
       INVESTIGATIVE ACTIVITY
                                                   and financial improprieties concerning a large
Active Cases From Previous                         NSF-funded research project. The university
Reporting Period                      37           had also received the allegations, and its
                                                   review determined that the project
New Allegations                       37           administrators instructed employees to
                                                   overstate the number of hours they were
    Total Cases                       74           working to receive additional pay. The
                                                   university also found that annual reports the
Cases Closed After                                 project administrators submitted to NSF may
Preliminary Assessment                 2           have substantially overstated the number of
                                                   the project’s industrial participants. The
Cases Closed After                                 university’s review resulted in the resignation
Inquiry/Investigation                 23           of the principal investigator (PI) and the
                                                   demotion of another project administrator.
    Total Cases Closed                25

    Active Cases                      49




   Semiannual Report Number 17                24         NSF Office of Inspector General
Our investigation confirmed that project          Use of Grant Funds for Personal
administrators had instructed two employees       Business Activities
to overstate their hours to receive additional
                                                  We received allegations that a professor was
pay, which led to improper payroll, fringe-
                                                  spending university funds, including funds
benefit, and overhead charges of more than
                                                  from NSF grants as well as other federal,
$15,000. We also determined that, in annual
                                                  state, and private grants, to support the
reports to NSF, the PI overstated the number
                                                  professor’s personal business interests. We
of the project’s industrial participants by
                                                  coordinated our investigation with the univer-
nearly half. The greatest misrepresentations
                                                  sity’s police and internal audit departments.
occurred during and after a crucial review of
the project in which NSF management               The coordinated investigation found that the
decided to continue NSF support for the           professor, who was the owner of several small
project. NSF management told us that the          businesses,
exaggerations of the level of industrial
participation influenced their assessment of      • failed to disclose his outside business
the project and its eligibility for future          interests to the university, as required by
funding. NSF managers also stated that if           the university’s regulations, and, in some
they had known the true level of industrial         instances, made affirmative statements that
participation, they might have decided to           concealed those interests;
decrease or even terminate funding for the
project. We also found that the PI submitted      • used his offices, telephones, and fax
false statements to NSF describing the criteria     machine at the university as well as
used for determining which companies were           university employees and students under his
current participants. Instead of requiring          supervision to conduct business related to
donations each year as he reported to NSF,          his companies; and
the PI continued to list some companies as
participants despite their failure to keep up     • expended over $20,000 in state, private,
their annual donations. We referred our             and NSF research grant funds for activities
findings to the Department of Justice for           directly related to his personal business
appropriate action.                                 interests.

Concurrent with our investigation, NSF            In addition, one of the professor’s companies
management conducted an extensive site visit      submitted proposals and obtained federal
of the project. Based on this site visit, NSF     research awards. The professor used graduate
decided to reduce the project’s funding for       students and university employees to conduct
1998 by more than $700,000 and terminate          work at the university that related solely to
funding altogether in 1999. NSF manage-           the company’s proposals and research awards.
ment’s actions were based on lack of              We identified possible false statements and
progress, including a determination that the      false claims that were submitted to federal
project’s actual industrial support was in-       agencies in the company’s research proposals
adequate. These funding changes will enable       and reports. We referred our findings to the
NSF program managers to allocate more than        appropriate prosecutorial authorities.
$3 million to other research projects.

Semiannual Report Number 17                 25          NSF Office of Inspector General
Personal Expenses Totaling $50,000                Administrative Assistant Embezzles
Charged to NSF Grants                             Funds
A university audit identified personal            We investigated allegations that funds may
telephone calls being charged to a professor’s    have been embezzled from a bank account
NSF grants for chemistry research. We             that was created to manage program income
coordinated our investigation with the            from a project supported by an NSF biology
university’s internal audit department and        grant. We coordinated our investigation with
determined that, from September 1987              the university’s internal audit office and
through April 1997, the professor’s wife used     police department. The director on the NSF
his university-issued telephone calling card to   grant loaned $6,000 from the program income
make $46,000 in telephone calls to her            account to an administrative assistant. The
relatives. The professor had directed that        administrative assistant later wrote four more
charges for use of the calling card be charged    checks to herself from the account, totaling
to his NSF grants. The professor claimed that     $11,600, and, in the process, forged the
he had been unaware of most of his wife’s         director’s signature on the checks. The
telephone charges. However, after learning        administrative assistant provided us a sworn
of them, he continued to allow the telephone      statement admitting that she wrote the four
billings to be charged to the grant but claimed   checks and forged the director’s signature on
he had been tracking the expenses with the        the checks.
intention of reimbursing the grant.
                                                  In addition, we determined that the director,
Further review determined that the professor      with help from the administrative assistant,
had received approximately $1,600 in excess       inflated the number of participants listed on
or partially duplicative travel reimbursements    requests for reimbursement of entertainment
for travel related to his NSF grant. In           expenses submitted to the university and
addition, the professor made several              charged to the NSF grant. We concluded that
unallowable purchases, such as landscaping        the director submitted the inflated request to
software and restaurant guides, that totaled      obtain reimbursements for conference ban-
approximately $1,800. The professor could         quet expenses. The actual expenses exceeded
be liable for the direct and indirect charges,    the university’s per diem rates by as much as
totaling $74,000, that were improperly            300 percent per person and caused $7,500 in
charged to his NSF grants. We have therefore      overcharges to the grant. We also found that
referred this matter to the appropriate U.S.      approximately $7,500 was charged to the
Attorney’s Office. The university has             NSF grant for alcohol that was served at the
suspended the professor’s signature authority     conferences, an unallowable expense under
on all university accounts, including             federal regulations.
the NSF grant.                                    During the investigation, the director and the
                                                  administrative assistant resigned from the
                                                  university, and the university returned over
                                                  $18,000 to the NSF grant. We referred our
                                                  findings to the appropriate U.S. Attorney’s
                                                  Office for criminal prosecution.

Semiannual Report Number 17                 26          NSF Office of Inspector General
Administrative Assistant Steals                   Professor Spends NSF Funds
Equipment and Embezzles Funds                     Intended for International
A university police department learned that an    Collaboration on Other Projects
administrative assistant on an NSF education      We received a complaint that a biology
grant had, without authorization, purchased       professor received funding from NSF to
four personal computers with NSF grant            pursue an international research collaboration
funds and then removed the computers from         but spent the funds on other projects. The
the university. The university police             grant budgeted funds to support travel and
department executed a search warrant at her       expenses for an international scientist to
residence, located two of the four computers,     conduct research with the professor at the
and seized several documents.                     university. We found that the professor had
                                                  spent all of the NSF funds, $38,410, on other
We assisted further investigation by the police   research projects without initiating the
department and the university’s internal audit    international research collaboration. The
department and determined that the adminis-       university agreed to credit the full $38,410 to
trative assistant, who had two prior convic-      the NSF account and to complete the
tions for financial crimes, created and           international collaboration as originally
submitted invoices to the NSF grant to falsely    proposed and guaranteed oversight
pay over $40,000 for “guest lecturers” who        procedures to ensure that the funds are spent
were, in reality, her husband, relatives, and     in accordance with the project objectives.
friends. We also found that the adminis-
trative assistant stole $5,000 in checks that     NSF-Sponsored Researcher
were intended to be credited to the NSF grant     Sentenced and Ordered to Pay
and deposited them into her personal account;     Restitution
submitted travel reimbursements claiming          As reported in Semiannual Report Number 16
funds for airline tickets that had already been   (page 34), a federal jury found the PI of a
paid for directly through the NSF grant;          small business that had received an NSF
submitted false travel vouchers for her           Phase II SBIR award, guilty of three counts
supervisor; and, when reimbursement was           of 18 U.S.C. § 1001, False Statements, and
issued for the travel vouchers, stole the         three counts of 18 U.S.C. § 1341, Wire
checks and deposited them into her own            Fraud. The jury concluded that the PI
account. The university fired the                 knowingly and intentionally submitted false
administrative assistant, and the matter has      certifications to NSF causing NSF to wire
been referred to and accepted for criminal        grant funds to the company’s bank account
prosecution by the local District Attorney’s      after the PI had ceased working on the grant.
Office.                                           On May 22, 1997, the PI was sentenced to
                                                  serve 4 months’ incarceration, perform 3
                                                  years’ supervised probation, pay restitution of
                                                  $49,453, and perform 300 hours of
                                                  community service. NSF has initiated
                                                  administrative action proposing to debar the
                                                  PI for 3 years.

Semiannual Report Number 17                 27          NSF Office of Inspector General
OTHER INVESTIGATIVE MATTERS
Improper Hiring Practices Led to                   him from matters involving the FFRDC,
Increased Cost and Conflicts of                    senior division executives sought and
                                                   obtained advice from this associate program
Interests
                                                   officer concerning 12 proposals from the
In Semiannual Report Number 16 (pages 38           FFRDC resulting in 8 awards to the FFRDC.
and 39), we reported that an NSF directorate
had attempted to reduce its number of full-        After conferring with the Department of
time equivalent (FTE) and IPA employees by         Justice, which declined prosecution, we
converting the positions to non-NSF positions      referred the matters to NSF for appropriate
funded by an FFRDC that receives most of its       corrective action. During this reporting
funding from the directorate. The NSF              period, we identified another individual
directorate amended its cooperative agree-         whose IPA position was being converted to a
ment with the FFRDC to provide additional          position funded by the same FFRDC. This
funds to cover the salaries, benefits, and         conversion would increase the cost of
indirect costs of these individuals, who were      obtaining the individual’s services by
hired by the FFRDC and immediately                 approximately 31 percent, resulting mostly
assigned back to NSF. The individuals              from additional indirect costs imposed by the
occupied the same positions with the same          FFRDC. We submitted an additional report
responsibilities at NSF before and after their     to NSF to inform it of this occurrence and for
conversion to the FFRDC; however, NSF              appropriate administrative action.
paid approximately 70 percent more to staff
the positions through this arrangement.            Based on our reports, the Acting Deputy
                                                   Director instructed the directorate to ensure
In addition, senior directorate executives         that its funding of the FFRDC adheres to the
placed one of the individuals whose position       purposes intended when the cooperative
had been converted in a situation involving a      agreement was created, and that funding for
conflict of interests. While aware of his          activities other than FFRDC support be
pending conversion to an FFRDC-supported           handled through other vehicles. The Acting
position, senior directorate officials failed to   Deputy Director directed the Office of the
recuse him from matters involving the              General Counsel (OGC) to review the ethics
FFRDC and obtained advice from the                 training provided to employees in this
individual on matters in which the FFRDC           directorate to determine whether additional
had a financial interest.                          training is needed to address the directorate’s
                                                   relationships with its FFRDCs. The Acting
We also reported that a division within the        Deputy Director also directed OGC to review
same NSF directorate had entered into an IPA       the possible need to enhance agency ethics
agreement with the same FFRDC to staff an          training regarding review processes for
associate program officer position with            offices coordinating interagency programs.
someone who had never worked at the
FFRDC and had no prospect of returning
there upon leaving NSF. Without recusing


Semiannual Report Number 17                   28         NSF Office of Inspector General
As to the individuals involved, the Acting         • a failure “to adequately consider the
Deputy Director took action to end all               increased costs associated with the staffing
conversions and to reestablish the pending           conversions described in the OIG report
conversion as an FTE or IPA position. The            and to adequately justify them, . . .
FFRDC awards in which the IPA from the               [leaving] the agency open to charges that it
FFRDC participated will be re-reviewed by            was inappropriately increasing its staff size
NSF staff members outside of the directorate         at some considerable expense of program
for an independent assessment of the funding         funds.”
decisions. The Acting Deputy Director issued
three letters of reprimand and four letters of     Conflict Involving Honoraria
censure to the officials who arranged the          Payments
conversions or failed to identify and avoid the    An audit of an NSF grant that supported a
conflicts. He characterized their actions as       conference identified an honorarium payment
“inexcusable misconduct.” The Acting               to an NSF executive for speaking at the
Deputy Director found that the conversions         conference. Further investigation found that
“reflect[ed] a serious lapse in judgment,” in      the executive had received several honoraria
that they represented:                             payments for speaking to institutions that
                                                   receive NSF funding, and that his talks
• “a non-standard mechanism for staffing
                                                   related in substantial part to his duties as an
  [directorate] responsibilities[, which]
                                                   NSF employee. We determined that these
  disregarded the intent of the Chief
                                                   payments violated NSF’s conflict regulations
  Operating Officer’s express guidance on
                                                   as well as 18 U.S.C. § 209, Salary of
  FTEs and IPAs, . . . [and] avoided the hard
                                                   Government Officials and Employees Payable
  calls necessary to make timely reductions in
                                                   Only by United States. We also found that
  staffing levels through adjustments in [the
                                                   the executive participated personally and
  directorate’s] operations”;
                                                   substantially in the approval of an NSF grant
• a failure “to anticipate and consider the        to an organization with which he was
  conflicts of interests issues that were          negotiating prospective employment, a
  triggered by the staffing arrangements . . . ,   violation of 18 U.S.C. § 208, Acts Affecting a
  placing both the grantee awards at risk and      Personal Financial Interest. Violation of
  [directorate] staff in jeopardy of serious       these statutes may give rise to criminal or
  conflicts violations”; and                       civil liability. We referred our findings to the
                                                   Department of Justice.




Semiannual Report Number 17                  29          NSF Office of Inspector General
Two Investigations Lead to Systemic                reliance on confidential, non-public
Recommendations                                    information learned in the course of his
                                                   official duties. Subsequently, the U.S.
Two investigations in this reporting period
                                                   Supreme Court’s decision in United States v.
highlighted the need for systemic action by
                                                   O’Hagan changed the state of the law
NSF to avoid problems in the future.
                                                   concerning securities fraud. Under O’Hagan,
    Conflict Involving Stock Ownership             NSF employees, consultants, and reviewers
An NSF program officer purchased stock in a        must comply with restrictions under federal
company whose SBIR proposals were                  securities law on purchasing or selling
submitted to his office for consideration. The     securities based on non-public information.
program officer failed to recuse himself from      Accordingly, we recommended that NSF
proposals submitted by the company after his       provide guidance for agency employees,
stock purchase, despite having been advised        consultants, and reviewers concerning their
to do so by NSF’s Designated Agency Ethics         possible exposure to criminal liability based
Official. After purchasing the stock, the          on the misuse of confidential information
program officer participated in the review         obtained through their work for NSF.
process, in violation of federal law and
                                                   The agency is reviewing our
regulations, by recommending declination of
                                                   recommendations.
two proposals by the company and
summarizing panel reviews for a third                   Misuse of Social Security Number
proposal, which was also declined. We              An NSF employee created false credit card
referred the matter to the Department of           accounts in the name of another NSF
Justice, which declined prosecution, and to        employee and fraudulently used these cards to
NSF for appropriate administrative action.         obtain merchandise at local retail stores.
                                                   After being arrested for this conduct by state
When we began investigating this matter, we
                                                   law enforcement authorities, the employee
considered whether the program officer may
                                                   pleaded guilty to a state felony charge of
have violated federal law against insider
                                                   signing, with intent to defraud, a credit card
trading when he purchased stock in the
                                                   issued to another. These same acts violated
company, based at least in part on
                                                   NSF regulations that require that employees
information he had acquired by virtue of his
                                                   refrain from illegal conduct. We referred the
evaluation of proposals submitted by the
                                                   matter to NSF. The employee resigned after
company in confidence to NSF. We learned
                                                   being notified that NSF would initiate
that, under a decision of the federal appellate
                                                   administrative action.
court in the jurisdiction where NSF is located,
a public official could not be convicted of
securities fraud for purchasing securities in




Semiannual Report Number 17                   30         NSF Office of Inspector General
During this investigation, we learned that the                    “to respect legitimate personal privacy
employee had access, through NSF records, to                      interests of individuals . . . [by] limit[ing] the
the other NSF employee’s social security                          use of the social security number as a
number (SSN). We determined that certain                          personal identifier.” Accordingly, we
agency practices afforded access to the SSNs                      recommended that NSF act, as promptly as
of NSF employees, PIs, and recipients of                          was practicable, to minimize use of SSNs as
individual awards by more NSF employees                           identifiers and to ensure that employees are
than necessary for legitimate agency                              routinely advised of all uses expected to be
purposes. The Privacy Act requires that                           made of their SSNs. The agency advised us
agencies advise individuals of the uses to be                     that it has begun limiting access to SSNs, and
made of their SSNs and that agencies                              is working to develop a plan to eliminate the
establish appropriate safeguards to ensure the                    use of SSNs to the extent possible.
security and confidentiality of records. NSF
recognizes the restrictions imposed by the
Privacy Act in its Administrative Manual,
where it states that it is NSF’s policy




                                                   TABLE 3
                                           INVESTIGATIVE STATISTICS

  New Referrals                                                                                                      13
  Referrals From Previous Reporting Period                                                                            7
  Prosecutorial Declinations                                                                                          5
  Indictments (including criminal information)                                                                        1
  Criminal Convictions/Pleas                                                                                          0
  Civil Complaints Files                                                                                              1
  Administrative Actions                                                                                             10
  Investigative Recoveries*                                                                                     $403,974
  * Investigative Recoveries comprise civil penalties and criminal fines and restitutions as well as specific cost savings for the
  government.




Semiannual Report Number 17                              31                NSF Office of Inspector General
Semiannual Report Number 17   32   NSF Office of Inspector General
                                       OVERSIGHT
        The Office of Oversight focuses on the science-engineering-
       education-related aspects of NSF operations and programs. It
         oversees the operations and technical management of the
        approximately 200 NSF programs that involve about 50,500
     proposal and award actions each year. The Office conducts and
      supervises compliance, operations, and performance reviews of
        NSF’s programs and operations; undertakes inspections and
        evaluations; and performs special studies. It also handles all
    allegations of nonfinancial misconduct in science, engineering, and
      education and is continuing studies on specific issues related to
    misconduct in science. The Office’s scientists and engineers engage
     in outreach activities to acquaint NSF’s staff with misconduct in
      science policies, inspections, and with OIG activities in general.




Semiannual Report Number 17       33        NSF Office of Inspector General
MISCONDUCT IN SCIENCE AND ENGINEERING
Notifying Universities of                           An important factor in our analysis is the
Misconduct                                          subject’s potential access to federal funds.
Unlike some federal agencies, NSF does not          How this factor affects our analysis is
routinely publicize the names of subjects           illustrated by a case we forwarded to the
found to have committed misconduct in               Acting Deputy Director in this period (see
science. Public notification of the names of        page 39 of this Semiannual Report). We
subjects found to have committed misconduct         concluded that the subject, who was a foreign
occurs only in the most serious cases, where        national temporarily working in the United
the misconduct leads to government-wide             States and who had returned to his home
debarment. In these instances, the General          country, was unlikely to have ready access to
Services Administration publishes the names         federal funds.
of the debarred scientists. The NSB has
                                                    This case also illustrates that we take into
advised us that it believes in less serious cases
                                                    consideration whether the subject perpetrated
publicizing names would be too harsh an
                                                    a single instance of misconduct or if there is
action, disproportionate to the seriousness of
                                                    evidence of a pattern. In our view, evidence
the misconduct.
                                                    of a pattern increases the likelihood that the
This advice raises a difficult question, which      subject may commit misconduct again and
is whether to recommend that NSF inform a           therefore should be monitored at the new
subject’s sponsoring institution about its          university. Here, we found no evidence of a
finding of misconduct. In deciding what             pattern, so we did not recommend notification
action to recommend we are guided by our            of the subject’s home university.
responsibility to protect federal funds and to
                                                    We also consider whether a subject’s
safeguard the integrity of the federal process
                                                    relocation to a new university allows that
for evaluating grant proposals and managing
                                                    individual to avoid any monitoring the
grant awards.
                                                    subject’s former university may have imposed
OIG uses the same analysis to determine             and whether that monitoring was important in
whether to recommend that the subject’s insti-      protecting the government’s interests. If we
tution be informed irrespective of whether the      decide monitoring is important, we would
misconduct occurred at that institution. In         recommend that NSF notify the subject’s new
many cases, the subject’s university is aware       university so that monitoring of the subject
of the misconduct because it investigated the       could be reestablished.
allegations or has asked about the outcome of
the OIG investigation under the Freedom of
Information Act. If a subject relocates to
another university that is unaware of the
misconduct, we consider whether protecting
the government’s interests requires us to
recommend that NSF inform this university.


Semiannual Report Number 17                   34          NSF Office of Inspector General
                                                     awards the subject might receive. NSF
When a university is aware of misconduct,
                                                     agreed with our recommendation and, if the
whether it occurred at that institution or not, it
                                                     subject had been recommended for an award,
can evaluate for itself what action(s) it may
                                                     would have required the new institution to
wish to take to prevent recurrences. These
                                                     establish and enforce special monitoring of
include providing ethics counseling; requiring
                                                     the subject’s compliance with NSF’s grant
that the subject discuss with an appropriate
                                                     conditions, a procedure that would have led to
university official the university’s research
                                                     disclosure of the subject’s misconduct.
standards, practices, and misconduct policy;
                                                     Because the subject did not receive an NSF
or placing more supervision over the subject’s
                                                     grant during the monitoring period, NSF did
research activities. While considering the
                                                     not notify the new institution.
specifics of each case, our concerns for
protecting the government’s funds and                Our recommendation to NSF is based on our
interests, as well as the university’s concerns,     analysis of the actions required to ensure
must be balanced against the seriousness of          fundamental fairness, protect federal funds,
the misconduct and the probable long-term            and safeguard the integrity of the federal
consequences of disclosure on the subject.           process. Of course, NSF decides these matters
                                                     independently and is free to decline to follow
The probable consequence on both the subject
                                                     our recommendations.
and the subject’s new university is another
important factor. For scientists in the early
part of their careers, disclosure of a
misconduct finding to the subject’s new
university could have long-term adverse                   NSF’s Definition of
effects on the subject’s reputation, a                 Misconduct in Science and
consequence that might be more serious than
warranted by the misconduct.
                                                             Engineering
In many findings of misconduct, NSF                       Fabrication, falsification,
requires that the university monitor the                 plagiarism, or other serious
subject’s proposals or awards for a specified              deviation from accepted
period to ensure compliance with NSF’s                practices in proposing, carrying
imposed conditions. In these situations,
disclosure to the university is only necessary
                                                        out, or reporting results from
if the subject submits a proposal or NSF                activities funded by NSF; or
decides to make an award. We had those                retaliation of any kind against a
concerns in a case (discussed in Semiannual                person who reported or
Report Number 12, page 29, and Semiannual                provided information about
Report Number 13, page 38) where a subject
relocated after an investigation that revealed a
                                                             suspected or alleged
pattern of serious noncompliance with NSF’s             misconduct and who has not
grant conditions. Accordingly, we recom-                      acted in bad faith
mended that NSF require monitoring of any


Semiannual Report Number 17                    35          NSF Office of Inspector General
CASES LEADING TO INVESTIGATIVE REPORTS SENT TO
THE OFFICE OF THE DIRECTOR
Subject Misrepresented Research                   interviewed the subject and sought expert
Progress and Research Capabilities                advice from NSF program staff.
A western university informed us that it had      We concluded that the subject’s failure to
completed an inquiry into alleged mis-            identify the actual experimental system used
representations in an NSF renewal proposal        to gather the data in the figure was mis-
submitted by the subject. It was alleged that     leading. The text of the renewal proposal
                                                  falsely implied that the experimental system
• the proposal falsely implied that the data in
                                                  used was the one the subject described as the
  one figure were gathered from the
                                                  focus of his proposed research.
  experimental system that was the focus of
  the proposal;                                   The subject claimed that his renewal proposal
                                                  statements about the two compounds were
• the proposal falsely claimed that two
                                                  based on oral conversations with his graduate
  different compounds could be used to
                                                  student. He included these statements in his
  establish conditions necessary for particular
                                                  proposal even though he seriously doubted
  experiments; and
                                                  the student’s experimental and recordkeeping
• a procedure used to prepare samples from        abilities and he had not reviewed the data
  the experimental system did not work as         before including them. Before submitting his
  claimed in the proposal.                        revised renewal proposal, he conducted new
                                                  experiments and modified the proposal
After the university was informed of the          language to reflect the new results.
allegations, the subject withdrew the renewal
proposal from review at NSF. Shortly              Although the renewal proposal claimed that
thereafter, he submitted a revised renewal        the sample preparation procedure was suitable
proposal and NSF provided a large, multiyear      for the proposed experiments and that the
award based on its contents. After                procedure worked “routinely,” we learned
investigating the allegations, the university     that the subject’s laboratory could rarely, if
concluded that the subject had committed          ever, gather usable data from these samples.
misconduct in science and reprimanded him.        His revised renewal proposal also failed to
                                                  describe his laboratory’s actual abilities to
We reviewed information provided by the           prepare these samples.
university as well as the subject’s submissions
to NSF and decided to initiate our own            The subject’s annual reports for his first NSF
independent investigation into these              award claimed, as progress, preliminary data
allegations. We also investigated a new           that he had collected with a collaborator 2
allegation that the subject had misrepresented    years before his receipt of any NSF research
his research progress in his submissions to       funds. He also failed in these progress reports
NSF. As part of our investigation, we             to acknowledge his collaborator. These
                                                  preliminary data were originally used as


Semiannual Report Number 17                  36         NSF Office of Inspector General
background information to partially support       Based on these conclusions, we recommended
one of the research objectives in the subject’s   that NSF’s Acting Deputy Director send the
original proposal to NSF.                         subject a letter of reprimand concluding that
                                                  he committed misconduct in science. For a
The allegations we investigated focused on        period of 3 years from the final disposition of
the subject's claims of progress on the           this case, we recommended that NSF
research objective partially supported by the
preliminary data and on his redescription of      • require that the subject submit a certifi-
this objective in his renewal proposals. The        cation as part of any submission to NSF
subject told us that he had included this           that the submission is free of misconduct;
objective in his renewal proposals because his
graduate student had been unable to make          • require that the subject secure, and include
significant progress on it. Neither renewal         as part of any submission to NSF, an
proposal stated that his laboratory was unable      assurance from a knowledgeable university
to conduct the proposed research in the             official who has reviewed his research
experimental system emphasized in this              records that the submission is accurate
objective. He told us that he had not dis-          and complete;
cussed his inability to conduct the proposed
                                                  • reduce the annual increment of any NSF
research because of NSF’s proposal page
                                                    award to the subject to $65,000 or to an
limitation. Yet, in place of discussions about
                                                    amount commensurate with the program
actual progress on this objective, the subject
                                                    officer’s evaluation of the subject’s
continued to redescribe experiments
                                                    research capabilities;
conducted before he received NSF support.
                                                  • reduce the duration of any NSF award to
We concluded that the subject intentionally
                                                    the subject to 2 years or a length of time
misrepresented his laboratory’s progress and
                                                    commensurate with the program officer’s
its ability to conduct certain experiments to
                                                    evaluation of the subject’s research
ensure continued support from NSF: he was
                                                    capabilities; and
successful in this effort. We also concluded
that these actions constituted misconduct in      • consider requesting that the subject’s
science.                                            requests for funds from NSF’s Research
                                                    Experiences for Undergraduates program
                                                    be accompanied by assurances from a
                                                    knowledgeable university official that his
                                                    mentoring and laboratory notebook
                                                    practices conform with acceptable
                                                    scientific norms.




Semiannual Report Number 17                  37         NSF Office of Inspector General
Plagiarism of Graduate Students’                    increases for 3 years. Our review of the
Theses by Faculty Advisor                           university’s report determined that it did not
                                                    contain sufficient documentation to allow us
We received an allegation that the subject, an
                                                    to independently assess the evidence related
experienced researcher at a southern
                                                    to the allegations. We requested that the
university, had, on two separate occasions,
                                                    university complete a final investigation
plagiarized materials from his graduate
                                                    report to document its conclusions.
students’ Master’s theses. He allegedly
copied materials from his graduate students’        The university-appointed Investigation Com-
theses into two of his publications without         mittee determined that the subject had copied
providing them authorship credit or                 material in the first paper from one student’s
appropriately citing the theses. In the first       thesis and material in the second paper from
instance, more than half of the material            another student’s thesis. It concluded that, in
presented in the subject’s first paper appeared     failing to provide authorship credit to the
to be identical or substantially similar to         students, the subject seriously deviated from
material in one student’s thesis. In the second     the accepted practice of his scientific commu-
instance, three figures presented in the            nity, committing misconduct in science.
subject’s second paper appeared to be               Further, the Investigation Committee deter-
identical or substantially similar to material in   mined that the subject did not commit plagia-
another student’s thesis.                           rism because (1) the original ideas in the
                                                    papers were traceable to the subject’s earlier
We were informed that the university had
                                                    published work, (2) the data in the papers
determined that the subject was guilty of
                                                    were obtained at the subject’s request, (3) the
academic misconduct and sanctioned him.
                                                    interpretations of the data were dependent on
Because we had not received any information
                                                    the subject, and (4) another coauthor on one
from the university informing us that it had
                                                    of the papers had “extensively revised/
initiated an investigation, we wrote to the
                                                    rewritten” the text of the student’s thesis from
Dean of the College requesting a copy of the
                                                    which the material was copied. On these
university’s investigation report. In response,
                                                    bases, the Committee argued that the work
we received a copy of a university report that
                                                    was conducted in a collaborative manner,
found there was no unequivocal evidence that
                                                    which made it “shared intellectual property.”
the subject had substantially misappropriated
                                                    Finally, it concluded that the sanctions
the students’ intellectual property. The report
                                                    imposed by the Dean were appropriate.
recommended, however, that the Dean
“censure” the subject “in a manner that he          We agreed that the subject committed
deem[ed] appropriate.” The Dean determined          scientific misconduct by seriously deviating
that the subject had committed “two incidents       from accepted practices when he denied two
of academic misconduct” and required that           students legitimate and deserved authorship
the subject write letters of apology to each        credit on work taken from their Master’s
graduate student and publish, at his own            theses. Further, we believe that, in doing so,
expense, corrections in the journals that           the subject committed plagiarism. The fact
published the subject’s papers. Further, the        that the ideas in the theses were traceable to
Dean made the subject ineligible for salary         the subject’s earlier work and that the

Semiannual Report Number 17                   38          NSF Office of Inspector General
students worked under the subject’s guidance       that (1) a university official provide
does not mean that he was entitled to claim as     assurances that the subject behaves
his own the students’ thinking or their            appropriately as a mentor to his graduate
experimental efforts described in their theses.    students in connection with NSF-supported
The subject’s contributions to the students’       activities, and (2) the subject provide a
theses’ efforts did not allow him to               certification countersigned by all the project
appropriate their work, especially since he        participants that, with every NSF-supported
had previously acknowledged, as a member           publication on which he is an author, he has
of the students’ thesis committees, that the       appropriately acknowledged all individuals
theses contained the students’ work.               involved with the project.

The Committee determined that the subject          Postdoctoral Researcher
had acted in a willful manner when he failed       Falsified Data
to provide authorship credit to the students.      A midwestern university investigated an
We concluded that the subject acted at least       allegation of data falsification against a
knowingly when he copied the students’             postdoctoral researcher who worked for the
materials into the papers without proper           PI of an NSF award. The subject sent
attribution or citation. The subject’s actions     material to a commercial company for
are made more serious in these two instances       analysis, and received a faxed analysis of the
because they deprived students under his           results (the report). The report’s results did
direction of appropriate recognition for their     not agree with the subject’s expected
work. We considered the subject’s two              theoretical calculations as well as he had
distinct acts of plagiarism as evidence of a       hoped, and the subject altered the report to
pattern. Finally, we noted that the subject,       better agree with his predictions. The falsi-
who had been specifically directed by the          fied report was discovered and brought to the
Dean to write letters of apology to the            attention of the PI, who contacted the com-
students, had done so, but without any             pany to ask for another copy of the results.
expression of remorse.                             The PI noticed that the data in the two reports
                                                   were different. At the PI’s request, the Chair
We concluded that the university’s actions         of the PI’s department arranged a meeting
did not fully protect federal funds: they failed   between the Chair, the PI, and the subject.
to provide assurances that the subject will        During this meeting, the subject admitted that
adhere to the community’s high mentoring           he had falsified the data in the report.
and scholarship standards as NSF expects
thereby protecting NSF’s interests in              During the university’s investigation, the
educating the next generation of scientists and    subject explained the motive for his action.
engineers. We recommended that NSF’s               The subject was a foreign citizen and planned
Acting Deputy Director send the subject a          to return to his home country after his
letter of reprimand informing him that NSF         research with the PI ended. The subject said
has made a finding of misconduct in science        he felt he had to accomplish as much work as
against him. In addition, we recommended           possible before he returned to his home
that, for 3 years from the final disposition of    country. He said he falsified the report
this case the Acting Deputy Director require       because he was afraid the PI would stop his

Semiannual Report Number 17                  39          NSF Office of Inspector General
work if the report’s results weren’t what the     Student Exhibits a Pattern of
PI expected. He lacked the time to resolve        Falsifying Time Sheets and
the scientific issues raised by the report, and   Fabricating Data
he feared not getting authorship credit for the
                                                  A university informed us that an under-
work he had done.
                                                  graduate student working in an NSF-
We concluded that, in creating the report with    supported laboratory was alleged to have
the intent to deceive the PI, the subject acted   committed “fraud and theft” in connection
purposefully. Since the uncontested evidence      with her work as a student laboratory aide.
established that (1) the subject falsified the    The university subsequently informed us that
report and (2) he did so purposefully, we         the student had confessed to falsifying time
concluded his actions constituted a serious       sheets and fabricating data in two research
deviation from accepted practices, which is       laboratories, one of which was supported by
misconduct in science.                            NSF. The university’s records showed that,
                                                  over a period of 11 months, the student
We recommended that NSF find that the             received almost $6,000 based on claims she
subject committed misconduct in science and       made on 31 falsified time sheets, 9 of which
take the following actions as a final             (approximately $2,000) involved the NSF-
disposition in this case. First, NSF’s Acting     supported project.
Deputy Director should send the subject a
letter of reprimand concluding that he            We learned that the student had been con-
committed misconduct in science. Second,          ducting sample analyses for over a year and
NSF should require that for the next 3 years,     was a trusted laboratory aide. During the PI’s
the subject submit, in connection with any        12-month sabbatical at another institution, the
NSF-supported publication or submission to        student was to continue these analyses with-
NSF, a certification to OIG that to the best of   out direct supervision. The student said she
his knowledge, his documents contain no           was working at night and on the weekends to
false data and no hypotheses or conclusions       accommodate her work in the other
based on falsified data. Third, NSF should        laboratory and her class schedule. The PI had
require that the subject ensure that an           instructed the accounting office to process
appropriate supervisory official provides an      unapproved timecards as long as the claimed
assurance that, to the best of his or her         time was consistent with previous claims.
knowledge, the subject’s work associated          After returning to the university, the PI
with any NSF-supported publication or             requested the raw data supporting the data
submission to NSF does not contain falsified      summary sheets the student had provided to
data and presents neither hypotheses nor          the PI. The student initially claimed to have
conclusions based upon falsified data. We         lost the raw data and the samples she was to
did not recommend notification of the             have analyzed. On searching the laboratory,
subject’s home university because this was an     the PI found the samples and learned that the
isolated instance of misconduct and it is         condition of the samples was inconsistent
highly unlikely that the subject will have        with their being processed for analysis. The
access to federal funds.                          student admitted to the PI that she had
                                                  falsified her time sheets. Subsequently, when


Semiannual Report Number 17                  40         NSF Office of Inspector General
questioned by the university police, the            We concluded that the university’s action in
student confessed to data fabrication.              dismissing the student did not protect the
                                                    government’s interests. The student has
In ensuing state legal proceedings, the student     shown that she can be considered a skilled
pleaded guilty to a misdemeanor offense of          laboratory technician, but that she has failed
theft by deception. In lieu of a 12-month jail      to internalize scientific norms of conduct and
sentence, she was placed on probation for 12        has failed to act with integrity when
months, required to pay a fine and make             independently gathering research data. We
restitution, and required to send the PI a letter   recommended that NSF send the student a
of apology. The university informed us that,        letter of reprimand informing her that it has
in a separate proceeding, its Student Behavior      concluded that she committed misconduct in
Committee unanimously recommended that              science and that it debar her for a period of 1
the student be dismissed and that she be            year from the date of NSF’s final disposition
required to disclose fully the reasons for          of this case.
dismissal to the Dean of Student Affairs, if
she applies for readmission.

We concluded that a preponderance of the
evidence supports the conclusion that the
student fabricated data to support the claims
on her falsified time sheets and that she acted
willfully. We concluded that the student’s
action in falsifying time sheets and fabricating
data seriously deviates from accepted
practices in the scientific community.

The student’s action was made more serious
because she showed no remorse for the effects
of her misconduct on other researchers. She
relied on, and abused, the trust scientists place
in their subordinates to faithfully report the
results of their experiments. The student
abused the long-standing tradition of
independent research and, left undetected,
could have introduced errors into the research
record. Because of her action, the PI’s and
the PI’s colleagues’ research programs were
delayed and disrupted for 1 year. Finally, the
student falsified time sheets and fabricated
data under the PI’s two successive NSF
awards and in two separate laboratories at the
university. Such actions can only be
considered a pattern of misconduct.


Semiannual Report Number 17                   41          NSF Office of Inspector General
DECISIONS BY THE OFFICE OF THE DIRECTOR
Violating the Confidentiality of Peer             As part of our review of the institution’s
Review and a Pattern of Plagiarism                investigation report, we obtained and
In Semiannual Report Number 15 (page 37),         reviewed earlier proposals submitted by the
we discussed the case of a PI who had             subject. While this review was in progress,
plagiarized text from an overview article and     ORI informed us that it had decided to close
an NSF proposal written by another scientist      its case. Based on its review of the institu-
into his NSF proposals and proposals              tion’s investigation report, ORI concluded
submitted to the National Institutes of Health    that the subject had committed scientific
(NIH). During our inquiry, we learned that        misconduct by plagiarizing material into the
the subject had been asked by a colleague to      NIH grant. ORI executed a voluntary agree-
review an NSF proposal submitted by the           ment with the subject requiring that, for 3
other scientist (the original author) that the    years, the institution must submit and endorse
colleague had received for confidential merit     the subject’s certification that all contributors
review. Months later, when revising his           to any application or report are properly cited
declined NSF and unfunded NIH proposals,          or acknowledged. The agreement also ex-
the subject transcribed text, without             cluded the subject from serving in an advisory
attribution, from pages he had photocopied        capacity for the PHS. ORI informed the
from the confidential proposal into his own       subject that his name had been entered into
submissions. The subject had specifically         the PHS ALERT system and that it would
requested that NSF not send his proposal to       remain in the system for 3 years.
the original author because that author had a
“conflict of interest” with the subject’s         During our review of the subject’s earlier
department. Although the NSF proposal was         NSF and NIH proposals, we found that the
declined, the NIH proposal was funded.            institution and ORI had not uncovered the
                                                  true extent of the subject’s plagiarism. We
Because the allegations involved both NSF         found that these earlier NSF and NIH pro-
and NIH proposals, we coordinated the             posals contained text that had been copied
referral of the investigation into this case to   without attribution from an overview article
the institution with the Public Health            coauthored by the original author. We found
Service’s (PHS) Office of Research Integrity      that much of this text was carried over into
(ORI). After investigation, the institution       the NIH and NSF proposals that were the
concluded that the subject had committed          focus of the institution’s investigation. Each
misconduct in science. Based on the subject’s     of the four sequentially submitted proposals
four separate statements during the               contained copied text not found in the
investigation that he had never plagiarized       previous proposal.
material in the past, it concluded that the
subject’s actions were isolated instances.




Semiannual Report Number 17                 42          NSF Office of Inspector General
We concluded that the subject knowingly          Programmer Falsifies Data
plagiarized text into his earlier NSF and NIH    In Semiannual Report Number 16 (page 50),
proposals and that he willfully plagiarized      we discussed a case of a programmer who
text into his revised proposals from the         falsified data to confirm a previously untested
original author’s confidential proposal. He      scientific hypothesis, allegedly as a result of a
knowingly violated the confidentiality of peer   long-standing psychiatric disorder. We
review, and he exhibited a pattern of pla-       recommended that NSF enter into an
giarism in the proposals he submitted to two     agreement with the programmer whereby the
federal agencies. We recommended that the        programmer would exclude himself from
Acting Deputy Director find that the subject     employment in federally funded projects for a
committed misconduct in science and debar        minimum of 3 years. We recommended that
him from receiving federal funds for 2 years     this be followed by a 2-year period during
and prohibit him from participating in NSF’s     which the programmer would agree not to
review process for 3 years. We recommended       accept employment on federal projects
that, for 2 years following the debarment, the   without informing responsible officials of his
subject be required to certify that his          past misconduct. NSF’s Acting Deputy
proposals contain nothing that violates NSF’s    Director decided to reprimand the program-
misconduct regulation and accompany his          mer and debar him from receiving federal
certification with an assurance by his           funds for 3 years. He concluded that these
departmental chairperson that the proposal       actions were sufficient to protect the govern-
contains no plagiarized material.                ment’s interest.

The Acting Deputy Director found that the        Debarment Proposed for Obstruction
subject plagiarized text into two NSF            of Agency Proceedings
proposals. He concluded that the subject’s       In Semiannual Report Number 16 (pages 49
actions were more egregious because he           and 50), we reported our recommendation
plagiarized text from an NSF proposal            that the Acting Deputy Director terminate
submitted by the original author that he knew    NSF’s current award to a university professor
was confidential and were more serious           and debar him for 3 years from receiving
because he “engaged in a pattern of              federal funds for his having submitted and
plagiarism by submitting four proposals to       vouched for the authenticity of false evidence
federal agencies which contain plagiarized       during an investigation into allegations that he
text.” The Acting Deputy Director con-           had committed misconduct in science.
cluded the subject committed misconduct in       During this reporting period, NSF issued a
science and issued a notice proposing to debar   notice proposing to debar the professor for 3
him for a period of 2 years and to prohibit      years. The professor submitted a written
him from serving as a reviewer, advisor, or      opposition to the notice and requested a
panelist for NSF for a period of 3 years.        hearing. NSF is considering that request.




Semiannual Report Number 17                43          NSF Office of Inspector General
OTHER CASES CLOSED IN THIS PERIOD
University Investigates Alleged                   disciplinary proceedings should be initiated in
Obstruction of Research                           the future if the current problems, or similar
                                                  ones, continue.” The committee proposed a
A PI complained to her NSF program officer
                                                  1-year monitoring period, after which, if it
and her university that several members of
                                                  was satisfied with the department’s progress
her department were committing misconduct
                                                  in resolving its problems, the committee
in science by obstructing her research.
                                                  would “recommend dropping the possibility
Among the PI’s allegations was that faculty
                                                  of pursuing formal disciplinary charges.” The
members in her department were attempting
                                                  university adopted the committee’s
to assert control over equipment the
                                                  recommendations.
university had agreed to dedicate to the PI’s
use when the PI joined the university’s           When the monitoring period ended, the
faculty. The PI needed the equipment for her      university sent us a revised report. It
NSF-supported project.                            reaffirmed its earlier conclusion that there
                                                  was no misconduct, and, based on our own
When the program officer brought the
                                                  analysis of the evidence in the report, we
allegation to us, we informed her that she
                                                  accepted this conclusion.
could intervene as necessary to ensure that
progress under the PI’s award would be            In closing the case, we told the university that
satisfactory. However, we cautioned her that,     we were pleased that it had recognized that
in keeping with NSF policy, she should avoid      some practices, though not misconduct in
addressing any misconduct allegations. The        science, nonetheless called for forward-
program officer indicated that she believed       looking, corrective action at the university
the complainant was making acceptable             level. We encouraged the university in its
progress on her award and that no NSF             effort to develop and disseminate an im-
intervention was required to enable the           proved equipment use policy and applauded it
complainant to continue doing so.                 for making an effort to help the complainant
                                                  overcome the disruptions to her research.
The university determined that the PI’s
complaint had substance, and it initiated an      This case shows that some deviations from
investigation. After considering the facts of     accepted scientific practice are not serious
the case, the university’s investigation          enough to be misconduct in science and are
committee concluded that “an unacceptable         best addressed with future-oriented solutions,
pattern of action based on non-normative          rather than by assigning blame. While noting
understandings of the proper conduct of           certain ill-judged or inappropriate actions, the
research ha[d] become common” in the PI’s         university saw this case mainly as an
department. The committee recommended             opportunity to improve the climate for
“an attempt to restructure the administration”    research on its campus. This case also shows
of the department “rather than proceeding to      how we work to separate our investigative
specific charges against specific individuals.”   activity from NSF’s management role in
However it “le[ft] open the issue of whether      furthering progress on NSF awards.


Semiannual Report Number 17                  44         NSF Office of Inspector General
                                         TABLE 4
                                 MISCONDUCT CASE ACTIVITY
                                                                              FY 1997                FY 1997
                                                                              First Half             Last Half
 Active Cases From Prior Reporting Period                                         59                      58
 Received During Period                                                           22                      17
 Closed Out During Period                                                         23                      27
 In-Process at End of Period                                                      58                      48
 Cases Forwarded to the Office of the
 Director During Period for Adjudication                                           2                      4
 Cases Reported in Prior Periods With No
 Adjudication by the Office of the Director                                       2*                     1**
*These cases are described in Semiannual Report Number 15, pages 37 through 41.
**This case is described in Semiannual Report Number 15, pages 40 through 41.


  During this reporting period, we closed 27 cases, 24 of which have not been discussed in this
  report. These latter cases involved allegations of plagiarism (verbatim and/or intellectual theft),
  mishandling of NSF proposals by NSF staff, violations of the confidentiality of peer review,
  destruction of scientific samples, misappropriation of equipment, hindrance of research progress
  by discrimination or harassment, false statements in proposals, or falsification of data. Many of
  these cases contained multiple allegations of misconduct in science. After reviewing informa-
  tion available to us from NSF or other sources, we found it necessary to obtain additional infor-
  mation from the subjects in nine of these cases. All 24 cases were closed at the inquiry stage.



                                 TABLE 5
                  ASSURANCES AND CERTIFICATIONS RECEIVED*

   Number of Cases Requiring Assurances at End of Period                                             3

   Number of Cases Requiring Certifications at End of Period                                         5

   Assurances Received During This Period                                                            0

   Certifications Received During This Period                                                        0

   *NSF accompanies some findings of misconduct in science with a certification and/or assurance requirement.
   For a specified period, the subject must confidentially submit to the Assistant Inspector General for Oversight a
   personal certification and/or institutional assurance that any newly submitted NSF proposal does not contain
   anything that violates NSF’s regulation on misconduct in science and engineering. These certifications and
   assurances remain in OIG and are not known to, or available to, NSF program officials.


  Semiannual Report Number 17                        45              NSF Office of Inspector General
OTHER OVERSIGHT ACTIVITIES
Representational Activities                      Propriety of NSF’s Candidate
On July 24, 1997, the Deputy Inspector           Emergence Research
General testified before the Senate Committee    Four Congressmen expressed concern about
on Commerce, Science, and Transportation         whether an NSF-funded award, entitled Col-
about management issues confronting NSF.         laborative Research on Candidate Emergence
The testimony focused on (1) Internet domain     in U.S. House Elections, was being used for
name registrations; (2) NSF’s hiring practices   its intended purpose. They asked us to
concerning visiting scientists and engineers;    “review the circumstances surrounding this
(3) accounting for approximately $900 mil-       study” and to report “on the extent to which
lion in PP&E owned by NSF; (4) NSF’s             the investigators are carrying out the program
implementation of the Government Perform-        proposal” that NSF chose to fund. They
ance and Results Act (GPRA); and (5) the         needed our report within 15 days of their
incidence of fraud in the SBIR program.          request.

A chemist from the Oversight staff spoke to      The purpose of the PIs’ study was to examine
faculty, administrators, postdoctoral fellows,   the factors that affected whether or not
and graduate and undergraduate students on       potentially strong candidates for Congress
“NSF’s Handling of Allegations of                decided to run for office. The study addres-
Misconduct in Science,” on July 9, 1997, as      sed questions that NSF’s merit reviewers
part of the California State University,         deemed scientifically important and used a
Fullerton, Department of Chemistry and           survey research design that the reviewers
Biochemistry’s NSF-REU seminar series on         praised as innovative. All of the items in-
“Science, Ethics, and the Environment.” On       cluded in the survey questionnaire the PIs
September 22, 1997, an Oversight scientist       developed under the award were fully consis-
met at NSF with visiting officials from the      tent with the purpose of the study described in
Deutsche Forschungsgemeinschaft (DFG) to         the PIs’ proposal to NSF. The cover letter the
discuss OIG’s policies and procedures for        PIs sent to survey respondents appropriately
handling allegations of misconduct in science.   stated that the study was motivated by scien-
                                                 tific, not political or partisan, purposes. We
                                                 determined that, however politically sensitive
                                                 certain questions might have appeared, there
                                                 were scientific reasons for asking them.




Semiannual Report Number 17                46          NSF Office of Inspector General
We found that the PIs had appropriately rep-
resented their work in their original proposal
to NSF and that neither their research objec-
tives nor the phenomena they were studying
had changed since the project’s inception.
During the study, the PIs made minor changes
in their research design without consulting
NSF. In our report, we noted that NSF
permits researchers to make such changes
because it recognizes that scientists need
flexibility to improve their research designs as
their work proceeds and to pursue significant
new issues that emerge in the course of their
research.

In mid September, GAO’s Resources,
Community, and Economic Development
Division initiated an expanded review of “the
Foundation’s grants for research on the
emergence of candidates for Congress and
other similar research.” GAO aims “to
determine if (1) key elements of NSF’s
candidate emergence research are
methodologically sound, (2) the grant awards
for the candidate emergence study and other
similar awards are consistent with NSF’s
missions and goals, and (3) appropriate NSF
funding guidelines were followed in awarding
grants for the candidate emergence study and
other similar studies.” We have offered GAO
our full cooperation.




Semiannual Report Number 17                  47    NSF Office of Inspector General
INSPECTIONS
Our office conducts internal and external inspections. Internal inspections review NSF’s
administrative units. External inspections are on-site reviews at grantee organizations that
receive NSF funding.
Inspections are designed to highlight what works well and identify problems or deficiencies so
that managers at NSF and NSF-funded organizations can improve their operations and better
achieve research and education goals. Inspections are conducted by multidisciplinary review
teams that may include scientists, engineers, auditors, computer specialists, investigators,
lawyers, and management/program analysts.
We completed one off-site internal inspection and three external inspections during this
reporting period. We conducted our external inspections at a private, nonprofit corporation in
the northeast; a private university in the northeast; and a state university in the west.

INTERNAL INSPECTIONS                               Because NSF had not yet identified specific
                                                   outcome performance measures or the data
We designed our internal inspections program       that will be used to support them, we devised
to help NSF fully implement GPRA. GPRA             a review that addressed the following four
requires that federal agencies develop             broad areas: (1) the adequacy of NSF’s
strategic plans that include mission               financial rules and procedures in ensuring
statements, outcome-based goals and                proper use of NSF funds, (2) the efficiency
objectives, descriptions of how goals will be      and effectiveness of NSF’s internal opera-
achieved, and a performance plan tied to the       tions, (3) the level of customer satisfaction
strategic plan. Beginning in FY 1999,              with NSF’s programs and operations, and
agencies will be required to prepare annual        (4) the capacity of NSF to make valid claims
reports that integrate financial and               about program performance and goal
performance information, and Offices of            achievement. Internal inspections stress the
Inspector General will be required to review       relationships among program, administrative,
those statements for accuracy. Internal            and financial considerations in the overall
inspections will help us understand how NSF        administration of NSF’s programs.
managers at the program and division levels
administer their programs and generate the         NSF’S Europe Office
information that NSF will use to measure           For our first off-site internal inspection, we
program performance and results. During this       reviewed NSF’s Europe Office. The Office is
reporting period, we conducted our first off-      located in the American Embassy in Paris,
site internal inspection.                          France, and is managed by NSF’s Division of
                                                   International Programs (INT) within the
                                                   Directorate for Social, Behavioral, and
                                                   Economic Sciences (SBE). The Office
                                                   consists of two staff members: a scientist or
                                                   international science policy expert (the
                                                   Europe Officer) and a full-time research and


Semiannual Report Number 17                 48           NSF Office of Inspector General
administrative assistant (RAA). Through our        interaction affords to observe subtleties of
inspection, we sought an integrated under-         feeling and to create relationships that can
standing of the financial, administrative, and     then be sustained through more impersonal
programmatic components of the Europe              means of communication. INT officials also
Office’s operation. We were especially             saw the Office’s flexibility and relative
interested in the control NSF management in        freedom from routine assignments as an asset,
Arlington exercises over a facility in a distant   enabling it to respond to unexpected
location and the measures NSF applies in           opportunities and to handle emergencies.
determining whether that facility is being
properly managed and is serving NSF’s              The INT officials who are the primary users
needs.                                             of the Office all report satisfaction with it.
                                                   The U.S. Department of State (State
The Europe Office performs informational,          Department) diplomats we interviewed said
representational, and programmatic functions.      that monitoring developments in basic science
NSF expects the Office to maintain and             was peripheral to their responsibilities and
develop a wide array of contacts with              that NSF could not expect Embassy staff
European scientists and science adminis-           members to assume any of the Office’s
trators. The Office disseminates information       functions if NSF chose to close the Office.
by making formal reports, usually about 10
pages long and based on site visits, and           The Europe Officer reports to INT’s
sending briefer news items to interested NSF       International Science and Engineering Issues
staff members. Representation includes             Office (Issues Office). INT develops
attending meetings and assisting NSF staff         priorities for the Office through consultations
members, especially NSF’s top management,          among division management, the coordinators
in arranging productive visits to Europe.          of the Eastern and Western Europe programs,
Programmatic assistance includes facilitating      and the head of the Issues Office. INT
initial contacts between European and              officials also engage in extensive informal
American scientists who are doing related          consultation with program officials through-
work and setting the stage for cooperative         out NSF to acquaint themselves with the
ventures to advance science. The same              needs of NSF’s different directorates so they
activities may contribute to all three functions   can incorporate those needs in the planning
simultaneously.                                    process for setting Europe Office priorities.

Among NSF’s many sources of information            NSF has no systematic data on who uses
about European science, the Office’s distinc-      Europe Office capabilities or what products
tive informational strength is its capacity for    and services the Office’s customers use.
sustained, wide-ranging interactions with          Although NSF can readily generate data on
European scientists and policymakers that can      Europe Office activities, these data document
yield serendipitous, sometimes impression-         outputs and not outcomes, as that term is used
istic, information that is useful for orienting    in GPRA. In light of GPRA, INT will need
and sensitizing NSF staff members to               to develop a clear articulation of why it
European developments. An additional               monitors results in the way it does and how
strength is the opportunity that face-to-face      its outcome measurement system helps it to


Semiannual Report Number 17                  49          NSF Office of Inspector General
achieve desired results. We recommended            Post Allowance
that SBE and INT develop a performance             Since NSF took over the Office’s
plan for the Europe Office that ties the           administrative responsibilities from the State
Office’s activities to NSF’s, SBE’s, and           Department, the Division of Human Resource
INT’s strategic goals. In response to our          Management (HRM) has been responsible for
recommendation, INT agreed that Europe             calculating the Europe Officer’s post
Office performance should be tied to division,     allowance, which is a cost-of-living
directorate, and NSF goals and that there          adjustment that the government pays to
should be mechanisms to measure the                employees at foreign posts where living costs
performance of the Europe Office in relation       are more than those in Washington, D.C.
to those goals. INT will, in the next revision     Although the post allowance can change bi-
of its strategic plan, make more explicit the      weekly, HRM did not monitor or adjust the
role of its overseas offices.                      Europe Officer’s post allowance for over 1
                                                   year and paid $2,814 in excess post
All of the officials we talked with strongly
                                                   allowance. We attributed HRM’s failure to
defended the value of the Office in its current
                                                   adjust the Europe Officer’s post allowance to
form, and none believed the resources now
                                                   its procedures for initiating post allowance
devoted to it could be put to a better use.
                                                   revisions. An HRM official told us that it
However, they were concerned that
                                                   was the employee’s responsibility, not
information and representation functions, the
                                                   HRM’s, to report any changes. Once the
results of which are difficult to measure,
                                                   employee reports a change, HRM adjusts the
might be vulnerable with the advent of
                                                   amount paid. We believe HRM’s procedures
GPRA. Program officials’ understandable
                                                   are fundamentally unsound. Proper internal
apprehensions on this point pose a challenge
                                                   controls require that a source independent of
to federal efforts to use results measures to
                                                   the employee be responsible for initiating,
more effectively manage federal resources.
                                                   preparing, and authorizing the employee’s
Until August 1995, NSF set the basic               payroll revisions including overseas
programmatic direction for the Office,             allowances. We recommended that HRM
assigned a staff member to the State Depart-       assume responsibility for monitoring changes
ment to serve as Europe Officer, and relied on     in overseas cost-of-living rates paid to NSF
the State Department to handle the Office’s        employees. INT agreed that rate changes
administrative functions. Since that time,         require closer monitoring and indicated it has
NSF has assumed the Office’s administrative        already requested HRM to assume
functions, including making the Europe             responsibility for monitoring changes in
Officer an NSF employee. Our review identi-        overseas cost-of-living rates and authorizing
fied the following instances in which NSF          changes to the amount of post allowance.
administrative practices had not changed to
reflect the additional administrative respon-
sibilities that the current arrangements entail.




Semiannual Report Number 17                  50          NSF Office of Inspector General
Financial Reporting                                 consider establishing a regular, full-time NSF
INT could not locate some Office financial          position for the RAA in the Europe Office.
records that had been placed in storage, and        INT responded that it was exploring the
an Office summary of costs INT prepared for         various options outlined in our inspection
our inspection was inaccurate. When asked,          report for supporting the RAA position in the
INT told us that it had difficulty preparing the    future.
schedule of Europe Office costs because of
                                                         NSF Europe Officer. The Europe
diverse sources of financial information. We
                                                    Officer is appointed for a 2-year term, but
recommended that INT design and implement
                                                    most of the people we interviewed thought
a periodic comprehensive financial reporting
                                                    s/he should ordinarily serve for 3 or 4 years.
process for the Office so that a single
                                                    This increased length of stay would have both
summary of financial information about the
                                                    programmatic and financial advantages.
Office is readily available for NSF manage-
                                                    Programmatically, it would reduce the
ment. INT agreed that a more regularized
                                                    disruptions of frequent turnover. Financially,
schedule of financial reports directly from the
                                                    it would reduce relocation costs. For
Europe Office that would complement the
                                                    example, when compared to 2-year terms, we
reports transmitted by the Embassy’s fiscal
                                                    estimated savings over a 10-year period to be
office to the Office of Budget, Finance, and
                                                    $22,360 for 3-year terms and $49,540 for 4-
Award Management would be helpful.
                                                    year terms.
Personnel
     Research/Administrative Assistant
Position. The incumbent RAA is employed
through a personal service agreement, which
was issued by the State Department in August
1994. As with all previous Europe Office
support positions, NSF reimburses the State
Department for the RAA’s salary and benefits
through an interagency agreement. The
personal service agreement is no longer an
appropriate employment mechanism for the
RAA position because, unlike the State
Department, NSF does not have authority to
enter into personal service agreements. We
recommended that NSF implement an
appropriate employment mechanism for the
RAA position before the current contractual
agreement expires in January 1998. The
RAA position has evolved from one of
secretarial support to a bona fide professional
position that is, for all intents and purposes, a
full-time NSF job. We suggested that NSF


Semiannual Report Number 17                   51          NSF Office of Inspector General
EXTERNAL INSPECTIONS                             Financial Controls

We designed our external inspections pro-             Indirect Cost Rate Review. Although
gram to improve our understanding of NSF’s       the U.S. Department of Health and Human
grantee activities by integrating financial,     Services (DHHS) is the institution’s
administrative, and program analyses in a        cognizant federal agency, we conducted a
single review. We view external inspections      limited review of the methodology used by
as an effective approach because they allow      the institution to calculate its indirect cost rate
us to determine whether NSF’s program goals      for FY 1995 because NSF has been providing
are being achieved as well as review the         most of the federal funding for this institution
financial and administrative management of       since at least FY 1994. DHHS had not con-
NSF awards. Inspection teams look for early      ducted an indirect cost review at the institu-
indications of financial, administrative, or     tion since at least 1989. We concluded that
compliance problems so they can be addres-       problems exist in the manner in which the
sed before they become so serious that their     institution calculates and applies its overhead
resolution requires an audit or investigation.   rates. For example, the institution included
                                                 unallowable costs in its indirect cost pool and
Problems of compliance with NSF’s                could not provide documentation to show that
Investigator Financial Disclosure Policy         these costs could be considered exceptions.
(NSF’s Policy) were found at each of the         The institution also included in its indirect
inspected institutions; two were seriously out   cost pool charges that had already been billed
of compliance.                                   as direct costs. We noted problems with the
                                                 institution’s fringe-benefit cost and occu-
Inspection at a Private, Nonprofit
                                                 pancy cost rate analyses. We are concerned
Institution in the Northeast                     that, despite a 55-percent increase in the
All 12 awards in this inspection were made by    institution’s federal funding over the last
the NSF Education and Human Resources            5 years, its overhead rates have not decreased.
Directorate’s Division of Elementary,            Increases in federal funding usually result in
Secondary and Informal Education (ESIE) to       lower overhead rates because a larger direct
a nonprofit educational institution to support   cost base does not proportionally increase
the development of instructional materials,      indirect cost expenses. Because NSF pro-
teacher enhancement activities, and informal     vides most of the federal funds and because
science education opportunities. NSF is the      the findings developed by this inspection
major source of overall funding for this         were significant, we requested that federal
institution and had awarded it nearly $25        cognizance be reassigned to NSF. Once
million between FY 1994 and the middle of        federal audit cognizance is reassigned, we
FY 1997, the time of our inspection.             intend to conduct an audit of the institution’s
                                                 indirect cost rate calculation for FY 1998.




Semiannual Report Number 17                 52         NSF Office of Inspector General
                                                   A Shared Strategic Focus
     Conflict of Interests. Two subcontracts
made by the institution appeared to involve        On site, we interviewed 13 PIs/Project
conflicts of interests. The subcontracts were      Directors (PDs) and 12 “other professionals”
to a nonprofit organization run by a Board         associated with the 12 awards in our inspec-
member of the institution. The institution had     tion base. The PIs/PDs were open, informed,
not competed the subcontracts (as required by      highly articulate, well-organized in presenting
OMB Circular A-110) or documented the              their projects, and keenly interested in and
justification for the sole source procurements.    dedicated to their work. The PIs/PDs we
We were especially concerned because the           interviewed understood ESIE’s goals in much
institution did not maintain written standards     the same way that ESIE’s program managers
of conduct covering conflicts of interests (and    did. Like the program managers, they stres-
other issues), as required by OMB Circular A-      sed hands-on and inquiry-based education for
110. We recommended that the institution           students at all levels and geared their work to
implement policies and procedures that             recently developed national standards for
address Circular A-110 requirements on codes       science and mathematics education. The
of conduct to eliminate real and apparent          other professionals working on ESIE’s
conflicts of interests. The institution            awards also shared the PIs/PDs’ vision.
acknowledged that its documentation may
have been inadequate, but it did not believe       The people we interviewed stated without
there was any wrongdoing regarding either          reservation that NSF was the funding source
subcontract.                                       for innovation in science education and
                                                   doubted that much change would occur with-
      Participant Support Costs. The institu-      out continued NSF leadership. The PIs/PDs
tion underspent $44,000 in support costs           described ESIE’s program directors as dedi-
budgeted for one award and instead used the        cated and supportive experts. However, they
funds for other grant-related purposes without     perceived NSF as shifting priorities toward
first obtaining approval from the relevant         “local systemic change,” where funds go to
NSF program officer. We recommended that           whole school districts and large-scale teacher
NSF’s Division of Contracts, Policy and            enhancement projects. They questioned
Oversight (CPO) require that the institution       whether truly innovative individual projects
remit $44,000 to NSF for the underspent            were being “squeezed out” in this shift.
support costs. CPO responded that it would         Results Under Awards to the Institution
determine whether to recover any of these
costs based on the institution’s response to the   NSF is in the initial stages of attempting to
draft report and any other documentation it        comply with GPRA requirements. NSF
may require that the institution provide. The      recently sent its first GPRA strategic plan and
institution stated that it shared the inspection   accompanying performance plan to OMB.
team’s concern that documentation requesting       However, we found that ESIE’s Strategic
approval to reallocate the underspent              Plan: FY 1995-FY 2000 has been in effect
participant costs had not been prepared.           since the beginning of FY 1995. At the end
                                                   of FY 1996, ESIE reported its progress and
                                                   revised some of the milestones and


Semiannual Report Number 17                  53          NSF Office of Inspector General
performance measures developed for its            We informed NSF officials in CPO about the
original strategic plan.                          institution’s noncompliance. CPO officials
                                                  told the institution that they had decided to
We were especially interested in the results of   suspend the five awards affected by the
the work done under ESIE’s awards, some of        institution’s noncompliance. They also said
which are described below.                        they would suspend processing pending
                                                  proposals until the institution finalized and
• Materials were developed as part of a
                                                  implemented its conflict-of-interests policy,
  comprehensive, grades K through 5
                                                  submitted new cover sheets for those
  mathematics curriculum based on the
                                                  proposals (whereby the institution certifies,
  national mathematics standards. These
                                                  among other things, that all financial
  materials are now being disseminated by a
                                                  disclosures have been made), and resolved
  textbook publisher.
                                                  any conflicts of interests by a specified
• Five middle school curriculum packages          deadline. Before CPO issued a formal letter
  were designed to help students learn both       conveying its intentions, the institution
  science content and the process of scientific   provided CPO with a copy of its final
  investigation. The National Geographic          conflict-of-interests policy and all required
  Society has prepared these materials for        cover sheets. As a result, CPO did not
  publication and distribution.                   impose sanctions.
                                                  Misconduct in Science
• A new class of playground equipment
                                                  The institution prepared a draft policy and
  based on understanding how students learn
                                                  procedures for handling allegations of
  mathematics and science concepts has been
                                                  misconduct in science in response to our
  developed. By providing instantaneous
                                                  requests for documentation before our on-site
  feedback, this equipment exposes children
                                                  visit. We recommended that the institution
  to significant ideas in science and
                                                  complete and disseminate final revisions to its
  mathematics through play. A manufacturer
                                                  draft policy, taking into account the need to
  of playground equipment has initiated
                                                  (1) establish a standard of proof for
  preliminary licensing arrangements.
                                                  investigations and adjudications and
PI Financial Disclosure                           (2) specify alternative officials for receiving
The institution was not in compliance with        allegations of misconduct in science when a
NSF’s Policy, which became effective on           designated official is either the subject of an
October 1, 1995. Financial disclosures, as        allegation or has a conflict of interests. The
required by NSF’s Policy, had not been made       institution agreed with our recommendation
for the five funded proposals the institution     and informed us that it addressed both of
submitted to NSF after October 1, 1995. As a      these concerns in its final misconduct in
result of our requests for documentation          science policy and that it disseminated the
before our inspection, the institution became     final policy to institution staff.
aware of NSF’s Policy and formulated a draft
policy addressing financial conflicts of
interests.


Semiannual Report Number 17                 54          NSF Office of Inspector General
Inspection at a Private University in             As a result of our recommendations, the
the Northeast                                     university agreed to prepare and approve
This inspection included eight grants support-    timely certifications for summer salary
ing basic research in physics made by NSF’s       changes, revise the faculty effort reporting
Directorate for Mathematical and Physical         system to capture effort data in a more timely
Sciences and one grant supporting U.S.-Korea      manner, and establish formal policies and
Cooperative Research made by NSF’s SBE.           procedures to ensure that subrecipients of
                                                  federal awards are audited and that the
Financial Controls
                                                  university takes corrective action on the
The university generally complied with            audits where necessary.
NSF’s and other federal award requirements.
                                                  Investigator Financial Disclosure
We identified minor compliance and internal
control issues concerning cost sharing,           Each of the university’s nine faculties has its
summer salary certifications, and subrecipient    own conflict-of-interests policy and
audits. We recommended, and the university        disclosure system to carry out federal
agreed to implement, procedures to account        requirements. The university provost is
for cost sharing to comply with Cost              responsible for ensuring that each faculty has
Accounting Standard 501, Consistency in           a policy and system in place. There is no
Estimating, Accumulating and Accounting for       monitoring at the university level.
Costs. The university’s new financial system,
which is planned for implementation in July       Since the university’s Faculty of Arts and
1998, will contain a segment in the new Chart     Sciences (FAS) receives most of the funds
of Accounts that will be used to capture cost     NSF awards the university, we reviewed the
sharing as the costs are accumulated and          FAS financial disclosure system and spot-
charged to sponsored programs. The                checked 12 awards NSF made to the
university is also training its research          university from proposals submitted by 9
department administrators on the importance       FAS PIs. We determined that the FAS had
of accounting for cost sharing and the proper     made a good faith effort to comply with
procedures for filling out the cost-sharing       NSF’s Policy. The FAS disclosure system is
forms. In the interim, the university is          clearly explained and available to faculty
revising its cost-sharing procedures to account   members. It appeared that the system has
for the costs when they are proposed by           been successful in ensuring disclosures by
tracking the accounts to which the cost           faculty members. However, we found
sharing is being charged.                         weaknesses in the implementation of the
                                                  disclosure system, especially as it applies to
                                                  investigators who are not faculty members,
                                                  such as research associates and postdoctoral
                                                  fellows. If these weaknesses are symptoms of
                                                  a wider problem, the university would not be
                                                  able to ensure that disclosures are being made
                                                  by all investigators on all proposals submitted
                                                  to NSF, as required by NSF’s Policy.


Semiannual Report Number 17                 55          NSF Office of Inspector General
During our spot check, the conflict-of-             In response to our concerns and recom-
interests official could not immediately            mendations, the university transmitted with its
retrieve disclosures for all of the investigators   response a draft of a newly created form,
on each award for us to verify. He readily          Principal Investigator Certification on
retrieved disclosures for the investigators who     Investigator Conflict of Interest, that will be
were faculty members but could not do so for        completed and signed by the PI when the
those investigators who were not faculty            proposal is submitted to NSF and at the time
members because FAS PIs are responsible for         of annual renewal or continuation for
obtaining disclosures from non-faculty              multiyear grants. The PI will certify, by
investigators on their awards, forwarding any       signature, that NSF policy requirements have
positive disclosures to the conflict-of-interests   been met by the PI and by any other
official, and maintaining records of negative       investigators involved in the PI’s project.
disclosures.
                                                    The university also responded that it believes
After the conflict-of-interests official            the current conflict-of-interests policies of
contacted the PIs to request the non-faculty        each of its faculties does comply with the
investigators’ disclosure forms, he learned         requirements of NSF regulations in this area.
that none of the five non-faculty investigators     However, the university agreed that it would
had filed the appropriate disclosure forms          be useful to review those policies in light of
with their respective PIs. As a result of our       the revisions to the FAS policy outlined
inspection, all noncompliant investigators          above and to suggest similar revisions to
filed disclosure forms.                             other faculties’ policies where appropriate.
                                                    Misconduct in Science
We recommended that FAS
                                                    The university’s policy on misconduct in
• correct its investigator financial disclosure     science did not contain a definition of mis-
  system so that the university can ensure that     conduct in science or give examples of what
  disclosures are made for all investigators on     might constitute an allegation of misconduct
  NSF awards and                                    in science. The university’s undergraduate
                                                    and graduate handbook did not discuss mis-
• reconsider the advisability of requiring that     conduct in science, although the graduate
  other investigators make confidential             handbook provided a brief exposition on
  disclosures through a PI rather than directly     research practices. Without a definition,
  to the Committee on Professional Conduct.         neither the subjects of allegations, investigat-
                                                    ing officials, nor adjudicating officials will
Our concern with the latter recommendation
                                                    know to what standard scientists are being
is that other investigators might be reluctant
                                                    held. In response to our recommendation to
to supply personal financial information to a
                                                    formalize a definition, the university respond-
supervisor (that is, the PI) and/or
                                                    ed that it expected that an implicit definition
administrative staff.
                                                    in its policy would soon be made more
                                                    explicit.




Semiannual Report Number 17                   56          NSF Office of Inspector General
Neither the student handbooks nor the univer-       Undergraduate students in the physics
sity’s policy stated that it was the university’s   department had opportunities to learn about
responsibility to notify NSF when an investi-       research firsthand through a research course
gation begins that involves allegations of          that taught them the basics of research while
misconduct in science in connection with an         they worked on a small research topic or
NSF proposal or award, or to notify NSF of          project directly with a faculty member’s
the results of such an investigation. Further,      research group. A few faculty members had
there was no indication in any of the hand-         undergraduate students in their research
books or policies that NSF may take action          groups, and most had graduate students who
against wrongdoers if they are found to have        were actively involved in research. In these
committed misconduct in science. In                 groups, students learn by apprenticeship to
response to our recommendation for dissemi-         the PI and from other members of their
nation of this information, the university          research team. When questions about ethical
indicated that the student handbook and             issues in research occur, for example, the use
university policy would be modified, and the        of fitted (or adjusted) data versus raw data or
revised statements in the student handbook          possible citation problems, a group meeting is
and their policy “should provide the necessary      held to discuss the proper procedure or
publicity.”                                         response.
Integrating Research and Undergraduate
                                                    The undergraduate students believed the ex-
Education
                                                    perience gained by working in the
The physics department was highly ranked in         laboratories of leading researchers in their
public ratings. The university sought to            discipline would improve their chances of
award tenure only to leading researchers in         admission to graduate school, especially if the
their field. Proposals from physics                 students’ contributions are acknowledged on a
department faculty members were unusually           conference presentation or a published paper.
successful in obtaining NSF funding. We             They saw their research experience as an
viewed this as evidence that the university         opportunity to develop their visibility in the
had succeeded in attracting leading                 research community and as helping them to
researchers in the discipline. In addition to       continue research in a top program at
being excellent researchers, the faculty were       graduate school.
expected to teach at all levels. This was
                                                    Research Records
consistent with NSF’s strategy of integrating
research and teaching so that students can          The university did not have a formal, written
learn from scientists active in the field.          policy on the standards of research record-
                                                    keeping. Most faculty members thought the
                                                    university policy required retention of records
                                                    for 3 years, but a few faculty members
                                                    thought the policy was 5 years. Members of
                                                    the groups that kept data said that, regardless
                                                    of the university policy, they kept data
                                                    indefinitely.


Semiannual Report Number 17                   57          NSF Office of Inspector General
The customs of the wider physics community        Inspection at a State University in
seem to have imposed some uniformity on           the West
recordkeeping practices, with the primary
differentiation appearing only in the differ-     This inspection included 11 NSF grants.
ence between theoretical and experimental         NSF’s Directorate for Biological Sciences
physics. The theoretical physicists did not       awarded eight grants for basic research and
generate empirical data and therefore did not     one grant for equipment. NSF’s Directorate
keep research records as such; they con-          for Education and Human Resources awarded
sidered their publications to be their research   one grant for a Graduate Research
record. The experimental physicists stored        Traineeship, and one grant was from NSF’s
data in notebooks and computer files on hard      Experimental Program to Stimulate
drives. Access to the computers was               Competitive Research (EPSCoR) program to
commonly restricted to members of the             create a multidisciplinary consortium of
group. The notebooks remained with the            scientists to study ecosystem issues.
group when the students graduated, but            Program Review
students were allowed to photocopy any
                                                  The focus of this inspection was the
notebook material they wanted.
                                                  university’s Division of Biological Sciences,
Laboratory Safety                                 which was formed in 1988 from the
The university’s environmental and safety         departments of biochemistry, botany,
policies were among the few comprehensive         microbiology, and zoology. In contrast to
policies that applied universitywide. Each        recent concerns discussed in scientific
school or administrative department had a         literature about the difficulties of managing a
designated environmental and safety               group with diverse research interests, we
compliance officer. The university offered a      found that Division members were pleased
series of safety seminars, and, at the time of    with its organization and that there were an
our inspection, had recently implemented a        increasing number of vigorous cross-
web page that faculty members will                disciplinary collaborative efforts. We
eventually use to maintain certification in       concluded that the Division was becoming a
safety programs that require regular updates.     powerful research group, but that this effort
                                                  was hindered by serious space constraints.
                                                  We were told that the construction of a new
                                                  biological sciences building was a high
                                                  priority for the university administration.




Semiannual Report Number 17                  58         NSF Office of Inspector General
                                                Investigator Financial Disclosure
Few of the individuals with whom we spoke
could locate their laboratory safety manuals    The university was not in compliance with
or relevant information about the chemicals     NSF’s Policy. The university’s policy
they handled. We learned that a recent Fire     addressing financial conflicts of interests was
Marshal’s inspection concluded that chemical    not adopted until over 2 months after NSF’s
storage, marking, securing, and signing was     Policy became effective, and university
inadequate. Further, few of the PIs we          officials were unable to demonstrate that the
interviewed had attended a meeting about        university had an adequate system in place to
chemical safety scheduled by the university     ensure that disclosures of significant financial
just prior to our inspection. We recom-         interests were made, and conflicts of interests
mended that the university conduct on-site      identified, before proposals were submitted to
inspections in each laboratory because we       NSF. For example, the university’s policy
were concerned about laboratory safety. The     left investigators to disclose “potential
university agreed with our recommendation       conflicts of interests” on their own initiative;
and said that it would form a Division safety   the university treated silence as indicating that
committee responsible for “continual”           an investigator had nothing to disclose. The
inspections and education.                      University had received no voluntary
                                                disclosures of “potential conflicts of interests”
We learned that the university was not          since its policy became effective, and none of
handling the approval of research involving     the 10 investigators we interviewed was
animal and human subjects appropriately.        aware of the university’s policy. We found
We made recommendations designed to             that the university’s policy did not meet
improve its procedures. The university          NSF’s requirements and contained
accepted our recommendations. We also           inconsistent, ambiguous, and misleading
learned that the university had received NSF    language. As a result, even if the university
funds for nonexempt human subjects research     community was aware of the university’s
but had failed to file the proper assurances    policy, we did not believe it would generate
with NSF. We recommended that this              the disclosures that NSF’s Policy requires.
research not go forward until this paperwork    Our review indicated that of the six proposals
was completed and approved by NSF. The          submitted to NSF during the period in which
university informed us that the scientist has   the university had no conflict-of-interests
decided not to conduct this research and that   policy, two awards were made. All of the
it has informed NSF of this decision. It        cover sheets accompanying these proposals
agreed to review all of its NSF awards to       incorrectly certified that the university was in
ensure that research involving human subjects   compliance with NSF’s Policy. From the
is in conformance with the regulations.         time its policy was adopted until the time of
                                                our inspection, the university had submitted
                                                50 proposals to NSF that resulted in 7 awards.




Semiannual Report Number 17               59          NSF Office of Inspector General
                                                  Misconduct in Science
We recommended that the university revise
and disseminate its policy, establish a system    We reviewed the university’s “Alleged
to maintain and track records of investigator     Misconduct Policy” and discussed
financial disclosures for proposals submitted     misconduct-in-science issues with the PIs and
to NSF, and take steps to ensure that inves-      students covered by the awards in this
tigators are made aware of their financial        inspection as well as with several
disclosure responsibilities. We recommended       administrators. Among other suggestions, we
that NSF’s CPO ensure that the university         recommended that the university’s policy be
fully complies with NSF’s Policy and takes        revised to include its definition of misconduct
remedial action regarding all proposals the       in science, define who was covered by its
university submitted to NSF after NSF’s           policy, specify a burden of proof and a level
Policy became effective, including all            of intent necessary for a finding of
pending university proposals. NSF officials       misconduct in science, and identify an
decided to delay action until they had seen the   adjudicator distinct from the individuals
university’s response to our draft inspection     involved in the investigative effort. Because
report and recommendations. The university        few of the people we spoke with were aware
agreed with our recommendations, but said it      of the university’s policy, we also
did not expect to revise and disseminate its      recommended that the university widely
new policy until December 31, 1997. After         disseminate its revised policy. The university
receiving the university’s response, NSF          agreed with our recommendations and said
officials gave the university explicit            that it would disseminate its revised policy by
instructions to follow until it revises and       December 31, 1997, and consider ways of
implements its conflict-of-interests policy.      heightening awareness among the faculty,
The instructions dealt with awarded proposals     staff, and students about ethical issues.
submitted after NSF’s Policy became               Financial Controls
effective, as well as with pending and future
proposal submissions. NSF officials               The university generally complied with NSF
informed the university that no further awards    and other federal requirements. We identified
would be made to the university until it had      minor compliance and internal control issues,
complied with these instructions.                 for which we suggested improvements.




Semiannual Report Number 17                 60          NSF Office of Inspector General
Audit Reports Issued With Recommendations
for Better Use of Funds



                                                                                   Dollar Value

A. For which no management decision has been made by the
   commencement of the reporting period                                            64,406,545

B. Recommendations that were issued during the reporting period
   (these were issued in 10 reports)                                               57,396,351

C. Adjustment resulting from resolution process                                     2,760,000

Subtotal of A+B+C                                                                 124,562,896


D. For which a management decision was made during the reporting period            19,676,900


   (i) dollar value of recommendations that were agreed to by management


       based on proposed management action                                         19,010,000


       based on proposed legislative action                                                    0


   (ii) dollar value of recommendations that were not agreed to by management            666,900


E. For which no management decision had been made by the end of
   the reporting period                                                            104,885,996


For which no management decision was made within 6 months of issuance
                                                                                   60,739,645




Semiannual Report Number 17                       61   NSF Office of Inspector General
Audit Reports Issued With Questioned Costs



                                                           Number        Questioned       Unsupported
                                                                              Costs             Costs


A. For which no management decision has been made
   by the commencement of the reporting period                   39       6,998,361         2,568,221

B. That were issued during the reporting period                  44       2,616,738           732,330


C. Adjustments to questioned costs resulting from
   resolution activities                                          0               0            33,675

Subtotal of A+B+C                                                83       9,615,099         3,334,226

D. For which a management decision was made
   during the reporting period                                   18       1,082,193           207,294

       (i) dollar value of disallowed costs                    N/A          832,262              N/A

       (ii) dollar value of costs not disallowed               N/A          249,931              N/A

E. For which no management decision had been made
   by the end of the reporting period                            65       8,532,906         3,126,932

For which no management decision was made within
6 months of issuance                                             30       5,435,678         2,414,981




Semiannual Report Number 17                        62   NSF Office of Inspector General
Additional Performance Measures

As required by the Inspector General Act of              findings result in formal questioned costs. The
1978, we provide tables in each Semiannual               table on page 64 provides statistical
Report to the Congress that give statistical             information about shortfalls occurring during
information on work conducted by our audit               the course of a project and at the completion of
and investigation units.                                 the project.

Tables that provide statistics concerning these          Auditors who conduct financial statement
required performance measures are on pages               audits at grantee organizations may identify a
24, 31, and 45. GAO and OMB suggested that               general deficiency concerning cost sharing
Offices of Inspector General develop additional          (which we classify as a “compliance finding”)
performance measures that provide information            but often do not identify the amount of a cost-
about their activities. As a result, we                  sharing shortfall (which we classify as a
developed two additional performance                     “monetary finding”) because it is not material
measures to provide additional insights about            in the context of the organization’s overall
the work of our office. The two additional               financial statement presentation. We track both
measures are “Cost Sharing Shortfalls” and               monetary and compliance findings that involve
“Systemic Recommendations.”                              cost sharing.

COST-SHARING SHORTFALLS—NSF                              SYSTEMIC RECOMMENDATIONS—OIG
seeks to leverage its resources by acting as a           staff members regularly review NSF’s internal
catalyst, promoting partnerships, and, in some           operations. These reviews often result in
cases, obligating grantees to contribute                 systemic recommendations that are designed to
substantial nonfederal resources to a project.           improve the economy and efficiency of NSF
When NSF award documents require                         operations.
substantial cost sharing, we seek to determine
whether grantees are in fact providing                   We routinely track these systemic recom-
promised resources from nonfederal sources.              mendations and report to NSF’s Director and
                                                         Deputy Director quarterly about the status of
We divide cost-sharing shortfalls into two               our recommendations. The table on page 65.
categories. Shortfalls occurring during the life         provides statistical information about the status
of a project indicate that the grantee may not be        of all systemic recommendations that involve
able to provide all promised resources from              NSF’s internal operations.
nonfederal sources before completing the
project. Shortfalls that remain when a project
is complete demonstrate that a grantee has in
fact not met cost-sharing obligations; these




Semiannual Report Number 17                         63       NSF Office of Inspector General
  Audit Reports Involving Cost-Sharing Shortfalls
                                                                                           At Risk of        Cost-
                                                                                           Cost-             Sharing
                                                          Number         Cost              Sharing           Shortfalls at
                                                          of             Sharing           Shortfall/        Completion
                                                          Reports        Promised          (Ongoing          of the
                                                                                           Project)          Project*
A. For which no management decision has
been made by the beginning of the
reporting period
   1. Reports with monetary findings                           8           27,324,344         15,691,416             221,722

   2. Reports with compliance findings                         9                   N/A                N/A               N/A

B. That were issued during the reporting
period
   1. Reports with monetary findings                        12             33,684,309         14,790,114             220,681
   2. Reports with compliance findings                         2                   N/A                N/A               N/A

Total of Reports With Cost-Sharing
Findings (A1+A2+B1+B2)                                      31             61,008,653         30,481,530             442,403
C. For which a management decision was
made during the reporting period
   1. Dollar value of cost-sharing shortfall
   that grantee agrees to provide                              0                       0                 0                0
   2. Dollar value of cost-sharing shortfall
   that management waives                                      1               121,717                   0            34,333
   3. Compliance recommendations with
   which management agreed                                     4                   N/A                N/A               N/A
   4. Compliance recommendation with
   which management disagreed                                  0                   N/A                N/A               N/A
D. For which no management decision has
been made by the end of the reporting
period

   1. Reports with monetary findings                        19             60,886,936         30,481,530             408,070
   2. Reports with compliance findings                         7                   N/A                N/A               N/A


  ∗ These findings result in questioned costs and are also identified in our table on questioned costs on page 62.




  Semiannual Report Number 17                             64          NSF Office of Inspector General
Status of Systemic Recommendations
That Involve Internal NSF Management
Open Recommendations
 Recommendations Open at the Beginning
 of the Reporting Period                                                                 45
 New Recommendations Made During
 Reporting Period                                                                        36

    Total Recommendations to be Addressed                                                81

Management Resolution1 of Recommendations
 Recommendations Awaiting
 Management Resolution                                                                    9
 Recommendations Resolved by Management                                                  72
      Management Agrees to Take Reasonable Action                                        72
      Management Decides No Action is Required                                            0


Final Action2 on OIG Recommendations
  Final Action Completed                                                                 34
  Recommendations Open at End of Period                                                  47

Aging of Open Recommendations
 Awaiting Management Resolution:
    0 through 6 Months                                                                    9
    7 through 12 Months                                                                   0
    more than 12 Months                                                                   0


Awaiting Final Action After Resolution
   0 through 6 Months                                                                    18
   7 through 12 Months                                                                   16
   13 through 18 Months                                                                   0
   19 through 24 Months                                                                   2
   more than 24 Months                                                                    2

1
  “Management Resolution” occurs when management completes its evaluation of an OIG recommendation and
issues its official response identifying the specific action that will be implemented in response to the
recommendation.
2
   “Final Action” occurs when management has completed all actions it had decided are appropriate to address an
OIG recommendation.

Semiannual Report Number 17                           65         NSF Office of Inspector General
Recommendations Where Management Decides No Action Is Required
None to report during this period.


Recommendations Awaiting Management Resolution for More Than 12 Months
None to report during this period.

Recommendations Awaiting Final Action for More Than 24 Months

Report Title                   Date                          Issue

Review of NSFNET              03/23/93   Audit of Infrastructure Account

Review of NSF’s Property
Management System             04/21/95   Responsibilities of Property Custodians




Semiannual Report Number 17               66        NSF Office of Inspector General
List of Reports
                                                 NSF and CPA Performed Reviews
 Number                      Subject      Questioned     Unsupported     Better Use        Cost
                                               Costs           Costs      of Funds∗   Sharing at
                                                                                           Risk
 97-1014        School District                 57,202              0            0             0

 97-1015        Research Foundation                 0               0            0            0

 97-1016        Oceanographic Institute         10,866              0            0            0

 97-1017        School Board                      985             985            0            0

 97-1018        School District                173,877        123,406            0            0

 97-1019        Nonprofit                       38,681         24,316            0            0

 97-1020        School District                104,320         63,441            0       487,837

 97-1021        Public School System            49,455         11,435            0       292,352

 97-1022        School District                     0               0            0        20,607

 97-1023        University                     134,358              0            0            0

 97-1024        School District                 52,151         33,134            0       822,279

 97-1025        School District                345,937              0            0    11,511,738

 97-1026        Nonprofit                      144,520              0            0            0

 97-1027        School District                133,478           9,500           0       624,626

 97-1028        School for Science and
                Mathematics                    251,639        218,102            0            0
 97-1029        Public School System           397,967        183,951            0       138,314

 97-1030        Laboratory                       4,312              0            0            0

 97-1031        Research Corporation           314,690              0     2,341,945           0

 97-1032        Communications Company          49,194         38,651            0            0

 97-2111        Ocean Drilling Program              0               0            0            0

 97-2112        International Ocean
                Drilling Program                    0               0            0            0

 ∗
     Over 5 years

 Semiannual Report Number 17              67       NSF Office of Inspector General
Number                         Subject              Questioned     Unsupported Better Use of             Cost
                                                         Costs           Costs      Funds*           Sharing
                                                                                                      at Risk
97-2113        U.S. Antarctic Program                         0               0      2,788,000              0

97-2114            Preaward Analysis of
                   Research Proposal                          0               0      8,125,000              0

97-2115            Research Center                            0               0      2,800,000              0


97-2116            Hiring Scientists in Temporary
                   Positions                                  0               0     10,500,000              0

97-2117            Budget for SBIR Programs                   0               0     13,250,000              0

97-6014            Public School System                   16,680              0                 0           0

97-6015            Atmospheric Research                       0               0        335,000              0

97-6016            University Foundation                      0               0                 0           0

97-6017            Communications Company                 81,985              0     17,256,406              0

                   Total                              2,362,297         706,921     57,396,351      13,897,753

∗
    Over 5 years




Semiannual Report Number 17                          68       NSF Office of Inspector General
                                                      NSF-Cognizant Reports


                                                                                  Cost
                                               Questioned    Unsupported      Sharing
Number     Subject                                  Costs          Costs       at Risk
97-4046    Mathematics Society                       4,060               0          0

97-4048    Professional Association                  3,827               0     892,361

97-4070    Botanical Garden                         54,594               0          0

97-4071    Science Museum                            1,439               0          0

97-4101    Institute                                 1,797               0          0

97-4104    Science & Technology Council              4,611           4,611          0

97-4111    Professional Association                   653                0          0

97-4114    Science Society                           3,810               0          0

97-4133    Research Station                          4,812               0          0

97-4137    Scientific Society                       65,200               0          0

97-4141    Science Center                            1,238           1,238          0

97-4148    Public TV / Radio Company                 8,900               0          0

97-4157    Children’s Museum                          350                0          0

97-4167    Institute                                  312                0          0

97-4168    Scientific Society                       51,594               0          0

97-4173    Science Foundation                         243               14          0



           TOTAL                                  207,440            5,863     892,361




Semiannual Report Number 17               69     NSF Office of Inspector General
  Other Federal Audits


Number       Subject                                   Questioned         Unsupported
                                                            Costs               Costs
97-5305      State Audit                                        61                       0

97-5346      University                                      7,198                       0

97-5352      College                                           550                       0

97-5355      College                                         3,311                     152

97-5356      University                                      1,414                       0

97-5357      Association of Junior Colleges                 19,394                   19,394

97-5358      University                                      1,979                       0

97-5455      University                                     12,811                       0

97-5456      Graduate School                                   283                       0



                                TOTAL                       47,001                   19,546




Semiannual Report Number 17                   70   NSF Office of Inspector General
Audit Reports With Outstanding Management Decisions
This section identifies audit reports involving questioned costs, funds put to better use, and cost
sharing at risk where management had not made a final decision on the corrective action
necessary for report resolution within 6 months of the report’s issue date. At the end of the
reporting period, there were 30 audit reports with questioned costs, 3 reports with recommen-
dations for funds to be put to better use, and 4 items involving cost sharing at risk. The status of
systemic recommendations that involve internal NSF management are described on page 65.


 Report                                                        Date Report        Dollar
 Number           Title                                          Issued           Value        Status

 Items Involving Questioned Costs
 95-1022          BBN Laboratories                               03/06/95            122,067     1
 95-1042          Mr. Wizard Foundation                          03/31/95            157,780     1
 95-1048         Virginia State Department of Education          09/01/95            317,664     1
 95-5722          State of South Dakota                          09/22/95            113,204     1
 96-1002          North Carolina Department of                   10/01/95            181,459     1
                  Administration
 96-1003          Texas Education Agency and University of       11/14/95            514,268     1
                  Texas
 96-1009          Society of Automotive Engineers                03/26/96             33,962     1
 96-1014          American Educational Research Association      03/20/96            211,879     1
 96-1015          Blackfeet Community College                    03/29/96            258,955     3
 96-1018          Woodrow Wilson National Fellowship             03/27/96             24,657     1
 96-1024          College Board                                  03/28/96            171,663     1
 96-1025          Franklin Institute Science Museum              03/28/96            237,678     1
 96-1027          Abt Associates                                 03/28/96            828,915     1
 96-1031          National Learning Center                       09/30/96            337,377     1
 96-2113          AMSI                                           08/28/96              4,054     1
 96-5024          University of Wisconsin                        03/06/96            177,669     1
 97-1002          Discovery Museum                               12/26/96            128,108     1
 97-1003          Please Touch Museum                            02/07/97             66,994     1




Semiannual Report Number 17                      71       NSF Office of Inspector General
Report                                                            Date Report        Dollar
Number            Title                                             Issued           Value          Status
97-1004           Jenks Public Schools                              02/07/97           130,996        1

97-1007           Chattanooga Public Schools                        02/13/97           333,753        1

97-1009           Cambridge School Department                       03/12/97            25,785        1

97-1010           Sacred Heart University                           03/13/97           451,147        1

97-1011           Academic Research Infrastructure                  04/09/97           109,209        1

97-1012           American Mathematical Society                     03/18/97           341,057        1

97-4022           Girls Inc., of Alameda County                     03/28/97              2,484       1

97-4023           American Meteorological Society                   03/24/97              1,924       1

97-5065           Stanford University                               03/21/97              1,260       1

97-5066           Rochester Institute of Technology                 03/21/97                  900     1

97-6010           University of Colorado - Boulder                  02/28/97           148,398        1

97-6013           Eagle-Union Community School                      03/11/97                  412     1
                  Corporation

Items Involving Funds Put to Better Use
97-2106         National Radio Astronomy Observatory                03/31/97           721,945        3

97-2107           Review of Funding for Development                 03/31/97         60,000,000       3
                  of the Internet

97-6006           Small Business Grantee                            02/05/97            17,700        3

Items Involving Cost Sharing at Risk
97-1003         Please Touch Museum                                 10/04/96            19,829        2

97-1008           Poway School District                             11/13/96           268,388        2

97-1009           Cambridge School Department                       10/18/96           901,263        2

97-2103           Academic Research Infrastructure                  03/05/97         14,501,936       2

Status Codes
1 = Resolution is progressing with final action expected in next reporting period.
2 = Information requested from grantee not yet received in full.
3 = Further negotiations required before resolution.



Semiannual Report Number 17                        72        NSF Office of Inspector General
                      Prepared by
                 Office of Inspector General
                 National Science Foundation




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Semiannual Report to the Congress
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