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 For additional copies, write Office of Inspector General 4201 Wilson Boulevard Arlington, VA 22230 For additional information, call (703) 306-2100 This report is accessible on the World Wide Web at http://www.nsf.gov/cgi-bin/getpub?oig17 Electronic Mail Hotline firstname.lastname@example.org Semiannual Report to the Congress National Science Foundation
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)