Letter to the Congress of the United States
The Inspector General Act mandates that we independently develop factual
analysis, fairly and impartially. As a component of the National Science Foundation,
we are party to the Foundation’s mission of enabling discovery and education.
Accordingly, we participate fully in the Foundation’s efforts to be innovative and
flexible while operating efficiently and with integrity. We can best carry out our
responsibilities by working in partnership with all areas of the Foundation and the
communities we jointly serve.
This Semiannual Report to the Congress describes models of best practice. Our
Office of Audit and the Foundation’s Office of Polar Programs together developed an
audit program, which identified over $20 million in administrative savings. These
savings will be recognized during the transition of Antarctic logistics operations from
the Navy to the Air National Guard (page 2). Our Criminal Investigations Unit
continues to develop investigative findings by coordinating closely with investigators in
other federal agencies and with internal audit departments in major universities
(page 16). Finally, our administrative investigative program involving misconduct in
science succeeds only because we rely heavily on investigative reports developed
initially by universities and other funded organizations (page 26). We will build on
these models of partnership in the future.
In this reporting period, at the request of the Senate Committee on Commerce,
Science, and Transportation, we also analyzed the Foundation’s award portfolio to
determine whether funding decisions were based on political or other non-merit based
criteria. We found that the Foundation’s merit-review system consistently uses
reasonable and impartial criteria that are applied fairly throughout NSF’s programs
(page 33).
This is a time of change in key personnel for the Foundation, the National
Science Board, and our office. We look forward to a collaborative dialogue so that we
can work together with the Congress, the Foundation’s management, and the National
Science Board to help our agency accomplish its laudable mission of education and
discovery.
Respectfully submitted,
Philip L. Sunshine
Acting Inspector General
March 31, 1998
Table of Contents
Audit 1
Investigations 15
Oversight 25
Statistical Data
Audit 42
Investigations 53
Oversight 54
Glossary 55
Acronyms
AMTRAK OIG National Railroad Passenger Corporation’s
Office of Inspector General
CFO Chief Financial Officer
DOD Department of Defense
DoEd Department of Education
DOJ Department of Justice
EHR Directorate of Education and Human Resources
FASAB Federal Accounting Standards Advisory Board
FBI Federal Bureau of Investigation
GC-1 Grant General Conditions
GMRA Government Management Reform Act
GPM Grant Policy Manual
GRT Graduate Research Traineeship
IGERT Integrative Graduate Education and Research Training
IPA Intergovernmental Personnel Act
OMB Office of Management and Budget
OPP Office of Polar Programs
PAM Proposal and Award Manual
PM Program Manager
PP&E Property, Plant, and Equipment
SBIR Small Business Innovation Research
SSI Statewide Systemic Initiatives
USAP U.S. Antarctic 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.
Legal Reference 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 51 and 54
Section 5(a)(4) Matters Referred to Prosecutive Authorities 53
Section 5(a)(5) Summary of Instances Where None to Report
Information Was Refused This Period
Section 5(a)(6) List of Audit Reports 48
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 43
Section 5(a)(9) Statistical Table Showing Number of Reports and Dollar Value
of Recommendations That Funds Be Put to Better Use 42
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 51
Section 5(a)(11) Significant Management Decisions That Were Revised None to Report
This Period
Section 5(a)(12) Significant Management Decisions With Which None to Report
the Inspector 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, admini-
strative, 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.
Audit Highlights
Partnering Activities 2
Significant Reviews
• Antarctic Flight Operations 2
• NSF’s Financial Statements 5
• Graduate Traineeship Program 6
Audits Resulting in Questioned Costs 7
Audit Resolutions 13
Statistical Data 42
NSF OIG Semiannual Report 1 March 1998
Partnering Activities
In addition to conducting systematic reviews of programs based on objective
criteria, we believe it is important to establish partnerships with NSF programs.
The most extensive partnership to date has been established with the Office of
Polar Programs (OPP). For example, on two recent projects we worked closely with
OPP to shape project work plans that would accomplish its goals and objectives. We
continued to work closely with OPP staff throughout these projects, providing them
with updates on the progress of our work and advising them of issues and findings as
we developed them. We also briefed OPP managers on our findings and recommen-
dations before requesting formal comments on our draft report.
This ongoing, open communication enabled OPP to address issues as they arose.
In some instances, OPP addressed and began implementing our recommendations
before we issued the report. Recommendations resulting from the two reviews already
completed will result in a total of $23.7 million in savings and cost avoidances over a
5-year period. The Acting Director of OPP acknowledged the benefit of our partnering
efforts by stating that “OPP considers [our] assessments and accompanying
recommendations [to be] a tremendous benefit in [OPP’s] ongoing efforts to more
efficiently and effectively manage the U.S. Antarctic Program.” We plan to expand
this model of partnering to reach other NSF programs.
Review of U.S. Antarctic Program
Flight Operations
The U.S. Antarctic Program complex and expensive, accounting for
(USAP) is funded and managed by 55 percent of OPP’s $228 million
NSF. Past and current administrations FY 1998 budget.
determined that it is important for the
United States to maintain an active and The Navy provided logistical
influential presence in Antarctica. support for more than 40 years, but in
Accordingly, NSF manages a 1993 announced that it would withdraw
substantial research program aimed at from the USAP. The Navy’s decision
understanding the Antarctic region and presented an opportunity for us to assist
its relationship to the rest of the planet. OPP in evaluating and endeavoring to
OPP implements the research program maximize the efficiency of transferring
and coordinates the necessary logistics. functions traditionally performed by the
Because Antarctica is geographically Navy to other organizations. In Semi-
remote and is located in a harsh annual Report Number 17 (pages 2-5),
environment, the logistics to support a we reported on the results of a
robust research program are both functional review and cost analysis of
NSF OIG Semiannual Report 2 March 1998
transferring support for the USAP in LC-130 Flight Operations
Christchurch, New Zealand, from the
Navy to OPP’s prime contractor and an During the operating season,
Air National Guard detachment. We airlift of passengers, cargo, scientific
verified annual net savings to the USAP and construction supplies and equip-
of $13.2 million over a 5-year period, ment, and fuel to and within Antarctica
and we made recommendations that is accomplished using ski-equipped
would save an additional $2.8 million aircraft (LC-130s). There are currently
over the same period, $2.1 million of only two operators of this aircraft: the
which have been accepted and Navy’s Antarctic Development
implemented. Squadron SIX (the Squadron) and the
Guard. With the Navy’s decision to
In this reporting period, we withdraw from the USAP, another
worked with OPP to develop a similar operator for NSF’s LC-130s had to be
plan for reviewing and analyzing the identified. Because the Guard has
transition of flight operations. The experience flying LC-130s in the Arctic
109th Airlift Wing of the New York Air and has assisted the USAP in its
National Guard (the Guard) provides Antarctic flight operations since 1988,
flight operations to OPP under a it is well positioned to assume
Memorandum of Agreement that is responsibility for LC-130 flight
effective without time limitations. operations. Accordingly, these
Although the Agreement may be operations are being transferred from
terminated at any time upon mutual the Squadron to the Guard over a
consent or by either party upon at least 3-year period (from 1997 through 1999)
1 year’s notice, OPP anticipates that the with joint Squadron and Guard
Guard will provide flight operations operations during the transition.
support for the foreseeable future.
The Guard plans to hire 235
In this review, we identified additional full-time employees (USAP
total potential savings of $32.7 million hires) to support the program. The
over a 5-year period, beginning in FY Guard expects that OPP will pay for the
2000, the first full year of the USAP hires based on a flat composite
transition. Of this amount, we verified pay rate the Guard established (one
personnel savings of $11.7 million. We amount for officers and another for
made recommendations for additional enlisted personnel regardless of their
efficiencies and cost avoidances of actual ranks or rates). We compared
$21 million over a 5-year period. NSF the cost of these personnel using the flat
management generally agreed with our rate to a rate that varies by position.
recommendations. We also identified We found that the amount OPP would
and validated one-time transition costs pay for these personnel significantly
of $79 million, of which $43.2 million exceeds actual personnel costs to the
is associated with reconfiguring three Guard. Accordingly, we recommended
NSF-owned aircraft to meet U.S. Air that OPP negotiate reimbursement to
Force standards. the Guard that more closely reflects
NSF OIG Semiannual Report 3 March 1998
actual costs. This would save could be achieved by lengthening the
$1.8 million per year. rotations of USAP hires and other full-
time Guard personnel.
The USAP hires will be on
rotational assignments to the Antarctic We made other recommen-
throughout the operating season. Only dations in the areas of personnel,
about 50 percent of the USAP hires will operations, ground support, aircraft and
be deployed to the Antarctic at any one ski maintenance, and supply. These
time. The rest of the Guard workforce additional recommendations would save
in the Antarctic will consist of $1.2 million annually.
Reservists and other Guard employees
deployed on a temporary basis. OPP One-time
will reimburse the Guard for the cost of Transition Costs
USAP hires without regard to the
amount of time they are actually One-time costs associated with
deployed and for the temporary the transition total approximately
employees based on a daily rate for $79 million: $43 million for aircraft
actual time deployed. reconfiguration and $36 million in other
transition costs. The majority of the
Because OPP will pay for the cost is because of the concurrent
USAP hires regardless of whether they operation of the Squadron and the
are deployed, we recommended that a Guard, which is necessary to ensure a
greater portion of deployed positions be safe and efficient transition of flight
filled by USAP hires. If the USAP operations support.
hires were to account for 75 percent of
the positions rather than only 50 per- OPP plans to reconfigure three
cent, as planned, the overall cost of LC-130 R-Model aircraft to meet U.S.
personnel would be reduced by Air Force safety and operations
$750,000 per year. standards. The reconfiguration and
spare parts are expected to cost
The Guard plans to deploy approximately $43 million. Due to the
personnel for varying time periods, reconfiguration schedule, the aircraft
with some scheduled to leave after as will not be available during FYs 2000
little as 2 weeks. Each rotation adds and 2001. The Guard has identified
airfare, hotel, and meal and incidental alternatives to provide flight support
expense costs. In addition, OPP will during these seasons, but the additional
pay for days that are not actually costs have not yet been estimated. We
worked because, during a 2-week recommended that OPP undertake an
rotation, 1 full week is spent in travel analysis to determine whether a
and rest status. A high number of commercial source can provide flight
rotations also increases flight hour and operations safely, efficiently, and cost-
fuel costs. We recommended fewer effectively. If, in fact, it can, OPP
rotations: if only 25 percent fewer should consider integrating commercial
rotations were made, OPP would save support into Antarctic flight operations
$433,500 per year. These savings
NSF OIG Semiannual Report 4 March 1998
and possibly avoid the costs associated Next Phase of Our Review
with reconfiguring the R-Models.
During the next reporting period,
we will review the Guard’s FY 2000
USAP flight operations budget, and the
cost of support to be provided to the Guard
by other organizations.
Audit of NSF’s Financial Statements
We completed the second annual its capitalized property, plant, and
audit of NSF’s agency-wide financial equipment (PP&E) held at sites and
statements for FY 1997 to comply with facilities operated by NSF grantees and
the Chief Financial Officers (CFO) and contractors.
Government Management Reform
(GMRA) Acts, which are intended to Because accounting policies
bring more effective general and concerning treatment of these types of
financial management practices to the assets were not clear last year, both
government by improving systems of NSF management and OIG requested
accounting, financial management, and guidance from the Federal Accounting
internal controls. Standards Advisory Board (FASAB)
and the Office of Management and
Background on Last Year’s Budget (OMB) to determine how these
FY 1996 Audit Opinion assets should be reported. On
December 5, 1997, NSF received
In Semiannual Report Number interim guidance from FASAB and
16 (pages 2 through 9), we reported OMB that only PP&E used in the
that we had completed the audit of USAP and used within NSF
NSF’s first agency-wide financial headquarters should be reported in
statements for FY 1996. We did not NSF’s Statement of Financial Position.
express an opinion on NSF’s 1996 As a result, the dollar value of NSF-
Statement of Operations and Changes in owned PP&E held at colleges,
Net Position because it was a first-year universities, and federally funded
statement that reported the cumulative research and development centers was
effect of NSF operations during prior, not included in the NSF’s 1997
unaudited fiscal years. The statement Statement of Financial Position.
would have been impractical to audit.
FY 1997 Audit Opinion
We also issued a qualified
opinion on NSF’s 1996 Statement of Our FY 1997 audit resulted in a
Financial Position because NSF had not “qualified” opinion on both the State-
maintained an adequate system to ment of Financial Position and the
accurately and completely account for Statement of Operations and Changes in
NSF OIG Semiannual Report 5 March 1998
Net Position. Most of the PP&E evaluate liability termination clauses
reported on these statements is related that provide for accrued employee
to the USAP and physically located in benefits.
the Antarctic. Due primarily to the
timing of the FASAB guidance and the NSF’s accounts payable balance
long lead time required to travel to the on the financial statements did not
Antarctic, we were not able to plan and include approximately $14 million in
perform audit procedures to determine FY 1997 invoices and erroneously
whether the PP&E balance, as of included approximately $4 million in
September 30, 1997, was fairly invoices that did not relate to FY 1997.
presented. We have developed plans to We recommended that NSF prepare
audit USAP PP&E during 1998. formal written procedures for
accumulating and recording the
Internal Controls accounts payable balance at the end of
the year, including adequate instructions
During our internal controls and supervisory reviews. We also
review, we found that NSF had not recommended that NSF continue to
developed formal procedures for refine its performance measures by
identifying liabilities arising from grant linking them to NSF’s desired outcome
and contract provisions that should be goals in its strategic plan.
recorded or disclosed on the financial
statements. There also appears to be NSF management generally
ambiguity among NSF and the agreed with our recommendations. We
awardees regarding NSF’s liability for will continue to work with NSF
accrued employee benefit costs. We management in an effort to arrive at
recommended that NSF devise and unqualified opinions on future financial
implement a mechanism for identifying statements.
all liabilities arising from grant and
contract provisions and review and
Review of Graduate Research Traineeship Program
Graduate Research Traineeship the GRT program, Integrative Graduate
(GRT) awards provide support to about Education and Research Training
1,400 graduate student trainees (IGERT), was issued in 1997 and the
participating in specific programs at 91 first awards are being made this year.
different awardee institutions through
trainee stipends, cost of education We reviewed awards made
allowances, and project enhancement under the GRT program for compliance
allowances. By the time the last of the with two award conditions. Because
160 GRT awards expire in 2000, it is many awards made in the first year of
expected that the program will have the program were subject to cost
expended $89 million. The program sharing, we reviewed compliance with
announcement for the replacement for that requirement. In addition, the
NSF OIG Semiannual Report 6 March 1998
program requires that all GRT trainees, As part of this review, we
who are selected by the awardee studied data available to GRT program
institution, be either U.S. citizens or managers through the GRT database.
permanent residents. We found The GRT database contains infor-
substantial compliance with both the mation, gathered from GRT awardees
cost–sharing and citizenship require- through a web–based data collection
ments by the awards we reviewed. system, about GRT projects and
However, we found that a small trainees as well as their achievements.
number of trainees who received Trainee citizenship status information in
funding were not U.S. citizens or the database should allow NSF program
permanent residents. managers and grant officials to identify
awardees that do not comply with
Our citizenship review included trainee eligibility restrictions and take
49 awards, with $26 million in total corrective actions. We recommended
funding through FY 1997, supporting enhancements to the GRT (and any
552 trainees. We found only 12 subsequent IGERT) database and web–
trainees who were ineligible because based data collection system that would
they were not U.S. citizens or per- help program managers ensure that
manent residents, and we questioned trainees supported by NSF under these
$259,556 associated with these trainees. awards meet the citizenship status
We recommended that NSF obtain requirements.
refunds from the five awardees who
supported ineligible trainees.
Audits Resulting in Questioned Costs
We select organizations and awards for review based on a preliminary
assessment of whether it appears these organizations would have difficulty complying
with regulations that govern the use of federal funds. By using risk assessment
principles, we try to identify those organizations or programs that have the greatest risk
of financial irregularities. This section describes audits of NSF awardees conducted in
this reporting period that involve significant questioned costs.
Nonprofit Organization Has global marketplace. The cooperative
Substantial Questioned Costs agreement was jointly funded by NSF
and the Advanced Research Projects
In 1996, NSF transferred a Agency.
$9.6 million cooperative agreement
from a university to its wholly owned An audit of this organization
subsidiary that operates as a scientific identified total questioned costs of
research and educational organization to $705,125, including costs we consider
encourage and assist American industry unallowable, such as:
in becoming more competitive in the
NSF OIG Semiannual Report 7 March 1998
• $108,373 for consultant costs paid Systemic Initiatives
in excess of the maximum NSF rate.
The following discussions focus on two
• $91,648 for hotel rooms that were questioned cost audits involving systemic
reserved but never used. initiatives. We also conducted an inspection of
• $44,241 for office equipment not a Statewide Systemic Initiative cooperative
agreement. See page 37.
included in the budget.
Statewide Systemic
• $7,004 for alcoholic beverages.
Initiative Award
The organization, which is required to
SSIs foster systemic improve-
share at least $9.6 million of the project
ments to mathematics and science
costs, reported over $15 million in cost
education on a statewide basis. A
sharing at the time of our audit. We
northeastern state department of
questioned $14.4 million of the reported
education received an NSF Statewide
cost sharing, which resulted in a
Systemic Initiative (SSI) award of
potential cost sharing deficit of
$9,999,790. This project included such
$9 million. Examples of questioned
groundbreaking goals as the first state
cost sharing include: an estimate of
curriculum framework and implemen-
time spent by visitors to the organi-
tation of a new science and mathematics
zation’s web page that was claimed as
Master Teacher certification standard.
equivalent to $953,969 worth of con-
sulting; news coverage on a national
Our audit questioned
network that the organization claimed
$1,099,207, which included problems
as equivalent to $60,000 worth of
related to the calculation of indirect
television advertising; and magazine
costs. We also identified problems
articles about the organization claimed
related to subcontract compliance.
as equivalent to $156,850 in paid
advertisements.
We questioned $426,810
because indirect costs were calculated
The organization agreed that
using an indirect cost rate and base that
about $2,000 of the alcoholic beverages
were different from the rate and base
should not have been claimed, but did
stipulated by NSF in the award
not agree with the other questioned
documentation.
costs. NSF management will resolve
these issues during the audit resolution
We identified material com-
process.
pliance deficiencies pertaining to the
reporting and recording of subcontracts.
Subcontract expenses were often
reported based on the subcontract
budget rather than actual costs. In
addition, in several instances the sub-
contractor’s fiscal year did not coincide
NSF OIG Semiannual Report 8 March 1998
with the subcontract year, resulting in Our audit disclosed material
untimely reconciliation and reporting. compliance weaknesses related to the
school system’s ability to support salary
Urban Systemic Initiative Award costs and contribute to project costs.
In 1994, NSF entered into a Because the school system did
cooperative agreement with a large not have an active NSF award, we
urban school system providing support recommended that before making any
for the grantee’s mathematics, science, future awards to the school system NSF
and technology initiative. Subse- ensure that policies and procedures are
quently, NSF program officials in place to safeguard federal funds spent
concluded that the school system did on salaries and to meet cost-sharing
not show sufficient progress toward requirements.
achieving the primary goals of the
cooperative agreement and, in Urban Teacher Enhancement
September 1996, notified the school Award
system that it would phase out the
award. We subsequently performed a We conducted a financial and
final audit on the award costs, and we compliance audit of an NSF award to a
questioned $104,658 of the $2,595,468 northeastern city’s board of education.
the school system had claimed. Our audit included six awards from
NSF’s Division of Elementary,
The questioned costs consisted Secondary and Informal Education, and
of unallowable costs totaling $35,878 one award from NSF’s Division of
and unsupported costs totaling $68,780. Human Resource Development. Of the
For example: $4,818,796 claimed costs by the
awardee for the seven awards, we
• An employee’s full salary and questioned $2,071,176. The audit
benefits were charged to the award, identified $1,671,623 that was not
although the employee estimated adequately documented and related
that he worked only one-half of his primarily to personnel compensation.
time on the award. The audit also found $399,553 in
inappropriate or unallowable costs
• Stipends were paid to teachers for charged to the awards. An additional
attending workshops and training $366,611 was identified as at risk for
for days on which records did not cost sharing.
show that the teachers were present.
We identified several material
• Costs claimed for materials and compliance problems that may have led
supplies were not supported by to the questioned costs. We found that
purchase orders, invoices, canceled the board of education’s staff was not
checks, or expense vouchers. familiar with NSF’s grant requirements.
The awardee did not track actual
participant support costs in relation to
NSF OIG Semiannual Report 9 March 1998
participant costs budgeted in the award We found that the overall cost of
documents. An awardee’s ability to the project was below the amount
track participant support costs is originally budgeted. However, even
important because NSF-provided funds though the overall project cost declined,
for participant support may not be used the association requested increased
by the awardee for other categories of funding from NSF. NSF’s program
expenses without the specific prior director and grants officer approved the
approval of the cognizant NSF program supplemental funding without
officer. In addition, the awardee paid recognizing that in so doing the
subcontract costs based on budgeted association’s cost sharing commitment
amounts rather than actual costs. would be reduced.
Shrinking Program Budget We audited the budget and
Results in Reduced Funding for recalculated the awardees’ cost sharing
commitment based on the original share
Nonprofit Association
promised of 56 percent. As a result,
we recommended that NSF reduce the
A nonprofit association was
amount of the award by $294,095. The
awarded over $1.1 million to develop a
funds recovered can be made available
multimedia project that conveys stories
to support other programs.
of successful environmental efforts at
the grassroots level and shows how
NSF management is reviewing
those efforts can be replicated
our recommendations.
elsewhere. The association created a
three-part television program broadcast
in September 1997 and an educational
CD-ROM. The association originally
agreed to share 56 percent of the
project’s cost.
NSF OIG Semiannual Report 10 March 1998
Summary of Other Significant
Audits of NSF Awards
Before conducting an audit, we usually perform preaudit surveys. The preaudit
survey is a limited review of an institution’s accounting system and grant expenditures to
determine whether further auditing is required. Based on the results of our preaudit
surveys, we may conduct a full financial audit or an audit that focuses on specific cost
categories. Questioned costs can result both from audits and preaudit surveys.
Education Awards
During this reporting period, we completed seven audits and two surveys
covering education awards totaling more than $10.8 million. The institutions audited
were primarily school districts with no recent NSF audit coverage. The audits
identified a total of $544,257 in direct costs and $157,685 of amounts claimed as cost
sharing that were questioned. In addition, they identified $2,193,095 of cost sharing
commitments that may not be satisfied by the institutions. Two of the audits had
significant findings:
• A northwestern school district charged $285,309 for personnel compensation costs
that were questioned because they were not adequately supported by time and
attendance records.
• An audit of a southwestern school district disclosed $88,336 that had been budgeted
as participant support costs that were spent in other cost categories without prior
NSF approval.
Research Awards
During this semiannual period, we also completed 14 preaudit surveys, 7 of
which resulted in audits, covering 46 research awards totaling approximately $36 mil-
lion. The organizations we reviewed were primarily small research institutions that had
limited experience administering federal awards, and they had no recent NSF audit
coverage.
Most of the surveys conducted during this semiannual period did not yield
significant questioned costs or identify serious compliance issues. Four of the audits
and three of the surveys conducted this period yielded total questioned costs of
$193,262 for indirect costs in excess of the amount allowed; costs incurred after the
expiration of the award without the prior approval of appropriate NSF officials; and
unsupported consultant fees, participant support costs, equipment, and supplies. Three
of the audits disclosed more significant findings, which are summarized below.
NSF OIG Semiannual Report 11 March 1998
• An audit of a southwestern nonprofit organization identified questioned costs of
$103,123 for preaward costs incurred more than 90 days prior to the start of the
award, indirect costs not included in the award budget, unsupported costs, duplicate
costs, and costs that were not allocable to the award. The audit also identified
several compliance issues including at risk cost sharing.
• An audit of a northeastern, nonprofit educational organization yielded questioned
costs of $109,887. Costs for leasehold improvements, legal fees related to a
reorganization, and duplicate costs and consultant costs in excess of the NSF daily
allowable rate were questioned because they were unallowable under the applicable
federal cost principles. We also questioned certain indirect costs charged to the
award because they were not approved by NSF, and we questioned costs that were
incurred more than 90 days prior to the start of the award without the approval of
an appropriate NSF official.
• An audit of a Midwestern nonprofit hospital yielded questioned costs of $237,060.
The majority of these costs were for a subcontract with a Canadian university that
was not approved by NSF and for which there was no subcontract agreement. We
also questioned unsupported salaries and benefits and indirect costs charged to the
award because they were not approved by NSF. The audit also identified several
compliance issues.
Peer Review of Another Office
of Inspector General
The Inspector General Act of We reviewed the system of
1978, as amended, requires that the quality control for the audit function of
audit function of OIGs must be peer the National Railroad Passenger
reviewed by a federal audit entity. This Corporation’s Office of the Inspector
peer review is required to ensure that General (AMTRAK OIG) for the year
OIGs are in compliance with auditing ended March 31, 1997. We found that
standards established by the Comp- the system of quality control for the
troller General of the United States. audit function of AMTRAK OIG was
These standards require that audit designed in accordance with the quality
organizations establish an appropriate standards established by the President’s
system of internal quality control and Council on Integrity and Efficiency.
undergo an external quality control
review of that system at least once While there were no significant
every 3 years. findings, NSF OIG made three minor
recommendations for improving the
quality control system: (1) to retain
copies of external quality control review
reports, (2) to ensure working papers
are prepared in accordance with
NSF OIG Semiannual Report 12 March 1998
AMTRAK OIG policy and procedures the AMTRAK OIG’s monitoring of
and with government standards, and financial statement audits.
(3) to establish written procedures for
The AMTRAK OIG agreed with
these recommendations.
Audit Resolutions
Underpayment of Wages to amount of back wages and interest from
Contract Employees the contractor and subcontractor.
In Semiannual Report Preaward Audit Analysis of Two
Number 15 (page 21), we reported that Proposals Results in Significant
a contractor and its subcontractor, who Savings
provided the staffing for NSF’s
mailroom, printing, and warehouse In Semiannual Report
operations, were suspected of not Number 17 (page 9), we reported that
complying with the minimum wage our preaward audit analysis of a
standards outlined in the “Wage proposal for funding of supercomputer
Determination” section of the Service centers identified $8 million in potential
Contract Act of 1965, as amended. We savings. These estimates were
informed NSF management, and it associated with avoidance of sales tax
referred the apparent violations to the payments on equipment purchases
U.S. Department of Labor, which has ($5 million), limiting annual salary
jurisdiction for formal investigation and increases ($2 million), and negotiating a
adjudication. subcontractor’s fee ($1 million).
During 1997, we conducted a NSF concurred with our
follow-up review with the Department recommendation to avoid sales tax
of Labor related to the audit of the NSF payments on equipment purchases
contractor. The Department of Labor which, because of the reduced amount
agreed that an underpayment liability budgeted for equipment, will save
under the NSF contract had occurred $3.7 million. The award budget did not
and asked our assistance in calculating provide funding increases for future
the amount owed to the employees. periods. Therefore, any annual salary
The Department of Labor requested that increases requested will be negotiated
the contractor and its subcontractor pay by the agency in future years. The
the employees back wages in accor- supercomputer center negotiated the
dance with the amounts outlined in the subcontractor’s fee prior to submitting
wage determination. As a result of this the proposal to NSF. However, upon
review, we determined that contractor expiration of this arrangement (in
and subcontractor employees had been 2 years) NSF will review the
underpaid by $51,120. We worked subcontractor’s fee.
closely with NSF management to ensure
that the employees received the correct
NSF OIG Semiannual Report 13 March 1998
Use of Temporary Scientists
and Engineers
In Semiannual Report Num-
ber 17, we evaluated the costs of two
programs that NSF uses for employing
temporary scientists: the Intergovern-
mental Personnel Act (IPA) Mobility
Program and the Program for Visiting
Scientists, Engineers, and Educators
(VSEE). We recommended certain cost
controls.
In this reporting period, NSF
management modified its process for
determining IPA salaries, and NSF
implemented two new requirements.
NSF decided that (1) senior manage-
ment must concur with the hiring of any
IPAs whose salary exceeds the normal
rate of pay for a position at NSF and
(2) the Deputy Director must concur
with the hiring of any IPA whose salary
exceeds the level of pay for a senior
federal executive (level 6 of the pay
scale for the Senior Executive Service).
Management also implemented
additional controls to ensure that IPA
assignments are temporary by limiting
them to a maximum of 6 years during a
10-year period.
NSF OIG Semiannual Report 14 March 1998
Investigations
The Investigations section
is responsible for investi-
gating 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 for administrative resolution.
Investigative Highlights
Coordinating Our Investigative Efforts 16
Cases Involving Improper Use of NSF Funds 17
Update on Continuing Investigations
of NSF SBIR Awardees 21
Other Investigative Matters 23
Statistical Data 53
NSF OIG Semiannual Report 15 March 1998
Coordinating Our Investigative Efforts
Over the last 5 years, we identified instances when NSF funds awarded to
academic and research institutions were diverted from their intended purposes. In other
instances, we identified small businesses that made false statements and omitted
material information in documents to secure NSF funding through the Small Business
Innovation Research (SBIR) program. We obtained efficient and effective resolutions
in cases when we coordinated our investigative efforts with other organizations.
In cases involving SBIR awards, we found that companies engaged in fraudulent
activity tend to do so concurrently against several agencies that support SBIR programs.
By coordinating our investigation of SBIR award recipients with other agencies, we
conserve federal investigative resources while developing effective working relation-
ships. In some instances, agencies alerted us to fraud that might affect NSF and have
invited us to initiate or participate in an investigation. In other instances, we identified
possible fraudulent activities that do not directly implicate NSF and referred relevant
information to the cognizant law enforcement authority.
During this reporting period, we combined our investigative efforts with those
of other affected agencies to uncover evidence that a company may have received
substantial duplicate funding from several federal agencies under the SBIR program. In
previous and current investigations, we worked with agents from other federal agencies
in identifying companies that secured SBIR awards through a pattern of false statements
and material omissions in their research proposals, progress reports, and final reports.
Prior semiannual reports detailed SBIR investigations by our office that resulted in
three criminal convictions, three civil settlements, and investigative recoveries
exceeding $6 million. During this semiannual period, one case resulted in a criminal
conviction. We continue to work with the Department of Justice (DOJ) and other law
enforcement offices to resolve four other SBIR cases.
Outside of the SBIR arena, we often work closely with grantee academic and
research institutions to coordinate investigations regarding allegations of financial
improprieties involving NSF funds and programs at those institutions. University
internal auditors, for example, assist us by explaining their university’s accounting and
records systems as well as policies and procedures. They also have internal sources of
information that can provide key investigative leads.
We believe grantee institutions also benefit from our coordinated investigations.
The grantee can use jointly obtained evidence to support prompt and appropriate
administrative action to stop improper activities while state or federal authorities decide
whether criminal prosecution or civil litigation is warranted. In a number of cases,
university internal auditors have used evidence gathered during the coordinated
investigations to support their own recommendations to their university. Auditors’
recommendations based on coordinated investigations have supported administrative
NSF OIG Semiannual Report 16 March 1998
actions ranging from suspension of a subject’s signature authority over university funds
to placement of the subject on administrative leave or termination of the subject’s
employment. In those cases where we successfully coordinated our investigative efforts
with grantees, but concluded that criminal prosecution or civil action was unwarranted,
we often allow the institution to resolve any outstanding administrative issues.
Several of our coordinated investigations are detailed in this report.
Cases Involving Improper Use of NSF Funds
We place a high priority on allegations involving embezzlement, diversion of
grant or contract funds for personal use, or other illegal use of NSF funds. Deliberate
diversion of NSF funds from their intended purpose is a criminal act that can be
prosecuted under several statutes. We encourage universities and other grantees to
notify NSF of any significant problems related to the misuse of NSF funds. Early
notification of significant problems increases our ability to investigate allegations and
take corrective action to protect NSF and its grantees.
University Professor Indicted for Our joint investigation revealed
Theft and Abuse of Official evidence that the professor had used
university funds and resources for his
Capacity
personal gain. In February and March
1998, based on this joint investigation,
We worked jointly with the
a state grand jury brought three separate
Federal Bureau of Investigation (FBI),
felony indictments against the
the Defense Criminal Investigative
professor. One of the indictments
Service, state and federal prosecutorial
charged the professor with Theft for
authorities, and university internal
appropriating property of another that
auditors in investigating allegations
came into his custody and possession
involving a professor at a southwestern
through his position as a public servant.
state university. The professor, who
Two of the indictments stated that, as
was the PI on NSF awards as well as
an employee of the state university
research awards from other federal,
system and therefore a public servant,
state, and private grant-making entities,
he misused government money that
was also the owner of two private
came into his custody and possession by
companies. One of the professor’s
virtue of that employment. These two
companies had submitted proposals to,
indictments charged the professor with
and obtained federal research awards
Abuse of Official Capacity for using
from, the SBIR program administered
state government money for personal
by various federal agencies, including
gain.
NSF and the Department of Defense
(DOD).
NSF OIG Semiannual Report 17 March 1998
An indictment charges that the state agency awarded $235,588 to the
professor intentionally and knowingly university with the professor as PI. We
misused government money for his found that no matching support was
personal gain to pay expenses for: ever provided by the professor’s
(1) printing promotional fliers for company. The university and state
courses he sponsored through a personal agency determined that the professor’s
business; (2) textbooks for those failure to disclose his interest in the
courses; and (3) airline flights, hotel company was material to the award
accommodations, meals, and ground process and canceled the grant.
transportation related to the courses.
Another indictment charges that the The university also found that
professor intentionally and knowingly the professor had used university
misused government money for his resources for activities related to his
personal gain to pay travel expenses personal companies. When required to
related to the operation of the designate an account to be charged for
professor’s other small business, which the use of these resources, the professor
had secured SBIR funding from the charged many of the associated costs to
federal government. research accounts, including an account
for an NSF grant on which the
In a separate outgrowth of our professor was a co-PI. The university
investigation, DOD proposed that the found that the professor had wrongfully
professor and his SBIR company be charged the NSF grant $100,349. The
suspended from eligibility for federal total amount of the NSF award was
grants and contracts, and suspended a $318,304, and the university provided
pending $750,000 Phase II SBIR award $308,191 in cost sharing for this
to the company. That procurement was project. The university returned
canceled during this period, and the $100,349 to the project to fund
funds were used for an SBIR contract to continued research by the other PIs.
another small business. The university removed the professor as
co-PI on this NSF award, and it
Our coordinated investigation replaced the professor as PI on another
with the university led to a deter- NSF award, which totaled $323,730.
mination that the professor had failed to On another NSF award that expired
disclose his outside business interests to during the investigation the university
the university as required by university returned $60,582 of unspent funds.
regulations, and he had made affir- The university also placed the professor
mative statements to conceal these on administrative leave and restricted
business interests. In one instance, in a his signature authority to charge
proposal to the university and a state expenses to university accounts.
funding agency, the professor stated
that a company had pledged to provide
$170,000 in matching industrial support
for the project; however, he did not
disclose that he was the owner of that
company. Based on this proposal, the
NSF OIG Semiannual Report 18 March 1998
Administrative Assistant Agrees agreement, which mandated 18 months
to Pretrial Diversion for of supervised probation, 200 hours of
community service, and counseling as
Embezzlement
directed by Pretrial Services. If the
assistant successfully completes the
In a case involving an
supervised probation, the charges will
investigation we coordinated with a
be dropped.
west coast university, we determined
that the director of an NSF-funded
In the course of this inves-
biology project “loaned” $6,000 to her
tigation, we also identified questionable
administrative assistant from an
entertainment expenses the admini-
unauthorized private bank account
strative assistant and the director had
created specifically to manage program
charged to the NSF grant. The
income generated by the NSF grant.
university agreed to credit the NSF
The administrative assistant also
grant account for approximately $7,360
subsequently wrote four checks to
of these charges. During the inves-
herself from the account, totaling
tigation, the director resigned from the
$11,600, and forged the director’s
university and the university terminated
signature on the checks. During the
the employment of the administrative
investigation, the administrative
assistant.
assistant repaid the university the
$17,600 she had received from the
project income account, plus an Conditions Placed on Future
additional $1,000 which she described NSF Funding for a Northeast
as “interest.” The administrative Nonprofit
assistant admitted, in a sworn statement
to OIG agents, that she signed the We received allegations that a
director’s name on the checks without small science center in the northeast had
authorization, and that she used the misused NSF funds from a grant that
money to pay for work being done on was to provide an environmental
her house. She also stated that she had science program for teachers. The
always intended to repay the money, center, a nonprofit organization offering
plus interest. We referred the matter to educational programs in science,
the cognizant U.S. Attorney’s Office. previously received a number of awards
to develop and disseminate science
In November 1997, the U.S. education materials to teachers in
Attorney’s Office filed a criminal secondary schools. While we found
complaint charging the administrative evidence that the organization produced
assistant with violating 18 U.S.C. the program that it proposed, and
§ 666, Theft or Bribery Concerning identified no specific examples of
Programs Receiving Federal Funds. misuse, we also found evidence that the
Subsequently, the U.S. Attorney’s institution was financially unstable and
Office and the administrative assistant that financial records had not been
agreed to resolve the case by having the adequately maintained.
assistant enter a pretrial diversion
NSF OIG Semiannual Report 19 March 1998
Because the science center has
no current federal awards but had
previously received over $1 million
from NSF, we recommended that NSF
take action to ensure that further
funding is not provided to the science
center or any other organization
operated by its current director unless
the organization can demonstrate that it
has an adequate system for maintaining
financial records that comply with
applicable federal regulations. NSF
agreed with our suggestion and
immediately took steps to implement it.
NSF Funds Reprogrammed
After Jury Verdict
An FBI investigation of an NSF-
funded scientist resulted in his being
found guilty by a U.S. District Court
jury of extortion and fraud. Based on
the FBI investigation, we began an
inquiry into the scientist’s use of NSF
grant funds. Our inquiry led the
scientist’s university to voluntarily
suspend a newly awarded NSF biology
grant that named the scientist as PI.
Following the jury verdict, NSF and the
university agreed to cancel the 3-year
continuing grant, allowing NSF to
reprogram the $345,000 awarded.
After the scientist is sentenced, we will
recommend that, based on the fraud
conviction, NSF debar the scientist for
3 years from receiving federal grants
and contracts.
NSF OIG Semiannual Report 20 March 1998
Update on Continuing Investigations
of NSF SBIR Awardees
As previously stated, we evidence that the company may have
continue to coordinate SBIR inves- submitted similar or identical proposals
tigative efforts with other agencies and to several different federal agencies
are currently conducting several joint without disclosing prior submissions, as
investigations of companies that receive required in the solicitations, even
funds from NSF’s SBIR program. The though this action rendered the
following significant actions involving proposals and accompanying certi-
SBIR cases occurred during this fications false or misleading. We
reporting period: referred this matter to the U.S.
Attorney’s Office, which is now
• During a review of an east coast coordinating a joint investigation that
company that had received NSF SBIR includes all involved federal agencies.
funding, we found evidence that the During this reporting period, the U.S.
company had received awards from the Attorney’s Office sent a letter to the
Department of Education (DoEd) and company notifying it of the investi-
the National Institutes of Health for gation and asking for the company’s
identical projects by making mis- response to allegations that it had
statements and omissions in the wrongfully applied for and received
proposals and signing false or mis- duplicate awards.
leading certifications. Because the
fraud did not involve NSF awards, we • NSF, and several other agencies that
referred the matter to the DoEd OIG for award SBIR grants and contracts,
investigation. In February 1998, the received allegations that a company was
company’s president, who was the PI misusing SBIR funds by receiving
on the duplicate awards, pled guilty to duplicate awards and by subcontracting
one count of violating the mail fraud work on SBIR awards to other com-
statute, 18 U.S.C. § 1341, Fraud and panies owned by its president. We
Swindles, for submitting false and coordinated the investigative efforts of
fraudulent documents through the mail all the agencies that had made SBIR
in order to receive identical SBIR awards to this company. Our initial
awards. The company president is to review found evidence to support the
be sentenced later this year. allegations and we referred this matter
to the cognizant U.S. Attorney’s
• During a review of a company that Office. We and the U.S. Attorney’s
had received several NSF SBIR awards, Office are now coordinating this multi-
we found evidence that the company agency investigation.
may have received duplicate awards
from NSF and DOD. DOD inves- • A civil complaint seeking $298,854
tigators joined our review of this in damages and penalties was filed by
company’s SBIR awards and we found the cognizant U.S. Attorney’s Office,
NSF OIG Semiannual Report 21 March 1998
charging violations of 31 U.S.C. technical report as having been obtained
§ 3729, False Claims Act, alleging that for the NSF award. In fact, the data
a west coast company had submitted were obtained before the NSF SBIR
similar or identical proposals to award was made for another, unrelated,
different federal agencies without federally funded project conducted by
disclosing the prior submissions, as and at the university. The company no
required. As a result of these mis- longer submits proposals through the
leading submissions, the company SBIR program; therefore, we are
received a $49,618 SBIR award from working with the cognizant U.S.
NSF after receiving a $49,983 SBIR Attorney’s Office, which is negotiating
contract for the same project from a civil settlement to resolve this matter.
another federal agency. Based on the
evidence supporting the civil complaint, • We found evidence that a company
NSF suspended the company and the had placed a graphic image of the NSF
company’s president, who was the sole logo on its website along with the
PI on all SBIR proposals by the words “A National Science Foundation
company, from participating in federal SBIR Site,” without NSF’s authori-
grants and contracts. zation or knowledge. This company
had never received funding from NSF.
• In our investigation of a Midwest It received the logo from another entity,
company, we found evidence that the which had been given the graphic image
company had submitted false claims to under an NSF contract. We were
receive $50,000 of NSF SBIR grant concerned about the unauthorized use of
funds. The company president was the NSF logo and the words “A
ineligible to be the PI on the NSF SBIR National Science Foundation SBIR
award because he was a full-time Site,” because it implied a close
employee at a university during most of affiliation between the company and
the SBIR award period. In addition, NSF. Based on our investigation, the
the company, acting through its company removed the NSF logo and the
president, who was also the PI on the words “A National Science Foundation
award, presented data in the SBIR final SBIR Site” from its website.
NSF OIG Semiannual Report 22 March 1998
Other Investigative Matters
Conflicts of Interests
In Semiannual Report Number 17, we mentioned that we referred two conflict-
of-interests investigations to DOJ. The conflict matter involving honoraria payments
remains pending at DOJ. The conflict matter involving stock ownership was declined
by DOJ. Our investigation in that matter found evidence that an NSF program officer
had failed to recuse himself from acting on proposals submitted by a company after he
purchased stock in the company, despite being advised to do so by NSF’s Designated
Agency Ethics Official. After receiving advice from the Designated Agency Ethics
Official, the program officer improperly participated in the review process by
recommending the declination of two proposals submitted by the company and by
summarizing panel reviews for a third proposal, which was also declined. Participation
of any kind (including declination) is a violation of federal conflict-of-interests laws
and regulations. During this report period, NSF suspended the program officer for
14 days.
Anti-Spam Legislation Needed
“Spam” is a term applied to widely disseminated, unsolicited electronic mail.
The quantity of spam has increased dramatically in recent years, wasting both
recipients’ time and Internet resources. We reviewed the status of the law after
receiving complaints from NSF staff who had received spam at their NSF electronic
mail addresses. We determined that current law affords no effective means of taking
action against this practice, unless the spam constitutes fraud or other wrongdoing.
Two bills pending in the Senate would allow users of the Internet to avoid spam and
would allow legal action to be taken against the senders of spam in certain circum-
stances. The enactment of either bill into law would enable federal agencies, such as
NSF, to protect agency resources against the ever-increasing onslaught of unsolicited
electronic mail.
NSF OIG Semiannual Report 23 March 1998
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 evalu-
ations; 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.
Oversight Highlights
Misconduct in Science
• Partnership With Universities 26
• Plagiarism Case Sent to the Office of the Director 27
• Three Decisions by the Office of the Director 28
• Cases Involving Citation Errors 31
Examination of Merit Review 33
Inspections
• Statewide Systemic Initiative 37
• Bioscience Organization 39
Statistical Data 54
NSF OIG Semiannual Report 25 March 1998
Misconduct in Science and Engineering
Partnership With Universities in the Referral Process
Our practice of referring allegations of misconduct in science to awardee institutions for
investigation is guided by NSF’s misconduct in science regulation that affirms “awardee
institutions bear primary responsibility for prevention and detection of misconduct” (45 C.F.R.
§689.3(a)). This practice permits awardee institutions to take responsibility for activities on
their campuses and provides us with the relevant scientific community’s assessment of whether
a subject’s actions are considered serious.
As explained in Semiannual Number 12 (page 26), we refer cases to awardees for
investigation after we, or the awardee, conduct an inquiry to determine whether the allegation
requires investigation. A referral allows each partner to perform its role. When an awardee
institution accepts the referral of an allegation, we delay our own investigation, pending the
receipt of the institution’s investigation report. We review an awardee institution’s report to
determine if it is accurate and complete and if usual and reasonable procedures were followed.
We determine whether we can use it instead of initiating our own independent investigation.
The balance that is maintained between the partners permits each to take actions it considers
appropriate and necessary. Although we both share responsibility for the integrity of the scientific
community, an awardee institution takes action within its community and NSF takes action within
the federal context.
We reviewed our closed cases to develop a quantitative assessment of the frequency with
which we refer cases and the effectiveness of our referral process. We determined that, from
our office’s inception in 1989 until September 30, 1997, awardee institutions conducted
88 percent of our completed investigations. We were unable to refer a few of these inves-
tigations to awardee institutions because we were notified of the matter after they had
completed their efforts. The remaining 12 percent were investigated by our office alone
because the institution’s size, the location of the individual, or the nature of the allegation
precluded an impartial evaluation of the allegations by the institution.
We considered 61 percent of the investigations conducted by awardee institutions to have
met our criteria, and accepted the institution’s investigation reports as our own, often after
contacting the awardee institution to request clarification or supplementary information. The
remaining 39 percent of awardee investigations required further investigation by our office.
Our investigative efforts were principally to develop more evidence about intent, seriousness,
or a pattern of behavior uniquely important in support of our recommended actions to NSF
management. Of all the investigations conducted by awardee institutions, we considered only
10 percent to be unacceptable, requiring that we conduct our own review.
Our practice of referring cases to awardee institutions has routinely provided our office
with information upon which we have relied when making our own recommendations.
NSF OIG Semiannual Report 26 March 1998
Although we frequently supplement these reports with additional information, we have rarely
been required to conduct an entirely new review. We believe that the referral process
strengthens our partnership with awardee institutions and the scientific community. It ensures
that our recommendations are grounded in the relevant scientific community’s assessment of its
members’ actions and not in a process dissociated from the community served by NSF.
Case Leading to Investigative Report
Sent to the Office of the Director
Plagiarism From Three subject’s proposal to evaluate the signi-
Published Papers ficance and seriousness of the duplication
between the two documents. During his
We received an allegation that the evaluation, the expert noticed that a figure
president of a small business (the subject) in the proposal was an unattributed
plagiarized from a previously published reproduction of a figure from a third paper
paper (paper 1) into his proposal submitted and that most of that figure’s caption was
to NSF’s SBIR program. It was alleged also copied. Our expert reported that most
that the subject’s proposal was based on the of the verbatim duplication between the
same basic research ideas put forth in proposal and paper 1 occurred in the
paper 1 and that it relied significantly on section of the proposal containing the
the theory and the application of that theory scientific and technical justification for
as developed in paper 1. We determined using this specific approach to the problem.
that the subject’s proposal contained The expert said that the volume of copied
extensive, verbatim text, a figure, material was substantial and that the
references, and formulas identical to those proposal made use of the scientific research
in paper 1, but without attributing or ideas originally presented in paper 1. We
distinguishing the copied material from considered the subject’s verbatim use of
material original to the proposal. We also this material from paper 1 more serious
determined that the subject’s proposal because he incorporated almost all of the
contained verbatim text without attributing text that presented and justified the original
or distinguishing it from a second, ideas in paper 1 into his proposal.
published paper (paper 2).
Although the subject included citations
We wrote to the subject three times in his proposal to papers 1 and 2, these
and telephoned him once asking for an citations did not adequately convey to the
explanation for the similarity of his reader that he used ideas, verbatim text,
proposal to the published papers. We did formulas, references, and a figure from
not receive a substantive response. For this paper 1 and verbatim text from paper 2 in
reason, we took the unusual step of his proposal. Our expert said that in key
proceeding without input from the subject. places, proper attribution was not given and
it was not clear to the reader that much of
We asked an expert in the proposal’s the background discussion came from
field of science to compare paper 1 and the paper 1. The expert considered the non-
NSF OIG Semiannual Report 27 March 1998
attribution significant and serious. We We believe that a preponderance of the
concluded that a preponderance of the evidence supports the conclusion that the
evidence supported the conclusion that the subject acted knowingly when he
subject copied substantial material from plagiarized material from three source
three published papers and used scientific documents with the intention of deceiving
research ideas from paper 1 in his proposal. NSF’s reviewers and Program Director into
believing that these were his ideas, and that
It is inconceivable that the subject he had the expertise and knowledge to
could have inadvertently copied such a complete the project.
large quantity and variety of material
without acting intentionally. He copied We recommended that NSF conclude
extensive material from three published that the subject committed misconduct in
papers and, in particular, two figures from science and take three actions to protect the
two different published papers were federal government’s interest. First, NSF
xerographically reproduced and included in should send a letter of reprimand to the
his proposal without any citation or subject informing him that NSF has made a
acknowledgment. In light of the fact that finding of misconduct in science against
the subject did provide some citations to him. Second, for 3 years from the final
source documents within the proposal, disposition of this case, NSF should require
including some properly referenced figures, the subject to obtain certification, signed by
it is not probable that the subject forgot to himself and co-signed by the PI or manager
provide the appropriate references and to of any federally sponsored research, that
distinguish the copied text from his own. any documents the subject prepares in
The subject demonstrated a selective use of connection with the research project contain
citations, not a lack of knowledge about no plagiarism. Third, NSF should exclude
how to use them. the subject from participating as an NSF
reviewer, advisor, or consultant for 3 years
from the final disposition of this case.
Decisions by the Office of the Director
Agreement to Voluntary Exclusion into allegations that he had committed
Settles Case of Obstruction of misconduct in science. In this reporting
period, the professor entered into a binding
Agency Proceedings
agreement with NSF to resolve the
debarment proceeding and misconduct-in-
As reported in Semiannual Report
science allegation. Although denying
Number 17 (page 43), at our
wrongdoing, the professor acknowledged
recommendation, NSF issued a notice
that there was sufficient evidence
proposing to debar a university professor
from receiving federal funds for his having
to permit a fact finder to conclude
submitted and vouched for the authenticity
that he submitted falsified evidence
of false evidence during an investigation
for the purpose of disproving the
NSF OIG Semiannual Report 28 March 1998
misconduct in science charge being professor] from receiving Federal funds
investigated by the OIG, that [he] and the university’s inability to arrange for
knew that the evidence was an appropriate substitute PI.”
falsified, and that [he] made false
statements under oath in the OIG Postdoctoral Researcher
investigation concerning the Falsified Data
authenticity of the evidence.
In Semiannual Report Number 17
The professor accordingly withdrew (pages 39-40), we discussed the case of an
his request for a fact-finding hearing, and NSF-supported postdoctoral researcher who
voluntarily excluded himself from receiving falsified data from a commercial firm’s
any funds from, serving as a PI on, or analysis. We recommended that NSF’s
having supervisory responsibility, sub- Acting Deputy Director find the subject
stantive control or critical influence over, committed misconduct in science and
awards from any federal agency for 2 years impose certification and assurance
following the date of the agreement. He requirements in the event the subject
also voluntarily excluded himself for the associated himself with an NSF-supported
same period from serving as a merit project. NSF’s Acting Deputy Director
reviewer, panelist, or member of a sent the subject a letter of reprimand that
Committee of Visitors for NSF. In turn, concluded he committed misconduct in
NSF agreed not to issue a finding of science. He required for the next 3 years
misconduct in science against the professor that the subject submit, in connection with
or to make further referrals to federal or any NSF-supported publication or
state prosecutorial authorities based upon submission to NSF, a certification to OIG
the facts in the administrative record. that to the best of his knowledge, his
documents contain no false data and no
NSF also agreed to fund a pending hypotheses or conclusions based upon
proposal by his university on which the falsified data. He also required that the
professor had originally been named as PI, subject ensure that an appropriate
conditioned on his replacement as PI and supervisory official provide an assurance
his exclusion from supervisory or that, to the best of his or her knowledge,
management control over the research. the subject’s work associated with any
This agreement tracked the terms of NSF’s NSF-supported publication or submission to
debarment regulation, 45 C.F.R. Part 620, NSF does not contain falsified data and
which contemplates that persons debarred presents neither hypotheses nor conclusions
or voluntarily excluded from financial based upon falsified data.
assistance and benefits under federal
programs and activities may not have
Use of Paraphrased Text
“primary management or supervisory
responsibilities” or have “critical influence in an NSF Proposal
on or substantive control” over a covered
transaction during the period of debarment In Semiannual Report Number 15
or voluntary exclusion. However, the (page 40), we described a case of a PI
university ultimately withdrew the proposal whose failure to cite text paraphrased from
“due to the voluntary exclusion of [the a source document had given rise to an
NSF OIG Semiannual Report 29 March 1998
allegation of misconduct in science. We On Appeal, NSF Upholds
deferred the case to the institution whose Misconduct Decision
Investigation Committee did not view the
subject’s copying as plagiarism. The In Semiannual Report Number 17,
Committee determined that the subject had we discussed NSF’s Acting Deputy
not committed misconduct in science. We Director’s decision to debar for 2 years a
regarded the Committee’s view of scientist who plagiarized text from a review
plagiarism as too narrow because it did not article and an NSF proposal. The
recognize that paraphrased text needed to plagiarized text appeared in four different
be cited to a source document. proposals that sought funding for the same
underlying research project. The subject
The adjudicator, NSF’s Acting Deputy appealed this decision to NSF’s Director.
Director, determined that although the The Director concluded that the admini-
subject “did not adequately apprise the strative record established that the subject
reader of the full extent of [his] reliance on plagiarized text into four proposals and that
the . . . review article in the background he attempted to conceal his actions by
section of [his] NSF proposal,” he “did not requesting that the original author not serve
seriously deviate from accepted practices or as a peer reviewer of his proposal. The
engage in scientific misconduct.” He Director concluded that the 2-year
cautioned him debarment was warranted and observed that
the University investigation committee
to use great care in future NSF recommended a longer period of debar-
proposals or submissions to ensure ment. He noted that the University
that [he] attribute[d] full credit to investigation committee was unaware of the
the original author and that [he] full extent of the subject’s plagiarism
offset verbatim or paraphrased text (which we discovered during our
and include[d] citations to the subsequent investigation).
source document.
NSF OIG Semiannual Report 30 March 1998
Misconduct Cases Involving Citation
Errors in NSF Proposals
PIs cite papers and manuscripts in journal. The co-author relayed comments
NSF proposals to reference work and to attributed to the member to the subject.
show their accomplishments under prior The subject incorrectly interpreted these
NSF-supported projects. This information comments to mean that, pending some
needs to be prepared carefully so the PIs’ revisions, the manuscript would be
proposed research can be evaluated and published in the second journal. The
compared with competing proposals fairly subject then began incorrectly citing it as
by everyone involved in the review “submitted” to, and then as “accepted” by,
process. We closed three cases this period the second journal in his NSF proposals.
in which inconsistent, incomplete, and Later, the subject learned that the society
inaccurate citations for papers and member had not read the manuscript. Once
manuscripts gave rise to allegations of he had, he said it was not ready for
misrepresentations in NSF proposals. publication. The co-authors then revised
the manuscript and submitted it to the third
In the first case, it was alleged that journal, in which it was published. The
the subject, in three successively submitted subject said that his actions were “honest
NSF proposals, misrepresented facts about error[s],” but that he had also been “naive
the submission and publication of a co- and incorrect.” We considered the
authored manuscript. In his first proposal, subject’s actions to be a bad practice, but
the subject stated in two separate sections not sufficiently serious to initiate an
that the manuscript was either submitted to investigation. We concluded that no
one journal or to a second journal. In three further action was required in this case
separate sections of his second proposal, because (1) he is aware, through our
the subject cited the manuscript as exchanges, that his incorrect claims about
“accepted” by the second journal and his manuscript were a bad practice and do
included the date of acceptance by the not meet the community’s expectations for
journal in two of these sections. In the high scholarship and (2) the subject’s
third proposal, the subject listed the accurate citation for the manuscript in his
manuscript as “accepted” by the second progress report for the award had corrected
journal. In his most recent progress report NSF’s record.
for his award (from the first proposal), he
stated that the manuscript had been In the second case, a reviewer
published in yet a third journal. alleged that the subject misrepresented
information in his proposal because he
We learned from the subject that the failed to cite a manuscript that discussed
manuscript had been submitted to, but the results of the proposed project. We
rejected by, the first journal. The subject’s learned that the subject had submitted four
co-author had then submitted a revised proposals on the same idea over a 3-year
manuscript for comment to a member of a period. The first three proposals were
scientific society that publishes the second declined (the third was the focus of this
NSF OIG Semiannual Report 31 March 1998
inquiry) and the fourth was funded. authors discussed their uncertainty in using
According to the subject, there were two the species name in the title and deferred
separate manuscripts describing a pilot any final decision on its correctness until
project; the second was a revision of the they had more information. We concluded
first. He explained that the earlier the title changes were consistent with the
manuscript had been rejected by the editor subject’s attempt to clarify his position in
shortly before he submitted his third the debate. Further, the changes had not
proposal and that the later manuscript was introduced a significant error in the record
submitted after NSF received it. He said or misinterpreted his research. We con-
he should have clarified the status of the cluded that the subject’s changes were a
project and the relationship of the careless way of providing information in an
manuscripts to it in his proposal. We NSF proposal; however, they were not, in
concluded that the reviewer’s concerns this case, sufficiently serious to pursue.
could have been avoided if this explanation
had been included in the third proposal. These examples demonstrate the
importance of careful preparation of
In the third case, a reviewer alleged proposals. The Grant Proposal Guide
that the subject had misrepresented the instructs applicants to prepare their
titles of two co-authored papers and a co- proposals with “strict adherence to the rules
authored manuscript in two separate of proper scholarship and attribution”
sections of his NSF proposal by changing (NSF 98-2). If the subjects in these three
the species name of an organism in those cases had carefully checked the information
titles. For the two papers, we confirmed provided in their proposals prior to
that the journals had not been officially submission, the interpretations that led to
notified of any corrections. We learned the allegations of misconduct in science
that the correct speciation of the organism could have been avoided.
has been the focus of an ongoing scientific
disagreement. In one of the papers, the
NSF OIG Semiannual Report 32 March 1998
Examination of Merit-Review System
The Senate Committee on Com- While there are both statutory and
merce, Science, and Transportation was administrative priorities regarding par-
concerned about the possibility of NSF ticular programs, such as K-12 science
awards being given out in circumvention of education, global climate change, or polar
merit review. At the Committee’s request, programs, these are not specific to
we sought to identify any discretionary individual institutions. The only exceptions
spending programs that have no formal we found were in report language accom-
merit-based criteria established or that have panying FYs 1994 and 1995 NSF appro-
criteria that are not being properly applied. priations that provided funds to review
We determined NSF’s merit-review system NSF’s research centers. However, these
uses reasonable and impartial criteria that allocations appear to have been directed at
are fairly applied throughout NSF’s administrative issues rather than substantive
programs. scientific research.
All NSF awards are merit reviewed, Our findings are consistent with
either through the peer-review system, those of reviews conducted by the General
which solicits opinions from experts outside Accounting Office, an external Proposal
the Foundation, or through internal review Review Advisory Team, and a joint NSF
by NSF program officials. Awards made and National Science Board Task Force on
without outside peer-review are restricted Merit Review. We concluded that formal
primarily to special classes of proposals, merit-based review criteria exist to guide
such as workshops, conferences, and Small all of NSF’s funding decisions, and that the
Grants for Exploratory Research. We applicable criteria are appropriately applied
examined awards for FY 1997 that were to these funding decisions. We did not
made without outside peer-review and identify any NSF programs or awards for
determined that the waivers of outside peer which such criteria were absent or
review were reasonable and consistent with improperly applied.
NSF guidelines.
NSF OIG Semiannual Report 33 March 1998
Other Oversight Activities
We describe aspects of four cases we closed this period in which concerns were raised
about NSF’s management decisions. In the first case, our efforts resulted in an improvement
in an NSF program, and in the remaining cases, our review of NSF programmatic and
managerial decisions concluded that NSF had proceeded properly.
Database user alleges PM refused to acknowledge the university’s
“invasion of privacy” misrepresentation. The complainant was
not listed as a PI or co-PI on the proposal,
NSF maintains an Internet but was to provide technical support. The
accessible database system that contains complaint was concerned that possible
information on academic science and misrepresentations in NSF records were
engineering resources. A complainant damaging to his professional reputation and
accurately informed us that new users could sought information from us. We deter-
not access the database without providing mined the complainant’s request for
information, such as their names and e-mail information about the site visit was more
addresses, that the complainant considered appropriately handled as a Privacy Act
an invasion of privacy. Most of the user- request and forwarded it to NSF’s Privacy
entered information was stored so that each Act Officer, who informed the complainant
future use did not require re-entering all of that the only information about him in the
the originally requested information. proposal was a copy of his vitae and
offered it to him.
The program manager (PM)
responsible for the database explained that Unsatisfied with this response, the
the requested information allowed NSF to complainant alleged to OIG that NSF was
statistically determine the percentage of engaged in a “cover-up” because it would
users from academia, the government, or not provide him the information he sought.
the private sector. The PM said he was He said he was concerned with “things not
concerned about any negative impression in the proposal” that should have been in
users might have about providing the record, and thus alleged the PM was
identifying information and said he would not being honest about his description of
change the requirement that users enter the site visit. The complainant also alleged
their names and e-mail addresses to an that the PM had spoken with the media
option. We confirmed that he had about the project. The complainant asked
implemented this change and that users may OIG to investigate his allegations. The
now access the database anonymously. complainant provided no evidence to
support his allegations, but did provide us
NSF’s alleged “cover-up” with the names of individuals who
participated in the site visit.
The complainant alleged to OIG that
his university had misrepresented his We interviewed these people and the
abilities during an NSF site visit in PM and found no written or oral evidence
connection with a proposal, and that the that anyone from the site visit team acted
NSF OIG Semiannual Report 34 March 1998
inappropriately, that NSF has any records Unacceptable Remarks
about the complainant it has not offered in an ad hoc Review
him, or that anyone from the complainant’s
university misrepresented his abilities to One case caused us to consider
NSF’s site visit team. NSF’s practices for handling inappropriate
remarks made by reviewers—considerations
PI’s Replacement we have periodically addressed. NSF
of Project Personnel management informed us that a PI, whose
proposal had been declined, expressed
As part of a larger case, a com- concern about a PM’s use of one ad hoc
plainant alleged that her removal as director review. We reviewed the matter to
of an effort that was supported by a determine if the PM had handled the ad hoc
supplement to a PI’s larger NSF award review appropriately. The review
violated NSF’s Grant General Conditions contained prejudicial language about the
(GC-1). The institutional officials to whom PI’s and his students’ ethnic group. The PI
she appealed supported the PI’s decision. said the PM should not have used this
We learned the NSF award jacket contained biased review. The PI acknowledged,
a message from the PI documenting the however, that the PM had written on the
decision to replace the complainant. The copy of the verbatim review that the
complainant sought our assistance after she paragraph with the prejudicial language
spoke with NSF staff requesting their “was not considered when making the
intervention; NSF staff had concluded that decision.” The PI subsequently contacted
her removal did not require NSF approval. the PM, who explained she had not
considered the prejudicial remarks in
The GC-1 stipulates that although a making her funding decision.
grantee can seek NSF’s advice, the grantee
is responsible for the administration of an NSF’s Proposal and Award Manual
award. Seeking NSF’s advice does not (PAM) explains that a PI should receive
shift the responsibility for operating verbatim copies of all reviews except those
decisions to NSF. The GC-1 specifies only determined to be unacceptable. Unaccep-
that NSF must be notified and approve of table reviews are not to be used in the
the unusual absence of, or a change in, PI; evaluation of the proposal. According to
it does not require NSF approval for the the PAM, verbatim copies of all reviews
removal of other project personnel, such as used to make a decision must be sent to the
the complainant. We concluded that the PI PI after deleting information that could
was within his authority to replace the identify the reviewer and, in rare instances,
complainant and his decision was supported other information that is necessary to
by the institution. The terms of the GC-1 protect certain other rights and interests.
had not been violated by the PI’s decision
and NSF had acted appropriately.
NSF OIG Semiannual Report 35 March 1998
We are aware that NSF PMs use We concluded that, however dis-
one of the following approaches when tressful such discriminatory remarks are,
dealing with inappropriate remarks in the PM’s actions were consistent with
reviews. They (1) consider the review NSF’s requirements. Her decision to
unacceptable and don’t use it at all, or decline this proposal was consistent with
(2) use the review and include a note to the her program’s goals and objectives and was
PI explaining that the inappropriate remarks not influenced by the inflammatory
were not considered. remarks.
Oversight Staff Activities
• Two OIG scientists participated in a Conference on Managing Integrity in Research co-
sponsored by the Public Health Service’s Office of Research Integrity and the Office of
the Vice President for Research at the University of Michigan in Ann Arbor.
• At NSF, OIG scientists and Japanese scientists from the National Center for Science
Information Systems in Tokyo and from the JIKEI University School of Medicine in Tokyo
discussed how NSF handles allegations of misconduct in science and engineering and how
public information on findings of misconduct in science can be made readily accessible
with Japanese scientists.
• At the annual meeting of the Association for Practical and Professional Ethics in Dallas,
TX, the Assistant Inspector General for Oversight moderated a small group discussion of
the keynote address, “Ethical Systems and Public Policy: The National Bioethics Advisory
Commission Experience.”
NSF OIG Semiannual Report 36 March 1998
Inspections
Our office conducts external and internal inspections. External inspections are on-site
reviews at grantee organizations that receive NSF funding. Internal inspections review NSF's
administrative units.
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 two external inspections during this reporting period, which were
conducted at a public school system in the South and at a private, non-profit biological
laboratory in the Mid-Atlantic region. We did not conduct any internal inspections during this
period.
External Inspections
We designed our external inspections program to improve our understanding of NSF’s
grantee activities by integrating financial, administrative, and program analyses in a single
review. We view external inspections as an effective approach because they allow us to
determine whether NSF’s program goals are being achieved as well as review the financial and
administrative management of NSF awards. Inspection teams look for early indications of
financial, administrative, or compliance problems so they can be addressed before they become
so serious that their resolution requires an audit or investigation.
We have been closely following the development of NSF's GPRA Strategic Plan for
FY 1997-2003 and in particular, the GPRA performance measures included in the FY 1999
Performance Plan NSF sent to OMB to accompany its FY 1999 budget. Although we expect
internal inspections to play a larger role than external inspections in our monitoring of NSF’s
GPRA compliance, our external inspections will examine the capacity of NSF's grantees to
supply information relevant to NSF's GPRA performance measures.
Inspection of a Statewide Systemic administer a project aimed at reforming the
Initiative in the South state’s education system. Supporting
projects such as this is one of NSF’s key
We also discussed two questioned investment strategies toward its goal,
cost audits of systemic inititative awards stated in its GPRA Strategic Plan, of
in this report. See page 8. “promot[ing] broad-based or system-wide
reform in science, mathematics, engineer-
This inspection was based on a ing and technology education that is based
cooperative agreement made by NSF’s
on national standards.”
Directorate for Education and Human
Resources (EHR) with a state agency to
NSF OIG Semiannual Report 37 March 1998
We found that project and NSF NSF had no way to realize that funds were
officials shared a commitment to results actually being carried over in the subcon-
oriented management as envisioned in tractors’ cash reserve.
GPRA. They sought to use student
achievement data to measure results and To make a reasonable assessment of
help them focus and improve their efforts. past performance and future budget needs,
We learned that, despite this commitment, NSF needs accurate information about what
the project’s capacity to generate and funds have and have not been expended by
analyze results data was widely viewed as the state agency’s regional partnership
needing improvement. subcontractors. Accordingly, we recom-
mended that the state agency report any
Reporting to NSF carry-over funds maintained by the
subawardees with an explanation of the
NSF receives ample programmatic reasons if the funds exceed 10 percent of
information about the state agency’s the year’s budget. The state agency agreed
project, enabling NSF to monitor the that this information was useful for NSF
project effectively. However, the state and promised to include it in future reports.
agency's reports did not supply necessary
financial information, including some Monitoring Subawardees
information that would have helped NSF
evaluate programmatic performance. The A major focus of our review was
cooperative agreement requires the state the state agency’s management of its
agency to annually report an estimate of subawards to institutions across the state to
carry-over funds with an explanation of the engage in educational reform activities. As
reasons if the funds exceed 10 percent of of August 31, 1997, the state agency spent
the year’s budget. In the fourth year, the 80 percent of costs claimed for the
state agency reported that of the $2.4 mil- cooperative agreement ($6.6 million) on
lion it had received that year, there would regional partnership subcontracts and other
be no carry-over funds at the end of the subawards. We were especially interested
fourth year. However, we found that the in how the state agency monitored the
state agency’s five regional partnership activities of the project’s five regional
subcontractors had carried $362,582 partners, which together received about
(15 percent of the fourth-year funding) over half of the funds from NSF’s award. In
to the fifth year. our visits to two of the regional partner-
ships and our interviews at the state
The state agency did not report agency, we found that project managers at
carry-over funds maintained by the the state agency were intimately familiar
subcontractors primarily because the state with programmatic activities in the regions
agency recorded cash advance payments to and that communication between the state
subcontractors as actual incurred costs. agency and its regional partners was
When the state agency claimed these cash excellent.
advance payments as incurred cooperative
agreement costs, NSF believed that the
subcontractors had already used those funds
to support educational reform activities.
NSF OIG Semiannual Report 38 March 1998
Our financial review found that the unallowable expenditures. We recom-
state agency’s cash management procedures mended that in future subawards the state
for its subawardees needed improvement. agency include a provision requiring com-
The state agency typically provided pliance with NSF and federal regulations,
subawardees a large portion of their funds and the state agency agreed to do so.
at the beginning of each subaward period
based on long-term budget projections. Inspection at Private Nonprofit
NSF’s Grants Policy Manual (GPM) and Bioscience Organization
OMB Circular A-110 require that grantees
and subawardees make actual disbursements This inspection was based on nine
in a minimum amount of time after the grants made by NSF's Directorate for
transfer of federal funds. We do not Biological Sciences. Over the 7 years
believe that the one-time cash advances to spanned by these grants, NSF provided
subawardees for an entire subaward period approximately $2.7 million in funding. In
meet federal cash management require- 1996, NSF provided about 18 percent of
ments. When subawardees have unspent the federal funding to this institution. Five
federal funds at or near the end of a of the grants were made by NSF's Living
subaward period, they may spend these Stocks Collections program to support the
funds in unauthorized or inefficient ways various collections of biological materials
rather than choose to return unspent funds maintained by the organization and its
to the state agency. Accordingly, we efforts to distribute and preserve
recommended that the state agency authenticated specimens. The remaining
implement appropriate cash management four awards supported basic research.
standards for its subawardees. The state
agency agreed to implement procedures At the time of our inspection, this
whereby subawardees will submit requests 73-year old organization was in major
for payments based on their calculations of transition. It is relocating, aligning itself
immediate cash needs. with an academic institution, emphasizing
the importance of an internal basic research
As required by the cooperative effort, developing new databases for the
agreement, the state agency had written storage and retrieval of information about
agreements with each of the five regional its specimens, and changing its production
partners. These agreements were generally and distribution practices. It is anticipated
well prepared and included detailed that the relocation will cause a large turn-
provisions regarding the state agency’s over in personnel. One of the three
expectations of its subcontractors. How- buildings it currently occupies was pur-
ever, we noted that these agreements did chased, in part, with NSF funding. At our
not include a provision requiring suggestion, the organization agreed to
compliance with NSF and federal regu- coordinate the sale of that building with
lations. This type of provision would be NSF.
helpful in alerting subawardees to their
obligations. When, as at a subawardee we
visited, personnel are not familiar with
NSF and federal regulations, the risk
increases that the awardee will incur
NSF OIG Semiannual Report 39 March 1998
We found that this organization
provides valuable services to the biological
community. In terms of potential NSF
GPRA results, the organization's efforts
can be expressed as outputs and outcomes.
It can measure how many samples it
supplied for scientific research as well as
how many times it responds to information
requests from the scientific community. It
can monitor the influence of the specimens,
services, and information it provides on
new discoveries and on subsequent
directions taken by research efforts.
With the exception of the
organization's misconduct in science policy
and its laboratory records retention policy,
we concluded that its policies and practices
were consistent with NSF's expectations.
The organization is modifying its current
policies to incorporate many of our recom-
mendations. We also concluded that the
administration and management of these
awards generally met NSF's standards. We
learned that no formal subcontract existed
in one of several awards that contained
large subcontracts. We recommended that
such a document be executed. We also
learned that the NSF-approved budget for
two of the grants in this inspection per-
mitted the organization to charge some of
the expenses of advisory committee
meetings as direct costs that allowed it to
recover the associated indirect costs. NSF
has clarified that such meeting costs may be
charged to NSF grants, but only as par-
ticipant support, which does not permit
indirect cost recovery. We recommended
that the organization and NSF consider the
best way to implement these budgetary
changes.
NSF OIG Semiannual Report 40 March 1998
Statistical Data
Audit Reports Issued With Recommendations
for Better Use of Funds 42
Audit Reports Issued With Questioned Costs 43
Additional Performance Measures 44
Audit Reports Involving Cost-Sharing Shortfalls 45
Status of Systemic Recommendations That Involve
Internal NSF Management 46
List of Reports 48
Audit Reports With Outstanding Management Decisions 51
Investigative Activity and Statistics 53
Misconduct Case Activity and Assurances/Certifications Received 54
NSF OIG Semiannual Report 41 March 1998
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 104,885,996
B. Recommendations that were issued during the reporting period
(these were issued in 6 reports) 22,689,440
C. Adjustment resulting from resolution process 0
Subtotal of A+B+C 127,575,436
D. For which a management decision was made during the reporting period 39,822,080
(i) dollar value of recommendations that were agreed to by management
based on proposed management action 8,160,129
based on proposed legislative action 0
(ii) dollar value of recommendations that were not agreed to by management 32,416,951
E. For which no management decision had been made by the end of
the reporting period 86,998,356*
For which no management decision was made within 6 months of issuance 65,141,945*
*Of this amount, $60 million is related to funds collected for the registration of domain names. These funds are
the subject of litigation in Federal District Court.
NSF OIG Semiannual Report 42 March 1998
Audit Reports Issued With Questioned Costs
Questioned Unsupported
Number Costs Costs
A. For which no management decision has been
made by the commencement of the reporting 65 8,532,906 3,126,932
period
B. That were issued during the reporting period 31 5,744,711 2,692,595
C. Adjustments to questioned costs resulting from
resolution activities 0 0 0
Subtotal of A+B+C 96 14,277,617 5,819,527
D. For which a management decision was made
during the reporting period 53 3,109,108 872,503
(i) dollar value of disallowed costs N/A 1,286,459 N/A
(ii) dollar value of costs not disallowed N/A 1,822,649 N/A
E. For which no management decision had been
made by the end of the reporting period 43 11,168,509 4,947,024
For which no management decision was made within
6 months of issuance 21 5,497,942 2,254,429
NSF OIG Semiannual Report 43 March 1998
Additional Performance Measures
As required by the Inspector General Act of 1978, we provide tables in each Semiannual
Report to the Congress that give statistical information on work conducted by our audit and
investigation units.
Tables that provide statistics concerning these required performance measures are on pages
53 and 54. GAO and OMB suggested that Offices of Inspector General develop additional
performance measures that provide information about their activities. As a result, we developed
two additional performance measures to provide additional insights about the work of our office.
The two additional measures are “Cost Sharing Shortfalls” and “Systemic Recommendations.”
COST-SHARING SHORTFALLS—NSF seeks to leverage its resources by acting as a
catalyst, promoting partnerships, and, in some cases, obligating grantees to contribute substantial
nonfederal resources to a project. When NSF award documents require substantial cost sharing,
we seek to determine whether grantees are in fact providing promised resources from nonfederal
sources.
We divide cost-sharing shortfalls into two categories. Shortfalls occurring during the life
of a project indicate that the grantee may not be able to provide all promised resources from
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 findings
result in formal questioned costs. The table on page 45 provides statistical information about
shortfalls occurring during the course of a project and at the completion of the project.
Auditors who conduct financial statement audits at grantee organizations may identify a
general deficiency concerning cost sharing (which we classify as a “compliance finding”) but often
do not identify the amount of a cost-sharing shortfall (which we classify as a “monetary finding”)
because it is not material in the context of the organization’s overall financial statement
presentation. We track both monetary and compliance findings that involve cost sharing.
SYSTEMIC RECOMMENDATIONS—OIG staff members regularly review NSF’s
internal operations. These reviews often result in systemic recommendations that are designed to
improve the economy and efficiency of NSF operations.
We routinely track these systemic recommendations and report to NSF’s Director and
Deputy Director quarterly about the status of our recommendations. The table on page 46 provides
statistical information about the status of all systemic recommendations that involve NSF’s internal
operations.
NSF OIG Semiannual Report 44 March 1998
Audit Reports Involving Cost-Sharing Shortfalls
At Risk of Cost-Sharing
Cost-Sharing Shortfalls at
Number Cost Sharing Shortfall/ Completion
of 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 19 60,886,936 30,481,530 408,070
2. Reports with compliance findings 7 N/A N/A N/A
B. That were issued during the reporting
period
1. Reports with monetary findings 10 13,833,241 11,557,912 182,165
2. Reports with compliance findings 1 N/A N/A N/A
Total of Reports With Cost-Sharing
Findings (A1+A2+B1+B2) 37 74,720,177 42,039,442 590,235
C. For which a management decision
was made during the reporting period
1. Dollar value of cost-sharing
shortfall that grantee agrees to provide 12 28,980,608 17,217,736 263,721
2. Dollar value of cost-sharing
shortfall that management waives 2 0 12,799 58,417
3. Compliance recommendations with
which management agreed 8 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 17 45,739,569 24,808,907 268,097
2. Reports with compliance findings 0 N/A N/A N/A
*These findings result in questioned costs and are also identified in our table on questioned costs on page 43.
NSF OIG Semiannual Report 45 March 1998
Status of Systemic Recommendations That Involve
Internal NSF Management
Open Recommendations
Recommendations Open at the Beginning
of the Reporting Period 47
New Recommendations Made During
Reporting Period 30
Total Recommendations to be Addressed 77
Management Resolution1 of Recommendations
Recommendations Awaiting
Management Resolution 11
Recommendations Resolved by Management 66
Management Agrees to Take Responsive Action 63
Management Decides No Action is Required 3
Final Action2 on OIG Recommendations
Final Action Completed 40
Recommendations Open at End of Period 37
Aging of Open Recommendations
Awaiting Management Resolution:
0 through 6 Months 11
7 through 12 Months 0
more than 12 Months 0
Awaiting Final Action After Resolution
0 through 6 Months 15
7 through 12 Months 4
13 through 18 Months 5
19 through 24 Months 0
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.
NSF OIG Semiannual Report 46 March 1998
Status of Systemic Recommendations
That Involve Internal NSF Management
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 Issue
Review of NSFNET Audit of Infrastructure Account
Review of NSF’s Property
Management System Responsibilities of Property Custodians
NSF OIG Semiannual Report 47 March 1998
List of Reports
NSF and CPA Performed Reviews
Report Subject Questioned Unsupported Better Use Cost
Number Costs Costs of Funds* Sharing
At-Risk
98-1001 Atmospheric Research Group 9,100 0 0 0
98-1002 Small Company 0 0 78,029 0
98-1003 School District 285,309 285,309 0 510,310
98-1004 City School System 225,938 111,039 0 0
98-1005 Zoological Society 66,512 64,502 0 2,362
98-1006 City Board of Education 2,071,176 1,671,623 0 366,611
98-1007 City School System 96,944 31,282 0 1,682,785
98-1008 Science Museum 5,534 0 87,000 0
98-1009 Research and Instrument Company 3,037 0 0 0
98-1010 Small Company 25,365 0 0 0
98-1011 Southwest College 35,167 0 0 0
98-1012 Telecommunications Company 31,327 5,126 0 0
98-1013 City School District 41,222 0 0 0
98-1014 Public Television Station 0 0 294,095 0
98-1015 School 103,123 66,294 0 7,700
98-1016 School 109,887 15,010 0 0
98-1017 City School System 104,658 68,780 538,816 0
98-1018 Small Company 705,125 20,000 0 8,987,733
98-1019 State Department of Education 1,099,207 292,927 0 0
98-1020 Hospital Organization 237,060 60,703 0 411
98-1021 Traineeship Program 259,556 0 0 0
98-1023 County School District 0 0 0 0
98-2001 Office of Polar Programs 0 0 20,936,500 0
98-2002 NSF’s FY 97 Financial
Statements 0 0 0 0
NSF OIG Semiannual Report 48 March 1998
List of Reports
NSF and CPA Performed Reviews
Report Subject Questioned Unsupported Better Use Cost
Number Costs Costs of Funds* Sharing
At-Risk
98-2003 NSF—Administrative Cost Recoveries 0 0 755,000 0
98-2004 NSF—Draft FY 97 Management
Letter Report 0 0 0 0
98-6001 National Engineering Center 60,613 0 0 0
98-6002 Research Foundation 3,368 0 0 0
98-6003 City Public School System 0 0 0 0
98-6004 Science Center 0 0 0 0
98-6005 Association 3,040 0 0 0
Total 5,582,268 2,692,595 22,689,440 11,557,912
_________________________
* Over 5 years.
NSF OIG Semiannual Report 49 March 1998
List of Reports
NSF-Cognizant Reports
Cost
Report Questioned Unsupported Sharing
Number Subject Costs Costs At-Risk
98-4009 Research Company 25,650 0 0
98-4011 Telecommunications 65,695 0 0
Institute
Total 91,345 0 0
Other Federal Audits
Report Questioned Unsupported
Number Subject Costs Costs
98-5012 School Foundation 13,569 0
98-5018 Northeast University 936 0
98-5072 Southwest University 6,654 0
98-5075 Botanical Garden 16,738 0
98-5101 Southwest University 1,437 0
98-5104 Midwest College 31,200 0
98-5121 Institute 564 0
Total 71,098 0
NSF OIG Semiannual Report 50 March 1998
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 21 audit reports with questioned costs, 5 reports with
recommendations 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 46.
Report Date Report Dollar
Number Title Issued Value Status
Items Involving Questioned Costs
95-5722 State Government 09/22/95 113,204 1
96-1002 State Department of Administration 10/01/95 181,459 1
96-1003 State Education Agency and University 11/14/95 514,268 1
96-1014 Educational Research Association 03/20/96 211,879 1
96-1025 Science Museum 03/28/96 237,678 1
96-1027 For-Profit Contractor 03/28/96 828,915 1
96-1031 Learning Center 09/30/96 337,377 1
96-2113 Contract Services Provider 08/29/96 4,054 1
97-1004 Public School System 02/07/97 130,996 1
97-1010 Northeastern University 03/13/97 451,147 1
97-1012 Mathematical Society 03/18/97 341,057 1
97-1018 School District 06/02/97 173,877 1
97-1021 Public School System 08/07/97 49,455 1
97-1023 University 09/03/97 134,358 1
97-1024 School District 09/03/97 52,151 1
97-1025 School District 09/04/97 345,937 1
97-1027 School District 09/17/97 133,478 1
97-1028 School for Science and Mathematics 09/19/97 251,639 1
97-1031 Research Corporation 09/30/97 314,690 1
97-1032 Communications Company 09/30/97 49,194 1
97-2105 Review of FFRDC 03/31/97 641,129 1
NSF OIG Semiannual Report 51 March 1998
Audit Reports With Outstanding
Management Decisions
Report Date Report Dollar
Number Title Issued Value Status
Items Involving Funds Put to Better Use
97-2107 Review of Funding for Development of the Internet 03/31/97 60,000,000 3
97-1031 Research Corporation 09/30/97 2,341,945 3
97-2115 Research Center 09/15/97 2,800,000 3
Items Involving Cost Sharing at Risk
97-1021 Public School System 08/07/97 292,352 2
97-1024 School District 09/03/97 822,279 2
97-1025 School District 09/04/97 11,511,738 2
97-1027 School District 09/17/97 624,626 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.
NSF OIG Semiannual Report 52 March 1998
Investigative Activity and Statistics
Investigative Activity
Active Cases From Previous Reporting Period 49
New Allegations 14
Total Cases 63
Cases Closed After Preliminary Assessments 0
Cases Closed After Inquiry/Investigation 22
Total Cases Closed 22
Active Cases 41
Investigative Statistics
New Referral 2
Referrals From Previous Reporting Period 14
Prosecutorial Declinations 1
Indictments (including criminal complaints) 4
Criminal Convictions/Pleas 0
Civil Settlements 1
Administrative Actions 1
Investigative Recoveries* $1,338,675
*Investigative recoveries comprise civil penalties and criminal fines
and restitutions as well as specific cost savings for the government.
NSF OIG Semiannual Report 53 March 1998
Misconduct Case Activity and
Assurances/Certifications Received
Misconduct Case Activity
FY 1997 FY 1998
Last Half First Half
Active Cases From Prior Period 58 48
Received During Period 17 33
Closed Out During Period 27 23
In-Process at End of Period 48 58
Cases Forwarded to the Office of the
Director During Period for Adjudication 4 1
Cases Reported in Prior Periods With No
Adjudication by the Office of the Director 1* 3**
*This case is described in Semiannual Report Number 15, pages 40 through 41.
**These cases are described in Semiannual Report Number 17, pages 36 through 41.
During this reporting period, we closed 23 cases, 21 of them at the inquiry stage. These cases
included allegations of plagiarism (verbatim and/or intellectual theft), violations of the confidentiality
of peer review, failure to share samples, misrepresentations of research efforts, abuse of the mentor
relationship, or human subjects violations. Many of these cases contained multiple allegations of
misconduct in science. After reviewing information available to us from NSF or other sources, we
found it necessary to obtain additional information from the subjects in nine of these cases.
Assurances and Certifications Received*
Number of Cases Requiring Assurances at End of Period 1
Number of Cases Requiring Certifications at End of Period 1
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.
NSF OIG Semiannual Report 54 March 1998
Glossary
Funds to be Put to Better Use
Funds the Office of Inspector General has identified in an audit recommendation that
could be used more efficiently by reducing outlays, deobligating funds, avoiding unnecessary
expenditures, or taking other efficiency measures.
NSF’s Definition of Misconduct in Science and Engineering
Fabrication, falsification, plagiarism, or other serious deviation from accepted practices
in proposing, carrying out, or reporting results from activities funded by NSF; or retaliation of
any kind against a person who reported or provided information about suspected or alleged
misconduct and who has not acted in bad faith.
Questioned Cost
A cost resulting from an alleged violation of law, regulation, or the terms and
conditions of the grant, cooperative agreement, or other document governing the expenditure
of funds. A cost can also be “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.
NSF OIG Semiannual Report 55 March 1998
Prepared by
Office of Inspector General
National Science Foundation
For more information write
Office of Inspector General
National Science Foundation
4201 Wilson Boulevard
Arlington, VA 22230
call
(703) 306-2100
or visit our web site
www.nsf.gov/cgi-bin/getpub?oigmarch1998
Electronic Mail Hotline
oig@nsf.gov
Semiannual Report - March 1998
Published by the National Science Foundation, Office of Inspector General on 1998-03-01.
Below is a raw (and likely hideous) rendition of the original report. (PDF)