oversight

Semiannual Report - September 1998

Published by the National Science Foundation, Office of Inspector General on 1998-09-01.

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

O
F   SEMIANNUAL
F
I   REPORT
C
E   TO THE
O
    CONGRESS
F

I
N
S
P
E
C
T
O
R

G
E
N
E   NATIONAL SCIENCE FOUNDATION
R
    SEPTEMBER 1 9 9 8
A
L
Letter to the Congress of the United States
         In the Inspector General Act, Congress describes our mission: to work to-
gether with the Foundation and its programs so that their goals are achieved efficiently
and to detect and deter improper activities. This report describes our vision for the
future: to carry out our mission by choosing to be inclusive; promoting flexibility and
innovation for our office, NSF, and the community NSF serves; and recommending
change in proportion to need and foreseeable benefit. To develop an environment that
will enable us to realize this vision, we created new structures and processes that
facilitate the pursuit of common goals shared by our staff and by Foundation
managers. For example, we formed a committee with Foundation execu-
tives to coordinate and analyze audits and audit resolution, and we de-
signed and began to implement an outreach program with NSF’s direc-
torates. These new partnering activities have already created a culture
that promotes constructive dialogue and continuous improvement for
our office and for the Foundation (page ii).

         The 20th anniversary of the Inspector General Act has occa-
sioned proposals for legislative change to improve the operations of all
Inspectors General. Our office benefits greatly from the advice and guid-
ance we receive from eminent executives, scientists, and engineers who serve
on the National Science Board. We believe that a similar approach for obtaining
advice and guidance would serve the entire Inspector General community well. For
this reason, we recommend that Congress consider creating an oversight board, con-
sisting of experts from within and outside the government in the areas of management,
investigation, and audit, that would provide advice and guidance on the many complex
issues facing Inspectors General. Contrary to a specific legislative proposal intro-
duced in the 105th Congress, we do not believe it is in the Foundation’s best interest to
consolidate our office with another Office of Inspector General because NSF is best
served by having an Office of Inspector General tailored to its mission and culture
(page 26).

        In streamlining our operations, we now group our audits and inspections under
a new category called “Efficiency” (page 1) and describe our financial investigations
and reviews of alleged misconduct in science under a new category labeled “Integrity”
(page 15). We view all our efforts as contributing to the Foundation’s ongoing effort to
improve continuously its portfolio of programs in support of excellent research and
education in science and engineering.

        We look forward to continuing dialogue with Foundation management and with
all the communities with which we interact for the purpose of promoting ongoing,
positive change for Offices of Inspector General and for the Foundation.

                                Respectfully submitted,




                               Philip L. Sunshine
                               Acting Inspector General
                               September 30, 1998
                              OIG’s Mission, Vision,
                               and Strategic Goals
        In April 1998, we began to review our role in assisting the Foundation’s mission of
enabling discovery and education in science and engineering. We defined our mission, vision,
and goals; established new structures and processes to begin to realize our vision; and developed
a draft strategic plan. Through this ongoing process we continue to define and refine our aspira-
tions for the National Science Foundation’s Office of Inspector General.

      In the Inspector General Act, Congress describes our mission: To work together with the
Foundation and its programs so that their goals are achieved efficiently and to detect and deter
wrongdoing. Our overarching mission is to foster positive change for the Foundation and the
community it serves.



       Our vision of the office stresses the shared goals between ourselves
and the Foundation. Three precepts capsulize our vision:                                  V
            • Although organizationally and operationally independent, we
                                                                                          I
              are part of the Foundation and choose to be inclusive.
                                                                                          S
            • We participate fully in the Foundation’s efforts to be flexible
              and innovative while operating efficiently and with integrity.
                                                                                          I
            • We support the Foundation’s mission of enabling
                                                                                          O
              discovery and education, and we recommend change in
              proportion to need and foreseeable benefit.
                                                                                          N


                      To effect this vision, we articulated three broad goals:
     G
                             • Focus on substantive matters and focus our audits and
     O                         inspections prospectively.

     A                       • Develop fair, accurate, and timely products.

     L                       • Create partnerships that enable our customers to achieve
                               their goals.
     S


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                                                KX
CONTENTS

   Efficiency               1


   Integrity               15


   Legislative Proposals   26


   Statistical Data        27


   Glossary                40
ACRONYMS
CFO      Chief Financial Officer

DOJ      Department of Justice

EHR      Directorate of Education and Human Resources

GAO      General Accounting Office

IAB      Industrial Advisory Board

NGI      Next Generation Internet

OMB      Office of Management and Budget

OPP      Office of Polar Programs

PP&E     Property, Plant, and Equipment

SBIR     Small Business Innovation Research

SIUCRC   State/Industry/University Cooperative Research Center

USAP     U.S. Antarctic Program
REPORTING REQUIREMENTS
    Under the Inspector General Act, we report to Congress every 6 months
       about what we have been doing. In particular, we must discuss:



•   Reports issued, significant problems identified, the value of
    questioned costs and recommendations that funds be put to
                                                                      1, 27
    better use, and NSF’s decision in response (or, if none, an
    explanation of why and a desired timetable for such a
    decision)

•   Matters referred to prosecutors, and the resulting prosecu-
    tions and convictions
                                                                     15, 38
•   With regard to previously reported recommendations:
    significant management decisions that were revised, and
                                                                     35, 39
    significant recommendations for which NSF has not com-
    pleted its response

•   Legislation and regulations that may affect the efficiency or
    integrity of NSF’s programs
                                                                            26
•   Whether we disagree with any significant decision by NSF        None to Report
    management                                                       This Period

•   Any matter in which the agency unreasonably refused to          None to Report
    provide us with information or assistance                        This Period
                                                                       E



W
            e are responsible for auditing grants, contracts, and
            cooperative agreements funded by the Foundation’s
            programs. We review agency operations and ensure that
                                                                       F
financial, administrative, and programmatic aspects of agency
operations are conducted economically and efficiently. We conduct
financial audits to determine whether costs claimed by awardees are
allowable, reasonable, and properly allocated. Our audits also seek
to identify practices that can reasonably be modified in the future,   F
thereby allowing funds to be used for other purposes that our
customers consider more important. We also conduct inspections.
These on-site, integrated, multi-disciplinary reviews highlight what
works well, and they identify problems so that Foundation and
funded organizations’ managers can improve operations and better       I
achieve research and education goals. We are also responsible for
the annual audit of the Foundation’s financial statements, which
includes evaluations of internal controls and data processing
systems.
                                                                       C


                                                                       I
                              Highlights
                   Audits of State/Industry/University
                    Cooperative Research Centers 2
                                                                       E
              Accounting Guidance for School Districts 4

                     Audits of Education Awards 5

        Review of Organization That Conducts Ship Operations 7         N
         Savings Associated With Antarctic Flight Operations 8

           Inspection of U.S. Arctic Research Commission 9

                          Statistical Tables 27                        C


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     VJCVVJGWPKXGTUKV[JCFCEVWCNN[RTQXKFGFVJGTGSWKTGFHWPFKPICPFVJGTGYCUPQ
     GXKFGPEGVJCVVJGWPKXGTUKV[JCFTGEGKXGFCP[KPGYL5VCVGHWPFUVQUWRRQTVVJG
     %GPVGT6JKURTCEVKEGKUKPEQPUKUVGPVYKVJVJGEQQRGTCVKXGCITGGOGPVCPFYKVJVJG
     KPVGPVQHVJGRTQITCO+VUEQPVKPWCVKQPVJTQWIJVJGPGZV[GCTUQHVJGCYCTFYQWNF
     TGUWNVKPCPCFFKVKQPCNUJQTVHCNNKP5VCVGOCVEJKPIHWPFUHQTVJG%GPVGT
     6JKU%GPVGTCNUQCEEWOWNCVGFCOKNNKQPECUJUWTRNWUHTQOKPFWUVTKCN
     EQPVTKDWVKQPUVJCVYCUPQVTGRQTVGFVQKVU+#$QTVQ05(#UCTGUWNVVJG+#$CPF
     05(FKFPQVJCXGEQORNGVGKPHQTOCVKQPCDQWVVJG%GPVGTIUHKPCPEKCNEQPFKVKQPYJGP
     TGUGCTEJQRGTCVKPICPFHWPFKPIFGEKUKQPUYGTGOCFG9GTGEQOOGPFGFVJCVVJG
     %GPVGTHWNN[TGRQTVKVUHKPCPEKCNUVCVWUVQ05(CPFCNN+#$OGODGTU

•    #PQVJGT%GPVGTENCKOGFOKNNKQPQHKPFWUVTKCNUWRRQTVHQTC[GCTRGTKQF9G
     HQWPFVJCVQPN[YCUEQPUKUVGPVYKVJVJGVGTOUQHVJGCYCTF6JG%GPVGT
     OKUTGRQTVGFOCVEJKPIHWPFUCPFKPEQTTGEVN[ECVGIQTK\GFTGUGCTEJCEVKXKVKGU9G
     TGEQOOGPFGFVJCV05(TGFWEGVJGVJKTF[GCTIUHWPFKPIVQVJG%GPVGTD[
     VQOCVEJVJG%GPVGTIUUGEQPF[GCTKPFWUVTKCNHWPFKPIUJQTVHCNN9GCNUQCFXKUGF
     05(OCPCIGOGPVVJCVKPFWUVTKCNUWRRQTVKPVJG%GPVGTCYCTF IUTGOCKPKPI[GCTUKU
     NKMGN[VQDGNGUUVJCPVJGTGSWKTGFWPFGTVJGCITGGOGPVIUVGTOU
     CPFTGEQOOGPFGFVJCV05(ENQUGN[OQPKVQTHWVWTGKPFWUVTKCNOCVEJKPI
     EQPVTKDWVKQPU

•    $[URGPFKPIHGFGTCNCPF5VCVGHWPFUDGHQTGKPFWUVTKCNHWPFUCVJKTF%GPVGT
     CEEWOWNCVGFCPECUJUWTRNWU7PFGTVJGVGTOUQHVJGRTQITCOCNNQHVJGUG
     HWPFUOWUVDGURGPVD[VJGGZRKTCVKQPFCVGQHVJG05(CYCTF9GTGEQOOGPFGF
     VJCV05(GPUWTGVJGECUJUWTRNWUKUWUGFKPHWTVJGTKPIVJGRTQLGEV IUQDLGEVKXGUDGHQTG
     RTQXKFKPIPGY05(HWPFKPI

        9GCTGYQTMKPIYKVJ05(OCPCIGOGPVVQTGUQNXGVJGUGKUUWGUVJTQWIJVJGCWFKV
TGUQNWVKQPRTQEGUU

4GUGCTEJ%GPVGT#ITGGUVQ4GFWEG#FOKPKUVTCVKXG%QUVU

        +PQWT5GRVGODGT5GOKCPPWCN4GRQTV
RCIGJVVRYYYPUHIQXEIK
DKPIGVRWD!QKI YGTGRQTVGFQPQWTTGXKGYQHCPGYRTQRQUCNHQTC%GPVGTFGXQVGF
VQGCTVJSWCMGTGUGCTEJCVCNCTIGPQTVJGTP5VCVGWPKXGTUKV[1WTTGXKGYQHVJGTGUGCTEJ
EGPVGTIURTQRQUCNKFGPVKHKGFGZEGUUKXGCFOKPKUVTCVKXGEQUVUKPHQWTCTGCU9G
TGEQOOGPFGFVJCV05(NKOKVVJGCOQWPVQHHWPFUKVOCMGUCXCKNCDNGHQTCFOKPKUVTCVKXG
TGNCVGFEQUVUCPFVJCVVJGTGUGCTEJEGPVGTRTGRCTGCFQEWOGPVGFEQUVTGFWEVKQPRNCPHQT
05(IUTGXKGY




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
        +PTGURQPUGVQQWTTGRQTVVJGTGUGCTEJHQWPFCVKQPRTQXKFGFCRTQRQUGFUVTCVGIKE
RNCPVJCVCFFTGUUGFVJGCFOKPKUVTCVKXGEQUVEQPEGTPU6JGRTQRQUGFUVTCVGIKERNCP
HQEWUGUQPVJTGGUVTCVGIKGUTGFWEKPIEQUVUGNKOKPCVKPIFWRNKECVKQPCPFQDVCKPKPIQVJGT
UQWTEGUQHHWPFKPIHTQO5VCVGCPFKPFWUVTKCNUQWTEGU05(OCPCIGOGPVCITGGFVQ
CEEGRVVJGRNCP1XGTCNNVJGTGUGCTEJHQWPFCVKQPIUUVTCVGIKERNCPUJQWNFTGFWEG
CFOKPKUVTCVKXGEQUVUD[OKNNKQPQXGT[GCTU


#WFKVU+PXQNXKPI'FWECVKQPCPF6TCKPKPI#YCTFU
#EEQWPVKPI)WKFCPEGHQT5EJQQN&KUVTKEVU

         9GUWOOCTK\GFHQTVJG&KTGEVQTCVGQH'FWECVKQPCPF*WOCP4GUQWTEGU
'*4
VJGTGUWNVUQHQWTRTGXKQWUN[EQORNGVGFTGXKGYUQHCYCTFUHTQO05( IU7TDCP
5[UVGOKE+PKVKCVKXGUCPF6GCEJGT'PJCPEGOGPV2TQITCO6JGUGCYCTFUYGTGKUUWGFVQ
GNGOGPVCT[CPFUGEQPFCT[NGXGNUEJQQNFKUVTKEVU6JG[VQVCNGFOKNNKQPCPFXCTKGF
KPCOQWPVHTQOVQOKNNKQP+PCFFKVKQPVQ05(IUHWPFKPIVJGUEJQQN
FKUVTKEVURTQOKUGFVQRTQXKFGCPCFFKVKQPCNOKNNKQPKPEQUVUJCTKPI

           •     #NOQUVJCNHQHVJGUEJQQNFKUVTKEVUENCKOGFUCNCTKGUCPFHTKPIGDGPGHKVEQUVU
                 
VQVCNKPIOKNNKQPYKVJQWVJCXKPIVJGPGEGUUCT[VKOGCPFGHHQTV
                 EGTVKHKECVKQPUVQUWRRQTVVJGGZRGPUGU5EJQQNFKUVTKEVUPGGFVQOCKPVCKP
                 CEVKXKV[TGRQTVUVQFGETGCUGVJGRQUUKDKNKV[QHUCNCTKGUDGKPIKPEQTTGEVN[
                 EJCTIGFVQVJGCYCTFU

           •     #DQWVRGTEGPVQHVJGUEJQQNFKUVTKEVUENCKOGFEQUVUJCTKPIYKVJQWVJCXKPI
                 VJGHKPCPEKCNTGRQTVUPGEGUUCT[VQUWRRQTVVJGUEJQQNFKUVTKEVUIENCKOU#UC
                 TGUWNVCDQWVRGTEGPVQHVJGXCNWGQHEQUVUJCTKPIENCKOGFYGTG
                 WPUWRRQTVGF9GHQWPFVJCVJCNHQHVJGUEJQQNFKUVTKEVUTGXKGYGFFKFPQV
                 JCXGCPCEEQWPVKPIU[UVGOVJCVVTCEMGFCPFFQEWOGPVGFEQUVUJCTKPI
                 $GECWUGEQUVUJCTKPIKUCRRTQZKOCVGN[RGTEGPVQHVQVCNRTQITCOHWPFKPI
                 VJGUGFGHKEKGPEKGUTCKUGEQPEGTPUCDQWVVJGCDKNKV[QHVJGUGUEJQQNFKUVTKEVUVQ
                 EQORNGVGVJGRTQITCOQDLGEVKXGUCUQWVNKPGFKPVJGCYCTFFQEWOGPVU

       /CP[QHVJGUEJQQNFKUVTKEVUJCFPQVRTGXKQWUN[TGEGKXGF05(CYCTFUCPFYGTG
PQVHCOKNKCTYKVJHGFGTCNTGSWKTGOGPVU#EEQTFKPIN[YGTGEQOOGPFGFVJCV05(CUUKUV
VJGUEJQQNFKUVTKEVUKPVJGFGXGNQROGPVQHCEEQWPVKPIU[UVGOUHQTOQPKVQTKPIVTCEMKPI
CPFFQEWOGPVKPIUCNCT[CPFEQUVUJCTKPI05(OCPCIGOGPVCITGGFVQRWTUWGVJKU
TGEQOOGPFCVKQPCPFYGQHHGTGFVQRTQXKFGCFXKEGCPFCUUKUVCPEGVQ05(QHHKEKCNUKP
FGXGNQRKPICRTQITCOFGUKIPGFVQJGNRUEJQQNFKUVTKEVUOGGVHGFGTCNIWKFGNKPGU




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
#WFKVUQH'FWECVKQP#YCTFU%QPFWEVGF
KP6JKU4GRQTVKPI2GTKQF

        9GEQPFWEVGFHKPCPEKCNCPFEQORNKCPEGCWFKVUQH05(GFWECVKQPTGNCVGFCYCTFU
KUUWGFVQVYQUVCVGFGRCTVOGPVUQHGFWECVKQPVYQNQECNUEJQQNFKUVTKEVUCVTKDCNEQNNGIG
CPFCPQPRTQHKVQTICPK\CVKQP9GHQWPFVJCVKORTQXGOGPVUYGTGPGGFGFRTKOCTKN[KP
VJGITCPVGGUIOQPKVQTKPIQHEQUVUJCTKPIGHHQTVUCPFUWDEQPVTCEVEQUVUCPFYGKFGPVKHKGF
UQOGWPCWVJQTK\GFGZRGPFKVWTGU

           •     #PQTVJGCUVGTPUVCVGFGRCTVOGPVQHGFWECVKQPTGEGKXGFCP05(5VCVGYKFG
                 5[UVGOKE+PKVKCVKXGCYCTFQHOKNNKQP6JGRTQLGEVIUOCKPIQCNUYGTGVQ
                 KPETGCUGUKIPKHKECPVN[VJGUEKGPEGCPFOCVJGOCVKECNNKVGTCE[UMKNNUQHUVWFGPVU
                 CPFVJGPWODGTUCPFSWCNKV[QHRGQRNGKPVJGUVCVGYJQRWTUWGECTGGTUKP
                 UEKGPEGCPFVGEJPQNQI[9GHQWPFVJCVKPENCKOGFEQUVUYCU
                 SWGUVKQPCDNGDGECWUGQHKPCFGSWCVGUWRRQTVHQTUWDITCPVGGEQPUWNVCPV
                 VTCXGNCPFOCVGTKCNCPFUWRRNKGUEQUVU
CPFWPTGCUQPCDNG
                 OGGVKPIUCPFVTCXGNEQUVU


           •     9GEQPFWEVGFCPCWFKVQHRCTVKEKRCPVUWRRQTVEQUVUKPFKTGEVEQUVUCPFEQUV
                 UJCTKPIENCKOGFHQTGFWECVKQPCPFVTCKPKPIITCPVUCYCTFGFVQCNQECNUEJQQN
                 FKUVTKEVKPVJGPQTVJYGUV6JGUGCYCTFUUWRRQTVGFXCTKQWURTQLGEVUKPENWFKPI
                 VTCKPKPIHQTVGCEJGTU9GSWGUVKQPGFQHVJGEQUVU
                 ENCKOGFD[VJGUEJQQNFKUVTKEV6JGOCLQTKV[QHVJGSWGUVKQPGFEQUVUTGNCVGF
                 VQGZRGPFKVWTGUENCKOGFHQTEQUVUVJCVYGTGPQVKPENWFGFKPVJGCYCTF
                 DWFIGVUCPFHWPFUDWFIGVGFGZENWUKXGN[HQTRCTVKEKRCPVUWRRQTVVJCVYGTG
                 WUGFD[VJGITCPVGGHQTQVJGTRWTRQUGUYKVJQWVVJGTGSWKTGFRTKQTCRRTQXCN
                 9GHQWPFVJCVVJGCYCTFGGUIFQEWOGPVCVKQPHQTCRRTQZKOCVGN[OKNNKQPKP
                 EQUVUJCTKPIFKFPQVUWRRQTVVJGHWNNCOQWPVENCKOGFCPFVJCVUQOGQHVJGUG
                 EQUVUENCKOGFYGTGWPCNNQYCDNG

           •     9GTGXKGYGFOKNNKQPENCKOGFD[CNCTIGUQWVJGCUVGTPUEJQQNFKUVTKEVQP
                 C[GCTOKNNKQPEQQRGTCVKXGCITGGOGPVCYCTFGFVQUVTGPIVJGP
                 EQOOWPKV[RCTVPGTUJKRUVJCVNKPMOCVJGOCVKEUCPFUEKGPEGNGCTPKPIKPVJG
                 ENCUUTQQOVQVJGTGCNYQTNF6JGUEJQQNFKUVTKEVNCEMGFCFGSWCVGU[UVGOUVQ
                 OQPKVQTRCTVKEKRCPVUWRRQTVEQUVUCPFEQUVUJCTKPIEQPVTKDWVKQPU#NVJQWIJ
                 VJGCYCTFGGRTQXKFGFFQEWOGPVCVKQPVJCVYGWUGFVQXGTKH[VJGUGGZRGPUGU
                 YGTGEQOOGPFGFVJCVVJGCYCTFGGKORTQXGVJGUGU[UVGOU




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
           •     1WTCWFKVQHCVTKDCNEQNNGIGKPENWFGFCTGXKGYQHCYCTFUTGNCVGFVQRTQXKFKPI
                 UVWFGPVUYKVJQRRQTVWPKVKGUKPQDVCKPKPIFGITGGUKPEQORWVGTUEKGPEGCPF
                 GPIKPGGTKPICUYGNNCUIKXKPIVJGOCEEGUUVQVJG+PVGTPGV9GSWGUVKQPGF
                 QHVJGENCKOGFEQUVUD[VJGITCPVGG6JGOCLQTKV[QHVJG
                 SWGUVKQPGFEQUVU
TGNCVGFVQVJGEQNNGIGENCKOKPIEQUVUVQ05(KP
                 GZEGUUQHKVUTGEQTFGFEQUVU9GCNUQHQWPFVJCVVJGEQNNGIGFKFPQV
                 CFGSWCVGN[FQEWOGPVCPFOCKPVCKPKVUEQUVUJCTKPIGHHQTVU9GHQWPFHQT
                 GZCORNGVJCVVJGEQNNGIGENCKOGFKPEQUVUJCTKPIHQTUVWFGPV
                 HKPCPEKCNCKFVJCVKVEQWNFPQVUWRRQTVKPKVUCEEQWPVKPIU[UVGO

           9GCTGYQTMKPIYKVJ05(OCPCIGOGPVVQTGUQNXGVJGKUUWGUKFGPVKHKGFKPVJGUG
CWFKVU

#YCTFVQCP'FWECVKQPCN0QPRTQHKV1TICPK\CVKQP
2TQEGGFU#HVGT%QTTGEVKXG#EVKQP6CMGP

       #P05(RTQITCOQHHKEKCNTGSWGUVGFVJCVYGEQPFWEVCHKPCPEKCNTGXKGYCVC
UQWVJYGUVGFWECVKQPCNPQPRTQHKVQTICPK\CVKQP05(JCFHWPFGFCOKNNKQP
'NGOGPVCT[5GEQPFCT[CPF+PHQTOCN'FWECVKQPCYCTFVQVJGPQPRTQHKVQTICPK\CVKQPHQT
C5RCPKUJNCPIWCIGUEKGPEGGFWECVKQPRTQLGEVCPFVJGRTQITCOQHHKEKCNYCUGXCNWCVKPI
CPGYRTQRQUCNHQTCOKNNKQPCYCTFVQVJGQTICPK\CVKQPHQTCUKOKNCTRTQLGEV

           •     9GSWGUVKQPGFQHVJGOKNNKQPENCKOGFEQUVUTGNCVGFVQ
                 GZRGPFKVWTGUWPCNNQYCDNGWPFGTVJGEWTTGPVCYCTFIUEQPFKVKQPU6JG
                 SWGUVKQPGFEQUVUTGNCVGFRTKOCTKN[VQEGTVCKPFKTGEVEQUVUVJCVYQWNFJCXG
                 DGGPOQTGCRRTQRTKCVGN[EJCTIGFCUKPFKTGEVEQUVUCPFCOQWPVUDWFIGVGFHQT
                 RCTVKEKRCPVUWRRQTVVJCVYGTGWUGFVQHWPFQVJGTGZRGPUGU

           •     9GCNUQTGXKGYGFVJGQTICPK\CVKQPIUOGVJQFUCPFUWRRQTVKPIFQEWOGPVCVKQP
                 WUGFVQFGXGNQRVJGOKNNKQPDWFIGVHQTVJGPGYCYCTFCPFGXCNWCVGFVJG
                 CNNQYCDKNKV[CNNQECDKNKV[CPFTGCUQPCDNGPGUUQHVJGUGRTQRQUGFEQUVU9G
                 EQPENWFGFVJCVVJGDWFIGVEQWNFDGTGFWEGFD[CUUQEKCVGFYKVJ
                 UWDEQPVTCEVCPFHTKPIGDGPGHKVEQUVU

        6JGQTICPK\CVKQPIUOCPCIGOGPVCITGGFYKVJQWTHKPFKPIUCPFTGEQOOGPFCVKQP
TGNCVGFVQVJGEQUVUENCKOGFCPFVJGTGFWEVKQPVQVJGRTQRQUGFDWFIGV6JGRTQITCO
OCPCIGTWUGFQWTTGRQTVKPOCMKPIJKUHWPFKPIFGEKUKQPQPVJGPGYRTQRQUCN




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
4GXKGYU+PXQNXKPI5JKR1RGTCVKQPU
CPF2QNCT2TQITCOU
4GXKGYQH1TICPK\CVKQP6JCV%QPFWEVU
5JKR1RGTCVKQPU4GUWNVUKP5CXKPIU

        $CUGFWRQPVJGTGEQOOGPFCVKQPQH05(OCPCIGTUYGTGXKGYGFCRTKXCVG
PQPRTQHKVQTICPK\CVKQPVJCVEQPFWEVUQEGCPQITCRJKETGUGCTEJCPFGFWECVKQPRTQLGEVU
6JGQTICPK\CVKQPJCUCPCPPWCNQRGTCVKPIDWFIGVQHQXGTOKNNKQPCPFTGEGKXGU
CRRTQZKOCVGN[OKNNKQPCPPWCNN[HTQO05(RTKOCTKN[VQHWPFUJKRQRGTCVKQPUCPF
UEKGPVKHKETGUGCTEJ1XGTCNNVJGQTICPK\CVKQPJCUCJKIJEQOOKVOGPVVQUEKGPEGCPF
GFWECVKQPCPFKVRTQXKFGFGZEGNNGPVUVGYCTFUJKRQXGT05(CPFQVJGTHWPFU9GOCFG
VYQTGEQOOGPFCVKQPUVJCVUJQWNFTGUWNVKPCEQUVCXQKFCPEGQHCPPWCNN[VQ
05(CPFYGKFGPVKHKGFUGXGTCNRTQEGFWTCNKUUWGUYJKEJYJGPTGUQNXGFOC[TGUWNVKP
CFFKVKQPCNUCXKPIUCUYGNNCUKPETGCUGFCEEQWPVCDKNKV[HQTHGFGTCNHWPFU

        9GHQWPFVJCVVJGQTICPK\CVKQPFKFPQVUWDOKVVKOGN[KPFKTGEVEQUVTCVGRTQRQUCNU
FWTKPICRGTKQFYJGPKVUKPFKTGEVEQUVTCVGUYGTGHCNNKPICPFFWTKPIYJKEJKVPGGFGFVQ
OCMGOKPQTCFLWUVOGPVUVJCVYQWNFJCXGHWTVJGTTGFWEGFKVUTCVGU9GCNUQHQWPFVJCV
VJGQTICPK\CVKQPRTQRQUGFCHTKPIGDGPGHKVTCVGVJCVYCUUKIPKHKECPVN[JKIJGTVJCPKVU
CEVWCNTCVGYJKEJTGUWNVGFKPGZEGUUEQUVTGEQXGTKGU

         9GTGEQOOGPFGFVJCVVJGQTICPK\CVKQPUWDOKVKPFKTGEVEQUVTCVGRTQRQUCNU
YKVJKPOQPVJUQHVJGGPFQHGCEJHKUECN[GCTGNKOKPCVGCUOCNNCOQWPVQHWPCNNQYCDNG
EJCTIGUCPFTGFKUVTKDWVGUQOGEJCTIGUVQPQPHGFGTCNRTQLGEVU9GCNUQTGEQOOGPFGF
VJCVKPVJGHWVWTGVJGQTICPK\CVKQPWUGCNQYGTTCVGVJCVOQTGCEEWTCVGN[TGHNGEVUVJG
EQUVUQHHTKPIGDGPGHKVUVQVJGKPUVKVWVKQP+ORNGOGPVKPIVJGUGTGEQOOGPFCVKQPUUJQWNF
TGUWNVKPCPPWCNUCXKPIUVQ05(QHOQTGVJCPQTOKNNKQPQXGTC[GCT
RGTKQF

       9GUJCTGFQWTHKPFKPIUYKVJVJGEQIPK\CPV05(RTQITCOQHHKEKCNUYJQCITGGF
YKVJQWTTGEQOOGPFCVKQPU6JGQTICPK\CVKQPCNUQCITGGFYKVJVJGOCLQTKV[QHQWT
TGEQOOGPFCVKQPU05(OCPCIGOGPVKPEQQTFKPCVKQPYKVJQWTQHHKEGKUTGUQNXKPIVJG
TGOCKPKPIRTQEGFWTCNKUUWGU




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
5CXKPIU#UUQEKCVGF9KVJ#PVCTEVKE(NKIJV1RGTCVKQPU

        +PVJG0CX[CFXKUGF05(IU1HHKEGQH2QNCT2TQITCOU
122VJGQHHKEG
TGURQPUKDNGHQTHWPFKPICPFOCPCIKPIVJG75#PVCTEVKE2TQITCO
75#2VJCVKV
YQWNFFKUEQPVKPWGRTQXKFKPINQIKUVKECNUWRRQTVVQVJG75#2122VJGPDGICPVQUGCTEJ
HQTQTICPK\CVKQPUVJCVEQWNFRGTHQTOVJGUWRRQTVVJG0CX[RTQXKFGFCPFKVRNCPPGFVQ
VTCPUHGTVJGTGURQPUKDKNKV[HQTXCTKQWUCURGEVUQHVJCVUWRRQTVVQDQVJIQXGTPOGPVCPF
EQOOGTEKCNRTQXKFGTU6JG0CX[IUFGEKUKQPCHHQTFGFCPQRRQTVWPKV[HQT122VQVCMG
UVGRUVQKORTQXGVJGGHHKEKGPE[QHKVUQRGTCVKQPU+PRCTVPGTUJKRYKVJ122YGDGICPVQ
EQPFWEVTGXKGYUCPFCPCN[UGUQHVJGVTCPUHGTQHHWPEVKQPUVQQVJGTRTQXKFGTU

        +PQWT/CTEJ5GOKCPPWCN4GRQTV
RCIGUJVVRYYYPUHIQXEIK
DKPIGVRWD!QKIOCTEJ YGFKUEWUUGFQWTCPCN[UKUQHVJGVTCPUKVKQPQHHKZGFYKPI
HNKIJVQRGTCVKQPU9GEQORNGVGFQWTHNKIJVQRGTCVKQPUTGXKGYKPVJKUTGRQTVKPIRGTKQF
CPFOCFGCFFKVKQPCNEQUVCXQKFCPEGTGEQOOGPFCVKQPUYJKEJKHKORNGOGPVGFYKNN
KPETGCUGCPPWCNUCXKPIUD[CRRTQZKOCVGN[
OKNNKQPQXGT[GCTU

       7PFGTVJGVTCPUKVKQPRNCPCWPKVQHVJG0GY;QTM#KT0CVKQPCN)WCTF
VJG
)WCTFYKNNQRGTCVGCPFOCKPVCKP05(IUHNGGVQH.%UMKGSWKRRGFCKTETCHVKP
#PVCTEVKEC6JKUCKTETCHVVTCPURQTVURGTUQPPGNECTIQUEKGPVKHKECPFEQPUVTWEVKQP
UWRRNKGUCPFGSWKROGPVCPFHWGNVQ/E/WTFQVJG5QWVJ2QNG5VCVKQPCPFTGOQVGHKGNF
UKVGU

        1WTTGEGPVTGXKGYHQEWUGFQPVJG)WCTFIUDWFIGV9GSWGUVKQPGFUGXGTCNQHVJG
RTQRQUGFNKPGKVGOUKPVJG)WCTFIUDWFIGVVQVCNKPICRRTQZKOCVGN[RGT[GCTKP
VTCXGNYQTMFC[EQUVUCPFEQPVKPIGPEKGUDWKNVKPVQVJGDWFIGV9GTGEQOOGPFGFVJCV
122TGXKGYVJGUGEQUVRTQRQUCNUYKVJVJG)WCTFVQFGVGTOKPGYJGVJGTVJG[CTG
PGEGUUCT[CPFTGCUQPCDNG9GCNUQTGEQOOGPFGFVJCV122RTQRQUGCFFKVKQPCN
TGFWEVKQPUQHRGT[GCTVJCVECPDGTGCNK\GFD[EQODKPKPIVTCXGNNKOKVKPIVJG
PWODGTQHRGTUQPPGNUEJGFWNGFVQCVVGPFVJGUCOGEQPHGTGPEGCPFFGFWEVKPIKVGOU
DWFIGVGFD[QVJGT75#2QTICPK\CVKQPU6JGUGVYQTGEQOOGPFCVKQPUTGRTGUGPV
RQVGPVKCNUCXKPIUQHRGT[GCTQTPGCTN[OKNNKQPQXGT[GCTU

           9GCNUQTGEQOOGPFGFVJCV

           •     122FGVGTOKPGYJGVJGTKVKUCRRTQRTKCVGVQRC[EGTVCKPRGTUQPPGNEQUVUVJG
                 )WCTFYKNNKPEWTTGNCVGFVQVTCKPKPICPFCVVGPFCPEGCVEQPHGTGPEGU122
                 EQWNFTGFWEGKVUEQUVUD[CPPWCNN[CPFQXGTC[GCT
                 RGTKQF

           •     122CPFVJG)WCTFFGXGNQRCOGVJQFQNQI[HQTUJCTKPIVJGCPPWCNUWRRN[
                 OCPCIGOGPVEQUVUQHCPCKTETCHVOCKPVGPCPEGEQPVTCEVEWTTGPVN[
KH



05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
                 EQUVUYGTGURNKVGXGPN[122YQWNFUCXGRGT[GCTQT
                 QXGTC[GCTRGTKQF

           •     122GPUWTGVJCVVJGEQUVUQHUWRRN[HQTITQWPFGSWKROGPVKODGFFGFYKVJKP
                 HNKIJVJQWTEQUVUEJCTIGFD[VJG)WCTFFQPQVFWRNKECVGVJQUGCNTGCF[DGKPI
                 RCKFVQ122EQPVTCEVQTU(QTCJQWTHN[KPIRTQITCO
RTQLGEVGFCPPWCN
                 #PVCTEVKEHN[KPIJQWTU122YQWNFCXQKFKPFWRNKECVGEQUVUQXGT
                 [GCTUVJGCOQWPVCXQKFGFYQWNFDG

/QPKVQTKPIQHVJG5QWVJ2QNG%QPUVTWEVKQP2TQLGEV

        +PCPGHHQTVVQOQPKVQTRTQITGUUQPOCLQT05(EQPUVTWEVKQPRTQLGEVUYG
RCTVKEKRCVGFKPSWCTVGTN[RTQITGUUTGXKGYUQHVJG5QWVJ2QNG5VCVKQP5CHGV[CPF
'PXKTQPOGPVCNCPF/QFGTPK\CVKQPRTQLGEVUQXGTUGGPD[05(OCPCIGOGPV6JGUG
QPIQKPITGXKGYUHQEWUQPRTQEWTGOGPVNQIKUVKEUCPFEQPUVTWEVKQPCEVKXKVKGU6JG
TGXKGYUCTGXCNWCDNGDGECWUGVJG[KFGPVKH[RQVGPVKCNRTQDNGOUQTEQPHNKEVUDGHQTGVJG[
CHHGEVVJGRTQLGEVUCPFVJG[KFGPVKH[YC[UVQOKPKOK\GEQUVU

      9GEQPENWFGFVJCVVJGUGTGXKGYUCRRGCTYGNNUWKVGFHQTOQPKVQTKPIVJGRTQLGEVU
CPFOCMGKVOQTGNKMGN[VJCVVJGUGRTQLGEVUYKNNDGUWEEGUUHWNN[EQORNGVGFCUDWFIGVGF

+PURGEVKQPQHVJG75#TEVKE4GUGCTEJ%QOOKUUKQP

        6JG#TEVKE4GUGCTEJCPF2QNKE[#EVQHCUCOGPFGF
VJG#EVYCUGPCEVGF
DGECWUGHGFGTCN#TEVKETGUGCTEJYCUEQPUKFGTGFVQDGHTCIOGPVGFCPFWPEQQTFKPCVGF+V
YCURGTEGKXGFVJCVUQOGCTGCUQHTGUGCTEJYGTGPGINGEVGFYJKNGVJGTGYCUFWRNKECVKQP
QHGHHQTVKPQVJGTCTGCU6JG#EVGUVCDNKUJGFVJG#TEVKE4GUGCTEJ%QOOKUUKQP
VJG
%QOOKUUKQPCPFCPKPVGTCIGPE[#TEVKERQNKE[EQOOKVVGGYJKEJCTGTGURQPUKDNGHQT
HQTOWNCVKPICPCVKQPCN#TEVKETGUGCTEJRQNKE[CPFEQQTFKPCVKPIHGFGTCN#TEVKETGUGCTEJ
RTQITCOUYKVJGCEJQVJGTCPFYKVJVJGPCVKQPCNRQNKE[

         #NVJQWIJVJG%QOOKUUKQPKUCPKPFGRGPFGPVHGFGTCNCIGPE[KVKUHWPFGFVJTQWIJ
05(5KPEGVJG%QOOKUUKQPTGEGKXGFOKNNKQPKPHWPFKPIJQYGXGTDGHQTG
VJKU[GCTVJG%QOOKUUKQPJCFPGXGTDGGPTGXKGYGF6JKUKPURGEVKQPHQEWUGFQP
FGXGNQRKPICPWPFGTUVCPFKPIQHVJG%QOOKUUKQPCPFKVUHKPCPEKCNCPFRTQITCOOCVKE
CEVKXKVKGU

       9GHQWPFVJCVVJG%QOOKUUKQPHQTOWNCVGURTKQTKVKGUCPFTGEQOOGPFCVKQPUVJCV
CTGEQORTGJGPUKXGCPFYGNNKPHQTOGFCPFCTGIGPGTCNN[RGTEGKXGFVQDGPGHKVVJG#TEVKE
TGUGCTEJEQOOWPKV[6JG)GPGTCN5GTXKEGU#FOKPKUVTCVKQPEQPFWEVGFCHKPCPEKCN
TGXKGYQHVJG%QOOKUUKQP9GEQPEGPVTCVGFQWTGHHQTVUKPCTGCUPQVCFFTGUUGFD[VJG
)GPGTCN5GTXKEGU#FOKPKUVTCVKQPCWFKVCPFOCFGVYQHKPCPEKCNTGEQOOGPFCVKQPU9G
TGEQOOGPFGFVJCVVJG%QOOKUUKQPRC[%QOOKUUKQPGTUQPN[HQTCEVWCNVKOGURGPVKP
RGTHQTOCPEGQH%QOOKUUKQPFWVKGU9GCNUQTGEQOOGPFGFVJCVFWGVQVJG


05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
CEEWOWNCVKQPQHCUK\CDNGDWFIGVUWTRNWUVJG%QOOKUUKQPKPENWFGKPKVUCPPWCNDWFIGV
TGSWGUVVQ05(CUVCVGOGPVQHHWPFUQDNKICVGFCPFTGSWGUVGFD[ECVGIQT[UQ05(CPF
VJG%QPITGUUYKNNJCXGCDCUKUWRQPYJKEJVQCUUGUUVJGTGCUQPCDNGPGUUQHVJG
%QOOKUUKQPIUDWFIGVTGSWGUVU

        6JG%QOOKUUKQPTGURQPFGFVJCVKVKPVGPFUVQOQFKH[KVURTQEGFWTGUKP
CEEQTFCPEGYKVJQWTTGEQOOGPFCVKQPUD[CEEQWPVKPIHQT%QOOKUUKQPGT IUEQORGPUCVKQP
KPJCNHFC[KPETGOGPVUCPFD[KPENWFKPICFGVCKNGFUVCVGOGPVQHHWPFUQDNKICVGFCPF
TGSWGUVGFKPHWVWTGDWFIGVTGSWGUVU5WDUGSWGPVN[05(FKFTGEGKXGHTQOVJG
%QOOKUUKQPCPGZRNCPCVKQPQH(;GZRGPFKVWTGUC(;RNCPCPFVJG
(;DWFIGVTGSWGUV

       +PCFFKVKQPYGTGEQOOGPFGFVJCV05(KORNGOGPVCUVTGCONKPGFRTQEGUUHQT
GZRGFKVKQWUN[VTCPUHGTTKPIHWPFKPIVQVJG%QOOKUUKQPCVVJGDGIKPPKPIQHGCEJHKUECN
[GCT05(IU122JCUDGIWPYQTMVQKORTQXGVJGRTQEGUUVQGPUWTGVKOGN[HWPFKPIHQT
VJG%QOOKUUKQP


+UUWGU+PXQNXKPI4GUGCTEJ5WRRQTV
+PURGEVKQP+PXQNXKPI2J[UKEU4GUGCTEJCPF'FWECVKQP

        9GTGXKGYGFRTQITCOOCVKEHKPCPEKCNCPFCFOKPKUVTCVKXGCURGEVUQHGKIJVITCPVU
CYCTFGFVQ2+UKPCWPKXGTUKV[IU2J[UKEUFGRCTVOGPV05(IU&KTGEVQTCVGOCFGUKZ
ITCPVUUWRRQTVKPIDCUKETGUGCTEJKPRJ[UKEUHQT/CVJGOCVKECNCPF2J[UKECN5EKGPEGUCPF
VYQITCPVUUWRRQTVKPITGUGCTEJKPRJ[UKEUGFWECVKQPYGTGOCFGD[05(IU&KTGEVQTCVG
HQT'FWECVKQPCPF*WOCP4GUQWTEGU

        1WTTGRQTVFGUETKDGUQWTHKPFKPIUQPKUUWGUQHKPVGTGUVVQVJGWPKXGTUKV[CPF
05(+PQWTTGRQTVYGGZRNCKPVJCVVJG2+UJCFIGPGTCNN[RQUKVKXGEQOOGPVUCDQWV
05(IUOGTKVTGXKGYU[UVGOCPFVJCVOQUV2+UYJQJCFWUGF05(IUGNGEVTQPKE(CUV.CPG
U[UVGONKMGFVJGCFXCPVCIGUKVQHHGTGFCPFYQWNFEQPVKPWGVQWUGKV9GFGUETKDGUQOG
QHVJGCFXCPVCIGUUVWFGPVUCVVTKDWVGVQ05(URQPUQTGFRTQLGEVUCPFYGOGPVKQPVJCVVJG
FGRCTVOGPVKUTGEQIPK\GFCUCNGCFGTKPRJ[UKEUGFWECVKQPTGUGCTEJCPFRWDNKUJGU
VWVQTKCNUVJCVCTGWUGFPCVKQPYKFG

        +PQWTTGRQTVYGCNUQEQORNKOGPVVJG7PKXGTUKV[HQTKVUGZGORNCT[U[UVGOHQT
OQPKVQTKPICPFVTCEMKPIEQUVUJCTKPI9GOCFGUGXGTCNUWIIGUVKQPUVQUVTGPIVJGPVJG
7PKXGTUKV[IUEQPVTQNQXGTHGFGTCNHWPFUCPFGPUWTGEQORNKCPEGYKVJ05(TGSWKTGOGPVU
9GUWIIGUVGFVJCVVJG7PKXGTUKV[TGXKUGKVUVTCXGNRQNKE[VQTGSWKTGRTKQTCWVJQTK\CVKQP
QHHGFGTCNN[HWPFGFVTCXGNCPFVQGPUWTGVJCVVTCXGNTGKODWTUGOGPVUCTGUWRRQTVGFD[
CFGSWCVGFQEWOGPVCVKQP9GCNUQUWIIGUVGFVJCVVJG7PKXGTUKV[OQPKVQTWPGZRGPFGF
CYCTFDCNCPEGUOQTGENQUGN[CPFFKUUGOKPCVGU05(IURQNKE[HQTVJGNKOKVQPVJGFCKN[
TCVGQHRC[VQEQPUWNVCPVU6JG7PKXGTUKV[CITGGFVQKORNGOGPVCNNQHQWTUWIIGUVKQPU



05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
        9GHQWPFVJG7PKXGTUKV[IURTQEGFWTGUVQEQORN[YKVJ05(IUKPXGUVKICVQT
HKPCPEKCNFKUENQUWTGRQNKE[FKFPQVGPUWTGVJCVCNNKPXGUVKICVQTUOCFGFKUENQUWTGUQHVJGKT
RQUUKDNGHKPCPEKCNEQPHNKEVUQHKPVGTGUVU6JG7PKXGTUKV[CITGGFVQTGXKUGKVURTQEGFWTGU
VQRTQXKFGVTCKPKPIKPVJG2+IUTGURQPUKDKNKVKGUVQOGGVVJKUTGSWKTGOGPV9GEQPENWFGF
VJCVVJG7PKXGTUKV[IUOKUEQPFWEVRQNKE[YCUGZEGNNGPVCPFVJG7PKXGTUKV[CITGGFYKVJ
QWTUWIIGUVKQPVQOCMGKVUOKUEQPFWEVRQNKE[CPFRTQEGFWTGUOQTGTGCFKN[CXCKNCDNG
WUKPIKVU9GDRCIGU

(WPFUHQT+ORTQXKPIVJG+PVGNNGEVWCN
+PHTCUVTWEVWTGQHVJG+PVGTPGV

       +PQWT/CTEJ5GOKCPPWCN4GRQTV
RCIGJVVRYYYPUHIQXEIK
DKPIGVRWD!QKI YGFGUETKDGF05(IUEQQRGTCVKXGCITGGOGPVYKVJCEQOOGTEKCN
EQORCP[VJCVCWVJQTK\GUVJGEQORCP[VQCNNQECVG+PVGTPGVFQOCKPPCOGU7PFGTVJG
VGTOUQHVJGEQQRGTCVKXGCITGGOGPVVJGEQORCP[EJCTIGFCTGIKUVTCVKQPHGGHQT
GCEJFQOCKPPCOGKUUWGFHQTVJGKPKVKCN[GCTRGTKQFCPFRGT[GCTVJGTGCHVGT6JG
EQORCP[TGVCKPGFRGTEGPVQHVJGTGXGPWGEQNNGEVGFHQTQRGTCVKPIGZRGPUGUYJKNGVJG
TGOCKPKPIRGTEGPVYGTGUGVCUKFGKPCUGRCTCVGKPVGTGUVDGCTKPICEEQWPV KHQTVJG
RTGUGTXCVKQPCPFGPJCPEGOGPVQHVJGH+PVGNNGEVWCN+PHTCUVTWEVWTGIQHVJG+PVGTPGVL6JG
EQQRGTCVKXGCITGGOGPVYCUTGXKUGFUQVJCVVJGEQORCP[UVQRRGFEQNNGEVKPIVJG
RGTEGPVHQTFQOCKPPCOGUTGIKUVGTGFQPQTCHVGT#RTKN%QPVTKDWVKQPUVQVJG
(WPFCPFCEETWGFKPVGTGUVVQVCNGFCRRTQZKOCVGN[OKNNKQP

         +P1EVQDGT%QPITGUUCWVJQTK\GF05(VQWUGOKNNKQPHTQOVJGHWPFU
HQT05(VQWUGQP0GZV)GPGTCVKQP+PVGTPGV
0)+RTQLGEVU#NCYUWKVYCUHKNGF
CICKPUV05(KPHGFGTCNFKUVTKEVEQWTVUGGMKPICTGHWPFQHVJGRGTEGPVRQTVKQPQHVJG
HGGCPFCNNGIKPIVJCVVJGHGGEQNNGEVGFYCUCPWPCWVJQTK\GFVCZ6JGEQWTVCITGGFCPF
GPLQKPGF05(HTQOWUKPIVJGOQPG[KPVJG(WPFRGPFKPIVJGQWVEQOGQHVJGNKVKICVKQP
+P/C[%QPITGUURCUUGFNGIKUNCVKQPTCVKH[KPIVJGEQNNGEVKQPQHVJG+PVGNNGEVWCN
+PHTCUVTWEVWTG(WPFCPFFKTGEVKPIVJCVKVDGETGFKVGFVQVJG05(4GUGCTEJCPF4GNCVGF
#EVKXKVKGU#EEQWPVHQTUWRRQTVQH0)+CPFTGNCVGF+PVGTPGVCEVKXKVKGU+P#WIWUV
VJGEQWTVNKHVGFVJGKPLWPEVKQPCPFFKUOKUUGFVJGNCYUWKV05(VJGTGCHVGTQDNKICVGF
OKNNKQPHQT0)+CEVKXKVKGU6JGRNCKPVKHHUEQPVKPWGVQEJCNNGPIGVJGEQPITGUUKQPCN
TCVKHKECVKQPCPF05(JCUCITGGFPQVVQURGPFVJGTGOCKPFGTQHVJGHWPFUPQYETGFKVGF
VQVJG(QWPFCVKQPIUCRRTQRTKCVKQPHQTCOQPVJRGTKQFRGPFKPILWFKEKCNTGUQNWVKQPQH
VJGOCVVGT




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
+UUWGU+PXQNXKPI#FOKPKUVTCVKQPCPF/CPCIGOGPV
;GCT4GCFKPGUU

        05(KUTGSWKTGFVQRTQXKFGSWCTVGTN[TGRQTVUVQ1/$QPVJGTGCFKPGUUQHKVU
EQORWVGTU[UVGOUVQRTQEGUUFCVGUGPUKVKXGKPHQTOCVKQPKPVJG[GCT05(KUCNUQ
TGSWKTGFVQJCXGCPKPFGRGPFGPVXGTKHKECVKQPCPFXCNKFCVKQPQHVJGRTQITGUUOCFGKPKVU
;GCTTGCFKPGUURTQITCO9GTGXKGYVJGSWCTVGTN[RTQITGUUTGRQTVUVJCV05(
UWDOKVUVQ1/$CPFRGTKQFKECNN[OGGVYKVJVJG)#1YJKEJCNUQOQPKVQTU05( IU;GCT
TGCFKPGUURTQITCO+PCFFKVKQPYGJCXGRCTVPGTGFYKVJVJGTGURQPUKDNG05(
&KXKUKQPD[RCTVKEKRCVKPIQPVJGRCPGNVJCVUGNGEVGFCEQPVTCEVQTVQEQPFWEVVJG
KPFGRGPFGPVXGTKHKECVKQPQH05(IU;GCTRTQITGUUCPFYGCTGOQPKVQTKPIVJG
CEVKQPUVCMGPD[VJCVEQPVTCEVQT

#WFKVQH05(IU(KPCPEKCN5VCVGOGPVU

        9GCTGPQYEQPFWEVKPIVJGVJKTFCPPWCNCWFKVQH05(IUCIGPE[YKFGHKPCPEKCN
UVCVGOGPVUHQT(;VQEQORN[YKVJVJG%JKGH(KPCPEKCN1HHKEGTUCPF)QXGTPOGPV
/CPCIGOGPV4GHQTO#EVUYJKEJCTGKPVGPFGFVQDTKPIOQTGGHHGEVKXGIGPGTCNCPF
HKPCPEKCNOCPCIGOGPVRTCEVKEGUVQVJGIQXGTPOGPVD[KORTQXKPIU[UVGOUQHCEEQWPVKPI
HKPCPEKCNOCPCIGOGPVCPFKPVGTPCNEQPVTQNU1WT(;HKPCPEKCNUVCVGOGPVCWFKV
TGUWNVGFKPCKSWCNKHKGFLQRKPKQPQPDQVJVJG5VCVGOGPVQH(KPCPEKCN2QUKVKQPCPFVJG
5VCVGOGPVQH1RGTCVKQPUCPF%JCPIGUKP0GV2QUKVKQPDGECWUGYGYGTGPQVCDNGVQRNCP
CPFRGTHQTOCWFKVRTQEGFWTGUVQFGVGTOKPGYJGVJGTVJG2TQRGTV[2NCPVCPF'SWKROGPV

22'DCNCPEGCUQH5GRVGODGTYCUHCKTN[RTGUGPVGF

        %QPUKUVGPVYKVJQWTIQCNQHETGCVKPIRCTVPGTUJKRUVJG%(1CPFYGETGCVGFCP
#WFKV%QQTFKPCVKQP%QOOKVVGG6JKU%QOOKVVGGRTQXKFGUCUVTWEVWTGVJCVHQUVGTU
KPHQTOCVKQPGZEJCPIGFKCNQIWGCPFTGUQNWVKQPQHKUUWGUKPXQNXKPIVJGCWFKVQH05( IU
HKPCPEKCNUVCVGOGPVU6JG%QOOKVVGGCNUQUGTXGUCUCOGEJCPKUOVJTQWIJYJKEJYG
VTCPUHGTTGFITGCVGTTGURQPUKDKNKV[HQTOCPCIGOGPVQHVJGEQPVTCEVHKPCPEKCNUVCVGOGPV
CWFKVUGTXKEGUVQVJG%(1YJKNGGPUWTKPIQWTKPFGRGPFGPEGCPFVJGSWCNKV[QHVJGCWFKV
YQTMRGTHQTOGF$WKNFKPIQPFKUEWUUKQPUEQPFWEVGFWPFGTVJGCWURKEGUQHVJG#WFKV
%QQTFKPCVKPI%QOOKVVGGVJG%(1CPF1+)UVCHHUJCXGCNTGCF[VCMGPUVGRUVQTGUQNXG
EQORNKECVGFVGEJPKECNKUUWGUCUUQEKCVGFYKVJVJGHKPCPEKCNUVCVGOGPVCWFKVKPENWFKPIVJG
FGXGNQROGPVQHFGVCKNGFRNCPUHQTVKOGN[EQORNGVKQPQHCWFKVVGUVUCPFHKGNFYQTMCUYGNN
CUCRRTQRTKCVGOGEJCPKUOUHQTXCNWCVKQPQHCPFFQEWOGPVCVKQPHQTVJG22'TGNCVGF
VQVJG#PVCTEVKE2TQITCO

        /QUVQHVJG05(QYPGF22'KUTGNCVGFVQVJG75#PVCTEVKE2TQITCOCPF
VJGTGHQTGCEEGUUKDNGQPN[FWTKPIVJGUJQTV#WUVTCNUWOOGT9GFGXGNQRGFFGVCKNGF
RNCPUHQTEQPFWEVKPIKP&GEGODGTVJGRJ[UKECNCWFKVQHVJGGSWKROGPVCKTETCHV
DWKNFKPIUCPFUVTWEVWTGUKP#PVCTEVKECCPF%JTKUVEJWTEJ0GY<GCNCPF#VQWT



05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
TGSWGUVOCPCIGOGPVGZGEWVKXGUTGRQTVKPIVQVJG%(1CPFVJG%JKGH+PHQTOCVKQP
1HHKEGTYKNNDGRTGUGPVFWTKPIVJGHKGNFYQTMKPQTFGTVQGPUWTGVJCVCP[RTQDNGOUYG
KFGPVKH[ECPDGCFFTGUUGFCPFTGUQNXGFRTQORVN[

        +P/C[VJG2TGUKFGPVUKIPGFCFKTGEVKXGOCPFCVKPIVJCV05(
CNQPIYKVJ
QVJGTHGFGTCNCIGPEKGUVCMGPGEGUUCT[UVGRUVQQDVCKPWPSWCNKHKGFQRKPKQPUQPVJGKT
HKPCPEKCNUVCVGOGPVU9GCTGEQOOKVVGFVQEQPVKPWGVQYQTMYKVJ05(OCPCIGOGPV
VJTQWIJVJG#WFKV%QQTFKPCVKQP%QOOKVVGGVQCEEQORNKUJVJCVIQCN




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
                                                                           I
W
             e are responsible for investigating possible wrongdoing
            involving organizations or individuals that receive awards
            from, conduct business with, or work with the Founda-
tion. In investigating these allegations we assess their seriousness
and recommend proportionate action. When appropriate, the results
of these investigations are referred to the Department of Justice or
other prosecutorial authorities for criminal prosecution or civil
                                                                           N
litigation, or to the Foundation for administrative resolution.

Among our responsibilities are investigating allegations of miscon-
duct in science and engineering, such as falsification, fabrication, and   T
plagiarism. Misconduct in science strikes at the core of the
Foundation’s mission, and it is a special concern for our office. In
investigating these allegations, we

•   evaluate scientists’ conduct according to the ethical
    standards of their professional communities’ “accepted                 E
    practices,”

•   rely on the professional community at the Founda-
    tion and awardee institutions to articulate and
    evaluate these standards, and                                          G
•   recommend findings of misconduct in science only for
    “serious deviations” from those standards.

                                                                           R
                            Highlights

                Misconduct Investigations Forwarded
                    to the Deputy Director 16
                                                                           I
           Conviction for Submission of False Statements
                  and Obstruction of Justice 19

     Civil Settlement Involving Duplicate SBIR Proposals 20
                                                                           T
             Statistical Analysis of Misconduct Cases
          and Summary of Cases Closed This Period 22

                        Statistical Tables 27
                                                                           Y

                                   15
5WOOCT[QH4GHGTTCNUVQ#IGPE[/CPCIGOGPV
HQT#FOKPKUVTCVKXG4GUQNWVKQP
(CDTKECVKQPQH&CVC

        9GTGEGKXGFCNNGICVKQPUQHTGUGCTEJHCDTKECVKQPCICKPUVCUEKGPVKUVYJQTGEGPVN[
TGEGKXGFJGTFQEVQTCNFGITGG6JGTGUGCTEJOKUEQPFWEVEQOOKVVGGKPVJGKPUVKVWVKQP IU
EJGOKUVT[FGRCTVOGPVTGXKGYGFVJGGXKFGPEGCPFEQPENWFGFVJCVKVJGJGCTVQH=VJG
UEKGPVKUVIU?FKUUGTVCVKQP=YCU?DCUGFQPHTCWFWNGPVFCVCLCPFHQWPFKCXGT[ENGCTRCVVGTP
VJCVWPFGTOKPGUVJGGPVKTGDCUKUHQTVJGTGUGCTEJTGRQTVGFKPVJGFKUUGTVCVKQP L6JG
UEKGPVKUVFKFPQVEQPVGUVVJGOCLQTKV[QHVJGCNNGICVKQPUQHHCDTKECVKQPCICKPUVJGTCPF
YKVJFTGYJGTFKUUGTVCVKQP6JGKPUVKVWVKQPVJGPTGUEKPFGFJGTFQEVQTCNFGITGG

       9GTGXKGYGFVJGKPUVKVWVKQPIUGXKFGPEGCPFCITGGFVJCVVJGKPFGRGPFGPVTGUGCTEJ
TGRQTVGFKPVJGFKUUGTVCVKQPJCFDGGPHCDTKECVGFD[EWVVKPICPFVCRKPIURGEVTCVQTGOQXG
UQOGURGEVTCNRGCMUCPFCFFPGYQPGU9GCITGGFYKVJVJGEQOOKVVGGVJCVVJGYKNNHWN
TGUGCTEJHCDTKECVKQPUYJKEJWPFGTOKPGFVJGDCUKUHQTVJGTGUGCTEJKPVJGFKUUGTVCVKQP
YGTGCUGTKQWUFGXKCVKQPHTQOCEEGRVGFRTCEVKEGUCPFVJGTGHQTGOKUEQPFWEVKPUEKGPEG
WPFGT05(IUTGIWNCVKQP

        9GTGEQOOGPFGFVJCV05(IUCFLWFKECVQTCHHKTOVJGUGTKQWUPGUUQHVJGUWDLGEVIU
CEVKQPUD[HKPFKPIVJCVVJGUWDLGEVEQOOKVVGFOKUEQPFWEVKPUEKGPEGCPFD[KUUWKPIC
NGVVGTQHTGRTKOCPF9GDGNKGXGPQHWTVJGTCEVKQPD[VJGIQXGTPOGPVKUPGEGUUCT[CV
VJKUVKOGDGECWUGVJGKPUVKVWVKQPIUCEVKQPUYGTGCFGSWCVGVQRTQVGEVVJGIQXGTPOGPVIU
KPVGTGUVUCPFVJGUWDLGEVVQNFWUVJCVUJGJCUPQVYQTMGFKPEJGOKUVT[UKPEGUJG
HQTHGKVGFJGTFGITGG9GCNUQTGEQOOGPFGFVJCV05(FGXGNQRCPQVKHKECVKQPTGSWKTG
OGPVUQVJCVKHVJGUWDLGEVYQTMUQPHGFGTCNN[UWRRQTVGFUEKGPVKHKEQTGPIKPGGTKPI
TGUGCTEJQTGFWECVKQPYKVJKPVJGPGZV[GCTUCRRTQRTKCVGUCHGIWCTFUEQWNFDGKPRNCEG

2NCIKCTKUOKP5EKGPEG'FWECVKQP2TQRQUCN

        9GTGXKGYGFGXKFGPEGQHRNCIKCTKUOKPCP05(UWRRQTVGFGFWECVKQPRTQLGEV
#NOQUVVJGGPVKTGVGZVQHVJGRTQRQUCNYCUKFGPVKECNQTUWDUVCPVKCNN[UKOKNCTVQVJCVQHCP
GCTNKGTRTQRQUCN
VJGUQWTEGUWDOKVVGFD[GFWECVQTUCVCPQVJGTWPKXGTUKV[6JG
GZRGTKGPEGF2+CPFEQ2+
VJGUWDLGEVUYJQUWDOKVVGFVJGCNNGIGFN[RNCIKCTK\GF
RTQRQUCNUVCVGFKPVJGKTRTQRQUCNVJCVVJGKTRTQLGEVYQWNFDGOQFGNGFCHVGTVJGUQWTEG
RTQLGEVCPFYQWNFFTCYGZVGPUKXGN[QPGFWECVKQPCNOCVGTKCNUQTKIKPCNN[FGXGNQRGFHQT
VJCVRTQLGEV*QYGXGTVJGUWDLGEVUFKFPQVKPFKECVGVJCVVJGNCPIWCIGQHVJGKTRTQRQUCN
YCUVCMGPFKTGEVN[HTQOCPQVJGTUQWTEGCPFYCUPQVQTKIKPCNVQVJGKTRTQRQUCN




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
        9GTGHGTTGFVJGECUGVQVJGUWDLGEVUIWPKXGTUKV[HQTKPXGUVKICVKQP6JGWPKXGTUKV[
EQPENWFGFVJCVVJGRTQRQUCNYCURNCIKCTK\GFVJCVKVUUWDOKUUKQPEQPUVKVWVGFOKUEQPFWEV
KPUEKGPEGCPFVJCVDQVJUWDLGEVUYGTGTGURQPUKDNGHQTVJGOKUEQPFWEV

        6JGWPKXGTUKV[FGEKFGFVJCVVJG2+UJQWNFYTKVGNGVVGTUQHCRQNQI[VQ05(CPFVJG
CWVJQTUQHVJGUQWTEGRTQRQUCNCVVGUVVJCVHWVWTGCRRNKECVKQPUHQTUWRRQTVEQPUKUVQH
QTKIKPCNQTRTQRGTN[CVVTKDWVGFRTQUGCPFKFGCUCPFTGUKIPJKURQUKVKQPCU&KUVKPIWKUJGF
7PKXGTUKV[2TQHGUUQT
YJKNGTGVCKPKPIJKUVGPWTGTCPMCPFQVJGTWPKXGTUKV[RQUKVKQPU
6JG2+EQORNKGFYKVJVJGWPKXGTUKV[IUUCPEVKQPU6JGWPKXGTUKV[CNUQRNCEGFCNGVVGTQH
TGRTKOCPFKPVJG2+IURGTUQPPGNHKNGYJKEJYKNNDGTGOQXGFCHVGT[GCTUKHVJGTGKUPQ
HWTVJGTGXKFGPEGQHOKUEQPFWEV6JGWPKXGTUKV[IUTGEQOOGPFCVKQPUTGICTFKPIVJGEQ2+
YGTGUKOKNCT9JGPVJGEQ2+FKFPQVEQORN[YKVJVJGWPKXGTUKV[IUTGSWGUVVJCVJG
TGUKIPJKUVKVNGQH'OGTKVWUVJGWPKXGTUKV[UVTKRRGFJKOQHKV

        4GUGCTEJUEKGPVKUVUIGPGTCNN[EQPUKFGTRNCIKCTKUOCUGTKQWUXKQNCVKQPQH
RTQHGUUKQPCNUVCPFCTFU6JGWPKXGTUKV[IUKPXGUVKICVKQPEQOOKVVGGEQPUKFGTGFCPF
TGLGEVGFVJGKFGCVJCVYKVJTGICTFVQRNCIKCTKUORTQHGUUKQPCNUVCPFCTFUKPUEKGPEG
GFWECVKQPYGTGOCVGTKCNN[FKHHGTGPVHTQOVJQUGKPUEKGPVKHKETGUGCTEJCPFYGWTIGF05(
VQGPFQTUGVJKUXKGY

        9GDGNKGXGVJGNCTIGCOQWPVQHXGTDCVKORNCIKCTKUOCPFVJGUWDLGEVU IOCP[
[GCTUQHRTQHGUUKQPCNGZRGTKGPEGEQPVTKDWVGVQVJGUGTKQWUPGUUQHVJGOKUEQPFWEVKPVJKU
ECUG*QYGXGTVJGTGCTGOKVKICVKPIHCEVQTUKPENWFKPIVJCVVJGUWDLGEVUUVCVGFVJCV
VJGKTRTQLGEVYCUOQFGNGFCHVGTVJGUQWTEGRTQLGEVCPFVJCVVJGUWDLGEVU IOKUEQPFWEV
CRRGCTGFVQDGCPKUQNCVGFKPEKFGPV

        9GTGEQOOGPFGFVJCV05(LQKPVJGWPKXGTUKV[KPEQPENWFKPIVJCVVJGUWDLGEVU I
CEVKQPUEQPUVKVWVGOKUEQPFWEVKPUEKGPEGCPFUGPFGCEJUWDLGEVCPCRRTQRTKCVGNGVVGTQH
TGRTKOCPF9GEQPENWFGFVJCVVJGWPKXGTUKV[IUCEVKQPUYGTGQVJGTYKUGUWHHKEKGPVVQ
RTQVGEV05(IUKPVGTGUVUCPFTGPFGTCFFKVKQPCN05(CEVKQPWPPGEGUUCT[

05(2TQRQUGUVQ&GDCT5VWFGPV

       +PQWT5GRVGODGT5GOKCPPWCN4GRQTV
RCIGU
JVVRYYYPUHIQXEIKDKPIGVRWD!QKI YGFGUETKDGFVJGECUGQHCUVWFGPVYJQ
QXGTCPOQPVJRGTKQFHCNUKHKGFVKOGUJGGVUCPFHCDTKECVGFFCVCKPEQPPGEVKQPYKVJ
JGTYQTMKPVYQFKHHGTGPVTGUGCTEJNCDQTCVQTKGUVQLWUVKH[JGTENCKOUQPVJGVKOGUJGGVU
5JGYCUEQPXKEVGFQHCOKUFGOGCPQTKPCUVCVGEQWTV6JGCIGPE[CITGGFYKVJQWT
TGEQOOGPFCVKQPUCPFEQPENWFGFVJCVVJGUVWFGPVEQOOKVVGFOKUEQPFWEVKPUEKGPEG
$GECWUGQHVJGUGTKQWUPGUUQHVJGHCDTKECVKQPUCPFHCNUKHKECVKQPUCPFVJGEQPXKEVKQP05(
RTQRQUGFVQFGDCTJGTHQT[GCT



05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
4GXKGYQH4GUGCTEJ%GPVGTIU2QNKE[
HQT2C[OGPVQH#FOKPKUVTCVKXG%QUVU

       9GTGEGKXGFCNNGICVKQPUVJCVCTGUGCTEJEGPVGTCVCUVCVGWPKXGTUKV[JCFCRQNKE[
FGUKIPGFVQECRVWTGHQTIGPGTCNCFOKPKUVTCVKXGRWTRQUGUCRRTQZKOCVGN[RGT
[GCTPQOKPCNN[TGSWGUVGFD[EGPVGTHCEWNV[GCPFCYCTFGFD[05(GHQTTGUGCTEJ

         9GFGVGTOKPGFVJCVVJGEGPVGTTGSWKTGFHCEWNV[VQVTCPUHGTVQVJGEGPVGTHTQO
ITCPVHWPFUCDQWVRGTEGPVQHVJGKTCECFGOKE[GCTUCNCT[DGHQTGVJGEGPVGTYQWNF
CWVJQTK\GTGSWGUVUD[VJGHCEWNV[HQTUWOOGTUCNCT[VQDGRCKFQWVQHITCPVHWPFU#V
VJGEGPVGTVJKUVTCPUHGTYCUEQOOQPN[TGHGTTGFVQCUCKVKVJGL6JGUG05(ITCPVU
IGPGTCNN[FKFPQVHWPFUCNCTKGUFWTKPIVJGCECFGOKE[GCT6JGEGPVGTCFLWUVGFKVU
CEEQWPVKPITGEQTFUHQTVJGRGTKQFKPYJKEJCHCEWNV[OGODGTIUUCNCT[JCFDGGPHWPFGF
D[VJGEGPVGTVQTGHNGEVCNGXGNQHGHHQTVQPVJG05(CYCTFGSWCNVQVJGCOQWPVQHVJG
VKVJGVJWUWPGPEWODGTKPIVJGEGPVGTIUHWPFU6JGGHHGEVQHVJGVKVJGYCUVJCVHWPFUKPC
URQPUQTGFTGUGCTEJCEEQWPVGYJKEJCTGCXCKNCDNGHQTWUGD[VJGHCEWNV[OGODGTHQT
TGUGCTEJRWTRQUGUGYGTGVTCPUHGTTGFVQCPCEEQWPVCXCKNCDNGHQTWUGD[EGPVGT
CFOKPKUVTCVKQPHQTCP[RWTRQUG6JGVKVJGVJGTGD[FKTGEVN[TGFWEGFVJGHWPFUCXCKNCDNG
VQVJGHCEWNV[OGODGTHQTTGUGCTEJYJKNGKPETGCUKPIHWPFUCXCKNCDNGHQTCFOKPKUVTCVKQP
D[VJGEGPVGT6JGVKVJKPIRQNKE[YCUPQVGZRTGUUN[FKUENQUGFD[VJGEGPVGTKPKVU
RTQRQUCNUVQ05(

        'XGPVJQWIJVJGCYCTFUFKFPQVGZRTGUUN[EQPVCKPHWPFKPIHQTCECFGOKE[GCT
UCNCTKGUUQOG05(RTQITCOQHHKEGTUCFXKUGFWUVJCVJCFVJG[MPQYPVJG[OKIJVPQV
JCXGQDLGEVGFVQHWPFUDGKPIWUGFHQTVJCVRWTRQUG0QPGVJGNGUUKPQWTXKGYVJGVKVJG
COQWPVGFVQCSWGUVKQPCDNGEQPXGTUKQPQHFKTGEVFEQUVHWPFUKPVQKPFKTGEVFEQUVHWPFUKPC
OCPPGTKPEQPUKUVGPVYKVJ05(IURQNKE[QPVJGRC[OGPVQHUCNCTKGUHTQO05(CYCTFU+P
CFFKVKQPVJGPQPFKUENQUWTGQHVJGVKVJKPIRQNKE[ECWUGF05(RTQITCOUVCHHCPF
TGXKGYGTUVQGXCNWCVGTGSWGUVUHQTHWPFUVJCVRTQRQUCNUKFGPVKHKGFCUTGUGCTEJEQUVUYJGP
VJGEGPVGTKPVGPFGFVQWUGVJGHWPFUHQTCFOKPKUVTCVKXGRWTRQUGU

        9GTGEQOOGPFGFVJCVVJGEGPVGTFKUEQPVKPWGVJGVKVJKPIRQNKE[QTGZRNKEKVN[
FKUENQUGKVKPRTQRQUCNUVQ05(UQVJCVTGXKGYGTUCPF05(OCPCIGOGPVECPHQTOCNN[
GXCNWCVGKV+PTGURQPUGVQQWTTGRQTVVJGEGPVGTFKUEQPVKPWGFVJGVKVJKPIRQNKE[#UC
TGUWNVQXGTVJGPGZV[GCTUCRRTQZKOCVGN[QH05(HWPFUYKNNDGWUGFD[VJG
EGPVGTKPFKTGEVUWRRQTVQHTGUGCTEJCPFVJGEGPVGTIURTQRQUCNDWFIGVUYKNNEQPVCKP
CEEWTCVGTGRTGUGPVCVKQPU




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
5WOOCT[QH%CUGU4GHGTTGF
VQ2TQUGEWVQTKCN#WVJQTKVKGU
5EKGPVKUV%QPXKEVGFQH5WDOKUUKQPQH(CNUG
5VCVGOGPVUCPF1DUVTWEVKQPQH,WUVKEG

        #UEKGPVKUVUWDOKVVGFHCNUGCPFHQTIGFFQEWOGPVUVQ05(KPCPCVVGORVVQ
TGEGKXG05(IU#NCP69CVGTOCP#YCTFYQTVJCUYGNNCUC
%#4''4CYCTF6JKUUEKGPVKUV
HQTIGFVJG9CVGTOCPPQOKPCVKQPHQTOCNQPIYKVJ
VYQ9CVGTOCPTGHGTGPEGHQTOU
CNVGTGFCNGVVGTHTQOCEQNNGCIWGCPFUWDOKVVGFKVCU
CTGHGTGPEGHQTVJG9CVGTOCP#YCTFCPF
UWDOKVVGFCPQVJGTHCNUGFQEWOGPVCURCTV
QHJKU%#4''4RTQRQUCN6JGUEKGPVKUVCNUQCVVGORVGFVQQDUVTWEVQWTKPXGUVKICVKQPD[
TGRGCVGFN[EQPVCEVKPIYKVPGUUGUCPFUQNKEKVKPIHCNUGUVCVGOGPVUVJCVVJGYKVPGUUGUJCF
CWVJQTK\GFJKOVQYTKVGCPFUWDOKVHQTIGFFQEWOGPVU9GTGHGTTGFVJKUOCVVGTVQVJG
75#VVQTPG[IU1HHKEGCPFCHGFGTCNITCPFLWT[KPFKEVGFVJGUEKGPVKUVQPHKXGEQWPVUQH
HCNUGUVCVGOGPVU
75%hCPFVYQEQWPVUQHQDUVTWEVKQPQHLWUVKEG
75%
h

        +P/C[CHGFGTCNLWT[HQWPFVJGUEKGPVKUVIWKNV[QHCNNHGNQP[EQWPVU6JG
UEKGPVKUVHCKNGFVQCRRGCTKPEQWTVHQTCUEJGFWNGF5GRVGODGTUGPVGPEKPIFCVGCPFYCU
KPFKEVGFWPFGT75%h2GPCNV[HQT(CKNWTGVQ#RRGCT1P5GRVGODGT
VJGUEKGPVKUVUWTTGPFGTGFVQVJG75/CTUJCNUCPFKUEWTTGPVN[KPEWUVQF[CPF
DGKPIJGNFYKVJQWVDQPF

%KXKN5GVVNGOGPV+PXQNXKPI&WRNKECVG5$+42TQRQUCNU

        9GYGTGCNGCFCIGPE[QPCPKPXGUVKICVKQPQHCEQORCP[VJCVOC[JCXG
UWDOKVVGFUKOKNCTQTKFGPVKECN5OCNN$WUKPGUU+PPQXCVKQP4GUGCTEJ
5$+4RTQRQUCNUVQ
05(VJG&GRCTVOGPVQH&GHGPUGCPFVJG0CVKQPCN#GTQPCWVKECN5RCEG#FOKPKUVTCVKQP
YKVJQWVFKUENQUKPIRTKQTUWDOKUUKQPU6JGEQORCP[IURTQRQUCNUEQPVCKPGFEGTVKHKECVKQPU
CPFCHHKTOCVKXGUVCVGOGPVUVJCVUWDUVCPVKCNN[UKOKNCTQTKFGPVKECNRTQRQUCNUCPFCYCTFU
JCFPQVRTGXKQWUN[DGGPUWDOKVVGFQTTGEGKXGFHTQOQVJGTCIGPEKGU I5$+4RTQITCOUCU
TGSWKTGFKPVJG5$+4UQNKEKVCVKQPU

        6JGOWNVKCIGPE[KPXGUVKICVKQPFKUENQUGFVJCVVJGFWRNKECVKXGRTQRQUCNUJCFDGGP
UWDOKVVGFHTQOQPGQHVJGEQORCP[IUHQWTTGUGCTEJFKXKUKQPUCPFVJCVVJGUGRTQRQUCNU
TGRTGUGPVGFCUOCNNRGTEGPVCIGQHVJGEQORCP[IUQXGTCNNTGUGCTEJGHHQTVU6JG
TGUGCTEJGTUTGURQPUKDNGHQTVJGFWRNKECVKXGRTQRQUCNUJCXGNGHVVJGEQORCP[VJGTGD[
TGFWEKPIVJGNKMGNKJQQFVJCVFWRNKECVKXGRTQRQUCNUYKNNDGUWDOKVVGFD[VJGEQORCP[KP
VJGHWVWTG#UCRTGECWVKQPVJGEQORCP[CITGGFVQGUVCDNKUJKPVGTPCNRTQEGFWTGUVQ
GPUWTGVJCVVJGEQORCP[HQNNQYUCNN5$+4TGSWKTGOGPVUKPENWFKPIPQVKH[KPICIGPEKGUKH

05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
UKOKNCTRTQRQUCNUCTGUWDOKVVGF6JGEQORCP[CNUQCITGGFVQRC[KPCEKXKN
UGVVNGOGPVYKVJVJGIQXGTPOGPV

5OCNN$WUKPGUU1YPGT&KF0QV5WDOKV
'ZRNKEKVN[(CNUG5VCVGOGPVU

        +PQWT/CTEJ5GOKCPPWCN4GRQTV
RCIGJVVRYYYPUHIQXEIK
DKPIGVRWD!QKI YGTGRQTVGFVJCVCHGFGTCNLWT[HQWPFVJCVCUOCNNDWUKPGUUQYPGT
UWDOKVVGFHQTOUYKVJHCNUGKPHQTOCVKQPVJCVHTCWFWNGPVN[ECWUGF05(VQTGOKVPGCTN[
VQJKOCHVGTJGJCFUVQRRGFFQKPICP[TGUGCTEJ+PVJKUTGRQTVKPIRGTKQFCP
CRRGNNCVGEQWTVTWNGFVJCVVJGHQTOUKPSWGUVKQPFKFPQVETGCVGCUWHHKEKGPVDCUKUHQTVJG
LWT[VQEQPENWFGVJCVVJGUOCNNDWUKPGUUQYPGTOCFGGZRNKEKVN[HCNUGUVCVGOGPVU6JG
CRRGNNCVGEQWTVEQPENWFGFVJCVVJG05(HQTOUFKFPQVTGSWKTGVJGUEKGPVKUVVQOCMG
GZRNKEKVTGRTGUGPVCVKQPUCDQWVJQYRTGXKQWUN[TGEGKXGFHWPFUJCFDGGPURGPVQTHWVWTG
HWPFUYQWNFDGURGPV*QYGXGTVJGCRRGNNCVGEQWTVUCKFKVYCUKPFKURWVCDNGVJCVVJG
IQXGTPOGPVEQWNFUWGVJGUEKGPVKUVEKXKNN[HQTWPLWUVGPTKEJOGPVCPF&GRCTVOGPVQH
,WUVKEG
&1,KUGXCNWCVKPIVJKUQRVKQP

        05(IUEWTTGPVCPFRTQRQUGFRTQEGFWTGUHQTJCPFNKPIRC[OGPVTGSWGUVUUJQWNF
TGFWEGVJGNKMGNKJQQFQHCUKOKNCTUKVWCVKQPTGEWTTKPICPFDGVVGTGPCDNGVJGIQXGTPOGPV
VQVCMGNGICNCEVKQPKHCUKOKNCTECUGCTKUGUKPVJGHWVWTG0GYCYCTFGGUCTGPQY
UWDLGEVGFVQITGCVGTUETWVKP[QHVJGKTHKPCPEKCNU[UVGOUVQFGVGTOKPGYJGVJGTVJG[
SWCNKH[VQTGEGKXGCFXCPEGRC[OGPVUCPFURGEKCNEQPFKVKQPUCPFEGTVKHKECVKQPUCTG
KORQUGFYJGPCRRTQRTKCVG6JG(GFGTCN%CUJ6TCPUCEVKQP4GRQTVUEQPVCKPGZRNKEKV
UVCVGOGPVUVJCVHGFGTCNHWPFUTGEGKXGFWPFGTVJG05(CYCTFYGTGGZRGPFGFRTQRGTN[
CPF05(PQYTGVCKPUVJGO[GCTU5$+4CYCTFGGUOWUVRTQXKFGRTQITGUUTGRQTVU
YKVJVJGKTRC[OGPVTGSWGUVUCPFEGTVKH[VJCVKVJGYQTMHQTYJKEJRC[OGPVKUJGTGD[
TGSWGUVGFYCURGTHQTOGFKPCEEQTFCPEGYKVJVJGCYCTFVGTOUCPFEQPFKVKQPU L+P
CFFKVKQP05(IU(CUV.CPGU[UVGOYJKEJYKNNTGRNCEGVJGEWTTGPVRCRGTU[UVGOYKVJCP
CNOQUVGPVKTGN[GNGEVTQPKERTQRQUCNCPFCYCTFRTQEGUUYKNNTGSWKTGCUKOKNCTRGTUQPCN
EGTVKHKECVKQPYKVJGXGT[RC[OGPVTGSWGUV6JGUGRTQEGFWTGUUJQWNFCFGSWCVGN[RTQVGEV
VJGIQXGTPOGPVKPVJGHWVWTG

%KXKN5GVVNGOGPV+PXQNXKPI*QPQTCTKC

        +P,WPG&1,HKNGFCEKXKNEQORNCKPVKPC75&KUVTKEV%QWTVCNNGIKPIVJCV
CP05(QHHKEKCNTGEGKXGFHQWTJQPQTCTKCRC[OGPVUVQVCNKPIHQTIKXKPIURGGEJGU
VJCVFKTGEVN[TGNCVGFVQJKUQHHKEKCNRQUKVKQPCXKQNCVKQPQH75%h5CNCT[QH
)QXGTPOGPV1HHKEKCNUCPF'ORNQ[GGU2C[CDNG1PN[D[7PKVGF5VCVGU6QTGUQNXGVJKU
KUUWGVJGQHHKEKCNCITGGFVQRC[VJGIQXGTPOGPVCUCEKXKNUGVVNGOGPV+P
CFFKVKQP05(TGRTKOCPFGFVJGQHHKEKCNHQTJKUPQPYKNNHWNXKQNCVKQPQHhCPF
TGSWKTGFVJGQHHKEKCNVQQDVCKPYTKVVGPENGCTCPEGHTQOVJG1HHKEGQH)GPGTCN%QWPUGNHQT
CNNVTCXGNCPFURGCMKPICEVKXKVKGU+P#WIWUVVJGQHHKEKCNRCKFVJGEKXKNUGVVNGOGPV
05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
CPFCV&1,IUTGSWGUVVJGEQWTVFKUOKUUGFVJGECUG
9GFKUEWUUGFVJKUOCVVGTKPQWT
5GRVGODGTJVVRYYYPUHIQXEIKDKPIGVRWD!QKI CPF/CTEJ
JVVRYYYPUHIQXEIKDKPIGVRWD!QKIOCTEJ 5GOKCPPWCN4GRQTVURCIGU
CPFTGURGEVKXGN[

%QPVTCEVQTIU'ORNQ[GG#EEGRVU+ORTQRGT)KHVU

        #P05(EQPVTCEVQTTGEGKXGFCPCNNGICVKQPVJCVCPGORNQ[GGJCFUQNKEKVGFCPF
CEEGRVGFIKHVUHTQOQPGQHKVUVTCPURQTVCVKQPXGPFQTU6JGEQPVTCEVQTEQPFWEVGFC
TGXKGYCPFFGVGTOKPGFVJCVVJGCNNGICVKQPUYGTGETGFKDNG6JGEQPVTCEVQTKOOGFKCVGN[
RNCEGFVJGGORNQ[GGQPCFOKPKUVTCVKXGNGCXGCPFKPHQTOGF05( IU1HHKEGQH%QPVTCEVU
2QNKE[CPF1XGTUKIJVYJKEJVJGPPQVKHKGFQWTQHHKEG#HVGTTGXKGYKPIVJGEQPVTCEVQT IU
FQEWOGPVCVKQPYGFGVGTOKPGFVJCVVJGCNNGIGFCEVKQPUOC[JCXGXKQNCVGFVJG #PVK
-KEMDCEM#EVQH75%hh9GYQTMGFYKVJVJG05(EQPVTCEVQTVQ
KPXGUVKICVGVJKUOCVVGTCPFEQPFWEVGFCU[UVGOKETGXKGYQHVJGEQPVTCEVQTIUUJKRRKPI
RTQEGUU

         6JGXGPFQTCFOKVVGFRTGUGPVKPIIKHVUVQVJGGORNQ[GGQXGTEQPUGEWVKXG[GCTU
CPFVJGGORNQ[GGCFOKVVGFTGEGKXKPIIKHVUKPENWFKPICVGNGXKUKQPUGVCEQORWVGTCPFC
UCVGNNKVGFKUJ6JGXGPFQTENCKOGFVJCVKVFKFPQVDGNKGXGVJCVKVJCFXKQNCVGFCP[HGFGTCN
NCYUD[RTGUGPVKPIIKHVUVQCPGORNQ[GGQHCIQXGTPOGPVEQPVTCEVQT6JGGORNQ[GG
CFOKVVGFVJCVJGYCUCYCTGVJCVJGUJQWNFPQVCEEGRVIKHVUHTQOVJGXGPFQTDWVENCKOGF
VJCVJGGZEJCPIGFIKHVUDCUGFQPVJGKTRGTUQPCNTGNCVKQPUJKR

        9GFKFPQVHKPFGXKFGPEGVJCVVJGGORNQ[GGKORTQRGTN[KPHNWGPEGFGXGPVUKP
HCXQTQHVJGXGPFQTQTVJCVVJGXGPFQTRTGUGPVGFVJGIKHVUYKVJVJGKPVGPVVQKPHNWGPEGVJG
IQXGTPOGPVEQPVTCEVQT9GCNUQHQWPFPQGXKFGPEGVJCVVJG05(EQPVTCEVQTQXGTRCKF
HQTUGTXKEGURCKFHQTUGTXKEGUPQVTGEGKXGFQTKPCRRTQRTKCVGN[FKXGTVGFYQTMVQVJG
XGPFQT&WTKPIVJGKPXGUVKICVKQPVJGGORNQ[GGTGUKIPGFCPFYGTGHGTTGFQWTHKPFKPIU
VQVJGEQIPK\CPV75#VVQTPG[IU1HHKEGYJKEJFGENKPGFRTQUGEWVKQPDCUGFQPVJGNCEM
QHETKOKPCNKPVGPV

        9GKFGPVKHKGFEGTVCKPCFOKPKUVTCVKXGYGCMPGUUGUKPVJGEQPVTCEVQT IUQRGTCVKQP
UGTXKEGUYGTGRTQEWTGFYKVJQWVEQORGVKVKXGDKFFKPIKPXQKEGUYGTGCRRTQXGFHQT
RC[OGPVYKVJQWVXGTKH[KPIDCEMWRFQEWOGPVCVKQPCPFGORNQ[GGUOC[PQVJCXGDGGP
HWNN[CYCTGQHVJGEQPVTCEVQTIURQNKE[QPCEEGRVKPIIKHVU9GFKUEWUUGFVJGUG
YGCMPGUUGUYKVJVJGEQPVTCEVQTIUOCPCIGTCPFVJGEQPVTCEVQTJCURTQRQUGFCRNCPQH
CEVKQPVQCFFTGUUVJGUGYGCMPGUUGU9GCTGEQQTFKPCVKPITGUQNWVKQPQHVJGUGKUUWGUYKVJ
05(OCPCIGOGPV




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
/CVVGTU2GPFKPI9KVJ2TQUGEWVQTKCN#WVJQTKVKGU

        +PVGPVKQPCNFKXGTUKQPQH05(HWPFUHQTRGTUQPCNWUGKUCETKOKPCNCEVVJCVECPDG
RTQUGEWVGFWPFGTUGXGTCNUVCVWVGUCPFKPXGUVKICVKQPQHFKXGTUKQPCNNGICVKQPUKUC
RTKQTKV[9GGPEQWTCIGWPKXGTUKVKGUCPFQVJGTITCPVGGUVQPQVKH[05(QHCP[UKIPKHKECPV
RTQDNGOUTGNCVKPIVQVJGOKUWUGQH05(HWPFU'CTN[PQVKHKECVKQPQHUKIPKHKECPV
RTQDNGOUKPETGCUGUQWTCDKNKV[VQKPXGUVKICVGCNNGICVKQPUCPFVCMGEQTTGEVKXGCEVKQPVQ
RTQVGEV05(CPFKVUITCPVGGU9GYQTMGFYKVJRTQUGEWVQTKCNCWVJQTKVKGUQPHQWTECUGU
KPXQNXKPIVJGFKXGTUKQPQHITCPVHWPFUD[ITCPVGGQHHKEKCNU1PGQHVJGUGFKXGTUKQPECUGU
KUUEJGFWNGFHQTVTKCNNCVGTVJKU[GCT

         #PQVJGTHQEWUQHQWTKPXGUVKICVKXGTGUQWTEGUKPXQNXGUKPFKXKFWCNUQTITCPVGGU
VJCVCNNGIGFN[TGEGKXGFITCPVHWPFUD[UWDOKVVKPIHCNUGUVCVGOGPVUVQ05(6JG05(
RGGTTGXKGYRTQEGUUKURTGOKUGFQPVJGVTWVJHWNPGUUQHKPHQTOCVKQPUWDOKVVGFVQ05(KP
RTQRQUCNUCPFRTQITGUUTGRQTVU#OCVGTKCNHCNUGUVCVGOGPVKPCRTQRQUCNQTRTQITGUU
TGRQTVEQWNFTGUWNVKP05(HWPFUDGKPIKORTQRGTN[CYCTFGF#NQPIYKVJVJGECUGU
RTGXKQWUN[FKUEWUUGFKPVJKUTGRQTVYGYQTMGFYKVJRTQUGEWVQTKCNCWVJQTKVKGUQPHKXG
CFFKVKQPCNECUGUKPXQNXKPICNNGIGFN[HCNUGUVCVGOGPVUVJCVYGTGUWDOKVVGFVQ05(KP
RTQRQUCNUQTRTQITGUUTGRQTVU9GCNUQRTQXKFGFCUUKUVCPEGVQQVJGTNCYGPHQTEGOGPV
CIGPEKGUKPVJTGGQPIQKPIKPXGUVKICVKQPUKPXQNXKPIIQXGTPOGPVEQPVTCEVQTUVJCVCNNGIGFN[
EJCTIGFGZRGPUGUKORTQRGTN[QPVJGKTIQXGTPOGPVEQPVTCEVUQTOCFGHCNUG
TGRTGUGPVCVKQPUKPVJGKTEQPVTCEVRTQRQUCNUVQ05(CPFQVJGTHGFGTCNCIGPEKGU6JGVJTGG
ECUGUJCXGDGGPTGHGTTGFVQ&1,HQTCRRTQRTKCVGTGUQNWVKQP


5VCVKUVKECN#PCN[UKUQH/KUEQPFWEV%CUGU
         9GHTGSWGPVN[TGEGKXGSWGUVKQPUCDQWVVJGEJCTCEVGTKUVKEUQHQWTOKUEQPFWEVKP
UEKGPEGECUGU9GTGEGPVN[CPCN[\GFQWTENQUGFOKUEQPFWEVECUGUVQFGXGNQRCRTQHKNG
VJCVKPENWFGUUVCVKUVKEUCDQWVCNNGICVKQPUUWDLGEVUCPFEQORNCKPCPVU(QTVJGRWTRQUGU
QHVJKUUVWF[YGFKXKFGFCNNGICVKQPUYGTGEGKXGFKPVQHKXGECVGIQTKGUHCDTKECVKQP
HCNUKHKECVKQPRNCIKCTKUOTGVCNKCVKQPCPFKQVJGTL6JGKQVJGTLECVGIQT[KPENWFGU
CNNGICVKQPUVJCVOC[WPFGTUQOGEKTEWOUVCPEGUEQPUVKVWVGUGTKQWUFGXKCVKQPUHTQO
CEEGRVGFRTCEVKEGUUWEJCUXKQNCVKQPQHVJGEQPHKFGPVKCNKV[QHRGGTTGXKGYHCNUG
UVCVGOGPVUKPCRTQRQUCNQTTGRQTVVQ05(CPFCDWUGQTGZRNQKVCVKQPQHUWDQTFKPCVGU
EQYQTMGTUQTEQNNGCIWGU9GCNUQTGEGKXGFCNNGICVKQPUVJCVYGTGWNVKOCVGN[PQV
EQPUKFGTGFOKUEQPFWEVKPUEKGPEG

        /CP[QHQWTECUGUEQPVCKPOWNVKRNGCNNGICVKQPUYGHQWPFCVQVCNQH
CNNGICVKQPUKPVJGECUGUENQUGFHTQOVJGKPEGRVKQPQHQWTQHHKEGQP/CTEJ
VJTQWIJ,WN[#NVJQWIJRGTEGPVQHVJGECUGUEQPVCKPGFCUKPINGCNNGICVKQP
UQOGJCFHCTOQTG6JGOQUVEQOOQPCNNGICVKQPUYGTGRNCIKCTKUO
RGTEGPVHCNUG
UVCVGOGPVUKPCRTQRQUCNQTTGRQTVVQ05(
RGTEGPVCPFCDWUGQTGZRNQKVCVKQPQH

05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
UWDQTFKPCVGUEQYQTMGTUQTEQNNGCIWGU
RGTEGPV6JGNGCUVEQOOQPCNNGICVKQPUYGTG
XKQNCVKQPQHTGIWNCVKQPU
RGTEGPVUCDQVCIG
RGTEGPVCPFFKUETKOKPCVKQP

RGTEGPV1WTECUGUCTGURTGCFCETQUUVJGFKUEKRNKPGUKPYJKEJ05(UWRRQTVUUEKGPEG
CPFGPIKPGGTKPITGUGCTEJQTGFWECVKQPKPENWFKPIDKQNQI[GPIKPGGTKPIGFWECVKQP
OCVJGOCVKEUIGQNQIKECNUEKGPEGUUQEKCNUEKGPEGUEJGOKUVT[CPFRJ[UKEU6JGECUGU
CTGPQVGXGPN[FKUVTKDWVGFCOQPIVJGFKUEKRNKPGUYKVJVJGITGCVGUVPWODGTUKPDKQNQI[
CPFGPIKPGGTKPICPFVJGUOCNNGUVKPRJ[UKEU+VKUWPENGCTYJCVHCEVQTUEQPVTKDWVGVQVJKU
WPGXGPFKUVTKDWVKQP

        6JGV[RKECNECUGJCUQPGUWDLGEVYJQKUCHCEWNV[OGODGTCVCWPKXGTUKV[QT
EQNNGIG/CP[QHQWTEQORNCKPCPVUCTG05(TGXKGYGTU
RGTEGPVQTHCEWNV[OGODGTU

RGTEGPV+PRGTEGPVQHQWTENQUGFECUGU05(UVCHHKPKVKCNN[TGHGTTGFVJG
CNNGICVKQPUVQQWTQHHKEGCUTGSWKTGFD[05(RQNKE[

        /QUVECUGURGTEGPVYGTGENQUGFHQNNQYKPICPKPSWKT[CPFOQTGVJCPJCNHQH
VJGUGECUGUYGTGENQUGFYKVJQWVEQPVCEVKPIVJGUWDLGEV6JGTGOCKPKPIRGTEGPVQH
VJGECUGURTQEGGFGFVQVJGKPXGUVKICVKQPUVCIG1HVJGUGRGTEGPVTGUWNVGFKPTGRQTVU
VQVJG&GRWV[&KTGEVQTTGEQOOGPFKPIHKPFKPIUQHOKUEQPFWEV6JTGGECUGUYGTG
TGUQNXGFVJTQWIJVJG&1,QPGVJTQWIJCUVKRWNCVKQPKPENWFKPICPCFOKUUKQPQH
KPVGNNGEVWCNVJGHVCPFVYQKPYJKEJVJGUWDLGEVUUVKRWNCVGFVJCVVJGKTRTCEVKEGUUGTKQWUN[
FGXKCVGFHTQOCEEGRVGFRTCEVKEGUWPFGT05(IUOKUEQPFWEVTGIWNCVKQP+PTGURQPUGVQ
QWTTGEQOOGPFCVKQPUVJG&GRWV[&KTGEVQTCITGGFVQVCMGCEVKQPKPCNNDWVQPGECUG1H
VJGECUGUKPYJKEJVJG&GRWV[&KTGEVQTHQWPFOKUEQPFWEVRGTEGPVYGTGRNCIKCTKUO
RGTEGPVYGTGHCNUKHKECVKQPCPFRGTEGPVYGTGQVJGTYJKEJKPENWFGFVJGUWDLGEV IU
XKQNCVKQPQHJWOCPUWDLGEVUTGIWNCVKQPUCPFUGTKQWUCDWUGUKPVJGOGPVQTKPIQHUVWFGPVU
CPFEQNNGCIWGUKPTGNCVKQPVQVJGEQPFWEVQHVJGTGUGCTEJ6JG&GRWV[&KTGEVQT IU
CEVKQPUYGTGIGPGTCNN[EQPUKUVGPVYKVJQWTTGEQOOGPFCVKQPUCNVJQWIJVJGFWTCVKQPQH
KORQUGFEGTVKHKECVKQPUCPFCUUWTCPEGUYCUUQOGVKOGUUJQTVGTVJCPYGTGEQOOGPFGF

        1WTCPCN[UKURTQXKFGUCPUYGTUVQOCP[QHVJGSWGUVKQPUYGTGEGKXGHTQOVJG
UEKGPVKHKEEQOOWPKV[
DQVJKPUKFGCPFQWVUKFGQH05(CDQWVVJGUVCVKUVKECN
EJCTCEVGTKUVKEUQHQWTECUGU




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
5WOOCT[QH5KIPKHKECPV/KUEQPFWEV
%CUGU%NQUGF6JKU2GTKQF
        6JKURGTKQFYGENQUGFECUGUCHVGTCOKUEQPFWEVKPSWKT[CPFTGUQNXGFQVJGT
OCVVGTUVJCVYGTGDTQWIJVVQQWTCVVGPVKQP5QOGQHVJGUGNCVVGTOCVVGTUYGTG
OCPCIGOGPVEQPEGTPUVJCVYGHQTYCTFGFVQVJGCRRTQRTKCVG05(QHHKEGCPFUQOG
CRRGCTGFVQTCKUGOKUEQPFWEVKPUEKGPEGKUUWGUDWVYGEQWNFPQVQDVCKPUWHHKEKGPV
KPHQTOCVKQPVQRTQEGGF5GXGTCNQHVJGOKUEQPFWEVECUGUEQPVCKPGFOWNVKRNGCNNGICVKQPU
QHOKUEQPFWEVKPUEKGPEG'CEJJQYGXGTECPDGFGUETKDGFD[CUKPINGRTKOCT[
CNNGICVKQP6JGRTKOCT[CNNGICVKQPUKPENWFGVJGHVQHKFGCU
ECUGUXGTDCVKO
RNCIKCTKUO
ECUGUOKUTGRTGUGPVCVKQPUKPCP05(RTQRQUCN
ECUGUCPFKORTQRGT
TGXKGYQHCP05(RTQRQUCN
ECUG9GEQPVCEVGFVJGUWDLGEVKPVYQECUGUCPF
QDVCKPGFVGEJPKECNCFXKEGHTQOCRTQITCOQHHKEGTCUCPGZRGTVUEKGPVKUVQTGPIKPGGTKP
VJTGGKPUVCPEGU

         1PGENQUGFECUGKPXQNXKPICNNGIGFOKUTGRTGUGPVCVKQPKPCP05(RTQRQUCN
JKIJNKIJVUVJGPGGFVQECTGHWNN[EKVGVJGUVCVWUQHOCPWUETKRVU6JGUEKGPVKUVCNNGIGFN[
NKUVGFVJTGGOCPWUETKRVUHCNUGN[KPJKURTQRQUCNCUKUWDOKVVGFLVQLQWTPCNU&WTKPIVJG
KPSWKT[EQPFWEVGFD[VJGUEKGPVKUVIUFGRCTVOGPVVJGUEKGPVKUVVQNFVJGEQOOKVVGGVJCVJG
JCFJQRGFVJCVD[NKUVKPIVJGVJTGGOCPWUETKRVUCUKUWDOKVVGFLKVYQWNFGPEQWTCIGJKO
VQHKPKUJYTKVKPIVJGOCPWUETKRVU*GCNUQUCKFVJCVJGJCFFKUEWUUGFVJGNKUVKPIQHVJGUG
URGEKHKEOCPWUETKRVUYKVJJKUFGRCTVOGPVEJCKTCPFCPQVJGTHCEWNV[OGODGTDGHQTG
UWDOKVVKPIJKURTQRQUCN6JGKPSWKT[EQOOKVVGGFGVGTOKPGFVJCVVJGUEKGPVKUVCRRCTGPVN[
OKUWPFGTUVQQFVJGEJCKTIUEQOOGPVU+VEQPENWFGFVJCVCNVJQWIJVJGUEKGPVKUVIU
DGJCXKQTYCUECTGNGUUCPFUJQYGFRQQTLWFIOGPVKVFKFPQVTKUGVQVJGNGXGNQH
OKUEQPFWEVKPUEKGPEG6JGKPUVKVWVKQPIUFKTGEVQTTGRTKOCPFGFVJGUEKGPVKUV9G
FGVGTOKPGFVJCVVJGUEKGPVKUVFKFPQVENCKOVJGOCPWUETKRVUJCFDGGP KCEEGRVGFLQTKKP
RTGUULVJCVVJGYQTMYCUUWDUVCPVKCNN[EQORNGVGFHQTVJGOCPWUETKRVUYJGPJG
UWDOKVVGFJKURTQRQUCNCPFVJCVVJGTGYCUPQGXKFGPEGQHCRCVVGTPVQVJGUWDLGEV IU
DGJCXKQT9GEQPEWTTGFYKVJVJGEQOOKVVGGIUEQPENWUKQPCPFYTQVGVJGUEKGPVKUV
KPHQTOKPIJKOQHQWTFGEKUKQPVQENQUGVJGECUGCPFQH05(IUGZRGEVCVKQPUCDQWV
UEJQNCTUJKR

        6JTGGQHVJGECUGUYGENQUGFJKIJNKIJVRTQDNGOUCTKUKPIKPEQNNCDQTCVKXG
TGNCVKQPUJKRU+PVJGHKTUVECUGVJG2+UWDOKVVGFCRTQRQUCNVQ05(VJCVTGHGTGPEGFVJG
TGUWNVUQHCPQVJGTUEKGPVKUVCUKRGTUQPCNEQOOWPKECVKQPUL6JG2+YJQJCFRTGXKQWUN[
EQNNCDQTCVGFYKVJVJGUEKGPVKUVQPVJKUVQRKEVQNFVJGUEKGPVKUVVJCVUJGYQWNFDGCEQ2+
QPJKURTQRQUCN6JGUEKGPVKUVFKFPQVUGGVJGRTQRQUCNDGHQTGKVUUWDOKUUKQPDWVYJGP
UJGTGEGKXGFCEQR[HTQOVJG2+UJGQDUGTXGFVJCVUJGYCUPQVNKUVGFCUEQ2+5JG
VJQWIJVVJCVVJG2+	UTGHGTGPEGUVQJGTYQTMYGTGKPCFGSWCVGVJCVJGVQQMETGFKVHQTJGT
CEEQORNKUJOGPVUCPFVJCVJKURTQRQUCNEQPVCKPGFTGUGCTEJVJCVUJGJCFKPVGPFGFVQFQ
9GEQPENWFGFVJG2+IUCEVKQPUDTGCEJGFRTQHGUUKQPCNUVCPFCTFUDWVJGTGHGTGPEGFVJG

05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
UEKGPVKUV	UEQPVTKDWVKQPUUWHHKEKGPVN[UQJKUCEVKQPUYGTGWPHCKTDWVFKFPQVTKUGVQVJG
NGXGNQHOKUEQPFWEV9GENQUGFVJGECUGKPHQTOKPIJKOQHQWTEQPENWUKQPUCPF
GZRTGUUKPIQWTEQPEGTPCDQWVVJGYC[KPYJKEJJGWUGFVJGQVJGTUEKGPVKUV IUKPHQTOCVKQP
KPJKURTQRQUCN

        #PQVJGTECUGKPXQNXGFC[QWPIUEKGPVKUVYJQYCUCNNGIGFVQJCXGEQRKGFVGZVCU
YGNNCUVJGKFGCUHQTUGXGTCNTGUGCTEJRTQLGEVUHTQOJKUHQTOGTITCFWCVGCFXKUQT IU
RTQRQUCNKPVQJKURTQRQUCN6JGUEKGPVKUVGZRNCKPGFCPFFQEWOGPVGFVJCVJGJCFYTKVVGP
VJGVGZVCRRGCTKPIKPJKUCFXKUQTIURTQRQUCNYJKNGYQTMKPIYKVJVJGCFXKUQT6JG
CFXKUQTEQPHKTOGFVJGUEKGPVKUVIUTQNGKPRTGRCTKPIVJGVGZVWUGFKPDQVJRTQRQUCNU
(WTVJGTVJGUEKGPVKUVGZRNCKPGFVJCVCNVJQWIJUQOGQHVJGRTQLGEVUKPVJGVYQRTQRQUCNU
YGTGUKOKNCTVJGVGEJPKSWGJGRTQRQUGFVQWUGYCUUKIPKHKECPVN[FKHHGTGPVHTQOVJCV
FGUETKDGFKPVJGCFXKUQTIURTQRQUCN9GEQPENWFGFVJCVVJGEQNNCDQTCVKXGTGNCVKQPUJKR
DGVYGGPVJGUEKGPVKUVCPFVJGCFXKUQTJCFYQTMGFYGNNCPFVJCVVJGKTWUGQHVGZVLQKPVN[
RTGRCTGFCURCTVQHVJGEQNNCDQTCVKXGGHHQTVKUCEEGRVCDNGRTCEVKEG

        #VJKTFECUGKPXQNXGFCUEKGPVKUVYJQJCFCNNGIGFN[RCTCRJTCUGFVJTGGUGPVGPEGU
QHVGZVHTQOCPQVJGTTGUGCTEJGTIURWDNKECVKQPKPVYQUGRCTCVGUGEVKQPUQHJKURTQRQUCN
YKVJQWVCEMPQYNGFIKPIVJGUQWTEGQHVJGVGZV9GHQWPFVJCVVJGUGUGPVGPEGUJCFEQOG
HTQOCRCRGTFGUETKDKPICRCPGNIUGHHQTVCPFVJGUEKGPVKUVJCFUGTXGFQPVJCVRCPGN9G
FGVGTOKPGFVJCVKHVJGUEKGPVKUVEQRKGFVJGUGVJTGGUGPVGPEGUYKVJQWVCRRTQRTKCVG
CEMPQYNGFIOGPVKVYQWNFJCXGDGGPCFGXKCVKQPHTQOVJGCEEGRVGFRTCEVKEGUQHVJG
UEKGPVKHKEEQOOWPKV[DWVPQVUWHHKEKGPVN[UGTKQWUVQRTQEGGFVQCPKPXGUVKICVKQP9G
KPHQTOGFVJGUEKGPVKUVQHDQVJVJGCNNGICVKQPCPFQWTFGEKUKQPPQVVQRTQEGGFHWTVJGTCPF
UWIIGUVGFVJCVKPVJGHWVWTGJGHWNN[CEMPQYNGFIGUQWTEGUQHKPHQTOCVKQPVQCXQKF
RQUUKDNGCNNGICVKQPUQHOKUEQPFWEVKPUEKGPEG




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
2QUUKDNG#OGPFOGPVU
VQVJG+PURGEVQT)GPGTCN#EV
        6JKU[GCTOCTMUVJGVJCPPKXGTUCT[QHVJG+PURGEVQT)GPGTCN#EV6JGTGCTG
UGXGTCNNGIKUNCVKXGRTQRQUCNUDGKPIEQPUKFGTGFVJCVCTGFGUKIPGFVQKORTQXGVJG
QRGTCVKQPUQHCNN+PURGEVQTU)GPGTCN#OQPIVJGKUUWGUDGKPIEQPUKFGTGFCTGYJGVJGTVQ
JCXGCPPWCNKPUVGCFQHUGOKCPPWCNTGRQTVUVQVJG%QPITGUUVJGDGUVEQPVGPVHQTVJQUG
TGRQTVUCPFYJGVJGTCPFJQYVQGPJCPEGVJGCDKNKV[QH1+)UVQECTT[QWVVJGKTOKUUKQP

        1WT1HHKEGQH+PURGEVQT)GPGTCNDGPGHKVUITGCVN[HTQOVJGCFXKEGCPFIWKFCPEG
YGTGEGKXGHTQOGOKPGPVGZGEWVKXGUUEKGPVKUVUCPFGPIKPGGTUYJQUGTXGQPVJG
0CVKQPCN5EKGPEG$QCTF9GDGNKGXGVJCVCUKOKNCTOGVJQFHQTQDVCKPKPICFXKEGCPF
IWKFCPEGYQWNFUGTXGVJGGPVKTG+PURGEVQT)GPGTCNEQOOWPKV[YGNN(QTVJKUTGCUQP
YGTGEQOOGPF%QPITGUUEQPUKFGTETGCVKPICPQXGTUKIJVDQCTFEQPUKUVKPIQHGZRGTVU
HTQOYKVJKPCPFQWVUKFGVJGIQXGTPOGPVKPVJGCTGCUQHOCPCIGOGPVKPXGUVKICVKQPCPF
CWFKVVJCVYQWNFRTQXKFGCFXKEGCPFIWKFCPEGQPVJGOCP[EQORNGZKUUWGUHCEKPI
+PURGEVQTU)GPGTCNKPENWFKPIHQTGZCORNGVJGDGUVTQNGHQTCP+PURGEVQT)GPGTCN
RQNKE[KUUWGUKPXQNXKPICWFKVUCPFKPXGUVKICVKQPUDGUVRTCEVKEGUHQTKPVGTCEVKQPUDGVYGGP
OCPCIGOGPVCPF+PURGEVQTU)GPGTCNCPFCRRTQRTKCVGOGEJCPKUOUHQTTGXKGYKPI
+PURGEVQTU)GPGTCN

         1PGQHVJGDKNNUKPVJG VJ%QPITGUURTQRQUGFVQEQPUQNKFCVGVJG(QWPFCVKQPIU
1HHKEGQH+PURGEVQT)GPGTCNYKVJCPQVJGT+)QHHKEG9GFQPQVDGNKGXGVJKURTQRQUCNKU
KPVJGDGUVKPVGTGUVQHVJG(QWPFCVKQP05(KUVJGQPN[CIGPE[KPVJGHGFGTCN
IQXGTPOGPVFGXQVGFUQNGN[VQVJGUWRRQTVQHUEKGPVKHKECPFGPIKPGGTKPITGUGCTEJCPF
GFWECVKQP6QEQPFWEVCWFKVUCPFKPXGUVKICVKQPUKPXQNXKPIVJG(QWPFCVKQPVJCVCTG
GHHGEVKXGKVKUKORQTVCPVVJCVVJG+)QHHKEGDGVCKNQTGFVQCPFWPFGTUVCPF05( IUOKUUKQP
CPFEWNVWTGQHUWRRQTVHQTUEKGPEGCPFGPIKPGGTKPIGFWECVKQPCPFTGUGCTEJ05( IU1+)
KUCNUQVJGQPN[1+)KPIQXGTPOGPVYKVJTGURQPUKDKNKV[HQTKPXGUVKICVKPICNNGICVKQPUQH
OKUEQPFWEVKPUEKGPEG#UUGUUKPIVJGUGCNNGICVKQPUTGSWKTGUMPQYNGFIGQHCPF
UGPUKVKXKV[VQVJGGVJKECNRTCEVKEGUCPFOQTGUQHVJGUEKGPVKHKEEQOOWPKV[HWPFGFD[VJG
(QWPFCVKQP+PCFFKVKQPKPQTFGTVQRTQOQVGGHHKEKGPE[CPFFGVGTKORTQRGTCEVKXKVKGUKV
KUXGT[RTQFWEVKXGHQTVJG+)VQRCTVKEKRCVGKPVJGTGIWNCTOGGVKPIUVJCVVJG05(
&KTGEVQTCPF&GRWV[&KTGEVQTJQNFYKVJVJGKTUGPKQTUVCHH+PQWTQRKPKQPVJKUYKNNQPN[
QEEWTKHVJGUGPKQTGZGEWVKXGVGCOCV05(EQPUKFGTUVJG+)IUQHHKEGVQDGRCTVQHVJG
QXGTCNN(QWPFCVKQP




05(1+)5GOKCPPWCN4GRQTV5GRVGODGT
STATISTICAL DATA
Audit Reports Issued With
Recommendations for Better
Use of Funds                            28


Audit Reports Issued
With Questioned Costs                   29


Additional Performance Measures         30


Audit Reports Involving
Cost-Sharing Shortfalls                 31


Status of Systemic
Recommendations That Involve
Internal NSF Management                 32


List of Reports                         33


Audit Reports With Outstanding
Management Decisions                    35


Investigative Activity and Statistics   38


Misconduct Case Activity and
Assurances/Certifications Received      39



                                   27
AUDIT REPORTS ISSUED WITH
RECOMMENDATIONS FOR BETTER USE OF FUNDS

                                                                                             Dollar Value

A.       For which no management decision has been made by the                                86,998,356
         commencement of the reporting period


B.       Recommendations that were issued during the reporting period                           5,699,642
         (these were issued in 5 reports)


C.       Adjustment resulting from resolution process                                           (444,775)


Subtotal of A+B+C                                                                             92,253,223


D.       For which a management decision was made during the reporting                        60,000,000
         period based on legislative action*


E.       For which a management decision was made during the reporting                        25,712,812
         period based on the OIG recommended action


         (i) dollar value of management decisions that were consistent                        24,659,197
             with OIG recommendations


       (ii) dollar value of recommendations that were not agreed                                1,053,615
             to by management


F.       For which no management decision had been made by the end of                           6,540,411
         the reporting period


For which no management decision was made within 6 months of issuance                             919,911


* These funds are the subject of litigation. The U.S. District Court ruled in favor of the
  government and the matter is now under review by the U.S. Court of Appeals.


NSF OIG Semiannual Report                                28                                  September 1998
AUDIT REPORTS ISSUED
WITH QUESTIONED COST

                                                               Questioned      Unsupported
                                                     Number     Costs             Costs



A.      For which no management decision has              43   11,168,509          4,947,024
        been made by the commencement of the
        reporting period


B.      That were issued during the reporting             17    1,279,446            939,276
        period


C.      Adjustments to questioned costs resulting          0           0                     0
        from resolution activities


Subtotal of A+B+C                                         60   12,447,955          5,886,300


D.      For which a management decision was               21    1,809,333            776,154
        made during the reporting period


        (i) dollar value of disallowed costs             N/A     342,188                 N/A


        (ii) dollar value of costs not disallowed        N/A    1,467,145                N/A


E.      For which no management decision had              39   10,638,622          5,110,146
        been made by the end of the reporting
        period


For which no management decision was made                 31    9,658,745          4,369,225
within 6 months of issuance




NSF OIG Semiannual Report                           29                      September 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
38 and 39. GAO and OMB suggested that Offices of Inspector General develop additional perfor-
mance 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
non-federal 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 non-federal
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 non-
federal 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 31 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 presenta-
tion. 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 32
provides statistical information about the status of all systemic recommendations that involve NSF’s
internal operations.




NSF OIG Semiannual Report                      30                                        September 1998
AUDIT REPORTS INVOLVING
COST-SHARING SHORTFALLS

                                           Number    Cost-Sharing       At Risk of          Cost-Sharing
                                             of       Promised         Cost-Sharing          Shortfalls at
                                           Reports                      Shortfall/          Completion of
A. For which no management decision                                     (Ongoing              the Project
   has been made by the beginning of                                     Project)
   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
B. That were issued during the reporting
   period

     1. Reports with monetary findings         4           4,019,724       2,050,073              1,371,190

     2. Reports with compliance findings       4                N/A             N/A                     N/A
Total of Reports With Cost-Sharing
Findings (A1+A2+B1+B2)                        25          49,759,293      26,858,980              1,639,287

C. For which a management decision
   was made during the reporting period

    1. Dollar value of cost-sharing short-
       fall that grantee agrees to provide     2              13,134          2,773                      0

    2. Dollar value of cost-sharing short-
       fall that management waives             0                   0              0                      0
    3. Compliance recommendations with
       which management agreed                 2                N/A             N/A                     N/A

    4. Compliance recommendation
       with which management disagreed         0                N/A             N/A                     N/A
D. For which no management decision has
   been made by the end of the reporting
   period

    1. Reports with monetary findings         19          49,746,159      26,856,207              1,639,287

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




NSF OIG Semiannual Report                            31                                September 1998
STATUS OF SYSTEMIC RECOMMENDATIONS
THAT INVOLVE INTERNAL NSF MANAGEMENT
Open Recommendations
          Recommendations Open at the Beginning
          of the Reporting Period                                                       34
          New Recommendations Made During
          Reporting Period                                                               9

          Total Recommendations to be Addressed                                         43


Management Resolution of Recommendations1
          Awaiting Resolution                                                            5
          Resolved Consistent With OIG Recommendations                                  38


Management Decision That No Action is Required                                           0


Final Action on OIG Recommendations
          Final Action Completed                                                        32
          Recommendations Open at End of Period                                         11


Aging of Open Recommendations
          Awaiting Management Resolution:
                 0 through 6 Months                                                      5
                 7 through 12 Months                                                     0
                 more than 12 Months                                                     0


Awaiting Final Action After Resolution2
                  0 through 6 Months                                                     2
                  7 through 12 Months                                                    4
                  13 through 18 Months                                                   0
                  19 through 24 Months                                                   0
                  more than 24 Months                                                    0

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                               32                                            September 1998
LIST OF REPORTS
                     NSF and CPA Performed Reviews

Report                  Subject                Questioned   Unsupported   Better Use Cost Sharing
Number                                         Costs        Costs         of Funds At-Risk


 98-1022        Superintendent of Schools          11,828        11,828           0            0
 98-1024        School District                    62,762        24,135           0    1,067,673
 98-1025        Science Center                      3,910             0           0            0
 98-1026        Research Institute                  5,917             0           0            0
 98-1027        Educational Organization          160,961       149,205           0            0
 98-1028        Tribal College                     54,406        47,358           0            0
 98-1029        Research Foundation                     0             0     217,000      380,000
 98-1030        University Foundation              27,068             0           0            0
 98-1031        Engineering Center                      0             0           0      600,000
 98-1032        Department of Education           392,725       341,005           0            0
 98-1033        Academy of Science                381,461       328,423           0        2,400
 98-1035        Research Station                    1,616             0   1,375,000            0
 98-2005        International Ocean Drilling            0             0           0            0
 98-2006        Ocean Drilling Project                  0             0           0            0
 98-2007        Flight Operations                       0             0   3,206,500            0
 98-2008        School District Awards                  0             0           0            0
 98-6006        Public School System                    0             0           0            0
 98-6007        Foundation                         54,598        20,819      79,142            0
 98-6008        Corporation                             0             0           0            0
 98-6009        Company                                 0             0           0            0
 98-6010        Research Center                         0             0     822,000            0
 98-6011        Science Museum                          0             0           0            0
 98-6012        Research Center                         0             0           0            0
 98-6013        Research Center                         0             0           0            0

                Total                           1,157,252       922,773   5,699,642    2,050,073




NSF OIG Semiannual Report                           33                            September 1998
LIST OF REPORTS


                             NSF-Cognizant Reports

Report         Subject                   Questioned   Unsupported     Cost Sharing
Number                                   Costs        Costs           At-Risk


98-4034        Research Station            16,503        16,503              0
98-4036        Study Center                41,172             0              0

               Total                       57,675        16,503              0




                                  Other Federal Audits

Report         Subject                   Questioned   Unsupported
Number                                   Costs        Costs

98-5138        State University               212          0
98-5139        Organization                18,572          0
98-5182        Corporation                 45,535          0
98-5198        University                     200          0

               Total                       64,519          0




NSF OIG Semiannual Report                 34                        September 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 report-
ing period, there were 31 audit reports with questioned costs, 3 reports with recommendations for
funds to be put to better use, and 12 items involving cost sharing at risk. The status of systemic
recommendations that involve internal NSF management are described on page 32.


 Report                                                        Date Report             Dollar
 Number                             Title                      Issued                  Value            Status

Items Involving Questioned Costs
95-5722          State Government                             09/22/95                 113,204              1
96-1003          State Educational Agency                     11/14/95                 514,268              1
96-1014          Research Association                         03/20/96                 211,879              1
96-1027          Company                                      03/28/96                 828,915              1
96-1031          Learning Center                              09/30/96                 337,377              1
97-1004          Public School System                         02/07/97                 130,996              1
97-1010          Private University                           03/13/97                 451,147              1
97-1018          Independent School District                  06/20/97                 173,877              1
97-1021          Public School System                         08/07/97                   49,455             1
97-1023          State University                             09/30/97                 134,358              1
97-1024          Unified School District                      09/03/97                   52,151             1
97-1025          Independent School District                  09/04/97                 345,937              1
97-1027          Unified School District                      09/17/97                 133,478              1
97-1028          Science & Math School                        09/19/97                 251,639              1
97-1032          City Communications Co.                      09/30/97                   49,194             1
97-2105          FFRDC Contracts                              03/31/97                 641,129              1
98-1003          County School District                       12/02/97                 285,309              1
98-1004          Public School System                         12/17/97                 225,938              1
98-1006          Board of Education                           12/18/97               2,071,176              1
98-1007          School District                              12/29/97                   96,944             1
98-1008          Institute Science Museum                     01/28/98                    5,534             1
98-1011          College                                      02/24/98                  35,167              1
98-1013          School District                              03/30/98                  41,222              1


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                                    35                                   September 1998
AUDIT REPORTS WITH OUTSTANDING
MANAGEMENT DECISIONS

Report                                                        Date Report              Dollar
Number                     Title                              Issued                   Value            Status

Items Involving Questioned Costs

98-1015          Institute                                    03/16/98                 103,123              1
98-1016          Technical Institute                          03/31/98                 109,887              1
98-1017          Public School System                         03/31/98                 104,658              1
98-1018          Company                                      03/31/98                 705,125              1
98-1019          Department of Education                      03/31/98               1,099,207              1
98-1021          Traineeships                                 03/31/98                 259,556              1
98-4011          Telecommunication Institute                  03/31/98                  65,695              1
98-5104          College                                      02/10/98                  31,200              1

                 Total                                                                9,658,745

Items Involving Funds Put to Better Use

98-1008          Science Museum                               01/28/98                  87,000               3
98-1014          Public TV Station                            03/31/98                 294,095               3
98-1017          Public School System                         03/31/98                 538,816               3


                 Total                                                                 919,911


Items Involving Cost Sharing at Risk

97-1004          Public School System                         02/07/97                         0            2
97-1021          Public School System                         08/07/97                  292,352             2
97-1023          University                                   09/30/97                        0             2
97-1024          Unified School District                      09/03/97                  822,279             2
97-1025          Independent School District                  09/04/97               11,511,738             2
97-1027          Unified School District                      09/17/98                  624,626             2
97-1028          Science & Math School                        09/19/97                        0             2
98-1003          School District                              12/02/97                  510,310             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                               36                                         September 1998
AUDIT REPORTS WITH OUTSTANDING
MANAGEMENT DECISIONS
Report                                                                 Date Report     Dollar
Number                             Title                               Issued          Value         Status

Items Involving Cost Sharing at Risk
98-1006                   Board of Education                           12/18/97         366,611         2
98-1007                   School District                              12/29/97       1,682,785         2
98-1015                   Institute                                    03/16/98           7,700         2
98-1018                   Company                                      03/31/98       8,987,733         2

                          Total                                                      24,806,134




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                                    37                            September 1998
INVESTIGATIVE ACTIVITY AND STATISTICS


Investigative Activity                                               Investigative Statistics

Active Cases From Previous                                            New Referrals                                2
Reporting Period                           41
                                                                      Referrals From Previous
New Allegations                            26                         Reporting Period                            12

Total Cases                                67                         Prosecutorial Declinations                   2

Cases Closed After                                                    Indictments (including
Preliminary Assessments                    0                          criminal complaints)                         1

Cases Closed After                                                    Criminal Convictions/Pleas                   1
Inquiry/Investigation                     20
                                                                      Civil Settlements                            2
Total Cases Closed                        20
                                                                      Administrative Actions                       1
Active Cases                              47
                                                                      Investigative Recoveries*          $791,505




*Investigative recoveries comprise civil penalties and criminal fines and restitutions as well as specific cost
savings for the government. Investigative recoveries include government-wide recoveries on one case
 where NSF was a lead investigative agency.



NSF OIG Semiannual Report                             38                                            September 1998
MISCONDUCT CASE ACTIVITY AND
ASSURANCE/CERTIFICATIONS RECEIVED

                                            Misconduct Case Activity

                                                                   FY 1998                                FY 1998
                                                                   First Half                             Last Half

Active Cases From Prior Period                                          48                                     58
Received During Period                                                  33                                     15
Closed Out During Period                                                23                                     20
In-Process at End of Period                                             58                                     53

Cases Forwarded to the Office of the
Director During Period for Adjudication                                  1                                       2

Cases Reported in Prior Periods With No
Adjudication by the Office of the Director                               3                                       3*



*Two of these cases are described in our September 1997 Semiannual Report, pages 36 through 39 <http://www.nsf.gov/cgi-bin/
getpub?oig17>, and in our March 1998 Semiannual Report, pages 27 and 28 <http://www.nsf.gov/cgi-bin/
getpub?oigmarch1998>.




                                Assurances and Certifications Received*


Number of Cases Requiring Assurances at End of Period                                           2
Number of Cases Requiring Certifications at End of Period                                       2
Assurances Received During This Period                                                          0
Certifications Received During This Period                                                      0
Number of Debarments in Effect at the End of Period                                             4


*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 miscon-
duct 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                                         39                                            September 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.

   1998
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’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.




NSF OIG Semiannual Report                      40                                      September 1998
         For more information write:

        Office of Inspector General
        National Science Foundation
     4201 Wilson Boulevard, Suite 1135
           Arlington, VA 22230

                    call:

              (703) 306-2100

             visit our web site:

www.nsf.gov/cgi-bin/getpub?oigseptember1998

                 or use our
          Electronic Mail Hotline:

                oig@nsf.gov
  SEMIANNUAL REPORT
        TO THE
       CONGRESS




OFFICE OF INSPECTOR GENERAL
NATIONAL SCIENCE FOUNDATION