oversight

Semiannual Report - September 1999

Published by the National Science Foundation, Office of Inspector General on 1999-09-01.

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

Semiannual Report
  to the Congress




    Office of Inspector General
   National Science Foundation

                    September 1999
Letter to the
Congress of the United States

        The National Science Foundation (NSF) invests approximately $4 billion an-
nually in a portfolio of programs supporting scientific and engineering research and
education at over 2000 institutions. NSF funds about 10,000 awards each year that
are selected from 30,000 proposals. In my opinion, based on the work of my office,
my knowledge of agency operations and my interactions with the National Science
Board and NSF management, the overall NSF investment portfolio is healthy.

         This Semiannual Report describes specific reviews we conducted in the areas
of efficiency and integrity in the most recent six months. Highlights of our efficiency
efforts include reviews involving Science and Technology Centers (page 4), logistics
support concerning the United States Antarctic Program (page 7) and two Math-
ematical Sciences Research Institutes (page 7). In the integrity area, we recom-
mended that NSF’s Deputy Director issue misconduct findings in three cases involv-
ing data fraud, plagiarism and breach of confidential peer review (page 17). We also
closed several significant cases without making misconduct findings (page 22).

         One of NSF’s key strategic goals is to integrate research and education, and
NSF’s current regulation on misconduct in science appropriately applies to miscon-
duct associated with either research or education. Most recently, the Office of Sci-
ence and Technology Policy (OSTP) issued for public comment a proposed govern-
ment-wide policy on misconduct associated with research. We worked closely with
OSTP and other federal agencies to develop and refine the proposed policy. Overall,
we are pleased with the policy because all federal agencies that have a research port-
folio must now develop a uniform process designed to reinforce the importance of
integrity in the conduct of research. In our view, at the time this policy is finalized,
NSF should adopt the final policy as its own and also then implement a mechanism to
deal with misconduct in its education portfolio (page 16).

         In the letter accompanying previous Semiannual Reports, I explained our be-
lief that NSF is best served by having an Office of Inspector General tailored to its
mission and culture, and we recommended against a legislative proposal that would
consolidate our Office with another Office of Inspector General. Along with the issue
of consolidation, legislative proposals have now been introduced for the purpose of
enhancing the independence of certain Offices of Inspectors General. One proposal
would require that the President, rather than the National Science Board, appoint
the NSF Inspector General, subject to confirmation by the Senate. When analyzing
these proposals, it may be helpful to understand our current operating philosophy
through which we develop partnerships with NSF management while meeting the
standards for independence contemplated by the Inspector General Act (page 1).

        This is the fourth and final Semiannual Report prepared under my leadership
as Acting Inspector General; a new Inspector General will arrive in January 2000.
This has been an invigorating time for our Office and for the Foundation. We
developed and implemented the first strategic plan for our Office designed to ensure
that we operate in a manner that is inclusive, innovative and flexible, and keeps
issues in proportion; developed a meaningful outreach program to the agency and
the community it serves; and focused our efficiency reviews on substantive efforts
that add prospective value for NSF’s programs. I do consider public service to be
a privilege and greatly appreciate the opportunity I have had to serve as Acting
Inspector General.




                                Sincerely,




                                Philip L. Sunshine
                                Acting Inspector General
                                November 18, 1999
CONTENTS

                1
     Operating Independently
   and Developing Partnerships

                3
           Efficiency

              15
            Integrity

              33
         Statistical Data

              46
            Glossary
ACRONYMS
CFO      Chief Financial Officer
CIRT     Computer Incident Response Team
COI      Conflict of Interests
CPO      Division of Contracts, Policy, and Oversight
DOJ      Department of Justice
ERC      Engineering Research Center
GPRA     Government Performance and Results Act
HHS      Department of Health and Human Services
IG Act   Inspector General Act
ODP      Ocean Drilling Program
OHA      Office of Hearings and Appeals
OIA      Office Integrative Activities
OPP      Office of Polar Programs
OSTP     Office of Science and Technology Policy
SBA      Small Business Association
SBIR     Small Business Innovation Research
SBTT     Small Business Technology Transfer
SPSE     South Pole Safety and Environmental
SPSM     South Pole Station Modernization
STC      Science and Technology Center
STTR     Small Business Technology Transfer
USAP     U.S. Antarctic Program
REPORTING
REQUIREMENTS
  Under the Inspector General Act, we report to the 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
                                                                          3, 33
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
prosecutions and convictions
                                                                         15, 44

With regard to previously reported recommendations:
significant management decisions that were revised, and
                                                                        42, 45
significant recommendations for which NSF has not
completed its response

Legislation and regulations that may affect the efficiency or
integrity of NSF’s programs
                                                                              16

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
   Operating Independently
   and Developing Partnerships
           The National Science Foundation is managed by a Director and a Deputy Director and
   the agency receives broad-policy guidance and oversight from the National Science Board
   (the Board). The Office of Inspector General is organizationally independent from manage-
   ment and is committed to maintaining the independence contemplated by the Inspector Gen-
   eral Act (IG Act). As contemplated by the IG Act, the Board, through its Audit and Over-
   sight Committee, serves as the general supervisor of the IG. The Board and our office are
   particularly careful to respect our different roles under the IG Act. In particular, the Board’s
   Audit and Oversight Committee discusses overall policy with, and provides general guidance
   for our office, but the Board does not select, direct, or terminate any audits or investigations.
   This organizational independence from management allows our office to operate indepen-
   dently for the purpose of ensuring that our analyses are objective, our access to information is
   unfettered, and our sources of information remain confidential. We consider our organiza-
   tional and operational independence to be sufficient to meet standards of independence that
   are required to issue audit opinions under Government Auditing Standards and to operate as
   an independent law enforcement office within the meaning of applicable legal precedent.

           Our fundamental objective is to add value by identifying mechanisms that improve the
   efficiency and integrity of agency operations. To do so, we consider it essential to work
   cooperatively with NSF management and to focus on prospective change. For this reason, we
   are expending significant effort to nurture a culture that fosters open and constructive dia-
   logue with NSF managers on issues relating to efficiency and integrity in NSF’s portfolio of
   operations. As part of our long-range planning of office activities, we also continue to con-
   duct risk assessments and brief surveys in order to prioritize our work, focusing on prospec-
   tive, substantive issues.

            In this period, we significantly expanded our outreach and liaison programs. Our
   liaisons meet regularly with NSF staff to discuss our activities and areas of mutual interest.
   Along with this informal exchange of information, our liaisons regularly brief NSF divisions
   about our mission and goals, and obtain perspectives from division staff about our activities.
   Since our initiation of the outreach and liaison program a year ago, we have met with most of
   the NSF divisions. Within our office, liaisons regularly share information with the rest of our
   staff to ensure that our entire office can learn and benefit from these individualized interac-
   tions.

           In addition to building partnerships through the outreach and liaison program, we
   participate in a number of national and regional professional meetings to learn about high-
   priority issues and find better ways to promote awareness and understanding about our effi-
   ciency and integrity activities. For example, we were selected to participate in a best practices
   forum, during the Association of Government Accountants’ annual meeting. Together with
   NSF’s Chief Financial Officer, we described why we consider NSF’s Audit Coordination

NSF OIG Semiannual Report • September 1999                                                             1
    Committee to be an effective tool that can ensure that the auditing process is constructive. We
    now regularly participate in NSF’s Regional Grant Conferences, and in this way, we exchange
    information with organizations that receive NSF funding. We participated in two panels, one on
    audit issues for the future and the other on allegations of research misconduct, at the annual
    conference of the Society for Research Administrators. Our office hosted a meeting of the Fed-
    eral Scientific Misconduct Officials Network to discuss scientific misconduct and research integ-
    rity issues. We also worked closely with NSF and other federal officials in developing the final
    version of the recently released uniform Federal Research Misconduct Policy.

            We continue to work with NSF committees that assess and respond to management issues.
    Accordingly, we participate in several task forces charged to develop and implement NSF’s
    strategic and performance plans, evaluate certain aspects of NSF’s personnel system, assess risks
    associated with the use of electronic signatures, coordinate electronic submission issues, and
    assess security issues. By invitation, we have participated in orientation programs for new pro-
    gram officers in two NSF directorates and we regularly participate in NSF-wide, new employee
    orientation programs, and in conflict of interests briefings for all employees.

            We believe that our outreach efforts enable us to develop the best possible product that
    can more readily effect improvement on behalf of NSF. For the purpose of improving the timely
    and effective processing of misconduct cases, we now regularly visit university officials in connec-
    tion with the deferral of investigations in specific cases. Our partnerships with these universities
    and the reports we now receive for specific cases have improved because of these conversations.
    Similarly, for the purpose of improving the quality and utility of our audit reports, we regularly
    share our audit plans with NSF program officials for comment and suggestions, and we provide
    NSF officials with the opportunity to request reviews of specific awardees. In this way, we are
    better able to undertake reviews that are more meaningful to NSF managers and have the greatest
    potential to generate improvements in the economy and efficiency of NSF operations. Ongoing
    dialogue with NSF management about our auditing program also serves to increase awareness
    and understanding about the importance of fiscal and management controls throughout the
    Foundation’s portfolio.

            This Semiannual Report highlights several reviews that arose, in part, through our out-
    reach efforts and from requests for assistance from NSF management. These highlights include
    our review of NSF’s Science and Technology Centers, NSF’s Engineering Research Centers, and
    certain aspects of the U.S. Antarctic Program. These reviews are tangible evidence that our
    partnership activities are producing meaningful results. Through our outreach and liaison pro-
    grams, we are developing practical ways to implement strategic goals that enable us to refine and
    strengthen the positive effect our work can have on the National Science Foundation and the
    communities it serves.




2                                                              NSF OIG Semiannual Report • September 1999
         We review agency operations as well as grants, con-
tracts, and cooperative agreements funded by NSF. We con-
duct financial audits to determine whether costs claimed by
awardees are allowable, reasonable, and properly allocated.
Our audits also seek to identify practices that may be modi-
fied so that funds can be used for other purposes that our
customers consider more important. We are responsible
for auditing NSF’s financial statements, including evalua-
tions of internal controls and data processing systems.




                                                               Efficien
                                                               Efficiency
       We conduct multidisciplinary reviews of financial,
administrative, and programmatic operations to identify
problems as well as highlight what works well. These re-
views are designed to assist managers at NSF and funded
organizations to improve operations and better achieve
mutual research and education goals.



                     HIGHLIGHTS
       Reviews Involving
       Facilities and Research Centers                4


       Polar Program Reviews                          5


       Issues Involving
       Research Project Support                       7
                                                                        cy
       Audits Involving Education
       and Human Resources Awards                     9


       Issues Involving
       Administration and Management                  12


       Statistical Tables                             33




                                                  3
    Reviews Involving
    Facilities and Research Centers

    Science and Technology Centers Review
            NSF developed the Science and Technology Center (STC) program to achieve objec-
    tives that are best pursued by large-scale, long-term efforts that bring together scientists with
    diverse skills. An inaugural competition held in 1989 established 11 centers, and 14 additional
    centers were established in 1991. During 1998 and 1999, NSF phased down funding for a
    number of the existing centers and held a competition that will result in the creation of five
    new centers representing a commitment of up to $94 million over 5 years.

             We worked closely with the office that administers NSF’s STC program, the Office of
    Integrative Activities (OIA), to develop procedures for reviewing the STC program during
    this transition period. The OIA asked that we provide assistance in formulating terms and
    conditions of the cooperative agreements through which NSF will fund the newest STCs. We
    familiarized ourselves with how the STC program operates by reviewing various reports
    about the STC program, studying NSF STC proposal and award files, interviewing NSF
    personnel, and conducting site visits to two existing STCs.

            Based on our observations and suggestions, OIA incorporated provisions into the draft
    cooperative agreements that will enable NSF to more effectively monitor the new STCs
    during their start-up period. For example, NSF will require prior notice before significant
    changes can be effected concerning lead personnel or the amount of funds designated for
    undergraduate, graduate, and postdoctoral student support. OIA also incorporated provisions
    to improve the effectiveness of the STCs’ external advisory committees.

            OIA plans to discuss some of our observations for strategies with the new STC direc-
    tors that the STCs can use to develop cohesion, such as developing a strategic plan through
    center-wide participation; focusing on common products that require widespread involvement
    across institutional lines and budgeting for communication and travel. OIA also plans to
    convey these ideas to NSF staff members in research programs outside of OIA who have
    significant responsibility for monitoring the new STCs.



    Review of Engineering Research Centers

            Engineering Research Centers (ERC) involve long-term collaboration between indus-
    try and higher education to facilitate the transfer of advanced technology to the marketplace.
    NSF expects ERCs to generate support from industry and other stakeholders during the time
    they receive NSF support and to become self-sustaining by the end of the NSF award period.



4                                                              NSF OIG Semiannual Report • September 1999
           In 1998, NSF established five new ERCs, which represent a potential commitment of
   over $60 million over a 5-year period. Each ERC is scheduled to receive more than $2 mil-
   lion annually in NSF support during the initial, 5-year award period, and during this time, the
   new ERCs are expected to generate over $120 million in support from other sources.

           We conducted an audit survey at each of the five new ERCs. Our objective was to
   examine each ERC’s financial and administrative systems to identify areas that can be
   strengthened during the early stage of center operations. Because accurate records of finan-
   cial support from industry are important for NSF monitoring of ERC success, we recom-
   mended a number of methods to improve record-keeping policies and procedures while
   reducing administrative burdens. We recommended that ERCs combine industrial membership
   fees into a single account, maintain reserve funds in a dedicated account, and report reserve
   fund balances to NSF. We also recommended that the ERCs improve internal controls by
   separating responsibilities for preparing and maintaining records from responsibilities for
   handling cash payments.

          The ERCs found our input, at this early stage of their operations, to be helpful and
   agreed to implement most of our recommendations.


   Review of Proposal Results in Reduced Indirect Cost Rates

            In our March 1999 Semiannual Report (page 5), we reported that a university
   agreed to reduce by $2.4 million its proposed budget for management of a large research
   facility. At that time certain issues concerning overhead and fringe benefits were outstanding.
   NSF referred those issues for resolution to the Department of Health and Human Services
   (HHS), the cognizant agency responsible for negotiating indirect-cost rates with the
   university. HHS agreed with our recommendations and negotiated a reduction to the
   university’s indirect-cost rate for the facility that will apply for the next three fiscal years.
   Based on the negotiated indirect-cost rate, the university’s award will be further reduced by
   $1.2 million. These funds will be available to the NSF program to allocate for other purposes.


   Polar Program Reviews

           NSF’s Office of Polar Programs (OPP) is responsible for managing the U.S. Antarctic
   Program (USAP). OPP staff members oversee all aspects of the USAP, including a military
   unit that provides flight operations and a contractor selected through a competitive process
   that provides support. The USAP has been in a state of active transition for the past 3 years.
   Responsibility for support operations in Christchurch, New Zealand, was transferred from the
   Navy to the support contractor. During the same period, responsibility for flight operations
   was transferred to the Air National Guard (Guard). Also, the Foundation has been engaged in
   a multi-year effort to modernize and improve safety and environmental conditions at the South




NSF OIG Semiannual Report • September 1999                                                             5
    Pole Station. More recently, because the contract for support services that has been in effect
    for the past 10 years is due to expire, significant efforts have been underway to recompete that
    contract.

            As described in previous Semiannual Reports, during the past 3 years we reviewed
    many aspects of these transitions. During the current period, we continued this work by
    completing a follow-up study on supply and labor costs and a review of the USAP’s calibra-
    tion program. We also continued to monitor efforts to modernize the South Pole Station and
    assisted NSF’s contracting office with activities related to the recompetition of the USAP
    support contract, worth approximately $1 billion over the potential 10-year life of the award.

            Allocating Aircraft Maintenance Supply and Labor Costs. When the Guard
    assumed responsibility for operation and maintenance of LC-130 aircraft used in the USAP, it
    also assumed responsibility for managing an OPP-owned inventory of aircraft parts and supply
    valued at approximately $7 million. We recommended that OPP direct the Guard to imple-
    ment a system for reporting usage of the inventory to ensure that OPP received proper credit
    when parts and supply were used. Although OPP agreed with our recommendation, the
    system had not yet been implemented by the Guard. Accordingly, we began to work with
    OPP, Guard, and contractor personnel to determine the value of the inventory that had been
    used. We expanded our review to include verifying whether supply and labor costs incurred
    for aircraft maintenance performed by a contractor had been correctly allocated between OPP
    and the Guard.

            We identified nearly $684,000 that OPP should recover from the Guard. We also
    made suggestions for improving the internal controls, for example the tracking and reporting
    of the inventory and allocating supply and labor costs. The Guard has already returned about
    $300,000. OPP and the Guard are currently reviewing the rest of our findings.

            Calibration Requirements and Options. With the Navy’s departure from the USAP
    and closure of its calibration laboratory, it was necessary for OPP to determine whether and
    how to fulfill the USAP’s calibration needs. We participated in a joint study of the USAP’s
    calibration program - our office provided a program analyst for the cost/benefit portion of the
    study, and OPP provided a technical expert. The objectives of the study were to quantify the
    calibration services required by USAP organizations and to develop and review options for
    meeting those requirements.

            The team concluded that the most efficient and cost-effective option was for OPP to
    contract for year-round, on-site calibration services, which would initially save OPP $45,000
    annually, or $225,000 over 5 years, compared to current operating costs. OPP implemented
    the team’s suggestion and also agreed to direct the USAP organizations to update their
    respective inventories to remove equipment that is no longer needed or does not require
    calibration. This process could lead to reduced labor costs and further savings of $44,000 to
    $88,000 annualy.




6                                                              NSF OIG Semiannual Report • September 1999
           South Pole Safety and Environmental and Station Modernization Projects. During
   the recently concluded austral winter, the largest winter-over construction crew continued on
   schedule for completing the interior of the garage and maintenance complex in November
   1999. Documents reviewed during quarterly meetings show that both the SPSE and SPSM
   projects remain on schedule and within budget.

           USAP Support Contract Recompetition. For all offerors on the USAP support
   contract recompetition, NSF’s contracting office requested that we verify proposed indirect-
   cost rates and compliance with the Cost Accounting Standards. In addition, for those offerors
   whose proposals were determined to be within the competitive range, we field tested selected
   elements of business proposals including labor rates, other direct costs, premium pay plans,
   labor cost escalation estimates, and property tracking. We reviewed the proposed costs by
   analyzing the offerors’ ability to accurately estimate costs based on historical direct and
   indirect-cost data. We also reviewed their actual costs and experience on similar awards.
   These comparisons and the information generated in our review helped the contracting office
   make an assessment of the competitiveness of the proposals.

           Incumbent USAP Support Contractor. NSF’s contracting office also asked that we
   conduct a financial and compliance audit of the incumbent contractor to determine whether
   charges to the contract were allowable and reasonable. Of the $544 million in costs claimed
   over a 6-year period, we questioned only $127,183, most of which related to a state tax
   penalty paid by the contractor. We also made recommendations designed to improve the
   contractor’s cash management practices and the accuracy of contract documentation. The
   contractor agreed to implement these recommendations.


   Issues Involving
   Research Project Support

   Review of two Mathematical Sciences Research Institutes
            We reviewed active awards and proposed budgets for two mathematical sciences
   institutes under the 1998-1999 recompetition of NSF’s Mathematical Sciences Research
   Institutes program. The combined requests exceeded $30 million. NSF plans to award up to
   five new mathematical sciences institutes under the program, with an initial 5-year award
   period and the possibility of a second 5-year award. Over the long term, NSF expects the
   mathematical sciences institutes to generate outside funding and decrease their dependence on
   NSF for support. Accordingly, we recommended that NSF require the mathematical sciences
   institutes to develop a written, long-term strategy to reduce NSF funding over the next 10
   years and provide this strategy to NSF for its review and approval. We also suggested im-
   provements in accounting policies and procedures at each institute.




NSF OIG Semiannual Report • September 1999                                                         7
            In our review of one of the institutes, we recommended four actions that, if imple-
    mented, would reduce the amount of NSF funding required by $659,000 over a 5-year period.
    Specifically, we recommended that the institute increase its revenue estimates based on recent
    actual experience and reduce the budget request to NSF by a comparable amount; reduce the
    amount requested from NSF to cover the cost of past and future inflation; reduce publication
    costs by electronically distributing its newsletter and slide presentations; and reduce the
    amounts charged to NSF for dinners and non-workshop coffee breaks. The institute generally
    agreed with most of our recommendations and has taken action to implement them.

             In our review of the other institute, we recommended revised practices regarding
    hospitality costs that the institute agreed to adopt and as a result, will reduce needed NSF
    funding by $100,000. We also found that this institute made arrangements with the Univer-
    sity, on whose campus it was housed, that were inconsistent with what NSF expected when
    the grant was made. These arrangements concerned a 1987 building lease agreement between
    the institute and the University. They resulted in NSF having paid as much as $581,000 more
    than it originally expected. Further, had the $581,000 been used to reduce the debt on the
    building, the current outstanding debt balance would have been lowered by approximately
    $692,000. The institute believes, based on its own analysis, that the cost sharing to be pro-
    vided by the university is reasonable and makes up for any misunderstandings in the past.

            To avoid future misunderstandings, we recommended that NSF document its under-
    standings about significant funding arrangements in the award agreement. We also suggested
    that NSF use our analysis to evaluate the financial issues related to this award. NSF manage-
    ment is now in the process of negotiating a new award to the institution and will resolve this
    issue during the negotiation process.


    Research Institute Agrees to Actions That Will Save $499,920

            We reviewed expenditures totaling $5.7 million associated with current awards to a
    non-profit research institute. We also reviewed a pending $1.6 million research proposal and
    an indirect-cost rate proposal that the institute submitted to NSF.

            We made recommendations to improve compliance with government cost principles
    and regulations, enhance the institute’s management of NSF funds, and reduce costs without
    eliminating essential research services, and also recommended changes to the institute’s
    hospitality policies.

            We found $85,392 in unallowable or unreasonable costs that the institute agreed to
    reimburse to NSF. The institute also agreed to a reduced indirect-cost rate that we estimate
    will save the government $499,920 over 5 years. NSF management is currently resolving
    several outstanding recommendations.




8                                                             NSF OIG Semiannual Report • September 1999
   Other Significant Audits of NSF Research Awards
           During this reporting period, in addition to the reports described above, we completed
   financial and compliance audits covering 14 research awards totaling more than $200 million.
   These audits identified $226,000 in questioned costs and suggested some improvements in the
   awardees’ financial and accounting systems. Some of the more significant findings from these
   audits follow:

   Networking Awards. We reviewed three awards involving communications and networking
   to two organizations. Of the over $5.5 million costs claimed under these awards, we
   questioned $62,821, primarily because the claims could not be adequately supported.

   Ocean Drilling. We reviewed three institutions that receive support from a large NSF
   program to perform research at numerous locations around the world. Of the almost
   $200 million audited, we questioned only $57,066, most of which was related to the severance
   of a subcontractor employee.

   Technological University. We reviewed four awards, with claimed costs of $4.4 million, to a
   technological university in the northeast and we found only $9,059 in questioned costs. We
   made recommendations to strengthen the university’s cost-sharing accounting and ensure
   adequate university oversight of charges to Federal awards.

   Research Institute. We audited a northeastern, non-profit organization working in
   partnership with three universities to retrain displaced defense engineers. We questioned
   $113,694 out of $625,950 in claimed costs primarily because funds were rebudgeted without
   NSF approval. We also found unallowable and inadequately supported costs.



   Audits Involving Education
   and Human Resources Awards

   PreAward Cost-Sharing Review

           NSF management requested that we review the $3.9 million cost-sharing component
   of a $2 million proposed award to a Northeastern non-profit Center. The purpose of the
   proposed project is to create educational material to be licensed and sold commercially.

           We found that the Center had adequate systems in place to track and account for cost
   sharing. However, of the $3.9 million proposed as cost sharing, only $1.9 million could
   actually be considered cost sharing under NSF policies and Federal regulations. The remain-
   der was anticipated commercial revenue from the sales of products developed under the grant.
   We recommended to NSF management that this portion be classified as project income and
   that the cost-sharing commitment be reduced to $1.9 million.

NSF OIG Semiannual Report • September 1999                                                          9
             We found that the Center’s cost-sharing and revenue projections were reasonable, but
     also that they were estimates and could not be guaranteed. To help meet its cost-sharing
     obligations, the Center had established a fundraising plan, completed market research, devel-
     oped marketing strategies, and hired an experienced fundraiser, but it has yet to receive any
     firm commitments for cost sharing. We recommended that NSF establish a plan in order to
     monitor the Center’s progress toward meeting its proposed cost-sharing goals.

             We also found that the Center intends to generate income by selling internet banner
     advertising on its NSF-supported web site. NSF requires that material developed under a
     grant and published on the internet contain an acknowledgment of NSF support along with a
     disclaimer. We were concerned that commercial advertising in close proximity to the NSF
     name may give the impression that NSF is endorsing a particular advertiser. We recom-
     mended that the Center provide NSF with assurances that it ensure that the site would not
     associate NSF’s name with any advertisers. NSF agreed with all of our recommendations and
     will monitor the Center’s internet advertising as it relates to any association with NSF sup-
     port.

     Review of Awards to a For-Profit Company
             We reviewed a northwestern for-profit company that received two NSF awards
     totaling $2,555,004 to develop educational videodiscs that focus on the study of molecular
     and cell biology and genetics, and to design science-education software for the fifth through
     eighth grades.

             We found that the company had inadequate cash management practices and that the
     financial position of the company had declined significantly during recent years. After the
     company reviewed our draft report, it hired a major accounting firm to install and help
     implement new procedures that should enable the company to improve its cash management.
     The company was then able to provide adequate documentation for most of the expenditures
     charged to the NSF. We questioned costs totaling $198,666, most of which were incorrectly
     charged indirect costs. We also found $115,898 of costs the company had incurred but not
     yet reported, which will partially offset questioned costs. Because the company retained
     excess NSF cash contrary to Federal policy, we also recommended that the company pay
     interest of $11,983 to NSF. In addition, we found that the company may not be able to satisfy
     $399,689 of its cost-sharing commitment. NSF management has been alerted to the decline in
     the financial position of the company and is considering our recommendations.


     Audit of a Northwest Municipal School District

             A local school district in the northwest received an award under the NSF Local
     Systemic Change through Teacher Enhancement award program for $4.2 million and
     promised to contribute an additional $3.2 million in cost sharing over 5 years. However, we
     found that the district had provided only 58 percent of its promised first year cost sharing. At
     that rate, we projected that the district was at-risk of not providing $1,353,267 in required

10                                                              NSF OIG Semiannual Report • September 1999
   cost sharing over the course of the award. We found that even though the district understated
   its actual cost sharing by not including $138,538 in services donated by volunteer scientists,
   the district was significantly short of the required first year amount. The district agreed to
   make up the shortfall in the remaining years of the award. We recommended that NSF
   monitor the district’s progress in satisfying its cost-sharing commitment.

           Although we found that the school district’s accounting system was generally
   satisfactory, we found a number of compliance issues and recommended appropriate
   corrective action. We questioned $29,499 of participant support costs paid in excess of the
   amount allowable under the award conditions. We also estimated that unless existing
   practices were changed, the awardee would incur an additional $30,000 for participant
   support that would also be unallowable. The school system and NSF management agreed
   with these findings.



   Statewide Systemic Initiatives

            We reviewed two Statewide Systemic Initiatives awards during the period. One was a
   $9.8 million award to a midwestern board of regents to improve mathematics and science
   education for state middle school and high school students. Our audit questioned $274,281
   out of $9.3 million in claimed costs for this award. Most of the costs questioned were salaries
   and fringe benefits that were improperly charged to the award ($173,371), and other charges
   for indirect costs that exceeded the approved indirect cost rate ($85,649). The awardee is
   contesting the questioned costs and our report has been referred to NSF’s audit resolution
   officials for final action.

           We also reviewed an award of $6 million to a state department of education that NSF
   terminated early because of insufficient progress in meeting programmatic goals. We found
   that the department’s accounting system cannot compare actual costs with budgeted amounts
   by category, making it difficult to ensure that funds are spent in support of the activities
   intended in the award. We recommended that NSF require the education department to
   correct several specific weaknesses in its accounting system before making new awards to the
   departments. NSF and the department are evaluating our report.

            In our March 1998 Semiannual Report (page 8), we described our earlier audit of a
   $9.9 million NSF Statewide Systemic Initiative award. As a result of our review and a
   subsequent site visit to the department by NSF officials, the department agreed to repay
   $495,000, primarily for indirect costs that were incorrectly calculated. Our review also
   disclosed deficiencies in the reporting and recording of subcontract costs. The department
   found our recommendations useful in establishing procedures to more closely monitor the
   activities of its subcontractors.




NSF OIG Semiannual Report • September 1999                                                           11
     Review of Draft Program Announcement

              One of our liaisons noticed that a proposed new scholarships program might involve
     unusual student eligibility monitoring requirements for prospective awardees. We reviewed
     the draft program announcement and made several suggestions, including requiring that
     institutions describe how they will monitor eligibility for the program and clarifying that the
     program did not require awardees to provide any special cost-sharing contributions. Our
     suggestions should help ensure that funds are used in furtherance of the program’s goals.
     NSF managers told us they found our suggestions helpful and made changes to the draft
     program announcement as a result.



     NSF Disallows Municipal Board of Education’s Claimed Costs
             In our March 1998 Semiannual Report (page 9), we described our earlier audit of
     an award to the board of education of a northeastern city. As a result, NSF determined that
     the board of education must repay $844,397 in unallowable and unsupported costs. Most of
     these questioned costs related to several material compliance and internal control problems.
     For example, the awardee did not use NSF approved budgets for internal tracking purposes,
     needlessly complicating its oversight of the grant. The staff was also generally unfamiliar with
     NSF grant requirements. The report also detailed deficiencies in the awardee’s record reten-
     tion and retrieval system and in its accounting system for NSF grants. In its response, the
     board acknowledged these problems and proposed corrective action to address them.



     Issues Involving
     Administration and Management

     Expansion of the FY 1999 CFO Audit to Include Penetration Tests

             We are now in the process of conducting the fourth annual Chief Financial Officers
     (CFO) audit of NSF’s agency-wide financial statements. This year we expanded the scope of
     our audit to include a more comprehensive review of NSF’s data processing system and
     internal computer network. This review will identify and assess system controls that ensure
     financial data integrity, confidentiality, and availability. As part of this review, penetration
     tests will be performed, to identify and expose vulnerabilities in NSF’s data processing system
     and to evaluate whether NSF’s data processing environment and critical financial systems are
     vulnerable to unauthorized access and use. The review will be performed in accordance with
     the General Accounting Office’s Federal Information Systems Control Manual.

             We are also working with NSF’s CFO to accelerate the preparation and audit of NSF’s
     financial statements. This should result in providing audited financial statements in early
     January 2000, rather than by March 1, 2000.
12                                                               NSF OIG Semiannual Report • September 1999
   Review of Financial Summary Reports for the Ocean Drilling Program

           International contributions to fund operations of NSF’s Ocean Drilling Program
   (ODP) are deposited into a commercial bank account prior to being transferred to NSF’s
   Trust Fund account with the U.S. Department of Treasury. During our review of the FY 1998
   ODP financial summary reports, we found that the commercial bank did not correctly carry
   out NSF’s instructions to transfer funds to the U.S. Department of Treasury. Instead, the
   bank erroneously transferred approximately $2.9 million from the NSF account to the NSF
   Credit Union. The error was corrected the next day, but interest for that day was not credited
   to NSF’s account. As a result of our review, the commercial bank reimbursed NSF for the
   interest lost due to the error (about $500). We reviewed NSF’s and the commercial bank’s
   fund transfer procedures to identify the cause of the error and ensure that adequate controls
   are now in place to prevent errors of this kind.


   GPRA Monitoring

           We are involved in several NSF-wide activities concerning the Government Perfor-
   mance and Results Act (GPRA). During the current reporting period, we participated in
   internal agency working groups tasked to revise its strategic plan, develop performance plans
   for future years, and develop its first annual performance report. Where appropriate, we have
   offered NSF management suggestions, primarily related to data and measurement issues, that
   may affect the success of its GPRA system. We have also participated in an NSF working
   group that is monitoring the activities of an outside contractor assessing the quality of NSF
   data.
           We have also incorporated consideration of performance data systems in our ongoing
   efficiency reviews. During our recent review of a Centers program, for example, we exam-
   ined the manner in which the program developed and maintained databases that may be used
   for GPRA reporting purposes and made appropriate suggestions. We also tested the validity
   of some data provided by NSF-supported researchers on a statistically valid sample of infor-
   mation that could be considered by NSF management in its assessment of program perfor-
   mance. We found that the information was generally accurate.




NSF OIG Semiannual Report • September 1999                                                          13
     Review of Awardee A-133 Audit Reports

             OMB Circular A-133, issued pursuant to the Single Audit Act of 1984, sets forth
     standards for obtaining consistency and uniformity among federal agencies for the audit of
     state and local governments, educational institutions, and nonprofit organizations that receive
     federal awards. Reports prepared by independent auditors in accordance with this circular are
     referred to as A-133 audit reports.

             During the reporting period, our office reviewed 114 A-133 audit reports. The reports
     questioned costs at only 10 of the 114 institutions, and the total amount questioned was only
     $82,850. In addition, one report identified $875,104 of at-risk cost sharing and a cost-sharing
     shortfall of $1,312,792. NSF management has resolved six of these reports and sustained
     $62,649 of the costs questioned.




14                                                             NSF OIG Semiannual Report • September 1999
         We are responsible for investigating possible wrongdo-
ing involving organizations or individuals that receive awards
from, conduct business with, or work for NSF. In investigating
these allegations we assess their seriousness and recommend pro-
portionate action. When possible, we work in partnership with
agencies and awardees to resolve these issues. When appropri-
ate, the results of these investigations are referred to the De-
partment of Justice or other prosecutorial authorities for crimi-
nal prosecution or civil litigation, or to NSF for administrative
resolution.

         We focus our criminal and civil investigative resources




                                                                    Integrity
on allegations of intentional diversion of NSF funds and mate-
rial false statements in information submitted to NSF. Inten-
tional diversion of NSF funds for personal use is a criminal act,
which can be prosecuted under several statues and investigating
these allegations is a priority for our office. We encourage
awardees to notify NSF of any significant problems relating to
the misuse of NSF funds because it significantly increases our
ability to investigate them and possibly recover funds for NSF.

        Our administrative cases include those addressing alle-
gations of misconduct in science, engineering, and education,
such as falsification, fabrication, and plagiarism. Misconduct in
science strikes at the core of NSF’s mission, and it is a special
concern for our office.

                     HIGHLIGHTS
Announcement of the Uniform
Federal Policy on Research Misconduct                 16


Summary of Referrals to Agency
Management for Adjudication                           17


Summary of Significant
Administrative Investigative Activity                 27


Summary of Issues Involving
Civil and Criminal Investigations                     28


Statistical Tables                                    33

                                                15
     Proposed New Uniform
     Federal Policy on Research Misconduct
     is Consistent With NSF’s Procedures

             At the close of this reporting period, the Office of Science and Technology Policy
     (OSTP) issued a new, proposed policy on research misconduct for public comment. For
     several years, we worked closely with OSTP and other federal agencies to develop and refine
     the policy. Once finalized, the policy will be implemented by all federal agencies supporting
     research. This policy will not become final until OSTP and all affected agencies consider
     public comments and then issue their final policy or rule. Until the new policy is finalized, we
     must rely on the definition and procedures established under NSF’s current misconduct regu-
     lation.

             Consistent with NSF’s current practice, the proposed policy emphasizes the need to
     defer investigations, in most cases to awardee institutions, separates investigation from adjudi-
     cation, ensures confidential treatment for both complainants and subjects as the allegations are
     being resolved, and develops corrective actions that are in proportion to the seriousness of the
     misconduct. In order for there to be a misconduct finding under the proposed policy, the
     conduct in question must be a “significant departure from accepted practices of the scientific
     community for maintaining the integrity of the research record.” This is consonant with
     NSF’s current approach and is based on the principle that allegations of misconduct should be
     evaluated by comparing the conduct in question to the ethical standards established by the
     relevant scientific community.

             The uniform policy is limited to misconduct “in proposing, performing, or reviewing
     research, or in reporting research results.” Because OSTP focused exclusively on misconduct
     affecting the research record, the proposed policy explicitly states that agencies may adopt
     supplemental definitions and procedures to cover misconduct not affecting the research
     record. This provision is important for NSF because the Foundation does not only support
     scientific research, but also has a large investment in science and engineering education. In
     our view, it will be appropriate for NSF to adopt the proposed policy when it becomes final so
     long as the NSF also takes specific action so that it can continue to address allegations of
     misconduct associated with its education and research portfolios consistently.

             Overall, we are pleased with the proposed policy because all federal agencies that have
     a research portfolio will now have a uniform process designed to reinforce the importance of
     integrity in the conduct of research. We stand ready to share our experiences and insights
     with other agencies as they begin to implement a structure and process to carry out this new
     responsibility. At NSF, the responsibility rests with scientists within this Office of Inspector
     General. As other agencies consider an appropriate structure, we believe that the NSF model
     should be carefully evaluated. Having scientists lead investigations is desirable because
     scientists are familiar with the ethical standards of the scientific community and can use this


16                                                              NSF OIG Semiannual Report • September 1999
   familiarity to evaluate misconduct allegations. Locating scientists in an Office of Inspector
   General is desirable because of the Office’s inherent familiarity with the principles and prac-
   tices of fair and effective investigation, including mechanisms to ensure confidentiality, avail-
   ability of subpoena power, and clean separation between investigative and adjudicative func-
   tions.

   Summary of Referrals to
   Agency Management for Adjudication

   Recommendation to Conclude Subject Fabricated Publications and Data

            As part of its inquiry, a large, public university on the east coast requested from NSF
   information related to an allegation that a biologist misrepresented his publication record in
   his funded NSF proposal by listing as “in press” manuscripts that did not exist. We responded
   to the university’s request for information and deferred our inquiry to it. The university
   concluded there was sufficient substance for an investigation, and we deferred our
   investigation pending completion of its efforts. During the university’s investigation, it
   learned the subject’s progress report for his previously funded NSF proposal also contained
   false statements about “in press” publications. The university concluded the subject’s multiple
   misrepresentations of his publication record were misconduct in science.

           During the university’s investigation, we received an allegation of data fabrication
   against the subject. The university was unable to investigate this allegation because the
   subject moved to another university and took his laboratory records with him. We conducted
   our own investigation and requested the relevant laboratory notebooks from the subject. He
   provided us with a laboratory notebook that recorded the data obtained by a visiting scientist
   who conducted the experiments in the subject’s laboratory. We asked an independent scientist
   to evaluate the data. He said the data in the subject’s NSF proposal were not supported by
   data in the notebook and, based on the descriptions of the experiment in the proposal and
   notebook, some of the proposal data simply could not exist. We interviewed the visiting
   scientist, who confirmed he did not do the experiment described in the proposal and agreed
   that other data listed in the subject’s proposal could not exist, even in theory. In our interview
   with the subject, he said that the data were provided to him by the visiting scientist and were
   recorded in another laboratory notebook he did not have; he said the visiting scientist stole the
   other notebook. We determined there was no independent evidence to support this assertion.
   Based on the existing notebook, the testimony of the visiting scientist and the subject, and the
   analysis by the independent scientist, we concluded the subject’s explanations were not
   credible and that he fabricated the data.

           As part of our investigation, we also examined the allegation that the subject
   misrepresented his publication record. We found additional false publication claims in the
   subject’s funded NSF proposals. We agreed with the university’s conclusion that his multiple
   false claims of “in press” publications were misconduct in science.

NSF OIG Semiannual Report • September 1999                                                              17
             We recommended that NSF’s Deputy Director find the subject committed misconduct
     in science when he misrepresented his publications and fabricated data in his proposals to
     NSF. We recommended that he send the subject a letter of reprimand, debar him for 1 year,
     and impose certification and assurance requirements for any NSF-supported project for
     2 years after the debarment.


     Recommendation to Conclude PI Plagiarized in NSF Proposal

             We received an allegation that a chemist at a mid-sized, northeast university
     plagiarized text from an NSF award into his proposal. In our inquiry, we determined that over
     50 percent of the subject’s proposal was identical to the award and concluded that there was
     sufficient substance to the allegation to warrant an investigation. We referred the matter to
     the subject’s university, which told us its policy required that it conduct an inquiry first. The
     university’s inquiry concluded there was enough evidence for an investigation. The university
     found the subject committed plagiarism egregious enough to constitute misconduct in science.
     The university denied the subject a raise and associated benefits, and it also required the
     subject to obtain assurances that any documents he submits to NSF are his original work or
     are otherwise properly cited.

              Our review of the university’s investigation report determined that it was fair,
     accurate, and thorough, and could be used in lieu of our own. We concurred with the
     university’s finding. We recommended that NSF’s Deputy Director: (1) find that the subject
     committed misconduct in science; (2) send him a letter of reprimand; (3) require for 3 years
     that he provide a certification that any documents he submits to NSF contain no plagiarized
     material; and (4) require a similar assurance from his department chair or dean. In response to
     our draft investigation report, the subject pointed out that his NSF awards were unusual in
     that they were used almost exclusively to support students or to buy equipment, and one of
     our recommendations would disproportionately hurt his students and his department. Instead
     of that recommendation, the subject proposed to teach a science ethics course at his
     university, and we recommended NSF work with the subject (and his chair) to refine and
     implement his plan.


     Recommendation to Conclude PI Plagiarized
     and Breached Confidential Peer Review

             We received allegations that an associate professor of chemistry from a large southern
     university submitted an NSF proposal containing text and ideas plagiarized from another
     scientist’s NSF proposal, which the subject received for confidential peer review. In our
     inquiry, we found approximately 22 lines of substantially similar text, formulas, and references
     in the experimental design and methods section. When we contacted the subject, he said he
     did not see his actions as inappropriate, but admitted that he was “influenced” by the proposal.
     We concluded that there was sufficient substance to the allegations, and we referred the
     investigation to the subject’s university.

18                                                              NSF OIG Semiannual Report • September 1999
           The university’s investigation committee determined that essentially the same material
   appearing in the NSF proposal was used in several versions of a proposal that NIH eventually
   funded. The investigation committee reported that the subject acknowledged that he used
   material from the reviewed proposal, believing that the author would review his proposal, and
   he wanted to ensure that he presented the author’s work correctly. The subject admitted
   paraphrasing parts of the reviewed proposal, but contended that the equations and the
   references were general knowledge in the field and therefore copying them did not constitute
   plagiarism. However, he was unable to provide an example in which anyone else in his field
   used this same material.

           The investigation committee disagreed with the subject, and found that he committed
   misconduct in science. It recommended that the university prohibit the subject from
   submitting any proposals for a period of 1 year and for an additional year the subject and his
   department head should certify that all of the subject’s proposals are “misconduct-free.” In
   addition, it recommended the subject be prohibited from participating in peer review for
   2 years and that he actively educate himself about misconduct in science.

           The adjudicator for the university accepted the committee’s recommendations and also
   decided to terminate the subject’s NIH award and return the expended funds to NIH. The
   subject appealed the decision to impose the additional actions. The president of the university
   denied the subject’s appeal.

            After reviewing the university’s investigation report, we agreed with the university’s
   conclusion that the subject knowingly plagiarized from the reviewed proposal into his NIH
   proposal, and subsequently submitted the same plagiarized material in proposals to NSF and
   NIH. We also agreed that the subject’s plagiarism was more serious because he misused
   confidential information he acquired by participating in NSF’s peer review system. We
   recommended that NSF’s Deputy Director: (1) find that the subject committed misconduct in
   science; (2) send him a letter of reprimand; (3) require for a period of 2 years that he provide
   a certification that any documents he submits to NSF contain no plagiarized material; (4)
   require a similar assurance from his Department Chair or Dean; and (5) prohibit him from
   participating as an NSF reviewer for the same period. We recommended that NSF coordinate
   its actions with the other affected federal funding agencies.


   Recommendations Concerning Ineffective
   Oversight of Biohazardous Materials
            We were informed by officials at a mid-size, midwestern university that they had
   initiated an investigation against a faculty member with regard to his biohazardous research.
   The university concluded that the subject committed misconduct in science when he failed to
   (1) obtain proper authorization to receive biohazardous materials, (2) adhere to guidelines for
   their use, and (3) respond to university officials’ requests for information or provide them
   with accurate information. Among the disciplinary actions it took against him were
   suspending him without pay and prohibiting him from conducting research or applying for

NSF OIG Semiannual Report • September 1999                                                            19
     research funding. The subject disputed these conclusions and actions. After a full, factual
     hearing, an independent arbitrator decided that (1) the evidence did not support the first
     finding, and (2) the second act was not professional misconduct, but (3) he failed to provide
     prompt and clear information about his research. The arbitrator ordered the university to
     rescind the discipline and compensate the subject for pay and other benefits. He said that the
     university could issue the subject a written reprimand for his failure to provide information.

            After reviewing the university’s investigation report and the documents associated
     with the arbitrator’s decision, as well as additional records we requested, we determined that
     an investigation by our office was necessary. We questioned actions by both the university
     and the subject.

              For example, we learned that, while the subject had indicated on the internal university
     approval forms for his external proposals that the research involved recombinant DNA,
     approving officials did not ensure biosafety review of the proposals, despite being members
     of, or responsible for, the biosafety committee. Instead, an administrative employee arbitrarily
     filled in the required dates of approval on the forms—with dates that predated the subject’s
     employment at the university.

            Over the years, the subject submitted internal requests for funding that involved
     biohazardous materials. The committee chairman reviewing and funding these requests, who
     was a member of the biosafety committee, neither discussed these requests with the biosafety
     committee nor spoke with the subject about their content.

             To obtain biohazardous materials, the subject made explicit promises and
     commitments to suppliers assuring them that university officials would exercise oversight over
     his research, even though he knew there was no functioning biosafety committee and therefore
     no effective oversight was possible at the university. He proceeded with his research without
     such oversight—indeed, although he accepted personal responsibility for the safe conduct of
     his research, he was out of the country while many of these biohazardous experiments were
     conducted.

             University officials knew of their responsibility for providing informed approval and
     oversight regarding the use of biohazardous materials, but they neither took reasonable action
     to ensure it occurred nor did they take significant corrective action after these issues arose.
     The subject knew of his own responsibilities and also did not take reasonable action.
     However, because we found that there were no standards of practice at the university against
     which its or the subject’s actions could be measured, we concluded these actions were not
     misconduct in science. If there had been reasonable, informed administrative controls that
     were intentionally ignored, we would have considered recommending findings of misconduct
     in science against the subject.

             We recommended that NSF take significant action to ensure that the university not
     receive NSF awards involving the use of biohazardous materials until it demonstrates its



20                                                              NSF OIG Semiannual Report • September 1999
   ability to provide responsible oversight. With regard to the subject, we recommended that
   NSF require that for all future NSF awards he provide information about his commitments
   and declare in each progress report to NSF that he has taken the necessary steps to ensure
   proper oversight of his research.


   Deputy Director Concludes PI Plagiarized in Two NSF Proposals

           In our March 1999 Semiannual Report (page 17), we discussed our investigation
   into allegations that a professor of biology plagiarized over 90 percent of the text in two NSF
   proposals he submitted to different NSF directorates. The university investigation found that
   the subject’s use of verbatim material from another scientist’s NSF award in his two proposals
   constituted plagiarism. The university reprimanded the subject and required that he: (1) not
   submit federal or state proposals and not serve as a PI on federal or state awards for 3 years;
   (2) withdraw his pending NSF proposal; (3) certify to the originality of any external proposals
   for an additional 2 years; and (4) read materials and attend workshops/meetings on the topic
   of integrity in research. In light of the university’s actions, we recommended that the Deputy
   Director affirm that the subject committed misconduct in science and send him a letter of
   reprimand, but take no further action. The Deputy Director took action consistent with our
   recommendations.


   Deputy Director Concludes Plagiarism in Education Proposal is Misconduct

           In our September 1998 Semiannual Report (pages 16-17), we described a case in
   which a university found that an experienced PI and co-PI committed misconduct by
   plagiarizing the text of a proposal written by educators whose project they proposed to
   replicate. NSF agreed with our recommendation to find that the subjects committed
   misconduct in science and reprimand them. It rejected an appeal from one of the subjects,
   who argued that the other subject alone was responsible for the plagiarism.


   PI Appeals Deputy Director’s Misconduct Finding

           In our March 1999 Semiannual Report (page 19), we described the Deputy
   Director’s decision that a biology professor’s misrepresentations in his proposal were
   misconduct in science. NSF determined that the subject falsified his proposal by
   misrepresenting his research capabilities and the status of his research. The Deputy Director
   concluded his actions were misconduct in science and proposed significant action to protect
   the federal government’s interests.

          Consistent with NSF’s misconduct-in-science regulation, the subject appealed the
   Deputy Director’s decision to the Director. The Director said the subject’s misrepresentations
   “materially affected NSF’s decision to award [him] the substantial renewal grant he received.”


NSF OIG Semiannual Report • September 1999                                                           21
            She concluded that his appeal did not “raise new issues or provide additional
     information that was not previously addressed” and that his issues were “considered and
     addressed by the University, by the OIG, and by the Deputy Director.” She therefore
     “affirmed the finding of misconduct in science.” She did not modify the actions NSF
     proposed.

     Summary of Significant Cases
     Closed Without Recommendations
     for Findings of Misconduct

     Science Issues Intertwined with Allegation of Data Fabrication

             We were informed of an allegation that a geographer at a large, public university in the
     southwest falsified data by adding material to his samples to pre-determine the results that
     would be obtained when independent testing facilities analyzed his samples. The subject’s
     university also learned of the allegation and asked two scientists to attempt to duplicate the
     subject’s results. We discussed the matter with the subject’s university, agreed it would
     conduct an inquiry, and agreed to defer action pending completion of its inquiry. The
     university’s adjudicator concluded there was sufficient substance to proceed to an
     investigation. We deferred our investigation to allow the university to complete its
     investigation.

             The university’s investigation committee commissioned independent tests on some of
     the subject’s samples. The results of these tests indicated that some samples contained
     material that was anomalous because it is not known to be naturally occurring in the location
     where the samples were collected. The subject raised concerns about the chain of custody of
     the samples and suggested that some samples may have been inadvertently contaminated.

             A scientist provided the committee with a comparison of the subject’s results with
     known “control” data. This scientist’s analysis showed remarkable agreement between the
     two sets of data, and he argued that such close agreement suggested that the subject
     inappropriately manipulated his samples so that those data would match the “control” data. In
     response to the committee’s questions, the subject provided an analysis that showed
     substantially less agreement, and he suggested that the lack of uniformity was indicative of
     honest research efforts. The subject also provided the committee with scientific reasons why
     some of his data should show good agreement with the “control” data and others would not.
     The committee concluded that both the scientist’s and the subject’s representations of the data
     were inaccurate and there was ambiguity associated with the “control” data themselves.
     Ultimately, it concluded that there existed convincing scientific explanations for the
     agreements between the subject’s data and the “control” data.




22                                                              NSF OIG Semiannual Report • September 1999
           Although the committee concluded that some samples seemed likely to have been
   altered by the subject, it found no evidence that the samples were altered to achieve a pre-
   determined result—which in our view, consistent with the committee’s conclusions, precludes
   a finding of culpable action necessary to conclude that any such alterations constituted a
   serious deviation from accepted practices. We found the committee’s report to be objective
   and thorough, and we concur with its conclusion that the subject did not commit misconduct
   in science.

            The subject’s actions need to be assessed in light of the uncertainties about how best
   to analyze data and report results in an emerging area of science, and many of the committee’s
   efforts reflected those that a scientist carrying out research in this field would take to verify
   the subject’s reported results. This case exemplifies the importance of allowing the relevant
   scientific community to determine whether misconduct in science occurred and the importance
   of separating misconduct issues from issues of scientific judgement. Central to this case were
   issues of replicability, methodology, reliability of control data, and the amount and depth of
   scientific detail in publications. Such matters are at the heart of the scientific enterprise and
   are—as they should be—addressed by the scientific community in the ordinary practice of
   research.


   Investigation Finds Researchers’ Conclusion was Reached Independently

            A complainant alleged that a chemical engineering research group (the subjects’ group)
   at a large, eastern university incorporated ideas and conclusions from a manuscript that another
   research group (the other group) had submitted for publication into a paper of their own without
   giving the other group proper credit. The two groups were engaged in a scientific dispute over
   the interpretation of certain observations. Two hypotheses had been proposed to explain the
   observations, with each group favoring a different hypothesis. The other group’s manuscript
   purported to settle the dispute in favor of the other group’s preferred interpretation. The
   subjects’ paper reached essentially the same conclusion as the other group’s manuscript, but did
   so using the subjects’ own data, much of it previously published, and the subjects’ own analytical
   approach.

           The subjects appended a note to their paper that characterized the other group’s paper as
   containing similar experimental results and appearing in print while the subjects’ paper was
   under review. The note gave no indication that the subjects had seen the other group’s
   manuscript while the subjects’ paper was in preparation or that the subjects made use of the
   other group’s manuscript in preparing their own.

   We determined that an investigation into the allegation was warranted and referred the case to
   the subjects’ university. On the basis of the evidence the university collected, we concluded that:

   •       before the subjects received the other group’s manuscript, the subjects had done the
           experimental work that, in their view, was essential to interpreting the observations
           whose significance was in dispute;

NSF OIG Semiannual Report • September 1999                                                               23
     •      the only significant analytical work done after receipt of the other group’s manuscript was
            a logical outgrowth of the subjects’ prior experimental work and caused the subjects to
            move away from the specific interpretive schema proposed by the other group;

     •      the subjects’ own experimental and analytical work, and not the evidence or conclusions in
            the other group’s manuscript, caused the subjects to revise their conclusions about the
            hypotheses in dispute; and

     •      the subjects’ paper was written after they received the other group’s manuscript.

              We concluded that the subjects did not use the other group’s manuscript except as a spur
     prompting them to finish analyzing their findings and preparing them for publication. Although
     the subjects might have indicated that their paper was written after they had read the other group’s
     manuscript, their failure to do so could not be considered misconduct in science. This case
     illustrates the care that should be taken to acknowledge the contributions of others and that
     making informed distinctions among different kinds of unacknowledged “uses” of other scientists’
     work can be important in resolving misconduct cases.


     Further Investigation of Alleged Plagiarism Not Warranted

             We received an allegation that a social scientist at a large southwestern university
     committed plagiarism by incorporating language from a published article into her declined NSF
     proposals without appropriate attribution. The complainant informed us that the subject’s
     university had conducted an investigation into the allegation and closed its case without a
     finding of misconduct. We were also informed of numerous plagiarism allegations against the
     subject that did not involve NSF proposals and awards.

             At our request, the university sent us a copy of its investigation report and supporting
     evidence. In our letter, we noted that NSF expects awardees to notify us when, as in this case,
     a misconduct inquiry determines that an investigation is warranted. The university told us that
     it mistakenly believed that alleged misconduct in declined proposals was not covered by NSF’s
     misconduct regulation and intends to keep us appropriately informed in the future.

             We reviewed the records of the university’s investigation and its subsequent inquiries
     into related allegations. While our review was in progress, we learned that a professional
     association in the subject’s discipline had examined the plagiarism allegation involving the
     subject’s NSF proposal and concluded that there was insufficient evidence to warrant a formal
     investigation.

             The amount of allegedly plagiarized material comprised less than one page of back-
     ground material from the published article. Although the passages in the published article and
     the subject’s proposal were substantially similar, there were numerous small differences in
     wording. We concluded that the similarities between these passages were more extensive than
     would occur if two researchers independently summarized the ideas of a third scholar.

24                                                               NSF OIG Semiannual Report • September 1999
           However, we decided that it was questionable whether the subject’s alleged
   misappropriation, given the amount and character of the material involved, was sufficiently
   serious to be misconduct in science. We concluded that to further investigate this allegation,
   which had already been considered in proceedings in two different and independent forums,
   would be disproportionate to the seriousness of the alleged misconduct, and we closed the
   case on that basis. This case once again illustrates the importance of acknowledging the work
   of others, and our commitment to keeping matters in proportion when we do investigative
   work.


   Failure to Communicate Leads to Allegations of Misconduct

            Our Office received an allegation from a large northeastern university that the subject
   failed to give appropriate credit to a graduate student who supplied ideas that were used in
   the development of software under an NSF grant on which the subject was co-PI. The
   student, at the suggestion of the subject, began attending project meetings, and gave a
   presentation of software that he developed. Before the student’s involvement ceased a short
   time later, the PI and co-PI submitted a letter to NSF regarding their pending proposal. The
   letter explained their plans for the project, and mentioned the student’s software, describing it
   as “remarkable” and “revolutionary.” From his knowledge of the letter, the student believed
   that his software contributed substantially to the development of the final product, and that his
   contribution should have been acknowledged.

           To assess whether the student should have been credited for a contribution to the
   project, the university’s investigation committee analyzed the development of the software.
   The major features of the final product were developed about a year before the student
   presented his ideas to the group, and the final version did not utilize the special features
   demonstrated by the student. In the committee’s view, the PI’s notes, the statements of other
   witnesses, and the final version of the software, substantially corroborated the subject’s
   account of the development of the software. Thus, the committee concluded that the
   student’s ideas did not contribute to the development of the final version of the software.

           However, because the project team did not inform the student how the software was
   developed, the committee reached the conclusion that the student had reason to believe that
   he had contributed substantially to the final version of the software, and to file his complaint.
   In addition, the committee thought that the student’s clinical experience and new ideas
   stimulated the thinking of the project team and strengthened its NSF proposal. Nonetheless,
   the committee concluded that although it would have been appropriate to acknowledge the
   student in the documentation that was published with the software, the student’s contributions
   did not warrant co-authorship.

           While a majority of the committee believed that the failure to acknowledge the student
   was undesirable, the committee unanimously concluded that the lack of acknowledgment by
   the subject was not misconduct in science. We concurred with the committee’s assessment,
   and note that this situation could have been avoided if the subject had communicated better
   with the student.
NSF OIG Semiannual Report • September 1999                                                             25
     Failure to Reference Pending Proposal at Foreign Funding Agency

             We received a plagiarism allegation after a scientist received a proposal from NSF and
     a nearly identical proposal from a foreign funding agency for review. A foreign scientist (the
     foreign subject) and a resident scientist (the resident subject), a biologist at a large
     northeastern university, submitted nearly identical proposals to a foreign funding agency and
     to NSF, respectively. Each subject identified himself as the sole PI on his proposal. Although
     the NSF proposal identified the foreign subject as a consultant and requested consultant fees
     and foreign travel expenses, it did not refer to the foreign subject’s proposal at any point. The
     foreign subject’s proposal did not list the resident subject as a collaborator or reference the
     resident subject’s NSF proposal. We were concerned that these nearly identical proposals
     might constitute an attempt to secure duplicate funding for a single research project.

             The subjects explained that they collaborated on drafting the proposal, but the resident
     subject stated that NSF’s FastLane application did not provide a place “to explain the nature
     of my collaboration with [the foreign subject] and whether or not he is applying for funding on
     the same project.”

            The NSF Grant Proposal Guide instructions for the Current and Pending Support
     form state that “This section of the proposal calls for required information on all current and
     pending support for ongoing projects and proposals . . . . All current project support from
     whatever source (e.g. Federal, State or local agencies, private foundations, industrial or other
     commercial organizations) must be listed” for each Principal Investigator and other Senior
     Personnel. We spoke with NSF staff who explained that such information, from any funding
     source was important for the proper evaluation and administration of NSF proposals.

             After considering the subject’s response, we suggested the resident subject amend his
     most recent NSF proposal to explain the nature of his research collaboration with the foreign
     subject and what portions of the project would be supported by NSF. The subject responded
     to our suggestion by sending an amendment to the appropriate program officer. We
     considered this an adequate resolution to this matter and believe that it underscores the
     importance of providing accurate information to NSF.


     NSF Proposals and Progress Reports
     Containing Inconsistent Publication Citations

              A scientist alleged misrepresentation of the publication status of several manuscripts in
     a pending NSF proposal submitted by a biology professor at a large western public university.
     We reviewed the claims in the pending proposal, two past proposals, and two progress reports
     submitted by the subject and found several significant inconsistencies involving authorship,
     titles, and publication status within particular submissions.




26                                                               NSF OIG Semiannual Report • September 1999
          The subject told us that while preparing his proposals he received requests for changes
   to some of the manuscripts, but he failed to reflect those changes uniformly in all sections of
   his proposals and progress reports.

           According to the NSF Grant Proposal Guide, an NSF proposal “should present the
   merits of the proposed project clearly and should be prepared with the care and thoroughness
   of a paper submitted for publication.” This language applies to every aspect of NSF
   proposals, including publication citations, and is important for their fair and efficient
   evaluation. At our suggestion, the subject corrected the citations causing the apparent
   misinterpretations in his most recent NSF proposal. In closing this case, we noted that
   inaccuracy in citations can lead to allegations of misconduct in science as well as hampering
   efficient evaluation of proposals.

   Summary of Other
   Administrative Investigative Activity

           We reviewed 55 matters this period, 18 of which were either concerns best suited for
   resolution by NSF management, or misconduct allegations lacking sufficient information to
   allow us to proceed. We closed 37 misconduct cases this period, see page 45. Twenty-seven
   of these cases were closed at the inquiry stage and ten were closed after an investigation. Of
   these investigations, four were cases in which awardee institutions concluded that no
   misconduct occurred and we did not recommend a finding of misconduct in science. In six
   cases, institutions concluded that actions were misconduct and we ultimately forwarded
   reports on them to the Deputy Director, who took action consistent with our recom-
   mendations. During this period, we referred the inquiry or investigation of three cases to
   awardee institutions. We currently have eight cases under review by institutions.

           We closed 31 cases with no finding of misconduct in science. Twenty-one cases were
   from colleges and universities, four from government agencies or laboratories, four from
   private industry, and two others . These institutions were located in the northeast, southeast,
   midwest, southwest, and west, and the subjects worked in various fields including biology,
   chemistry, computer science, engineering, geosciences, mathematics, physics, and sociology.

            Of the 27 cases closed without an investigation, each can be described by a single
   primary allegation, even though some contained multiple allegations. The primary allegations
   include eight plagiarism cases, six false certifications or other misrepresentations, three breach
   of the confidentiality of peer review, two biased review of an NSF proposal, two fabrication/
   falsification, and six others such as abuse of colleague, duplicate submission of a proposal, and
   retaliation. Ten of the 27 cases were closed after we obtained information from the subject,
   and in two we requested information from experts.




NSF OIG Semiannual Report • September 1999                                                              27
             During this reporting period we considered several issues related to internal processes
     at NSF. We reviewed a complaint from an engineer whose full proposal was declined after a
     successful pre-proposal evaluation. He asked his program officer if either of the two pre-
     proposal reviewers, who ranked the pre-proposal as excellent, were used to review the full
     proposal. He interpreted NSF’s initial response to this question as affirmative, but a
     subsequent NSF reply informed him that neither reviewer provided a review for the full
     proposal. The difference in the two responses from NSF caused the complainant to suspect
     that the review process was manipulated to deny him funding. Although we could not resolve
     the discrepancy between the statements, our review provided no evidence that the program
     officer selected the reviewers to obtain a particular result, or that the project leader influenced
     the program officer’s selection of reviewers. NSF guidelines for choosing reviewers afford
     program officers latitude and flexibility in their choice of individual reviewers, and we found
     no evidence that the program officer’s actions were inconsistent with the guidelines.

             In another matter, we were informed that an employee of another federal agency, who
     represented his agency in the management of an interagency review panel, allegedly failed to
     disclose his potential conflict of interests (COI) with a PI on one of the proposals under
     review. As a management representative of the other agency, the employee was not a member
     of the panel and could not vote. In our review, we learned that the employee’s comments
     during the panel review discussion were interpreted as his inappropriate advocacy of the PI’s
     proposal. His comments would be inappropriate according to NSF’s COI regulations.
     However, the employee was representing the other agency, and because that agency’s COI
     regulation did not address this particular issue as a conflict, we concluded, in consultation
     with NSF’s designated agency ethics official, that he did nothing wrong. We encouraged the
     program manager to request greater disclosure of potentially biasing affiliations from other
     agency representatives when they participate in panel reviews affecting how NSF funds are
     used.



     Summary of Issues Involving
     Civil and Criminal Investigations

     Development of Computer Incident Response Team

             During this reporting period, we were notified of three separate incidents involving
     alleged computer crimes and unauthorized intrusions into NSF computer systems. In
     consultation with NSF and other agencies, we are developing a Computer Incident Response
     Team (CIRT). This team, like other CIRT teams in the federal government, will be able to
     rapidly respond to computer intrusions to protect NSF’s systems and carefully gather the
     evidence necessary for possible civil or criminal prosecutions. The NSF CIRT team will be
     multidisciplinary, incorporating management and law enforcement capabilities, and possessing
     technical and forensic skills.


28                                                                NSF OIG Semiannual Report • September 1999
           Among the three incidents, one involved a computer network administered by an NSF
   contractor that provides information and support for a government-wide program
   administered by NSF. The second involved the intrusion into an NSF-administered network.
   This incident was one in a series of similar incidents involving multiple government agencies.
   In both cases, we are working with other agencies to investigate these incidents.The third
   incident involved a former systems administrator for an executive policy office that shares
   NSF office space. After the policy office terminated the subject’s employment, he lied to gain
   physical entry into his former office. Once in the office, the subject obtained unauthorized
   access to the computer system, copying and rewriting computer files he developed as part of
   his past duties.

           The U.S. Attorney’s Office declined to prosecute this matter because there was no
   injury by the unauthorized intrusion and no financial gain. As a result of this matter, NSF is
   reviewing and updating its physical and information security procedures for handling former
   employees and contractors. We believe the establishment of a CIRT team will allow us to
   investigate cases of this kind more effectively and provide additional security for NSF’s
   systems.


   Continued Review of False Claims to SBIR Program

           In our March 1999 Semiannual Report (page 23), we discussed our referral to the
   Small Business Administration (SBA) for a formal size determination on a company that may
   have exceeded the maximum of 500 employees permitted to participate in the Small Business
   Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. In
   this reporting period, SBA determined that this company was affiliated with an international
   pharmaceutical firm with over 49,000 employees.

           The company appealed SBA’s size determination to SBA’s Office of Hearings and
   Appeals (OHA). OHA found minor technical errors in the size determination and remanded
   the case to SBA. Because of SBA’s determination and OHA’s opinion, the company declined
   to accept an NSF Phase II award in the amount of $400,000. Thus, our referral of this issue
   resulted in NSF’s SBIR program being able to use the $400,000 to fund other projects.

           Many of our Semiannual Reports have highlighted cases involving small businesses
   that fraudulently received duplicate funding for identical projects from different federal
   agencies. Currently, we are coordinating with the Department of Justice (DOJ) to resolve two
   SBIR cases involving duplicate funding that were referred in previous reporting periods. We
   expect that these cases will be resolved in the next reporting period.




NSF OIG Semiannual Report • September 1999                                                          29
     Government Contractor to Pay Civil Settlement

              We worked with DOJ and another federal agency’s IG office on an investigation of a
     government contractor which resulted in a $1.9 million civil settlement. These funds will go
     to the U.S. Department of Tresaury. It was alleged that the contractor billed 17 federal
     agencies for subcontractor and consultant charges that it had not yet paid, a violation of the
     Federal Acquisition Regulation. The investigation determined that over a 10-year period the
     contractor prematurely billed the government about 75 percent of the time, on average by 37
     days, prior to payment of funds, thereby depriving the government of the use of these funds
     for this period of time. We estimate that the loss attributed to NSF exceeded $200,000.

             In return for the monetary settlement, the government agreed not to initiate additional
     administrative sanctions against the contractor. NSF and the other affected agencies accepted
     the settlement because (1) the contractor provided the services it contracted for; (2) the
     contractor agreed to discontinue the unacceptable billing practices; and (3) a new financial
     management team has taken steps to reduce the risk that the billing practices will occur again.


     Professor Agrees to Pay $65,000 Civil Settlement

              A chemistry professor at a large, west coast university who allowed a large number of
     personal telephone calls to be charged to his NSF grants, agreed with the U.S. Attorney’s
     Office to pay $65,000 in a civil settlement resolving this matter. The subject’s university
     identified the questionable telephone charges during a university audit. In an investigation
     coordinated with the university’s internal audit department, we found that the subject directed
     that all charges for use of his university-issued calling card be charged to his NSF grants and
     that his wife used the calling card to make personal telephone calls. The subject claimed that
     he was unaware of most of his wife’s telephone charges. However, after he learned about the
     calls, he continued to allow telephone billings to be charged to the grant. He claimed he had
     been tracking the expenses with the intention of reimbursing the grant.

             As part of the civil settlement, the subject and his university agreed to restrict the
     subject’s authority to administer research funds for 3 years. The subject also agreed to pay
     the university $3,400 for other questionable expenditures charged to his research accounts. In
     addition, a university disciplinary committee suspended the subject without pay for 6 months.


     Other Cases Involving Alleged Misuse of NSF Funds

              During this period, we referred two diversion cases to prosecutorial authorities. In the
     first case, the awardee institution notified us of false travel receipts that were submitted by a
     co-PI on an NSF grant, and we coordinated our subsequent investigative efforts with the
     institution. We are currently working with a state prosecutor to resolve this case. In the



30                                                              NSF OIG Semiannual Report • September 1999
   second case, we concluded a PI misused NSF grant funds awarded for student support and
   supplies. We are coordinating with the Civil Division of the appropriate U.S. Attorney’s
   Office to resolve this case.

            We also resolved two small cases which had been opened because the subjects
   appeared to have inappropriately received duplicate travel reimbursements. However, we
   learned that the subjects returned the duplicate payments to their institutions but the
   institutions failed to credit $1,128 in funds to the appropriate NSF grant account. We
   informed the institutions, which credited the funds to the NSF grant accounts.

          Finally, we assisted NSF’s Division of Contracts, Policy and Oversight (CPO) in its
   assessment of an unauthorized purchase order. CPO requested that we review this incident to
   assess whether the procurement process was subverted. We found that an untrained
   individual assisting the procurement process had mishandled the purchase order. However,
   because the purchase order was not authorized, NSF funds were not obligated and payment
   was stopped. NSF agreed with our recommendation to initiate a program to ensure that
   personnel involved in the procurement process are properly trained.



   High School Science Teacher Pleads Guilty to Criminal Charges

          We assisted local law enforcement authorities in a southeastern state in investigating a
   complaint that a high school teacher invited students to participate in a research project and
   then sexually assaulted them during the project. The subject told the students his project was
   sponsored by NSF, but in fact the subject never received any research funds from NSF and
   had no connection with NSF or any NSF-funded research. The subject was arrested and
   subsequently pled guilty to state charges of sexual assault.




NSF OIG Semiannual Report • September 1999                                                           31
Audit Reports
Issued With Recommendations




                                                  Statistic
for Better Use of Funds                      34




                                                  Statistical
Audit Reports
Issued With Questioned Costs                 35


Additional




                                                     Data
                                                     Data
Performance Measures                         36


Audit Reports
Involving Cost-Sharing Shortfalls            37


Status of Systemic Recommendations
That Involve Internal NSF Management         38



List of Reports                              39


Audit Reports
With Outstanding Management Decisions        42
                                                            al
Investigative Activity and Statistics        44



Misconduct Case Activity and
Assurances/Certifications Received           45


Glossary                                     46




                                        33
AUDIT REPORTS
ISSUED WITH RECOMMENDATIONS
FOR BETTER USE OF FUNDS
                                                                                     Dollar Value

A.    For which no management decision has been made by the                              3,558,357
      commencement of the reporting period



B.    Recommendations that were issued during the reporting period                       1,734,390
      (these were issued in 5 reports)



C.    Adjustments related to prior recommendations                                       1,172,670



Subtotal of A+B+C                                                                        6,465,417



D.    For which a management decision was made during the                                 1,969,527
      reporting period



      (i) dollar value of management decisions that were consistent                      1,904,670
          with OIG recommendations



      (ii) dollar value of recommendations that were not agreed                             64,857
           to by management



E.    For which no management decision had been made by the end of                       4,495,890
      the reporting period



For which no management decision was made within 6 months of issuance                    3,206,500




34                                                        NSF OIG Semiannual Report • September 1999
AUDIT REPORTS
ISSUED WITH QUESTIONED COSTS

                                                               Questioned   Unsupported
                                                      Number   Costs           Costs



A.        For which no management decision has           25    8,908,037        3,483,419
          been made by the commencement of the
          reporting period



B.        That were issued during the reporting          22    1,081,676          267,305
          period



C.        Adjustment related to prior recommendations     0            0                  0


Subtotal of A+B+C                                        47    9,989,713        3,750,724


D.        For which a management decision was            20    4,942,658        2,554,356
          made during the reporting period



           (i) dollar value of disallowed costs         N/A    1,594,213             N/A


          (ii) dollar value of costs not disallowed     N/A    3,348,445             N/A


E.        For which no management decision had           27    5,047,055        1,196,368
          been made by the end of the reporting
          period



For which no management decision was made                 8    3,991,797          929,063
within 6 months of issuance




     NSF OIG Semiannual Report • September 1999                                     35
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
44 and 45 . The General Accounting Office 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
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 37 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 38 pro-
vides statistical information about the status of all systemic recommendations that involve NSF’s
internal operations.




36                                                            NSF OIG Semiannual Report • September 1999
AUDIT REPORTS
INVOLVING COST-SHARING SHORTFALLS

                                              Number    Cost-Sharing          At Risk of         Cost-Sharing
                                                of       Promised            Cost-Sharing        Shortfalls at
                                              Reports                         Shortfall/       Completion of the
                                                                           (Ongoing Project)       Project

A.   For which no management decision
      has been made by the beginning of
      the reporting period

      1. Reports with monetary findings          13         24,168,673           18,552,627          1,597,310
      2. Reports with compliance findings         2               N/A                  N/A                N/A
B.   That were issued during the reporting
      period

      1. Reports with monetary findings           3         5,851,162            2,628,060                  0
      2. Reports with compliance findings         2              N/A                  N/A                 N/A
C.   Adjustments related to prior
     recommendations                                                   0            (4,600)                     0
Total of Reports With Cost-Sharing
Findings        (A1+A2+B1+B2+C)                  20         30,019,835          21,176,087           1,597,310

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

     1. Dollar value of cost-sharing short-
        fall that grantee agrees to provide       4         9,955,636            5,356,881               1,587
     2. Dollar value of cost-sharing short-
        fall that management waives               5                    0                 0            811,760
     3.     Compliance recommendations with
            which management agreed               0              N/A                   N/A                N/A
     4.     Compliance recommendation
            with which management disagreed       0              N/A                   N/A                N/A

E.   For which no management decision has
     been made by the end of the reporting
     period

     1. Reports with monetary findings            7         20,064,199           15,819,206           783,963
     2. Reports with compliance findings          4              N/A                   N/A                N/A

          NSF OIG Semiannual Report • September 1999                                                       37
STATUS OF SYSTEMIC RECOMMENDATIONS
THAT INVOLVE INTERNAL NSF MANAGEMENT

Open Recommendations
          Recommendations Open at the Beginning
          of the Reporting Period                                                         23
          New Recommendations Made During
          Reporting Period                                                                13

          Total Recommendations to be Addressed                                           36


Management Resolution of Recommendations1
          Awaiting Resolution                                                              1
          Resolved Consistent With OIG Recommendations                                    35


Management Decision That No Action is Required                                             0


Final Action on OIG Recommendations
          Final Action Completed                                                          35
          Recommendations Open at End of Period                                            1


Aging of Open Recommendations
          Awaiting Management Resolution:
                 0 through 6 Months                                                        0
                 7 through 12 Months                                                       1
                 more than 12 Months                                                       0


Awaiting Final Action After Resolution2
                   0 through 6 Months                                                      0
                   7 through 12 Months                                                     0
                   13 through 18 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.



38                                                                      NSF OIG Semiannual Report • September 1999
LIST OF REPORTS
NSF and CPA Performed Reviews


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


99-1003         Board of Regents                274,281       182,311           0            0
99-1009         For-Profit Company              198,666        20,463           0      399,689
99-1017         Research Institute              113,694         6,135           0            0
99-1025         Municipal School District        29,499             0      30,265    1,353,267
99-1026         Networking Organization          12,745         7,933           0            0
99-1027         Networking Organization          50,076        47,978           0            0
99-1028         Oceanographic Institute          53,047             0           0            0
99-1029         Oceanographic Institute           4,019             0           0            0
99-1030         Research Foundation              41,165             0           0            0
99-1031         Support Contractor              127,183             0           0            0
99-1032         Math Institute                        0             0     659,205            0
99-1033         Math Institute                        0             0     100,000            0
99-2007         Calibration Laboratory                0             0     445,000            0
99-2008         Oceanographic Project                 0             0           0            0
99-2009         Oceanographic Project                 0             0           0            0
99-2010         Science and Technology
                Centers                               0             0           0              0
99-2011         Support Contractor                    0             0           0              0
99-6007         Technological University          9,059         2,485           0              0
99-6008         State Dept. of Education              0             0           0              0
99-6009         Engineering Research Ctr.             0             0           0              0
99-6010         Engineering Research Ctr.             0             0           0              0
99-6011         Engineering Research Ctr.             0             0           0              0
99-6012         Engineering Research Ctr.             0             0           0              0
99-6013         Engineering Research Ctr.             0             0           0              0
99-6014         Non-Profit Center                     0             0           0              0
99-6015         Research Institute               85,392             0     499,920              0

                Total                           998,826       267,305   1,734,390    1,752,956




NSF OIG Semiannual Report • September 1999                                                39
LIST OF REPORTS
                        NSF-Cognizant Reports

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

99-4008   Museum                               0                       0                      0
99-4010   Botanical Garden                     0                       0                      0
99-4011   Science Academy                      0                       0                      0
99-4012   Research Station                 3,231                       0                      0
99-4013   School Association                   0                       0                      0
99-4014   Technical Institute              6,308                       0                      0
99-4015   Communications Institute             0                       0                      0
99-4016   Automotive Society                   0                       0                      0
99-4017   Science Society                 33,000                       0                      0
99-4018   Astronomical Society                 0                       0                      0
99-4019   Chemical Society                 5,366                       0                      0
99-4020   Ocean Sciences Laboratory            0                       0                      0
99-4021   Physiological Society                0                       0                      0
99-4022   Science Center                       0                       0                875,104
99-4023   Corporation                          0                       0                      0
99-4024   Math Institute                       0                       0                      0
99-4025   Science Institute                    0                       0                      0
99-4026   School Association                   0                       0                      0
99-4027   Math and Science Alliance            0                       0                      0
99-4028   Geological Society                   0                       0                      0
99-4029   Museum                               0                       0                      0
99-4030   Museum                               0                       0                      0
99-4031   Ecological Institute                 0                       0                      0
99-4033   Educational Non-Profit               0                       0                      0
99-4034   Telecommunications Co.          12,053                       0                      0
99-4035   Center                               0                       0                      0
99-4036   Center                               0                       0                      0




          Total                           59,958                       0                875,104




40                                                 NSF OIG Semiannual Report • September 1999
LIST OF REPORTS


                               Other Federal Audits

Report                                       Questioned   Unsupported
Number         Subject                       Costs        Costs

99-5059        University                           785       0
99-5060        Unified School District              633       0
99-5070        State Government                   1,997       0
99-5076        University                        11,302       0
99-5078        Institute of Technology            8,175       0


               Total                             22,892       0




NSF OIG Semiannual Report • September 1999                              41
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 9 audit reports with questioned costs, 1 report 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 38 .



Report                                                         Date Report              Dollar
Number                              Title                      Issued                   Value              Status

Items Involving Questioned Costs
97-2105          FFRDC Contracts                              03/31/97                 641,129                 1
98-1018          Company                                      03/31/98                 705,125                 1
99-1002          University                                   10/13/98                 176,475                 1
99-1007          State University                             11/17/98                 700,337                 1
99-1015          State Dept. of Education                     03/22/99                 863,027                 1
99-1016          Museum                                       01/26/99                 332,737                 1
99-1021          College                                      03/12/99                   80,280                1
99-1022          State Dept. of Education                     03/23/99                   40,068                1
99-1024          University                                   03/25/99                  452,619                1


                 Total                                                                3,991,797



Items Involving Funds Put to Better Use
98-2107          Antarctic Flight Operations                  09/30/98               3,206,500                 1

                 Total                                                               3,206,500




Status Code
1 = Resolution is progressing with final action expected in next reporting period.




42                                                                       NSF OIG Semiannual Report • September 1999
AUDIT REPORTS
WITH OUTSTANDING MANAGEMENT DECISIONS


Report                                                        Date Report             Dollar
Number                    Title                               Issued                  Value       Status


Items Involving Cost Sharing at Risk

98-1018          Company                                      03/31/98                8,987,733      1
99-1002          University                                   10/13/98                1,301,728      1
99-1007          State University                             11/17/98                2,275,162      1
99-1016          Museum                                       01/26/99                  626,523      1


                 Total                                                               13,191,146


Status Code
1 = Resolution is progressing with final action expected in next reporting period.




NSF OIG Semiannual Report • September 1999                                                               43
INVESTIGATIVE ACTIVITY AND STATISTICS


Investigative Activity                                              Investigative Statistics

Active Cases From Previous                                           New Referrals                                 3
Reporting Period                          31
                                                                     Referrals From Previous
New Allegations                           31                         Reporting Period                              6

Total Cases                               62                         Prosecutorial Declinations                    2

Cases Closed After                                                   Indictments (including
Preliminary Assessments                    2                         criminal complaints)                          0

Cases Closed After                                                   Criminal Convictions/Pleas                    1
Inquiry/Investigation                     21
                                                                     Civil Settlements                             2
Total Cases Closed                        23
                                                                     Civil Complaints                              0
Active Cases                             39
                                                                     Administrative Actions                        4

                                                                     Investigative Recoveries*          $666,148




 *Investigative recoveries comprise civil penalties and criminal fines and restitutions as well as specific cost
  savings for the government.




44                                                                  NSF OIG Semiannual Report • September 1999
MISCONDUCT CASE ACTIVITY AND
ASSURANCE/CERTIFICATIONS RECEIVED

                                              Misconduct Case Activity


                                                                      FY 1999                                 FY 1999
                                                                      First Half                              Last Half

Active Cases From Prior Period                                             53                                       55
Received During Period                                                     35                                       31
Closed Out During Period                                                   33                                       37
In-Process at End of Period                                                55                                       49

Cases Forwarded to the Office of the
Director During Period for Adjudication                                      2                                        4

Cases Reported in Prior Periods With No
Adjudication by the Office of the Director                                   1*                                        1**




*This case is described in our September 1998 Semiannual Report, pages 16 and 17 .


**This case is described in our March 1999 Semiannual Report, page 18 .




                                  Assurances and Certifications Received*


Number of Cases Requiring Assurances at End of Period                                               3
Number of Cases Requiring Certifications at End of Period                                           4
Assurances Received During This Period                                                              1
Certifications Received During This Period                                                          1
Number of Debarments in Effect at the End of Period                                                 3



*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 Associate Inspector General for Scientific Integrity 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 • September 1999                                                                                            45
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.




46                                                           NSF OIG Semiannual Report • September 1999
For additional copies or 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?oigseptember1999

                or use our
          electronic mail hotline

               oig@nsf.gov
EXPLORE NEW WORLDS
THROUGH SCIENCE & TECHNOLOGY




Semiannual Report to the Congress
           Office of Inspector General
          National Science Foundation
                            September 1999