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NEON WARNING SIGNS: EXAMINING 

THE MANAGEMENT OF THE 

NATIONAL ECOLOGICAL OBSERVATORY NETWORK 

JOINT HEARING 

BEFORE THE

SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY 

& 

SUBCOMMITTEE ON OVERSIGHT 

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

September 18, 2015 

Serial No. 114–39 

Printed for the use of the Committee on Science, Space, and Technology 

( 

Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. LAMAR S. SMITH, Texas, Chair 

FRANK D. LUCAS, Oklahoma 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

DANA ROHRABACHER, California 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

MO BROOKS, Alabama 

RANDY HULTGREN, Illinois 

BILL POSEY, Florida 

THOMAS MASSIE, Kentucky 

JIM BRIDENSTINE, Oklahoma 

RANDY K. WEBER, Texas 

BILL JOHNSON, Ohio 

JOHN R. MOOLENAAR, Michigan 

STEVE KNIGHT, California 

BRIAN BABIN, Texas 

BRUCE WESTERMAN, Arkansas 

BARBARA COMSTOCK, Virginia 

DAN NEWHOUSE, Washington 

GARY PALMER, Alabama 

BARRY LOUDERMILK, Georgia 

RALPH LEE ABRAHAM, Louisiana 

EDDIE BERNICE JOHNSON, Texas 

ZOE LOFGREN, California 

DANIEL LIPINSKI, Illinois 

DONNA F. EDWARDS, Maryland 

SUZANNE BONAMICI, Oregon 

ERIC SWALWELL, California 

ALAN GRAYSON, Florida 

AMI BERA, California 

ELIZABETH H. ESTY, Connecticut 

MARC A. VEASEY, Texas 

KATHERINE M. CLARK, Massachusetts 

DON S. BEYER, JR., Virginia 

ED PERLMUTTER, Colorado 

PAUL TONKO, New York 

MARK TAKANO, California 

BILL FOSTER, Illinois 

SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY

HON. BARBARA COMSTOCK, Virginia, Chair 

FRANK D. LUCAS, Oklahoma 

MICHAEL T. MCCAUL, Texas 

RANDY HULTGREN, Illinois 

JOHN R. MOOLENAAR, Michigan 

BRUCE WESTERMAN, Arkansas 

DAN NEWHOUSE, Washington 

GARY PALMER, Alabama 

RALPH LEE ABRAHAM, Louisiana 

LAMAR S. SMITH, Texas 

DANIEL LIPINSKI, Illinois 

ELIZABETH H. ESTY, Connecticut 

KATHERINE M. CLARK, Massachusetts 

PAUL TONKO, New York 

SUZANNE BONAMICI, Oregon 

ERIC SWALWELL, California 

EDDIE BERNICE JOHNSON, Texas 

SUBCOMMITTEE ON OVERSIGHT

HON. BARRY LOUDERMILK, Georgia, Chair 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

BILL POSEY, Florida 

THOMAS MASSIE, Kentucky 

BILL JOHNSON, Ohio 

DAN NEWHOUSE, Washington 

LAMAR S. SMITH, Texas 

DON BEYER, Virginia 

ALAN GRAYSON, Florida 

ZOE LOFGREN, California 

EDDIE BERNICE JOHNSON, Texas 
(III) 

C O N T E N T S 

September 18, 2015 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Barbara Comstock, Chairwoman, Subcommittee 

on Research and Technology, Committee on Science, Space, and Technology, 

U.S. House of Representatives ............................................................................ 7 

Written Statement ............................................................................................ 7 

Statement by Representative Daniel Lipinski, Ranking Minority Member, 

Subcommittee on Research and Technology, Committee on Science, Space, 

and Technology, U.S. House of Representatives ............................................... 8 

Written Statement ............................................................................................ 9 

Statement by Representative Barry Loudermilk, Chairman, Subcommittee 

on Oversight, Committee on Science, Space, and Technology, U.S. House 

of Representatives ................................................................................................ 10 

Written Statement ............................................................................................ 11 

Statement by Representative Donald S. Beyer, Jr., Ranking Minority Member, Subcommittee on Oversight, Committee on Science, Space, and Technology, U.S. House of Representatives ............................................................... 12 

Written Statement ............................................................................................ 13 

Statement by Representative Lamar S. Smith, Chairman, Committee on 

Science, Space, and Technology, U.S. House of Representatives ..................... 14 

Written Statement ............................................................................................ 15 

Witnesses: 

Dr. James L. Olds, Assistant Director, Directorate for Biological Sciences, 

National Science Foundation 

Oral Statement ................................................................................................. 17 

Written Statement ............................................................................................ 19 

Dr. James P. Collins, Chairman of the Board, National Ecological Observatory 

Network, Inc. 

Oral Statement ................................................................................................. 25 

Written Statement ............................................................................................ 27 

Discussion ................................................................................................................. 35 

Appendix I: Answers to Post-Hearing Questions 

Dr. James L. Olds, Assistant Director, Directorate for Biological Sciences, 

National Science Foundation .............................................................................. 52 

Appendix II: Additional Material for the Record 

Document submitted by Barry Loudermilk, Chairman, Subcommittee on 

Oversight, Committee on Science, Space, and Technology, U.S. House of 

Representatives .................................................................................................... 76 

Doument submitted by Daniel Lipinski, Ranking Minority Member, Subcommittee on Research and Technology, Committee on Science, Space, and 

Technology, U.S. House of Representatives ....................................................... 84 
Page

IV 

Addittional responses submitted by Dr. James L. Olds, Assistant Director, 

Directorate for Biological Sciences, National Science Foundation ................... 87 
(1) 

NEON WARNING SIGNS: 

EXAMINING THE MANAGEMENT OF THE 

NATIONAL ECOLOGICAL OBSERVATORY 

NETWORK 

FRIDAY, SEPTEMBER 18, 2015 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON RESEARCH AND TECHNOLOGY & 

SUBCOMMITTEE ON OVERSIGHT, 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, 

Washington, D.C. 

The Subcommittees met, pursuant to call, at 9:04 a.m., in Room 

2318 of the Rayburn House Office Building, Hon. Barbara Comstock [Chairwoman of the Subcommittee on Research and Technology] presiding. 
2 
3 
4 
5 
6 
7 

Chairwoman COMSTOCK. The Subcommittees on Research and 

Technology and Oversight will come to order. 

Without objection, the Chair is authorized to declare recesses of 

the Committee at any time. 

Welcome to today’s hearing titled ‘‘NEON Warning Signs: Examining the Management of the National Ecological Observatory Network.’’ I now recognize myself for five minutes for an opening statement. 

In August, the National Science Foundation informed the Committee that the National Ecological Observatory Network project, 

known as NEON, was on trajectory to be $80 million over budget 

and 18 months behind schedule. NSF also notified the Committee 

that it was taking immediate action to de-scope the project and institute other corrective actions to keep it on time and on budget, 

in accordance with the no-cost-overrun policy that the Foundation 

has had in place since 2009. To put this in perspective, the $80 million is about 20 percent of the project’s $433 million construction 

budget, a project that is supposed to be in its final year of construction in the upcoming fiscal year 2016. 

In today’s hearing, we want to learn more about how NEON has 

gotten so far off track, why the overrun was not caught sooner, and 

look at what corrective actions both NSF and NEON intend to take 

to complete the project, or actions that they’ve already undertaken 

to correct this issue. I also want to review NSF’s proposed plans 

for scaling back the project and understand what impact it will 

have on the scientific value of the network. 

We have an obligation and responsibility to ensure every dollar 

intended for scientific research is spent as effectively and efficiently 

as possible. Any dollars that are wasted on mismanagement is a 

dollar that could have been spent on groundbreaking basic research 

or training future scientists. 

This is not the first time the Committee has looked at the serious 

problems which seem to have plagued NEON. We need to better 

understand what went wrong so we can determine what steps, including new legislation or guidelines, must be taken to ensure 

these problems never happen again. 

[The prepared statement of Chairwoman Comstock follows:] 

PREPARED STATEMENT OF SUBCOMMITTEE ON RESEARCH & TECHNOLOGY

CHAIRWOMAN BARBARA COMSTOCK

In August, the National Science Foundation informed the Committee that the National Ecological Observatory Network project, known as NEON, was on trajectory 

to be $80 million over budget and 18 months behind schedule. 

NSF also notified the Committee that it was taking immediate action to de-scope 

the project and institute other corrective actions to keep it on time and on budget, 

in accordance with the no-cost overrun policy that the Foundation has had in place 

since 2009. 

To put this in perspective, $80 million is about 20% of the project’s $433 million 

construction budget—a project that is supposed to be in its final year of construction 

in the upcoming Fiscal Year 2016. 

In today’s hearing, I want to learn more about how NEON has gotten so far off 

track, why the overrun was not caught sooner, and look at what corrective actions 

both NSF and NEON intend to take to complete the project. I also want to review 

NSF’s proposed plans for scaling back the project and understand what impact it 

will have on the scientific value of the network. 

We have a constitutional obligation and responsibility to ensure every dollar intended for scientific research is spent as effectively and efficiently as possible. Every 
8 

dollar wasted on mismanagement, is a dollar that could be spent on groundbreaking 

basic research or training future scientists. 

This is not the first time the Committee has looked at the serious problems, which 

seem to have plagued NEON. We need to better understand what went wrong so 

we can determine what steps, including new legislation or regulations, must be 

taken to ensure these problems never happen again. 

Chairwoman COMSTOCK. I now recognize the Ranking Member, 

the gentleman from Illinois, Mr. Lipinski, for an opening statement. 

Mr. LIPINSKI. Thank you, Chairwoman Comstock and Chairman 

Loudermilk, and thank you for holding this hearing, and I thank 

Dr. Olds and Dr. Collins for being here this morning. 

About six weeks ago, NSF informed the Committee that NEON was on a projected path, if not corrected, to go $80 million over 

budget, clearly a significant problem. While I hope that all of my 

colleagues join me in supporting the scientific goals of the NEON 

project and are interested in seeing it put on a better path going 

forward, I know we share the goal of being good stewards of taxpayer money. And I also believe we agree that, in a situation like 

this, more information sharing with the Committee at an earlier 

date would have helped us do better by these goals. 

On the other hand, it seems a crisis may have been averted by 

swift action on the part of NSF and the NEON governing board, 

and this hearing is an opportunity to learn some lessons for the future. Today we will examine what went wrong, including whether 

NSF could have taken more aggressive steps sooner, and whether 

NSF has since taken all necessary corrective actions. 

As we all know, this is not the first time this Committee is holding hearings about the NEON project. Our most recent hearings 

addressed NEON Inc.’s use of management fees under their cooperative agreement. In those hearings, we also addressed larger risk 

management policies, including policies for cost estimates and contingency funds. In fact, those broader topics have come up at a 

number of hearings over the last few years. 

As we take a close look at what went wrong with NEON, we 

should also be considering what broader reforms may still be necessary. The NSF Inspector General, Ms. Lerner, is not on today’s 

panel, but she has weighed in for several years on her broader facility management and policy concerns, and earlier this week on 

NEON specifically with an Alert Memo on NEON’s potential $80 

million cost overrun. As we discuss what reforms NSF has implemented and what reforms may still be necessary, it will be valuable 

for us to have that discussion in the context of the Inspector General’s recommendations. 

Finally, I want to address what happens now to ensure that 

NEON remains a valuable scientific asset for the research community and for the nation. We do not have a representative from the 

ecological sciences research community on today’s panel. However, 

a group of leaders from that research community did publish a 

statement supporting the NEON project, while also expressing concerns about the level of engagement between NSF and the user 

community in determining the scientific priorities for NEON. I ask 

unanimous consent to include that letter with my opening remarks. 

Chairwoman COMSTOCK. Without objection. 

[The information appears in Appendix II] 
9 

Chairwoman COMSTOCK. Thank you—— 

Mr. LIPINSKI. I’m not done yet. 

Chairwoman COMSTOCK. Sorry. 

Mr. LIPINSKI. I don’t believe anyone is interested in delaying 

NEON construction by another year. However, we are in effect at 

a temporary pause in the project. Given how much the scientific opportunities, the technological options, and the environment itself 

have changed since the NEON scope and design were approved five 

years ago, it might be worth taking advantage of this unplanned 

pause to ensure that we truly are getting the best science out of 

this facility. 

I look forward to today’s discussion. I believe the Committee can 

work productively with NSF to ensure NEON’s success going forward and avert similar challenges for future NSF projects. 

With that, I yield back. 

[The prepared statement of Mr. Lipinski follows:] 

PREPARED STATEMENT OF SUBCOMMITTEE

MINORITY RANKING MEMBER DANIEL LIPINSKI

Thank you Chairwoman Comstock and Chairman Loudermilk for holding this 

hearing, and thank you Dr. Olds and Dr. Collins for being here this morning. 

About six weeks ago, NSF informed the Committee that NEON was on a projected path, if not corrected, to go $80 million over budget. Clearly a significant problem. 

While I hope that all of my colleagues join me in supporting the scientific goals of 

the NEON project and are interested in seeing it put on a better path going forward, I know we share the goal of being good stewards of taxpayer money. And I 

also believe we agree that, in a situation like this, more information sharing with 

the Committee at an earlier date would have helped us do better by these goals. 

On the other hand, it seems a crisis may have been averted by swift action on 

the part of NSF and the NEON governing board, and this hearing is an opportunity 

to learn some lessons for the future. Today we will examine what went wrong, including whether NSF could have taken more aggressive steps sooner, and whether 

NSF has since taken all necessary corrective actions. 

As we all know, this is not the first time this Committee is holding hearings about 

the NEON project. Our most recent hearings addressed NEON Inc.’s use of management fees under their cooperative agreement. In those hearings we also addressed 

larger risk management policies, including policies for cost estimates and contingency funds. In fact, those broader topics have come up at a number of hearings 

over the last few years. As we take a close look at what went wrong with NEON, 

we should also be considering what broader reforms may still be necessary. The 

NSF Inspector General, Ms. Lerner, is not on today’s panel, but she has weighed 

in for several years on her broader facility management and policy concerns, and 

earlier this week on NEON specifically with an ‘‘Alert Memo’’ on NEON’s potential 

$80 million cost overrun. As we discuss what reforms NSF has implemented and 

what reforms may still be necessary, it will be valuable for us to have that discussion in the context of the Inspector General’s recommendations. 

Finally, I want to address what happens now to ensure that NEON remains a 

valuable scientific asset for the research community and for the nation. We do not 

have a representative from the ecological sciences research community on today’s 

panel. However, a group of leaders from that research community did publish a 

statement supporting the NEON project, while also expressing concerns about the 

level of engagement between NSF and the user community in determining the scientific priorities for NEON. I am attaching that statement to my opening remarks. 

I don’t believe anyone is interested in delaying NEON construction by another 

year. However, we are in effect at a temporary pause in the project. Given how 

much the scientific opportunities, the technological options, and the environment 

itself have changed since the NEON scope and design were approved five years ago, 

it might be worth taking advantage of this unplanned pause to ensure that we truly 

are getting the best science out of this facility. 

I look forward to today’s discussion. I believe the Committee can work productively with NSF to ensure NEON’s success going forward and avert similar challenges for future NSF projects. 
10 

I yield back. 

Chairwoman COMSTOCK. Thank you, Mr. Lipinski, and I now recognize the Chair of the Oversight Subcommittee, the gentleman 

from Georgia, Mr. Loudermilk, for his opening statement. 

Mr. LOUDERMILK. Good morning. Thank you, Chairwoman Comstock. I would also like to thank our witnesses for being here today. As indicated, we are here today to discuss the $80 million in projected cost overruns to the National Science Foundation’s cooperative agreement regarding the NEON Project. The fact that we are 

also here to discuss how this project is 18 months behind schedule 

is frankly unbelievable and is unfortunately what the American 

taxpayer has come to think of as business as usual. 

Well, I’m here to say that at some point this most stop. In fact, 

I think that’s exactly what the NSF Inspector General has been 

saying for years about this project. Just this week the IG released 

an Alert Memo on the subject of today’s hearing. Striking is the 

fact that the NSF did not become aware of the $80 million budget 

overrun until August of this year, despite first having concerns 

about the budget and timeline in January of 2013. Given the multiple warning signs we’ll hear about this morning, was the NSF 

asleep at the wheel? 

This hearing is as much a reflection of the lack of oversight conducted by NSF as it is for the complete incompetence of NEON Incorporated to adequately handle a cooperative agreement of this 

size. However, I’m not sure anyone should be surprised of this outcome given that the NSF awarded NEON the $432 million cooperative agreement before an ongoing audit of their proposal was even 

completed. Frankly, exposing this kind of mismanagement in the 

federal government is one of the reasons my constituents sent me 

to Congress. 

According to the IG’s memo, although NEON plans to address 

the $80 million overrun, that number is only their best estimate 

and the IG indicates that based on their investigation, there is no 

certainty that the overrun will not increase. I am very troubled 

that NSF can provide our subcommittee with only its best estimate 

of an $80 million overrun. NSF needs an independent, expert analysis of the financial damage, or we may be in this hearing room 

again in another month to talk about how to de-scope another $10 

to $20 million from the NEON project to make up for an even 

worse overrun. 

To illustrate how fluid the $80 million NSF estimate is, I understand NSF is still unable to determine whether it gave NEON approval to spend any of the $35 million in project contingency funds. 

There is no accounting going on at the NSF for this almost halfa-billion-dollar project? 

As one looks further at the IG memo and reviews the IG’s previous audits of the NEON project, it is clear there has been a complete lack of proper oversight for this project. The memo indicates 

that the IG’s auditors issued three inadequacy memos and an adverse opinion since 2011 regarding NEON’s accounting, and the 

NSF has still not required NEON to provide adequate support for 

their spending. It also appears that multiple external audits were 

attempted before and during construction but were delayed because 

of an inability or unwillingness to provide the needed information. 
11 

How do you get almost a half-a-billion-dollar federal cooperative 

agreement and not have to cooperate when the government demands an accounting? 

As if it couldn’t get worse, we then learn that NEON has spent 

over a quarter of a million dollars on lobbyists and the NSF still 

hasn’t determined if those expenses were legal. Are these lobbyists 

being used to conceal the true cost of this project from the American people while ensuring that more and more money is spent on 

it? In addition to the lobbyists, the top executives at NEON are 

making more than $200,000 a year, and as we have already discovered from previous hearings, thousands of dollars are being spent 

on lavish Christmas parties, gourmet coffee, happy hours, and unnecessary travel. 

As a small business owner and former director of a nonprofit, I 

wholeheartedly understand the importance of accountability. However, what is inexcusable is that NSF has received warnings about 

this kind of irresponsible spending over the past four years, and it 

has not taken adequate measures to resolve the matter. 

At today’s hearing, I am not only interested in learning about 

how the federal government can and needs to do a better job with 

transparency and accountability, but also how we can ensure that 

this kind of abuse is not occurring with other cooperative agreements. Taxpayer money should be spent in a responsible way with 

the help of efficient management and oversight. In the end, I hope 

that this hearing will inform us on how to provide better oversight 

and management of federally funded research projects to ensure 

that taxpayers can trust us with their money and know that it will 

be spent in the manner intended. 

I have a copy of the September 15, 2015, IG Alert Memo that I 

would like to add to the record. 

[The prepared statement of Mr. Loudermilk follows:] 

PREPARED STATEMENT OF OVERSIGHT SUBCOMMITTEE

CHAIRMAN BARRY LOUDERMILK

Good morning. Thank you Chairwoman Comstock. I would also like to thank our 

witnesses for being here today. 

As indicated, we are here today to discuss the $80 million in projected overrun 

to the National Science Foundation’s (NSF) cooperative agreement regarding the 

NEON Project. The fact that we are also here to discuss how this project is 18 

months behind schedule is frankly unbelievable and is unfortunately what the 

American taxpayer has come to think of as business as usual. Well, I’m here to say 

that at some point this most stop. In fact, I think that’s exactly what the NSF Inspector General has been saying for years about this project. 

Just this week the IG released an alert memo on the subject of today’s hearing. 

Striking is the fact that the NSF did not become aware of the $80 million budget 

overrun until August of this year, despite first having concerns about the budget 

and timeline in January 2013. Given the multiple warning signs we’ll hear about 

this morning, was NSF asleep at the wheel? This hearing is as much a reflection 

of the lack of oversight conducted by NSF as it is for the complete incompetence 

of NEON Inc. to adequately handle a cooperative agreement of this size. However, 

I’m not sure anyone should be surprised of this outcome given that the NSF awarded NEON the $432 million cooperative agreement before an ongoing audit of their 

proposal was even completed. Frankly, exposing this kind of mismanagement in the 

federal government is one of the reasons my constituents sent me to Congress. 

According to the IG’s memo, although NEON plans to address the $80 million 

overrun, that number is only their ‘‘best estimate’’ and the IG indicates that based 

on their investigation, there is ‘‘no certainty that the overrun will not increase.’’ I 

am very troubled that NSF can provide our subcommittee with only its ‘‘best esti-
12 

mate’’ of an $80 million overrun. NSF needs an independent, expert analysis of the 

financial damage, or we may be in this hearing room again in another month to talk 

about how to de- scope another $10-20 million from the NEON project to make up 

for an even worse overrun. To illustrate how fluid the $80 million NSF estimate is, 

I understand NSF is still unable to determine whether it gave NEON approval to 

spend any of the $35 million in project contingency funds. Is there no accounting 

going on at the NSF for this almost half a billion project? 

As one looks further at the IG memo and reviews the IG’s previous audits of the 

NEON project, it is clear there has been a complete lack of proper oversight for this 

project. The memo indicates that the IG’s auditors issued three inadequacy memos 

and an ‘‘adverse opinion’’ since 2011 regarding NEON’s accounting, and the NSF 

has still not required NEON to provide adequate support for their spending. It also 

appears that multiple external audits were attempted before and during construction but were delayed because of an inability or unwillingness to provide needed information. How do you get almost a half a billion federal cooperative agreement and 

not have to cooperate when the government demands an accounting? 

As if it couldn’t get worse, we then learn that NEON has spent over a quarter 

of a million dollars on lobbyists and the NSF still hasn’t determined if those expenses were legal. Are these lobbyists being used to conceal the true cost of this 

project from the American people while ensuring that more and more money is 

spent on it? In addition to the lobbyists, the top executives at NEON are making 

more than $200,000 a year, and as we have already discovered from previous hearings, thousands of dollars are being spent on lavish Christmas parties, gourmet coffee, happy hours, and unnecessary travel. 

As a small business owner and former director of a non-profit, I wholeheartedly 

understand the importance of accountability. However, what is inexcusable is that 

NSF has received warnings about this kind of irresponsible spending over the past 

four years, and it has not taken adequate measures to resolve the matter. 

At today’s hearing, I am not only interested in learning about how the federal government can—and needs to—do a better job with transparency and accountability, 

but also how we can ensure that this kind of abuse is not occurring with other cooperative agreements. Taxpayer money should be spent in a responsible way with the 

help of efficient management and oversight. 

In the end, though, I hope that this hearing will inform us on how to provide better oversight and management of federally-funded research projects to ensure that 

taxpayers can trust us with their money and know that it will be spent in the manner intended. 

I have a copy of the September 15, 2015 IG Alert Memo that I would like added 

to the record. 

Chairwoman COMSTOCK. Thank you, Chairman Loudermilk. 

I now recognize the Ranking Member of the Subcommittee on 

Oversight, the gentleman from Virginia, Mr. Beyer, for an opening 

statement. 

Mr. BEYER. Thank you, Madam Chairman. 

I believe—and thank you both, Dr. Olds and Dr. Collins for being 

with us. 

I believe the National Ecological Observatory Network is a valuable and innovative scientific project. Its mission, to create a nationwide observatory to detect, study and forecast ecological 

change, is a major challenge with the potential for great scientific 

benefits. I am concerned, with my colleagues, about the management and budget challenges NEON has recently confronted, and 

possibly they may have been avoided. 

It appears that the National Science Foundation (NSF) may not 

have been adequately informed by NEON project management of 

cost and schedule challenges when they originally emerged, and 

the potential cost overrun also raises legitimate questions about 

NSF’s oversight of the NEON project. It troubles me that NEON 

was on a projected path that would have placed it $80 million over 

budget and potentially 18 months behind schedule, although I am 

thankful that you are moving forward with aggressive actions to 

put it back on track. Later in the questions, I am eager to explore, 
13 

Dr. Olds, whether we can apply the no-cost-overrun policy to the 

rest of government and maybe the rest of the private sector, because I think it’s very important as we talk about abuse and irresponsibility and all that, that these are hardly—that this is the 

first project hardly to have a cost overrun. Let me point out that 

the NOAA satellites were billions of dollars overrun back during 

the Bush Administration. Let me point out that the Joint Strike 

Fighter, the F–35, is again billions and billions of dollars overrun. 

The wars in Afghanistan and Iraq cost a little more than we had 

projected. And I will also say, this is not limited to the public sector. I have had the opportunity to build a number of buildings in 

Virginia over the last couple years and have yet to have one that 

met the original budget or the original timeline. We are constantly 

adapting and adjusting based on what we’re actually learning. 

Now, that doesn’t relieve you guys, our witnesses today, of trying 

to explain why the $80 million is over there, why the 18 months 

is behind, what we’re going to lose as we adapt to it, and how we 

take steps to make sure that we move forward. But we can’t let the 

mistakes of the past relieve us of our responsibility to make NEON 

come true in a good and meaningful way in the short run. 

This is—we can overcome the budget challenges to look to the incredible technological and environmental benefits that NEON will 

yield when we get past this. It is wise and important to understand 

the interaction among organisms in our environment and the impact the environment has on these organisms, specifically how 

land-use changes and climate change are driving ecological change, 

and how these changing systems in turn affect human health and 

wellbeing, and the economy, and this is NEON’s fundamental purpose. 

The environmental data that NEON collects will—and their 

analyses that will be conducted on the basis of this will help us understand the spread of invasive diseases, invasive species. It will 

help us gain potential insights into the biological and agricultural 

impact of increasing droughts across the country. It will help us explore responsible measures regarding land use, and aid scientists 

in deciphering the challenges we face from climate change. 

So I’m looking forward to a good discussion on what happened 

and how we can prevent it in the future, but we also want to make 

sure that this doesn’t get to be highly political because history 

would suggest that that would be pretty ugly. 

Thank you. I yield back to the Chair. 

[The prepared statement of Mr. Beyer follows:] 

PREPARED STATEMENT OF SUBCOMMITTEE ON OVERSIGHT

MINORITY RANKING MEMBER DONALD S. BEYER, JR. 

Thank you Chair Comstock and Loudermilk. 

I believe the National Ecological Observatory Network or NEON is a valuable and 

innovative scientific project. Its mission, to create a nationwide observatory to detect, study and forecast ecological change, is a major challenge with the potential 

for great scientific benefits. 

I am, however, concerned that some of the management and budget challenges 

NEON has recently confronted may have been avoided. It appears that the National 

Science Foundation (NSF) may not have been adequately informed by NEON project 

management of cost and schedule challenges when they originally emerged. The potential cost overrun also raises legitimate questions about NSF’s oversight of the 
14 

NEON project. It troubles me that NEON was on a projected path that would have 

placed it $80 million over budget and potentially 18 months behind schedule, although I am thankful that NSF and NEON Inc. are now taking aggressive actions 

to put NEON on a better path forward. 

I hope that our two witnesses, Dr. Olds from NSF and Dr. Collins from the NEON 

Inc. governing board, can help us better understand what led to this situation and 

what corrective actions they have put in place to prevent these issues from emerging in the future. I have other questions regarding how NEON Inc. and NSF are 

communicating with the ecological sciences community about their needs and what 

steps they are each taking to ensure that these needs are being appropriately examined and addressed. 

We cannot step back to prevent past mistakes or missteps. But we can and should 

learn from these past events. We can implement corrective actions now to ensure 

greater oversight of NEON by NSF in the future. NEON is a unique and important 

scientific endeavor. I believe NEON Inc. and NSF can rise to the challenge and 

build a cutting edge scientific facility. There may be bumps on the road ahead and 

new scientific and management challenges. That is not uncommon to innovative 

technological projects. But I believe the benefits we will draw from NEON’s future 

are indispensable and worthy of our continued investment and support. 

I believe it is both wise and important to understand the interaction among organisms in our environment and the impact the environment has on these organisms, 

specifically how land use changes and climate change are driving ecological change, 

and how these changing systems in turn affect human health and wellbeing, and 

the economy. Fundamentally, this is NEON’s purpose. Everyone benefits from this 

challenging scientific endeavor. 

The environmental data NEON will help collect and the scientific analyses that 

will be conducted will help us all better understand the spread of infectious diseases 

and invasive species. It will help us gain potential insights into the biological and 

agricultural impact of increasing droughts across our country. It will help us explore 

responsible measures regarding land use, and aid scientists in deciphering the challenges we face from a changing climate. 

I believe these are deeply important issues, regardless of political convictions. I 

believe there are legitimate management concerns about NEON that needs to be aggressively addressed and quickly corrected. But I hope those issues are not used as 

a political excuse to undermine the unique scientific benefits we can all gain from 

this project. 

Thank you. I yield back. 

Chairwoman COMSTOCK. Thank you, Beyer. 

I now recognize the Chairman of the full Committee, Mr. Smith. 

Chairman SMITH. Thank you, Madam Chair. 

This morning’s hearing will focus on one of the National Science 

Foundation’s most ambitious major research facility projects, the 

National Ecological Observatory Network, or NEON. This hearing 

should help answer why the NSF and NEON Inc. failed to heed the 

warning signs that the $433 million project was seriously off track. 

We now have a better estimate of just how far off track—-$80 million over budget and 18 months behind schedule—and there is no 

guarantee that the figure is not even higher, as I understand NSF 

has increased this estimate several times since June. 

For over a year, this Committee has raised concerns about the 

financial mismanagement of NEON. We have pushed the NSF to 

exert greater oversight controls of the construction project, which 

seemed to be plagued with problems. In the first NEON hearing 

the Committee held in December 2014, we learned that the Inspector General’s independent audit of NEON’s cost proposal identified 

more than $150 million in unsupported or questionable costs, yet 

NSF went ahead and made the award and did not resolve these 

issues. 

A second audit of NEON’s accounting system revealed a number 

of inappropriate NEON expenditures, which include lobbying, parties, and travel. All of these activities were financed by the man-
15 

agement fee NSF agreed to pay NEON for ordinary and essential 

business expenses, and, of course, all these dollars came from taxpayers. The IG issued an Alert Memorandum this week that details 

further inappropriate expenditures by NEON discovered by the National Science Foundation. These include liability insurance for the 

CEO, excessive legal fees, and salaries for multiple executives in 

excess of $200,000. It also appears NEON wasted a half a million 

dollars when it broke a rental lease to move into a larger office 

space. 

NSF discovered these inappropriate costs when they finally started to require NEON to provide more detail about its spending in 

May 2015. My understanding is that NEON still has not provided 

the NSF with adequate documentation to review all taxpayercharged expenses. 

In the Committee’s second hearing in February, the chairman of 

NEON testified that NEON had made mistakes, but pledged to redouble their efforts to be ‘‘good stewards of the taxpayer funds we 

receive.’’ It appears that the leadership of NEON Inc. has not fulfilled that promise. I understand that the Board of Directors is 

transitioning out the current CEO and is in the process of hiring 

a replacement. But I am frankly not sure that change is enough 

to regain the confidence of this Committee or the American people. 

For its part, the NSF finally seems to be taking steps to more 

closely manage and take control over the costs of NEON. I am 

pleased that at the Committee’s urging, the Foundation also has 

begun to evaluate how it can better manage major research facilities in the future. But the NSF must now scale back the scope of 

NEON to keep it under budget, which means less science for the 

same price tag. This week the IG recommended some additional 

steps that the NSF could take immediately to ensure it has the financial and project information it needs to oversee NEON. I hope 

the Foundation will take a close look at those recommendations. 

The NSF, as well as its grantees and contractors, need to be held 

accountable for how they spend taxpayers’ hard-earned dollars. I 

hope today’s hearing will give the Committee a better understanding of the missteps that have lead NEON to this point, and 

I hope it will lead to a solution, which includes the possibility of 

legislative action, so that the mismanagement of taxpayer funds 

will not continue. 

Madam Chair, also let me acknowledge that most of the problems with NEON occurred before the current Director of the National Science Foundation, Dr. Co ́rdova, assumed her responsibilities, but there is still much that needs to be done, and I realize 

that Dr. Co ́rdova is aware of that too. 

I’ll yield back. 

[The prepared statement of Chairman Smith follows:] 

PREPARED STATEMENT OF COMMITTEE CHAIRMAN LAMAR S. SMITH

This morning’s hearing will focus on one of the National Science Foundation’s 

(NSF’s) most ambitious major research facility projects, the National Ecological Observatory Network, or NEON. 

This hearing should help answer why the NSF and NEON Inc. failed to heed the 

warning signs that the $433 million project was seriously off track. We now have 

a better estimate of just how far off track—$80 million over budget and 18 months 

behind schedule. 
16 

And there is no guarantee that the figure is not even higher, as I understand NSF 

has increased this estimate several times since June. 

For over a year this Committee has raised concerns about the financial mismanagement of NEON. We have pushed the NSF to exert greater oversight controls 

of the construction project, which seemed to be plagued with problems. 

In the first NEON hearing the Committee held in December 2014, we learned 

that the Inspector General’s (IG’s) independent audit of NEON’s cost proposal identified more than $150 million in unsupported or questionable costs. Yet NSF went 

ahead and made the award and did not resolve these issues. 

A second audit of NEON’s accounting system revealed a number of inappropriate 

NEON expenditures, which include lobbying, parties, and travel. All of these activities were financed by the management fee NSF agreed to pay NEON for ordinary 

and essential business expenses. And, of course, all these dollars came from taxpayers. 

The IG issued an alert memorandum this week that details further inappropriate 

expenditures by NEON discovered by the NSF. These include liability insurance for 

the CEO, excessive legal fees, and salaries for multiple executives in excess of 

$200,000. It also appears NEON wasted $500,000 when it broke a rental lease to 

move into a larger office space. 

NSF only discovered these inappropriate costs when they finally started to require 

NEON to provide more detail about its spending in May 2015. My understanding 

is that NEON still has not provided the NSF with adequate documentation to review all taxpayer charged expenses. 

In the Committee’s second hearing in February, the chairman of NEON testified 

that NEON had made mistakes, but pledged to redouble their efforts to be ‘‘good 

stewards of the taxpayer funds we receive.’’ It appears that the leadership of NEON 

Inc. has not fulfilled that promise. 

I understand that the Board of Directors is transitioning out the current CEO and 

is in the process of hiring a replacement. But I am frankly not sure that change 

is enough to regain the confidence of this Committee or the American people. 

For its part, the NSF finally seems to be taking steps to more closely manage and 

take control over the costs of NEON. I am pleased that at the Committee’s urging, 

the Foundation also has begun to evaluate how it can better manage major research 

facilities in the future.But the NSF must now scale back the scope of NEON to keep 

it under budget, which means less science for the same price tag. 

This week the IG recommended some additional steps that the NSF could take 

immediately to ensure it has the financial and project information it needs to oversee NEON. I hope the Foundation will take a close look at those recommendations. 

The NSF, as well as its grantees and contractors, need to be held accountable for 

how they spend taxpayers’ hard-earned dollars. 

I hope today’s hearing will give the Committee a better understanding of the 

missteps that have lead NEON to this point. And I hope it will lead to a solution, 

which includes the possibility of legislative action, so that the mismanagement of 

taxpayer funds will not continue. 

Chairwoman COMSTOCK. Thank you, Mr. Chairman. 

At this time I would now like to introduce our witnesses. Our 

first witness is Dr. James Olds. He is the Assistant Director of the 

Directorate for Biological Sciences, or BIO, at the National Science 

Foundation. Before joining NSF, Dr. Olds was Director of the 

Krasnow Institute for Advanced Study at George Mason University 

in Virginia. Dr. Olds received his undergraduate degree in Chemistry from Amherst College and his doctorate from the University 

of Michigan in Neuroscience. 

Our second and final witness today is Dr. James Collins, Chairman of the Board for NEON. Prior to his work with NEON, Dr. 

Collins was NSF’s Assistant Director for Biological Sciences. Dr. 

Collins has a long history at NSF, having served in various positions there from 1985 to 2009. Dr. Collins is also the Virginia M. 

Ullman Professor of Natural History and Environment in the 

School of Life Sciences at Arizona State University. Dr. Collins 

earned his bachelor of science degree from Manhattan College and 

his Ph.D. from the University of Michigan. 
17 

I now recognize Dr. Olds for five minutes to present his testimony. 

TESTIMONY OF DR. JAMES L. OLDS, 

ASSISTANT DIRECTOR, 

DIRECTORATE FOR BIOLOGICAL SCIENCES, 

NATIONAL SCIENCE FOUNDATION 

Dr. OLDS. Madam Chairwoman, Mr. Chairman, and Members of 

the Committee, thank you for this opportunity to testify about the 

National Science Foundation’s oversight of the National Ecological 

Observatory Network project. I will confine my remarks to the 

steps NSF took to strengthen its oversight of NEON Inc. in light 

of recent schedule slippages and potential cost overruns. My written testimony provides a more complete explanation of the NEON 

project and its management history. 

NEON is a one-of-a-kind continental-scale research observatory 

with a potential to transform environmental science. NEON construction and operation are funded through a cooperative agreement with NEON Inc., a private nonprofit corporation responsible 

for building and operating the NEON project. An integrated NSF 

project team currently tracks NEON Inc.’s progress and costs 

against deliverables in the cooperative agreement and the organization’s expenditures. NEON’s civil construction has been completed in 48 of 82 site locations with expenditures to date of approximately $285 million. 

In spite of NSF oversight of NEON Inc., a cost sufficiency review 

and attempts at corrective guidance, it was clear to NSF in June 

of 2015 that NEON Inc. was at risk of a potential $80 million cost 

overrun and an 18-month schedule delay. 

NSF takes its responsibility for stewardship of taxpayer resources extremely seriously and strong oversight of our large facilities is a top priority for NSF. That is why major research projects 

are subject to NSF’s no-cost-overrun policy, which requires the 

project to maintain its cost and schedule profile within budget and 

timeline approved by the National Science Board and approved and 

appropriated by Congress. 

When a project encounters potential cost overruns, NSF conducts 

a Scope Management Analysis to determine if the project should be 

de-scoped or canceled. A de-scoping can be achieved while still preserving the plan’s transformational science and the project is allowed to continue within the bounds of the original budget. 

Consistent with NSF policy, in July 2015, the NSF Biology Directorate convened a Scope Management Analysis of NEON by a panel 

of experts drawn from NSF, NEON Inc., the Neon Board of Directors, and scientific experts from the community involved in the 

original design. This panel developed a plan to reduce NEON Inc. 

corporate and project management costs, accelerate transition to 

operations, and selectively reduce non-essential capabilities. Importantly, this plan will still allow NEON Inc. to deliver a continentalscale observatory that accomplishes the planned science goals. NSF 

formally notified NEON Inc. of this de-scoping plan including a detailed series of benchmarks and deadlines that must be met for the 

project to stay on track. Key community and government stake-
18 

holders were informed when the Scope Management Plan was finalized. 

In response, I’m pleased that past and present presidents of the 

Ecological Society of America published a letter expressing their 

enthusiastic support of the NEON project in its new de-scoped 

form. 

As described in my written testimony, NSF has carefully examined and strengthened its oversight of the project including implementing oversight recommendations by the NSF Inspector General. 

Organizing a review of the de-scoped project science by an independent subcommittee, the Biology Directorate Advisory Committee and establishing a National Science Board Task Force to 

monitor overall progress. 

By December 1, 2015, NSF expects to have enough information 

to determine if NEON Inc. has improved sufficiently to complete 

construction of the NEON project within budget and on time. If 

NEON Inc. is not capable of completing construction, NSF will take 

action to pursue an alternative management process capable of 

completing construction. 

Madam Chairwoman and Mr. Chairman, I hope I have reassured 

you that NSF has greatly increased its oversight of this important 

project and that we are following up with specific and appropriate 

actions. We remain ready to take additional actions if needed, but 

we are hopeful that the NEON Observatory will fulfill the goal of 

being a continental-scale research platform that supports transformative science. 

Thank you again for the opportunity to testify. I would be 

pleased to answer your questions. 

[The prepared statement of Dr. Olds follows:] 
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Chairwoman COMSTOCK. Thank you, Dr. Olds. 

And I now recognize Dr. Collins for five minutes to present his 

testimony. 

TESTIMONY OF DR. JAMES P. COLLINS, 

CHAIRMAN OF THE BOARD, 

NATIONAL ECOLOGICAL OBSERVATORY NETWORK, INC. 

Dr. COLLINS. My name is Dr. James Collins, and I serve as chairman of the Board of Directors of NEON Inc., a 501(c)(3) corporation 

established to implement NEON, or the National Ecological Observatory Network. 

At the outset, I want to thank you for your commitment to 

NEON. I can’t say I relish the time I spend before you on this 

project—you ask hard questions but your diligent oversight is welcomed, and there is no doubt that it has made NEON a better 

project. 

I also want to thank NSF for its vision and tireless support of 

NEON and for being a terrific partner in this path-breaking 

project. 

Finally, let me say that I share your concerns about the construction budget gap and regret that the project required re-scoping. 

We’re taking dramatic steps to place NEON back on the right path, 

and I commit to you that we will do what we can to keep it there. 

NEON is an advanced research infrastructure for the study and 

analysis of the biosphere. Across the continent, we are creating a 

network of instruments and sensors so that we can better understand our changing environment at an unprecedented level of detail and successfully forecast and respond to these changes. 

Despite recent changes to the project, NEON’s high-level science 

requirements have not and will not be compromised. We are working aggressively to re-scope NEON based on the recommendations 

of NSF, NEON Inc., and community experts convened in July 2015. 

But the discussion did not start then. Five months earlier, in February 2015, NEON Inc. staff members initiated the discussions to 

explore strategies for cost savings through improved efficiencies 

and restructured processes. During these discussions, NEON Inc. 

staff proposed recommendations that ultimately formed the backbone of the current re-scoping. Under the re-scoped configuration, 

NEON will continue to build and then collect data at 81 of its original 96 sites. The essential core NEON terrestrial and aquatic sites 

all remain part of the national site constellation. 

Your opening statements made clear your interest in discussing 

NEON’s construction budget and specifically you cite $80 million 

gap between the construction budget approved in 2011 and NEON’s 

current construction budget. To be clear, the gap is the result of 

costs that were underestimated, and NEON Inc. bears its share of 

blame. 

While I go into greater detail in my written statement, let me list 

three categories of such underestimated costs. First, production 

costs and technology development. This accounts for about 50 percent of the gap. Challenges obtaining permits, this accounts for 

about 25 percent of the gap. And transitioning of observatory elements to operations, and that’s about 25 percent of the gap. 
26 

The gap necessitated the re-scoping completed this past July. It’s 

important to note that NEON has not requested nor received any 

additional construction funds. I would also note that at least five 

other NSF MREFC projects have undergone scope revisions, management adjustments, and/or instrument configuration changes 

during construction. So in this respect, NEON is not unique. 

NEON Inc. is committed to ensuring that further re-scoping will 

not be necessary in the future. Together with NSF and independently, we are taking steps not only to develop and share better information in a more timely manner but also to fundamentally 

change the processes we undertake in order to ensure that NEON 

is on track and within budget. Let me briefly discuss some of these 

steps. 

First, NEON has addressed the issues that led to the re-scoping 

by, among other things, reorganizing its complete supply chain to 

better facilitate the production process and imposing new control 

measures on permitting activities. Second, NEON is working closely with NSF as well as independent cost and schedule consultants 

to revise cost estimates and to ensure that adequate systems and 

estimating methodologies are implemented. 

Third, NEON is now providing a comprehensive monthly financial report to the NSF that includes detailed expenditures, explanations of expenditures by budget line item, and functional areas 

with the sources of funding clearly identified. In addition, NEON 

is providing the NSF with complete general ledger detail of all 

transactions. Fourth, NEON Inc. is under the guidance of a new interim CEO. We will be searching for a new CEO. NEON is developing a comprehensive strategy for improving project management 

and identifying potential cost reductions. 

NEON Inc. understands that in its pursuit of scientific goals, it 

must not sacrifice responsible stewardship of taxpayer dollars. 

That is a lesson to which we will strictly abide as we continue to 

monitor our construction schedule and budgeting work towards 

completing the observatory. 

Thank you, and I welcome your questions. 

[The prepared statement of Dr. Collins follows:] 
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Chairwoman COMSTOCK. Thank you. 

I thank the witnesses for their testimony, and the Chairman recognizes herself for five minutes of questioning. 

Okay. Dr. Olds, we understand that NSF was originally informed by NEON that the cost overrun would be $27 million and then at 

that point NSF has further questions in light of that, and then the 

estimates went up to $40 million, then 60, then 80. How confident 

are you that we’re at the right figure now, and that in looking back 

because the IG has looked at this and sort of a lot of this was predicted in this manner, what was ignored in the previous analysis 

and why the process of how we can prevent that, given we sort of 

had the warnings and they came true to a large extent? How do 

we and how can you going forward avoid this kind of situation? 

Dr. OLDS. Madam Chairwoman, when the February hearing took 

place about NEON, I was deeply troubled, and it wasn’t the scale 

of the dollars and the management fee, it was the fact that that 

issue had been raised at all, and so I sent in the early spring after 

that hearing a number of members of my team including folks who 

are expert in finances, and they basically sat in a rolling review of 

what was going on with NEON’s dollars that lasted from the middle of spring through June 15. When it became clear to that NSF 

team in collaboration with NEON folks, that this problem was 

much larger that had been anticipated, that forensics was led by 

NSF folks. You know, I’m a molecular neuroscientist so my expertise is not in financial forensics, but we are determined to actually 

make sure that we are sure about the dollars. We accept the NSF 

Inspector General’s recommendations, and we plan to in December 

when we finish up looking at the numbers, to get an independent 

cost estimate on those NEON numbers also just to make sure that 

there are other eyes looking at this. But I think this was a result 

of hard work on the part of NSF and NEON during the spring to 

actually elucidate the right number. 

Chairwoman COMSTOCK. And Dr. Collins, could you kind of basically answer the same question on how you see—and I know you’re 

in a position where you’re still looking for somebody to run the 

project here, so we keep inviting you back. Thank you for being 

here. But can you offer us your thoughts on the same issue? 

Dr. COLLINS. I can. So for purposes of perspective, it’s useful if 

we start in August 2014 actually. So in August of 2014, as a result 

of a series of reviews, NEON was given a clear bill of health. It was 

scheduled to be on time and on budget as of August of 2014. In November, the period of November-December of 2014, as a result of 

regular financial reviews at NEON itself, it was recognized that in 

fact there was an expense of about $11–1/2 million that was not 

included as far as the August review is concerned. So at that point 

we were looking at about $11–1/2 million, and there was another 

expense of about $4.5 million to bring to a total of about $16 million at that point that should have been accounted for in that August 2016—I am sorry—August 2014 review. 

In January of 2015, then, another internal review at NEON uncovers that there looks to be a gap developing as far as production 

costs are concerned in the project. So this is important to note, that 

it was a result of internal forensics, to use Dr. Olds’s words, which 

is a good thing. The corporation itself is reviewing itself, and at 
36 

that point in January 2015 informs NSF that it looks like there’s 

this gap that’s developing within the corporation. 

In February of 2015, then, the board gets notified that this gap 

is developing in terms of something that needs to be corrected, and 

this was at a regularly scheduled board meeting that we were informed. The board then took upon itself to call a special meeting 

in March of 2015 to get a better handle on what was going on as 

far as the finances are concerned and to make it clear to the corporation that they had to take this absolutely seriously and we had 

to understand what was happening. So that was a special board 

meeting in March. In April, then, there’s a much better handle on 

the production expense, and that’s about $20 million. Put that together with the $16 million and now we have about $36 million 

that’s developing as a gap, and that’s in April of ’15. 

NSF then comes in and asks for a directive assistance review, 

which is a good thing to do because at that point now you have a 

whole other set of eyes to begin to look at the project and say all 

right, where are we at on this in order to get a better handle on 

it. In order to do that review, NSF asked the project to not go back 

to August 2014 but to rather go back to 2011, February of 2011, 

and re-baseline the project from February of 2011, and it was in 

the course of re-baselining the project from February 2011 that you 

sweep up a bunch of additional expenses because you’re essentially 

taking costs from 2015 and you’re projecting them back over multiple years and then you’re bringing them forward to project what 

the cost is going to be. So at that point you run it up to $80 million. 

Chairwoman COMSTOCK. Okay. And those kind of situations, are 

there areas you’re able to identify that those costs don’t have to be? 

There are, things like you said, with permitting. That’s a problem 

there that you just didn’t know what the permits were going to be 

and now those are fixed costs that you can’t adjust in any way? 

Dr. COLLINS. That’s right, and they fall into this category of 

areas where you start out, you expect some difficulties when it 

comes to permitting. Just as when you go into remodel a home, you 

expect some difficulties, but yet there are things that still pop up, 

and in the case of permitting in particular, there are things like 

endangered species that show up on a review and you have to deal 

with that, for example, and with permitting when you’re doing 

something across the entire country and you have 20 sites, it’s prudent and it makes a lot of sense to take the easiest sites first so 

that you can keep the construction moving along. But then as you 

take care of the easier sites, it becomes harder to take care of those 

at the end, and especially those where you begin to run into ‘‘not 

in my backyard.’’ 

Chairwoman COMSTOCK. You know, I’m sorry, I know we’re over 

time, but will you continue to highlight for us some of those things 

because I know we often deal with all those things. It might be informative for us to know where there are these local regulations 

where they’re causing particular problems that we might want to 

know about because we are often doing things in other areas to alleviate those problems. So thank you. 

And I now recognize Mr. Lipinski for five minutes. 

Mr. LIPINSKI. Thank you. 
37 

I want to focus on not only NEON but also more general lessons 

learned. I want to start out with Dr. Olds and the IG recommendations. The NSF IG made a series of recommendations since 2011 

for strengthening cost controls and general management oversight 

of MREFC projects, not just limited to NEON. The IG and NSF 

senior officials have testified on these issues in earlier hearings. 

The NSF had implemented a number of the IG’s recommendations 

but continues to disagree with others. The IG’s Alert Memo issued 

earlier this week restated all of these earlier recommendations and 

faulted NSF for continuing to resist some of them. 

So Dr. Olds, can you please update us as to which IG recommendations you have fully complied with and which you continue to have some disagreements over, and why—what’s the nature of the disagreements? 

Dr. OLDS. Congressman, the NSF accepts all of the recommendations of the IG in the Alert Memo that you just received, and the 

only one that we’re delaying is the independent cost estimate because we need to get the data to have such an independent cost estimate, which we will have in December. 

Mr. LIPINSKI. Okay. So—but you are saying that you agree with 

all of them, and is there anything more that you want to tell us 

about what NSF has done in terms of complying with the recommendations? 

Dr. OLDS. Sure. Over the past 15 years, NSF has spent tremendous effort developing and implementing and detailing requirements related to its oversight of large facilities projects. These requirements are published in the NSF’s Large Facilities Manual, 

which was just recently revised and published in June of this year. 

It’s a much tougher document. And it must be noted that NSF’s 

primary role is oversight while our recipients like NEON Inc. are 

responsible for the day-to-day management of construction, operation facilities. So NEON is an excellent example of how NSF is 

implementing its latest policy and process improvements in accordance with the IG’s advice. 

Mr. LIPINSKI. Okay. Let me use the rest of my time. I want to 

go over to Dr. Collins in regard to lessons learned. 

You started going into some of those, I think, in your testimony 

and then in the—some of your answers to the Chairwoman’s questions. Is there anything else that you could tell us that you think— 

mistakes that were made by NEON Inc. or mistakes by NSF in the 

whole process of what kind of lessons we might be able to learn 

from these going forward with other projects. 

Dr. COLLINS. Sure. One of the lessons—and to echo something 

that Dr. Olds said, is to bring more outside expertise in, and in 

particular, outside expertise on the accounting side as far as these 

projects are concerned as opposed to the performance side. So the 

reviews often emphasize performance as far as the science is concerned relative to outcomes, relative to the goals that you’re looking for, and is the project proceeding towards those goals. What we 

could use is a deeper analysis of the accounting side, the expense 

side, individuals who are really familiar with the ins and outs of 

the accounting on these large projects. That would be one point in 

terms of something that would be very, very helpful. 
38 

The other thing is to—just to expand on that in terms of estimates where you really get to the ground truth of what those estimates are. So the estimates are made early on using the best information that’s available, inflation indicators, for example. But you 

have to be willing to go in and reach into the project and keep adjusting those on really an adaptive management basis in order to 

keep constant track of what those expenses are on an ongoing 

basis. That’s really the biggest lesson it seems to come out of this 

as far as I’m concerned as I watch all these reviews that are taking 

place, and yet in some ways there are details that are slipping 

through the fingers of the referees in these cases, and we need to 

do a better job and understand probably on the accounting side 

what’s going on. 

Mr. LIPINSKI. Thank you. My time’s up, so I yield back. 

Chairwoman COMSTOCK. Thank you, and the Chair now recognizes Mr. Loudermilk. 

Mr. LOUDERMILK. Thank you, Madam Chair. 

Before I get into my questions, I’d like to make a statement and 

have something entered into the record. 

According to a September 2015 Cato Institute report on federal 

government cost overrun, the statement is: ‘‘Cost overruns on large 

government projects are pervasive. The problem appears to stem 

from a mixture of deception and mismanagement. It has not diminished over time. One of the many consequences is that taxpayers 

are likely footing the bill for many projects that cost more than the 

benefits delivered.’’ And I ask that a copy of the Cato report be entered into the record. 

Chairwoman COMSTOCK. No objection. 

[The information appears in Appendix II] 

Mr. LOUDERMILK. Dr. Olds, thank you for being here today. I’ve 

got a couple of questions, and I appreciate your commitment that 

you and I have met about and you have stated here today to make 

sure that this project comes in within the budget level or we move 

on, and I think that’s what the taxpayers are expecting. 

First question. Before this cooperative agreement was signed, 

there was an ongoing audit of NEON’s initial cost proposal. However, the NSF didn’t wait for the audit to be completed before 

awarding the contract. The first question is, why did we not wait, 

and if we would have waited, would that audit of the initial cost 

proposal uncovered some of the potential cost overruns? 

Dr. OLDS. Congressman, NSF has worked to resolve the OIG recommendations. Based on our review of the audits conducted, only 

approximately five percent, or $19.8 million, of the costs questioned 

in the audits were ultimately determined by NSF to not be properly documented and justified. It is important to note that this 

amount is associated with differences in the estimated costs necessary to complete the project and not actual expenditures. NSF 

has required that NEON provide additional justification for these 

costs. The bottom line is, we need to pay really careful attention 

to the cost estimates that are the basis for these large projects. It’s 

something that’s essential so that we deliver to the taxpayer what 

they deserve, and I think that’s really where our eyes need to be 

on the ball in the future. 
39 

Mr. LOUDERMILK. But in the initial cost estimate of the project, 

you know, the audit of the project estimate, if we would’ve waited 

for that audit to be done, would that have uncovered some of the 

overruns we have now? 

Dr. OLDS. Congressman, I think that the key aspect is, these audits as a result as a rule are really important lest we go off course. 

I think it’s always possible to look back in time and say could we 

have done something different or better. What I am prepared to 

say is, we have to redouble our efforts, redouble our efforts to actually take numbers, get them looked at not only by us but independent auditors so that the basis for these cost estimates is as 

solid as possible for the American people. That’s the goal going forward. And what I can promise you is that in the months leading 

up to the December decision point, we’re going to be doing just 

that. We’re going to be putting as many eyes as possible on these 

cost estimates so that those dollar figures are not fuzzy. 

Mr. LOUDERMILK. Dr. Collins, can you answer the question? 

Would an audit of the cost proposal have uncovered some of these 

cost overruns? 

Dr. COLLINS. I’ll go back to the example that you used yourself 

in terms of when you put up a building, you do wind up with these 

costs that are just unexpected. So part of the answer is, sure, we 

could have, and indeed, the project, as I suggested earlier in response to Mr. Lipinski, by having additional external eyes, especially when it comes to folks really skilled in accounting. Yes, you 

probably could have taken care of some of the variance there. 

There’s going to be some of the variance, though, that’s going to be 

left over that it’s the nature of doing larger construction projects 

that you still have to be able to pick up and be able to deal with. 

Mr. LOUDERMILK. But isn’t that what the $60 million in contingency was for, those unintended, unexpected—— 

Dr. COLLINS. Those $60 million in contingency, that is what it’s 

for as far as unexpected is concerned, and that takes care of that 

level of unexpected costs that in a way you expect to have, you expect to be showing up. But in a project like this where you’re developing new technology, you’re of necessity going to have new costs 

added on top. 

Mr. LOUDERMILK. So the $60 million is for expected unexpected 

costs is what you’re saying? 

Dr. COLLINS. You can put it that way. 

Mr. LOUDERMILK. Okay. Okay. I’m running out of time, but one 

other question. Is this standard operating procedure for NSF to 

award these agreements without first completing an audit of the 

cost proposal? 

Dr. OLDS. I think NSF has to strive for all projects going forward 

to audit the cost estimates multiple times so that we are really 

sure of those numbers. That’s our obligation to the American people. 

Mr. LOUDERMILK. I yield back the balance of my time. 

Chairwoman COMSTOCK. Thank you, and I now recognize Mr. 

Beyer. 

Mr. BEYER. Thank you, Madam Chair. 

I want to begin, Dr. Olds, by thanking you for at least four 

things. First, for the many, many steps taken both in your oral tes-
40 

timony and your written to get the project back on track, both in 

time and in costs, and you’re very committed to that and you’ve 

done lots of things to do that. 

Second, I want to congratulate you on the accountability. We had 

a very painful hearing yesterday with EPA Administrator Gina 

McCarthy in Natural Resources and the Oversight and Government Reform Committees in which mirroring an earlier hearing 

that we had here on accountability on the same spill on August 5 

out in Colorado, three million gallons of acid mine wastewater, and 

they kept coming back to say who was fired, who was fired, who 

was fired. Well, I can tell them the head of NEON was fired for 

these cost overruns. 

The third thing I’d like to thank you for is for adopting all of the 

IG recommendations, even those that you weren’t exactly excited 

about, and three of them implemented already. 

And finally, to match up with Chairman Loudermilk’s comments 

on Cato, I wonder if we could send a no-cost-overrun policy to Cato 

and they could figure out how we could apply this to the rest of 

the federal government, and also I’m thinking about our own 

household budget, and how we could apply that. 

And Dr. Collins, in your written testimony also, you talked about the $80 million broken and $40 million of it was the establishment 

of sustainable supply chain for procurement production. It seems 

that that was largely you didn’t realize the contractors there to 

build the sensors, the quality needed at the time just weren’t there. 

Dr. COLLINS. That’s right. 

Mr. BEYER. And the second $20 million was permits. I was fascinated by the fact that you needed ten times as many permits as 

you’d anticipated originally, and even the Inspector General pointed out that the permitting was something that was factors outside 

your control. 

Dr. COLLINS. Exactly. 

Mr. BEYER. The third $20 million, the last 25 percent, was transition of observatory elements to operations. Could you explain that 

to us? That’s the one thing I don’t understand. 

Dr. COLLINS. Sure. So the observatory, the NEON observatory, 

basically has two pieces to it in the sense that first you have to 

build it. You’re going to put up the towers, you’re going to build the 

sensors and so on, put them on the towers, and you’re going to develop the sampling regimes, and that’s largely what’s going on now 

and has been going on for the past 18 months, two years. And now 

the observatory is in a position of transitioning away from the construction part so the towers will be up, the sensors will be hung, 

and you’re moving into individuals that will be now operating the 

system, will be collecting data. Now, there are already individuals 

in place to do that, and it’s in the bringing the transition through 

that gets hard because you have to switch personnel. The same individuals who are doing the construction—engineers, technicians 

and so on—are not necessarily the same individuals who are going 

to be doing the operating part of the observatory. So there are 

whole new hirings that have to be done. Some individuals may 

transition but others will not. 

Mr. BEYER. Were the operating costs ever intended to be in the 

original $430 million budget, though? 
41 

Dr. COLLINS. No, the operating costs are handled separately from 

the original construction budget. 

Mr. BEYER. Thank you, Dr. Collins, very much. Dr. Olds, much has been made of the $257,000 in lobbying costs, 

the Christmas party, the entertainment, visas and meals. How 

much of the—when you put all that together, how much of the $80 

million is represented by these controversial costs? 

Dr. OLDS. The controversial costs are not represented at all in 

the dollars that were uncovered looking at the trajectory to a cost 

overrun. Those are, as Dr. Collins said, related to these really substantive scientific and engineering issues, permitting and the like. 

Mr. BEYER. Thank you. 

Dr. Olds, one of the things in the IG’s letter, she talked about 

the NSF hadn’t required the incurred cost submissions from NEON 

nor has it conducted an incurred-cost audit of NEON, and if NSF 

had taken either action, NSF could have been able to identify unallowable or poor spending mby on NEON, and yet I think what 

we’ve just heard is, the $80 million wasn’t unallowable or poor 

spending, that it was permitting, it was the shift to operations, and 

it was the absence of a secure supply chain. Am I reading that correctly, and does that make this particular IG recommendation less 

meaningful? 

Dr. OLDS. Congressman Beyer, so I want to make sure that I 

give you a very full and accurate answer to that question so I’m 

going to ask to get back to you on that one for the record. 

Mr. BEYER. You’re a thoughtful, careful person. 

One last thought. None of the proposed cost elements for labor, 

overhead, equipment and other costs reconciled to the supporting 

data in the proposed budget. Again, a direct quote from the IG’s 

report. I’m just about out of time, but it concerns me greatly that 

the budget didn’t match up with the underlying data. 

Dr. OLDS. I think it’s always a challenge to get these things right 

on really complicated projects where you’re building a distributed 

instrument that extends from Barrow, Alaska, to Puerto Rico, and 

you’re using bleeding-edge state-of-the-art technology and trying to 

network it all together. So that’s always a challenge, and it’s very— 

it’s qualitatively very different from building something like a ship 

or an airplane that we’ve had a lot of experience with, so I think 

that relates to those challenges. 

Mr. BEYER. Thank you. 

Thank you, Madam Chair. 

Chairwoman COMSTOCK. Thank you, and the Chair now recognizes Mr. Johnson. 

Mr. JOHNSON. Thank you, Madam Chairman. 

Dr. Olds, you testified that NSF started having concerns with the 

NEON project’s budget and timeline management as early as January 2013. The NSF Inspector General first noted concerns about 

NEON’s cost proposal in 2011 and recommended that NSF require 

annual incurred cost submissions and conduct annual incurred cost 

audits. NSF did not follow this recommendation. So in hindsight, 

could annual audits have caught NEON’s cost issues earlier and 

helped preserve more of the budget as designed? 

Dr. OLDS. Congressman, I’ll freely admit that we could have done 

a better job, and what I’m determined to do is make sure that 
42 

going forward we are as rigorous as we can possibly be in terms 

of auditing, getting cost estimates and getting independent eyes on 

on those so that we don’t have these issues in the future. 

Mr. JOHNSON. Hindsight’s always 20/20, isn’t it? 

Dr. OLDS. Yes, sir. 

Mr. JOHNSON. Again, Dr. Olds, the NSF Inspector General has 

previously recommended that NSF should retain contingency funds 

for projects like NEON and pay the contractor as those expenses 

are approved as appropriate contingency costs. The NSF has not 

agreed with this recommendation. Would retaining contingency 

funds for NEON have helped NSF notice the cost overrun at NEON 

sooner? 

Dr. OLDS. Congressman, once again, that’s an issue which is outside my area of molecular neuroscience, so I want to make sure I 

get you an accurate and full answer to that, so I’d like to get back 

to you on that one. 

Mr. JOHNSON. Take that one for the record. Okay. 

Let’s see. Dr. Olds, in dealing with management and oversight, 

what alternative options does NSF have with respect to the existing NEON cooperative agreement? If you determine that you’re not 

capable of delivering the project on budget and on time, is relieving 

NEON as the managing entity one of those options that would be 

considered? 

Dr. OLDS. Congressman, I don’t want to presuppose what the answer is going to be to the answer that we will receive in—— 

Mr. JOHNSON. I’m not asking you for the answer. I’m asking you 

what options you might consider. 

Dr. OLDS. I think that there are a variety of options that would 

quite substantive in terms of getting this project through to completion in a way that deals with the management issues that you 

put forward. I don’t want to lock on to any one in particular at this 

time. 

Mr. JOHNSON. I’m not asking you to do that. I’m asking you—— 

Dr. OLDS. But I—— 

Mr. JOHNSON. —is relieving NEON is the managing entity one 

of the options that would be considered? 

Dr. OLDS. That’s certainly an option. 

Mr. JOHNSON. Okay. All right. That’s fair enough. Dr. Olds, it appears that NEON has moved $35 million of contingency funds into the base construction budget. The cooperative 

agreement requires approval by NSF for NEON to use contingency 

funds. Did NSF approve the transfer of contingency funds? 

Dr. OLDS. That issue has been previously identified and addressed with NEON Inc. with regard to the process. 

Mr. JOHNSON. So did NSF approve? 

Dr. OLDS. The organization had incorrectly concluded that a 

prior initial approval of their contingency estimate had provided 

authorization of contingency expenditures. That situation has been 

corrected. We do plan to do a full accounting of the documentation 

to ensure contingency allocations were not actually spent in advance of approvals. 

Mr. JOHNSON. Okay. So let me make sure I understood. You’re 

telling me that NSF, the finding is that NSF did approve the transfer of contingency funds? 
43 

Dr. OLDS. I want to make sure that I get that exactly accurate 

so I’m going to have to get back to you on that answer. 

Mr. JOHNSON. I’m very interested in the answer to that because 

obviously there would be a violation of the cooperative agreement 

if that approval is not there. 

Dr. OLDS. Understood. 

Mr. JOHNSON. Okay. Mr. Chairman, I yield—Madam Chairman, 

I yield back. 

Chairwoman COMSTOCK. Thank you, and the Chair now recognizes Mr. Tonko. 

Mr. TONKO. Thank you, Madam Chair. 

While I have concerns regarding NEON’s budget and management challenges, I also want to take this time to express my gratitude to the many people who had the vision for this type and scale 

of research and coordination. I recognize that NEON will have real 

implications for our understanding of climate science, of agriculture 

and infectious diseases, water use, and so many other areas that 

affect all of our lives. Improving our understanding of our world 

and how it’s changing and how we effect that change will allow us 

to better evaluate our actions and priorities. For instance, the scale 

of this project will allow us to have a baseline of data that will inform us long before catastrophic events occur so that we can better 

prevent and prepare for these occurrences. So can you further describe why it is significant that this research is happening on such 

a large scale? Dr. Collins? 

Dr. COLLINS. Well, you said it very well in terms of the implications of the sort of research that’s being done. It has the expectation to affect our understanding of the dispersal of infectious disease, emerging infectious diseases, exotic species. It has—it’s designed to help understand the way in which various sorts of gases 

will move across the continent. So, as you’ve said, it really has 

these much larger implications in terms of grand challenge questions in the ecological sciences. 

Mr. TONKO. Now, we know that with the will and necessary resources, America will lead the way in continued exploration in research and development. When our Nation leads by investing and 

innovating, we also inspire our next generation of scientists and 

engineers. We must retain the will to learn about our world as well 

as the human infrastructure needed to make the proposed research 

a reality. 

I recently learned that Rensselaer Polytechnic Institute, which is 

in New York’s 20th Congressional District, was one of 19 academic 

institutions selected to receive a grant to do research that will leverage data from NEON. Can you further describe how these 

awards and NEON’s efforts will ensure that our Nation’s research 

pipeline, so to speak, will remain vibrant for the decades to come? 

Dr. COLLINS. Sure, sure. So NEON employs some 320 individuals 

at the Boulder site, but then there are another 120 individuals dispersed throughout the system in the United States in terms of 

gathering data and sampling various sorts of biological material 

across the country. 

Relative to your pipeline point, though, it’s especially notable 

that in the summer, NEON brings on as many as 100 and even 

more summer interns, students, who work in the system and are 
44 

learning the basic biological sciences, and therefore can go on to careers in the sciences themselves or basically are STEM-capable students. They know what science is about. They’re dealing with leading-edge questions and they’re dealing with leading-edge technology. Your example from RPI is really a good one in that one of 

my colleagues at RPI, who just moved there recently, is working 

with IBM to monitor a lake system in that area, and they’re using 

comparable leading-edge technology to begin to understand what 

these ecological processes are looking like on a 24/7 basis and involving young people in doing this sort of work right from the very 

beginning. 

Mr. TONKO. What other types of data or research capabilities is 

NEON already providing to the larger scientific community, and 

who can access these resources? 

Dr. COLLINS. NEON is providing data from the airborne observing platform. This is a series of sophisticated instruments that are 

flown on airplanes over the NEON system. They’ll eventually be 

flown over the entire NEON system. The planes are flying over 

eight domains, and those data are freely available to the entire 

community. 

Likewise, as far as the NEON system is concerned, when those 

data come online, and they’re already coming online—they will be 

freely available on a 24/7 basis to the entire research community 

to use as they see fit. 

Mr. TONKO. Okay. I thank you very much, and with that, yield 

back, Madam Chair. 

Chairwoman COMSTOCK. The Chair now recognizes Mr. Posey for 

five minutes. 

Mr. POSEY. Thank you, Madam Chairman. 

Dr. Collins, since we last met, has NEON Inc. paid back the federal government any of the thousands of dollars spent on liquor 

and parties for the unintended benefit of the employees who enjoyed the endeavors? 

Dr. COLLINS. NEON has not used any management fee dollars 

since the last time I was here. 

Mr. POSEY. Okay, but they haven’t paid the government back? 

They haven’t reimbursed the government for the unintended 

squandering of the tax dollars on parties and liquor? 

Dr. COLLINS. Well, as we discussed last time, there is this issue 

in terms of how management fees can be used, and we could not 

use management fees to pay back the federal government at this 

point. That’s my understanding. I’m not an accountant when it 

comes to these details. 

Mr. POSEY. Have there been any fears of repercussions from the 

IRS for the misuse of that money? 

Dr. COLLINS. Not that I’m aware of. 

Mr. POSEY. You’re a 501(c)(3) nonprofit corporation? 

Dr. COLLINS. That’s correct. 

Mr. POSEY. Who are the principals of the corporation, just out of 

curiosity? 

Dr. COLLINS. Well, the principals of the corporation would be— 

well, the board of directors has fiduciary responsibility, if that’s 

what you mean. 
45 

Mr. POSEY. Yeah. Whose name is—who’s the president of the 

company? 

Dr. COLLINS. Well, there’s a chief executive officer of the company—— 

Mr. POSEY. Who’s that? 

Dr. COLLINS. —who at the moment, the interim, is Gene Kelly, 

Dr. Eugene Kelly from Colorado State University. 

Mr. POSEY. What state is it incorporated in? 

Dr. COLLINS. Colorado. 

Mr. POSEY. Colorado? Given the total mismanagement by NEON 

Inc. of this project to date, why should it continue to manage the 

project? You know, wouldn’t taxpayers and the research community 

be better served by another qualified organization taking over the 

management of the project? 

Dr. COLLINS. So we’ve—I’ve explained to you some of the details 

in terms of where the discrepancies occurred, and it’s important, I 

believe, at a moment like this to appreciate the degree to which 

there is learning going on within the corporation and learning by 

the individuals. So we admit mistakes were made. We admit we 

could do a better job. I admitted that the last time. And therefore 

I believe the key is to look forward, and as Dr. Olds has suggested, 

put in place those kinds of things—— 

Mr. POSEY. Well, you know, when you were here in February, 

you testified ‘‘We pledge going forward to redouble our efforts to be 

good stewards of the taxpayers’ funds we receive.’’ Yet, according 

to the National Science Foundation Inspector General, since that 

time they continue to discover inappropriate charges by NEON and 

its leadership. 

Dr. COLLINS. Well, inappropriate charges in—— 

Mr. POSEY. I think those they referred to as legal fees and lobbyist expenses. 

Dr. COLLINS. I’ll have to get back to you on that because, as I 

said, there are no management fees that have been used since the 

last time I was here. 

Mr. POSEY. Not a dime spent for lobbyists or legal fees, not one 

penny? 

Dr. COLLINS. Again, I would have to get back to you, but in 

terms of my understanding, that’s true. 

Mr. POSEY. Okay. Mr. Olds, do you care to comment? 

Dr. OLDS. Well, I think it’s extremely important that any federal 

monies that were misspent needs to be made right to the American 

people. 

Mr. POSEY. You know, I think we can’t spend the management 

fees to reimburse the federal government for wasting their money. 

Maybe you could just divide it among the participants that enjoyed 

the liquor and the parties and have them ante up and just repay 

the government for a party that wasn’t intended, was authorized, 

certainly wasn’t ethical, useful or in any way positive for the taxpayers who funded it. Does it sound like a good idea to you? 

Dr. COLLINS. And so your question is whether there should be 

some retroactive effort to gather in the individuals who were at the 

party and have them contribute? 

Mr. POSEY. I know it’s a foreign concept to some, but it’s called 

justice. You know, you take something that doesn’t belong to you, 
46 

and as a minimum, you pay it back. Like the lawyers behind you 

today—are they lawyers for you? Are they your lawyers? 

Dr. COLLINS. There is one—I have one counsel representing me, 

yes. 

Mr. POSEY. Okay. Do they get paid? 

Dr. COLLINS. Yes. 

Mr. POSEY. Okay. Who pays them? 

Dr. COLLINS. NEON. 

Mr. POSEY. And from what funds does NEON pay them? 

Dr. COLLINS. We have fees within the corporation to be used in 

order to ensure that the corporation is acting in ways that are consistent with the laws of the United States, and so we do have legal 

counsel. 

Mr. POSEY. But you haven’t used any since you told me since the 

last time we met here on lobbyists or legal fees, correct? 

Dr. COLLINS. I said that I—that we have not used any management fee money for lobbyists since the last time I was here. 

Mr. POSEY. Okay. 

Dr. COLLINS. And we haven’t spent any management fees at all. 

Mr. POSEY. Okay. And the lawyers behind you, they prepared 

your testimony for today? 

Dr. COLLINS. I had help as far as the testimony and preparation 

from a variety of individuals, not just legal counsel, but individuals 

at NEON as well. It was a real team effort. 

Mr. POSEY. Just to come in and tell us what’s going on? 

Dr. COLLINS. Well, I guess I wouldn’t say just to come in. I believe that the issues that you’re raising are indeed important and 

serious issues, and so we put in a good deal of preparation in order 

to be ready to help you out—— 

Mr. POSEY. Tell me that you don’t know the answer? 

Dr. COLLINS. —to help you understand. 

Mr. POSEY. I understand. All right. Sorry I went over, Madam 

Chair. 

Chairwoman COMSTOCK. Okay. Thank you, and the Chair now 

recognizes Ms. Bonamici. 

Ms. BONAMICI. Thank you very much, Chair Comstock. 

Dr. Olds, large construction projects often run into some unanticipated challenges. The NEON project in particular is unprecedented in size and scope for the ecological sciences community, and 

it required, of course, significant technology development. I share 

the concerns raised today about the troubles with NEON but also 

that they were allowed to progress to the point that we find ourselves today. So in your testimony, you described for us the series 

of increasingly aggressive oversight steps that NSF took in an effort to keep NEON on track. I know there’s been some talk about 

hindsight and retrospect, but could you talk a little bit about what 

might you have done even sooner or more aggressively to avert 

such a significant re-scope of the project? And I also want to hear 

about what the lessons are that have been learned for future 

projects. 

Dr. OLDS. Well, I think you raise a really good question, Congresswoman, and I would say what we’ve learned really comes 

down to this. If you think about the large projects scientifically 

that NSF does, they’re over a spectrum. Oceanographic research 
47 

vessels, we’ve done those before. Things like NEON, that’s at the 

other end of the spectrum. We’ve never built anything like NEON 

before. So I would say in terms of lessons learned going forward, 

projects like NEON that involve technologies and instrumentation 

and distribution that we have not done before deserve a much 

greater level of scrutiny from the very beginning going forward so 

that we have a better handle on how the project’s doing and when 

it starts to get off the rails. 

When we’re looking at something that we’ve done before, that’s 

a different story, but NEON and projects in the future that may 

be like NEON I think deserve a much higher level of scrutiny. 

Ms. BONAMICI. Thank you. I was among the group of Committee 

Members who went to the South Pole this last year and saw the 

IceCube Neutrino project. That one went pretty well, didn’t it? 

Dr. OLDS. It certainly did. That’s a terrific example of a large 

project that is delivering to the American people as we hoped it 

would. 

Ms. BONAMICI. So, Dr. Olds, a group of former Ecological Society 

of America presidents published an open letter strongly supporting 

the NEON project. I believe Mr. Lipinski already has entered that 

into the record. They support the project even as re-scoped but they 

express some concern that NSF has not sufficiently engaged the 

community in decision-making for NEON since construction began. 

So I fully appreciate the tension between keeping a large construction project on time and on budget and wanting to be responsive 

to the evolving scientific and technological opportunities that come 

from that. 

I don’t think anyone wants to delay the project for a length of 

time or increase its budget but we’re at a sort of unplanned pause 

here as NEON develops a new cost proposal. So the scientific and 

technological opportunities have changed since 2010 when the 

project design was approved. So is there an opportunity here to 

more directly engage the community in the final re-scoping decisions so that the science meets the needs of the user community? 

And I’ll get Dr. Collins in on this as well and ask him about that. 

Dr. OLDS. Congresswoman, that’s a terrific idea. Just weeks ago, 

I personally went to the Ecological Society meeting in Baltimore. 

A little bit after that, I went out to Estes Park, Colorado, to meet 

with a long-term ecological network of scientists community so I 

believe that actually that engagement needs to start from the very 

top of the Biological Sciences Directorate and permeate everything 

that we do. Really, the community needs to be fully engaged scientifically in this project so that the data that is delivered back is 

as valuable to them as possible. 

Ms. BONAMICI. And Dr. Collins, what role are you playing or is 

NEON playing in making sure that the community is engaged in 

the re-scoping? 

Dr. COLLINS. I agree entirely with Dr. Olds. I was also there in 

Baltimore with him. It is a moment to bring along even greater engagement by the scientific community. You put your finger on exactly the issue early on. You’re balancing this tension between getting the facility built and therefore controlling a scope creep as far 

as the construction is concerned. But now at this moment, and it 

is just right as you transition from construction to operations, that 
48 

you want to bring the community in even more deeply and take advantage in the course of doing the re-scope to look at new instrumentation that’s available, new potential that you have in order to 

make it an even better facility than you thought it could be at the 

beginning. 

Ms. BONAMICI. Thank you. 

My time is expired. I yield back. Thank you, Madam Chair. 

Chairwoman COMSTOCK. Thank you, and I now recognize Dr. 

Abraham for five minutes. 

Mr. ABRAHAM. Thank you, Madam Chairman. 

Dr. Collins, I’ll certainly agree with your suggestion that we 

bring more private accountants in to monitor these projects. I’m 

looking at some notes I have, and it’s my understanding that since 

2011, the NSF has had at least seven expert—I’ll use that tongue 

in cheek with the word ‘‘expert’’—reviews of these projects, and in 

August 2014, they’re telling us that you guys are on target, on 

time, on budget, and then 3 months later we’re $16 million in the 

hole and it has just escalated since then. So I think it’s an excellent 

idea. 

Dr. Collins, on NEON Inc., I understand it’s a private enterprise. 

Is that a correct statement? 

Dr. COLLINS. Well, it’s a 501(c)(3). 

Mr. ABRAHAM. Okay. How many employees does Neon Inc. have? 

Dr. COLLINS. There are approximately 320 individuals in Boulder 

and about another 120 individuals throughout the United States. 

Mr. ABRAHAM. And to your knowledge, were there any employment bonuses given in 2014 and 2015? 

Dr. COLLINS. That’s a detail that would be left to the financial 

individuals in the corporation, and I can get you that information. 

Mr. ABRAHAM. I would appreciate that. 

Dr. Olds, hearing the testimony that you and Dr. Collins both 

gave, and we appreciate your presence here, at least I do, I hear 

this term over and over, we’re learning, we’re learning. But we’re 

learning on the taxpayers’ dollars here, guys, and you need to learn 

somewhere else, not on the taxpayers’ dollars. I mean, you guys 

should be past the learning into the doing stage. 

Of these projects that have been—or this entire project that has 

been de-scoped—I’ll use that term—we use a different term, a more 

direct term in private business. We’re down to 60 or 80 sites. How 

many of those sites are projected to be in the United States? 

Dr. OLDS. All of them are in the United States, Congressman. 

Mr. ABRAHAM. And with—Dr. Olds, I’ll go to you. The CEO, it’s 

my understanding, of NEON Inc. was just relieved of duty, and 

that’s a pretty big strike when you take out a CEO of a 300- to 

450-employee company. That shows that there some basic large 

mismanagement. Do you have confidence that NEON Inc. can do 

the job? 

Dr. OLDS. Well, we are going to be sitting on NEON Inc. over the 

next three months and putting them through some pretty difficult 

hoops, and we will know very quickly whether this organization is 

going to be successful under new leadership in changing its course, 

and if they aren’t, we’ll act. 

Mr. ABRAHAM. Have you guys got a timeline that says hey, 

you’ve got to be at this point at this time or—— 
49 

Dr. OLDS. Yes, sir. 

Mr. ABRAHAM. —game over? Okay. 

Dr. OLDS. Yes, sir. 

Mr. ABRAHAM. Fair enough. 

Dr. Collins, the CEO that was just relieved of his duties, how 

much—and I know it’s an opinion but I’m asking it—in your opinion, how much of the mismanagement was attributed directly to 

him? 

Dr. COLLINS. Well, the issue is a personnel issue, of course, so 

I’m only going to go into certain kinds of details, but let’s put it 

this way. We have a corporation that is changing. It is dynamic. 

And it was the judgment of the board that at this time we needed 

to bring on, to go back to some points that we made earlier—an 

individual who could deal with this transition from construction to 

operations. 

Mr. ABRAHAM. But come on, Doc. I mean, you know, this guy 

should have already been vetted to—he should have been—if he’s 

a CEO of a company of this size, he should have known from A to 

Z how this project was going. I mean, he is the CEO. 

Dr. COLLINS. Yes. 

Mr. ABRAHAM. And I guess that’s my frustration is that maybe 

he didn’t know all the particulars, but the board should’ve done a 

better job of vetting this guy before he was hired. I think that’s just 

basic business acumen there. 

Dr. COLLINS. So it was a previous board that hired the CEO, but 

the important thing is that I’m confident that they did the best job 

that they could at the time. Then you work with the individual in 

order to bring the individual along. Now we’re at a point where 

we’re going to look for a new individual. 

Mr. ABRAHAM. I would probably respectfully disagree that they 

did the best job at that time in hiring this guy. 

Madam Chairman, I yield back. 

Chairwoman COMSTOCK. Thank you. 

I thank the witnesses for their testimony today and the Members 

for their questions. We very much appreciate your diligence in looking at this and responding to us and appreciating the concerns 

here. 

And the record will remain open for two weeks for additional 

written comments and written questions from Members. 

So the hearing is now adjourned. 

[Whereupon, at 10:26 a.m., the Subcommittees were adjourned.] 

(51) 

Appendix I 

ANSWERS TO POST-HEARING QUESTIONS
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ANSWERS TO POST-HEARING QUESTIONS

Responses by Dr. James Old 
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(75) 

Appendix II 

ADDITIONAL MATERIAL FOR THE RECORD
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DOCUMENT SUBMITTED BY REPRESENTATIVE LOUDERMILK
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DOCUMENT SUBMITTED BY REPRESENTATIVE LIPINSKI
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ADDITIONAL RESPONSES SUBMITTED BY DR. JAMES OLD
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Æ