type: other

jurisdiction: US

text: b' Semiannual Report to the Congress\n Number 16\n October 1, 1996 Through March 31, 1997\n\n\n\n\nOffice of Inspector General\n National Science Foundation\n\x0cSemiannual Report to the Congress\n\n Number 16\n October 1, 1996 Through March 31, 1997\n\x0c Letter to the National\n Science Board and the\n Congress\n\nThis report describes our activities and accomplishments for the first half of FY 1997.\nSection 5 of the Inspector General Act of 1978, as amended, requires that the National\nScience Board transmit this report to the Congress within 30 days of its receipt along\nwith any comments the Board may wish to make.\n\nAs described in the following pages, NSF has been working with the President\'s Office\nof Science and Technology Policy to write a definition of misconduct in federally funded\nresearch that can be implemented as the uniform federal definition. Work toward this\nobjective is ongoing, and we are hopeful of success. We do want to note, however,\nthat one of the individuals who was integral in the development of NSF\xe2\x80\x99s definition,\npolicies, and practices in this area will not be available to assist in the government-\nwide task.\n\nDr. Donald E. Buzzelli retired during this reporting period after 22 years of federal\nservice\xe2\x80\x94all with NSF. Dr. Buzzelli\xe2\x80\x99s deep intellectual understanding of the issues that\nbridge science and philosophy made him highly qualified to suggest viable approaches\nto the problems that arise in resolving allegations of misconduct. Dr. Buzzelli\xe2\x80\x99s insights\nwill be missed, but his legacy of excellence provides a benchmark for us as we\ncontinue to work in this area.\n\n\nLinda G. Sundro\nInspector General\nApril 30, 1997\n\x0c Executive Summary\nFINANCIAL AUDITS INVESTIGATIONS\n\nWe completed the first audit of NSF\xe2\x80\x99s A federal jury found a principal investi-\nfinancial statements. We issued a gator (PI) at a small business guilty of\nqualified opinion on NSF\xe2\x80\x99s Statement of knowingly and intentionally causing NSF\nFinancial Position because NSF does not to wire funds to his company after the PI\nhave an adequate system to account for had stopped all research (page 33). A\nproperty and equipment (page 2). federal grand jury indicted a scientist for\n obstructing justice after forging letters of\nWe reviewed NSF\xe2\x80\x99s cooperative recommendation to NSF (page 39).\nagreement with a company that registers\nInternet domain names and recom- Instead of recusing themselves, two\nmended that federal oversight over individuals who entered into employment\nInternet address allocation continue. We arrangements with an NSF awardee\nestimate that, by the time the agreement participated in NSF award decisions that\nends, the company must allocate more involved that awardee (page 38).\nthan $60 million in fee revenues to a fund\nfor the \xe2\x80\x9cenhancement of the intellectual MISCONDUCT IN SCIENCE\ninfrastructure of the Internet.\xe2\x80\x9d Instead of\nallowing the company to expend these The National Science Board reviewed\nfunds, we recommended that NSF NSF\xe2\x80\x99s experience in handling misconduct\nallocate these funds through its merit- in science matters and reaffirmed NSF\xe2\x80\x99s\nbased, peer review process (page 10). preference to maintain the definitions and\n processes that have served the agency\nAt three Federally Funded Research and well (page 47).\nDevelopment Centers, we identified over\n$1 million in funds that can be better We referred two reports with recommen-\nused to support research, and we dations for findings of misconduct in\nquestioned over $600,000 (page 20). science and debarment to NSF\xe2\x80\x99s Deputy\n Director for adjudication (page 49).\nWe developed a new performance\nmeasure to track monetary and INSPECTIONS\ncompliance findings that involve cost\nsharing (pages 84 and 26). We initiated an internal inspections\n program designed to help NSF implement\nPROGRAM EVALUATIONS the Government Performance and\n Results Act. In our inspection of NSF\xe2\x80\x99s\nAt the request of the House\n Western Europe Program, we found\nCommittee on Science, we reviewed\n that the Program needs to improve its\nNSF policies concerning grantee use of\n ability to readily generate accurate\nequipment to provide services that may\n data to support performance\ncompete with companies (page 77).\n measures (page 68).\n\x0c Table Of Contents\n\n1 Audit\n\n32 Investigations\n\n45 Oversight\n\n82 Audit Reports Issued With\n Recommendations for Better Use of Funds\n83 Audit Reports Issued With Questioned Costs\n\n84 Additional Performance Measures\n\n88 List of Reports\n\n93 Audit Reports With Outstanding\n Management Decisions\n\x0cAcronyms\nAOR Authorized Organizational Representative\nCAS Cost Accounting Standards\nCFO Chief Financial Officer\nCOI Conflict of Interests\nCPA Certified Public Accounting Firm\nCPO Division of Contracts, Policy and Oversight\nEAR Division of Earth Sciences\nFASAB Federal Accounting Standards Advisory Board\nFFRDC Federally Funded Research and Development Center\nFTE Full-Time Equivalent\nGMRA Government Management Reform Act\nGPRA Government Performance and Results Act\nIN-91 Important Notice 91\nINT Division of International Programs\nIPA Intergovernmental Personnel Act\nMS&E Misconduct in Science and Engineering\nNASA National Aeronautics and Space Administration\nNSB National Science Board\nOGC Office of the General Counsel\nOMB Office of Management and Budget\nOPS Office of Policy Support\nPI Principal Investigator\nPO Program Officer\nPP&E Property, Plant, and Equipment\nrDNA Recombinant DNA\nREU Research Experiences for Undergraduates\nSBIR Small Business Innovation Research\nSBE Directorate for Social, Behavioral and Economic Sciences\nSRAS Statement of Recommended Accounting Standards\nWEP Western Europe Program\n\x0c Reporting Requirements\nThis table cross-references the reporting requirements prescribed by the Inspector General Act of\n1978, as amended, to the specific pages in the reports where they are addressed.\n\n Requirements Page\n\n Section 4(a)(2) Review of Legislation and Regulations Throughout\n\n Section 5(a)(1) Significant Problems, Abuses, and Deficiencies Throughout\n\n Section 5(a)(2) Recommendations With Respect to Significant Problems, Throughout\n Abuses, or Deficiencies\n\n Section 5(a)(3) Prior Significant Recommendations on Which Corrective 93, 51\n Action Has Not Been Completed\n\n Section 5(a)(4) Matters Referred to Prosecutive Authorities 32\n\n Section 5(a)(5) Summary of Instances Where None to Report\n Information Was Refused This Period\n\n Section 5(a)(6) List of Audit Reports 88\n\n Section 5(a)(7) Summary of Each Particularly Significant Report Throughout\n\n Section 5(a)(8) Statistical Table Showing Number of Reports and Dollar 83\n Value of Questioned Costs\n\n Section 5(a)(9) Statistical Table Showing Number of Reports and Dollar 82\n Value of Recommendations That Funds Be Put to Better\n Use\n\n Section 5(a)(10) Summary of Each Audit Issued Before This Reporting 93\n Period for Which No Management Decision Was Made\n by the End of the Reporting Period\n\n Section 5(a)(11) Significant Management Decisions That Were Revised None to Report\n This Period\n\n Section 5(a)(12) Significant Management Decisions With Which the None to Report\n Inspector General Disagrees This Period\n\x0c AUDIT\n The Office of Audit is responsible for auditing grants, contracts, and\n cooperative agreements funded by NSF\xe2\x80\x99s programs. It reviews agency\n operations and ensures that financial, administrative, and program aspects\n of agency operations are examined. It also conducts the annual audit of\n NSF\xe2\x80\x99s financial statements, which encompass approximately $3.2 billion.\n The Office evaluates internal controls, reviews data processing systems,\n and follows up on the implementation of recommendations included in audit\n reports. In addition, the Office assists in the financial, internal control, and\n compliance portions of OIG inspections. All audit reports are referred to\nNSF management for action or information. The Office of Audit advises and\n assists NSF in resolving audit recommendations. The Office also acts as a\n liaison between NSF and audit groups from the private sector and other\nfederal agencies by arranging for special reviews, obtaining information, and\n providing technical advice. The Office of Audit provides speakers and staff\n assistance at seminars and courses sponsored by NSF and other federal\n agencies and at related professional and scientific meetings.\n\n\n\n\nSemiannual Report Number 16 1 NSF Office of Inspector General\n\x0cAUDIT OF THE FOUNDATION\xe2\x80\x99S\nFINANCIAL STATEMENTS\nThe Government Management Reform Act funding programs. Each agency\xe2\x80\x99s CFO is\nof 1994 (GMRA) amended the Chief responsible for developing and main-\nFinancial Officers (CFO) Act and taining adequate financial management\nincreased NSF\xe2\x80\x99s requirements for the systems and internal controls as well as\npreparation of financial statements, and, for generating reports on these systems\nconsequently, the breadth of our internal that meet audit requirements.\naudit responsibilities. Before GMRA was\n Financial statements, and their\nenacted, NSF\xe2\x80\x99s CFO was required to\n accompanying audit opinions, can be\nprepare, and we were required to audit,\n powerful tools for managers, but a\nfinancial statements for the agency\xe2\x80\x99s\n significant amount of preparation is\n$40 million Donations (Trust Fund)\n necessary for their production. GMRA\xe2\x80\x99s\nAccount. This year, GMRA required the\n timetable for CFO audit implementation\npreparation of statements and an audit of\n gave NSF\xe2\x80\x99s financial managers several\naccounts comprising NSF\xe2\x80\x99s entire\n years to prepare for the first audit. NSF\xe2\x80\x99s\n$3.2 billion budget.\n CFO and his staff used this time to work\nThe primary purpose of the CFO Act is to with a large, private-sector certified public\nbring more effective general and financial accounting (CPA) firm to ensure that\nmanagement practices to government by NSF\xe2\x80\x99s financial statements would be\nimproving its systems of accounting, complete, accurate, and timely. Because\nfinancial management, and internal the CFO audit requirement is an annual\ncontrols. The Act imposes corporate requirement in perpetuity, the time and\nmodels of financial reporting and audit money expended to restructure financial\nassurance so both the Congress and systems and correct deficiencies\nExecutive Branch managers can use this represents an investment that should be\ninformation to make decisions about recouped in the years to come.\nfinancing, managing, and evaluating\n\n\n\nSemiannual Report Number 16 2 NSF Office of Inspector General\n\x0cNSF\xe2\x80\x99s Financial Statements OIG\xe2\x80\x99s Audit Opinions\nNSF\xe2\x80\x99s CFO prepared two principal OIG contracted with a major, private-\nfinancial statements for FY 1996 sector CPA firm to conduct the audit of the\naccounts. The Statement of Financial FY 1996 statements. The 1996 fiscal year\nPosition reported on the agency\xe2\x80\x99s assets, closed on September 30, 1996. From\nliabilities, and net position (or equity early in November 1996 through the end\nposition). The Statement of Operations of January 1997, we worked with the CFO\nand Changes in Net Position is an and his staff testing account balances and\naccounting of NSF\xe2\x80\x99s operations for the helping to resolve issues as they arose.\nfiscal year and provides information about Final statements were provided to us on\nsources of revenue and expenses, January 31, 1997, and we forwarded the\ndescribes differences between the results of our audit to NSF management\nrevenues and expenses, and accounts for on February 28, 1997, to meet the\nthe change in the agency\xe2\x80\x99s net position at statutory March 1 deadline.\nthe beginning and end of the fiscal year.\n We audited NSF\xe2\x80\x99s principal financial\nThe CFO is also required to incorporate statements so we could express an\nfinancial performance measures into the opinion on whether the statements, and\nstatements. Ultimately, the financial accompanying footnotes, fairly present\nperformance measures derived from the the agency\xe2\x80\x99s financial position and results\nagency\xe2\x80\x99s financial systems will be of operations in accordance with\ncompiled with other administrative and applicable accounting standards.\nmission measures that are being educed\npursuant to the Government Performance\nand Results Act (GPRA) to provide\ncomprehensive measures of NSF\xe2\x80\x99s\nperformance.\n\n\n\n\nSemiannual Report Number 16 3 NSF Office of Inspector General\n\x0c\xe2\x80\x9cOpinions\xe2\x80\x9d on financial statements are Auditors are also required to identify and\nexpressed in one of the following four report the existence of \xe2\x80\x9cmaterial\ncategories. weaknesses\xe2\x80\x9d and \xe2\x80\x9creportable conditions\xe2\x80\x9d\n in audited financial systems. A \xe2\x80\x9cmaterial\n \xe2\x80\x9cUnqualified\xe2\x80\x9d or \xe2\x80\x9cclean\xe2\x80\x9d opinions\n weakness\xe2\x80\x9d is an element of the internal\nindicate that the auditor has determined\n control structure that does not help reduce\nthat the statements present the assets,\n to a relatively low level the risk that\nliabilities, revenues, expenses, and net\n significant errors or irregularities will go\nfinancial position of the agency fairly, in\n undetected. \xe2\x80\x9cReportable conditions\xe2\x80\x9d are\nall material respects.\n significant deficiencies in the internal\n\n \xe2\x80\x9cQualified\xe2\x80\x9d opinions indicate that, control structure that could adversely\n\nexcept for one or more significant affect NSF\xe2\x80\x99s ability to maintain effective\n\nproblems, the statements fairly present internal controls.\n\nthe assets, liabilities, revenues, expenses,\n Auditors make the determination of what\nand net financial position.\n amounts are \xe2\x80\x9cmaterial\xe2\x80\x9d to the financial\n\n \xe2\x80\x9cAdverse\xe2\x80\x9d opinions signal serious statements. A judgment on materiality is\n\nproblems with the statements and indicate particularly important in audits where\n\nthat the overall financial position has not large amounts of money are being\n\nbeen fairly presented. accounted for\xe2\x80\x94it is essentially the\n assessment by the auditor of how large an\n A \xe2\x80\x9cdisclaimer of opinion\xe2\x80\x9d states that accounting error must be to affect his or\nthe auditor does not express an opinion her opinion on the statements.\non the statements. A disclaimer is used\nwhen the auditor has not, or cannot,\nperform sufficient audit work to form an\nopinion on the statements.\n\n\n\n\nSemiannual Report Number 16 4 NSF Office of Inspector General\n\x0cAuditors also prepare a separate letter FY 1996 Audit Results\nreport to NSF, often referred to as the\n We disclaimed an opinion on NSF\xe2\x80\x99s\n\xe2\x80\x9cmanagement letter.\xe2\x80\x9d This document\n Statement of Operations and Changes in\naddresses less significant internal control\n Net Position. Since this was the first year\nweaknesses and errors in accounting to\n NSF\xe2\x80\x99s CFO produced this statement, it\nprovide financial managers with insights\n would not have been cost-effective for the\ninto how to improve their systems.\n government to invest in a thorough audit\n\nIt is the goal of every CFO and Inspector because of the high level of effort\n\nGeneral to work together so that \xe2\x80\x9cclean\xe2\x80\x9d required, and difficulties that would be\n\nopinions on each of the agency\xe2\x80\x99s financial encountered, to examine properly the\n\nstatements can be rendered in the cumulative effect of NSF operations\n\nshortest period of time. However, the during prior, unaudited fiscal years. We\n\nGeneral Accounting Office, the American plan to audit this statement for FY 1997\n\nInstitute of Certified Public Accountants, using the FY 1996 statements for\n\nand the President\xe2\x80\x99s Council on Integrity comparison.\n\nand Efficiency have all issued guidance\n Our management letter identified an in-\nreminding Inspectors General that they\n ternal control weakness affecting the\nmust render audit opinions in an\n compilation of this statement. We deter-\natmosphere that enables them to maintain\n mined that NSF\xe2\x80\x99s accounting for cumula-\nan independent attitude and appearance.\n tive results of operations and unexpended\n appropriations needs improvement.\n Accordingly, we recommended that NSF\n revise its method of accounting for\n cumulative results of operations from prior\n fiscal years by properly identifying and\n aggregating all sources of revenues and\n expenses. This will allow NSF to support\n an opening balance for cumulative results\n\n\n\n\nSemiannual Report Number 16 5 NSF Office of Inspector General\n\x0cof operations in the FY 1997 Statement of In anticipation of the first-year audit,\nOperations and Changes in Net Position. NSF\xe2\x80\x99s CFO requested and obtained\n certified inventories from the grantees and\nWe issued a qualified opinion on NSF\xe2\x80\x99s\n contractors that held most of the NSF-\nStatement of Financial Position because\n owned assets during FY 1996. Those\nwe determined that NSF had not main-\n lists were used to adjust the property\ntained an adequate system to accurately\n accounts presented as PP&E on NSF\xe2\x80\x99s\nand completely account for its capital-\n Statement of Financial Position.\nizable property, plant, and equipment\n(PP&E). Ninety-nine percent of NSF\xe2\x80\x99s We attempted to verify the accuracy of the\n$922 million PP&E balance is located at PP&E account balance. Our test results\nsites and facilities operated by NSF raised concerns related to the safe-\ngrantees and contractors\xe2\x80\x94including guarding of assets, the recording of PP&E\nsubstantial assets located in New Zealand transactions, the completeness and ade-\nand Antarctica, which are used in the quacy of the documentation supporting\noperation of the U.S. Antarctic Program. the assets listed on the custodians\xe2\x80\x99\nNSF\xe2\x80\x99s financial managers rely primarily on property listings, and inconsistencies\nfinancial statement audits conducted by related to the recording of salvaged\nthe awardees\xe2\x80\x99 independent auditors to assets. As a result, we could not verify\nensure compliance with the requirement that the PP&E balance reported in the\nfor accurate and complete listings of Statement of Financial Position was\nPP&E assets. As a standard practice, accurate and complete.\nNSF receives property lists from its major\n In addition to concerns about PP&E, our\ngrantees and contractors that have\n audit identified other material weaknesses\ncustody of NSF-owned assets.\n and reportable conditions in NSF\xe2\x80\x99s\nAdjustments are made to NSF\xe2\x80\x99s property\n systems of internal controls. Material\nrecords to bring those records into\n weaknesses were identified in NSF\xe2\x80\x99s\nagreement with the property balances\n systems for reporting accrued liabilities\nreported by the grantees and contractors.\n\n\n\n\nSemiannual Report Number 16 6 NSF Office of Inspector General\n\x0cand making advances to grantees, and performance measures. Similarly, we\nreceiving advances from other federal were unable to evaluate the financial\nagencies. These material weaknesses systems\xe2\x80\x99 capability to capture cost and\nwere the result of significant omissions resource data and relate them to program\nand overstatements related to advances activities. We recommended that NSF\nand liabilities incurred in the last quarter develop performance measures that\nof the fiscal year that were later adjusted describe programmatic outcomes and\non the financial statements. We develop a system that will properly aggre-\nrecommended that NSF revise its gate underlying cost and resource data.\naccounting procedures for year-end\n Our review also identified weaknesses in\nadvances and liabilities.\n NSF\xe2\x80\x99s ability to identify contingent\nOther reportable conditions identified in liabilities. In particular, lawsuits have\nthe Independent Auditors\xe2\x80\x99 Report on been filed against NSF awardees by third\nInternal Control Structure related to NSF\xe2\x80\x99s parties with respect to matters arising\nsystem for developing performance from NSF contracts or grant awards.\nmeasures and the system through which NSF\xe2\x80\x99s Office of the General Counsel\nNSF identifies and tracks contingent (OGC), which is responsible for keeping\nliabilities. NSF\xe2\x80\x99s 1996 Annual Financial management apprised of potential claims,\nReport contains a discussion of its major initially took the position that such claims\nprograms and related activities as well as did not have to be considered for financial\ndescriptions of significant accomplish- statement purposes because NSF is not a\nments. There are, however, few, if any, party to the actions and would not be\nperformance measures that present legally obligated to satisfy judgments\nfinancial or program outcomes in terms of entered against its contractors or\ndollars or other quantitative measures. grantees. We believe federal auditing\nWe were unable to determine whether standards require that management report\nNSF\xe2\x80\x99s internal control structure was ade- these claims as contingent liabilities\nquate to generate reliable and complete because awardees may seek\n\n\n\n\nSemiannual Report Number 16 7 NSF Office of Inspector General\n\x0creimbursement for successful claims from Working Toward Clean Opinions\nNSF. This could affect the allocation of for the FY 1997 Statements\nprogram funds in future fiscal years. In The single largest impediment we have\nline with generally accepted accounting identified to date to producing uniformly\nstandards, NSF management agreed to \xe2\x80\x9cclean\xe2\x80\x9d opinions in FY 1997 remains the\nreport as contingent liabilities the potential PP&E issue. Under currently existing,\nlosses arising from claims against NSF generally accepted accounting standards,\nawardees when (1) the likelihood of loss NSF is required to provide accountability\nbecomes probable, (2) the amounts of and control over these assets. NSF\nloss can be reasonably estimated, and property records are expected to\n(3) NSF management determines that the (1) identify physical quantities of\nagency will probably pay them. Based on government-owned and leased property\nthe information provided in response to and its location, (2) capture information on\nour request, we also determined that OGC all acquisitions (including cost, estimated\ndoes not have a formal system for life, disposals, and retirements), and\nidentifying contingent liabilities. We (3) enable periodic independent\nrecommended that a formal process for verifications.\nidentifying the existence of contingent\n NSF management has suggested that it\nliabilities be implemented. This process\n might be appropriate to reclassify all NSF-\nshould include more effective communi-\n owned PP&E held by grantees and con-\ncation between OGC and NSF program\n tractors as \xe2\x80\x9cstewardship investments.\xe2\x80\x9d\nmanagers about claims occurring in the\n Under currently existing accounting\ncourse of NSF awards.\n standards, stewardship investments en-\nOur management letter also recommen- compass expenses that have substantial\nded improvements in controls over cash long-term benefit, but have no commercial\nreceipts and disbursements; the review application or market value. The Federal\nand approval of accounting entries, Accounting Standards Advisory Board\xe2\x80\x99s\nrecords, and documentation; the audit (FASAB) Statement of Recommended\nfollow-up process; and electronic data Accounting Standards (SRAS) No. 8,\nprocessing and physical security. entitled \xe2\x80\x9cSupplementary Stewardship\nSemiannual Report Number 16 8 NSF Office of Inspector General\n\x0cReporting\xe2\x80\x9d (effective beginning in FY PP&E assets from the principal\n1998), states that PP&E meeting certain statements.\nstewardship criteria may be reported on a\n NSF\xe2\x80\x99s management has demonstrated a\nsupplementary stewardship statement and\n sound understanding of, and commitment\ntreated as an expense in the year of\n to, implementing the CFO Act\xe2\x80\x99s financial\npurchase. In this way, PP&E meeting the\n and administrative management\nstewardship criteria and treated as an\n principles. However, CFO implementation\nexpense in the year of purchase would, in\n is not without substantial cost. To date,\nsubsequent years, no longer be subject to\n NSF management has expended approxi-\naudit in the Statement of Financial\n mately $510,000 to hire a private-sector\nPosition.\n accounting firm to assist in the prepara-\nAt this time, NSF\xe2\x80\x99s CFO believes that it tion of financial statements and to advise\nmay be possible to reclassify all, or nearly management on issues that arose during\nall, of the $922 million in PP&E assets the FY 1996 audit. Management antici-\ncurrently shown on the principal state- pates that it will spend an additional\nments and move them to a supplementary $215,000 on preparation of the FY 1997\nstatement. However, right now, SRAS statements and resolution of other out-\nNo. 8 is only a recommended accounting standing audit issues. OIG has spent\nstandard, which will not become effective about $500,000 in staff resources and\nuntil FY 1998. Further guidance as to its private-sector accounting firm fees to\napplicability to NSF assets held by audit the FY 1996 statements. Resolution\ncontractors and grantees is expected from of the PP&E issue may ultimately neces-\nFASAB, the General Accounting Office, sitate more audit expenditures. In the\nand the Office of Management and Bud- coming months, we will be working closely\nget (OMB) in the near future. The CFO, with NSF management and the National\nthe Inspector General, and the indepen- Science Board\xe2\x80\x99s (NSB) Committee on\ndent public accountants agree that further Audit and Oversight to set priorities,\nguidance on the implementation of this identify options, and allocate resources\nrecommended standard is needed before for our ongoing implementation of the\nit is prudent to remove large amounts of CFO Act.\n\nSemiannual Report Number 16 9 NSF Office of Inspector General\n\x0cFUNDS PUT TO BETTER USE\nOne of OIG\xe2\x80\x99s fundamental objectives under the Inspector General Act is to help NSF\nincrease the cost-effectiveness of its expenditures. Specifically, the Inspector General\nAct requires that we \xe2\x80\x9cprovide leadership and coordination and recommend policies for\nactivities designed to promote economy, efficiency, and effectiveness in the\nadministration of\xe2\x80\x9d NSF\xe2\x80\x99s programs and operations. Such activities will be increasingly\nimportant as budgetary pressures mount.\n\nFee for Domain Name names map to Internet number addresses,\nRegistration Services Can Be which identify each computer interface\na Source of Future Federal\n attached to the Internet and are used in\nInvestment in Research\n routing information over the network.\nWe reviewed NSF\xe2\x80\x99s current arrangement\n Domain names are popular with Internet\nfor providing Internet domain name\n users because they are easier to\nregistration services through a\n remember than number addresses. Our\ncooperative agreement with a commercial\n review focused on\nenterprise (\xe2\x80\x9cthe Company\xe2\x80\x9d). For the\nInternet to operate, the origin and \xe2\x80\xa2 the need for continued federal\ndestination points for information routed oversight of Internet addresses and\nbetween computers over the network must\n \xe2\x80\xa2 the Company\xe2\x80\x99s use of the fee revenues\nhave unique addresses. The Internet\xe2\x80\x99s\n collected under the cooperative\nworld wide web addresses, such as\n agreement to create a pool \xe2\x80\x9cfor the\n\xe2\x80\x9cwww.fastlane.nsf.gov,\xe2\x80\x9d are now widely\n preservation and enhancement of the\nused by the general public. The part of\n \xe2\x80\x98Intellectual Infrastructure\xe2\x80\x99 of the\nthe address after the last period (\xe2\x80\x9cgov\xe2\x80\x9d in\n Internet in general conformance with\nthe above example) is called the \xe2\x80\x9ctop-level\n approved Program Plans.\xe2\x80\x9d\ndomain name,\xe2\x80\x9d and the part of the\naddress immediately to the left of the last\nperiod (\xe2\x80\x9cnsf\xe2\x80\x9d in the example) is called the\n\xe2\x80\x9csecond-level domain name.\xe2\x80\x9d Domain\n\n\n\n\nSemiannual Report Number 16 10 NSF Office of Inspector General\n\x0c Federal Investment in the Internet. Domain Name Registration. In\nThe government has made major January 1993, NSF entered into a 5-year\ninvestments in the creation of the Internet. cooperative agreement with the Company\nIn addition to developing operational to provide registration services. NSF\nprecursors and subsidizing their use by amended that agreement in September\nthe research and education community, 1995 and authorized the Company to\nfederal funding has supported research charge fees for its domain name\nand development of related technologies. registration services. Under this current\nFrom FYs 1990 through 1995, NSF arrangement, the Company collects fees\nsupport for fundamental research on from individuals registering in the top-\ncommunications theory and data networks level \xe2\x80\x9ccom,\xe2\x80\x9d \xe2\x80\x9cnet,\xe2\x80\x9d and \xe2\x80\x9corg\xe2\x80\x9d domains and\nas well as the provision of network access from NSF for registrations in the top-level\nfor the science and education \xe2\x80\x9cgov\xe2\x80\x9d and \xe2\x80\x9cedu\xe2\x80\x9d domains. The chart on\ncommunities exceeded $230 million. page 12 shows the total (solid circles)\n and percentage increase per month\nThe government will continue to invest in\n (monthly growth rate) (diamonds) in\nthe Internet. In the fall of 1996, the\n domain name registrations.\nPresident identified the need for a\n$500-million investment in the next Using conservative methods to estimate\ngeneration of the Internet over the next 5 future growth, we estimate that the\nyears. The contributions of NSF and the number of domain name registrations will\nother implementing agencies toward this reach about 4 million by mid-1999.\nnew initiative could total as much as\n Fees are not charged separately for\n$100 million in FY 1998.\n Internet number addresses. Therefore, all\n costs of the services supported by the\n fees fall only upon those registering\n names. Imposing number address fees\n would distribute this burden more equi-\n tably throughout the Internet community.\n\n\n\nSemiannual Report Number 16 11 NSF Office of Inspector General\n\x0c Projected Domain Name Registrations\n\n\n 4,500,000 25\n\n 4,000,000\n 20\n Total (circles)\n\n\n\n\n 3,500,000\n\n\n\n\n Growth Rate (diamonds)\n 3,000,000\n 15\n 2,500,000\n\n 2,000,000\n 10\n 1,500,000\n\n 1,000,000 5\n 500,000\n Total Registrations\n 0 0 Projected Total\n Jan-95\n\n Apr-95\n\n Jul-95\n\n\n\n Jan-96\n\n Apr-96\n\n Jul-96\n\n\n\n Jan-97\n\n Apr-97\n\n Jul-97\n\n\n\n Jan-98\n\n Apr-98\n\n Jul-98\n\n\n\n Jan-99\n\n Apr-99\n Oct-95\n\n\n\n\n Oct-96\n\n\n\n\n Oct-97\n\n\n\n\n Oct-98\n Growth Rate\n\n\n\n\nInternet users have complained that NSF If, after the period of the cooperative\nhas given the Company a \xe2\x80\x9cmonopoly.\xe2\x80\x9d agreement ends, the Company does not\nThe Company is acting pursuant to a operate under NSF direction and is\nlegally binding agreement with NSF, in a somehow able to continue to provide its\nmanner that NSF has scrutinized and current registration services and collect\ndeemed acceptable. The agreement has registration fees, nothing would prevent\nnot conveyed any authority to the the Company from using its de facto\nCompany that extends beyond the control of Internet addresses to reap\nduration of the agreement, which expires unreasonably high profits from granting\non September 30, 1998. The agreement access to the Internet. It has been\nlimits the Company\xe2\x80\x99s ability to impose proposed that domain names be\nregistration fees because any changes to registered by several different\nthe fee structure require NSF approval. organizations in other top-level domains\n\n\n\n\nSemiannual Report Number 16 12 NSF Office of Inspector General\n\x0cequivalent to the \xe2\x80\x9ccom,\xe2\x80\x9d \xe2\x80\x9cnet,\xe2\x80\x9d and \xe2\x80\x9corg\xe2\x80\x9d Application of Infrastructure\ndomains presently administered by the Development Fund. Under the current\nCompany, in order to ensure that ensuing cooperative agreement, 30 percent of the\ncompetition for customers among these revenue generated from domain name\nalternative registries will stimulate registration fees are deposited into a pool\nimproved services at lower prices. That for the preservation and enhancement of\nproposal contemplates that a single, the Internet. The Company has sug-\nprivate nonprofit entity will select the gested that these funds be turned over to\ncompanies to register domain names; a private foundation to support Internet\nanother proposal would allow a nonprofit improvement projects. In our view, the\nentity to allocate number addresses. In Company\xe2\x80\x99s proposal would entrust these\nour view, proposals that rely on one funds to an entity that would lack any\nprivate entity with the authority to select relevant experience and that could not be\nand confer legitimacy upon domain name held accountable for ensuring that the\nregistries or number address distributors application of the resources will best\ndo not allay concerns about abuse of serve the Internet community and the\nmarket power and anti-competitive public. We believe that NSF possesses\nbehavior. In light of the significant public the requisite understanding of the impor-\ninterest in the continuing stability of the tant technical issues and the confidence\nInternet and the large federal investments of the research community to apportion\nat stake, we recommended that federal such funds wisely among its Internet-\noversight of Internet addresses continue. related research programs through its\nAbsent continued NSF oversight of merit-based, peer-review processes to the\nInternet name and number addresses, we benefit of the nation as a whole as well as\nrecommended that NSF urge the Federal the Internet community. Therefore, we\nCommunications Commission to consider recommended that NSF receive these\nexercising its authority under the funds to support NSF program activities.\nCommunications Act of 1934, as We intend to examine the infrastructure\namended, to ensure impartial and pool accounts when we audit the\nequitable allocation of Internet addresses.\n\n\nSemiannual Report Number 16 13 NSF Office of Inspector General\n\x0cCompany\xe2\x80\x99s costs, revenues, and practices Administrative Options. We recom-\nunder the cooperative agreement. mended that NSF use the income from the\n\nWe recommended that NSF continue the administration of Internet addresses to\n\ncooperative agreement through the supplement direct federal appropriations,\n\nSeptember 30, 1998, expiration date. with the ultimate objective of making\n\nEven assuming that the Company\xe2\x80\x99s actual NSF\xe2\x80\x99s investment in network-related basic\n\ndeposits to the infrastructure pool reflect research, service, and development self-\n\nonly its current apparent collection rate of sustaining. We estimated that by\n\n50 percent, $60 million would be provided adopting our recommended approach,\n\nto NSF from the pool over the present NSF can generate more than $300 million\n\nterm of the agreement. Our recommen- over 5 years to invest in Internet-related\n\nded approach would ensure the continu- projects. With this income, NSF could\n\nation of federal oversight while long-term fund much of the next generation Internet\n\npolicy decisions are made, preservation of initiative or continued fundamental\n\nNSF audit rights, and appropriate use of research on communications and data\n\ntaxpayer funds. networks.\n\n We suggested different administrative\n options to achieve this fiscal objective,\n )XQGV WR EH 3XW\n WR %HWWHU 8VH including administration through a\n \xe2\x80\x9cperformance based organization\xe2\x80\x9d or an\n Funds the Office of Inspector General\n independent commission. Each of the\n has identified in an audit\n options could accommodate different\n recommendation that could be used\n ways of registering domain names. For\n more efficiently by reducing outlays,\n example, registration services could be\n deobligating funds, avoiding\n performed by several different\n unnecessary expenditures, or taking\n organizations competing for customers;\n other efficiency measures.\n alternatively, a single organization could\n\n\n\n\nSemiannual Report Number 16 14 NSF Office of Inspector General\n\x0cbe competitively selected to provide the not be appropriate for NSF to continue its\nservice at a reasonable profit for a fixed oversight of Internet address registration,\nperiod. All of these options would, and it referred our report for consideration\nhowever, ensure that federal oversight of by an informal interagency task force\nInternet addresses continues and that chaired by OMB. NSF explained that \xe2\x80\x9c[i]n\nincome generated from the administration the meantime, next-step solutions . . . are\nof Internet addresses would be used to being implemented,\xe2\x80\x9d citing the proposals\nsupplement the federal investment in discussed above that would create new,\nnetwork-related basic research, service, top-level domain name and Internet num-\nand development. To ensure that the ber address registries. We believe these\nInternet address allocation rules and fee proposals could result in a concentration\nstructure adopted by NSF are fair, we of market power and possible anti-\nsuggested that NSF follow procedures competitive behavior. As a result, we are\nthat facilitate public participation and open referring these matters to the Antitrust\ndecisionmaking. Division of the Department of Justice for\n analysis and suggested disposition.\nWe believe our recommendations would\nensure the protection of the public interest In its response, NSF also pointed out that\nin the resource; the availability of funds to the Company has proposed a new, non-\nsupport future network-related basic profit organization to use the funds \xe2\x80\x9cfor\nresearch, service, and development; the preservation and enhancement of\nfairness to the Internet community; and the \xe2\x80\x98Intellectual Infrastructure\xe2\x80\x99 of the\nfairness to the taxpayers. Internet . . . .\xe2\x80\x9d We are aware of the\n Company\xe2\x80\x99s proposal, and we question\nNSF\xe2\x80\x99s Response to Our\n whether it is either necessary or efficient\nRecommendations\n to create a new, nonprofit organization\xe2\x80\x94\nNSF responded to our report by stating\n and the associated administrative\nthat \xe2\x80\x9clong-term issues raised by [our]\n overhead\xe2\x80\x94in order to distribute funds,\nrecommendations may indeed require\n collected under an NSF cooperative\nadditional government oversight.\xe2\x80\x9d\n agreement, to support the development of\nNonetheless, NSF decided that it would\n Internet infrastructure. NSF\xe2\x80\x99s response\n\nSemiannual Report Number 16 15 NSF Office of Inspector General\n\x0calso gave no indication whether these NSF should ensure that the Company fully\nfunds\xe2\x80\x94generated under an NSF award\xe2\x80\x94 meets its obligation to provide funds to\nwould be distributed by relying on the the infrastructure pool through\nrigorous system of merit review that is the September 1998.\nhallmark of NSF\xe2\x80\x99s research investments.\n Reducing Electricity Costs Would\nWe believe NSF should instead receive\n Make More Funds Available for\nand distribute those funds to support Science\nprojects selected by NSF\xe2\x80\x99s well-\n NSF pays for electricity costs at a number\nestablished, merit-based peer review\n of institutions either because NSF pro-\nsystem.\n vides most or all of the institutions\xe2\x80\x99 sup-\nNSF added that if, by mutual agreement port or because of the large electricity\nwith the Company, NSF believes it would requirements of certain scientific instru-\nbe appropriate to end the cooperative mentation. A number of factors indicate\nagreement before its expiration date, it will that these costs can be reduced either by\ndo so. We remain especially concerned taking advantage of recent changes in the\nthat premature termination of the agree- electric power industry to obtain lower\nment will allow the Company to reduce rates or by implementing conservation\ngreatly the amount of funds it contributes measures to reduce electricity consump-\nto the infrastructure pool. The Company tion. We conducted a review of the\nagreed to contribute substantial monies potential mechanisms through which NSF\ntoward the future development of the grantees could lower their electricity costs\nInternet by funding the pool with 30 per- and the extent to which such measures\ncent of all revenues received from user could result in cost savings to NSF.\nfees. (We estimate that the infrastructure\n We found that NSF grantees may be able\npool would receive $60 million over the\n to obtain lower electricity rates by\nlifetime of the agreement.) We do not\nbelieve NSF should prematurely terminate \xe2\x80\xa2 contracting for delivery of low-cost\nthe cooperative agreement, which will, in electricity in states that will soon\nessence, waive the company\xe2\x80\x99s obligation require retail competition (\xe2\x80\x9cretail\nto meet that commitment. At a minimum, wheeling\xe2\x80\x9d),\n\nSemiannual Report Number 16 16 NSF Office of Inspector General\n\x0c\xe2\x80\xa2 obtaining the voluntary cooperation of lower rates in the hope of retaining the\n the local utility in transmitting less customer when competition begins. One\n expensive power from another source, NSF grantee negotiated a 17-percent rate\n or decrease from its local utility.\n\n\xe2\x80\xa2 negotiating with the local utility for In addition to seeking the lowest possible\n lower rates. rates, NSF grantees can save on elec-\n tricity costs by introducing or supple-\nRecent legislation at both the federal and\n menting energy conservation measures.\nstate levels is opening the electric power\n Significant energy conservation is a goal\nindustry to competition, but, at present,\n that most institutions should be able to\nthe implementation of retail competition\n reach. Three institutions that we reviewed\ndepends on state law. In certain states\n reported cost savings of 8 to 20 percent\nthat are about to require retail competition\n from their energy conservation programs.\nin the electric power industry, grantees\nmay be able to contract for delivery of We reviewed electricity costs at six NSF-\nlower-cost electricity. In states that have supported facilities that have either a line\nnot implemented retail competition in the item for electricity in their NSF award\nelectric industry, NSF grantees may be budgets or are centers for which NSF\nable to obtain less expensive power pays all or a large part of the operating\nthrough the voluntary cooperation of the costs, including electricity. We recom-\nlocal utility in transmitting less expensive mended that NSF require that these and\npower from another source. One other institutions for which NSF pays\nuniversity saved approximately 18 percent significant electricity costs evaluate the\nof its power costs with this type of feasibility and cost-effectiveness of elec-\narrangement. Finally, 45 states permit the tricity rate reduction and/or conservation\nnegotiation of rates with the local electric measures and incorporate in the awards a\nutility in certain situations. With the plan to minimize electricity costs.\nimminent availability of competitive\n Although it is not possible to determine\nsuppliers of electricity in many states,\n the precise value of the cost savings that\nlocal utilities may be willing to negotiate\n\nSemiannual Report Number 16 17 NSF Office of Inspector General\n\x0ccould be achieved by such a requirement, Choosing the Least Expensive\nestimates of savings from rate reductions Air Fare Will Stretch NSF Travel\n Funds\nrelated to the restructuring of the electric\nindustry are generally at least 10 percent. NSF can save more than $300,000 over 5\nFurther, conservation measures by years if its travelers use the least\ngrantees should also result in cost expensive available government airfares\nsavings of at least 10 percent, which is when departing from or returning to one of\nabout half of the reduction federal law the three airports in the Washington\nrequires for federal facilities by the year metropolitan area. The General Services\n2000. Although many institutions may be Administration, which negotiates airfares\nable to take advantage of both rate for the government, has negotiated with\nreductions and conservation measures, the carrier for airfares that vary for\nwe assumed that each institution would be departures from Baltimore-Washington\nable to use only one approach. As a International Airport, Washington National\nresult, we conservatively estimate cost Airport, and Washington-Dulles\nsavings of 10 percent. International Airport. We reviewed NSF\n travel for FY 1996 and found that travelers\nBased on this figure, the six institutions\n did not always use the airport with the\ncovered by our review should save\n least expensive airfare. Even after\n$2.2 million over a 5-year period\n offsetting the cost of increased ground\nbeginning in FY 1999 from implementation\n transportation, these travelers could have\nof all reasonable and cost-effective\n realized significant transportation cost\nelectricity savings measures.\n savings by choosing to travel from the\n\nNSF responded favorably to our airport offering the lowest airfare to their\n\nrecommendations. To help make grantee destination.\n\ninstitutions aware of opportunities to save\non electricity costs, NSF plans to post our\nreport, with links to other information on\nthis topic, on NSF\xe2\x80\x99s website.\n\n\n\nSemiannual Report Number 16 18 NSF Office of Inspector General\n\x0cWe identified 10 cities to which travel We recommended that NSF alert travelers\ncosts vary by between $100 and $500 per to the airfare variations and actively\nround trip depending upon which encourage travel from the airport that\nWashington area airport is used. Last provides the most cost-effective trans-\nyear, NSF paid for 400 trips between portation. NSF management agreed to\nWashington and these 10 cities without take steps to alert travelers of the airfare\ntaking advantage of the least expensive variations and suggest that authorizing\nairfare. NSF could reduce airfare costs by officials ask to be informed when a\nmore than $125,000 by encouraging its traveler\xe2\x80\x99s airfare is $100 or more than the\ntravelers to purchase the least expensive lowest fare. However, management\nairline tickets. After considering the indicated that it would not issue a policy\nadditional ground transportation costs requiring use of the lowest cost transpor-\nassociated with more distant airports (that tation because it does not consider such\noften have less expensive fares), we a policy to be either necessary or\nconservatively estimate that NSF travelers enforceable.\ncould net at least $60,000 savings per\nyear or more than $300,000 over 5 years.\n\n\n\n\nSemiannual Report Number 16 19 NSF Office of Inspector General\n\x0cOVERSIGHT OF NSF FEDERALLY FUNDED RESEARCH\nAND DEVELOPMENT CENTERS\nFederally Funded Research and Development Centers (FFRDCs) are organizations\nthat conduct research and development activities that are administered by an industrial\nfirm, a university, or a nonprofit institution and are substantially financed by the\ngovernment to either meet particular research objectives or provide major research\nfacilities for which NSF is the primary funding source. NSF is responsible for auditing\nfive FFRDCs. The magnitude of the annual NSF investment in these organizations,\nover $125 million, warrants our continued oversight.\n and final year but may be renewed without\nFederally Funded Research and\nDevelopment Center Made Errors recompetition for an additional 5 years.\nin Billing NSF for Research and\nEducation The FFRDC began work on the database\n in September 1992 to assist its\nWe reviewed the investments and\n researchers in providing support to the\nactivities related to a database of federal\n government. Essentially ready for\nresearch and development efforts created\n deployment by December 1995, the\nby one of NSF\xe2\x80\x99s FFRDCs. This FFRDC is\n database tracks federal research and\nadministered and operated by a large\n development investments and activities at\ncorporation that also administers several\n each federal agency by program and\nnon-NSF FFRDCs.\n award levels and by fiscal year. Pending\nSince the FFRDC began operations in resolution of the issues noted below, NSF\nSeptember 1992, its mission has been to modified the contract to allow the FFRDC\nprovide independent and unbiased to make the database available to federal\nresearch and analytical support on issues agencies for an annual subscription fee.\nof relevance to science and technology\n In August 1996, the FFRDC responded to\npolicy in the United States. NSF is\n NSF\xe2\x80\x99s request for a detailed description of\nresponsible for financial, management,\n database-related investments and activi-\nand audit oversight of the FFRDC\xe2\x80\x99s\n ties. The FFRDC asserted that the\ncontract. This contract, with an original\n database was not a deliverable on the\nbudget and subsequent modifications\n contract, and that it used $1.548 million of\nrepresenting over $18 million, is in its fifth\n\nSemiannual Report Number 16 20 NSF Office of Inspector General\n\x0cits own, rather than federal, funds to If NSF elects to accept the FFRDC\xe2\x80\x99s\ndevelop the database. Although the ownership of the database, we recom-\nFFRDC initially billed costs associated mended that the FFRDC reimburse NSF\nwith database development to the govern- for the database costs ($641,000) remain-\nment, the FFRDC asserts that this was an ing on the contract and pay interest on the\nerror that was subsequently corrected by federal funds used to develop the data-\ntransferring those costs from the contract base. We also recommended that the\nto the nonprofit corporation that operates cognizant audit agency determine whether\nthe FFRDC. Thus, the FFRDC\xe2\x80\x99s position database operating losses, if any, should\nis that the government did not pay for, be included in the FFRDC\xe2\x80\x99s overhead\ndoes not own, and cannot assert pool.\nownership or control over the database.\n In response to our report, the FFRDC\nWe conducted an independent review of suggested a \xe2\x80\x9cpartnering arrangement\xe2\x80\x9d\nthese issues. The evidence we reviewed with NSF to ensure that the database\nindicated that the database was con- continues as a viable and useful tool for\nsidered a deliverable on the contract; the federal agencies. This partnering\nFFRDC used federal funds to develop the arrangement would be structured to\ndatabase; and the database cost $2.189 address such issues as allocation of\nmillion to develop, which is $641,000 revenues, division of operating costs,\nmore than the $1.548 million cited by the assignment of intellectual property rights,\nFFRDC. responsibility for control, and treatment of\n user groups, such as the government,\n federal contractors, and federal grantees.\n NSF management is reviewing our report\n and the FFRDC response.\n\n\n\n\nSemiannual Report Number 16 21 NSF Office of Inspector General\n\x0cNational Research Center Could essential to carrying out its mission. By\nIncrease Funds Available for reducing costs and increasing revenue,\nScience\n the Observatory could increase funds that\nThe Observatory is a national research are available for science. Our recommen-\ncenter for radio astronomy, which is man- dations for savings and extra revenue will\naged and operated for NSF by a private, result in $1,172,465 over 5 years. Obser-\nnonprofit association of universities. The vatory management agreed with $324,215\nObservatory is headquartered in Virginia in savings and agreed to undertake\nwith observation facilities located studies or reviews of savings totaling\nnationwide. $721,945, but disagreed with proposed\n savings of $126,305.\nIn 1990, the Observatory\xe2\x80\x99s managing\norganization entered into a fixed-price Sick Leave Buy-Back Program. To\ncontract with a company to build a large discourage sick leave abuse and enhance\ntelescope at one of its observing sites. employee morale, the Observatory reim-\nThe Observatory expects construction to burses hourly employees annually for\nbe complete in 1998. During our review, unused sick leave. We recommended the\nwe learned that the contractor building the program\xe2\x80\x99s elimination, which would save\ntelescope had submitted claims to the $194,855 over 5 years. Observatory\nObservatory for $28.6 million more than management agreed to phase out this\nthe amount of the original fixed-price program.\ncontract. The Observatory\xe2\x80\x99s managing\n Cafeteria and Dormitory. The Obser-\norganization will use internal staff and a\nCPA firm to audit the claim. This audit vatory subsidizes the cost of food and\n\nbegan on March 3, 1997, and is expected lodging services provided to its employ-\n\nto take 3 to 6 months to complete. We ees and their families, visiting astron-\n\nplan to monitor the situation closely. omers, and guests. We recommended\n that the Observatory revise its pricing\nWe also found opportunities for the policies to reduce the current subsidy.\nObservatory to reduce costs or increase By revising its prices, we estimated that\nrevenue without eliminating services the observatory could save as much as\n\nSemiannual Report Number 16 22 NSF Office of Inspector General\n\x0c$725,550 over 5 years. Observatory The Newsletter. The Observatory\nmanagement disagreed with our recom- publishes an informational newsletter,\nmendation to begin charging employees which it mails free-of-charge to readers.\nfor meals at one of the remote sites, but Since the publication is already available\nagreed to study its operating procedures on the Internet, we recommended that the\nand expects to reduce the overall Observatory discontinue the paper\noperating loss. version. An Internet-only newsletter\n should save $21,160 over 5 years. The\n Visitor Center. We found that the\n Observatory intends to reduce the number\nObservatory\xe2\x80\x99s employee associations\n of paper versions as it gains experience\nearned income at the visitor center using\n with electronic distribution.\ngovernment resources and property\n(project income) and used the income to Renovation and Replacement\npay for unallowable costs. We Reserve. We noted that the building\nrecommended that project income only be lease for the Observatory\xe2\x80\x99s headquarters\nused for costs that are allowable under includes a provision that it fund a main-\nfederal awards. This should save the tenance reserve of $10,000 per year in\nObservatory as much as $122,700 over 5 addition to the building\xe2\x80\x99s maintenance\nyears. Observatory management agreed costs. We believe the maintenance\nto review visitor center operations. reserve would be unallowable under\n federal regulations. Under the lease\xe2\x80\x99s\n Recreation Facilities. The Observa-\n current provisions, it is possible that the\ntory provides employee recreation facili-\n Observatory could pay $50,000 over the\nties free-of-charge to attract and retain\n next 5 years without receiving any benefit.\nqualified employees and their families at\n We recommended that the Observatory\nthe isolated observing site. We recom-\n negotiate provisions within the lease that\nmended that the Observatory begin\n will discontinue payments to the main-\ncharging a small monthly fee. For exam-\n tenance reserve and instead allow it to\nple, a monthly $10 fee would provide an\n pay only for necessary renovations and\nadditional $58,200 over 5 years. The Ob-\n repairs. Observatory management\nservatory agreed to implement a user fee.\n\nSemiannual Report Number 16 23 NSF Office of Inspector General\n\x0cagreed with our recommendation and will recommendation, agencies have not\nmake efforts to remove the reserve decided to discontinue paying these fees.\nprovision from the lease. Since agencies are continuing to pay\n these fees, we recommended in\nGrantee\xe2\x80\x99s Refusal to Comply With\n Semiannual Report Number 15 that NSF\nCost Accounting Standards\nResults in Reduced Fees From the not allow the Center to charge to the\nGovernment government, through the Center\xe2\x80\x99s indirect\n\nDuring this reporting period, we followed cost pools, depreciation for equipment\n\nup on several issues related to an FFRDC purchased with federal management fees.\n\nadministered by a university consortium We also recommended that NSF require\n\n(the Center) for which we have federal that the Center account separately for\n\ncognizant oversight responsibility. These management fees paid by federal\n\nissues included following up on other agencies and review the uses of these\n\nagencies\xe2\x80\x99 and NSF management\xe2\x80\x99s fees. NSF management has not\n\nresponses to our prior reports\xe2\x80\x99 recommen- responded to our recommendations.\n\ndations regarding fees paid to the Center,\n Compliance With Cost Accounting\ndetermining the status of a contract pro-\n Standards. In Semiannual Report\nposal the Center submitted to the National\n Number 13 (page 7), we reported on the\nAeronautics and Space Administration\n Center\xe2\x80\x99s need to comply with Cost\n(NASA), and reviewing the Center\xe2\x80\x99s\n Accounting Standards (CAS). We\nproposal to purchase a new building.\n reported that CAS identifies 19 areas that\n\n Prior Reports Related to Fees. In an organization should address in its\n\nSemiannual Report Number 13 (page 7), accounting system. CAS also requires\n\nwe estimated that the government could that an organization prepare an annual\n\nsave $4.5 million over a 5-year period disclosure statement. The disclosure\n\n(about $900,000 annually) by eliminating statement describes an organization\xe2\x80\x99s\n\nthe fees its agencies pay to the Center. In accounting practices including, but not\n\nSemiannual Report Number 15 (page 14), limited to, the distinction between direct\n\nwe explained that, despite our and indirect costs and the organization\xe2\x80\x99s\n method of allocating costs.\nSemiannual Report Number 16 24 NSF Office of Inspector General\n\x0cNASA requested that, as the Center\xe2\x80\x99s included in the cooperative agreement\ncognizant federal agency, we review a requires that the Center obtain NSF ap-\ncontract proposal it received from the proval before it purchases any real pro-\nCenter. In Semiannual Report Number 14 perty. We reviewed the Center\xe2\x80\x99s proposal\n(page 14), we reported that the Center and determined that, although the\nrequested over $1.3 million in fees as part Center\xe2\x80\x99s estimates of savings did not\nof this contract proposal. In light of our reflect an analysis based on net present\nrecommendations, NASA chose not to values, the purchase of the building, in\naward the contract to the Center because lieu of continued leasing, would result in\nof the Center\'s refusal to comply with significantly reduced cost to the\nCAS. Instead, NASA awarded the government.\ncontract to a University. The Center\n Under the agreement with the Center,\nsubsequently submitted a proposal to the\n NSF is committed to pay the full costs of\nUniversity for a subcontract, which\n space associated with the Center\xe2\x80\x99s\nincluded $570,000 in management fees\n buildings without regard to the amount of\nfor the Center. This amount for fees is\n vacant space. However, in the new\n$730,000 less than the Center would have\n building, NSF will not be obligated to pay\nreceived from NASA under the original\n for vacant space. Therefore, we\ncontract proposal. The University expects\n supported the stipulation contained in the\nto fund the Center\xe2\x80\x99s proposal.\n letter from NSF approving the purchase\n Proposed Building Purchase. In that the Center not create vacant space in\nDecember 1996, the Center notified NSF its fully supported government buildings\nof its intent to purchase a $4.6 million by relocating staff from these buildings to\nbuilding near one of its main facilities. the newly purchased building.\nThe Center has been renting space in the\nbuilding (approximately 85 percent of the\navailable square footage). A provision\n\n\n\n\nSemiannual Report Number 16 25 NSF Office of Inspector General\n\x0cAUDITS RESULTING IN QUESTIONED COSTS\nWe select organizations and awards for review based on a preliminary assessment of\nwhether it appears these organizations would have difficulty complying with regulations\nthat govern the use of federal funds. By using risk assessment principles, we try to\nidentify those organizations or programs that have the greatest risk of financial\nirregularities and provide opportunities for the greatest dollar recoveries. This section\ndescribes audits of NSF awardees conducted in this reporting period that involve\nsignificant questioned costs.\n\nInstitutions Had Significant We found two problems with the\nShortfalls in Cost Sharing and Did institutions\xe2\x80\x99 management of these awards:\nNot Promptly Start Projects\n shortfalls in cost sharing and delays in the\nWe conducted a review of the Academic commencement of the projects. Although\nResearch Infrastructure program, a cross- institutions agreed to contribute to the\ndisciplinary program that provides awards costs of the renovation and acquisition of\nto renovate research facilities and pur- scientific instruments as a condition of the\nchase major scientific instrumentation. To awards, we found that over one-third of\nensure that our review included awards the institutions were significantly behind in\nthat were completed or in-progress, we meeting their cost-sharing commitments.\nlimited our review to awards made during At the time of our review, these\nFY 1994. We reviewed all 72 of the institutions had met only $7.8 million of\nfacilities\xe2\x80\x99 renovation grants, with budgets $11 million in cost-sharing commitments.\nthat totaled $55 million. In addition, we In addition to this shortfall, these\nreviewed 50 instrumentation awards with institutions will be required to contribute\ncombined budgets of $10 million. another $11.2 million toward their cost-\n sharing commitment as they complete\n these NSF-funded projects. We believe\n that, without NSF oversight, the cost-\n sharing commitments from institutions\n may not be fulfilled by the time the\n projects are completed. We recommen-\n ded that NSF monitor institutions to\n\n\nSemiannual Report Number 16 26 NSF Office of Inspector General\n\x0censure that they meet their cost-sharing Audits at School Systems and\nobligations. We also recommended that Educational Organizations Result\n in $1.4 Million in Questioned\nNSF require that any institutions unable to\n Costs\nmeet their total cost-sharing commitments\n As reported in previous semiannual\nadjust their claims against NSF to reflect a\n reports (Semiannual Report Numbers 13\ndecrease in total project costs and\n and 14 pages 13 and 17, respectively),\nmaintain their proportional contribution\n our surveys and audits of awardees under\ntoward the project. NSF agreed to\n the Statewide Systemic Initiative program\nmonitor the institutions and determine\n disclosed that improvements were needed\nwhether remedial actions are necessary.\n in subawardee monitoring and\nWe also found that 14 of the institutions subawardee cost-sharing contributions.\ndelayed initiation of the projects by 10 to Several of the subawardees were school\n26 months. Other NSF-funded research systems and other educational\ninstitutions that were prepared to begin organizations. Based on these findings,\nprojects when these awards were made we initiated surveys of selected school\nmay have been able to make more systems and other educational\neffective use of the funds. Accordingly, organizations to determine whether the\nwe recommended that NSF award grants awardee\xe2\x80\x99s accounting system and related\nonly to institutions that have demonstrated records required further auditing.\nthat they can promptly begin projects.\n During this reporting period, we\nNSF agreed that, while it is preferable for\n completed audit surveys of five school\ninstitutions to begin projects soon after the\n systems and three other educational\naward is made, this is not always\n organizations. These surveys disclosed\npossible.\n that the financial systems could\n adequately account for NSF funds.\n Accordingly, for these eight entities, no\n further auditing was required.\n\n\n\n\nSemiannual Report Number 16 27 NSF Office of Inspector General\n\x0cWe also completed audits of five school NSF management will resolve the findings\nsystems and five other educational resulting from the audits with the award\norganizations. The audits questioned recipients during the audit resolution\n$552,853 in claimed costs for the five process.\nschool systems and $936,706 for the\n Based on these audit results, we believe\nfive other educational organizations.\n additional audits of school systems and\nThese questioned costs consisted of other educational organizations are\n$400,994 in unsupported labor and justified, and we are implementing an\nrelated fringe-benefit costs, $219,039 in appropriate audit program.\nunsupported and unauthorized use of\nparticipant support costs, $259,965 in\nunsupported consultant costs, and\n$226,546 in indirect costs claimed in\nexcess of allowed amounts. Additional\nquestioned costs of $383,015 resulted\nfrom charges in excess of actual costs\nincurred, unsupported charges for\nmaterials, equipment, travel, and sub-\ncontracts and for cost-sharing shortfalls.\n\nSeveral of those institutions at which NSF\nawards are still active have fallen behind\nin meeting their cost-sharing\ncommitments. We believe it is likely the\ninstitutions will fall short of meeting these\ncommitments by $168,179. We have\ncharacterized these potential shortfalls as\n\xe2\x80\x9cat risk.\xe2\x80\x9d\n\n\n\n\nSemiannual Report Number 16 28 NSF Office of Inspector General\n\x0cUniversity Falls Short in Meeting under the cooperative agreement. We\nIts Commitment to Cost Share in also repeated a previous recommendation\nan Ice Core Custodial Facility\n that the University account for cost\nA major University did not fulfill its cost- sharing in separate accounts that are\nsharing commitment on a cooperative integrated in the University\xe2\x80\x99s accounting\nagreement. The University received a system.\n$1.7 million award under a cooperative\nagreement to build and manage a facility\nto be used for storing, curating, and\nstudying ice cores recovered from the\npolar regions of the world. The University\nwas selected for the award following a\ncompetition in which the predecessor\ninstitution, which had satisfactorily\nmanaged and stored the ice core samples\n 4XHVWLRQHG &RVW\nsince 1975, had made a significantly\n A cost resulting from an alleged\nlower-cost proposal to continue operating\n violation of law, regulation, or the\nthe existing facility.\n terms and conditions of the grant,\nThe cost-sharing commitment was one of cooperative agreement, or other\nthe factors NSF considered in selecting document governing the expenditure\nthe University for the award. We reported of funds. A cost is \xe2\x80\x9cquestioned\xe2\x80\x9d\nthat the University had not fulfilled its because it is not supported by\ncost-sharing commitment and recom- adequate documentation or because\nmended that NSF offset payments under funds have been used for a purpose\nfuture awards to the University by that appears to be unnecessary or\n$148,398 to recover the shortfall in the unreasonable.\nUniversity\xe2\x80\x99s cost-sharing commitment\n\n\n\n\nSemiannual Report Number 16 29 NSF Office of Inspector General\n\x0cAGENCY ACTION ON PRIOR AUDIT FINDINGS\nAward Funds Used to Pay State NSF decided not to implement our\nSales Taxes May Be Avoidable recommendations that NSF modify the\n In Semiannual Report Number 15 award general conditions to expressly\n(page 2), we reported on our review of prohibit payments of state sales taxes on\nstate sales tax payments charged to NSF purchases funded by NSF awards and\nawards. We estimated that, by adopting that NSF pursue federal and state\nour recommended approach, beginning in legislative remedies to exempt purchases\nFY 1997, NSF would be able to allocate under NSF awards from the imposition of\nmore than $20 million over 5 years for state taxes. Although NSF has the legal\nscience and engineering research and authority to do so, NSF does not believe it\neducation. should now deviate from government-wide\n cost principles that recognize the\nNSF responded to our recommendations\n allowability of state sales taxes.\nduring this reporting period. NSF agreed\nthat the award terms and conditions Without endorsing or opposing our recom-\nshould be modified to prohibit the pay- mendations, NSF informed OMB of these\nment of sales taxes under NSF awards for recommendations and requested that\nthose states that have exemptions for the OMB consider whether federal cost\npayment of sales taxes. NSF intends to principles should be changed to make\nimplement a specific policy statement on sales taxes unallowable. OMB replied\nthis issue and will ensure that information that its \xe2\x80\x9ccost principles circulars have\non existing exemptions is disseminated to consistently classified state sales and use\nthe greatest extent practicable. NSF also taxes as an allowable cost of Federal\nagreed to establish guidance applicable to awards . . . [and that] OMB is not currently\nlarge equipment purchases, which will considering any changes to its\nensure that program and grant officials government-wide policies on the\nconsider whether to avoid sales taxes by allowability of sales and use taxes.\xe2\x80\x9d\nhaving NSF retain title to the equipment.\n\n\nSemiannual Report Number 16 30 NSF Office of Inspector General\n\x0cSavings Planned Through\nElectronic Information\nDissemination\nIn Semiannual Report Number 15\n(page 5), we reported on our review of\ninformation dissemination at NSF,\nparticularly electronic publishing. We\nestimated that NSF could reduce the\nvolume of paper it disseminates by\n50 percent by the beginning of FY 2001,\nNSF could save over $1.5 million per year\nin printing and postage costs. We\nrecommended that NSF adopt this\nobjective as an agency-wide goal and\nformalize that commitment through the\nGovernment Performance and Results Act\n(GPRA) process with specific goals for\neach NSF division.\n\nIn this reporting period, NSF agreed that\nthe goal of reducing paper documents by\n50 percent within 3 years was achievable.\nTo meet the goal, NSF will review current\nplans for converting to electronic\ndissemination. NSF will consider whether\nto include it as a GPRA performance goal.\n\n\n\n\nSemiannual Report Number 16 31 NSF Office of Inspector General\n\x0cINVESTIGATIONS\n\n\n\n The Investigations Section is responsible for investigating\n violations of criminal statutes or regulations involving NSF\n employees, grantees, contractors, and other individuals conducting\n business with NSF. The results of these investigations are referred\n to federal, state, or local authorities for criminal or civil prosecution\n or to NSF\xe2\x80\x99s Office of the Director to initiate administrative\n sanctions or penalties.\n\n\n\n\nSemiannual Report Number 16 32 NSF Office of Inspector General\n\x0cEMBEZZLEMENT OR DIVERSION OF\nNSF GRANT FUNDS\nWe place a high priority on allegations involving embezzlement, diversion of grant or\ncontract funds for personal use, or other illegal use of NSF funds. Deliberate diversion\nof NSF funds from their intended purposes is a criminal act that can be prosecuted\nunder several statutes. We encourage universities and other grantees to notify NSF of\nany significant problems relating to the misuse of NSF funds. Early notification of\nsignificant problems increases our ability to investigate allegations and take corrective\nactions to protect NSF and its grantees.\n\nSmall Business Innovation research funds to the SBIR program in\nResearch Cases FYs 1996 and 1997, respectively. Based\nNSF\xe2\x80\x99s Small Business Innovation on this formula, NSF spent about $40\nResearch (SBIR) program is designed to million on SBIR awards in FY 1996 and\nstimulate technological innovation in the expects to spend approximately $50\nprivate sector, strengthen the role of small million in FY 1997. Eleven other federal\nbusinesses in meeting federal research agencies also provide funds to SBIR\nand development needs, and increase the companies.\ncommercial application of the results of\n During the reporting period, a Principal\nfederally supported research. NSF\n Investigator (PI) was convicted of fraud\nprovides funds to SBIR companies in two\n involving an NSF SBIR award. In\nphases. Phase I awards are for up to\n addition, we referred another SBIR case\n$75,000 and are provided to test the\n to the Department of Justice and are\nviability of research ideas. Companies\n continuing work on other SBIR matters.\nthat are successful in the first phase may\ncompete for Phase II awards. In Phase II,\ncompanies may receive up to $300,000 to\ndevelop their idea for commercial\napplication. NSF is required by statute to\nallocate 2 percent and 2.5 percent of its\n\n\n\n\nSemiannual Report Number 16 33 NSF Office of Inspector General\n\x0cJury Convicts PI in Federal to notify NSF of his change in level of\nDistrict Court effort, but that he did not do so because\nIn September 1990, NSF awarded a he feared that NSF would suspend and\n$250,000 Phase II SBIR grant to the PI\xe2\x80\x99s terminate the grant.\nwest coast company to conduct research\n After the PI stopped conducting research,\nfor the development of a \xe2\x80\x9csoft x-ray\xe2\x80\x9d laser.\n he obtained the remaining $210,000 in\nThe PI proposed to conduct the research\n grant funds awarded for the research by\nusing a highly specialized laser at a\n completing, signing, and submitting to\nprominent west coast research facility.\n NSF\xe2\x80\x99s Division of Financial Management\nWe initiated an investigation after NSF\n several requests for advance payment or\nauditors were unable to conduct a routine\n reimbursement for expenses incurred. In\naudit of the company\xe2\x80\x99s SBIR Phase II\n each request, the PI certified that \xe2\x80\x9call\ngrant because the PI would not respond to\n outlays were made in accordance with the\nrepeated requests to schedule the audit.\n grant conditions.\xe2\x80\x9d Based on these\nThe PI also failed to submit the required\n certifications, NSF wired grant funds to\nfinal report on his research activities.\n the company\xe2\x80\x99s bank account. In addition,\nOur investigation found that the PI only the PI completed and submitted Federal\nconducted research for 3 of the 24 months Cash Transactions Reports to NSF that\nrequired under this award. After the first certified that \xe2\x80\x9call disbursements have\n3 months of research, the PI discontinued been made for the purposes and\nhis research efforts and did not notify NSF conditions of the award\xe2\x80\x9d throughout the\nthat he had stopped conducting research. grant period. Our investigation\nThe Grant General Conditions require that determined that the PI did not use these\nthe PI notify NSF of such a dramatic funds to support research under the grant.\nchange in level of effort. During an Instead, the PI used the funds for a\ninvestigative interview, the PI stated that variety of other purposes, including\nhe intended to complete the research but personal living expenses, travel and\nhad been excluded from using the laser at equipment unrelated to the grant,\nthe research facility. The PI admitted to personal investments, and repayment of\nour agents that he knew he was required personal debts.\n\nSemiannual Report Number 16 34 NSF Office of Inspector General\n\x0cWe referred our findings to the U.S. briefed their coworkers on the importance\nAttorney\xe2\x80\x99s Office for the Northern District of many NSF procedures, including main-\nof California, and, on November 16, 1995, taining complete records of every grant,\nthe PI was indicted by a Federal Grand and processing only those forms that are\nJury. On January 7, 1997, the case was properly completed by grantees because\nbrought to trial in the Federal District properly maintained records and consis-\nCourt. NSF employees from the Division tent practices are essential to the govern-\nof Financial Management, the Division of ment\xe2\x80\x99s ability to prove its case in court.\nGrants and Agreements, the SBIR office This case also caused us to examine\nof the Engineering Directorate, and our NSF\xe2\x80\x99s current requirement that certain\noffice testified as witnesses for the records be retained for only 3 years.\nprosecution. We recommended that NSF change this\n policy to ensure the retention of such\nOn January 18, 1997, a federal jury found\n records to cover the statute-of-limitations\nthe PI guilty of three counts of 18 U.S.C.\n periods associated with criminal and civil\n\xc2\xa7 1001, False Statements, and three\n enforcement actions. NSF is taking steps\ncounts of 18 U.S.C. \xc2\xa7 1341, Wire Fraud.\n to extend the record retention period.\nThe jury concluded beyond a reasonable\ndoubt that, beginning in September 1991, TABLE 1:\nthe PI knowingly and intentionally INVESTIGATIVE ACTIVITY\nsubmitted false certifications to NSF, Active Cases From Previous 41\n Reporting Period\ncausing NSF to wire grant funds to the\n New Allegations 26\ncompany\xe2\x80\x99s bank account after the PI had\nceased working on the grant. Sentencing Total Cases 67\nhas been scheduled for May 1997. The\n Cases Closed After Preliminary\nPI faces a maximum sentence of 30 years 1\n Assessment\nimprisonment and a fine of $1.5 million. Cases Closed After 29\n Inquiry/Investigation\nNSF employees who testified at the trial\n Total Cases Closed 30\nreturned with a new appreciation for the\nrigors of proving facts in court. They Active Cases 37\n\nSemiannual Report Number 16 35 NSF Office of Inspector General\n\x0cCompany Submitted False Claims SBIR awardee under the NSF SBIR grant.\nto Obtain Payment From NSF The PI also received and deposited into\nIn order to achieve the SBIR program\xe2\x80\x99s his checking account U.S. Treasury\ngoal of promoting commercial innovation, checks representing the first two\nNSF requires that each SBIR award be payments for the NSF SBIR Phase I grant\nmade to a business rather than an while he was a full-time employee of the\nacademic institution and that the PI be university and before he began working\nprimarily employed by the business during on the SBIR award for the SBIR company.\nthe period of the award.\n By depositing the U.S. Treasury checks\nWe received an allegation that the final before he took the leave of absence\nreport for an NSF SBIR award described necessary to make the SBIR company\nwork that had been conducted by a eligible for the award and by submitting a\nuniversity, rather than by the SBIR final report that falsely presented his\ncompany. Our investigation found that university research as work performed\nthe PI, who was the owner of the under and for the SBIR award by the SBIR\ncompany, also had a long-standing company, the PI may have violated\nemployment relationship with a federal statutes.\nmidwestern university. The PI\'s SBIR\n We referred our findings to the U.S.\nPhase I final report described research\n Attorney to determine whether the PI\nperformed by the university for a non-NSF\n violated 31 U.S.C. \xc2\xa7 3729-3733, the civil\nfederal research project. The final report\n False Claims Act. If he is found liable, the\npresented this work\xe2\x80\x94which the PI and his\n government may recover treble damages\nuniversity colleagues had performed at\n as well as impose penalties of $10,000 for\nthe university before NSF made the SBIR\n each false claim.\naward and before the PI took a leave of\nabsence from his university position to\nwork with the SBIR awardee\xe2\x80\x94as if it were\noriginal research conducted at and by the\n\n\n\n\nSemiannual Report Number 16 36 NSF Office of Inspector General\n\x0cResults of Ongoing SBIR Reviews In addition, as members of a government-\n wide task force, we routinely meet with\nDuring this reporting period, we continued\n federal agents from other offices and\nto support the efforts of the U.S. Attorney\n Assistant U.S. Attorneys to discuss\nto resolve two cases involving companies\n investigative issues involving SBIR cases,\nthat received duplicate SBIR awards,\n and we are currently assisting various\npreviously reported in Semiannual Report\n agencies with several other ongoing SBIR\nNumbers 14 (page 43) and 15 (pages 28\n investigations.\nand 29). In one case, we found additional\nduplicate awards and referred that During our ongoing reviews of SBIR\nadditional evidence to the appropriate grants, we identified a 1994 project that\nU.S. Attorney. appeared to be funded by NSF and\n another federal agency. We found that\nOur office also identified three other\n the company notified NSF that it had\ncompanies that received duplicate SBIR\n received a duplicate award after the NSF\nawards from different federal agencies.\n award was made and that the company\nAs with previous cases of companies\n requested a change in scope for the NSF\nreceiving duplicate SBIR awards, these\n grant. We found that no action had been\ncompanies were able to receive duplicate\n taken on the company\xe2\x80\x99s request and that\nawards for the same projects because\n NSF still listed the grant as active. In\nthey did not reveal pending proposals in\n 1994, the first and second payments\ntheir duplicate proposals sent to other\n totaling $42,244 for NSF\xe2\x80\x99s SBIR grant\nfederal agencies. Our reviews found that\n were automatically sent to the company\nall three companies had submitted\n after the award letter was mailed. After\nproposals to NSF and that two companies\n we recommended that NSF initiate\nreceived NSF SBIR awards. However,\n immediate action, NSF terminated the\nthe duplicate awards that we identified\n $63,367 grant and requested that the\nwere from other federal agencies, not\n company return the $42,244 that had\nNSF. We referred these matters to other\n been paid to the company.\nOffices of Inspector General and will work\nwith those offices to resolve these cases.\n\n\nSemiannual Report Number 16 37 NSF Office of Inspector General\n\x0cOTHER INVESTIGATIVE MATTERS\n occupied the same positions at NSF and\nImproper Hiring Practices in NSF\nDirectorate Lead to Increased had the same responsibilities before and\nCost and Conflicts of Interests after their positions were converted to the\n\nIn early 1996, NSF\xe2\x80\x99s Office of the Director FFRDC.\n\ninstructed an NSF directorate to reduce\n As a result of these staffing arrangements,\nthe number of individuals then employed\n NSF pays about 71 percent more for the\ndirectly by the directorate (categorized as\n same services by the same individuals\nfull-time equivalent [FTE] employees) and\n than it had when the individuals were NSF\nto reduce the number of employees then\n FTEs or IPAs. Most of the cost increase\nassigned from other organizations to the\n results from indirect costs that were not\ndirectorate on a temporary basis (under\n paid when these individuals were NSF\nthe Intergovernmental Personnel Act\n FTEs or IPAs.\n[IPA]) in order to operate within the\ndirectorate\xe2\x80\x99s allocation. To do so, the The arrangement also led to violations of\ndirectorate arranged to convert two conflict-of-interests laws and regulations.\ntemporary positions previously held by During the 4-month period between\nNSF FTEs, and one position held by an learning of the upcoming conversion and\nIPA at NSF, to non-NSF positions funded its occurrence, the IPA assignee, who\nby an FFRDC that receives most of its serves as a director of an organization,\nfunding from the directorate. By participated personally and substantially\namending a cooperative agreement, the in matters involving the FFRDC, with\ndirectorate provided the FFRDC with which he had an arrangement concerning\nadditional funds to cover the salaries, prospective employment. Instead of\nbenefits, and indirect costs for the three recusing himself, the office director\npositions. The FFRDC then entered into continued to provide recommendations\nemployment arrangements with the and advice on matters in which the\nindividuals and assigned them back to FFRDC had a financial interest.\nNSF the next day. The individuals\n\n\nSemiannual Report Number 16 38 NSF Office of Inspector General\n\x0cIn addition, in 1994, a division within the Forged Letters of\nsame NSF directorate entered into an IPA Recommendation\nagreement with the same FFRDC to staff A scientist submitted forged letters of\nan associate program officer position. recommendation to NSF as part of the\nThe FFRDC paid the program officer\xe2\x80\x99s application materials for NSF\xe2\x80\x99s Alan T.\nsalary and was technically his employer Waterman Award, a prestigious research\nwhile he was assigned to NSF. However, grant worth $500,000 over 3 years. Our\nthe program officer never worked at the investigation found that the scientist\nFFRDC, and had no prospect of returning produced the nomination form and three\nto the FFRDC upon leaving NSF. For this letters of recommendation, forged the\nreason, he did not consider himself to be names of his former colleagues on these\naffiliated with it for conflict purposes. documents, and then submitted them to\nInstead of recusing himself, the program NSF. We also found that this scientist\nofficer participated in the review and submitted a false document in a proposal\napproval process for 12 proposals that for the NSF CAREER Award that claimed\nresulted in 8 awards to the FFRDC. he would be collaborating with a former\n colleague when, in fact, that former\nWe referred these matters to the\n colleague had not agreed to any future\nDepartment of Justice, as required by law.\n collaboration. The CAREER program is\nThe Department determined that NSF\n an NSF-wide activity that encompasses all\nshould resolve the matters\n areas of research and education in\nadministratively and declined prosecution.\n science and engineering.\nAccordingly, we referred the matter to\nNSF\xe2\x80\x99s Office of the Director to take The scientist attempted to obstruct our\nappropriate corrective action. investigation. During an investigative\n interview with our agents, the scientist\n admitted to producing the false docu-\n ments, but stated that his colleagues had\n given him authority to write the references\n and sign their names. After the interview,\n the scientist contacted the former\nSemiannual Report Number 16 39 NSF Office of Inspector General\n\x0ccolleagues whose names he forged and semester, the PI offered the graduate\nasked them to state that they had student a $1,500 research assistantship\npreviously given him authority to write the on the condition that she return $700 of\nreferences and sign their names when, in the funds to him. The graduate student\nfact, they had not done so. We referred accepted the assistantship and provided a\nthis matter to the appropriate U.S. $700 check to the PI because the student\nAttorney\xe2\x80\x99s Office, and a federal grand jury feared retaliation from the PI, who was the\nindicted the scientist for violating 18 student\xe2\x80\x99s advisor.\nU.S.C. \xc2\xa7 1001, False Statements, and 18\n The joint investigation found that the\nU.S.C. \xc2\xa7 1505, Obstruction of\n source of the kickback came from state\nProceedings Before Departments,\n grant funds and not federal funds. There-\nAgencies, and Committees.\n fore, we referred the evidence of the kick-\nPI Obtained a Kickback From back to state law enforcement officials.\nGraduate Student\n We also found that the PI misused NSF\nWe conducted an investigation with the\n funds by paying graduate students for\nFederal Bureau of Investigation\n research not directly related to the NSF-\nconcerning a PI at a western university.\n funded projects. The PI was able to\nThe PI\xe2\x80\x99s research was supported by an\n misuse NSF funds by concealing grant\nNSF engineering grant and several state\n financial expenditure reports from the co-\ngrants. We found that the PI promised\n PIs. The university conducted a review of\ngraduate students financial assistance in\n the PI\xe2\x80\x99s use of grant funds, treatment of\nthe form of research assistantships and\n graduate students, and other issues, and\noften failed to provide the promised\n refused to renew the PI\xe2\x80\x99s appointment as\nassistance. For one graduate student, the\n an Associate Professor. In addition, the\nPI did not provide research assistantships\n university removed the PI from the NSF\nthat he promised to the student for two\n grant and voluntarily returned $6,500 to\nconsecutive academic semesters. This\n the NSF grant. During our investigation,\nsituation caused the graduate student to\n the PI left the United States and has not\nwork in the university cafeteria to meet\n returned.\nher financial obligations. In the third\nSemiannual Report Number 16 40 NSF Office of Inspector General\n\x0cEmbezzlement of Federal Funds Settlement of Civil Complaint to\nby University Administrators Stop Fraudulent Scholarship\n Program\nA joint Department of Defense OIG and\nNSF OIG investigation found that 3 In Semiannual Report Numbers 14 (page\n\nuniversity administrators embezzled over 46) and 15 (page 31), we reported that we\n\n$90,000 by submitting over 600 false were working with the U.S. Postal\n\npetty cash vouchers through a Inspector Service to investigate an\n\nsouthwestern university\xe2\x80\x99s accounting individual who had solicited money from\n\nsystem. The administrators produced students by falsely claiming that his\n\nfake invoices that were submitted to the organization, \xe2\x80\x9cNational Science Program,\xe2\x80\x9d\n\nuniversity as support for the petty cash could award or obtain academic\n\nvouchers. The administrators randomly scholarships. Despite signing an\n\ncharged the false vouchers to different agreement with the U.S. Postal Service in\n\nresearch accounts to conceal the amount 1994 to discontinue such activities, the\n\nof cash that the administrators were individual persisted in this conduct. In\n\nreceiving through the false vouchers. 1996, the Federal Trade Commission\n\nAbout $40,000 was charged to NSF joined our investigation and filed a civil\n\ngrants and Department of Defense complaint against the individual and an\n\ncontracts that had been awarded to the associate based on their ongoing\n\nuniversity. We referred our findings to the misrepresentations.\n\nappropriate U.S. Attorney\xe2\x80\x99s Office.\n\n\n\n\nSemiannual Report Number 16 41 NSF Office of Inspector General\n\x0cDuring this reporting period, the none of the cases showed a pattern of\nindividuals agreed to a settlement. The behavior that would signify criminal intent\nagreement requires the individuals to pay to defraud. In all three cases, the PIs\na combined monetary penalty of $19,000 received two sets of overlapping, but not\nand to forfeit $4,440 obtained through the identical, reimbursements. The PIs each\nscheme to the government for stated that they were unsure if the host\nredistribution to the students who had institution would cover their expenses and\nbeen defrauded. The individuals are also that they intended to repay the NSF\npermanently restrained from engaging in grants once they received payment from\nor assisting others engaged in scholarship the host organization. Each PI admitted\nservices businesses unless they first that he mistakenly forgot to reimburse his\nobtain combined performance bonds of NSF grant after receiving the payments\n$350,000. from the host organization. In all three\n cases, the PIs reimbursed their respective\nDuplicate Travel Reimbursements\n NSF grant after we initiated our investi-\nby PIs\n gation. About $3,000 was reimbursed for\nDuring this reporting period, our office\n these duplicate payments. We referred\nconducted a review of travel charges\n these cases to the Department of Justice,\nmade to several NSF grants. We found\n which declined prosecution.\nthree unrelated cases involving PIs who\nreceived travel reimbursements from NSF Agency Agrees to Post Firearm\ngrants and from another organization for Warnings\nthe same travel expenses. In each case, A federal criminal statute, 18 U.S.C.\nthe PI submitted a travel voucher against \xc2\xa7 930, generally bars non-law\nan NSF grant and did not reveal that he enforcement personnel from bringing\nhad also submitted and received a firearms or other dangerous weapons\nreimbursement for travel expenses from onto federal premises. The statute\nthe organization hosting the meeting to requires that notice of the statutory\nwhich he traveled. Our investigations prohibition be posted conspicuously at\ndetermined that, although each PI each public entrance. Successful\nreceived duplicate travel reimbursements, prosecution by the Department of Justice\nSemiannual Report Number 16 42 NSF Office of Inspector General\n\x0cof persons who endanger NSF employees to, and to facilitate appropriate\nby bringing weapons onto NSF premises enforcement action by, the agency.\nmay therefore depend, in part, on posting\n We found instances in which certifications\nof the required notices. We recommen-\n were signed by someone other than the\nded that NSF post these notices, and the\n person identified on the cover page as the\nagency agreed to do so.\n signatory. In some instances, there was\nImproper Signatures on Proposal no indication that the certification was\nCover Sheets signed by proxy. To assess the frequency\nWe reviewed the agency\xe2\x80\x99s practice of this practice, we reviewed certifications\nconcerning certification signatures on of PIs, co-PIs, and AORs on proposal\nproposal cover sheets. PIs and co-PIs cover sheets from a random sample of\ncertify on cover sheets to the accuracy of 114 proposals. We identified 114 PIs, 78\nfactual statements. Authorized co-PIs, and 114 AORs\xe2\x80\x94306 signatures in\nOrganizational Representatives (AORs) all. We found 19 anomalies. These\ncertify to provisions concerning debt, included missing signatures, substitute\ndebarment and suspension, lobbying signatures, and instances in which the PI\nactivities, drug-free workplace, financial and AOR were the same person.\nconflicts of interests, and institutional\n We recommended that NSF take steps to\ncompliance with award terms and\n ensure that all certifications be signed by\nconditions. The cover sheets warn that\n the individual identified as the certifying\nwillful provision of false information or\n party; that proposals with improper sig-\nconcealment of a material fact is a viola-\n natures not be processed until authentic,\ntion of criminal law (18 U.S.C. \xc2\xa7 1001).\n original signatures are received; and that\nThis warning is intended to alert signa-\n PIs and co-PIs generally not be permitted\ntories to their personal responsibility for\n to sign certifications intended for AORs.\nthe accuracy of the information provided\n\n\n\n\nSemiannual Report Number 16 43 NSF Office of Inspector General\n\x0cOur recommendations were made to presence of the PI/PD, co-PI/PD, and\nNSF\'s Office of Information and Resource AOR signatures. Nonconformance would\nManagement (IRM) and Office of Budget, result in the rejection of the proposal.\nFinance and Award Management (BFA).\n However, IRM plans to make no judgment\nIRM agreed that subsequent to the\n about the appropriateness of the\nannouncement of a policy change, the\n signatures or whether those signatures\nProposal Processing Unit will begin to\n were original. We have not yet received a\nreview proposal cover sheets for the\n response from BFA to our other\n recommendations.\n\n\n\n\n TABLE 2:\n INVESTIGATIVE STATISTICS\n New Referrals 9\n\n Referrals From Previous Reporting 7\n Period\n\n Prosecutorial Declinations 8\n\n Indictments (including criminal 1\n information)\n\n Criminal Convictions/Pleas 1\n\n Civil Settlements 1\n\n Administrative Actions 1\n\n Investigative Recoveries* $96,267\n\n *Investigative Recoveries comprise civil penalties and\n criminal fines and restitutions as well as specific cost\n savings for the government. In this reporting period,\n Investigative Recoveries include government-wide\n recoveries on 10 cases where NSF was the lead\n investigative agency.\n\n\n\n\nSemiannual Report Number 16 44 NSF Office of Inspector General\n\x0c OVERSIGHT\n\n The Office of Oversight focuses on the science-engineering-education-\n related aspects of NSF operations and programs. It oversees the\n operations and technical management of the approximately 200 NSF\n programs that involve about 53,500 proposal and award actions each year.\n The Office conducts and supervises compliance, operations, and\n performance reviews of NSF\'s programs and operations; undertakes\n inspections and evaluations; and performs special studies. It also handles\n all allegations of nonfinancial misconduct in science, engineering, and\n education and is continuing studies on specific issues related\n to misconduct in science.\n\n\n\n\nSemiannual Report Number 16 45 NSF Office of Inspector General\n\x0cMISCONDUCT IN SCIENCE\nAND ENGINEERING\nNSF\xe2\x80\x99s Definition of Misconduct in NSF\xe2\x80\x99s definition of misconduct in science\nScience proscribes acts that constitute\nIn the interest of safeguarding the federal \xe2\x80\x9cfabrication, falsification, plagiarism, or\ngovernment\xe2\x80\x99s vital interest in the integrity other serious deviation from accepted\nof research conducted with government practices in proposing, carrying out, or\nsupport, the President\xe2\x80\x99s Office of Science reporting results from activities funded by\nand Technology Policy (OSTP) has under- NSF.\xe2\x80\x9d The core of the definition is the\ntaken an assessment of the advisability of \xe2\x80\x9cserious deviation\xe2\x80\x9d clause: to constitute\nuniform procedures for handling allegations misconduct in science, an act must\nof \xe2\x80\x9cresearch misconduct\xe2\x80\x9d by all federal seriously deviate from accepted practices\nagencies that fund science. OSTP sought in the scientific community. Even an\nthe views of the National Science alleged act of fabrication, falsification, or\nFoundation\xe2\x80\x94and in particular the NSB\xe2\x80\x94\non a proposal that included a uniform\ndefinition of \xe2\x80\x9cresearch misconduct.\xe2\x80\x9d It 16)\xc2\xb76 \'(),1,7,21 2)\nwas recognized by OSTP and NSF that 0,6&21\'8&7 ,1 6&,(1&( $1\'\n (1*,1((5,1*\nthe construct of \xe2\x80\x9cresearch misconduct\xe2\x80\x9d on\n Fabrication, falsification, plagiarism,\nwhich the OSTP request was based was\n or other serious deviation from\nnarrower than NSF\xe2\x80\x99s use of the term\n accepted practices in proposing,\n\xe2\x80\x9cmisconduct in science.\xe2\x80\x9d The NSB and\n carrying out, or reporting results from\nNSF\xe2\x80\x99s Director reaffirmed the importance\n activities funded by NSF; or retaliation\nfor the agency of the broader coverage of\n of any kind against a person who\nmisconduct in science.\n reported or provided information\n about suspected or alleged\n misconduct and who has not acted in\n bad faith.\n\n\n\nSemiannual Report Number 16 46 NSF Office of Inspector General\n\x0cplagiarism will not be considered to be We recently published The\nmisconduct in science unless, in a Constitutionality of the \xe2\x80\x9cOther Serious\nparticular case, the act seriously deviates Deviation from Accepted Practices\xe2\x80\x9d\nfrom the ethical norms of the relevant Clause in JURIMETRICS, the American Bar\nscientific community. Association\xe2\x80\x99s Journal of Law, Science\n and Technology (Vol. 37, winter 1997,\nThe \xe2\x80\x9cserious deviation\xe2\x80\x9d clause provides a\n pages 149-166). In this article, we point\nlegal basis for NSF to take action in all\n out that comprehensive conduct\ncases of serious breaches of scientific\n standards similar to the serious deviation\nethics pertaining to NSF-funded\n clause are used by many professions and\nactivities, including cases that cannot be\n have been uniformly upheld by the\ncategorized as fabrication, falsification, or\n courts. For example, teachers and\nplagiarism. Fabrication, falsification, and\n professors\xe2\x80\x94who constitute the majority\nplagiarism are merely examples of\n of the recipients of NSF grant funds\xe2\x80\x94are\nmisconduct; the phrase \xe2\x80\x9cserious deviation\n generally subject to comprehensive\nfrom accepted practices\xe2\x80\x9d provides a\n community standards of conduct.\ncoherent context for those and other\n Teachers can be dismissed for \xe2\x80\x9cconduct\nexamples of misconduct in science. The\n unbecoming a teacher . . . or other good\nclause relies on the standards of the\n cause,\xe2\x80\x9d while professors are subject to\ncommunity. As a former chairman of the\n sanction for \xe2\x80\x9cfailure to maintain standards\nNSB, the governing body of NSF, stated:\n of sound scholarship and competent\n The phrase . . . \xe2\x80\x9cserious deviation from teaching, or gross neglect . . . .\xe2\x80\x9d When\n accepted practices\xe2\x80\x9d is a significant\n concession to the scientific community.\n assessing a professor\xe2\x80\x99s conduct under\n It essentially invites that community to the latter standard, a federal appellate\n establish a form of \xe2\x80\x9ccommon law\xe2\x80\x9d\n governing the behavior of its members court concluded that the \xe2\x80\x9cacademic\n in the legitimate use of public funds. It\n community\xe2\x80\x99s shared professional\n would be well for the scientific\n community to accept that invitation and standards\xe2\x80\x9d supplied fair notice of what\n work on this broader issue rather than\n endlessly debating the more limited conduct was prohibited.\n issue.\n\n\n\n\nSemiannual Report Number 16 47 NSF Office of Inspector General\n\x0cIn NSF\xe2\x80\x99s definition of misconduct in At the February 1997 meeting of the\nscience, the community standard of NSB, the NSB reviewed the experience of\nethical practices within the scientific NSF in handling misconduct in science\nprofession gives content to the serious matters. Subsequently, the NSB Chairman\ndeviation clause under specific and NSF\xe2\x80\x99s Director stated NSF\xe2\x80\x99s\ncircumstances. The serious deviation preference to maintain, with possible\nclause, as defined by the scientific minor modifications, the definitions and\ncommunity\xe2\x80\x99s ethical professional processes that have served the agency\npractices, is no less definite than the well over the past decade. NSF also\ncommunity standards imposed by other expressed willingness to continue\nprofessions and upheld by courts in discussions in this area in the interests of\nnumerous cases. a common federal approach.\n\nThe proposed uniform definition would\ndelete the serious deviation clause from\nthe definition of misconduct in science.\nWe believe the proponents of this\nproposal do not recognize the importance\nof\xe2\x80\x94or the firm legal basis for relying\nupon\xe2\x80\x94the practices of the scientific\ncommunity to establish what constitutes\nmisconduct in science. We believe this\nproposal should be reassessed based on\nthese considerations.\n\n\n\n\nSemiannual Report Number 16 48 NSF Office of Inspector General\n\x0cCASES LEADING TO INVESTIGATION REPORTS SENT TO\nTHE OFFICE OF THE DIRECTOR\nPlagiarism, Violation of After evaluating the evidence adduced by\nConfidential Merit Review, and the university as well as evidence we\nObstruction of Agency\n obtained, we sent the subject a draft\nProceedings\n investigation report recommending that\nA subject who committed a relatively\n the subject be found to have committed\nmodest instance of plagiarism then\n misconduct in science. Shortly thereafter,\nrendered his situation far more serious by\n the subject presented us with new\nendeavoring to obstruct our investigation.\n evidence that he said proved that he had\n\nWe received an allegation that the written the text at issue before he\n\nsubject, a university professor, had obtained the source document. If the\n\npublished a paper that contained material evidence were genuine, it would indeed\n\nplagiarized from a source document. We have proven the subject to be innocent.\n\nreferred the allegation to the university for However, we investigated and determined\n\ninvestigation. The university\xe2\x80\x99s investi- that the new evidence provided by the\n\ngation committee unanimously concluded subject had been faked. The subject\n\nthat the subject had knowingly plagiarized ultimately admitted that the evidence was\n\nfrom the source document. We found the fake, but he claimed that an employee\n\nuniversity\'s conclusion to be amply faked it without his knowledge.\n\nsupported by a preponderance of the\n Considering all of the evidence, we\nevidence.\n concluded that the subject was respon-\n sible for the employee\xe2\x80\x99s preparation of the\n fake evidence and knew that the new\n evidence was fake when he submitted it\n and vouched for its authenticity.\n\n\n\n\nSemiannual Report Number 16 49 NSF Office of Inspector General\n\x0cIn assessing the subject\'s state of mind as Programmer Falsifies Data\nwell as the appropriate NSF action, we\n During a university misconduct inquiry, a\nconsidered certain prior acts by the\n computer programmer working on an\nsubject. We determined that the subject\xe2\x80\x99s\n NSF-sponsored project admitted that he\nprior acts supported the conclusion that\n had falsified data. Confronted with strong\nhe knowingly obstructed the investigation\n evidence of his misconduct, he confessed\nin our case and underscored the need for\n that he had designed programs he wrote\nstrong action by NSF. We concluded that\n to alter experimental results and make the\nthe subject\xe2\x80\x99s pattern of conduct\n results confirm hypotheses that\ndemonstrated that he lacked the \xe2\x80\x9cpresent\n researchers on the project sought to test.\nresponsibility\xe2\x80\x9d required for those with\nwhom NSF does business. We The programmer skillfully hid his\nrecommended that the Deputy Director act misconduct. He wrote and distributed\ndecisively to protect federal funds by many error free programs for examination\nterminating the subject\'s current NSF and use by members of the research\naward and debarring him government- group. At the same time, he falsified data\nwide for 3 years. We also recommended by altering the system software that was\nthat the Deputy Director work with the part of the routine functioning of the\nuniversity to minimize the effect of these research group\xe2\x80\x99s computers. It would\nactions on the subject\'s graduate students have been highly unusual for researchers\nand postdoctoral research associates. on the project to examine the system\nThe Deputy Director is reviewing our software for errors. By falsifying the data\nrecommendations. in this way, the programmer expected to\n prevent the project\xe2\x80\x99s researchers from\n detecting his misconduct.\n\n\n\n\nSemiannual Report Number 16 50 NSF Office of Inspector General\n\x0c When the programmer confessed, he took After the programmer\xe2\x80\x99s confession, the\n full and sole responsibility for his actions university, acting in accordance with its\n and expressed regret about what he had misconduct procedures, found that the\n done. He explained that his falsifications programmer had committed misconduct\n were prompted by a long-standing and terminated his employment. The\n psychiatric disorder that had caused him university then investigated further to\n to form an irrational commitment to verify that the programmer had confessed\n proving one of the research group\xe2\x80\x99s to the full extent of his falsifications and\n hypotheses. that he alone was responsible for the\n misconduct. The PIs and their research\n Some researchers had previously raised\n group engaged in a series of replication\n suspicions about numerous, uncharac-\n studies to assess the extent of the\n teristic errors in the programmer\xe2\x80\x99s work.\n programmer\xe2\x80\x99s falsifications. They sought\n Their suspicions led to an earlier\n to determine whether the scientific\n misconduct inquiry that exonerated the\n findings of studies in which the program-\n programmer. During that inquiry, the\n mer participated were correct. The uni-\n programmer lied convincingly to\n versity appointed a faculty member\n investigators and continued to write\n unaffiliated with the project to monitor the\n programs that falsified data.\n\n TABLE 3:\n MISCONDUCT CASE ACTIVITY\n FY 1996 FY 1997\n Last Half First Half\n\nActive Cases From Prior Period 68 59\nReceived During Period 25 22\n\nClosed Out During Period 34 23\n\nIn-Process at End of Period 59 58\n\nCases Forwarded to the Office of the Director During Period 2 2\n\nCases Held in the Office of the Director More Than 6 Months 0 2*\n* These cases are described in Semiannual Report Number 15, pages 37 through 41.\n\n\n Semiannual Report Number 16 51 NSF Office of Inspector General\n\x0cgroup\xe2\x80\x99s efforts. The monitor concluded the group included in its progress report\nthat the programmer\xe2\x80\x99s confession was to NSF and presented at a scientific\ngenerally accurate, though not reliably conference. The misconduct substantially\nprecise in its details. delayed the progress of the research and\n involved several researchers in months of\nFrom the evidence the university sent us,\n effort to replicate the group\xe2\x80\x99s findings.\nwe concluded that the programmer acted\nwillfully and that his carefully planned We recommended that NSF\xe2\x80\x99s Deputy\ndeceptions indicated that he knew that he Director find that the programmer\nwas doing wrong. As an experienced committed misconduct in science and\nprogrammer with a strong interest in the seek to enter into a voluntary exclusion\nsubstance of the research, he should agreement with the programmer whereby\nhave been well aware of how offensive the programmer excludes himself from\ndata falsification is to the scientific employment in federally funded projects\ncommunity\xe2\x80\x99s ethical standards. for a minimum of 3 years. We recom-\n mended that, for 2 years after this period,\nWe concluded that this was an unusually\n the programmer agree, before accepting\nserious case of misconduct. The\n employment on a federally sponsored\nprogrammer\xe2\x80\x99s actions undermined the\n project, to inform the head of the project\nmain purpose for which NSF funds\n and the federal official responsible for it of\nresearch\xe2\x80\x94to advance scientific\n NSF\xe2\x80\x99s misconduct finding and the circum-\nknowledge. The programmer\xe2\x80\x99s\n stances surrounding it. We believe this\nfalsifications did not merely alter a few\n information, by alerting the persons\ndata points or strengthen the case for a\n responsible for federal projects to the\nhypothesis that was already well\n risks involved in employing the program-\nsupported with genuine data. His\n mer, would enable them to protect the\nfalsifications were designed to confirm a\n federal interest in preventing misconduct.\npreviously untested scientific hypothesis.\nThey prompted the research group to\ndraw significant scientific conclusions that\n\n\n\nSemiannual Report Number 16 52 NSF Office of Inspector General\n\x0cCASES CLOSED IN THIS PERIOD WITH NO INVESTIGATION\nREPORT TO THE OFFICE OF THE DIRECTOR\nIn this section, we discuss seven closed cases that did not result in recommendations\nfor action by the Office of Director, but that nevertheless highlight important issues.\nThe first four case descriptions present our resolution of allegations resulting from\nproblematic collaborative relationships between colleagues or between mentors and\nstudents. The last three descriptions present our inquiries into cases that raised\nconcerns about NSF\'s management of particular proposals or awards.\n in a foreign country, it was practically\nUniversity Thoughtfully Handles\nAlleged Obstruction of Research impossible for the complainant\xe2\x80\x99s project to\n obtain suitable substitute equipment in a\nA PI (the complainant) complained to NSF\n timely fashion.\nthat a former collaborator (the subject)\nhad \xe2\x80\x9covertly and deliberately\xe2\x80\x9d attempted to We referred this allegation to the subject\xe2\x80\x99s\nobstruct the PI\xe2\x80\x99s NSF-supported research. university and identified for it those\n questions that we knew an investigation\nThe complainant related two incidents of\n would have to answer to be satisfactory\nalleged obstruction, but our inquiry\n for purposes of NSF action. The\ndetermined that only one of the incidents\n committee weighed contradictory\nhad sufficient substance to warrant an\n evidence and found that the subject had\ninvestigation.\n permitted the complainant access to\nIn this incident, the subject allegedly easily reparable equipment and had made\npromised the complainant access to a him aware of how this equipment could be\npiece of equipment that was necessary for repaired. It further found that the subject\nhis research; encouraged him, in light of had reason to fear that researchers on the\nthis promise, to use his equipment funds complainant\xe2\x80\x99s project might be careless\nfor other project-related expenses; and about the needs of the subject\xe2\x80\x99s project\nthen unreasonably denied him access to and might misuse the subject\xe2\x80\x99s\nthe promised equipment. Because the equipment. The committee decided that\nprojects directed by the subject and the the subject\xe2\x80\x99s primary responsibilities were\ncomplainant shared facilities and to fulfill her research plan and ensure the\nequipment at a remote field research site safety of her employees and equipment.\n\nSemiannual Report Number 16 53 NSF Office of Inspector General\n\x0cIt concluded that, in a difficult situation, No Plagiarism by Ex-Collaborator\nthe subject had prudently balanced these\n The complainant notified us of allegations\nresponsibilities with her responsibility to\n against a scientist who was also a former\ncooperate with another scientist. The\n collaborator (the subject). The com-\nuniversity concluded that the subject had\n plainant alleged that the subject had\nnot committed misconduct, and we\n denied coworkers of authorship credit and\naccepted its conclusion.\n submitted proposals to NSF and the\n\nIn this case, the investigating committee National Institutes of Health that con-\n\napplied the scientific community\xe2\x80\x99s ethical tained misrepresentations and plagiarism\n\nstandards governing responsibilities to (including intellectual theft). The com-\n\ncolleagues in a thoughtful way to an plainant also alleged that the university\n\nunusual situation. It conducted its administrators retaliated against him\n\ninvestigation in light of our guidance because he made his charges against the\n\nabout the issues that an investigation of subject public.\n\nthis case would need to address to be\n After discontinuing her collaboration with\nadequate for NSF purposes. The\n the complainant, the subject submitted\ncommittee\xe2\x80\x99s report is evidence that the\n proposals without naming him as a co-PI.\npartnership between NSF and awardee\n The complainant alleged that the subject\xe2\x80\x99s\ninstitutions can make self-regulation by\n actions contributed to the university\'s\nrepresentatives of the scientific\n subsequent decision to deny him tenure.\ncommunity work well.\n A university committee convened to\n examine his tenure review and his\n allegations against the subject. It found\n no evidence to support his allegations that\n he was unfairly denied tenure or that the\n subject had committed misconduct in\n science.\n\n\n\n\nSemiannual Report Number 16 54 NSF Office of Inspector General\n\x0cThe basis for the complainant\xe2\x80\x99s Citations for Unpublished\nallegations of misrepresentation, Information\nfalsification, and plagiarism was that data An NSF program director received an\nand methodology developed through the unusual proposal review from the\nsubject\xe2\x80\x99s and complainant\xe2\x80\x99s collaborative complainant and, concerned about some\neffort were jointly owned and could not of the comments in it, brought it to us.\nsubsequently be used independently by The review alleged that the PI of the\nindividual members of the collaborative proposal inappropriately used the\nteam. As discussed in Semiannual unpublished results and methodologies of\nReport Number 10 (pages 27 through 30), another researcher. The proposal\nwe recognize that the results of contained a number of citations\ncollaborative projects can, with the referencing \xe2\x80\x9cpersonal communications\xe2\x80\x9d\nappropriate citation, be used with the researcher.\nsubsequently by all collaborators, either\n The researcher told us that the PI had\ntogether or individually. In this case, after\n contacted him and expressed interest in\nthe complainant\xe2\x80\x99s and subject\xe2\x80\x99s\n his research. The PI allegedly informed\ncollaborative relationship ceased, the\n the researcher that he was interested in a\nsubject continued to use their joint data\n research area different from the\nand appropriately referenced the source\n researcher\xe2\x80\x99s and that the researcher\'s\ndocuments. We concluded that the\n techniques and material could be useful in\nsubject\xe2\x80\x99s actions were not deviations from\n the PI\xe2\x80\x99s research. The researcher gave\naccepted practice and would not be\n the PI his material, unpublished\nconsidered misconduct in science.\n manuscripts, and his graduate student\'s\n thesis chapter. The researcher did not\n stipulate conditions on the use of this\n information.\n\n\n\n\nSemiannual Report Number 16 55 NSF Office of Inspector General\n\x0cThe PI said that before he submitted his A Poorly Functioning Faculty-\nproposal to NSF, the researcher told him Graduate Student Collaboration\nthat the manuscripts and thesis chapter We received allegations of misconduct in\nhad not been published. According to the science against a faculty member at a\nPI, they agreed that the best way to cite western university. Allegedly, the faculty\nthe information was as \xe2\x80\x9cpersonal member misrepresented the research\ncommunications.\xe2\x80\x9d effort of his former graduate student when\n he listed himself as first author and the\nWe concluded that, because the\n student as second author on a publication\nresearcher gave the PI research material,\n that was an edited version of the student\xe2\x80\x99s\nunpublished manuscripts, and a chapter\n master\xe2\x80\x99s thesis. The student was\nfrom a graduate student\xe2\x80\x99s thesis without\n unaware of the publication until after it\nconditions on their use, and the PI\n was published, and the thesis was not\ncarefully referenced the information he\n cited.\nobtained from the researcher in his\nproposal, his actions did not constitute a The student said that the faculty member\nserious deviation from accepted practice was never satisfied with the thesis drafts\nand would not be characterized as he prepared. The student eventually\nmisconduct in science. We note that if furnished the faculty member with a\nresearchers concerned about the future finished thesis copy and left the institution\nuse of sensitive information are asked to without providing a forwarding address.\nshare material and unpublished results by The faculty member explained that,\na potential collaborator, they should although the publication contained text\nprovide a letter indicating what conditions, copied from the student\xe2\x80\x99s thesis, it also\nif any, apply to the use of unpublished contained some of his own work. He did\ninformation and research material. not cite the thesis because he did not\n view theses as valid scientific\n publications; they were not readily\n available to other scientists and they did\n not go through the accepted scientific\n review process. He explained that he\nSemiannual Report Number 16 56 NSF Office of Inspector General\n\x0cplanned the research project, \xe2\x80\x9cwrote\xe2\x80\x9d most Effective communication in a student-\nof the thesis, submitted the paper for faculty mentoring relationship is important\npublication, and did not have any way to for success. In this case, both the student\ncontact the student during the and the faculty member failed to maintain\npublication\xe2\x80\x99s preparation. effective communication, which resulted in\n troublesome misunderstandings between\nWe sought the advice of an expert in the\n them.\nsubject\xe2\x80\x99s field of science who concluded\nthat \xe2\x80\x9conce stripped of the ill will of the Alleged Misrepresentations in a\nstudent and the arrogance of the advisor,\xe2\x80\x9d Progress Report\nthe matter was not serious. We deter- We received a letter alleging that two\nmined that the student had a responsibility administrators acted in bad faith when\nto maintain professional contact with the they accepted an NSF continuing grant\nfaculty member. At the same time, the that included the use of laboratory facili-\nfaculty member had the responsibility to ties that they knew would be unavailable\nnotify each named author about a to the PIs and that the administrators\nmanuscript to be published and to afford coerced the project\xe2\x80\x99s PIs into submitting\neach of the coauthors, even a student, the an NSF progress report that hid this fact.\nopportunity to participate in the production We received the allegation after the first\nof the manuscript, including deciding year\'s progress report had been submitted\nwhether documents, such as theses, to NSF.\nshould be cited. We concluded that the\n Although the PIs\xe2\x80\x99 proposal plans included\nfaculty member deviated from accepted\n the use of laboratory equipment, they also\npractice by failing to cite the student\'s\n knew that there would be times when the\nthesis, but that his action was not a\n equipment would (temporarily) not be\nserious deviation and therefore it did not\n available to undergraduate students and\nrise to the level of misconduct in science.\n made allowances for these instances.\nWe suggested that the faculty member\n During the first year, the administrators\nconsider submitting an appropriate\n informed the faculty that the laboratory\ncitation correction to the journal editor.\n equipment used to acquire data would be\n\nSemiannual Report Number 16 57 NSF Office of Inspector General\n\x0cunavailable to undergraduate students. manager concluded that the loss of the\nIn the first year\xe2\x80\x99s progress report, the PIs laboratory facilities was not detrimental to\nwrote that, although it was no longer the completion of the project and\npossible to use the laboratory facilities at continued to fund the project.\nthe university, this was not a problem\n Because the PIs wrote in their progress\nbecause most of the students\xe2\x80\x99 critical\n report that the laboratory was no longer\nthinking would involve the analysis, not\n available to them, we concluded that there\nthe acquisition, of data. The PIs\xe2\x80\x99 report\n was no substance to the allegation that\ndisclosed that they carefully considered\n they hid this information from NSF. We\ntheir options and concluded that the\n did not determine whether the PIs had\noriginal intent of the proposal could still be\n been pressured by their administrators,\ncompleted. Thus, NSF\xe2\x80\x99s program\n but concluded that the PIs, dealing with\nmanager was made fully aware that they\n whatever pressure their administrators\nno longer had access to the facilities,\n may have put on them, upheld their\nincluding the original equipment, and how\n partnership with NSF by providing an\nthat would influence their NSF-funded\n accurate progress report.\neducational activities. The program\n\n\n\n\n TABLE 4:\n ASSURANCES AND CERTIFICATIONS RECEIVED*\nNumber of Cases Requiring Assurances at End of Period 5\nNumber of Cases Requiring Certifications at End of Period 7\n\nAssurances Received During this Period 1\n\nCertifications Received During this Period 3\n* NSF accompanies some findings of misconduct in science with a certification and/or assurance\nrequirement. For a specified period, the subject must confidentially submit to the Assistant Inspector General\nfor Oversight a personal certification and/or institutional assurance that any newly submitted NSF proposal\ndoes not contain anything that violates NSF\xe2\x80\x99s regulation on misconduct in science and engineering. These\ncertifications and assurances remain in OIG and are not known to, or available to, NSF program officials.\n\n\n\n\nSemiannual Report Number 16 58 NSF Office of Inspector General\n\x0cProgram Officer Creates We learned that the program officer (PO)\nAppearance of Impropriety did not divulge confidential information or\nTwo scientists (the complainants) who improperly suggest that one scientist\nhad submitted unrelated declined pro- misappropriate another\xe2\x80\x99s ideas. However,\nposals to the same NSF program com- we concluded that the program officer\nplained to an NSF division director that used poor judgment in two instances. In\none of his program officers had improperly each instance, the PO made remarks that\nhandled their proposals. The complain- could be, and were, taken by members of\nants were concerned that the program the PO\xe2\x80\x99s research community to mean\nofficer may have divulged confidential that the PO was suggesting that one\ninformation about their proposed work and scientist perform work for which another\nimproperly suggested to scientists at other scientist was already seeking NSF sup-\ninstitutions that those institutions perform port. To make such a suggestion would\nthe work the complainants had proposed have been a serious breach of the con-\nto NSF. In addition, the complainants fidentiality with which NSF promises to\nalleged that the division had an review proposals and a misappropriation\nunarticulated policy that precluded of the ideas in a confidentially submitted\nfunding proposals such as theirs and that proposal.\ntheir proposals had not received a fair\n Although we are convinced that the PO\xe2\x80\x99s\nreview. The complainants chose not to\n actions were well motivated, we believe\nask NSF to reconsider their proposals.\n the PO was insufficiently attuned in these\n instances to the detrimental appearances\n that well-meaning actions can create. We\n recommended that the division director\n send the PO a confidential written\n message expressing disapproval of the\n PO\xe2\x80\x99s actions, and the division director\n accepted our recommendation.\n\n\n\n\nSemiannual Report Number 16 59 NSF Office of Inspector General\n\x0cThis case presented a mixture of possible Possible Reviewer Conflict of\nserious ethical improprieties and alleged Interests\npoor program management by a program It came to our attention that an ad hoc\nofficer. We addressed the possible reviewer submitted a proposal to NSF\nimproprieties in our inquiry. At the same shortly before he received two proposals\ntime, insofar as this complaint revealed from NSF with requests for his reviews.\ndeficiencies in how well the division arti- The reviewer\'s proposal disclosed that the\nculated and implemented its policies, we PIs on both proposals were his research\ntreated these as matters best resolved by collaborators; the PIs\xe2\x80\x99 proposals each\nthe division director and other responsible contained a citation to a paper coauthored\nmanagers in his directorate. This case with the reviewer. NSF\'s Proposal\nillustrates some pitfalls that well inten- Evaluation Form (NSF Form 1) instructs\ntioned program officers can encounter reviewers to disclose any affiliation that\nand the need for them to be aware of the might be considered a conflict of interests.\nappearance that their actions can create. In the absence of such disclosure, NSF\n assumes that the reviewer has no\n conflicting affiliations. NSF considers\n collaborative relationships existing within\n 48 months preceding a requested review\n to be potentially biasing. Program officers\n told us that they have disqualified\n reviewers because of existing or past\n collaborative relationships. The reviewer\n did not contact NSF to discuss any\n possible conflict of interests that he might\n have with the two PIs after he received\n their proposals for review.\n\n\n\n\nSemiannual Report Number 16 60 NSF Office of Inspector General\n\x0cThe reviewer told us that he knew both It is doubtful that NSF would have\nPIs, but he had no current collaborative considered the relationship described by\nrelationship with them. He characterized the reviewer as disqualifying or limiting,\nhis prior collaboration with them as and knowledge of it did not influence the\n\xe2\x80\x9climited\xe2\x80\x9d and said he had disclosed it in program\xe2\x80\x99s funding decisions. However,\nhis proposal because, even though the for the merit review process to work as\nresearch for the paper was conducted in fairly and objectively as possible, it is\n1990-1991, the paper was finally NSF, not the reviewer, that must\npublished in 1992 (less than 48 months determine whether a reviewer\'s\nbefore he submitted his proposal). He collaborative relationships disqualify or\nsaid that he did not disclose his past limit any review activities. We told the\ncollaborative relationship with the PIs to reviewer that he should have disclosed\nthe NSF program officer along with his this relationship to NSF before he\nreview because he did not feel his past submitted his reviews or, at the latest,\naffiliation created a conflict of interests, along with the reviews, and instructed him\nand he felt he could be objective in his to disclose relevant collaborative\nreview. relationships in the future.\n\n\n\n\nSemiannual Report Number 16 61 NSF Office of Inspector General\n\x0cINSPECTIONS\nOur office conducts external and internal inspections. External inspections are on-site\nreviews at organizations that receive NSF funding. Internal inspections review NSF\'s\nadministrative units.\n\nInspections are designed to highlight what works well and identify problems or\ndeficiencies so that managers at NSF and NSF-funded organizations can improve their\noperations and better achieve research and education goals. Inspections are conduc-\nted by multidisciplinary review teams that may include scientists, engineers, auditors,\ncomputer specialists, investigators, lawyers, and management/program analysts.\n\n EXTERNAL INSPECTIONS INSPECTION AT A MUSEUM\nWe designed our external inspections IN THE NORTHEAST\nprogram to improve our understanding of\nNSF\xe2\x80\x99s grantee activities by integrating This inspection was conducted at a\nfinancial, administrative, and program museum that has many exhibits as well\nanalyses in a single review. We view\nexternal inspections as an effective as programs in basic research and\napproach because they allow us to deter- informal science education. We\nmine whether NSF\xe2\x80\x99s program goals are\nbeing achieved as well as review the reviewed eight NSF grants. NSF\xe2\x80\x99s\nfinancial and administrative management Directorate for Geosciences awarded\nof NSF awards. Inspection teams look for\nearly indications of financial, three grants for basic research and one\nadministrative, or compliance problems so grant for equipment. NSF\xe2\x80\x99s Directorate\nthey can be addressed before they\nbecome so serious that their resolution for Biological Sciences awarded one\nrequires an audit or investigation. grant for basic research and one grant for\nDuring this reporting period, we con- Research Experiences for Under-\nducted an external inspection at a large\n graduates (REU). NSF\xe2\x80\x99s Directorate for\nnatural history museum in the northeast.\n Education and Human Resources\n awarded one grant for public education\n about biodiversity, and NSF\xe2\x80\x99s Office of\n Science and Technology Infrastructure\n awarded one grant for the renovation of\n research laboratories.\n\n\n\n\nSemiannual Report Number 16 62 NSF Office of Inspector General\n\x0cFinancial Controls Indirect Costs. The museum did not\n allocate all of its library\xe2\x80\x99s costs to the\nThe museum generally complied with\n government in an equitable manner. The\nNSF\xe2\x80\x99s and other federal requirements.\n museum allocated nearly 100 percent of\nNSF is the museum\xe2\x80\x99s cognizant federal\n certain library costs to its research activi-\nagency and therefore is responsible for\n ties instead of allocating these costs in\nrepresenting the government as a whole\n accordance with its most recent library\nin such matters as establishing indirect\n usage study. From its usage study, the\ncost rates and reviewing the adequacy of\n museum determined that 65 percent of\nfinancial systems. We made recom-\n the library\xe2\x80\x99s users were researchers and\nmendations to increase compliance and\n 35 percent were public users. Increasing\nstrengthen internal controls in time and\n the allocation of library costs to research\neffort reporting and indirect costs.\n activities results in the museum\n Time and Effort Reporting. The recovering more of its library costs from\nmuseum overcharged an award because the government through indirect cost\nit did not always adjust salary charges to charges to awards. OMB Circular A-122\nreflect the work performed by its states that \xe2\x80\x9ca cost is allocable to a parti-\nemployees. OMB Circular A-122, Cost cular cost objective . . . in accordance\nPrinciples for Non-Profit Organizations, with the relative benefits received.\xe2\x80\x9d\nstates that employees\xe2\x80\x99 time and effort Therefore, we recommended that, in its\nreports must reflect the employees\xe2\x80\x99 actual next indirect cost proposal, the museum\nwork. Accordingly, we recommended that allocate its library costs according to its\nthe museum ensure that the amount of most recent usage study. We also\nsalaries it charges to awards coincides recommended that NSF\xe2\x80\x99s Division of\nwith the actual time its employees have Contracts, Policy, and Oversight (CPO)\nworked on the awards. The museum thoroughly review the museum\xe2\x80\x99s next\nagreed with our recommendation and has proposal to ensure that its indirect cost\ntaken corrective action. allocations are equitable so that CPO can\n negotiate and approve the most accurate\n indirect cost rate. NSF\xe2\x80\x99s CPO stated that\n\n\nSemiannual Report Number 16 63 NSF Office of Inspector General\n\x0cit will reevaluate the museum\xe2\x80\x99s indirect Misconduct in Science\ncost rate methodology. The museum\n We were concerned about the museum\xe2\x80\x99s\nalso stated that it would be receptive to\n policy for handling allegations of\nrefinements in its allocation methods.\n misconduct in science because of several\nIn addition, the museum included deficiencies. We recommended that the\nunallowable depreciation and lobbying museum specify in its policy the purpose\ncosts in the calculation of its indirect cost of an inquiry and how it is distinguished\nrate. We recommended that the museum from an investigation. We also\nreview its indirect costs and ensure that it recommended that the museum\'s policy\nhas properly excluded such costs. The specify that NSF be notified if an\nmuseum agreed with our recommen- allegation of misconduct in science is\ndation and has reviewed its indirect costs determined to be substantive and to\nto exclude unallowable costs. require investigation.\n\nThe museum also noted that all of the Finally, we noted that the museum, which\nindirect costs to which we took exception is not a degree-granting institution, had\nwould have been totally offset by two formal affiliations with universities that\nmuseum misclassifications. However, the enabled its scientists to teach courses\n\xe2\x80\x9coffsets\xe2\x80\x9d to which the museum refers do and advise graduate students for\nnot share a one-to-one relationship with academic credit at the museum. The lack\nthe costs to which we took exception. of student coverage under the policy\nThe museum\xe2\x80\x99s misclassifications would created a unique situation for the\nreduce the costs in question by less than museum (see essay on page 78). The\n7 percent. formal arrangements with universities for\n students who studied at the museum\n included the acceptance and enrollment\n as well as shared financial support for\n participating students by both the\n museum and the university involved.\n Consequently, the assumption would be\n\n\nSemiannual Report Number 16 64 NSF Office of Inspector General\n\x0cthat a student alleged to have committed PI Financial Disclosure Policy\nmisconduct in science at the museum\n The museum was not in compliance with\nwould be covered by the affiliated\n NSF\xe2\x80\x99s Investigator Financial Disclosure\nuniversity\xe2\x80\x99s misconduct policies. This\n Policy. The museum\xe2\x80\x99s conflict-of-\ncreated uncertainty over what procedures\n interests policy did not become effective\nwould be used for a student who is\n until November 13, 1996, and disclosures\nalleged to have committed misconduct in\n had not been made by PIs on 13\nscience at the museum and raised\n proposals submitted to NSF since\nconcerns about confidentiality and\n October 1, 1995, the effective date of\nfairness for the subject of an allegation.\n NSF\xe2\x80\x99s Policy. Two of those proposals\nAll the PIs we interviewed were familiar\n were funded.\nwith the museum\xe2\x80\x99s policy regarding\nallegations of misconduct in science We informed NSF officials in CPO about\ninvolving museum scientists, but we this finding. NSF suspended the two\nfound that there was little consistency awards whose proposals were submitted\nregarding PIs\xe2\x80\x99 responses about what to after October 1, 1995, until NSF received\ndo if they became aware of alleged updated proposal cover sheets, endorsed\nmisconduct in science against a student. by the appropriate institutional official,\nTherefore, we recommended that the certifying, among other things, that all\nmuseum revise its policy to include financial disclosures have been made\nstudents. and that the museum will satisfactorily\n address all identified conflicts of interests\nThe museum agreed with all our\n before it expends NSF funds under any\nrecommendations and also indicated that\n resulting awards. NSF also requested\nit plans to share its revised misconduct in\n that the museum properly endorse cover\nscience policy with its affiliated\n sheets for the pending proposals\nuniversities and to encourage discussion\n submitted after October 1, 1995, and\nabout how the universities\xe2\x80\x99 policies relate\n return them to NSF within a specified\nto the museum\xe2\x80\x99s.\n deadline. NSF officials informed us that\n the museum submitted all of the\n\n\nSemiannual Report Number 16 65 NSF Office of Inspector General\n\x0cnecessary cover sheets, and that NSF NSF\xe2\x80\x99s Division of Earth Sciences\n \xe2\x80\x9cHold-Over\xe2\x80\x9d Practice\nlifted the suspensions on both of the\nawards in question. The museum stated We learned that NSF\xe2\x80\x99s Division of Earth\nin its written response that it had a long- Sciences (EAR) permits program\nstanding, conflict-of-interests policy that it directors to \xe2\x80\x9chold over\xe2\x80\x9d some\nbelieves to be more stringent than NSF\xe2\x80\x99s unsuccessful proposals for review in\nInvestigator Financial Disclosure Policy. EAR\xe2\x80\x99s next proposal competition. \xe2\x80\x9cHold\nThis policy was not mentioned before, or over\xe2\x80\x9d proposals receive no additional ad\nduring, our on-site review. At the exit hoc reviews and are declined if they do\nbriefing, we informed museum officials not compete successfully 6 months later,\nthat we had concluded the museum on their second try. We were concerned\nlacked an adequate financial disclosure that EAR lacked internal procedures for\npolicy for the awards reviewed. In view \xe2\x80\x9cholding over\xe2\x80\x9d proposals and that EAR\xe2\x80\x99s\nof the museum\xe2\x80\x99s written response, we practice could lead to an appearance of\nexamined this newly offered conflict-of- favoritism. We recommended that EAR\ninterests policy and found it inadequate describe the practice in its Program\nto meet the requirements of NSF\xe2\x80\x99s Announcement. NSF\xe2\x80\x99s Assistant Director\nInvestigator Financial Disclosure Policy. for Geosciences responded that EAR\xe2\x80\x99s\n \xe2\x80\x9chold over\xe2\x80\x9d policy was referenced in a\nWe considered this noncompliance to be\n \xe2\x80\x9cDear Colleague\xe2\x80\x9d letter, dated August 15,\nserious because the museum\xe2\x80\x99s AOR\n 1994, which is also available on-line\nwrongly certified on 13 proposals to NSF\n through NSF\xe2\x80\x99s Science and Technology\nthat the museum had a written and\n Information System. The Assistant\nenforced conflict-of-interests policy and\n Director stated that the Division chose\nthat, to the best of his knowledge,\n not to include an explanation of \xe2\x80\x9cholding\ndisclosures had been made; NSF funds\n over\xe2\x80\x9d proposals in its Program\nhad already been awarded on 2 of the 13\n Announcement because it might\nproposals; and the museum was\n encourage PIs to pressure EAR program\nconsiderably delinquent in implementing\n directors to \xe2\x80\x9chold over\xe2\x80\x9d their proposals.\na conflict-of-interests policy.\n We also recommended that NSF\xe2\x80\x99s EAR\n\n\nSemiannual Report Number 16 66 NSF Office of Inspector General\n\x0cdevelop a set of internal procedures for \xe2\x80\xa2 We recommended that the museum\nprogram directors to follow when using institute a regularly scheduled\nthis \xe2\x80\x9chold over\xe2\x80\x9d practice. The Assistant museum-wide safety inspection of all\nDirector responded that the practice is a laboratory facilities. The museum said\nuseful management tool, that there is no it plans to implement a regularly\nindication of misuse, and that additional scheduled museum-wide safety\npolicy overlays are not required. He inspection to supplement its existing\nnoted that the Advisory Committee for safety program.\nGeosciences recently approved the\npractice and said he would request that\nfuture Committees of Visitors monitor it.\n\n\nOther Recommendations\n\n\xe2\x80\xa2 We recommended that the museum\n either revise its collections and\n records retention policy to address the\n retention of data and materials that are\n NSF-supported but not part of the\n museum\xe2\x80\x99s collections, or develop a\n separate policy to address this issue.\n The museum said it will prepare a\n grant guide for scientists that will\n resolve this issue.\n\n\n\n\nSemiannual Report Number 16 67 NSF Office of Inspector General\n\x0cINTERNAL INSPECTIONS THE WESTERN EUROPE\n PROGRAM\nWe designed our internal inspections pro-\ngram to help NSF fully implement GPRA. Background\nGPRA requires that federal agencies\ndevelop strategic plans that include mission Since NSF\'s inception in 1950, an\nstatements, outcome-based goals and\nobjectives, descriptions of how goals will be integral part of its mission (to promote the\nachieved, and a performance plan tied to progress of U.S. science and\nthe strategic plan. Beginning in FY 1999,\nagencies will be required to prepare annual engineering) has been to support\nreports that integrate financial and per- international science activities. The\nformance information, and offices of inspec-\ntor general will be required to review those principal rationale for this function is to\nstatements for accuracy. Internal inspec- provide access for U.S. scientists,\ntions will help us understand how NSF\nmanagers at the program and division levels engineers, and educators to intellectual\nadminister their programs and generate the\n resources, unique facilities, and unusual\ninformation that NSF will use to measure\nprogram performance and results. field sites on a worldwide basis.\n\nBecause NSF has not yet identified specific\n INT\xe2\x80\x99s special functions are to expand and\noutcome performance measures or the data\nthat will be used to support them, we have facilitate the international dimension of\ndevised a review that addresses four broad\n NSF\xe2\x80\x99s mission by promoting and sup-\nareas: (1) the adequacy of NSF\'s financial\nrules and procedures in ensuring proper use porting new partnerships between U.S.\nof NSF funds, (2) the efficiency and\n scientists and engineers and their foreign\neffectiveness of NSF\'s internal operations,\n(3) the level of customer satisfaction with colleagues. INT supports an array of\nNSF\xe2\x80\x99s programs and operations, and (4) the\n activities designed for individuals and\ncapacity of NSF to make valid claims about\nprogram performance and goal achieve- small groups, and it encourages U.S.\nment. Internal inspections stress the\n organizations and institutions to consider\nrelationships among programmatic, adminis-\ntrative, and financial considerations in the projects aimed at establishing or\noverall administration of NSF\xe2\x80\x99s programs.\n strengthening relationships with foreign\nWe conducted our first NSF internal counterparts.\ninspection on the Western Europe Program\n(WEP) of the Division of International\nPrograms (INT) in the Directorate for Social,\nBehavioral and Economic Sciences (SBE).\n\n\n\n Semiannual Report Number 16 68 NSF Office of Inspector General\n\x0cWEP is one of six regional groupings in Financial Measures\nINT. The Western Europe Region\n We reviewed the WEP-funded research\nincludes 17 countries and several\n and verified that the awards were for\nmultilateral organizations. WEP is\n activities related to WEP\'s budgeted\nstaffed by four NSF employees: a\n goals and objectives. We found that\nprogram coordinator, two program\n essential award information in the\nmanagers, and one senior program\n financial accounting system and the\nassistant.\n award system corresponded to that in the\nIn FY 1996, WEP was allocated program jackets. We also found that INT\n$1,573,190 of INT\xe2\x80\x99s $17,441,949 budget complied with the main features of the\nand processed 200 proposals that Federal Managers\xe2\x80\x99 Financial Integrity\nresulted in 106 awards. About 90 Act. INT had performed an internal\npercent of WEP\xe2\x80\x99s funding is distributed control risk assessment and identified\nthrough cooperative research projects. internal control responsibilities in the\nVirtually all of the remainder is used to performance plans for key officials.\nfund workshops and dissertation\n International Implications Report.\nenhancement awards.\n NSF\xe2\x80\x99s International Implications Report is\nWe reviewed seven grants awarded by used to provide answers to questions\nWEP to support cooperative research from the U.S. Department of State and\nbetween the United States and Austria, foreign counterparts about trends and\nthe European Union, Germany, Greece, fields of interest and to brief NSF\'s\nItaly, and Sweden. Three of these Director on NSF\xe2\x80\x99s foreign research\nawards were split-funded with programs involvement. Both INT and WEP program\nin the divisions of atmospheric science, staff members emphasized that the report\nbiology, and chemistry. We also is the only document that provides in-\nreviewed three declined proposals, two depth coverage of NSF\xe2\x80\x99s international\nwithdrawn proposals, and one investment.\ninappropriate proposal.\n\n\n\nSemiannual Report Number 16 69 NSF Office of Inspector General\n\x0cWe found that the utility of the how much they received. We recommen-\nInternational Implications Report as a ded that INT develop better mechanisms\nfinancial measure of NSF\xe2\x80\x99s international for readily identifying its awards by\nscience and engineering activities was country or entity and describing how its\nminimal. The report does not total award dollars are divided among\n different countries or entities.\n\xe2\x80\xa2 include all awards with international\n implications, INT responded that its current\n mechanisms, though cumbersome, are\n\xe2\x80\xa2 accurately reflect the actual dollar\n accurate. It said that it is investigating\n amount of international implications of\n alternatives that involve modifying some\n the awards entered into the report,\n current NSF standard reports.\n\n\xe2\x80\xa2 accurately record the amount of\n Internal Operations\n money budgeted for foreign travel in\n individual awards, or WEP\'s work includes management of the\n proposal evaluation and award process\n\xe2\x80\xa2 limit data entries to foreign travel that\n and staff service as "country desk"\n advances the nation\xe2\x80\x99s position in\n officers to NSF\xe2\x80\x99s senior management and\n international science and engineering.\n program officers, OSTP, and other\nWe recommended that INT work with government agencies.\nother NSF components to ensure that the\n WEP\xe2\x80\x99s program officers were articulate\nreport is complete and accurate. INT\n and committed spokespersons for their\nagreed to do so.\n program. We found that stagnation in\n Western Europe Program Award WEP\xe2\x80\x99s budget and uncertainty about\nDollars by Country or Entity Report. INT\xe2\x80\x99s organizational home in NSF\nINT could not readily determine which adversely affected program officers\xe2\x80\x99\ncountries or entities within the Western morale.\nEurope region received WEP funding and\n\n\n\n\nSemiannual Report Number 16 70 NSF Office of Inspector General\n\x0c Conflicts-of-Interests Training. OGC maintains a database of the names\nIn 1992, NSF established a program of of the individuals who attend the conflicts\nannual mandatory conflicts training for all training. However, this database is not\nNSF officials at or above the program cumulative\xe2\x80\x94each new entry replaces the\nofficer level. OGC was tasked to conduct previous entry, leaving no record of the\nconflicts briefings, arrange scheduling, earlier training. We suggested that OGC\nnotify staff, and monitor compliance with consider changing its database to make it\nthis directive. We found that none of the cumulative.\nfour INT staff members we sampled\n We recommended that INT ensure that\nattended this mandatory training in 1995.\n \xe2\x80\xa2 each professional member of its staff\nOGC gives NSF-wide conflicts training\n completes NSF\'s annual mandatory\nsessions periodically throughout the year\n conflict-of-interests training and\nand, upon request, gives conflicts training\nto specific offices or divisions. Although \xe2\x80\xa2 records are updated and maintained\nOGC notifies staff members in October if on staff attendance for at least a\nthey have not yet taken training in that 5-year period.\ncalendar year, it does not follow up with\nindividuals who fail to take the training in INT agreed that appropriate NSF staff\n\na given year, so, essentially, this should attend these sessions and that\n\nmandatory training operates on the honor management should ensure that this\n\nsystem. We suggested that OGC consult occurs. Also, OGC implemented our\n\nwith NSF management to establish some suggestion for a system of cumulative\n\nmechanism to help ensure that records on completion of mandatory\n\nemployees\xe2\x80\x99 supervisors are informed conflict-of-interests training.\n\nwhen employees fail to attend the\nmandatory conflicts training.\n\n\n\n\nSemiannual Report Number 16 71 NSF Office of Inspector General\n\x0cCustomer Measures To monitor whether it is funding \xe2\x80\x9cnew\xe2\x80\x9d\n researchers, INT counts the number of\nWEP serves a variety of customers.\n PIs, postdoctoral fellows, and graduate\nNSF\xe2\x80\x99s senior management and program\n students and undergraduate students\nofficers, Department of State officials,\n associated with WEP awards who have\nand science counselors working for\n not received INT support within the last 5\nforeign embassies are the main\n years. Without further refinement, this is\ncustomers for WEP\xe2\x80\x99s \xe2\x80\x9ccountry desk\xe2\x80\x9d\n not, in our view, a valid measure of how\nactivities. Potential program customers\n many PIs are \xe2\x80\x9cnew\xe2\x80\x9d to international S&E\ninclude PIs, postdoctoral fellows, and\n collaborations.\ngraduate and undergraduate students\nfrom all NSF-funded research areas. We were able to identify two important\nConsistent with INT policy, WEP focuses sources of information on customer\non program customers who are just satisfaction for WEP programs. One\nstarting a research career and are new to source was the most recent Committee of\ninternational collaborations. WEP\xe2\x80\x99s Visitors Report (December 15, 1994),\ncustomer base also includes the institu- which covered all INT programs,\ntions that sponsor these individuals. We including WEP. This Committee of\nbelieve it will be important to have/ Visitors "observed" that all projects\ndevelop measures of how well WEP assisted U.S. scientists to engage in\nserves all categories of its customers. meritorious international research\n collaborations and that these\nAt the time of our inspection, WEP had\n collaborations involved large numbers of\nno measures of the long-term effect of its\n younger scientists. However, the\nawards. Some measures had been\n Committee of Visitors expressed concern\nconsidered, but they involved the\n about the timeliness with which NSF\nrelatively high costs of longitudinal\n processed proposals.\nsurveys and were characterized by INT\nofficials as \xe2\x80\x9cquestionably cost-effective.\xe2\x80\x9d\n\n\n\n\nSemiannual Report Number 16 72 NSF Office of Inspector General\n\x0cOur second source of customer Mission (Goals and Objectives)\n Measures\nsatisfaction information was NSF\xe2\x80\x99s\nCustomer Satisfaction Report for Fiscal We searched for strategic plans relevant\nYear 1996. For FY 1995, NSF to understanding WEP goals and\nestablished a customer service standard objectives and any corresponding\nfor timeliness in proposal processing. performance measures that had been\nNSF\xe2\x80\x99s goal was that, for 95 percent of developed. After we identified suggested\nproposals to the agency, proposal performance measures, we looked into\nprocessing divisions should decide their quality as measures. Because\nwhether to recommend funding within 6 NSF\xe2\x80\x99s GPRA Strategic Plan has not yet\nmonths of when NSF received the been finalized, the relevance of INT\xe2\x80\x99s\nproposal. According to the Customer performance measures to NSF\xe2\x80\x99s GPRA\nSatisfaction Report, in FY 1995 the objectives remains uncertain.\nagency met this goal for 50 percent of its\n We were pleased to find that in August\nproposals. The report also provided\n 1994, at the request of SBE, INT\nresults of a June 1996 survey of\n developed both a strategic plan and a set\nuniversity-sponsored research offices.\n of performance measures to cover its\nThe survey showed that all of the offices\n program and staff functions: DIVISION\nfavored decisions in 6 months or less.\n OF INTERNATIONAL PROGRAMS\nINT officials told us that the division\xe2\x80\x99s\n STRATEGIC PLAN, 1995-1999 (INT\ncurrent response time is approximately\n PLAN). Shortly afterwards, NSF\n7 months. We reviewed NSF\xe2\x80\x99s standard\n reorganized its central planning and\nOverage Proposal Report for October 18,\n assessment functions. INT\xe2\x80\x99s plans and\n1996, and found that less than 2 percent\n proposed measures have remained in\nof the WEP pending proposals were in\n abeyance since that time \xe2\x80\x9cpending\xe2\x80\x9d\nprocess for 6 months or longer.\n NSF\xe2\x80\x99s decisions on how to establish a\n management system to comply with\n GPRA requirements.\n\n\n\n\nSemiannual Report Number 16 73 NSF Office of Inspector General\n\x0cThe INT PLAN is generally consistent In keeping with GPRA, NSF\xe2\x80\x99s 1996 draft\nwith NSF\xe2\x80\x99s most recent (1994) strategic GPRA Strategic Plan for FYs 1999-2001\nplan, NSF IN A CHANGING WORLD attempts to translate the agency\xe2\x80\x99s current\n(NSF 95-24) and SBE\xe2\x80\x99s 1995 strategic strategic plan into operational terms.\nplan, TOWARD SBE 2000. The INT Among the eight NSF objectives listed in\nPLAN suggests possible output and this draft, at least five appear to involve\noutcome measures corresponding to its INT activities. Many of the measures that\nseven objectives. Although the INT NSF is considering using involve an\nPLAN was designated as a 5-year plan, international dimension. In 1997, as NSF\nthere were no benchmarks set for any of finalizes its GPRA planning and\nthe 5 years. We were told that one test performance measures, INT will have to\nrun of these measures was made on the adapt its early efforts to the NSF-wide\nEastern Europe Program. perspective. To the extent that\n international activities are part of the\nWe reviewed and commented on each of\n NSF-wide GPRA strategic plan and its\nthe measures in the INT PLAN. Among\n goals, INT should play a leading role in\nour observations was that some of the\n developing meaningful measures of NSF\nmeasures that INT has proposed relate to\n performance.\ncountry support within the Western\nEurope region. These measures will be\nproblematic if the WEP does not improve\nits ability to readily generate data on the\ndollar amounts of NSF awards to\nindividual countries.\n\n\n\n\nSemiannual Report Number 16 74 NSF Office of Inspector General\n\x0cEVALUATIONS\nThis section summarizes reviews we conduct concerning the efficacy of NSF policies\nand procedures. We summarize recommendations we made to NSF about competition\nwith private companies, describe our review of university policies on handling alleged\nstudent misconduct, and report NSF\'s response to our recommendations about the\nintroduction of non-indigenous organisms into Antarctica. Finally, we describe\nrepresentational activities by our staff.\n conditions in response to our recommen-\nNSF Needs to Clarify\nNon-Competition Policy dations in Semiannual Report Number 2\n (page 16) that NSF take action to make\nIn response to a request from the Chair-\n IN-91 enforceable:\nman of the House Committee on Science,\nwe reviewed a number of allegations of Competition. The grantee shall not\nviolations of NSF Important Notice 91 (IN- use equipment acquired with Federal\n funds to provide services to non-\n91). IN-91, which was approved by the Federal outside organizations for a fee\n that is less than private companies\nNSB in 1983, states: charge for equivalent services, unless\n specifically authorized by statute.\n It is contrary to the NSF\xe2\x80\x99s intent for\n grantees to use NSF-supported NSF also developed different procedures\n research instrumentation or facilities to\n provide services for a fee in direct to handle allegations stemming from this\n competition with private companies that\n provide equivalent services.\n policy, as compared to its procedures for\n\nIN-91 permits use of NSF-funded equip- handling allegations from IN-91.\n\nment and facilities by private industry only\n We reviewed a number of university\nunder two circumstances: on a collabo-\n facilities about which there had been\nrative basis with an academic scientist, or\n complaints that equipment or facilities\nwhen equivalent services are not avail-\n were used to provide services in violation\nable commercially. However, because\n of IN-91. We found that the NSF-funded\nNSF has other less restrictive policies on\n equipment and facilities that we reviewed\nthe appropriate use by industry of NSF-\n fell into two groups: advanced, very\nfunded equipment and facilities, grantees\n expensive instrumentation provided to a\nvary in their policies on industrial use of\n multiuser facility for use by a broad\nsuch equipment. One less restrictive\n segment of the scientific community, or\npolicy was added to NSF\xe2\x80\x99s grant\nSemiannual Report Number 16 75 NSF Office of Inspector General\n\x0cexpensive but conventional equipment they promote noncollaborative use of the\nprovided to an individual investigator or equipment and do not specify the true\ndepartment. We concluded that industrial rates for its use. Although these policies\nuse of the latter type of equipment was encouraging industrial involvement may\nminimal. By contrast, we found significant be consistent with NSF\xe2\x80\x99s core strategy of\nindustrial use of NSF-funded major shared promoting partnerships among industry\ninstrumentation and facilities, under and the academic community, they also\ncircumstances that raise concerns about put private companies at a competitive\ncompetition with private companies. disadvantage because their customers\n have the option of using NSF-funded\nWe learned that NSF programs that\n equipment rather than what is available\nsupport major shared instrumentation or\n commercially. The inconsistent provisions\nfacilities often specifically encourage\xe2\x80\x94\n set out in IN-91, the grant conditions, and\nand sometimes require\xe2\x80\x94commitments for\n the stated or de facto policies of NSF\xe2\x80\x99s\nindustrial participation. To promote open\n programs send mixed messages\naccess to the equipment, some NSF-\n regarding the appropriate use of major\nfunded facilities had nominal rates for all\n shared instrumentation funded by NSF.\nusers, including those from industry, when\n Industrial access to this instrumentation\nthe equipment was used to accomplish\n through industrial affiliate programs may\npublishable (rather than confidential\n also contribute to usage inconsistent with\nproprietary) research. Other facilities had\n IN-91 and/or the grant conditions.\nhigher rates but still undercut the cost of\nsimilar services offered commercially. We recommended that NSF assign\nIndustrial usage was not limited to the responsibility to someone with NSF-wide\nprovision of services that could not be authority to develop a consistent and\nobtained commercially, nor did it depend enforceable policy regarding the use by\non collaboration with facility staff. the for-profit sector of different types of\nIndustrial affiliate programs, in which NSF-funded equipment and facilities and\nprivate companies pay a flat annual fee to evaluate and resolve complaints of\nfor access to equipment plus other violations of the policy. NSF\xe2\x80\x99s revised\nbenefits, also raise concerns because policy should also address whether\n\nSemiannual Report Number 16 76 NSF Office of Inspector General\n\x0cgrantees\xe2\x80\x99 industrial affiliate programs that NSF\xe2\x80\x99s Director recently responded to our\nprovide access to NSF-funded equipment report. He advised us that he plans to\nare consistent with NSF policy. After NSF refer the issue of inconsistent policies\nimplements a clear and enforceable governing the use of NSF-funded\npolicy, appropriate corrective action equipment to the National Science Board\nshould be taken so that NSF-funded major for its consideration. We recommended\nshared instrumentation and facilities that NSF ensure that whatever policy the\ncomply with NSF\xe2\x80\x99s revised policy. Board adopts should be its exclusive\n policy, and the Board should rescind any\nWhen it reported the NSF Authorization\n policies that are inconsistent. The\nBill for fiscal year 1998 to the full House\n Director\xe2\x80\x99s response treats the issue of\nfor consideration, the House Committee\n industrial affiliate programs as an\non Science expressed its \xe2\x80\x9cconcern about\n operational issue to be addressed after\nNSF\xe2\x80\x99s enforcement of Important Notice\n the Board has resolved the\n91\xe2\x80\x9d and noted that \xe2\x80\x9c[s]till too often, the\n inconsistencies in formal policies. We\nCommittee is receiving complaints of\n recommended that the Director evaluate\nuniversities in competition with the private\n and address this issue before presenting\nsector.\xe2\x80\x9d The Committee concluded that it\n his recommendations to the Board.\n\xe2\x80\x9cstrongly endorses university/private\nsector collaboration,\xe2\x80\x9d but \xe2\x80\x9cdoes not desire\nto see federal resources used to compete\nagainst private sector interests.\xe2\x80\x9d\n\n\n\n\nSemiannual Report Number 16 77 NSF Office of Inspector General\n\x0cInstitutions Need to Review These concerns prompted us to conduct a\nPolicies for Responding to policy review on how allegations of\nAllegations of Student Misconduct\n student misconduct in science and\nin Science and Engineering\n engineering are handled.\nIn our on-site inspections of NSF-grantee\ninstitutions, we always review the institu- NSF\xe2\x80\x99s Misconduct in Science and\ntion\xe2\x80\x99s Misconduct in Science and Engine- Engineering regulation (45 CFR part 689)\nering Policies and Procedures (MS&E describes an NSF-grantee partnership for\nPolicies). We review the MS&E Policies, oversight of the ethical practices\nin part, to determine how cases against associated with NSF-supported activities.\nstudents who are alleged to have com- The partnership places the primary\nmitted misconduct in science in connec- responsibility for preventing and detecting\ntion with an NSF-supported activity are misconduct in science associated with\nhandled administratively. In more than NSF-supported activities with the grantee.\n75 percent of our published inspection As NSF support for science and\nreports that contain a discussion about engineering educational activities\nhow such allegations are handled, we increases, a broader group of\ndescribe concerns that range from the undergraduate and graduate students is\nabsence of, to the lack of clarity about, becoming involved. Consequently, for an\nstudent coverage in the grantee\xe2\x80\x99s MS&E effective NSF-grantee partnership,\nPolicy. In addition, our experiences with policies and procedures at institutions that\ncases of alleged student misconduct in address misconduct in science issues\nscience that are processed under institu- need to clearly include any student\ntions\xe2\x80\x99 student Academic Misconduct involved in an NSF-supported activity.\nPolicies have raised concerns about the We reviewed the existing policies and\ntimely notification of NSF and the lack of procedures at 11 large, publicly funded\ninformation necessary to evaluate an institutions to learn how cases involving\nallegation of misconduct in science (see students alleged to have committed\nSemiannual Report Number 11, page 31). misconduct in science would be handled.\n\n\n\n\nSemiannual Report Number 16 78 NSF Office of Inspector General\n\x0c Misconduct in Science and Student Coverage Under MS&E\nEngineering Policies and Procedures. Policies and Academic Misconduct\nMS&E Policies apply to faculty members Policies. Three of the 11 MS&E Policies\nand frequently to other staff members at refer to the Academic Misconduct Policies\nthe institutions. Eight of the institutions\xe2\x80\x99 to handle alleged misconduct in science\nMS&E Policies also include \xe2\x80\x9cstudents.\xe2\x80\x9d Of by students. The remaining institutions\xe2\x80\x99\nthe remaining three MS&E Policies, one MS&E Policies and Academic Misconduct\nrefers only to graduate students and Policies are ambiguous about which\nstates that they are covered by the policy applies to alleged student mis-\nstudent Academic Misconduct Policies; conduct for certain allegations where both\none excludes all students and provides policies cover students. For example, all\nthat allegations against them be handled the Academic Misconduct Policies and\nthrough Academic Misconduct Policies; MS&E Policies in this study list plagiarism\nand one provides insufficient information as an act of misconduct. In practice, an\nto judge whether students are included. allegation of plagiarism against a student\nFive of the eight MS&E Policies that involved in an NSF-supported activity\ninclude \xe2\x80\x9cstudents\xe2\x80\x9d define misconduct in could be pursued under either Policy. In\nscience to cover research and non- a few instances, this jurisdictional ambi-\nresearch activities. guity is recognized by the institution, and\n the MS&E Policies include language that\n Academic Misconduct Policies. In\n directs all student conduct concerns to the\ncontrast to MS&E Policies, Academic\n official responsible for administering the\nMisconduct Policies are exclusively for\n Academic Misconduct Policies. A com-\nstudents. Also, the Academic Misconduct\n parable statement directing student\nPolicies usually define misconduct in\n conduct concerns to the official respon-\nbroad terms. For example, the Academic\n sible for overseeing the MS&E Policies\nMisconduct Policy notes that \xe2\x80\x9cThe\n when federal support is involved does not\ndescription of prohibited conduct set forth\n appear in any of the Academic Miscon-\nherein shall be interpreted broadly and is\n duct Policies. At all 11 institutions,\nnot designed to define misconduct in\n separate officials are responsible for\nexhaustive terms.\xe2\x80\x9d\nSemiannual Report Number 16 79 NSF Office of Inspector General\n\x0cadministering the 2 Policies. Because review would help ensure that each\nthere is no complete \xe2\x80\x9cinformation loop\xe2\x80\x9d institution is upholding its end of the\nbetween the designated officials over- partnership with NSF in its oversight\nseeing the 2 separate Policies at any of responsibilities of ethical issues.\nthe 11 institutions, a misconduct in\n Concerns About the Possible\nscience allegation against a student that\n Introduction of Non-Indigenous\nadvances to an investigation under the Organisms in the Antarctic\nAcademic Misconduct Policy and that\n The Antarctic Conservation Act prohibits\ninvolves an NSF-supported activity would\n U. S. citizens from introducing \xe2\x80\x9cany animal\nnot necessarily be relayed to the MS&E\n or plant that is not indigenous to\nPolicy official.\n Antarctica\xe2\x80\x9d into Antarctica \xe2\x80\x9cunless\nNSF does not mandate any specific pro- authorized by regulation . . . or a permit\xe2\x80\x9d\ncedure or reporting method for institutions\xe2\x80\x99 issued by NSF. The question of whether\noversight responsibilities. However, it is a particular strain of Escherichia coli was\nimportant that institutions\xe2\x80\x99 Policies include not indigenous to Antarctica and therefore\nall students who receive or participate in required a permit for its introduction arose\nNSF-supported activities and establish a during the 1994-1995 season. NSF\nprocess to notify NSF of any inquiry that determined that these bacteria were\nleads to an investigation. None of the 11 indigenous to the Antarctic, and that no\nAcademic Misconduct Policies includes a permits were necessary for bringing\nprovision for notification of NSF. E. coli or genetic variants of this species\n to the Antarctic. We were concerned that\nInstitutions should review their existing\n NSF\xe2\x80\x99s decision to classify E. coli, and all\nMS&E Policies and Academic Misconduct\n of its genetic variants, as indigenous to\nPolices to ensure that, whatever Policy is\n the Antarctic was more broad than was\nused, an appropriate procedure is in place\n appropriate.\nto notify NSF of any misconduct in sci-\nence allegation against a student involved\nin any NSF-supported activity that advan-\nces to the investigation stage. Such a\n\nSemiannual Report Number 16 80 NSF Office of Inspector General\n\x0cWe recommended that NSF adopt a Staff Activities\npolicy that any laboratory culture of\n An Oversight scientist participated in and\nmicroorganisms is presumptively non-\n spoke at a PRACTICUM sponsored by the\nindigenous to the Antarctic. We also\n American Association for the Advance-\nrecommended that NSF program officers\n ment of Science on Responding to\nensure that any proposed on-site\n Allegations of Research Misconduct:\nrecombinant DNA (rDNA) experiments\n Inquiry and Investigation held in San\nreceive prior approval, if required, from\n Diego, California, from January 26\nthe grantee institution\xe2\x80\x99s rDNA biosafety\n through 28, 1997; another presented a\ncommittee. In response to our recommen-\n paper in a session on The Report of the\ndations, NSF agreed \xe2\x80\x9cto reinstate the\n Commission on Research Integrity at the\nrequirement that all laboratory cultures of\n annual meeting of the Association for\nmicroorganisms proposed for importation\n Practical and Professional Ethics, from\ninto Antarctica, regardless of their origin,\n March 6 through 8, 1997; and a third\nbe listed on a permit application . . .\n chaired a session on Issues in Research\nbeginning with the 1997/98 season.\xe2\x80\x9d NSF\n Ethics at the same Association for\nis considering our recommendation\n Practical Professional Ethics meeting.\nconcerning the prior approval of on-site\nrDNA experiments by a grantee\ninstitution\xe2\x80\x99s rDNA biosafety committee.\n\n\n\n\nSemiannual Report Number 16 81 NSF Office of Inspector General\n\x0cAudit Reports Issued With\nRecommendations for Better Use of Funds\n\n\n Dollar Value\n\nA. For which no management decision has been made 37,385,100\n by the commencement of the reporting period\n\nB. Recommendations that were issued during the 64,020,102\n reporting period (these were issued in ten reports)\n\nSubtotal of A+B 101,405,202\n\nC. For which a management decision was made during 36,998,657\n the reporting period\n\n (i) dollar value of recommendations that were agreed\n to by management\n\n based on proposed management action 12,202,565\n\n based on proposed legislative action 0\n\n (ii) dollar value of recommendations that were not 24,796,092\n agreed to by management\n\nD. For which no management decision had been made 64,406,545\n by the end of the reporting period\n\nFor which no management decision was made within 6 1,466,900\nmonths of issuance\n\n\n\n\n Semiannual Report Number 16 82 NSF Office of Inspector General\n\x0cAudit Reports Issued With Questioned\nCosts\n\n\n\n Number Questioned Unsupported\n Costs Costs\n\nA. For which no management decision has been 73 9,611,016 4,099,345\n made by the commencement of the reporting\n period\n\nB. That were issued during the reporting period 25 2,779,937 1,861,527\n\n\nC. Adjustments to questioned costs resulting 0 0 0\n from resolution activities\n\nSubtotal of A+B+C 98 12,390,953 5,960,872\n\nD. For which a management decision was made 59 5,392,592 3,392,651\n during the reporting period\n\n (i) dollar value of disallowed costs N/A 1,043,405 N/A\n\n (ii) dollar value of costs not disallowed N/A 4,349,187 N/A\n\nE. For which no management decision had been 39 6,998,361 2,568,221\n made by the end of the reporting period\n\nFor which no management decision was made 17 4,339,500 1,384,994\nwithin 6 months of issuance\n\n\n\n\n Semiannual Report Number 16 83 NSF Office of Inspector General\n\x0cAdditional Performance Measures\n\nAs required by the Inspector General Act of demonstrate that a grantee has in fact not\n1978, we provide tables in each Semi- met cost-sharing obligations; these findings\nannual Report to the Congress that give result in formal questioned costs. The\nstatistical information on work conducted by table on page 85 provides statistical\nour audit and investigation units. information about shortfalls occurring\n during the course of a project and at the\nTables that provide statistics concerning completion of the project.\nthese required performance measures are\non pages 44, 82, and 83. GAO and OMB Auditors who conduct financial statement\nsuggested that Offices of Inspector General audits at grantee organizations may identify\ndevelop additional performance measures a general deficiency concerning cost\nthat provide information about their sharing (which we classify as a\nactivities. As a result, we developed two \xe2\x80\x9ccompliance finding\xe2\x80\x9d) but often do not\nadditional performance measures to identify the amount of a cost-sharing\nprovide additional insights about the work shortfall (which we classify as a \xe2\x80\x9cmonetary\nof our office. The two additional measures finding\xe2\x80\x9d) because it is not material in the\nare \xe2\x80\x9cSystemic Recommendations\xe2\x80\x9d and context of the organization\xe2\x80\x99s overall\n\xe2\x80\x9cCost Sharing Shortfalls.\xe2\x80\x9d financial statement presentation. We track\n both monetary and compliance findings that\nCOST-SHARING SHORTFALLS\xe2\x80\x94NSF involve cost sharing.\nseeks to leverage its resources by acting\nas a catalyst, promoting partnerships, and, SYSTEMIC RECOMMENDATIONS\xe2\x80\x94OIG\nin some cases, obligating grantees to staff members regularly review NSF\xe2\x80\x99s\ncontribute substantial nonfederal resources internal operations. These reviews often\nto a project. When NSF award documents result in systemic recommendations that\nrequire substantial cost sharing, we seek to are designed to improve the economy and\ndetermine whether grantees are in fact efficiency of NSF operations.\nproviding promised resources from\nnonfederal sources. We routinely track these systemic\n recommendations and report to NSF\xe2\x80\x99s\nWe divide cost-sharing shortfalls into two Director and Deputy Director quarterly\ncategories. Shortfalls occurring during the about the status of our recommendations.\nlife of a project indicate that the grantee The table on page 86 provides statistical\nmay not be able to provide all promised information about the status of all systemic\nresources from nonfederal sources before recommendations that involve NSF\xe2\x80\x99s\ncompleting the project. Shortfalls that internal operations.\nremain when a project is complete\n\n\n\n\nSemiannual Report Number 16 84 NSF Office of Inspector General\n\x0c Audit Reports Involving Cost-Sharing Shortfalls\n At Risk of Cost-\n Cost- Sharing\n Sharing Shortfalls at\n Number Cost Shortfall/ Completion\n of Sharing (Ongoing of the\n Reports Promised Project) Project*\nA. For which no management\ndecision has been made by the\nbeginning of the reporting period\n 1. Reports with monetary N/A N/A N/A N/A\n findings\n 2. Reports with compliance N/A N/A N/A N/A\n findings\nB. That were issued during the\nreporting period\n 1. Reports with monetary 9 29,206,405 15,691,416 273,496\n findings\n 2. Reports with compliance 9 N/A N/A N/A\n findings\nTotal of Reports With Cost-Sharing 18 29,206,405 15,691,416 273,496\nFindings (A1+A2+B1+B2)\nC. For which a management\ndecision was made during the\nreporting period\n 1. Dollar value of cost-sharing 0 0 0 0\n shortfall that grantee agrees to\n provide\n 2. Dollar value of cost-sharing 1 1,882,061 0 51,774\n shortfall that management\n waives\n 3. Compliance 0 N/A N/A N/A\n recommendations with which\n management agreed\n 4. Compliance recommendation 0 N/A N/A N/A\n with which management\n disagreed\nD. For which no management\ndecision has been made by the end\nof the reporting period\n 1. Reports with monetary 8 27,324,344 15,691,416 221,722\n findings\n 2. Reports with compliance 9 N/A N/A N/A\n findings\n \xe2\x80\xa2 These findings result in questioned costs and are also identified in our table on questioned costs on\n page 83.\n\n\n\n Semiannual Report Number 16 85 NSF Office of Inspector General\n\x0cStatus of Systemic Recommendations\nThat Involve Internal NSF Management\nOpen Recommendations\nRecommendations Open at the Beginning 47\nof the Reporting Period\n\nNew Recommendations Made During 35\nReporting Period\n\nTotal Recommendations to be Addressed 82\n\nManagement Resolution1 of Recommendations\nRecommendations Awaiting\nManagement Resolution 8\n\nRecommendations Resolved by Management 74\n\n Management Agrees to Take Reasonable Action 74\n\n Management Decides No Action is Required 0\n\n\nFinal Action2 on OIG Recommendations\nFinal Action Completed 37\n\nRecommendations Open at End of Period 45\n\n\n\n\n1\n \xe2\x80\x9cManagement Resolution\xe2\x80\x9d occurs when management completes its evaluation of an OIG recommendation\nand issues its official response identifying the specific action that will be implemented in response to the\nrecommendation\n2\n \xe2\x80\x9cFinal Action\xe2\x80\x9d occurs when management has completed all actions it had decided are appropriate to\naddress an OIG recommendation.\n\n\n Semiannual Report Number 16 86 NSF Office of Inspector General\n\x0cAging of Open Recommendations\nAwaiting Management Resolution:\n\n 0 through 6 Months 8\n\n 7 through 12 Months 0\n\n more than 12 Months 0\n\nAwaiting Final Action After Resolution\n 0 through 6 Months 21\n\n 7 through 12 Months 5\n\n 13 through 18 Months 7\n\n 19 through 24 Months 1\n\n more than 24 Months 3\n\n\nRecommendations Where Management Decides\nNo Action Is Required\nNone to report during this period.\n\n\nRecommendations Awaiting Management Resolution\nfor More Than 12 Months\nNone to report during this period.\n\nRecommendations Awaiting Final Action for More Than 24 Months\n Report Title Date Issue\n Review of NSFNET 03/23/93 Audit of Infrastructure Account\n Peer Review Process\n (2 recommendations) 09/29/93 Issue Formal Guidance on Confidentiality\n\n\n\n\nSemiannual Report Number 16 87 NSF Office of Inspector General\n\x0cList of Reports\n NSF and CPA Performed Reviews\nNumber Subject Questioned Unsupported Better Use\n Costs Costs of Funds\n97-1001 School District 108,398 51,774 0\n\n97-1002 Museum 128,108 3,176 0\n\n97-1003 Museum 66,994 66,652 0\n\n97-1004 School District 130,996 112,777 0\n\n97-1005 Educational Nonprofit 92,433 65,768 0\n\n97-1006 Educational For Profit 4,904 4,904 0\n\n97-1007 School District 333,753 322,089 0\n\n97-1008 School District 5,695 2,343 0\n\n97-1009 School District 25,785 718 0\n\n97-1010 University 451,147 222,080 0\n\n97-1012 Non Profit Society 341,057 302,495 0\n\n97-2101 Review of Process Used to Purchase\n PCs at NSF 0 0 0\n\n97-2102 Audit of NSF Statements 0 0 0\n\n97-2103 Review of Infrastructure Awards 109,209 0 0\n\n97-2104 Review of Astronomy Observatories 0 0 2,195,715\n\n97-2105 Review of FFRDC 641,129 0 0\n\n97-2106 Review of Astronomy Laboratory 0 0 1,172,465\n\n97-2107 Review of Funding for Development 0 0 60,000,000\n of the INTERNET\n\n\n\nSemiannual Report Number 16 88 NSF Office of Inspector General\n\x0c Questioned Unsupported Better Use\nNumber Subject Costs Costs of Funds\n97-2108 Review of Electricity Costs 0 0 2,200,000\n\n97-2109 Review of Travel Expenses 0 0 300,000\n\n97-2110 Management Letter on NSF 0 0 0\n Statements\n\n97-6001 For Profit Contractor 2,304 0 0\n\n97-6002 Public Television Network 0 0 0\n\n97-6003 School District 11,944 0 0\n\n97-6004 Non Profit Educational Association 0 0 0\n\n97-6005 Small Business Grantee 0 0 172,002\n\n97-6006 Small Business Grantee 0 0 17,700\n\n97-6007 Small Business Grantee 0 0 25,683\n\n97-6008 Small Business Grantee 0 0 11,550\n\n97-6009 Small Business Grantee 0 0 120,702\n\n97-6010 National Laboratory 148,398 0 0\n\n97-6011 Educational Council 54,423 0 0\n\n97-6012 Educational Service Center 0 0 0\n\n97-6013 School District 412 0 0\n\n\n\n\nSemiannual Report Number 16 89 NSF Office of Inspector General\n\x0cNSF-Cognizant Reports\n Questioned Unsupported\nNumber Subject Costs Costs\n\n97-4001 Science & Technology Foundation 0 0\n\n97-4002 Film Network 0 0\n\n97-4003 Institute for Public Policy Research 0 0\n\n97-4004 Educational Council 0 0\n\n97-4005 Association 0 0\n\n97-4006 Botanical Garden 0 0\n\n97-4007 Botanical Garden 0 0\n\n97-4008 Aquarium Institute 0 0\n\n97-4009 Botanical Garden 751 751\n\n97-4010 Museum 0 0\n\n97-4011 Scientific Research Society 0 0\n\n97-4012 Educational Council 0 0\n\n97-4013 Educational Association 0 0\n\n97-4014 Institute 0 0\n\n97-4015 Non Profit Education Center 0 0\n\n97-4016 Science Center 0 0\n\n97-4017 Research Center 0 0\n\n97-4018 Educational Project 0 0\n\n97-4019 Educational Project 0 0\n\n97-4020 Museum Association 0 0\n\n\n\nSemiannual Report Number 16 90 NSF Office of Inspector General\n\x0c Questioned Unsupported\nNumber Subject Costs Costs\n97-4021 Science Academy 0 0\n\n97-4022 Non Profit Organization 2,484 0\n\n97-4023 Scientific Society 1,924 0\n\n97-4024 Museum 0 0\n\n97-4025 Science Association 0 0\n\n97-4026 Research Consortium 0 0\n\n97-4027 Research Center 0 0\n\n97-4028 Science and Educational Foundation 0 0\n\n97-4029 Educational Council 0 0\n\n97-4030 Museum 0 0\n\n97-4031 Non Profit Grantee 0 0\n\n\n\n\nSemiannual Report Number 16 91 NSF Office of Inspector General\n\x0cOther Federal Audits\n Questioned Unsupported\nNumber Subject Costs Costs\n97-5016 Southern State 114,734 113,900\n\n97-5051 University 795 0\n\n97-5065 University 1,260 0\n\n97-5066 Institute of Technology 900 0\n\n\n\n\nSemiannual Report Number 16 92 NSF Office of Inspector General\n\x0c Audit Reports With Outstanding\n Management Decisions\n This section identifies audit reports involving questioned costs and funds put to better use\n where management had not made a final decision on the corrective action necessary for\n report resolution within 6 months of the report\xe2\x80\x99s issue date. At the end of the reporting\n period, there were 17 audit reports with questioned costs and 2 reports with recommen-\n dations for funds to be put to better use that were not resolved. The status of systemic\n recommendations that involve internal NSF management are described on page 86.\n Report Date Report Dollar\n Number Title Issued Value Status\n\nItems Involving Questioned Costs\n\n95-1022 BBN Laboratories 03/06/95 122,067 2\n95-1042 Mr. Wizard Foundation 03/31/95 157,780 2\n95-1048 Virginia State Department of 09/01/95 317,664 1\n Education\n95-1051 ASA Edison Chouest Offshore, 09/15/95 646,266 3\n Inc.\n95-5722 State of South Dakota 09/22/95 113,204 2\n96-1002 North Carolina Department of 10/01/95 181,459 1\n Administration\n96-1003 Texas Education Agency and 11/14/95 514,268 3\n University of Texas\n96-1009 Society of Automotive Engineers 03/26/96 33,962 1\n96-1014 American Educational Research 03/20/96 211,879 3\n Association\n96-1015 Blackfeet Community College 03/29/96 258,955 3\n96-1018 Woodrow Wilson National 03/27/96 24,657 1\n Fellowship\n96-1024 College Board 03/28/96 171,663 1\n96-1025 Franklin Institute Science Museum 03/28/96 237,678 1\n96-1027 Abt Associates 03/28/96 828,915 3\n96-1031 National Learning Center 09/30/96 337,377 2\n\n\n Semiannual Report Number 16 93 NSF Office of Inspector General\n\x0c Report Date Report Dollar\n Number Title Issued Value Status\n96-2113 AMSI 08/28/96 4,054 1\n96-5024 University of Wisconsin 03/06/96 177,669 2\n\n\nItems Involving Funds Put to Better Use\n\n\n96-2106 National Bureau of Economic 03/29/96 800,000 2\n Research\n96-6008 UCAR 09/17/96 666,900 3\n\n\n\n\nStatus\nCodes\n1 = Resolution is progressing with final action expected in next reporting period.\n2 = Information requested from grantee not yet received in full.\n3 = Further negotiations required prior to resolution.\n\n\n\n\n Semiannual Report Number 16 94 NSF Office of Inspector General\n\x0c Prepared by:\n\n Office of Inspector General\n National Science Foundation\n\n For additional copies, write:\n\n Office of Inspector General\n 4201 Wilson Boulevard\n Arlington, VA 22230\n\nFor additional information, call:\n\n Audit\n Investigations\n (703) 306-2001\n\n Oversight\n (including misconduct in\n science and inspections)\n Legal\n (703) 306-2100\n\n Electronic Mail Hotline\n oig@nsf.gov\n\x0cSemiannual Report to the Congress\n National Science Foundation\n\x0c'