Title : Number 09--NSF OIG Semiannual Report to the Congresss Type : Report NSF Org: OIG Date : August 28, 1995 File : oig09 NATIONAL SCIENCE FOUNDATION SEMIANNUAL REPORT TO THE CONGRESS Number 9 April 1, 1993 - September 30, 1993 Office of Inspector General LETTER TO THE NATIONAL SCIENCE BOARD AND THE CONGRESS This report describes our activities and accomplishments for the second half of FY 1993. Section 5 of the Inspector General Act of 1978, as amended, requires that the National Science Board transmit this report to the Congress within 30 days of its receipt along with any comments the Board may wish to make. In this reporting period, we continued to investigate allegations of misconduct in science. In addition to our ongoing investigation of these allegations, we continued to participate in discussions about the definition of misconduct in science, the role of intent in misconduct cases, and the Department of Health and Human Services' decision to publish the identities of individuals found to have committed misconduct. Our investigators and lawyers conducted a fraud investigation that resulted in the governmentwide suspension of $1.4 million in awards. Our auditors completed a 2-year pilot program intended to evaluate the effectiveness of audit resources used to conduct reviews at universities under the Single Audit Act. They also reviewed NSF's $18 million, 5-year contract with the University of Alaska and completed a financial and compliance audit of the contract that provides logistical and management support for the Antarctic program. An inspection of performance under eight NSF grants at a private, nonprofit research institution's plant biology department was also completed. We appreciate the National Science Board's continued support, encouragement, and guidance. We welcome NSF's new director, Dr. Neal Lane, and look forward to working with him and his management team to ensure the success of the agency's mission to advance research, education, and related activities in science and engineering. Linda G. Sundro Inspector General October 31, 1993 EXECUTIVE SUMMARY FINANCIAL AUDITS Completed reviews at 16 universities to determine whether, and to what extent, our audit resources should be used to conduct audits of NSF awards at universities where other federal agencies have "single audit" responsibility. We identified over $1.2 million in questioned costs; the audits conducted by other federal agencies identified about $200,000. In addition, our audits disclosed numerous compliance and internal control findings and questioned costs that we believe should have been found by the OMB-required audits. Reviewed the $18 million, 5-year contract with the University of Alaska, Fairbanks, to determine whether accurate and should be used when the contract is renegotiated in October 1993. The indirect cost rate did not equitably allocate indirect costs to the contract. We estimated that if the follow-on contract uses the current indirect cost rate, $687,500 in excess indirect costs will be charged to the new contract. Received a formal ruling from OMB on the proper classification of an NSF trust fund. Our FY 1991 audit identified three funds that were not reported in the agency's financial statement even though they had characteristics similar to the funds in the Donations Account. The Inspector General believed that one account should be included in the trust fund, and NSF's Chief Financial Officer disagreed. OMB agreed with the Inspector General that the account should be reclassified as a trust fund in NSF's Donations Account. The remaining two accounts were determined to be the fiduciary responsibility of the Department of State. INVESTIGATIONS Recovered $435,356. Conducted investigations of two small, high-technology business that submitted false statements and false claims and forged documents to receive over $1.5 million in duplicate funding under the Small Business Innovation Research program. Because of this action, awards totaling $1.4 million were suspended. Investigated an allegation that a university professor had submitted false statements to qualify for an NSF Young Investigator award. MISCONDUCT IN SCIENCE Discussed four policy issues on misconduct in science. Two are on the definition of misconduct in science. The other two discussions are on the role of intent in misconduct in cases and the Department of Health and Human Services' new policy of publicly identifying all persons against whom it has made misconduct findings. OIG also conducted an investigation that concluded that a college engaged in misconduct. INSPECTIONS AND EVALUATIONS Conducted an inspection at a private, nonprofit research institution's department of plant biology to review performance and compliance under eight NSF grants. We did not find any significant deficiencies in the financial, administrative, or performance aspects of these grants. CONTENTS REPORTING REQUIREMENTS AUDITS INVESTIGATIONS OVERSIGHT LEGAL SIGNIFICANT AUDIT RECOMMENDATIONS FROM PREVIOUS SEMIANNUAL REPORTS REPORTS WITH OUTSTANDING MANAGEMENT DECISIONS AGENCY REFUSAL TO PROVIDE INFORMATION OR ASSISTANCE SIGNIFICANT MANAGEMENT DECISIONS THAT WERE REVISED INSPECTOR GENERAL'S DISAGREEMENT WITH SIGNIFICANT MANAGEMENT DECISIONS LIST OF REPORTS STATISTICAL TABLE OF INSPECTOR GENERAL ISSUED REPORTS WITH QUESTIONED COSTS INSPECTOR GENERAL REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE ACRONYMS ASA Antarctic Support Associates BIO Directorate for Biological Sciences CFO Chief Financial Officer CPA Certified Public Accounting CTIO Cerro Tololo Interamerican Observatory DoD Department of Defense FOIA Freedom of Information Act GRESE Grants for Research and Education in Science and Engineering GSA General Services Administration HHS Department of Health and Human Services NASA National Aeronautics and Space Administration NIH National Institutes of Health OGC Office of General Counsel OGE Office of Government Ethics OMB Office of Management and Budget OSTP Office of Science and Technology Policy PAM Proposal and Award Manual PHS Public Health Service PI Principal Investigator PICO Polar Ice Coring Office REU Research Experiences for Undergraduates RFP Request for Proposals SBA Small Business Administration SBIR Small Business Innovation Research UCAR University Corporation for Atmospheric Research REPORTING REQUIREMENTS The table cross-references the reporting requirements prescribed by the Inspector General Act of 1978, as amended, to the specific pages in the report where they are addressed. Section 4(a)(2) Review of Legislation and Regulations Section 5(a)(1) Significant Problems, Abuses, and Deficiencies Section 5(a)(2) Recommendations With Respect to Significant Problems, Abuses, and Deficiencies Section 5(a)(3) Prior Significant Recommendations on Which Corrective Action Has Not Been Completed Section 5(a)(4) Matters Referred to Prosecutive Authorities Section 5(a)(5) Summary of Instances Where Information Was Refused Section 5(a)(6) List of Audit Reports Section 5(a)(7) Summary of Each Particularly Significant Report Section 5(a)(8) Statistical Table Showing Number of Reports and Dollar Value of Questioned Costs Section 5(a)(9) Statistical Table Showing Number of Reports and Dollar Value of Recommendations That Funds Be Put To Better Use Section 5(a)(10) Summary of Each Audit Issued Before This Reporting Period for Which No Management Decision Was Made by the End of the Reporting Period Section 5(a)(11) Significant Revised Management Decisions Section 5(a)(12) Significant Management Decisions With Which the Inspector General Disagrees AUDITS The Office of Audit is responsible for auditing grants, contracts, and cooperative agreements funded by NSF's programs and operations and for ensuring that reviews of financial, administrative, and programmatic aspects of activities are performed. The Office evaluates internal controls, reviews data processing systems, examines allegations of improper actions by NSF staff, all follows up on the implementation of recommendations included in audit reports. All audit reports processed by the Office of Inspector General are referred to NSF management for action or information. The Office of Audit advises and assists NSF in resoling audit recommendations. The Office of Audit advises and assists NSF in resolving audit recommendations. The Office of Audit also assists NSF by acting as a liaison between NSF and audit groups from the private sector and other federal agencies by arranging for special reviews, obtaining information, and providing technical advice. AUDIT ACTIVITIES NSF's budget has increased 42.2 percent from $1.9 billion in 1989 to $2.7 billion in 1993. To appropriately use these funds and maintain our audit standards, we established a strategic plan for audit work conducted in 1993 and 1994. The plan consists of reviews of the three programs that have experienced the most growth. These are: (1) programs at universities including science and engineering centers, (2) the Antarctic program, and (3) science and engineering education programs. OIG Completes 2-Year Pilot Program In response to the Senate Subcommittee on Government Affairs' 1991 request, we initiated a 2-year pilot program to determine whether, and to what extent, our audit resources should be used to conduct audits of NSF awards at universities where other federal agencies have "single audit" responsibility. We also determined whether procedural findings and questioned costs revealed areas in which the administration of a specific NSF program, or overall management of an NSF program, could be improved. While implementing our 2-year program, we completed reviews at 16 universities (8 during our first year and 8 during this reporting period). We conducted financial and compliance audits of costs claimed at 16 universities. In accordance with Office of Management and Budget (OMB) Circulars A-110, A-128, and A-133, NSF management relies on university audits conducted by independent accountants, as well as state and cognizant federal auditors, to ensure that grantees are properly using award funds and complying with applicable laws and regulations. During our review, we found that the results of audits conducted under the OMB guidelines had been issued for 12 of the 16 universities in our sample. Based on our analysis of the reports issued on these 12 universities, we determined that audits conducted by independent accountants at universities did not always identify findings that were useful to NSF's oversight of these universities. The audit reports for six of the universities contained findings that NSF would not find useful in its oversight. Of the audits conducted at the remaining six universities, NSF had responsibility to follow up on findings contained in two reports. The four remaining reports contained findings that were forwarded to the cognizant agency for resolution. The 16 audits that we conducted identified over $1.2 million in questioned costs. The audits conducted by other federal agencies identified about $200,000 in questioned costs. As a result of our analysis of the audits at the 12 universities, we believe the quality of audit coverage varies among state auditors and the certified public accounting (CPA) firms conducting the audits for the universities. For example, one report identified substantive compliance and internal control findings; however, other reports did not identify any compliance or internal control findings or questioned costs. Our audits developed numerous compliance and internal control findings and questioned costs that we believe should have been identified by the OMB-required audits. We believe our university audits have been an efficient and effective way of reviewing the expenditure of NSF funds and are a productive means of augmenting the audit efforts of other independent, state, and federal auditors at colleges and universities. Based on the findings discussed in our reports and not disclosed by the independent, state, and federal auditors, we do not believe the OMB-required audits have adequately safeguarded NSF's interests. We plan to continue reviews at universities by participating in the financial audit component of the inspections program, by conducting reviews at science and technology centers as well as engineering research centers, and building upon audits conducted by other auditors to ensure that proper oversight has been provided to safeguard NSF's interests. The following paragraphs discuss the most common findings in our university audits. We noted deficiencies in the personnel activity reporting systems at 12 of the 16 institutions. These deficiencies included activity reports that (1) did not exist, (2) supported a salary amount that was different than the amount charged to the award, (3) were signed before the activity occurred, and (4) were not completed on time. Also, there was no independent internal review performed of the personnel activity reporting systems. Only one of the audits conducted to meet OMB requirements disclosed problems with the personnel activity reporting system. We noted deficiencies in the procurement process at 10 of the 16 institutions. These institutions did not conduct price or cost analyses, document sole source justifications, or screen for available equipment to prevent duplicative purchases. Only two of the audits conducted to meet the OMB requirements disclosed problems with the procurement process. We noted deficiencies in property procedures at 6 of the 16 institutions. These deficiencies included the lack of an adequate physical inventory and property files or records. Only three of the audits disclosed problems with the property procedures. We questioned costs at 11 universities because indirect costs, such as office supplies, magazine subscriptions, office furniture, telephone costs, and administrative labor costs, were claimed as direct costs. None of the audits conducted to meet the OMB requirements questioned costs related to indirect costs. Our audits also identified several practices that we believe could be changed to improve internal controls. For example, we found that although six institutions could demonstrate that they had met NSF cost sharing requirements, there were no formal systems in place to track cost sharing data. We also found that project budgets and budget justifications lacked sufficient details to facilitate adequate review, oversight, and control of spending under the projects. Indirect Costs Reviewed at the University of Alaska In November 1988, NSF signed an $18 million, 5-year contract with the University of Alaska, Fairbanks, to operate the Polar Ice Coring Office (PICO), which was established as an office at the university. PICO plans and organizes ice core drilling projects in the world's polar and high-altitude regions. PICO also designs various types of equipment that are used in the drilling operations. Each year, the University and its cognizant federal agency, the Office of Naval Research, negotiate the indirect cost rates that the University uses on federal grants and contracts. For the PICO contract, the University and NSF agreed to use an indirect cost rate that was different from the rate negotiated between the University and the Office of Naval Research. The rate agreed to by the University and NSF was established to more accurately allocate indirect costs to the PICO contract. We audited the PICO contract to determine whether the indirect cost rates were accurate and should be used when a new contract is negotiated in October 1993. As part of our audit, we reviewed the University's indirect costs to determine whether these costs supported the NSF program and should be included in the PICO indirect cost rate. We also reviewed the approach used to allocate the indirect costs to determine whether the approach was equitable to NSF. The indirect cost rate in place did not equitably allocate indirect costs to the PICO contract. This rate included excess research administration costs and allocated other costs for depreciation and use allowances, operations and maintenance, and library facilities that did not support the NSF contract. We estimated that if the University receives the follow-on contract with the current indirect cost rate, $687,500 in excess indirect costs will be charged to the new contract. As a result of our recommendation to eliminate excess research administration costs and other costs that do not relate to the NSF project, the University submitted a revised indirect cost proposal. The University also proposed to segregate the PICO indirect costs from the other on-campus indirect costs. We believe this rate will more accurately allocate indirect costs to the PICO contract. Therefore, we recommended that NSF's contracting officer accept the newly proposed rate for contract negotiations. Antarctic Program NSF is responsible for the overall management of U.S. operations in Antarctica. The Antarctic program supports research and provides a U.S. presence in Antarctica under the auspices of the Antarctic Treaty. Although NSF staff members provide the guidance, oversight, and funding for the Antarctic operations, a for-profit company under contract with NSF provides the actual management and operational support for the Antarctic program. During this reporting period, we completed a financial and compliance audit of the contract that provides logistical and management support for the Antarctic program. Contract Audit. NSF awarded a cost-plus-award-fee contract to Antarctic Support Associates (ASA). ASA is a joint venture company that was formed by two firms (one in California and one in Massachusetts) to bid and work on the Antarctic contract. NSF awarded the contract to ASA to fund research activities and operations as well as to maintain facilities and equipment at sites in Antarctica. ASA is also responsible for leasing and managing the two ships that are used in the Antarctic program. The major sites supported in Antarctica are the Palmer, McMurdo, and South Pole stations. ASA also maintains three facilities that are used as staging areas and shipping ports for the supplies and equipment needed in support and research activities. The 6-year operational contract began on April 1, 1990, and expires on March 31, 1996. The overall contract included a 6-month, phase-in period (October 1, 1989, through March 31, 1990) to allow for the transfer of operations from the contractor that previously held the program contract to ASA. The total estimated contract cost, including base and award fees, for the 6.5-year contract period was approximately $251 million. Financial and Compliance Audit. Our financial and compliance audit covered October 1, 1989, through December 31, 1992. As of that date, NSF had allotted approximately $193 million for the contract. Total expenditures through the end of the audit period were approximately $169 million, which included expenditures related to safety, environment, and health projects. As part of our audit, we reviewed previous findings and recommendations from a joint OIG/NSF review, and ASA's two parent companies' audit reports. From over 40 prior findings and recommendations, we found only a few instances where we felt the contractor did not take corrective actions. For example, ASA had not (1) established an internal audit function, (2) obtained financial statement audits from independent accounting firms, (3) established adequate payroll processing procedures, or (4) taken cash discounts on purchases when they were available. Our current audit questioned over $500,000 because inadequate, and in some cases no, documentation was provided to support claimed costs related to equipment, travel, and other services; reimbursements for travel in personal automobiles were not always justified; documentation was not maintained justifying the use of foreign-flag air carriers; and payments made by ASA for services rendered by its two parent companies were not supported by adequate documentation or a contractual agreement to be used to determine the reasonableness of the billed costs. We also noted the following compliance and internal control deficiencies: NSF's contracting officer was not notified before changes totaling $148,000 were made to the construction of a research vessel with ice-breaking capabilities. Formal policies and procedures related to the use of foreign-flag air carriers and cash drawdowns were not developed. The contract required that the ice-breaking vessel have liability insurance totaling $11 million. ASA's insurance policy was for only $10 million. Appropriate approvals for the change were not received. We presented these findings to the contractor. Because the contractor needed to obtain a great deal of documentation to the support the questioned costs, resolution is not expected until calendar year 1994. In addition to the financial and compliance audit, NSF asked that we audit the cost proposal for the maintenance contract that Air New Zealand holds for aircraft servicing Antarctica. We received the proposal for review and began our on-site work in New Zealand in September 1993. The new contract will be negotiated in November 1993. ***************************************************************** Questioned Cost A cost the Office of Inspector General has questioned because of an alleged violation of law, regulations, contract, grant, cooperative agreement, or document governing the expenditure of funds; such cost is not supported by adequate documentation; or the expenditure of funds for the intended purpose is unnecessary or unreasonable. ***************************************************************** Science and Engineering Education In Semiannual Report No. 8 (page 3), we reported that Congress had increased the funding for NSF's programs in science and engineering education from $171 million in FY 1989 to $487 million in FY 1993. With this additional funding, NSF was able to expand its education-related programs and provide awards to many new grantees. These new grantees often did not have experience working under federal laws and regulations. During this reporting period, we attempted to identify the organizations that were at risk and schedule audits of their programs. Since 1989, about 2,145 organizations have received financial support from NSF's science and engineering education programs. About 1,865 of these organizations were under the cognizance of other federal agencies that review audits conducted under OMB Circular A-128 or A-133 guidelines. Of the remaining 280 institutions, 150 non-academic, state, and local government organizations were audited within the past 5 years, and we arranged many of these audits. We screened the remaining 130 organizations to determine whether they had active grants, there was significant funding to make a review cost-effective, and their federally funded activities had been audited. As a result, 29 organizations that had never had their NSF programs reviewed were scheduled for audit. While we were scheduling audits of these organizations, we found that, although few of the grantees were anxious to be audited, one company that had received a grant from the Division of Elementary, Secondary, and Information Education was so averse to being audited that it returned the $300,950 grant rather than submit to an audit. We have completed seven audits in this area. Five of those audits are highlighted here. Resolution of these audits is in-process. NSF awarded a $407,206 grant to a nonprofit organization to develop and implement a curriculum and professional development model to up-grade the Cleveland public schools' seventh and eighth grade mathematic curriculums. The grantee claimed $358,617, and we questioned $197,293. We recommended that the grantee develop accounting policies and procedures and develop controls within its financial management system. NSF awarded a $450,780 grant to a commercial company to support production of the first "IMAX" film to survey the universe. The grantee claimed $88,459, and we questioned $80,591. Questioned costs related to salary expenses that were not supported by time/attendance or activity reports and unsupported subcontract costs. We recommended that the grantee get NSF's approval before placing any subcontract/order. Several requests by the auditor for comments from the grantee yielded no response. NSF awarded a $392,820 grant to a nonprofit organization to support the production of an educational film. The organization claimed $186,460, and we questioned $55,319. Consulting costs were not supported by written agreements, and inadequate invoices and labor costs were mistakenly charged to the grant. Cash advances were not deposited into an interest-bearing account, and documentation was not maintained to show how exchange rates were used to translate foreign expenditures. We made recommendations to correct these weaknesses. NSF awarded two grants totaling $312,612 to a nonprofit corporation to support the development and enhancement of the mathematic and scientific skills of precollege Hispanic students. The grantee claimed $254,044, and we questioned $33,596. The questioned costs resulted from insufficient documentation to support claimed salaries and material costs as well as supplies and costs claimed that exceeded recorded costs. We also found that the grantee did not maintain an approved indirect cost allocation plan, and federal cash transaction reports were not properly completed. In addition, we found that the grantee did not maintain adequate procedures for the competitive bidding for purchases over $10,000. NSF awarded over $1.3 million to a not-for-profit museum to support construction of a new exhibit. The grantee claimed $150,777, and we questioned $29,389. NSF awarded the museum funding with the expectation that the museum would share approximately $3.7 million of the project's costs. The museum had developed potential sources of cost sharing, but at the time of our audit, there was a significant gap between the funding received and the funding the project needed. We also found that excessive indirect costs were provided under the award. The following compliance and internal control deficiencies were also noted during our review: an audit was not conducted in accordance with federal guidelines, federal cash on-hand exceeded the project's operating needs, and the grantee's financial management system did not provide for a comparison of budgeted amounts with actual outlays. Chief Financial Officers Act To comply with the Chief Financial Officers (CFO) Act of 1990, NSF submits a Donations Account Financial Statement to OMB by March 31 of each year, the Office of Inspector General (OIG) audits the financial statements and submits a report to the agency head by June 30, and the CFO submits an annual report that incorporates the annual financial statement and the auditor's reports to OMB by August 31 of each year. Our FY 1991 audit identified one North Atlantic Treaty Organization and two Department of State funds that were not reported in the financial statements even though they had characteristics similar to the funds in the Donations Account. After extensive review, the CFO and OIG agreed that the Department of State funds were the fiduciary responsibility of the Department of State and should not be included in NSF's Donations Account financial statements. However, the Inspector General and the CFO could not agree on the proper classification of the North Atlantic Treaty Organization fund or whether it should have been included in NSF's financial statements. The Inspector General believed that the North Atlantic Treaty Organization fund should be classified as a Trust Fund. The CFO disagreed. In July 1992, a decision was made to request a formal ruling from OMB on the proper classification of the fund. As a result of this request, the Department of the Treasury and OMB's Energy and Science Division advised NSF that the $4-million North Atlantic Treaty Organization fund should be reclassified as a trust fund. Since the decision to reclassify the account was not made until May 1993 and OMB did not have the authority to issue waivers for FY 1992, OMB's Energy and Science Division decided, and OMB's Office of Financial Management concurred, that the North Atlantic Treaty Organization fund would be included in the Donations Account Financial Statements and audited beginning in FY 1993. During this reporting period, we audited the FY 1992 Donations Account Financial Statement. We also tested the FY 1991 information that NSF included in the FY 1992 statements for comparative purposes, even though we had conducted a complete audit of FY 1991 information in 1992. The FY 1991 information was amended on the FY 1992 statement to include administrative costs and was reformatted to conform with the revised financial statement formats that OMB required in FY 1992. Our audit identified underestimated liability, expense, and advance entries that materially affected the FY 1992 financial statements. The CFO amended the statements in response to our findings. On June 30, 1993, we issued the Auditor's Report on the Principal Statements, the Auditor's Report on Internal Controls, and the Auditor's Report on Compliance. In addition, we issued a Management Letter to the Acting Director of NSF. Based on information in our Management Letter, NSF agreed to (1) compare estimated accrued liabilities and expenses with actual liabilities and expenses for material differences before compiling the financial statements, (2) properly reverse expenditure accrual entries and review the general ledger for unusual general ledger entries and account balances, (3) record reversing entries in the same fiscal year that the adjusting entries are recorded, (4) establish a system to collect and report accurate financial and program performance data, (5) report total receipts and expenses for the U.S.-Saudi Arabia Joint Commission Program in future financial statements, and (6) document the procedures used to compile the financial statements. OMB revised the reporting requirements for future statements and audits. Our next audit must be submitted to OMB by March 1, 1994. We have already begun our testing and review of 1993 account activity. Audit of Grant Proposal Processing Time Review of Processing Times in the Grants Division. As part of our internal control reviews at NSF, we evaluated the time required to process grants and agreements in NSF's grants division. Our review covered details of activities conducted in FYs 1989 through 1992. NSF's policy stipulates that award activities in the grants division should not exceed 30 calendar days. We reviewed the staffing levels in the grants division for FYs 1989 through 1992 and analyzed those awards whose processing times exceeded the 30-day goal. We did this because staffing levels and averages of grant processing times could distort conclusions and obscure problems. In general, we found that the grants division was processing awards faster. The number of employees assigned to the grants division varied: in 1985 and 1992, there were 78 and 67 staff members, respectively. The number of awards processed increased 42.6 percent from 1985 to 1992. (See Table 1 for detailed statistics.) On average, it took the grants division 26 days to process an award in 1985 and 20 days to process an award in 1992. We think the reduction in processing time, despite the increase in the number of awards processed and a decrease in the number of staff members processing awards, is commendable. _________________________________________________________________ Table 1: Grants Division Statistics _________________________________________________________________ Number of Fiscal Number of Grants Years Employees Awarded _________________________________________________________________ 1985 78 13,785 1986 72 13,516 1987 67 14,903 1988 67 15,254 1989 66 16,545 1990 67 17,369 1991 58 18,571 1992 67 19,657 _________________________________________________________________ In reviewing the grants where processing times exceeded 30 days, we found that there were usually valid reasons why proposals took more than 30 days to process. The most common of these reasons was that the grants division had to pursue and resolve the following issues before the awards were made: (1) the proposals were from institutions that were new to NSF and therefore NSF did not have a working history with them, (2) the institution had provided old or invalid indirect cost rate information, and (3) the institution had included incorrect budget information in the proposal. We believe that these issues could be addressed faster if the grants division established an early warning system that identifies new institutions requiring added background work. Reviews of Processing Times in Program Offices. We surveyed the proposal processing times in the program offices to ensure that they were promptly processing proposals. We made this survey with an eye toward identifying issues for a future, more detailed review of the early stages of the proposal processing system. NSF's processing policy is that all receipt and review activities be completed within 6 months of NSF's receipt of the proposal. (The 6-month period does not include the 30 days that the grants division is given to process proposals.) The program offices met the 6-month goal about 55 percent of the time in 1989, 51 percent of the time in 1990, and 45 percent of the time in 1991 and 1992. There was at least a 10-day lapse between the date the program officer recommended the award and the date the office head or division director concurred with that recommendation in 46 and 48 percent of the cases reviewed in 1991 and 1992, respectively. Also, for 12 percent of approved proposals, it took longer than 5 days to enter approved proposals into the grant system after the division director concurred with the recommendation for award. NSF needs to have continuous training for program officers and other employees involved in processing proposals. Because of the large turnover of program managers within NSF, either through short-term rotators or through intergovernmental personnel act assignees, program managers do not always seem to know or remember the guidelines for processing a proposal or what can be discussed with the person who submitted the proposal. Grantees may believe that NSF grant processing does not meet its time goals because program managers tell the potential grantees that their proposals have been recommended for award. This may cause the proposer to expect the imminent announcement of the grant's award when, in fact, there are a number of actions still necessary under the award system before the award is actually issued. There are also instances (depending on funding availability, management concerns, and proposer financial condition) where awards will not ultimately be made, in spite of the program recommendation. We found that the grants division was generally timely in its processing of awards. However, our preliminary findings suggest that there are proposal processing issues that should be addressed in a future review of the program offices. As a result, we plan to conduct a detailed review of proposal processing in program offices during the upcoming year. Cerro Tololo Interamerican Observatory As part of our audit coverage of the National Optical Astronomy Observatories, we visited the Cerro Tololo Interamerican Observatory (CTIO) near La Serena, Chile. The Association of Universities for Research in Astronomy, which manages CTIO, received a $158,543,300, 5-year cooperative agreement from NSF to support the National Optical Astronomy Observatories. The agreement began on October 1, 1989, and will expire on September 30, 1994. CTIO is one of three observing sites that makes up the National Optical Astronomy Observatories. The other two sites are: Kitt Peak National Observatory near Tucson, Arizona, and Sunspot Solar Observatory near Cloudcroft, New Mexico. In 1987, CTIO identified and tracked the supernova. In 1992, CTIO sponsored 219 observing programs that involved 387 scientists who published 152 papers based on observations made at the CTIO facilities. We reviewed the CTIO operations and about $3.7 million in claimed costs under the cooperative agreement for the fiscal year ended September 30, 1992. We evaluated the adequacy of the internal control structure, assessed the effectiveness of the administrative operations, and determined the degree of compliance with CTIO's policies and procedures as well as federal laws and regulations. We found questionable costs charged to the cooperative agreement and made recommendations to decrease operational costs and improve the administrative support of CTIO, which would result in a $48,000 savings to NSF. These savings would result from more accurate revenue forecasts of cafeteria and housing services and indirect costs associated with an automobile rental business being operated by the contractor on CTIO's facilities. If CTIO included the additional revenue in its budget, it would have requested approximately $32,000 a year less from NSF. The allocation of approximately $16,000 of indirect costs to the automobile rental business would also have reduced NSF's costs. We also recommended improvements in the operational procedures and policies that, if implemented, should result in additional savings. These recommendations included: (1) lowering the $257,000 average balance of NSF cash held in the contractor's Chilean bank account, (2) seeking more competition to help ensure that the most reasonable price was obtained for expenditures charged to the cooperative agreement, and (3) reconciling property and financial records to help identify and track equipment purchased under the cooperative agreement. OTHER SIGNIFICANT AUDIT WORK When selecting programs for audit, we review the (1) grantee's previous business relationship with the federal government, (2) type of organization that the grantee operates (that is, nonprofit, educational institution, non-for-profit, or for-profit), (3) requirements for self audit through OMB Circular A-128 or A-133 audits, (4) history of audits received from the grantee, (5) unaudited funding, (6) results of any prior reviews of the grantee's accounting and management systems, and (7) concerns that may have been expressed by the NSF program and grant offices. As a result of this review process types of grantees continue to be identified for audits: grantees under the Small Business Innovation Research (SBIR) program; independent laboratories, and nonprofit organizations; and contractors that support NSF operations and programs. Below are detailed discussions of our reviews of these three types of grantees and contractors. SBIR Grantees SBIR grantees are likely to be selected for audit because (1) they are for-profit organizations that are not required to have audits of their operations by either OMB Circular A-128 or A-133, (2) they are usually small organizations that have had limited dealings with the federal government and therefore do not have a history of review by federal auditors, and (3) their federal awards are relatively small so they probably do not have on-site accounting and management reviews performed before they receive federal awards. In addition, SBIR grantees are often audited because previous audits have identified deficiencies in SBIR grantees. Summaries of three of our audits of SBIR grantees follow. NSF awarded a $249,400 grant to a for-profit corporation to support the development of a prototype system for molding reinforced plastic composites into commercial products. The grantee claimed $104,358, and we questioned $23,613. Cash advances received from NSF were not deposited in interest-bearing accounts, there was a lack of segregation of duties in the cash disbursement system, and the grantee did not prepare a manual detailing its accounting procedures. We recommended that (1) the grantee refund the questioned costs to NSF and deposit all federal funds in an interest-bearing account and (2) the grantee establish accounting procedures requiring that cash disbursement responsibilities be segregated and that the grantee prepare an accounting manual describing procedures for handling accounting transactions. Resolution of these recommendations is expected shortly. NSF awarded a for-profit organization a $224,137 grant to support the research and development of a set of statistical procedures. The grantee claimed $224,137, and we questioned $11,288. The questioned costs resulted from unapproved salaries charged to the award, unauthorized travel expenses, and salaries paid in excess of the allowable rate. We recommended that (1) the grantee establish personnel files for all employees to ensure that authorized pay rates and other pertinent personnel and payroll information are maintained, (2) the organization maintain property records that meet federal requirements, and (3) the organization obtain written approval from NSF before charging unauthorized project expenses to the NSF award. The grantee did not comment on the draft report. The NSF grants officer is working to resolve the findings. NSF awarded a $248,239 grant to a for-profit corporation to fund research in fruit maturation and ripening. The grantee claimed $83,122, and we questioned $44,932. Questioned costs related to unsupported salary and fringe benefit costs, purchase of equipment that was not a budget line item, and indirect costs claimed that exceeded the allowable amount. We recommended that the grantee produce documentation to support the questioned costs or refund NSF the $44,932 in questioned costs. The grantee provided documentation that the auditor considered inadequate. The NSF grants officer will decide whether the grantee's documentation and arguments are acceptable. Nonprofit Organizations and Laboratories The second group identified for audit is independent laboratories and other nonprofit organizations that have not been audited by federal agencies over an extended period of time, have not complied with the OMB Circulars for audit, or have been receiving small grants over many years that have resulted in a significant unaudited federal funding balance. NSF awarded 10 grants totaling $3,580,355 to a private, nonprofit corporation to assist in the exchange of information among research and educational institutions through high-speed data communications techniques and to promote collaborative research between private industry and universities. The grantee claimed about $2.8 million, and we questioned $19,372. Questioned costs related to overhead expenses that were claimed as direct costs, grant revenues that exceeded grant expenditures, salaries and wages claimed that exceeded the actual amount paid to employees, and lack of documentation to support other direct costs claimed. The grantee concurred with our findings and agreed to comply with our recommendations. NSF awarded eight grants totaling $1.2 million to a hospital to support health care services as well as research and education for the scientific community. The grantee claimed $745,609, and we questioned $16,911. Questioned costs related to duplicate costs claimed for equipment rental, indirect costs questioned as a result of questioned equipment rental costs, equipment charged to the grant that was not substantiated by supporting documentation, and a discount given on an equipment purchase that was not credited to the grant. The auditee concurred with the questioned costs and indicated that the errors will be corrected on the December 31, 1992, Federal Cash Transactions Report. NSF awarded five grants totaling $309,576 to a not-for-profit organization to support research facilities and programs. The grantee claimed $309,104, and we questioned $15,495. Questioned costs resulted from insufficient documentation to support costs claimed, unallowable costs, and interest earned on advanced funds that was not remitted to the government. We also found that final progress reports were not promptly submitted to NSF. Accounting functions were not segregated, and procedures were not maintained for awarding contracts totaling $10,000 or more. We recommended that the grantee maintain documentation and monitor costs charged to NSF awards. By the end of the reporting period, the findings and recommendations had not been resolved. Contracts That Support NSF Operations and Programs A third type of required review is the audit of contracts that are issued for support of NSF operations of programs. We are required by the Federal Acquisition Requirements to review these contracts. A summary of the most significant of these reviews follows. NSF awarded a $581,765 contract to a firm for technical support of NSF computer systems. We questioned $11,970 because indirect cost rates included excessive compensation and office expenses. The questioned costs represent an increase in the president of the firm's salary from calendar year 1990 to 1991. We believe that a 93-percent increase in the president's compensation was not reasonable and therefore not allocable to federal awards. We also questioned office expenses for furniture and equipment that were allocated to the overhead and general and administrative cost pools. In our opinion, the costs of the furniture and equipment should have been charged through depreciation rather than all at one time. Contracting officers at NSF and the federal cognizant agency responsible for negotiating governmentwide indirect rates will be working together to arrive at an equitable solution to the questioned contract costs. INVESTIGATIONS The Investigations Section is responsible for investigating violations or criminal statutes as well as regulations involving NSF employees, grantees, contractors, and other individuals conducting business with NSF. The results of these investigations are referred to federal, state, or local authorities for criminal or civil prosecution or to NSF's Office of the Director to initiate administrative sanctions or penalties. EMBEZZLEMENT OR DIVERSION OF NSF GRANT FUNDS We place a high priority on allegations involving embezzlement, diversion of grant or contract funds for personal use, or other illegal use of NSF funds. Deliberate diversion of NSF funds from their intended purpose is a criminal violation that can be prosecuted under several statutes. We encourage universities and other grantees to notify NSF of any significant problems relating to the misuse of NSF funds. Early notification of significant problems increases our ability to investigate allegations and take corrective action to protect NSF and its grantees. __________________________________________________________________ Table 2: Investigative Activity __________________________________________________________________ Active Cases From Prior Reporting Periods 22 New Allegations 30 Total Cases 52 Cases Closed After Preliminary Assessment 6 Cases Closed After Inquiry/Investigation 21 Total Cases Closed 27 ACTIVE CASES 25 _________________________________________________________________ The following section describes cases involving the diversion of funds that we investigated during this reporting period. False Statements and Forgeries Found in Investigations of SBIR Awards The SBIR program, which is coordinated by the Small Business Administration (SBA), is an important component of the government's effort to increase the competitiveness of American industry in innovative research and development. The program started at NSF and was so successful that 11 federal research agencies have implemented SBIR programs. The SBIR program's objectives include stimulating technological innovation in the private sector; strengthening the role of small business in meeting federal research and development needs; increasing the commercial application of federally supported research results; and fostering and encouraging participation by minority and disadvantaged persons in technological innovation. This year, we led investigations involving two small high-technology businesses that defrauded the SBIR program. Based on these investigations, we concluded that these companies submitted false statements and false claims and forged documents to receive duplicate funding under SBIR awards. Discussions of the two investigations, and the systemic recommendations made as a result of these investigations, follow. Small Business Fraudulently Obtained Over $1.5 Million in Duplicate Funding. NSF led an investigative team consisting of special agents from NSF, the National Aeronautics and Space Administration (NASA), and the Department of Defense (DoD). This coordinated investigation found evidence that the owner of a small, high-technology business repeatedly submitted duplicate proposals to, and received duplicate funding from, NSF, NASA, and various DoD agencies, without informing the agencies as required by the agency solicitations. We found that the company "recycled" 11 research ideas 40 times in duplicate submissions to the SBIR programs of different federal agencies. We concluded that the company made numerous false statements to conceal the duplicate submission of these proposals and prior duplicate awards. As a result, the company received over $2.5 million in research funds, of which only about $1 million would have been awarded if the company had informed the government of its duplicate submissions. Therefore, we concluded that the company had fraudulently obtained about $1.5 million in SBIR funding. Based on this information, we recommended, and NSF agreed, that the company be suspended from receiving new federal awards until the investigation is complete. Because of this action, awards totaling $1,395,311 have been suspended governmentwide. Also, in response to our recommendations, NSF saved $90,374 by deciding to no longer provide funds to the company under two current awards. In addition to submitting false statements to receive duplicate funding, we found that the president of the company submitted forged commitment letters with the proposals. Commitment letters are submitted with Phase II SBIR proposals to demonstrate that other companies have expressed an interest in commercializing the idea discussed in the small business' proposal. We have evidence that the president also forged the signature of one of the PIs on two proposals, one of which received an award. We referred criminal violations developed by our investigation under 18 U.S.C. 287 (False Claims), 494 (Forgery), 1001 (False Statements), and 1343 (Wire Fraud) and civil violations under the Civil False Claims Act to the appropriate U.S. Attorney. If the company is found liable under the Civil False Claims Act, the government may recover the $1.5 million fraudulently obtained and triple damages, as well as impose penalties of $5,000 for each false claim. Continued Investigation Uncovers Additional Fraud by Small Business Owner. In Semiannual Report No. 8 (page 14), we reported that a small, high-technology company fraudulently obtained double funding from NSF and another federal agency by submitting false statements in proposals that concealed the duplicate submission of the same proposal to NSF and NASA. In this semiannual period, at the request of the U.S. Attorney, we broadened our investigation to include all of that small business' SBIR activities. We led an investigative team of special agents from NSF, NASA, and DoD. We found that the owner of the small business submitted additional duplicate proposals, forged the signatures of the principal investigators (PI) on several proposals, and submitted false information concerning fringe benefits that were not paid to the PIs. These forgeries and misrepresentations resulted in a financial loss to the government of approximately $400,000. The investigation determined that the owner submitted at least 31 false statements, violating 18 U.S.C. 1001, and forged signatures on 14 documents, violating 18 U.S.C. 494. This matter in now under review by the U.S. Attorney's Office. Systemic Recommendations. Currently, SBA publishes an annual list of SBIR awards made by the 11 federal agencies that participate in the SBIR program. However, we found that the list is deficient because it does not provide enough information to allow the agencies to protect against duplicate funding. We have recommended that NSF coordinate with SBA and other SBIR agencies to establish a program-wide database that would include the names of all companies that have submitted SBIR proposals; the titles and abstracts of all proposals submitted to each agency; and whether each proposal was awarded or declined, and if awarded, the amount of the award. We believe that a program-wide SBIR database would reduce the likelihood of future problems similar to those in the cases discussed above. OTHER CASES INVOLVING MISUSE OF NSF FUNDS University Does Not Report Unobligated Funds We received allegations of misuse of NSF funds at a southern university. At our request, the university investigated the allegations. The university found no criminal wrongdoing on the part of its officials or employees. However, during our follow-up review, we did find that the university underreported over $400,000 in unobligated (residual) grant funds over several years. We recommended that the $400,000 be deleted from the university's FY 1994 program funds, and that NSF request repayment of the interest earned on the funds. The university agreed to promptly report future unobligated funds. University Employee Embezzles NSF Funds We were informed by a west coast university that a university employee had allegedly embezzled funds from an NSF grant account. Local law enforcement officials conducted an investigation and found that the employee had embezzled $19,775 in NSF grant funds as well as over $60,000 in other federal agencies' grant funds. The employee later pled guilty to charges of grand theft and forgery. On July 20, 1993, the employee was sentenced to 16 months imprisonment at a state penitentiary and ordered to make restitution. The university returned the embezzled funds to NSF. Unauthorized Charges Made to NSF Grant In February 1993, we received an allegation of wrongful charges to an NSF grant and misappropriation of NSF-funded equipment at a southern university. Although there was no evidence of criminal wrongdoing, we found that the PI's department chairman made charges to the PI's NSF grant without authorization. The university returned $6,689 to the grant account. Improper Salary Charges Made to NSF Grant We received an allegation of fraudulent payroll transactions involving NSF grant funds in a university's Young Scholar program. At our request, the university's audit department investigated the allegations. The department's investigation found that a part-time instructor at the university falsely stated that he taught two courses at the university. The two courses were actually taught by a different university employee. With the assistance of the other employee, the part-time instructor received NSF funds for teaching these two classes. The university returned $2,206 to NSF and is determining appropriate disciplinary action against the part-time instructor. FOLLOW UP ON CASES REPORTED IN PREVIOUS SEMIANNUAL REPORTS Credit Card Thefts: In Semiannual Report No. 8 (page 18), we reported that we had investigated the theft of credit cards from NSF and had recommended preventive measures to NSF, which were implemented. Further investigation resulted in the termination of two contract employees from the NSF mailroom. We referred our findings to the appropriate U.S. Attorney for prosecution. On July 20, 1993, one former employee waived indictment and pled guilty in U.S. District Court to one count of Obstruction of Mails, in violation of 18 U.S.C. 1701. The former employee was sentenced to 2 years' probation and ordered to pay restitution. Prosecution of the other former employee for credit card fraud was referred to local prosecutors and is pending. Diversion of NSF and Nonprofit Society Grant Funds by a PI: In Semiannual Report Nos. 7 and 8 (page 17), we reported that we had investigated allegations of fraud against a PI on grants totaling $280,000 from NSF and a nonprofit society. We also reported that the PI had pled guilty in U.S. District Court to violations of 18 U.S.C. 666 and 1341. On April 21, 1993, the PI was sentenced to 1 year imprisonment, and, upon release, 2 years' supervised release and 2 years' community service. At our recommendation, NSF debarred the PI from federal nonprocurement activities for 3 years. Abuse of Car Pool System: In Semiannual Report No. 8 (page 18), we reported that we had completed an investigation of employee abuses of the NSF parking permit system. We recommended that NSF impose a total of 43 administrative sanctions against individual employees for these abuses. NSF's Division of Human Resource Management has completed action on these sanctions, which considered the employees' parking permit abuses and past disciplinary records. The investigation resulted in 41 administrative actions, including suspensions, and recovery of fraudulently obtained parking subsidies. Procurement Problems Rectified: In Semiannual Report No. 5 (page 23), we described our investigation of impropriety associated with a request for proposals (RFP) to manage an NSF program. Based on our findings, NSF's Director ordered the cancellation and recompetition of the RFP. During this reporting period, NSF concluded the recompetition and hired a new contractor to manage the program. We reviewed the records of the recompeted RFP and concluded that the problems we previously identified had been rectified. _________________________________________________________________ Table 3 _________________________________________________________________ New Referrals 4 Referrals From Previous Reporting Period 1 Prosecutorial Declinations 1 New Indictments 1 Indictments From Previous Period 0 Criminal Convictions/Pleas 1 Administrative Actions 6 Investigative Recoveries* $435,356 Government Suspension of Awards* $1,395,311 *Investigative Recoveries comprise civil and criminal judgments, fines, and restitutions as well as specific cost savings for the government. In this reporting period, the Investigative Recoveries relate only to NSF, while the Governmentwide Suspension of Awards result from interagency investigations where NSF was the lead agency. _________________________________________________________________ OTHER INVESTIGATIVE ACTIVITIES Principal Investigator Submits False Statement for Awards. We investigated an allegation that a university professor had submitted false statements in order to qualify for an NSF Young Investigator award. These awards are given to selected university professors nationwide who possess outstanding teaching and research potential. Award recipients must meet several requirements and are selected on a competitive basis. Our investigation revealed that the professor submitted false statements regarding the dates on which he received his Ph.D. and began his postdoctoral research. We reported the accurate dates to NSF officials responsible for managing the NSF Young Investigator program. Although the professor was initially recommended to receive an award, NSF later determined that the professor was ineligible. The nomination was declared "inappropriate," on the basis of the professor's ineligibility. Withholding of the intended award saved NSF $312,500 and allowed NSF to award those funds to another eligible young professor. We referred the results of our investigation to the appropriate U.S. Attorney, who declined prosecution. We then referred this matter, and other possible problems regarding the professor's past submissions, to our Office of Oversight to determine whether these actions violate NSF's misconduct in science regulations. * * * NSF Program Officer Did Not Report Conflict of Interest: We investigated an allegation that an NSF program officer had an unreported conflict of interest with a PI. We found that the program officer had a personal association with the PI, whose grant he administered, and failed to recuse himself as required. Although we found no criminal conflict-of-interest violations, we did find that the program officer inappropriately used NSF telephone and electronic mail for personal communications with the PI. We also found that by making excessive personal calls during duty hours, the program officer demonstrated inattention to this NSF duties. We recommended that NSF take administrative action against the program officer. The program officer received a letter of warning and repaid the cost of the improper telephone charges. OVERSIGHT The Office of Oversight focuses on the science-engineering- education-related aspects of NSF operations and programs. It oversees the operations and technical management of the approximately 200 NSF programs that involve about 60,000 proposal and award actions each year. The Office conducts and supervises compliance, operations, and performance audits as well as investigations of NSF's programs and operations; undertakes inspections and evaluations; and performs special studies. It handles all allegations of nonfinancial misconduct in science, engineering, and education and is continuing studies on specific issues related to misconduct in science. MISCONDUCT IN SCIENCE AND ENGINEERING Policy Discussions Concerning Misconduct in Science We continue to follow the ongoing dialogue on misconduct in science. This semiannual report contains four policy discussions that address recent developments. The following two discussions concern the definition of misconduct in science and respond to continuing debate over that subject. Two other discussions, one on the role of intent in misconduct cases and another on the Department of Health and Human Services' (HHS) new policy of publicly identifying all persons against whom it has made misconduct findings, are in the Legal section of this report. OIG scientists and lawyers contributed to all four policy discussions. These discussions do not preempt or prejudge issues that are within the jurisdiction of NSF management, including issues that can only be decided when NSF's Director or Deputy Director review particular cases. ***************************************************************** NSF's Definition of Misconduct in Science and Engineering Fabrication, falsification, plagiarism, or other serious deviation from accepted practices in proposing, carrying out, or reporting results from activities funded by NSF; or retaliation of any kind against a person who reported or provided information about suspected or alleged misconduct and who has not acted in bad faith. ***************************************************************** Congress and the Definition of Misconduct in Science NSF and HHS define "misconduct in science" essentially identically, as fabrication, falsification, plagiarism, or other serious deviation from accepted practices. Some recent policy discussions criticizing this definition have suggested that Congress intended to limit the authority of federal agencies in this area to "scientific fraud," which is perceived to be substantially narrower in scope than "misconduct in science." The expression "scientific fraud" is promoted because it would include within the government's purview only cases involving deception. However, analysis of the legislation and its history does not reveal congressional intent to limit the authority of federal agencies to ensure the integrity of their programs. In our view, an agency would not be conducting adequate oversight of its programs if it ignored acts of misconduct in science merely because they did not constitute "fraud." In the 1980's, congressional subcommittees held several hearings to gather information on misconduct in science. These hearings tended to focus on egregious cases of misconduct in science that involved biomedical research projects funded by HHS. Because of the perceived inadequacy of HHS's handling of these cases, Congress responded to these hearings in 1985 by adding section 493 to the Public Health Service (PHS) Act. Section 493 is titled "Protection Against Scientific Fraud," and requires that HHS establish procedures for responding to "scientific fraud." Section 493 does not define "scientific fraud." Some critics have asserted that when Congress referred to "scientific fraud" in section 493, it intended something much less than the "misconduct in science" definitions that NSF and HHS later implemented and therefore NSF and HHS acted beyond their statutory authority. First, every agency has the intrinsic authority and responsibility to protect the integrity of the programs that it funds. Section 493 of the PHS Act does not apply to NSF or any federal agency other than HHS, and it also in no way limits HHS's authority to define, proscribe, investigate, adjudicate, and sanction misconduct in science under agency programs: like all federal agencies, HHS had such authority before section 493 was enacted, and it has it now. The focus of the hearings and legislative climate that produced section 493 was the perceived inadequacy of HHS's response to some if its cases; Congress' objective was to force HHS to establish procedures and take action. When Congress enacted section 493, it intended to force HHS to carry out its responsibility to protect the integrity of its programs; there is no evidence that Congress intended to limit HHS's authority to do so. Further, there is no evidence that Congress had a specific meaning in mind when it used the expression "scientific fraud" in section 493. When Congressman Henry Waxman introduced the bill in the House of Representatives, he referred to the new section 493 as providing a "system for investigating reports of scientific misconduct." The section in the conference report that discusses section 493 is entitled "Scientific Misconduct," and uses the terms "misconduct" and "fraud" interchangeably, even within the same sentence. And finally, regardless of what Congress may have intended when it used the word "fraud" in section 493 in 1985, Congress has now amended that section to use the "misconduct" language used by HHS and NSF. The current NSF definition was proposed and finalized in 1987 and amended in 1991, and HHS's definition was proposed in 1988 and finalized in 1989; both definitions eschewed the word "fraud" in favor of "misconduct." At the beginning of 1993, Congress amended section 493 of the PHS Act so that it now refers to "research misconduct" and explicitly gives to HHS the authority to define that expression. There is no indication in the legislative history of the 1993 amendment that Congress was dissatisfied with the NSF and PHS definitions or that Congress intended for HHS to change its definition. To the contrary, the House report accompanying the amendment explains that this new terminology was chosen "to clarify that coverage is not confined to basic research or any other narrow subcategory that might be suggested by the more traditional terms such as `scientific' misconduct." The House report directed that the definition promulgated by HHS "should include practices which seriously deviate from those that are commonly accepted within the scientific community and that materially and adversely affect the integrity of research." Similarly, the conference report accompanying the amendment discussed the need for the establishment of "Federal standards governing research integrity" and emphasized that "abuses or deviations from these standards must be uncovered and promptly dealt with in a serious and credible manner." Moreover, Congress expressed its approval of the current definitions in another forum, a committee report that accompanied the 1993 appropriation bill for the Office of Science and Technology Policy (OSTP). In that report, the committee noted that: OSTP intends to develop . . . a Government-wide definition of misconduct . . . . the Committee believes the definition should . . . ensure that Government sanctions can be imposed against any researcher who acts inappropriately. . . . in that regard, the Committee is strongly supportive of the definition . . . developed by the National Science Foundation. These are clearly not the actions of a Congress intending that the federal agencies that fund science should cut back on the scope of their efforts with regard to scientific integrity. "Plagiarism" and "Falsification" in the Definition of Misconduct in Science Some recent policy discussions on the definition of misconduct in science employed at NSF have proposed that the phrase "other serious deviation from accepted practices" should be dropped from the existing definition. These discussions suggest that the definition should consist only of falsification, fabrication, and plagiarism, the three examples of serious deviation contained in the current definition. This section suggests difficulties that might emerge if the definition were limited to falsification, fabrication, and plagiarism. One reason given for wishing to change the definition is that the current definition is excessively broad and vague. A definition consisting only of falsification, fabrication, and plagiarism is supposed to be narrow and precise enough that government application of it will be predictable and scientists will know what they are not supposed to do. To make the definition specific, some writers recommend definitions for the individual terms. Unfortunately, these definitions have to be excessively broad in order to capture the cases that are now covered under "other serious deviation from accepted practices" and that need to be covered by any definition. In addition, they turn out to be vague in their own way. For example, it has been suggested that plagiarism should be defined as "misappropriation of intellectual property." However, that is a vague term that itself raises serious problems of interpretation. Under such a definition, any offense that in some conceivable way pertains to the possession or ownership of intellectual property would be treated as plagiarism and therefore as misconduct in science. This happens because the proposed definition does not say what relation the offense has to have to intellectual property. In addition, it does not attempt to say which practices involving intellectual property should be considered "misappropriation." Hence, the range of possible cases that might fall under such a definition of plagiarism would be quite unpredictable. The proposed definition of plagiarism has been applied to a well-known case of alleged data falsification involving two scientists employed at the PHS, where the issue is said to be the "misappropriation" of a virus. It is surprising to see such a case classified as plagiarism. A second example is a widely reported case at Michigan State University in which a graduate student was accused of withholding data from her collaborators over a long period of time. While a visiting inquiry committee treated this as an "other serious deviation," it has also been called a misappropriation of intellectual property and therefore plagiarism, which goes far beyond the usual understanding of that term. Thus, the proposed definition raises issues of interpretation much like those raised by the "other serious deviation" phrase. In both cases, the solution is the same, that is, to rely on the standards of the relevant community of scientists as the criteria for what is or is not misconduct. The crafting of words in the definition cannot substitute for this. The violation of the confidentiality of peer review is a practice NSF would call an "other serious deviation." However, this practice is sometimes placed under the broadened definition of plagiarism as violation of intellectual property in order to make the "other serious deviation" phrase unnecessary. This effort does not succeed because some ways of violating confidentiality do not involve intellectual property. For example, it is a violation of confidentiality to reveal the names of reviewers or the scores that individual reviewers have given to grant proposals or fellowship applications, but these are not intellectual property matters. When a breach of confidentiality occurs that also involves a violation of intellectual property, these are two distinct elements of the case. Hence, it is not accurate to describe such cases exclusively as "plagiarism" cases. In general, all violations of confidentiality involve an offense that goes beyond even a broad definition of plagiarism, and the "other serious deviation" phrase is needed in order to deal with them. There have also been proposals with regard to defining the term "falsification." It has been suggested that this should be defined as "changing data or results." However, the same authors apply the term "falsification" to practices like misrepresenting one's qualifications and achievements in a grant application. This practice is widely regarded as misconduct in science and is currently covered by the "other serious deviation" phrase. Since information about one's qualifications and achievements is not "data or results," the misrepresentation of that information is not "falsification" as defined. The reference to "data or results" makes this definition too narrow to cover the desired case. However, in other respects, this definition is excessively broad. "Changing data or results" is an expression that might apply to any kind of data reduction or statistical analysis. Hence, it is not suitable for use in a government agency's definition of misconduct in science. As these examples demonstrate, it is far from easy to develop a new and practical definition of misconduct in science. The current definition of misconduct in science ensures that NSF can take action in all appropriate situations, and we believe that it is essential for NSF to maintain its authority to do so. We look forward to working with the other federal agencies and the scientific community regarding these issues. SIGNIFICANT MISCONDUCT CASES Misconduct Finding and Actions Recommended Against College For the first time, we have recommended that NSF make a finding of misconduct in science against an institution and take appropriate action. Previously, we have made such recommendations only with regard to individuals. This case involves two PIs who were employed in the college of engineering at a southwestern university. The PIs submitted three proposals and two letters to NSF that contained false statements. We determined that the college also shared responsibility for these misrepresentations. The false statements exaggerated the extent of the services that the college offered to Native American and Hispanic undergraduate students. These statements strengthened the proposals when they were reviewed at NSF. The proposals were submitted to NSF education programs, which place special emphasis on projects that serve minorities that are underrepresented in science and engineering. The PIs sent a total of eight false statements to NSF in various documents. For example, several statements indicated that the program for Hispanic students had awarded 20 full scholarships. In fact, it had awarded no full scholarships. Similarly, the Native American program was said to award 20 full scholarships per year. In fact, it had only awarded 20 full scholarships altogether. In response to an inquiry from NSF, 1 of the PIs later revised this statement to say that the Native American program awarded only 10 scholarships per year after the 20 scholarships that were awarded in the first year for a total of 50 over 4 years. To support this revised statement, the PI provided lists of students receiving these additional 10 scholarships. We learned that these students were not actually receiving new scholarships, but were only replacing dropouts. In fact, the program was in such difficulty that the number of awardees had fallen to seven. We regarded this further misinformation and this concealment of information as aggravating the original offense. We referred the matter to the U.S. Attorney, who declined to pursue this matter. We are treating this case as misconduct in science, under the "other serious deviation from accepted practices" provision. We have sent our investigation report on this case to NSF's Office of the Director with the recommendation that it issue findings of misconduct in science and take action against the two PIs and the college. Because of actions and omissions by the dean, the associate dean, and a department chair (the first PI), we believe that the college as a whole shares responsibility for the false statements sent to NSF. However, we were told that no one in the college administration took responsibility for assessing the accuracy of representations about the college when reviewing and clearing the proposal. We consider this unacceptable because the statements at issue are about matters that are within the college administration's knowledge and control. We do not expect the institution's reviewing officials to review the technical content of proposals, and institutions ordinarily bear no responsibility if the proposal contains false statements about science or engineering. However, institutions are expected to take responsibility for the truth of statements in proposals that concern matters within the purview of the institution itself, such as the minority programs that those institutions operate. This case illustrates the importance of providing accurate information in proposals. This applies in particular to claims about services offered to minorities when these services may be criteria used in evaluating those proposals. Institutions should ensure that statements on these matters are correct. Plagiarism in a Proposal Submitted to NSF We received an allegation that a faculty member at a midwestern university had plagiarized sections of her Research Experiences for Undergraduates (REU) proposal from a funded REU proposal, which was previously submitted by the complainant. We were informed that the institution was evaluating the allegation, and we waited for the results of the evaluation before deciding how to proceed. We learned that there were two evaluations of this allegation at the institution. By reviewing the documents associated with the institution's two evaluations, we determined that the subject had, at a previous department chairman's suggestion, obtained the departmental copy of the complainant's proposal. In preparing her proposal, she had copied a total of four pages of text from that proposal into her proposal. In the first evaluation, the chairman concluded that much of the copied material was "boilerplate" and that some of the copied material was part of the proposed work but, that text was so stringently dictated by the NSF program announcement that little latitude was left for the language that could be used in a proposal. The Chairman concluded that the subject's actions were naive and unintentional and did not constitute serious "academic dishonesty." A letter describing the evaluation was placed in the subject's personnel file at the institution, and the subject voluntarily withdrew her proposal from consideration at NSF. After reviewing the materials supplied by the institution, we concluded that they did not convey the results of a complete investigation. We completed the investigation by gathering the subject's views on the allegation and reviewing relevant documents. The subject confirmed that she had copied or closely paraphrased materials from the complainant's proposal without his permission and without providing him an acknowledgement because she thought they were "standard" materials. The subject's proposal did not cite his original proposal as the source for the copied materials. Language that is freely available to all faculty members and is used routinely in proposals submitted by a department can be considered "boilerplate." The subject informed us that such material did not exist in this department. In this case, the copied material determined by the institution to be "boilerplate" was unique to the complainant's original proposal. The complainant was unaware that his proposal was being "shared" with other faculty members. The copied material the chairman identified as part of the proposed work was not, as he portrayed, stringently dictated by the NSF brochure. That brochure provides guidance on the important topics to be included in a proposal and emphasizes the importance of these topics in NSF's evaluation of the proposal. The subject agreed that the NSF brochure did not dictate the text to be used in the proposed work. The subject said that although she viewed the material she had copied as "stereotyped supporting materials," she should have obtained the complainant's permission before using it. We regard using the words or ideas of another person without permission and attribution as plagiarism, even if the copied material is a description of common facilities or faculty. In deciding whether plagiarism occurred, the presence of unattributed, copied material in a work is not mitigated by the presence of original text in that same work. We recommended, and NSF's Deputy Director found, that the subject committed misconduct, specifically plagiarism, under NSF's definition of misconduct in science and engineering. We also recommended, and NSF's Deputy Director accepted, the following sanctions: for a 3-year period, any proposal the subject submits to NSF should be accompanied by a certification to OIG of her present responsibility and her understanding of ethical conduct. The institution should also include with each certification its own assurance that the proposal appropriately acknowledges all original sources of information. Plagiarism in SBIR Proposals Due to Common Third Source An NSF program officer reported that under the SBIR solicitation, two investigators had submitted proposals that contained identical language in their discussions of the general research problem and the broad technical approach. OIG contacted both subjects, who reported that the identical material was derived from a proposal written by an academic researcher with whom both had collaborated on industrial development projects. The original author told us that he had inadvertently given both investigators permission to adapt his proposal and submit it for funding. However, both investigators used verbatim excerpts in their submissions to NSF, and cited neither the proposal nor the original author. We determined that insufficient evidence existed to pursue an investigation of misconduct in science because both subjects had collaborated closely with the original author and had included him as a participant in their proposed research, and both believed in good faith that they had permission to revise and adapt the original author's proposal and then submit it as their own. We concluded, however, that both subjects and the original author should have been more careful. One subject was deceased, and we wrote to the other advising him that he should not have incorporated language from an earlier research proposal by another investigator without indenting the material or enclosing it in quotation marks and without citing the original source. We informed the original author that he should not have given two researchers permission to adapt and submit his proposal without clearly specifying the terms of their collaboration with him or the credit due him for his original contributions to the proposals derived from his work. With these letters, we closed the case. Openness Achieved for Social Science Data This case was brought to us by an NSF program officer who was concerned about a continuing resistance to share data collected under an NSF award by a faculty member of a prominent university. When other researchers challenged the accuracy of her findings, she repeatedly failed to make her data available for reanalysis. Under pressure from the cognizant NSF program office, she eventually placed the data in a public archive, but attached highly restrictive conditions to their use. The subject's actions were inconsistent with NSF's and the scientific community's commitment to open communication. NSF's Grants for Research and Education in Science and Engineering recognizes the importance the scientific community attaches to openness by "expect[ing] investigators to share with other researchers, . . . within a reasonable time, the data . . . gathered in the course of the[ir] work" and encouraging NSF program managers to implement this policy of openness in "the proposal review process [and] through award negotiations and conditions." After an exchange of letters in which NSF program officers reminded the subject that she had agreed to share these data when she applied for a subsequent grant, the subject agreed to make the data freely available. Her action brought her into compliance with community norms about data sharing, and we decided that the subject's earlier reluctance to share her data was not, as such, misconduct. We concluded that, with the data now open for scrutiny, the normal processes of scientific evaluation could be counted on to raise any issues of misconduct concerning data collection and analysis if the newly available facts warranted it. This case underscored the importance of data sharing to the progress of science and raised the possibility that under some circumstances persistent refusal to share data might itself constitute misconduct in science. Institution Finds Only Minor Plagiarism We were informed by a reviewer that a proposal he had received for merit review contained text from a review article he had previously published. The proposal contained one passage that had been copied from the original author's text, but which had not been offset by indentations or quotation marks and was not accompanied by a citation to the original author's work. We found another passage in the proposal that drew on information from the same article but was accompanied by a citation to that review article. In response to our request for information, the PI on the proposal stated that a subordinate in the PI's laboratory, as a mutually agreed upon first step in establishing the subordinate's independent research program, had written and submitted the proposal for institutional review. After its submission, the institution informed the subordinate and the PI that under institutional rules, the subordinate was prohibited from submitting the proposal. Therefore, the PI agreed to submit the proposal, with minor changes, as the sole PI. The PI stated that the copied material had been added by the subordinate in draft and had been carried forward in subsequent drafts; she was unaware of its presence. The PI's response was accompanied by a statement from the subordinate in which she accepted full responsibility for the copying and corroborated the PI's other statements. We determined that a full investigation into this allegation was necessary and deferred it to the institution. The institution confirmed the information in the PI's and subordinate's statements and concluded that the subordinate's failure to offset the text or to provide a citation was due to haste and carelessness in preparing the first proposal draft. The committee could not find any evidence that this copying was part of a pattern of behavior. The institution sent a letter of caution to the PI stating that mentorship responsibilities included providing subordinates with instruction on misconduct issues. A letter of reprimand for committing plagiarism was sent to the subordinate and a copy was placed in her faculty record file. We found that the institution's investigating committee conducted an accurate and complete investigation. We concluded that after all the mitigating circumstances were considered, among them the subordinate's relative inexperience, the institution's actions were sufficient. Therefore, we closed this case without further action. Alleged Breach of Confidentiality of Peer Review We recently handled a case involving a breach of confidentiality by panelists reviewing NSF Young Investigator proposals. From discussions with the panelists and the PI who received the confidential information, it was apparent that their views on the confidentiality of panel deliberations varied. We sought to evaluate the panel's alleged breach of confidentiality to determine what happened and who was involved. Our inquiry confirmed that the PI had approached at least two panelists seeking information about the reasons for his declination. When contacted, the PI expressed the view that the confidentiality of panel deliberations was not an important issue. Several panelists spoke to us in some detail about the case, revealing that panelists differ in their knowledge of, and attitudes toward, confidentiality requirements. For example, one panelist said that it is quite common for PIs to claim that they know their ranking or to try to find out about their ranking. Another stated that PIs frequently learn their rankings, and that the confidentiality of the review process is breached more frequently than one would expect. A third panelist indicated that he might reveal information about panel deliberations if he had a connection to the PI requesting the information. Some panelists expressed a need for clearer information on confidentiality requirements. This need is being addressed in part by NSF's new form, "Conflict of Interests Statement for NSF Advisory Panel Members." In this case, we could not conclude that the candidate actually received information from panelists, nor was it possible to determine, if information was leaked, which panelist was responsible. We closed this case without a finding of misconduct. However, we did communicate to those involved our view that confidentiality of panel deliberations is essential for open discussion and evaluation during the review process. Disclosure of such information is contrary to NSF policy, and it is the responsibility of both PIs and panelists to respect and maintain that confidentiality. Under some circumstances, breaches of confidentiality in peer review may constitute a violation of NSF's misconduct in science and engineering regulation. _________________________________________________________________ STAFF ACTIVITIES During this reporting period, members of the Oversight Offices's science and engineering staff organized a session on misconduct in science and presented papers at the Third Conference on Research Policies and Quality in Baltimore. One staff member also contributed a short article on plagiarism to "Perspectives on the Professions," a publication of the Center for the Study of Ethics in the Professions at the Illinois Institute of Technology and an article entitled "Some Considerations in Defining Misconduct in Science," to the Proceedings of the February 1993 Sigma Xi Forum on Ethics, Values, and the Promise of Science. _________________________________________________________________ _________________________________________________________________ Table 4: Misconduct Case Activity FY 1993 FY 1993 First Half Last Half Active Cases From Prior Period 72 81 Received During Period 27 31 Closed Out During Period 18 25 In-Process at End of Period 81 87 _________________________________________________________________ INSPECTIONS AND EVALUATIONS In March 1993, the President's Council on Integrity and Efficiency issued its Quality Standards for Inspections to guide the conduct of inspection work. These standards provide a framework for performing inspections and define an inspection as: ". . . a process, other than an audit or an investigation, that is aimed at evaluating, reviewing, studying, and/or analyzing the programs and activities of a Department or Agency for the purposes of providing information to managers for decision making, for making recommendations for improvements to programs, policies or procedures, and for administrative action. The objectives of inspections include providing a source of factual and analytical information, monitoring compliance, measuring performance, assessing the efficiency and effectiveness of operations, and/or conducting inquiries into allegations of fraud, waste, abuse and mismanagement." Quality Standards for Inspections addresses the following aspects of an inspection: the qualifications and independence of the individuals performing the work, due professional care, quality control, planning, data collection and analysis, evidence, supporting documentation, timeliness, fraud and illegal acts, reporting, and follow-up. As stated in the "Preface" of the Quality Standards for Inspections, the use of inspections by OIG offices has grown to meet a number of needs, including the need to generate greater deterrence through OIG coverage with fewer staff, to use different types of study methods and evaluation techniques, provide timely feedback to program managers, and review highly technical subjects. Since these needs vary from one OIG to another, it is widely understood that inspections will be tailored to individual circumstances that reflect the unique mission of each department or agency. We view inspections as an especially effective approach for OIG oversight in NSF because of the highly technical nature of NSF's mission. Our inspections are on-site reviews both within NSF itself and at the institutions that receive NSF funding. OIG staff assesses organizations' compliance and effectiveness in three major areas: finance, administration, and achievement of science and engineering program goals in research and education. Our inspections supplement OIG's ongoing audit and investigative activities by broadening accountability beyond financial and administrative compliance requirements to assess the responsiveness of research and education activities to individual program goals. Our external on-site reviews promote an increased awareness by PIs and their sponsoring institutions of the importance of accountability in the management and the performance of NSF awards. Inspection teams use a variety of study methods and are composed of three or four OIG staff members. The composition of any team depends on the expertise required to understand the research or activity being inspected. Team members may include scientists and engineers, auditors, computer specialists, investigators, lawyers, or management/program analysts. If the expertise is not represented by OIG staff, consultants from the private sector or other federal agencies may be used. Evaluation of the inspected institution's policies and procedures, award documentation, and related financial records is performed both in advance of, and during, the inspection. Inspection of a Plant Biology Department at a Private, Nonprofit Research Institution We conducted an inspection at the research institution's department of plant biology to review performance and compliance under a total of eight NSF grants. Five of these grants were for basic research in different areas of plant biology, and the remaining three grants were for equipment, a workshop, and international collaborative research. Financial: During the financial and compliance portion of our review, we found that the department's internal control structure was generally satisfactory, and the department complied in all material respects with the requirements of the award documents. However, we did identify, and make recommendations to correct, weaknesses in the institution's policies and procedures in the area of charging and controlling costs on federal projects. We questioned $28,707 because excessive fringe benefits were charged to NSF awards, costs were incurred after the expiration date of the grant, and tickets purchased to fly on foreign airlines were not justified. We recommended that the department improve the manner in which fringe benefit costs are allocated and leave is accumulated and reported; develop and implement a system that identifies cost sharing; and review and approve purchases, invoices, travel plans, and travel expenses. Administrative: In the administrative portion of our inspection, we found no significant deviations from, or failure to comply with, essential elements of current federal or agency requirements pertaining to the areas of this review, which were: to evaluate the institution's ability to effectively resolve allegations of misconduct in science; determine the adequacy of the institution's handling of misconduct allegations to date; assess the institution's compliance with drug-free workplace requirements, lobbying reporting, and certification requirements; review of the conditions for advancement by women and racial minorities as scientists and faculty members; and learn about, and evaluate, any institutional requirements governing financial disclosure. Our only concern was the potential problems that might arise in the handling of allegations of misconduct in science. While we were conducting the inspection, we learned that the institution had not received any allegations of misconduct in science, and we found its "Policy on the Conduct of Research" to be comprehensive. However, we were concerned about the potential for future problems because the department staff scientists and laboratory personnel were unaware of the content of their institution's policy and of NSF's misconduct in science and engineering regulation. Within the department of plant biology, only the department director, who is the designated misconduct official for that department, was knowledgeable about the institution's policy and NSF's regulation. We also learned that this department had a close working relationship with a university biology department. For example, some university graduate students work in the department of plant biology's laboratories. This cooperative arrangement mutually benefited both the institution and the university. However, there was no understanding between the university and the institution about who would be responsible if an allegation of misconduct in science involving a university graduate student is made while the student is working in this institution's department of plant biology. We recommended that the institution clarify, and increase the department's awareness of, its policies and procedures on misconduct in science. Performance: In the program and research review, we observed that the research funded by NSF in this department was conducted by well-known scientists, who are considered leaders in their fields, and in a manner consistent with accepted research practices. We were impressed by the level of collaboration among the staff members in this department and between this department's and the university's department of biology faculties. We found that the collaboration among the department of plant biology staff and the laboratory personnel was consciously facilitated by the design of the research setting and the amount of shared equipment, space, and supplies. We found that the institution's written "Guideline for Sharing Data and Materials," which recommended that "as a normal practice unique materials should be made available, after publication, to qualified investigators," was strongly integrated into the plant biology department's work environment. Our overall impression was that this department was a vigorous, positive, productive environment for the conduct of significant research that was particularly conducive to the training of graduate students and the advancement of postdoctoral scientists' fledgling research programs. We were concerned about the ownership of laboratory notebooks and other data sources documenting NSF-funded work. The PIs that we interviewed believed that their laboratory notebooks belonged to them, although they generally recognized that, as the product of federally sponsored grants, the location of such information was of concern to the federal government. PIs generally permitted postdoctoral scientists and visiting scientists working in their laboratories to take the research notebooks and data generated by those people with them when they left. In some cases, PIs who are permanent members of the department of plant biology retained copies of data and experiments that they believed were important. We were told that neither the institution nor the department of plant biology had a formal written policy regarding notebook ownership; however, the individual PIs in the department knew the location of the people who had worked in their laboratories. The PIs viewed this as adequate institutional knowledge of the current location of notebooks developed under NSF awards. NSF's grant conditions state that the grantee institution is responsible for the laboratory notebooks and primary data developed under NSF-funded grants. Institutions therefore should be able to produce or locate such materials in response to a request from the scientific community, to an agency site visit committee, or as part of a misconduct in science inquiry or investigation. In our view, the institution's informal knowledge of the location of this information did not meet the federal requirements for the retention of records pertinent to a grant. Thus, we recommended that the institution issue a written policy to all individuals working in its laboratories describing institutional responsibilities for laboratory notebook and data ownership and maintenance, as well as the procedures under which this material would be allowed to accompany a PI to a new location. Departmental Comments: During our interviews with the PIs at the department of plant biology, we received unsolicited, strong objections to the NSF Directorate for Biological Sciences' (BIO) policy against reviewing research proposals (with a few exceptions) that have been submitted to any other federal agency for simultaneous consideration. BIO's policy is an exception to NSF-wide policy, which allows for duplicate submission and review of proposals provided they are identified as such. We were told by NSF/BIO staff that this policy was instituted to deter overlapping support, reinforce distinctions among fields supported by NSF/BIO and other federal agencies, and reduce the workload created by duplicate submissions that have been as much as half of the workload. The PIs at the department of plant biology generally felt that the NSF/BIO policy was unfair especially during the current tight funding environment for research. We have recommended that BIO reevaluate its prohibition against reviewing research proposals that have been simultaneously submitted to other federal agencies. FOLLOW-UP ON COST SHARING As described in Semiannual Report No. 8 (page 31), we conducted a review of cost sharing by NSF awardees. The review found that some awardees failed to ensure that their level of cost sharing met the level promised, and some awardees failed to maintain adequate records detailing the extent of their cost sharing because they were not aware that they were required to maintain such information. We recommended that cost sharing requirements be made more explicit. During this reporting period, NSF stated that it will: Revise the Proposal and Award Manual (PAM) to require that program staff, while developing program announcements for unsolicited research awards, consider whether the mutuality of interest of the award recipient and NSF should require specific levels of cost sharing beyond the minimum requirements set forth in the Grant Policy Manual (section 640). The program announcement will state that where higher levels of cost sharing are determined to be appropriate, the requirement will be clearly reflected in the award. The PAM will also require that program staff consider whether to require cost sharing in program solicitations and announcements for awards in nonresearch areas. Add language to Grants for Research and Education in Science and Engineering (GRESE) (currently under revision) reminding applicants of NSF cost sharing requirements and also indicating that, if a proposal budget includes a specific cost sharing level that is a significant factor in the determination to fund an award, the cost sharing level will be included as a requirement in the award. Develop a process to ensure that there is a record of any decision not to require cost sharing at the level specified in the proposal. Modify NSF Form 1030, "Proposal Budget," and its electronic format to include a line for cost sharing. The approved award budget will reflect any required specific cost sharing level above the minimum requirements of Grant Policy Manual section 640. Revise the first sentence of Article 21 (a) of NSF's Grant General Conditions to clarify the need for grantees to share costs in accordance with any specific requirements contained in, or referenced by, the applicable program announcement, solicitation, or award letter. Require that recipients of multi-year awards involving cost sharing in excess of $500,000, provide annual certifications of the amount of cost sharing completed through the certification date. In a memorandum to all NSF staff, NSF's Acting Director stated: "We recognize that implementation of these actions will result in some additional burden to NSF program staff and NSF administrative components. However, it is important that NSF staff, proposers and award recipients clearly understand the significance and implications of cost sharing promises and requirements, especially as NSF moves increasingly toward establishment of partnership arrangements involving other institutions and organizations who participate substantially in the costs of activities funded by NSF. NSF staff also are reminded of the statutory requirement that each awardee share in the costs of research projects resulting from unsolicited proposals, with the proviso that the extent of cost sharing should reflect the mutuality of interest of the awardee and NSF in the research." LEGAL Attorneys in the OIG provide legal advice on all OIG activities, including investigations, audits, and oversight of NSF's functions and programs. OIG attorneys supported many of the activities that are described in other sections of this report. Under section 4 (a)(2) of the Inspector General Act, OIG is required to review and make recommendations concerning legislation and regulations that affect NSF and NSF-funded activities. OIG attorneys are responsible for conducting these reviews, as well as general oversight of NSF's legal activities. Policy Discussions Concerning Misconduct In Science As with the discussions in the Oversight section of this report, these discussions do not preempt or prejudge issues that are within the jurisdiction of NSF's management, including issues that can only be decided when NSF's Director and Deputy Director review particular cases. OIG scientists or lawyers contributed to all four policy discussions. Intent In Semiannual Report No. 8 (page 22), we discussed the difficulty that institutions sometimes have in assessing intent in misconduct cases. We have received inquiries from members of the scientific community including the National Conference of Lawyers and Scientists seeking additional elaboration of our views on intent. We will attempt here to clarify what we understand "intent" to mean and provide some general guidance on how institutions should address the issue when handling an allegation of misconduct in science under NSF's misconduct regulation. The Meaning of Intent A finding of misconduct in science against a subject requires that the subject both (1) committed a bad act and (2) did so with a minimal level of culpable intent that justifies taking action against the subject. The "bad act" is sometimes referred to in the law by the Latin expression "actus reus," while the level of culpable intent is referred to as the "mens rea." When we discuss "intent," we are inquiring into the subject's state of mind. We talk in terms of "levels of intent," which range from negligent (also known as careless) to reckless (also known as grossly negligent) to knowing to purposeful (also known as deliberate or willful). A person acts negligently if, according to community standards, that person should have acted differently because a reasonable person in the same circumstances would have acted differently. A person acts recklessly if, according to community standards, that person acts in a way that is a serious deviation from the way a reasonable person would have acted in the same circumstances. The knowing and purposeful standards require proof that the subject knew what he did; however, NSF's misconduct regulation does not require a finding of knowing or purposeful conduct for a finding of misconduct in science. Fundamentally, NSF's definition of misconduct in science proscribes conduct that is a "serious deviation from accepted practices in proposing, carrying out, or reporting results from activities funded by NSF." One of the individuals who drafted this definition held the opinion that a scientist can be found culpable "only if the action in question constitutes gross negligence or reckless disregard for human welfare, the rights of others, or the integrity of the scientific enterprise." Under NSF's definition, a showing of recklessness is clearly sufficient for a finding of misconduct in science. After a finding of misconduct is made, the regulation requires that NSF assess, in the context of "deciding what actions are appropriate," whether the misconduct "was deliberate or merely careless." In one case that we referred to NSF for adjudication, NSF's Deputy Director concluded that an individual had committed misconduct in science on the basis of the institution's conclusion that the subject's conduct had been reckless. That case, which is discussed in Semiannual Report No. 7 (page 24), illustrates the difference between reckless and knowing or purposeful conduct. The subject submitted a proposal to NSF that contained a substantial amount of material that was copied from a published article. The subject explained that he was in the habit of copying text from literature articles verbatim into notes, without including references to what he had copied, and then he later used his notes to prepare his proposals. Thus, in his view, his copying was "unintentional," because when he wrote his proposal, he did not know the source of the material he copied his notes from. The subject's university found, and NSF agreed, that the subject had exhibited "a reckless disregard for appropriate procedures of scholarship" and had "knowingly and repeatedly [engaged] in a pattern of research note-taking that, given enough time, was inevitably going to produce precisely the situation that arose with his NSF grant proposals." Evidence of Intent Establishing a subject's level of intent must be accomplished indirectly, because there is no direct means of probing a person's thoughts. One can look to any facts and circumstances that might aid in the determination of state of mind. This can include what the subject said and what the subject did and did not do. The burden of proof must also be kept in mind. Under NSF's misconduct in science regulation, all elements of an allegation of misconduct, including intent, must be proven by a preponderance of the evidence. Under the preponderance standard, the finder of fact must conclude, for each element, that it is more likely than not that the element occurred.We have encountered investigation reports in which a university panel decided it could not find the requisite level of intent because it is impossible to know what someone was thinking. But certainty is not what is required: what is required is that it is more likely than not that the subject acted with the requisite level of intent. One may infer that a subject is aware of the natural and probable consequences of acts knowingly done or omitted. Such an inference does not, and must not, shift the burden of proof, which is at all times on the party attempting to establish that misconduct occurred. Some acts that can constitute misconduct in science are of a nature that allows the natural inference that they were done with at least the subject's knowledge because it is extremely unlikely that the act could have been committed unwittingly. For example, it is highly unlikely that two people writing a substantial passage on the same subject would use the exact same words. If it is established that person A wrote a substantial passage in a proposal that was peer reviewed by person B, and the identical passage subsequently appears in a proposal submitted by person B, it is reasonable to infer that person B copied from person A's proposal, thus establishing the actus reus of plagiarism. The act of copying directly from a source into one's own document intrinsically requires awareness of that act, thus establishing the mens rea of plagiarism. Either of these natural inferences will be rebutted if, for example, the evidence shows that person B wrote the disputed passage before receiving person A's proposal, or that portion of the proposal had been incorporated by person B from a contribution that person B believed in good faith had been written by a member of person B's research group. The veracity of the subject's proffered explanation of the subject's actions must be thoroughly tested with regard to both the alleged act of misconduct (actus reus) and the level of intent (mens rea). All witnesses who may be able to corroborate (or not) the subject's story must be interviewed, and pertinent documentary and other physical evidence must be obtained and analyzed. If the subject's explanation is impeached, that fact must be taken into account when assessing the subject's level of intent at the time the misconduct was committed. Evidence reviewed for assessing level of intent may also include evidence of other acts, including other acts of misconduct in science. As explained above, a finding of misconduct in science may be based on reckless action. Thus, a subject may be found to have committed misconduct even though the subject did not intend to deceive-if it is determined that the subject acted in a way that was a serious deviation from the way a reasonable person in the circumstances would have acted. Establishing the level of intent is not easy, but it must be undertaken: an institution dealing with a misconduct case cannot simply decide the task is impossible and decline to make a determination about the level of intent--and thus conclude that no misconduct occurred. As with every other aspect of a case involving alleged misconduct in science, evidence must be gathered and weighed about the state of mind of the subject of the allegation. Decisions about a subject's level of intent must be explained as thoroughly as the other factual determinations in a misconduct case. PUBLIC IDENTIFICATION BY HHS OF INDIVIDUALS FOUND TO HAVE COMMITTED MISCONDUCT IN SCIENCE In June 1993, HHS began issuing press releases, publishing in the Federal Register, and otherwise broadly disseminating the identities of persons found by HHS to have committed misconduct in science. At the same time that it published these names, HHS provided the first formal public notice that it intends to "publish the results of all investigations resulting in a finding of misconduct . . . ." Certain of these individuals have been debarred by HHS, which is a governmentwide action that, as a matter of public record, prohibits the individual from receiving federal funds from any agency. In the other cases, however, HHS apparently determined that the misconduct did not warrant such governmentwide action. There are two issues facing NSF as a result of HHS's action: (1) What should NSF do if an individual who applies to NSF for a grant has been found by HHS to have committed misconduct in science but was not debarred? and (2) Should NSF also actively disseminate the identities of individuals found to have committed misconduct in science? NSF Actions on the Basis of HHS Findings Debarment is a governmentwide action: persons who are debarred by one agency are prohibited from receiving funds, directly or indirectly, from any federal agency. Thus, the individuals debarred by HHS for misconduct in science may not apply to NSF for grants. With regard to the other individuals, however, HHS chose not to limit their ability to receive federal funds by taking action under its debarment regulations, which is the only mechanism in place for agencies to take action with governmentwide applicability. Can NSF nevertheless take action against applicants for NSF funds who were found to have committed misconduct by HHS? HHS's findings pertain only to misconduct related to activities funded by HHS, and NSF's misconduct in science regulation applies only to misconduct committed while "proposing, carrying out, or reporting results from activities funded by NSF." We recommended that NSF consider, in consultation with its Office of General Counsel, what actions--if any--NSF should take regarding the individuals who were the subjects of these nondebarment HHS misconduct cases. NSF Dissemination of Names of Individuals Found by NSF to Have Committed Misconduct in Science The General Services Administration (GSA) publishes a list of all individuals debarred by the federal government to all government agencies and to members of the public upon request. However, the GSA list contains thousands of names arranged alphabetically and does not explain the basis for each debarment. Our current policy, consistent with the views of the National Science Board, is to not actively disseminate specific information about misconduct cases. We do not intend to actively publicize, in press releases, the Federal Register, or otherwise, the identities of individuals found to have committed misconduct, and we do not recommend that NSF do so. Misconduct cases handled by this office are discussed in general terms in our semiannual reports, and additional specific information on particular cases is available to the public upon request under the Freedom of Information Act (FOIA). Under the provisions of FOIA and the Privacy Act, we have not released identifying information about individuals in misconduct cases that did not warrant governmentwide debarment. The public release of a finding of misconduct can itself seriously injure the reputation of the person found to have committed misconduct. In our view, all findings of misconduct do not necessarily warrant the consequences of such public identification. Under the law, we balance the public interest in obtaining the information against the individual's interest in privacy. There are cases in which NSF determines that a person committed misconduct in science, but the misconduct was not so serious as to warrant prohibiting the person from obtaining federal funds. In these cases, we do not perceive a compelling public benefit in knowing the identity of that person that outweighs the person's right to privacy. The public still has access to records that fully explain the basis for the agency's decisions in every misconduct case, which is the overarching objective of the public information laws. We raised this issue with members of the Audit and Oversight Committee of the National Science Board, and they urged us to continue to not release identifying information in cases that were not sufficiently serious to warrant debarment. CLARIFICATION OF LEGAL OBLIGATIONS OF PIs AND PEER REVIEWERS As a result of problems we found in misconduct in science cases and criminal investigations, we recommended that NSF act to ensure that peer reviewers of NSF proposals and PIs on NSF proposals and awards are aware of certain legal obligations. The restrictions on the use and disclosure of information gleaned by reviewers of NSF proposals need to be clarified. Also, NSF needs to evaluate, and explain, what it means when it asks PIs what their "level of effort" will be under a proposed grant. Maintaining the Integrity of Confidential Peer Review The confidentiality of materials submitted for peer review and the integrity of the peer review process are fundamentally important to the manner in which the NSF funds science and engineering research and education. Serious abuse of the confidential peer review process can constitute a major breach of the trust that underlies the scientific enterprise supported by NSF, and, in our view, can constitute sanctionable misconduct. Scientists and educators who review proposals from NSF for mail review are told: "The Foundation receives proposals in confidence and is responsible for protecting the confidentiality of their contents. For this reason, please do not copy, quote, or otherwise use material from this proposal. If you believe that a colleague can make a substantial contribution to the review, please consult the NSF Program Officer before disclosing either the contents of the proposal or the applicant's name. When you have completed your review, please destroy the proposal." Individuals who serve on review panels "must be made aware of the substance" of the same requirements by NSF program staff. Panel reviewers are also required to sign a form that sets out the prohibitions on using or disclosing information from the proposal without permission, and includes a certification that the reviewer "will not divulge any confidential information I may become aware of during my term." In our view, these statements do not adequately convey the importance of NSF's policy on the confidentiality of the peer review process. During several cases, it became apparent to us that reviewers vary in their understanding of their obligations to maintain the integrity of the confidential peer review process. For example, despite the prohibition set out above, some reviewers believe that they may share proposals with members of their research groups. The Administrative Conference of the United States recently addressed this issue in its report "Peer Review in the Award of Discretionary Grants" and recommended that agencies that rely on peer review should inform all peer reviewers "in writing of their . . . obligations and of the penalties that may flow from a breach of confidence." Accordingly, we recommended that NSF ensure that all reviewers are more clearly informed, in writing, of all of the requirements of its policy regarding the integrity of the confidential peer review process and inform reviewers of the possible consequences of violating that policy. Clarification of Level of Effort The guidance provided by NSF to grant applicants explains that for NSF grants "NSF agrees to support a specific level of effort for a specified period of time"; a substantial change in a PI's level of effort under an award must receive prior approval from NSF. However, "level of effort" is not defined in the guidance. During several investigations, we encountered PIs who successfully received awards under which their apparent total level of effort substantially exceeded 100 percent. From those cases and informal discussions, we encountered a wide range of interpretation of the meaning of level of effort. Some PIs believe level of effort does not include time spent teaching or performing administrative functions. Some also believe that level of effort does not include "personal" time--time outside a normal work week--so that such personal time can, at the individual's option, be used for additional work. The information provided on level of effort is important to the evaluation of research and education proposals by NSF program officers. NSF must have reasonably accurate information on the present and proposed time commitments of the PIs and other key personnel. However, the level of effort information provided by PIs can only be useful to NSF program officers if program officers and PIs have a common understanding of what level of effort means. We therefore recommended that NSF amend the guidance provided to applicants to include an unambiguous explanation of the meaning of level of effort. OTHER LEGAL ISSUES New NSF Privacy Act Systems of Records: Under the Privacy Act, certain "systems of records" maintained by NSF must be established in a manner intended by the Act to protect the privacy interests of those individuals by prohibiting unauthorized disclosures. We previously identified two such systems of records maintained by NSF that had not been established pursuant to the Act's requirements. However, we are unaware of any unauthorized disclosure of these documents as a result of the records not being part of a proper system of records under the Act. Based on our recommendation, NSF acted to establish the systems of records as required by the Act. Review of OIG Staff Financial Disclosure: NSF rules require virtually all OIG staff to file Financial Disclosure Report forms provided by the Office of Government Ethics (OGE). In the past, the forms filed by OIG staff were reviewed only by NSF's OGC. Our peer reviewers from the Executive Council for Integrity and Efficiency recommended that the conflicts official for the Office of Inspector General review all such forms from OIG staff for possible conflicts of interests, before the forms are reviewed by OGC. In this reporting period, in cooperation with OGC, we implemented a process of review by the Counsel to the Inspector General of the forms filed by OIG staff. Touhy Regulation: In a 1951 case, United States ex relatione Touhy vs. Ragen, the Supreme Court upheld the authority of an agency to place restrictions on the disclosure of official agency information in response to a subpoena. We recommended that NSF adopt a "Touhy" regulation to establish procedures for NSF's response to subpoenas or other demands for current and former NSF employees to testify about, or produce records concerning, NSF matters in private litigation or other proceedings in which the United States is not a party. The regulation will prohibit NSF employees and former employees from complying with those demands without the permission of the Director or the Director's delegate; OIG employees and former employees will be prohibited from complying with such demands without the permission of the Inspector General or the Inspector General's delegate. This regulation will minimize the disruption of official duties caused by compliance with these demands and ensure that NSF has control over the release of official information. _________________________________________________________________ Progress on Financial Disclosure Policy for PIs. In Semiannual Report No. 8 (page 33), we discussed a revised NSF system for identifying potential conflicts of interest on the part of PIs who apply for NSF grants. The revised policy would require that investigators' financial interests by disclosed to universities rather than NSF, provided the PI certified on each proposal that all financial interests had been disclosed to the university and that the university certified that the disclosed financial interest had been reviewed and any conflicts of interest resolved. This rule had been forwarded to OMB and OSTP for comment and clearance. In the meantime, the National Institutes of Health (NIH) has been developing its own policy on investigative conflicts. We consider it to be a helpful development that, late in this reporting period, OMB and OSTP requested that NSF and NIH work together to establish consistent policies. _________________________________________________________________ SIGNIFICANT AUDIT RECOMMENDATIONS FROM PREVIOUS SEMIANNUAL REPORTS We are responsible for reporting to Congress and following up on the resolution of audit recommendations. From April 1, 1993, through September 30, 1993, we have resolved 5 reports with significant audit recommendations. These reports were noted in previous OIG Semiannual Reports 4 through 7. Grantee Has Questioned Costs Period First Reported: April 1, 1991 - September 30, 1991 NSF awarded $489,369 to a small business to develop and publish a science and mathematics newsletter for elementary school teachers. The grantee claimed $220,000. We questioned $115,887 because the grantee did not develop an indirect cost proposal, and claimed indirect costs that exceeded allowable amounts, charged direct and consultant salaries that were not authorized or supported by written agreements, claimed costs in excess of recorded costs, and did not remit interest to NSF. NSF submitted an agreement for closure to the grantee. The grantee signed the agreement during this reporting period. The agreement disallowed $47,137. Joint Oceanographic Institutions Period First Reported: April 1, 1992 - September 30, 1992 In audits of approximately $134 million provided for the Ocean Drilling Program, we questioned $342,000. These findings resulted from poor practices in the area of travel, consultants' costs, and audit requirements for subcontractors and grantees, and inattention to the requirements for an internal evaluation of the Ocean Drilling Program. The Joint Oceanographic Institutions is conducting its review every 3 years instead of every 2 years, as required by the contract. Many of the findings resulted from a lack of documentation and/or NSF approvals for funds expended. The Joint Oceanographic Institutions met with NSF and provided additional documentation to support the claimed costs. NSF determined that $41,732 was disallowed. University Corporation for Atmospheric Research Period First Reported: April 1, 1992 - September 30, 1992 In a review of the University Corporation for Atmospheric Research (UCAR) proposal for indirect cost rates to be used for federal grants and contracts we found a significant number of issues that needed to be addressed by NSF's program and award management officials. We found that items were included in the indirect cost pool that did not belong in those accounts, depreciation had been overstated because UCAR charged depreciation of federally funded buildings and equipment, occupancy rates included unallowable interest expense, and indirect costs recovery variances from prior years were not properly recognized. NSF and UCAR representatives resolved the outstanding issues and agreed to financial system changes and new indirect cost rates. Mathematics Association Claims Indirect Costs in Excess of Costs Incurred Period First Reported: April 1, 1992 - September 30, 1992 An audit of $704,653 of claimed costs from a Mathematics Association questioned $70,215. We questioned these costs because the indirect costs claimed exceeded actual rates. During audit resolution and development of acceptable indirect cost rates, we determined that the Association's accounting system was inadequate to track the data required for indirect cost issues. After NSF received additional documentation from the grantee, NSF determined that the total disallowance was $7,066. Museum Claims Unsupported Costs Period First Reported: October 1, 1992 - March 31, 1993 NSF awarded a $450,000 grant to a museum to support a teachers' intern program. We questioned $165,679 in expenditures and $11,354 in interest due to NSF. The questioned costs resulted from claimed indirect costs that exceeded actual indirect costs; claimed expenses that were not anticipated in the original grant budget; and claimed costs that had been reimbursed under a Department of Education grant. In addition, we found museum employees did not: limit advances from federal funds to current needs, identify and segregate unallowable costs in accounting records, have written accounting procedures, or maintain records to support cost sharing requirements. NSF disallowed $59,823. REPORTS WITH OUTSTANDING MANAGEMENT DECISIONS No management decisions have been made for the following four reports. These reports have questioned costs that have not been resolved. The Division of Contract Policy Office is tasked with resolving recommendations in external audit reports. During this reporting period, the Division of Contract Policy Office resolved 23 reports that had questioned costs and were over 6 months old or that would have reached 6 months old during this reporting period. ***************************************************************** Management Decision: Management's evaluation of audit findings and recommendations and issuance of a final decision concerning management's response to such findings and recommendations. ***************************************************************** Report Date Report Number Title Issued Reports with questioned costs: 91-1038 Prism Productions 12/21/90 93-1024 Laser Genics Corporation 03/16/93 93-1025 Mathematical Association of America 03/18/93 93-1026 Science Service, Inc. 03/18/93 Commercial Firm Earns Interest on NSF Funds Period First Reported: October 1, 1990 - March 31, 1991 NSF awarded two grants totaling $2,225,496 to a privately owned, for-profit corporation that provides technical and scientific information to commercial television stations. The corporation claimed $2,113,620, and we questioned $410,338. The questioned costs resulted from unsupported salary costs being charged to the grant, invoices supporting expenditures not being available, and indirect costs being charged at a rate higher than the actual rate of the maximum provisional rate. We recommended that an additional $21,175 of interest earned on NSF advances be returned to NSF. During this reporting period, NSF continued to receive information from the grantee in an attempt to resolve the issues in this report. Resolution is expected during the next reporting period. SBIR Grantee Claims Excess Indirect Costs Period First Reported: October 1, 1992 - March 31, 1993 NSF awarded a $230,206 grant to an organization to support a process of growing crystal fibers. We questioned $21,220 because claimed indirect costs exceeded allowable indirect costs, claimed costs exceeded recorded costs, and a grant charge was made without a supporting invoice. The Division of Contracts, Policy and Oversight is currently finalizing indirect cost rates for the award period. Resolution is expected during the next reporting period. Association Lacks Adequate Records Period First Reported: October 1, 1992 - March 31, 1993 NSF awarded an education association seven grants, totaling $1,585,701, to create instructional programs for math teachers. We questioned $180,449 because salaries and fringe benefits were not supported by time and attendance records; consulting charges were not supported by written agreements or invoices for services rendered; source documentation was not maintained for direct costs; and the rates used to claim indirect costs exceeded final indirect cost rates. We recommended that the grantee require that written consulting agreements be submitted to support consulting charges. The Division of Contracts, Policy and Oversight requested that the NSF program office review the project's accomplishments to determine whether the value was received for the undocumented expenditures. Resolution is progressing and should be completed before December 30, 1993. Nonprofit's Accounting System Was Inadequate Period First Reported: October 1, 1992 - March 31, 1993 NSF awarded two grants, totaling $150,000, to a nonprofit organization to support publication of annual directories of scientific training programs. We questioned $4,070. Both NSF grants had been charged to the same account. As a result, we could not identify which costs were applicable to each award, reconcile the amounts reported on the Federal Cash Transactions Report with the account ledgers, or determine the exact amount of income applicable to each award. We recommended that the grantee account for costs by grant, establish records that compare budgeted amounts for the grants with the amounts actually spent, and support payroll expenses with personnel activity reports or an alternative system. The Division of Contracts, Policy and Oversight conducted a site visit and found that significant self-funded expenditures could be used to offset the questioned costs. Resolution of compliance and internal control issues is expected before October 30, 1993. Agency Refusal To Provide Information Or Assistance During this reporting period, there were no reports made to the National Science Board of instances where information or assistance, requested under section 5(a)(5) of the Inspector General Act of 1978, as amended, was unreasonably refused or not provided. Significant Management Decisions That Were Revised No significant management decisions were revised during the reporting period. Inspector General's Disagreement With Significant Management Decisions The Inspector General has no disagreement with significant management decisions made during this reporting period. LIST OF REPORTS We issued the following audit reports and, where applicable, the total dollar value of questioned costs (including a separate category for the dollar value of unsupported costs) is listed for each report. ****************************************************************** Unsupported Cost: A cost the OIG has questioned because of a lack of adequate documentation at the time of the audit. ***************************************************************** NSF and CPA Performed Audits Date Report Questioned Unsupported Number Grantee Issued Costs Costs 93-1035 Cleveland Education Fund 04/22/93 197,293 0 93-1036 Rose Plastics & Machinery, Inc. 04/22/93 23,613 0 93-1037 Advance Refractory Technologies 04/22/93 487 0 93-1038 Moltech Corporation 04/22/93 7,742 0 93-1039 Queues Enforth Development Inc. 04/23/93 11,288 0 93-1040 St. Luke's-Rooservelt Institute for Health Sciences 04/23/93 373 0 93-1041 Division of Chemical Education, Department of Chemical Education 04/23/93 768 70 93-1042 Gordon Research Conferences, Inc. 04/23/93 12,360 1,133 93-1043 Nysernet, Inc. 05/03/93 19,372 1,206 93-1044 Massachusetts General Hospital 05/03/93 16,911 528 93-1045 Cosmic Voyage Project 05/28/93 80,591 80,000 93-1046 Neogen Corporation 05/28/93 44,932 30,622 93-1047 University of Alaska at Fairbanks 06/22/93 0 0 93-1048 Unicorn Projects, Inc. 06/22/93 55,319 1,610 93-1049 George Mason University 06/22/93 33,052 27,521 93-1050 Museum of Science and Industry 06/08/93 29,389 1,483 93-1051 Mount Desert Island Biological Laboratories 06/25/93 15,495 4,528 93-1052 Yale Southern Observatory 06/25/93 22,006 0 93-1053 Universal Hi-Tech Development 07/14/93 11,970 0 93-1054 Society of Hispanic Professional Engineers Foundation 08/17/93 33,596 0 93-1055 The Ecological Society of America 08/26/93 50,285 50,285 93-1056 Minnesota Environmental Sciences Foundation 09/07/93 6,573 6,573 93-1057 Cleveland Clinic Foundation 09/07/93 25,241 0 INTERNAL AUDITS Date Report Questioned Unsupported Number Grantee Issued Costs Costs 93-2105 Overseas Drilling Program 05/18/93 0 0 93-2106 International Program on Overseas Drilling 05/18/93 0 0 93-2107 Chief Financial Officer's Act 06/30/93 0 0 93-2108 Grant Proposal Processing Time 09/30/93 0 0 NSF COGNIZANT AUDITS Date Report Questioned Unsupported Number Grantee Issued Costs Costs 93-4044 American Mathematical Society 05/24/93 6,540 6,477 93-4045 St. Louis Science Center 05/28/93 0 0 93-4046 Hands On Science Outreach 05/28/93 0 0 93-4047 Institution of Electrical and Electronics Engineers 05/28/93 0 0 93-4048 Computing Research Association 05/28/93 0 0 93-4049 IRIS Consortium 05/28/93 6,526 6,217 93-4050 UCAR 06/25/93 0 0 93-4051 Mathematical Association of America 07/15/93 1,617 1,617 93-4052 Missouri Botanical Garden 09/08/93 7,233 0 OTHER FEDERAL AUDITS Date Report Questioned Unsupported Number Grantee Issued Costs Costs 93-5083 Woods Hole Oceanographic Institute 06/25/93 0 0 93-5084 Woods Hole Oceanographic Institute 06/25/93 0 0 93-5085 Woods Hole Oceanographic Institute 06/25/93 0 0 93-5086 Computer Sciences Corporation 06/25/93 0 0 93-5087 Computer Sciences Corporation 06/25/93 0 0 93-5088 Epitaxx, Inc. 06/25/93 0 0 93-5089 MIT 06/25/93 0 0 93-5090 University of Arizona 06/25/93 0 0 93-5091 Amarillo College 06/25/93 0 0 93-5092 SRI International 06/25/93 0 0 93-5093 Bend Research, Inc. 06/25/93 0 0 93-5094 Polytechnic University 06/25/93 0 0 93-5095 Brown University 06/25/93 0 0 93-5096 Miami University 06/25/93 0 0 93-5097 Beloit College 06/25/93 0 0 93-5098 Southwestern Oregon Community College 06/25/93 0 0 93-5099 Oklahoma State University Education & Research Foundation 06/25/93 0 0 93-5100 Epitaxx, Inc. 07/14/93 0 0 93-5101 Carnegie Mellon University 07/14/93 0 0 93-5102 Mathematical Policy Research 07/14/93 0 0 93-5103 Computer Sciences Corporation 07/14/93 0 0 93-5104 University of Hawaii 07/14/93 30,642 0 93-5105 University of Hawaii 07/14/93 17,398 0 93-5106 University of Rochester 07/14/93 0 0 93-5107 KMS Fusion, Inc. 07/14/93 0 0 93-5108 KMS Fusion, Inc. 07/14/93 0 0 93-5109 University of Notre Dame 07/14/93 0 0 93-5110 Stanford University 07/14/93 0 0 93-5111 Stanford University 07/14/93 0 0 93-5112 Lowell Observatory 07/14/93 0 0 93-5113 Carnegie Mellon University & Software Engineering Institute 07/14/93 0 0 93-5114 Millsaps College 07/14/93 0 0 93-5115 Southwest Missouri State University 07/14/93 0 0 93-5116 John Carroll University 07/14/93 0 0 93-5117 University of Louisville 07/14/93 0 0 93-5118 Murray State University 07/14/93 0 0 93-5119 Mount St. Mary's College 07/14/93 0 0 93-5120 Lake City Community College 07/14/93 0 0 93-5121 San Jose State University Foundation 07/14/93 0 0 93-5122 Peru State College 07/14/93 0 0 93-5123 State of Washington 07/30/93 0 0 93-5124 Coast Community College 07/30/93 0 0 93-5125 Northland College 07/30/93 0 0 93-5126 California State University -Hayward Foundation 07/30/93 0 0 93-5127 Mississippi State University 07/30/93 0 0 93-5128 State of Louisiana 07/30/93 0 0 93-5129 Jefferson State Community College 07/30/93 0 0 93-5130 George Washington University 07/30/93 0 0 93-5131 New Mexico Highlands University 07/30/93 0 0 93-5132 Hornet Foundation, Inc. 07/30/93 0 0 93-5133 Macalester College 07/30/93 0 0 93-5134 Rochester Institute of Technology 07/30/93 0 0 93-5135 Eckerd College 07/30/93 0 0 93-5136 Duke University 07/30/93 0 0 93-5137 Bradley University 07/30/93 0 0 93-5138 Concordia Luthern College 07/30/93 0 0 93-5139 San Jose/Evergreen Community College District 07/30/93 0 0 93-5140 Pima Community College District 07/30/93 0 0 93-5141 Ohio University 07/30/93 0 0 93-5142 Clemson University 07/30/93 0 0 93-5143 Valparaiso University 07/30/93 0 0 93-5144 Western Kentucky University 07/30/93 0 0 93-5145 Council for Basic Education 07/30/93 0 0 93-5146 Woods Hole Oceanographic Institute 07/30/93 0 0 93-5147 Brown University 08/03/93 0 0 93-5148 Brown University 08/03/93 0 0 93-5149 Cornell University 08/03/93 0 0 93-5150 Cornell University 08/03/93 0 0 93-5151 University of Rochester 08/25/93 0 0 93-5152 Virginia Institute of Marine Science 08/25/93 0 0 93-5153 Virginia Institute of Marine Science 08/25/93 0 0 93-5154 Foster-Miller, Inc. 08/25/93 0 0 93-5155 Brown University 08/25/93 0 0 93-5156 Computer Sciences Corporation 08/25/93 0 0 93-5157 Computer Sciences Corporation 08/25/93 0 0 93-5158 New Mexico State University 08/25/93 0 0 93-5159 New Mexico State University 08/25/93 0 0 93-5160 University of Notre Dame 08/25/93 0 0 93-5161 New Mexico Institute of Mining and Technology 08/25/93 0 0 93-5162 New Mexico Institute of Mining and Technology 08/25/93 0 0 93-5163 New Mexico State University 08/25/93 0 0 93-5164 New Mexico Institute of Mining and Technology 08/25/93 0 0 93-5165 Smithsonian Astrophysical Observatory 08/25/93 0 0 93-5166 Smithsonian Astrophysical Observatory 08/25/93 0 0 93-5167 Stanford University 08/25/93 0 0 93-5168 Cornell University 08/25/93 0 0 93-5169 Columbia University 08/25/93 0 0 93-5170 Massachusetts Institute of Technology 08/25/93 0 0 93-5171 Polytechnic University 08/25/93 0 0 93-5172 Cornell University 08/25/93 0 0 93-5173 California Institute of Technology 08/25/93 0 0 93-5174 Charles Stark Draper Laboratory, Inc. 08/25/93 0 0 93-5175 Woods Hole Oceanographic Institute 08/25/93 0 0 93-5176 Woods Hole Oceanographic Institute 08/25/93 0 0 93-5177 Woods Hole Oceanographic Institute 08/25/93 0 0 93-5178 Woods Hole Oceanographic Institute 08/25/93 0 0 93-5179 Syracuse University 08/25/93 0 0 93-5180 SRI International 08/25/93 0 0 93-5181 Computer Sciences Corporation 08/25/93 0 0 93-5182 Computer Sciences Corporation 08/25/93 0 0 93-5183 Computer Sciences Corporation 08/25/93 0 0 93-5184 Computer Sciences Corporation 08/25/93 0 0 93-5185 Columbia University 08/26/93 0 0 93-5186 University of San Diego 08/26/93 0 0 93-5187 State of Montana 08/26/93 4,746 0 93-5188 State of Georgia 08/26/93 956 0 93-5189 State of Colorado 08/26/93 0 0 93-5190 American Association of State Colleges & Universities 08/27/93 0 0 93-5191 University of Chicago 08/27/93 22 0 93-5192 State of Utah 08/27/93 0 0 93-5193 State of Massachusetts 09/14/93 0 0 93-5194 Computer Sciences Corporation 09/14/93 0 0 93-5195 Stanford University 09/14/93 0 0 93-5196 New Mexico State University 09/15/93 0 0 93-5197 Denison University 09/15/93 0 0 93-5198 Oakland University 09/15/93 0 0 93-5199 Teachers Academy for Mathematics and Science ('91) 09/15/93 0 0 93-5200 Teachers Academy for Mathematics and Science ('92) 09/15/93 0 0 93-5201 Jackson State University 09/15/93 0 0 93-5202 Pennsylvania State University 09/16/93 0 0 OVERSIGHT Date Report Questioned Unsupported Number Grantee Issued Costs Costs 93-3209 Conflicts-of-Interests Reviews: Volunteers Entering and Leaving, March 1993 04/28/93 0 0 93-3210 Conflicts-of-Interests Reviews: NSF Staff and Rotators Entering and Leaving, March 1993 04/30/93 0 0 93-3211 Conflicts-of-Interests Reviews: Intergovernmental Personnel Act Assignees Entering and Leaving, March 1993 04/30/93 0 0 93-3212 Conflicts-of-Interests Reviews: NSF Staff and Rotators Entering and Leaving, April 1993 05/27/93 0 0 93-3213 Conflicts-of-Interests Reviews: Volunteers Entering and Leaving, April 1993 05/05/93 0 0 93-3214 Committee of Visitors: Status of Reviews: 2nd Quarter FY 1993 05/07/93 0 0 93-3215 Conflicts-of-Interests Reviews: Intergovernmental Personnel Act Assignees Entering and Leaving, April 1993 07/12/93 0 0 93-3216 Conflicts-of-Interests Reviews: NSF Staff and Rotators Entering and Leaving, May 1993 07/15/93 0 0 93-3217 Conflicts-of-Interests Reviews: Intergovernmental Personnel Act Assignees Entering and Leaving, May 1993 08/04/93 0 0 93-3218 Conflicts-of-Interests Reviews: Volunteers Entering and Leaving, May 1993 06/28/93 0 0 93-3219 Oversight Review: Review of Conflict-of-Interest Form for Advisory Groups 04/20/93 0 0 93-3220 Conflicts-of-Interests Reviews: NSF Staff and Rotators Entering and Leaving, June 1993 08/05/93 0 0 93-3221 Conflicts-of-Interests Reviews: Intergovernmental Personnel Act Assignees Entering and Leaving, June 1993 08/05/93 0 0 93-3222 Conflicts-of-Interests Reviews: Volunteers Entering and Leaving, June 1993 07/29/93 0 0 93-3223 Committee of Visitors: Status of Reviews: 3rd Quarter FY 1993 07/23/93 0 0 93-3224 Conflicts-of-Interests Reviews: Intergovernmental Personnel Act Assignees Entering and Leaving, July 1993 08/06/93 0 0 93-3225 Conflicts-of-Interests Reviews: Volunteers Entering and Leaving, July 1993 08/09/93 0 0 93-3226 Conflicts-of-Interests Reviews: NSF Staff and Rotators Entering and Leaving, July 1993 08/13/93 0 0 93-3227 Oversight Review: Proposal Actions: Directorate for Education & Human Resources 1st & 2nd Quarters FY 1993 08/08/93 0 0 93-3228 Conflicts-of-Interests Reviews: NSF Staff and Rotators Entering and Leaving, August 1993 09/14/93 0 0 93-3229 Conflicts-of-Interests Reviews: Volunteers Entering and Leaving, August 1993, 09/21/93 0 0 Statistical Information Required by the Inspector General Act of 1978, as Amended Table I. Audit Reports Issued With Questioned Costs Questioned Unsupported Number Costs Costs A. For which no management decision has been made by the commencement of the reporting period. 28 1,716,494 179,161 B. Which were issued during the reporting period. 40 2,429,354 1,483,218 C. Adjustments to questioned costs resulting from resolution activities. 0 0 0 Subtotals of (A+B+C) 68 4,145,848 1,662,379 D. For which a management decision was made during the reporting period. 31 1,084,891 43,127 (i) dollar value of disallowed costs 0 385,911 N/A (ii) dollar value of costs not disallowed 0 698,980 N/A E. For which no management decision has been made by the end of the reporting period. 37 3,060,957 1,619,252 Report for which no management decision was made within 6 months of issuance. 4 616,077 144,342 Inspector General Reports ***************************************************************** Funds to be Put to Better Use: Funds the OIG has identified in an audit recommendation that could be used more efficiently by reducing outlays, deobligating program or operational funds, avoiding unnecessary expenditures, or taking other efficiency measures. ***************************************************************** Table II. Audit Reports Issued With Recommendations For Better Use of Funds Number Dollar Value A. For which no management decision has been made by the commencement of the reporting period. 0 0 B. Which were issued during the reporting period. 1 300,950 Subtotals of A & B 1 300,950 C. For which a management decision was made during the reporting period. 1 300,950 (i) dollar value of recommendations that were agreed to by management 1 300,950 based on proposed management action 1 300,950 based on proposed legislative action 0 0 (ii) dollar value of recommendations that were not agreed to by management 0 0 D. For which no management decision has been made by the end of the reporting period. 0 0 Report for which no management decision was made within 6 months of issuance. 0 0 Prepared by: Office of Inspector General National Science Foundation For additional copies, write: Office of Inspector General 4201 Wilson Boulevard Arlington, VA 22230 For additional information, call: Audit (703) 306-2001 Investigations (703) 306-2004 Oversight Activities (including misconduct in science and inspections) (703) 306-2006 Legal Issues (703) 306-2100 Electronic Mail: oig@nsf.gov Telephone Hotline: (703) 306-2004