February 2007




The Office of Inspector General will issue this newsletter periodically to report the results of recent audits, investigations, and other work related to NSF's programs. Our intent is to help members of the research community become more aware of the types of problems that may be found during an audit or investigation, as well as measures that may be taken to prevent them.




In This Issue








NSF Contractor Agrees to Pay Government $1.55 Million ::

A Maryland company engaged in social science research agreed to pay the government $1.55 million to settle allegations that they submitted false claims under their contracts with the National Science Foundation, and the Departments of Commerce, Health and Human Services, and Justice.  The matter was initially raised in a lawsuit filed by a former employee under the “whistle blower” provisions of the False Claims Act.  The lawsuit alleged that the company improperly charged the government for labor costs incurred for non-government contracts, and also for costs associated with marketing, bid preparation, and overhead.  The settlement followed an investigation by NSF and HHS, working closely with an Assistant United States Attorney from the U.S. Attorney's Office for the District of Maryland.  As part of the settlement, the company entered into a 4 year compliance plan with NSF OIG.





:: Trade Association Pays $52,150, Enters into Compliance Agreement ::

A Virginia based trade association that received an NSF grant settled allegations that it improperly drew down grant funds after being informed that it would not be reimbursed for costs incurred after the grant’s expiration date.  The drawdown was represented to NSF as a reimbursement.  OIG’s investigation determined that, in fact, the amount claimed had not been incurred.  The trade association agreed to pay NSF $52,150 to settle the matter, and instituted a compliance agreement, including a comprehensive business ethics program that covers all employees.





:: OIG Recommends More Comprehensive Process for Reviewing Indirect Cost

Rates ::

NSF agreed to continue to improve its program for the negotiation of indirect cost rates, in response to an audit of NSF’s procedures for reviewing indirect cost rate proposals.  Federal agencies review an indirect cost rate proposal and supporting documentation to determine the appropriate rate for reimbursing an awardee for its overhead or indirect costs. 


The audit revisited recent OIG audits of indirect cost proposals and found common problems, including overstated indirect costs and untimely or missing submission of indirect cost proposals.  OIG recommended development of a risk-based program comprised of four elements to review indirect cost proposals: 1) updated assessments of awardees’ financial management systems, 2) maintenance of historical files on awardees’ prior rate negotiations, 3) guidance for reviewers to use in processing submitted proposals, and 4) more effective tracking of proposal receipt and follow-up for late proposals.


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:: PI Ignores Warning, Submits Plagiarized Text in Proposal ::

A PI from a New England institution plagiarized text in an NSF proposal, disregarding an admonition from a colleague about the copied text.  Despite this warning, the PI submitted his proposal with virtually no changes from the draft version and the proposal was eventually funded by NSF.  In addition, the investigation revealed the PI had submitted an earlier NSF proposal that contained plagiarized text from another successful NSF proposal.  NSF agreed with OIG's conclusion that the subject committed research misconduct and debarred the individual for a period of two years. 




:: NSF OIG Joins National Procurement Fraud Task Force ::

The National Procurement Fraud Task Force was created on October 10, 2006, to support the prevention, early detection and prosecution of procurement fraud.  The Task Force is chaired by the Assistant Attorney General for the Criminal Division of the Department of Justice, and includes several federal Inspectors General, the FBI, defense investigative agencies, federal prosecutors, and various DoJ Divisions.  The Task Force will focus on increasing enforcement efforts in cases involving false claims, grant fraud, labor mischarging, ethics and conflict of interest violations, defective pricing, misuse of classified and procurement sensitive information, and other issues associated with procurement fraud. The Task Force also will seek to promote information sharing and take significant leadership in addressing issues such as grant fraud, relations with the private sector, training and legislation.







To report a possible instance of fraud, waste, or abuse pertaining to NSF programs or awards, please call our hotline at 1-800-428-2189 or contact us at oig@nsf.gov. For more information about OIG activities, visit our website: www.nsf.gov/oig

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