The Inspectors General are Coming !

1. The Inspectors General are Coming ! Doonesbury, 3 December 2005

2. The Inspectors General are Coming ! Ethics and the Public Sector: Achieving Ethical Conduct in the Research Environment Doonesbury, 3 December 2005 William J. Kilgallin Head, Investigative Legal and Outreach Office of the Inspector General National Science Foundation

3. Clemson Presidential Colloquium4 March 2008 Ethics and the Public Sector: Achieving Ethical Conduct in the Research Environment William J. Kilgallin Head, Investigative Legal and Outreach Office of the Inspector General National Science Foundation

4. The Inspectors General are Here ! Doonesbury, 5 December 2005

5. Presentation Outline • Partners in Oversight of the Research Environment • Missions, Responsibilities, and Expectations • Providing Protection • Examples of Misused Funds • The “Magic Bullet” ?? • Questions

6. National Science Foundation • Created in 1950 by Harry Truman • Budget: about $6.0 Billion • Funds scientific research/education, primarily grants • We “buy” science (pennies saved = another grant) • NSF provides 23% of the funding for basic research in America’s universities and colleges • Over 1800 organizations (colleges, universities, school systems, nonprofit institutions, and small businesses) receive NSF funding each year • No labs or research facilities

7. National Science Foundation • 40,000 proposals competitively reviewed each year • Total awards funded each year: 20,000 • New awards funded each year: 11,000 • Number of merit reviewers yearly: 50,000 • Number of reviews done each year: 250,000

8. Partners in Compliance • The Agency (National Science Foundation) • Program Officers (science decisions) • Grants Officers (business managers) • Office of Inspector General (Oversight) • Institution/University Officials • Administrative officials • Financial (business managers) • Research Community • Professors (Principal Investigators), students • Post-doctorate researchers • Support staff

9. NSF Responsibilities • Provide funding opportunities • Establish clear rules and expectations • Make timely decisions • Monitor progress (both research and funds) • Coordinate with other government agencies • Balance competing interests • Government • Institution • Researcher

10. NSF Responsibilities • Program Officers • Review proposals • Recommend awards • Monitor research portfolio • Conduct site visits • Review Cost Share Certifications • Grants Officers • Provide award funding • Review awardee systems • Monitor award financial activities / commitments • Conduct site visits to assess internal controls • Designate “high risk” awards, awardees • Advance or special payment decisions

11. NSF Expectations • True statements to the Government in proposals and in reports (research and financial) • Performance of the funded work • Charge reasonable, allowable, verifiable costs • Monitor expenditures for appropriate use • Comply with all requirements • Hire qualified individuals • Ensure rules apply to • employees & affiliated researchers • sub-contractors & suppliers • international collaborators

12. NSF OIG Mission • Prevent and detect fraud, waste, and abuse • Promote economy, efficiency, and effectiveness • Features: • Independent of agency management • Dual reporting requirements • Congress • National Science Board • Specific jurisdiction (NSF programs and operations) • Cannot manage programs or make policy Source: The Inspector General Act of 1978, as amended, 5 U.S.C. Appendix

13. What does NSF OIG investigate? The simple answer Allegations of: Lying Cheating Stealing

14. NSF OIG : Investigative Efforts • Respond to allegations • False statements • Fraud • Research misconduct • Proactively review trends for potential fraud • Intensive outreach effort • Results: • Recovered funds • Settlement and compliance agreements • Suspension / debarment • Assurances / certifications • High-risk award / awardee designation • Prison

15. NSF OIG: Tools • Audits • NSF financial statement • Internal NSF performance audits • External grant audits • Referrals to Investigations • Investigations • Staff of scientists, investigators, auditors, and attorneys • Criminal, civil, and administrative cases • Proactive reviews • Management implication reports • Referrals to Audit • Inspections and evaluations • Educational activities

16. Office of Investigations • OIG’s responsibilities include the detection and prevention of waste, fraud, and abuse involving NSF programs and operations • OIG investigations conducts civil, criminal, and administrative investigations

17. Principal Investigators NSF Program Officers Other NSF Employees Review Panelists Government Agencies Graduate Students University Administrators Contractors Anonymous Hotline Callers or Informants Sources of Allegations** ** Anyonemay confidentially contact OIG to report potential wrongdoing

18. Investigative Process • Conduct preliminary research; determine jurisdiction; identify issues; gather evidence • Objective investigation of substantive allegations • As appropriate, refer to audit or other agency OIG • Prepare written Report of Investigation • Work with DoJ, NSF, and awardees to develop appropriate resolutions that protect the interests of the Federal government and the U.S. taxpayer

19. Expectations • Of NSF • Clear articulation of rules / expectations • Balance compliance, institution responsibility and latitude, reduction of bureaucracy • Numerous funding opportunities • Of Institution/University • An environment in which employees can operate with integrity • Responsible administrative, financial, and research management and oversight (e.g. Article 1, GC-1) • Of Investigators • Overall -- Uphold ethics and standards of community • Submit quality proposals and conduct the funded activity • Know and adhere to rules, regulations, and ethics • Ensure compliance and education of staff, students

20. Institution/University Responsibilities • Certify / ensure compliance with terms and conditions • Maintain environment of integrity • Effective financial and administrative systems • Ensure monitoring and oversight of programs • Charge reasonable, allowable, verifiable costs • Act as conduit between researchers and funding agency • Ensure education of future generations of researchers

21. Institution/University Role • Notify OIG • of allegations of wrongdoing • of significant financial or administrative problems • of research misconduct issues • Take appropriate remedial actions

22. Institutional/University Role, cont’d • Report wrongdoing, financial or administrative problems • Respond to request or subpoena for documentation • Provide financial records • Provide research records • Provide internal audits • Permit interviews of employees • Report research misconduct • Expect referral of the matter for investigation • Permit interviews of employees • Conduct any required institutional investigation

23. Research Misconduct (RM) • Federal-wide definition and procedural framework. • RM means fabrication, falsification, or plagiarism in proposing or performing research, reviewing research proposals or in reporting research funded by the agency. 45 C.F.R. 689.1.a Fabrication: making up data or results and recording or reporting them Falsification: manipulating materials, equipment, or processes, or changing or omitting data or results Plagiarism: appropriation of another person’s ideas, processes, results or words without giving appropriate credit.

24. Common Admin Allegations

25. Trends(x=year, y= relative increase, base year 1995)

26. Trends (x=year, y= relative increase, base year 1995)

27. Admin Consequences • Reprimand • Training or teaching • Additional oversight • Certifications/Assurances • Dismissal • Withdrawal of proposal(s) • Award Suspension/Termination • Suspension/Debarment • Exceptional Status • Disallowed costs

28. RM Case Examples from the NSF OIG Semi-Annual Report to the Congress • Falsification, Fabrication, and Plagiarism Found in a Single Proposal (March 2005) • PI Ignores Warning to Remove Plagiarized Text From His Proposal (March 2006) • PI’s Pattern of Plagiarism Continues During OIG Investigation of His Proposals (March 2006) • PI Provides False Evidence to RefuteAllegation of Plagiarism (March 2006) • Plagiarism Found in University Professor’s Dissertation (March 2006)

29. More RM Case Examples . . . • NSF Funded Postdoctoral Fellow Falsifies Research Data (September 2006) • Professor Reviews Proposal for NSF, Then Plagiarizes It Into His Own Proposal (Sept 2007) • Professor Plagiarizes in Four NSF Proposals (Sept 2007) • Student Claims “Laziness” Caused Him to Fabricate/Falsify Data in Four Manuscripts (Sept 2007)

30. When Administrative cases turn Civil/Criminal . . .Case 1: Plagiarizing the Thesis • PI submitted his student’s thesis chapter as an SBIR-1 proposal ($100K, 6 months) from a non-existent company • When awarded, PI used the money to pay his child’s tuition at an ivy leagueinstitution and other personal expenses • PI copied the thesis into his final reportand proposal for the SBIR-2 award ($500K) • University notifies OIG of plagiarism allegation • PI denied everything

31. When Administrative cases turn Civil/Criminal . . .Case 1: Plagiarizing the Thesis (cont.) • NSF suspended the award • OIG issued subpoenas; reviewed records; presented the case to DoJ • DoJ accepted the case for prosecution • Professor pleaded guilty to a criminal count (1001) • Repaid NSF $240,000 • NSF OIG recommended RM finding and debarment. • 3 year debarment

32. When Administrative cases turn Civil/Criminal . . .Case 2: “No” Means “No” • PI asked for a second No Cost Extension on the Award • NSF program officer declined the request in FastLane, in writing, and by telephone • PI directed the finance officer to draw-down the award balance of $32K although the costs had not been incurred • OIG presented case to DoJ for prosecution. • DoJ settled case. • $52K returned to NSF as restitution and investigative costs. • Five-year Compliance Plan imposed. • PI debarred for five years. “NSF Proposes to Debar PI for Five Years” (NSF OIG SA Sept 2007)

33. Other Civil and Criminal Misconduct • Over-Charging Grants results in $1.55M to NSF and imposed 4-year compliance agreement • False Certifications result in $1.4M to NSF and imposed 5-year compliance agreement • False Certifications result in $3M to NSF and imposed 5-year compliance agreement

34. Common Types of Civil/Criminal Allegations *Includes mail fraud, false identification insurance fraud, impersonating a government officer, and copyright infringement. Data gathered from NSF OIG closed Investigative files (1990 – Present).

35. * Allegation was preliminarily investigated but found to be insufficiently material to warrant further action. ** Includes monitoring, enacting new guidelines, letters of reprimand, etc. Data gathered from NSF OIG closed Investigative files (1990 – Present).

36. Embezzlement/Theft Fraud False Statements or Claims Conflict of Interests Obstruction of Justice Civil False Claims 18 USC §§ 641, 666 18 USC §§ 1030, 1341-3 18 USC §§ 287, 1001 18 USC §§ 207-9 18 USC § 1505 32 USC § 3729 Common Statutory Violations

37. Possible Outcomes • Institutional Sanctions • Letter of Reprimand • Ban from Service as Reviewer • Ethics Training • Certifications • Assurances • Federal-wide Debarment • Fines / Restitution • Prison

38. www.lostinspacetv.com DANGER, Will Robinson, DANGER Our numbers are going up. WHY?

39. The Bad News • Ethical misconduct in business is back to pre-Enron levels; about half of employees witnessed misconduct • Employees don’t report misconduct when they see it due to fear of retribution • The number of companies with effective enterprise-wide ethics programs has declined since 2005 *National Business Ethics Survey, Ethics Resource Center, 2007 Report

40. More Bad News • Misconduct across government as a whole is very high; about 60% of employees witnessed misconduct • One in four government employees works in an environment deemed conducive to misconduct • The strength of ethical culture in government workplaces is declining, while pressure to commit misconduct is growing • Absent effective interventions, misconduct is likely to rise more in the future *National Government Ethics Survey, Ethics Resource Center, 2007 Report

41. So, what is the answer?

42. The Magic Bullet Does NOT exist.

43. AN Answer: • Effective Compliance Programs • Will you have a program? • Will it be voluntary? • or • Will it be imposed?

44. One Way To Get There: Imposed Compliance Plans • $15 M; overcharging IDC • $30 M, exceptional status; oversight program; misuse of federal grants • $12 M; overbilling • $650,000; research fraud and abuse • $1.5 M, 5-year compliance program; cost-sharing • $1.2 M; inflated research grant costs • $150,000, 5-year compliance program; misuse of federal funds • $2.5 M, 5-year compliance program; cost-sharing, salaries, double charging • $6.5 M, oversight program; mischarging awards • $3.4 M, 5-year compliance program; misuse of federal grants

45. NSF’s Requirements You already have the responsibility • The awardee has full responsibility for the conduct of the project or activity supported under this award and for adherence to the award conditions. Although the awardee is encouraged to seek the advice and opinion of NSF on special problems that may arise, such advice does not diminish the awardee’s responsibility for makingsound scientific and administrative judgements and should not imply that the responsibility for operating decisions has shifted to NSF. • By accepting this award, the awardee agrees to comply with the applicable Federal requirements for grants and cooperative agreements and to the prudent management of all expenditure and actions affecting the award. Reference: NSF’s Grant General Conditions, Article 1.

46. Compliance Programs Offer An Integrated Approach to Oversight in the Research Environment Government Institution/University Researcher

47. What IS a Compliance Program? • Use of internal controls to effectively monitor adherence to applicable statutes, regulations, and program requirements. • Finding risks and minimizing the danger of abuse • HHS Integrity Agreements in Medicare • HHS Guidance • Council on Government Relations Guidance • University Programs • Sarbanes Oxley

48. What IS a Compliance Program? • Implemented voluntarily or mandated • Mandated programs are based on US Sentencing Guidelines • Address laws, regulations, rules, or agreements • Holds organization responsible for employees actions • Requires Leadership - commitment to do the right thing • Requires Management - ethical environment • Focus on high risk areas • Provide systematic monitoring, auditing, oversight • Requires Training - Communicate facts and expectations • Requires Action - Early detection /correction

49. Why Have a Compliance Program? • To foster an environment where employees can operate with integrity and where ethical conduct is the norm • Serves as mitigating factor with DoJ • The Antithesis of the Rationale: • Too expensive • Not enough staff • Hard to organize • No authority • No need • Too much trouble

50. Compliance Program Elements • Reasonable standards and procedures • High-level personnel responsible • Careful delegation of authority • Effective training • Monitoring and auditing systems; whistleblowing system • Consistent enforcement • Respond appropriately to wrongdoing • Report wrongdoing Source: Federal Sentencing Guidelines, U.S.S.G. §§ 8B2.1, 8C2.5(f), & 8D1.4(c)(1) (11/1/04)