Sneak Preview: OIG Decries NSF’s Cost Surveillance Measures

December 5, 2012 | By Jerry Ashworth | Post a Comment

(The following was excerpted from an article in the Single Audit Information Service.) Concerned that federal funds awarded under National Science Foundation cooperative agreements will generate improper payments, the agency’s Office of Inspector General urged the agency to develop improved cost surveillance policies and procedures, especially for high-dollar cooperative agreements.

In an alert memo to the NSF Budget, Finance and Award Management Office, OIG noted that it found “serous weaknesses” in NSF’s cost surveillance measures for awarding and managing cooperative agreement. The agency has awarded 685 cooperative agreements totaling $11 billion, with 38 of these awards totaling more than $50 million each. Many of the agreements help fund the construction and maintenance of large facility projects (e.g., research and development centers).

NSF “stated in its fiscal year 2013 budget that ‘modern and effective research infrastructure is critical to maintaining U.S. leadership in science and engineering,’” OIG said. “Since NSF has chosen to use cooperative agreements for the construction, operation and management of high-risk, high-dollar large facility projects, it is imperative that it exercise strong cost surveillance controls over the lifecycle of such projects.”

OIG said NSF should improve its monitoring practices in both the pre-award and post-award phases. At pre-award, a panel of outside technical experts performs a limited review of applicants’ cost estimates and budgets to determine whether the project can be completed within the estimated costs and contingencies, in light of NSF’s no cost overrun policy. Because the panel reviews do not address Office of Management and Budget cost principles, they do not adequately identify overstated costs, OIG found. Although OIG did not express an opinion about the use of such panels, it did conclude that panel reviews insufficiently determine whether the proposal should be funded.

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