Washington, D.C. – Today in a joint hearing, members of the Subcommittee on Oversight and the Subcommittee on Research and Technology questioned the National Science Foundation (NSF) about how an environmental non-profit organization, NEON Inc., spent thousands of taxpayer dollars on expenses such as a Christmas party, premium coffee service, professional lobbying, as well as liquor for office happy hours and trips to a high-end resort in France.

Chairman Lamar Smith (R-Texas): “The basic responsibility of any government agency is to act in the national interest. I hope we can develop a solution, including the possibility of legislative action, so that this misuse of funds does not happen again. We must remember it is the people’s money, not the government’s money.”

The NSF entered into a long-term agreement with NEON to develop and operate the project’s national network of fixed and mobile sensors. On top of the frivolous spending outlined above, an audit by the Defense Contract Audit Agency (DCAA) identified more than $150 million in unsupported or questionable costs in the NEON proposal. Nevertheless, NSF did not wait for the audit results before it approved, without any change, a $433 million proposed construction budget.

Oversight Subcommittee Chairman Barry Loudermilk (R-Ga.): “If one project can get away with this, how do we know they aren’t all frivolously spending hard-earned taxpayer dollars? The fact that a non-profit can treat American taxpayer dollars as profit without any kind of consequences is absolutely inexcusable. What is even more inexcusable is that NSF has received warnings about this kind of irresponsible spending over the past four years, and it has not taken adequate measures to resolve the matter.”

“Management Fees” were created decades ago as a way to cover unallowable costs in contracts that might otherwise jeopardize the financial stability of a nonprofit entity. But the fees were only intended to be used for “ordinary and necessary” business expenses. For its part, NSF today acknowledged that costs such as alcohol and parties were “poor judgment.”  NSF also highlighted that in light of congressional scrutiny, the agency made some internal changes and has issued draft regulations to prevent expenditure of federal funds on inappropriate activities. 

Research and Technology Subcommittee Chairwoman Barbara Comstock (R-Va.): “Maintaining American leadership in science and innovation is the key to our nation’s future economic prosperity and security.  Basic research is about good jobs and a secure future.  We want to be strong advocates for federal support of basic research that advances science and the national interest.  But that advocacy is made more complicated when our constituents learn of taxpayer dollars diverted to parties and lobbying. It may be that nothing illegal has occurred, but taxpayer money has been spent very inappropriately.”

The following witnesses testified today:
Dr. Richard Buckius, Chief Operating Officer, National Science Foundation
Dr. James P. Collins, Chairman, National Ecological Observatory Network
Ms. Kate Manuel, Legislative Attorney, Congressional Research Service

For more information on the hearing, including witness testimony and the archived webcast, visit the Committee website.