Washington, D.C. – The Committee on Science, Space, and Technology today held a hearing to examine how the National Ecological Observatory Network Inc. (NEON), an environmental non-profit funded by the National Science Foundation (NSF), exploited lax NSF oversight to spend taxpayer dollars on unallowable expenses such as a $25,000 Christmas party, $1000 a month for premium coffee service, $112,000 for professional lobbying, as well as liquor for office happy hours and trips to a high-end resort in France.

Chairman Lamar Smith (R-Texas): “Federal agencies must be held accountable for their waste and misuse of taxpayer funds.  And the NSF needs to be held accountable for how they spend taxpayers’ hard-earned dollars. The basic responsibility of any government agency is to act in the national interest.  The NSF needs to meet that standard."

The NSF entered into a long-term agreement with NEON to develop and operate the project’s national network of fixed and mobile sensors. An audit by the Defense Contract Audit Agency (DCAA) identified more than $150 million in unsupported or questionable costs in the NEON proposal.  It concluded that there was not a “fair and reasonable basis” for NSF to enter into a contract.  Nevertheless, NSF did not wait for the audit results.  It instead finalized an agreement based on NEON’s original cost proposal.

Committee members today questioned how the NSF managed to approve, without any change, a $433 million proposed construction budget for which the DCAA auditors found $150 million was unsupported or questionable.

The NSF’s Inspector General testified that unallowable costs formed the basis for two fraud referrals that were ultimately sent to the United States Department of Justice (DOJ) for possible prosecution. But the DOJ declined to accept the case.

Audits have also raised questions about cost proposals that were accepted by NSF for several major projects.  These include the Ocean Observatories Initiative, the Advanced Technology Solar Telescope, NEON and, currently, the Large Synoptic Survey Telescope.

The following witnesses testified today:
The Honorable Allison Lerner, Inspector General, National Science Foundation
The Honorable Anita Bales, Director, Defense Contract Audit Agency

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