[Pages H3732-H3735]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

NSF MAJOR RESEARCH FACILITY REFORM ACT OF 2016

Mr. LOUDERMILK. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 5049) to provide for improved management and oversight of
major multi-user research facilities funded by the National Science
Foundation, to ensure transparency and accountability of construction
and management costs, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:

H.R. 5049

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``NSF Major Research Facility
Reform Act of 2016''.

SEC. 2. DEFINITIONS.

In this Act:
(1) Director.--The term ``Director'' means the Director of
the Foundation.
(2) Foundation.--The term ``Foundation'' means the National
Science Foundation established under section 2 of the
National Science Foundation Act of 1950 (42 U.S.C. 1861).
(3) Major multi-user research facility.--The term ``major
multi-user research facility'' means a science and
engineering infrastructure construction project that exceeds
the lesser of 10 percent of a Directorate's annual budget or
$100,000,000 in total project cost that is funded in the
major research equipment and facilities construction account,
or any successor thereto.

SEC. 3. MANAGEMENT AND OVERSIGHT OF LARGE FACILITIES.

(a) Large Facilities Office.--The Director shall maintain a
Large Facilities Office. The functions of the Large
Facilities Office shall be to support the research
directorates in the development, implementation, and
assessment of major multi-user research facilities, including
by--
(1) serving as the Foundation's primary resource for all
policy or process issues related to the development and
implementation of major multi-user research facilities;
(2) serving as a Foundation-wide resource on project
management, including providing expert assistance on
nonscientific and nontechnical aspects of project planning,
budgeting, implementation, management, and oversight;
(3) coordinating and collaborating with research
directorates to share best management practices and lessons
learned from prior projects; and
(4) assessing projects during preconstruction and
construction phases for cost and schedule risk.
(b) Oversight of Large Facilities.--The Director shall
appoint a senior agency official as head of the Large
Facilities Office whose responsibility is oversight of the
development, construction, and transfer to operations of
major multi-user research facilities across the Foundation.
(c) Policies for Large Facility Costs.--
(1) In general.--The Director shall ensure that the
Foundation's polices for developing and maintaining major
multi-user research facility construction costs are
consistent with the best practices described in the March
2009 Government Accountability Office Report GAO-09-3SP, or
any successor report thereto, the Uniform Guidance in 2
C.F.R. part 200, and the Federal Acquisition Regulation as
appropriate.
(2) Cost proposal analysis.--
(A) General requirement.--The Director shall ensure that an
external cost proposal analysis is conducted for any major
multi-user research facility.
(B) Resolution of issues found.--The Director, or a senior
agency official within the Office of the Director designated
by the Director, shall certify in writing that all issues
identified during the cost analysis, including any findings
of unjustified or questionable cost items, are resolved
before the Foundation may execute a construction agreement
with respect to the project.
(C) Transmittal to congress.--The Director shall transmit
each certification made under subparagraph (B) to the
Committee on Science, Space, and Technology of the House of
Representatives, the Committee on Commerce, Science, and
Transportation of the Senate, the Committee on Appropriations
of the House of Representatives, and the Committee on
Appropriations of the Senate.
(3) Incurred cost audits.--The Director shall ensure that
an incurred cost audit is conducted at least biennially on
any major multi-user research facility, in accordance with
Government Auditing Standards as established in Government
Accountability Office Report GAO-12-331G, or any successor
report thereto, with the first incurred cost audit to
commence no later than 12 months after execution of the
construction agreement.
(4) Contingencies.--
(A) In general.--Except as provided for in subparagraph
(C)(ii), the Foundation shall--
(i) provide oversight for contingency in accordance with
Cost Principles Uniform Guidance in 2 C.F.R. part 200.433, or
any successor thereto, and the Federal Acquisition Regulation
as appropriate, except as provided in this paragraph; and
(ii) not make any award which provides for contributions to
a contingency reserve held or managed by the awardee, as
defined in 2 C.F.R. part 200.433(c).
(B) Updating policy manual.--The Foundation shall update
its Large Facilities Manual and any other applicable guidance
for contingencies on major multi-user research facilities
with regard to estimating, monitoring, and accounting for
contingency.
(C) Foundation requirements.--The policy updated under
subparagraph (B) shall require that the Foundation--
(i) may only include contingency amounts in an award in
accordance with Cost Principles Uniform Guidance in 2 C.F.R.
part 200.433, or any successor thereto, and the Federal
Acquisition Regulation as appropriate; and
(ii) shall retain control over funds budgeted for
contingency, but may disburse budgeted contingency funds
incrementally to the awardee to ensure project stability and
continuity.
(D) Awardee requirements.--The policy updated under
subparagraph (B) shall require that an awardee shall--
(i) provide verifiable documentation to support any amounts
proposed for contingencies; and
(ii) support requests for the release of contingency funds
with evidence of a bona fide need and that the amounts
allocated to the performance baseline are reasonable and
allowable.
(E) Current awardees.--The Foundation shall work with
awardees for whom awards with contingency provisions have
been made before the date of enactment of this Act--
(i) to determine if any of their use of contingency funds
represents out-of-scope changes for which Foundation's prior
written approval was not obtained; and
(ii) if out-of-scope changes are found, to identify any
financial action that may be appropriate.
(5) Management fees.--
(A) Definition.--In this paragraph, the term ``management
fee'' means a portion of an award made by the Foundation for
the purpose of covering ordinary and legitimate business
expenses necessary to maintain

[[Page H3733]]

operational stability which are not otherwise allowable under
Cost Principles Uniform Guidance in 2 C.F.R. part 200,
Subpart E, or any successor regulation thereto.
(B) Limitation.--The Foundation may provide a management
fee under an award only if the awardee provides justification
as to the need for such funds. In such cases, the Foundation
shall take into account the awardee's overall financial
circumstances when determining the amount of the fee if
justified.
(C) Financial information.--The Foundation shall require
award applicants to provide income and financial information
covering a period of no less than 3 prior years (or in the
case of an entity established less than 3 years prior to the
entity's application date, the period beginning on the date
of establishment and ending on the application date),
including cash on hand and net asset information, in support
of a request for management fees. The Foundation shall also
require awardees to report to the Foundation annually any
sources of non-Federal funds received in excess of $50,000
during the award period.
(D) Expense reporting.--The Foundation shall require
awardees to track and report to the Foundation annually all
expenses reimbursed or otherwise paid for with management fee
funds, in accordance with Federal accounting practices as
established in Government Accountability Office Report GAO-
12-331G, or any successor report thereto.
(E) Audits.--The Inspector General of the Foundation may
audit any Foundation award for compliance with this
paragraph.
(F) Prohibited uses.--An awardee may not use management
fees for--
(i) costs allowable under Cost Principles Uniform Guidance
in 2 C.F.R. part 200, Subpart E, or any successor regulation
thereto;
(ii) alcoholic beverages;
(iii) tickets to concerts, sporting, or other entertainment
events;
(iv) vacation or other travel for nonbusiness purposes;
(v) charitable contributions, except for a charitable
contribution of direct benefit to the project or activity
supported by the management fee;
(vi) social or sporting club memberships;
(vii) meals or entertainment for nonbusiness purposes;
(viii) luxury or personal items;
(ix) lobbying, as described in the Uniform Guidance at 2
C.F.R. 200.450; or
(x) any other purpose the Foundation determines is
inappropriate.
(G) Review.--The Foundation shall review management fee
usage for each Foundation award on at least an annual basis
for compliance with this paragraph and the Foundation's Large
Facilities Manual.
(6) Report.--Not later than 12 months after the date of
enactment of this Act, the Director shall submit to Congress
a report describing the Foundation's policies for developing
and managing major multi-user research facility construction
costs, including a description of any aspects of the policies
that diverge from the best practices recommended in
Government Accountability Office Report GAO-09-3SP, or any
successor report thereto, and the Uniform Guidance in 2
C.F.R. part 200.
(7) Noncompliance.--The Director shall ensure that the
Foundation shall take the enforcement actions specified in 45
C.F.R. 92.43 for noncompliance with this section.

SEC. 4. WHISTLEBLOWER EDUCATION.

(a) In General.--The Foundation shall be subject to section
4712 of title 41, United States Code.
(b) Education and Training.--The Foundation shall provide
education and training for Foundation managers and staff on
the requirements of such section 4712, and provide
information on such section to all awardees, contractors, and
employees of such awardees and contractors.

The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Georgia (Mr. Loudermilk) and the gentlewoman from Texas (Ms. Eddie
Bernice Johnson) each will control 20 minutes.
The Chair recognizes the gentleman from Georgia.

General Leave

Mr. LOUDERMILK. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days to revise and extend their remarks and to
include extraneous material on H.R. 5049, the bill now under
consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Georgia?
There was no objection.
Mr. LOUDERMILK. Mr. Speaker, I yield myself such time as I may
consume.
I am pleased to sponsor H.R. 5049, the NSF Major Research Facility
Reform Act of 2016, to improve the management and oversight of major
multi-user research facilities that are funded by the National Science
Foundation and to ensure that taxpayer dollars are spent with
transparency and accountability.
The NSF funds a variety of large research projects through
cooperative agreements, including multi-user research facilities, tools
for research and education, and instrumentation networks. Current
construction projects underway include the Large Synoptic Survey
Telescope, the Daniel Inouye Solar Telescope, and the National
Ecological Observatory Network, otherwise known as NEON. These 5- to
10-year construction projects range from $350 million to $500 million
in total project cost. The proper stewardship of taxpayer dollars is
paramount when executing projects of this magnitude.
The Committee on Science, Space, and Technology held a number of
hearings over the last year and a half on these large research
projects, including several on the NEON Project, after learning about
the mismanagement of appropriated funds. Specifically, the hearings
discussed the findings of two financial audits. One of those audits
discovered that NEON was allowed to use Federal taxpayer dollars for
explicitly unallowable costs, including liquor, lobbying, and a lavish
holiday party.
Both audits of the NEON Project were initiated by the NSF inspector
general due to concerns about the lack of review of costs by the NSF.
In addition, the IG had concerns about the NSF's accounting financial
controls of major research facilities prior to entering into
cooperative agreements. The IG's work, combined with the oversight of
this committee's, resulted in the National Academy of Public
Administration's, also known as NAPA, conducting a commissioned review
of the NSF's management of cooperative agreements.
The bill I bring to the floor today is a product of many
recommendations that were made by the NSF IG, the auditors, NAPA, and
the Committee on Science, Space, and Technology.
First, the bill enhances the role of the NSF Large Facilities Office
in project management, giving it statutory permanence and ensuring that
expert management staff at the NSF work with scientific program staff
throughout all phases of project development and construction. It also
requires a senior agency official to have responsibility for the
oversight of the office.
Second, the bill requires the NSF to commission an external cost
proposal analysis for all major multi-user research facilities with a
total project cost of over $100 million. This will ensure that proposed
construction budgets are reasonable while allowing the NSF and the
awardee to address all cost issues before construction begins. This
small investment at the beginning of the award will pay off in savings
for the life of the construction project.
Third, the bill requires an incurred cost audit at least every 2
years during construction, starting 1 year after the execution of the
agreement. These regular audits will help ensure that a project is on
track and will detect problems while something can still be done to
remedy the problem, not after the project is well on its way to being
over budget or is already complete.
Fourth, the bill increases agency control over project contingency
funds by requiring the NSF to retain the majority of the funds rather
than the awardee. Reflecting the input of many stakeholders, the bill
allows the NSF to disburse contingency funds incrementally to the
awardee to allow for project continuity and stability. Contingency
expenditures must be supported by verifiable cost data, and the awardee
must record and report all contingency expenditures to the NSF.
Next, the bill closes loopholes for the use of management fees,
codifying regulations that the NSF has recently put into place to
ensure taxpayer funds are never abused again. This prohibition includes
alcohol, concert tickets, unnecessary travel, and lobbying. The bill
also requires awardees to demonstrate a financial need to justify
management fees which are included as part of the award.
Finally, the bill has a provision that supports the education of the
NSF grant awardees and their employees on the law that protects
whistleblowers. It was thanks to a whistleblower auditor that many of
the issues with the NEON Project were brought to light.
As a former small business owner and as the former director of a
nonprofit, I, wholeheartedly, understand the importance of
accountability. The fact that the NSF is mishandling American taxpayer
dollars, with little consequence,

[[Page H3734]]

is inexcusable. What is even more inexcusable is that the NSF has
received warnings about this kind of irresponsible spending over the
past 4 years, and it has not taken adequate measures to resolve the
matter.
This bill will ensure that the NSF makes the systematic changes
necessary to restore confidence in federally funded research projects
and that taxpayers can trust us with their money in their knowing that
it will be spent in the manner it was intended.
I thank Chairman Smith for his support in moving this bill forward,
and I ask my colleagues to join me in passing these commonsense
reforms.
Mr. Speaker, I reserve the balance of my time.
Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I yield myself such
time as I may consume.

I rise in support of H.R. 5049, the NSF Major Research Facility
Reform Act of 2016. While I support the passage of this bill in the
House today, I do so with some reservations, which I will discuss later
in my remarks.
Major research facilities play a central role in helping the NSF meet
its mission to promote the progress of science and cultivate the next
generation of scientists and innovators. These facilities include
telescopes, research ships, engineering test beds, and other cutting-
edge research platforms. We recently held a hearing to congratulate the
scientists who are working on one such endeavor, the LIGO project,
which detected gravity waves.
As the LIGO project demonstrated, these efforts involving major
facilities have the potential to generate profound breakthroughs in
science and to inspire a whole new generation of our best and brightest
to pursue careers in STEM. However, these major facilities also cost a
lot of money. Properly managing those large expenses is critical to
ensuring the success of the major facilities projects and is,
ultimately, critical to the advancement of science.
The intent of this bill is a good one. It is to ensure the proper
oversight and accountability for the National Science Foundation's
investments in major research facilities.
The National Science Foundation manages about 15 research facilities
across its diverse science and engineering portfolio. In any given
year, three or four new major facilities are under construction. H.R.
5049 largely addresses the design and construction phase of these
facilities, which is the highest-risk phase.
Republican and Democratic members and staff of the Committee on
Science, Space, and Technology worked together over many weeks to
develop and move through the committee a bill that addresses the need
for strong oversight and accountability while taking into consideration
the legitimate concerns of the agency and stakeholder groups about
unintended consequences. I appreciate the work of Mr. Loudermilk and
Chairman Smith and the Republican and Democratic staffs in this regard.
However, the devil is always in the details, and I hope that discussion
will continue on some of the details if this legislation continues to
move forward.
The fact is that every other Federal agency is held to governmentwide
standards and policies for contracting. In this bill, we are creating a
different set of rules with less flexibility for the National Science
Foundation even though the Foundation's record, overall, has been a
very good one and even though the Foundation has taken many aggressive
steps already to rectify deficiencies where they did exist.
As such, I hope that we tread carefully. Given that the impetus for
this bill was one project that went awry because of an inexperienced
project management team, the last thing we want to do is to enact a law
that discourages the most experienced project management professionals
from doing business with the NSF, thereby increasing the risk to the
taxpayer.

{time} 1915

In closing, I want to thank Mr. Loudermilk and Chairman Smith for
working with us to improve the legislation; and I hope we continue to
work with the agency, the National Science Board, and the expert
stakeholders to ensure we achieve our shared goals of both safeguarding
taxpayers' money and promoting the progress of science
I reserve the balance of my time.
Mr. LOUDERMILK. Mr. Speaker, I yield 1 minute to the gentleman from
California (Mr. McCarthy), the majority leader.
Mr. McCARTHY. Mr. Speaker, the Innovation Initiative is about two
things: enabling innovation in the private sector, and bringing
innovation into government.
It has now been 3 months since we started the Innovation Initiative.
In that time, we have met with innovators at the forefront of both our
missions. Today in the House, we are focused on harnessing innovation
for the public good.
Just moments ago, we passed Representative Darin LaHood's bill to
advance networking and information technology research and development;
and now we are considering Barry Loudermilk's reform of the National
Science Foundation.
Basic research and development investment is important as we strive
to remain at the cutting edge of technologies that will offer Americans
a happier and healthier life. But when the integrity of such efforts at
public institutions is compromised, as happened with the major NSF
facility that experienced massive cost overruns last year, it calls
into question the entire model. So this bill makes changes to our
research facilities to make them operate with transparency and
accountability.
When you look across our government, you can see inefficiencies, a
lack of accountability, and practices and policies that just don't make
sense. That is bad for the workers, it is bad for business, and, most
importantly, it is bad for America.
Here in the House, we aren't accepting the status quo. If it doesn't
make sense, we are getting rid of it. If it is holding back innovation,
we are changing it.
Mr. Speaker, we will surely consider more pieces of innovation
initiative in the weeks and months to come. Unleashing the power of
innovation, we will ensure American leadership now and into the future.
Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I reserve the
balance of my time.
Mr. LOUDERMILK. Mr. Speaker, I yield 5 minutes to the gentleman from
Texas (Mr. Smith), the chairman of the Science, Space, and Technology
Committee.
Mr. SMITH of Texas. Mr. Speaker, Mr. Loudermilk is the chairman of
the Science, Space, and Technology Committee's Oversight Subcommittee,
and I appreciate all the work he has done on this bill.
H.R. 5049, the NSF Major Research Facility Reform Act, is the second
bill today that is part of Majority Leader McCarthy's Innovation
Initiative. We appreciate all of his efforts on this and other
innovation bills, which now total 17.
This legislation addresses an issue about which the Science, Space,
and Technology Committee has expressed concerns for the last 2 years:
the National Science Foundation past management of major research
facility projects.
The Science, Space, and Technology Committee seeks to ensure that
taxpayer dollars are spent on research in the national interest, not
wasted on mismanagement and questionable costs.
This bill achieves that goal. It addresses gaps in project oversight
and management through solutions identified by the NSF inspector
general, auditors, an outside review panel, and the Science, Space, and
Technology Committee's own oversight for a year and a half.
Last year, in the wake of several reports of project waste and
mismanagement, NSF Director France A. Cordova agreed to commission a
study by the National Academy of Public Administration to take a closer
look at how NSF could better manage large-scale research projects. The
study's report offered 13 recommendations to improve NSF's management
of cooperative agreements.
Although NSF has begun to implement some of the recommendations,
there is still a need to implement four key measures addressed in this
bill: preconstruction verification of total project cost, incurred cost
audits during construction, better control over contingency funds, and
proper use of taxpayer-funded management fees.

[[Page H3735]]

The bill's approach to these four reforms ensures that no current or
future large-scale research project faces the same financial
mismanagement that plagued one of NSF's largest projects, the $400
million National Ecological Observatory Network, called NEON. Last
September, we learned that the project was likely to be $80 million
overbudget and 18 months behind schedule. I recognize that the NSF is
taking steps to better manage the cost of NEON, which include firing
the management organization; however, it is time to make systemic
changes for all current and future major research projects.
The accountability provisions in the bill have been developed with
input from the minority, the NSF, and many stakeholders. We
incorporated many of their suggestions during the markup of the bill in
committee on April 27, and the bill was reported out of the Science,
Space, and Technology Committee by voice vote.
Our staff has continued to work with the minority on the report that
was filed with the bill to make sure our intentions in the underlying
bill are clear. Although I believe the current NSF leadership is
committed to improving its management of these construction projects,
we need to make sure that the NSF will make the systemic changes
necessary in a timely and permanent fashion. This change of how the NSF
does business should outlast the current administration.
Many stakeholders have expressed support for the bill since it
provides certainty for how the NSF will operate. All agencies as well
as their grantees and contractors need 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.

H.R. 5049 will reduce waste, fraud, and abuse and make more resources
available for quality basic research. This will lead to scientific
discoveries, spur technological innovation, create new industries, and
provide better jobs for Americans.
Mr. Speaker, I urge the adoption of this good government
accountability bill.
Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I am delighted to
know that this is a part of the innovation project. There are a number
of good bills in the committee that we could really make a part of that
package.
I have no further speakers, and I urge support of the bill.
I yield back the balance of my time.
Mr. LOUDERMILK. Mr. Speaker, I urge my colleagues to support this
strong bipartisan measure.
I yield back the balance of my time.
The SPEAKER pro tempore (Mr. MacArthur). The question is on the
motion offered by the gentleman from Georgia (Mr. Loudermilk) that the
House suspend the rules and pass the bill, H.R. 5049, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. LOUDERMILK. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.

____________________