[Congressional Record (Bound Edition), Volume 162 (2016), Part 6]
[House]
[Pages 8605-8608]
[From the U.S. 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 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.

[[Page 8606]]

       (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, 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

[[Page 8607]]

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.
  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.

[[Page 8608]]

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.

                          ____________________