B-310725, National Science Foundation--Disposition of False Claims Act Recoveries, May 20, 2008

B-310725 May 20, 2008 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights The Inspector General (IG) for the National Science Foundation (NSF) may not credit to the IG appropriation amounts recovered pursuant to the False Claims Act that represent investigative costs incurred by the office. Recovery of these costs cannot be characterized as a repayment of an appropriation--the narrow exception to the miscellaneous receipts rule, 31 U.S.C. sect. 3302(b). Congress appropriates a specific amount to the IG for costs to carry out its duties under the Inspector General Act of 1978, including investigations of payments made pursuant to a false claim. Crediting the IG appropriation with these amounts recovered for investigative costs without specific statutory authority would violate the miscellaneous receipts statute and constitute an improper augmentation of the IG appropriation. View Decision B-310725, National Science Foundation--Disposition of False Claims Act Recoveries, May 20, 2008 Decision Matter of: National Science Foundation—Disposition of False Claims Act Recoveries File: B-310725 Date: May 20, 2008 DIGEST The Inspector General (IG) for the National Science Foundation (NSF) may not credit to the IG appropriation amounts recovered pursuant to the False Claims Act that represent investigative costs incurred by the office. Recovery of these costs cannot be characterized as a repayment of an appropriation—the narrow exception to the miscellaneous receipts rule, 31 U.S.C. sect. 3302(b). Congress appropriates a specific amount to the IG for costs to carry out its duties under the Inspector General Act of 1978, including investigations of payments made pursuant to a false claim. Crediting the IG appropriation with these amounts recovered for investigative costs without specific statutory authority would violate the miscellaneous receipts statute and constitute an improper augmentation of the IG appropriation. DECISION The Inspector General (IG) for the National Science Foundation (NSF) has requested a decision regarding the disposition of recoveries under the False Claims Act, 31 U.S.C. sect. 3729. Specifically, the IG has asked whether amounts the government recovers that represent investigative costs incurred by the IG may be credited to the IG appropriation. For the reasons stated below, we conclude that the recoveries for investigative costs may not be credited to the IG appropriation, but should be deposited into the Treasury as miscellaneous receipts. Our practice when rendering decisions is to obtain the views of the agency to establish a factual record and to elicit the agency's legal position in the matter. GAO, Procedures and Practices for Legal Decisions and Opinions, GAO-06-1064SP (Washington, D.C.: Sept. 2006), available at www.gao.gov/legal/resources.html. In this regard, we spoke with several NSF officials to obtain factual information and solicit NSF's legal views.[1] We also had telephone conversations and e-mail correspondence with Counsel to the IG to obtain factual information.[2] BACKGROUND The False Claims Act establishes liability for knowingly presenting to the U.S. government, or causing to present, a false or fraudulent claim for payment. 31 U.S.C. sect. 3729. Under the Act, the government may impose a civil penalty of $5,000 to $10,000 –plus 3 times the amount of damages which the Government sustains because of the act of that person . . . .— Id.The agency that sustained the damages may credit to its appropriation that portion of amounts recovered that represent amounts it erroneously disbursed as a result of the false claim. See, e.g., 69 Comp. Gen. 260, 262 (1990). Both IG and agency officials explained to us that IG staff, as part of their duties, investigate all potential False Claims Act claims for NSF and refer appropriate cases to the Department of Justice (DOJ) for litigation. Record of Interview, at 1; Chason E-mail. At NSF, most False Claims Act investigations involve false statements made to NSF by NSF grantees. Once DOJ reaches a settlement resolving a claim, IG staff notify the NSF Office of Budget, Finance, and Award Management (Budget Office) that a settlement will be forthcoming and advise the Budget Office of the amount of the settlement representing recovery for direct loss to NSF and the amount representing recovery of the IG investigative costs. Chason e-mail, attach. 2; Record of Interview, at 1. Upon settlement, DOJ forwards a check to the Budget Office for the amount of the settlement.[3] Referring to the settlement breakdown received from IG staff, the Budget Office credits amounts representing direct loss to the NSF appropriation from which the payment was originally made.[4] Record of Interview, at 1. The Budget Office deposits amounts identified as investigative costs into the Treasury as miscellaneous receipts. Record of Interview, at 1–2.