Safeguarding Federal Research Funds: The False Claims Act's Role in Combating Grant Fraud

On cue, may I? We're gonna go ahead and start on time cuz that's what we try to do. The subcommittee on investigation oversight will come to order. Without rejection, the chair is authorized to declare recess. of the subcommittee at any time. Welcome to today's hearing titled " Safeguarding Federal Research Funds, the False Claims Act's Role in Combating Grant Fraud." I recognize myself for five minutes for an opening statement. Today's hearing will examine an issue at the intersection of science, innovation, government accountability, and national security. The United States invests tens of billions of taxpayer dollars every year in research conducted at universities, hospitals, and laboratories across the country to keep America at the frontier of science and protect our national interests. That investment only succeeds if the system designed to protect it function effectively. In far too many cases, they do not. Consider the scale of the problem. At a two thousand twenty-four government accountability office report, estimated a fraud cost of the federal government between two hundred and thirty-three billion and five hundred and twenty-one billion every year. Just to put that in perspective, that's about a third to a half a trillion dollars per year of fraud. Federally funded research represents a meaningful share of that exposure. Last fiscal year, the Department of Justice recovered six point eight billion through False Claims Act settlements and judgments, marking the highest single year total in the law's one hundred and sixty year history. Nearly one thousand three hundred of those cases were brought not by the government authorities or the auditors, but by whistleblowers who came forward on their own, accounting for more than five point three billion of that recovery. That tells us something important, the miscon- of - of the misconduct that exists right now. It's with so much other fraud out there, uh, discovered lately, the same way it's the civilian that's protecting us even more than the government from ourselves and our fraudulent misbehavior. In many cases our own system does not find it. Then there's what fraud actually entails. It's relatively rare for a researcher to invent data from nothing, though that does happen. More often it's quieter. A grant application that overstates compliance. A progress report that omits an inconvenient fact. Or a certification that says everything in order when it's not. These representations are material. They affect with which products get funded, how closely they are monitored, and whether the public can trust that its tax dollars produce what was promised. Undisclosed foreign funding follows the same pattern. But the stakes are even higher. Federal law requires institutions to disclose substantial foreign gifts and contracts precisely, so agencies can evaluate conflicts of interest, intellectual property risks, and outside influence over taxpayer-funded work. When that disclosure does not happen, agencies make funding and oversight decisions with incomplete information. At the exact moment our strategic competitors are working hard to assess America's innovation pipeline. That is not an abstract concern. It requires finding across multiple federal reviews and it does the, and it deserves the committee's continued attention. Cyber security compliance raises a related concern. Many federal wards require recipients to protect sensitive taxpayer-funded data using specific well-established standards. When an institution falsely certifies that it meets those standards, that's not just a paperwork violation. It's exposing exactly the kind of information our adversaries are trying to obtain. The Department of Justice recovered more than fifty-two million dollars last fiscal year in Cybersecurity related False Claims Act settlements alone. And notably, most of those cases involved misrepresentation rather than an actual breach. That is the system working as intended, catching the false certifications before it becomes a national security incident, rather than after it recurs. I want to be clear on something. The overwhelming majority of research at institutions that receive federal funding to do honest work meet their obligations. This hearing is not an indictment on American science, but we have an obligation to ask whether the system meant to catch the exceptions keeping pace with the scale of federal investment and how high the stakes have become. The Department of Justice has taken real steps in the right direction by expanding False Claims Act enforcement and applying it to a broader range of compliance failures. That is progress. But enforcement after the fact is not the same as the system designed to prevent the problem in the first place. And the growth of federal research funding is not matched by the equivalent growth of oversight capacity. This commitment's responsibility is to ensure that federal investment in science delivers the innovation security and economic strength taxpayers were promised without fraud, waste, or abuse standing in the way. That is the purpose of today's hearing. Our witnesses can help us better understand both the scope and problem where the remaining gaps lie.

Mm.

I appreciate their willingness to be here and I look forward to substantive discussion about how Congress strengthen accountability with, without discouraging, legitimate scientific collaboration that keeps America in the lead. I now recognize ranking member representative from Ohio for her opening statement.

Thank you, Mister Chairman, and good morning to everyone, it's so good to be here with you all today. Uh, and it's certainly an interesting time to be talking about Uh, we'll get back to that in a moment. I am a by training a lawyer and I always enjoy a good legal discussion, but it does strike me as interesting that we are holding an oversight hearing about the Department of Justice. I very specifically chose not to sit on judiciary committee, but here we are. We have a broad jurisdiction on this committee, but it stops well short of overseeing DOJ's use of statutory authority to investigate fraudulent claims. This is yet another example of a pattern that we've seen throughout the hundred and nineteenth Congress. My colleagues on the other side of the aisle seem eager to talk about anything other than what the Trump administration is actually doing for American science. It's not hard to understand why. Since January twenty twenty five, the administration's attacks on scientists, scientific institutions, scientific integrity, and scientific agencies have sent American science into a tailspin that just keeps getting worse. Billions of dollars of research awards have been terminated. Science agencies have been gutted. Political pointees throughout the government interfere with merit-based processes at will something that the White House now wants to formalize through new regulation. Merit-based peer-reviewed research supported by the federal government helps us understand our world. It also creates a very real economic impact. In Ohio, twenty million dollars in NASA science funding generates more than fifty six million dollars in economic imp impact. NSF invested two point eight million dollars in my district in twenty twenty five alone, and this funding supports not just research but workforce development in growing sectors like the polymer industry. So when the administration decides that they wanna politicize a merit-based system to advance research only when it suits them, they aren't just messing with research, they're messing with our economy and good paying jobs for people in my district. These are the issues that this oversight committee should be focusing on. But that kind of oversight will require my majority colleagues to take an honest look at what Donald Trump has done, something that they seem too afraid to do. So instead, we have a hearing to discuss fraud. OK, good. Let's talk about fraud. I think trying to create a one point eight billion dollar slush fund to make payments to the president's friends and allies who raided the capital is a fraud against the public. I think shifting three hundred and fifty-two million dollars from the Secret Service to help pay for the President's fancy new ballroom is a fraud against the American taxpayer. I think failing to comply with the Epstein-Faust Transparency Act and redacting materials per to protect abusers, not survivors, is a fraud against the American public. Fabricating a made-up legal settlement to shield the President from being audited is a fraud against the hard-working people of my district, in Ohio's thirteenth. who do things honestly and expect that their government would do the same. The idea that this administration is generally concerned, genuinely concerned about fraud is laughable. Their positions are chaotic and full of hypocrisy. The political appointees in this administration and the Department of Justice will defend justify and rationalize any fraud if the President orders them to do so. And I wanna be clear, grant, fund, and research misconduct are unacceptable and need to be taken seriously. We should seek that out and spend the resources and direct the resources to ensure American tax dollars are being spent appropriately. It should remain a priority for the federal government to root them out. And the False Claims Act can be an important tool for just that purpose. But the problem we will confront today is the same problem we encounter over and over against this president. The Trump administration cannot be trusted to use the legitimate tools at their disposal without abusing them for their own improper ends. To me, fraught means fraud, improper charges, misused funds, kickbacks, falsified documents. But this DOJ fraught appears to be a fig leaf to cover up an ideological crackdown on ideas and beliefs they just don't support. Over the past year, the DOJ has used the False Claims Act against federal contractors and grant awardees in novel unprecedented ways. DOJ now argues that the

Thank you, Ranking Member Saiks. I now recognize the Chairman of the full committee for a statement. Thank you. Thank you. Chairman of the full committee for a statement.

Thank you, Mister Chairman, uh I wanna thank our witnesses for being here today as well. First off, I'd like to say that House Rule ten one P fourteen grants the Science, Base and Technology Committee jurisdiction over scientific research, development and demonstrations and projects therefore. Secondly, House Rule ten three K directs the committee to review and study on a continuing basis laws programs and government activities relating to non-military research and development. So, again, thank you all for being here. Mister Chairman, thank you for having this. Fraud has no place in the American scientific enterprise. While federally funded research has produced tremendous benefits for our nation, recent enforcement actions make clear that even our most respected research institutions are not immune to failures of oversight, compliance and and accountability. Whether the misconduct involves fraud in the scientific process itself, or fraudulent representations made to obtain federal grants and other funding, these actions undermine public trust in science and weakened confidence in America's research institutions. The purpose of this hearing is straightforward, to examine whether federal taxpayers are receiving the transparency accountability and integrity that they deserve from institutions that receive billions of dollars in federal research funding. It is estimated that the federal government loses between two hundred and thirty-three billion and five hundred and twenty-one billion annually to fraudulent actions. Let me repeat that. The federal government is losing between two hundred and thirty-three billion and five hundred and twenty-one billion annually to fraudulent actions. The False Claims Act is one of federal government's most effective tools for combating fraud. It applies to federal funding recipients and is increasingly used in recent years to protect our research enterprise. Through the act's enforcement mechanisms and whistleblower provisions, it recovered billions of dollars on behalf of taxpayers in exposed misconduct that might otherwise have gone undetected. As Chairman McCormick referenced in twenty twenty-five alone, The Department of Justice reported a record six point eight billion in False Claims Act recoveries across all agencies and funding types. The federal government invests heavily in scientific research through agencies such as the National Aeronautics and Space Administration, the National Science Foundation, the Department of Energy, the Department of War, and others. These investments drive innovation, strengthen our economy, and advance our national security. But they also depend on trust, trust that recipients of federal funding are providing accurate information, complying with federal requirements, safeguarding sensitive research, and using taxpayer dollars responsibly. This hearing will examine the tools available to enforce our laws, including the False Claims Act and several areas of growing concern. False certifications by institutions seeking to obtain or retain federal funding, failures to disclose foreign funding, foreign or malign affiliations, and other potential conflicts of interest, and research security compliance, particularly adherence to cyber security requirements, designed to protect sensitive government-funded research and information. These issues are especially important as the United States faces increasing global competition and attempts by foreign adversaries to gain access to American research, technology, and intellectual property. Protecting research integrity is not only a matter of financial stewardship, it is a matter of our national security. Enforcing these laws is not about discouraging scientific research or international collaboration. It is about ensuring that taxpayer funds are used responsibly and that federal research programs operate with integrity transparent- uh transparency and accountability. Taxpayers deserve con- uh confidence that federal funds are awarded based on accurate information that recipients comply with the obligations that they accept and that misconduct is detected and addressed whenever it occurs. Congress has a responsibility to ensure that federal research funding serves the interests of the American people not the interests of bad actors who seek to exploit witness to exploit weaknesses and oversight systems for their financial gain. Institutions that play by the rules should be supported. Institutions that knowingly violate those rules should be held accountable. Taxpayers deserve transparency. They deserve integrity. And they deserve confidence that the federal government is safeguarding both their investment and America's leadership in science and technology. I look forward to our discussions today, and I hope that this hearing will improve our understanding of the laws that protect federally funded research, and identify where gaps remain and explore what additional steps may be necessary to strengthen accountability, safeguard the future of our research enterprise, and ensure effective enforcement. So with that, Mr. Chairman, I yield back.

Thank you, Chairman Babin. I now recognize the ranking member for of the full committee for a statement.

Uh, thank you, Chairman McCormick and Ranking Member Sykes. It is a little odd to have a uh Justice Department witness here in the science committee. This topic and witness would be more familiar to me in my other committee assignment which is the judiciary committee. Nevertheless, I'm more than happy to talk about fraud, I'm just a bit surprised that uh those across the aisle feel that the fraud theme this month is a comfortable topic for anyone aligned with this administration. It's no exaggeration to say that during the Trump administration, fraud is coming from inside the house, it's hard to even comprehend the levels of graft emanating from the highest levels of our government. Crypto schemes, kickback deals, politically connected equity stakes, the list goes on and on. Two weeks ago, the secretary of energy appeared to mislead this committee by claiming that partisan politics played no role uh in award terminations, while the Department of Justice had nearly the exact same moment, was admitting again in federal court that the terminations were politically motivated, members of this committee might feel defrauded by that testimony. It would be a busy time uh for the fraud investigators at DOJ if the department had any independence left and sadly we know it does not. Of course we all wanna protect American taxpayer money from going towards fraudulent activities. Uh the offices of inspector generals represented here today are a key piece of that. OIGs within science agencies play a vital role in ensuring that federal research dollars and programs are protected from waste, fraud, and abuse, including, when appropriate, referring matters to the Department of Justice for prosecution under the False Claims Act. I can't say I understand the sense of in focusing on just one specific law, when IGs have many tools at their disposal. to ensure that grant recipients are adhering to all relevant laws and procedures. But perhaps this new fa- focus makes more sense when we consider the new tack this administration is taking with the False Claims Act. As ranking member Sykes noted, the False Claims Act is now being used as a weapon in this administration's war against what they refer to as a legal DEI. That's absurd to say. the diversity uh initiatives are discrimination, but that is unfortunately the twisted political reality we're living in at this moment, uh care of Mr. Trump and Stephen Miller. But let's not brush past the claim that such efforts are illegal. To the contrary, Congress and this committee in particular, on a bipartisan basis, has spent decades enacting laws to promote diversity in STEM. This includes racial diversity, gender diversity, ethnic diversity, geographic diversity, institutional diversity. We know that expanding access to STEM opportunities is not only the right thing to do for underserved populations, it's the right thing to do if we want the most competitive STEM workforce possible. This is, illustration could not possibly make it clear that they do not, in fact, care about a competitive STEM workforce. Our federal scientific enterprise has been wholly destabilized, through mass firings, chaotic and senseless reorganizations, deletion of crucial government databases, the list goes on and on. Researchers across the country have had grants rescinded after winning them through highly competitive processes, uh defrauding them of duly awarded funding for paper-thin reasons, such as misalignment, with presidential priorities, or for simply having a politically unpopular institutional affiliation. Just as the Committee on Science, Space and Technology is not the place one should expect a well-informed, germane conversation about the Department of Justice's use of the False Claims Act, I have to imagine that the particulars of federal scientific grant-making are out of place uh within the Department of Justice's commercial litigation branch. So perhaps This could be a learning experience for us all. Uh, science committee members can delve into how the False Claims Act can be used to identify and prosecute grant fraud and Miss Jenny can learn about the importance of diversity equity and inclusion in our nation's scientific enterprise that would be a valuable hearing indeed and with that, Mister Chairman, I I yield back.

Thank you. Thank you, Member Lofgren. Let me now introduce our witnesses. Our first witness today is Miss Brenna Jenney, Deputy Assistant Attorney General for the Commercial Litigation Branch Department of Justice. I now recognize Miss Jenney for five minutes to present her testimony.

Thank you, Chairman McCormick and Ranking Member Sykes for inviting me to testify at today's hearing to discuss the False Claims Act's role in combating federal research grant fraud and thank you to Chairman Babin and Ranking Member Lofgren for joining as well. I serve as the Deputy Assistant Attorney General for the Commercial Litigation Branch of the Civil Division. In that role, I supervise the civil fraud section, which leads the department's enforcement of the federal False Claims Act. The FCA is a flexible enforcement tool that allows us to redress a range of fraud and abuse in federal government programs, contracts, grants, and loans. The FCA provides for liability based on knowingly submitting a false claim, and allows the government to collect three times the amount of its damages, plus statutory penalties. The FCA is the government's primary civil tool to recover losses due to fraud and abuse by persons seeking payment from the United States. In fiscal year twenty twenty-five, the United States achieved a record recovery of more than six point eight billion dollars across all of its False Claims Act settlements and judgments. The concept of a claim under the FCA has been broadly construed by courts. relevant to the context of federal research grants, an application to receive a grant, or a request to draw down funds could all be considered a claim. Those claims can be rendered false if the grant recipient violates some applicable legal obligation. Our FCA matters generally originate from one of three primary sources. First, the FCA contains a key TAM provision that allows private persons to file sealed complaints in federal district court, and for the government to investigate and decide whether to take over the case. These whistleblowers may be awarded fifteen to thirty percent of the government's recovery. The second primary source of new FCA cases is agency referrals. Agencies have robust programs to identify and manage potential false claims, including through audits and reviews by agency inspectors general. Finally, DOJ initiates some FCA investigations based on information sources such as analyzing both public and non-public data. Fraud involving federal research grants can implicate a diverse range of misconduct. Key focus areas for the government recently include failure to disclose foreign funding, falsifying research data and images, and violations of cyber security requirements. First, failure to disclose foreign funding. All research institutions receiving federal funding must disclose all contracts or gifts from any foreign source that exceeds two hundred and fifty thousand dollars in a year. Recipients of NASA funds also must certify that they will not participate, collaborate, or coordinate bilaterally in any way with China or any Chinese-owned companies. Grantees certify they are complying with these requirements as applicable. Failure to disclose foreign funding can implicate national security concerns, and it also impinges on the ability of agencies to appropriately award funds. Often, had an agency known about alternate funding sources, it would have chosen to award grants to a different recipient. Over the past few years, DOJ has entered into five settlements with grant recipients to resolve allegations that those grantees failed to disclose foreign funding. The civil fraud section continues to investigate both whistleblower allegations and referrals from our agency clients. Second, falsifying research data or images. Grantees have an obligation to accurately describe data and prior related research when applying for new grant funding. Doing so is important because it allows granting agencies to fairly compare grant applications and make decisions about which research is the most promising and most deserving of funding. Falsifying research can cause agencies to award grants to research projects that have in fact been less successful and less deserving of grant money than other competing projects. It can also slow the development of legitimate research. The civil division has multiple active investigations right now reviewing allegations falsified or manipulated images used in grant applications. Third, violations of government cyber security requirements. While not limited to government grants, this is an area we have seen significant growth in recently. When a government grant involves the use of sensitive government data or personal health information it is common for that grant to impose specific cyber security requirements. Grantees that knowingly submitted a claim to the government, despite not satisfying cyber security obligations, can be liable under the FCA. The FCA is an important tool for the government in this context, because a grantee's violation of cyber security requirements potentially jeopardizes the security of government information and data, and the government does not receive the level of security it bargained for. Over the past five years, we have had sixteen cyber fraud settlements and our work continues. DOJ is committed to protecting the integrity of federally funded research and ensuring the taxpayer dollars are used for their intended purposes.

Thank you, Miss Jenna. And now I, our next witness is Miss Jennifer Springman, Special Agent in Charge, National Science Foundation Office of the Inspector General. I now recognize Miss Springman for five minutes to present her testimony.

Good morning, Chairman McCormick, Ranking Member Sykes, Ranking Member Lofgren, and Chairman Babin, and members of the subcommittee. I appreciate this opportunity to discuss the National Science Foundation, Office of Inspector General's use of the False Claims Act to combat fraud in federally funded research. My name is Jennifer Springman. I currently serve as the Special Agent-in-Charge and in performing the duties of the Assistant IG for Investigations at NSF OIG. As most of NSF's funds are used to make grants to the research community, our office's primary investigative focus is identifying and addressing grant fraud and preventing it from happening again. A tool that we frequently use to do this is the False Claims Act. Its treble damages and statutory penalties create meaningful deterrence and ensure accountability across the research community. Together with DOJ, our investigations have had uh held NSF grantees accountable for misusing NSF funds and making false statements to NSF in proposals and project reports. Over the past ten years, our investigations involving universities have resulted in fifteen False Claims Act settlements, recovering nearly nine million dollars for NSF. What helps us be successful in our investigations are NSF's policies and certifications. We are fortunate that NSF has strong policy language and clear requirements that help us hold institutions accountable. NSF reviewers and program staff rely on accurate disclosures to make informed funding decisions. NSF also has certifications at various stages of a grant, each informing the individual that they are certifying on behalf of their organization, that they are complying with NSF's policies, and that they can be held responsible for providing false information to NSF. As a small OIG, we must use our resources wisely, so we utilize proactive reviews as a fraud detection tool. This means that we use red flags identified in our prior work to identify fraud bec- before it comes to our attention through traditional hotline complaints. Where proactive reviews have been valuable for us is in identifying where to focus our efforts around foreign influence which is one of our top investigative priorities. In past investigations, we found that universities were often aware of their faculty members' foreign funding and positions overseas, but did not disclose this information to NSF. For this reason, we have initiated proactive investigations into whether universities are disclosing this information to NSF as required. These cases take time to investigate, and our office and other OIGs are currently working on many cases using our investigative methodology. Today, I will share with you the results of three of our cases that have been completed. The first, we found that one university was in full compliance with NSF's disclosure requirements, while two others were not. For the two that were not in compliance, the cases were ultimately resolved with civil settlements under the False Claims Act. These settlements were announced publicly, and they had a deterrent effect, in that NSF was contacted afterwards by several universities that wanted to make sure that they understood the rules. Preventing fraud is one of our missions as an OIG, So hearing that institutions were reaching out to NSF to ensure that they were in compliance shows how our work is having an impact. For every dollar that's obtained through deception or otherwise misused is a dollar that could have supported a meritorious proposal. The true victims are the researchers, students and institutions that competed fairly for these limited resources, only to see the funds diverted to individuals who obtained them through fraud. We will r- continue to rely on the False Claims Act as our primary tool for addressing fraud, and we will use the full range of our investigative authorities to safeguard the integrity of NSF's operations and its investments in the scientific enterprise. Thank you again for the opportunity to speak to you today, and I'm happy to answer any questions.

Thank you, Miss Freeman. I now recognize Mister Steinau for five minutes to present his testimony.

Thank you. Good morning, Chairman McCormick, Ranking Member Sykes, Chairman Babin, Ranking Member Lofgren, and members of the subcommittee. Thank you for inviting me to discuss NASA OIG's work combating grant fraud and safeguarding agency research funds. The topic of this hearing is more important than ever, following the success of Artemis two. NASA is propelling Americans to the moon and beyond. And it's our charge, as the agency's oversight authority, to prevent fraudsters and foreign adversaries from undermining our competitive edge in space. The bottom line is this. Safeguarding research security is nothing new for NASA OIG. Over decades, we've leveraged the False Claims Act, or FCA, to ensure federal resources are awarded fairly and responsibly. What has changed during this time is our approach. As our adversaries develop more sophisticated tactics, we evolved in kind. Spearheading new deterrence initiatives, closing cyber security gaps, in developing tools for proactive fraud identification. My testimony today outlines our top three research oversight priorities, which are essential preserving scientific integrity across NASA-funded programs. Our first priority is spearheading new, innovative strategies to combat rising research fraud. As NASA expands its partnerships, our oversight strategies must grow in tandem. Over the last decade, the agency's assistance obligations have exceeded ten billion dollars. And our research security caseload has increased seven-fold. I share these numbers to illustrate the sheer scale of the challenge NASA faces in protecting its resources. To rise to this challenge, we're reviewing ways to bolster our oversight capabilities, including the possibility of initiating site visits to those receiving NASA funds. In addition, the House Select Committee on China has called for a joint OIG, DOJ task force to examine research security risks. The DOJ is our longtime partner, and we look forward to working with them to continue targeting fraud schemes. Our second priority is safeguarding scientific data through strict cyber security enforcement. To spur discoveries, NASA is entrusting a growing network of contractors and grantees with access to government systems. At NASA OIG, our job is to ensure these individuals adhere to rigorous cyber security standards. Again, this charges nothing new. In the nineties, we were one of the, we were one of the first OIGs to establish a, establish a dedicated cyber crimes unit. We were also one of the first to join DOJ's civil cyber fraud initiative. And in one recent case, a university agreed to pay one point two five million dollars to resolve allegations that violated the FCA, by failing to comply with federal cyber security requirements. Finally, our third priority is maximizing recoveries through proactive investigations. It goes without saying that the earlier we can detect research security issues, the better. Timely oversight is paramount to intercepting fraud before bad actors can exploit NASA's weaknesses. That's why our office has initiated nearly four hundred proactive projects in the last decade. The monetary impact totaled over ninety-three million dollars, of which roughly thirty million dollars was recovered for NASA. Our own Intel analysts are also developing tools. and partnering with NASA to identify researchers with potential ties to China. In sum, these three priorities serve a common purpose, to leverage the FCA and other oversight tools to recoup mis-pent and defrauded funds with urgency and precision. To ensure America wins the race back to the moon, we look forward to continuing to safeguard NASA through enhanced deterrence initiatives, strict cyber security enforcement, and proactive investigations. I welcome any questions you may have. Thank you.

Thank you, Mister Steinow, and I I neglected to actually uh describe your title at the beginning. I apologize. Senior Official performing the duties of Inspector General, National Aeronautics and Space Administration Office of the Inspector General. Thank you. I thank the witnesses for their testimony, and I now recognize Chairman Babin for five minutes of questions.

I can get my mike on. Thank you, Mr. Chairman. Appreciate it. Uh, there does seem to be some uh some questions of jurisdiction of this c- this committee. I did read this in my opening study, but I'm gonna read it, read another uh section. The SST committee has clear oversight responsibility for federal research and development programs, science funding, research integrity, and the and the protection of taxpayer dollars invested in scientific endeavors. Examining False Claims Act enforcement in the context of grant fraud, false certifications, foreign influence, and cyber security directly supports our jurisdiction over agencies such as NSF, NASA, DOE, and EPA, uh, science programs. Strong oversight of these issues is essential to safeguarding American innovation, national security, and the integrity of federally funded research, not an overreach but a core duty of this committee. And having the primary agency responsible for prosecuting fraudulent cases as a witness today is critical to understanding the appropriate actions that are being taken to protect the American taxpayer. So with that, Miss Jenny, I'd like to ask you the first, uh, question. Of the six point eight billion recovered last year, how much came specifically from the research institutions and universities, and what share of that total was attributable to academic fraud?

I don't have a ready total of how much of that uh total came from universities and research institutions across any fraud theory, but I can talk about how much of the fiscal year, twenty twenty-five recoveries stemmed from the three areas of research fraud um that comprise the bulk of our university research fraud work right now, failure to disclose foreign funding, cyber fraud, and research falsification. We didn't have any failure to disclose foreign funding settlements last year, but we did have two settlements with universities involving cyber fraud, totaling about two million dollars. We also had a fifteen million dollar settlement with an oncology provider and research institution regarding falsification of research images. And then it's important to keep in mind that sometimes research fraud can be perpetrated by private companies as well as part of very important private, public partnerships. And so last fiscal year, civil fraud had two settlements with private companies that we alleged did engage in research grant fraud through federal funds. In one case, a pharmaceutical company allegedly manipulated images in a grant application to NIH. And then in another case, a robotics AI company, um, actually received a small business research grant from NSF that we alleged they were not eligible to receive. Those total recoveries were over five and a half million dollars.

Thank you, ma'am. Uh, and now for the second question for um uh Miss Springman and Mister Steinow. Uh, when your office identifies potential fraud in a grant or contract, what specific criteria do you use to decide whether to refer this matter for a FCA action versus handling it administratively and who makes that call in your chain of command? Uh, Miss - Miss Springman, you first. It doesn't matter. Whatever, whichever one.

Sure. Um, so We are - our job is to gather the facts. And so we request documents from the university. We look at the information that we have available to us through NSF's systems. And we conduct interviews with witnesses, or individuals who have relevant information. We take all of those facts into consideration. We apply it to the elements of the False Claims Act, determine whether or not it's a case that we would - we think that we would refer to DOJ and it would likely be, um, accepted. Ultimately, the decision on whether or not to make that referral is the decision is made by the case supervisor.

Right, thank you. Mr. Donnell.

Thank you for the question. Uh, I'll I'll echo what, uh, Miss Springman said. A lot of those facts, we we look at the facts of the case, we also look at the impact of the case as well. What type of research was it? Was it more sensitive, uh, towards, you know, things that shouldn't, uh, be controlled by our foreign adversaries? And then we we do the same independent, uh, oversight, uh, with our supervisors and our case agents. And then based on the determination we go to DOJ, which applies their own independent determination, and we figure out, uh, what the best way to prosecute that case is.

Thank you. And one - one - one more question for - for you, Miss Springman. Are federal fi- uh, program officers at funding agencies adequately trained to spot red flags in grant applications and progress reports or is detection almost entirely reactive and dependent on whistleblowers?

Program officers at NSF are required to take research security training. So they're being educated on what the risks are that are inherent with foreign affiliations and foreign funding. We have had program officers speak up and bring concerns to us. Uh, but what we found is the - the best way for us to, uh, generate cases is through our proactive approach. So we found that's been more successful for us than being reactive.

Yes, ma'am. Thank you very much, and again thank you witnesses for being here. Yield back.

Thank you, Chairman Babin. I now recognize Ranking Member Sykes for five minutes of questions.

Thank you, Mister Chair, uh, I'm gonna direct my first question to uh Deputy Assistant Attorney General Jenney. As I noted in my uh opening statement, the Trump DOJ has adopted quite a novel interpretation of the False Claims Act. The DOJ now uses the statute to investigate federal contractors and grantees for allegedly defrauding the government by engaging in illegal DEI, after pledging not to discriminate. You mentioned three areas that you work from, from the statute, but you did not mention this. But on February nineteenth this year at a federal bar association conference, you gave remarks about the False Claim Act in which you declare, quote, DEI is a priority for us and these cases are receiving expedited priority treatment. Scientists deserve to, uh, end quote, uh, scientists deserve to understand how you intend to use this tool of intimidation. even though in this committee you testified that you're primarily focused on foreign funds, data and cyber security, but on February nineteenth you said DEI is a priority. Uh, can you help me understand how grantees Well, excuse me, in the same remarks you conceded that grantees can operate DEI programs without engaging in legal discrimination. Explain how that works.

First of all, let me just clarify, I focused on the three uh False Claims Act areas that I think are, believe were germane to today's hearing. Obviously our civil fraud section um has a range of other enforcement areas, health care fraud and the like that we spend a great deal of time on. In terms of my, uh the discrimination cases, I'd like to address two um premises in the in the questioning that I think are are not quite right. The first is to suggest that because this use of

Miss Denny, I'm sorry. Miss Denny, I'm sorry. We we don't have the time to filibuster. We we don' have the time to filibuster. I'm just asking you specifically, how do you see DER I'm just asking specifically, how do you see DER under the False Claims Act and how it is that we can, researchers can operate DEI programs without engaging in uh d- illegal discrimination or illegal DEI.

Sure. So the focus of our cases in this space has been on unlawful discrimination, violations of long-standing federal anti-discrimination protections. So we look um in particular at the far regulation. It's fifty-two point two two two twenty-six. It includes broad prohibitions on government contractors taking any number of protected characteristics into account when they make hiring or promotion decisions. And so when federal contractors expressly certify to the government that they are complying with that anti-discrimination protection and then they nonetheless do not, that can be the premise, that can be a false, uh, certification to the government that can serve as the predicate for FCA liability.

And, Mr. Nies, so when you say that, How far is your look back period in these certifications and these hiring practice that you claim are illegal?

The, our cases extend back to the full uh extent of the statute of limitations period which can be up to ten years.

So ten years ago, um, preferential hiring was not illegal, but you're saying today you will do that, even though ten years ago that was not the law, this was a executive order by the current president made just a little over a year and a half ago.

None of the cases we have ongoing right now are based on

Miss Jenny, that's not what I asked you. I'm asking you in the future because we have researchers who are concerned about their funding and being prosecuted, but you're saying you'll look back ten years and perhaps may prosecute them for something that was perfectly legal to fit your vendetta against DEI.

I disagree. Our cases are based on violations of long-standing federal anti-discrimination requirements. the far provision that I cited has been in place throughout the current session.

So, Miss Jenny, how do you, how do, can someone operate a DEI program without engaging in illegal discrimination?

I've, there's been some guidance out from the Department of Justice that gives examples of a legal discrimination, I think.

What are those?

Examples of a legal discrimination?

Yes, from their guidance.

Um, taking race or sex into account when making a decision on whether to hire someone, when making a decision on whether someone should get promoted, on whether someone should get an internship, that's really a c- a core area of federal anti-discrimination protection.

So you're saying this is only gonna be related to hiring, but not programmatic DEI.

I think that programs can discriminate through DEI. They can also operate a DEI program without discrimination. The critical question is whether a program is making decisions based on protected characteristics and the law has long forbidden that from happening.

Thank you, Raking Member Sykes. I now rep- uh recognize Representative Webster for five minutes of questions.

Thank you, Mr. Chairman. Appreciate it. Uh, uh, Miss Springman, uh, your testimony highlights that, uh, NSF requirements for post-award disclosures and including updates on current and and uh pending support uh and foreign financial support. What are the most common failures you see in institutions uh post-award disclosures and what additional requirements or enforcement mechanism should Congress consider?

The most frequent nondisclosure or most frequent issue that we see with post-award disclosures is omissions. So researchers are required to update their current and pending support. And what we'll see is that they just, when they are required to do so, they don't update the form. So there are - there's information that is missing. It has been omitted. Um, I think for - what could help address that problem is what the government is trying to do with having a standard or common current and pending support form that all agencies can use.

So, um, you uh explain that False Claims uh uh um Act liability extends to sub-recipients, uh which are kind of like sub-contractors um but they're but they're not they're not involved in the initial um uh procurement of the contract and uh may not even apply to to them except that they're part of the deal afterwards. So what's the most significant uh encounter you're having regarding sub-recipient activities?

So I think the what NSF is when NSF allows a prime to uh have a sub-recipient, they are trusting that that pass-through entity or prime entity is doing the day-to-day monitoring that's required of those sub-recipients. Um to the extent that the requirements that are put on the pass-through entity can be the same as they are on the sub-recipient entity, I think that would help strengthen the pass-through entity's ability to monitor those subs. If it's a rule that the pass-through has to abide by, it's the same that the sub has to abide by. Think that as long as there's consistency there, that helps.

OK. Um, so Miss Jenny, um, your testimony describes cases where nondisclosure or foreign support uh was central to False Claims Act liability. Do you see the value in Congress establishing some sort of uh uniform government-wide disclosure uh framework for s- foreign ties to eliminate agency-to-agency inconsistencies?

I appreciate your interest in legislative reform in this area. I think it's really important, the idea of Congress establishing a uniform government-wide disclosure framework for

So, um, a, someone that's a grantor of uh, grantee of uh, of monies from the federal government, the sub people, sub-recipients, are they included in any of the discussions or any of the contract or anything like that now?

I would defer to my agency colleagues. I think that that is an area that can also vary um by agency and is probably another area of potential inconsistency that we could focus attention on.

OK. OK. Uh, you highlighted um, the growth of uh cyber security, false claims act cases. Are there significant statutory uh or specific statutory requirements that Congress could provide um to insure institutions cannot self-certify compliance?

I think this is another potentially fruitful area to think through in coordination with our uh agency partners and with um this committee. Uh whether Congress should set um, you know, a a nationwide government requirement, um, is something we would have to think through. Obviously, each agency has a different different portfolio and different sets of cyber security requirements. And so I think we would need to make sure that, um, anything put in place wouldn't be too rigid and kind of create an elevate paperwork over function but I think it's certainly something to explore, with our agency partners.

Thank you very much. You're back.

The gentlemen yields. I now represent Sorry, I now recognize Representative Lofgren for five minutes of questioning.

Uh, thank you, Mister Chairman. Uh, Chairman Babin has outlined broad jurisdiction for the committee, and I will never disagree with the idea of expanding the committee's jurisdiction. Um, but, as I mentioned in my statement, the False Claims Act uh isn't the usual science committee a topic, so let me lightly paraphrase an explainer from the Temple University School of Law. The False Claims Act was enacted in the Civil War era to prosecute contractors who were committing fraud against the government by selling, quote, "sawdust rather than gunpowder" or " rotting ships deceptively coated with fresh paint." Now, Miss Jenny, I presume your division, as your uh division looks to expand the use of the False Claims Act to go after alleged illegal DEI by federal contractors that you'll still use it. for these traditional uses, such as when a contractor obtains a contract by claiming to be qualified in a particular area and then delivering woefully unsatisfactory uh work products. Now, the False Claims Act is our topic, uh, and deceptively coding things in paint couldn't be a timelier discussion. That type of fraud clearly didn't end with the Civil War. Greenwater Solutions, a company owned by uh Trump donor John Cafaro uh who has a history of malfeasance. He has pled guilty to campaign finance violations and guilty uh to conspiring to bribe a member of Congress, in fact a former member of this committee. He received a one point seven million no-bid contract to install a water filtration system for the reflecting pool. As anyone who's seen the pool in the last week or so knows, This fill tracing system isn't doing a very good job. Miss Jenny, it appears that Green Water Solutions has no business claiming to be equipped to clean pools. Is the Department of Justice investigating this matter as a potential violation of the False Claims Act?

Long-standing department policy and practice preclude me from talking about any ongoing investigations or potential investigations but I can assure you that we broadly look at a range of potential fraudulent activities, we follow the facts and the law, and we're committed to protecting and safeguarding taxpayer dollars.

Well, I would say that not pursuing this, uh, as a potential false claims act violation would be, uh, look like ridiculous favoritism, since in fact the administration is arresting people who touch the remnants of the fourteen million dollar paint job that's floating in sheets. amidst the algae that Mister, uh, Cafaro's nano-bubble technology has failed to quell. And I would note that the US Attorney in, uh, in the District of Columbia has not declined to comment on those matters, uh, contrary to your assertion that it is against, uh, department policy. I do think, um, Miss Jenny, that your office looks like more interested in going after STEM outreach programs than blatant eight figure corruption like this reflecting pool embarrassment. Miss Springman and Mister Steno, I I'd like to learn more about how the False Claims Act fits into the larger tapestry of your work to ensure that federal grant making at your agencies remains free of waste, fraud, abuse, and management. What types of investigations are most likely to result in referrals to DOJ under the False Claims Act, and do you use this law in your work on research security?

Go first. The False Claims Act is the, is one of the best tools for us in our OIG for combating fraud. We do use it in research security. We also use it in our small business cases, involving the Small Business Innovation Research Program. What we do is we look to see if there's been any funds misused or if there've been any false statements to the agency made in proposals or project reports. As long as those false statements are material, we will then make a referral to DOJ for it to be considered as a False Claims Act case.

Wow, you keep going ahead of me and that's tough. Uh, a lot of the same.

We could

You know, we look at the FCA as a critical tool in - in what we do on a daily basis with our investigations. And we also have other tools in our tool belt as well, but the FCA is critical in going after grant fraud and omissions as well as, uh, you know, ensuring that our research stays, uh, with us and not fall into the hands of our adversaries.

What are the other tools that you would use?

So, you know, any time we have an investigation or somebody comes forward to us, we we look at hey, is this gonna be in the criminal realm? So we have criminal statutes available, conspiracy, false statements. Uh, then we have the SCA realm. We also have administrative uh remedies as well. So we go down the administrative road. So we just look at the case and depending on what is out there, what fits best for that investigation.

My time is expired. I yield back.

Thank you, Ranking Member Lofgren, I now recognize Representative Issa for five minutes of questions.

Thank you, Mr. Chairman, and uh, unlike the ranking member of the subcommittee, I am a judiciary and uh, I welcome Miss Jenning being here, uh, because in fact, we are concerned about the misuse of federal funds and this committee relies on your agency as a major part of the check and balance

Thank you for that question. Yes, we are. So we are using uh the Data Act and we actually at NASA OIG have a data data analytics group that focuses on this. We use analytics to run proactive measures to see what's out there, and really narrow the pool down to going after institutions and contracts that are the most uh likely to have fraud.

I echo what Bob said. We are also using that in our proactive reviews. It helps us to focus where we think the greatest risk is.

Well then on behalf of the late Jerry Conley, who was the cosponsor with me in that bill, and uh Senator Warner, who is still very much with us, uh we'd like to thank you because it doesn't work to make the data available if it isn't used. Miss Jenny, that goes to the next part. What have you done to reorganize to be able to react to what could potentially be between Doge and all these other reports, prioritizing the enforcement going after ways to - to try to reduce or eliminate it in government to the best of your ability with your resources.

So we always try and maximize taxpayer resources, do as much as we can with the resources that we have. And, uh, one example of a way that we've been trying to do that and - and work smarter is we recently launched an initiative called the Focus Data Miner Initiative. And the goal with that is to help us focus on working with the best, most successful data miners who are increasingly choosing, even before we started this initiative, to serve as whistleblowers under the QTAN provision. And so we are actually giving whistle, uh, data miner whistleblowers an opportunity to come in and show us why they are coming up with novel creative ways to mine publicly available data and connect disparate information sources and um sets to come up with ways to identify fraud, that maybe the government hasn't thought of yet. And so we are looking forward to having those meetings and really enhancing our ability to um engage in sophisticated analytics beyond the great work that our trial attorneys are already doing to identify um fraud.

Well, thank you for answering the next question, which is, is AI helping, uh, both inside and outside the uh the agency? Um, previously there ranking member of the full committee uh went to the reflecting pool. I guess she couldn't help herself. Um I just wanna make a comment. She and I have been here substantially the same time over a quarter of a century and since she's still here I will uh make the point uh in this committee that what the president's trying to do is fix a problem that has caused that reflecting pool to be emptied. Every congressional term I have served in and I have served here over a quarter of a century. So, I know it's fun to poke fun at algae growing there, but I have watched it drained for algae every year or two for a quarter of a century. Miss Jenny, what question are we not asking here today? When you look at what the resources you need or the frustrations you have with or without the quote " help of Congress", what is it we should hear from you here today?

I appreciate that question. I share your interest in wanting DOJ to be as effective as possible. Um, I do think we are effective at addressing research grant fraud and a host of other areas that we've been focusing on. And our record recoveries we've been talking about today really reinforce that. Um, we of course are committed to ongoing vigilance and committed to trying to continue to think creatively about how we can maximize taxpayer resources. Um, I did wanna highlight a couple big wins that we had in the state of California recently. We had a huge Medicare Advantage settlement, um, over five hundred and fifty million dollars, um, involving Medicare Advantage upcoding and the largest ever, uh, trade fraud settlement, uh, with a California company, again, almost, uh, five hundred and fifty million dollars back to taxpayers. So we do think

And, and in closing, what is your budget that has caused you to collect over a billion dollars that you just named?

Uh, uh, could you repeat the question?

What, uh, just what is your budget so we understand that that billion probably exceeds your budget?

Uh, I'm not aware offhand of the civil fraud's budget, but I can tell you that we estimate we have a return on investment of about three dollars for every dollar we spend.

Thank you, Mr. Chairman. You're back.

Thank you, Mister Iza, and I recognize Representative Bonamici for five minutes of questions.

Well, thank you to the chair, the ranking member, and thank you to the witnesses. There's no doubt that the False Claims Act is a is an important law. Um, it been around since the eighteen hundreds. We heard about that. Just between nineteen eighty six when it was uh updated and twenty eighteen, the government used it to recover more than fifty nine billion dollars and held, hold uh bilators accountable. Uh, nobody here disputes that grant fraud, real grant fraud, uh, deserves serious attention. But this committee's oversight authority does not extend to DOJ's enforcement of the False Claims Act. There's little explanation for the timing of this hearing other than It seems that the House Republican leadership is getting ready to signal that in their budget reconciliation bill they wanna slash programs under the auspices of combating fraud. Um, so a sending committee scrambling for fraud-themed, uh, hearings is exactly how you build that pretext, um, and today's hearing fits that pattern. It would be a much better use of our time if we were examining the billions of dollars in terminated federal research grants and dismantled merit-based peer review systems and targeted attacks on universities. Those are attempts to coerce compliance with the political agenda, not to further science. Uh, Miss Springman, Science Magazine reported this year that the NSF Inspector General's office can no longer independently investigate research misconduct allegations because of buyouts and staff purges at NSF so if research fraud is rampant enough to justify this hearing why are you empowering the grantee institutions to police themselves?

Last year we did have staffing losses in our research integrity team, but we pivoted with those losses and we found ways that we can still keep ourselves in compliance with NSF's research misconduct regulation, which is the regulation that governs how we handle the research misconduct cases that come into our office.

But obviously you had to give up something else, correct?

Yeah. We, we did not, we actually were able to pivot and find a new way to work those cases.

Oh, thank you. Um, I I wanna um go back to Ranking Member Sykes' line questioning um uh about the use of the False Claims Act. Um I've been on this committee for fourteen years and I'm also on the Education Workforce Committee. And we have had over uh that many years many, many conversations about the need to get more women and unrepresented minorities, for example, in STEM fields. We passed legislation on that, celebrated it. There was one that passed through on the House, three hundred and seventy-seven to six, obviously, greatly uh bipartisan. So, Miss Jenny? Under your office's current interpretation of the False Claims Act, could a research university that receives grant funding and run a program to recruit more women in STEM fields face civil False Claims Act liability because it is somehow associated with DEI?

It's hard to - to speculate on a hypothetical without seeing the certification. The crux of a False Claims Act case is did a - a contractor recipient of government funds certify that they were doing something, repres- make a representation, uh, and then violate that behind the scenes. And so the question we

Make a representation, what?

That they were not discriminating, unlawful discrimination. So

But do you view unlawful discrimination as, uh, for example, a piece of legislation that would encourage more women and unrepresented minorities to go into STEM fields? Is that DEI?

S- let me be clear, co- companies, grantees can run DEI programs without uh engaging in unlawful discrimination. What we're focused on is the language in the far regulation and title seven, which contains a restriction, a long-standing prohibition on taking race or sex into account in hiring or promotion. And so government contractors and grant recipients need to make sure that they are complying with their representation as to federal anti-discrimination protections.

Well, your your legal words, I'm sure, will not be very reassuring to some of these universities who programs. Um, and really, it's, what you're talking about is really is gonna depend on how the DOJ determines, um, uh, what the university is using the dollars for. And that is, um, you know, using things, uh, going after entities for political reasons is, is not a limiting principle. Uh, I just wanna close, Mister Chairman, by saying that American science built this country's competitive edge through freedom to ask hard questions, to follow evidence, to share findings openly, And the False Claims Act exists to protect that investment from fraud. But this administration has turned the law's own authority against the institutions it was meant to protect. And that is not right for our country. I yield back the balance of my time.

The gentlelady has yielded back her remaining time and now I recognize Representative Begich for five minutes of questions.

Thank you, Mr. Chair. Uh, my first question directed to Miss Jenny, um, DOJ recovered over fifty-two million dollars across nine cyber security false claims act settlements in fiscal year twenty twenty five how many of those cases originated from whistleblowers versus proactive government audits?

Five of those nine uh yielded from Keetam complaints that was associated with recoveries of about twenty-four million and then the other four cases were non-Keetam matters uh generally agency referrals. and that was associated with recoveries of over twenty-eight million dollars.

Thank you. So, so the role of whistle-blowers is fairly important for enforcement.

Absolutely. We, uh, take our our relationship with the whistle-blower bar very seriously. Um, the the Congress, when they passed the False Claims Act, put in a a whistle-blower provision to do just that, to encourage insiders who have witnessed fraud, potential fraudulent conduct, to come forward. And they are very

When an institution settles a false claims act case, what happens to the personnel responsible? Are individuals held personally accountable? Or would you say generally institutions simply write a check and and move on?

We do hold individuals personally accountable. Um, we're supported by the facts. I think we recognize that corporate entities cannot commit fraud, it is at the end of the day humans who are committing fraud. So if the evidence shows that particular employees, researchers, administrators, uh, knowingly participated and often orchestrated fraudulent conduct, we will consider whether claims against those individuals are warranted. Um, and if so, that individual will be a part of the settlement agreement and will pay part of the settlement pa- payment as well. And we make that clear in the settlement agreement and on the face of the press release, too. that there is individual liability. And we believe that, um, emphasizing that we are holding individuals accountable where appropriate, uh, is not only the right thing to do, it's part of doing justice, but it does have an important deterrent effect, I think, as well.

Uh, shifting gears, uh, Miss Springman, foreign adversaries increasingly target early stage federally funded research uh before technologies are commercialized or classified. Does the Foreign Claims Act as currently written give the government adequate tools to address that pre-commercialization threat window, or are there gaps that require new statutory authority in your view?

Yes, the False Claims Act is a great tool for us in going after grant fraud, regardless of which stage um the grant is in. It is uh one of the things that we would recommend though, one thing we have seen with our cases involving state schools is that they will claim a defense of sovereign immunity. They will say that the government cannot bring a case against them because they are an arm of the state. Um, it doesn't make the case impossible to pursue, but it does raise some challenges. So, for us it's an accountability gap. It means that we can easily hold the public, uh, the private schools, uh, pri- private institutions of higher education more accountable or ea- more easily accountable than those who are, uh, public schools. So that is one suggestion I believe that I included in my written testimony, that we think

That's great, thank you. Um, final question, uh, for Mister Steinau. Uh, section one seventeen of the Higher Education Act has been on the books for decades. Why are we still seeing serial nondisclosure violations from major research universities in in twenty twenty-five and twenty-twenty-six?

Thank you for that question. Yeah, I I think we're still seeing these, uh, nondisclosures because the, it's self-certification, right? They have to self-certify And it's easier for them not to self-certify and not disclose and not be penalized. And that is one of the gaps that we have in oversight, is we rely on self-certification of all these research institutions, and that's, that's what we have. We need to be more proactive and actually visit these institutions and, and really get into the weeds of what they're doing on a daily basis to, to root this out.

Thanks. Uh, and I see I've got a little bit more time. Uh, Miss Jenny, um, one additional question for you. Is there m- is there more in your view that we should be doing to encourage whistleblowers to come forward? And and if so, what would you recommend?

I think that the False Claims Act is a statutory matter, uh, contains sufficient incentives to encourage whistleblowers to come forward. They can recover fifteen to thirty percent of the financial recoveries. There's also a separate retaliation provision that protects whistleblowers from being fired, because they were

Thank you. I see my time has expired. With that, I yield back.

Thank you, Representative Begich. Now I recognize Representative Whitesides for five minutes of questions.

Thank you, Mr. Chairman. I would like to call up a a a chart if we're able to and direct the witnesses' attention to the chart. This chart shows the cumulative NSF awards made by day by fiscal year. Can everybody see the chart? OK, this shows the last few years as well as twenty twenty six to date. The result of this sh of this chart should shock all Americans who care about our country's scientific enterprise. Last year the Trump administration slow-rolled grants for most of the year and ended up with a much lower number of total grantees than any other year in the modern era but this year is much worse. We're now trending about sixty to seventy percent lower in aggregate grants to American researchers than in past years. This is causing massive damage to American researchers across the country. it's causing damage, especially to young researchers and researchers with smaller research groups. At a time when we profess to be concerned about competition with China, we are decimating the American research establishment. What are we doing? Sixty percent lower this year, maybe seventy percent, and flatlined in June? Miss Springman, you are in a difficult position because you are the

Those are management decisions. When to make an award is of a decision that is made by NSF management.

Mm.

So no, we are not investigating that.

We have been informed that part of the cause of this reduction is that NSF seems to be following proposed OMB rule that requires political appointees to approve grants. Now this rule has not been approved yet, it's still in the comment period. A report about the rule stated that senior political appointees, rather than career scientists or program officers, would now be required to conduct a pre-issuance review of every discretionary grant before it is awarded. These appointees are explicitly forbidden from deferring to peer reviewers or routinely ratifying their recommendations. Um, we have been told by reliable sources that grant approvals for NSF grants have now been pushed outside of NSF and are being approved by OSTP political officials. Is this true?

NSF leadership would be in the best position to answer that.

Do you know the answer to the question?

I do not.

OK. I think the science community should look into this. Do you think it's a good idea that American scientists now have political appointees approving each science grant that NSF issues?

I don't have a position on that.

As part of this new OMB rule, peer review is no longer binding. Reporting on the rule states that peer review recommendations remain advisory and are not ministerially ratified, routinely deferred to, or otherwise treated as de facto binding. This directly dismantles the post-World War Two system used by NIH, NSF, DOE, NASA, and nearly every scientific agency in which independent expert peer review was the primary measure of scientific Merit, do you think this is good for American science?

I defer to NSF on how it makes its decisions as to what proposals it will fund.

OK, well I know what I think about this rule and these changes, and it is the following. This administration is causing massive damage to the American science community. Everyone who cares about science and about what science brings to our world, from new forms of cures to new forms of energy to all the improvements of humanity, should step up and fight back against the damage that is being done. I yield back.

The gentleman's time is yielded back, and I now recognize Representative Herodopoulos for five minutes of questions.

Thank you, Mister Chairman, for allowing me to come on the committee today. Um, a bank robber, Willie Sutton, once asked, why do you rob banks? Cuz that's where the money is. Well, the banks today are the federal government. And we're seeing just horrific cases, not just in health care, but as evidenced today in science and education as well. And that is of great concern. I serve on the financial services committee, Sarbanes Oxley actually has criminal penalties there when people lie to the investors and the biggest investors in the world are called taxpayers, as we had the largest budget in the world. Uh, that said, I think it's really important what you all are doing today and I really appreciate you all holding people accountable. for the misuse of taxpayer dollars. Uh, the law right now has an allocation where for it when you have a penalty it's a three to one ratio, and I think that's very important. And, and it's very concerning that when we're trying to make these scientific investments and and just for the record I, I see the numbers game were being played prior. Uh, the numbers are are a little in uh, uh, total awards versus the number of awards. We, it was like a three percent ad- ad- adjustment between twenty twenty four and twenty twenty six, so. It's fun when people can have uh use of using numbers in in such ways, but federal act um taxpayers have the right to know that the agencies are one looking out to making sure that the information is correct and second when people break the law, that there are severe penalties and I'll just go into to one of those examples. At Duke University, settled for a hundred and twelve million dollars in twenty nineteen over a fail falsified research data and manipulated grant for NIH, EPA and uh the Department of War. Stanford, one point nine million in twenty twenty three. University of Maryland, five hundred thousand dollars. Albany, uh, three hundred and thirteen thousand dollars. In any of these cases, Miss Jenny, did anybody go to jail for lying to the taxpayers about their research and information? Or was just a slap on the wrist with a financial penalty?

To the best of my knowledge, uh, there were not any parallel criminal proceedings in those False Claims Act matters, but I disagree that the financial repercussions were merely a slap on the wrist. I think that those are serious, uh, settlements and there's, uh, adverse press as well for all of those institutions, right? We're sitting at a, at a

Well, they, but I, I, but let me just ask, so was this a three to one ratio in each of these cases?

When we, um, estimate damages, we will impose a multiplier as part of a resolution. Um, often that resolution, uh, multipliers part of a negotiated settlement is lower than the three to one requirement, because it's a negotiated settlement. But we do our best to estimate provable damages and then impose a multiplier.

And and that might be the case, but here's here's Duke. A hundred and twelve million dollar fine, right? Yeah, they got seven hundred and ten million dollars in grants last year. So is is there a a penalty when when a university uh like has they get a I'm sure they get a a little uh bad story, but it didn't stop them from getting uh future dollars. So what is the penalty beyond the financial uh or what can we do so that you don't have repeat offenders on some of these federal offenses in my opinion?

We do take what we call recidivism seriously. It is factored into um our our assessment of an appropriate resolution, and I believe that agencies, although I defer to them as well, factor recidivism in when they are making grant-making decisions.

And I'll just close with this, I I really appreciate first of all you are going after Medicaid, Medicare fraud as you just brought with the Medicare Advantage plan. Again, these are these are people who know where the money is, just like Willie Sutton said, and they're going after it knowing the likelihood of getting a criminal penalty is quite small. And I'm really grateful that our chairman would take on this type of issue because these are fundamental. I mean the way you erode trust in in our government is when you have election violations when people are voting who shouldn't be. And second, when people are stealing money and knowing the penalty is minuscule, especially for the amount of money we're talking about are quite substantial. And and I also, Ms. Dykes, I do appreciate also you you said we shouldn't be filibustering today. I think that's a great idea. Uh, maybe we should talk to our senators about some of these matters. So, uh, the this is this is fundamental to our country, and and people lose trust in government when the government does not react to what the voters ask for in twenty twenty four. And second, when, when we are allowing these major institutions to commit, let's just say fraud, then it is what it is, and, and really there's no penalty, and, and odds are the likelihood of being caught is quite low. And, and so with that, Mr. Chairman, thank you for taking this on. I appreciate the Department of Justice finally bringing justice to a lot of these, and, and I think people need to know that when you create, uh, such false documents like we do in financial services world, there will be a penalty. And so with that, Mr. Chairman, I yield back.

Thank you, Rep Herodopoulos. And I now recognize Representative Foster for five minutes of questions.

Uh, thank you, Chair McCormick, uh, Ranking Member Sykes, and - and to our witnesses. Um, I just would like to comment, um, you know, if we're really interested in - in large scale fraud, not at the hundreds of thousands of dollars level, not at the hundreds of millions, but at the hundreds of billions, we should look at Golden Dome. For forty years scientists have been telling uh Republican politicians that the Golden Dome, Star Wars, back in the day was never gonna work for scientific reasons you can hear about, publicly or privately. And we are now going to apparently spend hundreds of more billions of dollars in something you can prove from an elementary level won't work. And and the people behind those, people getting federal taxpayer money for those, have been caught repeatedly lying to Congress and to the public about what the the technical status of those are. So I realize it's not the subject right now, but if you're interested in fraud two orders of ma many more than six order, well six orders of magnitude larger uh then that is the place to look and not at universities that didn't declare all of their collaborators are this sort of stuff. Um then there is fraud, it's not good, it's bad for the scientific enterprise, but you know if you find the thing about scientists, I was a scientist for my, most of my career, if a scientist ever gets caught lying, their career's over. We we internally, you know, and and it's interesting to say why do, why is it if you're a politician these days, you can lie and just, oh I got, I guess I lied, and you shrug and you walk away. But if you're a scientist and you get caught lying, your career's over. You will lose tenure, you will lose, um, you know, you, no one's gonna read your papers anymore, you won't get them published. And the reason that we take that so seriously, is that we're always operating right on the edge of what's known. And we cannot tolerate in that circumstance the additional uncertainty of what whether the person is lying. And so we're, you know, we're not perfect, but we're a lot better than a lot of other things you can get and. Um, let's see, and I I've also brought up the Mister Whiteside slide again, and the question is, you know, what is happening to this money that's not going out as grants? And apparently a lot of it's going out to these Xlabs, uh by various reports. And these are the sort of pet venture capital slush fund money that that is being allocated by NSF leadership um for sort of whatever they think is cool and it's part of a continuing process of putting a bunch of people whose expertise is mainly software um you know f- sort of software venture capitalist types in charge of fundamental research for which they have no expertise. And so the the possibilities for having um you know just gross misspending of

This is a new area for NSF, and it's also gonna be a new area of oversight for us.

Mm-hmm.

NSF is also use a utilizing a new mechanism called Other Transactions.

Right.

And that's a new

Designed to bypass a lot of this stuff, which is not

Yes.

healthy.

So that's a new, it's a new mechanism for NSF. it's also a new mechanism for us to r- to need to oversight, so we have a lot to learn in that area.

OK, if there's anything specific where you need authorities to go after this, this sort of politically allocated, you know, venture capital type stuff, you know, I I think our, you know, our our ranking member has spoken repeatedly about uh how queasy it makes all of us, when they're taking equity positions, the the tax payers taking equity position in firms, that the the conflicts of interest in that are are horrible, it's unfair to all the firms that didn't get the equity position that they're being asked to and and you know there's also a revolving door problem in there. And so all of these things put that high on your um your radar and we we hope in future congresses to get you adequately resourced again to really go after this. Um unfortunately it's gonna be a a big deal. Um and so I'd just like to speak very briefly about we have there's a lot of mechanisms inside already about how agencies handle Fraud issues. Um, you know, we, you know, the researchers themselves have a responsibility, the grant receiving institutions, uh, and, and the agencies themselves. Um, when they review, they're, they're all supposed to, to look and keep their eyes open for fraud, uh, receiving tips and all of this. But, um, and then you, ultimately it's the Department of Justice. And so what is it, what are the conditions? How does this work for escalating these things? When, under what circumstances will NSF just handle this in, in-house? Um, do you understand the nature of my question?

Sure. So, program officers, we, we have, we do outreach to the program and we let them know these are the red flags that we've seen in our investigations. So we educate them on this is when you need to bring something to us, and we always say that our door is open. So they will come to us and bring information. We will assess it and see if it meets the criteria that we need to open an investigation. If not, we'll send it back to them so that they can handle it administratively.

Yeah, there there's a pretty well-evolved system that normally does a pretty good job, and so I wanna thank you all for being part of that. Thank you and yield back.

The gentleman yields. I now represent recognize Representative Harrington for five minutes of questions.

Thank you, Mister Chairman, and thanks to our um uh uh folks today for their testimony. I appreciate it very much and thank you for all the efforts that you're doing to combat fraud. everywhere that we find it in our government. I think that we certainly have an obligation as uh servants to the American taxpayer to fight it find it and fight it wherever it exists and I think we all know human nature. Um, you know, humans uh if they can do something bad they will, and whether they're a doctor, whether they're a scientist, whether they're a policeman, uh we we've gotta root it out where we can. That's an obligation that we have. So thank you for the work that you're doing. But I wanna just ask any one of you, feel free to respond, but Can you talk about when you do have grant fraud, how that erodes the trust of the American taxpayer? How that erodes the trust of the good actors within the scientific community? How does that overall impact the ecosystem and where we're trying to go?

Thank you for that question. Yeah, so it's a, it's a big deal eroding that trust, and, you know, not only does it erode the trust of the other folks putting in for those grants and awards, But it, it taints the whole community as well. And that's something that, that we're really looking at in, in fact, we're also looking at, hey, not only does it erode the trust, but what research is walking out the door, when it comes to grant fraud and research security? Uh, because one of the big factors is, quite frankly, you know, it may be a dollar value, it may be five hundred thousand or a million dollars, or a couple million dollars in, in grant, uh, fraud, but the real value is the research, and what research is walking out the door, or what research isn't being done. And that's more valuable than the dollar sometimes.

Thanks for that. I appreciate it. And, uh, again, a question for any of the three of you. Can you talk about, with this new prioritization of combating fraud, can you talk about how that has actually made changes in the day-to-day enforcement and oversight of these grants?

Huh, I'll take that one too. Um, yeah, so, w- when when looking at the grant fraud and research security, I I mentioned a bit earlier in my testimony, one of the big gaps that we have is how to actually root this out. You know, we have multiple tools, you know, we have whistle-blowers, we have hotline complaints, uh, you know, we have walk-ins to our offices, and those are all great tools. But really we're we're missing the, uh, how do we get boots on the ground to figure out where the fraud is, how to combat that fraud. And really, that's a big deterrence too. If if we were actually on the ground at some of these institutions, doing reviews of labs and seeing hey, who's doing the research, are they using other researchers that we're not aware of? Uh, that's a big deterrence for the other institutions out there. So that's something that we're really focused on right now, trying to build that, uh, build that bench of expertise to get in there and do that work. And it's also the same on the cyber security front as well, uh, because not only are we looking at the research security fraud, we're looking at the cyber security meas- measures at these institutions as well.

And from your perspective with this new prioritization on combating fraud, has that impacted scientific progress in any way, uh, as it relates to your area of, of expertise?

No, not, not that we've seen. Uh, yeah, cuz we're a partner in this. You know, NASA does a great job. I'll speak for NASA here. NASA does a great job of putting the language that we need in the grants and the contracts. And it's helped us to have the oversight and to have the proper oversight hand with the institutions. We're not heavy-handed. We come and we work with them to figure out, OK, what's the best way to move forward on these, these issues.

There was a chart up here that I think one of my colleagues on the, uh, other side of the dais brought up that appeared to string a narrative together that how the the work that you're doing to combat fraud is actually damaging American science. Can you talk to that?

Yeah. Definitely. I I would say that it's what the work we do is not damaging science, it's actually enhancing it, only because, you know, if we do not do this work on fraud, then it leaves the bad actors that take advantage of the system, and that taints the entire network.

Yeah, it seemed to me like that chart showed a decrease in the number of awards, but we're not talking about the overall level of spend that our government is committing to scientific progress. That has not changed. In fact, it has increased. And so from that perspective, I think it was a very misleading narrative from the other side, somehow wrapped up in in a in a guise to show that combating fraud is actually damaging American science when I totally agree with you, It is not, it's actually enhancing our ability to make scientific progress. Thank you for your testimony today and Mister Chairman, I yield back.

Just a point of clarification, when you say boots on the ground and combating, was that in reference to Mister Harrigan being a special forces army guy and Afghani uh veteran?

Yes.

Okay, thank you. The gentleman yields, I now uh recognize myself for five minutes. of questions. Uh, first of all, thank you all for, for being here today. Uh, interesting, I was looking at the same chart and had the same question. When we look at the number of awards actually given versus, and you can see on the chart, yeah, it looks like drastically less awards given. Can we put up the chart of money spent, comparison-wise? We came up this, literally while we're in, and this is the great thing about technology if it works, uh, is that we can actually put up a slide showing the spend is actually very commensurate. It's, it's a little bit less, but it's very much more on par as far as the spend versus the number of awards. We've actually spent a lot of money on fewer awards. But I will point out this too, that once again when we get into the spend and what we spend money on, I can point out some really easy things. If you could just go on, anybody can go on the internet right now and say, what are the worst federal grants we've given for science? And you'll see literally hundreds of thousands of dollars spent on mudskippers on a treadmill. or or hamsters in a cage, or pigeons on cocaine, or or you name it, I mean, it goes on and on, not to mention our investments in Solyndra, a failed company we spent about a, I don't know how many billions on, and and it basically went bankrupt. There are plenty of times we should have discernment on what we award to make sure that it meets the taxpayers' spend threshold of what actually is a good investment in actual science, not in just an excuse to give universities money to spend it on something that has absolutely no benefit to our society and to our taxpayers especially when we're paying interest on the overspend we're doing every year. And when I'd asked my, my, my friends from across the aisle, what do you wanna do to reduce the spend? Because we all agree we have too much spend. It is the one thing we really disagree on. We, we agree we spend too much. The question is what do we spend it on? And this is exactly the kind of waste fraud and abuse that we should be getting rid of. And we should agree on that. And our oversight is appropriate in science-based technology spending. Um, that by the way, notice we never rep- we never mentioned Republican or Democrat or administration. This is about our responsibility to have oversight on something that should be a non-partisan issue. Miss Jenny, the FCA recovered a record six point eight billion dollars in fiscal year two thousand twenty five. Does that number reflect the success story or does that reflect the scale of the fraud occurring in the first place? In other words, is there a lot more to find?

I think our record recoveries last year absolutely reflect a success story and, uh, the lion's share of the credit go to the really hard-working trial attorneys on my team in the civil fraud section that I'd like to recognize, for really driving forward this administration's focus on combating fraud, waste and abuse. whistleblowers of course uh deserve their share of credit as well, I think, for uncovering misconduct. Um, as we've mentioned there have been a record number of key TAM complaints last year nearly thirteen hundred, and we are on pace this year for another record year as well. Um, at the same time DOJ did initiate about four hundred of its own investigations, many of those coming from referrals from our agency partners, and so I think it is a success story that we can not only move through and investigate all the incoming key TAM complaints, but also find ways to initiate our own investigations and broaden the reach of whistleblowers.

So there's a lot more we can do, obviously.

We, uh, whenever we get more resources we always find ways to p- to put it to good use.

Great. Mister Steinau, are research institutes treating cyber security compliance as a paperwork exercise rather than a substantive national security obligation?

I wouldn't say they're treating it as a paperwork exercise. But they are self-certifying with no actual oversight on the ground. So it is a concern for us, and we are looking at ways to proactively get in there and root out the, root out fraud, and make sure that they are securing the data with the way they should be.

Do you think that there's data that might be vulnerable because of institutions failing to comply with cyber security requirements?

Yes, I think we've shown in the past through some of our cases that there is data, that's, that's sensitive data that was not secured properly. And the, the good news with the with this new initiative, the civil cyber fraud initiative, there doesn't have to be a breach to hold people accountable. We can do it without an actual breach and loss of data. We can hold the uh the institutions accountable.

Imagine that, having something that's actually proactive in government rather than reactive, and actually solving the problem before it it becomes something that's a security risk. That's a great thing to do. Uh, Miss Springman, do you federal agencies currently share information effectively enough to deter, sorry, detect researchers who fail to disclose foreign support across multiple grants, and agencies.

What we are seeing is that agencies are talking a lot more now than they used to. Um, but one gap is that there isn't a single government-wide system where all of the documents are being housed. So, for example, if someone discloses information to NASA, an NSF program officer doesn't have the ability to see that automatically unless they reach out to NASA to ask it. So that is one gap.

And as always, my time runs out just as fast as everybody else's, so I'm gonna have to bring this to a conclusion. I'd like to recognize the ranking member just for a minute to uh talk about her staff member.

Thank you, Mister Chair, uh I wanna take a point of personal privilege to recognize one of our dedicated staff members in Ohio's thirteenth district uh Isabel Root. She is leaving the office to go to law school and saying that we are incredibly sad to see her go is an understatement but I am incredibly proud of her and the work that she has done uh and I certainly look forward to seeing all the fantastic work that she does. to advance the field of health law uh and making sure that the American public get all that they deserve to live their American dreams. So, Isabel, we love you, we appreciate you, we thank you. Uh, we won't be mad at you for leaving us, but um I'm very proud of you and thank you, Mister Chair, for allowing her to be a part of our team here in the science committee, uh and such a proactive member as well. So thank you, Chair, for the the moment to recognize Isabel.

Absolutely. I think recognizing our hard-working staff is always a bipartisan effort and uh and appreciated by by everyone. Uh I thank the witnesses for their valuable testimony and members for their questions. The record will remain open for ten days for additional comments and written questions from members. This hearing is adjourned.