Every federal agency has an inspector general's office that acts as the internal auditor of the agency's finances and is the group charged with rooting out waste, fraud, and abuse in that agency. The National Science Foundation's Office of Inspector General (OIG) recently issued the first of this fiscal year's semi-annual reports, covering the period ending on 31 March 2007. The report included evidence of plagiarism on several proposals submitted to NSF.
Perhaps even more disturbing was the report of some PIs who blamed unnamed graduate students or postdocs for the plagiarism rather than taking responsibility for the problem. The OIG's report cites the NSF's Grant Proposal Guide, which states that "Authors other than the PI (or any co-PI) should be named and acknowledged.” These additional authors may include graduate students, postdocs, and even freelance writers hired to polish the text.
Not naming all of the authors also prevents the OIG from getting to the bottom of plagiarism cases. The report says, "If the explanation provided indicates that an unnamed individual (such as a graduate student or postdoc) was responsible for the copied text, we contact that individual to confirm the explanation. Unfortunately, many times these individuals have left the university, and in some cases, the country, making it nearly impossible to validate the explanation."
The OIG puts responsibility for the integrity of a proposal squarely on the PI. "We believe that final responsibility for the contents of the proposal ultimately resides with the named authors of the proposal—the PI and the co-PIs. Recent university investigation committees share this view. Therefore, PIs should carefully review any written materials that their students and postdocs provide as a part of a submitted proposal to ensure they meet the high scholarship standards required of an NSF proposal."
Hat-tip: Ric Weibl, AAAS.

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