Gov't to probe U. research costs

A U.S. Congressional subcommittee reviewing potentially-illegal spending practices at Stanford University will extend its investigation to the University, an aide to a high-ranking Congressman said last Monday. The House Subcommittee on Oversight and Investigations has been probing Stanford's use of so-called "overhead" funding connected to research grants since last summer. An aide to Representative John Dingell (D-Michigan), who heads the subcommittee, said committee members will turn their inquiries to the University and several other top research institutions to determine if misuse of indirect overhead costs charged to the federal government is widespread. The investigation will commence in a couple of months, the aide added. The University received over $175 million in research funding from the federal government last fiscal year. Some administrators at the University and across the country have expressed fear that the subcommittee's review may lead government agencies to further restrict funds allocated to universities for research and fundamentally alter the way schools do business with the government. The aide, who wished to remain anonymous, said the committee will also investigate the spending practices of the University of California at Berkeley, Harvard Medical School, the Massachusetts Institute of Technology and the University of Southern California. Officials here said they have not yet received notification about the review from the committee. The investigations will focus on the use of indirect overhead costs -- the expense universities charge for use of buildings, maintaining research facilities and the administrative costs associated with research projects. When federal grants are allocated, researchers receive a certain amount for the specific project and universities are also compensated for overhead costs. The University charges the government 65 percent overhead on every research grant to cover these indirect costs. In other words, for every $1,000 a researcher receives, the University receives an additional $650. Stanford University's indirect cost rate is 72 percent, one of the highest rates in the country. The subcommittee discovered in the course of its investigation that in the past decade, Stanford officials have spent indirect research funds for illegitimate purposes such as refurbishing a grand piano in the president's residence and depreciation on the university's yacht. Illegitimate spending at Stanford may total several million dollars, subcommittee members say. Stanford is also undergoing a criminal investigation. The aide said if the subcommittee finds that the University has overcharged the federal government, it will demand that the money be paid back. A criminal investigation could follow, he added. According to Dennis Fitzgibbons, an aide to Representative Dingell, one reason the committee decided to investigate the charges at Stanford is that "more and more money is going to research but the number of grants are going down." Fitzgibbons said the committee's decision to also investigate the University is not a sign that the University has improperly used government funds. He said the committee is conducting several "case studies" -- of which Stanford was the first -- that cover a range of funding and spending methods. The intense scrutiny that Stanford has received during the congressional investigation has led government and education officials to speculate that similar questionable practices occur at institutions nationwide. "We have testimony that overcharging is taking place in many universities," Fitzgibbons said. "But we hope and we believe that's not the case." University administrators last week seemed unconcerned about the pending investigation, saying they are confident that the amount of money the University charges for indirect overhead is precise and justified. They said the percentage was approved by the Department of Health and Human Services, the government agency responsible for negotiating such contracts with the University. University Comptroller Alfred Beers said last Monday the University followed specific principles set aside by the government in determining how much money to charge and how to spend that money once received. Beers said the University has not taken any special measures to prepare for the congressional investigation. He said the University periodically audits its own records and will be prepared for an outside study of the books. "The University administration is concerned with the investigation because it does not cast a kind light on higher education," Beers said. "But we believe our proposal [to Health and Human Services] was put together properly." Vice Provost for Research Barry Cooperman said last Monday he thinks the recent focus on research spending should highlight the fact that the government is "not doing enough for research institutes." "I hope we can turn the problem into an opportunity," Cooperman added.

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