Stanford improprieties sparked House probe

Congressional investigators have accused Stanford University of overcharging the government of up to several million dollars in indirect overhead costs related to research, in a review of spending practices which will soon extend to the University. The investigation by the House Subcommittee on Oversight and Investigations has revealed that during the past decade, Stanford officials misappropriated federal overhead money, using it for blatantly non-research purposes. Congressional investigators say that Stanford administrators used government money to purchase thousands of dollars worth of linen, buy a cedar-lined chest and refurbish a piano in the president's mansion, depreciate the university's yacht, and hold a reception for Stanford President Donald Kennedy's new bride. The university also charged the government over $100,000 for administrative costs of the Stanford Shopping Center. While Stanford officials have claimed much of the misuse is due to severe accounting errors, the university is now undergoing a criminal investigation. Members of Congress and educators across the country now fear that Stanford is not alone in its allegedly illegal use of government money. The subcommittee is expanding its investigation to include the University and several other peer institutions. Congressional aides said yesterday it is too soon to tell what the long-term effects of the prolonged investigations will be, but said the review may lead to a change in the government policy of allocating research funds to institutions. "We're not sure if there's a legislative procedure needed in this situation," an aide to the House subcommittee's chairperson said yesterday. "Through the investigations we will decide if governmental oversight should be increased." David Morse, who lobbies in Washington for the University, said yesterday he does not think the probe will have a dramatic impact on the dollar amount of federally-sponsored research grants, but said he is concerned that it will decrease the overhead needed to maintain the research in campus buildings. Some universities across the country have jumped the gun, auditing their books in preparation for a governmental probe of their spending practices. Officials here said they are not concerned about the impending probe and are not taking any special measures. The congressional investigations center around the use of indirect costs -- costs universities charge for the maintenance of buildings and for administrative services related to federally-funded research. Stanford charges the government 70 percent overhead on every research grant to cover these indirect cost meaning that for every $1000 a researcher receives, the university receives an additional $700. This indirect cost rate is one of the highest in the country. Due to negotiations between Stanford and the government agency handling their funding agreement, the school lowered its indirect cost rate from 78 percent this year. This difference amounts to approximately $10 million in revenue loss. In congressional hearings last week, government officials suggested further reducing the rate to 62 percent, which would amount to a $30 million loss. Congressional officials first became aware of Stanford's misuse of funds through the campus' representative to the Office of Naval Research, who accused past Navy officials of having a "cozy" relationship with the university. He said the government's inefficient supervision of the funds and the university's disregard for spending guidelines caused the severe misappropriation of funds. Representative John Dingell (D-Michigan), who heads the subcommittee, attacked the administrators at hearings last week, saying their actions raised "a serious question of criminal liability." "[This] is a story of excess and arrogance, compounded by lax governmental oversight," Dingell said. 5/89The Stanford Daily3/41 contributed to this story.

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