US Justice Department Investigates Researchers

Image: Artville US Justice Department investigators want to know how academic scientists spend their time and the government's money. The department is making quiet inquiries at research institutions to determine how they've used their federal funding. Research executives would not say which schools the Department of Justice (DOJ) has approached, and department officials refuse to comment, as is their policy with matters under investigation. The inquiries could go nowhere, or they could herald a return to past cycles of scrutiny by the department, which has enforcement powers anywhere federal dollars are spent. "I don't really know what it is that they're after," says Robert Killoren, incoming president of the National Council of University Research Administrators (NCURA). "It's such a pity. When we talk about accountability for the way our federal funds are spent, we shouldn't be dealing with accountants necessarily. We should be dealing with people who understand scientific research." ON ALERT The DOJ can target any aspect of research--investigator time, goods, and materials and indirect costs--if it believes the intent to do wrong is present, says James Sheehan, chief of the civil division for the US Attorney's office in Philadelphia. Willful blindness, where universities shield themselves from seeing their star scientists' wrongdoing, also counts. "What we prosecute is lies, intentional false statements," he says. Justice probes can begin with reports from a labyrinth of federal agencies, or from insiders who testify that a lab's financial irregularities may represent more than sloppy bookkeeping. "We get our information sometimes from the audit side of the house, from DHHS OIG [Department of Health and Human Services, Office of Inspector General] or other auditors," Sheehan says. "Sometimes we get our information from whistleblowers. Typically, someone has gone to the researcher or department chair and says something wrong is going on and nothing happens because the person is powerfully connected. Then they come to us." The Justice Department's investigation of federal grants to academic institutions represents just one way that institutions are scrutinized. The National Institutes of Health, for example, answers to the DHHS for its performance as a watchdog of public money. The General Accounting Office can take both of those agencies to task for sloppy management. At the base of the pyramid of scrutiny are research institutions that can be called to account by all agencies. More accounting, however, does not always mean more accountability, research executives say. It can mean more time, money, and energy on paperwork, and less time, money, and energy for science. NCURA and other academic associations attempt to keep their membership informed about new probes. When auditors start making the rounds, university executives pass the word through formal and informal channels, and government scrutiny remains a popular topic in the Federal Demonstration Partnership, a twice-yearly forum where government officials talk with research executives. DHHS joins the DOJ in examining contracts. That agency's OIG listed four major NIH-related probes in its 2003 workplan. The chief audit agency overseeing much of the nation's biomedical research funding, the DHHS OIG wants to know: Whether major research institutions inflate NIH training-grant awards by promising more principal investigator (PI) time than the PI can deliver. The OIG has already cited a major research institution for "routinely" over-committing PI time on training grants. Whether the NIH has cleared up problems with grant oversight identified in an earlier General Accounting Office study. The OIG will be looking for financial or programmatic sloppiness in the NIH's handling of $16.8 billion (US) awarded to 50,000 researchers in 2,000 universities, hospitals, and research centers in 2001. Whether "selected" NIH grantees have followed all the rules for proper use of grant funds. The probe will assess performance and examine actual expenditures. Whether colleges and universities, which took in $12 billion from NIH in 2001, are toeing the line on financial reporting and monitoring of NIH funds. OIG investigators will take a second look at institutions where they spotted problems in the past. CULTURAL CONFLICT The audit action has university research administrators worried that accountants on a mission to find fault may be unschooled in the ways of research institutions. The Committee on Institutional Cooperation (CIC), a key group of university administrators, discussed the DOJ queries at a meeting in June 2002. According to minutes from the CIC meeting, the "Department of Justice has been contacting medical schools to find out if paperwork is on record to verify faculty time on certain projects. ... The issue is that the regulators (OMB [the Office of Management and Budget], Justice, etc.) do not understand how the university works." Killoren, director of the Office of Sponsored Programs at Pennsylvania State University, says authorities have not contacted his institution. But research executives are particularly concerned about the rules governing principal investigator time. "Obviously this is a huge concern for us if they're going to be going back into this whole game of looking at the number of hours," Killoren says. Research institutions have been engaged in a long-running battle with the government over what kind of documentation best assures that the public gets what it pays for from federally funded research, he explains. "The federal government periodically becomes suspicious that faculty aren't spending the time on research that they say they're going to," explains Killoren. "That's been going on for 25 years. Every time, they add a requirement for us to capture more data and every time we prove faculty are doing even better than they say they would." Researchers feel the burden of new data-capture requirements, since every rule change means more time on the books and less on the bench. As associate director of the White House Office of Science and Technology Policy during the last three years of the Clinton Administration, Arthur Bienenstock has watched rules pile up on researchers. The change of administration sent him back to an academic post as professor of applied physics, materials science, and engineering at the Stanford Synchotron Radiation Laboratory. "I returned to Stanford where previously I was director of a large project with administrative support," Bienenstock relates. "I came back to campus and saw how much clerical work my colleagues were doing." NEW RULES The series of probes also hits at a critical juncture in discussions between universities and the OMB, which sets policies for how institutions account for faculty effort and other grant expenses. Key OMB circulars currently under revision have elicited hundreds of pages of comments from research institutions. Faculty effort reporting and cost-sharing are major factors in the formulas OMB requires schools to use to document time and other grant-related expenses, explains Pat Fitzgerald, director of cost analysis for the Massachusetts Institute of Technology's Office of Sponsored Programs. OMB Circular A-21 contains the rules universities must follow to track costs against federal grants. Schools are pushing for changes in the rule that would reflect their contention that dedicated researchers and teachers do, indeed, deliver more than a 100% effort. "It's hard to look at those faculty reporting regulations and overlay them on to the reality of life," Fitzgerald says. "The requirements are overly complicated and we are striving to have that section of [OMB Circular] A-21 simplified." But some research executives say that proposed changes to OMB Circular A-21 published for comment in the Federal Register in August 20021 would make things more difficult. It would, among other things, require researchers to get prior approval from the funding agencies before traveling on grant-related work, paying grant-related publication costs or buying certain grant-related equipment. A working group of the Federal Demonstration Project (FDP) that Fitzgerald heads has filed a comment opposing the proposed revision. The lives of university researchers will get much harder if OMB changes Circular A-21 according to its plan, the FDP task force reports. Eighty-three universities and 11 federal agencies belong to FDP, a forum for streamlining grants administration. According to a formal comments filed by FDP task force with the OMB, faculty members who reviewed the proposed A-21 changes were particularly concerned about the new prior approval requirements, stating that they viewed the proposal "as turning back the clock, not progress in reducing the administrative burden they feel is counterproductive to research." The comments were signed by Fitzgerald of MIT and Elizabeth Mora, director of sponsored research programs at Harvard University--both leaders of the FDP working group. OMB expects to issue another revision of Circular A-21 in March. Peg Brickley (PegBrickley@hotmail.com) is a freelance writer in Philadelphia. 1. "Proposed revisions to OMB cost principles' Circular A-21," Federal Register, 67:52558-60, Aug. 12, 2002. ACCOUNTING TO THE FEDS The vagaries of federal cost accounting rules have cost major research institutions major dollars in past cases. Stanford University's years of battle with the federal government are perhaps the best known of the indirect-cost controversies. The case that started with allegations from a former Office of Naval Research representative at the school in 1990 is often pointed to as one that set the stage for years of intensified scrutiny. Stanford was accused of improperly inflating indirect research costs by including such items as American Association of University dues, maintenance on a donated yacht, and flowers for the presidential residence in its calculation of overhead on research. Such expenses are not clearly tied to research infrastructure. On Oct. 17, 1994, Stanford came to terms with the federal government over all disputes related to the billing and payment of the indirect costs of federally sponsored research. Stanford agreed to pay the government $1.2 million to adjust indirect cost payments for the years between 1981 and 1992. That was in addition to $2 million in erroneous billings the university had already given back. For its part of the settlement, the Navy agreed it had no claim against Stanford for fraud, misrepresentation, or other wrongdoing. But in a less well-known case, New York University Medical Center paid more than Stanford did to allay government suspicions that it had overbilled its indirect research costs. The settlement, announced in April 1997, called for NYU to pay $15.5 million to quell allegations it had given the government a "false, inaccurate and incomplete picture" of research overhead costs between 1982 and 1993. Geoffrey Clark became Stanford's associate vice president for research administration in 1998, moving from the position of director of grants policy at the National Institutes of Health. Early in the probe, the feds chopped Stanford's indirect-costs reimbursement rate and for years afterward the school was on a short leash, forced to renegotiate the reimbursement rate annually, and after the fact. But the school has won regulators back, Clark says, and now negotiates prospective, two-year contracts. Five years ago, Stanford had seven or eight federal auditors on campus at all times. These days, the count is down to two or three. "This reflects the increasing confidence they have, based on our recent audits, the internal controls we have in place, the research administration policies," Clark said. "We have more education, more awareness of the need for compliance and sensitivity in those areas." Like Stanford before it, NYU agreed to the settlement while denying wrongdoing. The wrongs alleged involved government overhead rate calculations that included such costs as American Association of University dues, trustee meetings where research was discussed, and medical school commencement expenses. "We clearly made some accounting and administrative mistakes," NYU said in its official statement. But the school insisted its errors were not deliberate efforts to hoodwink the government. These days, American tuition-payers, rather than American taxpayers, are footing an unfair share of the bill for research overhead, some say. "I had done a calculation in Washington, DC, which was later confirmed, that uncollected indirect costs and cost-sharing are now costing the research universities about $1,000 per student," said Arthur Bienenstock, former associate director of the White House Office of Science and Technology Policy and now a professor at the Stanford Synchotron Radiation Laboratory. --Peg Brickley

US Justice Department Investigates Researchers

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