Investigation brings cutbacks to Harvard

A federal agency last week announced plans to reduce the amount of research overhead money Harvard University Medical School receives from the government, representing the first sign of fallout from the continuing review into universities' research spending methods. The Defense Contract Audit Agency has also alleged that the Massachusetts Institute of Technology has submitted improper overhead charges to the federal government. Harvard Medical School and MIT came under scrutiny as part of a probe that includes the University, which began when a Congressional subcommittee uncovered gross misspending of research funds at Stanford University. The government discovered that Stanford overcharged the government by $200 million in the last decade. The Harvard and MIT findings support educators' fears that the misappropriation uncovered at Stanford may be widespread. A Department of Health and Human Services official, who asked that his name not be printed, said the investigation has made the government more wary of these expenses. "We recognize that we're in a . . . fishbowl and we're being much more careful with what we approve," the official said. "Part of the problem is that the regulations are too gray and should be changed to make [appropriate charges] more clear." The University is now preparing to face the same scrutiny as Harvard and MIT, and Health and Human Services has begun an audit of the University's direct research spending which will aid the Congressional subcommittee's review. Although the University has yet to receive official notice of a federal investigation, President Sheldon Hackney has maintained that a University audit will reveal that only valid expenses were charged to the federal government. But he told University Council members this month there may be some questionable expenditures among the University's many transactions. "There may be some transactions that look a little funny," Hackney said. "I'm not sure there are not things in the transactions that we wouldn't want to see on the front page of The Philadelphia Inquirer." The Health and Human Services official, who helps negotiate the University's indirect research proposal, agreed with Hackney last week, saying he expects that "slight" problems will be overblown. At Stanford, federal investigators found that research money went to refurbish the university's yacht. The federal probe is looking specifically at the use of indirect research funds -- federal money universities receive for maintenance and administrative expenses related to government-sponsored research. Besides the University, Harvard, MIT and Stanford, up to 13 more schools could be involved in the probe including the University of Southern California, Johns Hopkins University and the University of California at Berkeley. Health and Human Services, which negotiates indirect research proposals with Harvard and with the University, plans to reduce Harvard Medical School's overhead rate from 88 percent to 65 percent because it discovered the school charged the government for expenses not related to research. Since Harvard officials requested an indirect overhead rate of 96 percent for its next budget year, the reduction will cost the university approximately $5.8 million. The University charges an overhead rate of 65 percent. Harvard Medical School currently charges 88 percent indirect overhead for every grant a researcher receives from the government, which means that for every $100 the government gives to the researcher, the administration charges an additional $88. Engineering Dean Gregory Farrington said last week it is important researchers do not suffer from the federal probe. He said that despite what the government uncovers, it is essential for the University to receive a fair overhead rate to allow research to continue on campus. "The University is not in the business of subsidizing research," Farrington said. "The research ability is essential to its economy, its people, its economic straits and it's really only fair to the University that valid indirect research costs are receivable."

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