U.S., Stanford settle research costs dispute

Abstract

The Office of Naval Research (ONR) and Stanford University have settled a more than four-year-old dispute over payment and billing of indirect research costs (C&EN, March 18, 1991, page 4). The settlement effectively means that Stanford's indirect cost accounting was legal and that charges of fraud have not been substantiated. Under the settlement, Stanford will reimburse the federal government $1.2 million for some expenses. The university also will drop its appeal seeking recovery of money lost when the Navy arbitrarily lowered its indirect cost rate from 74% to 55.5% of direct research costs. As a result of the dispute, ONR has revised its regulations on procurement to allow multiyear determination of indirect costs. And ONR has established new government auditing procedures for investigation of possible fraud or other irregularities. The ONR-Stanford dispute arose in 1990 when Paul Biddle, a Navy auditor on site at Stanford, charged the university with fraudulent indirect cost accounting and claimed ...