Stanford Goes on Offensive to Rebut Government’s Charges

Stanford University has released a voluminous report attempting to rebut allegations that the school overcharged the federal government as much as $50 million in research-related funds to support campus libraries. The Stanford defense is the latest step in a spending controversy in which the government may challenge as much as $200 million in federal payments to the prestigious university over the past decade.

According to university documents released Monday, federal reports alleging that Stanford’s libraries overbilled the government between $35 million and $50 million for research-related use are “completely unsupported by any evidence or analysis.” What’s more, Stanford suggests that the school actually may have been shortchanged millions of dollars in federal reimbursement for library costs.

Two review agencies in the Defense Department and a congressional subcommittee have been investigating Stanford’s use of funds to cover indirect costs of research, such as utilities, building maintenance and administration. In addition, the Navy has begun a criminal inquiry into whether the school had a sweetheart deal with the Navy officials supervising the research spending.

Stanford’s library report released Monday centers on arcane accounting methods. For example, the university’s formula for the number of hours graduate students use the library for government research produces four times more funds than the formula used by the Defense Contract Audit Agency (DCAA). The Stanford report was given to the DCAA several months ago but the federal agency asked that it be kept confidential until this week.

“I think we made a strong and convincing case on our side,” Larry Horton, Stanford’s associate vice president for public affairs, said Monday in a telephone interview from Washington.

Whether federal investigators agree may be apparent when the inspector general for the Office of Naval Research releases its own audit, expected within a week or so. A Navy spokesman, Mark Van Dyke, said Stanford’s arguments “certainly will be taken into account” but he declined to comment further. Van Dyke said he did not know when the separate criminal investigation would end.

Stanford officials are expected to testify about the research billings when the oversight and investigations subcommittee of the House Energy and Commerce Committee holds hearings later this month or in early March. “We’ll be comparing this statement to what they testify under oath,” a congressional source said of the Stanford documents.

Two weeks ago, Stanford announced it would withdraw $500,000 worth of “embarrassing” claims the university charged to the government as research overhead, including flowers, wine and antiques for residences of campus officials. But Stanford President Donald Kennedy insisted that much of that was legitimate as part of entertaining research faculty. In November, Stanford withdrew an additional claim of $184,216 for depreciation on the university yacht and athletic gear, saying the charge was a mistake.

The congressional source described those refunds as “a token on a long path” and said that as much as $200 million is disputed of the $600 million Stanford received over the past 10 years for indirect costs of research. Stanford appears to be taking a publicity offensive before the hearings begin, the source said.

In fact, the university recently hired Frank Mankiewicz, a political consultant and a top official in George McGovern’s 1972 presidential campaign, to help with the hearings and press inquiries about the research controversy, according to Horton. Mankiewicz, now an official with the Hill & Knowlton public relations firm in Washington, recently coached Kennedy for a television interview.

“We really had to have advice in Washington,” Horton said. The controversy, he said, is “quite beyond anything we’ve had before.”

Times staff writer Christopher Elliott contributed to this story.