Stanford’s Kennedy Warns Against Cuts : Education: The school’s president says a crackdown on spending could hurt research at many universities.

Stanford University President Donald Kennedy, facing a tough House hearing on his school’s controversial billings for research costs, warned Tuesday that a sweeping crackdown could seriously damage government-sponsored research at many universities.

“I would hate to see a quick legislative or administrative fix that in effect threw the baby out with the bathwater,” Kennedy told reporters in advance of a scheduled hearing today before an investigative panel of the House Energy and Commerce Committee.

Kennedy again acknowledged that Stanford should not have charged taxpayers for a cedar-lined closet, flower arrangements and wedding reception at his official residence, among other items claimed as research overhead costs. He called them “significant but quantitatively small errors.”

The most important and fastest-growing indirect costs of research are equipment and facilities, for which the government should continue to pay a large share, he said.

“We shouldn’t let the sensational items deflect our view from that,” he said, adding that universities would be hard-pressed to pick up a significantly greater part of their research tabs.

At a press conference arranged by a prominent Washington public relations firm, Kennedy used charts and background papers in previewing testimony to be given to the subcommittee on investigations and oversight, headed by Rep. John D. Dingell (D-Mich.)

“We’ll take our lumps,” the university president said in predicting that legislators will hit hard on controversial expenses identified by a whistle-blowing Navy auditor, Paul Biddell, and leaked to the press in recent months by Dingell’s investigators.

Testifying with Kennedy will be James C. Gaither, a San Francisco attorney who serves as president of Stanford’s board of trustees, and William T. Keevan, an official with the accounting firm of Arthur Andersen & Co., which Stanford has hired to help resolve disputed claims with the government.

The House panel also will hear from several government officials, including Biddell, the Office of Naval Research overseer at Stanford since 1988 and the most vocal critic of the school’s research costs. The Office of Naval Research is one of several federal agencies that oversee research funding to universities.

Biddell has alleged that Stanford owes taxpayers as much as $200 million for overcharges during the last decade, but the inspector general at the naval research agency recently concluded that Biddell used faulty calculations.

But the Defense Contract Audit Agency is still reviewing about $600 million in overhead charges, such as administration salaries and building depreciation, that were billed by Stanford over the last 10 years.

In the last few months, the university has withdrawn about $690,000 in charges for such embarrassing items as a Jacuzzi-equipped yacht and costs associated with Kennedy’s residence, which is used for many university functions.

Kennedy said Tuesday that it is “not unlikely” that negotiations between Stanford and government auditors will result in Stanford’s turning back additional sums to the U.S. Treasury. But he predicted that they would be relatively small.