Whistle-Blower Still Shaking Up Stanford : Education: Accountant who reported overbilling of government now wants to be university’s congressman.

If it were not for Paul Biddle, Stanford University might have gone on for years overcharging the federal government. In the eyes of many, his work as a whistle-blower revealed the renowned university as just another defense contractor that tried to bilk the taxpayers.

The role sat well with Biddle, an eccentric, portly Navy accountant who saw in the Loma Prieta earthquake a sign from God that something was amiss at Stanford.

He found and publicized questionable billings, and reveled in the national attention that resulted--a congressional inquiry of the nation’s top research universities and upheaval at the highest levels of Stanford.

At the same time, he saw in the scandal his chance for personal riches. Under federal law, Biddle could be eligible for 30% of whatever money the government recovers from Stanford--a bill that could total $230 million--and he talked openly of his plans for the fortune he stood to collect.

On Thursday, Biddle announced a new twist in his relationship with Stanford--he resigned his post as a federal watchdog over the university and will seek instead to become its representative in Congress.

Biddle, a 47-year-old Republican, hopes to replace Rep. Tom Campbell (R-Palo Alto), a Stanford law professor before his election in 1988, who is running for the U.S. Senate. If elected, Biddle said, he would continue casting a critical eye on Stanford’s affairs.

“Paul Biddle is the pebble in the shoe,” said Biddle, who often refers to himself in the third person. “Paul Biddle is not a line unit. Paul Biddle is a guerrilla.”

Stanford officials, who have battled Biddle since he arrived in 1988, were not amused at the news. Larry Horton, Stanford’s associate vice president for public affairs, said Thursday that the university “has no comment on Mr. Biddle’s candidacy now and never will have in the future.”

Stanford, which had long sought Biddle’s ouster from his Navy post, complained again Thursday to the Office of Government Ethics, citing portions of a rambling, 26-page letter in which Biddle recently accused Stanford trustees of a cover-up and called Stanford administrators “two-legged rodents.”

“Is this permissible conduct by an employee of the United States government who is suing Stanford for hundreds of millions of dollars?” Stanford attorneys asked.

So far, Biddle’s legacy at Stanford includes the resignation of university President Donald Kennedy, a budget crisis so severe the university must cut faculty and classes, and a system of fiscal accounting that alone costs the school $10 million a year.

Ultimately, Biddle’s discovery could force the university to pay back as much as $230 million to the federal government--he insists it’s more like $480 million--and jeopardize the huge research program that helped make Stanford one of the nation’s premier universities.

What Biddle exposed, after combatting both the university and his superiors at the Office of Naval Research, was a pattern of improper billing by Stanford officials for the overhead expenses of research projects funded by the government.

Stanford came to rely on the federal overhead payments as a major source of income--second only to tuition--to finance the university’s operations.

The university has admitted improper billings totaling $2.3 million, including such items as depreciation of the university’s 72-foot yacht, a steady supply of fresh flowers for Kennedy’s home and upkeep of the mausoleum where the founding Stanford family is buried.

Though school officials still deny the bulk of Biddle’s accusations, their initial confident assurances that all payments had been proper turned out to be wrong.

“Stanford admits there were mistakes,” said Peter Van Etten, the new Stanford chief financial officer brought in to clean up the mess. “There is no question Stanford is contrite and concerned. . . .”

But, he added: “There is a general belief among people that we are ripping off the country. Our belief is that couldn’t be farther from the truth.”

Stanford’s problems with the federal government triggered unprecedented scrutiny of other research universities. But Stanford, according to government auditors, was in a league of its own. Taking advantage of a cozy relationship with Navy overseers, its reimbursement rate for overhead costs rose to 74% in 1990, one of the highest in the nation. This meant that for every $100 received by Stanford researchers from the government, the university got $74 more for overhead.

Among other things, Stanford billed the government for costs that federal auditors said had nothing to do with research: $185,000 for operation of a shopping center on Stanford property, ornate furnishings for the president’s house and an orientation for freshmen students that included a trip to the beach.

Kennedy and other Stanford leaders have consistently maintained that such charges were legal, but they have been forced to concede they were not necessarily appropriate.

“There was one important mistake made by President Kennedy and the (Stanford) trustees,” said David Packard, a co-founder of the Hewlett-Packard Co., a former deputy secretary of defense and a longtime Stanford booster. “They should have considered the propriety of these things as well as the legality.”

Biddle came to the university as the Navy’s new representative in 1988 after having earlier been rejected by Stanford for accounting jobs. University officials quickly came to see Biddle as disorganized, vulgar and egotistical. He kept a huge nameplate on his desk and, a devout Anglican, he called the damage to Stanford Memorial Church during the Loma Prieta earthquake a sign from God that there was “something unacceptable in the way things were being done.”

Biddle’s accusations about Stanford’s methods might ultimately have been pushed aside if he had not taken his case to Rep. John Dingell, a tough Michigan Democrat and chairman of the House Energy and Commerce subcommittee on oversight and investigations who helped bring to light the defense contracting scandal of the 1980s.

With Biddle’s assistance, Dingell’s staff began investigating the university and found a wealth of examples to embarrass Stanford. They stumbled on the Jacuzzi-equipped yacht and they scrutinized charges for Kennedy’s residence, discovering a treasure trove of items billed in part to the government: $7,000 in linens, two $1,500 Voltaire chairs, a pair of $1,200 George II lead urns, a cedar closet, a reception to introduce Kennedy’s new wife to the campus, and the cost of enlarging the Kennedys’ bed.

At a well-publicized hearing last spring, Dingell and his committee raked Stanford over the coals. “And where was the Stanford Board of Trustees while all of this was happening?” Dingell asked. “They were at Lake Tahoe on a retreat costing $45,250 that was also subsidized by the taxpayers.”

For Biddle, who often had to fight his superiors, the hearing was a vindication.

Subsequently, six members of the Office of Naval Research were disciplined for lax administration of the Stanford contracts. Biddle received the Navy’s Meritorious Civilian Service Award.

In recent months, however, Biddle’s image as a public-spirited whistle-blower was undermined by his filing of a qui tam court action seeking a portion of the money the federal Treasury gets back from Stanford. Under federal law, anyone who reports improper charges to the government can file such a claim and receive as much as 30% of the money the government recovers.

Stanford officials, eager to be rid of Biddle, have argued that his claim gave Biddle a conflict of interest and had urged the Navy to remove him as its representative on campus.

“For a long time, Paul Biddle was assumed to be clean and his motives were pure,” said Bob Byer, Stanford’s dean of research. “It is evident to a lot of us that his aim is to get rich at Stanford’s expense.

By law, Biddle is barred from discussing his legal move. But he has been happy to talk about what he would do if he should ever become wealthy.

First he would endow a university, perhaps his alma mater, the University of Cincinnati, with enough money to establish a program to train accountants in how to expose corruption.

He would consider bankrolling a political candidate, like himself, who would bring his sense of propriety to government, Biddle said. And of course, he would keep enough to live well.

“I intend to be a rich man if at all possible,” he said.

Meanwhile, at Stanford the shock waves from Biddle’s years on campus continue. The school plans to trim $43 million in faculty, staff and programs over the next two years--largely because of the cutback in federal research funds to Stanford.

The central issue in the scandal is the 125 memorandums of understanding the university negotiated with the Office of Naval Research. The Defense Contract Audit Agency, making up for not conducting audits for 10 years, maintains the agreements are invalid and contends the university owes $230 million in back payments.

University officials, however, insist that all 125 of the agreements are within the law and that the government cannot simply throw them out.

“We have looked at this issue and found no wrongdoing, (by Stanford),” said Van Etten, the university’s chief financial officer. “If you sign a contract, you can’t retroactively cancel that contract without paying damages.”