Harvard Fares Better Than Stanford, MIT

WASHINGTON--Ken Campbell, MIT's chief public relations official, was working the floor at the hearing here yesterday, perhaps still surprised that something so complex as indirect costs had attracted so much media attention.

Minutes before the Congressional hearing began, the MIT spokesperson began introducing himself to reporters, shaking hands, smiling, trying his best to put a spin on a situation that had already spun out of the school's control. he knew that Stanford was already in trouble, from a public relations' standpoint, with the yacht, the flowers and the cabinets.

MIT is second only to Stanford in its spending mischief. The Pentagon says it overcharged the government by $19 million in 1990, and that figure is expected to jump to $75 million for the five-year period the Pentagon is auditing. Campbell has his work cut out for him.

Harvard, on the other hand, appears to have pulled off a public re- lations success.

It helps that the U.S. General AccountingOffice (GAO) has not found too much to complainabout, at least in comparison to Stanford and MIT.But Harvard's spin doctors--who includespokesperson Peter Costa, Vice President andGeneral Counsel Daniel Steiner '54 andothers--showed insight months before this issuebecame a national scandal.

The GAO chose the Medical School as its firstpost-Stanford target for investigation of overheadcost claims. Staying ahead of the game, Harvardcommissioned the local accounting firm Coopers andLybrand to conduct an independent audit of theSchool's finances and then stole the GAO's thunderby voluntarily withdrawing $250,000 inquestionable expenses from its 1991 reimbursementrequest.

Harvard was the first school to voluntarilytake money out of a reimbursement request.Quickly, other schools, including much-plaguedMIT, followed suit.

The GAO has since found $75,000 in furtherinappropriate charges at the Medical School, anddiscounts $663,000 more because of an accountingapproach it says Harvard can't justify.

Some of those extra costs are potential publicembarrassments. The GAO questioned $8000 in legalfees for such matters as the defense of a sexualdiscrimination suit filed against the Businessschool and the sale of property in New York.

The GAO also overruled some shuttle bus costs,travel costs and faculty hiring costs, but thefinal total for these kinds of mishaps, excludingHarvard's voluntary withdrawal, is less than$100,000.

The GAO's figures place the Medical School inthe company of dozens of other schools, butHarvard has already taken the moral high ground bybeing the first to voluntarily "give back" moneyto the government.

Rep. John D. Dingell (D--Mich..), who heads theCongressional investigation into indirect costclaims and has been a leading Stanford-basher,praised Harvard for its move, saying thedifference from Stanford was "night and day."

Of course, the facts still say the MedicalSchool is in for some difficult dealings with thegovernment one way or another. The school stillcollects indirect costs at a higher rate, 88percent of grant monies, than any other majorresearch school. The Department of Health andHuman services, Which sets Harvard's rate, has ahistory of tough negotiations with the University,negotiations that sometimes broke down and othertimes were termed "protracted" and "contentious."

Now, the Medical School wants a 96 percent ratefrom the government. Negotiations havingdeteriorated again, health and Human Services hasunilaterally proposed a rate of 63.5 percent--a 30percent drop that would mean at least $6 millionless annually in indirect cost reimbursements forHarvard.

And the GAO has problems with how Coopers andLybrand conducted its independent audit. Forstarters, GAO officials say the company didn'tchoose a random starting point in the MedicalSchool's books, a usual practice for this type ofaudit.

Vice President for Finance Robert H. Scottconcedes that the government's objection is"technically correct" but insists a randomstarting point would not have made any statisticaldifference in the end.

Harvard still has its problems with thegovernment. By taking the public relations highground, though, the University has assured itselfof having to deflect less flak from theCongressional subcommittee members than many otherschools, particularly MIT.

Campbell can smile for the media all he wants.Meanwhile, Harvard's public relations czars cansmile to themselves

It helps that the U.S. General AccountingOffice (GAO) has not found too much to complainabout, at least in comparison to Stanford and MIT.But Harvard's spin doctors--who includespokesperson Peter Costa, Vice President andGeneral Counsel Daniel Steiner '54 andothers--showed insight months before this issuebecame a national scandal.

The GAO chose the Medical School as its firstpost-Stanford target for investigation of overheadcost claims. Staying ahead of the game, Harvardcommissioned the local accounting firm Coopers andLybrand to conduct an independent audit of theSchool's finances and then stole the GAO's thunderby voluntarily withdrawing $250,000 inquestionable expenses from its 1991 reimbursementrequest.

Harvard was the first school to voluntarilytake money out of a reimbursement request.Quickly, other schools, including much-plaguedMIT, followed suit.

The GAO has since found $75,000 in furtherinappropriate charges at the Medical School, anddiscounts $663,000 more because of an accountingapproach it says Harvard can't justify.

Some of those extra costs are potential publicembarrassments. The GAO questioned $8000 in legalfees for such matters as the defense of a sexualdiscrimination suit filed against the Businessschool and the sale of property in New York.

The GAO also overruled some shuttle bus costs,travel costs and faculty hiring costs, but thefinal total for these kinds of mishaps, excludingHarvard's voluntary withdrawal, is less than$100,000.

The GAO's figures place the Medical School inthe company of dozens of other schools, butHarvard has already taken the moral high ground bybeing the first to voluntarily "give back" moneyto the government.

Rep. John D. Dingell (D--Mich..), who heads theCongressional investigation into indirect costclaims and has been a leading Stanford-basher,praised Harvard for its move, saying thedifference from Stanford was "night and day."

Of course, the facts still say the MedicalSchool is in for some difficult dealings with thegovernment one way or another. The school stillcollects indirect costs at a higher rate, 88percent of grant monies, than any other majorresearch school. The Department of Health andHuman services, Which sets Harvard's rate, has ahistory of tough negotiations with the University,negotiations that sometimes broke down and othertimes were termed "protracted" and "contentious."

Now, the Medical School wants a 96 percent ratefrom the government. Negotiations havingdeteriorated again, health and Human Services hasunilaterally proposed a rate of 63.5 percent--a 30percent drop that would mean at least $6 millionless annually in indirect cost reimbursements forHarvard.

And the GAO has problems with how Coopers andLybrand conducted its independent audit. Forstarters, GAO officials say the company didn'tchoose a random starting point in the MedicalSchool's books, a usual practice for this type ofaudit.

Vice President for Finance Robert H. Scottconcedes that the government's objection is"technically correct" but insists a randomstarting point would not have made any statisticaldifference in the end.

Harvard still has its problems with thegovernment. By taking the public relations highground, though, the University has assured itselfof having to deflect less flak from theCongressional subcommittee members than many otherschools, particularly MIT.

Campbell can smile for the media all he wants.Meanwhile, Harvard's public relations czars cansmile to themselves