Tuesday, May 31, 2016

Why Contractors and Grantees Need Government Oversight

A professor of civil and environmental engineering from Washington State University (WSU) was arrested and charged with defrauding the Government out of $8 million in federal research fund last February. He has been charged with fabricating letters of support and investment, providing false information in research grant proposals and reports, and providing falsified reports and emails regarding how federal research funds were spent.

WSU, for its part, have initiated its own review of the evidence and will use that information to determine any disciplinary action it will pursue in this case. WSU officials said they were cooperating with federal investigators and working to help gather evidence for the investigators.

This professor received about 30 grants from the National Science Foundation (NSF) and the Energy, Transportation, and Agriculture Departments, to develop asphalt-composition technologies. The grant money was deposited into bank accounts and subsequently distributed for the professor's personal use, and not the technology development represented in their grant applications.

Grants and certain types of contracts such as research and development (e.g. Small Business Innovative Research), seem to be at risk for this type of fraud. The Government gives money to individuals or businesses with the hope of advancing the state of the art in various fields. Many times, the "experiments" fail or do not produce the intended result. That happens in research. The "deliverable" for these types of grants/contracts is typically a report summarizing the results of the research. If individuals or businesses are so inclined, it is easy to perpetrate fraud in these programs, especially if there is lax oversight.

Universities like grants for many reasons including financial reasons where the work on the grant helps absorb some of the overhead. WSU pulls in $330 million in grants every year. Universities sponsoring these grant-wielding professors however have a fiduciary duty to provide a certain level of oversight into what their staffs are doing and how they are performing,

You can read the full Department of Justice press release here.

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