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093056 1 (1970-10-30)

handle is hein.gao/gaobacwyk0001 and id is 1 raw text is: UNITED-'STATEZ GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 CIVIL DIVISION 30 1970 Dear Dr. Allen a During our current review of affiliation agreements between Veterans Administration (VA) hospitals and private schools of medicine, we have noted certain matters regaraing the administration of research in the VA Hospital, Palo Alto, Califrirnia (VAUPA) which we would like to bring to your immediate attention because of possible savings in research funds. The research at APA was performed under grants awarded by the National Institutes of Health (NIH) and the National Institutes of Mental Health (NIMH) of the Public Health Service (PuS) to the Stanford University School of Medicine (Stanford). Our review is still in progress at six other VA hospitals which have a sub- stttal amount of PHS research funds which are admintred by affiliated medicAl schools, In this regard, VA records indicate that more than $15 million of university administered research was performed in VA hospitals during fiscal year 1969, and we were advised by VA officials that probably more than 90 percent of this was funded by PHS. The matters discussed below are concerned with (1) the possibility of reducing the indirect cost of research performed under PHS grants by awarding the grants directly to VA hospitals, and (2) the use of an inappropriate in- direct cost rate for certain research at VAHEA. OPPORTUNITY FOR REDUCING INDIRECT COST OF RESEARCH Our review of 17 medical research grants awarded by NIX and NIII to Stanford disclosed that during fiscal year 1969, 100 percent of the research was conducted at the VAHEA for 15 of these grants and about 90 percent of the research was conducted at VAUPA for the remaining two grants. In all but one case, the principal investigator was employed by the VA as a physician or researcher. Total fiscal year 1969 costs charged to these grants were about $865,000. These grants were awarded based on applications submitted by the principal investigators through Stanford. In each case the applicant organisation was shown as Stanford University, and in nearly ell cases the grant applications indicated that a high percentage of the research was to be conducted in Federal facilities. Our review has indicated that the overhead or indirect cost rates applied to these grants by Stanford generally ranged from 43 to 57 percent of direct labor cost. The 43 percent rate was negotiated by the Government with Stanford University for research performed off-campus and the 57 percent rate ,a'4 BEST DOCUMENT AVAILABLE

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