Stanford University

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NEWS RELEASE

9/9/96

CONTACT: Stanford University News Service (415) 723-2558


Overbilling suit against Stanford dismissed

STANFORD -- A federal judge in San Jose has dismissed a private lawsuit that alleged that the university overbilled the federal government for the costs of research projects.

The lawsuit, filed five years ago by Paul Biddle, former contracting officer for the Office of Naval Research at Stanford, was dismissed on Aug. 26 by U.S. District Judge Ronald M. Whyte. It was the last legal action facing the university from the dispute.

Stanford President Gerhard Casper said he was gratified by Judge Whyte's decision.

"This is welcome news after a drawn-out, costly controversy," he said.

Whyte's decision follows Stanford's 1994 settlement with the U.S. government, in which the Office of Naval Research concluded that it did "not have a claim that Stanford engaged in fraud, misrepresentation, or other wrongdoing."

That earlier agreement between the university and the federal government settled all differences over the billing expenses for federally sponsored research at Stanford from 1981 through 1992. As part of the settlement, Stanford agreed to pay an additional $1.2 million to the government for that period.

The 1994 settlement upheld the validity of "Memoranda of Understanding" ­ or MoUs ­ previously reached between the government and the university.

The MoUs ­ which were at the center of the controversy ­ were formal written agreements between the government and Stanford covering such complex accounting issues as the allocation of utility costs, recovery for library expenses, accounting for administrative effort and property management.

In his suit ­ which was filed under a federal law that allows individuals to sue for fraud on behalf of taxpayers and receive a portion of any award ­ Biddle claimed the MoUs were invalid, even though the agreements had been negotiated and signed by government representatives. In December 1993, after reviewing Biddle's claims, the U.S. Department of Justice declined to join his lawsuit.

Whyte ruled that Biddle's suit did not qualify under that law because his job as administrator of government contracts at the university required him to report suspected wrongdoing.

Although heartened by Whyte's ruling, Casper acknowledged that the controversy has taken a toll.

"The dispute has imposed extraordinary expenses on Stanford and the United States government. It has lasted for more than six years. In its course, the reputation and integrity of individuals and institutions have been sullied," Casper said.

"As a member of the legal profession ­ and on a personal note ­ I am increasingly concerned by the sensationalism that characterizes so much of our public life. A process that causes such extensive damage over unwarranted allegations deserves to be carefully examined."

Biddle's attorney, Timothy Rastello, said he plans to appeal the decision. He has until Oct. 28 to file an appeal.

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