The consequences of University of Puerto Rico’s (UPR) noncompliance with National Science Foundation (NSF) requirements involving the reporting of time, effort, compensation and incentives for research projects funded by the federal agency could have more far-reaching consequences for the university’s research & development than originally anticipated.
Now the Federal Bureau of Investigation (FBI) has reportedly joined the NSF inquiry.
At issue are an estimated $52.2 million in suspended NSF funds, of which $17 million is unrecoverable. If there is no change in NSF policies, a total of $92 million in funds are at stake, and more could follow if other agencies also freeze funding. As a result, research projects have been directly affected.
Among the scientists affected, the most competent are reportedly leaving the UPR or are planning to do so. This could amplify the effect of the brain drain Puerto Rico is suffering.
From a market point of view, it could be disastrous, a source connected to the UPR’s central administration told CARIBBEAN BUSINESS. “In a knowledge-based economy, this situation is dismantling our capacities to generate income, and credit-rating institutions are surely taking note of that,” the source said. “Trust is shattered among the entities and there is a risk of [discovering] more irregularities. It usually is a red fl ag for all of them.”
In addition to the NSF, other federal funding sources for the UPR include the National Aeronautics & Space Administration, National Institutes of Health and the departments of Defense and Energy.
The NSF, an independent federal agency, has granted 30% of the UPR’s funding destined for research since the 1980s. Most of the funding has been earmarked to the university’s Resource Center for Science & Engineering (CRCI by its Spanish acronym).
POSSIBLE CRIMINAL INVESTIGATION
However, the crisis doesn’t stop with the cessation of federal funding. UPR sources indicated that in recent months the nature of the inquiries has changed, as well as the purpose of the investigation. “Since February, the NSF said there would be no more money,” a source explained. “But they are still investigating everything. This process has the features of a criminal investigation.”
In October 2012, the NSF’s Inspector General Office (IGO) initiated a legal investigation of CRCI’s research projects and UPR’s Mayagüez campus (RUM by its Spanish acronym). IGO required full disclosure of the projects through a subpoena, utilizing this legal recourse for the first time. In response, UPR President Miguel Muñoz announced the hiring of the Drinker, Bidddle & Reath LLP law firm to “provide legal services in affairs related to the NSF.”
The story continues to unfold. UPR’s Medical Sciences Campus President Rafael Rodríguez recently informed the university’s Academic Senate that the FBI has joined the investigation.
In February 2010, after the NSF visited the UPR’s central administration, the CRCI and RUM, 32 areas were identified to be in noncompliance with federal regulations. Five of the irregularities were infringements of rules from White House Office of Management & Budget’s A-21 circular on cost principles, NSF’s award and administration guidelines, and time & effort used for research so payment can be made, particularly related to salaries and compensation for faculty.
At the end of 2010, the central administration proposed a corrective action plan (CAP) to the NSF. In February 2011, the NSF accepted the plan. However, the CAP wasn’t publicly divulged until October 2012.
In February 2012, a year after accepting the plan, the NSF sent a letter requesting clarification of the policies and procedures, and status reports on the CAP, warning the deadline to correct all deficiencies would be April 1.
The NSF raised flags in a letter dated April 23, 2012, when it announced the suspension of all awards to the UPR’s central administration and RUM (with the exception of one award). More than two years have elapsed since the original findings put the UPR at a critical juncture in its history. The federal agency said its motive for the suspension was the UPR’s constant failure to adequately report the time and effort utilized in its federally funded research projects. The measure also led to the loss of 74% of the funds the NSF grants to the public university, about $52.2 million.
When the NSF suspended all awards in April 2012, the measure originally was for 60 days. However, in June, the federal agency considered the noncompliance issues persistent and made the measure indefinite. In August of that year, the NSF decided not to revise the decision until 2013.
THE ALLEGED SCHEME
Within the walls of the UPR, the issue is more than a failure of compliance. Rather, the federal actions are responding more to a scheme of wrongful profit and its cover-up.
Federal guidelines spell out how funds must be spent, a source told CARIBBEAN BUSINESS. To pay professors involved in research—in addition to their basic salary and a reduced academic schedule—professors are assigned a sum of money from the grants, which can’t exceed 30% of their wage as compensation for their participation, according to circular A-21.
The source said the way to report time & effort was out of control, and some professors’ salaries had increased by more than 100%. “You could see professors whose basic wages were about $80,000 a year, and suddenly they were earning $300,000 annually.”
The source said to sidestep the limitation on salaries, professors were assigned funds destined for other expenditures, such as indirect costs.
An explanatory vote issued in January by the UPR’s board of trustees—denying payment of about $7 million from the Government Development Bank to compensate for the loss of funds—referred to a report that stated, “Subject 1, in 2012, collected $43,000 in indirect costs for NSF research concluded in July 2011.” The report added, “Subject 1 received a compensation increase for directing the CRCI, from $24,000 in 2010 to $48,000 in 2012, to conduct the same chores.”
CRCI Director Manuel Gómez, who couldn’t be reached by CARIBBEAN BUSINESS, has denied there was a scheme to make profit from the funding, which he said was a common misunderstanding over different accounting methods. The scientist, with a career of more than 40 years, said at the UPR, each professor/researcher determines the number of hours he or she will dedicate to research investigations.
The NSF’s next visit is scheduled for March 15.