Concern about indirect costs of research soars Rep. John D. Dingell (D.-Mich.), chairman of the House Energy & Commerce Committee, apparently opened Pandora's box when he publicly assailed Stanford University last month for billing the federal government for expenses inappropriately called indirect costs of research (C&EN, March 18, page 4). Since then, universities have been scrambling to review their accounts, while additional government entities have opened investigations of indirect costs—expenses such as administration, maintenance, and library costs that can't easily be assigned to a particular research grant. Last week alone, another Congressional subcommittee held hearings on the issue, the White House Office of M a n a g e m e n t & Budget announced tighter accounting regulations, and Massachusetts Institute of Technology withdrew $731,000 it had charged over the past five years. "These investigations are only the highly visible tip of an iceberg of muddled university accounting, ambiguous government regulation, and inadequate federal oversight," said Rep. Rick Boucher (D.-Va.), chairman of the House Science, Space & Technology Subcommittee on Science, as he opened two days of hearings. "The subcommittee intends to pursue legislative and administrative changes to the present system." Among actions the subcommittee is considering is a cap on indirect costs. These totaled about $2.5 billion in 1990, roughly one third of the total cost of research grants to universities. Indirect costs have been increasing steadily in recent years both in absolute amount and as a percentage of total funding. And revelations like Stanford's charging depreciation for its yacht as an indirect cost have shaken confidence in the system. Boucher's panel heard testimony from the Office of Naval Research and the Department of Health & Human Services, the two agencies that set indirect cost rates for most universities. Representatives from other funding agencies and from research
institutions also appeared, including Jon C. Clardy, chairman of Cornell University's chemistry department. Clardy describes the issue of indirect costs as the most "corrosive element in the university research establishment today." But before considering a cap on them, he says, it's important to agree on their definition. For example, he tells C&EN, chemical waste disposal is charged as an indirect cost at Cornell, but as a direct cost elsewhere. Without agreement on definitions, what are now indirect costs at some universities would simply reappear as direct costs. OMB will amend its guidelines for indirect costs "to clarify policy and stop the abuse," OMB Director Richard G. Darman announced last
week. Among charges to be ruled unallowable are entertainment and alcoholic beverages, housing and personal living expenses of university officers, defense of fraud, and lobbying. Proposed changes will be published in the Federal Register. The $731,000 in past charges MIT says it is voluntarily withdrawing— even though many are technically allowable—include several unallowable under OMB's n e w rules. Among them is $27,000 in legal expenses for a law firm that assisted MIT officials in hearings before Dingell's committee during its investigation of former MIT researchers David Baltimore and Thereza Imanishi-Kari (C&EN, May 22,1989, page 27). Pamela Zurer
Iraq submits chemical weapons report to UN Key features of the United Nations cease-fire resolution relating to Iraq's weapons of mass destruction were played out last week. Iraq filed two letters describing its chemical, missile, and nuclear programs. And UN Secretary General Javier Perez de Cuellar named Swedish diplomat Rolf Ekeus executive chairman of the special commission charged with inspecting, monitoring, and possibly destroying Iraqi weapons. The U.S. quickly faulted Iraq's disclosures for omissions and incomplete information. State Department spokesman Richard A. Boucher said Iraq's letter to UN headquarters in New York City "shows clearly that the Iraqis have significant stocks of chemical munitions, ballistic missiles, and warheads for these missiles. But the responses appear to fall short of reality." One shortcoming he cited: "Iraq stated it doesn't have biological weapons." Iraq submitted its declarations on nuclear-related items to the International Atomic Energy Agency in Vienna. According to Boucher, that letter declares only the nuclear material under IAEA safeguard. "They declare no nuclear weapons, nuclear-weapons useable material, or other related facilities or activities," he notes. IAEA has written to Iraq asking for more precise information. In its chemical weapons declara-
tion, Iraq lists thousands of artillery shells, bombs, and mortar shells containing mustard gas and the nerve gas Sarin. It claims to have hundreds of tons of bulk stocks of mustard gas, Sarin, and precursors for the nerve gas Tabun, but no finished Tabun. It lists 30 chemical warheads for ballistic missiles, although all the missiles fired at Israel and Saudi Arabia during the Persian Gulf War carried conventional warheads. Iraq also says it has over 300 Sarin-containing "binary-system" bombs.
Ekeus: controls over chemical industry April 29, 1991 C&EN
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News of the Week In addition to actual chemical weapons or agents, Iraq lists six storage sites and one proving ground. It claims five R&D sites, each with five labs, were destroyed, presumably by Allied bombing. It also says one production site for Sarin, one for mustard gas, four for precursor chemicals, and five for filling ammunition were destroyed. "Probably one of the main omissions is that Samarra is not listed," says Brookings Institution chemical warfare expert Elisa D. Harris. The U.S. believes Samarra is Iraq's main chemical arms production facility. Iraq's declarations set in motion a timetable for eventual removal or destruction of the weapons. The Ekeus commission will oversee the series of activities spelled out in the UN resolution for doing this. Ekeus, who chaired the chemical weapons treaty talks at the Conference on Disarmament in Geneva, will be assisted by deputy chairman Robert Gallucci, a nuclear weapons expert. Gallucci, a professor at the U.S. National War College, has also served at the State Department. At a press conference last week in Stockholm, Ekeus said his commission will employ about 300 highly trained technicians who will use the most sophisticated equipment to identify, locate, and destroy Iraqi weapons. He also noted that international controls over Iraq's entire chemical industry will have to be set in place to monitor dual-use chemicals. Eventually, the Ekeus commission will have about 25 members to direct the technicians' work. The other members, to be named by midMay, will be divided into teams whose first order of business will be on-site inspections at declared and undeclared sites. Lois Ember
Bush strongly backs math, science education President Bush stressed his strong support for math and science education last week in an appearance before mathematics educators gathered at the National Academy of Sciences in Washington, D.C., for a National 6
April 29, 1991 C&EN
Summit on Mathematics Assessment. "When I first heard that I was invited to a math summit," cracked Bush, "I kind of had images of Gorby and I going head-on-head, you know, in long division, something like that." But on a more serious note, he thanked the group for helping to pursue the Administration's oft-stated goal that U.S. students be "first in the world in math and science achievement by the year 2000." The President particularly emphasized his Administration's commitment to the America 2000 program, a national strategy announced on April 18 to restructure and revitalize the U.S. educational system. The program aims to establish national standards for what children should learn in five core subjects—mathematics, science, English, history, and geography. A system of voluntary
national exams will be developed to assess how well students meet these standards. "I've challenged the nation to have a test ready for the fourth-graders of 1993 and to produce tests for eighth- and 12th-graders soon after," Bush said. To stimulate reform in math and science education, the program includes $40 million in new grants to school districts showing significant gains in student achievement. Bush noted that the budget sent to Congress this year calls for a 13% increase in math and science education funding, for a total of nearly $2 billion. "We must improve training for precollege math and science teachers," he said, and "we need to attract more women and minorities into science and technology. . . . Dollars alone won't get the job done. Real excellence demands a commitment from us all." Stu Borman
Chemicals hit hard in Olin reorganization Chemical operations will be hit hard in a reorganization announced last week by Olin Corp. in an attempt to increase its cash flow, lower its costs, and reduce its debt. Based on plans announced by the Stamford, Conn.-based company, its chemicals operations will bear the brunt of cuts through sales of businesses and staff reductions. Whereas other business segments reported sales and earnings growth in 1990, chemical sales decreased about 3% and chemical net income fell about 60%. Corporate and chemical staff is to be reduced about 10%, involving 250 salaried employees. Olin says it hopes to accomplish this largely through an early retirement incentive program. This reduction will be in addition to an as-yet-unspecified work force reduction associated with disposition of certain businesses. Olin went through a similar major restructuring in late 1985. Put up for sale are underperforming and nonstrategic businesses that include industrial phosphates, several electronic chemical operations, and certain small chemical and metal product lines. In the past two years, Olin has sold its water treat-
ment services, photographic chemicals, and ammonia and urea businesses, as well as interests in two sodium chlorate joint ventures and a 50% interest in a photoresists business. Olin's ongoing chemical operations will focus primarily on chlorine and caustic soda, urethanes, pool chemicals, and organic chemicals. The firm's other major operations are in metals and in defense and ammunition. When completed in the next 18 months, sale of businesses is expected to yield between $80 million and $100 million in after-tax proceeds. In anticipation, Olin has taken an $80 million special charge against earnings, leaving it with a net loss of $59 million in the first quarter of 1991. Compared with the same period last year, sales in the first quarter are down about 11%, to $561 million. Chemical sales, down about 36%, have been depressed by a weak economy, increased raw material costs, and lower margins and volumes. With the recent Persian Gulf War, defense and ammunition turned in the best performance for the quarter. Ann Thayer
