Word: indirect
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Examples of spending improprieties have received national attention, but the process that determines indirect cost rates has remained, in large part, a mystery. Traditionally, schools supply information about their expenses and then negotiate with the government to establish a specific indirect cost rate...
Within the negotiation process, Harvard and federal officials have been reluctant to offer any further illuminating information about how such decisions are made. Officials from the Department of Health and Human Services (HHS), which sets Harvard's indirect cost rate, did not respond to questions submitted last week...
However, documents obtained under the Freedom of Information Act begin to shed light on the process. The files show that the negotiations are often heated and contentious and reveal a number of potential flaws in the indirect cost reimbursement system...
...Federal negotiators canceled audits which could have revealed inappropriate charges, like the senior dean's retirement party which Harvard has admitted including in this year's cost proposal. In 1987, Health and Human Services notified the University that it planned to carry out such audits, but after completing indirect rate negotiations with Harvard, called off the inquiry...
...Medical School's indirect cost expenditures have not been formally audited by HHS in at least a decade. Federal auditors are the only external check on Harvard's specific expenditures, including millions of dollars in maintenance, library and administrative costs...