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I was involved in several projects which got considerable funding from the US federal government.

In retrospect I feel there was a substantial amount of equipment that should have been purchased/built but wasn't and the PI did something else with the funds but I don't know what. I always felt the whole thing was fishy at a department level since there was a big gap between what needed to be purchased and what was.

Does the university encourage PIs to keep the money for other uses? How does this work? It's certainly not being given to graduate students.

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    This is pretty vague. You say you feel money should have been spent on certain things, but does that match what was actually requested in proposals and funded?
    – Anyon
    Commented Oct 31, 2022 at 20:35
  • IIRC they get a couple million grant, spent maybe 10K total on equipment, the grant was in part to develop machine vision algorithms for certain conditions but the PIs refused to spend money to build systems for data acquisition. Commented Oct 31, 2022 at 20:38
  • @FourierFlux How many people worked on the project, and over how long? For most US federal grants, it's not permitted to spend the funds on computing equipment and other similar resources.
    – Bryan Krause
    Commented Oct 31, 2022 at 20:38
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    Generally, "equipment" (that exceeds some monetary threshold, e.g. $5,000) cannot be purchased or built on a grant unless it has been explicitly budgeted in the proposal. Even then, funding sources may limit or outright prohibit equipment spending. (Instead, there are specific grants solely for the purchase of equipment)
    – user71659
    Commented Oct 31, 2022 at 20:39
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    See Anyon's comment: did you look at the budget section of the grant? What did it say the money would be spent on?
    – Bryan Krause
    Commented Oct 31, 2022 at 21:00

2 Answers 2

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Research administrator here. It appears that you are accusing the PI of fraud, is that right? Let me explain the proposal and award process roughly for government grants and contracts before we jump to that conclusion, although some PIs do commit fraud. Please note that the sponsor and exact solicitation will vary the rules which I cannot speak to without knowing this information.

When you put in a proposal, you respond to a specific solicitation (RFP/BAA, etc.) that will put forth some rules, potentially what cost categories you can spend on. E.g., with NSF, the MRI program restricts the entire budget to a piece of capital equipment. The REU and RET programs focus on training undergrads or teachers. Some solicitations are very open, and you can propose a budget with "any" cost category.

There are federal restrictions on what government money will fund, however there are exceptions if you put the costs into your proposed budget and the government agrees to fund it. An example would be with studying alcohol. Alcohol as an entertainment expense is not allowed on federal grants, but if you are studying alcohol, it can be cited as having "unlike use" and then you can classify it as a lab supply. Similarly, "office supplies" are not allowed on grants as they are part of the "indirect cost" line (typically ranges from 50-70% of the direct costs), but if you were to propose a project that has a large focus on surveys, it would be reasonable to ask for paper, envelopes, and postage as a direct cost. As for computers, in 2014, the passage of Uniform Guidance changed the rules for charging computers to grants. It used to be that they had to be "sole source", e.g., running a piece of equipment. Now you are allowed to split-code them between multiple projects. However, you still have to meet the burden of determining the allocation. If a computer should be split between 10 funding sources, one could argue that it is similar to an indirect cost, and thus does not belong on any grants. In my computer science department, we do not charge student computers to grants for this reason. We do not want to have to track usage. However, when really fancy computers are purchased, we do budget for them upfront because they are beyond the normal administrative machine for email, etc.

As charges hit the funding, there are research administers who are hired to monitor the spending, and requirements for internal controls mean that audits are periodically performed on expenses. It is very possible that when costs are proposed to a research administrator (like myself) the proposed costs are not considered allowable on the project. The sponsor may have restrictions preventing a rebudget or the exact thing (which appeared to be in the proposal) cannot be purchased for other reasons, e.g. strategic procurement could block an equipment charge. Sometimes I have found conflict of interest problems because the PI wanted to buy equipment from a small business they have too large a stake in and the university blocked it.

It's always possible that the funds are also unspent and not misused. Unless you are privvy to the exact spending, you cannot know how things were spent to know that funds are misused. At the end of the day, the institution will send financial reports to the sponsor, and the PI is responsible for sending annual (or more frequent) technical reports. Are you assuming the technical reports are fraudulent and are falsely reporting progress on the project? Also consider that if your institution has an indirect cost rate of 70%, a $500k project is only $294k of direct costs. If you have the PI's effort, fringe, and a student's effort and tuition to consider, and the project is three years, you are talking less than $100k per year to distribute. At my university, many PIs don't take any salary because this money is so little, and students and postdocs are so expensive. $100k direct annually won't even get you a postdoc for a year in Computer Science, and not much more than a student. You can likely look up your indirect ("facilities and administration") and fringe rates as most academic institutions publish them online.

If you are still concerned, you can see if your institution has a whistleblower option and let an internal group investigate. However, if they find no fault, you have to accept that you just don't know how grants are run and there is nothing wrong with that; you just are not privileged to know this information.

Please note that if any student or postdoc asked for information on a project that they are paid on, I would only be willing to give them the award number for their publications' acknowledgment section. I would never discuss spending with them or anyone who is not the PI. I even limit conversations with Co-PIs to the spending they oversee.

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  • I don't think the professor took it for himself but I suspect the money was saved for something else or in general it was just extremely poorly managed. Commented Nov 3, 2022 at 5:06
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    That's not how it works. You have to send the money back. If what you say is true (saved for something else), your institution could be sued by the government because the feds send grant money as cost reimbursable -- you can only bill for your spending that benefits the project. At some point you have to decide it's fraud and whistleblow or let it go. I vote let it go unless you have concrete evidence where they admit to misuse of funds. Not using it as you prefer or in the best possible way is not misuse of funds. The PI would have to break a law and the internal controls failed. Commented Nov 3, 2022 at 13:20
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Generally speaking grants, especially those from federal agencies, are administered by the university through a "Grants Office" or similar. The PI doesn't get the money directly. This assures that the university stands behind how the funds are spent and provides a way to audit the grant.

So, if bad things happen, lots of people are involved, not just a "rogue" PI. At R1 universities, which might be just about the only place that such a large grant might occur, the accounting is very strict and all expenditures need to be justified and accounted for.

The university also takes a substantial part of the grant for general overhead (heat, light, lab space, buildings, maintenance, etc.). None of that stuff is free. IIRC, 40% is a typical overhead charge.

If there were RAs working on the project, they might have been funded via the grant, including their "forgiven" tuition and such. Yes, they might have been funded anyway and it may just be an accounting "trick", but it does work that way.

I've even had private grants (from corporations) that are administered this way. But, federal grants are in almost all (all?) cases handled by the university. It isn't just free money - do what you like with it.

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  • Why wouldn't PI be willing to invest into equipment which would make the project actually viable then? The whole experience was ridiculous in retrospect. Terrible planning/project. Commented Oct 31, 2022 at 23:37
  • @FourierFlux did you actually read the answer? How do you know there was any money left to spend on equipment once all of these expenses were paid? Also the comments: how do you know the grant even covered the necessary equipment?
    – Esther
    Commented Nov 1, 2022 at 14:15
  • The premise of the project(which was written into the grant summary) was to evaluate and develop algorithms for a specific application. Unless you have a way to get data in this environment the project is cooked, there was an inherent implication in the proposal that this stuff would be done even if it wasn't enumerated. Commented Nov 1, 2022 at 19:14

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