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Stanford University (A): Indirect Cost Recovery

Authors: Steven Huddart and Ratna Sarkar

In July 1990, Stanford University enjoyed wide praise for cutting costs. Less than one year later, Stanford was at the center of a roiling dispute over indirect costs billed to the government for federally sponsored research. The case introduces students to procurement and audit from several perspectives--the regulator, the purchaser, and individuals within the supplier organization. The determination of costs under procurement regulations and contracts receives special attention. The not-for-profit setting is novel. Examines: the costs and benefits of various forms of procurement contracts, the effect of the cost allocation scheme on the incentives faced by individuals within Stanford University and the government, and the role of auditors and audited cost information in the procurement process. Also raises certain ethical and political issues.

Subject(s): Auditing; Cost allocation; Government agencies; Higher education; Nonprofit organizations; Political risk; Purchasing

Setting Information: Geographic Setting: California Industry Setting: education-higher Number of Employees: 5,000 Case Time Frame Start: 1991 Case Time Frame End: 1991

Supplemental Material(s): Supplement (Field), (A155B), 5p, Huddart, Steven, Sarkar, Ratna Supplement, (A155AQ), 2p, Huddart, Steven, Sarkar, Ratna

Type: Case (Field) Publication Date: 7/1/94 Product Number: A155A Length: 20p Source: Stanford University

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Steven Huddart
Smeal College of Business, Penn State University, University Park, PA 16802-3603 USA
(814) 865-3271
(814) 863-8393 fax
huddart@psu.edu
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