From The Vault: Why Compliance Matters (Hint: You Don’t Want To Be Exceptional)

[Occasionally, we like to revisit posts from days gone by that either (1) are always relevant, or (2) are the subject of recent questions received by our office.  Today, we’ll look at the importance of complying with all post-award obligations.]

Originally Published March 20, 2012

The topic of budgetary and performance oversight on a funded research project is generally not high on the list of priorities for many research admin personnel.  So much time and energy is spent in the application phase that, when the Notice of Award finally does come through, the grants or contracts associate, as well as the department analyst, is already focusing on 19 other proposals.

However, post-award activities are vitally important to not only the PI, but also the institution as a whole when it comes to future activities.  There are many stories of universities great and small getting audited and subsequently penalized for myriad issues, from improper use of funds to unreported conflicts of interests.  Besides the financial penalties that are ultimately imposed, there is also the damage done to the school’s reputation, which can affect the availability of funding.

However, in certain circumstances, simply fining an institution isn’t sufficient to ensure that the conduct never happens again.  Once such instance occurred at the University of Minnesota in the 1990s, when investigations revealed that, among other improper actions, researchers were trading funding on NIH awards, which resulted in misplaced funds and generally poor budgeting.  Additionally, there were issues surrounding the implementation of a drug program, including commercialization prior to approval.

Following a multi-year examination by multiple parties, the University was placed on NIH’s “exceptional status” list.  This designation removed UM’s expanded authorities, and further required the implementation and management of a compliance program with mandatory participation.  Not surprisingly, complying with the listed penalties required substantial effort by the University, both in terms of award management and overall research oversight, not to mention the additional funds that had to be expended to do so.

Minnesota was eventually removed from “exceptional status” in 2001.  The University indicated that it did not see a substantial impact on its funding opportunities while designated as such, but the ramifications of the episode still resonate with school administrators, and should serve as a warning to research institutions everywhere.