Can anything good come out of raising a possible ethics violation?

November 5, 2021 9:06 PM

In September, something happened at work that seemed hinky to me. I raised the issue by email with Jane, the person who did it, copying our boss (Mike) and our boss's boss (Lisa). Jane replied it was nothing to worry about, nobody else responded, and I didn't pursue it further. Today I had to take the annual ethics training, and it seems what happened in September was a violation of policy. What now?

I have basically two questions:

• Is what happened as hinky to you as it seems to me?
• Should I bring it up again, or not?

I am the technical lead on a project, for which we had to contract out work to a university. I got a draft plan of work from the university and a quote, but no cost breakdown. Jane said the money would be paid as an unrestricted gift to the university. The quote was approved by the senior people at my job, my colleagues on the project and I revised the plan, and the university contact agreed to do it at the same cost. The work finished, and the university sent us a final report, listing the results of everything they did for us: A, B, C, D and E. A couple months later, Jane, the person who handles contracts for this kind of thing, sent me, Mike, and Lisa the contract to review before she sent it to Lisa's boss, Bob, for his signature. The cost was about 35% higher than the quote, and the statement of work in the contract listed only A, and much more A than they actually did. I asked Jane by email about that (copying Mike and Lisa) and she said the cost was higher because the type of contract changed (presumably from a gift to work for hire). She replied that she chose from the university's menu of items and chose quantities to make the total add up to the right amount, in order to speed up the process. She said she should have told me not to pay attention to the statement of work, haha. Mike and Lisa were copied on this response, too. They didn't reply, so I didn't either. Presumably, Bob signed the contract and my company paid the university.

I don't know if Bob knew he was signing a contract with a false statement of work. But Mike and Lisa knew the statement of work was false, if they reviewed the contract, because I sent them the final report and also presented the results to them in a meeting before this... aside from being copied on the email where I called it out.

On the one hand, the work was done, and the university got paid, so what's the problem? Maybe everybody rolls with inaccurate statements of work, maybe it doesn't matter. On the other hand, I already knew that Jane's initial plan was to pay the university as a gift to avoid the overhead charged on work for hire, so I can't help but think the university might have gotten cheated somehow, with the collusion of our contact there -- is that plausible? And this is indisputably Creative Accounting, and maybe we shouldn't do that. The ethics training I had to take said that we should not, and someone thought that was important enough to pay me to hear it.

Maybe I was in the wrong for not talking to Bob directly, or taking it further when it happened, or so someone will argue. And retaliation is supposed to be illegal, but if they want you to suffer/leave they can always find a way. Will Mike and/or Lisa get in trouble for this? Mike is cool, a good boss, and Lisa has gone way out of her way many times to help me out, so I definitely don't want any negative consequences for them. In fact, if I raise this again, I think I'll raise it with Lisa, and let her tell me what needs to happen. Jane is bad at her job and a pain in my ass, but she's besties with a very senior guy, so she's safe as houses.

But is there any way I can get this corrected and come out OK? Or should I leave it alone?

posted by pH Indicating Socks to Work & Money (13 answers total)

Not knowing your work area, a general organizational-politics answer: leave it. You've done what you could with the limited power your workplace has granted you.

Your higher-ups should have acted on your email. Maybe they did quietly, but more likely they screwed up. They're unlikely to welcome your making them admit this now.

The VERY NARROW exception is if 1) the paperwork that happened leaves some type of bigtime compliance risk hanging over the employer, 2) action can be taken now to refile somehow and mitigate that, and 3) you're such a smooth operator you can sell your bosses on making that mitigation, avoid touching Jane and getting bombed by Jane's air cover, and get credit for averting catastrophic risk. In my experience even at well run companies nobody wants to care that you averted risk that wasn't already well known.

And, look, this isn't my area, but is paying a university a ~gift~ to dodge overhead a pretty canonical sketchy behavior? That actually strikes me as the big bullet dodged, and malleable statements of work as small potatoes. Again I may be taking this wrong, but the fact that a ~gift~ contract payment was apparently normal and unremarkable within your employer makes me wonder if the whole place is ethically fucked. Despite the good people working there.
posted by away for regrooving at 11:12 PM on November 5, 2021

You should definitely, definitely leave this alone.

As I read this, everyone agrees that the work was done as expected. The billed SOW doesn’t agree with the proposed SOW though. If you escalate this, it will be received as you creating unnecessary work that has no impact on the substance of the agreement (a gift, not a contract). People will be annoyed, and paperwork will be created to align the payments with the terms of the gift (again, not a contract). And you’ll become a problem.

And, look, this isn't my area, but is paying a university a ~gift~ to dodge overhead a pretty canonical sketchy behavior?

It’s standard practice in US research universities. Broadly accepted without even a shrug. There are many reasons for this…. But given that it’s standard, all parties understand the terms and no one is being cheated. I guarantee you the Dean knows about it. And maybe even the Vice Provost for Research.
posted by mr_roboto at 11:23 PM on November 5, 2021

OK, thanks for the correction on that then.
(also, universities are weird)
posted by away for regrooving at 11:28 PM on November 5, 2021

I actually work with university contracts, and from the outside it sounds like the university and your business are all kinds of loosey-goosey in a way that makes it seem difficult to fix things. Do you do a lot of contracting like this? If this was a one-off, I'd put it down to bad internal processes and let it go since you are a subordinate, this is not your responsibility, you've notified your superiors already and it seems more like a "we screwed up this procedure" violation than a "we are trying to conceal something shady" violation.

If this were a very large or complex agreement or there were a legal risk angle, I might follow up with Bob and Lisa and say, "I've been thinking about our agreement with X and I'm worried about Y because Z". But hopefully the university just prepared a report about your toothpaste samples and the work is clear-cut enough that this is a dead letter.

As to the university, it's the university's job to get its contracts right. They need a tighter process than they have but it's on them. Let the university look out for itself in terms of gift versus payment, etc. I admit that I am surprised that they let Jane set up a contract with an apparently random selection of work done, but they may be taking the path of least resistance since the work is finished and invoiced.

If you regularly do contracting, work with Jane to make sure that the agreement is in place before the project starts. Doing a retroactive agreement is the least-best thing. It happens, I think I've done two, but that's your real problem here. In fact, I bet one reason everyone is being so hands-off is that the work is already done.

Can your business simply accept the university's terms and conditions up front and allow them to invoice you without a separate signed agreement and based merely on a quote? A lot of businesses do this for smaller projects and while on the one hand it does mean you've accepted the terms/conditions, it does free you from preparing an actual agreement, the SOW issues, etc.

I guess this seems to me more like really bad process than something where I'd feel honor-bound to push the issue from the customer side. If I were the university and we were creating inaccurate signed agreements after the fact, I'd be a lot more troubled.
posted by Frowner at 11:32 PM on November 5, 2021

Also, when you say there was no cost break-down, what do you mean?

I've seen two broadly acceptable ways to indicate costs:
1. "Toothpaste calibration at $160 per sample", giving a max number of samples or a max dollar value,
2. Breakdown of all costs involved in toothpaste calibration - materials, labor time, any fees, etc.

Some customers prefer one, some the other. Neither is shady. A university external sales unit that does regular business (as opposed to a specialist lab that has agreed to do a one-off) will have rate development on file at the university; they can't just make shit up.

Both of these often come with a statement saying that costs may vary by up to X percent from the quote. This is particularly important right now because materials costs are all over the map due to supply chain.

I would not expect to write a contract for toothpaste calibration as "toothpaste calibration, $5000" and nothing more.
posted by Frowner at 12:30 AM on November 6, 2021

At my office, compliance would want you to report this so they could investigate. After all, you did the training which makes you think this might be a violation. It’s up to them to look into it and determine if anything should be done, either retroactively or going forward on university contracting. We also need to sign an annual statement that we’re not aware of ethics violations so it’s all taken very seriously.

Of course, this could have business or personnel repercussions, even with anonymous reporting or no retaliation policies. But so could not reporting and having a later investigation (on either the university side or within your company) turn it up.

You mention you’d prefer to have a conversation with Lisa about it. That may be the best solution and within your company’s guidelines. She’s in a position to fix this or to explain why it’s okay.
posted by Sukey Says at 2:22 AM on November 6, 2021

You’ve already raised this with Lisa, so she knows about it. What are you planning on saying this time, “Hey Lisa, that issue I was telling you about before, well I’m telling you about it again?”. Lisa has seen it. You’re assuming she’s done nothing about it, but maybe she has and you aren’t aware of it. Either way, whether she’s acted on it or not, telling her again is going to achieve nothing except maybe annoy her.

Now if you want to have a conversation about how issues like this should be handled and what the company’s stance is on this one and why, that’s a different conversation and it sounds like you need it clarified going forward for the next time this pops up.
posted by Jubey at 3:29 AM on November 6, 2021

Based on your description, contract rather than gift makes the most sense. Gifts don’t come with statements of work or separate result in detailed reports. At my university it’s very common for people to think they can make things gifts to avoid overhead, but then that idea gets smacked down and it becomes a contract which, yes, costs more. So that’s all pretty normal and the increase in cost wouldn’t worry me.

The SOW sounds weirder. I think my main concern would be the source of the funds. Was this federal money or otherwise outside money? If so, you ultimately may owe the sponsor an accurate accounting of how that money was spent, and I’d be concerned enough about that to raise it with whoever handles compliance at your organization. If it is purely internal funding I might let it go - it’s not super unusual for SOWs not to line up exactly with what ends up being done, and for internal decisions to be made that it’s more important to close out the books than to iterate six more times on the SOW.

Either way, if you do raise it, raise it with whoever’s responsible for compliance. They have at least some ability to protect you from some forms of retaliation, and also have access to information you may not.
posted by Stacey at 3:52 AM on November 6, 2021

Yes, I answered this assuming that you're a commercial entity. If you're spending federal funds this is actually a lot more serious. When you say "contract", was this a sponsored project run through the university's sponsored projects office? If so, I'm really surprised that they accepted a post-hoc agreement at all. (We wouldn't.) I ask because paying overhead/F&A shouldn't come into it if it's a sales contract even if you're spending grant money.

If this was a sponsored agreement then in fact I probably would bring it up at least once more with the superior with whom I was most friendly or even with compliance and consequences be damned. If you yourself are at a university or a research institute that receives a lot of sponsored funding and has a sponsored funding office/officer, can you give them a call and describe the situation as a theoretical question?

If it's federal or state funds, you could end up with a real problem at audit. Jane needs to understand that when you are spending state or federal (or city or county, but usually it's not those) funds you can't guess or approximate or do an after the fact agreement showing your best guess about the work. If it's commercial money and no one actually did anything shady, the bar is higher on the paperwork - the actual money will have a substantial paper trail at the university.

But even so, the solution is to get the agreement in place before work begins.
posted by Frowner at 6:31 AM on November 6, 2021

People who have a lot more specific knowledge about procedures of dealing with these institutions have already contributed, but I will say this- it seems like you have a low opinion of Jane's work (perhaps justifiably so) and you're flush with enthusiasm from recently having completed some ethics training. It's tempting to make these two things fit in one box. At the end of the day, it sounds like the only thing wrong was that the SOW was somewhat inaccurate and was done after the fact. No one is lining their pockets, defrauding anyone, evading taxes, no one's life is being endangered by welds on a bridge which weren't properly x-rayed, etc. You reported the issue to your superior, so I think your ass is covered. People and institutions exist in a nearly constant state of doing things which are technically illegal but never result in any consequences. I would shrug and move on.
posted by Larry David Syndrome at 6:50 AM on November 6, 2021

I wouldn't worry about the gift versus contract thing at all. That's the university's business and the whole situation you described is fairly routine anyway.

The other bits are definitely weird but mainly seem to indicate a lack of competence and attention to detail on Jane's part, not really ultimately a question of ethics. You reported it in writing up two levels of supervision (as you should have) and no one seems to care, nor do their seem to be any material ill consequences to your company for this situation.
posted by grouse at 7:42 AM on November 6, 2021

I think it's useful to sort out compliance vs ethics. Compliance lapses are not great. They are also common ( sometimes inevitable when guidelines are contradictory or outmoded.) They are worth reporting once to the people whose job is to monitor such things, then you can let it go. Ethics violations mean actual harm has occurred. Lots of people would feel an obligation to keep raising awareness of an ethical violation even if initial reports are ignored.

In this case, there was a clear compliance violation, but I don't see any evidence of an ethical violation, or even a strong reason to suspect one, so long as the overall price paid was within reason for the work done.
posted by Ausamor at 8:08 AM on November 6, 2021

She replied that she chose from the university's menu of items and chose quantities to make the total add up to the right amount, in order to speed up the process.

This is what happens when contracts are prepared from generic forms without legal review; you have to fit a square peg into a round hole so there’s a certain amount of inaccuracy and sloppiness. I don’t know the particulars of your work or university transactions, but I can tell you this is incredibly common in my industry.

Very broadly, a contract means whatever both parties agree it means so if the University is comfortable describing their work as x units of A and your signatory is comfortable paying the stated amount, that’s not necessarily an ethics or a compliance issue in and of itself.

That said, this is a complicated area, nobody on mefi can actually answer this with certainty, it clearly bothers you, and you have an opportunity to learn more here. Your company may have a compliance officer or legal department; I’d have no compunction about asking them about this for my own edification. “I just completed compliance training and it got me wondering about some of our contracting processes, for example blah blah blah.” If this means they crack down on some sloppier practices then that’s a good result. I wouldn’t re-raise this with any of the parties you mention, though.
posted by kapers at 4:44 PM on November 6, 2021