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Prize winner
Authors: Ratna G Sarkar
Published by: Stanford Business School
Originally published in: 1994
Version: May 2007

Abstract

In July of 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. Principal issues for discussion are: (1) the costs and benefits of various forms of procurement contracts; (2) the effect of the cost allocation scheme on the incentives faced by individuals within Stanford University and the government; and (3) the role of auditors and audited cost information in the procurement process. The case also raises certain ethical and political issues.
Location:
Industry:
Other setting(s):
1991

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Abstract

In July of 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. Principal issues for discussion are: (1) the costs and benefits of various forms of procurement contracts; (2) the effect of the cost allocation scheme on the incentives faced by individuals within Stanford University and the government; and (3) the role of auditors and audited cost information in the procurement process. The case also raises certain ethical and political issues.

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Location:
Industry:
Other setting(s):
1991

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