Recommendation concerning the University Affiliated Research Center
Statement of University of Hawaii System Interim President David McClain to the University of Hawaii Board of Regents, February 16, 2006University of Hawaiʻi
Fifteen months ago, responding to a recommendation from UH Manoa Chancellor Peter Englert, which I forwarded to the Board of Regents, the board gave its provisional approval to a U.S. Navy University Affiliated Research Center, the Applied Research Laboratory at UH Manoa, subject to the completion of consultation and the negotiation of a contract.
Such a center would involve the sole source provision—via "task orders"—of UH scientists‘ expertise in astronomy, oceanography, advanced electro-optical systems and communications systems. Task order sponsors could be the U.S. Navy or any other federal agency, including agencies whose primary focus is not defense related matters, such as the National Science Foundation. The center would be funded for three years, with an option for renewal for an additional two years, for a total of five years. It was estimated that a maximum of $10 million per year in task orders would be funded.
Eight months ago, I advised the board that I would not recommend the renewal of Chancellor Englert‘s contract.
Seven months ago, I recommended to the board that Dr. Denise Konan be appointed interim chancellor of UH Manoa. Upon the board‘s approval, she assumed her duties on August 1, 2005.
Three months ago, in the wake of a thorough process of consultation on her campus, Chancellor Konan recommended against proceeding with the UARC on the Manoa campus. During these consultations, the Manoa Faculty Senate, the undergraduate student association ASUH and the Kualiʻi Council all recommended against proceeding with the UARC. The Graduate Student Organization took no position.
The Manoa Faculty Senate ad hoc committee report, compiled with the assistance of outside counsel provided by the Manoa administration, offers a thorough review of the issues surrounding the UARC. It noted that several concerns that were generally felt (e.g., dealing with the complexity of administration required, with publication restrictions, with classified research) were often not matters of concern to researchers likely to participate in the UARC.
Chancellor Konan‘s summary statement read in part, "…the proposed UARC with the U.S. Navy is not supported by our campus. The contract remains problematic, and it would be difficult to implement an integrated UARC on our campus. The proposed UARC would involved very few of our researchers. Due to the potential for research to be classified and to the significant research space constraints on the UH Manoa campus, UARC-related research would more appropriately be located off-campus."
Her summary statement also read, "I am firmly committed to the ability of individual faculty members to pursue defense related research and funding" and "Faculty will continue to engage in naval research at our university." She noted that the debate in the Manoa Faculty Senate focused at its core on "an examination of Manoa‘s mission and how to promote our future as a research university."
One month ago, the Board of Regents in an informational meeting took six hours of testimony on the proposed UARC. Chancellor Konan began the meeting with a summary of her decision process and salient aspects of the UARC and took questions from the regents. During the course of these remarks the board learned that the overwhelming majority of the 100 most productive researchers on the Manoa campus supported the UARC; a poll conducted by the UH Association of Research Investigatorsreflected a similar preference.
Today I am giving the board my recommendation on how to proceed
In coming to this recommendation, I have met, inter alia, with the Pukoa Council, many of the members of which are also members of the Kuali‘i Council. Pukoa is against proceeding with the UARC. So, also, is the Student Caucus, composed of student representatives from each of the campuses in the UH System. I have no recommendation from the systemwide All Campus Council of Faculty Senate Chairs, but the Faculty Senate of Hawaiʻi Community College recommends against proceeding with the UARC, as does the Faculty Senate of the College of Arts and Sciences at UH Hilo. This latter body does not represent all the UH Hilo faculty, but it represents most of them.
I have also consulted with the Council of Chancellors, with several members of the Native Hawaiian community not employed at UH and with numerous others.
I would also note that the contract in its current form may be somewhat improved (from a UH perspective) from the contract as reviewed by Chancellor Konan, in part as a result of the recommendations of the outside counsel provided for the Manoa Faculty Senate ad hoc committee and in part as a result of the work of outside counsel retained to assist the university‘s attorneys in the Office of General Counsel. I also note that, by law, only the University of Hawaiʻi, and not the University of Hawaiʻi at Manoa, may enter into contractual relationships of this kind.
Before announcing my recommendation, let me review briefly each of Chancellor Konan‘s reasons for not proceeding.
- The proposed UARC is not supported by the UH Manoa campus. Certainly the three Manoa-based advisory bodies who took votes all voted against supporting the UARC. Testimony received at the Board of Regents meeting last month was on both sides of the issue; for example, most in the law school are opposed, and most in the engineering school are in support. Overall, a majority of those who testified orally and in writing at the BOR‘s informational meeting were in opposition.
- The contract remains problematic. The chancellor‘s statement references—but does not mention further—a "detailed legal analysis of the particular conditions of the proposed contract" done by independent attorneys for the Manoa Faculty Senate‘s ad-hoc committee charged with reviewing the proposed contract. I return to these legal issues later in these remarks.
- It would be difficult to implement an integrated UARC on our campus. Chancellor Konan‘s statement mentioned the integration of the UARC "into existing facilities and the permitted dual use of UARC funded personnel and equipment"—in contrast to "Navy UARCs at other universities, which are located in self-contained laboratories with independent facilities and staff." She also noted that "were a UARC to be established, a complex management structure would need to be put in place to assure the necessary safeguards for national security interests within the context of an open campus environment."
I agree with the chancellor‘s assessment that the "embedded" nature of the UARC complicates the administrative challenges substantially, particularly to the extent that classified research is performed.
- The proposed UARC would involve very few of our researchers. Privately, the chancellor has given me an estimate of one dozen; other estimates I‘ve received suggest the number would be higher, but not by a multiple of more than two or three.
- The potential for research to become classified and the significant research space constraints on the UH-Manoa campus. Both of these considerations are given as a reason that "UARC-related research would more appropriately be located off-campus." I address more fully classified research later in these remarks.
This summary list of reasons why not to proceed does not address the financial terms of the UARC. As testimony received by the regents from one Manoa faculty member (Walker Chair and Professor of Accounting Shirley Daniel in the UH Manoa College of Business) suggested, and as the business plan provided indicates, the university‘s proceeds from a contract vehicle like the UARC are about 25 percent higher than under normal research contracts. One reason is that some direct costs (including personnel costs) are reimbursed; in the typical contract vehicle only indirect costs can be recovered. The UARC contract also permits UH to charge a fee for its services, unlike in normal research contracts.
Whether these superior returns are justified by the start-up costs of a UARC (some of which would later be reimbursable), by the additional administrative burden and expense and by the risks involved (discussed further below, along with the legal issues) is a matter of judgment.
What are the risks and the legal issues?
Some opponents of the UARC believe that the process by which UH received its UARC designation from the Navy in July, 2004 was inappropriate or illegal. Both outside and inside counsel have opined that the UARC proposed is legal.
Outside counsel provided to the Manoa Faculty Senate identified seven areas of concern, and focused in depth on the first two. The seven areas were (1) limitations on the disclosure of research information; (2) the authority to reject task orders found objectionable (the "unilateral" provision of the contract); (3) "virtual offices" and the use of property on non-UARC research; (4) intellectual property rights; (5) drug free work force and other personnel issues; (6) the impact of security classification procedures on research staff; and (7) "organizational conflicts of interest" and restrictions on faculty conduct of non-UARC research.
With regard to (1), let me observe that current grants and contracts received by UH from a number of federal, State of Hawaiʻi and industry sources do contain some form of publications restriction, voluntarily accepted by the researchers in question. Such restrictions, of course, also characterize most classified contracts. That said, whether or not a task order is classified, in the contract as it current exists the Navy does retain the final authority, after a request to disclose has been made, to determine the meaning of "sensitive and inappropriate" information that may not be disclosed. If researchers involved in the UARC voluntarily accept such a restriction, that practice would be similar to what already occurs with a number of other research relationships at UH.
With regard to (2) the contract as it currently exists does contain a unilateral provision. Research by inside counsel has concluded that, in more than 3,000 task orders given the other Navy UARCs since 1997 involving some $3 billion of research work, there is not one example of the Navy exercising this unilateral option. Other language elsewhere in the contract, which suggests that task orders are arrived at in a more collaborative fashion, seems to be operative in other UARCs. I therefore conclude that the risk of a unilateral imposition of a task order is quite small.
With regard to (7), inside counsel advises that only those who work on UARC projects will be affected by the organizational conflicts of interest issue; other researchers will not. With regard to (3), (4) and (5), inside and outside counsel advise that the UARC doesn‘t raise any issues that haven‘t already surfaced in the current UH research portfolio.
This leaves us with (6), the matter of classified research. By one estimate, 15 percent of the volume of research funded by the UARC would be classified in nature; over the five-year life of the contract, that means that perhaps $7—$8 million in classified research would be conducted.
Let me now summarize for the board the situation as I see it. This proposed contract is clearly the most visible contract to come before the board in many years. It is neither as flawed as its opponents assert, nor is it as promising as its supporters claim.
The way ahead involves a question of balance between the rights of individual researchers to pursue topics that interest them and the concerns of some on the campus—perhaps even a majority—that all must engage in activities congruent with the majority‘s particular perception of the university‘s mission, values and strategic plan. Because of the inherent diversity and need for freedom of inquiry that, in my view, does and should characterize the academy, I tend to be biased in favor of measures to support the individual scholar no matter how popular—or even more importantly, how unpopular—his or her research interests.
The way ahead also involves a question of the capability of our institution to respond to the additional administrative responsibility that would come with the establishment of such a facility, a responsibility that would be all the greater if classified research were to be included in the task orders. We‘ve shown that we can do this in the case of the Maui High Performance Computing Center, so we have a track record. Still, a UARC is a new kind of organization for us.
The way ahead also involves the question of the nature of the university‘s responsibility to the State of Hawaiʻi. This is a matter of importance of particular interest to the University of Hawaiʻi System, which has the responsibility for leading the effort to set the agenda for public higher education in our state and for responding to state needs for an educated citizenry, a well-trained workforce and a robust and diversified economy.
Finally, as I have listened to and read testimony and read other expressions of concern about the UARC, I‘ve concluded that the way ahead must involve more directly the question of classified research. Board of Regents‘ policy characterizes UH‘s primary mission as "…to provide environments (italics mine) in which faculty and students can discover, examine critically, preserve and transmit the knowledge, wisdom and values that will help ensure the survival of the present and future generations with improvement in the quality of life."
Classified research, by its very nature, impedes the creation of the environments described above. While this is also true of the restrictions involving publication and in other matters currently accepted by researchers receiving a variety of non-classified contracts, many in the public perceive classified work as more sinister, since defense issues are often involved. Should a research project become classified in mid-stream, it is current UH practice to move the project to an off-campus location, thus "restoring" the campus environment. As noted above, this is one of two reasons—the other being limited space—that Chancellor Konan gives for her recommendation that UARC-related activity occur off campus.
With these considerations and questions in mind, I have the following recommendation for the Board of Regents:
- Accept Chancellor Konan‘s recommendation.
- In its place, and in the tradition of our EPSCoR and P-20 grants and contracts and the Maui High Performance Computing Center itself, approve the establishment of the UARC as an administrative unit attached to the UH System.
- Provide that the UARC will perform no classified task orders during its first three years of operation. This simplifies the administration of the UARC during its initial years, and addresses the "environments" issue profiled above.
- Provide that the UARC will retain the option to terminate a task order should the research involved become classified after the task order begins. This approach mimics Stanford University‘s approach to research that it finds is classified in mid-stream and gives UH additional flexibility, over and above current practice of moving projects off campus, in this area.
- Provide that UH will evaluate the UARC during its third year in terms of the financial and research returns received, and the costs and risks incurred, including the administrative burden associated with managing the UARC. If the UARC receives a favorable evaluation within UH, the university would invite the U.S. Navy to exercise its option for renewal of the contract for an additional two years. If the UARC did not pass the UH evaluation, or if it did and the U.S. Navy elected not to exercise its option, UH would discontinue the UARC.
With this "unclassified UARC" approach, faculty can continue to pursue defense-related research and funding and can continue to perform naval research, activities that the chancellor supports and that help to diversify our economy. UARC contracts would be much like other grants and contracts, with the exception that they would be sole-sourced, and our costs would be more generously reimbursed.
Thank you for your attention. I would be happy to take any questions you may have.