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U of Connecticut investigated for conflict of interest in buying from faculty start-up

By David Schwartz
Published: May 6th, 2015

The University of Connecticut (UConn) and some of its faculty are being investigated for allowing a no-bid contract for $250,000 worth of equipment purchased from a start-up company the faculty have a stake in.

Using funding it received from the National Science Foundation (NSF), UConn purchased 15 specialized acoustic modems from AquaSeNT, an underwater communications company that was housed at UConn’s Technology Incubation Program (TIP) until April 2014. TIP provides support to start-ups until they can become self sufficient; in return, the university has the option to license any intellectual property that results from the research.

UConn’s purchases with AquaSeNT were authorized by faculty who claimed they had no financial interest in the company but in actuality did have a stake in AquaSeNT and its success. That action could be in violation of both state and federal law.

UConn administrators were notified formally in 2014 that the NSF funds were frozen but failed to report it to auditors in violation of state law. UConn officials first told auditors the frozen funds did not involve funds administered by the school, but then disclosed involvement when auditors made it clear they were already aware that school-administered funds were involved.

The auditors’ investigation found that forms the faculty signed, which were required by the school, did not initially indicate a conflict of interest when the purchase process began. Later, the faculty submitted amended statements that were accurate, and claimed they rushed through the forms at first and did not fully read them before signing.

Auditors say UConn did not seem to have sufficient financial controls in place to flag conflicts of interest. They also said that UConn should have accurately, more promptly reported the suspension of the NSF grant.

The NSF has frozen seven grants to the university, all related to underwater communication and exploration, worth more than $4.6 million. Principals with AquaSeNT are principal investigators or co-principal investigators in each of the grants.

“NSF has determined that suspension of the referenced awards is reasonable to protect the interests of the government,” NSF Grants Officer J. Christopher Robey wrote. “NSF has restricted expenditures on these awards, and the University of Connecticut will not be able to withdraw any funds for these specific awards. The suspension and expenditure restrictions will remain in effect until otherwise notified by NSF.”

UConn spokeswoman Stephanie Reitz said in a statement that the school would have blocked the modem purchases if the UConn employees “had disclosed their conflicts of interest as principals in the company from which the items were purchased.” She said the university has since blocked the professors from obtaining new grants and removed them from other grants. She also said personnel investigations have been initiated.

Sources: Fox CT and Courant

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