From the Easy Chair

P. Biddle at Stanford U. Contract With U.S.

Professor: Dr. R.J. Rushdoony

Subject: Conversations, Panels and Sermons

Lesson: 111-214

Genre: Speech

Track:

Dictation Name: RR161CF153

Year: 1980s and 1990s

Dr. R. J. Rushdoony, RR161CF153, P. Biddle at Stanford U. Contract With U.S., from the Easy Chair, excellent colloquies on various subjects.

[ Rushdoony ] This is R. J. Rushdoony, Easy Chair number 263, April 8, 1992.

Tonight we are very privileged because we have a most unusual and important person with us as a guest, Paul Biddle. He is the man who has exposed the abuse and misuse and misappropriation of federal funds at Stanford University and, of course, at a great many other institutions from coast to coast. Paul Biddle is a dedicated Christian. He is a man—and I am going to ask him to tell us more than a little about his past—who has had the unique distinction of having posters circulated with his picture on it with a high reward for his murder by the Vietcong in Vietnam and Stanford University seems to regard him as equally public enemy number one. So it tells us something about the academic community of the United States.

Paul, would you give us a little bit of your personal history?

[ Biddle ] Well, Rush, I am 47 years old. I have a family and a son. I grew up in the Midwest and attended a state school, Ohio State University for my undergraduate degree. And at the completion of my undergraduate degree with a bachelor’s in finance I went on to get my master’s. And then the Vietnam War came upon, built I had been in ROTC while I had been at Ohio State. And shortly after I started my graduate work I dropped out after the first semester, after I had held a place there for my return after coming back from Vietnam and I went on active duty. The time when you are in college in ROTC—and there are probably many ROTC graduates who listen to your tape—we had a wish list when we graduated as to where we wanted to be assigned and what type of branch we wanted to be assigned to. And my senior year in college I had put my first choice as being Vietnam and being infantry or intelligence. And I had done that because of ... I had felt some very heart felt advice from my advisors. I had been a distinguished military student of.... of sorts at Ohio State.

And they said if you want to become a commander of troops in the field and you want to look to the military as a career—which was considering at that time—you had best get some command time in a military action area which was Vietnam. So I went on active duty, went through infantry officer training at Fort Benning, Georgia and then was assigned to preparation for a program that... here in the United States that is called Phoenix program and was stationed up in the Washington area, attended training, specialized training. Went to Vietnam, was in two corps, central highlands in a province called {?}. Remained there for eight months in the field, came back to two corps headquarters area in the {?} and at that point in time decided I wanted to be an international banker. I had found the flavor of the international life and I had a Chinese family who were my ... the husband was my interpreter and his wife and their children had become very close to me. I had no American troops under my command. I had all indigenous soldiers. And I decided I was going to study Chinese when I came back to the United States and become an international banker.

So when I came back to the United States I continued my master’s program and studied Chinese at Stanford for a summer and went to work for First National City Bank of New York in Europe. And after working in Europe I was a bit disappointed. I found it to be a very stilted environment and very little class mobility for people who were coming out of schools and hadn't laid the ... the rails through their families to get good jobs. And I found an absence of class mobility.

And I inquired at the bank as to whether I could be reassigned to Asia, which I felt was much more a ... a... a develoing and burgeoning area. And they assigned me to Asia. I went to the Philippines first and then to Hong Kong, Japan and ultimately ended up working in many of the countries of Asia from India to Korea and then going to work with a Japanese family owned business, stayed with them for four years, then went to work for Pete Marwick, Mitchel and America CPA firm in Tokyo. Came back to the United States, worked with the emergence of the Japanese investments in the United States, saw how that occurred, recognized that there were many instances of give always, less than full price being obtained for access to our markets. And decided to switch off into an area outside of the international practice. And I went to work for Coopers and Lybrand and one of the first engagements I handled—because my expertise was not only accounting, but data processing—we determined how much it would cost to desegregate Los Angeles Unified School District. And that was done in conjunction with Arthur D. Little out of Boston.

That was done in a manner that I think was very responsible and Tom Lawson at Los Angeles Unified School District who was deputy superintendent had nothing but praises for the ... the manner in which we had accomplished that. We could tell you how much the tires would cost on the buses for the various alternative methods of integration. We could tell you how many hours a child would be on a bus under this program versus that program. That level of definition was something that decision makers needed to be apprised of.

When I left there I took over Coopers and Lybrand’s management advisory services offices in Honolulu which was marketing to American multinationals and Japanese corporates and coming into the west coast and going out to Asia. And that was a very enjoyable time in my life. I would suggest anyone that has an opportunity to go out to Hawaii and work for a year, it is not to be passed by. But at the end of a year I had an opportunity that was quite unique.

IBM was involved in one of the largest anti trust actions in the United States since the time of Standard Oil of New Jersey and their offensive... their legal firm {?} out of New York were interviewing individuals and firms for developing what we call an offensive case strategy. If you are sued, not only have to defend yourself, but in many instances you have to prove things that are in your best interest. And when you get into anti trust it is heavy in financial accounting aspects as well as pulling data from large masses of computerized information.

IBM chose Coopers and Lybrand and myself to handle the IBM versus Trans America case. And there were two partners with me on that. And that was probably my second major piece of complex litigation that I addressed account and ADP skills to, the first being Los Angeles Unified School District desegregation.

With IBM I felt very comfortable that we could justify the offensive case strategy of {?} and ultimately, as you recall, IBM did win that case.

That gave me a position at that time of having probably some of the most beneficial experience to do with EDP and financial support of complex litigation and I went on to establish the EDP and financial support of complex litigation practice for another major accounting firm here in the United States called Alexander Grant. And within roughly a year and a half after that I began my own practice which ran from 1980 to 1985. And I went back into doing the international.

We all get burned out of things and we should all have a change. So I still use the EDP and financial aspects, but use my banking background in developing my own practice. In 85 I sold that, disposed of my client list and looked around for something to do that I felt would have an impact where I could make a difference. And I saw at that time we were hearing things about he very expensive toilet seats that the air force was buying and the hammers and I thought, well, I can understand that from an accounting standpoint, but how does the system allow those exceptions to become the norm? And the only way you find that out is by becoming a part of it. You will never fathom a situation until you ... you have walked a mile in their shoes, so to speak.

And I approached some of the people who I had met in government during the Carter administration. I had become very much involved with transfer pricing of crude on the high seas when I was with Alexander Grant. That was another major engagement.

So I went to Washington and I talked to some of the people in government as to what opportunities there might be. And they gave me a very disappointing future. They said, “If you are in Washington, you can never cause change. The people in the field will do whatever they want to anyway and you are only here for a brief period of time as a political appointee.” They said, “If you really want to cause change, you are going not have to get down to the nitty gritty, the nuts and bolts of government.”

And I attempted, then, to talk to people here in California about finding an opportunity to do just that. And there was tremendous apathy about someone of my age and experience going to work as a hands on auditor in the department of defense. They said, “You will be disappointed. You won’t have a continued level of interest.”

But finally a fellow by the name of Paul Mc Gregor was able to convince some people on the west coast in the western region of the defense contract audit agency that here was a fellow who had a roughly five years of non compete time and it would be beneficial to the federal government if he was allowed to get involved with the defense contracting operation. And that is how I got into government.

I came in and the first contractor that I worked for was a major defense contractor and on the particular contract that we identified we knocked roughly 30 percent of the cost out of it. So that is on a proposed cost to do a major weapons procurement system.

That demonstrated to me that many of the things that I had seen in the private sector associated with redundant systems, associated with layering effect of one period of time in a company versus the progression into another style of management where you get layering of bureaucracy was operating in the federal government, too, and in the contracting establishment. So the next thing that I went after had to do with not so much what we call sloppiness as I attempted to see if there was intent associated with it, or the appearance of intent. And on the next defense contractor that I went after, which was another major defense contractor, I found that they were billing amounts in excess of that permitted by the federal law. And it had been approved by their corporate headquarters in Baltimore. That gave me even more confidence that we had a system that was out of control, because these things should have been caught by other people. They shouldn’t have been caught by a fellow who was fresh out of the ... the basket and looking at these things. These were system type problems that could have been caught easily.

I did that for three years and at the end of three years I was pretty well burnt out. I had worked on voluntary frauds disclosures, some high profile defense contractors in silicone valley and I found the defense contract audit agency did not have the quality of audit effort that was necessarily to address the tax payer’s needs.

When we get good staff, they would be making 30 to 35,000 at most and the defense contractors would hire them away for 40 k if they were any good. So we ended up having a residual of contract auditors who were either fresh out of school using it as a training ground to advance their own careers or we ended up having people who were not aggressive and assertive about protecting the tax payer’s money, because those were the ones contractors love. But they can do an audit and find nothing but give them a few issues to talk about.

So at that point I had... I decided to back out and I had turned in my resignation in October, September, 1988 and as I say I was involved with audit at that point. There is ... there is a three pronged stool to federal purchasing. The first one is someone has to say what we are going to buy. The second one is someone has to evaluate the cost. That is the audit function I was involved with. And the third one is someone has to pick up the contract and make it work over the period of time.

I had never been involved in either of the other two legs and in October 88 I was given the opportunity to pick up responsibilities at Stanford University on another leg of the stool and that is making the contracts work once they have been signed. That is called contract administration. And in contract administration you have responsibilities for evaluating the validity and reasonableness of charges to the federal government and the conduct of a contract. You have the responsibility for determining whether they are taking adequate and proper care of government equipment entrusted to them to conduct whatever work they are to do. And it is a different approach, but you still rely upon the auditors.

So when I came in to Stanford, I was learning a new skill area, but I was relying a great deal upon the awarenesses and knowledge that I had developed as an auditor within the department of defense. And shortly after I arrived at Stanford I began to see the same type... I shouldn’t say the same type, but abuses with similar effect as I had noted in the types of defense contractors that all just shrug our shoulder and say, “Well, that is what you would expect of a defense contractor.” I was seeing the same type of attitude on the part of a university that we normally associate much higher fiduciary calling with. And that step brought me up to Stanford. And that has been the last three years of my life, from 1988 to 19... well, just this past year. March fifth was my last day of government employ. I resigned at that time.

[ Rushdoony ] And before we go into what you found at Stanford and ask questions, I would like to introduce those who are here with me. Of course, our regulars, Otto Scott and Douglass Murray, but we also have with us Susan Alder of Virginia, a free lance writer and a very good one.

We have all heard a great deal through the media about what you did at Stanford. Do any of you want to ask a question to start off the discussion of the Stanford situation?

[ Alder ] I remember hearing in reading a newspaper article about that when you walked though the door or pretty soon after you walked into the office at Stanford you knew something was wrong. Could you tell us about that and what led you to...?

[ Biddle ] Well, that occurred in October of 1988 and I had been there roughly a week when that instance occurred. The university tried to represent utilization of various resources on the campus such as the libraries by modeling and then would charge the federal government on the basis of the models. And, as I told you, having done the Los Angele Unified School District desegregation where we used models and with IBM when we had used models for anti trust, I felt very comfortable with models and I had done my doctorate work, my... I hadn't obtained my degree, but in the course preparation for my PhD at the University of Cincinnati I had particular interest in modeling and stat.

So within a weeek of the time I arrived in Stanford, Stanford’s assistant comptroller, John Sweep, invited myself and my predecessor, Rod Simpson, to sit in on a show and tell regarding this is why we charge the federal government this percentage of our library costs.

[ Voice ] That is funny.

[ Biddle ] ...for federal research. And I looked at the documentation provided to us and it was... to say it nicely, it was modest. It... there was not very much demonstration of causality. There was little more than a method of computation depicted without any of the things one would normally expect to find in a model such as justification for your premises, testing of givens and so on.

And so I became a little bit suspect of the model, but not so much of the results, because often times you can have a flawed model which will provide accurate output, accurate measures of the real world.

The next thing to do, though, was I thought to make a analytical determination as to whether the amounts of money they were seeking by this model, however it might be flawed, were reasonable. And what I observed there was that Stanford was obtaining roughly three times as much as any other university in the country for their library facilities. So that told me, one, I had the appearance of a flawed model and, two, analytically they were way out on the skewed end of the distribution for the amount of monies they were taking from the federal tax payer.

And I brought this up to the university and to my superior and they said, “We have always done it this way in the past and we don’t see any reason to change now.”

Now that was the beginning of the fall between myself and Stanford University. They felt they had no necessity to demonstrate the validity of their claims and I felt, as a representative of the tax payer, which I... I thought was a very high fiduciary responsibility that I was absolutely required that I demand they demonstrate how they came up with those levels of reimbursement and that ... that happened, as you say, shortly after I arrived, within the first month.

[ Alder ] How many years had Stanford claims gone unchallenged?

[ Biddle ] Stanford’s claims had never been challenged until I came there. And that would be ... they have been a major defense contractor for 15, 20 years. So it is not a matter that... In fact, I... I have to believe it... in fact I know as a fact, I spoke to my superiors. They likewise were aware of the disproportionate level of reimbursement at Stanford visa vie the other universities and had not challenged it.

now that shows to me they were derelict. There might have been occasion why they felt it was pragmatically unacceptable to challenge a national icon like Stanford University. They feared for their jobs. But that is not what we are paid for. Well, I hope that is not what we pay our civil servants for. We expect them to have a higher calling and they should sound the alarm. They are the watch dog for the federal treasury.

[ Scott ] Who... what department in Stanford drew up this model?

[ Biddle ] Comptroller’s office.

[ Scott ] The comptroller’s office. And...

[ Biddle ] It was done by a particular group and they are called the government and cost grade studies group.

[ Scott ] I see.

[ Rushdoony ] How much was the total amount at the time you left? I believe it went back to 1983. You didn’t go back beyond that or did you?

[ Biddle ] I went back to 1980. The university insisted that they had worked out a special agreement with my predecessors that locked up the years 1981, 82 and 83. And I disputed that, still dispute it. And I don’t think it is going to... to be sustained in court, if we can just get this thing to court.

I chose to look at the amount of abuse for the entire period of the ten years plus 1991 projected costs. I estimated roughly 50 million in ... in over charges associated only with the library and the special studies associated with the library reimbursements.

Defense contract audit agency reviewed it. They took a different approach to evaluating it than I did, which I think is beneficial. It allows us to triangulate on the amount rather than just replicating my effort. And they came up with approximately 30 million that they saw based upon preliminary evaluation. They now have begun the audits of all prior years and the last we have heard were the library is a component of the total overcharging is it will bre roughly 310 million dollars of overcharging before interest and penalties. But the library is only one part of that 310 million.

[ Scott ] Rush recently read aloud to me the fact that Stanford University has had a fund raising drive and has raised one billion three hundred million dollars. Do you have any idea of what percentage of Stanford’s income came from the federal government?

[ Biddle ] Well, the 1.3 billion of fund raising would not reflect direct transfers from the federal government to Stanford.

[ Scott ] No. I know.

[ Biddle ] But if you are saying what amount of federal funding comes into Stanford in a year, say, we spend between 300 and 400 million dollars a year at Stanford.

[ Scott ] Out of a... well, that would be Stanford’s income from the federal government.

[ Biddle ] Correct.

[ Scott ] What is its overall income?

[ Biddle ] I am having to extrapolate in my mind

[ Scott ] Yes.

[ Biddle ] Just a moment.

[ Scott ] Yes.

[ Biddle ] In the neighborhood ... we account in government for roughly 35 percent to 40 percent of their revenues traditionally every year.

[ Scott ] Well...

[ Biddle ] I have worked...

[ Scott ] So over a billion dollars a year.

[ Biddle ] Oh, yes, yes, yes. They are having over a billion dollars a year in income.

[ Scott ] Right.

[ Biddle ] But...but I am ... I am trying to give you something very specific. But you are in the ball part there...

[ Scott ] Yes.

[ Biddle ] ...if that is what you are looking for is a ball park figure.

[ Scott ] Yes, yes. So a billion dollars a year and that is not enough to run the university. How many people in the university?

[ Biddle ] Well, there are 13,000 students and a comparable number of faculty. It has one of the ...

[ Scott ] Equal?

[ Biddle ] Well, let’s include administrative people with the faculty.

[ Scott ] Right, yes.

[ Biddle ] If you are including staff, let’s put it that way.

[ Scott ] Right, yes.

[ Biddle ] Staff versus students it probably has close to a one and a half to one ratio.

[ Scott ] That is not a very efficient corporation.

[ Biddle ] Well, you can almost tuck the students in at night with that kind of a head count.

[ Scott ] That is right.

[ Biddle ] I... I think what is more important is that you only have containment of costs when there are constraints on a system. Academics traditionally have ever envisioned constraints on their systems. They are purists in the sense that any price is worth the deliverable. And that is the reason that we have run away costs not only in our college education, but we experience it in research. We experience it in some of our secondary schooling system. We experience it throughout the educational establishment. There are... if we look at the aspects of cost in education which have grown most significantly, it is the middle management costs within secondary education that have grown.

[ Scott ] Of course the... the myth is that Stanford is a private university.

[ Rushdoony ] It is a federal university. Most of them are now.

[ Scott ] That is the reality, yes.

[ Biddle ] I think even if you look at the contributions to the endowment fund, the people who are major contributors to Stanford many of them live off the largesse of the federal government. We as the tax payers in our federal purchasing and contracting have made a lot of people rich.

[ Scott ] Well, don’t forget that every endowment to the university is tax exempt. It is written off. It is a write off.

[ Biddle ] That has given rise to a lot of abuses. Stanford University, the faculty I thought had the gumption and the chutzpah to go down and tell the state of California that they felt they shouldn’t pay property taxes.

[ Scott ] At all.

[ Biddle ] At all.

[ Scott ] What about taxes on the equipment that they buy?

[ Biddle ] Oh, they don’t. That is {?}. That... that there can be an argument made for, but, you are right. They do not pay taxes on that. But I am talking about where the university owns land, lease the land for 99 years to a faculty member and he builds a house on it. Faculty said, “Even though it is our house, we shouldn’t have to pay property tax, because we are part of the... part of they system. We are an educationally exempt operation.”

[ Scott ] Well, you just lifted a piece of the curtain that has been shrouding the largest and most corrupt industry in the United States.

[ Rushdoony ] Yes. The university systems...

[ Scott ] The educational systems...

[ Rushdoony ] The educational system as a whole...

[ Scott ] As a whole. Untold multi millions poured down that rat hole with no accounting to the public and the only thing that I associate with education in the United States is the demand by the ecucators for more money.

[ Rushdoony ] Yes. And the NEA asks of candidates not what their premise and belief is, but: Do you agree with the NEA or do you disagree? And it will list page after page of things. The question is not whether or not the candidate is working for something that is reform, but do you agree with the NEA? That is the only thing that counts. And it is the most powerful single lobby in the United States.

[ Scott ] Union.

[ Rushdoony ] Union, yes. It is a union.

[ Alder ] Paul, when... when you made this known to your uppers at... at work were they grateful to you for what you had exposed?

[ Rushdoony ] Well....

[ Biddle ] We... we have to operate under the mindsets that I have no. Recognize my coming in to Stanford. I had no indication of the extent or the pervasiveness of the abuse that I have now. So when I came in I was picking up a little thread here, a little thread there. And I followed it back always and I see, “Oh, this is improper.” But all of us have improprieties in our life. We foul up on this or that, not out of intentional abuse of the system, but sometime we just fall. And... and God always expects us to fail. He just expects us to get back up and get on track.

Well, that was the premise I was operating with with the people in the navy. I though, well, maybe they are just not aware of this and if I bring it to their attention, boy, they will focus in on hit and really get it straightened out.

[ Alder ] Wrong, huh, Paul?

[ Biddle ] Wrong, wrong. After I was there for ... I was February of 1989 I had told one of my assistants—and I only had one that I had inherited—I said, “We are going to start going out now and validating the assertions of Stanford on their records of charges. And I expect you to go out with pencil and paper and check these things out against payroll checks and what have you.”

She said, “I have never done that in my life.”

I said, “Well, I think that was a good time to start.”

So she found another job and she went to work for another part of the defense establishment. Well, I was left with no one. But I had gone to my superiors and I had told them what I was seeing unfolding before my eyes and I said, “You know, I am an accountant. You folks are not.” I said, “I think it is really important that people who spend and oversight the contracts have an accounting background, but you don’t, so I am going to help you. Here is what I see.”

And they took violent exception to this and said, “Well, how could these things be happening?”

And I said, “I think we have got some problems with these memoranda of understanding we have made in prior years.”

Little did I realize that my superior and his superior had written these memoranda over the last 10 years. So I never received any help replacement for my assistant for five months. And you have to recognize, we are doing roughly half a billion dollars worth of research a year. And I started trying to pick up the slack and I was working long hours. I mean, to the point of 14 hour days seven days a week up until May. And in May, physically, I just fell apart. At that point in time I ... you know, I was sick for like a week. I couldn’t even stand. I was just totally exhausted. And I might have pushed on a little bit further, but the thing that kicked it over was my superior’s boss, the director for the western part of the United States said, “You are doing such a fine job with this, I don’t think you need any assistance.”

And I thought, now wait a second. You know I am working these long hours. You know I am sick. And you re not going to give me the help.

Well, what I feel happened at that time was they did not want to encourage a Paul Biddle to remain on station. I can’t substantiate that in any way. I don’t have memos to that point. But I think at that point on the west coast there was an effort afoot to discourage me from going further with my inquiry, because having to do all the administrative work—and the administrative work was piling up. I would send a fax up and I would say, “I am now four weeks behind. I am now six weeks behind. I need help. I need an administrative assistant.” And I was getting no responses.

Finally I just said, “That is not in my job description. I am here to protect and to manage not to do the work of, in effect, what now is three people.” Now there are three people doing what I did by myself for five months.

They then said, “Find someone to work there.” And I found another person in government who wished to come to Stanford. And we had difficulties because my concept of aggressiveness and assertiveness and how you go in and evaluate things, I found the person who the government gave me could not fully comprehend the provisions in terms of the contract for research. Well, it is very hard to determine whether the contractor is complying with the contract if the person evaluating that cannot really understand the terms and the provisions of the contract.

So I... I said, “I need a second person. And this time I am going to hire someone from the outside. I am not going to take a government employee. I am going to open it up for recruitment outside of government.” And that meet with a lot of resistance and it leads me to think now one of the positions I have is that we should never allow people ... you have term limits on congressmen. We should have periods of employment for administrative agency employees where they can work for a set period of time, maybe six to eight years in government and then they have to go to work in the private sector for two to three years to blow some of the cobwebs out of their mind. And, likewise, we should bring some of these people from the private sector into government for a period time. And, specifically, I am talking about public service for attorneys, CPAs, statisticians, that type of thing where they have some sort of federal or state certification that allows them to earn a living. They should do some commensurate service in return to make things clean within our government.

[ Rushdoony ] I understand the navy tried to settle behind your back for a few cents on the dollar and that you had to research how you could prevent that. Could you tell us about that?

[ Biddle ] I can talk to you about the research I did, Rush. The department of justice has a real tricky provision with the false claims act that says you cannot talk about actions under seal and if there were a {?} in place it would be under seal. But I can tell you things that I did preparatory to this time which was September time frame of last year.

I ... for 14 months I was bringing up issues that cost to the federal tax payer to the navy and being very vocal, being very vehement that they needed to get on top of these things. And they would keep deferments and they would say, “Well, we can’t do anything until an audit has been accomplished.” And in some instances they skewed the description of the audit expecting a favorable reply. I said at table one day when a senior navy administrator from Washington was in California in Palo Alto and asked if the heads of the audit team reviewing Stanford whether or not they agreed with an assertion I had made and the BCA audit supervisor said, “We concur with Mr. Biddles’ findings.” And he said, “What did you say?” He said, “We concur with Mr. Biddle’s findings.” He said, “You have read the things Mr. Biddle has said about you people that you didn’t do decent audits in the past, that he was critical of the ways you had handled your responsibilities. This is your last chance to get back at Mr. Biddle. Otherwise I think Mr. Biddle might be right.”

Now that is no way to conduct the tax payer’s business. That is, once we see there is a problem, government should come together and say, “Well, we might have had a foul up in the past, but now let’s get on top of these things.”

[ Scott ] But would you compare this to ... it is... first of all it is obviously a long standing situation that you have uncovered.

[ Biddle ] Yes.

[ Scott ] And people prefer the even tender of their ways. It is much easier. You can put in a normal day’s work. You don’t have to work 14 hours a day. And you can go home, go to bed, go to sleep. Nobody is rocking the boat. And there is a built in resistance to change and a built in resistance to rocking the boat and a built in resistance to extra work which is provoked by a new comer on the scene.

Would you.... would you say that...

[ Biddle ] I... I think that...

[ Scott ] ... sort of a... a stagnation that sets in... in the... everything... everything was running for... Stanford was happy. The navy was happy. The tax payers, of course, are looted all the time.

[ Biddle ] That is right. And they are not aware.

[ Scott ] And they are not aware of it and there is no investigative journalist, no matter what the newspapers say. I haven’t seen any in recent years.

[ Biddle ] Well, when you have closed negotiations it is hard for the public to find out anything. My... my... one of my other premises is that public business should be just that, public business.

[ Scott ] Yes.

[ Biddle ] So I think what you are saying is very much accurate, Otto, that when you have a situation that has continued for a long period of time there is a certain reluctance to expose it and fess up to it.

[ Scott ] Yes.

[ Biddle ] And it... that is... that is associated with possibly a governmental mentality that says, “We never got enough money to do the work in the first place. We never had enough bodies. We never had qualified people. And if we have made a mistake, well, let’s correct it. And let’s not make a big thing out of it.”

Now that... that was exemplified when I brought these things up. I had been put on probation for what I considered probation. The navy now says, “Oh, we never put Mr. Biddle on probation.” But for 120 days my duties were reassigned. All my authorities were taken away. That to me sounds like an administrative probation.

[ Rushdoony ] Who intervened on your behalf to change the navy’s attitude?

[ Biddle ] For the probation or overall?

[ Rushdoony ] Overall. Who in Washington?

[ Biddle ] Congressman John Dingle. Congressman John Dingle. But it... at the end of that 120 day probation I realized that this was not just a malady associated with two few people and too little effort. This was an intentional effort. When I confronted people in the navy about this they said, “Well, our mission is not just to procure research. Our mission is to support education.”

[ Scott ] Well, that was a very noble excuse.

[ Biddle ] Say, wasn’t it?

[ Scott ] They took the high ground. Education is the American religion.

[ Biddle ] Well, I went back to the administrative agency charter and I said, “Where within our charter does it say that we are supposed to do transfer payments? We are meant to procure. We are meant to buy. We are not running aid for dependent colleges.” And so at that point I realized there was a sever tilt that had nothing to do with what I had considered a gentlemanly way of covering up some bad business. But these were people who for whatever reason had perpetrated a real abuse on the tax payer.

By the fact that I saw no one else around me that wanted to rise up to the occasion and I had kind of ... I mean, I fought for this within the navy. I had... it was not that Paul Biddle stood like a ... a door post. I went out and I was button holing this person and that person. I said, “We have got to do something about this. What can we do about it?”

And I would always get this put down.

[ Scott ] Were these uniformed people that you dealt with?

[ Biddle ] No.

[ Scott ] No.

[ Biddle ] No. Uniformed people I found in the naval... navy that once something can be demonstrated and proven to them where they have no wiggle room, they respond. But bureaucrats in... in civilian attire, they are a different breed. They are very self serving and I don’t know whether it has to do with civil service. Some of them have high calling.

[ Scott ] High calling?

[ Biddle ] Yes.

[ Scott ] And you...

[ Biddle ] I mean, I couldn’t have gotten where I am today if you didn’t have some civil servants who did have a sense of high calling.

[ Murray ] Right.

[ Biddle ] But there are a great many people in our civil service who milk the public unmercifully. So during that 120 day period I became a man with a mission and I ... I sat down and I worked through my own mind what I thought the scope of wrongdoing would be, the total dollar figure at Stanford. And I started then looking in to what I though were the instances of abuse across the country.

[ Scott ] At other places.

[ Biddle ] At other places. And identified 42 universities from correspondents and documents that I had that had been accumulated over the past 10 years within the navy.

[ Scott ] Forty two?

[ Biddle ] Forty two. That I thought were meaningful abuses.

[ Scott ] Including ivy league?

[ Biddle ] Oh, yes, most definitely. Harvard medical school was one of the people that I felt really had done a number on us as well as MIT.

So that information I sat on until I had it pretty well documented, because I realized I couldn’t go off half cocked to push this type of an agenda. I mean there was going to be a knock down drag out brawl. And the first person that I went to with it was my minister, because I actually went to my mother first. Excuse me. I went and talked to her, because I felt she was nearly 80 years old at that time and I thought, well, if I get into this, this ... she could be vastly embarrassed by a young son who gets buried by the bureaucracy. And all his... every mother says, “This is my son and he has done this and I am so proud of him.”

Well, what if her son comes along and comes up a {?}. So I... you know, I had to explain to her down side risks on this. And her position was, she said, “You shouldn’t do it. No one will ever appreciate what you do and if you fail, which might likely be the case, because not too often do good hearted people come out on top,” she said, “It will be a stigma associated with you for the rest of you life.”

And that she knows that I have always risen to the occasion. I have always done what I thought is right and she didn’t have much effect and she has gotten use to it in 80 years, right?

So I then went to my ministers and I spoke to him and he is another person with substantial years and experience. I don’t know how old Mr. Millbank is, but...

[ Rushdoony ] I believe he is 79.

[ Biddle ] Seventy nine? Well, he and...

[ Rushdoony ] Norman Millbank.

[ Biddle ] He is an exceptional fellow.

[ Rushdoony ] Yes.

[ Biddle ] He doesn’t... he doesn’t think of himself as exceptional. I mean, he is not that type. But one thing I observed is... is in his ministry and his accomplishments, he has really been blessed and he has paid his dues. So when I portrayed the situation to him, I gave him a week to think about it. Now he had reason to be supportive of me. I am one of his parish. And at that time I was a member of the vestry so he was... he would be supportive by nature and inclination. But he came back with a fervor a week later saying, “You know, all of us look to this opportunity where we have the insight, the awareness and the knowledge to do something about what we popularly characterize as waste and abuse. You have the opportunity. You have the skills and you have the personality. So I think God would want you to do something like that.”

So at with that type of support I sat down. I tried to figure out how to implement the correction. And I had identified the abuse. Now it was a matter of figuring out how to make the correction occur.

[ Scott ] What intrigues me most is the fact that the opposition to the exposure came from those who favor education. Now if it had been presented from the beginning as a defense department boondoggle against a manufacturer there would have been an entirely different swing of sentiment. The manufacturer, they would have no hesitation about pillorying, burning at the stake a defense manufacturer.

[ Rushdoony ] Yes.

[ Scott ] But because it is an educational institution, you are stepping onto holy ground.

[ Biddle ] Well, I think ... I think you are talking about something that is putting the best face on a sad situation. These people who enunciated those positions were people who on their retirement would look for a second job within the universities. We have ... well at Stanford University we have a gentleman by the name of Bill Wilkin who was a... a very senior administrator within the office of naval research who oversaw federal research. When he left the navy he went to work for Stanford.

We had another individual, not quite as high a position, but another senior government official who went to work for MIT.

[ Scott ] So you can say this with a manufacturer.

[ Biddle ] Yes. {?}

[ Scott ] It is the same situation.

[ Biddle ] So it is not so much the fact that they are interested... I... I shouldn’t say that they are not interested in education. That would be presumptive on my part, but if you are standing on the outside looking in, you can say there might be some motivations why these people are so positive on education apart from the fact that education has merit. And that ... that is, I think, the breakdown more than anything else. You... you talked about we have lifted up the curtain or something like that.

I... I count it... I said, “This is the camel sticking their nose under the tent flap and it is not just that we are seeing now a microcosm of abuse university against the tax payer, but we are seeing a microcosm of the abuse of our federal govenremnt in their lax vision and overseight of the entire process.

[ Scott ] What you are talking about here is a system of national corruption...

[ Biddle ] Yes.

[ Scott ] ... in which they are nibbling away at the treasury and they are nibbling away at the taxes. They are nibbling away at the earnings of the American people and they are spending it in profligate ways. And they want to keep on doing it.

[ Rushdoony ] What would you say as of the time span you covered, the 80s, in principle and interest Stanford owes the United States and the tax payer?

[ Biddle ] Well, I over a year and a half, almost two years ago estimated that it would be 300 million and 100 million of that... this is principle now. I am not talking about interest. I am just talking about the amount of overcharging. I said there was in my awareness, I felt there would be likely 300 million of overcharging. A hundred million of that we would never be able to collect on because of the staleness of the documentation. We wouldn’t be able to find records to support our case in court.

In the GAO findings and in the government audit findings from the defense contract audit agency presented to the Congress by... and Congressman Dingle’s subcommittee, they have estimated 310 million from Stanford. And they are not completed yet. They have only looked at two of the five areas of abuse that I have identified. I would say... let’s do on the conservative say. Say it does... they... they are not able to find another dollar, which I find unbelievable. But if they were unable to find another dollar you are talking 300 million over a period of 10 years should develop in the neighborhood, because we had very high interest rates at the beginning of the 80s. I think we would probably be able to expect doubling of that amount from the interest, so another 300 million from the interest. But the penalties that could be brought to bear on Stanford especially if we can ... and I... I don’t think this is very difficult to show either, that they did things that a reasonable and prudent person would not have done. The penalties may amount to another 300 million. So we ... we are talking about a substantial amount of change there. And it... I... some people have said it is... it is embarrassing to get that kind of a recovery from one contractor, one university that has such a noble endeavor. But I would think we haven’t the bodies to police the entire establishment and, therefore, you... when you go after a contractor who abuses a trust, especially one that is teacher or these people who are admisitators were teachers at one time. So we repose a higher degree of trust in those people than we do in the people that turn out widgets. We, if we find an abuse pattern—and this pattern existed for more than 10 years—it was pervasive. We never had a memoranda of understanding at Stanford that did not benefit Stanford financially. Out of 100 and some memoranda of understanding all of them benefited the university.

The next nearest number of memoranda of understanding at a university was MIT which, I believe, had 12. So Stanfords was gilding the lily. Well, what do you do when you find someone abusing the trust in this manner and you have very few people to police the situation?

My feeling is you set the tone. You set the example with that school no matter how difficult it is to say, “Gee, these are nice people, because you have to bring in line all those universities, institutions where you don’t have the time or the resources to go in. You have to encourage self policing. And it is not that the law was not known to Stanford when they began. Stanford is probably one of the highest, most recognized universities in our country and possibly in the world for quality.

To say that they cannot understand the federal regulations which... which the lawyers from their law school write, I find is then expecting a lot more of common people to do their 1040 tax returns.

[ Rushdoony ] Their liability must exceed then a billion dollars a present.

[ Biddle ] Potentially. Now that ... whether or not we will ever collect that is a question that I think should be on the minds of many tax payers. The reason being is the navy can forgive and forget.

Now Otto brought up... or perhaps it was you, Rush, about there was a navy intent perhaps not to collect every penny they could have. And that was associated with the navy choosing to audit only two years out of the 10 and doing a projection of over charging based on those two years. Now anyone who is a lawyer will tell you that in order to enforce a claim you have to have what is called specificity and particularity. That means you cannot say, “I am drawing an inference based upon this sampling and I want you to pay on the basis of it.”

No, you can only make someone pay if you have specificity. And that means we would have head to have audited all 10 years.

[ Scott ] Well, I would say just one comment on the business of the widgets, that representative Bentley in the Baltimore area told me that the ... there is a fastener crisis in the United States. Fasteners are these little gadgets that put things together and hold them together. We have been buying fasteners from Europe and from Latin America. And they have discovered that we do not monitor the quality of the fasteners that they provide. So therefore these are in ... inferior and very important little items that have permeated.... pervaded ... pervaded the whole defense manufacturing industry. And what you are portraying is a piece of overall corruption because what is corruption? Corruption isn’t always taking money out of the till and putting it in your pocket. Corruption is not doing your job, collecting money from the government for indifferent performance and not caring about the quality of what you are producing.

Stanford may be rated very highly, but Stanford Law School is the only place that I was ever booed at when I lectured. And I will never forget it because one of the leaders of the booing was a bare foot girl with her feet up over the seat.

[ Rushdoony ] Well, our time is just about ended and we haven’t done more than skim over the subject, but I think all of us are deeply grateful to you, Paul, because you have done something no one else has tackled. You were a highly decorated soldier in Vietnam and you have a received the navy’s highest award to a civilian for your work at Stanford. It is a pity the taxpayers don’t have an award to offer to men, because you most certainly deserve it and one good result is that all the universities in the country are now running scared because of your work. Let’s hope the scare straightens them out. We are all very, very grateful to you, Paul, for your work and God bless you and anything and everything you do in the days ahead.

[ Voice ] Authorized by the Chalcedon Foundation. Archived by the Mount Olive Tape Library. Digitized by ChristRules.com.