At UIC, administrators make up their own rules. This web page gives some examples.
This instruction has no basis in any government policy, and no basis in any university policy. It is a unilateral action of the UIC MSCS associate head for administration, who has neither the authority nor the competence to decide what grants can pay for.
This demand is patently absurd: NSF's overhead requirements are simply not consistent with the Sloan prohibition on all overhead charges, for example, and NSF's program-director-buyout-approval requirements are simply not consistent with the free use of Sloan funds for buyouts.
OMB A-21, the main policy specification relevant to NSF payments, clearly states its scope as ``agreements with the Federal Government.'' Meanwhile, the Sloan rules merely require department-head approval and compliance with university policies.
I did have some equipment purchases in mind, and a $1000 discount sounded wonderful, so I said sure. I worked out a list of (as I recall) $10316.38 in computer purchases. We asked the department to purchase those computers from my colleague's account and to set aside $9316.38 from my account.
I had no idea that this type of trade required sponsor approval. The department certainly didn't tell me. I regret not asking NSF for permission in advance.
Nearly two years later, in December 2002, several other grant-management problems came to my attention. ``I believe I'm under an obligation to my sponsors to inform them that UIC is mishandling their money,'' I wrote.
In response, the UIC MSCS grant accountant threatened me, implying that I would be somehow punished for my agreement with my colleague if I brought these problems to NSF's attention.
``I cannot imagine why you think that NSF would be unhappy with anything I have done,'' I wrote. I pointed out that the agreement had saved money for NSF, and that my colleague's use of Army money wasn't my problem.
In response, the UIC business manager issued a much more specific threat, telling me to expect a ``federal offense of misappropriation of funds,'' a ``legal investigation,'' and a loss of future funding. The department head stated in a phone call that an agreement of this type required approval from both sponsors.
I ended up reporting the incident to NSF in April 2003.
Of course, I'm much more careful about these things now, but the incident still bothers me. The department obviously knew it was doing something wrong, but it didn't tell me---until I started investigating other grant problems, at which point the department tried to stop my investigation by threatening me with a ``federal offense of misappropriation of funds.''