Exploring the Ethics of University-Vendor Relationships

Recent years have seen very high-profile investigations of university-vendor relationships and purchasing practices. The most well-publicized were no doubt the investigations into university relationships with credit card and other banking vendors that began in 2007 with the New America Foundation, spread to the New York State Attorney General’s office, then culminated in various Congressional and government office investigations. These inquiries comprised what came to be known as the national student loan scandal of 2007, as top financial aid administrators at leading universities across the country — whose job it is to advise cash-strapped students — were discovered to have pervasive financial ties to the loan companies they were recommending to students. In some cases, some were personally profiting off of their students’ debt load. In June and September of 2007, Senator Edward M. Kennedy (D-Mass.) released two reports proving that abuses in the student loan program were widespread; numerous colleges had accepted or even solicited inducements from lenders — often with the expectation or explicit agreement that the institution would grant the lender preferential treatment.

Studies of purchasing practices at medical schools followed, with a variety of less dramatic — but nonetheless potentially compromising — arrangements coming under scrutiny. Physicians making purchasing recommendations or recommendations for prescription or medical device use were widely found to be recipients of gifts or payments from vendors. On-site commercial marketing is pervasive at many academic medical schools and their affiliated teaching hospitals, where pharmaceutical, medical device and biotechnology companies routinely distribute marketing pens, pads, mugs, free meals and drug samples as gifts to both physicians and trainees. A number of medical associations have since issued guidelines to help manage vendor relationships responsibly.

The American Association of University Professors (AAUP) has studied these reports and recommendations, collated them, added to them as necessary and issued a book-length (368 pages) report, “Recommended Principles to Guide Academy-Industry Relationships,” that will be distributed by the University of Illinois Press in January 2014. The book opens discussion of the relevant issues with a basic statement of principle:

“Universities should ensure that vendor evaluation, selection and contracting for university products and services are consistent with their academic mission and do not jeopardize the best interests of students. Vendors should never be persuaded or coerced into making financial contributions to the university, either through direct university donations or recruitment of other contributing donors, in exchange for winning university contracts.” [1]

“All university bidding for contracts and services related to such areas as banking and student loans should be conducted through a fair, impartial and competitive selection process. Many universities currently have ethics policies banning gifts from vendors; the policies should also clearly prohibit institutions from accepting direct remuneration, or kickbacks, from vendors doing business with the university or its students. Such profiteering can undermine public trust in the university and compromise the best interests of the students the university has pledged to serve.”[2]

These principles apply to an array of vendor relationships, from the provision of student loans and the issuance of credit cards to the purchase of medical supplies and the provision of food and beverages on campus. As public funding for higher education has declined, colleges and universities have sought new revenue sources in the form of lucrative vendor contracts with corporations eager to market products and services to student audiences. The AAUP adds a caution specifically applicable to academic medical centers because their vendor relationships have implications for patient care and human subject research: “Academic medical centers should implement policies that prohibit acceptance of any industry gifts by physicians and other faculty, staff, students, and trainees of academic medical centers, whether on-site or off-site. Such standards should encompass gifts from equipment and service providers as well as pharmaceutical and device suppliers.”[3]

But none of these recommendations will be effective without full transparency. All of the parties to these arrangements need to be in communication with one another, and both governing principles and resulting practices and contracts need to be made public. Placing vendor contracts on a publicly accessible website is the ideal way to provide the kind of sunlight that will largely prevent practices that can and have led to a loss of public confidence in higher education. Everyone engaged in negotiating vendor contracts should be aware that these agreements can have wide impact on how universities are perceived.

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References

[1] American Association of University Professors, “Recommended Principles and Practices to Guide Academy-Industry Relationships,” pg 168. Accessed at http://www.insidehighered.com/sites/default/server_files/files/aaupacademeyindustry.pdf

[2] Ibid, pg 18

[3] Ibid, pg. 226