The University of California and Lawrence Livermore National Laboratory agreed last week to pay the federal government $3.9-million after an investigation found that managers at the laboratory had inappropriately charged overhead expenses to research projects financed by the U.S. Department of Energy.

The investigation found that the laboratory, one of three managed by the university system for the department, had overcharged the government by $2.2-million. The remainder of the settlement, which was completed on Friday, will cover interest and investigation costs, according to Susan Houghton, a spokeswoman for the laboratory.

"We do not believe there was any malice intended," Ms. Houghton said. "We had a new accounting system and these were managers who did not fully understand the implications of what they were doing."

The settlement comes less than two weeks after the Energy Department's announcement that it will allow open bidding for contracts to operate five of its national laboratories, including Lawrence Livermore (The Chronicle, February 6). A spokesman for the University of California system, Chris Harrington, said he does not believe the settlement will harm the institution's chances for retaining the contracts. "We've known for quite some time that a settlement in this amount was likely," Mr. Harrington said.

The accounting discrepancies at the laboratory were first brought to light in 1996 by a former employee, Michelle Doggett, who informed officials at Lawrence Livermore of the problem. Ms. Doggett sued the university in 2000, alleging that she had been shunned and isolated after reporting what she had uncovered. In September, she settled out-of-court with the university for $990,000. The university maintains that there was no retaliation against Ms. Doggett.

Ms. Houghton said Ms. Doggett's efforts were not the sole cause of the investigation that led to the settlement, but she said the laboratory was "grateful" for her help. "She played a role in saying that the laboratory needed to look at this area, and we did," Ms. Houghton said.