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entitled 'NIH Conflict of Interest: Recusal Policies for Senior 
Employees Need Clarification' which was released on May 31, 2007. 

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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

April 2007: 

NIH Conflict of Interest: 

Recusal Policies for Senior Employees Need Clarification: 

GAO-07-319: 

GAO Highlights: 

Highlights of GAO-07-319, a report to congressional requesters 

Why GAO Did This Study: 

To safeguard the integrity of National Institutes of Health (NIH) 
research, government employees who have significant decision-making 
responsibilities and peer reviewers who evaluate the scientific and 
technical merit of research funding requests should be free from 
conflicts of interest. One method to resolve a conflict of interest is 
recusal, which is accomplished by not participating in work that will 
affect a personal interest or involves a personal relationship. GAO 
reported on (1) how NIH informs senior employees about recusal and what 
the requirements are for them to notify supervisors, and (2) how NIH 
informs peer reviewers about recusal and how NIH monitors their 
compliance with recusals. GAO reviewed relevant NIH policy manual 
chapters and NIH guidance and interviewed NIH officials. GAO selected 
NIH’s National Cancer Institute and National Institute of Allergy and 
Infectious Diseases for the review because they have the largest 
budgets at NIH. 

What GAO Found: 

NIH has provided several methods to inform senior employees about 
recusal as a remedy to conflicts of interest, such as annual ethics 
training. However, NIH has not established clear recusal policies for 
senior employees, as the NIH policy manual is contradictory on whether 
senior employees must recuse in writing and notify their supervisors of 
their recusals. For example, the policy manual contains contradictory 
directions on how employees seeking nongovernment employment are to 
recuse. One section states that the employee “must” put the recusal in 
writing and that his or her supervisor “should” be notified, while 
another section states that the recusal “may” be done in writing and 
that the supervisor “must” be notified if the recusal is not written. 
Moreover, the two definitions of recusal in the policy manual imply 
that the employee must put a recusal into writing but do not explicitly 
require such action, and neither definition requires that the 
employee’s supervisor be notified of the recusal. Senior employees who 
consult the policy manual may or may not put their recusals in writing 
and may or may not notify their supervisors, depending on what section 
of the policy manual they consult. 

NIH provides written and oral methods for informing peer reviewers 
about recusal and for monitoring compliance with recusals. In the NIH 
policy manual and guidance, NIH states that peer reviewers must be 
informed about NIH conflict of interest regulations and policies, which 
include information pertaining to recusal. The policy manual refers to 
a form that describes situations that may constitute conflicts of 
interest and the need to recuse in those situations. The Scientific 
Review Administrators (SRAs)— NIH employees who manage the scientific 
review group (SRG), or peer review meeting—are also instructed to give 
oral guidance on the NIH conflict of interest policy to peer reviewers, 
according to NIH guidance. The NIH policy manual states that the SRA is 
responsible for overseeing the SRG meeting to ensure fair and unbiased 
evaluations of research funding requests, and that peer reviewers must 
certify in writing after the meeting that they have executed their 
recusals. 

GAO concludes that, although the NIH policy manual and guidance 
describe how peer reviewers are to be informed about and comply with 
recusals, the lack of clear recusal policies for senior employees 
results in a vulnerability in the management of one part of NIH’s 
conflict of interest policies. 

What GAO Recommends: 

GAO recommends that NIH expeditiously clarify its policies with regard 
to written recusals and supervisor notification related to senior 
employees’ use of recusal to resolve conflicts of interest. HHS, on 
behalf of NIH, concurred with GAO’s recommendation and plans to revise 
and reissue relevant portions of its policy manual within 6 months. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-319]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Cynthia A. Bascetta at 
(202) 512-7101 or bascettac@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

NIH Informs Senior Employees about Recusal through Several Methods; 
However, Its Policy Requirements for Notification of Supervisors Are 
Unclear: 

NIH Provides Written and Oral Methods for Informing Peer Reviewers 
about Recusal and for Monitoring Compliance with Recusals: 

Conclusions: 

Recommendation: 

Agency Comments: 

Appendix I: Comments from the Department of Health and Human Services: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Abbreviations: 

DAEO: Designated Agency Ethics Official: 
DEC: Deputy Ethics Counselor: 
FACA: Federal Advisory Committee Act: 
HHS: Department of Health and Human Services: 
NCI: National Cancer Institute: 
NEO: National Institutes of Health Ethics Office: 
NIAID: National Institute of Allergy and Infectious Diseases: 
NIH: National Institutes of Health: 
OER: Office of Extramural Research: 
OGE: Office of Government Ethics: 
R&D: research and development: 
SGE: special government employee: 
SRA: Scientific Review Administrator: 
SRG: Scientific Review Group: 

United States Government Accountability Office: 
Washington, DC 20548: 

April 30, 2007: 

The Honorable Joe Barton: 
Ranking Member: 
Committee on Energy and Commerce: 
House of Representatives: 

The Honorable Ed Whitfield: 
Ranking Member: 
Subcommittee on Oversight and Investigations: 
Committee on Energy and Commerce: 
House of Representatives: 

The National Institutes of Health (NIH), a part of the Department of 
Health and Human Services (HHS), is the primary federal agency for 
supporting medical research. In fiscal year 2005, NIH awarded 
approximately 85 percent of its $28 billion budget through awards of 
grants and research and development (R&D) contracts to researchers at 
universities, medical schools, and other research institutions. NIH 
senior employees, such as the NIH director and the directors of NIH's 
27 institutes and centers, provide leadership for NIH scientific 
research priorities and programs and have significant decision-making 
responsibilities. Peer reviewers, who are generally outside scientific 
experts from academia, also play significant roles in advising NIH 
research and programs through the scientific and technical review of 
requests for research funding. There is a potential for conflicts of 
interest to occur when senior employees or peer reviewers have personal 
or financial interests that could impair their judgment in carrying out 
their NIH responsibilities. Identifying and addressing conflicts of 
interest among senior employees and peer reviewers helps to safeguard 
public funds and the integrity of NIH-funded research. 

Under federal ethics laws and regulations, employees and peer reviewers 
are responsible for identifying and appropriately resolving their 
conflicts of interest. Federal criminal law on conflict of interest 
prohibits government employees from participating personally and 
substantially in a particular matter in which they have a financial 
interest, if the matter will have a direct and predictable effect on 
that interest.[Footnote 1] Federal regulations also provide that an 
employee should not participate in a matter when there is an appearance 
of a conflict of interest such that a reasonable person with knowledge 
of the relevant facts would question the employee's impartiality in the 
matter.[Footnote 2] HHS regulations prohibit peer reviewers from 
reviewing requests for research funding with which they have conflicts 
of interest or which present an appearance of a conflict.[Footnote 3] 
One method an employee or peer reviewer may use to resolve a conflict 
of interest or the appearance of a conflict is recusal.[Footnote 4] 
According to federal regulations, recusal is the responsibility of the 
employee or peer reviewer and is accomplished by the employee or peer 
reviewer not participating in the matter affected by the conflict of 
interest.[Footnote 5] Additionally, an employee may also notify his or 
her supervisor about the recusal to help ensure that the matter 
affected by the conflict of interest is not presented to the recused 
employee. 

In response to concerns about ethics at NIH raised by congressional 
committees and in the media, the agency created the NIH Blue Ribbon 
Panel on Conflict of Interest Policies to assess the status of conflict 
of interest policies and procedures.[Footnote 6] The panel issued a 
report in 2004 with 18 recommendations for improving NIH conflict of 
interest policies and procedures for employees, including one 
recommendation that employees be required to submit recusals in writing 
to their supervisors.[Footnote 7] Also in response to congressional 
concerns, the NIH Director stated, in a May 2004 prepared statement for 
a subcommittee of the House Committee on Energy and Commerce, that NIH 
would require a uniform policy for employees to notify relevant 
personnel of recusals and would establish a new process for monitoring 
employees' recusals.[Footnote 8] 

In light of these congressional concerns, you asked us to examine 
issues related to conflicts of interest at NIH. We report on (1) how 
NIH informs senior employees about recusal and what the requirements 
are for them to notify supervisors, and (2) how NIH informs peer 
reviewers about recusal and how NIH monitors their compliance with 
recusals. 

Our work is based on our review of written materials and interviews in 
NIH's Office of the Director--the agency's central office--and in 2 of 
NIH's 27 institutes and centers.[Footnote 9] We selected the National 
Cancer Institute (NCI) and the National Institute of Allergy and 
Infectious Diseases (NIAID) for our review because they have the 
largest budgets among all NIH institutes.[Footnote 10] 

To report on how NIH informs senior employees about recusal and what 
the requirements are for them to notify supervisors, we reviewed 
relevant chapters of the NIH policy manual. We also reviewed NIH ethics 
training materials for 2005 and 2006 and NIH guidance on identifying 
conflicts of interest. We used the definition of "senior employee" that 
is found in the HHS supplemental ethics regulations.[Footnote 11] Under 
this definition, NIH senior employees are the Director and Deputy 
Director; members of the senior staff within the Office of the Director 
who report directly to the Director; the institutes' Directors, Deputy 
Directors, Scientific Directors, and Clinical Directors; Extramural 
Program Officials who report directly to an institute Director; and any 
employee of equivalent levels of decision-making responsibility who is 
designated as a senior employee by either the HHS Designated Agency 
Ethics Official (DAEO)[Footnote 12] or the NIH Director in consultation 
with the HHS DAEO.[Footnote 13] We did not include two senior 
employees--the NIH Director and the NCI Director--in our review. The 
individuals who hold these positions are appointed by the President, 
and the HHS DAEO, rather than an NIH ethics official, serves as their 
ethics officer. We interviewed ethics officials who provide advice and 
counseling to senior employees, including the Director, NIH Ethics 
Office; the HHS DAEO; the HHS DAEO's representative on the NIH campus; 
the NIH Deputy Ethics Counselor (DEC); and the NCI and NIAID DECs. 

To report on how NIH informs peer reviewers about recusal and how NIH 
monitors their compliance with recusals, we reviewed relevant NIH 
policy manual chapters and guidance for peer reviewers. We interviewed 
officials in the NIH Office of Extramural Research, which is 
responsible for developing NIH peer review policies. We also 
interviewed officials at NCI and NIAID who are responsible for the peer 
review process at those institutes. 

Our review focused on recusal; we did not review the other remedies to 
a conflict of interest, which are waivers, authorizations, and 
divestiture. Our scope of review included recusals that senior 
employees or peer reviewers communicate to NIH officials; it was not 
possible to identify recusals by senior employees or peer reviewers who 
did not disclose their recusals to NIH officials. We also examined only 
the recusal processes in place for senior employees' and peer 
reviewers' recusals; we did not examine whether these processes were 
followed or specific instances of recusal for individual senior 
employees or peer reviewers. Furthermore, for peer reviewers we 
reviewed recusals related to the scientific peer review process for 
grant applications and R&D contract proposals, which is carried out by 
scientific review groups (SRGs) composed of peer reviewers who are 
primarily nonfederal scientists selected for membership based on their 
current research areas and depth of scientific expertise.[Footnote 14] 
Finally, our findings from interviews with NCI and NIAID officials 
cannot be generalized to other institutes at NIH. We conducted our work 
from March 2006 through April 2007 in accordance with generally 
accepted government auditing standards. 

Results in Brief: 

NIH has provided several methods to inform senior employees about 
recusal as a remedy to conflicts of interest, such as annual ethics 
training. However, NIH has not established clear recusal policies for 
senior employees, as the NIH policy manual is contradictory on whether 
senior employees must recuse in writing and notify their supervisors of 
their recusals. For example, the policy manual contains contradictory 
directions on how employees seeking nongovernment employment are to 
recuse. One section states that the employee "must" put the recusal in 
writing and that his or her supervisor "should" be notified, while 
another section states that the recusal "may" be done in writing and 
that the supervisor "must" be notified if the recusal is not written. 
Moreover, the two definitions of recusal in the policy manual imply 
that the employee must put a recusal into writing but do not explicitly 
require such action, and neither definition requires that the 
employee's supervisor be notified of the recusal. These inconsistencies 
raise questions as to which sections of the manual are to be followed. 
Senior employees who consult the policy manual may or may not put their 
recusals in writing and may or may not notify their supervisors, 
depending on what chapter and section of the policy manual they 
consult. 

NIH provides written and oral methods for informing peer reviewers 
about recusal and for monitoring compliance with recusals. In the NIH 
policy manual and guidance, NIH states that peer reviewers must be 
informed about NIH conflict of interest regulations and policies, which 
include information pertaining to recusal. The policy manual refers to 
a form that describes situations that may constitute conflicts of 
interest and the need to recuse in those situations. NCI and NIAID 
officials told us that peer reviewers are provided with this form 
before the SRG meets. In addition, the Scientific Review Administrators 
(SRAs)--NIH employees who manage the SRGs--are instructed to give oral 
guidance on the NIH conflict of interest policy to peer reviewers prior 
to the first meeting of the SRG, according to NIH's SRA handbook. The 
NIH policy manual states that the SRA is responsible for overseeing the 
SRG meeting to ensure fair and unbiased evaluations of applications and 
proposals. Peer reviewers must certify in writing after the meeting 
that they have executed their recusals, according to NIH policy. 

To address the inconsistencies in the policy manual related to senior 
employees' notification of recusals and ensure that NIH helps its 
senior employees fulfill their responsibilities related to recusal, we 
recommend that the Director of NIH expeditiously clarify NIH policies 
with regard to written recusals and supervisor notification related to 
senior employees' use of recusal to resolve conflicts of interest. In 
commenting on a draft of this report on behalf of NIH, HHS concurred 
with our recommendation and said it plans to revise and reissue 
relevant portions of its policy manual within 6 months. NIH also 
provided technical comments that we incorporated as appropriate. 

Background: 

One of the ways that NIH assists its employees, including senior 
employees, in avoiding and preventing conflicts of interest is through 
its ethics program. NIH ethics officials assist senior employees in 
examining potential conflicts of interest between senior employees' 
myriad and changing job responsibilities and their professional and 
financial outside activities and interests. Peer reviewers at NIH are 
subject to HHS regulations governing conflict of interest and recusal. 
To manage conflicts of interest that may arise in the course of the 
peer review process, NIH officials provide ethics guidance and advice 
to peer reviewers. 

The NIH Ethics Program and the Office of Extramural Research: 

All executive branch agencies, including HHS, are required to have an 
ethics program and a DAEO who is tasked with coordinating and managing 
the agency's ethics program.[Footnote 15] HHS has established a 
decentralized ethics program, allowing all agencies within HHS to 
administer their own distinct programs. The NIH Ethics Office (NEO) 
administers the NIH ethics program and provides leadership, guidance, 
and advice to the NIH community. The NEO is headed by the NIH DEC and 
is located in the Office of the Director. In addition, the NEO also 
serves as the ethics office for all senior employees and for employees 
in the Office of the Director. In addition to the NEO, each institute 
has its own ethics office. Each institute's ethics office is headed by 
an institute DEC who can provide ethics advice and counseling to 
institute employees. The HHS DAEO has delegated most of his 
responsibility for ethics matters at NIH to the NIH DEC and to the 
institute DECs.[Footnote 16] There is also a representative of the HHS 
DAEO located on the NIH campus. The HHS DAEO serves as the agency's 
primary liaison to the Office of Government Ethics (OGE), an 
independent executive branch agency that oversees ethics programs at 
all executive branch agencies and advises agencies on many ethics 
issues. 

While the NEO administers the ethics program for senior employees, the 
NIH Office of Extramural Research (OER) develops NIH peer review 
policy, including policy regarding conflicts of interest. The OER is 
located within the Office of the Director. NIAID and NCI each have a 
Division of Extramural Activities that implements, and provides 
information about, peer review in the institute. 

NIH Senior Employees and Conflict of Interest Regulations: 

OGE promulgates regulations relating to conflicts of interest and 
remedies for conflicts of interest for all employees in executive 
branch agencies. In addition to OGE regulations, HHS has issued 
supplemental conflict of interest regulations specific to its 
agencies.[Footnote 17] According to OGE and HHS supplemental 
regulations, as described below, conflicts of interest may generally 
arise because of an NIH employee's (1) financial holdings, (2) outside 
activities, (3) pursuit or negotiation of nonfederal employment, or (4) 
receipt of awards and honorary degrees.[Footnote 18] 

* Financial holdings: Generally, under federal law and OGE regulations, 
an employee may not participate personally and substantially in a 
particular matter in which the employee has a financial interest if 
participation in the matter will have a direct and predictable effect 
on that interest.[Footnote 19] Although this standard calls for a case- 
by-case analysis of an employee's interests, OGE regulations also allow 
agencies to prohibit ownership of certain kinds of financial holdings 
by regulation.[Footnote 20] HHS supplemental regulations state that NIH 
senior employees generally may not have holdings in a substantially 
affected organization. However, holdings of $15,000 or less are 
generally permitted.[Footnote 21] Substantially affected organizations 
generally include organizations such as biotechnology or pharmaceutical 
companies and medical device manufacturers, and organizations 
significantly involved in those industries through research, 
development, or manufacturing.[Footnote 22] The HHS supplemental 
regulations state that when a senior employee is permitted to retain a 
financial interest, that employee is generally obligated to recuse from 
any particular matter that would affect that interest.[Footnote 23] 

* Outside activities: OGE and HHS supplemental regulations generally 
prohibit employees from engaging in outside employment or other outside 
activities that conflict with their official duties.[Footnote 24] The 
OGE regulations contain many exceptions, particularly in the areas of 
speaking, teaching, and writing. OGE also allows agencies to prohibit 
participation in or require prior approval of outside 
activities.[Footnote 25] HHS supplemental regulations prohibit NIH 
employees from participating in certain outside activities (such as 
teaching, speaking, writing, or editing for compensation) with any 
substantially affected organization, a supported research institution, 
or a health care provider or insurer.[Footnote 26] In addition, the HHS 
regulations require NIH employees to apply for advance approval of 
certain outside activities, such as editing a journal or book that 
relates to the employee's official duties.[Footnote 27] According to 
the OGE regulations, even when an outside activity is permitted, 
participation in that activity may require an employee to recuse from 
matters involving or affecting the employee's interest in the outside 
entity or employer to avoid conflicts of interest.[Footnote 28] 

* Pursuit or negotiation of nonfederal employment: According to OGE 
regulations, a conflict may arise when an employee seeks or negotiates 
for nonfederal employment with an organization whose financial 
interests would be affected by the employee's actions as a government 
employee.[Footnote 29] Generally, OGE regulations require an employee 
to recuse from particular matters that would have a direct and 
predictable effect on a prospective employer.[Footnote 30] However, an 
employee may receive a waiver or authorization to participate in the 
matter.[Footnote 31] In addition, an agency may determine that an 
employee must recuse for a certain period of time after negotiations 
that did not result in employment have concluded.[Footnote 32] Finally, 
according to the Procurement Integrity Act, if an employee who is 
participating in an agency procurement initiates contact with or is 
contacted by the contractor regarding employment with the contractor, 
then the employee must report the contact in writing to his or her 
supervisor and to the DAEO or the DAEO's designee. The employee must 
then either reject the employment or recuse from further participation 
in the procurement.[Footnote 33] 

* Receipt of awards and honorary degrees: OGE regulations permit 
federal employees to accept awards with a value of less than $200 if 
the donor does not have interests that may be substantially affected by 
the employee's duties.[Footnote 34] Awards from such donors with values 
greater than $200 may be accepted only with the approval of an agency 
ethics official.[Footnote 35] An employee may also accept an honorary 
degree with written permission from an agency ethics official.[Footnote 
36] The HHS supplemental regulations require NIH employees to obtain 
advance approval for any award, regardless of value.[Footnote 37] 
Further, the HHS regulations generally prohibit employees from 
accepting an award with a value greater than $200 if the employee has 
official responsibility over matters affecting the donor of the 
award.[Footnote 38] However, an exception can be made for an award that 
would further an agency interest because it confers an exceptionally 
high honor in the fields of medicine or scientific research.[Footnote 
39] According to the HHS supplemental regulations, when any award is 
approved, the employee must recuse from any particular matter in which 
the donor is a party for 1 year following receipt of the 
award.[Footnote 40] 

Peer Reviewers at NIH and Conflict of Interest Regulations: 

NIH uses a peer review process to evaluate the scientific and technical 
merit of grant applications and R&D contract proposals.[Footnote 41] 
These evaluations are conducted by peer reviewers in SRGs, which can 
include standing committees and special emphasis panels.[Footnote 42] 
Standing committees generally meet three times per year and have as 
many as 16 to 20 members, who usually serve for a term of 4 years. 
Special emphasis panels are not standing but instead are convened on an 
as-needed basis. NIAID convenes about 120 special emphasis panels per 
year, and NCI convenes about 50 to 75 special emphasis panels per year. 
In the SRG meeting, applications with the highest merit, and all 
proposals, are discussed and scored by the peer reviewers. Consistent 
with the Federal Advisory Committee Act (FACA), NIH policy designates a 
Scientific Review Administrator (SRA) to manage the SRG 
meeting.[Footnote 43] A non-NIH scientist also chairs each SRG meeting. 

HHS regulations govern the procedures for selecting peer reviewers and 
contain a section on conflict of interest.[Footnote 44] According to 
the regulations, conflicts of interest may arise because of peer 
reviewers' financial interests, employment, or professional 
relationships. Conflicts occur when a peer reviewer or his or her close 
relative or professional associate[Footnote 45] 

* has or could receive a direct financial benefit of any amount 
deriving from an application or proposal; 

* has or could receive a financial benefit over $10,000 from an 
institution, offeror, or principal investigator named in an application 
or proposal;[Footnote 46] or: 

* is currently employed or negotiating for employment with an 
institution, offeror, or principal investigator named in the 
application or proposal.[Footnote 47] 

The HHS regulations provide two possible remedies for conflicts of 
interest--recusals and waivers. If a recusal is used, then the peer 
reviewer for an NIH SRG does not evaluate the application or 
applications with which there is a conflict. If a waiver is used, then 
the peer reviewer may participate in the review of the application 
despite the conflict.[Footnote 48] Waivers of conflicts are allowed 
when the NIH Director or his designee determines that there are no 
other practical means of securing appropriate expert advice and that 
the conflict is not so substantial as to be likely to affect the 
integrity of the advice of the reviewer.[Footnote 49] 

NIH Informs Senior Employees about Recusal through Several Methods; 
However, Its Policy Requirements for Notification of Supervisors Are 
Unclear: 

NIH has provided several methods to inform senior employees about 
recusal as a remedy to conflicts of interest, such as annual ethics 
training. However, NIH has not established clear recusal policies for 
senior employees, as the NIH policy manual is contradictory on whether 
senior employees must recuse in writing and notify their supervisors of 
their recusals. For example, the policy manual contains contradictory 
directions on how employees seeking nongovernment employment are to 
recuse. One section states that the employee "must" put the recusal in 
writing and that his or her supervisor "should" be notified, while 
another section states that a recusal "may" be done in writing and that 
the supervisor "must" be notified if the recusal is not written. The 
two definitions of recusal in the policy manual imply that the employee 
must put the recusal into writing but do not explicitly require such 
action, and neither definition requires that the employee's supervisor 
be notified of the recusal. 

NIH Informs Senior Employees about Recusal through Several Methods: 

NIH informs senior employees about recusal through several methods, 
including annual ethics training, preemployment financial disclosure 
review, and information on various ethics forms that are completed for 
certain new financial interests and outside activities as they arise. 
NIH is required by regulation to conduct annual ethics training that 
includes certain topics, such as the Standards of Ethical Conduct for 
Employees of the Executive Branch.[Footnote 50] The agency may 
supplement the training to cover additional topics as needed each year. 
For example, the 2005 training not only provided a high-level summary 
of the Standards of Ethical Conduct for Employees of the Executive 
Branch and ethics principles, but also described what constitutes a 
conflict of interest related to outside activities, awards, and 
prohibited financial interests. These additional topics were the focus 
of the HHS supplemental ethics regulations revised in August 2005. The 
2005 training also noted that recusal may be used in cases of conflicts 
arising from the acceptance of an award or from financial interests and 
that recusal involves nonparticipation in official duties related to 
the particular matter. However, it did not discuss the use of recusal 
as a remedy for conflicts arising from outside activities. The 2006 
training noted that recusal may be used to remedy conflicts arising 
from seeking employment, after receiving an award from an outside 
organization, and in any situation where an employee's impartiality 
would be questioned. In addition to the annual ethics training for all 
employees, staff with supervisory responsibilities, which includes most 
senior employees, completed an ethics training module for supervisors 
in 2005, according to a NEO official. This training module described 
how to screen employees' financial disclosures related to substantially 
affected organizations for potential conflicts of interest and how to 
evaluate whether recusals are an appropriate remedy to resolve the 
conflicts.[Footnote 51] 

The preemployment financial disclosure review is another method of 
informing senior employees about recusal. In the review, required by 
HHS since October 2004, HHS guidance states that NIH ethics officials 
inform prospective NIH senior employees about the ethics laws and 
regulations they will be subject to as federal employees and discuss 
the remedies for conflicts of interest, including recusal. NIH ethics 
officials are to review the prospective senior employees' outside 
activities and financial holdings before the prospective senior 
employees make final decisions about employment. If an actual or 
apparent conflict of interest is identified through this process, the 
prospective senior employee is required to agree to resolve the 
conflict, which may include using recusal. NIH provides a standard 
ethics agreement form on which the prospective senior employee 
describes specific actions to be taken to execute the recusal and 
indicates the duration of the recusal in the recusal section of the 
form. 

NIH also informs senior employees about recusal through information 
presented on several other ethics forms that senior employees complete 
for certain new financial interests and outside activities as they 
arise. Certain ethics forms--specifically the "Confidential Report of 
Financial Interests in Substantially Affected Organizations for 
Employees of the National Institutes of Health" (HHS Form 717- 
1),[Footnote 52] the "Request for Approval of Outside Activity" (HHS 
Form 520),[Footnote 53] and the "Annual Report of Outside Activity" 
(HHS Form 521)[Footnote 54]--provide detailed summaries of conflict of 
interest regulations and recusal.[Footnote 55] For example, all of 
these forms notify employees that they must refrain entirely and 
absolutely from participating personally and substantially in a 
government matter that affects their own financial interest or that of 
an outside employer, and HHS Form 520 lists examples of official duties 
from which an employee might be required to recuse. These forms also 
state that employees must refrain from participating in all parts of 
their official duties that are in conflict with any financial interests 
or outside activities. In addition, HHS Form 717-1 includes a space for 
the employee to describe a recusal, including naming another employee 
to whom the official duties are transferred. By signing the forms, 
employees certify that they have read and understand the summaries 
provided on the forms and that any statements they have made on the 
forms, such as recusal statements, are correct. Finally, senior 
employees may also seek individual advice and counseling from the DECs 
and supervisors about recusal as a resolution to an identified conflict 
of interest, according to NIH ethics officials.[Footnote 56] 

NIH Policy Manual Is Contradictory on Whether Written Recusals and 
Notification of Supervisors Are Required: 

The NIH policy manual is contradictory on whether senior employees must 
recuse in writing and notify their supervisors of their recusals. For 
example, with respect to employees seeking nongovernment 
employment,[Footnote 57] one section of the manual chapter "Avoiding 
Conflicts of Interest" states that an employee must submit a recusal 
statement to the person responsible for the employee's assignment. 
However, the same section also states that recusal is "accomplished by 
not participating in the particular matter,"[Footnote 58] which could 
lead the reader to assume that there are no other requirements. 
Further, a section in the manual chapter "Outside Work and Related 
Activities with Outside Organizations" on employees seeking 
nongovernment employment states that the notice of recusal "must be in 
writing" and that the employee's supervisor "should" be notified of the 
recusal.[Footnote 59] In contrast, another section of the same chapter 
states that a recusal "may be done either in writing or simply by the 
employee withdrawing from participation" in the particular matter but 
that employees who do not recuse in writing "must" notify their 
supervisors of their recusal.[Footnote 60] These inconsistencies raise 
questions as to which sections of the manual are to be followed. 

Moreover, neither definition of recusal in the policy manual provides 
clear guidance. Both imply that the employee must put a recusal into 
writing but do not explicitly require that action, and neither 
definition requires that the employee's supervisor be notified of the 
recusal.[Footnote 61] The definition of recusal in the chapter 
"Avoiding Conflicts of Interest" states that the recused employee 
"signs a written statement" reflecting the scope of the recusal and the 
nature of the conflicting interest or activity,[Footnote 62] and the 
definition of recusal in the chapter "Outside Work and Related 
Activities with Outside Organizations" states that recusal is a 
"written statement used to resolve an apparent or actual conflict of 
interest."[Footnote 63] 

NIH ethics officials, who may be contacted by senior employees for 
guidance, provided varying responses on whether recusals must be put in 
writing and whether supervisors must be notified. The DECs we 
interviewed generally stated that in practice senior employees either 
put recusals in writing, or were advised to do so, and notified their 
supervisors of their recusals. However, other ethics officials at NIH 
and HHS each correctly stated that OGE's regulations do not require 
written recusal, and the HHS ethics official stated that employees meet 
the legal obligation for recusal by not participating in the particular 
matter.[Footnote 64] As a result, a senior employee seeking clarity 
from an NIH ethics official could receive varying directions about how 
to recuse. 

NIH officials provided us with a draft paragraph in October 2006 that 
would require employees to put recusals in writing and notify their 
supervisors. The officials expect the paragraph will be included in the 
forthcoming revision to the policy manual. However, as of February 2007 
this revision to the policy manual had not been issued and NIH 
officials reported that they did not know when it would be issued. 
Furthermore, it is not clear to what extent this revision will address 
the inconsistencies we identified in different chapters of the manual. 

NIH ethics officials said that although they may be notified of a 
recusal they were not involved in monitoring compliance with it. A NEO 
official told us that monitoring compliance with recusals was a 
management responsibility, because recusals relate to official duties 
of the recused employee and it is the supervisor, rather than the 
ethics officials, who has access to information about official duties. 
The NEO official told us that she did not know whether supervisors are 
trained or instructed on monitoring compliance with their employees' 
recusals. Our review of the 2005 and 2006 annual ethics training 
materials found that neither set of materials contained instructions 
for supervisors to monitor compliance with recusals. 

NIH Provides Written and Oral Methods for Informing Peer Reviewers 
about Recusal and for Monitoring Compliance with Recusals: 

In the NIH policy manual and guidance, NIH states that peer reviewers 
must be informed about recusal and describes how compliance with such 
recusals is to be monitored. According to NCI and NIAID officials, 
prior to the SRG meeting peer reviewers are given a form, referred to 
in the policy manual, that describes situations that may constitute 
conflicts of interest and the need to recuse in those situations. In 
addition, peer reviewers are to receive oral instruction on the NIH 
conflict of interest policy from SRAs at the beginning of each SRG 
meeting, according to NIH's SRA handbook. The NIH policy manual states 
that SRAs are required to oversee the SRG meeting to ensure fair and 
unbiased evaluations of grant applications and R&D contract proposals. 
The NIH policy manual also requires peer reviewers to certify in 
writing after the SRG meeting that they have recused. 

NIH Provides Written and Oral Methods for Informing Peer Reviewers 
about Recusal: 

The NIH policy manual and guidance provide written and oral methods for 
informing peer reviewers about recusal, including guidance on a form. 
The NIH policy manual states that peer reviewers must be informed about 
NIH conflict of interest regulations and policies, which include 
information pertaining to recusal. The policy manual refers to the 
form, "NIH Conflict of Interest, Confidentiality and Non-Disclosure 
Rules: Information for Reviewers of Grant Applications and R&D Contract 
Proposals," that describes situations that may constitute conflicts of 
interest and the need to recuse in these situations, and states that it 
is the responsibility of the peer reviewer to notify the SRA of any 
potential conflict of interest. This form is provided to all peer 
reviewers prior to each SRG meeting, according to NCI and NIAID 
officials. A NIAID official told us that after a notification of a 
potential conflict of interest, the SRA follows up with the peer 
reviewer to discuss whether a conflict exists.[Footnote 65] In 
addition, peer reviewers are to receive oral instruction on the NIH 
conflict of interest policy from SRAs at the beginning of each SRG 
meeting, according to NIH's SRA handbook. NCI and NIAID also send 
written review guides to peer reviewers prior to each SRG meeting, 
according to NCI and NIAID officials. These guides include sections 
describing circumstances in which peer reviewers may encounter 
conflicts of interest and describe the NIH policy that requires peer 
reviewers to leave the room in order to execute recusals during the SRG 
meeting. 

NIH Policy and Guidance Provide for Monitoring Compliance with Recusals 
through Required Certification Forms and Oversight at SRG Meetings: 

The NIH policy manual requires peer reviewers to sign an "NIH Pre- 
Review Certification Form" before each SRG meeting. This form instructs 
peer reviewers to list the grant applications or R&D contract proposals 
with which they have a conflict and to certify that they will not 
review these applications or proposals.[Footnote 66] NIH policy also 
requires peer reviewers to sign an "NIH Post-Review Certification Form" 
to certify that they recused from discussion of any application or 
proposal with which they had a conflict. NIH policy requires the SRA 
and his or her staff to compile an SRG file that contains the pre-and 
postreview certification forms. NCI and NIAID officials told us that 
their institutes maintain these SRG files. 

The NIH policy manual states that SRAs are required to oversee the SRG 
meeting to ensure fair and unbiased evaluations of grant applications 
and R&D contract proposals. According to NCI and NIAID officials, the 
SRA is responsible for ensuring that the peer reviewer leaves the room 
to execute his or her recusal. The SRA handbook states that the SRA or 
the chair of the SRG should ask peer reviewers to leave the room during 
discussion of the application or proposal with which they have a 
conflict. The SRA's assistant is to tell the peer reviewers when to 
return to the meeting, according to the SRA handbook. 

Conclusions: 

The NIH policy manual and guidance describe how peer reviewers are to 
be informed about and comply with recusal, but NIH has not established 
clear recusal policies for senior employees. The statements in the NIH 
policy manual regarding whether employees' recusals must be put in 
writing and whether supervisors must be notified are unclear, and, 
regarding recusals associated with seeking nongovernment employment, 
contradictory. Senior employees who consult the policy manual may or 
may not put their recusals in writing and may or may not notify their 
supervisors, depending on what chapter and section of the policy manual 
they consult. Therefore, it is unclear what actions NIH wants senior 
employees to take regarding notifications of recusals. 

Although recusal is only one resolution to conflicts of interest, it 
constitutes an important component of NIH's overall framework for 
managing conflicts of interest and ensuring the integrity of NIH-funded 
research. Clear policies and guidance for senior employees' recusals 
are particularly important because senior employees serve in positions 
of leadership. NIH has undertaken a number of activities to improve its 
policies and processes related to conflicts of interest, such as 
requiring a preemployment financial disclosure review for prospective 
senior employees and implementing the revised HHS supplemental 
regulations through the annual ethics training and ethics forms. 
Nevertheless, the lack of clear recusal policies for senior employees 
results in a vulnerability in the management of one part of NIH's 
conflict of interest policies. 

Recommendation: 

To address the inconsistencies in the policy manual related to senior 
employees' notification of recusals and ensure that NIH helps its 
senior employees fulfill their responsibilities related to recusal, we 
recommend that the Director of NIH expeditiously clarify NIH policies 
with regard to written recusals and supervisor notification related to 
senior employees' use of recusal to resolve conflicts of interest. 

Agency Comments: 

On behalf of NIH, HHS provided us with comments on a draft of this 
report, which we have reprinted in appendix I. In its comments, HHS 
agreed with our recommendation and said it plans to revise and reissue 
relevant portions of its policy manual within 6 months. NIH also 
provided technical comments, which we have incorporated as appropriate. 

As arranged with your offices, unless you publicly announce its 
contents earlier, we plan no further distribution of this report until 
30 days after its issue date. At that time, we will send copies of this 
report to the Director of the National Institutes of Health and other 
interested parties. We will also provide copies to others on request. 
In addition, the report will be available at no charge on the GAO Web 
site at http://www.gao.gov. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-7101 or bascettac@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made major contributions 
to this report are listed in appendix II. 

Signed by: 

Cynthia A. Bascetta: 
Director, Health Care: 

[End of section] 

Appendix I: Comments from the Department of Health and Human Services: 

Office Of The Assistant Secretary For Legislation: 
Department Of Health & Human Services: 
Washington, D.C. 20201: 

Apr 11 2007: 

Ms. Cynthia A. Bascetta: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Bascetta: 

Enclosed are the Department's comments on the U.S. Government 
Accountability Office's (GAO) draft report entitled, "NIH Conflict of 
Interest: Recusal Policies for Senior Employees Need Clarification" 
(GAO-07-319), before its publication. 

The report notes that the current NIH manual chapter contains 
inconsistencies regarding the procedures senior employees should follow 
to document their need to recuse from a matter and recommends that we 
expeditiously clarify our policies on written recusals and supervisor 
notification. We concur and will work quickly to clarify our policies 
by revising and reissuing the relevant portions of the manual chapter. 
We expect to complete this task as soon as possible and certainly 
within six months. 

We are committed to providing consistent and clear guidance to our 
employees on the situations that require them to recuse from official 
duty matters because of a conflict of interest and on the procedures 
they should follow. 

The Department has provided several technical comments directly to your 
staff. 

The Department appreciates the opportunity to review and comment on 
this draft. 

Sincerely, 

Signed by: 

Vincent J. Ventimiglia: 
Assistant Secretary for Legislation: 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Cynthia A. Bascetta, (202) 512-7101: 

Acknowledgments: 

In addition to the contact named above, Linda Kohn, Assistant Director; 
Lori Fritz; Adrienne Griffin; Roseanne Price; and Ann Tynan made key 
contributions to this report. 

FOOTNOTES 

[1] See 18 U.S.C. § 208(a). Participation is also prohibited when the 
financial interest is held by a person or organization that is closely 
related to the employee, namely, (1) the employee's spouse; (2) the 
employee's minor child; (3) the employee's general partner; (4) an 
organization in which the employee serves as officer, director, 
trustee, partner, or employee; or (5) a person or organization with 
which the employee is negotiating for prospective employment or has an 
arrangement for prospective employment. These interests are often 
referred to as "imputed interests." 

[2] See 5 C.F.R. § 2635.502(a) (2006). 

[3] See 42 C.F.R. § 52h.5 (2006). These regulations define a conflict 
of interest as a situation in which a reviewer or a close relative or 
professional associate of the reviewer has a financial or other 
interest in an application or proposal that is known to the reviewer 
and is likely to bias the reviewer's evaluation of that application or 
proposal. An appearance of a conflict occurs when the financial 
interest of the reviewer or a close relative or professional associate 
of the reviewer would cause a reasonable person to question the 
reviewer's impartiality if he or she were to participate in the review. 
See 42 C.F.R. § 52h.2 (2006). 

[4] Recusal is called disqualification in the ethics regulations that 
apply to the executive branch. The other three methods for resolving a 
conflict of interest are waivers, authorizations, and divestiture. 
Waivers permit employees or peer reviewers to participate in the matter 
in spite of a conflict. Authorizations permit employees to participate 
in the matter in spite of a conflict. Divestiture, which is not used by 
peer reviewers, typically involves selling the financial holdings that 
pose the conflict. 

[5] See, for example, 5 C.F.R. § 2635.402(c) (2006) and 42 C.F.R. § 
52h.5 (2006). 

[6] Also in response to media reports and congressional hearings, in 
August 2005 HHS issued revised regulations that focus on outside 
activities, awards, prohibited financial interests, and financial 
reporting requirements. See 5 C.F.R. Parts 5501 and 5502 (2006). 

[7] National Institutes of Health, Working Group of the Advisory 
Committee to the Director, Report of the National Institutes of Health 
Blue Ribbon Panel on Conflict of Interest Policies (June 22, 2004). 
Accessed on February 6, 2007, at Hyperlink, 
http://www.nih.gov/about/ethics_COI_panelreport.htm. 

[8] See NIH Ethics Concerns: Consulting Arrangements and Outside 
Awards: Hearings Before the Subcomm. on Oversight and Investigations of 
the House Comm. on Energy and Commerce, 108th Cong. (2004) 24 
(statement of Elias A. Zerhouni, Director, National Institutes of 
Health). 

[9] Throughout the report, we use the term institute to refer to an 
institute or center. 

[10] NCI and NIAID also have the largest budgets among all institutes 
for awards of grants and R&D contracts. 

[11] See 5 C.F.R. § 5501.110(b)(1) (2006). This section prohibits 
senior employees at NIH from having certain financial interests. 

[12] The DAEO is the individual selected by the Secretary of HHS to 
coordinate its ethics program. 

[13] There are 9 senior employees at NIAID, 14 senior employees at NCI, 
and 16 senior employees in the Office of the Director. 

[14] Unlike many other federal agencies, NIH does not appoint the 
members of these SRGs as Special Government Employees (SGEs). HHS 
regulations state that no more than one-quarter of the members of an 
SRG may be full-time federal employees. See 42 C.F.R. § 52h.4(c) 
(2006). However, according to NIH, membership on SRGs has been only 
about 1 percent full-time federal employees since the inception of 
NIH's peer review process approximately 50 years ago. NIH also conducts 
a subsequent review of grant applications that is carried out by 
different advisory committees that comprise both scientific and lay 
members chosen for their expertise, interest, or activity in matters 
related to health and disease. Most of these committee members are 
appointed as SGEs, who are subject to less restrictive conflict of 
interest prohibitions than regular federal employees and to different 
rules than those applicable to NIH peer reviewers. 

[15] See 5 C.F.R. Part 2638, Subpart B (2006). 

[16] The DAEO has retained his responsibility for the ethics actions 
involving the NIH Director, who is a presidential appointee confirmed 
by the Senate. The DAEO also has responsibility for the ethics actions 
involving the NCI Director, who is a presidential appointee. 

[17] See 5 C.F.R. Parts 5501 and 5502 (2006). 

[18] In addition to those situations in which an actual conflict of 
interest may arise, OGE regulations state that executive branch 
employees must take appropriate steps to avoid the appearance of a loss 
of impartiality in the performance of their official duties. See 5 
C.F.R. § 2635.501 (2006). For example, such appearance problems may 
arise when the employee knows that a particular matter is likely to 
have a direct and predictable effect on the financial interest of a 
member of the employee's household. See 5 C.F.R. § 2635.502(a) (2006). 

[19] This prohibition also applies to instances in which the financial 
interest is held by a person whose interests are imputed to the 
employee. See 18 U.S.C. § 208(a) (2006); 5 C.F.R. § 2635.402(a) (2006). 

[20] See 5 C.F.R. § 2635.403 (2006). These regulations must be based on 
the agency's determination that the holdings would cause a reasonable 
person to question the impartiality and objectivity with which agency 
programs are administered. 

[21] This rule also applies to the spouses and minor children of the 
senior employees. See 5 C.F.R. § 5501.110 (2006). The regulation 
provides for other exceptions to this rule, including for interests 
held in pension plans or other employee benefits and publicly available 
mutual funds. 

[22] See 5 C.F.R. § 5501.109(b)(10) (2006). 

[23] See 5 C.F.R. § 5501.110(d) (2006). Recusal is not required when 
the value of the interest is less than the thresholds for regulatory 
exemptions established by OGE in its executive branch regulations at 5 
C.F.R. § 2640.202 (2006). 

[24] See 5 C.F.R. Part 2635, Subpart H (2006). 

[25] See 5 C.F.R. §§ 2635.802(a); 2635.803 (2006). 

[26] See 5 C.F.R. § 5501.109(c) (2006). There are several exceptions to 
the general prohibition, including one for the authorship of writings 
subjected to scientific peer review or a substantially equivalent 
editorial review process. 

[27] See 5 C.F.R. § 5501.106(d) (2006). The regulation states that 
approval may only be given if the activity is not expected to involve 
conduct prohibited by statute or federal regulation, including the OGE 
regulations. 

[28] See 5 C.F.R. § 2635.802 (2006). 

[29] There are no HHS supplemental regulations on seeking or 
negotiating outside employment. 

[30] See 5 C.F.R. § 2635.602 (2006). 

[31] Whether a waiver or an authorization must be sought depends on 
whether the employee is merely seeking employment or has begun to 
negotiate for employment. See 5 C.F.R. §§ 2635.605 and 2635.606 (2006). 

[32] This decision to require the recusal for a certain period of time 
after negotiations have ended is made based on an assessment of whether 
the employee's participation in the matter would create an appearance 
of a conflict. See 5 C.F.R. § 2635.606(b) (2006). 

[33] See 41 U.S.C. § 423(c). 

[34] See 5 C.F.R. § 2635.204(d)(1) (2006). The award must be given for 
meritorious public service or achievement. The rule governing the 
acceptance of awards is an exception to the general gifts rule. For the 
purposes of this report, we use the term award to refer specifically to 
gifts given as awards or given incident to awards. 

[35] All awards consisting of cash or investment interests, regardless 
of value, must be approved by an agency ethics official prior to 
acceptance by the employee. 

[36] See 5 C.F.R. § 2635.204(d)(2) (2006). 

[37] See 5 C.F.R. § 5501.111(c)(2) (2006). The HHS supplemental 
regulations do not address honorary degrees. 

[38] See 5 C.F.R. § 5501.111(c)(1) (2006). Awards of cash or investment 
interests are prohibited under these circumstances regardless of value. 

[39] See 5 C.F.R. § 5501.111(d). In addition, it must be determined 
that the award would be otherwise permissible under the OGE regulations 
and that the application of the prohibition is not necessary to ensure 
public confidence in the impartiality or objectivity with which NIH 
programs are administered or to avoid a violation of the OGE 
regulations. 

[40] See 5 C.F.R. § 5501.112 (2006). An authorization to participate 
may be granted under 5 C.F.R. § 2635.502(d) (2006). 

[41] Peer review of grant applications and R&D contract proposals is 
required by statute. See 42 U.S.C. § 289a. Grants are awarded to 
institutions on behalf of a principal investigator to facilitate the 
pursuit of a scientific objective when the idea for the research is 
initiated by the investigator and the institute anticipates no 
substantial involvement. R&D contracts are awarded to procure specific 
activities for scientific inquiries in particular areas of R&D needed 
by NIH. 

[42] SRGs for solicited grant applications and R&D contract proposals 
are conducted in the institutes. Specifically, the majority of 
scientist-initiated grant applications are reviewed by NIH's Center for 
Scientific Review, whereas applications that are submitted in response 
to an institute-initiated request for applications are generally 
reviewed by that institute. R&D contract proposals are reviewed by the 
institute that requested the proposals for that individual contract. 

[43] FACA requires agencies to designate a federal officer or employee 
to chair or attend every meeting of each advisory committee it 
convenes. Committee meetings may not be held without the advance 
approval of the designated official. See 5 U.S.C. app., § 10(e),(f). 

[44] See 42 C.F.R. Part 52h (2006). 

[45] Close relative means the peer reviewer's parent, spouse, child, or 
domestic partner. Professional associate means a colleague, scientific 
mentor, or student with whom the peer reviewer is currently conducting 
research or other significant professional activities or with whom the 
peer reviewer has conducted such activities within 3 years of the date 
of the SRG meeting. 42 C.F.R. §§ 52h.2(e) and (m) (2006). 

[46] A principal investigator oversees the scientific and technical 
aspects of the grant and manages the day-to-day research funded by the 
grant. An offeror is the organization submitting a proposal for an R&D 
contract. 

[47] The regulation allows for a determination that there is no 
conflict of interest in situations where the components of a large or 
multicomponent organization are sufficiently independent so as to be 
considered separate organizations. In these situations, the reviewer 
would be allowed to consider an application or proposal from a separate 
component, provided that he or she has no responsibilities at the 
institution that would significantly affect that component. 42 C.F.R. § 
52h.5(b)(1) (2006). 

[48] The rules of recusal for grant applications differ from the rules 
of recusal for R&D contract proposals. For grant applications, peer 
reviewers who have a conflict with an application must recuse from, or 
obtain a waiver for, the application with which they have a conflict of 
interest. See 42 C.F.R. § 52h.5(b) (2006). Therefore, a reviewer who 
has recused from one application is allowed to review and score the 
other applications in the group. For R&D contract proposals, a peer 
reviewer who has a conflict with one proposal must recuse from the 
review of all proposals for the same contract, unless the NIH Director 
grants a waiver to allow the peer reviewer to recuse from the proposal 
with which he has a conflict and to review the other proposals in the 
group. The waiver is based on a determination that there is no other 
qualified reviewer available with the reviewer's expertise and that 
expertise is essential to ensure a competent and fair review. See 42 
C.F.R. § 52h.5(b)(3) (2006) . 

[49] 42 C.F.R. § 52h.5(b)(4) (2006). In comparison, waivers are 
permitted for an appearance of a conflict when the NIH Director or his 
designee determines that it would be difficult or impractical to carry 
out the review otherwise and that the integrity of the review process 
would not be impaired by the peer reviewer's participation. 42 C.F.R. § 
52h.5(c) (2006). 

[50] See 5 C.F.R. Part 2638, Subpart G (2006), for the requirements 
related to agency ethics training programs. According to the 
regulations, certain federal employees, such as those who are required 
to file public or confidential financial disclosure reports, are 
required to receive annual ethics training. Since 2004, NIH has 
required that all NIH employees receive annual ethics training, 
according to NIH ethics officials. 

[51] NIH also requires all new employees to receive initial ethics 
training, according to NIH ethics officials. The training we reviewed 
consists of an overview of the Standards of Ethical Conduct for 
Employees of the Executive Branch and an ethics orientation module. 
Both the overview and the ethics orientation module state that recusal 
may be used in cases of conflicts arising from financial interests, 
seeking employment, and outside activities, and that recusal involves 
nonparticipation in official duties related to the particular matter. 

[52] This form is used to fulfill the requirement in the HHS 
supplemental regulations that certain NIH employees, including all 
senior employees, file supplemental disclosures of their financial 
interests in substantially affected organizations. 5 C.F.R. § 
5502.107(c) (2006). Employees must disclose these interests upon 
beginning employment with NIH, and within 30 days of acquiring any 
additional interests during their employment. 

[53] Employees use this form to comply with the HHS supplemental 
regulation requiring approval of certain outside activities, 5 C.F.R. § 
5501.106(d) (2006). 

[54] Employees use this form to comply with the HHS supplemental 
regulation requiring an annual supplemental report on any activities 
for which prior approval has been obtained or is required. 5 C.F.R. § 
5502.102 (2006). This form must be reviewed by the employee's 
supervisor, in consultation with a DEC or other ethics official, to 
make sure the employee has complied with applicable ethics laws and 
regulations and to determine whether approval of the activities listed 
should be continued or canceled. 

[55] In addition, two other forms--the "Public Financial Disclosure 
Report" (Form 278) and the "Confidential Financial Disclosure Report" 
(OGE 450)--do not specifically include information about conflicts of 
interest and recusals but when completed may disclose information about 
financial interests that allows for identification of potential 
conflicts of interest. These forms were developed by OGE based on their 
regulations implementing provisions of the Ethics in Government Act, 
which required a public annual financial reporting system for certain 
high-level federal employees and authorized a confidential annual 
financial reporting system for other employees, as OGE deems 
appropriate. See 5 U.S.C. app. §§ 101; 107 and 5 C.F.R. Part 2634 
(2006). 

[56] A NEO official told us that the NIH DEC is the official ethics 
officer of record for all NIH senior employees and signs senior 
employees' ethics forms, except for those of the NIH Director and the 
NCI Director, who are presidential appointees. The HHS DAEO serves as 
the ethics officer for these appointees. 

[57] This includes but is not limited to services as an officer, 
director, employee, agent, attorney, consultant, contractor, general 
partner, or trustee. See 5 C.F.R. § 2635.603(a) (2006). 

[58] See National Institutes of Health Policy Manual, Chapter 2300-735- 
1--Avoiding Conflicts of Interest (June 19, 1998), p. 12. 

[59] National Institutes of Health Policy Manual, Chapter 2300-735-4-- 
Outside Work and Related Activities with Outside Organizations, 
February 17, 1998, Appendix 4, p. 3. 

[60] Ibid., pp. 1-2. 

[61] NIH also makes available on its Web site two templates that senior 
employees may use to write a recusal memorandum. One recusal memorandum 
template is for institute directors, and the other template is for all 
other NIH employees. Although these templates allow for notification of 
supervisors, employees are not required to use these templates. 

[62] National Institutes of Health Policy Manual, Chapter 2300-735-1-- 
Avoiding Conflicts of Interest, p. 7. 

[63] National Institutes of Health Policy Manual, Chapter 2300-735-4-- 
Outside Work and Related Activities with Outside Organizations, p. 4. 

[64] OGE regulations state that recusal is accomplished by not 
participating in the particular matter. See, for example, 5 C.F.R. § 
2635.402(c) (2006). Written recusal is not required by the regulation, 
with some exceptions that apply to the NIH Director, who is nominated 
by the President and confirmed by the Senate and is under an ethics 
agreement. The regulations further state that the employee "should 
notify the person responsible for his assignment" about a recusal and 
that the employee "may" make "appropriate oral or written notification" 
to coworkers. Several other federal agencies, such as the Department of 
Defense and the Department of Energy, have promulgated supplemental 
regulations approved by OGE that require employees to provide written 
notice of recusals in certain situations. Additionally, the Procurement 
Integrity Act requires written recusals resulting from a government 
employee's contacts regarding employment with a bidder or offeror in a 
contract exceeding the simplified acquisition threshold (most contracts 
greater than $100,000). See 41 U.S.C. § 423(c). 

[65] HHS regulations allow the SRA to determine whether a peer reviewer 
has a conflict of interest with an application or proposal. See 42 
C.F.R. § 52h.2(q) (2006). 

[66] Reviewers with no stated conflicts must also certify to that fact 
on the form. NCI and NIAID officials told us that peer reviewers with 
conflicts of interest generally do not receive documents related to 
applications with which they have a conflict, or if they have received 
them are instructed to destroy those documents. 

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