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Report to Ranking Members, Subcommittee on Environment, Technology and 
Standards and Subcommittee on Research, Committee on Science, House of 
Representatives: 

February 2005: 

Federal Research: 

NIH and EPA Need to Improve Conflict of Interest Reviews for Research 
Arrangements with Private Sector Entities: 

GAO-05-191: 

GAO Highlights: 

Highlights of GAO-05-191, a report to congressional requesters: 

Why GAO Did This Study: 

An institute at the National Institutes of Health (NIH) and an office 
in the Environmental Protection Agency (EPA) entered into collaborative 
arrangements with the American Chemistry Council (ACC) to support 
research on the health effects of chemical exposures. NIH accepted a 
gift from ACC to help fund the research. EPA and ACC funded their 
proposals separately. The arrangements raised concerns about the 
potential for ACC to influence research that could affect the chemical 
industry. GAO determined the agencies’ legal authorities to enter into 
the arrangements; the extent to which the agencies evaluated and 
managed potential conflicts of interest resulting from these 
arrangements; the extent to which the NIH institute complied with NIH’s 
gift acceptance policy; and the extent to which NIH, EPA, and other 
agencies have similar arrangements. 

What GAO Found: 

NIH’s National Institute of Environmental Health Sciences (NIEHS) used 
the authorities granted to NIH’s institutes and centers under sections 
of the Public Health Service Act to enter into its arrangement with 
ACC. Similarly, EPA’s Office of Research and Development (ORD) relied 
on authorities granted to EPA under sections of the Clean Air Act, the 
Clean Water Act, and the Solid Waste Disposal Act to enter into its 
research arrangement. Nothing in these statutes appears to prohibit 
either agency from entering into research arrangements with nonprofit 
organizations such as ACC.

NIEHS and ORD did not formally evaluate the potential for conflicts of 
interest with ACC before they entered into the arrangements, but both 
agencies took steps to manage the potential as the arrangements were 
implemented. NIH and EPA had no specific policies requiring officials 
to evaluate or manage potential conflicts of interest when they entered 
into the ACC arrangements, nor do they currently have such policies. 
Although no formal evaluation occurred, agency officials managed the 
arrangements through their existing research management processes. Both 
agencies believe these actions helped mitigate the potential for undue 
influence by ACC and adequately protected the integrity of the 
scientific research conducted under the arrangements. Because the 
agencies’ research management processes were not designed to address 
conflict of interest issues they are not a substitute for a formal 
evaluation of such conflicts. Without policies requiring a formal 
evaluation and management of conflicts, there is no assurance that 
similar arrangements will be appropriately evaluated and managed for 
such conflicts in the future. 

NIEHS officials complied with portions of NIH’s gift acceptance policy 
that guide the acknowledgement and administration of gifts. However, 
the policy’s guidance on evaluating and managing potential conflicts is 
extremely broad, and it lacks clarity and consistency. As a result, the 
policy gives officials wide discretion in this area. In addition, the 
policy does not require the agency to document the basis for its 
decisions. Consequently, the policy does not provide sufficient 
assurance that potential conflicts of interest between NIH and donor 
organizations will be appropriately considered. 

While some institutes and centers at NIH had arrangements somewhat 
similar to the ACC arrangements, GAO did not find any similar 
arrangements at other program offices at EPA or at the Food and Drug 
Administration and the Federal Aviation Administration—two other 
agencies with significant research budgets. None of the nine research 
arrangements GAO found at NIH institutes and centers involve 
organizations that represent industry in the same direct manner that 
ACC represents the chemical industry.

What GAO Recommends: 

GAO recommends, among other things, that NIH and EPA develop formal 
policies for evaluating and managing conflicts of interest when 
entering into research arrangements with nongovernmental partners, 
particularly those representing a regulated industry, and that NIH 
revise its gift policy to require conflict of interest evaluations and 
documentation of decisions.

www.gao.gov/cgi-bin/getrpt?GAO-05-191.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Anu Mittal at (202) 
5123841or Mittala@gao.gov.

[End of section]

Contents: 

Letter: 

Results in Brief: 

Background: 

NIEHS and ORD Used Broad Legal Authority to Support Their Arrangements 
with ACC: 

NIEHS and ORD Did Not Formally Evaluate, but Took Steps to Manage, the 
Potential for Conflicts of Interest in Their Arrangements with ACC: 

NIEHS Generally Complied with NIH's Gift Acceptance Policy, but the 
Policy Cannot Provide Assurance that Conflicts of Interest Are 
Evaluated and Managed: 

Research Arrangements Such as Those with the American Chemistry Council 
Are Not Widely Used: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Environmental Protection Agency: 

Appendix III: Comments from the National Institutes of Health: 

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Staff Acknowledgments: 

Table: 

Table 1: NIH Arrangements with Nonprofit Partners for Cosponsoring 
Research, 1999-2004: 

Figure: 

Figure 1: Four Agencies' Funding Devoted to Intramural and Extramural 
Research, Fiscal Year 2002: 

Abbreviations: 

ACC: American Chemistry Council: 

EPA: Environmental Protection Agency: 

FAA: Federal Aviation Administration: 

FDA: Food and Drug Administration: 

NIEHS: National Institute of Environmental Health Sciences: 

NIH: National Institutes of Health: 

ORD: Office of Research and Development: 

Letter February 25, 2005: 

The Honorable Mark Udall: 
Ranking Member: 
Subcommittee on Environment, Technology and Standards: 
Committee on Science: 
House of Representatives: 

The Honorable Eddie Bernice Johnson:
Ranking Member, Subcommittee on Research:
Committee on Science: 
House of Representatives: 

In fiscal year 2002, the federal government devoted an estimated $45 
billion to research, $35 billion of which funded research conducted by 
universities, industry, nonprofit organizations and state and local 
governments.[Footnote 1] Some agencies fund this extramural research 
through direct federal grants to or contracts with researchers, which 
are generally considered an effective way to encourage federal and 
nonfederal research partnerships. Other agencies collaborate with 
governmental and nongovernmental organizations to solicit and/or fund 
extramural research proposals, and in some cases have the authority to 
accept money from their partners to support the research.[Footnote 2] 
These collaborative arrangements have taken the form of cooperative 
agreements or memorandums of understanding with external research 
partners. The American Chemistry Council (ACC)--a nonprofit 
organization that represents the chemical industry--has entered into 
two such research arrangements; one with the National Institute of 
Environmental Health Sciences (NIEHS) in the National Institutes of 
Health (NIH), and the other with the Office of Research and Development 
(ORD) in the Environmental Protection Agency (EPA). Since ACC 
represents chemical companies that are regulated by the federal 
government, these arrangements have raised concerns that ACC or its 
members could potentially influence, or appear to influence, the 
scientific results that may be used to make future regulatory 
decisions.[Footnote 3]

In 2001, ACC entered into an arrangement with NIEHS to solicit and fund 
research on the effects of environmental chemicals on human 
reproduction and development. Under the arrangement, NIEHS, which has 
authority to accept gifts from external organizations, accepted funds 
from ACC to support the research.[Footnote 4] In 2003, ACC entered into 
a similar arrangement with ORD to solicit and fund research; under this 
arrangement the first solicitation for research proposals focused on 
novel approaches to analyzing existing data on human exposure to 
chemicals.[Footnote 5] In the absence of authority allowing EPA to 
accept gifts, ORD and ACC solicited proposals jointly but funded 
selected research proposals separately. A goal of both research 
arrangements is to provide scientific tools or knowledge that will 
ultimately help improve the effectiveness of human health and 
ecological risk assessments.

In the context of these two arrangements, you asked us to determine the 
(1) legal authority NIEHS and ORD used to enter into the arrangements 
with ACC; (2) extent to which NIEHS and ORD evaluated and managed the 
possibility that conflicts of interest could result from their 
arrangements with ACC; (3) extent to which NIEHS complied with NIH's 
gift acceptance policy when accepting ACC's funds; and (4) extent to 
which similar research arrangements exist within other offices and 
programs of NIH and EPA, as well as other regulatory agencies.

To identify the legal authority each agency used to enter into 
collaborative research arrangements with ACC, we reviewed the 
authorities cited in each agency's arrangement, as well as the related 
legislative histories and policies at NIH and EPA. We also interviewed 
program and legal staff at the agencies. To ascertain the extent to 
which NIEHS and ORD evaluated and managed the potential that conflicts 
of interest could result from their research arrangements with ACC, we 
reviewed agency policy and documents relevant to the ACC arrangements 
and interviewed senior officials. To determine the extent to which 
NIEHS complied with the NIH gift acceptance policy, we reviewed the 
policy and related documentation and interviewed senior NIEHS officials 
and NIH legal advisors. To determine the prevalence of similar research 
arrangements, we interviewed officials within NIH and EPA. In addition, 
we contacted officials at the Food and Drug Administration (FDA) and 
the Federal Aviation Administration (FAA), both of which, like EPA, are 
regulatory agencies that have significant extramural research budgets. 
We interviewed officials responsible for 96 percent or more of each 
agency's extramural research dollars and reviewed research arrangements 
that have been signed since January 1999. We conducted our review from 
March 2004 through February 2005 in accordance with generally accepted 
government auditing standards. The details of our scope and methods can 
be found in appendix I.

Results in Brief: 

NIEHS used the authorities granted to NIH's institutes and centers 
under sections of the Public Health Service Act to enter into its 
arrangement with ACC. Similarly ORD relied on authorities granted to 
EPA under sections of the Clean Air Act, the Clean Water Act, and the 
Solid Waste Disposal Act to enter into its research arrangement with 
ACC. These statutes, among other things, provide broad authority to 
both agencies to collaborate with external organizations in support of 
research. For example, the Public Health Service Act, as amended, 
authorizes NIH and its institutes and centers to cooperate in, assist, 
and promote the coordination of research on the causes, diagnosis, 
treatment, control, and prevention of physical and mental diseases. 
Similarly, the Clean Air Act, as amended; the Clean Water Act, as 
amended; and the Solid Waste Disposal Act, as amended, authorize EPA to 
promote the coordination and acceleration of research on the causes, 
effects, extent, prevention, reduction, and elimination of pollution. 
Nothing in these statutes appears to prohibit either agency from 
entering into research arrangements with nonprofit organizations such 
as ACC.

NIEHS and ORD did not formally evaluate the potential for conflicts of 
interest with ACC before they entered into the arrangements, but both 
agencies took several steps to manage the potential for conflicts of 
interest that could occur as the arrangements were implemented. Neither 
NIH nor EPA had formal policies that required officials to evaluate or 
manage potential conflicts of interest when they entered into the 
collaborative research arrangements, nor do they currently have such 
policies. As a result, no formal evaluation occurred. In the absence of 
formal policies to manage potential conflicts of interest, officials at 
both agencies relied on their existing research management processes to 
implement these research arrangements. According to these officials, 
the agencies' existing research management processes helped mitigate 
the potential for undue influence by ACC and helped protect the 
integrity of the scientific research to be carried out under these 
arrangements. For example, agency officials told us that NIEHS and ORD 
established the scientific topics that would be the focus of the 
research through routine agency planning processes before they entered 
into the ACC arrangements. These processes involved significant input 
from a range of stakeholders, and the agency-established research 
priorities did not change after the arrangements with ACC were 
implemented. Similarly, the opportunity to apply for funding under the 
research arrangements was widely announced within the research 
community, and the funding of research proposals was competitively 
awarded only after the proposals had been independently peer reviewed 
for their scientific merit. Furthermore, ORD officials told us that 
they took additional steps that they believe helped manage the 
potential for conflicts of interest. For example, ORD sought public 
input on the terms and conditions of its research arrangement with ACC. 
The processes that the agencies used to mitigate potential conflicts of 
interest were appropriate for managing and implementing the research 
arrangements with ACC but cannot substitute for a formal conflict of 
interest evaluation. This is because these processes were not designed 
to specifically address conflict of interest issues. Formal policies 
requiring the evaluation and management of conflicts of interest would 
help the agencies ensure that potential conflicts in future research 
arrangements will be appropriately addressed. Therefore, we are 
recommending that NIH and EPA establish formal policies for evaluating 
potential conflicts of interest when entering into research 
arrangements with nongovernmental partners (particularly those that 
represent regulated industry), and for managing these conflicts as the 
agencies implement these arrangements.

NIEHS officials complied with sections of NIH's gift acceptance policy 
for acknowledging and administering gifts, but the policy's guidance on 
evaluating and managing potential conflicts of interest is so broad 
that it allows officials to satisfy its requirements with a wide array 
of actions. As a result, the policy does not provide sufficient 
assurance that potential conflicts of interest between NIH and donor 
organizations will be appropriately considered before a gift is 
accepted. Specifically, the policy is inconsistent on whether and how 
to evaluate potential conflicts of interest. As a result, agency 
officials have wide discretion in deciding how to comply with the 
policy. In addition, the policy does not require the agency to document 
any conflict-of-interest evaluations or the basis for deciding whether 
to accept or reject a gift. For example, the NIEHS official who decided 
to accept the ACC gift stated that he was concerned that accepting 
funds from ACC might create an apparent conflict of interest. However, 
he believed that his informal and undocumented consultations with other 
NIH officials and two representatives from external organizations 
satisfied the NIH policy. Other senior NIEHS officials also told us 
they had concerns about accepting funds from ACC. However, in referring 
the arrangement to the NIH Legal Advisor's Office for review, these 
officials said they did not specifically request a determination of 
whether the gift would constitute a conflict of interest because the 
policy did not require them to do so. Consequently, the NIH counsel 
conducted a more general legal review. Since NIEHS entered into the ACC 
arrangement, NIH has revised its gift acceptance policy. However, these 
revisions have not eliminated the inconsistency nor do they require 
agency officials to document the basis for their decisions. We are 
recommending that NIH further revise its gift acceptance policy to 
clarify how officials are to evaluate gifts for potential conflicts of 
interest, particularly from organizations that represent regulated 
industry, and require the officials to document the basis for their 
decisions, including what, if any, steps are needed to manage potential 
conflicts of interest.

While some institutes and centers at NIH had arrangements somewhat 
similar to the ACC arrangements, we did not find any similar 
arrangements at the regulatory agencies we reviewed: EPA, FDA, and FAA. 
We found nine signed research arrangements at NIH institutes and 
centers that share some, but not all, of the characteristics of the ACC 
arrangements. For example, all nine are formal arrangements with 
nonprofit organizations to jointly sponsor extramural research. 
However, none of the arrangements involve organizations that represent 
a regulated industry in the same direct manner that ACC represents the 
chemical industry, although several of the nonprofit partners have at 
least some corporate sponsorship. For example, the Juvenile Diabetes 
Research Foundation has a research arrangement with the National 
Institute of Neurological Disorders and Stroke to support extramural 
research into the neurobiology of diabetic complications. One of the 
corporate sponsors of the Juvenile Diabetes Research Foundation is an 
airline company, not an entity with any material connection to the 
outcome of the research.

In commenting on a draft of this report, EPA did not indicate whether 
it agreed or disagreed with our recommendation but provided technical 
comments that we have incorporated as appropriate. NIH agreed to 
implement our recommendations and also provided technical comments that 
we have incorporated as appropriate. EPA's comments are provided in 
appendix II, and NIH's comments are provided in appendix III.

Background: 

Many federal agencies fund research to serve their goals and 
objectives. For example, NIH, the largest source of federal support for 
nondefense research, is the federal focal point for medical and 
behavioral research to help extend healthy life and reduce illness and 
disability. Each of the 27 institutes and centers that constitute NIH 
has an explicit mission focused on a particular disease, organ system, 
stage of development, or a cross-cutting mission, such as developing 
research tools. Other agencies, such as EPA, FDA, and FAA, support 
research, in part, to further scientific understanding that may in the 
future better inform their regulatory decisions. Nineteen offices 
within EPA conduct and/or support research to help carry out the 
regulatory aspect of the agency's mission to protect human health and 
the environment and to implement environmental laws.[Footnote 6] 
Similarly, FDA relies on research to help identify and assess risks and 
to serve as the basis for regulatory decisions about such issues as 
human and veterinary drugs, medical devices, and the nation's food 
supply. Finally, FAA, which enforces regulations and standards for the 
manufacture, operation, and maintenance of aircraft, conducts research 
to help ensure a safe and efficient system of air navigation and air 
traffic control.

Federal research can be conducted by scientists in government 
laboratories--called intramural research--or by scientists at 
universities, in industry, or at nonprofit organizations--called 
extramural research. In fiscal year 2002, NIH, EPA, FDA, and FAA 
devoted a total of about $23 billion to intramural and extramural 
research. (See fig. 1.) Together, these four agencies accounted for 
about 50 percent of the federal funds devoted to research.

Figure 1: Four Agencies' Funding Devoted to Intramural and Extramural 
Research, Fiscal Year 2002: 

[See PDF for image]

[End of figure]

Federal laws have created an environment conducive to a full range of 
joint ventures between government and industry, or between industry and 
universities, as well as among companies. Specifically, through 
collaboration, federal and nonfederal partners attempt to share the 
costs, risks, facilities, and expertise needed for research and to 
promote the movement of ideas and technologies between the public and 
private sectors. This cooperation between federal and private sector 
researchers may take many forms. Through informal cooperation, for 
example, federal agencies and industry may coordinate and share 
research agendas to prevent duplication of effort, or agency and 
private sector scientists may consult one another. Through formal 
cooperation, federal and nonfederal partners use written agreements, 
such as contracts or memorandums of understanding, to define the roles 
and responsibilities of each party. However, each type of arrangement 
differs in the extent of federal involvement in the research conducted 
under the agreement. Generally, work conducted under contracts is 
directed and overseen by federal agencies that do not participate in 
the work. In contrast, memorandums of understanding allow great 
flexibility in terms of participation by federal agencies and may also 
allow for sharing of resources or the funding of research by nonfederal 
partners.

Congress may provide federal agencies the authority to accept gifts 
from external sources. For example, under the Public Health Service 
Act, certain agencies, such as NIH, may accept funds or nonmonetary 
gifts to support their research efforts or other agency functions. 
Under the act, donors may stipulate how agencies may use their gifts, 
for example, to only support research on a specific disease or 
condition, or they may allow the agency to use the gift for the benefit 
of any effort without stipulations. An agency's statutory authority to 
accept donations is called its "gift acceptance authority."

In 2001 and 2003, NIEHS and ORD, respectively, entered into research 
arrangements with ACC to solicit and fund extramural research 
proposals. These arrangements specified how research proposals would be 
solicited, reviewed, funded, and overseen. Specifically, under the 
NIEHS-ACC arrangement, ACC and NIEHS agreed to support a 3-year 
research program to study the effects on reproduction and development 
of exposure to chemicals in the environment. ACC provided a gift of 
$1.05 million to NIEHS to fund this research, and NIEHS contributed 
$3.75 million to the project. Using the combined funds, NIEHS awarded a 
total of 17 research proposals from among the 52 it received. The 
program ended in 2004. Under the ORD-ACC arrangement, ACC and ORD 
agreed to support and fund research, with the first solicitation for 
research proposals focusing on novel approaches to analyzing existing 
human exposure data. In response to this first announcement of funding 
availability, issued in July 2003, 36 research proposals were 
submitted. ORD funded four research proposals, for a total of about 
$1.7 million, and ACC funded two proposals, for a total of about $1 
million. ORD and ACC separately funded the research proposals that each 
had selected under this arrangement because EPA does not have the 
authority to accept contributions from outside sources. Researchers 
could specify whether they wanted their proposals considered for 
funding solely by ORD or by either ORD or ACC.[Footnote 7]

ACC is a nonprofit trade organization representing most major U.S. 
chemical companies.[Footnote 8] It represents the chemical industry on 
public policy issues, coordinates the industry's research and testing 
programs, and leads the industry's initiative to improve participating 
companies' environmental, health, and safety performance. In 1999, ACC 
launched a $100 million research initiative to study the potential 
impacts of chemicals on human health and the environment and to help 
improve screening and testing methods. A primary goal of the initiative 
is to focus on projects or programs that might take advantage of work 
planned or conducted by EPA, NIEHS, and other laboratories to stimulate 
collaboration and/or to prevent unnecessary duplication.

Individuals or organizations can have conflicts of interest that arise 
from their business or financial relationships. Typically, federal 
conflict-of-interest laws and regulations govern the actions of 
individual federal employees, including their financial interests in, 
and business or other relationships with, nonfederal organizations. 
Conflict-of-interest concerns about individual federal employees 
typically arise when employees receive compensation from outside 
organizations; such arrangements often require prior approval from the 
federal employer. When a federal agency enters into a relationship 
with, or accepts a gift from, a regulated company or industry, concerns 
may arise about the agency's ability to fulfill its responsibilities 
impartially.

NIEHS and ORD Used Broad Legal Authority to Support Their Arrangements 
with ACC: 

The statutory provisions that NIEHS and ORD relied upon to enter into 
their arrangements with ACC grant the agencies broad authority to 
collaborate with external organizations in support of research. Nothing 
in these statutes appears to prohibit either agency from entering into 
research arrangements with nonprofit organizations such as ACC.

NIEHS used the authorities granted to NIH's institutes and centers 
under sections of the Public Health Service Act, as amended, to enter 
into its arrangement with ACC (sections 301 and 405). The act 
authorizes NIH and its institutes and centers to cooperate, assist, and 
promote the coordination of research into the causes, diagnosis, 
treatment, control, and prevention of physical and mental diseases. In 
its research arrangement with ACC, NIEHS cited sections of the act as 
the authority it relied on to enter into the arrangement. These 
sections enumerate the general powers and duties of the Secretary of 
Health and Human Services and the directors of the institutes and 
centers in broad terms, including the authority to encourage and 
support studies through grants, contracts, and cooperative agreements.

Similarly, ORD relied on broad authorities granted to EPA under 
sections of the Clean Air Act, as amended; the Clean Water Act, as 
amended; and the Solid Waste Disposal Act, as amended, to enter into 
its research arrangement with ACC (sections 103, 104, and 8001, 
respectively). These sections authorize EPA to promote the coordination 
and acceleration of research relating to the causes, effects, extent, 
prevention, reduction, and elimination of pollution in the air and 
water, and from solid waste. These sections authorize the EPA 
Administrator and other EPA officials to cooperate with appropriate 
public and private agencies, institutions, organizations, and industry 
to conduct research and studies.

NIEHS and ORD Did Not Formally Evaluate, but Took Steps to Manage, the 
Potential for Conflicts of Interest in Their Arrangements with ACC: 

NIEHS and ORD did not formally evaluate the possibility that 
organizational conflicts of interest could result from their research 
arrangements with ACC because neither agency had policies requiring 
such evaluations. However, officials at both agencies took steps to 
manage potential conflicts that might arise during implementation of 
the arrangements.

NIEHS and ORD Did Not Formally Evaluate Potential Conflicts of Interest 
that Could Result from Research Arrangements with ACC: 

In 2001 and 2003, when they entered into arrangements with ACC, neither 
NIH nor EPA had specific policies requiring officials to formally 
evaluate potential conflicts of interest that could result from 
entering into such collaborative arrangements. As a result, neither 
NIEHS nor ORD conducted such evaluations. During negotiations with ACC 
on their research arrangements, NIEHS and ORD officials recognized the 
potential for organizational conflicts of interest, or at least the 
appearance of such conflicts. However, in light of the lack of policies 
on this issue, neither agency formally evaluated the potential for 
conflicts before finalizing their arrangements with ACC. Instead, 
officials told us, they informally evaluated the potential for 
conflicts of interest and intended to manage potential conflicts that 
might arise during implementation. To date, neither agency has 
developed any such policy guidance.

NIEHS and ORD Relied on Existing Research Management Processes to Help 
Mitigate Potential Conflicts of Interest: 

In implementing their arrangements with ACC, NIEHS and ORD used their 
general research management processes to help manage potential 
conflicts of interest. These processes are designed to help ensure the 
integrity of scientific research undertaken by these agencies. 
According to agency officials, these processes helped guard against 
undue influence of ACC by limiting ACC's participation in the 
selection, review, and oversight of agency-funded research conducted 
under the arrangements. For example: 

* Developing research topics. Research priorities at both NIEHS and ORD 
were identified through routine agency planning processes that involved 
significant input from a range of stakeholders before the arrangements 
with ACC were finalized. In addition, NIEHS included research topics 
suggested by the National Research Council, a congressionally chartered 
scientific advisory body. Both NIEHS and ORD then worked with ACC to 
select the specific scientific topics that would become the focus of 
the research conducted under the arrangements. According to NIEHS and 
ORD officials, their arrangements with ACC did not change or influence 
the agencies' research priorities. Because the research conducted under 
these arrangements supported the agencies' existing research agendas, 
officials believe that the ACC arrangements helped them effectively 
leverage federal research dollars.

* Advisory council consultation. Both agencies have advisory panels 
that they routinely consult on matters related to the conduct and 
support of research, among other things.[Footnote 9] These 
consultations include public sessions that allow interested 
individuals, in addition to the panel members, to provide comments on 
the topics discussed. NIEHS obtained approval from its National 
Advisory Environmental Health Sciences Council before entering into the 
arrangement with ACC. ORD did not specifically consult its Board of 
Scientific Counselors regarding the agency's arrangement with ACC, but 
did seek input from the Board regarding the research priorities covered 
by the arrangement. Both advisory bodies were established under the 
Federal Advisory Committee Act and must comply with the requirements of 
the act as well as related regulations.

* Publicly announcing the availability of funds. Both NIEHS and ORD, in 
2001 and 2003, respectively, announced the opportunity to apply for 
grant funds available under the arrangements with ACC throughout the 
scientific community. Both agencies announced the availability of 
funding on their Web sites and included detailed information on the 
research programs and how to apply for funds. Both agencies also posted 
announcements in publications that are commonly used to advertise the 
availability of federal funding. Specifically, NIEHS published an 
announcement in the NIH Guide to Grants and Contracts, and ORD 
published its announcement in the Catalog of Federal Domestic 
Assistance. In addition, both agencies sent announcements to relevant 
scientific and professional organizations and to interested scientists 
who had signed up for electronic notice of funding opportunities. ORD 
also published a notice in the Federal Register. By widely announcing 
the availability of funds, the agencies hoped to ensure the 
participation of many qualified researchers and to avoid the appearance 
of preferential treatment for specific researchers. Moreover, widely 
publicizing the availability of funds would help ensure the openness of 
the agencies' research processes. However, the agencies differed in the 
clarity of their instructions regarding how information would be shared 
with ACC. For example, in the portion of the announcement labeled 
"special requirements," NIEHS's announcement stated that applicants 
"should," among other things, submit a letter allowing NIEHS to share 
their proposals with ACC. According to NIEHS this wording was not 
intended to be interpreted as a requirement but instead was intended to 
be a request. We believe that the language could have confused 
potential applicants about whether sharing information with ACC was 
required and could have dissuaded some qualified applicants from 
submitting proposals. In contrast, under the ORD-ACC arrangement, 
researchers were clearly advised that they could elect to have their 
proposals considered for funding by either ORD or ACC or solely by ORD. 
Applicants who did not want to share their proposals with ACC could 
elect to have their applications reviewed and considered solely by ORD.

* Determining completeness and responsiveness. Initially, NIEHS and ORD 
reviewed all submitted research proposals for compliance with 
administrative requirements. ACC did not participate in these reviews. 
At both agencies, research proposals judged incomplete were to receive 
no further consideration. NIEHS and ORD also had similar approaches for 
determining the responsiveness of the applications to the goals of the 
research program. At ORD, responsiveness was determined as part of the 
agency's completeness review and did not involve ACC. Similarly, at 
NIEHS, responsiveness was determined solely by agency officials. 
Although NIEHS's announcement stated that ACC would participate in the 
responsiveness review, NIEHS and ACC officials told us that ACC did not 
take part in this review.

* Peer review of research proposals. At both NIEHS and ORD, complete 
and responsive research proposals were independently peer reviewed for 
technical and scientific merit. According to officials, each agency 
followed its standard procedures for selecting experts to serve as peer 
reviewers and excluded representatives of ACC from serving as 
reviewers. At both agencies, only meritorious research proposals 
qualified for funding decisions. Both agencies also subjected these 
proposals to additional independent review. NIEHS's National Advisory 
Environmental Health Sciences Council reviewed qualified proposals, and 
ORD required other EPA staff to review research proposals that were 
judged "excellent" or "very good" to help ensure a balanced research 
portfolio responsive to the agency's existing research agenda.[Footnote 
10] ACC convened its own technical panels to review qualified research 
proposals to ensure the relevancy of the proposals to the industry's 
research needs and to ensure that the proposals balanced its research 
portfolio.

* Making results available to the public. NIEHS and ORD required-- 
without input from ACC--the results of the research funded under the 
arrangements to be made public. For example, according to agency 
officials, NIEHS and ORD required researchers to discuss their 
preliminary findings in periodic public meetings, and, once their 
projects were completed, both agencies required researchers to submit 
their results for publication in peer-reviewed scientific 
journals.[Footnote 11] In addition, NIEHS strongly encouraged 
researchers to present their results at professional conferences and 
workshops. Officials from both agencies agreed that publicizing the 
results of research conducted under the arrangements helped ensure that 
agency-sponsored research adhered to accepted analytic standards and 
was unbiased.

ORD Took Additional Steps that Officials Believe Helped Manage 
Potential Conflicts of Interest: 

In addition to the routine research management processes, discussed in 
the previous section, officials at ORD took further steps that they 
believe helped them manage the potential for conflicts of interest in 
their collaboration with ACC. Specifically: 

* Research arrangement developed with public input. ORD publicly 
announced that it might collaborate with ACC and invited public comment 
on the terms and conditions of the proposed partnership. In addition, 
ORD invited public comment on the draft announcement of the opportunity 
to apply for funding. ORD officials told us that they believed an open 
and public process to define the terms of ORD's collaboration with ACC 
could help guard against real or perceived conflicts of interest.

* Membership of review panels. In addition to prohibiting ACC 
representatives from serving as expert reviewers, ORD did not allow 
employees of ACC member companies to serve on the peer review panels 
that evaluated research proposals for technical and scientific merit. 
ORD officials said this step helped minimize the perception that ACC or 
its members could play a role in evaluating the scientific merit of 
research proposals.

NIEHS Generally Complied with NIH's Gift Acceptance Policy, but the 
Policy Cannot Provide Assurance that Conflicts of Interest Are 
Evaluated and Managed: 

When accepting funds from ACC under the research arrangement, NIEHS 
officials complied with those sections of NIH's policy that guide the 
acknowledgement and administration of gifts. However, the policy's 
guidance on evaluating and managing potential conflicts is extremely 
broad, lacking clarity and consistency. Consequently, officials have 
wide discretion in deciding how to fulfill their responsibilities under 
the gift acceptance policy. Further, the policy does not require 
officials to document the basis of their decisions. As a result, the 
gift policy does not provide the public sufficient assurance that 
potential conflicts of interest between NIH and donor organizations 
will be appropriately considered.

Specifically, NIH's gift acceptance policy outlines several steps that 
officials must take to acknowledge and administer gifts. NIEHS 
officials generally complied with these policy sections when accepting 
the gift from ACC. For example, NIEHS officials acknowledged the 
acceptance of ACC's gift in a timely manner, deposited the funds in 
government accounts, and used the gift only for the purposes stipulated 
by ACC. As the policy also requires, NIEHS obtained ACC's written 
agreement that any remaining funds could be used to further NIH's goals 
without additional stipulation.

However, other policy sections are inconsistent or unclear about what 
actions officials must take to evaluate conflicts of interest when 
accepting gifts--thereby affording officials wide discretion in 
carrying out their responsibilities. For example, one part of the 
policy in effect at that time and in subsequent revisions requires the 
approving official to use two assessment tools to evaluate conflicts of 
interest before accepting a gift, but another part of the policy states 
that the use of these tools is recommended rather than required. The 
Director of NIEHS, who had authority to accept the gift, said he was 
acutely aware that accepting the ACC money could pose the potential for 
real or apparent conflicts of interest. In light of his concerns, he 
spoke informally with the Acting NIH Director, senior NIEHS officials, 
NIH legal advisers, and senior officials from two external groups. 
Through these discussions and using his professional judgment, the 
NIEHS Director determined that accepting the ACC funds would not 
present a conflict of interest for NIEHS. When he decided to accept the 
ACC gift, the Director said that he was unaware of the assessment tools 
recommended by NIH's policy. However, he believes the steps he and 
other NIEHS officials took in accepting ACC's gift satisfied the gift 
acceptance policy regarding conflicts of interest. Given the lack of 
consistency in the policy sections that relate to conflicts of interest 
and the use of the assessment tools, it is difficult for us to 
determine whether the actions the director took complied with the NIH 
policy. Moreover, without documentation of his actions, we could not 
determine whether the steps he took were adequate to evaluate the 
potential for conflicts of interest.

Furthermore, the policy in effect at that time and in subsequent 
revisions does not provide clear guidance on what type of coordination 
should occur between NIH offices in evaluating the potential for 
conflicts of interest when accepting a gift. For example, several NIEHS 
staff were concerned that the proposed ACC gift could result in an 
apparent conflict of interest and, consistent with NIH's gift policy, 
forwarded the written agreement to the NIH Legal Advisor's Office for 
review. However, the gift policy does not require staff to identify 
their concerns when seeking legal advice. According to these officials, 
in referring the agreement to NIH attorneys for review, they did not 
specifically request a determination of whether the gift would 
constitute a conflict of interest. As a result, the NIH attorneys 
conducted a general legal review of the gift and the proposed research 
arrangement, focusing primarily on the agency's legal authority to 
enter into the arrangement. NIH legal staff told us that they could 
have provided assistance on conflict-of-interest issues had they been 
notified that the program staff had such concerns, or if in their view, 
the gift or written agreement had contained clauses that were obviously 
illegal or contrary to NIH policy. If the policy had been clearer about 
how conflict of interest concerns are to be communicated to NIH 
attorneys, we believe the legal staff would have conducted a conflict- 
of-interest review.

Finally, NIH's policy does not require officials to document how they 
have addressed conflict-of-interest concerns. Neither the NIEHS 
Director nor other senior NIH officials documented their consideration 
of potential conflicts of interest when accepting the ACC gift. The 
lack of documentation, coupled with the broad discretion resulting from 
the inconsistency and lack of clarity in the policy, allows officials 
to satisfy requirements with a wide array of actions, ranging from a 
formal evaluation to a highly informal one.

Research Arrangements Such as Those with the American Chemistry Council 
Are Not Widely Used: 

At NIH, we identified nine arrangements that were somewhat comparable 
to the ACC research arrangements, but we did not identify any similar 
arrangements at ORD, other EPA program offices, FDA, or FAA.[Footnote 
12] None of the nonprofit partners in the nine research arrangements we 
found at NIH represents industry in the same direct manner that ACC 
represents the chemical industry. However, some of the nonprofit 
partners have either general corporate sponsorship or corporate 
sponsorship for specific events. For example, sponsors of the 
Parkinson's Unity Walk in 2004 included pharmaceutical companies. The 
sponsors helped defray operating expenses to ensure that all proceeds 
from the walk supported Parkinson's research. Likewise, the Juvenile 
Diabetes Research Foundation received corporate sponsorship from an 
airline company, manufacturers of soft drinks and household products, 
and others, none of whom had any material connection to the outcome of 
the research. One nonprofit partner is a corporation's philanthropic 
foundation.

At NIH, we found a total of 11 institutes and centers--either singly or 
with other institutes and centers--that had entered into research 
arrangements with one or more nonprofit partners. Under the terms of 
four of the arrangements, NIH accepted gift funds from nonprofit 
partners to support the research described in the arrangements. In four 
other arrangements, when NIH institutes or centers lacked sufficient 
money to fund all the research proposals rated highly by peer review 
panels, they forwarded the research proposals to their nonprofit 
partner(s) for possible funding. (See table 1 for details on the NIH 
arrangements.)

Table 1: NIH Arrangements with Nonprofit Partners for Cosponsoring 
Research, 1999-2004: 

Purpose of arrangement: "Progress for Patients" project on early phase 
clinical interventions in breast cancer; 
NIH partner: National Cancer Institute; 
Nonprofit partner: Avon Products Foundation; 
Nonprofit partner's corporate or industry connection: Philanthropic arm 
of Avon Corporation; 
Plan for funding research: NIH accepted gift funds.

Purpose of arrangement: Research on the neurobiology of diabetic 
complications; 
NIH partner: National Institute of Neurological Disorders and Stroke, 
National Institute of Diabetes and Digestive and Kidney Diseases; 
Nonprofit partner: Juvenile Diabetes Research Foundation International; 
Nonprofit partner's corporate or industry connection: Sponsorship by 
Proctor & Gamble, Coca Cola, Delta Airlines, and others; 
Plan for funding research: NIH accepted gift funds.

Purpose of arrangement: Support for infrastructure and research at 
Islet Cell Resource Centers; 
NIH partner: National Center for Research Resources; 
Nonprofit partner: Juvenile Diabetes Research Foundation International; 
Nonprofit partner's corporate or industry connection: Sponsorship by 
Proctor & Gamble, Coca Cola, Delta Airlines, and others; 
Plan for funding research: NIH accepted gift funds.

Purpose of arrangement: Research relevant to the cure, prevention, and 
treatment of Parkinson's disease and its complications; 
NIH partner: National Institute of Neurological Disorders and Stroke, 
National Institute of Deafness and Other Communication Disorders, 
NIEHS, National Institute of Mental Health; 
Nonprofit partner: Parkinson's Unity Walk; 
Nonprofit partner's corporate or industry connection: 2004 sponsors 
include Boehringer Ingelheim, MirapexPramipexoe Dihydrochloride 
Tablets, Pfizer, and others. Sponsors fund operating expenses for the 
walk; 
Plan for funding research: NIH accepted gift funds.

Purpose of arrangement: Research relevant to the cure, prevention, and 
treatment of Parkinson's disease and its complications; 
NIH partner: National Institute of Neurological Disorders and Stroke, 
National Institute of Deafness and Other Communication Disorders, 
NIEHS, National Institute of Mental Health; 
Nonprofit partner: National Parkinson Foundation; 
Nonprofit partner's corporate or industry connection: Some corporate 
funding but no information available on who those corporate sponsors 
are.

Purpose of arrangement: Research relevant to the cure, prevention, and 
treatment of Parkinson's disease and its complications; 
NIH partner: National Institute of Neurological Disorders and Stroke, 
National Institute of Deafness and Other Communication Disorders, 
NIEHS, National Institute of Mental Health; 
Nonprofit partner: Parkinson Alliance; 
Nonprofit partner's corporate or industry connection: Corporate 
sponsorship varies with different fundraising events, includes 
sometimes Pfizer, Boehringer Ingelheim, Medtronic.

Purpose of arrangement: Research relevant to the cure, prevention, and 
treatment of Parkinson's disease and its complications; 
NIH partner: National Institute of Neurological Disorders and Stroke, 
National Institute of Deafness and Other Communication Disorders, 
NIEHS, National Institute of Mental Health; 
Nonprofit partner: Michael J. Fox Foundation for Parkinson's Research.

Purpose of arrangement: Research relevant to the cure, prevention, and 
treatment of Parkinson's disease and its complications; 
NIH partner: National Institute of Neurological Disorders and Stroke, 
National Institute of Deafness and Other Communication Disorders, 
NIEHS, National Institute of Mental Health; 
Nonprofit partner: Parkinson's Disease Foundation.

Purpose of arrangement: Support Muscular Dystrophy Cooperative Research 
Centers; 
NIH partner: National Institute of Neurological Disorders and Stroke, 
National Institute of Arthritis and Musculoskeletal and Skin Diseases, 
National Institute of Child Health and Human Development; 
Nonprofit partner: Muscular Dystrophy Association; 
Nonprofit partner's corporate or industry connection: Extensive 
corporate sponsorship, including Albertsons, CITCO, Harley Davidson 
Motor Co., AmEx, Acosta Sales and Marketing; 
Plan for funding research: Partner provides separate funding directly 
to research centers.

Purpose of arrangement: Research on the effects of candidate drugs for 
neurodegeneration; 
NIH partner: National Institute of Neurological Disorders and Stroke; 
Nonprofit partner: Families of Spinal Muscular Atrophy
Plan for funding research: Agency shares unfunded qualified research 
proposals with partner.

Purpose of arrangement: Research on the neurological aspects of 
lysosomal storage disorders; 
NIH partner: National Institute of Neurological Disorders and Stroke; 
Nonprofit partner: The Lysosomal Storage Disease Research Consortium
Plan for funding research: Agency shares unfunded qualified research 
proposals with partner.

Purpose of arrangement: Research on treatment of hemophilia, von 
Willebrand disease, and other hereditary bleeding disorders; 
NIH partner: National Heart Lung and Blood Institute; 
Nonprofit partner: National Hemophilia Foundation; 
Nonprofit partner's corporate or industry connection: Sponsorship from 
Wyeth, AHF, Baxter Healthcare, Bayer, Aventis Behring Company, and Novo 
Nordisk for its "it's time for a cure" campaign and "project red flag"; 
Plan for funding research: Agency shares unfunded qualified research 
proposals with partner.

Purpose of arrangement: Research to better understand the role of 
religiousness and spirituality in the prevention, treatment, and 
recovery from alcoholism and alcohol-related diseases; 
NIH partner: National Institute on Alcohol Abuse and Alcoholism; 
Nonprofit partner: Fetzer Institute
Plan for funding research: Agency shares unfunded qualified research 
proposals with partner.

Source: GAO analysis of NIH data.

[End of table]

At EPA, none of the 16 program and regional offices we contacted 
identified any arrangements similar to the research arrangement between 
ORD and ACC. In addition, we did not identify any partnerships similar 
to the ACC research arrangement at FDA or at FAA. FDA officials we 
contacted said the agency had no research arrangements similar to the 
ACC arrangement with organizations that represent industry. Finally, 
FAA officials said that the agency had not entered into any research 
arrangements like the arrangements with ACC and generally did not use 
this type of collaborative arrangement to conduct extramural research.

Conclusions: 

Federally funded research advances scientific understanding and helps 
improve regulatory approaches to protecting human health and the 
environment. For both regulatory and nonregulatory agencies 
collaboration with external organizations is one mechanism to maximize 
the financial and intellectual resources available to federal agencies. 
However, collaboration, particularly with organizations that directly 
represent regulated industries, can raise concerns about conflicts of 
interest that could call into question the quality and independence of 
federally funded research. As a result, it is imperative that federal 
agencies ensure, before they enter into collaborative research 
arrangements with nonfederal partners, that they fully consider the 
potential for conflicts of interest.

NIEHS and ORD relied on their general research management processes to 
minimize any potential conflicts of interest that might arise during 
implementation of their respective ACC arrangements. While these 
processes were appropriate for managing the arrangements, they were not 
specifically designed to address conflict-of-interest concerns and 
therefore cannot be considered adequate substitutes for formal conflict-
of-interest evaluations. Consequently, without policies requiring 
officials at NIH and EPA to formally evaluate and manage potential 
conflicts of interest when they enter into collaborative arrangements 
such as those with ACC, neither agency can ensure that similar 
arrangements in the future will be systematically evaluated and managed 
for potential conflicts of interest.

When accepting the gift from ACC, NIEHS officials believed their 
actions satisfied the conditions of the NIH gift acceptance policy for 
conflict of interest. However, NIH's policy--both the wide discretion 
allowed in deciding on whether and how officials should evaluate 
conflicts of interest and the lack of required documentation--provides 
little assurance of systematic evaluation of gifts that may present 
potential conflicts of interest for the agency. To allay concerns about 
the potential for conflicts of interest that may result from accepting 
gifts, officials should clearly document both their evaluation of the 
potential for conflicts of interest and the basis for their decisions 
to accept or reject a gift.

Recommendations for Executive Action: 

The Director of NIH and the Administrator of EPA should develop formal 
policies for evaluating and managing potential conflicts of interest 
when entering into research arrangements with nongovernmental 
organizations, particularly those that represent regulated industry.

The Director of NIH should further revise the NIH gift acceptance 
policy to require NIH officials to evaluate gifts, particularly from 
organizations that represent regulated industry, for potential 
conflicts of interest and to document the basis for their decisions, 
including what, if any, steps are needed to manage potential conflicts.

Agency Comments and Our Evaluation: 

We provided EPA and NIH with a draft of this report for their review 
and comment. EPA neither agreed nor disagreed with our recommendation, 
but provided technical comments that we have incorporated as 
appropriate. (See app. II.) NIH concurred with our recommendations and 
stated it would take steps to implement them. In addition, NIH 
emphasized that is it not a regulatory agency and suggested changes to 
the report to clarify its role. We have added language to clarify NIH's 
relationship with the regulated industry. NIH also provided technical 
comments that we have incorporated as appropriate. NIH's comments and 
our response are included in appendix III.

Signed by: 

Anu K. Mittal, Director: 
Natural Resources and Environment: 

[End of section]

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

As requested by the Ranking Member of the Subcommittee on Environment, 
Technology and Standards, House Committee on Science, and the Ranking 
Member of the Subcommittee on Research, House Committee on Science, we 
determined the (1) legal authority the National Institutes of Health's 
(NIH) National Institute of Environmental Health Sciences (NIEHS) and 
the Environmental Protection Agency's (EPA) Office of Research and 
Development (ORD) used to enter into arrangements with the American 
Chemistry Council (ACC); (2) extent to which NIEHS and ORD evaluated 
and managed the possibility that conflicts of interest could result 
from their arrangements; (3) extent to which NIEHS complied with NIH's 
gift acceptance policy when accepting ACC's funds; and (4) extent to 
which similar research arrangements exist within other offices and 
programs within NIH and EPA, as well as other regulatory agencies.

To determine the legal authorities NIEHS and ORD relied on to enter the 
research arrangements with ACC to solicit and fund extramural research, 
we reviewed the statutes cited in agency documentation related to the 
arrangements. For NIH, these authorities included sections 301 and 405 
of the Public Health Service (PHS) Act, as amended (42 U.S.C. §§ 241 
and 284); and gift acceptance statutes contained in sections 231 and 
405(b)(1)(H) of the PHS Act as amended (42 U.S.C. §§ 238, 
284(b)(1)(H)). For ORD these authorities included section 103 of the 
Clean Air Act, as amended (42 U.S.C. § 7403), section 104 of the Clean 
Water Act, as amended (33 U.S.C. §1254), and section 8001 of the Solid 
Waste Disposal Act, as amended (42 U.S.C. § 6981). We also reviewed the 
following related documentation on delegations of authority: 

* Memorandum from the Assistant Secretary for Health to Public Health 
Service Agency Heads for "Delegation of Authority To Accept Gifts Under 
Title XXI of the PHS, Miscellaneous" (July 10, 1995), and: 

* NIH Manual Chapter 1130, Delegations of Authority, Program: General 
#5 Accept Gifts Under Section 231 of the PHS Act, Program: General #10 
National Library of Medicine.

We also reviewed relevant legislative histories and Comptroller General 
decisions and interviewed attorneys at NIEHS and ORD about their 
reviews of the arrangements. Furthermore, we compared each agency's 
policies and both formal arrangements with the authorities cited above.

To determine what measures NIEHS and ORD took to evaluate and manage 
the potential that conflicts of interest could result from their 
arrangements with ACC, we interviewed program officials on their 
perceptions of conflict of interest when the ACC arrangement was being 
considered, as well as on the actions they took to develop and 
implement the arrangements. We also interviewed budget and legal 
officials, as appropriate, at each agency on their involvement in 
reviewing and completing the arrangements. We reviewed the research 
arrangements with ACC, as well as other documentation related to the 
arrangements, including correspondence between agency officials and 
ACC, interagency memorandums, and documentation of agency legal and 
other reviews. We considered statutes on conflict of interest and 
ethics guidelines that might address the need for agencies to consider 
and manage real or apparent conflicts of interest (18 U.S.C. § 209, and 
the Ethics in Government Act of 1978, 5 U.S.C. app. 4). Finally, we 
interviewed ACC officials to obtain their views on conflicts of 
interest and on the role of ACC representatives in developing the 
announcement of funding availability, reviewing and funding research 
proposals, and administering the grants. We did not test the NIEHS or 
ORD internal controls governing the administration of grants awarded 
under the arrangements.

To determine whether NIEHS's acceptance of ACC funds as a gift complied 
with NIH policy for accepting gifts, we collected and analyzed NIH's 
policy for gift acceptance and we interviewed legal staff at NIEHS 
concerning their review of potential gifts and their assistance to 
program officials. We obtained and reviewed the research arrangement 
and related documentation on transferring and administering the gift 
funds. We interviewed program officials on their actions in accepting 
the funds and compared activities and documentation pertaining to 
NIEHS's acceptance of ACC's gift with the requirements and 
recommendations outlined in NIH's policy.

To determine the extent of similar research arrangements at other 
federal agencies, we identified officials responsible for 96 percent or 
more of the extramural research budgets at NIH, EPA, and two additional 
agencies. We then used a structured guide to determine what, if any, 
research arrangements the agencies had with external partners. In 
addition to NIEHS and ORD, we selected a nonprobability sample of two 
additional agencies on the basis of the magnitude of the research 
component of their mission and congressional interest.[Footnote 13] The 
two agencies selected were the Food and Drug Administration (FDA) and 
the Federal Aviation Administration (FAA) because each agency had a 
research component to its mission, a corresponding research budget, and 
a regulatory role. We determined that the selection was appropriate for 
our design and objectives and that the selection would generate valid 
and reliable evidence to support our work.

To determine the extent to which arrangements exist within these four 
agencies, we obtained the most current available data on extramural 
research budgets from institutes and centers in NIH, program and 
regional offices in EPA, and the programs and centers at FAA and FDA. 
To assess the reliability of these data, we used a structured guide to 
interview officials at each agency responsible for maintaining the 
databases containing the data provided. Specifically, we obtained 
descriptions of the databases, how data are entered into the databases, 
quality control checks on the data, testing conducted on the data, and 
officials' views on the accuracy and completeness of the data. We asked 
follow-up questions whenever necessary. FDA officials noted one 
limitation on the data that were provided. Specifically, when compiling 
data on research budgets, officials must sometimes subjectively 
interpret the term "research." The impact of such interpretation may 
cause the extramural research figures for FDA to be slightly 
overstated. After taking these steps, we determined that the data were 
sufficiently reliable for the purposes of this report.

We used these data to rank order the programs and centers and identify 
officials in each agency responsible for administering 96 percent or 
more of each agency's extramural research budget. In our interviews 
with these officials, we focused on arrangements established since 
January 1999--specifically, arrangements with characteristics similar 
to the ACC arrangements. We looked for and considered arrangements with 
nongovernmental, nonacademic partners to sponsor research extramural to 
both organizations. We did not collect information or report on the use 
of other types of agency research cooperation with external partners 
such as cooperative research and development agreements or informal 
consultations between agency and external scientists.

At NIH, we used a structured guide to interview officials at the 
following institutes or centers, listed in order of greatest to least 
extramural research grant-dollar totals, in fiscal year 2002: National 
Cancer Institute; National Heart, Lung, and Blood Institute; National 
Institute of Allergy and Infectious Diseases; National Institute of 
General Medical Sciences; National Institute of Diabetes and Digestive 
and Kidney Diseases; National Institute of Neurological Disorders and 
Stroke; National Institute of Mental Health; National Center for 
Research Resources; National Institute of Child Health and Human 
Development; National Institute on Drug Abuse; National Institute on 
Aging; National Eye Institute; NIEHS; National Institute of Arthritis 
and Musculoskeletal and Skin Diseases; National Human Genome Research 
Institute; National Institute on Alcohol Abuse and Alcoholism; National 
Institute on Deafness and Other Communication Disorders; National 
Institute of Dental and Craniofacial Research; National Institute of 
Nursing Research; and National Institute of Biomedical Imaging and 
Bioengineering. Together, these institutes and centers accounted for 99 
percent of NIH's total extramural research funds for fiscal year 2002.

At EPA, we used a structured guide to interview program officials from 
the following offices and regions (shown in order of greatest to least 
funding available for extramural research fiscal year 2003): [Footnote 
14] ORD; Office of Water; Region 6; Region 9; Office of International 
Affairs; Region 3; Office of Solid Waste and Emergency Response; Region 
4; Region 5; Region 1; Region 2; Region 7; Region 10; Region 8; Office 
of Prevention, Pesticides and Toxic Substances; and Office of Air and 
Radiation. Together, these offices accounted for 99 percent of the 
EPA's extramural research funds for fiscal year 2003.

At FDA, we interviewed the agency official responsible for getting 
approval for Memorandums of Agreement from the General Counsel's Office 
and Office of Grants Management and for ensuring that each agreement is 
published in the Federal Register. FDA does not accept funds from 
external partners under these agreements.

Finally, at FAA, we interviewed officials from the research and 
development offices at headquarters as well as the division manager of 
the Acquisition, Materiel, and Grants Division of the William J. Hughes 
Technical Center. Together, these offices accounted for 96 percent of 
the agency's fiscal year 2003 funds for extramural research.

To independently corroborate the information obtained from agency 
officials, to the extent possible, we collected documents on the 
agreements we identified at these agencies and reviewed agency Web 
sites maintained by the relevant centers and offices, as well as Web 
sites maintained by external sources, such as advocacy or trade groups.

We conducted our review from February 2004 through February 2005 in 
accordance with generally accepted government auditing standards.

[End of section]

Appendix II: Comments from the Environmental Protection Agency: 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY: 
OFFICE OF RESEARCH AND DEVELOPMENT:

WASHINGTON, D.C. 20460:

JAN 26 2005:

Ms. Anu K. Mittal:
Director, Natural Resources and Environment: 
U.S. Government Accountability Office: 
Washington, DC 20548:

Dear Ms. Mittal:

Thank you for the opportunity to comment on the Government 
Accountability Office (GAO) draft report entitled, Federal Research. 
NIH and EPA Need to Improve Conflict of Interest Reviews for Research 
Agreements with Private Sector Entities (GAO-05-191). We are especially 
pleased that GAO found that: (1) "...the actions the agencies took to 
manage potential conflicts of interest were appropriate;" and (2) "ORD 
officials took appropriate steps to minimize potential conflicts of 
interest as their research agreements with ACC [American Chemistry 
Council] were implemented." In light of these findings, we believe that 
GAO needs to substantially revise the title of the report to more 
accurately portray the results of its review. 

We, therefore, suggest a more accurate title to consider could be: 
"Federal Research: Agencies Took Reasonable Steps to Manage Potential 
Conflicts of Interest but Policies and Procedures Can be Improved." 
This revision would be consistent with the findings of the draft 
report. 

Extramural Research Agreements:

As discussed below, GAO's use of the term "research agreement" to 
describe EPA's legal relationship with organizations that EPA 
cooperates with to coordinate environmental research is not accurate. 
In addition, we have enclosed detailed comments on specific portions of 
the text of the draft report. 

Extramural research agreements may take the form of contracts, grants, 
cooperative agreements, or Memoranda of Understanding (MOU), depending 
upon the nature of the transaction. Contracts allow federal agencies to 
purchase services and products for their direct use or benefit, 
including research that agencies use directly in the development of 
regulations. Agencies use grants and cooperative agreements to support 
research that has broader application in the scientific community as a 
whole. Once the scope of work for a grant is negotiated, federal 
involvement in grant-funded research is generally limited to that 
necessary to effectively oversee the use of federal funds. On the other 
hand, federal agencies are substantially involved in research carried 
out under cooperative agreements through ongoing collaboration on 
scientific matters, and data sharing and other joint activities, with 
more intense monitoring of the substantive aspects of the research. MOU 
specify the terms under which federal agencies will cooperate with non-
federal organizations, but do not involve transfers of funds between 
the parties to the MOU, unless the federal agency has gift acceptance 
authority. The term, MOU, is accurate and avoids confusion with 
"research agreements," which are used for grants or cooperative 
agreements. 

The MOU that the Office of Research and Development (ORD) entered into 
with ACC is not unique. Since 1975, ORD has entered into MOUs under its 
broad authority to cooperate with federal and non-federal parties to 
encourage, coordinate, and accelerate environmental research. 

We appreciate the opportunity to respond to this draft report. Should 
you have any questions or need additional information, I can be reached 
at 202-564-6620.

Sincerely, 

Signed by: 

Lek G. Kadeli: 

Acting Deputy Assistant Administrator for Management: 

Enclosure: 

[End of section]

Appendix III: Comments from the National Institutes of Health: 

DEPARTMENT OF HEALTH & HUMAN SERVICES: 
Public Health Service:
National Institutes of Health:
Bethesda, Maryland 20892:

http://www.nih.gov:

JAN 31 2005: 

Ms. Anu K. Mittal:
Director, Natural Resources and Environment: 
U.S. Government Accountability Office:
441 G Street, N.W.: 
Washington, D.C. 20548:

Dear Ms. Mittal:

We appreciate the opportunity to review and comment on the draft report 
entitled Federal Research: NIH and EPA Need to Improve Conflict of 
Interest Reviews For Research Agreements With Private Sector Entities 
(GAO-05-191). Enclosed are the comments of the National Institutes of 
Health. Since the report involves both the NIH and the Environmental 
Protection Agency, a regulatory agency, we feel it is important to 
emphasize that NIH is not a regulatory agency. A reader could infer, 
from the recommendations that contain references to "regulated 
industry," that there are industries regulated by NIH. We believe that 
the report should clearly indicate that NIH is not a regulatory agency 
and therefore could not enter into research agreements with or accept 
gifts from industries that it regulates. 

Should you or your staff have any questions, please call Patricia Quast 
at 301-402-8264. 

Sincerely,

Signed by: 

Elias A. Zerhouni, M.D. 
Director:

-Enclosures:

Comments of the National Institutes of Health (NIH) On the U. S. 
Government Accountability Office (GAO) Revised Draft Report "Federal 
Research: NIH and EPA Need to Improve Conflict of Interest Reviews for 
Research Agreements With Private Sector Entities" GAO-05-191:

We appreciate the opportunity to review and comment on this revised 
draft report. The report acknowledges that NIH used the tools, then 
extant, to assess and manage potential conflicts of interest. It is 
important to note that the GAO evaluation team did not identify or 
conclude that conflicts of interest existed in the collaborative 
research effort described in the report. Nonetheless, we know that 
improvements can be made to our policies and procedures for evaluating 
the potential for conflicts of interest. Therefore, we concur with the 
two recommendations and plan to take actions to implement them. 

Despite our concurrence with the recommendations, we believe that the 
report contains erroneous comparisons and unsupported statements that 
could lead the reader to make incorrect conclusions about the public 
health role and mission of the NIH. For example:

* The body of the report, and both recommendations, discuss relations 
between governmental agencies and "regulated industry." The way this is 
written, a reader of this report could infer that there are industries 
regulated by the NIH. We believe that it is important to clarify-- 
throughout the report--that NIH, unlike the Environmental Protection 
Agency (and the other Federal agencies used in the report for 
comparison purposes), is not a regulatory agency. By definition, 
therefore, NIH could not enter into research agreements or accept gifts 
from industries it regulates. 

* The revised version of this draft report added a sentence on page 13 
that states, in part, that "...certain aspects of NIEHS' announcement 
could [emphasis added] have deterred some qualified researchers from 
applying..." If there is evidence that this occurred, it should be 
included in the report. Otherwise, this is a speculative statement that 
is inappropriate to include in the report. 

* The report does not put into perspective the relationship of the 
collaborative effort to the entire extramural research effort. The 
monies provided by the collaborative partner represent about 6/100,000 
of 1 percent (0.000057%) of NIH's extramural research budget for fiscal 
year 2002. 

We also offer a number of technical comments that we believe improve 
the clarity and accuracy of the final report. 

GAO Recommendation:

The Director of NIH and the Administrator of EPA should develop formal 
policies for evaluating and managing potential conflicts of interest 
when entering into research agreements with nongovernmental 
organizations, particularly those that represent regulated industry. 

NIH Response:

We concur with this recommendation. As noted in the report, NIH has 
policies and processes to ensure the integrity of scientific review and 
that grant funds are awarded and administered appropriately. However, 
we agree that a formal policy should be developed for evaluating and 
managing potential conflicts of interest when entering into agreements 
to fund extramural research with industry or organizations that 
represent industry. Because this is an issue that is important to NIH, 
we plan to establish a high-level working group to develop such a 
policy. 

GAO Recommendation:

The Director of NIH should further revise the NIH gift acceptance 
policy to require NIH officials to evaluate gifts, particularly from 
organizations that represent regulated industry, for potential 
conflicts of interest and to document the basis for their decisions, 
including what, if any, steps are needed to manage potential conflicts. 

NIH Response:

We concur with this recommendation. NIH will clarify and make 
consistent the actions officials must take to evaluate conflicts of 
interest when accepting gifts and include these updated procedures in a 
revision to NIH Policy Manual 1135, Gifts Administration. The revisions 
will include:

1. Making mandatory, consistently throughout the policy manual, the 
requirement for approving officials to use the "Gift Acceptance 
Validity Survey" and the "NIH Gift Pre-Acceptance Checklist" assessment 
tools to evaluate conflicts of interest before accepting a gift; and:

2. Requiring reviewing officials to formally document their decisions 
and any plans to manage potential conflict. 

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Anu Mittal, (202) 512-3841; 
Cheryl Williams, (404) 679-1991: 

Staff Acknowledgments: 

In addition to the individuals listed above, key contributions to this 
report were made by Amy Dingler, Karen Keegan, Judy Pagano, Carol 
Herrnstadt Shulman, Barbara Timmerman, Mindi Weisenbloom, and Eugene 
Wisnoski. Also contributing to this report were Anne Dievler and Jim 
Lager.

(360433): 

FOOTNOTES

[1] Federal Funds for Research and Development: Fiscal Years 2000, 
2001, and 2002. Because it is being used for background purposes only, 
we did not assess the reliability of the National Science Foundation 
data in this report.

[2] Congress has provided some agencies, such as NIH, with the 
authority to accept gifts--including money--while other agencies, such 
as EPA, do not have this authority.

[3] Although NIH is not a regulatory agency the scientific knowledge 
that results from NIH-sponsored research may be used by regulatory 
agencies, such as EPA, when making decisions about potential risks 
chemicals pose to public health and the environment. It is in this 
context that the ACC-NIEHS arrangement has raised concerns.

[4] NIEHS used its gift acceptance statute, 42 U.S.C. § 238(a), to 
accept the ACC funds as a conditional gift. In a separate effort, our 
Office of General Counsel is preparing a legal opinion to address 
whether the gift acceptance statute authorizes NIEHS to accept 
donations with the specific conditions attached by the agreement 
between NIEHS and ACC.

[5] For purposes of this report we will refer to the memorandums of 
understanding that NIEHS and ORD signed with ACC as well as documents 
to implement the memorandums, such as the announcement of funding 
availability, as research arrangements.

[6] EPA consists of nine programmatic offices and 10 regional offices 
that collectively develop and implement the agency's programs.

[7] Researchers who wanted their proposals considered for funding 
solely from ACC were advised to send their proposals directly to ACC 
for review and evaluation. ORD did not review or evaluate any such 
proposals.

[8] ACC was formerly known as the Chemical Manufacturers Association.

[9] These advisory panels are comprised of experts in scientific 
disciplines and other relevant fields.

[10] Under the agreement, researchers could request that their 
proposals be considered for funding solely by ORD or by either ORD or 
ACC. Applicants who wanted their proposals considered for funding 
solely from ACC were advised to send their proposals directly to ACC 
for review and evaluation. ORD did not review or evaluate any such 
proposals.

[11] In addition, ORD obtained agreement from ACC that results of ACC- 
funded research would also be discussed in periodic public meetings and 
published in peer-reviewed journals.

[12] We also identified one agreement that is under negotiation at NIH, 
which if signed would share some characteristics of the ACC research 
agreement. Specific details on the terms and conditions of the 
agreement will not be available until it is signed.

[13] Results from nonprobability samples cannot be used to make 
inferences about a population because, in a nonprobability sample, some 
elements of the population being studied have no chance or an unknown 
chance of being selected as part of the sample.

[14] EPA has 10 regional offices, each of which is responsible within 
its states and territories for the execution of the agency's programs. 

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