[Federal Register Volume 59, Number 123 (Tuesday, June 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15551]
[Federal Register: June 28, 1994]
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NATIONAL SCIENCE FOUNDATION
Investigator Financial Disclosure Policy
AGENCY: National Science Foundation.
ACTION: Notice of changes to award conditions and proposal content.
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SUMMARY: The National Science Foundation (NSF) is issuing revised award
conditions and revised requirements for proposal submission in order to
require that institutions maintain written and enforced policies on
investigator conflicts of interest.
EFFECTIVE DATE: June 28, 1995.
FOR FURTHER INFORMATION CONTACT: Miriam Leder, Assistant General
Counsel, National Science Foundation, 4201 Wilson Boulevard, Room 1265,
Arlington, VA 22230, (703)306-1060.
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act Control Number 3145-0149
NSF favors and has actively encouraged increased involvement of
academic researchers and educators with industry and with private
entrepreneurial ventures. However, such involvements create an
increased risk of conflict between the private interests of
individuals, or of the companies with which they are involved, and the
public interest that NSF funding should serve. These risks have aroused
concern in the scientific and engineering communities, in the public
media, in Congress, and at NSF.
In response to this concern, NSF developed a proposed Investigator
Financial Disclosure Policy requiring financial disclosure by
investigators and professional employees at grantee institutions who
are involved in NSF-funded research and educational activities. On July
16, 1992, NSF published its proposed Policy in the Federal Register,
and invited public comment. 57 FR 31540 (July 16, 1992). NSF received
seventy-two written comments from universities, research institutions
and various associations. The primary issues raised by commenters, and
NSF's responses, are described below.
Comments
Uniform Federal Policy
Most commenters recommended either that the Federal Government
adopt a uniform, government-wide investigator conflicts policy with a
single point of contact for conflict of interest and financial
disclosure issues, or that NSF coordinate with other agencies to ensure
that agency policies are consistent.
NSF agrees that a uniform, government-wide approach to the
conflicts issue is advisable--it would eliminate the possibility of
inconsistent agency policies, and reduce the bureaucratic burdens
associated with compliance with different conflicts policies. NSF has
been working closely with the Department of Health and Human Services
(HHS) to ensure that this Policy and the proposed rule issued by HHS in
this edition of the Federal Register will be consistent, and will
impose the same obligations on grantees. In addition, NSF has been
working with the Office of Science and Technology Policy, the Office of
Management and Budget, HHS and other interested agencies to develop and
propose a common Federal policy on investigator conflicts of interest.
It is expected that this policy, when completed, will ensure consistent
treatment of investigator conflicts issues at all Federal funding
agencies.
Financial Disclosure to NSF
The proposed Investigator Financial Disclosure Policy required
grant applicants to disclose to NSF the significant financial ties
their investigators have with parties whose financial interests might
be affected by the work to be funded. It also required applicants to
describe the measures, if any, that would be taken to minimize the
risks associated with actual or potential conflicts of interest.
Most commenters felt that universities and research institutions,
and not NSF, should have primary responsibility for collecting and
reviewing investigator financial information, and for managing
conflicts. They objected to the requirement that each grant proposal be
accompanied by financial disclosures, and offered a variety of reasons
for doing so. These included privacy concerns; a belief that NSF's
review of financial disclosures would be inconsistent with an emphasis
on institutional responsibility; a belief that the requirement imposed
an unjustified paperwork and staff burden on institutions; and a
concern that this disclosure requirement could have a chilling effect
on university-industry collaborations and on the submission of grant
proposals.
As an alternative, some commenters suggested that NSF require
institutional certifications that appropriate policies and procedures
had been implemented, and that actual or potential conflicts were
resolved to the satisfaction of the institution. NSF could then conduct
periodic reviews of grantee financial disclosure/conflict of interest
records to assure itself that institutions had complied with NSF's
minimum requirements. Some commenters also suggested that financial
disclosure to NSF would be appropriate if institutions are unable to
satisfactorily resolve conflicts issues that they identify.
NSF recognizes the fact that many institutions and investigators
are concerned about the possible ramifications of providing financial
information to NSF. While NSF does not necessarily agree with all of
the conclusions reached by those institutions and investigators, the
final Policy has been revised so that disclosure to NSF is not required
unless institutions find that they are unable to satisfactorily resolve
a conflict issue. Instead, NSF's final Policy requires an institutional
representative to certify with each grant proposal that the required
conflict of interest policy has been implemented; that, to the best of
his or her knowledge, all required financial disclosures were made; and
that there are no actual or potential conflicts of interest, or, if
such conflicts exist, they were, or prior to funding of the award, they
will be managed in a manner satisfactory to the institution or
disclosed to NSF. Individual investigators also must certify that each
has read and understood the institution's conflict of interest policy;
to the best of his/her knowledge, all financial disclosures required by
the institution's policy were made; and he/she will comply with any
conditions or restrictions imposed by the institution to manage actual
or potential conflicts of interest.
The final Policy also requires that institutions maintain records
of financial disclosures, and records relating to the management of
actual and potential conflicts of interest, until three years after the
later of the termination or completion of the award to which they
relate, or the resolution of any government action involving the
records. NSF may undertake periodic reviews of the records in order to
assess the reliability of institutional and investigator
certifications, and to determine whether institutional safeguards do,
in fact, protect the integrity of NSF-funded research. In undertaking
any such reviews, NSF will coordinate with HHS, to the extent feasible,
to ensure that institutions are not unnecessarily subjected to multi-
agency reviews.
Timing of Disclosure
Several commenters questioned the proposed Policy's timing for
required financial disclosures. Seven believed the required
certifications and/or disclosures should be made at the time of an
award, not when the proposal is submitted, and one suggested that
institutional review take place within 90 days of submission of the
grant proposal to NSF. Two commenters believed the proposed Policy
required grantee institutions to collect financial disclosures on a
periodic basis, and also prior to the submission of each grant
proposal. These commenters felt the two requirements might be
inconsistent.
In order to provide the required certifications, institutions will
have to collect all required disclosures and resolve actual or
potential conflicts prior to the time an award is funded. In addition,
the final Policy requires that, during the pendency of any NSF award,
institutions either solicit financial disclosures on an annual basis or
require updates as investigators obtain new reportable financial
interests.
Overly General and/or Ambiguous Terms
Some commenters were troubled by the proposed Policy's lack of
definitions for various terms, including ``entrepreneurial venture'',
``significant financial ties'', ``significant conflict of interest'',
``routine small holdings'', ``direct relevance'', ``directly and
significantly'', ``immediate family'', ``close business associate'',
``adequate enforcement mechanisms'', ``professional employee'' and
``relevant consulting arrangements''.
These terms were left undefined in the proposed Policy so that
institutions would be able to tailor definitions and conflicts policies
to the particular conditions existing on their campuses. This remains
NSF's basic philosophy, but the final Policy provides more guidance on
the types of financial interests that must be disclosed, the types that
need not be disclosed, and the individuals who must make financial
disclosures.
Contents of Institutional Conflict of Interest Policies
A few commenters believe institutions should establish conflict of
interest policies, but that NSF should not prescribe the details of
those policies. Three suggested that NSF establish ``outcome'' or
``performance'' criteria for institutional disclosure policies, rather
than requiring disclosure of specific categories of financial
interests.
NSF agrees that institutions should have some latitude to develop
policies that fit local circumstances. For this reason, NSF's Policy
requires institutions to solicit financial disclosures, but does not
prohibit any particular financial interest or mandate specific rules
for managing conflicts of interest. NSF believes that its system, in
which institutions will have primary responsibility for collecting and
reviewing financial disclosures, establishes the minimum requirements
necessary to protect the integrity of NSF-funded research.
Scope of Required Disclosure
Most commenters agree that limited and targeted financial
disclosure is a cornerstone of an effective conflict of interest
policy. However, many believe the proposed Policy required more
information than was necessary to effectively manage actual and
potential conflicts of interest, and some suggested that disclosure be
required only where financial ties are directly related to NSF-
supported research. Two commenters from state institutions in
Connecticut believe that their local Freedom of Information Act will
essentially make these disclosures public information.
NSF has narrowed the Policy's disclosure requirements so that they
now apply only to those individuals who are responsible for the design,
conduct or reporting of research or educational activities funded or
proposed for funding by NSF. In addition, the categories of disclosable
financial interests have been limited to so that they now must relate
to research funded or proposed for funding by NSF.
Disclosure of Ties of Immediate Family and Close Business Associates
Five commenters believe the Policy should not require disclosure of
the financial interests of an investigator's immediate family, and
nineteen thought it should not require disclosure of the financial
interests of close business associates. These commenters cited privacy
concerns, and, for close business associates, argued that it is
inappropriate to require confidential information from these
individuals, it might not be possible to elicit it in any event, and it
is too difficult to determine what constitutes a close business
associate.
NSF's Policy is meant to ensure that institutions have enough
information to determine whether conflicts exist, and to impose
appropriate safeguards. Clearly, financial interests of individuals
other than the investigators themselves can, under certain
circumstances, affect the objectivity with which the investigators
conduct their research. This is particularly true where there is a
close personal or business relationship between the investigator and
another individual. However, NSF recognizes that requiring financial
disclosure from all such persons presents certain difficulties and
raises privacy concerns. NSF believes it reasonable to require
disclosure of the relevant financial ties of an investigator's spouse
and dependent children, but the relationship between an investigator
and his or her ``close business associate'' is more attenuated. As a
result, in light of concerns raised by commenters, the final Policy
does not require that their financial interests be disclosed.
Miscellaneous Comments
One state institution pointed out that its institutional conflict
of interest rules must be part of the state's administrative code, and
this would require new legislation. The effective date for NSF's Policy
will be one year following the date of its publication in the Federal
Register. NSF hopes that this will provide institutions with sufficient
time to implement required policies.
Two commenters believe institutions do not have sufficient
expertise to conduct the types of investigations necessary to assure
the reliability of investigator financial disclosure. NSF does not
expect institutions to undertake herculean efforts to verify the
accuracy of all disclosures. However, institutional policies should
include viable and reasonable methods for enforcing those policies.
Two commenters asked whether NSF's Policy applies to subrecipients
of grant funds. It does not.
One commenter asked whether the disclosure requirements apply to
current financial ties, or to those which existed over some period of
time. The requirements apply to current ties, but institutions must
maintain records of disclosures until three years after the later of
the termination or completion of the award to which they relate, or the
resolution of any government action involving the records.
One commenter suggested that the disclosure requirements might
conflict with consulting arrangements that prevent investigators from
disclosing the name of companies for whom they consult. In such cases,
in order to receive Federal funds, investigators would have to obtain
permission to make the required disclosures, or discontinue the
consulting arrangements. Investigators who enter into consulting
arrangements that prevent disclosure could seek agreements with their
institutions to maintain the confidentiality of arrangements they
disclose to those institutions.
One commenter felt the guidelines for product evaluations should
differ from those for basic research. NSF's Policy allows institutions
to develop differing guidelines if they believe it appropriate.
Many comments specifically related to the proposed Policy's
requirement of financial disclosure to NSF. Because this disclosure is
not required by the final Policy, these comments are not discussed
individually.
Paperwork and Recordkeeping Burden
In the proposed Policy, NSF estimated that it would take each
investigator listed on a grant proposal 20 minutes to prepare the
required financial disclosures. Many commenters believed this seriously
underestimated the actual paperwork burden associated with Policy, and
several pointed out that it did not take into account the institutional
burden associated with reviewing the disclosures. Few commenters
provided suggestions for formulating a more accurate estimate. However,
NSF has revised its estimate of the annual reporting and recordkeeping
burden to take into account changes from the proposed Policy. NSF's
revised estimates are as follows:
Financial Disclosure Requirement
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Hours per Total
No. of respondents response\1\ hours
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38,000.......................................... .5 19,000
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\1\NSF estimates that 23% of all respondents will have financial
interests to disclose, and 77% will not. The estimate assumes that it
will take an hour to provide required financial disclosures when
reportable ties exist, and twenty minutes when they do not.
Recordkeeping Requirement
------------------------------------------------------------------------
Hours per
No. of recordkeepers recordkeeper Total
hours
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2,000.......................................... 8 16,000
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Total hours for disclsoure and recordkeeping
35,000
Organizations and individuals who wish to submit comments on the
estimated burden should send them to:
Herman G. Fleming, Reports Clearance Officer, National Science
Foundation, Washington, DC 20550
and
Office of Information and Regulatory Affairs, Office of Management and
Budget, New Executive Office Building, Washington, DC 20503
The Investigator Financial Disclosure Policy
NSF's Investigator Financial Disclosure Policy has the following
primary features:
A. A requirement that any NSF grantee employing more than fifty
persons maintain ``an appropriate written and enforced policy on
conflict of interests''.
B. Minimum requirements for what must be in an institution's
policy. These include (a) limited and targeted financial disclosure,
(b) designation of a person(s) to review the disclosures and resolve
actual or potential problems revealed, (c) enforcement mechanisms, and
(d) arrangements for informing NSF of conflicts issues that are not
resolved to the satisfaction of the institution.
Changes made to NSF issuances to establish and communicate the
Policy are described below. Copies of the NSF Grant General Conditions
and the NSF publication Grant Proposal Guide may be obtained from the
contact listed above. Copies of the NSF Grant Policy Manual may be
obtained from the Government Printing Office.
WHAT WOULD BE REQUIRED IN INSTITUTIONAL POLICIES
Grant General Conditions
Insert a new subparagraph 23(b):
Records of investigator financial disclosures and of actions taken
to manage actual or potential conflicts of interest (see Grant Policy
Manual Section 310), shall be retained until 3 years after the later of
the termination or completion of the award to which they relate, or the
resolution of any government action involving those records.
Renumber subsequent subparagraphs accordingly.
Insert a new paragraph 33:
If the grantee employs more than fifty persons, the grantee shall
maintain an appropriate written and enforced policy on conflict of
interest consistent with the provisions of Grant Policy Manual Section
310.
Renumber subsequent paragraphs accordingly.
Grant Policy Manual
In GPM 516.3 ``Consulting and Other Outside Activities of Principal
Investigators Under NSF Awards'', add to subparagraph ``a.'':
However, see GPM 310 on Conflict of Interest Policies.
Strike all after subparagraph ``a.'', including Exhibits V-1 and V-
2.
Add a new GPM 310 ``Conflict of Interest Policies'':
a. NSF requires each grantee institution employing more than fifty
persons to maintain an appropriate written and enforced policy on
conflict of interest. Guidance for such policies has been issued by
university associations and scientific societies.\1\
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\1\See On Preventing Conflicts of Interests in Government-
Sponsored Research at Universities, a Joint Statement of the Council
of the American Association of University Professors and the
American Council on Education (1964); Managing Externally Funded
Programs at Colleges and Universities, especially ``Principle X.
Research Ethics and Conflicts'', issued by the Council on Government
Relations (1989); Guidelines for Dealing with Faculty Conflicts of
Commitment and Conflicts of Interest in Research, issued by the
Association of American Medical Colleges (1990); and Framework
Document for Managing Financial Conflicts of Interest, issued by the
Association of American Universities (1993).
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b. An institutional conflict-of-interest policy should require that
each investigator disclose to a responsible representative of the
institution all significant financial interests of the investigator
(including those of the investigator's spouse and dependent children)
(i) that would reasonably appear to be directly and significantly
affected by the research or educational activities funded or proposed
for funding by NSF; or (ii) in entities whose financial interests would
reasonably appear to be directly and significantly affected by such
activities.
The term `investigator' means the principal investigator, co-
principal investigators, and any other person at the institution who is
responsible for the design, conduct, or reporting of research or
educational activities funded or proposed for funding by NSF.
The term `significant financial interest' means anything of
monetary value, including, but not limited to, salary or other payments
for services (e.g., consulting fees or honoraria); equity interests
(e.g., stocks, stock options or other ownership interests); and
intellectual property rights (e.g., patents, copyrights and royalties
from such rights).
The term does not include:
salary, royalties or other remuneration from the
institution; or any ownership interests in the institution, if the
institution is an applicant under the Small Business Innovation
Research Program or Small Business Technology Transfer Program;
income from seminars, lectures, or teaching engagements
sponsored by public or nonprofit entities;
income from service on advisory committees or review
panels for public or nonprofit entities; or
financial interests in business enterprises or entities if
the value of such interests do not exceed $5,000 or represent more than
a 5% ownership interest for any one enterprise or entity when
aggregated for the investigator and the investigator's spouse and
dependent children.
c. An institutional policy must ensure that investigators have
provided all required financial disclosures at the time the proposal is
submitted to NSF. It must also require that those financial disclosures
are updated during the pendency of the award, either on an annual
basis, or as new reportable significant financial interests are
obtained.
d. An institutional policy must designate one or more persons to
review financial disclosures, determine whether an actual or potential
conflict of interest exists, and determine what conditions or
restrictions, if any, should be imposed by the institution to manage,
reduce or eliminate such conflict of interest. An actual or potential
conflict of interest exists when the reviewer(s) reasonably determine
that a significant financial interest could affect the design, conduct,
or reporting of the research or educational activities funded or
proposed for funding by NSF.
Examples of conditions or restrictions that might be imposed to
manage, reduce or eliminate actual or potential conflicts of interest
include:
public disclosure of significant financial interests;
monitoring of research by independent reviewers;
modification of the research plan;
disqualification from participation in the portion of the
NSF-funded research that would be affected by the significant financial
interests;
divestiture of significant financial interests; or
severance of relationships that create actual or potential
conflicts.
If the reviewer(s) determines that imposing conditions or
restrictions would be either ineffective or inequitable, and that the
potential negative impacts that may arise from a significant financial
interest are outweighed by interests of scientific progress, technology
transfer, or the public health and welfare, then the reviewer(s) may
allow the research to go forward without imposing such conditions or
restrictions.
e. The institutional policy must include adequate enforcement
mechanisms, and provide for sanctions where appropriate.
f. The institutional policy must include arrangements for keeping
NSF appropriately informed if the institution finds that it is unable
to satisfactorily manage an actual or potential conflict of interest.
g. Institutions must maintain records of all financial disclosures
and of all actions taken to resolve actual or potential conflicts of
interest until at least 3 years after the later of the termination or
completion of the award to which they relate, or the resolution of any
government action involving those records.
Renumber GPM Sections 310-40 accordingly.
WHAT WOULD BE REQUIRED IN PROPOSALS
Grant Proposal Guide (Formerly Grants for Research and Education in
Science and Engineering)
In Section C-1 of Part II, INSTRUCTIONS FOR PROPOSAL PREPARATION,
at the end of the Certification for Principal Investigators and Co-
Principal Investigators, add:
A new certification has been added that requires Principal
Investigators and Co-Principal Investigators to certify that they have
read and understood the institution's conflict of interest policy; to
the best of their knowledge, all required financial disclosures were
made; and they will comply with any conditions or restrictions imposed
by the institution to manage, reduce or eliminate actual or potential
conflicts of interest.
In Section C-1 of Part II, INSTRUCTIONS FOR PROPOSAL PREPARATION,
at the end of the Certification for Authorized Institutional
Representative or Individual Applicant, add:
A new certification has been added that requires an institutional
representative to certify that the institution has implemented and is
enforcing a written policy on conflicts of interest consistent with the
provisions of Grant Policy Manual Section 310; that, to the best of
his/her knowledge, all financial disclosures required by the conflict
of interest policy were made; and that actual or potential conflicts of
interests, if any, were, or prior to funding the award, will be
satisfactorily managed, reduced or eliminated in accordance with the
institution's conflict of interest policy or disclosed to NSF.
In Appendix E on the Certification Page, add the following new
certification to the Certification for Principal Investigators and Co-
Principal Investigators:
(3) I have read and understand the institution's conflict of
interest policy, if any; have made all financial disclosures required
by it, if any; and will comply with any conditions or restrictions
imposed by the institution to manage, reduce or eliminate actual or
potential conflicts of interest.
In Appendix E on the Certification Page, add the following to the
end of the section on Certification for Authorized Institutional
Representative or Individual Applicant:
In addition, if the applicant institution employs more than fifty
persons, the authorized official of the applicant institution is
certifying that the institution has implemented a written and enforced
conflict of interests policy that is consistent with the provisions of
Grant Policy Manual Section 310; to the best of his/her knowledge, all
financial disclosures required by that conflict of interests policy
have been made; and all identified conflict of interests have been, or,
prior to funding an award, will be either satisfactorily managed,
reduced or eliminated in accordance with the institutions policies, or
disclosed to NSF.
Lawrence Rudolph,
Acting General Counsel.
[FR Doc. 94-15551 Filed 6-27-94; 8:45 am]
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