45 CFR Parts 160 & 164 (CFR Annual Edition) receiving, any assessment, subscrip- tion or contribution for any political purpose whatever from another officer or employee. This prohibition extends to one who acts as a mere agent or messenger for the purpose of turning the contribution over to a political or- ganization. 18 U.S.C. 602. (2) All persons, whether employees or not, are prohibited from soliciting in any manner, or receiving a contribu- tion of, money or a thing of value, in any room or building occupied in the discharge of official duties by any offi- cer or employee of the United States. 18 U.S.C. 603. This prohibition extends to the sending of a letter soliciting po- litical contributions for delivery in a Government building. (3) No officer or employee may di- rectly or indirectly give to any other officer, employee or person in the serv- ice of the United States, any money or other thing of value to be applied to the promotion of any political objec- tive. 18 U.S.C. 607. (4) Discrimination for giving or with- holding any contribution for any polit- ical purpose and discrimination based on political influence or recommenda- tions is prohibited. (c) Various other laws prohibit cer- tain activities in connection w ng any contribution for any polit- ical purpose and discrimination based on political influence or recommenda- tions is prohibited. (c) Various other laws prohibit cer- tain activities in connection with po- litical campaigns and elections. They include: (1) Intimidating, threatening, or co- ercing voters in Federal elections (18 U.S.C. 594). (2) Using official authority in inter- fering with a Federal election by a per- son employed in any administrative po- sition by the United States or by any establish- department, ment, or agency of the United States or by any State, agency, or political subdivision thereof in connection with any activity financed in whole or in part by Federal funds (18 U.S.C. 595). independent (3) Promising Federal employment, compensation, or any benefit from Fed- eral funds, in return for political activ- ity or support (18 U.S.C. 600). (4) Depriving anyone of employment, compensation, or any benefit derived from Federal relief or work relief funds on account of race, creed, color, or po- litical activity (18 U.S.C. 601). (5) Soliciting, assessing, or receiving subscriptions or contributions for po- litical purpose from anyone on Federal relief or work rel of race, creed, color, or po- litical activity (18 U.S.C. 601). (5) Soliciting, assessing, or receiving subscriptions or contributions for po- litical purpose from anyone on Federal relief or work relief (18 U.S.C. 604). 205 § 73.735–701 45 CFR Subtitle A (10–1–24 Edition) Subpart G—Outside Activities § 73.735–701 General provisions. (a) Outside employment may be ap- propriate when it will not adversely af- fect performance of an employee’s offi- cial duties and will not reflect dis- credit on the Government or the De- partment. Such work may include civic, charitable, religious, and com- munity undertakings. There are cer- tain types of outside work, however, which give rise to a real or apparent conflict of interest. Some of these are prohibited by law. Others are prohib- ited by regulation, as discussed in paragraph (b) of this section, or by cri- teria developed by heads of operating components for application within a particular component. All of these pro- visions are binding, but they do not necessarily include all possible con- flicts of interest. In all instances, good judgment must be used to avoid a con- flict between an employee’s Federal re- sponsibilities and outside t they do not necessarily include all possible con- flicts of interest. In all instances, good judgment must be used to avoid a con- flict between an employee’s Federal re- sponsibilities and outside activities. (b) An employee shall not engage in outside employment or other outside activity not compatible with the full and proper discharge of the duties and responsibilities of his or her Govern- ment employment whether or not in violation of any specific provision of law. Incompatible activities include, but are not limited to: (1) Acceptance of a fee, compensa- tion, gift, payment of expense, or any other thing of monetary value in any in which acceptance circumstances may result in, or create the appearance of, conflicts of interest; (2) Outside employment which tends to impair the employee’s mental or physical capacity to perform Govern- ment duties and responsibilities in an acceptable manner; (3) Work which identifies the Depart- ment or any employee in his or her of- ficial capacity with any organization commercializing products relating to work conducted by the Department, or with any commercial advertising mat- ter, or work performed under such cir- cumstances as to give t city with any organization commercializing products relating to work conducted by the Department, or with any commercial advertising mat- ter, or work performed under such cir- cumstances as to give the impression that it is an official act of the Depart- ment or represents an official point of view; (4) Outside work or activity that takes the employee’s time and atten- tion during his official work hours. (c) An employee shall not receive any salary or anything of monetary value from a private source as compensation for services to the Government. For ex- ample, a Department employee may be called upon, as a part of his or her offi- cial duties, to participate in a profes- sional meeting sponsored by a non- Government organization, or to con- tribute a paper or other writing pre- pared on official time for publication under non-Government auspices. The employee must not accept an hono- rarium or fee for such services, even though the organization accepting the service customarily makes such a pay- ment to those who participate. Nor may the employee accept a contribu- tion to some charity, educational insti- tution, or the like, in appreciation of the services furnished by the Depa s such a pay- ment to those who participate. Nor may the employee accept a contribu- tion to some charity, educational insti- tution, or the like, in appreciation of the services furnished by the Depart- ment employee who cannot accept the usual payment. All offers to make such a contribution must be refused. Any employee with whom such a question is raised shall explain that the service in- volved was provided as an official ac- tion of the Department and is author- ized by cir- law. Under cumstances, it is inappropriate for any payment to be made, even indirectly and to a third party, for services which are furnished without charge by the Government. these (d) Other than as provided in para- graph (c) of this section, employees may receive compensation or other things of monetary value for any lec- ture, discussion, writing or appearance the subject matter of which is in part devoted to the responsibility, programs or operations of the Department so long as the activity is undertaken in a personal capacity, is not performed as official duty, is not done while on offi- cial time, and does not create a con- flict of interest or appearance of con- flict of interest. However, such ac in a personal capacity, is not performed as official duty, is not done while on offi- cial time, and does not create a con- flict of interest or appearance of con- flict of interest. However, such activi- ties are considered outside employ- ment and may be undertaken only as provided in this subpart. (e) This section does not restrict the acceptance of compensation or other things of monetary value for any lec- ture, discussion, writing or appearance, 206 Dept. of Health and Human Services § 73.735–703 the subject matter of which is not de- voted to the responsibilities, programs, or operations of the Department and which are undertaken in a private ca- pacity and in accordance with § 73.735– 704, § 73.735–705, or § 73.735–706. (f) Federal law limits the amount of honorarium that may be paid any em- ployee for any one speech, writing or appearance to $2,000.00 (not to include amounts for actual travel and subsist- ence expenses for the employee and his or her spouse) and an aggregate of $25,000.00 in any calendar year. This limitation applies to such activities whether or not the subject matter is related to the responsibilities, pro- grams or operations of the Depart- ment. (2 U. of $25,000.00 in any calendar year. This limitation applies to such activities whether or not the subject matter is related to the responsibilities, pro- grams or operations of the Depart- ment. (2 U.S.C. 441i) The term ‘‘hono- rarium’’ means payment of money or other thing of value whether made gra- tuitously or as a fee for an appearance, speech or article but does not include salary or compensation made for serv- ices rendered on a continuing basis, such as for teaching, or as proceeds from the sale of a book or similar un- dertaking. (g) An employee who is a Presidential appointee covered by section 401(a) of Executive Order 11222 shall not receive compensation or anything of monetary value for any consultation, lecture, dis- cussion, writing or appearance, the subject matter of which is devoted sub- stantially to the responsibilities, pro- grams, or operations of his or her com- ponent, or which draws substantially on official data or ideas which have not or will not on request become public information. (h) Application of these general pro- visions to some specific activities is discussed below. § 73.735–702 Criminal prohibitions on outside activities. (a) An employee may not come public information. (h) Application of these general pro- visions to some specific activities is discussed below. § 73.735–702 Criminal prohibitions on outside activities. (a) An employee may not, with or without compensation, represent an- other before any Government agency, court or commission in connection with any proceeding, application, re- quest for a ruling, contract, claim or other particular matter in which the United States is a party or has a direct and substantial interest. (18 U.S.C. 203 and 205) (b) An employee may not act as agent or attorney for anyone else in prosecuting any claim against the United States (18 U.S.C. 205). (c) As an exception to the above, if it is not inconsistent with the perform- ance of his or her duties, an employee may act without compensation as an agent or attorney for another em- ployee, or a person under active consid- eration for Federal employment, who is the subject of disciplinary, loyalty, or other personnel administration pro- ceedings in connection with those pro- ceedings at the administrative level. For example, an employee may rep- resent another employee who is the subject of disciplinary action, or the complainant in a d dings in connection with those pro- ceedings at the administrative level. For example, an employee may rep- resent another employee who is the subject of disciplinary action, or the complainant in a discrimination pro- ceeding, at all stages within the De- partment and before the Merit Systems Protection Board or Equal Employ- ment Opportunity Commission but not in Federal Court. It would be incon- sistent with the performance of official duties for a supervisor to represent subordinate employees. (d) The law and these regulations do not prohibit an employee from acting, with or without compensation, as agent or attorney for his or her par- ents, spouse, child or any person for whom, or estate for which, he or she is acting as fiduciary provided that the head of the principal operating compo- nent or his or her designee approve. Such approval, if granted, must be granted in accordance with the proce- dures for approval of outside activity. However, the employee may not do so if the particular matter is one in which he or she has participated personally and substantially or which is his or her official responsibility. (18 U.S.C. 205). § 73.735–703 Statutory prohibitions re- lated to ticular matter is one in which he or she has participated personally and substantially or which is his or her official responsibility. (18 U.S.C. 205). § 73.735–703 Statutory prohibitions re- lated to employment by a foreign government. Employees, including officers in the Public Health Service (PHS) Commis- sioned Corps and retired officers of the Regular Commissioned Corps of the PHS, may not, without the consent of Congress, be employed by a foreign government or agency of a foreign gov- ernment (Art. I, Sec. 9, U.S. Const.). Congress has consented to such em- ployment by Reserve Commissioned Of- ficers of the PHS not on active duty and by Retired Regular Commissioned Officers (37 U.S.C. 801, note) if approved 207 § 73.735–704 45 CFR Subtitle A (10–1–24 Edition) under regulations of the Department of State. 22 CFR part 3a. § 73.735–704 Professional and consult- ative services. (a) Employees may engage in outside professional or consultative work only after meeting certain conditions. Ex- cept as provided in §§ 73.735–705 and 73.735–706 for activities discussed in those sections, the conditions which must be met are: (1) The work is not to be rendered, with or without compensatio . Ex- cept as provided in §§ 73.735–705 and 73.735–706 for activities discussed in those sections, the conditions which must be met are: (1) The work is not to be rendered, with or without compensation, to orga- nizations, institutions, or state or local governments with which the official duties of the employee are directly re- lated, or indirectly related if the indi- rect relationship is significant enough to cause the existence of conflict or ap- parent conflict of interest; or (2) The work is not to be rendered for compensation to help a person, institu- tion, or government unit prepare or aid in the preparation of grant applica- tions, contract proposals, program re- ports, and other material which are de- signed to become the subject of deal- ings between the institutions or gov- ernment units and the Federal Govern- ment. All requests to perform consult- ative services, either compensated or uncompensated, for institutions or gov- ernment units which have recently ne- gotiated or may in the near future seek a contract or grant from this Depart- ment must be carefully appraised to avoid any conflict or apparent conflict of interest. (b) Advance administrative approval in acc or may in the near future seek a contract or grant from this Depart- ment must be carefully appraised to avoid any conflict or apparent conflict of interest. (b) Advance administrative approval in accordance with § 73.735–708 of this subpart must be obtained. Such ap- proval is required whether or not the services are for compensation, and whether or not related to the employ- ee’s official duties. (c) For the purpose of this section, ‘‘professional and consultative work’’ is performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a course of specialized in- struction and study in an institution of higher education, or hospital which re- quires the exercise of judgment and discretion in its performance and is primarily intellectual in nature as op- posed to manual, mechanical or phys- ical work. (d) Membership on a Board of Direc- tors, Board of Regents, Board of Trust- ees, Planning Commission, Advisory Council or Committee, or on any simi- lar body which provides advice, coun- sel, or consultation, shall be considered outside consultative services for which advance administrative approval is re- quired. § 73.735–705 Wr , or on any simi- lar body which provides advice, coun- sel, or consultation, shall be considered outside consultative services for which advance administrative approval is re- quired. § 73.735–705 Writing and editing. (a) Employees are encouraged to en- gage in outside writing and editing whether or not done for compensation, when such activity is not otherwise prohibited. Such writing and editing, though not a part of official duties, may be on a directly related subject or entirely unrelated. Certain conditions must be met in either case, however, and certain clearances or approvals are prescribed according to the content of the material as set forth in paragraphs (b) through (e) of this section. (b) Conditions applying to writing and editing done not as a part of offi- cial duties. (1) The following conditions shall apply to all writing and editing wheth- er related or unrelated to the employ- ee’s official duties: (i) Government-financed time or sup- plies shall not be used by the author or by other Government employees in connection with the activity; and (ii) Official support must not be ex- pressed or implied in the material itself or advertising or promotional material, in author or by other Government employees in connection with the activity; and (ii) Official support must not be ex- pressed or implied in the material itself or advertising or promotional material, including book jackets and covers, relating to the employee and his or her contribution to the publica- tion. (2) If the writing or editing activity is unrelated to the employee’s official duties or other responsibilities and pro- grams of the Federal government, the employee must: (i) Make no mention of his or her of- ficial title or affiliation with the De- partment, or (ii) Use his or her official title or af- filiation with the Department in a way that will not suggest or convey official endorsement of the work. (3) If the writing or editing activity is related to the employee’s official du- ties or other responsibilities and pro- grams of the Federal government, the employee must: 208 Dept. of Health and Human Services § 73.735–706 (i) Make no mention of his or her of- ficial title or affiliation with the De- partment, or (ii) Use his or her official title or af- filiation with the Department and a disclaimer as provided in paragraph (c) of this section, or (iii) Submit the material ffiliation with the De- partment, or (ii) Use his or her official title or af- filiation with the Department and a disclaimer as provided in paragraph (c) of this section, or (iii) Submit the material for clear- ance within the operating component, under procedures established by the component. When clearance is denied at any lower level, the employee shall have recourse for review up to the head of the principal operating component. This clearance will show there are no official objections to the activity and the employee may then use his or her official title or affiliation with the De- partment usually without a disclaimer. (c) Disclaimers. (1) Except where the requirement for disclaimer is waived as a result of official clearance, dis- claimers shall be used in all writing and editing related to the employee’s official duties or other responsibilities and programs of the Federal govern- ment: (i) In which the employee identifies himself or herself by official title or af- filiation with the Department, or (ii) When the prominence of the em- ployee or the employee’s position might lead the public to associate him or her with the Department, even with- out identification other th with the Department, or (ii) When the prominence of the em- ployee or the employee’s position might lead the public to associate him or her with the Department, even with- out identification other than name. (2) Disclaimers shall read as follows unless a different wording is approved by the Assistant General Counsel, Business and Administrative Law Divi- sion, Office of the General Counsel: ‘‘This (article, book, etc.) was (written, edited) by (employee’s name) in (his or her) private capacity. No official suport or endorsement by (name of op- erating component or of Department) is intended or should be inferred.’’ (d) Advance approval. Advance ap- proval is required in accordance with § 73.735–708 of this subpart when one or more of the following conditions apply: (1) Any Government information is used which is not available on request to persons outside the Government; (2) Material is written or edited which pertains to subject matter di- rectly related to an employee’s official duties; (This includes editing for sci- entific or professional journals which is related to his or her official duties.) (3) Material is written or edited which pertains to any Government- sponsored res ies; (This includes editing for sci- entific or professional journals which is related to his or her official duties.) (3) Material is written or edited which pertains to any Government- sponsored research or other studies for which clinical case records or other material of a confidential nature are used or to which access is limited for persons outside the Government. Such use will not be permitted unless made under safeguards established by the op- erating component to retain the con- fidentiality of the material, and such use is determined to be in the public interest. § 73.735–706 Teaching, lecturing, and speechmaking. (a) Employees are encouraged to en- gage in teaching and lecturing activi- ties which are not part of their official duties when certain conditions are met. These conditions, which apply to outside teaching and lecturing (includ- ing giving single addresses such as commencement and Memorial Day speeches) whether or not done for com- pensation, are: (1) No Government-financed time, or Government supplies not otherwise available to the public, are used in con- nection with such activity; (2) Government travel or per diem funds are not used for the sole purpose of -financed time, or Government supplies not otherwise available to the public, are used in con- nection with such activity; (2) Government travel or per diem funds are not used for the sole purpose of obtaining or performing such teach- ing or lecturing; (3) Such teaching or lecturing is not dependent on specific information which would not otherwise be available to the public; (4) Teaching, lecturing, or writing may not be for the purpose of the spe- cial preparation of a person or class of persons for an examination of the Of- fice of Personnel Management or Board of Examiners for the Foreign Service, that depends on information obtained as a result of the employee’s Govern- ment employment, except when that information has been made available to the general public or will be made available on request; (5) Such activities do not involve knowingly instructing persons on deal- ing with particular matters pending be- fore Government organizations with which the employee is associated in an official capacity; (6) Advance approval is obtained when required by paragraph (b) of this section. 209 § 73.735–707 45 CFR Subtitle A (10–1–24 Edition) (b) Advance approval. Advance ap- proval mus an official capacity; (6) Advance approval is obtained when required by paragraph (b) of this section. 209 § 73.735–707 45 CFR Subtitle A (10–1–24 Edition) (b) Advance approval. Advance ap- proval must be obtained in accordance with § 73.735–708 of this subpart before an employee may: (1) Teach or lecture for an institution which has or is likely to have official dealings with the bureau or comparable organizational unit in which he or she is employed; (2) Use, for teaching or lecturing pur- poses, clinical case records or other material of a confidential nature or to which access is limited for persons out- side the Government. Such use will not be permitted unless made under safe- guards established by the operating component to retain the confiden- tiality of the material, and such use is determined to be in the public interest. § 73.735–707 Holding office in profes- sional societies. (a) Employees may be members of professional societies and be elected or appointed to office in such a society. Activity in professional associations is generally desirable from the point of view of both the Department and the employee. Employees shall avoid, how- ever, any real or apparent conflic h a society. Activity in professional associations is generally desirable from the point of view of both the Department and the employee. Employees shall avoid, how- ever, any real or apparent conflict of interest in connection with such mem- bership. For example, they must not: (1) Directly or indirectly commit the Department or any portion of it on any matter unless such action is taken in an official capacity; (2) Permit their names to be attached to documents the distribution of which would be likely to embarrass the De- partment; or (3) Serve in capacities involving them as representatives of non-Govern- ment organizations in dealing with the Government. (b) In undertaking any office or func- tion beyond ordinary membership in a professional association, a Department employee must obtain advance ap- proval in accordance with § 73.735–708 of this subpart in any situation in which his or her responsibilities as an officer would relate to his or her official du- ties or would create a real or apparent conflict of interest with responsibil- ities as a Department employee. For example, advance administrative ap- proval must be obtained: or contracts, or is in a supervisory po- siti a real or apparent conflict of interest with responsibil- ities as a Department employee. For example, advance administrative ap- proval must be obtained: or contracts, or is in a supervisory po- sition over those who conduct review and approval, may hold office, or be a trustee or member of the governing board, or the chairman or member of a committee, in any organization which has or is seeking a grant or contract with the bureau or comparable organi- zational unit in which he or she is em- ployed; (2) Before an employee may hold of- fice in an organization which custom- arily expresses publicly views on mat- ters of legislative or administrative policy within the specific areas of con- cern to the Department. § 73.735–708 Administrative approval of certain outside activities. (a) Scope. As specified in § 73.735–704 through 707, an employee is required to obtain advance administrative ap- proval to engage in the following out- side activities: (1) Certain writing or editing activi- ties; (2) Certain types of teaching and lec- turing; (3) All professional and consultative services; (4) Any other outside activity for which the head of a principal operating component or the head of ies; (2) Certain types of teaching and lec- turing; (3) All professional and consultative services; (4) Any other outside activity for which the head of a principal operating component or the head of a sub-unit of a principal operating component im- poses internal requirements for admin- istrative approval; and (5) Certain office-holding activities in professional societies. (b) Requests for Administrative Ap- proval. An employee seeking to engage in any of the activities for which ad- vance approval is required shall make a written request for administrative approval a reasonable time before be- ginning the activity. (See § 73.735– 202(e)(1)). This request should be di- rected to the employee’s supervisor who will forward it to the official au- thorized to approve outside work re- quests for the employee’s component. The request should include the fol- lowing information: (1) Employee’s name, position title, grade or rank; (2) Nature of the activity, fully de- scribing the specific duties or services for which approval is requested; (1) Before an employee who is respon- sible for review and approval of grants (3) Name and business of person or organization for which work will be 2 ties or services for which approval is requested; (1) Before an employee who is respon- sible for review and approval of grants (3) Name and business of person or organization for which work will be 210 Dept. of Health and Human Services § 73.735–801 done, or statement that work will be self-employment. If self-employment, employee must state whether activity will be conducted alone or with part- ners; (4) Place where work will be per- formed; (5) Estimated total time to be de- voted to activity. If on a continuing basis, indicate estimated time per year and the anticipated termination date; (6) Whether services can be per- formed entirely outside of usual duty hours. If not, the estimated number of hours absent from work should be indi- cated; (7) Method or basis of compensation if any (e.g., fee, per diem, per annum, or other). (8) Where an employee seeks approval to provide consultative or professional including services to organizations governments which have been awarded or may apply for a Federal grant or contract, the request shall also include full details on any aspect of the profes- sional and consultative services which could relate in any way, either directly or indirec ply for a Federal grant or contract, the request shall also include full details on any aspect of the profes- sional and consultative services which could relate in any way, either directly or indirectly, to grant applications, contract proposals, program reports, and other material which are designed to become the subject of dealings be- tween the grantee or contractor and the Government. (See § 73.735–704(a)(2)) (c) The Department Ethics Counselor will review and approve outside work requests for Executive level officers, non-career executives, deputy ethics counselors, and Schedule C employees in the Office of the Secretary. (d) Granting Approval of Certain Ac- tivities. The approving official shall re- view each request submitted under paragraph (b) of this section, and ap- praise each request on the basis of the standards of this part and all other ap- plicable laws, regulations or internal rules of the principal operating compo- nent or sub-unit thereof. He or she should consult with a deputy ethics counselor or the Department Ethics Counselor in all cases that raise a dif- ficult or novel question of law or fact. The approving official shall approve or disapprove each reques with a deputy ethics counselor or the Department Ethics Counselor in all cases that raise a dif- ficult or novel question of law or fact. The approving official shall approve or disapprove each request and commu- nicate his or her decision in writing to the employee. § 73.735–709 Annual reporting of out- side activities. By September 10 of each year the ap- proving official shall require a report from each person for whom outside work has been approved during the past year. The report shall show: (a) For the 12 months just past (end- ing August 31): (1) Whether the anticipated work was actually performed for the person or organization named in the request for approval; (2) Actual amount of time spent on the activity. (b) For the forthcoming 12 months (ending August 31): (1) Whether it is anticipated that the outside work will continue; (2) Whether any change is anticipated with respect to information supplied in accordance with the original request on which approval was based. § 73.735–710 Maintenance of records. The official responsible for the ad- ministrative aspects of these regula- tions (§ 73.735–202) shall make provi- sions for the retention and filing of re- quests for appr –710 Maintenance of records. The official responsible for the ad- ministrative aspects of these regula- tions (§ 73.735–202) shall make provi- sions for the retention and filing of re- quests for approval of outside work (or copies of such requests), a copy of the notification of approval or disapproval, and the annual report. Subpart H—Financial Interest § 73.735–801 Participation in matters affecting a personal financial inter- est. (a) An employee shall not participate personally and substantially as a Gov- ernment employee in a matter in which any of the following individuals or or- ganizations has a financial interest: (1) The employee; (2) The employee’s spouse; (3) The employee’s minor child; (4) An organization in which the em- ployee serves as an officer, director, trustee, partner, or employee; or (5) A person or organization with which the employee is negotiating for prospective employment or has an ar- rangement for prospective employ- ment. Criminal penalties may be im- posed under 18 U.S.C. 208 for violations of the prohibition. (b) Applying the provision of 18 U.S.C. 208: 211 § 73.735–802 45 CFR Subtitle A (10–1–24 Edition) (1) A ‘‘financial interest’’ is any in- ter sed under 18 U.S.C. 208 for violations of the prohibition. (b) Applying the provision of 18 U.S.C. 208: 211 § 73.735–802 45 CFR Subtitle A (10–1–24 Edition) (1) A ‘‘financial interest’’ is any in- terest of monetary value which may be directly and predictably affected by the official action of an employee. There is no minimum amount of value or control that constitutes a financial interest. Example 1: An employee owns a single share of stock in a widely-held corporation. If the corporation is likely to be affected by a matter in which the employee participates as a Government official, the employee may violate 18 U.S.C. 208. Example 2: An employee has a paid part- time position with a non-federal organiza- tion. If the organization is likely to be af- fected by a matter in which the employee participates as a Government official, the employee would violate 18 U.S.C. 208. (2) The prohibition of 18 U.S.C. 208 applies to personal and substantial in- volvement by an employee in a matter, exercised through decision, approval, disapproval, recommendation, inves- tigation, giving advice, or other sig- nificant effort regarding the matter. Example 1: An employee is a member of a panel that xercised through decision, approval, disapproval, recommendation, inves- tigation, giving advice, or other sig- nificant effort regarding the matter. Example 1: An employee is a member of a panel that evaluates proposals for contracts and makes recommendations as to their award. If the employee’s spouse owns stock in a company which submits a proposal that is reviewed by the panel, the employee would violate 18 U.S.C. 208 even though the panel recommendation may be rejected by the con- tracting officer. Example 2: An employee is on a leave of ab- sence from a university. He or she would vio- late 18 U.S.C. 208 by participating in the drafting of regulations which would have a ‘‘direct and predictable effect’’ upon univer- sities in general and, therefore, upon the em- ployee’s university. (3) An employee must know that the financial interest exists in order to vio- late 18 U.S.C. 208. Example: An employee inherited a bene- ficial interest in a trust. He or she does not, however, have actual knowledge of the spe- cific property held by the trustee. If the trust contains stock in a corporation which may be affected by the employee’s official actions, he or she would not violate 18 U. ctual knowledge of the spe- cific property held by the trustee. If the trust contains stock in a corporation which may be affected by the employee’s official actions, he or she would not violate 18 U.S.C. 208 in taking official action affecting the corporation. (4) Negotiation for prospective em- ployment includes both an indication of interest on the part of the employee in working for an organization and an affirmative action on the part of the organization to show consideration of the employee. Example 1: An employee of the Department sends resumes and cover letters to fifty pro- spective employers, all of whom regularly have dealings with HHS. Forty employers do not respond; however, ten respond with cor- dial form letters stating that the employee’s resume will be retained for future reference. For purposes of the 18 U.S.C. 208 prohibition, the employee is negotiating for prospective employment at the time he or she sends re- sumes. Example 2: At a site visit to a grantee insti- tution, an employee who is officially respon- sible for a grant to that institution informs an officer of the institution that he or she is seeking a new position outside HHS. The grantee subsequently ution, an employee who is officially respon- sible for a grant to that institution informs an officer of the institution that he or she is seeking a new position outside HHS. The grantee subsequently makes a conditional offer of employment to the employee who promptly responds by asking for an oppor- tunity to discuss salary and related matters. Under these circumstances, a negotiation for prospective employment is underway. (c) An employee may obtain approval to participate in his or her official ca- pacity in a matter in which he or she has a direct or indirect financial inter- est, if the interest is not so substantial as to affect the integrity of his or her official duties. An employee who be- lieves that such participation is war- ranted should follow the procedures in § 73.735–804. (d) An employee convicted of vio- lating 18 U.S.C. 208 may be fined up to $10,000, or imprisoned up to two years, or both. § 73.735–802 Executive order prohibi- tions. (a) Basic prohibition of Executive Order 11222. (1) An employee shall not have a direct or indirect financial interest that conflicts substantially, or appears to conflict substantially, with his or her duties as a Federal employee. ve Order 11222. (1) An employee shall not have a direct or indirect financial interest that conflicts substantially, or appears to conflict substantially, with his or her duties as a Federal employee. (2) An employee need not have a fi- nancial interest that actually conflicts with his or her duties to violate the prohibition of E.O. 11222. Any financial interest that could reasonably be viewed as an interest which might compromise the employee’s integrity, whether or not this is in fact true, is subject to this prohibition. (3) Except as provided in § 73.735–802 (b) and (c), an employee who has an in- direct financial interest in a business entity through the ownership of shares in a widely-held mutual fund or other 212 Dept. of Health and Human Services § 73.735–804 regulated investment company will not violate E.O. 11222. Stocks in business entities held by an intermediary such as a mutual fund are generally too re- mote or inconsequential to affect the integrity of an employee’s services. (b) Employees in regulatory activities. (1) An employee who is working in a regulatory activity shall not have a fi- nancial interest in any company whose business activities are subject to th rvices. (b) Employees in regulatory activities. (1) An employee who is working in a regulatory activity shall not have a fi- nancial interest in any company whose business activities are subject to the regulations of the particular activity with which the employee is associated, unless the regulated activities of the company are an insignificant part of its total business operations. (2) An employee working in a regu- latory activity may not hold shares in a mutual fund or other regulated in- vestment company which specializes in holdings in industries that are regu- lated by the particular activity in which he or she is employed. Example: An employee working for the Bu- reau of Laboratories, Centers for Disease Control, may not hold shares in a regulated investment company which specializes in holdings that include medical testing labora- tories. (c) Employees having procurement or contracting responsibilities. (1) An em- ployee who serves as a procurement or contracting officer shall not have a fi- nancial interest in a company or com- panies with which he or she in the course of his or her official duties would be likely to have procurement or contracting relationships. (2) A pr not have a fi- nancial interest in a company or com- panies with which he or she in the course of his or her official duties would be likely to have procurement or contracting relationships. (2) A procurement or contracting of- ficer may not hold shares in a mutual fund or other regulated investment company that specializes in holdings in industries with which such officer would be likely to have procurement or contracting relationships. Example: A contracting officer in the So- cial Security Administration owns shares in the XYZ Mutual Fund which specializes in stock in firms manufacturing electronic data processing equipment. Ownership of XYZ Mutual Fund shares would be prohibited in this instance. On the other hand, a con- tracting officer for a Public Health Service hospital, who is not likely to have responsi- bility for major contracts relating to elec- tronic data processing, could hold such shares. § 73.735–803 Prohibition against in- volvement in financial transactions based on information obtained through Federal employment. An employee shall not engage in, di- rectly or indirectly, a financial trans- action as a result of, or in primary reli- ance upon, any information on information obtained through Federal employment. An employee shall not engage in, di- rectly or indirectly, a financial trans- action as a result of, or in primary reli- ance upon, any information gained through his or her official duties. Infor- mation gained through official duties are those facts and other data that re- late to the employee’s official duties or to the functions of the employing com- ponent and would not be available to the employee were he or she not an of- ficer of the Federal government. Example 1: An employee working part-time for a consulting firm that does no business with the employee’s principal operating component, in the area of health care plan- ning advises it, based upon his or her knowl- edge of a new health care planning program about to be initiated by the Public Health Service. The employee’s knowledge of the program was acquired solely through reading policy statements and other PHS literature available to the public under the Freedom of Information Act. In such case, the employee would not violate this regulation if the out- side activity was otherwise approvable under Subpart G. Example 2: A contracting officer with de- tailed knowledge of ion Act. In such case, the employee would not violate this regulation if the out- side activity was otherwise approvable under Subpart G. Example 2: A contracting officer with de- tailed knowledge of a negotiated procure- ment contract invests in a corporation that is likely to indirectly profit from the award of that contract. The officer’s decision to in- vest is based upon technical details of the successful contract proposal that would not otherwise be available to a private citizen. The officer would violate this regulation in such a situation. § 73.735–804 Waiver of the prohibitions in this subpart. (a) An employee may request ap- proval to participate in his or her offi- cial capacity in a matter in which he or she has a direct or indirect financial interest if the employee believes the interest is so remote and inconsequen- tial that it would not affect the integ- rity of his or her official duties. Also an employee who has a financial inter- est that would otherwise be prohibited under these regulations may request an exemption from the prohibition for the reason stated in the preceding sen- tence. (b) The request shall be in writing and shall include the following infor- ted under these regulations may request an exemption from the prohibition for the reason stated in the preceding sen- tence. (b) The request shall be in writing and shall include the following infor- mation: 213 § 73.735–805 45 CFR Subtitle A (10–1–24 Edition) (1) Employee’s name, occupational title, grade or rank and Federal salary; (2) Full description of financial inter- est: including whether ownership, serv- ice as officer, partner, etc.; (3) Business or activity in which fi- nancial interest exists; (4) Description of official matter in which employee is requesting approval to participate; (5) Basis for requesting determina- tion that the interest is ‘‘not so sub- stantial as to be deemed likely to af- fect the integrity of the services which the Government may expect.’’ (If based on a small total value of investment, supply appropriate information on total value, such as total shares held and latest quoted market price. If other basis, explain fully.) The request should be sent through usual administrative channels to the official responsible for reviewing finan- cial disclosure reports or statements for the employee’s organization (Sub- part I). That official, after conferr through usual administrative channels to the official responsible for reviewing finan- cial disclosure reports or statements for the employee’s organization (Sub- part I). That official, after conferring with a deputy ethics counselor or with the Department Ethics Counselor as appropriate, will make a decision about the exemption or exception and inform the employee in writing. § 73.735–805 Advice and guidance on conflicts matters. (a) Whenever an employee has a ques- tion about the appropriate course of conduct to be followed in a matter that may involve an actual or apparent con- flict of interest, he or she should imme- diately consult with his or her super- visor or a deputy ethics counselor, or both. If a supervisor who is consulted determines that the matter warrants further consideration, he or she may, in conjunction with the employee, sub- mit the details of the matter, in writ- ing, to the appropriate deputy ethics counselor. These details should include a description of: (1) The activity, relationship, or in- terest giving rise to the question posed by the employee; (2) The duties or official responsibil- ities of the employee(s) involved; (3) The nature of the actual or The activity, relationship, or in- terest giving rise to the question posed by the employee; (2) The duties or official responsibil- ities of the employee(s) involved; (3) The nature of the actual or appar- ent conflict of interest; and (4) Any other information that may be helpful in reviewing the problem. (b) Upon receiving the submission of an employee or a supervisor, the dep- uty ethics counselor will develop any additional information about the mat- ter as necessary, and will confer with the Department Ethics Counselor as appropriate. The Department Ethics Counselor and the head of the principal operating component or his or her des- ignee will be informed of any serious violation of the standards of this sub- part or any other conflict of interest law. Questions of first impression or other unusual matters shall be brought to the attention of the Department Ethics Counselor and the head of the principal operating component or his or her designee. (c) On the basis of all information gathered including, where appropriate, the advice of the Department Ethics Counselor, the deputy ethics counselor will: (1) Decide that there is no violation or potential violation of the standar tion gathered including, where appropriate, the advice of the Department Ethics Counselor, the deputy ethics counselor will: (1) Decide that there is no violation or potential violation of the standards of this subpart or any other law and so notify the employee and his or her su- pervisor in writing; or (2) Decide that a violation or poten- tial violation of the standards of this subpart or other law has occurred or may occur, and that the employee in- volved shall take one or more of the steps set forth in § 731.735–904 to resolve the problem and notify the employee and his or her supervisor in writing; or (3) Decide that, although no violation of this subpart or other law has oc- curred, the nature of the matter is such that the employee should periodi- cally report any additional information that would require reconsideration of the initial submission. § 73.735–806 Documentation and publi- cation of opinions. (a) The Department Ethics Coun- selor, deputy ethics counselors, and any other individuals required to be in- volved in the review and resolution of violations or potential violations of this subpart shall maintain full and ac- curate documentation of the formal ad- vice a other individuals required to be in- volved in the review and resolution of violations or potential violations of this subpart shall maintain full and ac- curate documentation of the formal ad- vice and guidance given. (b) From time to time, the Depart- ment Ethics Counselor shall publish summaries of advisory opinions issued by his or her office, deleting, as nec- essary, any personal identifiers or 214 Dept. of Health and Human Services § 73.735–901 other information which may give rise to an unwarranted invasion of personal privacy. These summaries shall be dis- tributed to all deputy ethics coun- selors, heads of principal operating components, and principal regional of- ficials. (c) From time to time, the Depart- ment Ethics Counselor shall publish an index of all summaries issued in ac- cordance with paragraph (b) of this sec- tion, and shall distribute these indexes to all deputy ethics counselors and heads of principal operating compo- nents who shall in turn make them available for review by supervisors and interested employees. Subpart I—Reporting Financial Interests § 73.735–901 Reporting requirement of the Ethics in Government Act of 1978. (a) Applicability. The followi e for review by supervisors and interested employees. Subpart I—Reporting Financial Interests § 73.735–901 Reporting requirement of the Ethics in Government Act of 1978. (a) Applicability. The following em- ployees and special Government em- ployees shall submit public financial disclosure reports in accordance with the provisions of Title II of the Ethics in Government Act of 1978, Pub. L. 95– 521, as amended: (1) Officers and employees (including consultants who will work more than 60 days in a calendar year) whose posi- tions are classified at GS–16 or above of the General Schedule, or whose basic rate of pay (excluding ‘‘step’’ increases) under other pay schedules is equal to, or greater than, the rate for GS–16 (step 1); (2) Members of the uniformed serv- ices whose pay grade is 0–7 or above; (3) Officers and employees in any other positions determined by the Di- rector of the Office of Government Eth- ics to be of equal classification to GS– 16; (4) Administrative Law Judges; (5) Employees in the excepted service in positions which are of a confidential or policy-making character, unless their position has been excluded by the Director of the Office of Government Ethics; (6) Employees in the excepted service in positions which are of a confidential or policy-making character, unless their position has been excluded by the Director of the Office of Government Ethics; (6) Department Ethics Counselor; and (7) Deputy Ethics Counselors. An employee who thinks that his or her position has been improperly in- cluded under the reporting require- ments of this part may obtain a review of that determination by writing to the Department Ethics Counselor. (b) Filing Dates. Employees listed in § 73.735–901 (a) of this subpart shall file a financial disclosure report: (1) Within 5 days after the trans- mittal by the President to the Senate of their nomination to a position re- quiring Senate confirmation, or (2) Within 30 days after assuming a covered position not requiring Senate confirmation unless the employee has left another covered position listed in § 73.735–901 (a) of this subpart, or (3) Within 30 days after terminating Federal employment or assuming a po- sition which is not listed in § 73.735–901 (a) of this subpart; and (4) By May 15 of each calendar year, unless the employee has in that cal- endar year already submitted a finan- cial disclosure report ion which is not listed in § 73.735–901 (a) of this subpart; and (4) By May 15 of each calendar year, unless the employee has in that cal- endar year already submitted a finan- cial disclosure report covering the pre- ceding calendar year. (c) Submission of reports. (1) Executive level officers, non-career executives, deputy ethics counselors and Schedule C employees in the Office of the Sec- retary who are required to report in ac- cordance with § 73.735–901 (a) of this subpart shall submit their reports to the Department Ethics Counselor. (2) All other employees required to report in accordance with § 73.735–901 (a) of this subpart shall submit their reports to the reviewing official for their organizational component under procedures described in the Depart- ment’s Personnel Manual. Personnel offices will keep a list of reviewing offi- cials and will give each covered em- ployee the name of the official to whom his or her report should be sent. (d) Review and certification of reports. (1) Each report submitted in accord- ance with this section shall be re- viewed by the appropriate reviewing of- ficial within 60 days of its receipt. Upon reviewing a report and finding that the i s. (1) Each report submitted in accord- ance with this section shall be re- viewed by the appropriate reviewing of- ficial within 60 days of its receipt. Upon reviewing a report and finding that the information contained therein reveals no conflict of interest or other violation of any provision of this part or applicable law, the reviewing officer shall certify the report with his or her signature. (2) The certification of a report filed in accordance with this section shall have the concurrence of the Office of the General Counsel. 215 § 73.735–902 45 CFR Subtitle A (10–1–24 Edition) (3) Action to be taken by the review- ing official if the individual is not in compliance with applicable laws and regulations is discussed in §§ 73.735–903 and 73.735–904. § 73.735–902 Reporting requirements for certain employees not covered by the Ethics in Government Act of 1978. (a) Applicability. The following em- ployees and special Government em- ployees shall submit confidential state- ments of employment and financial in- terests in accordance with the provi- sions of this subpart, provided they are not required to submit financial disclo- sure reports under § 73.735–901. A list of the posit mployment and financial in- terests in accordance with the provi- sions of this subpart, provided they are not required to submit financial disclo- sure reports under § 73.735–901. A list of the positions in this Department whose incumbents are required to file finan- cial interest statements as prescribed by this subpart is available for review in all of the Departments servicing per- sonnel offices. (1) Officers and employees in posi- tions classified at GS–13 or above (or comparable pay level) who have deci- sion-making responsibility for the fol- lowing matters: (i) Contracting or procurement, (ii) Administering or monitoring grants or subsidies, (iii) Regulating or auditing private or other non-Federal enterprises, or (iv) Other activities where the deci- sion or action would have an economic impact on the interest of any non-Fed- eral enterprise. (2) Incumbents of any other positions designated by the head of the principal operating component, or by the Assist- ant Secretary for Management and Budget for the Office of the Secretary, to report employment and financial in- terests in order to protect the integrity of the Government and to avoid pos- sible conflicts of interest. Management and Budget for the Office of the Secretary, to report employment and financial in- terests in order to protect the integrity of the Government and to avoid pos- sible conflicts of interest. The designa- tion of any such positions below the GS–13 grade must be approved by the Office of Personnel Management. (3) All experts, consultants, or advi- sory committee members who are not required to submit a public financial disclosure report in accordance with the Ethics in Government Act except: (i) Doctors, dentists and allied med- ical specialists performing services for, or consulted as to the diagnosis or treatment of, individual patients; or (ii) Veterinarians performing services for or consulted as to care and service to animals. (b) Filing dates. (1) Experts, consult- ants, and advisory committee members shall file a confidential Statement of Employment and Financial Interest no later than the date employment com- mences and shall file supplemental statements as necessary to keep all in- formation submitted current and accu- rate. (2) Other individuals covered by § 73.735–902 (a) of this subpart shall: (i) File a confidential statement no later than 30 days after assumin keep all in- formation submitted current and accu- rate. (2) Other individuals covered by § 73.735–902 (a) of this subpart shall: (i) File a confidential statement no later than 30 days after assuming a covered position unless the employee, within 30 days before assuming the po- sition, left another covered position in HHS that is included in § 73.735–901(a) or § 73.735–902(a) of this subpart; and (ii) Report changes in or additions to the information in the statement as of June 30 of each calendar year, or a dif- ferent date set by employee’s compo- nent with authorization by the Office of Personnel Management. (c) Submission and review of financial statements. (1) Heads of principal oper- ating components, the Assistant Sec- retary for Management and Budget, and principal regional officials for em- ployees under their appointing author- ity shall establish procedures to ensure that financial statements from covered employees are received and updated on a timely basis and are referred to the appropriate reviewing officials for re- view and certification. (See § 73.735–202 (e)(1)). (2) The reviewing official shall review statements to determine whether con- flicts of interest or a d to the appropriate reviewing officials for re- view and certification. (See § 73.735–202 (e)(1)). (2) The reviewing official shall review statements to determine whether con- flicts of interest or apparent conflicts might arise from the activities re- ported thereon. If the review discloses no conflict or apparent conflict, the re- viewing official shall certify the state- ment with his or her signature. Action to take if the individual is not in com- pliance with applicable laws and regu- lations is discussed in §§ 73.735–903 and 73.735–904. § 73.735–903 Action if conflicts of inter- est or possible conflicts are noted. (a) If after reviewing a financial dis- closure report or a financial interest statement, a reviewing official believes that additional information is needed, 216 Dept. of Health and Human Services § 73.735–904 he or she shall tell the individual sub- mitting such report what additional in- formation is required and the time by which it must be submitted. (b) If the reviewing official is of the opinion that, on the basis of informa- tion submitted, the reporting indi- vidual is not in compliance with appli- cable laws and regulations, he or she shall notify the i reviewing official is of the opinion that, on the basis of informa- tion submitted, the reporting indi- vidual is not in compliance with appli- cable laws and regulations, he or she shall notify the individual, afford him or her a reasonable opportunity for a written or oral response, and after con- sideration of such response, determine whether or not the individual is in compliance. (c) If the reviewing official deter- mines that an individual is not in com- pliance with applicable laws and regu- lations, he or she shall notify the indi- vidual of that determination in writing and, after an opportunity for personal consultation, determine and notify the individual of the action, including those actions set forth in § 73.735–904, that would be appropriate to assure compliance with such laws and regula- tions, and the date by which such ac- tion should be taken. The action re- quired and the date for taking it shall be determined by the nature of the fi- nancial interest or other relationship, the particular circumstances of the re- porting individual (including his or her ability to resolve the problem), and other factors which the reviewing offi- cial deems relevant. In no case, ionship, the particular circumstances of the re- porting individual (including his or her ability to resolve the problem), and other factors which the reviewing offi- cial deems relevant. In no case, how- ever, should the date be later than 90 days after the reporting individual is notified of the reviewing official’s opin- ion. (d) If steps for assuring compliance with applicable laws and regulations are not taken by the date set in para- graph (c) of this section, the matter shall be referred to the Department Ethics Counselor. § 73.735–904 Resolution of apparent or actual conflicts of interest. (a) Disqualification from partici- pating in a particular matter or cat- egory of matters is an appropriate method for resolving apparent or ac- tual conflicts of interest when the in- terest or activity giving rise to the problem: (1) Bears a direct or indirect relation- ship to particular, identifiable duties of the employee involved; and (2) Is not so substantial as to affect or give the appearance of affecting the integrity of the services which the Government may expect of the em- ployee. Whenever disqualification is employed to resolve an apparent or ac- tual conflict of interest, t ppearance of affecting the integrity of the services which the Government may expect of the em- ployee. Whenever disqualification is employed to resolve an apparent or ac- tual conflict of interest, the disquali- fied employee shall sign a written statement reflecting the scope of the disqualification and the precise nature of the conflicting interest or activity. The reviewing official shall keep a file of all such disqualification statements and shall monitor compliance with these statements on a regular basis. (b) Change of assignment is an appro- priate method for resolving apparent or actual conflicts of interest when the interest giving rise to the problem bears a direct or indirect relationship to particular, identifiable duties of the employee involved, and those duties constitute a significant portion of the employee’s position. (c) Waiver under 18 U.S.C. 208(b) is an appropriate method for resolving ap- parent or actual conflicts of interest when: (1) The employee seeking the waiver reported the financial interest that bears some relationship to his or her official duties, and the reviewing offi- cial, in consultation with a deputy eth- ics counselor or the Department Eth waiver reported the financial interest that bears some relationship to his or her official duties, and the reviewing offi- cial, in consultation with a deputy eth- ics counselor or the Department Ethics Counselor, determines that the finan- cial interest is not so substantial as to be deemed likely to affect the integrity of the services which the Government may expect from such employee; or (2) By general rule or regulation pub- lished in the FEDERAL REGISTER, the Department has exempted the financial interest from the requirements of 18 U.S.C. 208 and this part as being too re- mote or too inconsequential to affect the integrity of the Government offi- cers’ service. (d) A trust containing a financial in- terest which may give rise to an appar- ent or actual conflict of interest is an appropriate method of resolving such conflicts when: (1) The trust is qualified under sec- tion 202(f) of the Ethics in Government Act of 1978 (Pub. L. 95–521), as amended, and subject to the regulations of the Office of Government Ethics; or 217 § 73.735–1001 45 CFR Subtitle A (10–1–24 Edition) (2) In the opinion of the Depart- ment’s Ethics Counselor, it is suffi- ciently independent of the emplo ns of the Office of Government Ethics; or 217 § 73.735–1001 45 CFR Subtitle A (10–1–24 Edition) (2) In the opinion of the Depart- ment’s Ethics Counselor, it is suffi- ciently independent of the employee involved so that the integrity of the employee’s services to the Government are not compromised. (e) Divestiture is an appropriate meth- od for resolving actual conflicts of in- terest when the nature of the financial interest is such that the conflict of in- terest cannot be adequately resolved by any of the methods set forth in paragraphs (a), (b), (c), and (d) of this section. (f) Terminating an appointment as a method for resolving an actual conflict of interest should be used only when it is clear that no other remedy can be found which would be acceptable to both the Department and the em- ployee. Generally, this method will be employed only in the most extreme cases. Such a termination would be subject to adverse action. Subpart J—Provisions Relating to Experts, Consultants and Ad- visory Committee Members § 73.735–1001 Coverage. (a) For purposes of this subpart the title ‘‘consultant’’ will be used to in- clude those who are appointed to serve as experts, consultants or mem Ad- visory Committee Members § 73.735–1001 Coverage. (a) For purposes of this subpart the title ‘‘consultant’’ will be used to in- clude those who are appointed to serve as experts, consultants or members of advisory committees. All persons who serve as an employee of the Govern- ment in the capacity of a consultant are covered by the provisions of this subpart irrespective of: (1) The title by which designated; (2) The statutory authority under which services are obtained; (3) The duration of the period for which services are obtained; (4) Whether services are obtained by appointment or invitation and accept- ance; (5) Whether services are compensated or rendered without compensation; (6) Whether or not services are ob- tained pursuant to a statute excepting employees or special Government em- ployees from conflict of interest stat- utes. (b) When the service is for less than 130 days in a service year, experts, con- sultants, and advisory committee members are included in the group of employees designated by law (18 U.S.C. 202) as ‘‘Special Government employ- ees.’’ § 73.735–1002 Ethical standards of con- duct. (a) Like other Federal employees, an individual serving in a consulta f employees designated by law (18 U.S.C. 202) as ‘‘Special Government employ- ees.’’ § 73.735–1002 Ethical standards of con- duct. (a) Like other Federal employees, an individual serving in a consultant ca- pacity must conduct himself or herself according to ethical behavior standards of the highest order. In particular, such an individual must: (1) Refrain from any use of office which is, or appears to be, motivated by a private gain for himself or herself or other persons, particularly those with whom he or she has family, busi- ness, or financial ties. The fact that de- sired gain, if it materializes, will not take place at the expense of the Gov- ernment makes his or her actions no less improper. (2) Conduct himself or herself in a manner devoid of any suggestion that he or she is exploiting Government em- ployment for private advantage. A con- sultant must not, on the basis of any inside information, enter into any speculation or recommend speculation to members of his or her family or business associates, in commodities, land, or the securities of any private company. This injunction applies even though the consultant’s duties have no connection whatever with the Govern- ment ly or business associates, in commodities, land, or the securities of any private company. This injunction applies even though the consultant’s duties have no connection whatever with the Govern- ment programs or activities which may affect the value of such commodities, land, or securities. He or she should be careful in all personal financial activi- ties to avoid any appearance of acting on the basis of information obtained in the course of his or her Government work. (3) Refrain from using information not generally available to those out- side the Government for the special benefit of a business or other entity by which the consultant is employed or retained or in which he or she has a fi- nancial interest. Information not avail- able to private industry should remain confidential in the consultant’s hands and not be divulged to his or her pri- vate employer or clients. In cases of doubt whether information is generally available to the public, the consultant should confer with the person for whom he or she provides services, with the of- fice having functional responsibility for a specific type of information, or, 218 Dept. of Health and Human Services § 73.735–1003 as appropr person for whom he or she provides services, with the of- fice having functional responsibility for a specific type of information, or, 218 Dept. of Health and Human Services § 73.735–1003 as appropriate, with the officials des- ignated in § 73.735–202 to give interpre- tive and advisory service. (4) Where requested by a private en- terprise to act for it in a consultant or advisory capacity and the request ap- pears motivated by the desire for inside information, make a choice between acceptance of the tendered private em- ployment and continuation of his or her Government consultancy. He or she may not engage in both. (5) Not use his or her position in any way to coerce, or give the appearance of coercing, anyone to provide a finan- cial benefit to him or her or another person, particularly one with whom the consultant has family, business, or fi- nancial ties. (6) Not receive or solicit anything of value as a gift, gratuity, loan, enter- tainment, or favor for himself or her- self or another person, particularly one with whom he or she has family, busi- ness, or financial ties if the acceptance would result in loss of complete inde- pendence or impartiality in serving the Gover or another person, particularly one with whom he or she has family, busi- ness, or financial ties if the acceptance would result in loss of complete inde- pendence or impartiality in serving the Government. All consultants are sub- ject to the restrictions in § 73.735–506 of this part concerning gifts and decora- tions from foreign governments. (b) Consultants may engage in other employment so long as there is no real or apparent conflict between the con- sultant’s private employment and his or her official duties. See § 73.735 Sub- part G. The regular employment of a consultant who is a special Govern- ment employee is not considered out- side work for purposes of Subpart G. Also, the limitation in § 73.735–701(f) re- garding the amount of an honorarium that may be received does not apply to special Government employees. (c) A consultant who has questions about conflicts of interest or the appli- cation of the regulations in this part to him or her or to his or her assigned work should make inquiry of the per- son for whom services are provided. That person may direct the consultant to the Department Ethics Counselor or a deputy ethics counselor for interpre- tative and advisory s d make inquiry of the per- son for whom services are provided. That person may direct the consultant to the Department Ethics Counselor or a deputy ethics counselor for interpre- tative and advisory services as pro- vided in § 73.735–202. § 73.735–1003 Conflicts of interest stat- utes. (a) Each consultant should acquaint himself or herself with sections 203, 205, 207 and 208 of title 18, United States Code, all of which carry criminal pen- alties related to conflicts of interest. The restraints imposed by the four criminal sections are summarized in paragraphs (b) and (c) of this section. (b) 18 U.S.C. 203 and 205. (1) These two sections in general op- erate to preclude a person who works for the Government, except in the dis- charge of his or her official duties, from representing anyone else before a court or Government agency in a mat- ter in which the United States is a party or has a direct and substantial interest. The applies whether or not compensation is re- ceived for the representation. However, if the individual is a special Govern- ment employee, this restriction applies only if: prohibition (i) The representation involves a matter in which the individual has at any ti resentation. However, if the individual is a special Govern- ment employee, this restriction applies only if: prohibition (i) The representation involves a matter in which the individual has at any time participated personally and substantially in the course of his or her Government employment; or (ii) The individual has served the De- partment for more than 60 days in the immediately preceding period of 365 days, and the matter is one which is pending before the Department. This second restraint applies whether or not the matter is one in which the indi- vidual participated personally and sub- stantially in his or her Government employment. These two provisions apply to a special Government em- ployee on days when he or she does not serve the Government as well as on the days when services are rendered, and they apply to both paid and unpaid rep- resentation. (2) To a considerable extent the pro- hibitions of sections 203 and 205 are aimed at the sale of influence to gain special favors for private businesses and other organizations and at the mis- use of governmental position or infor- mation. In accordance with these aims, a consultant, even when not compelled to do so by sectio rs for private businesses and other organizations and at the mis- use of governmental position or infor- mation. In accordance with these aims, a consultant, even when not compelled to do so by sections 203 and 205, should make every effort in his or her private work to avoid any personal contact with respect to negotiations for con- tracts or grants with the component of 219 § 73.735–1004 45 CFR Subtitle A (10–1–24 Edition) the department in which he or she is serving, if the subject matter is related to the subject matter of his or her consultancy or other service. This will not always be possible to achieve where, for example, a consultant has an executive position with his or her regular employer which requires him or her to participate personally in con- tract negotiations with the department or agency he or she is advising. When- ever this is the case, the consultant should participate in the negotiations for his or her employer only after ad- vising the responsible Government offi- cial of his or her involvement in other matters in the Department. In other instances an occasional consultant may have technical knowledge which is indispensable to his or her regular em- ployer fi- cial of his or her involvement in other matters in the Department. In other instances an occasional consultant may have technical knowledge which is indispensable to his or her regular em- ployer in his efforts to formulate a re- search and development contract or a research grant, and for the same rea- son, it is in the interest of the Govern- ment that the consultant should take part in negotiations for his or her pri- vate employer. Again, the individual should participate only after advising the responsible Government official of the relevant facts. (3) Section 205 permits both the Gov- ernment and the private employer of a special Government employee to ben- efit, in certain cases, from his or her performance of work under a grant or contract for which he or she would oth- erwise be disqualified because of hav- ing participated in the matter for the Government or because it is pending in a component in which the consultant had served more than 60 days in the past year. This provision gives the head of a department the authority, notwithstanding any prohibition in ei- ther section 203 or 205, to allow a spe- cial Government employee to represent before such department or ag ovision gives the head of a department the authority, notwithstanding any prohibition in ei- ther section 203 or 205, to allow a spe- cial Government employee to represent before such department or agency ei- ther his or her regular employer or an- other person or organization in the per- formance of work under a grant or con- tract. As a basis for this action, the Secretary must first make a certifi- cation in writing, published in the FED- ERAL REGISTER, that it is required by the national interest. (4) Section 205 contains two other ex- emptive provisions, which apply to both special and regular Government employees. See § 73.735–702. (c) 18 U.S.C. 207 applies to individuals who have left Government service. See Subpart N of these regulations. (d) 18 U.S.C. 208 bears on the activi- ties of Government personnel, includ- ing special Government employees, in the course of their official duties. In general, it prevents a Government em- ployee from participating as such in a particular matter in which, to his or her knowledge, he or she, his or her spouse, minor child, partner, or a profit or non-profit enterprise with which he or she is connected has a financial in- terest. However, atter in which, to his or her knowledge, he or she, his or her spouse, minor child, partner, or a profit or non-profit enterprise with which he or she is connected has a financial in- terest. However, the section permits an employee’s agency to grant him or her an ad hoc exemption if the interest is not so substantial as to affect the in- tegrity of his or her services. Insignifi- cant interests may also be waived by a general rule or regulation. The matters in which special Government employ- ees are disqualified by section 208 are not limited to those involving a spe- cific party or parties in which the United States is a party or has an in- terest, as in the case of sections 203, 205 and 207. Section 208 therefore extends to matters in addition to contracts, grants, judicial and quasi-judicial pro- ceedings, and other matters of an ad- versary nature. Accordingly, a special Government employee, like all govern- ment employees, should in general be disqualified from participating as such in a matter of any type the outcome of which will have a direct and predict- able effect upon the financial interests covered by the section. However, the power of exemption may be exercised in t such in a matter of any type the outcome of which will have a direct and predict- able effect upon the financial interests covered by the section. However, the power of exemption may be exercised in this situation if the spe- cial Government employee renders ad- vice of a general nature from which no preference or advantage over others might be gained by any particular per- son or organization. The power of ex- emption may also be exercised where the financial interests involved are minimal in value. § 73.735–1004 Requesting waivers or exemptions. (a) A consultant may present in writ- ing to the official for whom he or she provides services requests for the waiv- ers or exemptions specified in § 73.735– 1003. That official will take, or refer the request for, action as appropriate, and will see that the employee receives 220 Dept. of Health and Human Services § 73.735–1004 advice or decision on his or her re- quest. (b) A file of all waivers or exemptions granted shall be maintained in such manner that information can be given promptly on individual cases or statis- tics provided upon request. Generally, these records, together with written advice given in connection with less form such manner that information can be given promptly on individual cases or statis- tics provided upon request. Generally, these records, together with written advice given in connection with less formal requests concerning questions of ethical standards, are kept with the employee’s statement of employment and financial interests or financial dis- closure report (§ 73.735–1006). (c)(1) Waiver for reviewers from certain multi-campus institutions. Applicability of the prohibitions of 18 U.S.C. 208(a) and this subpart are hereby waived pursuant to a determination that the interest involved is too remote or too inconsequential to affect the integrity of a special Government employee’s re- view of a funding application or con- tract proposal from one campus of one of the following multi-campus institu- tions, where the interest consists sole- ly of employment as a faculty member (including Department Chairman) at a separate campus of the same multi- campus institution: The University of Alabama system con- sisting of the University of Alabama, the University of Alabama in Birmingham, and the University of Alabama in Huntsville. The campuses of the University of Cali- fornia. The system bama system con- sisting of the University of Alabama, the University of Alabama in Birmingham, and the University of Alabama in Huntsville. The campuses of the University of Cali- fornia. The system consisting of Colorado State University, the University of Southern Colo- rado, and Fort Lewis College. The Indiana University system consisting of eight universities on nine campuses, with the exception of the system-wide schools: the School of Business; the School of Dentistry; the School of Medicine; the School of Nurs- ing; and the School of Public and Environ- mental Affairs. The University of Nebraska system con- sisting of the University of Nebraska—Lin- coln, the University of Nebraska at Omaha, and the University of Nebraska Medical Cen- ter. The campuses of the State University of New York. The Oregon system of higher education consisting of the University of Oregon, Or- egon State University, Oregon Health Sciences University, Portland State Univer- sity, Western Oregon State College, South- ern Oregon State College, Eastern Oregon State College, and the Oregon Institute of Technology. The campuses of the University of Ten- nessee. The separate universities comprising the Un llege, South- ern Oregon State College, Eastern Oregon State College, and the Oregon Institute of Technology. The campuses of the University of Ten- nessee. The separate universities comprising the University of Texas System. The separate universities comprising the University of Wisconsin System. (2) Institutions that are not subject to 18 U.S.C. 208(a) and the subpart, because they are not part of the same organization within the State. The following State in- stitutions and systems of higher edu- cation have been determined to be sep- arate from each other to such a degree that no waiver is necessary in order to permit a faculty member (including Department Chairman) employed by one of the State institutions of higher education to review a funding applica- tion or contract proposal from another of the named institutions within that State: The University of Alabama System and other Alabama State owned institutions of higher education. The California Community Colleges, the California State Universities and Colleges, and the University of California. The University of Colorado, Colorado State University, and other Colorado State owned institutions of higher education. The Universi State Universities and Colleges, and the University of California. The University of Colorado, Colorado State University, and other Colorado State owned institutions of higher education. The University of Connecticut, Con- necticut State University, the Connecticut Technical Colleges, and the Connecticut Community Colleges. The University of Illinois, Illinois State Illinois University, University, Western Southern Illinois University, and the Illinois Community Colleges. The Indiana University and the other Indi- ana State owned institutions of higher edu- cation. The University of Iowa, and Iowa State University. The University of Kansas, Kansas State University, Wichita State University, Fort Hays State University, Pittsburg State Uni- versity, and the Kansas Technological Insti- tute. Louisiana State University, and other Lou- isiana State owned institutions of higher education. The University of Massachusetts, and other Massachusetts State owned institu- tions of higher education. The University of Michigan, Michigan State University, and Wayne State Univer- sity. The University of Minnesota, the Min- nesota State University System, and the Minnesota Community College System. . The University of Michigan, Michigan State University, and Wayne State Univer- sity. The University of Minnesota, the Min- nesota State University System, and the Minnesota Community College System. The University of Missouri, and other Mis- souri State owned institutions of higher edu- cation. 221 § 73.735–1005 45 CFR Subtitle A (10–1–24 Edition) The University of Nebraska, and other Ne- braska State owned institutions of higher education. The State University of New York System, and the City University of New York Sys- tem. The University of North Carolina, North Carolina State, and other North Carolina State owned institutions of higher edu- cation. Pennsylvania State University, the Uni- versity of Pittsburgh, Temple University, Lincoln University, and the other State owned colleges and universities in Pennsyl- vania. The University of Texas System, the Texas A&M System, the Texas State University System, the University System of South Texas, the Lamar University System, the University of Houston System, East Texas State University, Stephen F. Austin State University, West Texas State University, Midwestern University, North Texas State University, Texas Southern University, ersity of Houston System, East Texas State University, Stephen F. Austin State University, West Texas State University, Midwestern University, North Texas State University, Texas Southern University, Texas Woman’s University, Texas Tech Uni- versity and Pan American University. The University of Utah and Utah State University. [46 FR 7369, Jan. 23, 1981, as amended at 51 FR 15627, Apr. 25, 1986] § 73.735–1005 Salary from two sources. Special Government employees are not subject to 18 U.S.C. 209 which pro- hibits other employees from receiving any salary, or supplementation of Gov- ernment salary, from a private source as a compensation for services to the Government. This Department will not knowingly pay per diem to a consult- ant who also receives per diem pay for the same day from another Govern- ment agency (in or outside the Depart- ment). Erroneous payments in con- travention of this provision will be sub- ject to collection, and any consultant who willfully collects double payments may be barred from further employ- ment. § 73.735–1006 Reporting financial in- terests. (a) Consultants who will work more than 60 days in a calendar year are sub- ject to the provisions of title nts may be barred from further employ- ment. § 73.735–1006 Reporting financial in- terests. (a) Consultants who will work more than 60 days in a calendar year are sub- ject to the provisions of title II of the Ethics in Government Act of 1978 when their rate of pay is equal to or greater than the basic rate for GS–16, Step 1. Such consultants are covered by the re- porting requirements of § 73.735–901 of these regulations. (b) Consultants not subject to the Ethics in Government Act shall file statements of financial interests as provided by § 73.735–902 of these regula- tions. § 73.735–1007 Political activity. Consultants who serve intermit- tently are subject to the political ac- tivity restrictions of Subchapter III of Chapter 73 of Title 5 U.S.C. and Civil Service Rule IV only on days on which service is rendered and then for the en- tire 24 hours of such service day. Other consultants are subject to these re- strictions at all times. Subpart K—Special Government Employees Other Than Con- sultants § 73.735–1101 General provision. Individuals who are designated as special Government employees because of the nature of their services but who are not serving as a consultant, expert, n Con- sultants § 73.735–1101 General provision. Individuals who are designated as special Government employees because of the nature of their services but who are not serving as a consultant, expert, or advisory committee member are subject to the provisions of Subparts B through I of these regulations. How- ever, the provisions of 18 U.S.C. 205, 206, 207, and 208 apply to them only as de- scribed in Subpart J. Also, the limita- tion in § 73.735–701(f) on the amount of an honorarium that may be received does not apply. Subpart L—Disciplinary Action § 73.735–1201 General provisions. (a) Violations of the regulations con- tained in the part may be cause for dis- ciplinary action which could be in ad- dition to any penalty prescribed by law. (For a list of some offenses for which disciplinary action may be taken and ‘‘The Code of Ethics for Govern- ment Service,’’ the violation of which may also result in disciplinary action, see appendixes A and B of this part). (b) The type of disciplinary action to be taken must be determined in rela- tion to the specific violation. Those re- sponsible for recommending and for taking disciplinary action must apply judgment to each case, taking int nary action to be taken must be determined in rela- tion to the specific violation. Those re- sponsible for recommending and for taking disciplinary action must apply judgment to each case, taking into ac- count the general objectives of meeting any requirements of law, deterring similar offenses by the employee and 222 Dept. of Health and Human Services § 73.735–1303 other employees, and maintaining high standards of employee conduct and public confidence. Some types of dis- ciplinary action which may be consid- ered are: (1) Admonishment (2) Written reprimand (3) Reassignment (4) Suspension (5) Demotion (6) Removal (c) Suspension, demotion, and re- moval are adverse actions; and when such actions are taken, applicable laws, regulations, and policies must be followed. [46 FR 7369, Jan. 23, 1981, as amended at 53 FR 4409, Feb. 16, 1988] Subpart M—Reporting Violations § 73.735–1301 Responsibility for report- ing possible criminal violations. An employee who has information which he or she reasonably believes in- dicates a possible offense against the United States by an employee of the Department, or any other individual working on behalf of the Department, shall immediately report he reasonably believes in- dicates a possible offense against the United States by an employee of the Department, or any other individual working on behalf of the Department, shall immediately report such informa- tion to his or her supervisor, any man- agement official, or directly to the Of- fice of the Inspector General. Offenses covered by the preceding sentence in- clude, but are not limited to, bribery, fraud, perjury, conflict of interest, mis- use of funds, equipment, or facilities, and other conduct by a government of- ficer or employee, grantee, contractor or other person which is prohibited by title 18 of the United States Code. Em- ployees and supervisors should refer to chapter 5–10 of the Department’s Gen- eral Administration Manual for proce- dures regarding the reporting and han- dling of such information. § 73.735–1302 Responsibility for report- ing allegations of misconduct. An employee who has information which he or she reasonably believes in- dicates the existence of an activity constituting (a) a possible violation of a rule or regulation of the Department; or (b) mismanagement, a gross waste of funds, or abuse of authority; or (c) a substantial and specific d of an activity constituting (a) a possible violation of a rule or regulation of the Department; or (b) mismanagement, a gross waste of funds, or abuse of authority; or (c) a substantial and specific danger to the public health and safety, shall imme- diately report such information to his or her supervisor, any management of- ficial of the Department, or directly to the Office of the Inspector General. Employees and supervisors should refer to chapter 5–10 of the Department’s General Administration Manual for procedures regarding the reporting and handling of such information. This sub- section does not cover employee griev- ances, equal employment opportunity complaints, classification appeals, or other matters for which a formal gov- ernment-wide review system has been established by the Federal government. § 73.735–1303 Prohibition of reprisals. (a) Any employee who has authority to take, direct others to take, rec- ommend, or approve any personnel ac- tion, shall not, with respect to such au- thority, take or threaten to take any action against any employee as a re- prisal for making a complaint or pro- viding any information pursuant to §§ 73.735–1301 and 73.735–1302. If the c to such au- thority, take or threaten to take any action against any employee as a re- prisal for making a complaint or pro- viding any information pursuant to §§ 73.735–1301 and 73.735–1302. If the com- plaint was made or the information was disclosed with the knowledge that it was false, or with willful disregard of its truth or falsity, any personnel ac- tion taken against the employee based on those reasons would not constitute a reprisal action. (b) An employee who believes that he or she has been threatened with a per- sonnel action, any other action, or har- assment or has been harmed by any ac- tion as a reprisal for having made a complaint or providing information pursuant to § 73.735–1301 or § 73.735–1302 may request the Office of the Inspector General to review his or her allega- tions. Whenever the Inspector General has reason to believe that the allega- tions may be true, he or she will refer the matter to the Assistant Secretary for Personnel Administration for ap- propriate action. The Assistant Sec- retary for Personnel Administration may order a stay of any personnel ac- tion if he or she determines that there are reasonable grounds to believe that the personnel ac ate action. The Assistant Sec- retary for Personnel Administration may order a stay of any personnel ac- tion if he or she determines that there are reasonable grounds to believe that the personnel action is being taken as a reprisal for making a complaint or information pursuant to providing § 73.735–1301 or § 73.735–1302. 223 § 73.735–1304 45 CFR Subtitle A (10–1–24 Edition) § 73.735–1304 Referral of matters aris- ing under the standards of this part. (a) The Department Ethics Counselor may refer to the Inspector General for investigation and/or further action any matter arising under the standards of this part. (b) The Department Ethics Counselor may refer to the Office of Government Ethics, or the Inspector General may refer to the Department of Justice, sus- pected violations of the criminal laws regarding employee standards of con- duct and conflicts of interest. Subpart N—Conduct and Respon- sibilities of Former Employees § 73.735–1401 Prohibitions against post-employment conflicts of inter- est. (a) The purpose of criminal prohibi- tion in 18 U.S.C. 207 is to prevent the unfair use of inside knowledge or influ- ence that results from Federal service. 18 U.S.C. 207 generally cts of inter- est. (a) The purpose of criminal prohibi- tion in 18 U.S.C. 207 is to prevent the unfair use of inside knowledge or influ- ence that results from Federal service. 18 U.S.C. 207 generally prohibits a former employee from acting as an- other person’s representative to the Government in particular matters in- volving a specific party or parties in which the employee had been involved while in Federal service. This prohibi- tion does not require a former em- ployee to decline employment with any organization regardless of his or her dealings with that organization while employed by the Government. It ap- plies solely to activities, not the mere existence of an employment arrange- ment. (b) The Office of Government Ethics, Office of Personnel Management, has issued Government-wide regulations covering post-employment conflict of interest (5 CFR part 737). Those regula- tions are incorporated herein by ref- erence, and they are available for re- view in personnel offices throughout the Department. APPENDIX A TO PART 73—LIST OF SOME OFFENSES FOR WHICH DISCIPLINARY ACTION MAY BE TAKEN Following is a list of some offenses for which disciplinary action may be taken under this P hout the Department. APPENDIX A TO PART 73—LIST OF SOME OFFENSES FOR WHICH DISCIPLINARY ACTION MAY BE TAKEN Following is a list of some offenses for which disciplinary action may be taken under this Part. When a statute applies spe- cifically to a particular offense, either whol- ly or in part, the statute is cited. Neither the list of offenses nor the statutory citations are all-inclusive. The ‘‘Code of Ethics for Government Service’’ is not cited because of its general applicability but is published in its entirety in appendix B. A. Concerning Efficiency of Operations in General. 1. Engaging in wasteful actions or behavior in the performance of assigned du- ties; conducting non-Government business during official work hours; or participating in a strike (18 U.S.C. 1918), work stoppage, slowdown, sickout, or other similar action. 2. Absence without leave, failure to adhere to the rules and regulations for requesting and obtaining leave, or improper use of sick leave. 3. Deliberate insubordination or refusal to carry out lawful orders or assignments given. 4. Disruptive behavior, such as: a. Inflicting or threatening or attempting to inflict bodily injury on another (except for nec ubordination or refusal to carry out lawful orders or assignments given. 4. Disruptive behavior, such as: a. Inflicting or threatening or attempting to inflict bodily injury on another (except for necessary defense of self or others) while on the job or on Federal premises. b. Discourtesy, disreputable conduct, or use of insulting, abusive or obscene language to or about other individuals while on the job. 5. Sexual harassment of employees or members of the public. 6. Failure to observe precautions for safe- ty, such as failure to use safety equipment when it is provided or ignoring signs, posted rules or regulations, or written or verbal safety instructions. or controlled 7. Unauthorized use, possession, or dis- tribution of alcoholic beverages (5 U.S.C. 7352) (e.g., hallucinogens, such as LSD; stimulants, such as cocaine and amphetamines; sedatives, such as barbiturates; narcotics and other drugs or substances, such as hashish and other cannabis substances). substances 8. Unauthorized gambling; or canvassing, soliciting, or peddling on Government prem- ises. 9. Failure to carry or show proper identi- fication or credentials as required by com- petent authority; misuse of identifi d gambling; or canvassing, soliciting, or peddling on Government prem- ises. 9. Failure to carry or show proper identi- fication or credentials as required by com- petent authority; misuse of identification cards or investigative or identification cre- dentials or badges. 10. Failure to disclose (i.e., report) infor- mation, when such disclosure is not specifi- cally prohibited by law or Executive Order, that involves (a) violation of law, rule, or regulation, (b) mismanagement or gross waste of funds or abuse of authority, or (c) posing a substantial and specific danger to public health or safety; failure to cooperate in an official Department inquiry. 11. Failure to pay just debts, including taxes to and loans from governmental sources. 224 Dept. of Health and Human Services Pt. 73, App. A 12. Deceit or interference in a Civil Service examination (18 U.S.C. 1917) or in connection with a Government personnel action. 13. Fraud or false statements in a Govern- ment matter. (18 U.S.C. 1001 through 1003.) 14. Supervisory failure to initiate discipli- nary or corrective action when the facts are known and disciplinary or corrective action is warranted. 15. Employment of a member of an 01 through 1003.) 14. Supervisory failure to initiate discipli- nary or corrective action when the facts are known and disciplinary or corrective action is warranted. 15. Employment of a member of an organi- zation that advocates the overthrow of our constitutional form of government. (5 U.S.C. 7311; 50 U.S.C. 784.) B. Concerning Government Funds, Property, Documents, and Records. 1. Actual or at- tempted embezzlement or theft of Govern- ment or personal money or property either directly or through use of Government docu- ments, automated equipment, or other means; actual or attempted embezzlement or theft of the money or property of another person in the possession of an employee by reason of his or her employment. (18 U.S.C. 641 and 654.) 2. Failure to account for public money. (18 U.S.C. 643.) 3. Deliberate falsifying of official time and attendance records; improper use of official travel or forging, counterfeiting, or other- wise falsifying official Government travel records or documents. (18 U.S.C. 508.) 4. False record entries or false reports of money or securities. (18 U.S.C. 2073.) 5. Loss or misuse of or damage to Govern- ment property or endangering persons or Governmen cuments. (18 U.S.C. 508.) 4. False record entries or false reports of money or securities. (18 U.S.C. 2073.) 5. Loss or misuse of or damage to Govern- ment property or endangering persons or Government property through carelessness or by willful malicious conduct. 6. Mutilating, destroying, or concealing public records. (18 U.S.C. 2071.) 7. Misuse of penalty (postal) privilege. (18 U.S.C. 1719.) 8. Failure to safeguard administratively confidential, financial, and trade secrets in- formation. 9. Unauthorized use of documents pre- sented or used to procure the payment of money from or by the Government. (18 U.S.C. 285.) 10. Unauthorized use of a Government vehi- cle; serious or repeated violations of traffic regulations while driving a Government ve- hicle or a vehicle rented or leased for official Government purposes; reckless driving or improper operation of any Government owned, rented, or leased motor vehicle. (31 U.S.C. 1349[b].) 11. Violations of the Privacy Act, includ- ing: a. Willful prohibited disclosure of individ- ually identifiable information in violation of 5 U.S.C. 552a. b. Willfully maintaining a system of records without meeting the notice require- ments of the Pri illful prohibited disclosure of individ- ually identifiable information in violation of 5 U.S.C. 552a. b. Willfully maintaining a system of records without meeting the notice require- ments of the Privacy Act as required by 5 U.S.C. 552a. 12. Violation of regulations concerning the release of classified information, confiden- tial, or security and investigative informa- tion. (18 U.S.C. 798 and 1905; 21 U.S.C. 331j; and 50 U.S.C. 783.) C. Concerning Conflicts of Interest and Re- lated Unethical Conduct: 1. Violations of 18 U.S.C. Chapter 11: Bribery, Graft, and Con- flicts of Interest, including: a. Having a direct or indirect financial in- terest (includes employee ownership of stocks, bonds, or partnership interests in an entity or employment of the employee, his or her spouse, or dependent child) that con- flicts with one’s Government duties because such entity is either regulated by, has or seeks to do business with the agency, or has any other particular matter with or pending before the agency that may give rise to ei- ther an actual conflict or the appearance thereof. (18 U.S.C. 208.) b. Bribery of a public official; soliciting or accepting directly or indirectly anything of ore the agency that may give rise to ei- ther an actual conflict or the appearance thereof. (18 U.S.C. 208.) b. Bribery of a public official; soliciting or accepting directly or indirectly anything of monetary value, including gifts, gratuities, favors, entertainment, or loans either as compensation for governmental services or from individuals who are seeking contrac- tual or other business or financial relations with the Department, are conducting oper- ations or activities that are regulated by the Department, or have interests that may be substantially affected by the performance or nonperformance of the employee’s official duties; receiving salary or any contribution to or supplementation of salary from a pri- vate source as compensation for services for the Government. (18 U.S.C. 201 and 209.) c. Acting as the agent of a foreign prin- cipal registered under the Foreign Agents Registration Act. (18 U.S.C. 219.) 2. Engaging, directly or indirectly, in a fi- nancial transaction as a result of or pri- marily relying on information that is ob- tained through one’s official duties and would not be available were the employee not an employee of the Federal Government. 3. Soliciting result of or pri- marily relying on information that is ob- tained through one’s official duties and would not be available were the employee not an employee of the Federal Government. 3. Soliciting a contribution from another employee for a gift to an official superior, making a donation as a gift to an official su- perior, or accepting a gift from an employee receiving less pay than oneself. (5 U.S.C. 7351.) 4. Engaging, without required permission, in outside activities that result in or create the appearance of a conflict of interest. 5. Teaching, lecturing, or writing that de- pends on specific information obtained as a result of one’s Government employment when that information is not otherwise available to the public. 6. Failure to obtain required clearance of an official speech or article. 7. Lobbying with appropriated funds. (18 U.S.C. 1913.) 8. Representation before a Federal agency (other than in the proper discharge of one’s official duties) as an agent or attorney in a claim against the United States (or receiving any gratuity or share in any such claim in 225 Pt. 73, App. B 45 CFR Subtitle A (10–1–24 Edition) considertion for assistance given) or as an agent or attor aim against the United States (or receiving any gratuity or share in any such claim in 225 Pt. 73, App. B 45 CFR Subtitle A (10–1–24 Edition) considertion for assistance given) or as an agent or attorney for anyone before any de- partment, agency, court, or otherwise in connection with any proceeding, application, request for a ruling, or claim on any other particular matter in which the United States is a party or has a direct and substantial in- terest. (18 U.S.C. 205.) (Note: This section notwithstanding, an employee may, if not in- consistent with the performance of his or her official duties, act without compensation as an agent or attorney for another person who is the subject of any disciplinary or other ad- ministrative proceeding or as an agent or at- torney for one’s parent, spouse, child, or any person or estate for whom or which he or she serves as personal fiduciary except in those matters in which the employee has partici- pated personally and substantially.) D. Concerning Prohibited Political and Elec- tion Activities. 1. Activities prohibited by 5 U.S.C. Chapter 73, Subchapter III, including: a. Section 7323, ‘‘Political contributions; prohibition.’’ b. Section 7324 g Prohibited Political and Elec- tion Activities. 1. Activities prohibited by 5 U.S.C. Chapter 73, Subchapter III, including: a. Section 7323, ‘‘Political contributions; prohibition.’’ b. Section 7324, ‘‘Influencing elections; tak- ing part in political campaigns; prohibitions; exceptions.’’ 2. Activities prohibited by 18 U.S.C. Chap- ter 29, including: a. Section 594, ‘‘Intimidation of voters.’’ b. Section 597, ‘‘Expenditures to influence voting.’’ c. Section 598, ‘‘Coercion by means of relief appropriations.’’ d. Section 600, ‘‘Promise of employment or other benefit for political activity.’’ e. Section 601, ‘‘Deprivation of employment or other benefit for political contribution.’’ f. Section 602, ‘‘Solicitation of political contributions.’’ g. Section 604, ‘‘Solicitation from persons on relief.’’ h. Section 606, ‘‘Intimidation to secure po- litical contributions.’’ E. Concerning Prohibited Personnel Practices. 1. Commission of a prohibited personnel practice (as defined in 5 U.S.C. 2302[b] [1–11]); that is, any employee who has authority to take, direct others to take, recommend, or approve any personnel action, shall not, with respect to such authority, commit any of the followi 302[b] [1–11]); that is, any employee who has authority to take, direct others to take, recommend, or approve any personnel action, shall not, with respect to such authority, commit any of the following practices: a. Discriminate for or against any em- ployee or applicant for employment on the basis of race, color, religion, sex, national or- igin, age, handicapping condition, marital status, or political affiliation. b. Solicit or consider any recommendation or statement, oral or written, with respect to any individual who requests or is under consideration for any personnel action un- less such recommendation or statement is based on the personal knowledge or records of the person furnishing it and consists of (1) an evaluation of the work performance abil- ity, aptitude, or general qualifications of such individual or (2) an evaluation of the character, loyalty, or suitability of such in- dividual. c. Coerce the political activity of any per- son (including the providing of any political contribution or service) or take any action against any employee or applicant for em- ployment as a reprisal for the refusal of any person to engage in such political activity. d. Deceive or wil tical contribution or service) or take any action against any employee or applicant for em- ployment as a reprisal for the refusal of any person to engage in such political activity. d. Deceive or willfully obstruct any person with respect to such person’s right to com- pete for employment. e. Influence any person to withdraw from competition for any position for the purpose of improving or injuring the prospects of any other person for employment. f. Grant any preference or advantage not authorized by law, rule, or regulation to any employee or applicant for employment (in- cluding defining the scope or manner of com- petition or the requirements for any posi- tion) for the purpose of improving or injur- ing the prospects of any particular person for employment. g. Appoint, employ, promote, advance, or advocate for appointment, employment, pro- motion, or advancement, in or to a civilian position any individual who is a relative (as defined in 5 U.S.C. 3110) when the civilian po- sition is in the Department or under his or her jurisdiction or control. h. Take or fail to take a personnel action with respect to any employee or applicant for employment as a reprisal for the lawful di on is in the Department or under his or her jurisdiction or control. h. Take or fail to take a personnel action with respect to any employee or applicant for employment as a reprisal for the lawful disclosure of information. i. Take or fail to take any personnel action against an employee or applicant for em- ployment as a reprisal for the exercise of any appeal right granted by any law, rule, or reg- ulation (including HHS Instructions and issuances). j. Discriminate for or against any em- ployee or applicant for employment on the basis of conduct that does not adversely af- fect the performance of the employee or ap- plicant or the performance of others (except criminal conviction in determining suit- ability or fitness). k. Take or fail to take any personnel ac- tion when the taking of or failure to take such action violates any law, rule, or regula- tion implementing, or directly concerning the merit system principles (as set forth in 5 U.S.C. 2301). [53 FR 4410, Feb. 16, 1988] APPENDIX B TO PART 73—CODE OF ETHICS FOR GOVERNMENT SERVICE Any person in Government service should: I. Put loyalty to the highest moral prin- ciples and to country above loyalty to per- sons, party, or ENDIX B TO PART 73—CODE OF ETHICS FOR GOVERNMENT SERVICE Any person in Government service should: I. Put loyalty to the highest moral prin- ciples and to country above loyalty to per- sons, party, or Government department. II. Uphold the Constitution, laws, and reg- ulations of the United States and all govern- ments therein and never be a party to their evasion. 226 Dept. of Health and Human Services § 73a.735–103 III. Give a full day’s labor for a full day’s pay, giving earnest effort and best thought to the performance of duties. IV. Seek to find and employ more efficient and economical ways of getting tasks accom- plished. V. Never discriminate unfairly by the dis- pensing of special favors or privileges to any- one, whether for remuneration or not; and never accept, for himself or herself or family members, favors or benefits under cir- cumstances which might be construed by reasonable persons as influencing the per- formance of governmental duties. VI. Make no private promises of any kind binding upon the duties of office, since a Government employee has no private word which can be binding on public duty. VII. Engage in no business with the Gov- ernment, either directly or i any kind binding upon the duties of office, since a Government employee has no private word which can be binding on public duty. VII. Engage in no business with the Gov- ernment, either directly or indirectly, which is inconsistent with the conscientious per- formance of governmental duties. VIII. Never use any information gained confidentially in the performance of govern- mental duties as a means of making private profit. IX. Expose corruption wherever discovered. X. Uphold these principles, ever conscious that public office is a public trust. [53 FR 4410, Feb. 16, 1988] PART 73a—STANDARDS OF CON- DUCT: FOOD AND DRUG ADMIN- ISTRATION SUPPLEMENT Subpart A—General Provisions Sec. 73a.735–101 Principles and purpose. 73a.735–103 Responsibilities. 73a.735–104 Advice and guidance. Subpart B—Miscellaneous Provisions 73a.735–201 Control activity employees for- merly associated with organizations sub- ject to FDA regulation. Subpart C [Reserved] Subpart D—Outside Employment 73a.735–401 General provisions. Subpart J—Statements of Employment and Financial Interests 73a.735–1004 Submission and review of state- ments. AUTHORITY: 45 CFR 73.735–105. SOURCE: 43 FR 7619, Feb. 24, 1978, unless ot al provisions. Subpart J—Statements of Employment and Financial Interests 73a.735–1004 Submission and review of state- ments. AUTHORITY: 45 CFR 73.735–105. SOURCE: 43 FR 7619, Feb. 24, 1978, unless otherwise noted. Subpart A—General Provisions § 73a.735–101 Principles and purpose. (a) To assure that the business of the Food and Drug Administration (FDA) is conducted effectively, objectively, and without improper influence or ap- pearance thereof, all employees must be persons of integrity and observe the highest standards of conduct. Because of FDA’s special regulatory respon- sibilities to the consumer and industry, its employees must be especially alert to avoid any real or appearance of con- flict of their private interests with their public duties. Their actions must be unquestionable and free from sus- picion of partiality, favoritism, or any hint of conflicting interests. This sup- plement recognizes FDA’s public obli- gation to set reasonable and fair safe- guards for the prevention of employee conflicts of interest. It is necessary to meet FDA’s regulatory responsibilities and to otherwise assure full protection of the public confidence in the integ- rity of its employees. tion of employee conflicts of interest. It is necessary to meet FDA’s regulatory responsibilities and to otherwise assure full protection of the public confidence in the integ- rity of its employees. for purposes of (b) Since FDA is a unique consumer protection and regulatory agency with- in the Department, the DHHS Stand- ards of Conduct need further sup- plementation to reflect this role. Therefore, imple- menting the DHHS Standards of Con- duct regulations within the FDA, this supplement provides interpretive defi- nitions and additional requirements. As further guidance to its employees and supervisory officials, FDA will issue internal procedural instructions in accordance with this supplement. Subpart E—Financial Interests § 73a.735–103 Responsibilities. 73a.735–501 General provisions. 73a.735–502 Employees in regulatory activi- ties. 73a.735–504 Exceptions. Subparts F–I [Reserved] (a) A ‘‘control activity’’ employee shall be personally responsible for as- suring that he does not hold an interest in any organization whose FDA-regu- lated activities constitute more than an insignificant part of its business as 227 § 73a.735–104 45 CFR Subtitle A (10–1–24 Edition) defined in § hold an interest in any organization whose FDA-regu- lated activities constitute more than an insignificant part of its business as 227 § 73a.735–104 45 CFR Subtitle A (10–1–24 Edition) defined in § 73a.735–502(b)(2). The Asso- ciate Commissioner for Administration (or his designee) is available to assist such employees in obtaining corporate data necessary to make such a deter- mination. (b) Other employees are similarly re- sponsible for observing the financial interest retention requirements in §§ 73a.735–501(b) and 73a.735–502(a)(2). § 73a.735–104 Advice and guidance. (a) The Associate Commissioner for Administration (or his designee) shall provide day-to-day guidance and assist- ance to employees and supervisors on matters covered by regulations in part 73 and this part of this chapter. (b) The FDA Conflict of Interest Re- view Board shall review and make rec- ommendations to the Commissioner on requests for exceptions to conflict of interest policies and procedures in reg- ulations in this part and part 73 of this chapter. Subpart B—Miscellaneous Provisions § 73a.735–201 Control activity employ- ees formerly associated with orga- nizations subject to FDA regulation. (a) For ons in this part and part 73 of this chapter. Subpart B—Miscellaneous Provisions § 73a.735–201 Control activity employ- ees formerly associated with orga- nizations subject to FDA regulation. (a) For a period of 1 year after FDA appointment, or appointment to the Food and Drug Division, Office of the General Counsel, a control activity em- ployee who was employed in a regu- lated organization within 1 year before FDA employment shall not participate in any regulatory action before FDA that involves the former employer or- ganization. Exceptions may be author- ized only under paragraph (e) of this section. (b) A control activity employee who was previously employed in a regulated organization shall not participate in any regulatory action before FDA in which the employee had participated personally and substantially in behalf of the former employer organization, e.g., drug investigations/applications, food additive petitions, matters deal- ing with compliance in areas of radi- ation-producing products or medical devices. Exceptions may be authorized only under paragraph (e) of this sec- tion. (c) Employment in a regulated orga- nization includes contractual relation- ships, e.g., at ducing products or medical devices. Exceptions may be authorized only under paragraph (e) of this sec- tion. (c) Employment in a regulated orga- nization includes contractual relation- ships, e.g., attorneys who may have represented an FDA-regulated firm or industry or an association of such firms and individuals who may have served a firm, industry or association in a consultant capacity. information (d) Within 30 days after assignment to a control activity position, an em- ployee shall submit to his supervisor concerning detailed former industry employers, and dates and substance of involvement in such regulatory matters as may be subject to the prohibition in paragraph (b) of this action. (e) The Commissioner may grant in- dividual exceptions to paragraphs (a) and (b) of this section whenever he de- termines that strict application would not be in the best interests of the United States. A memorandum of any exception granted shall be filed for public inspection in the Public Records and Documents Center, Food and Drug Administration, Room 4–68, 5600 Fish- ers Lane, Rockville, Md. 20857, within 10 days after the Commissioner’s deci- sion. The memorandum shall include the employee and Documents Center, Food and Drug Administration, Room 4–68, 5600 Fish- ers Lane, Rockville, Md. 20857, within 10 days after the Commissioner’s deci- sion. The memorandum shall include the employee’s name, title, grade, sum- mary of official duties, prior pertinent industry involvement, a brief descrip- tion of the specific regulatory action in which the employee has been permitted to participate, and a statement ex- plaining why such strict application of the subpart would not be in the best in- terests of the United States. Subpart C [Reserved] Subpart D—Outside Employment § 73a.735–401 General provisions. (a) Employees of the Food and Drug Administration shall obtain advance approval for all outside employment, whether paid or unpaid. Employment, as used in this section, does not in- clude: (1) Memberships in charitable, reli- gious, social, fraternal, recreational, public service, civic, or similar non- business organizations. (2) Memberships in professional orga- nizations. (Officeholding, however, re- quires advance approval.) 228 Dept. of Health and Human Services § 73a.735–501 (3) Performance of duties in the Armed Forces Reserve or National Guard. (b) Control activity e ficeholding, however, re- quires advance approval.) 228 Dept. of Health and Human Services § 73a.735–501 (3) Performance of duties in the Armed Forces Reserve or National Guard. (b) Control activity employees (de- fined in § 73a.735–502) will not generally be granted approval to: (1) Manage or direct an organization whose activities are subject to FDA regulation, or (2) Be employed in an organization whose business activities are subject to FDA regulation unless: (i) The regulated activities of the or- ganization are an insignificant part of its total operations, i.e., the regulated products of the organization constitute no more than 10 percent of its annual gross sales, and (ii) The outside employment is in nonregulated activities of the organi- zation. (c) All other employees will generally be granted approval to engage in out- side employment which is compatible with the full performance of their FDA duties and responsibilities and which will not give rise to a real or apparent conflict of interest. Permissible em- ployment includes but is not limited to: (1) Employment where the sale of FDA-regulated products is incidential to the purpose of the establishment, e.g., hotels, th flict of interest. Permissible em- ployment includes but is not limited to: (1) Employment where the sale of FDA-regulated products is incidential to the purpose of the establishment, e.g., hotels, theaters, bowling alleys, and sports arenas. (2) Sales and clerical occupations re- lating to regulated products, e.g., su- permarkets, drugstores, department stores, liquor stores. (3) Trade, industrial, and service oc- cupations relating to regulated prod- ucts, e.g., gasoline service station at- tendant, line production or assembly work, cook, waiter, waitress, hospital attendant, snack bar vendor, ware- houseman. (d) All employees will generally be granted approval to engage in paid or unpaid outside employment which con- tributes to their technical or profes- sional development, e.g., (1) Medical, dental, and veterinary practices. (2) Pharmacy practice after meeting the following conditions which will serve to protect against possible con- flicts or apparent conflicts of interest and to avoid other problems resulting in embarrassment to the employee or FDA: (i) The primary purpose of the part- time employment is to contribute to the overall professional development of the employee a avoid other problems resulting in embarrassment to the employee or FDA: (i) The primary purpose of the part- time employment is to contribute to the overall professional development of the employee and generally enhance his capability to better perform his current FDA duties. (ii) The part-time duties will be con- fined generally to dispensing Rx drugs and related professional pharmacy du- ties. (iii) The employee will avoid unre- lated nonprofessional duties such as su- pervision or management of store oper- ations, contractual or purchasing re- sponsibilities (except normal ‘‘out-of- stock’’ requisitioning) and repacking and relabeling of bulk items. (iv) The employee will demonstrate a high degree of discretion and judgment in his contacts with customers and rep- resentatives of regulated industry and competitor firms so as to avoid giving the impression that: (a) His part-time actions, rec- ommendations, opinions, or remarks are official points of view; (b) He is using his FDA position for private gain by oral misrepresentations and false claims of the company’s prod- ucts; (c) He is making a Government deci- sion outside official channels, e.g., to customers, prescribing phys ition for private gain by oral misrepresentations and false claims of the company’s prod- ucts; (c) He is making a Government deci- sion outside official channels, e.g., to customers, prescribing physicians, buy- ers, distributors; (d) He or other FDA representatives will give preferential treatment to any regulated organization or representa- tives of such organizations, or that FDA employees have not exercised complete independence or impartiality in carrying out their regulatory and consumer protection responsibilities; or (e) His part-time work is creating an adverse effect on the image of FDA or discrediting the integrity of official FDA regulatory decisions. Subpart E—Financial Interests § 73a.735–501 General provisions. (a) No restrictions are placed on own- ership of diversified mutual funds. (b) An FDA employee, other than a control activity employee (defined in § 73a.735–502), may have financial inter- ests: 229 § 73a.735–502 45 CFR Subtitle A (10–1–24 Edition) (1) In an organization whose FDA- regulated activities are an insignifi- cant part of its total operations, i.e., no more than 10 percent of the organi- zation’s annual gross sales are in prod- ucts regulated by FD nization whose FDA- regulated activities are an insignifi- cant part of its total operations, i.e., no more than 10 percent of the organi- zation’s annual gross sales are in prod- ucts regulated by FDA; or (2) In an organization whose FDA- regulated business activities are a sig- nificant part of its total business oper- ations: Provided, That: (i) The holding is less than $5,000 (value or cost at time of initial report- ing), (ii) The holding represents less than 1 percent of the total outstanding stock shares of that organization, and (iii) No more than 50 percent of the employee’s total investment value is concentrated in organizations whose FDA-regulated business activities are a significant part of their business oper- ations. (c) Notwithstanding the provisions of this part permitting employees to hold financial interests in organizations subject to FDA regulation, an em- ployee holding such an interest shall not participate in an official matter whose outcome would have a direct and predictable effect on his financial in- terest. However, this prohibition is not applicable to: (1) Diversified mutual funds, which are exempted from 18 U.S.C. 208 by § 73.735–501(a) of this chapt and predictable effect on his financial in- terest. However, this prohibition is not applicable to: (1) Diversified mutual funds, which are exempted from 18 U.S.C. 208 by § 73.735–501(a) of this chapter. (2) Financial interests for which the Commissioner has in advance granted a written exception on the ground that the public interest would be served if a particular employee is allowed to par- ticipate in an official matter whose outcome may have a direct and pre- dictable effect on the employee’s finan- cial interest. Such exemptions will be in exceptional cir- granted only cumstances. Any determination to au- thorize such exceptions shall be made in accordance with 18 U.S.C. 208(b)(1) and documented for public inspection in accordance with § 73a.735–504. § 73a.735–502 Employees in regulatory activities. (a) An employee in regulatory activi- ties (‘‘control activity’’ employee) may hold financial interests in an FDA-reg- ulated organization only if either of the following conditions are met: (1) The regulated activities of the or- ganization are an ‘‘insignificant’’ part of its total business operations, or (2) Written approval for an individual exception is granted by the Commis- re met: (1) The regulated activities of the or- ganization are an ‘‘insignificant’’ part of its total business operations, or (2) Written approval for an individual exception is granted by the Commis- sioner in accordance with § 73a.735–504; however, such approval will not be con- sidered unless all of the following con- ditions are met: (i) Retention of the financial interest does not give rise to an actual conflict of interest; (ii) Acquisition of the financial inter- est occurred by marriage or inherit- ance, or the interest was held prior to an FDA reorganization, change in regu- lations, or similar circumstances be- yond the control of the employee that resulted in the interest becoming pro- hibited; (iii) No direct relationship exists be- tween the employee’s official duties and the regulated activities of the or- ganization in which the financial inter- est is held; (iv) The employee occupies a position below that of Bureau/Deputy Bureau Director (or Assistant/Deputy General Counsel, Food and Drug Division, Of- fice of the General Counsel); and (v) The employee agrees to refrain from engaging, either directly or indi- rectly, in transactions that are de- signed to increase t nsel, Food and Drug Division, Of- fice of the General Counsel); and (v) The employee agrees to refrain from engaging, either directly or indi- rectly, in transactions that are de- signed to increase the value of his ‘‘ex- cepted’’ financial interest. (b) To administer provisions within this part, the following interpretations apply: (1) A ‘‘control activity’’ employee (‘‘control activity’’ positions are iden- tified in appendix C to part 73 of this chapter), means one who: (i) Occupies an FDA position classi- fied at GS–11 or above, or PHS Com- missioned Officer 0–3 or above, or equivalent; (ii) Occupies an FDA position below GS–11 with duties of a nature that the employee could in the discharge of his official duties and responsibilities cause an economic advantage for or impose a handicap on a non-Federal en- terprise (includes investigators, inspec- tors, regulatory analysts); (iii) Occupies a position at GS–11 or above in the Office of the Assistant General Counsel, Food and Drug Divi- sion. 230 Dept. of Health and Human Services § 73a.735–504 (2) ‘‘Insignificant’’ (part of an organi- zation’s total business operations) means that the FDA-regulated prod- ucts constitute no more ivi- sion. 230 Dept. of Health and Human Services § 73a.735–504 (2) ‘‘Insignificant’’ (part of an organi- zation’s total business operations) means that the FDA-regulated prod- ucts constitute no more than 10 per- cent of the organization’s annual gross sales. § 73a.735–504 Exceptions. (a) A control activity employee who can satisfy all of the conditions speci- fied in § 73a.735–502(a)(2) may submit a request to retain a prohibited financial interest. Any such request must be sub- mitted no later than 30 days after the event that results in the employee holding the prohibited financial inter- est. Such requests for exception should be forwarded in writing through super- visory channels to the Associate Com- missioner for Administration for re- view by the FDA Conflict of Interest Review Board and subsequent rec- ommendation to the Commissioner. All decisions on requests for exceptions shall be in writing and a copy furnished to the employee involved. (b) A memorandum of each approved exception shall be filed in the Public Records and Documents Center for pub- lic inspection. Such public disclosure shall be made within 10 days after the Commissioner’s decision. The following is an e xception shall be filed in the Public Records and Documents Center for pub- lic inspection. Such public disclosure shall be made within 10 days after the Commissioner’s decision. The following is an example of the format of such memorandum (in a hypothetical em- ployee situation): (1) Employee: Joe Doe. (2) Title: Research Chemist. (3) Grade/Salary: GS–14. (4) Organization: Bureau of Biologics, Food and Drug Administration, Be- thesda, Md. (5) Date of employee’s request for ex- ception: ______. (6) Date of Commissioner’s approval: ______. (7) Basis for exception: Employee owns financial interest in the ABC Foods Corporation, and permanent re- tention is normally prohibited under FDA/HHS conflict of interest regula- tions for such an employee. The em- ployee, however, acquired this finan- cial interest prior to his reassignment to FDA on ______, which was part of a major Department reorganization transferring certain functions from NIH to the FDA (i.e., FDA’s Bureau of Biologics). At the time of acquisition and immediately prior to the reorga- nization, the employee’s financial in- terest was allowable under Department regulations. The employee’s official du- ties are fully confined e time of acquisition and immediately prior to the reorga- nization, the employee’s financial in- terest was allowable under Department regulations. The employee’s official du- ties are fully confined to the matters under the jurisdiction of the Bureau of Biologics, and his official duties do not involve any contact with the food in- dustry. The Commissioner has deter- mined that an exception is warranted under the following criteria: (i) Acquisition occurred prior to De- partment reorganization; (ii) Financial interest retention will not give rise to an actual conflict of in- terest situation; (iii) There is no direct relationship between the employee’s official duties and the regulated activities of ABC Foods; (iv) The employee occupies a position below that of Bureau or Deputy Bureau Director (or equivalent position in the Office of the Commissioner); and (v) The employee agrees to refrain from engaging in any direct or indirect transactions that are designed to in- crease the value/shares of the ‘‘ex- cepted’’ ABC Foods interests. This exception is considered equitable to the employee involved, and reten- tion of the ABC Foods interest will not in any way impair the interests o /shares of the ‘‘ex- cepted’’ ABC Foods interests. This exception is considered equitable to the employee involved, and reten- tion of the ABC Foods interest will not in any way impair the interests of the Government or of the public. (c) In interpreting the requirement of § 73a.735–502(a)(2)(v), events not involv- ing employee discretion (e.g., accepting dividends in the form of cash or addi- tional shares) do not constitute trans- actions designed to increase the value/ shares of an ‘‘excepted’’ financial inter- est. A transaction involving discretion, e.g., exercise of stock options, may be made only if proposed to the Associate Commissioner for Administration and approved by the Conflict of Interest Review Board as an amendment to the original exception. A memorandum re- cording such approval shall be made public in accordance with paragraph (b) of this section. (d) An employee may temporarily re- tain a prohibited financial interest pending review of a written request for an exception submitted in accordance with this section. (e) Except as provided in § 73a.735– 501(c), no employee may participate in an official matter whose outcome will have a direct and predictable effect o tion submitted in accordance with this section. (e) Except as provided in § 73a.735– 501(c), no employee may participate in an official matter whose outcome will have a direct and predictable effect on 231 § 73a.735–1004 45 CFR Subtitle A (10–1–24 Edition) a financial interest held by him. This prohibition applies to official matters handled before and after approval of an exception under this section. corps of the Public Health Service, be- cause of violation of the post-employ- ment restrictions of the conflict of in- terest laws and regulations. Subparts F–I [Reserved] § 73b.2 Rules and regulations. Subpart J—Statements of Employ- ment and Financial Interests § 73a.735–1004 Submission and review of statements. (a) Employees occupying control ac- tivity positions shall file Form HHS– 473 ‘‘Confidential Statement of Em- ployment and Financial Interests’’ with the Associate Commissioner for Administration within 30 days after en- trance in this category and annually thereafter as of June 30, or such other dates as the Secretary, with the con- currence of the Civil Service Commis- sion, may approve. Prior to the due date, the Associate Commissioner for Administration shall advise ‘‘ ne 30, or such other dates as the Secretary, with the con- currence of the Civil Service Commis- sion, may approve. Prior to the due date, the Associate Commissioner for Administration shall advise ‘‘control activity’’ employees of the annual fil- ing requirement through normal ad- ministrative channels. The annual re- porting requirement shall commence as of June 30, 1977. (b) The Associate Commissioner for Administration (or his designee) shall serve as the principal reviewing official for Outside Activity Forms, HHS–520 and 521, and shall make final deter- minations on matters arising from ac- tivities reported on Form HHS–473. PART 73b—DEBARMENT OR SUS- PENSION OF FORMER EMPLOY- EES Sec. 73b.1 Scope. 73b.2 Rules and regulations. 73b.3 Reports of violations. 73b.4 Proceedings. 73b.5 Hearings. AUTHORITY: 18 U.S.C. 207(j). SOURCE: 47 FR 17505, Apr. 23, 1982, unless otherwise noted. § 73b.1 Scope. This part contains rules governing debarment or disqualification action against a former officer or employee of the Department, including former and retired officers of the commissioned This part will be applied in conform- ance with the standards established by the Office of Government E officer or employee of the Department, including former and retired officers of the commissioned This part will be applied in conform- ance with the standards established by the Office of Government Ethics in its regulations, 5 CFR part 737, and inter- pretations thereof. Former officers and employees of the Department may re- quest advice and assistance in compli- ance with those regulations from the Assistant General Counsel, Business and Administrative Law Division, De- partment of Health and Human Serv- ices. § 73b.3 Reports of violations. (a) If an officer or employee of the Department has reason to believe that a former officer or employee of the De- partment has violated any provision of 18 U.S.C. 207 (a), (b) or (c) or if any such officer or employee receives informa- tion to that effect, he/she shall prompt- ly make a written report thereof which shall be forwarded to the Inspector General. If any other person has infor- mation of such violations, he/she may make a report thereof to the Inspector General or to any officer or employee of the Department. (b) The Inspector General shall co- ordinate proceedings under this part with the Department of Justice in cases where it eof to the Inspector General or to any officer or employee of the Department. (b) The Inspector General shall co- ordinate proceedings under this part with the Department of Justice in cases where it appears criminal pros- ecution is warranted. § 73b.4 Proceedings. (a) Upon a determination by the As- sistant General Counsel, Business and Administrative Law Division, or his/ her designee, after investigation by the Inspector General, that there is reason- able cause to believe that a former offi- cer or employee, including a former special Government employee, of the Department of Health and Human Services (former departmental em- ployee) has violated 18 US.C. 207 (a), (b) or (c), the Assistant General Counsel, or his/her designee, shall cause a copy of written charges of the violation(s) to be served upon such individual, either personally or by registered mail. The 232 Dept. of Health and Human Services § 73b.4 charges shall be accompanied by a no- tice to the former departmental em- ployee to show cause within a specified time of not less than 30 days after re- ceipt of the notice why he/she should not be prohibited from engaging in rep- resentational activities in relation to ma ployee to show cause within a specified time of not less than 30 days after re- ceipt of the notice why he/she should not be prohibited from engaging in rep- resentational activities in relation to matters pending in the Department, as authorized by 18 U.S.C. 207(j), or sub- jected to other appropriate debarment or disqualification action under that statute. The notice to show cause shall include: (1) A statement of allegations, and their bases, sufficiently detailed to en- able the former departmental employee to prepare an adequate defense; (2) Notification of the right to a hear- ing, and that failure to answer shall constitute a waiver of defense; and (3) An explanation of the method by which a hearing may be requested. (b) If a former departmental em- ployee who submits an answer to the notice to show cause does not request a hearing or if the Assistant General Counsel does not receive an answer within the time prescribed by the no- tice, the Assistant General Counsel shall forward the record, including the report(s) of investigation, to the As- sistant Secretary for Personnel Admin- istration (Assistant Secretary). In the case of a failure to answer, such failure shall consti d the record, including the report(s) of investigation, to the As- sistant Secretary for Personnel Admin- istration (Assistant Secretary). In the case of a failure to answer, such failure shall constitute a waiver of defense. (c) Upon receipt of a former depart- mental employee’s request for a hear- ing, the Assistant General Counsel shall notify him/her of the time and place thereof, giving due regard both to such person’s need for an adequate pe- riod to prepare a suitable defense and an expeditious resolution of allegations that may be damaging to his or her reputation. (d) The presiding officer at the hear- ing and any related proceedings shall be a federal administrative law judge. He/she shall insure that the former de- partmental employee has the following rights: (1) To self-representation or represen- tation by counsel, (2) To introduce and examine wit- nesses and submit physical evidence, (3) To confront and cross-examine ad- verse witnesses, (4) To present oral argument, and (5) To a transcript or recording of the proceedings, upon request. (e) The Assistant General Counsel shall designate one or more officers or employees of the Department to present the evidence agains (5) To a transcript or recording of the proceedings, upon request. (e) The Assistant General Counsel shall designate one or more officers or employees of the Department to present the evidence against the former departmental employee and perform other functions incident to the proceedings. (f) A decision adverse to the former departmental employee must be sus- tained by substantial evidence that he/ she violated 18 U.S.C. 207 (a), (b) or (c). If a judgment of conviction has been entered by a Federal district court against the former departmental em- ployee for violation of 18 U.S.C. 207 (a), (b) or (c), regardless of whether the judgment is based upon a verdict or a plea of guilty, such judgment of convic- tion shall be conclusive evidence of a violation of 18 U.S.C. 207 (a), (b) or (c), unless and until the judgment is va- cated or reversed on appeal. (g) The administrative law judge shall issue an initial decision based ex- clusively on the transcript of testi- mony and exhibits, together with all papers and requests filed in the pro- ceeding, and shall set forth in the deci- sion findings and conclusions, sup- ported by reasons, on the material issues of fact and law presented gether with all papers and requests filed in the pro- ceeding, and shall set forth in the deci- sion findings and conclusions, sup- ported by reasons, on the material issues of fact and law presented on the record. (h) Within 30 days after issuance of the initial decision, either party may appeal in writing to the Assistant Sec- retary who in that event shall issue the final decision based on the record of the proceedings or those portions thereof cited by the parties to limit the issues. If the final decision modifies or reverses the initial decision, the As- sistant Secretary shall specify the find- ings of fact and conclusions of law that vary from those of the presiding offi- cer. (i) If a former departmental em- ployee fails to appeal from an adverse initial decision within the prescribed period of time, the administrative law judge shall forward the record of the proceedings to the Assistant Secretary. (j) In the case of a former depart- mental employee who filed an answer to the notice to show cause but did not request a hearing, the Assistant Sec- retary shall make the final decision on 233 § 73b.5 45 CFR Subtitle A (10–1–24 Edition) the record submitted to him by the As- s notice to show cause but did not request a hearing, the Assistant Sec- retary shall make the final decision on 233 § 73b.5 45 CFR Subtitle A (10–1–24 Edition) the record submitted to him by the As- sistant General Counsel pursuant to paragraph (b) of this section. (k) In a case where: (1) The defense has been waived, (2) The former departmental em- ployee has failed to appeal from an ad- verse initial decision, or (3) The Assistant Secretary has issued a final decision that the former departmental employee violated 18 U.S.C. 207 (a), (b) or (c), The Assistant Secretary may issue an order: (i) Prohibiting the former depart- mental employee from making, on be- half of any other person (except the United States), any informal or formal appearance before, or, with the intent to influence, any oral or written com- munication to, the Department on a pending matter of business for a period not to exceed five years, or (ii) Prescribing other appropriate de- barment or disqualification action, such as limiting the action to a par- ticular organization or organizations within the Department. (l) An order issued under either para- graph (k)(i) or (k)(ii) of this section shall be supplemented such as limiting the action to a par- ticular organization or organizations within the Department. (l) An order issued under either para- graph (k)(i) or (k)(ii) of this section shall be supplemented by a directive to officers and employees of the Depart- ment not to engage in conduct in rela- tion to the former departmental em- ployee that would contravene such order. § 73b.5 Hearings. (a) Hearings shall be stenographi- cally recorded and transcribed and the testimony of witnesses shall be taken under oath or affirmation. Hearings will be closed unless an open hearing is requested by the respondent, except that if classified information or pro- tected information of third parties is likely to be adduced at the hearing, it will remain closed. If either party to the proceeding fails to appear at the hearing, after due notice thereof has been sent to him/her, he/she shall be deemed to have waived the right to a hearing and the administrative law judge may make a decision on the basis of the record before him/her at that time. (b) The rules of evidence prevailing in courts of law and equity are not con- trolling in hearings under this part. However, the administrative law judge shall the record before him/her at that time. (b) The rules of evidence prevailing in courts of law and equity are not con- trolling in hearings under this part. However, the administrative law judge shall exclude evidence which is irrele- vant, immaterial, or unduly repeti- tious. (c) Depositions for use at a hearing may, with the consent of the parties in writing or the written approval of the administrative law judge be taken by either the Assistant General Counsel or the respondent or their duly authorized representatives. Depositions may be taken upon oral or written interrog- atories. There shall be at least 10 days written notice to the other party. The requirement of a 10-day written notice may be waived by the parties in writ- ing. When a deposition is taken upon written interrogatories, any cross-ex- amination shall be upon written inter- rogatories. Copies of such written in- terrogatories shall be served upon the other party with the notice, and copies of any written cross-interrogation shall be mailed or delivered to the op- posing party at least 5 days before the date of taking the depositions, unless the parties mutually agree otherwise. Expenses in the reporting of depos rogation shall be mailed or delivered to the op- posing party at least 5 days before the date of taking the depositions, unless the parties mutually agree otherwise. Expenses in the reporting of deposi- tions shall be borne by the party at whose instance the deposition is taken. PART 74 [RESERVED] PART 75—UNIFORM ADMINISTRA- TIVE REQUIREMENTS, COST PRIN- CIPLES, AND AUDIT REQUIRE- MENTS FOR HHS AWARDS Subpart A—Acronyms and Definitions Sec. 75.1 Acronyms. 75.2 Definitions. Subpart B—General Provisions 75.100 Purpose. 75.101 Applicability. 75.102 Exceptions. 75.103 Authorities. 75.104 Supersession. 75.105 Effects on other issuances. 75.106 Agency implementation. 75.107 OMB responsibilities. 75.108 Inquiries. 75.109 Review date. 75.110 Effective/Applicability date. 75.111 English language. 75.112 Conflict of interest. 234 Dept. of Health and Human Services Pt. 75 75.113 Mandatory disclosures. Subpart C—Pre-Federal Award Require- ments and Contents of Federal Awards 75.200 Purpose. 75.201 Use of grant agreements (including fixed amount awards), cooperative agree- ments, and contracts. 75.202 Requirement to provide public notice of Federal financial assistance programs. 75.203 Notices Use of grant agreements (including fixed amount awards), cooperative agree- ments, and contracts. 75.202 Requirement to provide public notice of Federal financial assistance programs. 75.203 Notices of funding opportunities. 75.204 HHS funding agency review of merit of proposals. 75.205 HHS awarding agency review of risk posed by applicants. 75.206 Standard application requirements, including forms for applying for HHS fi- nancial assistance, and state plans. 75.207 Specific award conditions. 75.208 Certifications and representations. 75.209 Pre-award costs. 75.210 Information contained in a Federal award. 75.211 Public access to Federal award infor- mation. 75.212 Reporting a determination that a re- cipient is not qualified for a Federal award. 75.213 Suspension and debarment. 75.214 Metric system of measurement. 75.215 Disclosure of lobbying activities. 75.216 Special provisions for awards to com- mercial organizations as recipients. 75.217 Special provisions for awards to Fed- eral agencies. 75.218 Participation by faith-based organi- zations. Subpart D—Post Federal Award Requirements 75.320 Equipment. 75.321 Supplies. 75.322 Intangible property and copyrights. 75.323 Property l agencies. 75.218 Participation by faith-based organi- zations. Subpart D—Post Federal Award Requirements 75.320 Equipment. 75.321 Supplies. 75.322 Intangible property and copyrights. 75.323 Property trust relationship. 75.324–75.325 [Reserved] PROCUREMENT STANDARDS 75.326 Procurements by states. 75.327 General procurement standards. 75.328 Competition. 75.329 Procurement procedures. 75.330 Contracting with small and minority businesses, women’s business enterprises, and labor surplus area firms. 75.331 Procurement of recovered materials. 75.332 Contract cost and price. 75.333 HHS awarding agency or pass- through entity review. 75.334 Bonding requirements. 75.335 Contract provisions. 75.336–75.340 [Reserved] PERFORMANCE AND FINANCIAL MONITORING AND REPORTING 75.341 Financial reporting. 75.342 Monitoring and reporting program performance. 75.343 Reporting on real property. 75.344–75.350 [Reserved] SUBRECIPIENT MONITORING AND MANAGEMENT 75.351 Subrecipient and contractor deter- minations. 75.352 Requirements for pass-through enti- ties. 75.353 Fixed amount subawards. 75.354–75.360 [Reserved] RECORD RETENTION AND ACCESS STANDARDS FOR FINANCIAL AND PROGRAM MANAGEMENT 75.300 Statutory s. 75.352 Requirements for pass-through enti- ties. 75.353 Fixed amount subawards. 75.354–75.360 [Reserved] RECORD RETENTION AND ACCESS STANDARDS FOR FINANCIAL AND PROGRAM MANAGEMENT 75.300 Statutory and national policy re- quirements. 75.361 Retention requirements for records. 75.362 Requests for transfer or records. 75.363 Methods for collection, transmission and storage of information. 75.301 Performance measurement. 75.302 Financial management and standards 75.364 Access to records. 75.365 Restrictions on public access to for financial management systems. Internal controls. 75.303 75.304 Bonds. 75.305 Payment. 75.306 Cost sharing or matching. 75.307 Program income. 75.308 Revision of budget and program plans. 75.309 Period of performance and avail- ability of funds. 75.310–75.315 [Reserved] records. 75.366–75.370 [Reserved] REMEDIES FOR NONCOMPLIANCE 75.371 Remedies for noncompliance. 75.372 Termination. 75.373 Notification of termination require- ment. 75.374 Opportunities to object, hearings, and appeals. 75.375 Effects of suspension and termi- PROPERTY STANDARDS nation. 75.316 Purpose of property standards. 75.317 75.318 Real property. 75.319 Federally-owned and exempt prop- ct, hearings, and appeals. 75.375 Effects of suspension and termi- PROPERTY STANDARDS nation. 75.316 Purpose of property standards. 75.317 75.318 Real property. 75.319 Federally-owned and exempt prop- Insurance coverage. erty. 75.376–75.380 [Reserved] CLOSEOUT 75.381 Closeout. 75.382–75.385 [Reserved] 235 Pt. 75 45 CFR Subtitle A (10–1–24 Edition) POST-CLOSEOUT ADJUSTMENTS AND CONTINUING RESPONSIBILITIES 75.386 Post-closeout adjustments and con- tinuing responsibilities. 75.387–75.390 [Reserved] COLLECTION OF AMOUNTS DUE 75.391 Collection of amounts due. Subpart E—Cost Principles GENERAL PROVISIONS 75.400 Policy guide. 75.401 Application. BASIC CONSIDERATIONS 75.402 Composition of costs. 75.403 Factors affecting allowability of costs. 75.404 Reasonable costs. 75.405 Allocable costs. 75.406 Applicable credits. 75.407 Prior written approval (prior ap- proval). 75.408 Limitation on allowance of costs. 75.409 Special considerations. 75.410 Collection of unallowable costs. 75.411 Adjustment of previously negotiated indirect (F&A) cost rates containing un- allowable costs. 75.431 Compensation—fringe benefits. 75.432 Conferences. 75.433 Contingency provisions. 75.434 Contributions and don of previously negotiated indirect (F&A) cost rates containing un- allowable costs. 75.431 Compensation—fringe benefits. 75.432 Conferences. 75.433 Contingency provisions. 75.434 Contributions and donations. 75.435 Defense and prosecution of criminal and civil proceedings, claims, appeals, and patent infringements. 75.436 Depreciation. 75.437 Employee health and welfare costs. 75.438 Entertainment costs. 75.439 Equipment and other capital expendi- tures. 75.440 Exchange rates. 75.441 Fines, penalties, damages and other settlements. 75.442 Fund raising and investment manage- ment costs. 75.443 Gains and losses on disposition of de- preciable assets. 75.444 General costs of government. 75.445 Goods or services for personal use. 75.446 Idle facilities and idle capacity. 75.447 Insurance and indemnification. 75.448 Intellectual property. 75.449 Interest. 75.450 Lobbying. 75.451 Losses on other awards or contracts. 75.452 Maintenance and repair costs. 75.453 Materials and supplies costs, includ- ing costs of computing devices. 75.454 Memberships, subscriptions, and pro- DIRECT AND INDIRECT (F&A) COSTS fessional activity costs. 75.412 Classification of costs. 75.413 Direct costs. 75.414 clud- ing costs of computing devices. 75.454 Memberships, subscriptions, and pro- DIRECT AND INDIRECT (F&A) COSTS fessional activity costs. 75.412 Classification of costs. 75.413 Direct costs. 75.414 75.415 Required certifications. Indirect (F&A) costs. SPECIAL CONSIDERATIONS FOR STATES, LOCAL GOVERNMENTS AND INDIAN TRIBES 75.416 Cost allocation plans and indirect cost proposals. 75.417 Interagency service. SPECIAL CONSIDERATIONS FOR INSTITUTIONS OF HIGHER EDUCATION 75.418 Costs incurred by states and local governments. 75.419 Cost accounting standards and disclo- sure statement. GENERAL PROVISIONS FOR SELECTED ITEMS OF COST 75.420 Considerations for selected items of cost. 75.421 Advertising and public relations. 75.422 Advisory councils. 75.423 Alcoholic beverages. 75.424 Alumni/ae activities. 75.425 Audit services. 75.426 Bad debts. 75.427 Bonding costs. 75.428 Collections of improper payments. 75.429 Commencement and convocation costs. 75.455 Organization costs. 75.456 Participant support costs. 75.457 Plant and security costs. 75.458 Pre-award costs. 75.459 Professional service costs. 75.460 Proposal costs. 75.461 Publication and printing costs. 75.462 Rearrangement and reconv support costs. 75.457 Plant and security costs. 75.458 Pre-award costs. 75.459 Professional service costs. 75.460 Proposal costs. 75.461 Publication and printing costs. 75.462 Rearrangement and reconversion costs. 75.463 Recruiting costs. 75.464 Relocation costs of employees. 75.465 Rental costs of real property and equipment. 75.466 Scholarships and student aid costs. 75.467 Selling and marketing costs. 75.468 Specialized service facilities. 75.469 Student activity costs. 75.470 Taxes (including Value Added Tax). 75.471 Termination costs. 75.472 Training and education costs. 75.473 Transportation costs. 75.474 Travel costs. 75.475 Trustees. HHS SPECIFIC SELECTED ITEMS OF COST 75.476 Independent research and develop- ment costs. 75.477 Shared responsibility payments. Subpart F—Audit Requirements GENERAL 75.430 Compensation—personal services. 75.500 Purpose. 236 Dept. of Health and Human Services § 75.1 AUDITS 75.501 Audit requirements. 75.502 Basis for determining Federal awards expended. 75.503 Relation to other audit requirements. 75.504 Frequency of audits. 75.505 Sanctions. 75.506 Audit costs. 75.507 Program-specific audits. AUDITEES 75.508 Auditee responsibilities. 75.509 Audi ed. 75.503 Relation to other audit requirements. 75.504 Frequency of audits. 75.505 Sanctions. 75.506 Audit costs. 75.507 Program-specific audits. AUDITEES 75.508 Auditee responsibilities. 75.509 Auditor selection. 75.510 Financial statements. 75.511 Audit findings follow-up. 75.512 Report submission. APPENDIX XII TO PART 75—AWARD TERM AND CONDITIONS FOR RECIPIENT INTEGRITY AND PERFORMANCE MATTERS AUTHORITY: 5 U.S.C. 301; 2 CFR part 200. SOURCE: 79 FR 75889, Dec. 19, 2014, unless otherwise noted. Subpart A—Acronyms and Definitions § 75.1 Acronyms. The following acronyms apply to this part: CAS Cost Accounting Standards CFDA Catalog of Federal Domestic Assist- FEDERAL AGENCIES ance 75.513 Responsibilities. AUDITORS 75.514 Scope of audit. 75.515 Audit reporting. 75.516 Audit findings. 75.517 Audit documentation. 75.518 Major program determination. 75.519 Criteria for Federal program risk. 75.520 Criteria for a low-risk auditee. MANAGEMENT DECISIONS 75.521 Management decision. APPENDIX I TO PART 75—FULL TEXT OF NO- TICE OF FUNDING OPPORTUNITY APPENDIX II TO PART 75—CONTRACT PROVI- SIONS FOR NON-FEDERAL ENTITY CON- TRACTS UNDER FEDERAL AWARDS APPENDIX III TO PART 75—INDIRECT (F&A) COST TO PART 75—FULL TEXT OF NO- TICE OF FUNDING OPPORTUNITY APPENDIX II TO PART 75—CONTRACT PROVI- SIONS FOR NON-FEDERAL ENTITY CON- TRACTS UNDER FEDERAL AWARDS APPENDIX III TO PART 75—INDIRECT (F&A) COSTS IDENTIFICATION AND ASSIGNMENT, AND RATE DETERMINATION FOR INSTITU- TIONS OF HIGHER EDUCATION (IHES) APPENDIX IV TO PART 75—INDIRECT (F&A) COSTS IDENTIFICATION AND ASSIGNMENT, AND RATE DETERMINATION FOR NONPROFIT ORGANIZATIONS APPENDIX V TO PART 75—STATE/LOCAL GOV- ERNMENTWIDE CENTRAL SERVICE COST AL- LOCATION PLANS APPENDIX VI TO PART 75—PUBLIC ASSISTANCE COST ALLOCATION PLANS APPENDIX VII TO PART 75—STATES AND LOCAL GOVERNMENT AND INDIAN TRIBE INDIRECT COST PROPOSALS APPENDIX VIII TO PART 75—NONPROFIT ORGA- NIZATIONS EXEMPTED FROM SUBPART E OF PART 75 APPENDIX IX TO PART 75—PRINCIPLES FOR DE- TERMINING COSTS APPLICABLE TO RE- SEARCH AND DEVELOPMENT UNDER GRANTS AND CONTRACTS WITH HOSPITALS APPENDIX X TO PART 75—DATA COLLECTION FORM (SF-SAC) APPENDIX XI TO PART 75—COMPLIANCE SUP- PLEMENT CFR Code of Federal Regulations CMIA Cash Management Improvement Act COG Councils Of Governments COSO Committee of Sponsoring Organiza- tions of the Treadway Commission EPA Environmental Protection A CFR Code of Federal Regulations CMIA Cash Management Improvement Act COG Councils Of Governments COSO Committee of Sponsoring Organiza- tions of the Treadway Commission EPA Environmental Protection Agency ERISA Employee Retirement Income Secu- rity Act of 1974 (29 U.S.C. 1301–1461) EUI Energy Usage Index F&A Facilities and Administration FAC Federal Audit Clearinghouse FAIN Federal Award Identification Number FAPIIS Federal Awardee Performance and Integrity Information System FAR Federal Acquisition Regulation FFATA Federal Funding Accountability and Transparency Act of 2006 or Trans- parency Act—Public Law 109–282, as amended by § 6202(a) of Public Law 110–252 (31 U.S.C. 6101) FICA Federal Insurance Contributions Act FOIA Freedom of Information Act FR Federal Register FTE Full-time equivalent GAAP Generally Accepted Accounting Principles GAGAS Generally Accepted Government Auditing Standards GAO Government Accountability Office GOCO Government owned, contractor oper- ated GSA General Services Administration HHS U.S. Department of Health and Human Services IBS Institutional Base Salary IHE Institutions of Higher Education IRC Internal Revenue Code ISDEAA Indian Self-Determination Services Administration HHS U.S. Department of Health and Human Services IBS Institutional Base Salary IHE Institutions of Higher Education IRC Internal Revenue Code ISDEAA Indian Self-Determination and Education and Assistance Act MTC Modified Total Cost MTDC Modified Total Direct Cost OMB Office of Management and Budget PII Personally Identifiable Information PMS Payment Management System PRHP Post-retirement Health Plans PTE Pass-through Entity REUI Relative Energy Usage Index 237 § 75.2 45 CFR Subtitle A (10–1–24 Edition) SAM System for Award Management (ac- cessible at https://www.sam.gov) SF 424 Standard Form 424 series and Form Families Application for Federal Assist- ance SFA Student Financial Aid SNAP Supplemental Nutrition Assistance Program SPOC Single Point of Contact TANF Temporary Assistance for Needy Families TFM Treasury Financial Manual U.S.C. United States Code VAT Value Added Tax [79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3012, Jan. 20, 2016] § 75.2 Definitions. These are the definitions for terms used in this part. Different definitions may be found in Federal statutes or regulations that apply more specifi- cally to particular program or activi- ties. Th s. These are the definitions for terms used in this part. Different definitions may be found in Federal statutes or regulations that apply more specifi- cally to particular program or activi- ties. These definitions could be supple- mented by additional instructional in- formation provided in in government- wide standard information collections. Acquisition cost means the cost of the asset including the cost to ready the asset for its intended use. Acquisition cost for equipment, for example, means the net invoice price of the equipment, including the cost of any modifica- tions, attachments, accessories, or aux- iliary apparatus necessary to make it usable for the purpose for which it is acquired. Acquisition costs for soft- ware includes those development costs capitalized in accordance with gen- erally accepted accounting principles (GAAP). Ancillary charges, such as taxes, duty, protective in transit insur- ance, freight, and installation may be included in or excluded from the acqui- sition cost in accordance with the non- Federal entity’s regular accounting practices. Advance payment means a payment that a Federal awarding agency or pass-through entity makes by any ap- propri ui- sition cost in accordance with the non- Federal entity’s regular accounting practices. Advance payment means a payment that a Federal awarding agency or pass-through entity makes by any ap- propriate payment mechanism, includ- ing a predetermined payment schedule, before the non-Federal entity disburses the funds for program purposes. Allocation means the process of as- signing a cost, or a group of costs, to one or more cost objective(s), in rea- sonable proportion to the benefit pro- vided or other equitable relationship. The process may entail assigning a cost(s) directly to a final cost objective or through one or more intermediate cost objectives. Audit finding means deficiencies which the auditor is required by § 75.516(a) to report in the schedule of findings and questioned costs. Auditee means any non-Federal enti- ty that expends Federal awards which must be audited under subpart F-of this part. Auditor means an auditor who is a public accountant, or a Federal, state, local government, or Indian Tribe audit organization, which meets the general standards specified for external auditors in generally accepted govern- ment auditing standards (GAGAS). The term auditor does l government, or Indian Tribe audit organization, which meets the general standards specified for external auditors in generally accepted govern- ment auditing standards (GAGAS). The term auditor does not include internal auditors of nonprofit organizations. Awardee (see Non-Federal entity). Budget means the financial plan for the project or program that the Fed- eral awarding agency or pass-through entity approves during the Federal award process or in subsequent amend- ments to the Federal award. It may in- clude the Federal and non-Federal share or only the Federal share, as de- termined by the Federal awarding agency or pass-through entity. Capital assets means tangible or in- tangible assets used in operations hav- ing a useful life of more than one year which are capitalized in accordance with GAAP. Capital assets include: (1) Land, buildings (facilities), equip- ment, and intellectual property (in- cluding software) whether acquired by purchase, construction, manufacture, lease-purchase, exchange, or through capital leases; and (2) Additions, improvements, modi- rearrange- replacements, fications, ments, reinstallations, renovations or alterations to capital assets that mate purchase, exchange, or through capital leases; and (2) Additions, improvements, modi- rearrange- replacements, fications, ments, reinstallations, renovations or alterations to capital assets that mate- rially increase their value or useful life (not ordinary repairs and mainte- nance). Capital expenditures means expendi- tures to acquire capital assets or ex- penditures to make additions, improve- ments, modifications, replacements, rearrangements, reinstallations, ren- ovations, or alterations to capital as- sets that materially increase their value or useful life. 238 Dept. of Health and Human Services § 75.2 Catalog of Federal Domestic Assistance (CFDA) number means the number as- signed to a Federal program in the CFDA. CFDA program title means the title of the program under which the Federal award was funded in the CFDA. Central service cost allocation plan means the documentation identifying, accumulating, and allocating or devel- oping billing rates based on the allow- able costs of services provided by a state, local government, or Indian tribe on a centralized basis to its depart- ments and agencies. The costs of these services may be allocated or billed to users. Claim me s of services provided by a state, local government, or Indian tribe on a centralized basis to its depart- ments and agencies. The costs of these services may be allocated or billed to users. Claim means, depending on the con- text, either: (1) A written demand or written as- sertion by one of the parties to a Fed- eral award seeking as a matter of right: (i) The payment of money in a sum certain; (ii) The adjustment or interpretation of the terms and conditions of the Fed- eral award; or (iii) Other relief arising under or re- lating to a Federal award. (2) A request for payment that is not in dispute when submitted. Class of Federal awards means a group of Federal awards either awarded under a specific program or group of pro- grams or to a specific type of non-Fed- eral entity or group of non-Federal en- tities to which specific provisions or exceptions may apply. Closeout means the process by which the Federal awarding agency or pass- through entity determines that all ap- plicable administrative actions and all required work of the Federal award have been completed and takes actions as described in § 75.381. Cluster of programs means a grouping of closely related programs that administrative actions and all required work of the Federal award have been completed and takes actions as described in § 75.381. Cluster of programs means a grouping of closely related programs that share common compliance requirements. The types of clusters of programs are re- search and development (R&D), student financial aid (SFA), and other clusters. ‘‘Other clusters’’ are as defined by OMB in the compliance supplement or as designated by a state for Federal awards the state provides to its sub- recipients that meet the definition of a cluster of programs. When designating an ‘‘other cluster,’’ a state must iden- tify the Federal awards included in the cluster and advise the subrecipients of compliance requirements applicable to the cluster, consistent with § 75.352(a). A cluster of programs must be consid- ered as one program for determining major programs, as described in § 75.518, and, with the exception of R&D as de- scribed in § 75.501(c), whether a pro- gram-specific audit may be elected. responsibilities Cognizant agency for audit means the Federal agency designated to carry out the in § 75.513(a). The cognizant agency for audit is not necessarily the same as the cogn may be elected. responsibilities Cognizant agency for audit means the Federal agency designated to carry out the in § 75.513(a). The cognizant agency for audit is not necessarily the same as the cognizant agency for indirect costs. A list of cognizant agencies for audit may be found at the FAC Web site. described Cognizant agency for indirect costs means the Federal agency responsible for reviewing, negotiating, and approv- ing cost allocation plans or indirect cost proposals developed under this part on behalf of all Federal agencies. The cognizant agency for indirect cost is not necessarily the same as the cog- nizant agency for audit. For assign- ments of cognizant agencies see the following: (1) For IHEs: Appendix III to part 75 C.11. (2) For nonprofit organizations: Ap- pendix IV to part 75 C.2.a. (3) For state and local governments: Appendix V to part 75 F.1. (4) For Indian tribes: Appendix VII to part 75 D.1. Commercial organization means an or- ganization, institution, corporation, or other legal entity, including, but not limited to, partnerships, sole propri- etorships, and limited liability compa- nies, that is organized or operated for the profit or benefit of its shar tion, or other legal entity, including, but not limited to, partnerships, sole propri- etorships, and limited liability compa- nies, that is organized or operated for the profit or benefit of its shareholders or other owners. The term includes small and large businesses and is used interchangeably with ‘‘for-profit orga- nization.’’ Compliance supplement means appen- dix XI to part 75 (previously known as the Circular A–133 Compliance Supple- ment). Computing devices means machines used to acquire, store, analyze, process, and publish data and other information including accessories electronically, 239 § 75.2 45 CFR Subtitle A (10–1–24 Edition) (or ‘‘peripherals’’) for printing, trans- mitting and receiving, or storing elec- tronic information. See also Supplies and Information technology systems. Contract means a legal instrument by which a non-Federal entity purchases property or services needed to carry out the project or program under a Federal award. The term as used in this part does not include a legal in- strument, even if the non-Federal enti- ty considers it a contract, when the substance of the transaction meets the definition of a Federal award or subaward (see Subaward does not include a legal in- strument, even if the non-Federal enti- ty considers it a contract, when the substance of the transaction meets the definition of a Federal award or subaward (see Subaward). Contractor means an entity that re- ceives a contract as defined in Contract. Cooperative agreement means a legal instrument of financial assistance be- tween a Federal awarding agency or pass-through entity and a non-Federal entity that, consistent with 31 U.S.C. 6302–6305: (1) Is used to enter into a relation- ship the principal purpose of which is to transfer anything of value from the Federal awarding agency or pass- through entity to the non-Federal enti- ty to carry out a public purpose au- thorized by a law of the United States (see 31 U.S.C. 6101(3)); and not to ac- quire property or services for the Fed- eral Government or pass-through enti- ty’s direct benefit or use; (2) Is distinguished from a grant in that it provides for substantial involve- ment between the Federal awarding agency or pass-through entity and the non-Federal entity in carrying out the activity contemplated by the Federal award. (3) The term does not include: (i) A cooperative research and devel- opment ng agency or pass-through entity and the non-Federal entity in carrying out the activity contemplated by the Federal award. (3) The term does not include: (i) A cooperative research and devel- opment agreement as defined in 15 U.S.C. 3710a; or (ii) An agreement that provides only: (A) Direct United States Government cash assistance to an individual; (B) A subsidy; (C) A loan; (D) A loan guarantee; or (E) Insurance Cooperative audit resolution means the use of audit follow-up techniques which promote prompt corrective action by improving communication, fostering collaboration, promoting trust, and de- veloping an understanding between the Federal agency and the non-Federal en- tity. This approach is based upon: (1) A strong commitment by Federal agency and non-Federal entity leader- ship to program integrity; (2) Federal agencies strengthening partnerships and working coopera- tively with non-Federal entities and their auditors; and non-Federal enti- ties and their auditors working coop- eratively with Federal agencies; (3) A focus on current conditions and corrective action going forward; (4) Federal agencies offering appro- priate relief for past noncompliance when audits show pro - eratively with Federal agencies; (3) A focus on current conditions and corrective action going forward; (4) Federal agencies offering appro- priate relief for past noncompliance when audits show prompt corrective action has occurred; and (5) Federal agency leadership sending a clear message that continued failure to correct conditions identified by au- dits which are likely to cause improper payments, fraud, waste, or abuse is un- acceptable and will result in sanctions. Corrective action means action taken by the auditee that: (1) Corrects identified deficiencies; (2) Produces recommended improve- ments; or (3) Demonstrates that audit findings are either invalid or do not warrant auditee action. Cost allocation plan means central service cost allocation plan or public assistance cost allocation plan. Cost objective means a program, func- tion, activity, award, organizational subdivision, contract, or work unit for which cost data are desired and for which provision is made to accumulate and measure the cost of processes, products, jobs, capital projects, etc. A cost objective may be a major function of the non-Federal entity, a particular service or project, a Federal award, or late and measure the cost of processes, products, jobs, capital projects, etc. A cost objective may be a major function of the non-Federal entity, a particular service or project, a Federal award, or an indirect (Facilities & Administra- tive (F&A)) cost activity, as described in subpart E of this part. See also Final cost objective and Intermediate cost objec- tive. Cost sharing or matching means the portion of project costs not paid by Federal funds (unless otherwise author- ized by Federal statute). This may in- clude the value of allowable third party in-kind contributions, as well as ex- penditures by the recipient. See also § 75.306. 240 Dept. of Health and Human Services § 75.2 Cross-cutting audit finding means an audit finding where the same under- lying condition or issue affects Federal awards of more than one Federal awarding agency or pass-through enti- ty. Departmental Appeals Board means the independent office established in the Office of the Secretary with dele- gated authority from the Secretary to review and decide certain disputes be- tween recipients of HHS funds and HHS awarding agencies under 45 CFR part 16 and to perform other review, adjudica- tion and mediat thority from the Secretary to review and decide certain disputes be- tween recipients of HHS funds and HHS awarding agencies under 45 CFR part 16 and to perform other review, adjudica- tion and mediation services as as- signed. Disallowed costs means those charges to a Federal award that the Federal awarding agency or pass-through enti- ty determines to be unallowable, in ac- cordance with the applicable Federal statutes, regulations, or the terms and conditions of the Federal award. Equipment means tangible personal property (including information tech- nology systems) having a useful life of more than one year and a per-unit ac- quisition cost which equals or exceeds the lesser of the capitalization level es- tablished by the non-Federal entity for financial statement purposes, or $5,000. See also Capital assets, Computing de- vices, General purpose equipment, Infor- mation technology systems, Special pur- pose equipment, and Supplies. Excess property means property ac- quired in whole or in part under the control of any Federal awarding agen- cy that, as determined by the head of the awarding agency or his/her dele- gate, is no longer required for the agen- cy’s needs or the dis le or in part under the control of any Federal awarding agen- cy that, as determined by the head of the awarding agency or his/her dele- gate, is no longer required for the agen- cy’s needs or the discharge of its re- sponsibilities. Expenditure report means: (1) For non-construction awards, the SF–425 Federal Financial Report (FFR) (or other OMB-approved equivalent re- port); (2) For construction awards, the SF– 271 ‘‘Outlay Report and Request for Re- imbursement’’ (or other OMB-approved equivalent report). Expenditures means charges made by a non-Federal entity to a project or program for which a Federal award was received. (1) The charges may be reported on a cash or accrual basis, as long as the methodology is disclosed and is con- sistently applied. (2) For reports prepared on a cash basis, expenditures are the sum of: (i) Cash disbursements for direct charges for property and services; (ii) The amount of indirect expense charged; (iii) The value of third-party in-kind contributions applied; and (iv) The amount of cash advance pay- ments and payments made to sub- recipients. (3) For reports prepared on an ac- crual basis, expenditures are the sum of: (i) Cash disbursements for ns applied; and (iv) The amount of cash advance pay- ments and payments made to sub- recipients. (3) For reports prepared on an ac- crual basis, expenditures are the sum of: (i) Cash disbursements for direct charges for property and services; (ii) The amount of indirect expense incurred; (iii) The value of third-party in-kind contributions applied; and (iv) The net increase or decrease in the amounts owed by the non-Federal entity for: (A) Goods and other property re- ceived; (B) Services performed by employees, contractors, subrecipients, and other payees; (C) Programs for which no current services or performance are required such as annuities, insurance claims, or other benefit payments. Federal agency means an ‘‘agency’’ as defined at 5 U.S.C. 551(1) and further clarified by 5 U.S.C. 552(f). Federal Audit Clearinghouse (FAC) means the clearinghouse designated by OMB as the repository of record where non-Federal entities are required to transmit the reporting packages re- quired by subpart F of this part. The mailing address of the FAC is Federal Audit Clearinghouse, Bureau of the Census, 1201 E. 10th Street, Jefferson- ville, IN 47132 and the web address is: http://harvester.cen ubpart F of this part. The mailing address of the FAC is Federal Audit Clearinghouse, Bureau of the Census, 1201 E. 10th Street, Jefferson- ville, IN 47132 and the web address is: http://harvester.census.gov/sac/. Any fu- ture updates to the location of the FAC may be found at the OMB Web site. Federal award has the meaning, de- pending on the context, in either para- graph (1) or (2) of this definition: (1)(i) The Federal financial assistance that a non-Federal entity receives di- rectly from a Federal awarding agency or indirectly from a pass-through enti- ty, as described in § 75.101; or 241 § 75.2 45 CFR Subtitle A (10–1–24 Edition) (ii) The cost-reimbursement contract under the Federal Acquisition Regula- tions that a non-Federal entity re- ceives directly from a Federal award- ing agency or indirectly from a pass- through entity, as described in § 75.101. (2) The instrument setting forth the terms and conditions. The instrument is the grant agreement, cooperative agreement, other agreement for assist- ance covered in paragraph (2) of Federal financial assistance, or the cost-reim- bursement contract awarded under the Federal Acquisition Regulations. (3) Federal award does not agreement for assist- ance covered in paragraph (2) of Federal financial assistance, or the cost-reim- bursement contract awarded under the Federal Acquisition Regulations. (3) Federal award does not include other contracts that a Federal agency uses to buy goods or services from a contractor or a contract to operate Federal Government owned, contractor operated facilities (GOCOs). (4) See also definitions of Federal fi- nancial assistance, grant agreement, and cooperative agreement. Federal award date means the date when the Federal award is signed by the authorized official of the Federal awarding agency. Federal awarding agency means the Federal agency that provides a Federal award directly to a non-Federal entity. Federal financial assistance means: (1) Assistance that non-Federal enti- ties receive or administer in the form of: (i) Grants; (ii) Cooperative agreements; (iii) Non-cash contributions or dona- tions of property (including donated surplus property); (iv) Direct appropriations; (v) Food commodities; and (vi) Other financial assistance (ex- cept assistance listed in paragraph (b) of this section). (2) For § 75.202 and subpart F of this part, Federal financial assista iations; (v) Food commodities; and (vi) Other financial assistance (ex- cept assistance listed in paragraph (b) of this section). (2) For § 75.202 and subpart F of this part, Federal financial assistance also in- cludes assistance that non-Federal en- tities receive or administer in the form of: (i) Loans; (ii) Loan Guarantees; (iii) Interest subsidies; and (iv) Insurance. (3) Federal financial assistance does not include amounts received as reim- bursement for services rendered to in- dividuals as described in § 75.502(h) and (i). Federal interest means, for purposes of § 75.343 or when used in connection with the acquisition or improvement of real property, equipment, or supplies under a Federal award, the dollar amount that is the product of the: (1) Federal share of total project costs; and (2) Current fair market value of the property, improvements, or both, to the extent the costs of acquiring or im- proving the property were included as project costs. Federal program means: (1) All Federal awards which are as- signed a single number in the CFDA. (2) When no CFDA number is as- signed, all Federal awards to non-Fed- eral entities from the same agency made for the same purpose All Federal awards which are as- signed a single number in the CFDA. (2) When no CFDA number is as- signed, all Federal awards to non-Fed- eral entities from the same agency made for the same purpose must be combined and considered one program. (3) Notwithstanding paragraphs (1) and (2) of this definition, a cluster of programs. The types of clusters of pro- grams are: (i) Research and development (R&D); (ii) Student financial aid (SFA); and (iii) ‘‘Other clusters,’’ as described in the definition of Cluster of Programs Federal share means the portion of total project costs that are paid by Federal funds. Final cost objective means a cost ob- jective which has allocated to it both direct and indirect costs and, in the non-Federal entity’s accumulation sys- tem, is one of the final accumulation points, such as a particular award, in- ternal project, or other direct activity of a non-Federal entity. See also Cost objective and Intermediate cost objective. Fixed amount awards means a type of grant agreement under which the Fed- eral awarding agency or pass-through entity provides a specific level of sup- port without regard to actual costs in- curred under the Federal award. This type of grant agreement under which the Fed- eral awarding agency or pass-through entity provides a specific level of sup- port without regard to actual costs in- curred under the Federal award. This type of Federal award reduces some of the administrative burden and record- keeping requirements for both the non- Federal entity and Federal awarding agency or pass-through entity. Ac- countability is based primarily on per- formance and results. See §§ 75.201(b) and 75.353. Foreign organization means an entity that is: (1) A public or private organization located in a country other than the 242 Dept. of Health and Human Services § 75.2 United States and its territories that is subject to the laws of the country in which it is located, irrespective of the citizenship of project staff or place of performance; (2) A private nongovernmental orga- nization located in a country other than the United States that solicits and receives cash contributions from the general public; (3) A charitable organization located in a country other than the United States that is nonprofit and tax ex- empt under the laws of its country of domicile and operation, and is not a university, college, accredited degr nization located in a country other than the United States that is nonprofit and tax ex- empt under the laws of its country of domicile and operation, and is not a university, college, accredited degree- granting institution of education, pri- vate foundation, hospital, organization engaged exclusively in research or sci- entific activities, church, synagogue, mosque or other similar entities orga- nized primarily for religious purposes; or (4) An organization located in a coun- try other than the United States not recognized as a Foreign Public Entity. Foreign public entity means: (1) A foreign government or foreign governmental entity; (2) A public international organiza- tion, which is an organization entitled to enjoy privileges, exemptions, and immunities as an international organi- zation under the International Organi- zations Immunities Act (22 U.S.C. 288– 288f); (3) An entity owned (in whole or in part) or controlled by a foreign govern- ment; or (4) Any other entity consisting whol- ly or partially of one or more foreign governments or foreign governmental entities. General purpose equipment means equipment which is not limited to re- search, medical, scientific or other g whol- ly or partially of one or more foreign governments or foreign governmental entities. General purpose equipment means equipment which is not limited to re- search, medical, scientific or other technical activities. Examples include office equipment and furnishings, mod- ular offices, telephone networks, infor- mation technology equipment and sys- tems, air conditioning equipment, re- production and printing equipment, and motor vehicles. See also Equipment and Special Purpose Equipment. Generally Accepted Accounting Prin- ciples (GAAP) has the meaning specified in accounting standards issued by the Government Accounting Standards Board (GASB) and the Financial Ac- counting Standards Board (FASB). Generally Accepted Government Audit- ing Standards (GAGAS), also known as the Yellow Book, means generally ac- cepted government auditing standards issued by the Comptroller General of the United States, which are applicable to financial audits. Grant agreement means a legal instru- ment of financial assistance between a Federal awarding agency or pass- through entity and a non-Federal enti- ty that, consistent with 31 U.S.C. 6302, 6304: (1) Is used to enter into a relation- ship th t of financial assistance between a Federal awarding agency or pass- through entity and a non-Federal enti- ty that, consistent with 31 U.S.C. 6302, 6304: (1) Is used to enter into a relation- ship the principal purpose of which is to transfer anything of value from the Federal awarding agency or pass- through entity to the non-Federal enti- ty to carry out a public purpose au- thorized by a law of the United States (see 31 U.S.C. 6101(3)); and not to ac- quire property or services for the Fed- eral awarding agency or pass-through entity’s direct benefit or use; (2) Is distinguished from a coopera- tive agreement in that it does not pro- vide for substantial involvement be- tween the Federal awarding agency or pass-through entity and the non-Fed- eral entity in carrying out the activity contemplated by the Federal award. (3) Does not include an agreement that provides only: (i) Direct United States Government cash assistance to an individual; (ii) A subsidy; (iii) A loan; (iv) A loan guarantee; or (v) Insurance. Grantee (see Recipient) HHS awarding agency means any or- ganization component of HHS that is authorized to make and administer awards. Hospital means a facility licensed a uarantee; or (v) Insurance. Grantee (see Recipient) HHS awarding agency means any or- ganization component of HHS that is authorized to make and administer awards. Hospital means a facility licensed as a hospital under the law of any state or a facility operated as a hospital by the United States, a state, or a subdivision of a state. Improper payment: (1) Means any payment that should not have been made or that was made in an incorrect amount (including over- payments and underpayments) under statutory, contractual, administrative, or other legally applicable require- ments; and 243 § 75.2 45 CFR Subtitle A (10–1–24 Edition) (2) Includes any payment to an ineli- gible party, any payment for an ineli- gible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper. Indian tribe means any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or villag viewer from discerning whether a payment was proper. Indian tribe means any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act (43 U.S.C. Chapter 33), which is recognized as eligible for the special programs and services provided by the United States to Indians be- cause of their status as Indians (25 U.S.C. 450b(e)). See annually published Bureau of Indian Affairs list of Indian Entities Recognized and Eligible to Re- ceive Services. Indirect cost rate proposal means the documentation prepared by a non-Fed- eral entity to substantiate its request for the establishment of an indirect cost rate as described in appendix III through appendix VII, and appendix IX of this part. Indirect (Facilities and Administration or F&A) costs means costs incurred for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objec- tives specifically benefitted, without effort disproportionate to the results achieved. To facilitate equitable dis- tribution of indirect expenses to the co not readily assignable to the cost objec- tives specifically benefitted, without effort disproportionate to the results achieved. To facilitate equitable dis- tribution of indirect expenses to the cost objectives served, it may be nec- essary to establish a number of pools of indirect (F&A) costs. Indirect (F&A) cost pools must be distributed to bene- fitted cost objectives on bases that will produce an equitable result in consider- ation of relative benefits derived. Information technology systems means computing devices, ancillary equip- ment, software, firmware, and similar procedures, services (including support services), and related resources. See also Computing devices and Equipment. Institution of Higher Education (IHE) is defined at 20 U.S.C. 1001. Intangible property means property having no physical existence, such as trademarks, copyrights, patents and patent applications and property, such as loans, notes and other debt instru- ments, lease agreements, stock and other instruments of property owner- ship (whether the property is tangible or intangible). Intermediate cost objective means a cost objective that is used to accumu- late indirect costs or service center cost truments of property owner- ship (whether the property is tangible or intangible). Intermediate cost objective means a cost objective that is used to accumu- late indirect costs or service center costs that are subsequently allocated to one or more indirect cost pools or final cost objectives. See also Cost ob- jective and Final cost objective. Internal control over compliance re- quirements for Federal awards means a process implemented by a non-Federal entity designed to provide reasonable assurance regarding the achievement of the following objectives for Federal awards: (1) Transactions are properly re- corded and accounted for, in order to: (i) Permit the preparation of reliable financial statements and Federal re- ports; (ii) Maintain accountability over as- sets; and (iii) Demonstrate compliance with Federal statutes, regulations, and the terms and conditions of the Federal award; (2) Transactions are executed in com- pliance with: (i) Federal statutes, regulations, and the terms and conditions of the Federal award that could have a direct and ma- terial effect on a Federal program; and (ii) Any other Federal statutes and regulations that are identified in the Compliance Sup s and conditions of the Federal award that could have a direct and ma- terial effect on a Federal program; and (ii) Any other Federal statutes and regulations that are identified in the Compliance Supplement; and (3) Funds, property, and other assets are safeguarded against loss from un- authorized use or disposition. Internal controls means a process, im- plemented by a non-Federal entity, de- signed to provide reasonable assurance regarding the achievement of objec- tives in the following categories: (1) Effectiveness and efficiency of op- erations; (2) Reliability of reporting for inter- nal and external use; and (3) Compliance with applicable laws and regulations. Loan means a Federal loan or loan guarantee received or administered by 244 Dept. of Health and Human Services § 75.2 a non-Federal entity, except as used in the definition of Program income. (1) The term ‘‘direct loan’’ means a disbursement of funds by the Federal Government to a non-Federal borrower under a contract that requires the re- payment of such funds with or without interest. The term includes the pur- chase of, or participation in, a loan made by another lender and financing arrangements that defer payment t requires the re- payment of such funds with or without interest. The term includes the pur- chase of, or participation in, a loan made by another lender and financing arrangements that defer payment for more than 90 days, including the sale of a Federal Government asset on credit terms. The term does not include the acquisition of a federally guaranteed loan in satisfaction of default claims or the price support loans of the Com- modity Credit Corporation. (2) The term ‘‘direct loan obligation’’ means a binding agreement by a Fed- eral awarding agency to make a direct loan when specified conditions are ful- filled by the borrower. (3) The term ‘‘loan guarantee’’ means any Federal Government guarantee, in- surance, or other pledge with respect to the payment of all or a part of the principal or interest on any debt obli- gation of a non-Federal borrower to a non-Federal lender, but does not in- clude the insurance of deposits, shares, or other withdrawable accounts in fi- nancial institutions. (4) The term ‘‘loan guarantee com- mitment’’ means a binding agreement by a Federal awarding agency to make a loan guarantee when specified condi- tions are fulfilled by the borrower, the le itutions. (4) The term ‘‘loan guarantee com- mitment’’ means a binding agreement by a Federal awarding agency to make a loan guarantee when specified condi- tions are fulfilled by the borrower, the lender, or any other party to the guar- antee agreement. Local government means any unit of government within a state, including a: (1) County; (2) Borough; (3) Municipality; (4) City; (5) Town; (6) Township; (7) Parish; (8) Local public authority, including any public housing agency under the United States Housing Act of 1937; (9) Special district; (10) School district; (11) Intrastate district; (12) Council of governments, whether or not incorporated as a nonprofit cor- poration under state law; and (13) Any other agency or instrumen- tality of a multi-, regional, or intra- state or local government. Major program means a Federal pro- gram determined by the auditor to be a major program in accordance with § 75.518 or a program identified as a major program by a Federal awarding agency or pass-through entity in ac- cordance with § 75.503(e). Management decision means the eval- uation by the Federal awarding agency or pass-through entity of the audit findings and corrective action plan a