Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

O A
UTSIDE  CTIVITIES OF 

S -L NIH E
ENIOR EVEL  MPLOYEES

Daniel R. Levinson 

Inspector General 

July 2005

OEI-01-04-00150
 Office of Inspector General 

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout the department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts management and 
program evaluations (called inspections) that focus on issues of concern to the 
department, the Congress, and the public. The findings and recommendations contained 
in the inspections reports generate rapid, accurate, and up-to-date information on the 
efficiency, vulnerability, and effectiveness of departmental programs.  The OEI also 
oversees State Medicaid fraud control units, which investigate and prosecute fraud and 
patient abuse in the Medicaid program. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers.  The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations.  The OCIG imposes program exclusions and 
civil monetary penalties on health care providers and litigates those actions within the 
department.  The OCIG also represents OIG in the global settlement of cases arising 
under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops compliance program guidances, renders advisory opinions on OIG sanctions to 
the health care community, and issues fraud alerts and other industry guidance.    E X E C U T I V E   S U M M A R Y  

OBJECTIVES 
1. 	 To describe the nature of outside activities for which senior-level 
National Institutes of Health (NIH) employees received approval 
between 2001 and 2003. 
2. 	 To determine the extent to which senior-level NIH employees 
provided key information on their outside activity forms and 
supporting documentation between 2001 and 2003. 
3. 	 To assess NIHs process for reviewing outside activity requests 
between 2001 and 2003. 
BACKGROUND 
In general, employees of the Department of Health and Human Services 
(HHS) are allowed to work privately with non-Federal entities on their 
personal time through outside activities, which in some cases require 
prior approval.  Examples of outside activities include consulting, 
teaching, speaking, and writing related to official duties.  These 
activities must not conflict with employees official duties, and may or 
may not involve financial compensation.  Outside activities must be 
approved in accordance with regulations issued by the Office of 
Government Ethics and supplemental rules issued by HHS. 
In December 2003, an investigative report in the Los Angeles Times 
raised concerns about the ethics program at NIH.  This article alleged 
that certain approved outside activities (i.e., consulting arrangements) 
of several NIH employees had created serious conflicts of interest that 
may have biased agency decisions.  In response to these allegations, 
several internal and external groups have conducted reviews of NIHs 
ethics program. 
NIH takes a decentralized approach to implementing and overseeing its 
ethics program.  NIH has 27 institutes and centers, as well as a central 
Office of the Director, Office of Research Facilities, and Office of 
Research Services (all hereafter referred to as institutes).  Each 
institute has its own ethics staff.   
When an employee seeks to participate in an outside activity, he or she 
submits an outside activity request (the HHS-520 form) and supporting 
documentation (which often includes two additional forms, the  
NIH-2657 and the unnumbered supplemental form) to his or her 
supervisor.  The supervisor makes a recommendation regarding 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  i  E X E C U T I V E   S U M M A R Y  
whether the activity should be approved and then forwards the request 
on to the appropriate ethics official, who makes a final determination. 
We conducted a retrospective review of all outside activity requests and 
supporting documentation that senior-level employees submitted to 
NIH ethics officials between January 1, 2001, and December 31, 2003.  
We defined senior-level employees to be those employees who were 
required to file Standard Form (SF)-278 public disclosure financial 
forms as of February 2004.  We also interviewed the ethics staff at each 
NIH institute.  Finally, we reviewed institutes written procedures 
related to outside activities. 
We conducted this review prior to February 2005, when HHS issued an 
interim final rule that placed several new restrictions on the types of 
outside activities in which NIH employees are allowed to participate. 
NATURE OF OUTSIDE ACTIVITIES 
Forty percent of senior-level employees at NIH received approval for 
319 outside activities between 2001 and 2003.  Of the 174 senior-level 
employees at NIH, 78 requested approval for 355 outside activities 
between 2001 and 2003.  NIH approved 90 percent, or 319, of these 
requests for 69 senior-level employees. 
About half of these outside activities involved teaching or consulting 
and most were compensated.  Thirty-three percent of the approved 
activities were for teaching/lecturing.  Twenty percent of the approved 
activities were for consulting, of which almost half involved 
pharmaceutical or biotechnology companies.  Eighty-eight percent of the 
approved outside activities involved some type of compensation.  
VULNERABILITIES 
Limited information submitted by employees inhibits NIHs ability to 
effectively review outside activity requests 
o 	 Thirty-two percent of the approved outside activity requests were 
missing at least 1 required piece of information:  reviewing 
officials signatures were missing from 67, the unnumbered 
supplemental form was missing or incomplete for 19, and the 
NIH-2657 form was missing or incomplete for 34. Both the 
supplemental form and the NIH-2657 form provide NIH with 
additional information regarding the nature of the activity; this 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  ii  E X E C U T I V E   S U M M A R Y  
information is critical in determining whether an activity should 
be approved. 
o 	 Twenty-two percent of the outside activities were not disclosed as 
required by regulations on annual financial disclosure forms.   
o 	 Ten of the sixty-three consulting activities contained a copy of the 
consulting contract and 54 percent of all the activities contained a 
letter of invitation.  Although NIH requires neither, consulting 
contracts and letters of invitation can provide important 
information on the nature of an outside activity. 
o 	 Position descriptions and job billets that employees provided were 
too general to demonstrate that employees official duties would 
not overlap with proposed outside activities.   
Inadequacies in the review process inhibit NIHs ability to effectively 
review outside activity requests 
o 	 Twenty-eight percent of outside activity requests were approved 
after the scheduled start dates for those activities, which violates 
HHS regulations. 
o 	 Written recusals were present for 19 percent of the activities.  
Recusals disqualify employees from general or particular matters 
in their official duties so that conflicts of interest are avoided.  All 
employees who engage in outside activities are required to recuse 
themselves from official duty matters that may create actual or 
apparent conflicts of interest; however, recusals are not 
necessarily required in writing.  Written recusals are important 
because they inform supervisors and co-workers of potential 
conflicts of interest and increase awareness among employees. 
o 	 Nine institutes do not routinely notify employees supervisors of 
final decisions on requests, and four others notify supervisors only 
of disapproved requests. 
o 	 Six institutes do not follow up on ongoing outside activities to 
determine whether the nature and time commitment associated 
with activities have changed.  NIH policy regarding the frequency 
and the nature of followup of ongoing activities is unclear. 
o 	 Ethics work is a collateral duty for about three-quarters of the 
ethics officials at NIH, which means it may be difficult for staff to 
maintain ethics expertise. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  iii  E X E C U T I V E   S U M M A R Y  
o 	 Lack of training for supervisors and employees is a major 
challenge. Although NIH trained all employees and provided 
training specifically geared towards supervisors in 2004, there is 
currently no requirement that supervisors attend regular training 
in how to review outside activity requests, and there is no 
requirement that all other employees attend regular training 
sessions on outside activities. 
RECOMMENDATIONS 
HHS and NIH have already undertaken a variety of initiatives to 
address inadequacies in the review and approval process for outside 
activities. NIH has increased training and has centralized the review of 
certain types of outside activity requests.  Furthermore, in 
February 2005, HHS issued an interim final rule that placed several 
restrictions on the types of outside activities in which NIH employees 
are allowed to participate.  (For a complete list of HHS and NIH 
initiatives, see Appendix C attached to the main body of this report.) 
We offer the following recommendations to NIH. 
Improve the quality and extent of information for outside activities 
o 	 Require all employees to submit additional details on the nature 
of their proposed outside activities and their current official 
duties. 
o 	 Ensure that employees fill out their outside activity requests 
completely. 
o 	 Ensure that institutes cross-check financial disclosure forms with 
employees outside activities records for the previous year. 
Address the inadequacies in the review process for outside 
activities 
o 	 Ensure that institutes approve outside activities before their 
scheduled start dates.  
o 	 Require recusals, if needed, to be made in writing and 
disseminated to immediate supervisors and other key personnel 
for all outside activities that are related to employees official 
duties. 
o 	 Ensure that ethics officials notify supervisors of all approvals and 
disapprovals. 
o 	 Ensure annual followup of ongoing outside activities. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  iv  E X E C U T I V E   S U M M A R Y  
o 	 Enhance training related to outside activities. 
o 	 Consider centralizing some or all aspects of the review process for 
outside activities. 
AGENCY COMMENTS 
NIH concurred with our findings and recommendations.  However, it 
indicated a need for caution regarding written recusals for outside 
activities in certain circumstances.  Further, NIH noted that it has 
already taken many steps to address the vulnerabilities identified in 
this report, and has further initiatives planned.  For NIHs complete 
comments, see page 24 of this report. 
OIG RESPONSE 
We appreciate NIHs comments and the steps that NIH has taken and 
has planned to address vulnerabilities in its review process for outside 
activities. 
In response to NIHs concerns about recusals, we reiterate that written 
recusals, when needed, are protective of employees who are 
participating in outside activities because they allow for the 
establishment of screening and gate-keeping practices that help to 
ensure employees do not encounter conflicts between their official duties 
and outside activities.  Thereby, they can help prevent conflicts of 
interest from arising. Recent guidance from the Office of Government 
Ethics also suggests that recusals can help to prevent conflicts from 
arising. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  v    T A B L E   O F   C O N T E N T S  

EXECUTIVE SUMMARY ........................................  i

INTRODUCTION ................................................ 1 

NATURE OF OUTSIDE ACTIVITIES .......................... 8 

VULNERABILITIES ............................................ 10 

Limitedinformation on outsideactivities  . . . . . . . . . . . . . . . . . . .  10

Inadequacies in the review process  . . . . . . . . . . . . . . . . . . . . . . . .  13

RECOMMENDATIONS ......................................... 18 

AGENCY COMMENTS ......................................... 24 

END NOTES .................................................... 30 

APPENDIXES .................................................. 36 

A:  Methodology  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  36

B:  The Natureof Outside Activities  . . . . . . . . . . . . . . . . . . . . . . .  42

C:  HHS and NIH Initiatives Related to Outside Activities  . . . . .  54

D:  Recommendations from the Office of Government Ethics. . . .  56

E:  Recommendations from theNIHBlue Ribbon Panel. . . . . . . .  58

ACKNOWLEDGMENTS ......................................... 63
   I N T R O D U C T I O N  

OBJECTIVES 
1. 	To describe the nature of outside activities for which senior-level 
National Institutes of Health (NIH) employees received approval 
between 2001 and 2003. 
2. 	To determine the extent to which senior-level NIH employees 
provided key information on their outside activity forms and 
supporting documentation between 2001 and 2003. 
3. 	To assess NIHs process for reviewing outside activity requests 
between 2001 and 2003. 
BACKGROUND 
Federal employees hold positions of public trust and are accountable for 
the responsible use of public funds.  As such, the public expects Federal 
employees actions and decisions to demonstrate integrity and 
objectivity. Therefore, pursuant to congressional mandate, the Office of 
Government Ethics (OGE) has put into place an ethics program that 
addresses a broad array of topics, including employees outside 
activities. Each department in the executive branch is responsible for 
implementing its ethics program. 
In general, employees of the Department of Health and Human Services 
(HHS) are allowed to work or interact privately with non-Federal 
entities on their personal time through outside activities, which in some 
cases require prior approval.  Examples of outside activities include 
consulting, teaching, speaking, and writing related to employees official 
duties. These activities must not conflict with employees official duties, 
and may or may not involve financial compensation. 
Outside activities are not necessarily related to employees professions, 
but some outside activities provide scientists at NIH with opportunities 
to work with industry, academia, hospitals, and nonprofit foundations to 
help translate important scientific and biomedical research into 
practice.  Outside activities can also be sources of professional 
gratification by allowing NIH scientists to build and maintain their 
professional expertise. Further, the compensation from outside 
activities may help NIH attract and retain staff. 
However, outside activities may create actual or apparent conflicts of 
interest for employees.  Pursuant to 18 U.S.C.  208(a), an actual 
conflict of interest arises when an employee personally and 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  1  I N T R O D U C T I O N  
substantially participates, in an official capacity, in a particular matter 
in which he or she has a personal or imputed financial interest, if the 
matter will otherwise have a direct and predictable effect on that 
interest. Additionally, pursuant to 5 CFR  2635.502, the appearance of 
a loss of impartiality arises when an employee participates in an official 
capacity in a matter in which he or she has certain defined associations 
or interests that would cause a reasonable person [...] to question his 
impartiality in the matter. 
Recent concerns regarding outside activities 
In December 2003, an investigative report in the Los Angeles Times 
raised concerns about NIHs ethics program.1 The article alleged that 
certain approved outside activities (i.e., consulting arrangements) for 
several employees at NIH had created serious conflicts of interest that 
may have biased agency decisions.2  The article also raised questions 
about the lack of public disclosure regarding the compensation that 
scientists received for these outside activities.   
In response to these allegations, several internal and external groups 
have launched reviews of both the overall system for reviewing outside 
activity requests at NIH and the questionable outside activities in 
which NIH employees participated.  The following is a summary of 
those reviews: 
o 	 NIH is in the process of reviewing all compensated outside 
activities involving consulting with pharmaceutical and 
biotechnology companies in which employees participated between 
1999 and 2003 to ensure that they met pertinent requirements.   
o 	 Several hearings by the Senate Appropriations Committee and 
the House Energy and Commerce Committees Subcommittee on 
Oversight and Investigations examined consulting arrangements 
that NIH employees maintained with pharmaceutical and 
biotechnology companies.  
o 	 A blue ribbon panel of outside advisors convened by NIH 
evaluated the agencys policies for outside activities.  
o 	 A routine program review by OGE assessed the procedures and 
administrative systems in place for outside activities at four NIH 
institutes. 
Requirements for outside activities at NIH 
Office of Government Ethics. OGE was established in the Ethics in 
Government Act of 1978 to oversee ethics programs at all executive 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  2  I N T R O D U C T I O N  
branch agencies.  In October 1992, OGE promulgated governmentwide 
Standards of Ethical Conduct for Employees of the Executive Branch, 
which became effective on February 3, 1993, and include Subpart H on 
outside activities.3  OGE regulations require employees to comply with 
18 U.S.C.  209, which prohibits employees from accepting outside 
compensation for work conducted in an official capacity.  OGE 
regulations also prohibit employees from engaging in outside activities, 
both compensated and uncompensated, that would conflict with those 
employees official duties to such a degree that they would have to be 
disqualified from performing essential parts of their jobs.  Further, 
employees are required to endeavor to avoid actions that would create 
the appearance of violating the standards of ethical conduct.4 
Department of Health and Human Services. Agencies may impose, with 
OGE concurrence, additional limitations on outside activities.  In 1996, 
HHS promulgated the Supplemental Standards of Ethical Conduct, 
which provide additional ethics rules.5  During the period covered by our 
review, these supplemental regulations prohibited all HHS employees 
from engaging in any compensated employment regarding HHS-funded 
activities, or providing consultative or professional services for 
compensation in preparing grant applications, contract proposals, and 
certain other documents for submission to HHS. In addition, the 
regulations required, and continue to require, employees to request and 
receive prior written approval from their supervisors and ethics officials 
for certain outside activities.  The types of activities that trigger the 
prior approval requirement include: (1) providing consultative or 
professional services; (2) teaching, speaking, writing, or editing that 
relates to official duties or results from contact with certain sources; or 
(3) serving on certain boards or advisory bodies.6 
In February 2005, HHS issued an interim final rule that revised the 
Supplemental Standards of Ethical Conduct and placed additional 
restrictions on the types of outside activities in which NIH employees 
are allowed to participate.7 
At the time of this review, regulation stipulated that outside activities 
shall be approved unless they violate a statutory or regulatory 
requirement.8 
National Institutes of Health. In its NIH Manual, NIH maintains 
policies and procedures for outside activities that elaborate on HHS and 
OGE regulations.9  The NIH Manual reiterates and clarifies the basic 
rules for outside activities as stated in OGE regulations and HHS 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  3  I N T R O D U C T I O N  
supplemental regulations. The NIH Manual stipulates that outside 
activities may draw on employees general scientific or professional 
expertise and may be compensated, but they may not be conducted on 
Government time or using Government resources, and they may not be 
related to any matter that an employee has been assigned as an official 
duty in the past 12 months.10 
Outside activity approval process at NIH 
NIH takes a decentralized approach to implementing and overseeing its 
ethics program.  It has 27 institutes and centers, as well as a central 
Office of the Director, Office of Research Facilities, and Office of 
Research Services (all hereafter referred to as institutes).  Each 
institute has its own Deputy Ethics Counselor (DEC), and sometimes 
additional ethics staff, who oversee its ethics program.  Among their 
ethics duties, the DECs ensure that institute employees abide by NIHs 
requirements for outside activities and answer employees questions 
regarding ethics.  Typically, DECs are the Deputy Directors or executive 
officers of their institutes, so they have other job responsibilities in 
addition to ethics.  The DEC for the Office of the Director also serves as 
the head NIH DEC and the Deputy Director of NIH. 
While the process for approving an outside activity in every institute 
reflects the policies delineated in the NIH Manual, institutes may 
develop their own procedures for executing those policies so long as 
those procedures do not contradict HHS, OGE, or NIH policies or rules. 
Outside Activity Requests. In general, the official process for approval 
begins when an employee submits a Request for Approval of Outside 
Activity (HHS-520) and, often, one or more NIH supplements to his or 
her supervisor.  Each of these forms collects information on particular 
aspects of a proposed outside activity and is used in determining 
whether an outside activity may pose a conflict of interest.  
o 	 The HHS-520 is required for all outside activity requests. It 
collects information on the employees position, the nature of the 
outside activity, the length of time over which the outside activity 
will be performed, and the method of compensation. As of 
January 2004, the amount of compensation must also be 
disclosed.11 
o 	 The NIH Unnumbered Supplemental Information Form to 
Accompany the HHS-520 is required for all compensated outside 
activities.12  It documents the employees official duties, how the 
outside activity does or does not relate to those official duties, and 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  4  I N T R O D U C T I O N  
the nature of the relationship, if any, between the organization 
sponsoring the outside activity and NIH. 
o 	 The Supplemental Information to the HHS-520 Form (NIH-2657) 
is required for outside activities involving consulting and private 
clinical and legal practice.  It contractually binds the employee to 
avoid certain situations that could create an actual or apparent 
conflict of interest. 
The employees supervisor reviews these forms and makes a 
recommendation to the appropriate DEC about whether an activity 
should be approved.  The DEC then reviews these forms and makes a 
final decision about whether to approve the outside activity request.  At 
this point, the need for any recusals would be determined.  A recusal 
disqualifies an employee from a general or particular matter in his or 
her official capacity to avoid a conflict of interest.  It is a protective 
measure that aims to ensure that employees do not face conflicts of 
interest. 
Annual Financial Disclosure.  Certain executive branch employees, 
including some NIH employees, must also disclose their compensated 
outside activities through an annual financial disclosure form. By 
statute, officials for whom the minimum base pay in their pay band is 
equal to or greater than 120 percent of the minimum rate of base pay for 
the GS-15, and certain other designated officials such as presidential 
appointees and members of the uniformed services above a certain pay 
grade, must file the annual public financial disclosure, the Standard 
Form (SF)-278, with their DECs.13 The SF-278 captures all outside 
sources of assets worth at least $1,000, income, and liabilities along 
with the financial value for each source; compensated outside activities 
for which the income is greater than $200; and certain compensated and 
uncompensated positions.   
Other employees who do not file the SF-278 but who hold positions of 
significant decisionmaking authority as determined by NIH in 
conjunction with OGE are required to file the annual confidential 
financial disclosure form, the OGE-450, with their DECs.  The OGE-450 
captures certain outside sources of assets worth at least $1,000, income, 
and liabilitiesincluding compensated outside activities above $200but 
does not require the disclosure of the financial value from any source.  
This form requires the disclosure of certain compensated and 
uncompensated positions. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  5  I N T R O D U C T I O N  
Employees who do not meet the criteria for filing the SF-278 or the 
OGE-450 do not file any annual financial disclosure forms. 
METHODOLOGY 
Our review is based on three data sources:  (1) a file review, 
(2) interviews, and (3) a procedure review.  (For a complete description 
of our methodology, see Appendix A.)  We conducted this review prior to 
February 2005, when HHS issued an interim final rule that placed 
several new restrictions on the types of outside activities in which NIH 
employees are allowed to participate. 
For our file review, we conducted a retrospective review of all outside 
activity requests that senior-level employees submitted to NIH ethics 
officials between January 1, 2001, and December 31, 2003.  We defined 
senior-level employees to be those employees who were required to file 
SF-278 public disclosure forms as of February 2004.  NIH provided us 
with a list of 176 employees who met that criterion.  We excluded from 
our review the Director of NIH and the Director of the National Cancer 
Institute, both of whom are presidential appointees and are therefore 
overseen by ethics officials outside of NIH.  Therefore, our final 
population was 174 employees. The population of senior-level 
employees included, but was not limited to:  (1) institute directors, 
(2) institute deputy directors, (3) institute scientific directors, and    
(4) institute clinical directors. 
Our file review included three methodologies:  (1) a descriptive review, 
(2) a completeness review, and (3) a compliance review.14 For the 
descriptive review, we tallied the number and nature of the outside 
activity requests overall and conducted trend analyses of the approved 
activities. One limitation of this review is that it may have been subject 
to underreporting, as we did not assess whether employees conducted 
any additional outside activities between 2001 and 2003 that were not 
reported to NIH in outside activity requests. For the completeness 
review, we calculated the extent to which the required documentation 
was filled out completely and correctly.   
For the compliance review, two analysts, and when necessary a third, 
independently assessed each approved outside activity using a set 
protocol and documented whether the activity appeared to be allowable 
under existing requirements.  A limitation of this review is that we 
made our assessments based solely on the documentation provided by 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  6  II NN TT RR OO DD UU CC TT II OO NN
NIH and did not follow up with employees or ethics officials for further 
details on the outside activities. 
For our interviews, we interviewed the DECs, and any ethics staff they 
chose to include, at all institutes. We used a structured questionnaire 
to conduct the interviews. The questionnaire addressed topics such as 
the institutes procedures for reviewing outside activity requests and 
challenges that ethics officials experience in reviewing outside activity 
requests. 
Finally, we requested operating procedures related to outside activities 
from all institutes. We assessed the nature of these documents and 
identified common themes and best practices. 
We conducted this inspection in accordance with the Quality Standards 
for Inspections issued by the Presidents Council on Integrity and 
Efficiency. 
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In this section we provide a summary of the number and types of 
outside activities in which NIH senior-level employees participated 
between 2001 and 2003.  We conducted this review prior to February 
2005, when HHS issued an interim final rule that placed several new 
restrictions on the types of outside activities in which NIH employees 
are allowed to participate.  For more information see Appendix B. 
Forty percent of senior-level NIH employees 
received approval for 319 outside activities 
between 2001 and 2003 
Senior-level employees received approval for 90 percent of the outside 
activity requests they submitted 
o 	 Of the 174 senior-level employees at NIH, 78 requested approval 
for 355 outside activities between 2001 and 2003.  NIH approved 
319 of these outside activity requests for 69 senior-level 
employees. It is not surprising that most activities were 
approved.  At the time of our review, departmental supplemental 
regulations required that outside activity requests be approved 
unless they violated statute or regulation.15 
Most senior-level employees participated in 1 or 2 approved outside 
activities, but a few participated in more than 20 
o 	 Fifty-seven percent (39) of the sixty-nine senior-level employees 
participated in only one or two approved outside activities 
between 2001 and 2003.   
o 	 Eight senior-level employees participated in 10 or more approved 
outside activities during this 3-year period, and 3 senior-level 
employees participated in 20 or more approved outside activities.   
Senior-level intramural employees accounted for 76 percent of the approved 
outside activities 
o 	 Intramural employees coordinate and conduct research within 
their institutes at NIH, whereas extramural employees 
administer grants and contracts with outside entities.   
Senior-level employees at three institutes accounted for 52 percent of the 
approved activities 
o 	 Senior-level employees at the National Institute of Mental Health 
participated in 77 approved outside activities between 2001 and 
2003. Senior-level employees at the National Human Genome 
Research Institute participated in 45 approved outside activities, 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  8  N A T U R E   O F   O U T S I D E   A C T I V I T I E S  
and senior-level employees at the National Heart, Lung and Blood 
Institute participated in 44 approved outside activities. 
About half of these activities involved teaching or 
consulting and most were compensated 
Fifty-three percent of the approved outside activities involved teaching or 
consulting, commonly with universities and pharmaceutical companies, 
respectively 
o 	 Thirty-three percent (105) of the approved activities were for 
teaching/lecturing. Forty-four percent (46) of these teaching/ 
lecturing activities were with universities.  It is important that 
NIH review activities with universities carefully as NIH funds 
scientific research at universities, and certain outside activities 
may inappropriately influence the employees or the agencys 
decisions with respect to future funding decisions.  Extramural 
employees, who administer grants and contracts with universities, 
may pose greater risks for conflicts of interest if they engage in 
outside activities with universities and other potential grantees. 
o 	 Twenty percent (63) of the approved activities were for consulting.  
Forty-nine percent (31) of these consulting arrangements were 
with pharmaceutical or biotechnology companies.  It is vital that 
NIH review activities with these companies carefully to ensure 
that they are not receiving inappropriate access to Government 
data and that the employees and the agencys decisions are not 
influenced by industry. 
Eighty-eight percent of the approved outside activities involved some type 
of compensation 
o 	 For those activities for which the information was available, 
senior-level employees reported earning on average $869 in 
expenses, $1,500 in honoraria, and $2,000 in fees, per activity.  
Honoraria and fees ranged from $150 to $18,000 and $500 to 
$30,000, respectively, per activity.16 For those activities for which 
the information was available, no relationship appeared to exist 
between the amount of time an employee spent on an outside 
activity and the amount of compensation he or she received for 
that activity. 
o 	 Fifty-seven percent of approved activities involved some amount of 
time off and 7 percent required a week or more of time off. 
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  V U L N E R A B I L I T I E S

Limited information submitted by employees 
inhibits NIHs ability to effectively review 
outside activity requests 
Of the 319 approved outside activities, 101 were missing at least 1 required 
piece of information in the documentation 
Of the 101 activities that were missing information, 82 percent were 
missing 1 item of information, 15 percent were missing 2 items, and    
3 percent were missing 3 items.   
Foremost among the missing items were signatures on the HHS-520, 
which is the main outside activity request form and is required for all 
employees submitting requests. Of the 319 approved outside activities, 
67 were missing a signature by the reviewing official.  The reviewing 
official, typically the employees supervisor, is responsible for verifying 
that a proposed outside activity does not overlap with the employees 
official duties and recommending to the ethics official whether a request 
should be approved.  One approved outside activity request lacked an 
employee signature testifying that the information provided on the 
HHS-520 was true and complete, and one approved outside activity 
request lacked a signature of the final approving official. 
For 19 of the 279 approved outside activity requests that required 
unnumbered supplemental forms, the forms were either missing or 
incomplete.  The unnumbered supplemental form is the NIH form that 
is required for all compensated activities.  These missing and 
incomplete forms are of particular concern as this form solicits details 
about an employees official duties, the proposed outside activity, and 
the difference between the two.  It is essential for ethics officials to have 
this information in determining whether proposed outside activities 
could create real or apparent conflicts of interest.   
NIH requires employees to attach position descriptions or job billets 
along with unnumbered supplemental forms.  Of the 279 approved 
requests that required unnumbered supplemental forms, 66 percent 
lacked position descriptions or job billets.   
It is also of concern that NIH does not require unnumbered 
supplemental forms and position descriptions for all outside activity 
requests, regardless of compensation amount.17  These documents 
provide information that is relevant to determining whether or not 
activities should be allowed. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  10  V U L N E R A B I L I T I E S  
Furthermore, for 34 of the 205 approved outside activity requests that 
required NIH-2657 forms, the forms were either missing or incomplete. 
The NIH-2657 is the supplemental form that, in certain situations, 
contractually binds employees who participate in consulting activities or 
private clinical or legal practice to avoid real or apparent conflicts of 
interest.  
Even when the forms were complete, they often provided limited information 
Because of the limited information provided on the forms, ethics officials 
must routinely follow up with employees for additional details or 
clarification, which consumes valuable staff time.  Ethics officials at    
22 institutes commented that they always or often follow up with 
employees for additional information as they review outside activity 
requests.  Ethics officials indicated that the most common reason for 
followup with employees is to obtain more information on the difference 
between an outside activity and an employees official duties.   
NIH does not require certain additional documents that could be useful 
for reviewers.  For example, NIH does not require employees to submit 
letters of invitation or any descriptions of the outside activities from 
outside entities, although 12 institutes require letters of invitation in 
their written procedures for outside activities.  Fifty-four percent (172) 
of approved outside activity requests contained letters of invitation.   
Furthermore, NIH does not require ethics officials to collect or review 
copies of contracts for consulting activities.  Ten of the sixty-three 
consulting activities had copies of the contracts, with the terms and 
conditions of the activity, on file.  Previously, NIH counsel would 
occasionally review contracts for outside activities.  However, they no 
longer do so because such reviews may have led to NIH lawyers 
providing legal advice to Government employees in their private 
capacities.  Currently, NIH requires employees who are participating in 
outside activities to insert a standard clause in all contracts so that 
outside employers recognize that Federal employees must adhere to 
certain laws and standards of ethical conduct.18 
In addition, the position descriptions and job billets that employees 
provided were typically too general to demonstrate that employees 
official duties would not overlap with proposed outside activities. 
Position descriptions do not commonly list employees current research 
projects and affiliations. 
In our compliance review, our reviewers found that information on 
outside activities was limited in 81 percent of the approved outside 
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activities. This limitation included insufficient detail regarding the 
nature of the outside activities, the nature of employees official job 
duties, the differences between the outside activities and their official 
job duties, the outside organizations, and any NIH funding or 
partnerships with the outside organizations.  For example, in describing 
the differences between their official duties and proposed outside 
activities, employees provided vague responses such as, The activity is 
not appropriate as an official duty. 
To address these concerns, the HHS Designated Agency Ethics Official 
(DAEO) has reminded ethics officials throughout the Department of the 
importance of performing due diligence when reviewing ethics forms.19 
The DAEO has authority, delegated from the Secretary, to oversee the 
HHS ethics program. 
Twenty-two percent of the approved outside activities were not disclosed as 
required on annual financial disclosure forms 
Employees who file the annual public financial disclosure form (SF-278) 
must disclose all sources of income over $200, certain outside positions, 
and all reimbursement for travel expenses greater than $260.  All 
disclosures on the SF-278 must include the amount of compensation, if 
applicable.  Senior-level employees who were public filers did not 
disclose 20 of the 95 approved outside activities that required disclosure 
on their SF-278 forms in 2001 or 2002.  In addition, senior-level 
employees did not disclose 22 of the 93 approved outside activities that 
required disclosure in 2003; however, NIH had not completed its final 
review and authorization of the 2003 SF-278 forms at the time of our 
review, and some of the deficiencies for 2003 may have been later 
identified and corrected by ethics officials.20 
Employees who file the confidential financial disclosure form (OGE-450) 
must disclose all sources of income over $200, certain outside positions, 
and reimbursement for travel expenses greater than $285.  However, 
confidential filers are not required to report the amount of 
compensation in all cases.  Senior-level employees who filed the 
confidential financial disclosure at any point during the period of our 
review did not disclose 30 of the 141 approved outside activities that 
required disclosure on the OGE-450.21  At the time of our review, NIH 
had already completed its final review and authorization of the  
OGE-450 forms for 2003. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  12  V U L N E R A B I L I T I E S  

Inadequacies in the review process   
inhibit NIHs ability to effectively review 
outside activity requests 
Approvals after the start date 
Twenty-eight percent of outside activity requests were approved after 
the start dates provided on the request forms. HHS regulations 
mandate that outside activities must be approved in advance.22 A 
recent OGE review of outside activities at NIH also found a significant 
number of late approvals: in its sample of 155 approved activities at    
4 institutes, 25 percent were approved after their scheduled start 
dates.23 
In our review, some approvals after the scheduled start dates were due 
to late submissions.  For 40 percent of the late approvals, employees 
submitted their outside activity requests after the activities had begun. 
Late approvals may also occur if ethics officials need to follow up with 
employees for additional information on requests.  Ethics officials noted 
that followup can add weeks to the time it takes to review requests.24 
Fifteen institutes set specific deadlines for the submission of outside 
activity requests in their procedures.  Eleven institutes require requests 
to be submitted at least 6 weeks prior to start dates; the remaining 
institutes have shorter deadlines or call for reasonable advance. 
Limited use of written recusals for outside activities 
Written recusals specific to outside entities were present for 19 percent 
of the approved activities.  Pursuant to the prohibitions of the Federal 
conflict of interest statute (18 U.S.C.  208) and OGE regulations, all 
employees who participate in outside activities are obligated to recuse 
themselves, in other words disqualify themselves, from any official duty 
matters that may create an actual conflict of interest or an appearance 
of loss of impartiality in the performance of official duties.25 However, 
ethics officials generally leave recusals to employees to carry out. 
Recent OGE guidance suggests that recusals can help to prevent 
conflicts of interest from arising.26 
It is unclear what NIHs expectations with regard to written recusals 
are.  The NIH Manual continues to call for written recusals in all 
cases.27  However, NIH officials have indicated that recusals are not 
necessarily required in writing.  All employees participating in outside 
activities receive two forms, the Notice to Applicants for Prior Approval 
of Outside Activities and the Excerpts from the Standards of Ethical 
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Conduct for Employees of the Executive Branch and the Department of 
Health and Human Services Supplemental Agency Ethics Regulations, 
which mention the expectation that employees must recuse themselves, 
but do not include further details. 
Although ethics officials at 28 of the 30 institutes indicated that when 
they require recusals they require them in writing, ethics officials at 
only 8 of these institutes indicated that they always or often require 
recusals for outside activities.  Only four institutes mention the need for 
recusals in their written procedures.  Written recusals are important 
because they inform supervisors and coworkers of potentials for conflicts 
of interest and thereby help to prevent those conflicts from arising. 
Ethics officials at five institutes indicated that they have no 
mechanisms for determining whether or not recusals are being 
observed, and ethics officials at other institutes rely on oversight by 
supervisors, verbal reminders, and the annual review of financial 
disclosure statements to ensure that employees are observing recusals.   
Inadequate notification of supervisors 
Nine institutes do not routinely notify employees supervisors of final 
decisions on requests, and four others notify supervisors only of 
disapproved requests.  Although employees supervisors are required to 
review and sign off on outside activity requests before sending them to 
the appropriate DECs, they are frequently not aware of the final 
approval decisions made by the DECs.  When supervisors are unaware 
of ongoing outside activities, they may not be able to monitor employees 
assignments to avoid conflicts of interest.  However, NIH ethics staff 
commented that supervisors typically assume that all outside activity 
requests are approved unless they hear otherwise. 
Inadequate followup of ongoing outside activities 
Six institutes do not follow up on ongoing outside activities to determine 
whether the nature and time commitments of activities are in line with 
the specifications of the requests, or whether ethics rules are being 
observed.  Although ethics officials at 22 institutes stated that they 
perform varying levels of followup, ethics officials at only 14 institutes 
said that they review outside activities annually.28  Six institutes 
mention the importance of annual review for ongoing activities in their 
written procedures.29 
It used to be that NIH required employees to annually submit the 
HHS-521 form, which collects updated information on ongoing outside 
activities, for all ongoing activities. The requirement for followup still 
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exists in the NIH manual.30 At the time of this report, filing of the 
HHS-521 was no longer required. However, the February 2005 interim 
final rule stipulates that employees who engage in outside activities 
must file annual reports on their activities.31 
OGE also found that followup of outside activities was problematic. 
None of the four institutes it examined appeared to be conducting 
followup consistently.32 OGE found examples of institutes following up 
only once, at sporadic intervals over the course of a multiyear activity, 
or not at all. 
Varying levels of staffing and training 
Ethics work is a collateral duty for about three-quarters of institute 
ethics officials, and only two institutes have full-time DECs. The DECs 
report spending 27 percent of their time on ethics issues, on average, 
and other key ethics staff reported spending an average of 59 percent of 
their time on ethics issues. 
Ethics officials at 14 institutes cited staffing as a major or moderate 
challenge. Although it may be efficient for ethics staff to perform their 
ethics function as a collateral duty, this arrangement may make it 
difficult for ethics officials to cultivate the set of skills and experience 
necessary for handling outside activities, especially at smaller institutes 
that receive fewer requests. In addition, when ethics offices are 
understaffed, ethics officials may have less time to train employees. 
Ethics officials at 18 institutes reported providing no training on outside 
activities specifically geared toward supervisors. Currently, there is no 
requirement for supervisor training that addresses the review of outside 
activities. However, in 2004 NIH distributed to supervisors a 
memorandum that provided guidance on reviewing outside activities.33 
Training supervisors is crucial to ensuring that they understand their 
role in the outside activity approval process and vet requests 
adequately. Ethics officials at 12 institutes noted that insufficient 
training of supervisors posed a major or moderate challenge in the 
outside activity approval process, and 1 official said that supervisors are 
currently flying blind with regard to their outside activities duties. 
Moreover, ethics officials at 11 institutes noted that insufficient training 
for employees posed a major or moderate challenge in the outside 
activity approval process. Currently, there is no requirement for annual 
ethics training for all employees. Annual ethics training is required for 
employees who file financial disclosure reports, as well as for other 
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employees designated by institute directors or DECs.34  This training is 
generally done through a computer-based module and includes one 
section on outside activities and official duties.  Face-to-face training 
typically happens once every 3 years, although several ethics officials 
noted opportunities for informal face-to-face training exist whenever 
they answer employees questions. NIH required all employees to 
attend face-to-face training in 2004, but there is no requirement for 
annual training. 
These vulnerabilities may have led to possible violations of ethics rules 
We conducted this review prior to February 2005, when HHS issued an 
interim final rule that placed several new restrictions on the types of 
outside activities in which NIH employees are allowed to participate.  
Our review, therefore, only addresses activities that may have been 
inappropriate under the previous version of the regulations. The new 
regulations impose substantially greater restrictions on the types of 
activities that are appropriate for NIH employees. 
Determining whether any outside activity adhered to the regulations 
involved a judgment call on our part.  To minimize subjectivity,   
two reviewers independently reviewed each outside activity.  A final 
reviewer was consulted to resolve cases in which the two initial 
reviewers disagreed. 
Our review included all available NIH documentation regarding these 
activities. However, these documents do not necessarily include all the 
facts known to or considered by the NIH ethics reviewers at the time of 
their reviews.  Ethics officials indicated to us that they often do 
additional research to get information about proposed activities. 
In no instance was the documentation we reviewed adequate for us to 
make a definitive determination regarding whether an activity was 
appropriate. As demonstrated above, the information contained in the 
documentation for outside activity requests is often inadequate to make 
determinations.  Therefore, we cannot state with absolute certainty that 
any activity was or was not allowable. Instead, we made one of three 
determinations for each activity:  (1) appears to be allowable, 
(2) appears not to be allowable, and (3) cannot determine.  
In cases for which the documentation did not suggest any violation of 
the regulations, our reviewers identified activities as appears to be 
allowable, even if more information would be necessary to definitively 
determine that they were in fact allowable.  Our reviewers only 
identified an activity as appears not to be allowable if the 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  16  V U L N E R A B I L I T I E S  
documentation suggested a violation of the regulations.  Finally, our 
reviewers identified activities as cannot be determined when the 
information available was so incomplete that they were unable to make 
a determination, or when the information raised concerns that the 
activity may have violated the regulations.   
Ultimately, our reviewers could not determine the appropriateness of 
eight activities, and they also determined that two of the activities 
appeared to violate regulations.  However, it is quite possible that, due 
to the approach taken in this review, we have underestimated the 
number of activities that should not have been approved.  Inadequate 
documentation for outside activities can, intentionally or 
unintentionally, hide potential violations.  If ethics officials conduct 
additional research on requests, they may uncover and resolve those 
potential problems before they become violations, but this may not 
happen in every case. 
Our reviewers were unable to make determinations on the 
appropriateness of eight activities; it was unclear whether or not these 
activities may have posed a variety of potential violations. In some 
cases, it was unclear whether activities violated 5 CFR  2635.802, 
which prohibits employees from engaging in outside activities that 
conflict with their official duties.  Other activities appeared to 
potentially violate various stipulations of the NIH Manual.  In some 
instances, it was unclear whether employees had received compensation 
for outside activities that related to their official duties.  In other cases, 
it was unclear whether employees had used Government time or 
facilities to conduct outside activities.  In still other cases, it was 
unclear whether employees had been properly recused from official 
duties that may have related to their outside activities.  NIH reviewed 
these activities and determined that no violations had occurred. 
The two outside activities that appeared not to be allowable may have 
violated 5 CFR  5501.106(c)(1) of the HHS supplemental standards, 
which prohibits employees from providing consultative or professional 
services for compensation to assist in the preparation of any grant 
application intended for submission to HHS.35  We referred these two 
cases to NIH for further review and copied the HHS DAEO.  NIH 
reviewed both of these outside activities and agreed that they appeared 
to violate HHS supplemental regulations and therefore should not have 
been approved.  NIH also reported that the employees who performed 
these activities had disclosed all relevant details to their DECs.36 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  17    R E C O M M E N D A T I O N S  

HHS and NIH recognize the importance of reviewing outside activities 
and have proposed several major changes to NIHs process for reviewing 
outside activities.  (See Appendix C for a list of these initiatives.)  Most 
notably, in February 2005, HHS issued an interim final rule that 
established new requirements for outside activities of NIH employees, 
as well as of other Federal employees.37  The interim final rule 
addresses many of the vulnerabilities identified in this report. 
The changes made by HHS and NIH reflect a commitment to addressing 
concerns regarding outside activities, and these changes appear to be 
moving in the right direction.  We encourage HHS and NIH to continue 
their efforts to improve the NIH ethics program. 
We offer the following recommendations to NIH on how to improve its 
review process for outside activities. (For lists of recommendations 
offered by OGE and the NIH blue ribbon panel, see Appendixes D 
and E, respectively.) 
Improve the quality and extent of information for outside activities 
Require all employees to submit additional details on the nature of their 
proposed outside activities and their current official duties. 
Determining whether an outside activity is appropriate or whether it 
conflicts or overlaps with an employees job duties depends on the 
employees specific job duties and the nature of the outside activity.  In 
2005, HHS revised the HHS-520 to ensure that it provides substantive 
information.38  We recommend that NIH amend its NIH Manual to 
require that several additional pieces of information be submitted for all 
outside activity requests.  NIH should require: 
o 	 Statements, written by employees, that carefully, accurately, and 
substantively describe the work that will be performed for outside 
entities, and also describe the differences between outside 
activities and official duties.  The interim final rule calls for 
supervisors to prepare statements . . . addressing the extent to 
which the employees duties are related to the proposed outside 
activity . . . .39 
o 	 Detailed descriptions of employees current job-related activities, 
in addition to copies of their position descriptions, to accompany 
all outside activity requests. Position descriptions are often vague 
and lack information on specific research projects or organizations 
that employees work with as part of their official duties.  A list of 
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employees specific job duties would help reviewers in making 
decisions about appropriateness. This information would be 
especially valuable for ethics officials, who may not always be 
fully aware of the scope of employees work.  NIH has already 
begun to supplement request packets with employees current 
publications and performance plans.  The interim final rule 
requires employees to submit additional information about their 
official duties and any relationships between their official duties 
and outside activities.40 
o 	 Written letters of invitation to accompany all requests for 
approval.  These letters can provide important information on the 
sponsoring organization, the location of the activity, and the 
nature of the activity. 
o 	 All consulting contracts and other confidentiality agreements to 
be submitted with outside activity requests, when applicable. 
These agreements can provide important information on the 
nature of proposed activities.  We recognize that Government 
lawyers cannot provide personal legal advice to employees who 
are requesting approval for outside activities.  Therefore, we 
recommend that these contracts be used as tools to provide 
additional information on the type and scope of work in which 
employees will be engaging with outside entities.  If reviewers 
find that contract terms violate regulation or policy, activities 
should be disapproved. However, Government lawyers should not 
negotiate contract terms on behalf of NIH employees. 
Ensure that employees fill out their outside activity requests 
completely. We found that not only were required forms incomplete, but 
also answers were sometimes too vague to be meaningful.  To assist 
employees in filling out these forms properly, NIH could develop a 
standardized checklist for employees to ensure that all proper 
documentation is submitted.  This type of checklist would serve as an 
aid in filling out and gathering forms and would help to verify that all 
appropriate forms and questions are completed. The checklists use 
should be limited to ensuring that forms are administratively complete; 
it should not be used to determine the appropriateness of any activity.  
Ensure that institutes cross-check financial disclosure forms with 
employees outside activities records for the previous year.  We found that 
outside activities were not always properly disclosed, as required by OGE 
regulations, on the applicable financial statements.41  Ensuring disclosure 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  19  R E C O M M E N D A T I O N S  
on these forms promotes transparency in employees outside affiliations 
and earnings and makes the employees publicly accountable for avoiding 
real or apparent conflicts of interest.  NIH should make this requirement 
more explicit in its NIH Manual.  
Address the inadequacies in the review process for outside activities 
Currently, institutes have differing procedures for reviewing outside 
activity requests.  The following recommendations serve to address the 
variation that currently exists across institutes in the review process for 
outside activity requests.   
Ensure that institutes approve outside activities before their scheduled 
start dates. HHS and OGE regulations, as well as the NIH Manual, 
require that all approvals occur prior to outside activities scheduled 
start dates.42  However, we found that some outside activities are being 
approved after the start dates provided on request forms. NIH should 
reemphasize its expectation that institutes comply with these 
regulations and policies and ensure that institutes are in compliance.  
It is important for all institutes to continue to collect information when 
employees come forward to disclose outside activities after the fact, as 
doing so provides a record of employees noncompliance and the nature 
of activities conducted.  However, this does not mean that activities 
should necessarily be approved when they are disclosed after they have 
begun.  In fact, if ethics officials discover that completed outside 
activities are inappropriate, the DEC and/or supervisor should take 
appropriate disciplinary action (e.g., counseling, verbal or written 
reprimands, requiring the employee to return any compensation, 
prohibiting participation in future outside activities, and, in the most 
extreme circumstances, removing the employee). 
To help ensure that reviewers have adequate time to review requests 
prior to their start dates, NIH should consider amending its NIH 
Manual to establish an appropriate timeframe for the submission of 
requests for outside activities.  This timeframe should allow adequate 
time for supervisors and ethics officials to conduct their reviews and 
follow up with the employees, if necessary, for clarification.  We 
recognize that such a timeline may not always be feasible, but we 
encourage NIH to use deadlines whenever possible. 
Require recusals, if needed, to be made in writing and disseminated to 
immediate supervisors and other key personnel for all outside activities 
that are related to employees official duties. Regulations do not require 
recusals to be in writing, although NIH policy appears to require 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  20  R E C O M M E N D A T I O N S  
written recusals.43  Recusals are protective of employees who participate 
in outside activities, as they allow for the establishment of screening 
and gate-keeping practices that help to ensure that employees do not 
encounter conflicts between their official duties and outside activities.44 
Having recusals in writing is important because recusals inform 
supervisors and subordinates of disqualifications and their scopes. 
Recusals also serve as points of accountability. Supervisors who are 
aware of recusals can work to ensure that employees meet their recusal 
obligations.  NIHs blue ribbon panel recommended that written 
recusals be submitted to immediate supervisors.45 
We recognize that if recusals are very widely disseminated, there are 
implications for employee privacy. However, at the very least, 
employees immediate supervisors should be aware of any recusals.  
Supervisors can serve as gatekeepers who ensure that information 
implicated in employees recusals does not reach them. 
Ensure that ethics officials notify supervisors of all approvals and 
disapprovals. We found that supervisors were not always notified of the 
final decisions on outside activity requests, especially for activities that 
were approved.  It is important for the integrity of the process that all 
relevant parties are informed of final decisions, regardless of outcome.  
Supervisors can play an important role in ensuring that their 
employees work continues to remain free of conflicts, even after 
activities are approved, as job duties change over time. NIH has 
already issued a training memorandum for supervisors and has added 
the ethics function to the performance plans of all supervisors.46 
Ensure annual followup of ongoing outside activities. We found that not 
all institutes are conducting annual followup of ongoing outside 
activities. Following up on continuing outside activities is important 
because over time job duties and the nature of outside activities can 
change and new conflicts can arise.  We recommend that NIH 
reestablish the expectation, already set forth in the NIH Manual, that 
information on continuing activities be collected on an annual basis.   
The NIH blue ribbon panel also recommended annual followup of 
ongoing outside activities.47  OGE recommended that NIH either 
improve its procedures for collecting updated information or eliminate 
the requirement altogether.48  The interim final rule calls for employees 
to submit annual reports on any ongoing outside activities.49 
Enhance training related to outside activities. Existing OGE 
regulations and the NIH Manual require annual ethics training for 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  21  RR EE CC OO MM MM EE NN DD AA TT II OO NN SS  
those employees who file financial disclosure forms, but not for all 
employees.50  We recommend that NIH require all employees, 
regardless of whether they file financial disclosure forms, to attend 
annual ethics training that covers outside activities. NIH has taken an 
important first step by providing ethics training to all of its employees 
in 2004, and we encourage NIH to continue this into the future. 
NIHs blue ribbon panel also recommended that NIH enhance its 
training program. It recommended that NIH disseminate user-friendly 
documents to explain ethics rules in straightforward language. It also 
recommended that NIH issue regular agency-side reports on anonymous 
case studies and general issues related to outside activities to help 
foster a common understanding of the ethics rules.51 
NIH should require all supervisors to receive training on how to review 
outside activity requests. Ethics officials commented that a lack of 
training for supervisors posed a significant challenge. Supervisors play 
a critical role in the review process, and therefore they should know how 
to conduct these reviews effectively. NIH has already taken important 
first steps toward holding supervisors more accountable by adding their 
ethics functions to their performance plans and by issuing a 
memorandum to supervisors that elaborated on how to review outside 
activity requests. Ethics training for supervisors could be accomplished 
by modifying existing Web-based training modules or videos. 
NIHs blue ribbon panel called for additional training for supervisors, 
but not specifically regarding the review of outside activities.52 
Consider centralizing some or all aspects of the review process for 
outside activities. NIH is in part moving in this direction with the 
implementation of its NIH Ethics Advisory Committee (NEAC), a group 
comprised of senior employees from across NIH that reviews certain 
outside activity requests.53  NIH could centralize several facets of the 
process for outside activities, including: 
o  Standardized criteria and procedures; 
o  Training for ethics officials, supervisors, and employees; 
o  Audits of prior outside activity request reviews; and 
o  Decisionmaking regarding the approval of outside activities. 
We recognize that institutes vary in size and mission and that taking 
steps toward centralization may be challenging to implement. 
Centralization may involve removing ethics officials from the 
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institutes. Ethics officials at several institutes told us that by being 
easily accessible to employees, they are able to better monitor 
employees outside activities. Furthermore, the mere presence of 
ethics offices in the institutes serves as a reminder to employees that 
ethics play an important role in the day-to-day business of NIH. 
However, centralization could also offer several important 
advantages. First and foremost, it would allow NIH to develop a 
cadre of full-time ethics officials who, over time, could develop 
expertise in all ethics matters, including the review of outside 
activities. Currently, many ethics officials perform ethics functions as 
a collateral duty. Centralization could help ensure the independence 
of the decisionmaking process, since ethics officials would be more 
removed from the employees in the institutes. No longer would ethics 
officials be making decisions regarding their immediate colleagues. 
AGENCY COMMENTS 
NIH concurred with our findings and recommendations. However, it 
indicated a need for caution regarding written recusals for outside 
activities in certain circumstances. Further, NIH noted that it has 
already taken many steps to address the vulnerabilities identified in 
this report and has further initiatives planned. 
OIG RESPONSE 
We appreciate NIHs comments and the steps that NIH has taken and 
has planned to address vulnerabilities in its review process for outside 
activities. 
In response to NIHs concerns about recusals, we reiterate that written 
recusals, when needed, are protective of employees who are 
participating in outside activities because they allow for the 
establishment of screening and gate-keeping practices that help to 
ensure employees do not encounter conflicts between their official duties 
and outside activities. Thereby, they can help prevent conflicts of 
interest from arising. Recent OGE guidance also suggests that recusals 
can help to prevent conflicts from arising.54 
Finally, based on the revised HHS-520 form released by HHS in April 
2005, we made minor edits to our recommendation concerning the 
quality and extent of information that NIH collects for outside activities. 
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1	 Wilman, D. December 7, 2003.  Stealth Merger:  Drug Companies and 
Government Medical Research.  The Los Angeles Times:  A1, A32-33. 
2	 Of the six employees mentioned in the Los Angeles Time article on 
December 7, 2003, only one was included in our review. 
3	 5 CFR Part 2635. 
4	 5 CFR  2635.801(c). 
5	 5 CFR Part 5501. 
6	 5 CFR  5501.106(c).  These requirements remain the same in the 
February 2005 interim final rule. 
7	 70 Fed. Reg. 5,543, Feb. 3, 2005. 
8	 5 CFR  5501.106(d)(4).  At the time this review was conducted, the 
regulation stipulated that:  Approval shall be granted unless it is 
determined that the outside employment or other outside activity is 
expected to involve conduct prohibited by statute or Federal   
regulation . . . .  In the February 2005 interim final rule, the standard 
of approval is higher:  Approval shall be granted only upon a 
determination that the outside employment or other outside activity is 
not expected to involve conduct prohibited by statute or Federal 
regulation . . . . [emphasis added].   
9	 NIH Manual 2300-735-4Outside Work and Related Activities with 
Outside Organizations, release date February 17, 1998. 
10 NIH Manual 2300-735-4Outside Work and Related Activities with 
Outside Organizations, release date February 17, 1998, pp. 7-8. 
11 Department of Health & Human Services memorandum to Deputy 
Ethics Counselors and Ethics Contacts, January 27, 2004. 
12 NIH Manual 2300-735-4Outside Work and Related Activities with 
Outside Organizations, release date February 17, 1998. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  30  13 5 CFR  2634.202. 
14 We first determined that 319 of the 355 outside activities in our 
population had been approved by NIH.  All remaining analysis was 
performed on the 319 approved activities. 
15 5 CFR  5501.106(d)(4).  At the time this review was conducted, the 
regulation stipulated that:  Approval shall be granted unless it is 
determined that the outside employment or other outside activity is 
expected to involve conduct prohibited by statute or Federal   
regulation . . . .  In the February 2005 interim final rule, the standard 
of approval is higher:  Approval shall be granted only upon a 
determination that the outside employment or other outside activity is 
not expected to involve conduct prohibited by statute or Federal 
regulation . . . . [emphasis added]. 
16 Prior to January 2004, employees were not required to report the 
amount of compensation on the HHS-520.  Therefore, when possible, we 
obtained this information from annual public disclosure forms (for 
those employees required to file the SF-278) and from employees who 
voluntarily disclosed the amount of compensation on their HHS-520 or 
supporting documentation.  We only obtained information from the   
SF-278 when the employee reported the exact amount of compensation, 
rather than a range.   
In January 2004, HHS required compensation information for all 
activities to be provided on the HHS-520 form.  Department of Health 
& Human Services memorandum to Deputy Ethics Counselors and 
Ethics Contacts, January 27, 2004. 
Furthermore, the interim final rule calls for disclosure of compensation 
information for all outside activity requests.  5 CFR  5501.106(d)(3)(ii). 
17 Forty approved outside activity requests for senior-level employees 
between 2001 and 2003 did not require unnumbered supplemental 
forms. 
18 The required statement reads:  Notwithstanding any other provisions 
of this agreement, the rights of Consultants employer, the National 
Institutes of Health (NIH), shall not be abrogated by any commitment 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  31  or obligation Consultant has incurred hereunder.  Company recognizes 

that as a Federal employee, Consultant is bound by Federal laws, 

regulations and policies, including those governing conflicts of interest, 

standards of conduct, and intellectual property, including        

45 C.F.R. Part 7. 

19 Performing due diligence that is appropriate to the circumstances 
should be a standard operating procedure.  Conduct Internet searches, 
make phone calls to the entities involved, talk to the employees, elicit 
responses from them . . . .  Department of Health & Human Services 
memorandum to Deputy Ethics Counselors and Ethics Contacts, 
August 13, 2004, p. 1. 
20 Although senior-level employees submitted outside activity requests for 
319 outside activities during our timeframe, only 290 of those activities 
actually had start dates between January 1, 2001, and       
December 31, 2003, which would require disclosure on the SF-278 or 
OGE-450 for those years.  However, we reported that 188 outside 
activities should have been disclosed on the SF-278 forms in those 
3 years and 141 outside activities should have been disclosed on the 
OGE-450 forms; this adds up to 329 outside activities.  The explanation 
for the excess is that the 329 outside activities include 43 activities that 
senior-level employees reported on both the SF-278 and OGE-450 in a 
given year (typically because a change in their employment status or 
the equal classification determination required that they switch from 
confidential filer to public filer within the course of a year) and that 
were therefore double-counted.  The 329 figure also does not account for 
4 outside activities for which employees were not required to file either 
the SF-278 or the OGE-450 in the year in which they performed the 
outside activity (because their employment status was not in one of the 
categories that required filing an annual disclosure form).   
21 Many of the senior-level employees who were required to file the       
SF-278 as of February 2004 had been required to file the OGE-450 at 
some point between 2001 and 2003.  
22 5 CFR  5501.106(d).  This expectation remains the same in the 
February 2005 interim final rule. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  32  23 U.S. Office of Government Ethics, memorandum to the Director of NIH, 
July 26, 2004, p. 9. 
24 On average, it took ethics staff 17 calendar days from the time senior-
level employees submitted their outside activity requests to final 
approval.  Senior-level employees submitted 14 outside activity 
requests 17 days or less prior to the start of the activity between     
2001 and 2003. 
25 5 CFR  2635, Subpart D (for conflicting financial interests) and    
5 CFR  2635, Subpart E (for appearances of a loss of impartiality).  
The exception to the recusal obligation is when an employee is granted 
a waiver or authorization. 
26 U.S. Office of Government Ethics memorandum to Designated Agency 
Ethics Officials, General Counsels and Inspectors General,      
June 1, 2004, p. 1. 
27 The NIH Manual states that . . . [a] disqualified employee [should 
sign] a written statement reflecting the scope of the disqualification 
and the precise nature of the conflicting interest or activity.  The 
disqualification should also identify the individual who will deal with 
the matters from which the employee is disqualified.  NIH Manual 
2300-275-1Avoiding Conflicts of Interest, release date June 19, 1998, 
p. 15. 
28 The other eight institutes indicated that they rely on annual financial 
disclosure reports to verify whether activities are ongoing or have 
ended, but not all employees are required to file annual disclosures, 
and those who do file may not always disclose their outside activities. 
29 One of these six also provides specific instructions about the tracking 
system that the institute uses to monitor ongoing activities and the 
timeframe for the annual review. 
30 NIH Manual 2300-735-4Outside Work and Related Activities with 
Outside Organizations, release date February 17, 1998, p. 11. 
31 5 CFR  5502.102. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  33  32 U.S. Office of Government Ethics memorandum to the Director of NIH, 
July 26, 2004, p. 9. 
33 National Institutes of Health memorandum to Supervisors,       
April 12, 2004. 
34 5 CFR  2638.704(a) for public filers; 5 CFR  2638.705(a)(3) for 
confidential filers. 
35 This prohibition remains the same in the February 2005 interim final 
rule. 
36 At the time of NIHs review, both of these employees were retired from 
Federal service.  
37 70 Fed. Reg. 5,543, Feb. 3, 2005. 
38 Department of Health & Human Services memorandum to the Acting 
Director of OGE, October 22, 2004. 
39 5 CFR  5501.106(d)(3). 
40 5 CFR  5501.106(d)(3). 
41 5 CFR Part 2634. 
42 5 CFR  2635.803; 5 CFR  5501.106(d); NIH Manual 2300-735-4 
Outside Work and Related Activities with Outside Organizations, 
release date February 17, 1998, p. 10.  The requirement for prior 
approval remains in the February 2005 interim final rule. 
43 NIH Manual 2300-275-1Avoiding Conflicts of Interest, release date 
June 19, 1998, p. 15. 
44 U.S. Office of Government Ethics memorandum to Designated Agency 
Ethics Officials, General Counsels and Inspectors General,      
June 1, 2004, pp. 1-2. 
45 Blue Ribbon Panel Report on Conflict of Interest Policies, Report of the 
National Institutes of Health, June 22, 2004, p. 66. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  34  46 National Institutes of Health, Department of Health & Human 
Services memorandum to Desginated Agency Ethics Office,       
October 22, 2004, and National Institutes of Health, Department of 
Health & Human Services memorandum to Supervisors,     
February 16, 2004. 
47 Blue Ribbon Panel Report on Conflict of Interest Policies, Report of the 
National Institutes of Health, June 22, 2004, p. 62. 
48 U.S. Office of Government Ethics memorandum to the Director of NIH, 
July 26, 2004, p. 19. 
49 5 CFR  5502.102 and 5 CFR  5502.103.  
50 5 CFR  2638 Subpart G, February 14, 2000, and NIH Manual    
2300-735-1, p. 20. 
51 Blue Ribbon Panel Report on Conflict of Interest Policies, Report of the 
National Institutes of Health, June 22, 2004, p. 67. 
52 Blue Ribbon Panel Report on Conflict of Interest Policies, Report of the 
National Institutes of Health, June 22, 2004, p. 65. 
53 In its recent report, OGE also raised concerns regarding the 
appropriateness of NEAC since it is not comprised of ethics officials. 
OGE recommended that the HHS DAEO establish a set of clear 
guidelines to help NEAC determine if an activity is allowable, and that 
the NEAC not have final approving authority over outside activity 
requests.  U.S. Office of Government Ethics memorandum to the 
Director of NIH, July 26, 2004, p. 11. 
54 U.S. Office of Government Ethics memorandum to Designated Agency 
Ethics Officials, General Counsels and Inspectors General,      
June 1, 2004, p. 1. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  35    A P P E N D I X   ~   A  

METHODOLOGY 
We conducted this review prior to February 2005, when HHS issued an 
interim final rule that placed several new restrictions on the types of 
outside activities in which NIH employees are allowed to participate. 
File reviews 
We conducted a retrospective review of all outside activity requests that 
senior-level employees submitted to NIH ethics officials between 
January 1, 2001, and December 31, 2003.   We defined senior-level 
employees to be those employees who were required to file SF-278 
public financial disclosure forms as of February 2004.  NIH provided us 
with a list of 176 employees who met that criterion. This group of 
employees included, but was not limited to:  (1) institute directors, 
(2) institute deputy directors, (3) institute scientific directors, and    
(4) institute clinical directors. We excluded from our review the 
Director of NIH and the Director of the National Cancer Institute, both 
of whom are presidential appointees and as such are overseen by ethics 
officials outside of NIH. Therefore, our final population was    
174 employees. 
We focused our review on senior-level employees because these 
employees may be most likely to engage in outside activities that 
involve substantial influence and compensation, and therefore they may 
pose the greatest risk for NIH in terms of potential conflicts of interest.  
However, restricting our review to employees in this group presents 
some limitations.  During 2004, while this review was taking place, NIH 
designated over 600 additional employees as public financial disclosure 
filers to create consistency across NIH in terms of the categories of 
positions that require public financial disclosure.  Additionally, it may 
be the case that employees who do not hold senior-level positions are 
more likely to engage in high-risk, high-compensation outside activities. 
We requested outside activity request forms (HHS-520s) and supporting 
documentation for all outside activities performed by these 
174 senior-level employees during the timeframe of our review. 
Supporting documentation that we received included:  
o 	 NIH Unnumbered Supplemental Information Forms to 
Accompany the HHS-520; 
o 	 Supplemental Information to the HHS-520 Forms (NIH-2657); 
o 	 Written waivers, authorizations, and recusals; 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  36  A P P E N D I X   ~   A  
o  Public Financial Disclosure Reports (SF-278); 
o  Confidential Financial Disclosure Reports (OGE-450); 
o  Correspondence; 
o  Reviewer notes; 
o  Position descriptions; 
o  Letters of invitation; 
o  Consulting contracts; and 
o  Confidentiality agreements. 
We received 355 outside activity requests from NIH. We considered 
requests to be within the timeframe of our review if the dates on which 
employees signed the requests fell between January 1, 2001, and 
December 31, 2003. Employees signature dates served as proxies, as 
the dates on which forms were submitted were typically not documented 
in the files. We did not assess whether employees conducted any 
additional outside activities between 2001 and 2003 that were not 
reported in the requests we reviewed, which represents a potential 
limitation of our review.  However, the responsibility for submitting 
outside activity requests rests with employees. 
Our review included initial requests, revised requests, and renewed 
requests.  An initial request occurs when an employee submits an   
HHS-520 for the first time for a particular activity.  A revised request 
would be submitted if an employee had to change information on an 
initial request. A renewed request is submitted if an activity continues 
beyond the end date originally specified in the initial request. Our 
population of approved outside activities included 249 initial requests, 
53 renewals, 6 revised requests, and 11 outside activity requests for 
which request types were not specified.   
Because we intended to analyze all outside activity requests submitted 
between 2001 and 2003, we needed to include all types of requests. 
However, we may have double-counted some activities if they were 
approved as initial requests and later resubmitted and approved as 
revised or renewed requests.  At most, we estimate that we may have 
counted 17 outside activities in our population more than once because 
employees may have submitted 1 or more renewals for already approved 
activities between 2001 and 2003.  Based on the documentation we 
received from NIH, we cannot verify whether these 17 outside activity 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  37  A P P E N D I X   ~   A  
requests are actual duplicates.  However, none of the revised requests 
appeared to match with initial requests in our timeframe. 
Our file review included three methodologies:  (1) a descriptive review, 
(2) a completeness review, and (3) a compliance review.   
Descriptive review. For each outside activity request in our timeframe, 
we extracted the details of the outside activity from the HHS-520 and 
supporting documents into a database.  If the amount of compensation 
for the activity was listed on the HHS-520, the applicable financial 
disclosure form, or any other documentation in the file, we recorded 
that. Finally, we noted any additional documentation that the employee 
submitted as part of the outside activity request. 
After entering the data into a Microsoft Access database, we verified 
the data accuracy for a random sample of 10 percent of the 355 outside 
activity requests in the database.  Because we identified data entry 
errors regarding the start and end dates of outside activities and the 
types of compensation received for activities, we subsequently reviewed 
the accuracy of those data fields for all records in our database.  
We tallied the number and nature of outside activities overall, as well 
as by year, activity type, compensation type, institute, employee type, 
and time commitment.1  (When employees provided estimated ranges 
for time commitments, we used the midpoints in our analysis.)  We 
performed our analyses using SAS version 8.0 (a statistical software 
package). 
Completeness review. We calculated the extent to which forms were 
filled out completely and correctly. For each outside activity request in 
our timeframe, we documented in our database the dates on which the 
employee, reviewing official, and final approving official signed off on 
the outside activity request.  We also recorded whether the employee 
had completed the unnumbered supplemental form and the NIH-2657, 
if applicable, and whether the employee had listed the outside activity 
on his or her financial disclosure form (SF-278 or OGE-450) for that 
year. 
We counted the number of missing signatures, missing or incomplete 
supplemental forms, and missing outside activity disclosures on annual 
disclosure forms. 
1	 We first determined that 319 of the 355 outside activities in our population had been 
approved by NIH.  All remaining analysis was performed on the 319 approved activities. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  38  A P P E N D I X   ~   A  
Compliance review. We reviewed all approved outside activity requests 
that senior-level employees submitted between January 1, 2001, and 
December 31, 2003, to determine whether activities complied with the 
pertinent requirements for avoiding conflict of interest. 
We used the following statutes, regulations, and policies as our criteria: 
o 	 Federal ethics laws regarding conflict of interest (18 U.S.C.  205, 
18 U.S.C.  208, and 18 U.S.C.  209), 
o 	 Governmentwide Standards of Ethical Conduct for Employees of 
the Executive Branch (codified in 5 CFR  2635), 
o 	 HHS Supplemental Standards of Ethical Conduct (codified in 
5 CFR  5501), and 
o 	 NIH Manual chapter on Outside Work and Related Activities with 
Outside Organizations (section 2300-735-4). 
It is important to note that these criteria do not explicitly prohibit 
certain types of outside activities (e.g., consulting arrangements).  
Therefore, determining whether an outside activity adhered to the 
regulations involved a judgment call on our part.  In order to minimize 
subjectivity, two reviewers used a standardized protocol to 
independently review each outside activity request and all supporting 
documentation.  A final reviewer was consulted to resolve cases in 
which the two initial reviewers disagreed.  A third reviewer was 
required for 92 outside activities.  In the cases where the two initial 
reviewers agreed, no third reviewer was used. 
Our review included all available NIH documentation regarding these 
activities. However, these documents do not necessarily include all 
facts known to or considered by NIH ethics reviewers at the time of 
their reviews.  Ethics officials indicated to us that they often perform 
additional research to obtain information on proposed activities. 
In no instance was the documentation we reviewed adequate for our 
reviewers to make a definitive determination regarding the 
appropriateness of any activity.  As demonstrated in the Vulnerabilities 
section of this report, the information contained in the documentation 
for outside activity requests is often inadequate, which limits reviewers 
abilities to make determinations on the appropriateness of proposed 
activities. Therefore, we could not state with absolute certainty that 
any activity was or was not allowable. Instead, we made one of three 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  39  AA PP PP EE NN DD II XX    ~~    AA  
determinations for each activity: (1) appears to be allowable, 
(2) appears not to be allowable, and (3) cannot determine. 
In cases where the documentation contained enough information and 
did not appear to violate any regulations, our reviewers identified it as 
appears to be allowable, even if more information would have been 
necessary to definitively determine that the activity was in fact 
allowable. Our reviewers only identified an activity as appears not to 
be allowable if the documentation indicated a violation of the 
regulation. Finally, our reviewers identified activities as cannot be 
determined when the available information was so incomplete that 
they were unable to make a determination, or when the information 
raised concerns that the activity may have violated the regulations. 
Ultimately, our reviewers could not determine the appropriateness of 
eight activities, and they determined that another two activities 
appeared to have violated the regulations. However, it is quite possible 
that, due to the approach taken in this review, we have underestimated 
the number of activities that should not have been approved. 
Inadequate documentation for outside activities can, intentionally or 
unintentionally, hide potential violations. If ethics officials conduct 
additional research on requests, they may uncover and resolve those 
potential problems before they become violations, but this may not 
happen in every case. 
In general, we did not seek additional information beyond what was 
provided in the files. For example, we did not speak with any employees 
or ethics officials at NIH or research the outside organizations involved 
in outside activities. As a result, an important limitation of this review 
is that we cannot comment on whether NIH ethics officials considered 
additional facts during their reviews of outside activity requests. 
As part of our assessment, we recorded whether additional pieces of 
information would have been helpful in making determinations. These 
pieces of information included: (1) greater detail on the nature of an 
outside activity, (2) greater detail on the nature of an employees job 
duties, (3) greater detail regarding the difference between an outside 
activity and an employees job duties, (4) greater detail on the outside 
organization, and (5) whether the outside organization received or was 
in the process of negotiating NIH funding. 
Interviews with NIH ethics officials 
We interviewed the DECs and ethics staff they chose to include at all 
27 institutes, the Office of Director, the Office of Research Services, and 
OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  40  A P P E N D I X   ~   A  
the Office of Research Facilities Development and Operations.  
Additional staff included, but was not limited to, the ethics coordinator 
for the institute, the executive officer for the institute, and management 
analysts within the ethics office.  Five institutes (Office of Research 
Services, Office of Research Facilities, National Institute on Aging, 
National Institute on Biomedical Imaging and Bioengineering, and 
Center for Information Technology) share an ethics coordinator and 
three of those (Office of Research Services, Office of Research Facilities, 
and Center for Information Technology) share a DEC; we conducted 
three interviews with these institutes, one with each of the DECs and 
the ethics coordinator. 
Prior to each interview, we provided ethics officials with a preinterview 
questionnaire.  This questionnaire captured the number of outside 
activity requests their institutes reviewed in calendar years 2001, 2002, 
and 2003, and the job duties of all ethics staff at their institutes. 
We used a structured questionnaire to conduct the interviews.  The 
questionnaire addressed:  (1) institutes procedures for reviewing 
outside activity requests; (2) the training that institutes provide to 
employees, supervisors, and ethics staff on outside activities;  
(3) institutes approaches to enforcing ethics violations regarding 
outside activities; (4) challenges institutes face in reviewing outside 
activity requests; and (5) recommendations for improving the system for 
outside activities.  We conducted all interviews by telephone. 
We also spoke with staff in the NIH Ethics Office to learn of initiatives 
to improve the NIH process for outside activities that are planned or 
under way. Staff in the NIH Ethics Office served as a resource for 
clarifying our questions on NIH ethics policy throughout our review. 
Institute procedure review 
We requested operating procedures related to outside activities from all 
27 institutes, the Office of Director, the Office of Research Services, and 
the Office of Research Facilities Development and Operations.  NIH 
allows, but does not require, its institutes to develop written operating 
procedures for implementing NIH policies on outside activities. 
Nineteen institutes provided us with written procedures.  These 
included:  (1) standard operating procedures, (2) checklists, (3) routing 
slips, (4) Web site printouts, and (5) memoranda.  We counted the 
number of institutes that maintained these documents and compared 
them to one another. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  41    A P P E N D I X   ~   B  

NATURE OF OUTSIDE ACTIVITIES 
We conducted this review prior to February 2005, when HHS issued an 
interim final rule that placed several new restrictions on the types of 
outside activities in which NIH employees are allowed to participate. 
Forty percent of senior-level employees at NIH received approval for 
319 outside activities between 2001 and 2003 
Senior-level employees received approval for 90 percent of the outside 
activity requests they submitted. Of the 174 senior-level employees at 
NIH, 78 requested approval for 355 outside activities between 2001 and 
2003. (See Table 1 below.)  NIH approved 319 of these outside activity 
requests for 69 senior-level employees.2 The remaining outside activity 
requests were either disapproved, cancelled, conducted as part of the 
employees official duties, or did not have a final action documented. 
 Table 1.  NIH's Decisions Regarding Outside Activity Requests
 Submitted by Senior-Level Employees, 2001 - 2003.
Number of  Percent of 
Final Actions Taken 
Outside Activity Requests  Outside Activity Requests
 Approved  319  90
 No Final Action Specified  19  5
 Cancelled  12  3
 Conducted as Official Duty  3  1
 Disapproved  2  1
 Totals  355  100
 Source:  Office of Inspector General analysis of NIH data, 2005. 
2	 For the period covered by this review, HHS supplemental regulations called for outside 
activity requests to be approved unless they clearly violated statute (5 CFR  5501.106).  
The interim final rule calls for a higher standard of approval, where activities are only to 
be approved . . . upon a determination that [activities are not] expected to involve 
conduct prohibited by statute or Federal regulation . . . .  Further, NIH employees often 
confer with ethics officials before formally submitting requests to ensure that their 
proposals are approvable. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  42 A P P E N D I X   ~   B  
An approved outside activity is an activity for which both the requesting 
employees supervisor and the institutes DEC determined that it met 
the pertinent requirements and did not pose a potential conflict of 
interest.  Approval allows the employee to conduct the activity.  
No final action specified means that the DEC did not check the box on 
the HHS-520 that indicated whether the outside activity was approved 
or disapproved.  Without a mark in that checkbox, we could not 
determine the status of the outside activity request. 
A cancelled outside activity is an activity that was approved and then 
terminated before the end date designated on the outside activity 
request form.  From the documentation in the employees files we could 
not generally determine the dates of cancellation or whether decisions 
to cancel the activities were made by employees or ethics officials. 
An activity was conducted as an official duty if, after being approved as 
an outside activity, an employees supervisor or ethics official identified 
overlap between the employees proposed outside activity and his or her 
current job duties that could pose a potential conflict of interest. In 
these cases, the employee converted the activity to an official duty.  
When an employee conducts an activity as an official duty, NIH excuses 
the employee from his or her job duties for the allotted time and covers 
the costs of travel.  In return, the employee conducts the work as an 
NIH representative and receives no outside compensation. 
Typically, when supervisors identify overlap between proposed outside 
activities and employees official duties, they disapprove the requests 
and ask employees to request permission to perform the activities in 
their official capacities.  However, this process was not followed in the 
activities we reviewed that were conducted as official duties. 
A disapproved activity is one that the DEC did not consider to be 
allowable given the pertinent requirements. Between 2001 and 2003, 
NIH disapproved only two outside activity requests for the senior-level 
employees in our population.  Both were disapproved because of overlap 
between the activities and the employees official duties.   
One disapproved request involved an employee who wished to give a 
speech to a foreign audience on aspects of disease distribution in the 
United States.  The supervisor recommended approval for the activity, 
but the DEC ultimately disapproved the request, writing on the  
HHS-520: After discussions with [the institute Deputy Director], we do 
not feel that the lecture to be delivered can be separated from your 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  43  A P P E N D I X   ~   B  
official role . . . .  The DEC recommended resubmission for approval as 
an official duty. 
The second disapproved request involved an employee who submitted a 
renewal request to continue serving on a scientific advisory board of an 
organization that raises funds and awards grants for scientific research. 
Although the employee had received approval for the outside activity in 
the past, the institute ethics official indicated that the activity appeared 
closely related to the employees research area and suggested that it 
instead be done as an official duty.  The employee agreed to perform the 
activity as an official duty. 
The distribution of employee submissions was virtually constant across 
the 3-year period.  The number of employees who submitted 1 or more 
outside activity requests that were approved was 39 in 2001, 40 in 2002, 
and 41 in 2003.3 
Most senior-level employees participated in 1 or 2 outside activities, but 
a few participated in more than 20. Fifty-seven percent of the  
sixty-nine senior-level employees participated in only one or 
two approved outside activities between 2001 and 2003.  (See Table 2 on 
the following page.)  However, 8 senior-level employees participated in 
10 or more approved outside activities during this 3-year period, and 
3 senior-level employees participated in 20 or more approved outside 
activities. The maximum was 37 approved outside activities for 
1 employee. 
3	 If one were to sum up the 39 senior-level employees in 2001, 40 in 2002, and 41 in 2003, 
the total would add up to more than the 69 senior-level employees who submitted outside 
activity requests in that 3-year period.  This is because senior-level employees may have 
submitted outside activity requests in two or more of the years in that period, meaning 
some employees are counted more than once.  The distribution of approved outside 
activities is also virtually constant across the 3-year period.  The 39 senior-level 
employees in 2001 accounted for 31 percent of all approved outside activities in our 
timeframe. The 40 employees in 2002 accounted for 37 percent of the approved outside 
activities in our timeframe.  And the 41 employees in 2003 accounted for 32 percent of the 
approved outside activities in our timeframe. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  44  Table 2. Number of Approved Outside Activities for
Senior-Level NIH Employees, 2001 - 2003.
Number of Number of
Percent of
Approved Activities Participating Employees Participating Employees
Totals
. Column does not sum to 100 due to rounding.
Source: Offce of Inspector General analysis of NIH data, 2005.
OEI.01-04-00150 OUTSIDE ACTIVITIES OF SENIOR-LeVEL NIH EMPLOYEES A P P E N D I X   ~   B  
Senior-level intramural employees accounted for 76 percent of the 
approved outside activities.  Intramural employees coordinate and 
conduct research within their institutes at NIH.  Intramural senior-
level employees comprise 39 percent of all senior-level employees at 
NIH.  However, they accounted for more than half of the senior-level 
employees who received approval for outside activities between 2001 
and 2003, and for more than three-quarters of the approved outside 
activities during this time. (See Table 3 below.) 
 Table 3.  Number of Approved Outside Activities for
 Senior-Level NIH Employees, by Employee Type, 2001 - 2003.
Number of  Percent of  Number of 
Employee Types 
Approved Activities  Approved Activities  Employees
 Intramural  243  76  40
 Extramural  37 12  12
 Other *  39 12  17
 Totals  319  100  69
 * Includes institute directors and deputy directors, who are neither intramural nor extramural.

 Source:  Office of Inspector General analysis of NIH data, 2005.

OGE noted in its recent NIH ethics program review that . . . the 
potential for conflicts among intramural researchers may be at least as 
great, if not greater . . . than for extramural employees.4 Extramural 
employees oversee and provide technical support for NIH-funded 
research at external institutions, which includes administering grants 
and contracts with outside entities. OGE further noted: 
Many of the very consulting activities that have become the subject of public 
controversy have involved intramural researchers . . .  Overall, it appears to us that 
intramural researchers are more likely to have official duties that directly involve drug 
companiesfor example, cooperative research and development agreements or other 
arrangements with a particular companys products  than do extramural officials.   
4  U.S. Office of Government Ethics memorandum to the Director of NIH, July 26, 2004,     
p. 13. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  46  A P P E N D I X   ~   B  
OGE cautioned NIH against imposing less restrictive limits on 
intramural employees than extramural employees.  However, these  
two groups of employees have different functions, have little contact 
within NIH, and may pose different kinds of risks in terms of conflicts of 
interest.  Extramural employees may be more likely to pose risks when 
they engage in activities with universities and other potential or actual 
grantees.  Intramural employees may be more likely to pose risks when 
they engage in activities where there is scientific overlap between their 
official, Government-sponsored research and the work they are 
performing for outside entities. 
Senior-level employees at three institutes accounted for 52 percent of 
the approved activities.  Senior-level employees at the National 
Institute of Mental Health participated in 77 approved outside activities 
between 2001 and 2003.  Senior-level employees at the National Human 
Genome Research Institute participated in 45 approved outside 
activities, and senior-level employees at the National Heart, Lung, and 
Blood Institute participated in 44 approved outside activities. 
(See Table 4 on the following page.) 
The primary explanation for the volume of approved outside activities at 
these three institutes seems to be that one employee at each institute 
was engaging in many outside activities over the 3-year period, thereby 
increasing the numbers for the institute as a whole.  In addition, 
demand may be particularly high for certain types of scientific expertise 
in which these institutes specialize. Moreover, institutes with large 
numbers of employees may be likely to receive more outside activity 
requests than smaller institutes.5 
5	 The National Institute of Mental Health and the National Heart, Lung, and Blood 
Institute are two of the larger institutes at NIH. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  47  A P P E N D I X   ~   B  

Table 4.  Approved Outside Activities for Senior-Level NIH Employees, by Institute, 2001 -2003. 
Number of  Percent of 
Number of  Percent of 
Senior-Level  Senior-Level 
Approved  Approved 
Institutes  Institute  Institute 
Outside  Outside 
Employees  Employees 
Activities  Activities 
Participating  Participating 
National Institute of Mental Health  77  24 7  54
 National Human Genome Research Institute 45  14  4  80
 National Heart, Lung, and Blood Institute  44  14  9  56
 National Institute of Neurological Disorders and Stroke  25  8  4  67
 NIH Clinical Center 16  5  4  67
 National Library of Medicine  16  5  4  44
 National Institute on Drug Abuse  15  5  3  43 
National Institute of Diabetes and Digestive and Kidney Diseases  12  4  3  60 
National Cancer Institute  10 3 4  31
 National Institute on Aging  9  3  4  50
 National Institute of Child Health and Human Development 9  3  5  71
 National Institute on Deafness and Other Communications Disorders 9  3  3  60
 Center for Scientific Review 5  2  2  40 
National Eye Institute  4 1 2  25
 National Institute on Alcohol Abuse and Alcoholism  4  1  1  14
 National Institute of Allergy and Infectious Diseases 4  1  1  25
 National Institute of Environmental Health Sciences 4  1  3  60 
National Center for Complementary and Alternative Medicine  3 1 1  50
 Office of the Director *  3  1  2  12
 National Center on Minority Health and Health Disparities 2  1  1  50
 National Institute of Arthritis and Musculoskeletal and Skin Diseases 2  1  1  33
 National Institute of Dental and Craniofacial Research 1  <1  1  17
 Center for Information Technology 0  0  0  0
 Fogarty International Center 0  0  0  0
 National Center for Research Resources 0  0  0  0
 National Institute of Biomedical Imaging and Bioengineering 0  0  0  0
 National Institute of General Medical Sciences 0  0  0  0
 National Institute of Nursing Research 0  0  0  0
 Totals  319  **  69  -
 * Includes Office of Research Facilities and Office of Research Services.

** Column does not sum to 100 due to rounding.

 Source: Office of Inspector General analysis of NIH data, 2005.

  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  48  A P P E N D I X   ~   B  
About half of these outside activities involved teaching or 
consulting and most were compensated 
Fifty-three percent of the approved outside activities involved teaching 
or consulting. Thirty-three percent (105) of the approved activities were 
for teaching/lecturing. (See Table 5 below.)  Forty-four percent (46) of 
these teaching/ lecturing activities were with universities.  Of the 
46 activities with universities, only 8 appeared to involve teaching 
regular classes.  It is important that NIH review activities with 
universities carefully as NIH funds scientific research at these 
universities and certain outside activities may inappropriately influence 
the employees or the agencys decisions with respect to future funding 
decisions.  Extramural employees who work with universities may pose 
potential risks in terms of conflicts of interest because they may oversee 
university funding decisions.  Other common venues for lecturing were 
hospitals (19 activities), industry (10 activities), professional societies 
(13 activities), and continuing education courses (9 activities). 
 Table 5.  Nature of Approved Outside Activities for
 Senior-Level NIH Employees, 2001 - 2003.
Number of Approved  Percent of Approved 
Types of Outside Activities 
Outside Activities  Outside Activities
 Teaching/Lecturing  105  33
 Consulting 63  20
 Other * 51  16
 Speaking 41  13
 Serving on Advisory Boards ** 29  9
 Writing/Editing   19  6
 Clinical/Private Practice  6  2
 Consulting with Law Firms  5  2
 Totals  319  ***
 * Includes primary task forces, boards, and committees that were not scientific or consultory in nature.

 ** In addition, seven consulting arrangements included advisory board memberships as part of the

 approved activities.

 *** Column does not sum to 100 due to rounding.

 Source:  Office of Inspector General analysis of NIH data, 2005.

  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  49  A P P E N D I X   ~   B  
Twenty percent (63) of the approved activities involved consulting.   
(See Table 5 on the previous page.) Forty-nine percent (31) of these 
consulting activities took place with pharmaceutical or biotechnology 
companies. It is vital that NIH review activities with these companies 
carefully to ensure that they are not receiving inappropriate access to 
Government data and that the employees and the agencys decisions 
are not influenced by industry. 
Moreover, NIH approved 29 additional outside activities in which 
senior-level employees participated on scientific advisory boards, which 
can be considered a type of consulting.  Forty-eight percent of these 
advisory board memberships were with pharmaceutical or biotechnology 
companies. 
The NIH Manual acknowledges that outside activities with 
pharmaceutical or biotechnology companies pose special concerns.6 In 
particular, if employees sign consulting agreements with these 
companies that contain confidentiality clauses, information sharing may 
be restricted in ways that interfere with employees official duties. For 
example, confidentiality clauses that prevent consultants from engaging 
with an outside entitys competitors could inhibit future NIH research 
partnerships or programs.  In fact, the HHS Office of the General 
Counsel has prepared a statement addressing this concern that 
employees are required to include in all consulting agreements.7 
Previously, Government lawyers occasionally reviewed contracts for 
outside activities.  However, they no longer do so because such reviews 
may have led to Government lawyers providing legal advice to 
Government employees in their private capacities.  Currently, although 
employees are not required to submit contracts with their activity 
requests and NIH will not review them, some employees do submit 
those contracts in order to provide additional information about their 
activities. Nineteen approved consulting or advisory board activity 
requests in our review included consulting arrangements.  Thirteen of 
those included confidentiality agreements. 
6	 NIH Manual 2300-735-4Outside Work and Related Activities with Outside 
Organizations, release date February 16, 1998, Appendix 7, p. 2. 
7	 The required statement reads, Notwithstanding any other provisions of this agreement, 
the rights of Consultants employer, the National Institutes of Health (NIH), shall not be 
abrogated by any commitment or obligation Consultant has incurred hereunder. 
Company recognizes that as a Federal employee, Consultant is bound by Federal laws, 
regulations and policies, including those governing conflicts of interest, standards of 
conduct, and intellectual property, including 45 C.F.R. Part 7. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  50  A P P E N D I X   ~   B  
Eighty-eight percent of the approved outside activities involved some 
type of compensation.  Employees must report on their HHS-520s the 
types of compensation they plan to receive for outside activities. 
Approved outside activities may involve one or more forms of 
compensation; employees may also perform activities for no 
compensation. The NIH Manual does not impose any limits on the 
types or amounts of compensation that employees may receive.8 
 Table 6.  Types of Compensation that Senior-Level NIH Employees
 Received for Approved Outside Activities, When Reported, 2000 - 2003.
Number of Approved  Percent of Approved 
Types of Compensation  Activities Involving  Activities Involving 
This Type  This Type *
 Expenses  202  63
 Honoraria  176  55
Fees 50  16
 None 37  12
 Other ** 19  6
 Per Diem Payments  13  4
 Per Annum Payments  2  1
 Royalties  2  1
 * Column sums to more than 100 because some outside activities involved more than 1 type of

 compensation.

 ** Includes a copy of a textbook, a subscription to a publication, and a cruise.

 Source:  Office of Inspector General analysis of NIH data, 2005.

Expenses and honoraria were the most common types of compensation 
that senior-level employees reported.  (See Table 6 above.) Sixty-three 
percent of approved outside activities involved compensation for 
expenses, and 55 percent received compensation in the form of 
honoraria. 
We obtained information on the exact amount of compensation for 
134 approved outside activities. (See Table 7 on the following page.)  
8	 NIH Manual 2300-735-4Outside Work and Related Activities with Outside 
Organizations, release date February 17, 1998, p. 7. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  51  A P P E N D I X   ~   B  
For those 134 approved activities, senior-level employees reported 
earning on average $869 in expenses, $1,500 in honoraria, and $2,000 in 
fees, per activity.  Honoraria and fees ranged from $150 to $18,000 and 
$500 to $30,000, respectively, per activity. 
 Table 7.  Amounts of Compensation that Senior-Level NIH Employees
 Received for Approved Outside Activities, When Reported, 2000 - 2003.
Number of 
Activities  Median  Range of 
Types of Compensation  Disclosing  Compensation  Compensation 
Compensation  Amount  Amounts
Amount 
 Expenses  41  $   869  $ 125 - $  3,000
 Honoraria  97  $ 1,500  $ 150 - $ 18,000
Fees  15  $ 2,000  $ 500 - $ 30,000
 Per Annum Payments 1  $ 5,500  N/A
 Per Diem Payments 0  N/A  N/A
 Royalties 0  N/A  N/A
 Source:  Office of Inspector General analysis of NIH data, 2005. 
For those activities where information was available, there did not 
appear to be a relationship between the amount of time an employee 
spent on an outside activity and the amount of compensation he or she 
received for that activity. 
Prior to January 2004, employees were not required to report the 
amount of compensation on the HHS-520.  Therefore, when possible, we 
obtained this information from annual public disclosure forms (for those 
employees required to file the SF-278) and from employees who 
voluntarily disclosed the amount of compensation on their HHS-520s or 
supporting documentation.  We only obtained information from the   
SF-278 when the employee reported the exact amount of compensation, 
rather than a range. 
This portion of our analysis is limited by the fact that compensation 
amounts were self-reported by the employees.  We did not 
independently verify that employees received the same amounts and 
types of compensation they disclosed on these forms.  
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  52  A P P E N D I X   ~   B  
Fifty-seven percent of approved outside activities involved some amount 
of time off and 7 percent required a week or more of time off. In order to 
participate in outside activities, employees often take time off from 
work.  Those employees who reported taking time off reported that they 
would take between 1 and 96 hours of time off per approved outside 
activity. The median amount of time employees anticipated taking off 
per approved outside activity was 8 hours (1 day). 
Employees may also use personal time, or hours outside the normal 
working day, to engage in outside activities.  Overall time commitments 
for approved outside activities including both time off from work and 
personal time ranged from 1 to 300 hours.  The median length per 
approved outside activity was 12 hours.  The NIH Manual does not 
impose limits on the number of hours that employees spend on outside 
activities, except when time spent on outside activities interferes with 
the performance of an employees official duties.9  The employees 
supervisor is typically responsible for making this assessment. 
Employees may perform multiple outside activities simultaneously, 
which can increase their overall time commitments to outside activities.  
Between 2001 and 2003, senior-level employees who participated in 
multiple approved outside activities documented spending anywhere 
between 2 and 964 hours on their outside activities. To do so, they 
reported taking a median of 34 hours (about 4 days) of time off.  Four 
senior-level employees took 1 month or more of time off to engage in 
outside activities. 
9	 NIH Manual 2300-735-4Outside Work and Related Activities with Outside 
Organizations, release date February 17, 1998, p. 8. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  53  A P P E N D I X   ~   C  
  A P P E N D I X   ~   C  

HHS & NIH INITIATIVES RELATED TO OUTSIDE ACTIVITIES 
HHS and NIH have the following efforts to strengthen the NIH review 
and approval process for outside activities planned or under way.   
Interim Final Rule 
HHS issued an interim final rule in February 2005 that provides new 
restrictions on the types of outside activities in which NIH employees 
can participate, and also imposes new responsibilities on employees 
who participate in outside activities.10  The following are some of the 
provisions of the interim final rule, relating to outside activities: 
o 	 Employees must provide additional detailed information in their 
outside activities requests. The revised HHS-520 form, released 
in April 2005, captures significantly more information than the 
previous version. 
o 	 Employees must file annual reports on their outside activities. 
o 	 Outside activities may only be approved for 1-year periods. 
o 	 Employees are restricted from participating in certain activities 
with several types of outside entities, including biotechnology and 
pharmaceutical companies and research institutions supported by 
NIH funds. 
Enhanced Oversight 
o 	 In November 2003, NIH established the NIH Ethics Advisory 
Committee (NEAC) to provide recommendations with regard to 
approval to the NIH DEC for all outside activity requests 
submitted by appointed or acting NIH Office of the Director senior 
staff and institute directors.  The NEAC also advises the NIH 
DEC on all outside activity requests submitted by institute deputy 
directors, scientific directors, clinical directors, and extramural 
directors, all of whom report directly to institute directors. For all 
other employees, the NEAC advises the NIH DEC on any outside 
activity request involving a biotechnology or pharmaceutical 
company, compensation in excess of $10,000, and/or compensation 
involving stocks, stock options, or other equity positions.   
o 	 In February 2004, NIH transferred final approving authority for 
senior officials from their institutes DECs to the NIH DEC. 
10 70 Fed. Reg. 5,543, Feb. 3, 2005. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  54  A P P E N D I X   ~   C  
o 	 In February 2004, at the request of NIH, OGE determined that    
93 additional NIH employees were eligible to file the public 
financial form (SF-278) because the responsibilities and influence 
of their positions were equivalent to those of other public filers.  
OGE issued a second equal classification determination in 
September 2004, adding another 547 employees to the roll of 
public filers. 
o 	 In August 2004, NIH added the ethics function to the performance 
plans for all DECs and supervisors.  
Internal Reviews  
o 	 In December of 2003, NEAC began a review of all continuing 
consulting activities with pharmaceutical and biotechnology 
companies that were initiated between January 1999 and 
December 2003. This review is ongoing. 
o 	 In January 2004, the Director of NIH convened a blue ribbon 
panel to examine NIHs process for reviewing outside activities.  
The panel issued its recommendations in June 2004.  (See 
Appendix E for a list of those recommendations.) 
Enhanced Information Management  
o 	 NIH is in the process of expanding the capabilities of its Ethics 
Management Information System (EMIS) to allow for cross-checks 
between proposed outside activities and official duties, research 
partnerships, or other potential conflicts of interest. This system 
will also provide detailed reporting information and will track the 
status of pending ethics actions.  In addition, the system will 
allow for automated submission and approval of certain forms.  
Institutes are encouraged, but not required, to enter information 
on employees outside activities in EMIS.  The enhanced EMIS 
will also become a tool for random audits of employees ethics 
activities. 
Increased Training for Supervisors and Employees 
o 	 In February 2004, NIH issued a memorandum to supervisors 
explaining how to properly review outside activities. 
o 	 In 2004, NIH conducted face-to-face ethics training effort for all of 
its 18,000 employees. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  55    A P P E N D I X   ~   D  

RECOMMENDATIONS FROM THE OFFICE OF GOVERNMENT 
ETHICS 
OGE issued a program review of NIHs ethics system in July 2004.  The 
resulting recommendations, which were directed to the Designated 
Agency Ethics Office for HHS (who oversees the NIH ethics program), 
are quoted below.11  The Designated Agency Ethics Official for HHS 
responded to OGEs recommendations in October 2004.12 
1. 	 Take certain steps to ensure that you directly coordinate and 
manage the program.  First, you should meet periodically with 
NIH management so that you will be fully cognizant of current 
and emerging ethics issues at NIH and be able to react to them 
accordingly.  These meetings should ensure that you are aware 
when policies and procedures at NIH are not effective, and enable 
you to make changes as needed.  Second, you should meet with 
NIH ethics officials and NIH management to determine what 
policies need to be developed to deal with the issue of outside 
consulting by NIH employees and develop an NIH-specific section 
of the HHS supplemental regulation for submission to our Office 
for concurrence and joint issuance. Finally, to formalize the 
responsibilities of the institute DECs, their position descriptions 
should contain a description of their ethics duties.  The NIH DEC 
should rate each DEC annually on the ethics portion of his or her 
work. 
2. 	 Ensure that NIH continues efforts to re-examine ongoing outside 
activities. 
3. 	 Ensure that outside activities are approved in accordance with the 
requirements of the NIH Manual and the HHS supplemental 
standards of conduct regulation, including the activities that we 
identified for which no requests were submitted. 
11 U.S. Office of Government Ethics memorandum to the Director of NIH, July 26, 2004,  
pp. 19-20. 
12 Department of Health & Human Services memorandum to the Acting Director of OGE, 
October 22, 2004. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR- LEVEL NIH EMPLOYEES  56  A P P E N D I X   ~   D  
4. 	 Ensure that the requirements to collect annual updated 
information on ongoing outside activities is clarified, and then 
either:  (1) improve the procedures for collecting the required 
annual information or (2) eliminate the requirement from the 
current Manual. 
5. 	 Ensure that after review and recommendation by NEAC, the NIH 
Senior Ethics Counsel has final approval/disapproval over outside 
activity requests. 
6. 	 Develop and propose new supplemental standards of conduct 
specifically to address the kinds of consulting activities that have 
raised recent concerns. 
7. 	 Help NIH develop guidelines to use in determining whether an 
individual outside activity request should be approved. The 
guidelines should make clear that NIH must apply all relevant 
provisions of the HHS Standards of Ethical Conduct to each 
request it is considering. 
8. 	 Develop internal procedures and criteria for NIH award reviewers 
in connection with future award requests so that the recent OGE 
guidance will be implemented consistently across all the ICs 
[institutes and centers]. 
9. 	 Ensure that CC [Clinical Center] and OD [Office of the Director] 
public financial disclosure reports are certified in a timely 
manner. 
10. Ensure that OD [Office of the Director] annual confidential 
reports are collected in a timely manner. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  57    A P P E N D I X   ~   E  

RECOMMENDATIONS FROM THE NIH BLUE RIBBON PANEL 
NIH convened a Blue Ribbon Panel of independent experts in ethics, 
academic research, and industry to assess the state of NIHs ethics 
system and policies.  This Panel put forth 18 recommendations to NIH, 
which are quoted below.13 
1. 	 NIH senior management and NIH extramural employees who are 
responsible for program funding decisions and recommendations, 
and professional staff managing grants and contracts and 
application review, should not engage in consulting activities with 
pharmaceutical or biotechnology companies or in paid consulting 
for academia.  The Panel considers speaking for compensation at 
an industry site as equivalent to consulting for industry.  The 
Panel does not include in this prohibition time spent in clinical 
practice by health care practitioners, if approved as an outside 
activity free of conflicts. 
2. 	 The Panel reaffirms current Federal law, which states that 
intramural scientists conducting research with human subjects 
for example, investigators and research team members involved in 
patient selection, the informed consent process, and clinical 
management of a trialshould not be allowed to have any 
financial interest in or relationship with any company whose 
interests could be affected by their research or clinical trial, except 
in special circumstances, and with an appropriate waiver or 
authorization. 
13 Blue Ribbon Panel Report on Conflict of Interest Policies, Report of the National 
Institutes of Health, June 22, 2004, pp. 2-5. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR- LEVEL NIH EMPLOYEES  58  A P P E  N  D   I X    ~   E  
3.  In addition to existing requirements for engaging in outside 
activities, and the restrictions posed in Recommendations 1 and 2, 
the following requirements should be in place for all employees 
who are involved in the administration or conduct of NIH research 
programs:  
a.  The total amount earned annually from compensated 
consulting with industry or academia should not exceed an 
amount equal to 50 percent of the employees annual 
salary, and no one source should account for an amount 
exceeding 25 percent of annual salary.  
b.  Employees eligible to engage in compensated outside 
professional activities should not: 
i.  receive compensation in the form of stock options or 
other forms of equities for their services, or 
ii.  spend more than 400 hours per year on these 
activities (writing excepted). 
c.  An exclusion to the above limits should exist for NIH 
employees who are health care practitioners. For these 
employees, there should be a more flexible time limitation 
and the capitation for compensated outside medical care 
and patient services should be 100 percent of base pay, 
with the one-source limitation removed. 
4.  To improve NIHs ability to manage and track approved outside 
activities: 
a.  All requests for outside activities (Form 520) should be 
updated on an annual basis (with such updates indicating 
only those changes that have occurred);  
b.  Supervisors should be held accountable for the evaluation 
and approval of outside activity requests, and this 
supervisory function should be a component of a 
supervisors performance evaluation; and 
c.  NIH should publish an annual agency-wide statistical 
report on the number and types of outside activities 
approved for its employees. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  59  A P P E N D I X   ~   E  
5. 	 NIH should seek a change to OGE regulations to allow NIH 
scientists to receive compensation for teaching, speaking, or 
writing about their research providing that the information is to 
be shared in a public forum and that it has appeared in the 
published literature. 
6. 	 NIH intramural scientists should continue to be allowed to engage 
in compensated speaking, teaching, and writing for professional 
societies and for academic and research institutions as an outside 
activity providing that all ethics review and approval 
requirements are met. 
7. 	 NIH should seek a change to OGE regulations to permit employees 
to be identified by their title or position (and institutional 
affiliation) when engaged in teaching, speaking, or writing as an 
approved outside activity.  Disclaimers should be provided that the 
activity is not being conducted in the employees official capacity 
as an NIH employee and that the views expressed do not 
necessarily represent the views of NIH. 
8. 	 There should be no restrictions on royalties received on works 
written, edited, or published or on income received from patents 
licensed by any NIH employee who conducted the work as an 
approved outside activity. 
9. 	 The current OGE rules regarding receipt of bona fide cash awards 
for meritorious public service or achievement and NIHs 
interpretations of the rules are reasonable and should apply to all 
employees. There should be no limit on the amount of money 
received from a bona fide award.  These awards are considered 
gifts under current law and are not considered outside activities 
because the employee accepts the award in his or her official 
capacity. 
10. To increase NIHs ability to manage conflicts of interest, it should 
move immediately to either increase the number of employees 
required to annually file a confidential disclosure form (Form 450) 
or find some other means to achieve comparable levels of internal 
disclosure. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  60  A P P E N D I X   ~   E  
11. NIH should ask OGE to make a regulatory change or seek 
statutory modifications to provide NIH with greater discretion in 
determining whether certain Title 42 employees should file a 
public financial disclosure form (Form 278).  This would promote 
the public interest by increasing transparency and would thereby 
enhance trust in government.  In the meantime, NIH should seek 
additional equivalency rulings from OGE to increase the number 
of public filers to include the senior employees specified in 
Recommendation 1. 
12. NIH supervisors should be provided with enhanced training on the 
criteria to be used for their annual review of financial disclosures 
so that they can become more effective in managing and avoiding 
employee conflicts of interest. 
13. To preserve public confidence in NIH, the agency should put in 
place a policy that requires employees to disclose all relevant 
outside relationships and financial holdings in their work 
products, such as publications, speeches, and invention 
disclosures.  In addition, where relevant, such disclosures should 
be made to potential research subjects as part of the informed 
consent process. 
14. NIH employees should be required to submit recusals in writing to 
immediate supervisors when a potential conflict of interest 
emerges. The supervisor should then be required to inform those 
who should be aware of the employees need to be recused from the 
official duties for which there is a conflict.  As is currently the 
case, when an employee must be recused from official duties, those 
duties can be reassigned only to someone at an organizational 
level above the employee.  As such, recused employees or their 
supervisors will need to inform both superiors and affected 
subordinates of the recusal. 
15. The NIH Ethics Office should prepare a user-friendly document 
and website that displays the ethics rules in simple language and 
emphasizes examples of outside activities and financial interests 
that are permissible, as well as those that are not. Employees 
seeking approval of outside activities should, as part of their 
submission of Form 520 and its supplements, indicate in writing 
that they have reviewed these summary materials and have 
discussed any questions they have with their relevant ethics 
official and/or supervisor. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  61  A P P E N D I X   ~   E  
16. The NIH Ethics Advisory Committee should issue a report of its 
findings, in the form of anonymous case studies and generalizable 
principles, on a regular basis to provide the NIH community with 
a clear common body of knowledge by which to understand and 
interpret ethics rules. 
17. NIH management should assure that sufficient resources are 
provided for the administrative and management functions of its 
ethics activities to guarantee that the expanded program proposed 
in this report can be implemented. 
18. The NIH Director, working with Congress, should ensure that the 
agency has authority under Title 42, or some other hiring 
mechanism, to recruit senior scientific staff in the current highly 
competitive market.  In addition, the NIH Director should ask 
HHS to review and, if appropriate, raise the current annual salary 
capitation of $200,000 for the most senior Title 42 employees at 
NIH.  The Panel is concerned that the present ceiling is limiting 
the agencys ability to recruit and retain the nations best 
scientists as the leaders of NIH. 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  62    A C K N O W L E D G M E N T S  

This report was prepared under the direction of Joyce M. Greenleaf, 
MBA, Regional Inspector General for Evaluation and Inspections in the 
Boston regional office.  Other principal Office of Evaluation and 
Inspections staff who contributed include: 
Aimee Golbitz, Team Leader 
Sara Schulman, Project Leader 
Tanaz Dutia, Program Analyst 
Michael Flood, Program Analyst 
Steven Keenan, Program Analyst 
Genevieve Nowolinski, Program Specialist 
Elise Stein, Director, Public Health and Human Services 
Technical Assistance  
Barbara Tedesco, Mathematical Statistician 
Kevin Farber, Mathematical Statistician 
Office of Counsel to the Inspector General 
Melinda Golub, Senior Counsel 
  OEI-01-04-00150  OUTSIDE ACTIVITIES OF SENIOR-LEVEL NIH EMPLOYEES  63