Department of Health and Human Services


OFFICE OF 

INSPECTOR GENERAL 

OUTSIDE ACTIVITIES OF 


SENIOR-LEVEL NIH EMPLOYEES


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. 
Δ EXECUTIVE SUMMAR 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 NIH’s 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 NIH’s 

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 

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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 NIH’s 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 

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EXE CUTIVE S U MMAR 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 NIH’s 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. 

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EXE CUTIVE S U MMAR 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. 

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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 NIH’s complete 

comments, see page 24 of this report. 

OIG RESPONSE 

We appreciate NIH’s comments and the steps that NIH has taken and 

has planned to address vulnerabilities in its review process for outside 

activities. 

In response to NIH’s 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. 

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Δ T ABLE OF CONTENTS 

EXECUTI VE SUMMARY ........................................ i

INTRODUCTI ON ................................................ 1 

NATURE OF OUTS IDE ACTI V ITIES .......................... 8 

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

Limited information on outside activities ................... 10

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

RECOM M E NDATI O NS ......................................... 18 

AGENCY COMME NTS ......................................... 24 

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

APPENDI XES .................................................. 36 

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

B: The Nature of 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 the NIH Blue Ribbon Panel........ 58

ACKN O W LEDGMENTS ......................................... 63
Δ INTRODU C TION 

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 NIH’s 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 

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INTROD UCT ION 

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 NIH’s 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 Committee’s 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 agency’s 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 

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INTROD UCT ION 

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 

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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 NIH’s 

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 employee’s 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 employee’s official duties, how the 

outside activity does or does not relate to those official duties, and 

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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 employee’s 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 liabilities–including compensated outside activities above $200–but 

does not require the disclosure of the financial value from any source. 

This form requires the disclosure of certain compensated and 

uncompensated positions. 

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INTROD UCT ION 

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 

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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 President’s Council on Integrity and 

Efficiency. 

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Δ N A TURE OF OUTSIDE ACTIVITIES

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, 

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N A TURE OF OUTSI D E ACTIV ITIE 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 employee’s or the agency’s 

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 employee’s and the agency’s 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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ΔVULNE R ABI L ITIE S 

 VULNERABILITIE S

Limited information submitted by employees 

inhibits NIH’s 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 employee’s supervisor, is responsible for verifying 

that a proposed outside activity does not overlap with the employee’s 

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 employee’s 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. 

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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 employee’s 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. 

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Inadequacies in the review process 

inhibit NIH’s 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 NIH’s 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 

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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 

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Δ RECOMME NDA TIONS 

HHS and NIH recognize the importance of reviewing outside activities 

and have proposed several major changes to NIH’s 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 employee’s job duties depends on the 

employee’s 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 employee’s 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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R E C O MMENDA T I O N S 

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 checklist’s 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 

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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 

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R E C O MMENDA 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. NIH’s 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 

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R E C O MMENDA T I O N S 

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. 

NIH’s 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. 

NIH’s 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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R E C O MMENDA T I O N S 

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 NIH’s comments and the steps that NIH has taken and 

has planned to address vulnerabilities in its review process for outside 

activities. 

In response to NIH’s 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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Δ AGENCY COMMENTS 

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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A G E N C Y CO MMENT S

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Δ END NOTES 

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 2300-735-4–Outside Work and Related Activities with 

Outside Organizations, release date February 17, 1998. 

10 NIH Manual 2300-735-4–Outside 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 2300-735-4–Outside Work and Related Activities with 

Outside Organizations, release date February 17, 1998. 

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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 Consultant’s employer, the National 

Institutes of Health (NIH), shall not be abrogated by any commitment 

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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. 

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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 seniorlevel 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 

2300-275-1–Avoiding 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 2300-735-4–Outside Work and Related Activities with 

Outside Organizations, release date February 17, 1998, p. 11. 

31 5 CFR § 5502.102. 

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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 NIH’s 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 2300-275-1–Avoiding 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. 

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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. 

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Δ APPENDIX ~ 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; 

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APP 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 

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APP 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. 

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APP 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 

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APP E N D I X ~ A 

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 employee’s job 

duties, (3) greater detail regarding the difference between an outside 

activity and an employee’s 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 

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APP 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. 

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Δ APPENDIX ~ 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 

employee’s 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.

Final Actions Taken Number of 

Outside Activity Requests 

Percent of 

Outside Activity Requests

 Approved 

 No Final Action Specified

 Cancelled

 Conducted as Official Duty

 Disapproved

319

 19

 12

 3

 2

 90

 5

 3

 1

 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. 

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APP E N D I X ~ B 

An approved outside activity is an activity for which both the requesting 

employee’s supervisor and the institute’s 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 employee’s supervisor or ethics official identified 

overlap between the employee’s 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 

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APP 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 employee’s 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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 44 
OEI. 01- 04- 00150

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.

OUTSIDE ACTIVITIES OF SENIOR- LeVEL NIH EMPLOYEES
APP 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 seniorlevel 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.

Employee Types 

Number of 

Approved Activities 

Percent of 

Approved Activities 

Number of 

Employees

 Intramural 

 Extramural

 Other *

243

 37

 39

 76 

12 

12 

40

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 

companies–for example, cooperative research and development agreements or other 

arrangements with a particular company’s products – than do extramural officials. 

4 U.S. Office of Government Ethics memorandum to the Director of NIH, July 26, 2004, 

p. 13. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 46 
APP 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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 47 
APP E N D I X ~ B 

Table 4. Approved Outside Activities for Senior-Level NIH Employees, by Institute, 2001 - 2003. 

Institutes 

Number of 

Approved 

Outside 

Activities 

Percent of 

Approved 

Outside 

Activities 

Number of 

Senior-Level 

Institute 

Employees 

Participating 

Percent of 

Senior-Level 

Institute 

Employees 

Participating 

National Institute of Mental Health 

 National Human Genome Research Institute

 National Heart, Lung, and Blood Institute

 National Institute of Neurological Disorders and Stroke

 NIH Clinical Center

 National Library of Medicine

 National Institute on Drug Abuse

National Institute of Diabetes and Digestive and Kidney Diseases

National Cancer Institute 

 National Institute on Aging

 National Institute of Child Health and Human Development

 National Institute on Deafness and Other Communications Disorders

 Center for Scientific Review

National Eye Institute 

 National Institute on Alcohol Abuse and Alcoholism

 National Institute of Allergy and Infectious Diseases

 National Institute of Environmental Health Sciences

National Center for Complementary and Alternative Medicine 

 Office of the Director *

 National Center on Minority Health and Health Disparities

 National Institute of Arthritis and Musculoskeletal and Skin Diseases

 National Institute of Dental and Craniofacial Research

 Center for Information Technology

 Fogarty International Center

 National Center for Research Resources

 National Institute of Biomedical Imaging and Bioengineering

 National Institute of General Medical Sciences

 National Institute of Nursing Research

77 

45 

 44 

 25 

16 

 16 

 15 

 12 

10

 9 

9 

9 

5 

4

 4 

4 

4 

3

 3 

2 

2 

1 

0 

0 

0 

0 

0 

0 

24

14 

14 

8 

5 

5 

5 

4 

3

3 

3 

3 

2 

1

1 

1 

1 

1

1 

1 

1 

<1 

0 

0 

0 

0 

0 

0 

7 

4 

9 

4 

4 

4 

3 

3 

4 

4 

5 

3 

2 

2 

1 

1 

3 

1 

2 

1 

1 

1 

0 

0 

0 

0 

0 

0 

54

80

56

67

67

44

43 

60 

31

50

71

60

40 

25

14

25

60 

50

12

50

33

17

0

0

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.

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 48 
APP 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 employee’s or the agency’s 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.

Types of Outside Activities Number of Approved 

Outside Activities 

Percent of Approved 

Outside Activities

 Teaching/Lecturing 

 Consulting

 Other *

 Speaking

 Serving on Advisory Boards **

 Writing/Editing

 Clinical/Private Practice

 Consulting with Law Firms

105 

63 

51 

41 

29

 19

 6

 5

33

20

16

13

 9

 6

 2

 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.

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 49 
APP 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 employee’s and the agency’s 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 entity’s 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 2300-735-4–Outside 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 Consultant’s 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.” 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 50 
APP 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.

Types of Compensation 

Number of Approved 

Activities Involving 

This Type 

Percent of Approved 

Activities Involving 

This Type *

 Expenses 

 Honoraria 

Fees

 None

 Other **

 Per Diem Payments

 Per Annum Payments

 Royalties

202 

176 

50 

37 

19

 13

 2

 2

63

55

16

12

 6

 4

 1

 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 2300-735-4–Outside Work and Related Activities with Outside 

Organizations, release date February 17, 1998, p. 7. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 51 
APP 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.

Types of Compensation 

Number of 

Activities 

Disclosing 

Compensation 

Amount 

Median 

Compensation 

Amount 

Range of 

Compensation 

Amounts

 Expenses 

 Honoraria 

Fees 

 Per Annum Payments

 Per Diem Payments

 Royalties

41 

97 

15 

1 

0 

0 

$ 869 

$ 1,500 

$ 2,000 

$ 5,500 

N/A 

N/A 

$ 125 - $ 3,000

$ 150 - $ 18,000

$ 500 - $ 30,000

N/A

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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 52 
APP 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 employee’s official duties.”9 The employee’s 

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 2300-735-4–Outside Work and Related Activities with Outside 

Organizations, release date February 17, 1998, p. 8. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 53 
ΔAPP E N D I X ~ C 

 APPENDIX ~ 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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 54 
APP 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 NIH’s 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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 55 
Δ APPENDIX ~ D 

RECOMMENDATIONS FROM THE OFFICE OF GOVERNMENT 

ETHICS 

OGE issued a program review of NIH’s 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 OGE’s 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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 56 
APP 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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 57 
Δ APPENDIX ~ 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 NIH’s 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 trial—should 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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 58 
APP 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 employee’s 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 NIH’s 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 

supervisor’s 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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 59 
APP 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 employee’s 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 NIH’s 

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 NIH’s 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. 

 OE I-01-04-00 150 OU T S I DE AC T I V I T I E S O F S E N I O R - L EVE L NIH E M P L O Y E ES 60 
APP 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 employee’s 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. 

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APP 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 agency’s ability to recruit and retain the nation’s best 

scientists as the leaders of NIH. 

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Δ ACKNOWLEDGMENTS 

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: 

Aimée 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 

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