[Federal Register Volume 60, Number 132 (Tuesday, July 11, 1995)]
[Notices]
[Pages 35820-35823]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16800]




  Federal Register / Vol. 60, No. 132 / Tuesday, July 11, 1995 / 
Notices  

[[Page 35820]]


NATIONAL SCIENCE FOUNDATION


Investigator Financial Disclosure Policy

AGENCY: National Science Foundation.

ACTION: Notice of technical changes to investigator financial 
disclosure policy.

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SUMMARY: The National Science Foundation (NSF) is making certain 
technical changes and clarifications to its Investigator Financial 
Disclosure Policy in order to make the Policy more consistent with the 
provisions of the final Department of Health and Human Services (HHS) 
rule on this subject.

EFFECTIVE DATE: The effective date of the Investigator Financial 
Disclosure Policy and these technical changes is October 1, 1995. 
Proposals submitted on or after October 1, 1995 must contain the new 
certifications set forth in the Policy.

EFFECTIVE DATES: Christopher L. Ashley, Assistant General Counsel, 
National Science Foundation, 4201 Wilson Boulevard, Room 1265, 
Arlington, VA 22230, (703) 306-1060.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act Control Number 3145-0149

    On June 28, 1994 NSF published in the Federal Register a final 
Policy announcing revised award conditions relating to investigator 
financial disclosure. Those revised conditions require grantee 
institutions to maintain written and enforced policies on investigator 
conflict of interest. 59 FR 33308 (June 28, 1994).
    NSF has been coordinating its Investigator Financial Disclosure 
Policy with the Public Health Service and the Office of the Secretary 
of the Department of Health and Human Services (HHS). At the same time 
NSF published its final policy, HHS published a notice of proposed 
rulemaking also dealing with investigator conflicts. HHS received and 
reviewed public comments on that proposed rule, and is issuing in this 
Federal Register its final rule regarding investigator conflicts that 
will be effective on October 1, 1995. In cooperation with HHS, NSF is 
now making certain corresponding technical changes and clarifications 
to its Investigator Financial Disclosure Policy in order to maintain 
consistency with the final HHS rule. In addition, NSF and HHS will be 
working together to develop common guidance, including a set of 
questions and answers, to help institutions implement conflict of 
interest policies that comply with both HHS and NSF requirements.
    The following summarizes the changes and clarifications to NSF's 
Investigator Financial Disclosure Policy:
    Grant Policy Manual References: All references to GPM 310 will be 
changed to GPM 510.
    Disclosures by Investigators: Subparagraph b of GPM 510 will be 
revised to require disclosure to the institution's representative of 
significant financial interests that ``would reasonably appear to be 
affected'' by the activities funded or proposed for funding by NSF. 
Previously, the provision had required disclosure of interests that 
``reasonably appear to be directly and significantly affected'' by such 
activities. This change will result in a slightly broader disclosure by 
the investigator. As explained below, the institutional 
representative(s) will be responsible for reviewing the disclosures to 
determine which disclosed interests could directly and significantly 
affect the design, conduct or reporting of the research.
    Definition of ``Significant Financial Interest''--Exclusions: For 
greater clarity, the exclusion set out in subparagraph b.5 of GPM 510 
will be split into two separate exclusions--one for equity interests 
and one for other types of payments. Also, the dollar threshold 
increased from $5,000 to $10,000. To be excluded from the definition of 
``significant financial interest,'' an equity interest, when aggregated 
for the Investigator and his or her spouse and dependent children, must 
be under both the $10,000 and five percent ownership thresholds. For 
example, an investigator who owns an equity interest which is worth 
$20,000 (with reference to public prices or other reasonable measures 
of fair market value), but which represents only one percent ownership 
in the entity, would nevertheless be required to disclose that interest 
if it would reasonably appear to be affected by the research or 
educational activities funded or proposed for funding by NSF.
    Conflicts of Interest: In subparagraph d of GPM 510, the definition 
of a conflict of interest will be revised. As revised, a conflict of 
interest exists if the reviewer(s) of disclosures determines that a 
significant financial interest ``could directly and significantly 
affect the design, conduct, or reporting of'' NSF-funded activities. 
Thus, contrary to the previous definition, the reviewer(s) rather than 
the investigator determines whether a significant financial interest 
directly and significantly affects the design, conduct or reporting of 
NSF-funded activities.
    Timing of Conflict of Interest Review and Resolution; In order to 
conform with the HHS final rule, the Certification for Authorized 
Institutional Representative or Individual Applicant (in the Section 
WHAT WOULD BE REQUIRED IN PROPOSALS) will be changed to require the 
institutional representative to certify that any identified conflicts 
of interests will be managed, reduced or eliminated ``prior to the 
institution's expenditure of any funds under the award.'' The 
certification previously required resolution of conflicts ``prior to 
funding the award.'' This technical change will enable institutions to 
refrain from reviewing and resolving identified conflicts until after 
the award is funded, thereby eliminating the need to review and resolve 
conflicts in proposals that do not get funded. Also, the last sentence 
of the certification has been separated into two sentences to clarify 
that conflicts of interest that cannot be satisfactorily managed, 
reduced or eliminated must be reported to NSF. Accordingly, the 
certification will now read as follows:

    In addition, if the applicant institution employs more than 
fifty persons, the authorized official of the applicant institution 
is certifying that the institution has implemented a written and 
enforced conflict of interest policy that is consistent with the 
provisions of Grant Policy Manual Section 510; that to the best of 
his/her knowledge, all financial disclosures required by that 
conflict of interest policy have been made; and that all identified 
conflicts of interest will have been satisfactorily managed, reduced 
or eliminated prior to the institution's expenditure of any funds 
under the award, in accordance with the institution's conflict of 
interest policy. Conflicts which cannot be satisfactorily managed, 
reduced or eliminated must be disclosed to NSF.


    Deletion of Additional Certification for Principal Investigators 
and Co-Principal Investigators: In order to conform with the HHS final 
rule, NSF's policy will be revised to delete the additional 
Certification for Principal Investigators and Co-Principal 
Investigators that was previously to be included in Section C-1 of Part 
II of the Grant Proposal Guide and on Page 2 of the NSF Form 1207, 
Cover Sheet for Proposal to NSF. Although submission of the additional 
certification to NSF is no longer required, NSF believes that most 
institutions' policies will have principal and co-principal 
investigators certify to the institution that the investigator has read 
and understands the institution's policy, that all required disclosures 
were made and that the investigator will comply with any conditions or 
restrictions imposed by the institution to manage, reduce or eliminate 
conflicts of interest.

[[Page 35821]]


Other Clarifications

    1. Application of Policy to Increments of Major Awards: In addition 
to new NSF proposals, the Policy will apply to certain large ongoing 
projects such as centers and other activities that are currently being 
funded by NSF on an incremental basis through cooperative agreements or 
other agreements for which new proposals may not be submitted for 
several years. NSF will require that institutions and investigators 
involved in such projects, at the time of their first funding increment 
which occurs after October 1, 1995, provide the certifications required 
by the Policy for all cooperative agreements and for all continuing 
grant increments exceeding $1,000,000. Such awardees will be advised in 
advance in writing by the Grants Officer that they will be required to 
have a policy in place and submit the required certifications as a 
condition of future funding increments.
    2. In addition to the technical changes and clarifications 
announced above, NSF has made a small number of word changes to resolve 
minor inconsistencies between its policy and the final HHS rule. These 
changes are not intended to alter the meaning of any provision of NSF's 
final policy. The changes are as follows:
    a. In subparagraph b.1 of GPM 510, the word ``applicant'' will be 
added before the word ``institution.'' The exclusion from the 
definition of ``significant financial interest'' will now read 
``salary, royalties or other remuneration from the applicant 
institution.''
    b. In subparagraph c of GPM 510, the word ``pendency'' will be 
replaced with the word ``period''. An institutional policy must require 
financial disclosures to be updated during the period the award is in 
effect.
    c. In subparagraph d of GPM 510, immediately before the list of 
examples of conditions or restrictions to manage, reduce or limit 
conflicts of interest, the words ``but are not limited to'' will be 
added after ``include.''
    d. In the second sentence of subparagraph d of GPM 510, the phrase 
``research or educational activities funded or proposed for funding by 
NSF'' will be replaced with the phrase ``NSF-funded research or 
educational activities.''
    e. Subparagraph g of GPM 510 will be revised to require 
institutions to maintain records ``for at least three years beyond the 
termination or completion of the grant to which they relate, or until 
the resolution of any NSF action involving those records, whichever is 
longer.''
    f. The words ``actual or potential'' will be deleted in all places 
where they are used to modify ``conflict of interest.''
    3. Paperwork and Recordkeeping Burden: In cooperation with HHS, NSF 
has revised its estimate of the paperwork burden associated with the 
Policy in order to make its estimate consistent with HHS' and to 
conform to certain changes in the law since NSF issued the final 
Policy. NSF and HHS have used the same methodology in estimating 
respective paperwork burdens for their rules.
    NSF's revised estimates are as follows:

                       Reporting and Recordkeeping                      
------------------------------------------------------------------------
                                    Number of    Hours per              
                                   respondents    response      Total   
------------------------------------------------------------------------
Files *..........................        2,300            4        9,200
Reports of conflict to NSF **....           50           80        4,000
Subsequent reports of conflict of                                       
 interest........................            7            2           14
------------------------------------------------------------------------
* Consistent with HHS methodology, NSF is now using the number of files 
  expected to be necessary as a basis for estimating the Policy's       
  recordkeeping burden. NSF estimates that the Policy will apply to     
  approximately 10,000 awards annually and that 23% of all investigators
  will have disclosures which will require the creation of a file. NSF  
  estimates that 77% of investigators will not have disclosures         
  requiring the creation of a file. NSF estimates that it will require  
  four hours for the establishment and maintenance of a file.           
** HHS has estimated that it will receive 200 reports of conflicts of   
  interest. NSF believes that it will receive significantly fewer       
  reports of conflicts because NSF makes fewer awards annually than HHS 
  and because, on average, activities funded by NSF are less likely to  
  affect the financial interests of investigators.                      


                       Disclosure by Investigators                      
------------------------------------------------------------------------
                                                 Hours per              
             Number of respondents                response      Total   
------------------------------------------------------------------------
38,000........................................          1.0       38,000
------------------------------------------------------------------------


         Institutional Disclosure of Policy to Investigators ***        
------------------------------------------------------------------------
                                                 Hours per              
            Number of Institutions                response      Total   
------------------------------------------------------------------------
2,000.........................................           20       40,000
------------------------------------------------------------------------
*** NSF did not initially include an estimate for this aspect of the    
  paperwork burden. However, in light of revisions to the Paperwork     
  Reduction Act, effective October 1, 1995, which will require this     
  element to be estimated, NSF is including such an estimate. NSF's     
  estimate is consistent with that of HHS.                              

    Total hours for reporting, recordkeeping and disclosure: 91,214.
    In accordance with the requirements of the Paperwork Reduction Act 
of 1980, the National Science Foundation has submitted the information 
collection requirements cited above to OMB for review and approval. 
Organizations and individuals desiring to submit comments on the 
information collection requirements and the estimated burden should 
direct such comments to the information address cited above and to: NSF 
Desk Officer, Office of Information and Regulatory Affairs, OMB, New 
Executive Office Building, Room 10235, 725 17th Street NW., Washington, 
DC 20503.
    Accordingly, NSF's Investigator Financial Disclosure Policy now 
reads as follows:

[[Page 35822]]


The Investigator Financial Disclosure Policy

    NSF's Investigator Financial Disclosure Policy has the following 
primary features:
    A. A requirement that any NSF grantee employing more than fifty 
persons maintain ``an appropriate written and enforced policy on 
conflict of interest.''
    B. Minimum requirements for what must be in an institution's 
policy. These include (a) limited and targeted financial disclosure, 
(b) designation of a person(s) to review the disclosures and resolve 
actual or potential problems revealed, (c) enforcement mechanisms, and 
(d) arrangements for informing NSF of conflicts issues that are not 
resolved to the satisfaction of the institution.
    Changes made to NSF issuances to establish and communicate the 
Policy are described below. Copies of the NSF Grant General Conditions 
and the NSF Grant Proposal Guide referenced in the Policy may be 
obtained from the National Science Foundation, Forms and Publications 
Unit, 4201 Wilson Blvd., Rm. P-15, Arlington, Virginia 22230, (703) 
306-1130, Internet: [email protected]. Copies of the NSF Grant Policy Manual 
may be obtained from the Government Printing Office.
What Would be Required in Institutional Policies

Grant General Conditions

    Insert a new subparagraph b. to Article 23:
    Records of investigator financial disclosures and of actions taken 
to manage conflicts of interest (see Grant Policy Manual Section 510), 
shall be retained until 3 years after the later of the termination or 
completion of the award to which they relate, or the resolution of any 
government action involving those records.
    Renumber subsequent subparagraphs accordingly.
    Insert a new Article 33:
    For proposals submitted on or after October 1, 1995, if the grantee 
employs more than fifty persons, the grantee shall maintain an 
appropriate written and enforced policy on conflict of interest 
consistent with the provisions of Grant Policy Manual Section 510.
    Renumber subsequent articles accordingly.

Grant Policy Manual

    Add a new GPM 510 ``Conflict of Interest Policies'':
    a. NSF requires each grantee institution employing more than fifty 
persons to maintain an appropriate written and enforced policy on 
conflict of interest. Guidance for such policies has been issued by 
university associations and scientific societies.\1\

    \1\ See On Preventing Conflicts of Interests in Government-
Sponsored Research at Universities, a Joint Statement of the Council 
of the American Association of University Professors and the 
American Council on Education (1964); Managing Externally Funded 
Programs at Colleges and Universities, especially ``Principle X. 
Research Ethics and Conflicts'', issued by the Council on Government 
Relations (1989); Guidelines for Dealing with Faculty Conflicts of 
commitment and Conflicts of Interest in Research, issued by the 
Association of American Medical Colleges (1990); and Framework 
Document for Managing Financial Conflicts of Interest, issued by the 
Association of American Universities (1993).
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    b. An institutional conflict of interest policy should require that 
each investigator disclose to a responsible representative of the 
institution all significant financial interests of the investigator 
(including those of the investigator's spouse and dependent children) 
(i) that would reasonably appear to be affected by the research or 
educational activities funded or proposed for funding by NSF; or (ii) 
in entities whose financial interests would reasonably appear to be 
affected by such activities.
    The term investigator means the principal investigator, co-
principal investigators, and any other person at the institution who is 
responsible for the design, conduct, or reporting of research or 
educational activities funded or proposed for funding by NSF.
    The term significant financial interest means anything of monetary 
value, including, but not limited to, salary or other payments for 
services (e.g., consulting fees or honoraria); equity interests (e.g., 
stocks, stock options or other ownership interests); and intellectual 
property rights (e.g., patents, copyrights and royalties from such 
rights). The term does not include:
    1. Salary, royalties or other remuneration from the applicant 
institution;
    2. Any ownership interests in the institution, if the institution 
is an applicant under the Small Business Innovation Research Program or 
Small Business Technology Transfer Program;
    3. Income from seminars, lectures, or teaching engagements 
sponsored by public or nonprofit entities;
    4. Income from service on advisory committees or review panels for 
public or nonprofit entities;
    5. An equity interest that, when aggregated for the investigator 
and the investigator's spouse and dependent children, meets both of the 
following tests: does not exceed $10,000 in value as determined through 
reference to public prices or other reasonable measures of fair market 
value, and does not represent more than a 5% ownership interest in any 
single entity; or
    6. Salary, royalties or other payments that, when aggregated for 
the investigator and the investigator's spouse and dependent children, 
are not expected to exceed $10,000 during the next twelve month period.
    c. An institutional policy must ensure that investigators have 
provided all required financial disclosures at the time the proposal is 
submitted to NSF. It must also require that those financial disclosures 
are updated during the period of the award, either on an annual basis, 
or as new reportable significant financial interests are obtained.
    d. An institutional policy must designate one or more persons to 
review financial disclosures, determine whether a conflict of interest 
exists, and determine what conditions or restrictions, if any, should 
be imposed by the institution to manage, reduce or eliminate such 
conflict of interest. A conflict of interest exists when the 
reviewer(s) reasonably determine that a significant financial interest 
could directly and significantly affect the design, conduct, or 
reporting of NSF-funded research or educational activities.
    Examples of conditions or restrictions that might be imposed to 
manage, reduce or eliminate conflicts of interest include, but are not 
limited to:
    1. Public disclosure of significant financial interests;
    2. Monitoring of research by independent reviewers;
    3. Modification of the research plan;
    4. Disqualification from participation in the portion of the NSF-
funded research that would be affected by the significant financial 
interests;
    5. Divestiture of significant financial interests; or
    6. Severance of relationships that create conflicts.
    If the reviewer(s) determines that imposing conditions or 
restrictions would be either ineffective or inequitable, and that the 
potential negative impacts that may arise from a significant financial 
interest are outweighed by interests of scientific progress, technology 
transfer, or the public health and welfare, then the reviewer(s) may 
allow the research to go forward without imposing such conditions or 
restrictions.
    e. The institutional policy must include adequate enforcement 
mechanisms, and provide for sanctions where appropriate.
    f. The institutional policy must include arrangements for keeping 
NSF's Office of General Counsel appropriately 

[[Page 35823]]
informed if the institution finds that it is unable to satisfactorily 
manage a conflict of interest.
    g. Institutions must maintain records of all financial disclosures 
and of all actions taken to resolve conflicts of interest for at least 
three years beyond the termination or completion of the grant to which 
they relate, or until the resolution of any NSF action involving those 
records, whichever is longer.

What Would Be Required in Proposals

Grant Proposal Guide

    Section II.C.1, INSTRUCTIONS FOR PROPOSAL PREPARATION, at the end 
of the Certification for Authorized Institutional Representative or 
Individual Applicant, will be revised to add:
    A new certification will be added that requires an institutional 
representative to certify that the institution has implemented a 
written and enforced policy on conflicts of interest consistent with 
the provisions of Grant Policy Manual Section 510; that to the best of 
his/her knowledge, all financial disclosures required by that conflict 
of interest policy have been made; and that all identified conflicts of 
interests will have been satisfactorily managed, reduced or eliminated 
prior to the institution's expenditure of any funds under the award, in 
accordance with the institution's conflict of interest policy. 
Conflicts which cannot be satisfactorily managed, reduced or eliminated 
must be disclosed to NSF.
    Page 2 of the NSF Form 1207, Cover Sheet for Proposal to the NSF, 
will be revised to add the following to the end of the section on 
Certification for Authorized Institutional Representative or Individual 
Applicant:
    In addition, if the applicant institution employs more than fifty 
persons, the authorized official of the applicant institution is 
certifying that the institution has implemented a written and enforced 
conflict of interest policy that is consistent with the provisions of 
Grant Policy Manual Section 510; that to the best of his/her knowledge, 
all financial disclosures required by that conflict of interest policy 
have been made; and that all identified conflicts of interest will have 
been satisfactorily managed, reduced or eliminated prior to the 
institution's expenditure of any funds under the award, in accordance 
with the institution's conflict of interest policy. Conflicts which 
cannot be satisfactorily managed, reduced or eliminated must be 
disclosed to NSF.

    Dated: May 17, 1995.
Lawrence Rudolph,
General Counsel.
[FR Doc. 95-16800 Filed 7-10-95; 8:45 am]
BILLING CODE 7555-01-M