Federal Research: NIH and EPA Need to Improve Conflict of	 
Interest Reviews for Research Arrangements with Private Sector	 
Entities (25-FEB-05, GAO-05-191).				 
                                                                 
An institute at the National Institutes of Health (NIH) and an	 
office in the Environmental Protection Agency (EPA) entered into 
collaborative arrangements with the American Chemistry Council	 
(ACC) to support research on the health effects of chemical	 
exposures. NIH accepted a gift from ACC to help fund the	 
research. EPA and ACC funded their proposals separately. The	 
arrangements raised concerns about the potential for ACC to	 
influence research that could affect the chemical industry. GAO  
determined the agencies' legal authorities to enter into the	 
arrangements; the extent to which the agencies evaluated and	 
managed potential conflicts of interest resulting from these	 
arrangements; the extent to which the NIH institute complied with
NIH's gift acceptance policy; and the extent to which NIH, EPA,  
and other agencies have similar arrangements.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-191 					        
    ACCNO:   A18239						        
  TITLE:     Federal Research: NIH and EPA Need to Improve Conflict of
Interest Reviews for Research Arrangements with Private Sector	 
Entities							 
     DATE:   02/25/2005 
  SUBJECT:   Chemical research					 
	     Conflict of interests				 
	     Gifts or gratuities				 
	     Nonprofit organizations				 
	     Policy evaluation					 
	     Medical research					 
	     Research grants					 
	     Research programs					 
	     Policies and procedures				 

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GAO-05-191

                 United States Government Accountability Office

                     GAO Report to Congressional Requesters

February 2005

FEDERAL RESEARCH

     NIH and EPA Need to Improve Conflict of Interest Reviews for Research
                   Arrangements with Private Sector Entities

                                       a

GAO-05-191

[IMG]

February 2005

FEDERAL RESEARCH

NIH and EPA Need to Improve Conflict of Interest Reviews for Research
Arrangements with Private Sector Entities

  What GAO Found

NIH's National Institute of Environmental Health Sciences (NIEHS) used the
authorities granted to NIH's institutes and centers under sections of the
Public Health Service Act to enter into its arrangement with ACC.
Similarly, EPA's Office of Research and Development (ORD) relied on
authorities granted to EPA under sections of the Clean Air Act, the Clean
Water Act, and the Solid Waste Disposal Act to enter into its research
arrangement. Nothing in these statutes appears to prohibit either agency
from entering into research arrangements with nonprofit organizations such
as ACC.

NIEHS and ORD did not formally evaluate the potential for conflicts of
interest with ACC before they entered into the arrangements, but both
agencies took steps to manage the potential as the arrangements were
implemented. NIH and EPA had no specific policies requiring officials to
evaluate or manage potential conflicts of interest when they entered into
the ACC arrangements, nor do they currently have such policies. Although
no formal evaluation occurred, agency officials managed the arrangements
through their existing research management processes. Both agencies
believe these actions helped mitigate the potential for undue influence by
ACC and adequately protected the integrity of the scientific research
conducted under the arrangements. Because the agencies' research
management processes were not designed to address conflict of interest
issues they are not a substitute for a formal evaluation of such
conflicts. Without policies requiring a formal evaluation and management
of conflicts, there is no assurance that similar arrangements will be
appropriately evaluated and managed for such conflicts in the future.

NIEHS officials complied with portions of NIH's gift acceptance policy
that guide the acknowledgement and administration of gifts. However, the
policy's guidance on evaluating and managing potential conflicts is
extremely broad, and it lacks clarity and consistency. As a result, the
policy gives officials wide discretion in this area. In addition, the
policy does not require the agency to document the basis for its
decisions. Consequently, the policy does not provide sufficient assurance
that potential conflicts of interest between NIH and donor organizations
will be appropriately considered.

While some institutes and centers at NIH had arrangements somewhat similar
to the ACC arrangements, GAO did not find any similar arrangements at
other program offices at EPA or at the Food and Drug Administration and
the Federal Aviation Administration-two other agencies with significant
research budgets. None of the nine research arrangements GAO found at NIH
institutes and centers involve organizations that represent industry in
the same direct manner that ACC represents the chemical industry.

                 United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
NIEHS and ORD Used Broad Legal Authority to Support Their

Arrangements with ACC

NIEHS and ORD Did Not Formally Evaluate, but Took Steps to
Manage, the Potential for Conflicts of Interest in Their
Arrangements with ACC

NIEHS Generally Complied with NIH's Gift Acceptance Policy, but
the Policy Cannot Provide Assurance that Conflicts of Interest
Are Evaluated and Managed

Research Arrangements Such as Those with the American

Chemistry Council Are Not Widely Used
Conclusions
Recommendations for Executive Action
Agency Comments and Our Evaluation

1 3 6

10

10

15

17 19 20 21

Appendixes

                                                                  Appendix I:
                                                                 Appendix II:
                                                                Appendix III:
                                                                 Appendix IV:

Objectives, Scope, and Methodology
Comments from the Environmental Protection Agency
Comments from the National Institutes of Health
GAO Contacts and Staff Acknowledgments

GAO Contacts
Staff Acknowledgments

22

27

29

32 32 32

Table Table 1:	NIH Arrangements with Nonprofit Partners for Cosponsoring
Research, 1999-2004

Figure Figure 1:	Four Agencies' Funding Devoted to Intramural and
Extramural Research, Fiscal Year 2002 7

Contents

Abbreviations

ACC American Chemistry Council
EPA Environmental Protection Agency
FAA Federal Aviation Administration
FDA Food and Drug Administration
NIEHS National Institute of Environmental Health Sciences
NIH National Institutes of Health
ORD Office of Research and Development

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

A

United States Government Accountability Office Washington, D.C. 20548

February 25, 2005

The Honorable Bart Gordon Ranking Minority Member Committee on Science
House of Representatives

The Honorable Mark Udall House of Representatives

The Honorable Eddie Bernice Johnson House of Representatives

In fiscal year 2002, the federal government devoted an estimated $45
billion to research, $35 billion of which funded research conducted by
universities, industry, nonprofit organizations and state and local
governments.1 Some agencies fund this extramural research through direct
federal grants to or contracts with researchers, which are generally
considered an effective way to encourage federal and nonfederal research
partnerships. Other agencies collaborate with governmental and
nongovernmental organizations to solicit and/or fund extramural research
proposals, and in some cases have the authority to accept money from their
partners to support the research.2 These collaborative arrangements have
taken the form of cooperative agreements or memorandums of understanding
with external research partners. The American Chemistry Council (ACC)-a
nonprofit organization that represents the chemical industry-has entered
into two such research arrangements; one with the National Institute of
Environmental Health Sciences (NIEHS) in the National Institutes of Health
(NIH), and the other with the Office of Research and Development (ORD) in
the Environmental Protection Agency (EPA). Since ACC represents chemical
companies that are regulated by the federal government, these arrangements
have raised concerns that ACC or

1Federal Funds for Research and Development: Fiscal Years 2000, 2001, and
2002. Because it is being used for background purposes only, we did not
assess the reliability of the National Science Foundation data in this
report.

2Congress has provided some agencies, such as NIH, with the authority to
accept gifts- including money-while other agencies, such as EPA, do not
have this authority.

its members could potentially influence, or appear to influence, the
scientific results that may be used to make future regulatory decisions.3

In 2001, ACC entered into an arrangement with NIEHS to solicit and fund
research on the effects of environmental chemicals on human reproduction
and development. Under the arrangement, NIEHS, which has authority to
accept gifts from external organizations, accepted funds from ACC to
support the research.4 In 2003, ACC entered into a similar arrangement
with ORD to solicit and fund research; under this arrangement the first
solicitation for research proposals focused on novel approaches to
analyzing existing data on human exposure to chemicals.5 In the absence of
authority allowing EPA to accept gifts, ORD and ACC solicited proposals
jointly but funded selected research proposals separately. A goal of both
research arrangements is to provide scientific tools or knowledge that
will ultimately help improve the effectiveness of human health and
ecological risk assessments.

In the context of these two arrangements, you asked us to determine the
(1) legal authority NIEHS and ORD used to enter into the arrangements with
ACC; (2) extent to which NIEHS and ORD evaluated and managed the
possibility that conflicts of interest could result from their
arrangements with ACC; (3) extent to which NIEHS complied with NIH's gift
acceptance policy when accepting ACC's funds; and (4) extent to which
similar research arrangements exist within other offices and programs of
NIH and EPA, as well as other regulatory agencies.

To identify the legal authority each agency used to enter into
collaborative research arrangements with ACC, we reviewed the authorities
cited in each agency's arrangement, as well as the related legislative
histories and policies at NIH and EPA. We also interviewed program and
legal staff at the

3Although NIH is not a regulatory agency the scientific knowledge that
results from NIHsponsored research may be used by regulatory agencies,
such as EPA, when making decisions about potential risks chemicals pose to
public health and the environment. It is in this context that the
ACC-NIEHS arrangement has raised concerns.

4NIEHS used its gift acceptance statute, 42 U.S.C. S: 238(a), to accept
the ACC funds as a conditional gift. In a separate effort, our Office of
General Counsel is preparing a legal opinion to address whether the gift
acceptance statute authorizes NIEHS to accept donations with the specific
conditions attached by the agreement between NIEHS and ACC.

5For purposes of this report we will refer to the memorandums of
understanding that NIEHS and ORD signed with ACC as well as documents to
implement the memorandums, such as the announcement of funding
availability, as research arrangements.

agencies. To ascertain the extent to which NIEHS and ORD evaluated and
managed the potential that conflicts of interest could result from their
research arrangements with ACC, we reviewed agency policy and documents
relevant to the ACC arrangements and interviewed senior officials. To
determine the extent to which NIEHS complied with the NIH gift acceptance
policy, we reviewed the policy and related documentation and interviewed
senior NIEHS officials and NIH legal advisors. To determine the prevalence
of similar research arrangements, we interviewed officials within NIH and
EPA. In addition, we contacted officials at the Food and Drug
Administration (FDA) and the Federal Aviation Administration (FAA), both
of which, like EPA, are regulatory agencies that have significant
extramural research budgets. We interviewed officials responsible for 96
percent or more of each agency's extramural research dollars and reviewed
research arrangements that have been signed since January 1999. We
conducted our review from March 2004 through February 2005 in accordance
with generally accepted government auditing standards. The details of our
scope and methods can be found in appendix I.

Results in Brief	NIEHS used the authorities granted to NIH's institutes
and centers under sections of the Public Health Service Act to enter into
its arrangement with ACC. Similarly ORD relied on authorities granted to
EPA under sections of the Clean Air Act, the Clean Water Act, and the
Solid Waste Disposal Act to enter into its research arrangement with ACC.
These statutes, among other things, provide broad authority to both
agencies to collaborate with external organizations in support of
research. For example, the Public Health Service Act, as amended,
authorizes NIH and its institutes and centers to cooperate in, assist, and
promote the coordination of research on the causes, diagnosis, treatment,
control, and prevention of physical and mental diseases. Similarly, the
Clean Air Act, as amended; the Clean Water Act, as amended; and the Solid
Waste Disposal Act, as amended, authorize EPA to promote the coordination
and acceleration of research on the causes, effects, extent, prevention,
reduction, and elimination of pollution. Nothing in these statutes appears
to prohibit either agency from entering into research arrangements with
nonprofit organizations such as ACC.

NIEHS and ORD did not formally evaluate the potential for conflicts of
interest with ACC before they entered into the arrangements, but both
agencies took several steps to manage the potential for conflicts of
interest that could occur as the arrangements were implemented. Neither
NIH nor EPA had formal policies that required officials to evaluate or
manage

potential conflicts of interest when they entered into the collaborative
research arrangements, nor do they currently have such policies. As a
result, no formal evaluation occurred. In the absence of formal policies
to manage potential conflicts of interest, officials at both agencies
relied on their existing research management processes to implement these
research arrangements. According to these officials, the agencies'
existing research management processes helped mitigate the potential for
undue influence by ACC and helped protect the integrity of the scientific
research to be carried out under these arrangements. For example, agency
officials told us that NIEHS and ORD established the scientific topics
that would be the focus of the research through routine agency planning
processes before they entered into the ACC arrangements. These processes
involved significant input from a range of stakeholders, and the
agency-established research priorities did not change after the
arrangements with ACC were implemented. Similarly, the opportunity to
apply for funding under the research arrangements was widely announced
within the research community, and the funding of research proposals was
competitively awarded only after the proposals had been independently peer
reviewed for their scientific merit. Furthermore, ORD officials told us
that they took additional steps that they believe helped manage the
potential for conflicts of interest. For example, ORD sought public input
on the terms and conditions of its research arrangement with ACC. The
processes that the agencies used to mitigate potential conflicts of
interest were appropriate for managing and implementing the research
arrangements with ACC but cannot substitute for a formal conflict of
interest evaluation. This is because these processes were not designed to
specifically address conflict of interest issues. Formal policies
requiring the evaluation and management of conflicts of interest would
help the agencies ensure that potential conflicts in future research
arrangements will be appropriately addressed. Therefore, we are
recommending that NIH and EPA establish formal policies for evaluating
potential conflicts of interest when entering into research arrangements
with nongovernmental partners (particularly those that represent regulated
industry), and for managing these conflicts as the agencies implement
these arrangements.

NIEHS officials complied with sections of NIH's gift acceptance policy for
acknowledging and administering gifts, but the policy's guidance on
evaluating and managing potential conflicts of interest is so broad that
it allows officials to satisfy its requirements with a wide array of
actions. As a result, the policy does not provide sufficient assurance
that potential conflicts of interest between NIH and donor organizations
will be appropriately considered before a gift is accepted. Specifically,
the policy is

inconsistent on whether and how to evaluate potential conflicts of
interest. As a result, agency officials have wide discretion in deciding
how to comply with the policy. In addition, the policy does not require
the agency to document any conflict-of-interest evaluations or the basis
for deciding whether to accept or reject a gift. For example, the NIEHS
official who decided to accept the ACC gift stated that he was concerned
that accepting funds from ACC might create an apparent conflict of
interest. However, he believed that his informal and undocumented
consultations with other NIH officials and two representatives from
external organizations satisfied the NIH policy. Other senior NIEHS
officials also told us they had concerns about accepting funds from ACC.
However, in referring the arrangement to the NIH Legal Advisor's Office
for review, these officials said they did not specifically request a
determination of whether the gift would constitute a conflict of interest
because the policy did not require them to do so. Consequently, the NIH
counsel conducted a more general legal review. Since NIEHS entered into
the ACC arrangement, NIH has revised its gift acceptance policy. However,
these revisions have not eliminated the inconsistency nor do they require
agency officials to document the basis for their decisions. We are
recommending that NIH further revise its gift acceptance policy to clarify
how officials are to evaluate gifts for potential conflicts of interest,
particularly from organizations that represent regulated industry, and
require the officials to document the basis for their decisions, including
what, if any, steps are needed to manage potential conflicts of interest.

While some institutes and centers at NIH had arrangements somewhat similar
to the ACC arrangements, we did not find any similar arrangements at the
regulatory agencies we reviewed: EPA, FDA, and FAA. We found nine signed
research arrangements at NIH institutes and centers that share some, but
not all, of the characteristics of the ACC arrangements. For example, all
nine are formal arrangements with nonprofit organizations to jointly
sponsor extramural research. However, none of the arrangements involve
organizations that represent a regulated industry in the same direct
manner that ACC represents the chemical industry, although several of the
nonprofit partners have at least some corporate sponsorship. For example,
the Juvenile Diabetes Research Foundation has a research arrangement with
the National Institute of Neurological Disorders and Stroke to support
extramural research into the neurobiology of diabetic complications. One
of the corporate sponsors of the Juvenile Diabetes Research Foundation is
an airline company, not an entity with any material connection to the
outcome of the research.

In commenting on a draft of this report, EPA did not indicate whether it
agreed or disagreed with our recommendation but provided technical
comments that we have incorporated as appropriate. NIH agreed to implement
our recommendations and also provided technical comments that we have
incorporated as appropriate. EPA's comments are provided in appendix II,
and NIH's comments are provided in appendix III.

Background	Many federal agencies fund research to serve their goals and
objectives. For example, NIH, the largest source of federal support for
nondefense research, is the federal focal point for medical and behavioral
research to help extend healthy life and reduce illness and disability.
Each of the 27 institutes and centers that constitute NIH has an explicit
mission focused on a particular disease, organ system, stage of
development, or a crosscutting mission, such as developing research tools.
Other agencies, such as EPA, FDA, and FAA, support research, in part, to
further scientific understanding that may in the future better inform
their regulatory decisions. Nineteen offices within EPA conduct and/or
support research to help carry out the regulatory aspect of the agency's
mission to protect human health and the environment and to implement
environmental laws.6 Similarly, FDA relies on research to help identify
and assess risks and to serve as the basis for regulatory decisions about
such issues as human and veterinary drugs, medical devices, and the
nation's food supply. Finally, FAA, which enforces regulations and
standards for the manufacture, operation, and maintenance of aircraft,
conducts research to help ensure a safe and efficient system of air
navigation and air traffic control.

Federal research can be conducted by scientists in government
laboratories-called intramural research-or by scientists at universities,
in industry, or at nonprofit organizations-called extramural research. In
fiscal year 2002, NIH, EPA, FDA, and FAA devoted a total of about $23
billion to intramural and extramural research. (See fig. 1.) Together,
these four agencies accounted for about 50 percent of the federal funds
devoted to research.

6EPA consists of nine programmatic offices and 10 regional offices that
collectively develop and implement the agency's programs.

Figure 1: Four Agencies' Funding Devoted to Intramural and Extramural
Research, Fiscal Year 2002

Millions of dollar 20,000

18,393

National Environmental Food and Drug Federal Aviation Institutes
Protection Administration Administration of Health Agency

Agency

Intramural

Extramural Source: GAO's analysis of NIH, EPA, FDA, and FAA data.

Federal laws have created an environment conducive to a full range of
joint ventures between government and industry, or between industry and
universities, as well as among companies. Specifically, through
collaboration, federal and nonfederal partners attempt to share the costs,
risks, facilities, and expertise needed for research and to promote the
movement of ideas and technologies between the public and private sectors.
This cooperation between federal and private sector researchers

may take many forms. Through informal cooperation, for example, federal
agencies and industry may coordinate and share research agendas to prevent
duplication of effort, or agency and private sector scientists may consult
one another. Through formal cooperation, federal and nonfederal partners
use written agreements, such as contracts or memorandums of understanding,
to define the roles and responsibilities of each party. However, each type
of arrangement differs in the extent of federal involvement in the
research conducted under the agreement. Generally, work conducted under
contracts is directed and overseen by federal agencies that do not
participate in the work. In contrast, memorandums of understanding allow
great flexibility in terms of participation by federal agencies and may
also allow for sharing of resources or the funding of research by
nonfederal partners.

Congress may provide federal agencies the authority to accept gifts from
external sources. For example, under the Public Health Service Act,
certain agencies, such as NIH, may accept funds or nonmonetary gifts to
support their research efforts or other agency functions. Under the act,
donors may stipulate how agencies may use their gifts, for example, to
only support research on a specific disease or condition, or they may
allow the agency to use the gift for the benefit of any effort without
stipulations. An agency's statutory authority to accept donations is
called its "gift acceptance authority."

In 2001 and 2003, NIEHS and ORD, respectively, entered into research
arrangements with ACC to solicit and fund extramural research proposals.
These arrangements specified how research proposals would be solicited,
reviewed, funded, and overseen. Specifically, under the NIEHS-ACC
arrangement, ACC and NIEHS agreed to support a 3-year research program to
study the effects on reproduction and development of exposure to chemicals
in the environment. ACC provided a gift of $1.05 million to NIEHS to fund
this research, and NIEHS contributed $3.75 million to the project. Using
the combined funds, NIEHS awarded a total of 17 research proposals from
among the 52 it received. The program ended in 2004. Under the ORD-ACC
arrangement, ACC and ORD agreed to support and fund research, with the
first solicitation for research proposals focusing on novel approaches to
analyzing existing human exposure data. In response to this first
announcement of funding availability, issued in July 2003, 36 research
proposals were submitted. ORD funded four research proposals, for a total
of about $1.7 million, and ACC funded two proposals, for a total of about
$1 million. ORD and ACC separately funded the research proposals that each
had selected under this arrangement because EPA does

not have the authority to accept contributions from outside sources.
Researchers could specify whether they wanted their proposals considered
for funding solely by ORD or by either ORD or ACC.7

ACC is a nonprofit trade organization representing most major U.S.
chemical companies.8 It represents the chemical industry on public policy
issues, coordinates the industry's research and testing programs, and
leads the industry's initiative to improve participating companies'
environmental, health, and safety performance. In 1999, ACC launched a
$100 million research initiative to study the potential impacts of
chemicals on human health and the environment and to help improve
screening and testing methods. A primary goal of the initiative is to
focus on projects or programs that might take advantage of work planned or
conducted by EPA, NIEHS, and other laboratories to stimulate collaboration
and/or to prevent unnecessary duplication.

Individuals or organizations can have conflicts of interest that arise
from their business or financial relationships. Typically, federal
conflict-ofinterest laws and regulations govern the actions of individual
federal employees, including their financial interests in, and business or
other relationships with, nonfederal organizations. Conflict-of-interest
concerns about individual federal employees typically arise when employees
receive compensation from outside organizations; such arrangements often
require prior approval from the federal employer. When a federal agency
enters into a relationship with, or accepts a gift from, a regulated
company or industry, concerns may arise about the agency's ability to
fulfill its responsibilities impartially.

7Researchers who wanted their proposals considered for funding solely from
ACC were advised to send their proposals directly to ACC for review and
evaluation. ORD did not review or evaluate any such proposals.

8ACC was formerly known as the Chemical Manufacturers Association.

NIEHS and ORD Used Broad Legal Authority to Support Their Arrangements
with ACC

The statutory provisions that NIEHS and ORD relied upon to enter into
their arrangements with ACC grant the agencies broad authority to
collaborate with external organizations in support of research. Nothing in
these statutes appears to prohibit either agency from entering into
research arrangements with nonprofit organizations such as ACC.

NIEHS used the authorities granted to NIH's institutes and centers under
sections of the Public Health Service Act, as amended, to enter into its
arrangement with ACC (sections 301 and 405). The act authorizes NIH and
its institutes and centers to cooperate, assist, and promote the
coordination of research into the causes, diagnosis, treatment, control,
and prevention of physical and mental diseases. In its research
arrangement with ACC, NIEHS cited sections of the act as the authority it
relied on to enter into the arrangement. These sections enumerate the
general powers and duties of the Secretary of Health and Human Services
and the directors of the institutes and centers in broad terms, including
the authority to encourage and support studies through grants, contracts,
and cooperative agreements.

Similarly, ORD relied on broad authorities granted to EPA under sections
of the Clean Air Act, as amended; the Clean Water Act, as amended; and the
Solid Waste Disposal Act, as amended, to enter into its research
arrangement with ACC (sections 103, 104, and 8001, respectively). These
sections authorize EPA to promote the coordination and acceleration of
research relating to the causes, effects, extent, prevention, reduction,
and elimination of pollution in the air and water, and from solid waste.
These sections authorize the EPA Administrator and other EPA officials to
cooperate with appropriate public and private agencies, institutions,
organizations, and industry to conduct research and studies.

NIEHS and ORD Did Not Formally Evaluate, but Took Steps to Manage, the
Potential for Conflicts of Interest in Their Arrangements with ACC

NIEHS and ORD did not formally evaluate the possibility that
organizational conflicts of interest could result from their research
arrangements with ACC because neither agency had policies requiring such
evaluations. However, officials at both agencies took steps to manage
potential conflicts that might arise during implementation of the
arrangements.

NIEHS and ORD Did Not Formally Evaluate Potential Conflicts of Interest
that Could Result from Research Arrangements with ACC

In 2001 and 2003, when they entered into arrangements with ACC, neither
NIH nor EPA had specific policies requiring officials to formally evaluate
potential conflicts of interest that could result from entering into such
collaborative arrangements. As a result, neither NIEHS nor ORD conducted
such evaluations. During negotiations with ACC on their research
arrangements, NIEHS and ORD officials recognized the potential for
organizational conflicts of interest, or at least the appearance of such
conflicts. However, in light of the lack of policies on this issue,
neither agency formally evaluated the potential for conflicts before
finalizing their arrangements with ACC. Instead, officials told us, they
informally evaluated the potential for conflicts of interest and intended
to manage potential conflicts that might arise during implementation. To
date, neither agency has developed any such policy guidance.

NIEHS and ORD Relied on Existing Research Management Processes to Help
Mitigate Potential Conflicts of Interest

In implementing their arrangements with ACC, NIEHS and ORD used their
general research management processes to help manage potential conflicts
of interest. These processes are designed to help ensure the integrity of
scientific research undertaken by these agencies. According to agency
officials, these processes helped guard against undue influence of ACC by
limiting ACC's participation in the selection, review, and oversight of
agency-funded research conducted under the arrangements. For example:

o 	Developing research topics. Research priorities at both NIEHS and ORD
were identified through routine agency planning processes that involved
significant input from a range of stakeholders before the arrangements
with ACC were finalized. In addition, NIEHS included research topics
suggested by the National Research Council, a congressionally chartered
scientific advisory body. Both NIEHS and ORD then worked with ACC to
select the specific scientific topics that would become the focus of the
research conducted under the arrangements. According to NIEHS and ORD
officials, their arrangements with ACC did not change or influence the
agencies' research priorities. Because the research conducted under these
arrangements supported the agencies' existing research agendas, officials
believe that the ACC arrangements helped them effectively leverage federal
research dollars.

o 	Advisory council consultation. Both agencies have advisory panels that
they routinely consult on matters related to the conduct and support of
research, among other things.9 These consultations include public sessions
that allow interested individuals, in addition to the panel members, to
provide comments on the topics discussed. NIEHS obtained approval from its
National Advisory Environmental Health Sciences Council before entering
into the arrangement with ACC. ORD did not specifically consult its Board
of Scientific Counselors regarding the agency's arrangement with ACC, but
did seek input from the Board regarding the research priorities covered by
the arrangement. Both advisory bodies were established under the Federal
Advisory Committee Act and must comply with the requirements of the act as
well as related regulations.

o 	Publicly announcing the availability of funds. Both NIEHS and ORD, in
2001 and 2003, respectively, announced the opportunity to apply for grant
funds available under the arrangements with ACC throughout the scientific
community. Both agencies announced the availability of funding on their
Web sites and included detailed information on the research programs and
how to apply for funds. Both agencies also posted announcements in
publications that are commonly used to advertise the availability of
federal funding. Specifically, NIEHS published an announcement in the NIH
Guide to Grants and Contracts, and ORD published its announcement in the
Catalog of Federal Domestic Assistance. In addition, both agencies sent
announcements to relevant scientific and professional organizations and to
interested scientists who had signed up for electronic notice of funding
opportunities. ORD also published a notice in the Federal Register. By
widely announcing the availability of funds, the agencies hoped to ensure
the participation of many qualified researchers and to avoid the
appearance of preferential treatment for specific researchers. Moreover,
widely publicizing the availability of funds would help ensure the
openness of the agencies' research processes. However, the agencies
differed in the clarity of their instructions regarding how information
would be shared with ACC. For example, in the portion of the announcement
labeled "special requirements," NIEHS's announcement stated that
applicants "should," among other things, submit a letter allowing NIEHS to
share their proposals with ACC. According to NIEHS

9These advisory panels are comprised of experts in scientific disciplines
and other relevant fields.

this wording was not intended to be interpreted as a requirement but
instead was intended to be a request. We believe that the language could
have confused potential applicants about whether sharing information with
ACC was required and could have dissuaded some qualified applicants from
submitting proposals. In contrast, under the ORD-ACC arrangement,
researchers were clearly advised that they could elect to have their
proposals considered for funding by either ORD or ACC or solely by ORD.
Applicants who did not want to share their proposals with ACC could elect
to have their applications reviewed and considered solely by ORD.

o 	Determining completeness and responsiveness. Initially, NIEHS and ORD
reviewed all submitted research proposals for compliance with
administrative requirements. ACC did not participate in these reviews. At
both agencies, research proposals judged incomplete were to receive no
further consideration. NIEHS and ORD also had similar approaches for
determining the responsiveness of the applications to the goals of the
research program. At ORD, responsiveness was determined as part of the
agency's completeness review and did not involve ACC. Similarly, at NIEHS,
responsiveness was determined solely by agency officials. Although NIEHS's
announcement stated that ACC would participate in the responsiveness
review, NIEHS and ACC officials told us that ACC did not take part in this
review.

o 	Peer review of research proposals. At both NIEHS and ORD, complete and
responsive research proposals were independently peer reviewed for
technical and scientific merit. According to officials, each agency
followed its standard procedures for selecting experts to serve as peer
reviewers and excluded representatives of ACC from serving as reviewers.
At both agencies, only meritorious research proposals qualified for
funding decisions. Both agencies also subjected these proposals to
additional independent review. NIEHS's National Advisory Environmental
Health Sciences Council reviewed qualified proposals, and ORD required
other EPA staff to review research proposals that were judged "excellent"
or "very good" to help ensure a balanced research portfolio responsive to
the agency's existing research agenda.10

10Under the agreement, researchers could request that their proposals be
considered for funding solely by ORD or by either ORD or ACC. Applicants
who wanted their proposals considered for funding solely from ACC were
advised to send their proposals directly to ACC for review and evaluation.
ORD did not review or evaluate any such proposals.

ACC convened its own technical panels to review qualified research
proposals to ensure the relevancy of the proposals to the industry's
research needs and to ensure that the proposals balanced its research
portfolio.

o 	Making results available to the public. NIEHS and ORD required- without
input from ACC-the results of the research funded under the arrangements
to be made public. For example, according to agency officials, NIEHS and
ORD required researchers to discuss their preliminary findings in periodic
public meetings, and, once their projects were completed, both agencies
required researchers to submit their results for publication in
peer-reviewed scientific journals.11 In addition, NIEHS strongly
encouraged researchers to present their results at professional
conferences and workshops. Officials from both agencies agreed that
publicizing the results of research conducted under the arrangements
helped ensure that agency-sponsored research adhered to accepted analytic
standards and was unbiased.

ORD Took Additional Steps thatOfficials Believe Helped Manage Potential
Conflicts of Interest

In addition to the routine research management processes, discussed in the
previous section, officials at ORD took further steps that they believe
helped them manage the potential for conflicts of interest in their
collaboration with ACC. Specifically:

o 	Research arrangement developed with public input. ORD publicly
announced that it might collaborate with ACC and invited public comment on
the terms and conditions of the proposed partnership. In addition, ORD
invited public comment on the draft announcement of the opportunity to
apply for funding. ORD officials told us that they believed an open and
public process to define the terms of ORD's collaboration with ACC could
help guard against real or perceived conflicts of interest.

o 	Membership of review panels. In addition to prohibiting ACC
representatives from serving as expert reviewers, ORD did not allow
employees of ACC member companies to serve on the peer review panels that
evaluated research proposals for technical and scientific

11In addition, ORD obtained agreement from ACC that results of ACC-funded
research would also be discussed in periodic public meetings and published
in peer-reviewed journals.

merit. ORD officials said this step helped minimize the perception that
ACC or its members could play a role in evaluating the scientific merit of
research proposals.

NIEHS Generally Complied with NIH's Gift AcceptancePolicy, but the Policy
Cannot Provide Assurance that Conflicts of Interest Are Evaluated and
Managed

When accepting funds from ACC under the research arrangement, NIEHS
officials complied with those sections of NIH's policy that guide the
acknowledgement and administration of gifts. However, the policy's
guidance on evaluating and managing potential conflicts is extremely
broad, lacking clarity and consistency. Consequently, officials have wide
discretion in deciding how to fulfill their responsibilities under the
gift acceptance policy. Further, the policy does not require officials to
document the basis of their decisions. As a result, the gift policy does
not provide the public sufficient assurance that potential conflicts of
interest between NIH and donor organizations will be appropriately
considered.

Specifically, NIH's gift acceptance policy outlines several steps that
officials must take to acknowledge and administer gifts. NIEHS officials
generally complied with these policy sections when accepting the gift from
ACC. For example, NIEHS officials acknowledged the acceptance of ACC's
gift in a timely manner, deposited the funds in government accounts, and
used the gift only for the purposes stipulated by ACC. As the policy also
requires, NIEHS obtained ACC's written agreement that any remaining funds
could be used to further NIH's goals without additional stipulation.

However, other policy sections are inconsistent or unclear about what
actions officials must take to evaluate conflicts of interest when
accepting gifts-thereby affording officials wide discretion in carrying
out their responsibilities. For example, one part of the policy in effect
at that time and in subsequent revisions requires the approving official
to use two assessment tools to evaluate conflicts of interest before
accepting a gift, but another part of the policy states that the use of
these tools is recommended rather than required. The Director of NIEHS,
who had authority to accept the gift, said he was acutely aware that
accepting the ACC money could pose the potential for real or apparent
conflicts of interest. In light of his concerns, he spoke informally with
the Acting NIH Director, senior NIEHS officials, NIH legal advisers, and
senior officials from two external groups. Through these discussions and
using his professional judgment, the NIEHS Director determined that
accepting the ACC funds would not present a conflict of interest for
NIEHS. When he decided to accept the ACC gift, the Director said that he
was unaware of the assessment tools recommended by NIH's policy. However,
he believes

the steps he and other NIEHS officials took in accepting ACC's gift
satisfied the gift acceptance policy regarding conflicts of interest.
Given the lack of consistency in the policy sections that relate to
conflicts of interest and the use of the assessment tools, it is difficult
for us to determine whether the actions the director took complied with
the NIH policy. Moreover, without documentation of his actions, we could
not determine whether the steps he took were adequate to evaluate the
potential for conflicts of interest.

Furthermore, the policy in effect at that time and in subsequent revisions
does not provide clear guidance on what type of coordination should occur
between NIH offices in evaluating the potential for conflicts of interest
when accepting a gift. For example, several NIEHS staff were concerned
that the proposed ACC gift could result in an apparent conflict of
interest and, consistent with NIH's gift policy, forwarded the written
agreement to the NIH Legal Advisor's Office for review. However, the gift
policy does not require staff to identify their concerns when seeking
legal advice. According to these officials, in referring the agreement to
NIH attorneys for review, they did not specifically request a
determination of whether the gift would constitute a conflict of interest.
As a result, the NIH attorneys conducted a general legal review of the
gift and the proposed research arrangement, focusing primarily on the
agency's legal authority to enter into the arrangement. NIH legal staff
told us that they could have provided assistance on conflict-of-interest
issues had they been notified that the program staff had such concerns, or
if in their view, the gift or written agreement had contained clauses that
were obviously illegal or contrary to NIH policy. If the policy had been
clearer about how conflict of interest concerns are to be communicated to
NIH attorneys, we believe the legal staff would have conducted a
conflict-of-interest review.

Finally, NIH's policy does not require officials to document how they have
addressed conflict-of-interest concerns. Neither the NIEHS Director nor
other senior NIH officials documented their consideration of potential
conflicts of interest when accepting the ACC gift. The lack of
documentation, coupled with the broad discretion resulting from the
inconsistency and lack of clarity in the policy, allows officials to
satisfy requirements with a wide array of actions, ranging from a formal
evaluation to a highly informal one.

Research Arrangements Such as Those with the American Chemistry Council
Are Not Widely Used

At NIH, we identified nine arrangements that were somewhat comparable to
the ACC research arrangements, but we did not identify any similar
arrangements at ORD, other EPA program offices, FDA, or FAA.12 None of the
nonprofit partners in the nine research arrangements we found at NIH
represents industry in the same direct manner that ACC represents the
chemical industry. However, some of the nonprofit partners have either
general corporate sponsorship or corporate sponsorship for specific
events. For example, sponsors of the Parkinson's Unity Walk in 2004
included pharmaceutical companies. The sponsors helped defray operating
expenses to ensure that all proceeds from the walk supported Parkinson's
research. Likewise, the Juvenile Diabetes Research Foundation received
corporate sponsorship from an airline company, manufacturers of soft
drinks and household products, and others, none of whom had any material
connection to the outcome of the research. One nonprofit partner is a
corporation's philanthropic foundation.

At NIH, we found a total of 11 institutes and centers-either singly or
with other institutes and centers-that had entered into research
arrangements with one or more nonprofit partners. Under the terms of four
of the arrangements, NIH accepted gift funds from nonprofit partners to
support the research described in the arrangements. In four other
arrangements, when NIH institutes or centers lacked sufficient money to
fund all the research proposals rated highly by peer review panels, they
forwarded the research proposals to their nonprofit partner(s) for
possible funding. (See table 1 for details on the NIH arrangements.)

12We also identified one agreement that is under negotiation at NIH, which
if signed would share some characteristics of the ACC research agreement.
Specific details on the terms and conditions of the agreement will not be
available until it is signed.

  Table 1: NIH Arrangements with Nonprofit Partners for Cosponsoring Research,
                                   1999-2004

                                                       Nonprofit     
                                                       partner's     
                                                     corporate or    Plan for 
                                                       industry       funding 
        Purpose of       NIH partner     Nonprofit    connection     research 
        arrangement                        partner                   
                         National                                         NIH 
       "Progress for     Cancer      Avon Products Philanthropic arm accepted 
         Patients"       Institute                 of Avon               gift 
     project on early                 Foundation      Corporation     funds   
           phase                                                     
         clinical                                                    
     interventions in                                                
       breast cancer                                                 

                    National Institute  Juvenile       Sponsorship        NIH 
Research on the          of          Diabetes       by Proctor &  accepted 
                                                                         gift 
neurobiology of  Neurological           Research    Gamble, Coca   funds   
       diabetic     Disorders and                      Cola, Delta   
    complications   Stroke, National      Foundation   Airlines, and 
                    Institute of                          others     
                    Diabetes and        International                
                    Digestive and                                    
                      Kidney Diseases                                

     Support for   National Center Juvenile         Sponsorship by        NIH 
infrastructure  for Research    Diabetes           Proctor &      accepted 
                                                                         gift 
and research at    Resources       Research    Gamble, Coca Cola,  funds   
     Islet Cell                                   Delta              
      Resource                       Foundation     Airlines, and    
       Centers                                          others       
                                   International                     
      Research        National                                            NIH 
relevant to the  Institute of   Parkinson's      2004 sponsors    accepted 
                                   Unity               include           gift 
        cure,      Neurological         Walk          Boehringer      funds   
prevention, and Disorders and                      Ingelheim,     
    treatment of   Stroke,                                           
     Parkinson's   National                       MirapexPramipexoe  
                   Institute of                                      
disease and its  Deafness and                   Dihydrochloride   
                        Other                          Tablets,      
    complications  Communication                  Pfizer, and        
                   Disorders,                     others. Sponsors   
                   NIEHS, National                fund operating     
                   Institute of                   expenses for       
                    Mental Health                      the walk      
                                   National       Some corporate     
                                   Parkinson      funding but        
                                     Foundation   no information     
                                                  available on       
                                                      who those      
                                                      corporate      
                                                     sponsors are    

Parkinson Alliance	Corporate sponsorship varies with different fundraising
events, includes sometimes Pfizer, Boehringer Ingelheim, Medtronic Michael
J. Fox Foundation for Parkinson's Research

Parkinson's Disease Foundation

Support Muscular Dystrophy National Institute of Muscular Dystrophy
Extensive corporate Partner provides Cooperative Research Neurological
Disorders and Association sponsorship, including separate funding Centers
Stroke, National Institute of Albertsons, CITCO, Harley directly to
research

Arthritis and Musculoskeletal Davidson Motor Co., AmEx, centers
and Skin Diseases, National Acosta Sales and Marketing
Institute of Child Health and
Human Development

(Continued From Previous Page)

                                                       Nonprofit   
                                                       partner's   
                                                      corporate or   Plan for 
                                                      industry        funding 
Purpose of arrangement   NIH partner   Nonprofit    connection   research  
                                          partner                  
Research on the effects    National    Families of                Agency   
             of             Institute of  Spinal                     shares   
     candidate drugs for    Neurological  Muscular                   unfunded 
                           Disorders and  Atrophy                   qualified 
      neurodegeneration        Stroke                                research 
                                                                    proposals 
                                                                      with    
                                                                    partner   
       Research on the        National        The                    Agency   
                            Institute of   Lysosomal                 shares   
neurological aspects of  Neurological    Storage                  unfunded 
                           Disorders and    Disease                 qualified 
      lysosomal storage        Stroke      Research                  research 
          disorders                                                 proposals 
                                          Consortium                  with    
                                                                    partner   

Research on treatment of National Heart Lung and Blood National Hemophilia
Sponsorship from Wyeth, Agency shares hemophilia, von Willebrand Institute
Foundation AHF, Baxter Healthcare, unfunded qualified disease, and other
Bayer, Aventis Behring research proposals hereditary bleeding Company, and
Novo Nordisk with partner disorders for its "it's time for a cure"

campaign and "project red

flag"

        Research to better       National Institute   Fetzer    Agency shares 
                                     on Alcohol     Institute  
      understand the role of         Abuse and                       unfunded 
                                     Alcoholism                     qualified 
         religiousness and                                           research 
           spirituality                                             proposals 
in the prevention, treatment,                                 with partner 
         and recovery from                                     
      alcoholism and alcohol-                                  
         related diseases                                      

Source: GAO analysis of NIH data.

At EPA, none of the 16 program and regional offices we contacted
identified any arrangements similar to the research arrangement between
ORD and ACC. In addition, we did not identify any partnerships similar to
the ACC research arrangement at FDA or at FAA. FDA officials we contacted
said the agency had no research arrangements similar to the ACC
arrangement with organizations that represent industry. Finally, FAA
officials said that the agency had not entered into any research
arrangements like the arrangements with ACC and generally did not use this
type of collaborative arrangement to conduct extramural research.

Conclusions	Federally funded research advances scientific understanding
and helps improve regulatory approaches to protecting human health and the
environment. For both regulatory and nonregulatory agencies collaboration
with external organizations is one mechanism to maximize the financial and
intellectual resources available to federal agencies. However,
collaboration, particularly with organizations that directly represent
regulated industries, can raise concerns about conflicts of

interest that could call into question the quality and independence of
federally funded research. As a result, it is imperative that federal
agencies ensure, before they enter into collaborative research
arrangements with nonfederal partners, that they fully consider the
potential for conflicts of interest.

NIEHS and ORD relied on their general research management processes to
minimize any potential conflicts of interest that might arise during
implementation of their respective ACC arrangements. While these processes
were appropriate for managing the arrangements, they were not specifically
designed to address conflict-of-interest concerns and therefore cannot be
considered adequate substitutes for formal conflict-of-interest
evaluations. Consequently, without policies requiring officials at NIH and
EPA to formally evaluate and manage potential conflicts of interest when
they enter into collaborative arrangements such as those with ACC, neither
agency can ensure that similar arrangements in the future will be
systematically evaluated and managed for potential conflicts of interest.

When accepting the gift from ACC, NIEHS officials believed their actions
satisfied the conditions of the NIH gift acceptance policy for conflict of
interest. However, NIH's policy-both the wide discretion allowed in
deciding on whether and how officials should evaluate conflicts of
interest and the lack of required documentation-provides little assurance
of systematic evaluation of gifts that may present potential conflicts of
interest for the agency. To allay concerns about the potential for
conflicts of interest that may result from accepting gifts, officials
should clearly document both their evaluation of the potential for
conflicts of interest and the basis for their decisions to accept or
reject a gift.

Recommendations for Executive Action

The Director of NIH and the Administrator of EPA should develop formal
policies for evaluating and managing potential conflicts of interest when
entering into research arrangements with nongovernmental organizations,
particularly those that represent regulated industry.

The Director of NIH should further revise the NIH gift acceptance policy
to require NIH officials to evaluate gifts, particularly from
organizations that represent regulated industry, for potential conflicts
of interest and to document the basis for their decisions, including what,
if any, steps are needed to manage potential conflicts.

Agency Comments and Our Evaluation

We provided EPA and NIH with a draft of this report for their review and
comment. EPA neither agreed nor disagreed with our recommendation, but
provided technical comments that we have incorporated as appropriate. (See
app. II.) NIH concurred with our recommendations and stated it would take
steps to implement them. In addition, NIH emphasized that is it not a
regulatory agency and suggested changes to the report to clarify its role.
We have added language to clarify NIH's relationship with the regulated
industry. NIH also provided technical comments that we have incorporated
as appropriate. NIH's comments and our response are included in appendix
III.

As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report for 30 days after
the
date of this letter. At that time, copies of this report will be sent to
the
congressional committees with jurisdiction over the Environmental
Protection Agency and the National Institutes of Health; the Honorable
Stephen L. Johnson, Acting Administrator of EPA; the Honorable Elias A.
Zerhouni, Director of NIH; and the Honorable Joshua B. Bolten, Director of
the Office of Management and Budget. This report will also be available at
no charge on GAO's home page at http://www.gao.gov.

If you have any questions about this report, please contact me at (202)
512
3841. Key contributors to this report are listed in appendix IV.

Anu K. Mittal, Director
Natural Resources and Environment

Appendix I

                       Objectives, Scope, and Methodology

As requested by the Ranking Member of the Subcommittee on Environment,
Technology and Standards, House Committee on Science, and the Ranking
Member of the Subcommittee on Research, House Committee on Science, we
determined the (1) legal authority the National Institutes of Health's
(NIH) National Institute of Environmental Health Sciences (NIEHS) and the
Environmental Protection Agency's (EPA) Office of Research and Development
(ORD) used to enter into arrangements with the American Chemistry Council
(ACC); (2) extent to which NIEHS and ORD evaluated and managed the
possibility that conflicts of interest could result from their
arrangements; (3) extent to which NIEHS complied with NIH's gift
acceptance policy when accepting ACC's funds; and (4) extent to which
similar research arrangements exist within other offices and programs
within NIH and EPA, as well as other regulatory agencies.

To determine the legal authorities NIEHS and ORD relied on to enter the
research arrangements with ACC to solicit and fund extramural research, we
reviewed the statutes cited in agency documentation related to the
arrangements. For NIH, these authorities included sections 301 and 405 of
the Public Health Service (PHS) Act, as amended (42 U.S.C. S:S: 241 and
284); and gift acceptance statutes contained in sections 231 and
405(b)(1)(H) of the PHS Act as amended (42 U.S.C. S:S: 238, 284(b)(1)(H)).
For ORD these authorities included section 103 of the Clean Air Act, as
amended (42 U.S.C. S: 7403), section 104 of the Clean Water Act, as
amended (33 U.S.C. S:1254), and section 8001 of the Solid Waste Disposal
Act, as amended (42 U.S.C. S: 6981). We also reviewed the following
related documentation on delegations of authority:

o 	Memorandum from the Assistant Secretary for Health to Public Health
Service Agency Heads for "Delegation of Authority To Accept Gifts Under
Title XXI of the PHS, Miscellaneous" (July 10, 1995), and

o 	NIH Manual Chapter 1130, Delegations of Authority, Program: General #5
Accept Gifts Under Section 231 of the PHS Act, Program: General #10
National Library of Medicine.

We also reviewed relevant legislative histories and Comptroller General
decisions and interviewed attorneys at NIEHS and ORD about their reviews
of the arrangements. Furthermore, we compared each agency's policies and
both formal arrangements with the authorities cited above.

To determine what measures NIEHS and ORD took to evaluate and manage the
potential that conflicts of interest could result from their arrangements

Appendix I
Objectives, Scope, and Methodology

with ACC, we interviewed program officials on their perceptions of
conflict of interest when the ACC arrangement was being considered, as
well as on the actions they took to develop and implement the
arrangements. We also interviewed budget and legal officials, as
appropriate, at each agency on their involvement in reviewing and
completing the arrangements. We reviewed the research arrangements with
ACC, as well as other documentation related to the arrangements, including
correspondence between agency officials and ACC, interagency memorandums,
and documentation of agency legal and other reviews. We considered
statutes on conflict of interest and ethics guidelines that might address
the need for agencies to consider and manage real or apparent conflicts of
interest (18 U.S.C. S: 209, and the Ethics in Government Act of 1978, 5
U.S.C. app. 4). Finally, we interviewed ACC officials to obtain their
views on conflicts of interest and on the role of ACC representatives in
developing the announcement of funding availability, reviewing and funding
research proposals, and administering the grants. We did not test the
NIEHS or ORD internal controls governing the administration of grants
awarded under the arrangements.

To determine whether NIEHS's acceptance of ACC funds as a gift complied
with NIH policy for accepting gifts, we collected and analyzed NIH's
policy for gift acceptance and we interviewed legal staff at NIEHS
concerning their review of potential gifts and their assistance to program
officials. We obtained and reviewed the research arrangement and related
documentation on transferring and administering the gift funds. We
interviewed program officials on their actions in accepting the funds and
compared activities and documentation pertaining to NIEHS's acceptance of
ACC's gift with the requirements and recommendations outlined in NIH's
policy.

To determine the extent of similar research arrangements at other federal
agencies, we identified officials responsible for 96 percent or more of
the extramural research budgets at NIH, EPA, and two additional agencies.
We then used a structured guide to determine what, if any, research
arrangements the agencies had with external partners. In addition to NIEHS
and ORD, we selected a nonprobability sample of two additional agencies on
the basis of the magnitude of the research component of their

Appendix I
Objectives, Scope, and Methodology

mission and congressional interest.1 The two agencies selected were the
Food and Drug Administration (FDA) and the Federal Aviation Administration
(FAA) because each agency had a research component to its mission, a
corresponding research budget, and a regulatory role. We determined that
the selection was appropriate for our design and objectives and that the
selection would generate valid and reliable evidence to support our work.

To determine the extent to which arrangements exist within these four
agencies, we obtained the most current available data on extramural
research budgets from institutes and centers in NIH, program and regional
offices in EPA, and the programs and centers at FAA and FDA. To assess the
reliability of these data, we used a structured guide to interview
officials at each agency responsible for maintaining the databases
containing the data provided. Specifically, we obtained descriptions of
the databases, how data are entered into the databases, quality control
checks on the data, testing conducted on the data, and officials' views on
the accuracy and completeness of the data. We asked follow-up questions
whenever necessary. FDA officials noted one limitation on the data that
were provided. Specifically, when compiling data on research budgets,
officials must sometimes subjectively interpret the term "research." The
impact of such interpretation may cause the extramural research figures
for FDA to be slightly overstated. After taking these steps, we determined
that the data were sufficiently reliable for the purposes of this report.

We used these data to rank order the programs and centers and identify
officials in each agency responsible for administering 96 percent or more
of each agency's extramural research budget. In our interviews with these
officials, we focused on arrangements established since January 1999-
specifically, arrangements with characteristics similar to the ACC
arrangements. We looked for and considered arrangements with
nongovernmental, nonacademic partners to sponsor research extramural to
both organizations. We did not collect information or report on the use of
other types of agency research cooperation with external partners such as
cooperative research and development agreements or informal consultations
between agency and external scientists.

1Results from nonprobability samples cannot be used to make inferences
about a population because, in a nonprobability sample, some elements of
the population being studied have no chance or an unknown chance of being
selected as part of the sample.

Appendix I
Objectives, Scope, and Methodology

At NIH, we used a structured guide to interview officials at the following
institutes or centers, listed in order of greatest to least extramural
research grant-dollar totals, in fiscal year 2002: National Cancer
Institute; National Heart, Lung, and Blood Institute; National Institute
of Allergy and Infectious Diseases; National Institute of General Medical
Sciences; National Institute of Diabetes and Digestive and Kidney
Diseases; National Institute of Neurological Disorders and Stroke;
National Institute of Mental Health; National Center for Research
Resources; National Institute of Child Health and Human Development;
National Institute on Drug Abuse; National Institute on Aging; National
Eye Institute; NIEHS; National Institute of Arthritis and Musculoskeletal
and Skin Diseases; National Human Genome Research Institute; National
Institute on Alcohol Abuse and Alcoholism; National Institute on Deafness
and Other Communication Disorders; National Institute of Dental and
Craniofacial Research; National Institute of Nursing Research; and
National Institute of Biomedical Imaging and Bioengineering. Together,
these institutes and centers accounted for 99 percent of NIH's total
extramural research funds for fiscal year 2002.

At EPA, we used a structured guide to interview program officials from the
following offices and regions (shown in order of greatest to least funding
available for extramural research fiscal year 2003):2 ORD; Office of
Water; Region 6; Region 9; Office of International Affairs; Region 3;
Office of Solid Waste and Emergency Response; Region 4; Region 5; Region
1; Region 2; Region 7; Region 10; Region 8; Office of Prevention,
Pesticides and Toxic Substances; and Office of Air and Radiation.
Together, these offices accounted for 99 percent of the EPA's extramural
research funds for fiscal year 2003.

At FDA, we interviewed the agency official responsible for getting
approval for Memorandums of Agreement from the General Counsel's Office
and Office of Grants Management and for ensuring that each agreement is
published in the Federal Register. FDA does not accept funds from external
partners under these agreements.

Finally, at FAA, we interviewed officials from the research and
development offices at headquarters as well as the division manager of the
Acquisition, Materiel, and Grants Division of the William J. Hughes

2EPA has 10 regional offices, each of which is responsible within its
states and territories for the execution of the agency's programs.

Appendix I
Objectives, Scope, and Methodology

Technical Center. Together, these offices accounted for 96 percent of the
agency's fiscal year 2003 funds for extramural research.

To independently corroborate the information obtained from agency
officials, to the extent possible, we collected documents on the
agreements we identified at these agencies and reviewed agency Web sites
maintained by the relevant centers and offices, as well as Web sites
maintained by external sources, such as advocacy or trade groups.

We conducted our review from February 2004 through February 2005 in
accordance with generally accepted government auditing standards.

Appendix II

Comments from the Environmental Protection Agency

Appendix II
Comments from the Environmental
Protection Agency

Appendix III

Comments from the National Institutes of Health

Appendix III
Comments from the National Institutes of
Health

Appendix III
Comments from the National Institutes of
Health

Appendix IV

                     GAO Contacts and Staff Acknowledgments

GAO Contacts	Anu Mittal, (202) 512-3841 Cheryl Williams, (404) 679-1991

Staff 	In addition to the individuals listed above, key contributions to
this report were made by Amy Dingler, Karen Keegan, Judy Pagano, Carol
Herrnstadt

Acknowledgments	Shulman, Barbara Timmerman, Mindi Weisenbloom, and Eugene
Wisnoski. Also contributing to this report were Anne Dievler and Jim
Lager.

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