University Policies, George Mason University

Research Policies

University Policy Number 4001

Subject: Financial Conflicts of Interests in University Contracts with Businesses under Virginia Law

Responsible Parties: President, Vice President for Research, Office of Sponsored Programs, Office of Technology Transfer

Procedures:Procedure for Policy 4001, Financial Conflicts of Interests in University Contracts with Businesses under Virginia Law

Related University Policies: University Policy Number 410 – Policy on Financial Conflicts of Interests in Federally-Funded Research

I. SCOPE

This policy applies to all officers and employees of the University, including part-time employees, adjunct faculty, and students on the University payroll.

II. POLICY STATEMENT

Purpose

This policy implements, and assists officers and employees of the University in complying with, provisions of the Virginia State and Local Government Conflict of Interests Act that relate to contracts between the University and a business. The Act is codified at § 2.2-3100 et seq., Code of Virginia, as amended. The policy describes how an employee may obtain a waiver of a conflict of interests in a contract for research and development or for the commercialization of intellectual property, as authorized by the Act. Other University policies, referred to above, address related concerns.

Prohibition

Generally, an officer or employee of the University may not have a “personal interest in a contract” with the University other than his or her own employment contract. A personal interest in a contract exists when the employee is a party to the contract or when he or she has a “personal interest” in a business that is a party to the contract.

A “personal interest” is a financial benefit or liability accruing to the employee or a member of his or her immediate family. In a business context, a “personal interest” includes, but is not limited to, an ownership interest in the business that exceeds three percent of its total equity, or income from the business that exceeds $10,000 annually. See the definition of “personal interest” in the Definitions section of this policy.

The consequences of noncompliance with the requirements of the statute, which are summarized in the Compliance section of this policy, can be serious.

Exceptions

State law includes some exceptions to the general prohibition against having a personal interest in a contract.

· The prohibition does not apply to certain enumerated types of contracts. See Va. Code, §§ 2.2-3106.C and 2.2-3110.

· The prohibition does not apply under certain circumstances to an officer or employee whose income from a business exceeds $10,000. In order to qualify for this exception, the officer or employee, and members of his or her immediate family, must not participate in the business’s contracting process or have authority to do so. In addition, the officer or employee must not have authority to participate in the University’s contracting process unless he or she publicly disqualifies himself or herself and does not participate in that process. See Va. Code, § 2.2-3110.A.4.

· The prohibition does not apply to an employee’s personal interest in a contract for research and development or for the commercialization of intellectual property if, before the contract is entered into, the interest is disclosed in writing to and approved by the President, and if the employee files disclosure statements provided by law. The President must file with the Board of Visitors, and the University must file with the Secretary of the Commonwealth, annual reports concerning these contracts. See Va. Code, § 2.2-3106.C.7. and E.

Waivers for contracts for research and development or for the commercialization of intellectual property

If an employee will be responsible for the design, conduct, or reporting of activities under a contract for research and development or for the commercialization of intellectual property between the University and a business, the employee must disclose in writing whether he or she has a “personal interest in [the] contract”. If so, the employee may seek a waiver of the conflict of interests that would arise from the contract’s approval.

Any University employee who has a personal interest in a business and knows that the business is preparing to enter into a contract with the University for research and development or for the commercialization of intellectual property must disclose in writing his or her personal interest and may seek a waiver. The consequences of an employee’s failure to remedy a conflict of interests in the contract are summarized in the Compliance section of this policy.

Waivers of conflicts of interests are available to employees, but not officers, of the University. Members of the Board of Visitors are University officers.

By delegation from the Board of Visitors, the authority to approve or modify the terms of a waiver rests exclusively with the President. No later than December 1 of each year, the President files with the Board of Visitors the conflict of interests report required by Va. Code, § 2.2-3106.E.

Until the President has approved a waiver, the University will not enter into a contract that would give rise to a conflict of interests. A request for a waiver must be signed by the requesting employee, by his or her Center Director, Department head, and Dean or Director, and by the Vice President for Research. The signature of a reviewing official reflects the official’s determination that approval of the requested waiver is in the best interests of the University. If a reviewing official declines to reach such a determination concerning the waiver as proposed, the employee may appeal this decision to the next highest reviewer.

The Vice President for Research determines whether a waiver of a conflict of interests should be recommended to the President. If the Vice President declines to recommend a waiver as proposed, the employee may appeal this decision to the Provost. The Provost makes the final decision on appeals from decisions of the Vice President.

If a waiver of a conflict of interests is recommended, the Office of the Vice President for Research prepares a recommendation and transmits it to the President for consideration. If the President approves the waiver, the Office of the Vice President sends a copy of the approved waiver to the requesting employee and each official who reviewed the request and informs the employee of his or her obligation to file Statements of Economic Interests under Va. Code, § 2.2-3106.C.7.(ii).

A request for a waiver of a conflict of interests is a public document when it is recommended for approval and transmitted to the President for consideration. Disclosure of such a request is subject to applicable State and federal law.

The Vice President for Research establishes guidelines to implement this policy. The Office of the Vice President for Research prepares the annual conflict of interests report required to be filed with the Board of Visitors by the President and, by December 31 of each year, files with the Secretary of the Commonwealth the conflict of interests report required by Va. Code, § 2.2-3106.C.7.(iv). The Office of the Vice President for Research maintains a record of all actions taken during the review and approval of a waiver for a period of at least three years following the termination of the contract to which the documents pertain.

III. DEFINITIONS

The following definitions of terms used in this policy are taken from Va. Code, § 2.2-3101.

“Business” means a corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, trust or foundation, or any other individual or entity carrying on a business or profession, whether or not for profit.

“Immediate family” means (i) a spouse and (ii) any other person residing in the same household as the officer or employee, who is a dependent of the officer or employee or of whom the officer or employee is a dependent.

“Officer” means any person appointed or elected to [the University], whether or not he receives compensation or other emolument of office.

“Personal interest” means a financial benefit or liability accruing to an officer or employee or to a member of his or her immediate family. Such interest shall exist by reason of (i) ownership in a business if the ownership interest exceeds three percent of the total equity of the business; (ii) annual income that exceeds, or may reasonably be anticipated to exceed, $10,000 from ownership in real or personal property or a business; (iii) salary, other compensation, fringe benefits, or benefits from the use of property, or any combination thereof, paid or provided by a business that exceeds, or may reasonably be anticipated to exceed, $10,000 annually; (iv) ownership of real or personal property if the interest exceeds $10,000 in value and excluding ownership in a business, income, or salary, other compensation, fringe benefits or benefits from the use of property; or (v) personal liability incurred or assumed on behalf of a business if the liability exceeds three percent of the asset value of the business.

“Personal interest in a contract” means a personal interest that an officer or employee has in a contract with a governmental agency, whether due to his being a party to a contract or due to a personal interest in a business that is a party to a contract.

IV. OTHER INFORMATION

The Office of the Vice President for Research, including the Office of Sponsored Programs and the Office of Technology Transfer, provides advice and technical assistance to University employees in the preparation of requests for waivers of conflicts of interests.

Employees should note that this policy implements only the provisions of State law that relate to conflicts of interests in contracts between the University and a business; it does not address all conflicts treated by the State and Local Government Conflict of Interests Act. This policy does not alter State law. If the policy appears to conflict with State law, the latter takes precedence. Employees who have questions about conflicts of interests may consult the statute itself or seek legal counsel. The University’s Legal Affairs Department is not authorized to provide personal legal counsel to University employees.

This policy’s provisions may not be waived or modified by any University officer or employee except as a result of the review process set out in the policy.

V. COMPLIANCE

The State and Local Government Conflict of Interests Act specifies serious consequences for violations of the conflict of interests requirements described in this policy. See Va. Code, § 2.2-3120 et seq. Among these penalties and remedies are the following:

· A person who knowingly violates the conflict of interests prohibition is guilty of a misdemeanor and of malfeasance in office or employment and is subject to fines, penalties, and forfeiture of office or employment. See Va. Code, §§ 2.2-3120 and 2.2-3122.

· A contract made in violation of the prohibition may be rescinded by the University and the contractor denied any profits from the work performed. See Va. Code, § 2.2-3123.

· Any money derived by an officer or employee from a violation must be forfeited, and a civil penalty of an equal amount may be imposed for a knowing violation. See Va. Code, § 2.2-3124.

VI. EFFECTIVE DATE AND APPROVAL

This policy is effective upon approval by the Board of Visitors. The policy will be reviewed and, if necessary, revised annually. Any revision will take effect at the beginning of the first University fiscal year following its approval unless the revision specifies a different date.

Approved:

_______________________
Maurice W. Scherrens
Senior Vice President

________________________
Peter N. Stearns
Provost

Date approved: July 28, 2005

______________________
Board of Visitors

Date approved: August 19, 2005