A conflict of interest is generally understood as "a conflict between the private interests and the official responsibilities of a person in a position of trust."[1] Within financial assistance, both real and perceived conflicts must be properly mitigated.
This information applies to:
All financial assistance programs
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Overview
Non-Federal entities who apply for and receive Federal financial assistance awards are required to "establish safeguards to prohibit employees from using their positions for a purpose that constitutes or presents the appearance of personal or organizational conflict of interest, or personal gain." [2] Broadly, applicants (and recipients) need to address any relationship or matter which might put themselves, their employees, or their subrecipients in conflict with their responsibilities under the award and outside interests. During the application process, non-Federal entities disclose in writing any potential conflicts of interest related to the funding opportunity. If disclosed, the Federal agency or pass-through entity may elect to work with the applicant on a mitigation plan as part of the Federal awards terms and conditions. Successful applicants agree when accepting the Federal award or subaward to disclose any subsequent real or perceived conflicts of interest during its lifecycle. Failure to do so could result in termination of the award or subaward.
Authorities
2 CFR 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
§200.112 Conflict of interest.
The Federal awarding agency must establish conflict of interest policies for Federal awards. The non-Federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy.
[80 FR 43308, July 22, 2015]
The Council on Financial Assistance Reform's (COFAR) Frequently Asked Questions on 2 CFR 200 (July 2017 update)
200.112
.112-1 Conflict of Interest
Q: Section 200.112 states “The Federal awarding agency must establish conflict of interest policies for Federal awards. The non-Federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy.” Does this policy refer to scientific conflicts of interest that might arise in the research community?
A: No, however Federal agencies may have special policies or regulations specific to scientific conflicts of interest, such as HHS's policy at 42 CFR Part 50. The conflict of interest policy in 2 CFR 200.112 refers to conflicts that might arise around how a non-Federal entity expends funds under a Federal award. These types of decisions include, for example, selection of a subrecipient or procurements as described in section 200.318.
.112-2 Conflict of Interest – Scientific Collaborations
Q: Section 200.112 states “The Federal awarding agency must establish conflict of interest policies for Federal awards. The non-Federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy.”
A: FAQ 112-1 confirmed that this requirement does not refer to scientific conflicts of interest that may apply to projects supporting research. Scientific collaborations on research and development projects are generally the result of close collaboration prior to the submission of applications for support. Accordingly, virtually all of these collaborations might be considered to include a potential conflict of interest. The potential conflict is mitigated by the disclosure of these collaborations pursuant to agency requirements.
Q: Does Section 200.112 apply when a pass-through entity awards a subaward to support scientific collaboration on a research and development project?
A: Yes. When a subaward for scientific collaboration on a research and development project is included in the application for assistance or requested for prior approval and approved by the Federal awarding agency, the disclosure of any potential nonscientific conflict of interest, if required by the Federal awarding agency, provides sufficient information to the Federal awarding agency for the purpose of compliance with section 200.112.
U.S. Fish and Wildlife Service Guidance
Notice of Funding Opportunity template (March 21, 2018)
I. Conflict of Interest Disclosures: Applicants must notify the Service in writing of any actual or potential conflicts of interest that are known at the time of application or that may arise during the life of this award, in the event an award is made. Conflicts of interest include any relationship or matter which might place the recipient, the recipient’s employees, or the recipient’s subrecipients in a position of conflict, real or apparent, between their responsibilities under the award and any other outside interests. Conflicts of interest may also include, but are not limited to, direct or indirect financial interests, close personal relationships, positions of trust in outside organizations, consideration of future employment arrangements with a different organization, or decision-making affecting the award that would cause a reasonable person with knowledge of the relevant facts to question the impartiality of the applicant, the applicant’s employees, or the applicant’s future subrecipients in the matter. Applicants must notify the Service in writing in their application if any key project personnel, including subrecipient and contractor personnel, are known to be related to, married to, or have a close personal relationship with any Federal employee in or associated with the program to which you are applying for funding or who otherwise may be involved in the review and selection of the application. Upon receipt of such a notice, the Service Project Officerprogram, in consultation with their Ethics Counselor, will determine if a conflict of interest exists and, if so, if there are any possible actions to be taken by the applicant to reduce or resolve the conflict. Failure to disclose and resolve conflicts of interest in a manner that satisfies the Service may result in the project not being select for funding.
Notice of Award Letter template (January 6, 2017)
Conflict of Interest Disclosures:
Recipients are responsible for notifying the Service Project Officer in writing of any actual or potential conflicts of interest that may arise during the life of this award. Conflicts of interest include any relationship or matter which might place the Recipient, the Recipient’s employees, or the Recipient’s subrecipients in a position of conflict, real or apparent, between their responsibilities under this award and any other outside interests. Conflicts of interest may also include, but are not limited to, direct or indirect financial interests, close personal relationships, positions of trust in outside organizations, consideration of future employment arrangements with a different organization, or decision-making affecting the award that would cause a reasonable person with knowledge of the relevant facts to question the impartiality of the Recipient, the Recipient’s employees, or the Recipient’s subrecipients in the matter. Upon receipt of such a notice, the Service Project Officer in consultation with their Ethics Counselor will determine if a conflict of interest exists and, if so, if there are any possible actions to be taken by the Recipient, the Recipient’s employee(s), or the Recipient’s subrecipient(s) that could reduce or resolve the conflict. Failure to resolve conflicts of interest in a manner that satisfies the Service may result in any of the remedies described in 2 CFR 200.338, Remedies for Noncompliance, including termination of this award.
Frequently Asked Questions
What are some examples of situations that may represent a potential or actual conflict of interest?
Some potential conflict of interest situations include: (1) financial interest, including ownership in stocks and bonds, in a firm which submits or is expecting to submit an application; (2) outstanding financial commitments to any applicant or potential applicant; (3) employment in any capacity, even if otherwise permissible, by any applicant or potential applicant; (4) employment within the last 12 months by any applicant or potential applicant; (5) any vested pension or reemployment rights, or interest in profit sharing or stock bonus plans; (6) employment of any member of the immediate family by any applicant or potential applicant; (7) positions of trust that may include employment, past or present, as an officer, director, trustee, agent, attorney, etc.; (8) a close personal relations that may include a childhood or other friend, sibling, or other family relations that may compromise or impair the fairness and impartiality of the proposal evaluator or advisor and grants officer during the proposal evaluation and award selection process; (9) negotiation of outside employment with any applicant or potential applicant.
What is the financial assistance recipients role in complying with 2 CFR 200.112?
The 2 CFR 200 requires all non-Federal entities to disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with the applicable Federal awarding agency policy.
I know avoiding conflict of interest is very important under Federal procurement rules. Are there conflict of interest requirements for contracts under Federal financial assistance awards?
Yes. 2 CFR 200.338(c)(1) requires non-Federal entities to maintain written conflict of interest standards for contractual activities under Federal awards.
The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity.
(2) If the non-Federal entity has a parent, affiliate, or subsidiary organization that is not a state, local government, or Indian tribe, the non-Federal entity must also maintain written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest means that because of relationships with a parent company, affiliate, or subsidiary organization, the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.
[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014; 80 FR 43309, July 22, 2015]
As a recipient of financial assistance awards, how do I become aware of the U.S. Fish and Wildlife conflict of interest requirements?
All FWS awards include conflict of interest disclosure requirements for recipients.
Learning Aids
Related Pages
Resources
References
1. "Conflict of Interest." Merriam-Webster.com. Merriam-Webster, n.d. Web. 29 Dec. 2017.
2. SF-424 Assurances Form (SF-424B/D).
