PURDUE UNIVERSITY
OFFICE OF THE PRESIDENT
EXECUTIVE MEMORANDUM No. C-39
(Supplements Executive Memorandum No. C-1 dated August 22, 1983 and
Supersedes Interim Faculty Policy on Conflicts of Interest and Commitment
dated December 30, 1991)

October 25, 1995

To: Vice Presidents, Chancellors, Deans, Directors, and Heads of Schools, Divisions, Departments and Offices
Re: University Policy on Conflicts of Interest and Commitment

This policy is intended to serve as a guide for Faculty and Staff members in structuring their relationships with industry and other outside ventures in view of their responsibilities for teaching, research, administrative activities and service. It is not the intent of this policy to eliminate all situations of conflict of interest, but rather to enable Faculty and Staff members to recognize situations that may be subject to question and ensure that such situations are properly reviewed and, if necessary, supervised or monitored. Some conflicts of interest, however, will be prohibited. The guidelines are intended to maintain the professional autonomy of Faculty and Staff as appropriate to their respective disciplines and professional activities. These guidelines should be viewed as complementing and elaborating Executive Memorandum No. C-1 and the University's policy on consulting (see Faculty and Staff Handbook).

The policy fulfills two other purposes as well. First, it provides Faculty and Staff members with meaningful guidance for the continued development and future structuring of productive external relationships. Secondly, the policy will provide assurance to the Faculty, Staff, the University and most importantly the public, that potential Conflicts of Interest have been examined and will be conducted in a manner consistent with institutional and public values.

CONFLICTS OF COMMITMENT:

Conflicts of Commitment relate to the devotion of time and energy to external activities. With the acceptance of a full-time appointment to the University, an individual makes a commitment to the University that is understood to be full-time in the most inclusive sense. Full-time members of the Faculty and Staff are expected to devote their primary professional loyalty, time and energy to their teaching, research, administrative, responsibilities and service activities. Accordingly, they should arrange outside activities and financial interests so as not to interfere with the primacy of these commitments.

Members of the Faculty and Staff whose appointments are less than full-time are expected to devote professional loyalty, time and energy to their teaching, research and service activities in accordance with their agreed-upon time commitments. For these Faculty and Staff members, conflicts of commitment relate only to those external activities to be undertaken within "University time" or those which compromise the individual's ability to meet his/her University responsibilities.

CONFLICTS OF INTEREST:

Conflict of Interest occurs when a Faculty or Staff member, any of his/her family or associated entity, receives personal financial reward from his/her University position in a manner which may bias the individual's judgment, or compromise his/her ability to carry out the contractual obligation for teaching, research, administrative, and service responsibilities. In certain cases where a Faculty or Staff member may benefit personally from his/her activities, this benefit may be permitted following disclosure and approval.

The following is a representative and non-inclusive list of extramural relationships subject to this policy. These examples have been divided into three groupings. Category I consists of relationships that, while conflicts in a technical sense, are allowable because they are (a) accepted practices and (b) generally minimal in their personal financial impact and impact on the University. A second classification, Category II, consists of instances that will ordinarily be permissible following disclosure and, where necessary, the implementation of oversight procedures designed to ensure academic standards, intellectual values, and institutional integrity. Category III consists of relationships that may be allowable after disclosure, review and approval with oversight by a standing committee of the University.

These classifications are not intended to serve as a comprehensive code of conduct or to define rigid rules with respect to conflict of interest. It is expected that the guidelines will be applied in accordance with the mission of Purdue University. Hence, an integral part of the adaptation to the guidelines will be a process of interpretation and application by a standing committee. By this process, it is expected that a common institutional experience in the application of these guidelines will gradually evolve. Finally, the complexity of the subject matter is such that the current guidelines and their ensuing interpretations should be formally reviewed on a periodic basis.

The impact of a Faculty member's conflict of interest on students (including that of post-doctoral fellows and other trainees) is of special concern to the University. Students, post-doctoral fellows, and trainees should not ordinarily participate in research that involves confidential information or otherwise constrains their right to publish or communicate freely. Additionally, the University is particularly concerned about the content and quality of the educational experience for students whose research is sponsored by a for-profit business and whose preceptors have a personal interest in that business. It is essential that Faculty members demonstrate at all times their commitment to the highest intellectual and ethical standards in all aspects of research, particularly that research in which opportunities for conflict may exist. As a corollary, the educational experiences of students are expected to incorporate the values of objectivity in research and the importance of public trust.

Lastly, the rigorous application of the guidelines will be particularly important in the case of persons exercising significant authority. There are those in the Faculty and Staff who have substantial influence over others by virtue of their major role in professional appointments, promotions, tenure decisions, allocation of space, and determination of salary. Typically these individuals hold positions such as Dean of a School, Head of a Department, major professor or senior colleague. While the guidelines are applicable to all Faculty and Staff, these individuals with great influence over the careers of others and resource allocations must take particular care not to become involved in conflicting relationships that would lead to their personal financial gain or that would adversely affect the professional or academic advancement of Faculty colleagues, Staff members or students.

The following section provides examples of potential conflicts in all three categories. This list is not inclusive and serves only to illustrate the nature of situations which can give rise to conflicts of commitment and interest. These situations call for interpretation and review with department supervisors against the context of the Faculty and Staff member's professional area, and the extent, nature and consequences of involvement in specific external activities.

Examples of activities:

1. receiving royalties for published scholarly works and other writings,
   
   
2. accepting honoraria for commissioned papers and occasional lectures,
   
   
3. receiving royalties under institutional royalty-sharing policies, or
   
   
4. accepting prizes and awards for recognition of professional excellence.
   
   

The following activities must be disclosed on Purdue University Form 32A and submitted for review. For certain cases, approval may require specification of conditions or the use of oversight procedures.

Example of Activities:

RESEARCH ACTIVITIES

1. participating in research on a technology invented or developed by that Faculty member or a member of his/her family, and the technology is assigned or contractually obligated to a business not owned by the Faculty member or a member of his/her family.
   

EXTERNAL ACTIVITIES

2. assuming an executive position in a not-for-profit business engaged in commercial or research activities,
3. assuming ownership or partnership of, or is an officer, director, consultant or agent for a for-profit business engaged in commercial or research activities,
4. possessing a financial interest in a business which competes with the services provided by the University, or
5. assuming certain public offices either by election or appointment; employment outside of the university; and assuming any connection with a professional association, educational institution or foundation as a trustee, officer, or public representative.

PUBLIC DISCLOSURE

6. publishing or formally presenting research results, or providing expert commentary on a subject which covers Intellectual Property or products developed by Faculty member with concomitant disclosure of Financial Interest relating to such results or such subject.

The following activities must be disclosed on Purdue University Forms 32A and 35. In certain cases, responses on Form 32A may direct the Faculty/Staff member to fill out a Form C1. When approved, these activities would ordinarily require oversight.

Example of Activities:

RESEARCH ACTIVITIES

1. participating in research on a University technology that is assigned or contractually obligated (by license or exercise of an option to license) to a business in which the Faculty or Staff member, a member of his/her family, or an associated entity has a consulting relationship, holds a stock or similar ownership interest, or has any other financial interest, other than receipt of University supervised sponsored research support or royalties under institutional royalty-sharing policies,
2. receiving University supervised sponsored and other funded research support (whether in dollars or in kind) or assigning students, post-doctoral fellows or other University employees to projects sponsored by a for-profit business in which he/she, a member of his/her family, or an associated entity holds a stock or similar ownership interest, or
3. receiving financial compensation for conducting research externally that would ordinarily be conducted within the University.

BOARD MEMBERSHIPS

4. serving on the Board of Directors or Scientific Advisory Board of a business from which that Faculty or Staff member or a member of his/her family receives University supervised sponsored research support or with which the University has a contractual relationship.

TECHNOLOGY EVALUATION

5. participating in the evaluation (as an individual or member of a committee) of a Technology which is assigned or contractually obligated (by license or exercise of an option to license) to a business in which that individual, a member of his/her family, or an associated entity has a financial interest. The level of financial interest allowable will be determined during review of Form 35.

ADMINISTRATIVE RESPONSIBILITIES

6. taking administrative action within the University which is beneficial to a business in which a Faculty or Staff member has a financial interest.

Purdue University recognizes that external activities can advance its ability to provide high quality research and educational experiences for students. External activities congruent with the professional expertise of the Faculty or Staff Member and consistent with the mission of the corresponding department enhance the individual's professional development and enrich the learning community as a whole. In addition, activities such as licensing of technology, consulting or business start-ups are critical to meeting society's needs.

At the same time, all members of the University must be committed to conducting themselves in accordance with the highest standards of integrity and ethics. This includes identification of the potential for conflicts of interest and the assurance that they do not improperly affect the conduct of University activities. This is not to eliminate all conflicts of interest but to set forth the guidelines and procedures for proper disclosure and management of these situations.

These guidelines describe a process for the disclosure of outside activities for those Faculty and Staff Members reporting to the Office of the Executive Vice President for Academic Affairs (EVPAA). A parallel process should be followed for those Staff Members reporting to the Executive Vice President and Treasurer (EVPT) and other offices at Purdue University.

1. Each Faculty and Staff Member will annually disclose any activities outside of the university which may potentially involve business, employment or vocation; or appointment to other positions or responsibilities as defined by the Faculty and Staff Handbook and the Policy on Conflicts of Interest and Commitment (see attachment). Faculty and Staff Members of the University should not engage in an outside activity unless prior approval has been obtained from the President of the University or his designee.
2. The regulations of the Trustees contain the following: "No employee of the University shall be permitted to engage in any business, employment or vocation; or to accept appointment to other positions of trust or responsibility, or otherwise to divert his interest and attention from University duties without the consent of the President of the University." In particular, the regulation is understood to cover: (1) connection with any business enterprise as owner, partner, officer, director, consultant, or agent; (2) connection with any public office either by election, appointment, or employment; (3) connection with any professional association, educational institution, or foundation as trustee, officer, employee, or public representative.
3. Form 32A "Application for Permission to Engage in An Outside Activity" is used for the disclosure of external activities. One form is to be completed for each activity.
4. This form will be reviewed and approved/ disapproved by the Department Head who will forward the application to the Dean for approval/disapproval. For final review, this form is forwarded to the Office of the Executive Vice President for Academic Affairs. Disapproval by the Department Head can be appealed to the Dean. Disapproval by the Dean can be appealed to the Executive Vice President for Academic Affairs. Final appeal is to the President.

At the Calumet, Fort Wayne and North Central campuses, this form will be reviewed and approved/ disapproved by the Department Head who will forward the application to the Dean for approval/disapproval. For final review, this form is forwarded to the Office of the Chancellor. Disapproval by the Department Head can be appealed to the Dean. Disapproval by the Dean can be appealed to the Office of the Chancellor. Final appeal is to the President.

5. The approved Form 32A does not replace the need to also complete a Form 33 or 33A for leaves associated with the activity.
   
   
6. The Policy on Conflicts of Interest and Commitment defines three categories of activities.
   
   1. For Category I activities, a Form 32A is not required.
   2. Category II activities may be approved following disclosure on Form 32A. In some cases, it may be approved with conditions and/or modifications. In other cases, implementation of oversight mechanisms may also be recommended by the Office of the Executive Vice President for Academic Affairs.
   3. Category III activities disclosed on Form 32A will require completion of a "Disclosure of Relationship with Outside Organizations" (Form 35). A Form C-1 ("Conflict of Interest Disclosure" statement) will also be necessary if a conflict exists as defined in Executive Memorandum No. C-1. This states that Purdue officers and employees serving "in positions involving any authority to purchase or contract on behalf of the University, must file disclosure statements with the Board of Trustees, stating any financial interest which they have in any University contract or purchase."

   The disclosure forms will be considered confidential and made available only to those individuals duly charged with the responsibility for review. Offices of the Department Heads, the Deans, and the Executive Vice Presidents will establish means for the preservation of confidentiality. The disclosure forms, however, are subject to the Public Records Statute of Indiana.

7. In the case of Faculty or Staff Members who hold the positions (or equivalent title) of Executive Vice President for Academic Affairs, Vice President, Chancellor, Dean, or Head of a Department, the "Permission to Engage in Outside Activities," and review of outside relationships will proceed as follows:
• Heads of departments will report directly to the Dean of the respective School.
• Directors that are accountable to a Dean will submit disclosures to that Dean.
• Deans and Academic Vice Presidents will report to the Executive Vice President for Academic Affairs,
• Chancellors, and Executive Vice President for Academic Affairs will report to the University President.
• The University President will report to the University Board of Trustees.

Note again that the following guidelines describe a process for the disclosure of outside activities for those Faculty and Staff Members reporting to the Office of the Executive Vice President for Academic Affairs (EVPAA). A parallel process should be followed for those Staff Members reporting to the Executive Vice President and Treasurer (EVPT) and other offices at Purdue University.

CATEGORY II:

To request approval for engaging in Category II activities, the Faculty/Staff Member must submit a Form 32A for each activity. If this activity is to extend beyond one year, annual renewal must be sought through an updated Form 32A. If a "yes" response is given to any question in Part 2 of Form 32A, then the Faculty/Staff member must also submit a Form 35 and Form C-1.

The Department Head and Dean are responsible for monitoring and when necessary, providing oversight of the approved category II activities to ensure compliance with the Purdue University Policy on Conflicts of Interest and Commitment.

CATEGORY III:

To request approval for engaging in Category III activities, the Faculty/Staff Member follows the same process as that specified for category II activities.

For certain cases, oversight mechanisms for category III activities are to be specified in a Memorandum of Understanding at the request of the Office of the Executive Vice President for Academic Affairs. As part of the Memorandum of Understanding, the Faculty or Staff Member is asked to provide detailed information on the nature of the potential conflict by filling out the Conflict of Interest Information Survey. The Memorandum of Understanding is to be developed by the Faculty or Staff Member and endorsed by the department head and dean. It should address the potential conflicts as disclosed in Form 35, Form C-1 and the Conflict of Interest Information Survey, and specify the details of the oversight process, the responsibilities of the department head and dean, and reporting conditions to EVPAA on the activities.

The Standing Committee (see below) is responsible for making recommendations on the approval/disapproval or modification of the Memorandum of Understanding. The committee is expected to seek advice from individuals outside as well as within the institution in preparing the recommendation. The associated rationale and details must be presented to the EVPAA for review and approval - a process intended to ensure uniformity in the structuring of effective oversight procedures.

The President will appoint a standing committee made up of representatives from the Faculty. For regional campuses, it may be appropriate to augment the membership of the committee by members from those campuses. The committee will have the following responsibilities:

1. make periodic recommendation to the President on the institutional policy and procedures pertaining to conflict of interest and commitment,
2. for category III activities, the committee will make recommendations to the EVPAA on oversight procedures suggested by the Faculty/Staff Member and his/her respective department in the proposed Memorandum of Understanding, and
3. review cases in which an appeal is submitted or non-compliance has occurred and make recommendations to the EVPAA on resolution.

Purdue University expects its Faculty and Staff Members to comply fully and promptly with the policy. The Office of the Executive Vice President for Academic Affairs is responsible for overseeing the implementation of the policy by all Schools including the processes and mechanisms for disclosure, review and oversight. It has ultimate responsibility for confirming compliance by all members in the West Lafayette and regional campuses.

The Office of the Executive Vice President for Academic Affairs will review all breaches of the disclosure process, including (a) failures to comply with such process, whether by virtue of a Faculty/Staff Member's refusal to respond or by his/her responding with incomplete or knowingly inaccurate information, (b) failures to remedy conflicts, and (c) failures to comply with a prescribed oversight plan. Such cases will be forwarded to the Standing Committee for review. Based on its review, the Committee will make recommendations to the Executive Vice President for Academic Affairs for further action. In all cases, Faculty and Staff Members will be provided the explicit opportunity to respond to the committee and Executive Vice President for Academic Affairs first in writing and after, if appropriate, in person to the issues raised in the course of such review. Any such written response will be appended to the Committee's report for review by the Executive Vice President for Academic Affairs.

Instances of deliberate breach of policy, including failure to file or knowingly file an incomplete, erroneous, or misleading disclosure form, violations of the guidelines, or failure to comply with prescribed monitoring procedures, will be adjudicated in accordance with applicable disciplinary policies and procedures of the University.

Approved Forms 32A for outside activities and Form 33 for leaves of absence (of ten or more days) will be retained in the individual's personnel file in accordance with University record retention guidelines. Personnel Services is responsible for maintaining this file which is retained permanently. Form 33A for leaves of absences of less than ten days is retained by the Department for seven (7) years. In accordance with Executive Memorandum No. C-1, a copy of the approved Conflict of Interest Disclosure Statement (Form C1) will be retained on file in the Treasurer's Office. Form 35 and the Memorandum of Understanding for category III conflicts will be retained on file in the Office of the Executive Vice President for Academic Affairs.

Guidelines of the National Science Foundation and regulations of the National Institute of Health require institutions participating in funded projects to have a written policy on conflicts of interest. The investigator, co-principal investigator, or any other person at the institution who is responsible for the design, conduct or reporting of the sponsored project must disclose significant financial interest that would reasonably appear to be directly and significantly affected by the sponsored activities. Investigators must submit all required financial disclosure at the time of proposal submission and update this information as new interests are obtained during the life of the project. In accordance with this regulation, potential conflicts will be disclosed on the Proposal Transmittal Check Sheet which will accompany each proposal. The Proposal Transmittal Check Sheet will be retained in accordance with Federal record retention requirements in the Division of Sponsored Programs project file.

The institution must certify compliance on each proposal. If a potential conflict of interest has been disclosed, then resolution strategies must be put in place before an award can be accepted. This requirement will be met by implementing the Memorandum of Understanding on oversight processes. The institution is also required to appoint an authority to sign each disclosure certification and be responsible for the policy. The Director of the Division of Sponsored Programs will act in this capacity since all information will be submitted with the proposals through DSP.

1. An "Associated Entity" of a Faculty or Staff member means any trust, organization or enterprise other than the university over which the Faculty or Staff Member, alone or together with his/her Family, exercises a controlling interest.
   
   
2. "Business" means any corporation, partnership, sole proprietorship, firm, franchise, association, organization, holding company, joint stock company, receivership, business or real estate trust, or any other legal entity organized for profit or charitable purposes, but excluding the university or any other entity controlled by, controlling, or under common control with the university.
   
   
3. "Contractual Relationship" refers to an agreement or an option to an agreement under which there is an exchange of goods, services, or money between or among the parties to the agreement.
   
   
4. "Executive Position" refers to any position which includes responsibilities for a material segment of the operation or management of a Business.
   
   
5. "Faculty Member" means any person possessing either a full or part-time academic, research scientist, or research professional appointment in the university.
   
   
6. "Staff Member" means all temporary or regular clerical/service and administrative/professional employees, and all graduate student employees.
   
   
7. The "Family" of a Faculty or Staff Member includes his/her spouse and dependent children.
   
   Abiding by the intent of Purdue's anti-nepotism policy (Executive Memorandum No. C-24), note that a potential conflict of interest may arise when the party holding the "Financial Interest" as defined in (h) below is related to the Faculty or Staff Member (in ways other than spouse and dependent children) as father, mother, brother, sister, uncle, aunt, son, daughter, niece, nephew, grandparents or by marriage. Financial Interests held by this party should be disclosed by employee to the best of his/her knowledge.
   
   
8. A "Financial Interest" is an interest in a Business consisting of any stock, stock option or similar ownership interest in such Business, but excluding (1) any interest arising solely by reason of investment in such Business by a mutual, pension, or other institutional investment fund over which the Faculty or Staff Member does not exercise control; or (2) receipt of, or the right or expectation to receive, any income from such Business, whether in the form of a fee (e.g., consulting), salary, allowance, forbearance, forgiveness, interest in real or personal property, dividend, royalty from the licensing of Technology, rent, capital gain, real or personal property, or any other form of compensation, or any combination thereof; or (3) financial interests in the Business if the value of the interests meet both of these conditions: (a) it does not exceed $10,000 and (b) it does not represent more than 5% ownership when aggregated for the Faculty or Staff member and his/her Family.
   
   
9. "Participate" means to be part of the described activity in any capacity, including but not limited to serving as the principal investigator, co-investigator, or research collaborator. The term is not intended to apply to individuals who provide primarily technical support or who are purely advisory, with no direct access to the data (e.g., control over its collection or analysis) unless they are in a position to influence the study's results or have privileged information as to the outcome.
   
   
10. "Sponsored Research" means research, training and instructional projects involving funds, materials, or other compensation from outside sources under agreements which contained any of the following:
    
    1. The agreement binds the University to a line of scholarly or scientific inquiry specified to a substantial level of detail. Such specificity may be indicated by a plan, by a stipulation of requirements for orderly testing validation of particular approaches, or by the designation of performance targets.
       
       
    2. A line-item budget is involved. A line-item budget details expense activity, function, or project period. The designation of overhead (or indirect costs) qualifies a budget as "line item."
       
       
    3. Financial reports are required.
       
       
    4. Unexpended funds must be returned to the sponsor at the conclusion of the project.
       
       
    5. The agreement provides for the disposition of either tangible or intangible properties which may result from the activity. Tangible properties include equipment, materials, records, technical reports, theses, or dissertations. Intangible properties include rights in data, copyrights, or inventions.
       
       
11. "Technology" means invention, procedure, process, copyright, know-how and materials intended for use in the private sector.

Steven C. Beering
President