Procedures for Compliance with the Virginia State and Local Government Conflict of Interest Act

Policy Memorandum No. 122

Recommended by the Commission on Research
Approved by University Council: January 20, 1992
Approved by the President: January 20, 1992
Effective: Immediately

The University Council, on recommendation of the Commission on Research, unanimously approved the PROCEDURES FOR COMPLIANCE WITH THE VIRGINIA STATE AND LOCAL GOVERNMENT CONFLICT OF INTEREST ACT (SECTION 2.1-639.6).

Following is the text of the resolution as adopted by Council.

WHEREAS, the 1991 Virginia General Assembly amended the Virginia State and Local Government Conflict of Interests Act, and

WHEREAS, said amendment permits an employee of a state institution of higher education to hold a personal interest in a business which has a research and development contract with the university if the employee's personal interest is disclosed to and approved by the University before the contract is entered into, and

WHEREAS, said amendment requires the institution to establish a formal policy regarding such contracts, and that policy be approved by the State Council of Higher Education, and

WHEREAS, the Commission on Research has developed the required Policy and Procedures for such disclosures, by the State Council of Higher Education,

THEREFORE, LET IT BE RESOLVED THAT the following PROCEDURES FOR COMPLIANCE WITH THE VIRGINIA STATE AND LOCAL GOVERNMENT CONFLICT OF INTEREST ACT (SECTION 2.1-639.6) be implemented, effective immediately.

Procedures for Compliance with the
Virginia State and Local Government Conflict of Interest Act
(Section 2.1-639.6)

PURPOSE:

The purpose of this Procedure is to provide a framework against which the propriety and advisability of a proposed contract for research and development can be monitored. The Guidelines apply to all employees of the university.

CURRENT LAW: A prohibited conflict of interest arises when a company in which an employee has a personal interest contracts directly or through a subcontract with a state institution of higher education. A personal interest is defined as: owning more than 3 percent of the equity in the company or having a commercial arrangement worth more than $10,000 annually.

The law exempts certain categories of contracts as described in the 1991 amendment (available in the Office of the General Counsel). In particular for the purposes of this policy, research and development contracts are exempted provided that the disclosure and approval requirements of this policy are followed. Typical research and development contracts covered by this policy are: research agreements through the Office of Sponsored Programs and licensing agreements from the University or an affiliated corporation.

PROCEDURE: An employee may be exempt from the prohibition of the current law if: (1) Approval in writing from the Vice Provost for Research is obtained before engaging in a contract for research and development between the university and a business in which the employee or the employee's immediate family has a personal interest. (Immediate family means a (i) spouse and (ii) any other person residing in the same household as the employee, who is a dependent of the employee or of whom the employee is a dependent.); and (2) A disclosure statement is filed with the Vice Provost for Research and the Secretary of the Commonwealth of Virginia in the form required by Section 2.1-639.12-15 of the Virginia Code.

APPROVAL PROCESS: Prior to the University signing the proposed research and development contract, the employee shall write his/her department head to disclose this personal interest in the company. The disclosure shall be a letter or memorandum accompanying the research proposal outlining the employee's personal interest and the benefits to be gained by the University from the proposed research and development contract. All employees with a personal interest who stand to gain benefits as a university employee from the proposed contract must disclose that personal interest. It is the responsibility of the Principal Investigator to inform all such employees and advise them of the disclosure requirements. Appropriate questions will be added to the Proposal Internal Approval Form to alert faculty to the disclosure requirement.

If the Department Head is satisfied that the proposed research and development contract will maintain/contribute to the character and scope of the university's research and educational programs and will not adversely affect the performance of the employee, approval shall be given by endorsing the disclosure statement and signing the Proposal Internal Approval Form. The College Dean and the Vice Provost for Research (or their designees) shall approve the request in like manner.

The Department Head is responsible for assuring that the original conditions of approval are met throughout the life of the contract. Should the Department Head determine that the research and development contract in which an employee has a personal interest has not maintained/contributed to the character and scope of the University's research and educational programs or has adversely affected the academic performance of that employee, the Department Head may initiate corrective action.

The law continues to define as an impermissible personal interest those situations in which an employee enters into a commercial arrangement with a company if the university currently has a signed research and development contract with that company. An employee contemplating entering into such an arrangement should seek advice from the University General Counsel.

If the research proposal and personal interest disclosure statement are approved, the employee will be informed in writing by the Director of the Office of Sponsored Programs of the requirement to file immediately all applicable forms in the Statement of Economic Interests. The completed forms will be returned to and held by the Office of Sponsored Programs until the disposition of the proposal is known. If a contract is signed, the Director of the Office of Sponsored Programs will send the completed forms to the Associate Vice President for Administrative and Personnel Services for forwarding to the Secretary of the Commonwealth. The Statement of Economic Interests must be completed annually thereafter on or before January 15 for the duration of the contract. If the proposal does not result in an award, the completed forms will be returned to the employee.

If the proposed research and development contract is with Virginia Tech Intellectual Properties, Inc., the Virginia Center for Innovative Technology, or other state/university related corporations for a licensing agreement for an intellectual property, the same process and the same approvals are required.

APPEAL PROCESS: If approval is denied at the Department, College or University, the employee may appeal to the Conflict of Interest Review Committee, a standing committee of the Commission on Research. The 5 member committee shall be elected annually by the Commission from its membership. There shall be no limitation on the number of terms served. The committee shall elect its own chair.

The committee will hear the appeal from the employee and the reasons for denial by the administrator. The committee may then call other witnesses and seek other information as deemed desirable. The committee shall make a recommendation to the Provost. The Provost will render the final decision.

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President's Policy Memorandum

URL: http://purl.vt.edu/vtdocs/policies/ppm122