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Executive Summary

FDA employee conflict-of-interest requirements should be more clearly explained and more carefully enforced, HHS' lnspector General concluded in a report on the agency's use of consultant services of John Norris before he joined the agency as deputy commissioner. In the report, Inspector General Richard Kusserow recommended that the FDA Staff Manual "incorporate an explanation of the requirements of federal conflict-of-interest law" and that the agency "establish and maintain effective internal controls to assure that these requirements are met." The Aug. 23 audit report culminated a two-month review of the manner in which FDA procured the consulting services of Norris & Norris and its executive John Norris before he was named deputy commissioner. Regarding the question of conflict of interest when Norris was simultaneously a special govt. employee and an agent of his firm, the 10-page memorandum states that the HHS Ethics Official advised the Inspector General: "It is clear that there was in this case no intent to violate the law and that whatever technical violation may have occurred, if any, was induced by FDA employees' failure to fully understand the statutory prohibition in question and the definition of a special govt. employee." Similarly, "an asst. U.S. attorney advised" Kusserow that "any violation of these ]conflictof-interest[ sections would have been unintentional and not worthy of consideration for prosecution," according to the report. The Inspector General's report on Norris reportedly is one of the last things holding up FDA Com. Young's promotion to HHS Asst. Secty. for Health. The required FBI clearance of Young could not be completed until the HHS Inspector General's conclusions about the affair had been submitted. The FDA staff's misunderstanding of the law involved the number of days Norris was paid as a consultant, the report explains. "FDA was careful not to pay Mr. Norris," who was hired at Young's request, "for more than 60 days, based on the understanding of the FDA administrative staff that to do so would have prevented Mr. Norris from obtaining contracts for a 365-day period." Consequently, Norris provided service on a pro Bono, or uncompensated, basis after the 60-day limit. However, the Inspector General asserted, agency staff "did not realize that services provided. . . without compensation would subject ]Norris[ to the restriction." The report therefore recommends that FDA "advise current ]special govt. employees[ that uncompensated days as well as compensated days should be considered in determining the 60-day limitation." The Inspector General's audit was requested by Rep. Weiss (D-N.Y.) in June. Weiss was particularly interested in the fact that Norris was retroactively reimbursed in a contract awarded in March 1985 for services provided during the precedIng December ("The Pink Sheet" June 24, p. 4). The memo reports that "although Mr. Norris and FDA officials stated that work was performed relative to the purchase orders ]contracts[ but prior to their award, they could not document the extent of that work." The lnspector General's "review of departmental regulations did not disclose specific provisions prohibiting Norris & Norris from working on the purchase orders prior to award." However, the report continues, "a department procurement specialist" maintained "that it would have been desirable for FDA to have adjusted the statement of work to show that work had already been performed." The report includes several recommendations with regard to FDA's administrative controls in awarding consulting contracts. The justification for awarding noncompetitive contracts to Norris & Norris "did not include compelling and convincing reasons" for eliminating competitive awards but, instead, was based on "the commissioner's specific request for the services of Mr. Norris' firm," the report notes. "We believe the commissioner's opinions should have been supported by objective evidence."

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