University of Pittsburgh Conflict of Interest Office A Partner in Promoting Integrity in Research, T

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University of Pittsburgh Conflict of
Interest OfficeA Partner in Promoting Integrity
in Research, Teaching, and Administration
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Attention University Shoppers Are There
Purchasing Procurement COIs in Your Shopping
Cart?

• -----------------------------------
• Presented by
• David T. Wehrle, CPA, CIA, CFE
• Director, COI Office
• University of Pittsburgh
• September 22, 2006
• --------------------------------------------------
  -----

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P P COI Definition

• Any transaction in which an employee has an
  undisclosed economic or personal interest that
  may adversely affect the University
• Purchasing and Procurement

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Examples of PP COIs

• Example 1
• Dr. William Monardo, faculty member/ researcher
• President/owner of Laboratory Solutions, Inc.
  (LSI)
• Dr. Monardos research group purchases scientific
  supplies from LSI.

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Examples of PP COIs (contd)

• Example 2
• Christine Magnani, departmental administrator at
  the University
• Mr. Vito Magnani, her husband, received 30,000
  in remuneration last year from Marketing Experts,
  Inc. (MEI) for whom he is a consultant.
• Ms. Magnani engages MEI to design a brochure for
  a continuing education program at the University
  cost is 5,500.

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Examples of PP COIs (contd)

• Example 3
• Jane Smith, financial administrator in a
  University department
• Mr. Samson Smith, her husband, is owner of Office
  Experts, Inc. (OEI), which sells office furniture
  and supplies.
• Ms. Smith, procurement card holder, buys new
  office furniture exclusively from OEI.

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Examples of PP COIs (contd)

• Example 4
• The University was awarded a federal grant on
  which Dr. Aryeh Samuel serves as PI.
• He subcontracted a portion of the work to
  Scanware for installation of eye-movement
  analysis software.
• Dr. Samuel has an equity interest in the vendor.

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• Thursday, April 14, 2005Former Professor Pleads
  Guilty to Embezzling Nearly 1-Million in Federal
  Grants
• Thursday, April 21, 2005George Washington U. to
  Pay 1.8-Million to Avoid Prosecution in
  Embezzlement Case

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Potential COI Issues

• Product or service may be inferior
• Price may be too high
• May give actual or perceived improper
  preferential treatment to vendors
• May violate terms of research grants and
  contracts (including failure to disclose COI) and
  federal regulations

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Federal Guidance

• Federal regulations require solid system of
  internal controls over purchasing activities in
  order to
• Ensure lowest total cost of ownership
• Avoid conflict of interest
• Protect funding agencys and taxpayers
  investment in research
• University of Pittsburgh is voluntarily
  implementing Sarbanes-Oxley requirements
  regarding internal purchasing controls.

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Federal Guidance (contd)

• Federal Circular A-21
• Addresses fraud and COIs that improperly benefit
  the buyer to the detriment of the University and
  the federal government

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Federal Guidance (contd)

• Federal Circular A-110
• Requires a code of conduct covering conflicts of
  interest
• Encourages competition as a means of
  avoiding/managing conflicts

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Federal Guidance (contd)

• Federal Acquisition Regulations (FARs)
• Address procurement integrity
• Require full and open competition wherever
  possible

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Identification of Conflicts

• Filing of electronic COI disclosure forms by
  Purchasing Department staff, procurement card
  users, and others in a position to make, direct,
  or materially influence business decisions
• Querying of COI database by Office of Research
  and Purchasing Department (via administrative
  company search feature) for
• Proposed enterprise-wide contracts
• Directed/Sole Source requests
• Subcontracts
• Disclosing to Purchasing Department of trustees
  potential conflicts by Office of General Counsel

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Identification of Conflicts (contd)

• Monthly report by COI Office to Purchasing
  Department and Office of Research of companies in
  which employees are known to have a financial
  interest (e.g., start-up companies)
• Membership on COI Committee of Director of Office
  of Research and Associate Vice Chancellor for
  Financial Operations

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Management Techniques

• Prohibition against gifts, favors, entertainment
• Professional central buyers sign very restrictive
  Purchasing Ethics Policy
• Prior review, approval of purchase by supervisor
• Disclosure of potential COI in proposal
• Prior express written approval of funding agency
• Recusal from negotiation of costs in favor of
  Purchasing Department
• For subcontracts requiring a cost-reimbursable
  contract with vendor
• adopted from National Association of Educational
  Buyers

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Management Techniques (contd)

• Required use of contracted suppliers
• Categories of suppliers
• Appliances
• Audio/visual
• Cell phones, Blackberries
• Communications pagers
• Computer software, supplies
• Scientific pharmaceutical, medical chemicals,
  equipment, or supplies

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Management Techniques (contd)

• Categories of suppliers
• Controlled substances
• Copiers
• Equipment maintenance
• Facilities management supplies
• Furniture, furnishings, office supplies
• Gases
• Photographic equipment, supplies

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Management Techniques (contd)

• Competitive Bidding
• A University-contracted supplier is not available
  (i.e., for purchase of unique products or
  services)
• The purchase is valued at 5,000 or more
• Requires review and approval of transaction by
  Purchasing Department

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Management Techniques (contd)

• Directed/Sole Source Justification
• Required when competitive bidding is not possible
  or necessary
• Request must be submitted in writing and approved
  by department chair or dean
• Requires review and approval of transaction by
  Purchasing Department

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Procurement Policies

• Please see our COI Web site http//www.rcco.pitt.
  edu/coi
• 05-02-02 Conflict of Interest and Procurement
  Relationships
• 05-02-03 Purchasing Code of Ethics
• 05-02-05 Department Purchasing Authority and
  Responsibilities
• 05-02-15 Required Use of Contracted Suppliers

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Procurement Policies (contd)

• 05-02-16 Competitive Bidding
• 05-02-17 Directed or Sole Source Purchase
  Justification
• 05-02-18 Supplier Code of Conduct
• 07-05-02 Conflict of InterestDesignated
  Administrators and Staff
• 07-05-03 Conflict of Interest for University of
  Pittsburgh Employees

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Training the University Community on PP COIs

• Annual memo from the provost and the executive
  vice chancellor
• P P case studies on COI Web site
• Tailored presentations to deans, department
  chairs, administrators (main and regional
  campuses)

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Contact Information

• Jerome L. Rosenberg PhD/Chair, COI Committee
• 412-624-3007
• jrosenb_at_pitt.edu
• David T. Wehrle
• 412-383-1774
• wehrledt_at_upmc.edu
• Khrys X. Myrddin/Compliance Coordinator, COI
  Office
• 412-383-2828
• myrddink_at_upmc.edu
• Hannelore N. Rogers, MA/Coordinator, COI Office
• 412-383-1968
• rogershn_at_upmc.edu