The Honorable Tommy Thompson
Secretary
Department of Health and Human Services
200 Independence Avenue, SW
Washington, D.C. 20201

Dear Secretary Thompson:

As part of its oversight of the ethics programs at the National Institutes of Health (NIH), the Committee has identified a serious concern about the NIH's use of special authority under Title 42 of the Public Health Service Act. The special authority, 42 U.S.C. 209(f) "Special Consultants," provides that under certain circumstances, special consultants may be employed "to assist and advise in the operations of the [Public Health] Service" without regard to civil service laws.

It appears that since 2000 the NIH has been using 42 U.S.C. 209(f) as a mechanism to compensate some NIH Institute Directors and other senior NIH officials at annual salary rates of up to $225,000. One result from using this mechanism is that these NIH officials employed under 42 U.S.C. 209(f) are not required under the Ethics in Government Act to file Public Financial Disclosure Reports (SF 278s), as the Congress and the public have recently learned. I note that on January 12, 2004, the HHS Associate General Counsel for Ethics requested a determination from the Office of Ethics to require these certain employees to file Public Financial Disclosure Reports. In support of this request, the HHS Associate General Counsel for Ethics stated that the roles of these NIH officials "carry particularly high levels of responsibility." (Attachment One)

However, closer scrutiny of 42 U.S.C. 209(f) yields an additional concern, beyond the lack of public financial disclosure. My fundamental concern is that 42 U.S.C. 209(f) on its face appears to be a provision for hiring special consultants who have limited responsibilities, not as authority for employing NIH Institute Directors and other high-level NIH officials, who occupy continuing, full-time positions and exercise broad-based levels of decision-making responsibility (such as making final decisions on substantive policies or functions in the NIH chain of command) considered to be inherently governmental. If this concern is correct, it would mean that high-level NIH officials compensated under 42 U.S.C. 209(f) lack the legal authority to exercise their inherently government functions and are improperly holding themselves out as NIH Institute Directors or other high-level titles when by law they are only special-consultant employees.

Almost two months ago, the Committee staff contacted the HHS Office of General Counsel (OGC) raising this concern and asked for background information that would support the use of 42 U.S.C. 209(f) to compensate high-level NIH officials. Last week, HHS OGC staff advised the Committee staff of the following:

1. HHS had not yet found any written, legal opinion supporting the use of 42 U.S.C. 209(f) as a mechanism to hire and compensate NIH Institute Directors, and other high-level NIH officials.

2. HHS is continuing its search for historical evidence supporting the use of 42 U.S.C. 209(f) as a mechanism to hire and compensate NIH Institute Directors, and other high-level NIH officials. At this time, HHS did not report any such historical evidence to the Committee staff.

3. There is no current employee at HHS OGC who has first-hand knowledge about any oral advice given to NIH that led to the use of 42 U.S.C. 209(f) to compensate high-level NIH officials. NIH was verbally advised by an HHS attorney, who has since retired from government service.

4. Even though it lacks a written legal opinion, HHS OGC believes that 42 U.S.C. 209(f) can be permissibly interpreted as an appropriate authority for hiring and compensating NIH Institute Directors, and other high-level NIH officials because such authority can be ascertained through inference. HHS OGC stated that it is a permissible interpretation of "assist" and "advice" that such consultants have authority beyond mere advice, but also managerial authority. The statutory provision in some form appeared in the 1930's and was originally intended to assist the National Cancer Institute (NCI), giving power to NCI to retain the services of employees outside 5 U.S.C. 3109, which relates to the appointment of special experts and includes a limitation that experts hired under this authority cannot perform administrative and supervisory work. Because 42 U.S.C. 209(f) lacks such a limitation, it can be inferred that consultants hired under this provision can perform such administrative and supervisory work. In addition, the use of the word "appointed" indicates that these consultants are not contractors since contractors receive awards not appointments.

Notwithstanding the views expressed by HHS OGC to Committee staff, my concerns about the proper use of 42 U.S.C. 209(f) remain. First, HHS documents seem to support the understanding that 42 U.S.C. 209(f) is for limited scientific appointments, not an alternative compensation scheme that permits high-level NIH officials to continue exercising broad-based, inherently governmental functions while being paid significantly higher salaries than if they had remained in the federal civil service system. For example, I note that HHS Personnel Instruction 304-1 (transmitted May 3, 1996), "Appointment of Experts and Consultants," references 42 U.S.C. 209(f) as a specific statutory authority for the Public Health Service under the section 304-1-20, Legal and Regulatory Authorities. Section 304-1-30, "Policies for Employment of Experts and Consultants," states:

"When expert and consultant appointments are made under one of the authorities listed in 304-1-20, the services to be performed must be ones that are properly covered by those authorities; the persons employed must be experts or consultants by definition; the needed services must be of such a nature that they can be met by an appointment of one year or less - unless the appointment is made under a statutory authority permitting a longer term.

Experts and consultants will not be employed in HHS to fill positions that are subject to competitive civil service examinations, position classification, and the General Schedule pay rates, or in cases where regular employees are available and have the skills and knowledge to perform the work. Nor will consulting services be obtained to bypass or undermine personnel ceilings, pay limitations, or civil service appointment procedures."

The section further states:

"Neither a consultant nor an expert may be assigned to perform the duties of a continuing, full-time position. While experts may serve as team leaders or directors of projects for which they were hired, neither experts nor consultants may make final decisions on substantive policies or functions in the agency chain of command." (Emphasis added).

On its face, it would appear that past written HHS policy and practice prohibited the application of 42 U.S.C. 209(f) to high-level NIH employees who "make final decisions on substantive policies or functions in the agency chain of command." I note that on November 1, 1999 the NIH Policy Manual providing guidance on Instruction 304-1 released new instructions about the employment of NIH, NCI and NHLBI Special Experts. This document discusses Title 42 special-expert appointment authorities, but does not mention 42 U.S.C. 209(f) as a specific statutory authority.

Second, the preliminary view of a specialist in American National Government, Government and Finance Division, Congressional Research Service (CRS) substantiates my concern. The CRS specialist examined the text of 42 U.S.C. 209(f) and noted that the use of consultants is generally limited to activities that are not inherently governmental. The CRS specialist stated: "If one were actually administering a program in which there was authority for such things as hiring and firing of personnel, having decision-making authority related to the operation of the agencies and other such activities, that would be considered to be inherently governmental." In addition, the CRS specialist looked at the 1996 and 2000 Plum Books published by the House Committee on Government Reform and Oversight and the Senate Committee on Governmental Affairs, respectively. The Plum Book lists over 7,000 Federal civil service leadership and support positions in the legislative and executive branches of the Federal government that may be subject to noncompetitive appointment, nationwide. In the 1996 volumes most of the directors of the institutes are listed as career incumbents paid under Senior Executive Service (SES) schedules, with the primary exception of the NCI Director, who is appointed under a special authority. In the 2000 edition, with the exception of the NCI director and one vacant position, there are no listings for directors of the institutes. They apparently were taken off the rolls of positions available to fill in the federal system. The CRS specialist concluded that on the face of it, it would support my concern that the positions are being filled by persons other than federal staff.

Finally, the application of Title 42 to high-level NIH decisionmakers has led to the anomalous result under current ethics law and regulation that these officials-some who earn more than the Vice-President of the United States and exercise power over the direction of millions and perhaps even billions of dollars of biomedical research funding-are not required to file public financial disclosure reports. The available information indicates that the practice of compensating high-level NIH officials appears to have started in 2000, well after the enactment of the Ethics in Government Act and the promulgation of federal ethics rules. According to HHS OGC, the statutory provision, 42 U.S.C. 209(f), has been in existence since the 1930's in one form or another, well before the Ethics in Government Act. There is no available information that the Ethics in Government Act was intended to provide a Title 42 loophole. There is reason to be dubious about the interpretation of Title 42 applicability to high-level NIH officials existing at the time of the passage of the Ethics in Government Act and that the anomalous result was intended. In fact, the anomalous result of applying Title 42 to high-level NIH officials suggests that current Title 42 interpretation may not be correct since it is an uneasy fit with the legal structure of federal ethics laws and regulations.

I note that it appears the OGC interpretation of Title 42 and NIH practice of using Title 42 U.S.C. 209(f) for high-level NIH employees predated your leadership of the Department. Under your leadership, I am aware that the Department found and took action with regard to about 70 non-scientific employees at NIH who were improperly converted from the civil service to higher-payment appointments under Title 42 (but not under 42 U.S.C. 209(f)). I am appreciative of your concern to these issues and look forward to working with you to resolve my concern.

Given our concerns, pursuant to Rules X and XI of the U.S. House of Representatives, please provide the following by February 20, 2004:

1. Does HHS believe that 42 U.S.C. 209(f) can be permissibly interpreted as an appropriate authority for hiring and compensating NIH Institute Directors, and other high-level NIH officials?

2. When did the practice of applying 42 U.S.C. 209(f) to NIH Institute Directors start? Who authorized it? What was the rationale for the authorization?

3. Are all appointments made under 42 U.S.C. 209(f) affected in any way by 5 U.S.C. 3109? If so, are these appointments in compliance with 5 U.S.C. 3109?

4. All records since January 1, 1999 relating to the use of 42 U.S.C. 209 (f).

5. All records relating to the use of 42 U.S.C. 209(f) as a mechanism to hire and compensate NIH Institute Directors, and other high-level NIH officials.

6. Identify all HHS OGC employees who provided any advice given to NIH that led to the use of 42 U.S.C. 209(f) to compensate high-level NIH officials.

7. Please provide the number of Title 42 hires at NIH (with a breakdown for each Institute or Center) for each fiscal year starting with FY 2000.

Please note that, for the purpose of responding to these requests, the terms "records" and "relating" should be interpreted in accordance with the attachment to this letter.

Thank you for your assistance. If you have any questions, please contact Alan Slobodin of the Majority Committee staff at (202) 225-2927.

Sincerely,

James C. Greenwood
Chairman, Subcommittee on Oversight and Investigations

Cc:

Peter Deutsch, Ranking Member, Subcommittee on Oversight and Investigations
Elias Zerhouni, Director, National Institutes of Health (NIH)