OAKES, Circuit Judge:
In this case — one involving a questionable grant of a motion to dismiss — the district court imposed Rule 11 sanctions on the plaintiff or the plaintiff’s attorney apparently for failure to make “reasonable inquiry” into the action’s jurisdictional basis before filing the complaint. Purporting to follow Eastway Construction Corp. v. City of New York, 762 F.2d 243 (2d Cir.1985), the district court ordered payment of $4,000 in attorneys’ fees and $12 in expenses to the defendants, without stating whether the sanctions were imposed on client, counsel, or both. We reverse.
BACKGROUND
Plaintiff, Susan Mary Kamen, sought an injunction and damages under section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 (1982), and the New York Human Rights Law, N.Y.Exec.Law § 296 (McKin[1008]*1008ney 1982 & Supp.1986) from her employer, AT & T Communications, Inc. (ATCOM),1 and two of her supervisors. The complaint alleged that plaintiff had a life-long history of severe tobacco smoke hypersensitivity and was a protected person within both section 7(7)(B) of the Rehabilitation Act, 29 U.S.C. § 706(7)(B) (1982), and the N.Y. Exec.Law § 292(21) (McKinney Supp.1986). See Vickers v. Veterans Administration, 549 F.Supp. 85, 86-87 (W.D.Wash.1982) (plaintiff who is hypersensitive to tobacco smoke is “handicapped person” as defined in 29 U.S.C. § 706(7)(B)). Plaintiff allegedly had numerous reactions when exposed to smoke, including difficulty in breathing, severe pain and discomfort, faintness, nausea, and headaches, but in no other respect did her medical condition affect her ability to perform her job. According to the complaint, when Kamen, who had worked for the American Telephone & Telegraph Company (AT & T) or its recently formed subsidiary ATCOM for over twelve years, was assigned to a new supervisor, co-defendant Patricia McDonald, and the new supervisor (breaking with the practice of Kamen’s previous supervisors) refused to provide her with a smoke-free environment, defendants violated the Rehabilitation Act and the New York Human Rights Law. The complaint also alleges that a violation of these laws occurred when McDonald suspended plaintiff for two days in February, 1985, for “insubordination” because Ms. Kamen had sought medical assistance from company physicians.
In order for the employer ATCOM to be subject to the Rehabilitation Act, it must have received “Federal financial assistance.” 29 U.S.C. § 794 (1982).2 Paragraph 6 of the complaint alleged on information and belief that “defendant AT & T is a recipient of federal funds.” After the complaint was filed, but before filing an answer, an ATCOM attorney telephoned plaintiffs counsel twice to inform him that ATCOM received no “Federal financial assistance” within the meaning of section 504, and insisted that plaintiff voluntarily discontinue her action. On July 9, 1985, the same day as the second telephone call, counsel for ATCOM hand-delivered a letter to plaintiff's counsel, asserting for a third time that ATCOM received “no ‘federal financial assistance,’ ” and threatening that if plaintiff did not voluntarily dismiss her case the defendants would seek sanctions, including attorneys’ fees and costs incurred “in defending this improperly filed action.” On July 10, 1985, plaintiff’s counsel sent a letter to ATCOM’s counsel in which he pointed out that he “would be remiss in advising a client to dismiss her case against AT & T Communications, Inc. based solely upon defendants’ counsel’s representation. ...” Plaintiff’s counsel indicated that he had nothing before him to permit him to determine that the parties agreed upon the meaning of federal financial assistance or, assuming agreement, to verify ATCOM’s representation that it received none. Accordingly, he requested ATCOM to provide him with a statement of “every grant, loan, or contract, or any other agreement by which federal funds or services of federal personnel are received by AT & T Communications, Inc.,” including the purpose of [1009]*1009the grant, loan or contract, dollar amount and government agency involved. He also sought copies of government documents evidencing the grant, loan or contract as well as information as to any federal government personnel on loan to ATCOM. Counsel’s letter then offered “unquestionably and without hesitation” to dismiss the instant action if the information provided showed, upon analysis, that ATCOM did not receive federal financial assistance. Counsel’s letter also noted that in light of AT & T’s history of accommodating plaintiff’s sensitivity to smoke during most of her twelve years of employment, “there is ample room upon which we could simply and swiftly resolve the merits of this small, but important dispute.” Counsel received a telephone call from defendants’ counsel and again explained that the request for injunctive relief could be simply resolved by permitting plaintiff to work as she had previously in a no smoking area and by obtaining co-workers’ consent not to smoke during meetings attended by plaintiff. A few days later, on July 22, 1985, defendants filed their motion for dismissal for lack of subject matter jurisdiction and for failure to state a claim, Fed.R.Civ.P. 12(b)(1) and (6), and for sanctions.
The motion for dismissal was supported by two affidavits, one by defendants’ counsel and one by an Assistant Secretary and General Attorney of ATCOM. Defendants’ counsel’s affidavit indicated on its face that it was derived solely from hearsay.3 The affidavit of ATCOM’s Assistant Secretary and General Attorney, after describing defendants’ business and summarizing the lawsuit, contained the single conclusory assertion: “However, AT & T receives no ‘federal financial assistance’ as that term is defined above. It is not, therefore, subject to suit under Section 504.” The United States District Court for the Southern District of New York, Gerard L. Goettel, Judge, granted dismissal for lack of jurisdiction despite plaintiff’s arguments that the affidavits were inadmissible hearsay and conclusory and that, in any event, since material on the matter was exclusively or largely in defendants’ control, plaintiff should be permitted to conduct discovery on the question whether ATCOM received federal financial assistance.
In granting the dismissal the court stated that the 1983 amendment to Rule 11 requires the plaintiff’s counsel to have a good faith belief in the allegations made in the complaint and to have made a reasonable inquiry into whether the facts support them. The court declared that nothing in plaintiff’s opposing papers indicated that such an inquiry was made and added that “[i]n the absence of any such proof, it is clear that there is no sufficient allegation of a claim of receipt of federal financial assistance as contrasted to possibly federal funds received under contracts.” Thus, Rule 11 was used as a springboard to decide the Rule 12(b) motion and then the grant of that motion, from which no appeal was taken, was used subsequently as the basis for the imposition of sanctions.4 In opposing the imposition of sanctions, counsel for the plaintiff filed an affirmation stating that his client had informed him that ATCOM was organized in several “regions,” in one of which she was employed. [1010]*1010Another region was called the Government Communications Corporation (GCC). Counsel stated that his client had advised him that GCC was divided into two parts, military and non-military, the former of which was involved in research and development of military communications equipment. She believed that GCC was a recipient not only of federal grants, but also of services of federal personnel, both of which, plaintiffs counsel noted, qualify as federal financial assistance. Counsel maintained that, because GCC and plaintiffs region were jointly managed and interrelated parts of ATCOM, all of ATCOM, or at least plaintiffs region, was arguably subject to the requirements of section 504. The district court found this reasoning “very attenuated.” Without receiving any factual information on the matter, or without apparent further investigation, the court asserted, “[mjilitary development programs are hardly ‘federal financial assistance’ as that term is commonly understood. If such programs could be so construed, anyone doing business with the federal government (and that includes most corporations of any size) would have to be considered as receiving federal financial assistance.” Purporting to follow Eastway, the district court then found that “[t]his case clearly falls within the intendment of the revised rule [11]” and awarded defendants approximately two-thirds of the sums requested, namely $4,000 attorneys’ fees and $12 costs, noting that “it would seem that such an early and relatively easy termination of an unjustified action could have been obtained, even by motion, at a lesser expense” than that sought by defendants. Interestingly, the affidavit submitted by counsel for defendants seeking attorneys’ fees indicated that on July 12, 1985, counsel was spending time doing “additional research regarding issue of whether AT & T receives federal financial assistance and other related issues,” three days after demand had already been made on plaintiff’s attorney to dismiss Ms. Kamen’s suit.
DISCUSSION
Preliminarily, we note that there is no suggestion that the Rule 11 sanction here was imposed for bad faith conduct. Therefore, we have no need to consider whether Rule 11 authorizes sanctions for subjective bad faith, and we examine only whether plaintiff’s counsel met Rule ll’s objective standard of reasonable inquiry into the factual and legal soundness of “[e]very pleading, motion, and other paper” signed by the attorney in an action, see Eastway, 762 F.2d at 253-54. The sanction was not imposed under 28 U.S.C. § 1927, which authorizes monetary sanctions against any attorney who “multiplies the proceedings in any case unreasonably and vexatiously,” a standard held by this court to require a “clear showing of bad faith,” State of West Virginia v. Chas. Pfizer & Co., 440 F.2d 1079, 1092 (2d Cir.), cert. denied, 404 U.S. 871, 92 S.Ct. 81, 30 L.Ed. 115 (1971), and held elsewhere to require “a finding that an attorney has acted ‘recklessly or in bad faith.’ ” United States v. Associated Convalescent Enterprises, Inc., 766 F.2d 1342, 1346 (9th Cir.1985). Since bad faith is not claimed to be present here, section 1927 could have no application.
We also note that the court below and the parties on appeal have treated the signing of the complaint as the occasion for the alleged Rule 11 violation. We approach the case in the same manner and, therefore, express no view on whether sanctions might be imposed under Rule 11 for an attorney’s failure to correct a “pleading, motion, or other paper” which, at the time of signing, he reasonably believed to be in compliance, but which, from information acquired at a later date, he could no longer reasonably view as well grounded in fact or law. We point out, however, that to the extent, if any, that Judge Goettel based his decision on ATCOM’s later representations that it received no federal financial assistance, plaintiff’s counsel’s efforts to obtain verification from ATCOM in exchange for a promise to dismiss the action if ATCOM’s assertions proved correct cannot be considered objectively unreasonable.
Under Rule 12(b), a “speaking” motion, i.e., a motion that includes eviden-[1011]*1011tiary matters outside the pleadings, is properly converted to a Rule 56 motion only when it is made under Rule 12(b)(6): failure to state a claim. However, when, as here, subject matter jurisdiction is challenged under Rule 12(b)(1), evidentiary matter may be presented by affidavit or otherwise. See Exchange National Bank of Chicago v. Touche Ross & Co., 544 F.2d 1126, 1130-31 (2d Cir.1976). While a 12(b)(1) motion cannot be converted into a Rule 56 motion, Rule 56 is relevant to the jurisdictional challenge in that the body of decisions under Rule 56 offers guidelines in considering evidence submitted outside the pleadings. Id. at 1131; Gordon v. National Youth Work Alliance, 675 F.2d 356, 360-61 (D.C.Cir.1982). Moreover, in resolving claims that they lack jurisdiction, courts have acted in a fashion suggestive of 56(f): they have required that the party asserting jurisdiction be permitted discovery of facts demonstrating jurisdiction, at least where the facts are peculiarly within the knowledge of the opposing party. See, e.g., Investment Properties International, Ltd. v. IOS, Ltd., 459 F.2d 705, 707-08 (2d Cir.1972); Williamson v. Tucker, 645 F.2d 404, 414 (5th Cir.), cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70 L.Ed.2d 212 (1981); Timberlane Lumber Co. v. Bank of America, 574 F.Supp. 1453, 1461 (N.D.Cal.1983), aff'd, 749 F.2d 1378 (9th Cir.1984), cert. denied, — U.S. —, 105 S.Ct. 3514, 87 L.Ed.2d 643 (1985). Similarly, courts have required that evidence submitted outside the pleadings be “competent.” See Peay v. Morton, 571 F.Supp. 108, 110 (M.D.Tenn.1983); Miller v. Indiana Hospital, 562 F.Supp. 1259, 1267 n. 11 (W.D.Pa.1988).
The affidavit from defendants’ attorney submitted in support of the motion for dismissal was entirely insufficient as such since the crucial statement — that AT-COM receives no federal financial assistance — was not based upon personal knowledge. Rule 56(e) specifically requires that affidavits in summary judgment motions be based upon personal knowledge. Attorneys’ affidavits not based upon personal knowledge have been held not to comply with Rule 56(e) at least since Automatic Radio Manufacturing Co. v. Hazeltine Research, Inc., 339 U.S. 827, 831, 70 S.Ct. 894, 896, 94 L.Ed. 1312 (1950), a position this court has frequently reiterated, see, e.g., In re Teltronics Services, Inc., 762 F.2d 185, 192 (2d Cir.1985); Wyler v. United States, 725 F.2d 156, 160 (2d Cir.1983). The conclusory allegation set forth in the affidavit of the Assistant Secretary and General Attorney is similarly insufficient under Rule 56. See, e.g., Luckett v. Bethlehem Steel Corp., 618 F.2d 1373, 1380 n. 7 (10th Cir.1980); cf. Flaherty v. Coughlin, 713 F.2d 10, 13 (2d Cir.1983) (party opposing summary judgment cannot rely on con-clusory statement). Furthermore, that affidavit contains no information to indicate a basis in personal knowledge for the affi-ant’s conclusory statement. In accord with principles of fundamental fairness and by analogy to Rule 56(e) and (f), it was improper for the district court, in ruling on the 12(b)(1) motion, to have considered the conclusory and hearsay statements contained in the affidavits submitted by defendants, and to deny plaintiff limited discovery on the jurisdictional question.
The district court apparently believed that the 1983 amendments to Rule 11 amended Rule 56 by implication. Its opinion indicates that a plaintiff opposing a summary judgment motion is no longer entitled under Rule 56(f) to discovery of facts that are, as the judge found they were in this case, “exclusively or largely in the defendant’s possession” if the court believes that plaintiff has not complied with Rule 11. We hold, however, that neither Rule 56 nor Rule 12(b) was in any way modified by the adoption of the 1983 amendments to Rule 11, and nothing in the Notes of the Advisory Committee on Rules indicates an intent to make any such modification. Indeed, those Notes emphasize that
[t]he rule is not intended to chill an attorney’s enthusiasm or creativity in pursuing factual or legal theories. The court is expected to avoid using the wisdom of hindsight and should test the [1012]*1012signer’s conduct by inquiring what was reasonable to believe at the time the pleading, motion, or other paper was submitted. Thus, what constitutes a reasonable inquiry may depend on such factors as how much time for investigation was available to the signer; whether he had to rely on a client for information as to the facts underlying the pleading, motion, or other paper; whether the pleading, motion, or other paper was based on a plausible view of the law; or whether he depended on forwarding counsel or another member of the bar.
(Emphasis added.) Neither the district court nor appellees cite any cases indicating that Rule 11 has modified Rule 56, and our research discloses none.
In granting the motion to dismiss the district court stated that nothing in plaintiffs papers indicated reasonable inquiry into the facts underlying the complaint. In the order granting sanctions, however, the district court found that plaintiff had provided her attorney with information related to ATCOM’s receipt of federal financial assistance. He simply rejected counsel’s arguments on the merits as “very attenuated.” Although the district court made no findings as to when plaintiff provided her counsel with this information, there is no basis for the dissent’s assertion that sanctions were imposed for lack of pre-complaint inquiry. Rather, the action was dismissed for failure to make that inquiry, the court reserving the question of sanctions. Sanctions were then imposed because the district court rejected the merits of plaintiff’s argument, based on the information she had supplied her attorney. The district court made no findings in the latter order indicating that there had been no pre-complaint inquiry and quite clearly did not impose sanctions on that basis.
Here we assume that in preparing the complaint counsel did have to rely on his client at least to a certain extent, since whether ATCOM was receiving federal financial assistance as that term is defined in 28 C.F.R. § 41.3(e) (1985) could hardly be known to an outsider, and since the relevant information was largely in the control of the defendants. Under the circumstances the extent of counsel’s inquiry and his reliance on the information supplied by his client was “reasonable” within the meaning of Rule 11.
Moreover, since in this case compliance with Rule 11 was determined not by a subjective “good faith” standard but by an objective inquiry into whether “after reasonable inquiry, a competent attorney could * * * form a reasonable belief” that the pleading is well grounded in fact and law, Eastway, 762 F.2d at 254 (emphasis added), we note that had plaintiffs or any competent counsel looked to the reported opinion in United States v. American Telephone & Telegraph Co., 552 F.Supp. 131 (D.D.C.1982), aff'd sub nom. Maryland v. United States, 460 U.S. 1001, 103 S.Ct. 1240, 75 L.Ed.2d 472 (1983), he would have found sufficient basis to support an allegation that AT & T received federal financial assistance. That opinion contains numerous references to the long-standing, close relationship between, on the one hand, AT & T, its wholly-owned subsidiary Western Electric Company, Inc., and their jointly-owned subsidiary Bell Telephone Laboratories and, on the other hand, the Department of Defense. See, e.g., 552 F.Supp. at 136 & nn. 8, 9 and 10 (in 1952 Defense Department officials, complying with request of AT & T officials, sought indefinite postponement of antitrust action on grounds that key Bell Laboratories and Western Electric executives were having to divert their attention from important national defense projects in order to prepare for trial); id. at 137 (Defense Secretary informed Attorney General that AT & T should not be required to divest itself of Western Electric because coordinated organization of AT & T and its subsidiaries was fundamental to successful carrying forward of critical defense projects); id. at 152 (court finds AT & T technological development “a vital part of the national economy, national defense, and foreign trade”); id. at 167 & n. 152 (company research had beneficial effect on nation’s position in respect to scientific advances and [1013]*1013national defense); id. at 208-09 (Department of Defense concerns over AT & T divestiture). To be sure, as the district judge below pointed out, a simple Government contract is not necessarily federal financial assistance. Still and all, it is plausible to suppose that in sending up satellites, see 552 F.Supp. at 172 n. 173, or putting up microwave towers, id., AT & T has received federal financial assistance in the form of services of federal personnel or the use of Government property in the form of satellite launching facilities and technology or, perhaps, federal lands. See 28 C.F.R. § 41.3(e)(2), (3) (1985). In view of the exceedingly close working relationship over the years between the defense establishment and AT & T as indicated in United States v. American Telephone & Telegraph Co., supra, one would certainly suppose that from time to time there were arrangements providing services, research, property usage, or other indirect means of financial assistance to AT & T irrespective of payments under any Government contract. One would suppose that an organization so large, see id. at 151-52 & n. 85, and so involved with providing the Government’s communications services and facilities would almost necessarily receive federal financial assistance, at least on some occasions. We note that it is far from clear, even with agency-provided definitions, see, e.g., 28 C.F.R. § 41.3(e) (1985), precisely what government funds qualify as “Federal financial assistance.” See, e.g., Paralyzed Veterans of America v. CAB, 752 F.2d 694, 706-16 (D.C.Cir.), cert. granted, 106 S.Ct. 244 (1985); Cook v. Budget Rent-A-Car Corp., 502 F.Supp. 494 (S.D.N.Y.1980). Thus, we do not think it unreasonable to argue that certain contracts or grants entered into for research and development, see Federal Acquisition Regulations System, 48 C.F.R. pt. 35 (1985), rather than being “procurement contracts,” provide “assistance” in such a way as to render an R & D contractor a recipient of “Federal financial assistance.” And the tacit admission in appellees’ brief that indeed it has done R & D work for the Government does not mean that it has done all its work under procurement contracts, rather than under other types of contracts, grants, or loans. See 48 C.F.R. § 35.003 (1985). All this is not to say that AT & T and its subsidiaries are necessarily subject to suit under the Rehabilitation Act, but rather to show that such a claim may be “well grounded in fact and is warranted by existing law” within the meaning of Rule 11, see Hansen v. Prentice-Hall, Inc., 788 F.2d 892, 894 (2d Cir.1986).
Our inquiry into whether Ms. Kamen’s suit was so groundless as to be subject to Rule 11 sanctions does not end here. We need also determine whether plaintiff had a nonfrivolous claim that she was within a “program or activity” receiving federal financial assistance. Section 504 contains the same program-specific requirement as section 901(a) of Title IX of the Education Amendments of 1972, 20 U.S.C. § 1681(a) (1982). In Grove City College v. Bell, 465 U.S. 555, 104 S.Ct. 1211, 79 L.Ed.2d 516 (1984), the Court held that federal financial assistance did not subject the entire college to regulation under Title IX, but rather only the program or activity receiving assistance. See id. at 570-74,104 S.Ct. 1220-22. In a separate opinion that day the Court indicated that such program-specific analysis should also be applied to section 504. See Consolidated Rail Corp. v. Darrone, 465 U.S. 624, 636, 104 S.Ct. 1248, 1255, 79 L.Ed.2d 568 (1984). However, it is often a difficult question to define which program or activity is receiving assistance. See id.; Paralyzed Veterans of America, 752 F.2d at 714-15 (deciding that relevant “program or activity” is the providing of commercial air transportation, not only airport operations, thus subjecting airlines as well as airports to section 504 by virtue of federal aid to airports), cert. granted, — U.S. —, 106 S.Ct. 244, 88 L.Ed.2d 253 (1985). As this court has stated, “[T]he issue of program-specificity [under section 504] cannot be properly analyzed in the abstract, but instead requires a concrete set of facts.” United States v. University Hospital, 729 F.2d 144, 151 (2d Cir.1984). Because there is no clear standard on the [1014]*1014nexus between “Federal financial assistance” and “program or activity,” Rule 11 sanctions on this basis would have been wholly improper.
In sum, this case is an inappropriate one for sanctions. The district court found that plaintiff had provided information to counsel; plaintiffs counsel had sought relevant information within the defendants’ control, which they declined to provide; the law on “Federal financial assistance” and “program or activity” is quite unsettled; and the plaintiff is very likely a “handicapped individual” under section 504, see Vickers, supra. Moreover, just as summary judgment or a 12(b) motion cannot be boot-strapped onto a finding of a Rule 11 violation, an improper grant of dismissal cannot be the basis for Rule 11 sanctions. We reiterate our position in Eastway, 762 F.2d at 254, that, in imposing Rule 11 sanctions, “we do not intend to stifle the enthusiasm or chill the creativity that is the very lifeblood of the law.”
For the reasons above stated, the judgment imposing sanctions is reversed.