Dudley Sharp, Asst. Director, Contracts and Subcontracts,

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(No Transcript)
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What Industry/Government Contract Professionals
Should Know About Contracting with Universities
Session 2006 Dudley Sharp, Asst. Director,
Contracts and Subcontracts, Arizona State
University Debbie Shaver, Subcontracts Manager,
Arizona State University Kathy Lorenzi, CPCM, Sr.
Grants Contracts Specialist, University of
Texas at Austin Date April 24, 2007 Time
320 420pm
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Agenda

1. What is different about universities?Sponsoring
   vs. Purchasing
2. What are the benefits of collaborating between
   universities and partners?
3. What are the challenges?
4. How to creating a winning situation.

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What is different about universities?

• In most circumstances, universities allow
  companies and other entities to sponsor
  research rather than selling research services.

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Sponsoring vs. Purchasing Research

• What does it mean to sponsor research?
• Companies pay for university investigators to
  focus some of their knowledge and experience on a
  particular research objective
• The university owns the results
• Typically, the company will be granted first
  right to license the results from the agreement

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Sponsoring vs. Purchasing Research

• Why are we not purchasing research it is a
  service (Work for Hire)?
• The particular area on which the company wishes
  the researcher to focus is only a small part of
  the total body of research
• Public universities cannot use their facilities
  for private purposes
• IRS Rules, federal law and state law
  universities are highly regulated
• Multiple investors contributed to the body of
  knowledge

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Sponsoring vs. Purchasing Research
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Contracting with Universities

• What are the benefits to Industry-University
  collaboration?

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Benefits to University

• Expand body of knowledge
• Develop faculty
• Attract top students
• Learning experiences for students

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Benefits to University (continued)

• Enhance reputation of institution and PI
• Attract top talent
• Potential for the future
• Revenue for future research and facilities
• Economic development
• Incentives for researchers

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Benefits to Industry

• Access to cutting-edge technological knowledge
• Ability to obtain the expertise of an independent
  expert to focus on areas of your interest
• Ability to gain all the benefits of previous
  funded research
• Results of research are thoroughly scrutinized
• Cost of research at a university is a great deal

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Benefits to Industry (continued)

• Access to multiple disciplines under one roof
• Potential for return on investment
• Investment is less than in-house costs
• Access to pre-publication results
• Independent, objective results
• Contribute to the long-term success
• of America

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Challenges

• What are the challenges to industry - university
  collaboration?
• Cultural
• Statutory
• Terms (Including flowdown of industry clauses and
  commercial POs)

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Cultural Challenges

• In part from the predominant procurement
  instruments used by industry
• In part from unique culture

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Cultural Challenges

• Financial Assistance Agreements (i.e. Grants or
  Cooperative Agreements) are seller-driven
• Funding agency provides support for proposal
• Intended to benefit public good by pushing
  forward the general body of knowledge
• Project Director (PD) / Principal Investigator
  (PI) has considerable control/flexibility
• Usually require minimal reporting

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Cultural Challenges

• Contracts are buyer-driven
• Specific direction is developed by funding source
• Funding source solicits proposals
• Funding source assumes role of buyer
• Performance requirements specific
• Oversight is more pronounced
• Project expenditures often restricted

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Cultural Challenges

• Industrial Culture
• Profit-oriented
• Goal-oriented
• Looking for competitive advantage
• Structured management chain
• Protection of proprietary data
• Quick response
• Clear lines of authority

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Cultural Challenges

• University Culture
• Non-profit
• Values idea dissemination
• Values deliberation and consensus
• Diffuse lines of authority
• Entrepreneurial university does not direct the
  research of the PI

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Cultural Challenges

• Common lack of understanding of each culture by
  both parties
• Lack of understanding of other funding sources
  (including state legislatures)
• Lack of knowledge of federal and state
  regulations on universities
• Work-for-hire customs of commercial world do not
  apply
• Control restrictions on publication, use of
  results
• Restrictions on the use of foreign students

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Statutory Challenges

• Universities are highly regulated in many ways
• Non-profit organizations (IRS regulations)
• Often governed by state law
• Constitutionally precluded from indemnifying
• Precluded from adding additional parties to
  insurance
• Requirements to meet public mission
• Educational mission is primary responsibility
• Cannot discriminate against students (DOL)
• Must stay in the realm of fundamental research or
  be subject to EAR, ITAR and IRS regulations
  (UBITs)

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Terms Challenges

• Payments
• Non-profit (no margin to cover risk)
• Public institutions must avoid appearance of
  subsidizing sponsor
• Advance payment will usually be necessary
• Research units are typically self supporting
  (they have to meet payrolls, too)

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Terms Challenges

• Termination
• Each contract should have a termination clause
  protecting the universitys non-cancelable
  obligations
• Protect graduate students that are contractually
  committed through the end of semester
• FAR does not recognize T for D for universities
  and non-profits performing research
• University is obligated to meet its obligations
  under a contract remedies defined by state

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Terms Challenges

• Publication Policy
• Dissemination of information is key to the
  educational environment
• Research activities are an integral part of the
  education process (i.e. thesis, dissertations)
• Faculty/Students need to publish results to
  compete in their world
• Academic Freedom
• Public purpose of research / public policy

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Terms Challenges

• Publication Policy What can be done
• Can allow for sponsor review and comment prior to
  publication
• Can provide for reasonable delay
• Willing to work with sponsors to protect
  proprietary data or IP of sponsor.

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Terms Challenges

• Confidentiality
• Public records laws hamper some universities
• Agreements may be with the individual or the
  university

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Terms Challenges

• Intellectual Property (IP)
• Patentable discoveries or inventions are property
  of the university public policy reinforced by
  law
• Policy and statutes determine how title can be
  assigned or licensed
• A separate Technology Transfer Office is
  responsible for IP matters

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Terms Challenges

• Bayh-Dole Act
• Small business or non-profit, as a prime or a
  subcontractor, retains intellectual property
  rights
• Industry Prime shall not require IP rights as
  consideration for awarding subcontract
• Subcontractor cannot assign rights to inventions
  to another party without federal agency approval
• University has responsibility to publish or
  license results of research

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Terms Challenges

• Best Effort
• Research is unpredictable and results cannot be
  guaranteed
• Reasonable efforts terms are the norm

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Terms Challenges

• Insurance / Liability
• Determined by state constitution and law
• Sovereign Immunity may be rule of law
• Self insured to statutory limits
• Nature of coverage varies from state to state

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Terms Challenges

• Arbitration
• Many state institutions are prohibited from
  accepting binding arbitration
• Other forms of alternate dispute resolution may
  be acceptable alternatives

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Creating a Winning Situation

• Communication is key and not just with
  technical issues
• Both sides need to look for ways to make it work
• Each side should look for long-term relationships
  with mutual benefits
• What is the potential for future funding?
• Are additional funding sources desirable?
• Win-Win is the goal - neither side should be
  afraid the other might make money

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Creating a Winning Situation for all

• Understand the rule sets that apply and the
  common goal of a successful research project
• Discuss field of use
• Understand the potential for exclusive or
  non-exclusive licensing
• Get the right contracting professionals on both
  sides involved as soon as possible
• Research activities can be carved out of Prime
  Contracts so appropriate terms can be used
• Everyone - listen and learn

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Thanks for coming!Any questions?