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Contracts: A Brief OverviewOffice of Research Operations & Support

November 2014Sammy Rodriguez Flecha, PhD

Research Operations & Support Administratorsamuel_rodriguez@wsu.edu

Revised November 2015

Contracts

• WSU context

• Focus: Research framework

• Main objective: To go over basic components (i.e., main terms and conditions)

WSU: Research—It’s What We Do

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Our Mission

Washington State University is a public research university committed to its land-grant heritage and tradition of service to society

• To advance knowledge through creative research and scholarship across a wide range of academic disciplines

• To extend knowledge through innovative educational programs in which emerging scholars are mentored to realize their highest potential and assume roles of leadership, responsibility, and service to society

• To apply knowledge through local and global engagement that will improve quality of life and enhance the economy of the state, nation, and world

State legislative allocations

Donations -WSU Foundation

Federal &Non-Federal

programs(includes financial aid)

Sponsored Project Funding

• For Research Instruction Other

• PI submits proposal Why?

• Mission (see Kraken slide)

• Part of PI’s appointment• Tenure considerations (usually)

Via OROS

• PI gets FUNDED Grant Cooperative agreement Contract

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Grant

• Assistance to carry out a public purpose of support/stimulation

• No substantial involvement expected between Sponsor and Recipient when carrying out the activity

Cooperative Agreement

• Assistance to carry out a public purpose of support/stimulation

• Substantial involvement expected between Sponsor and Recipient when carrying out the activity

Contract

• For acquisition of specific property/services

• Outlines T&Cs for specific work/services

• Fed & Non-Fed

31 USC

31 USC §§ 6301-6305

Parties Purpose

Performance Period Price

The 4 Ps of

Contracts

Parties: Who’s Involved?

• Parties to the contract usually (and should be) identified in the first few paragraphs of the contract

• WSU’s legal status – a state institution of higher education

• WSU is NOT a non-profit organization [i.e., 501(C)(3)]

• WSU Foundation is a separate entity

• Colleges, departments, centers, programs, professors are NOT the legal entity

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Parties: Authorized?

• Are the signers the authorized officials? Colleges, departments, centers, programs, professors

CANNOT bind WSU by signing contracts

• Different offices/individuals on campus can bind WSU depending on the type of contract/work to be conducted

• Authorized officials must have been given signature authority through a specific designation letter from the President of the University (WSU Delegate List)

• Dan Nordquist, Assoc. VP for Research, is the authorized institutional representative for any type of sponsored activity

Purpose of a Contract: Setting the Stage andthe Rules of Engagement

• Accurate description of the services/work PI should provide info re the “scope of work” (SoW) when

submitting a proposal SoW normally referenced in and attached to the agreement “Accurate” may mean 2 sentences or 20 pages – leave that

determination to the PI; the SoW, however, should clearly reflect the expectations of the parties regarding the project

• WSU must be able to defend the PI’s fulfillment of the scope in the event of dispute; check that the SoWactually conveys what the PI intends to do

• Avoid language in the description that “guarantees” anything. WSU will use its reasonable best efforts (research is never guaranteed)

Period of Performance (Term of the Agreement)

• START and an END date Start date is important to properly charge effort and other

expenditures to that project In some cases, sponsors may allow “pre-award costs”

• Allows for project expenditures to begin prior to contract start date

• Contract normally has a deliverable due on a given date The deliverable can be a report, prototype, evaluation, etc.

• Helps communicate expectations for the submission of reports (e.g., financial, technical, property, invention)

Note: If the contract does not allow WSU to extend the term by request only (i.e., unilaterally-without signature from both parties), then permission to extend end date must be requested from Sponsor by PI via OROS

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Price (Estimated Cost)

• “Budgeting for Sponsored Projects” course offered by OROS (online version also available)

• Guideline 2 – Budget Assistance

• Costs include – salaries, wages, goods & services, travel, computer time, equipment, fringe benefits, subcontractors, F&A costs, etc.

• Fixed Price (FPA) or Cost-Reimbursable—What’s the difference? (Guideline 28)

• Most research contracts should use a Cost-Reimbursable structure

• Purchase Orders normally FPAs

• Remaining balances on FPAs? What happens if you come up short and you need more money?

• FPCAs and BPPM 40.27

WSU’s Sponsored Project Agreement (SPA)

• How do the 4Ps apply to WSU’s SPA? Parties (Section 1.1) Purpose (Section 4.1 referencing Attachment A) Period of performance (Section 5.1) Price (Section 5.2 referencing Attachment B)

Other Considerations

• If only the 4Ps, Why are contracts so cumbersome at times? Why so many other sections? Legal issues, regulations, University policies WSU Mission conflicts with outside agency agenda Agencies/industries want to protect interests Work is viewed through “services/procurement” lens vs.

research/scholarly activity

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Clauses of “Interest”

• Confidentiality and Proprietary Information

• Data Rights

• Intellectual Property

• Publication Rights

• Indemnification

• Governing Law

Clauses of “Interest”

DisclaimerThe “real world” examples that follow are for discussion

purposes only and are NOT to be used as model responses for contract negotiation.

Clauses of “Interest” – Confidentiality and Proprietary Information

• WSU is an open access public university

• Employees go in and out of our labs, etc.

• Faculty work may be considered proprietary until published

• Always subject to Public Records Act

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Clauses of “Interest” – Confidentiality Example (Refer to SPA 5.8)

Clauses of “Interest” – Confidentiality Example

Clauses of “Interest” – Data Rights

Data Rights – work products developed by state employees belong to the State (WSU). See OGRD Guideline 29 Research Records: Definition, Retention, Ownership, Access, and Storage

• Faculty need to be able to use the results of their research for their normal teaching, research, and public service activities without hindrance.

• Graduate students need to be able to publish.

• Ownership of data is an important issue when managing misconduct in science allegations (grass burning data example). Remember, WSU is a state public institution. Part of our mission is to inform the public.

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Clauses of “Interest” – Data Rights Example (from BPPM 45.35)

Clauses of “Interest” – Data Rights Example

Clauses of “Interest” – Intellectual Property (Article 5.16)

• Most contested term – more and more entities getting involved with inventions, copyright, trade secrets, proprietary and confidential information, so IP terms get a lot of attention.

• WSU owns what it generates as long as our PIs have assigned their rights to WSU (Roche v. Stanford) PIs are required to assign rights to WSU (form in in

MyResearch)

• Bayh Dole Act - allows US universities to control the inventions and other intellectual property that arises from federal government funded research.

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Clauses of “Interest” – Intellectual Property (Article 5.16)

Clauses of “Interest” –IP Example

Clauses of “Interest” –IP Example

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Clauses of “Interest” – IP Example Exercise

Clauses of “Interest” – Publication Rights (Article 5.9)

• Implicates WSU’s academic freedom, mission, public standing, public trust

• Industry vs. Public Institution – the culture class Educating the counter-party

• Export Controls and the impact of publication

Clauses of “Interest” - Publication Rights (Section 5.9)

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Clauses of “Interest” – Publication Rights Example…

Clauses of “Interest” – Publication Rights Example

“intent is not to restrict . . . however . . . .”

taClauses of “Interest” – Publication Rights Example

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Clauses of “Interest” – Indemnification (Article 5.17)

• This one often hangs people up – basically this is insuring against third party loss

• Washington State Legislature has not given WSU the ability to indemnify

• WSU can only indemnify for our own negligent acts or omissions

• Mostly an issue with National Labs and large businesses

Clauses of “Interest” – Indemnification (Article 5.17)

Clauses of “Interest” – Indemnification Example

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Clauses of “Interest” – Indemnification Example1. COMPANY’s proposed language WSU’s proposed language

Consultant agrees to indemnify, defend and hold harmless Company and its directors, officers and employees from and against all claims, taxes, losses, damages, liabilities, costs and expenses, including attorneys’ fees and other legal expenses (“Losses”), arising directly or indirectly from or in connection with (i) any negligent, reckless or intentionally wrongful act of Consultant or its assistants, employees, subcontractors, or agents, (ii) a determination by a court or agency that the Consultant is not an independent contractor, (iii) any breach by Consultant or its assistants, employees or agents of any of the covenants or warranties contained in this Agreement, (iv) any failure of Consultant to perform the Services in accordance with all applicable laws, rules and regulations, or (v) any violation or alleged violation of a third party’s rights (including without limitation infringement of copyright or patent rights, or misappropriation of trade secrets) resulting in whole or in part from Company’s use of the Work Product of Consultant under this Agreement.

Each party to this Agreement shall be responsible for its own acts and/or omissions and those of its officers, employees and agents. COMPANY shall fully indemnify and hold harmless CONSULTANT against all claims arising out of COMPANY’s use, commercialization, or distribution of Intellectual Property or products that result in whole or in part from the Scope of Work

Explanation: In Washington, a state agency can only indemnify when authorized by statute. WSU is a state agency and has not been statutorily enabled to indemnify. This indemnification language is incompatible with WSU’s statutory authority.

Clauses of “Interest” – Governing Law Clause (Article 5.21)

• AG’s office recommends no agreements be signed with governing law clauses that have state laws other than Washington

• Keeping silent is acceptable

• In some cases non-Washington law can be accepted however, venue outside of Washington should always be left silent or rejected

Clauses of “Interest” – Governing Law Clause (Article 5.21)

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Clauses of “Interest” – Governing Law Example

Clauses of “Interest” – Governing Law Example

Other Topics of Importance

• Invoice Clause (Article 5.4)

• Dispute Resolution (Article 5.14)

• Key Personnel (Article 5.6)

• Control of Research (Article 5.7)

• Publicity (Article 5.10)

• Termination (Article 5.11 & 5.12)

• Disclaimer (Article 5.15)

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Contract Close-Out – Items to Consider

• Financial reports

• Invention reports

• Technical reports

• Property reports

Question #1

• What’s wrong with this Identification of Parties section?

THIS AGREEMENT is made and entered into by and between Washington State University’s Department of Entomology “WSU Entomology” and the Washington Department of Agriculture (SPONSOR). In this Agreement, the above entities are jointly referred to as PARTIES.

WSU Entomology is not a “legal” entity of WSU. Entomology cannot be bound in the agreement, only WSU as a whole can.

Question #2

• What’s wrong with this publication clause?

University may publish only after review and approval of the proposed publication by Sponsor.

The word APPROVAL. By providing approval of publications to the sponsor, WSU gives up its ability to control the content of the publication as well as the timing of the publication which can cause problems for graduate students.

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Question #3

• What is wrong with this intellectual property clause below?

Sponsor owns all rights and title to Intellectual Property created solely by WSU employees.

WSU owns its intellectual property. Sponsor ownership of WSU IP can only be approved by WSU Office of Research.

EXTRA SLIDES

WSU’s SPA

• WSU’s standard project agreement template available on the OGRD website http://www.ogrd.wsu.edu/forms.asp Feel free to provide our template to interested companies

who may not have one

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31 US Code 6304

• An executive agency shall use a grant agreement as the legal instrument reflecting a relationship between the United States Government and a State, a local government, or other recipient when—

• (1) the principal purpose of the relationship is to transfer a thing of value to the State or local government or other recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and

• (2) substantial involvement is not expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.

31 US Code 6305

• An executive agency shall use a cooperative agreement as the legal instrument reflecting a relationship between the United States Government and a State, a local government, or other recipient when—

• (1) the principal purpose of the relationship is to transfer a thing of value to the State, local government, or other recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and

• (2) substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.

31 US Code 6303

• An executive agency shall use a procurement contract as the legal instrument reflecting a relationship between the United States Government and a State, a local government, or other recipient when—

• (1) the principal purpose of the instrument is to acquire (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; or

• (2) the agency decides in a specific instance that the use of a procurement contract is appropriate.

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