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Office of Sponsored Programs (OSP)

Guide to Research Agreements with Industrial Sponsors

Guide to Research Agreements with Industry and Commercial Sponsors

Revised 2010

Introduction

This Guide summarizes a number of important principles and practices applicable to research agreements between the University of Washington (UW) and industry or other commercial organizations. Although these general principles and procedures apply to most sponsored research at the UW, the purpose of this Guide is to address the most common questions that tend to arise when dealing with for-profit organizations that are sponsoring research at the UW. This Guide is provided as information only and is not to be considered to be part of any legally binding agreement.

Selected Principles and Practices

The following selected principles underlying UW research agreements with industry sponsors are summarized to facilitate early understanding between the UW and new commercial sponsors:

  1. Reasonable Efforts

    Since the course of state-of-the-art research is by its nature unpredictable and research results are inherently uncertain, UW research is generally conducted on a reasonable efforts basis, performed at a standard that is consistent with research at comparable academic institutions. As a major research university, the UW has available a wide array of excellent researchers and facilities that reflect the UW's commitment to a large and varied research program that is in excess of $1 billion annually. Accordingly, the UW's extensive resources make it possible to organize research projects in a manner that is sensitive to the differing requirements of industry sponsors.

  2. Publications

    To fulfill its mission and meet requirements arising from the UW's status as a tax-exempt, public educational and research institution, research conducted at the UW must primarily serve public rather than private purposes. It is expected that research results will be published or otherwise be disseminated on a nondiscriminatory basis and within a reasonable period of time.

    Consistent with this, the UW also recognizes the legitimate proprietary needs of industry sponsors. Where appropriate, publication may be deferred for a limited time to protect intellectual property rights or to facilitate other forms of technology transfer. Similarly, on those occasions where the UW has received a sponsor's existing proprietary information in order to carry out a research project, the sponsor may be provided an opportunity to review proposed publications to prevent any inadvertent disclosure of its nonpublic information.

  3. Intellectual Property and Technology Transfer

    The basic objectives of the UW's intellectual policy policies are to promote the progress of science and technology, assure that discoveries and inventions are utilized in ways most likely to benefit the public, provide appropriate recognition to UW researchers, and share royalty revenues received from the licensing of inventions with UW inventors.

    While the UW customarily grants a royalty-free license to the sponsor to make internal use of any written reports and data that arise from the research project, the UW retains ownership to all inventions and discoveries, arising from UW-conducted research whether or not patentable. In appropriate cases, the UW will grant a sponsor a first right to negotiate a reasonable commercial license to use the technology arising from the research, which may include the right of the sponsor to obtain exclusive rights.

  4. Funding and Pricing

    UW sponsored research projects are generally conducted on the basis of full cost recovery, including payment of indirect costs (overhead) at the UW's established rate. Research rates do not have any allowance for profit or factors for uncertainty of payment. Prepayment or early payment may be necessary since the UW does not utilize its working capital to finance large expenditures incurred in the course of sponsored research. As a result, UW requires a payment schedule that is sufficient to assure payments keep pace with planned project expenditures. The specific payment schedule will be negotiated depending on the type and scope of the project, the length of the project, and the anticipated pace and pattern of actual expenditures. In most instances, research agreements are based on full reimbursement of actual costs incurred plus overhead. Frequently, such agreements may also specify a not-to-exceed maximum price. For cost-reimbursement arrangements, the agreement will generally provide that any unspent funds remaining at the end of a project will be returned to the sponsor. On limited occasions where it is deemed appropriate, pricing may be fixed or unit determined or based on achievement of well-defined, limited milestones where the research costs and goals are clear and understood.

  5. Warranties, Liability and Risks

    The UW receives no fee or profit on its research with which to cover business risks. For this reason, and because it is inconsistent with the reasonable efforts principle, the UW generally is unable to accept contractual provisions that establish rigid deadlines or deliverables, impose penalties for failure to progress at a certain pace, or provide for withholding of payment if the sponsor is not satisfied with the results. UW research agreements will have express provisions disclaiming any liability for sponsor business losses, such as lost profits. As provided by Washington law, the UW is precluded from indemnifying anyone, including the sponsor, for any form of deliberate misconduct.

Establishing a Sponsored Research Agreement

A sponsored research agreement may be established when a sponsor is willing to support a research project which a member of the UW faculty wishes to pursue. Any such project is subject to various UW internal review and approval processes which assure that the project is educationally and academically appropriate and consistent with the UW's research policy and tax-exempt status. These approval processes cover not only formal contractual, fiscal and financial approvals that result in a decision to enter into a binding research agreement, but may also include various types of collateral approvals such as authorization to conduct human subjects research.

Initial discussions between the sponsor and the prospective UW researcher are encouraged since this is necessary to confirm mutual interest and develop a research plan and related budget. It should be understood, however, that a sponsored research project and agreement can only be formally authorized through normal internal contractual review procedures and after an acceptable agreement is negotiated and signed by an authorized representative of the UW's Office of Sponsored Programs. If a confidentiality agreement is required in order for the preliminary discussions to occur, the Office of Sponsored Programs can negotiate, prepare and sign such an agreement. Following preliminary discussions between the sponsor and the UW researcher, the major steps are outlined below:

  1. Proposal Review, Approvals and Submission

    A duly-appointed UW researcher who will serve as Principal Investigator for the project develops a proposal that describes the research to be done, identifies the individuals who will participate, and sets forth an estimated budget, including both direct and indirect costs. The proposal is submitted through the UW's electronic research proposal submission system by the Principal Investigator.

    The department chair or other unit director as well as the dean review the proposal. Such approvals require determinations that (1) the project is appropriate for the department or unit to undertake as a part of its educational and research program, including necessary reviews for scientific merit, (2) appropriate staff are available and the faculty member is willing to supervise the research, (3) the proposed budget is adequate to pay for the anticipated costs of the project, and (4) adequate space and other facilities are available.

    The proposal is then reviewed by the Office of Sponsored Programs with particular attention to financial, business, compliance and legal considerations. In appropriate cases, it may be necessary to refer all or part of the proposal to other offices or committees for reviews and concurrence. When the review process is completed, the Office of Sponsored Programs negotiates and finalizes an appropriate research agreement with the sponsor.

  2. Negotiation of the Research Agreement

    All sponsored program agreements are executed on behalf of the UW by the Office of Sponsored Programs. This includes all terms and conditions of the agreement, which may require consultation with the Principal Investigator, legal counsel, risk management, the UW technology transfer office, and others within the UW as needed. Discussions between sponsor representatives and UW researchers are preliminary only and no understandings or agreements are legally binding until reflected in a duly-executed written agreement. When negotiations are completed, the agreement can be signed by the appropriate manager within the Office of Sponsored Programs who has delegated authority to do so.

  3. Project Administration

    Following execution of the agreement, the Office Sponsored Programs authorizes establishment of an appropriate project spending account based on the terms of the agreement. The UW's Grant and Contract Accounting Office notifies the Principal Investigator, department chair and dean of the account number and title assigned so that the Principal Investigator may begin the research and make appropriate charges to project funds.

    The Principal Investigator has primary responsibility for conducting the research and for assuring that only proper costs are charged to the project account. Reports and any required deliverables are submitted to the sponsor, consistent with terms of the particular agreement. During course of the project, the department or operating unit provides oversight, particularly with respect fiscal matters.

    Any correspondence proposing modification to the terms of a research agreement, including changes in the scope of the work, or an increase or decrease in the price for the work must be handled through the Office of Sponsored Programs. Renewals or extensions involving additional funds must also be reviewed through normal procedures in the same way as a new proposal.

Questions

Questions and comments concerning matters discussed in this Guide or other UW policies are invited. They may be addressed as follows:

University of Washington
Office of Sponsored Programs
4333 Brooklyn Ave NE, 17th Floor
Box 359472
Seattle, WA 98195-9472
Telephone: (206) 543-4043
Fax: (206) 685-1732