1. TRAINING MODULE II: PART I CONTRACTING 1 Office of Contracts and Grants The University of Colorado at Boulder February 16, 2012

2. TODAY’S TOPICS  What does a Principal Investigator (PI) or Department Administrator (DA) need to know about contracts?  What is the difference between a grant and a contract?  What types of contracts does OCG receive, negotiate, and manage?  What is the process to get a project number and speedtype?  Why is the set-up of some awards delayed?  What are the most troublesome clauses/issues that require special attention and negotiation? 2

3. CONTRACT BASICS: DEFINITIONS Federal Grant and Cooperative Agreement Act 31 USC 6304 6305  The purpose is to transfer money, property, services or anything of value to recipient in order to accomplish a public purpose.  Legally, it is Financial Assistance – not a procurement. 3

4. CONTRACT BASICS: DEFINITIONS  Grant – Project is implemented independently of the Sponsor, and there is no anticipated involvement between the Sponsor and Recipient during performance of an activity.  Cooperative Agreement – Substantial involvement is anticipated between Sponsor and Recipient during the planning and performance of the activity. 4

5. CONTRACT BASICS: DEFINITIONS Contract  Principal purpose is to acquire specific property or services for direct benefit or use of the sponsor;  Sponsor determines that a procurement contract is appropriate;  Sponsor prepares the Scope of Work;  Often called a “procurement mechanism” or referred to as an acquisition. 5

6. WHAT IS A CONTRACT? A relationship between two parties, such as a buyer and seller, that is defined by an agreement that makes a promise and creates an obligation. A written contract will memorialize the agreements made between the parties and outline their respective rights and responsibilities. BEWARE, contracts can be challenging in a number of ways:  more time consuming to negotiate  more complex to administer because they are governed by specific terms and conditions  require specific standards of performance  legally binding  involve cultural and legal issues of foreign sponsors 6

7. CONTRACTS HAVE MANY TITLES Contracts may masquerade as:  Grants with terms and conditions  Memorandums of Understanding  Purchase Orders  Interagency Agreements  Intergovernmental Agreements  Collaboration or Teaming Agreements Remember: It is the content of the agreement that will determine if it is a contract, not the title! 7

8. HOW TO IDENTIFY A CONTRACT How do you currently identify the agreement type? Read the agreement. PeopleSoft Lite Summary report PeopleSoft Financial Production 8

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11. AWARD PROCESSING andMANAGEMENT 11

12. WHEN AN AWARD IS RECEIVED… Forward awards received by PIs and Department Administrators to ocg@colorado.edu  award details are entered in FileMaker Award Database by Award Processor;  award is reviewed and, if necessary, negotiated by Contract and Grant Administrator (CGA);  if required, award is signed by Director or Associate Director;  Sponsored Projects Accounting (SPA) assigns project number(s) and speedtype(s) to new projects and updates budget details of existing projects. 12

13. EMAIL NOTIFICATIONS Email notification is sent to PI and Department Administrator and includes:  award identifiers: PI, title, proposal number, etc.  funding amount received  extension/period of performance changes  administrative changes  project number(s) and speedtype(s) A copy of the award and budget are attached to the email notification. 13

14. COMMON DELAYS  A revised budget is required  The proposal was not submitted through OCG  Unacceptable terms or language in contract requires negotiation (i.e. indemnification, state law, publication restrictions…)  Open compliance issues (i.e. no human subject approval, cost share form, DEPA certification, etc.)  Award received unsigned by sponsor 14

15.  Contracts must be negotiated in accordance with federal and State law, University policy, and specific project needs.  Contracts previously negotiated with an organization may be a good starting point, but may not be appropriate for new work, and should be carefully reviewed.  Only fully-executed contracts can be assigned a project number and speedtype. 15

16. CONTRACTS ARE NOT GRANTS 16  A-110 does not apply  NO expanded authorities  One-time 12-month No-Cost Extension  Budget Deviations  90-day Pre-award Spending  No OPAS forms

17. CONTRACT CHARACTERISTICS  More restrictive terms and conditions  More specific technical reporting requirements  More specific financial reporting requirements  must retain, and sometimes provide, back up documentation for expenses  No prior approval necessary for budget deviations, unless specifically stated 17

18. CONTRACT CLOSEOUT  Be aware of issues associated with early terminations.  Get reimbursed for all allowable costs to date and any non-cancelable obligations.  Ensure that all deliverables are within the scope of work and are consistent with contract terms.  Closeout paperwork:  Technical Reports  Financial Reports  Property Reports  Invention Reports  Subcontract and Small Business Subcontracting Reports  Release of Claims 18

19. CONTRACT ISSUES 19

20. TROUBLESOME CLAUSES/ISSUES  Financial Terms and Reporting  Payments  Scope of Work  Deliverables: Inspection and Acceptance  Key Personnel and Technical Direction  Publication Restrictions  Restricted, Proprietary, and Classified Research  Intellectual Property Rights  Export Compliance  Use of name/Publicity  Endorsement of Results  Disclosure of Sponsorship  Protection of Students  Termination  Audit  Indemnification 20

21. TROUBLESOME CLAUSES/ISSUES Financial Terms & Reporting  Do not pursue/accept projects that will cost more money than they generate.  Fully cost out the budget.  Limit cost sharing.  Charge the fully negotiated F&A rate.  Charge the on-campus F&A rate.  Maximize budget flexibility.  Spend the money. 21

22. TROUBLESOME CLAUSES/ISSUES Payments  Request a cost reimbursement agreement, which ties payments to expenditures – not performance.  Avoid fixed price agreements with payments based upon strict milestones or deliverables.  If there are deliverables, ensure that payment is not based on the acceptability of the deliverable without the enumeration of specific and achievable criteria.  Consult with accounting to ascertain the most efficient payment schedule.  Limit the detail required in financial reports.  Limit the penalties for late invoicing. 22

23. TROUBLESOME CLAUSES/ISSUES Scope of Work  Understand the purpose of the research.  Ensure that the SOW can be completed within the budget.  Search the SOW for cost sharing and imbedded controls, e.g. approval of key personnel, technical direction, non-disclosure of research results.  Recognize a need for Project management & budget accordingly. 23

24. TROUBLESOME CLAUSES/ISSUES Publication Rights  CU is an academic institution with strong interest in the free flow of information, in accord with CU policy.  The right to publish is a legal, practical, and philosophical requirement of academic research.  Some narrow limitations may be appropriate:  To protect the identity of research subjects/participants;  To allow for the protection of intellectual property;  To allow for the redaction of Sponsor proprietary information. 24

25. TROUBLESOME CLAUSES/ISSUES Restricted/Proprietary/Classified Research  The University normally does not place restrictions on the disclosure of information beyond that necessary to ensure the anonymity of research participants, protect IP, or redact proprietary information.  If confidentiality is necessary to plan the research, then a non- disclosure agreement may be signed by the University on behalf of the PI.  If confidentiality is required to perform the research, provisions may be included in the agreement that identify the extent to which proprietary or confidential information may be protected.  The Restricted, Proprietary, and Classified Research Committee and approved by the Chancellor may need to approve acceptance of certain contract clauses. 25

26. TROUBLESOME CLAUSES/ISSUES Patents and Invention Rights  What intellectual property is covered by the agreement?  What rights are retained by CU? What rights are jointly held with the Sponsor?  Are the time periods for sponsor election of a license kept to 30 days or less?  Who pays for patent application costs?  What types of licenses (nonexclusive, exclusive) are appropriate? 26

27. TROUBLESOME CLAUSES/ISSUES Export Compliance  The Export/Import Laws are the law and are in effect whether or not cited in the contract.  If Export license is required, the licensure may take several months. Check @ proposal stage.  The application of the law is determined by the technology and the nature of the research.  “Deemed exports” may occur within your own lab.  Clear foreign travel with Export Control (e.g., Department should be aware of taking a laptop outside of US)  OCG works with CU’s Export Control office closely. 27

28. TROUBLESOME CLAUSES/ISSUES Protection of Students  Students working on a project should have free rights to publish/use the research in a thesis or dissertation.  Assigning students to research projects from which the Principal Investigator may realize a financial gain requires review and approval of the Chair and Dean. 28

29. TROUBLESOME CLAUSES/ISSUES Indemnification (Hold Harmless -- Who is financially liable?)  Contract language must be avoided that causes the University to be liable for the wrongful acts or failures of another party.  The University of Colorado is prohibited by statute from providing indemnification for the acts of third parties.  The University will agree to be responsible for the negligent acts and omissions of its employees and students in the fulfillment of their roles and responsibilities at the University. 29

30. OTHER AGREEMENTS WE ADMINISTER  Non-disclosure Agreements  SBIR/STTR Agreements  Software Licenses  Data Use Agreements  Facilities Use Agreements  Visiting Scholar Agreements 30

31. 31 NONDISCLOSUREAGREEMENTS

32. NONDISCLOSURE AGREEMENTS  Also known as:  Confidential Information Agreements  Proprietary Information Agreements  NDA  Purpose of NDA:  A collaborative research or licensing activity where there is a need to know proprietary information for evaluation purposes;  To guard against a public disclosure of proprietary Information that would result in harm to the owning party.  Nondisclosure Agreements :  Can be unilateral or bilateral  Can be for an individual or organization  Can be for multiple parties 32

33. Confidential or Proprietary Information (e.g. Trade Secrets) defined:  Trade Secret – “all forms and types of financial business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if - (A) the owner thereof has taken reasonable measures to keep such information secret; and (B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.”*  Provided in tangible form with conspicuous markings stating the information is confidential /proprietary to the disclosing party. *18 U.S.C § 1839(3), CRS 18-4-408 Theft of Trade Secrets NONDISCLOSURE AGREEMENTS 33

34. NONDISCLOSURE AGREEMENTS Proprietary Information is NOT: Information found in the public domain as of the effective date of the NDA or comes into the public domain during the term of the agreement through no fault of a receiving party (there are exceptions); Known to a receiving party prior to the effective date and not acquired (directly or indirectly) from a disclosing party or from a third party under an obligation of confidentiality; Information independently developed by receiving party without substantive knowledge of, or assistance from, the proprietary information. 34

35. NONDISCLOSURE AGREEMENTS NDA = Contract NDAs should:  Identify the parties of the agreement  Provide a stated reason to share confidential information (i.e. the purpose of the agreement)  Contain a brief, high level, summary of the proprietary information each party will bring to the discussion held under the agreement  Identify the points of contact for the receipt and the responsibility for the protection of proprietary information  Identify the points of contract for administrative or legal notices 35

36. NONDISCLOSURE AGREEMENTS NDAs should: (cont.)  Require information to be in tangible form, identified as proprietary /confidential and conspicuously marked proprietary;  Require proprietary information shared verbally be identified as proprietary at the time of disclosure, summarized in writing as soon as possible thereafter with the summary shared with the parties from the discussion;  Specify a specific term where proprietary information will be shared (usually 1 year);  Specify a specific term during which the parties have a duty to protect the Proprietary information shared (usually 3 years from disclosure or the effective date);  Define the standards of care or protection of proprietary information (no less than reasonable care). Please note the questionnaire developed for NDAs on the Office of Contracts and Grants (OCG) website. http://colorado.edu/VCResearch/research/forms/index.html 36

37. NDAs should not:  Leave the definition of proprietary information open ended;  Leave the term of the agreement and the duty to protect proprietary information open ended;  Give license rights or right of use for the proprietary information to the receiving party outside the scope of the purpose of the NDA;  Discuss ownership rights of new information disclosed or created during the term of the nondisclosure agreement;  Discuss publication of the faculty’s research;  Warrant / guarantee the information provided;  Be signed by the faculty. 37

38.  Keep proprietary information secure – lock it up, keep it off web accessible computers, password protect files, and, do not share with anyone who does not have a need to know;  Do not share proprietary information with University faculty or students (over 18 years of age) without a need to know – a written agreement stating that that person has a copy of the NDA, has read it, and agrees to abide by its terms is a good thing;  Proprietary technical information received from a sponsor is likely to be export controlled (always ask the sponsor);  Faculty, staff and students are not authorized to sign NDAs related to their research at the University – authority is delegated in writing from the President of the University and comes to OCG;  The key to retaining the fundamental research exclusion is for the PI to retain complete control as to when, where, what, and how research results are published. 38

39. Bottom Line:  A nondisclosure agreement is a legally binding contract between the parties;  It is subject to all the rights and remedies that an injured party may have under law to become whole;  The University, faculty members, employees and anyone at the University who has access to proprietary information is responsible for managing the proprietary information and can be held personally liable for violating the terms of the agreement.  If the proprietary information is export controlled, disclosing the information to a foreign national on campus without a license is a deemed export. 39

40. SMALL BUSINESS PROGRAMS 40

41. SMALL BUSINESS PROGRAMS SBIR: Small Business Innovation Research ProgramSTTR: Small Business Technology Transfer Program 41

42.  Small Business Innovation Research (“SBIR”) and Small Business Technology Transfer (“STTR”) programs:  are competitive programs administered by the Federal Government,  the purpose is to stimulate technological innovation in the small business community,  The SBIR/STTR programs were developed to support scientific excellence and technological innovation through the investment of Federal research funds in critical American priorities to build a strong national economy. SMALL BUSINESS PROGRAMS 42

43. SMALL BUSINESS PROGRAMS  Phase I – Feasibility Study  $150,000  6 months (SBIR)  12 months (STTR)  Phase II – Full Research and Development  $750,000  2 years  Commercialization Plan required  Phase III – Commercialization  Use of non-SBIR/STTR Funds 43

44. WHICH AGENCIES ARE PARTICIPATING?  DODSBIR/STTR  HHSSBIR/STTR  NASA SBIR/STTR  DOE SBIR/STTR  NSF SBIR/STTR  DHSSBIR /STTR  USDASBIR  DOCSBIR  EDSBIR  EPASBIR  DOTSBIR SBIR/STTR Proposal guidelines and award terms vary from agency to agency. 44

45.  Encourage PI’s to work with PA and CGA at the proposal stage.  Provide a complete and detailed statement of work describing the work to be performed by UCB PI. This SOW should be separate from the work to be performed by the company.  Budget  Include all costs required to perform work.  If tuition is not allowed by the Sponsor, it must be covered somewhere else. HOW DO YOU EXPEDITE THE CONTRACTING PROCESS? 45

46.  Allocation of Rights – An agreement describing how Intellectual Property will be handled. Usually required before the small business can receive prime award. Sometimes required at the proposal stage. Contact CGA.  Use Sponsored Research Agreement to establish the contractual relationship between the University and the small business. Use of our SRA can significantly reduce the time it takes to negotiate.  CGA’s can work with the small business during their negotiations with the prime sponsor to avoid troublesome clauses/issues being included in award. 46