1. Contracts: A Brief Overview
Office of Research Operations & Support
Sammy Rodriguez Flecha, PhD
Research Operations & Support Administrator
November 2014
Revised November 2015

2. Contracts WSU context Focus: Research framework
Main objective: To go over basic components (i.e., main terms and conditions)

3. WSU: Research—It’s What We Do
V High Res. Activity

4. 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

5. State legislative allocations
Donations -
WSU Foundation
Where does the money come from?
Donations - 17A accounts
Fed &nonFed, incl financial aid. E.g.: sponsored project funding (programs 11-14)
Federal &
Non-Federal programs
(includes financial aid)

6. 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

7. Cooperative Agreement
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
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
Fed: Federal Acquisition Regulations (FARs)
Non-Federal entities have many forms of contracts, ie: “purchase orders”, “services agreements” or “research agreements”. Anything that requires the parties involved to sign a document with terms and conditions attached/included.
Contract (non-fed definition): A promise or set of promises by two or more parties to do (or to not do) something.
31 USC §§
31 USC

8. The 4 Ps of Contracts Parties Purpose Price Performance Period
Alignment b/w the 4 Ps

9. 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

10. 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

11. Purpose of a Contract: Setting the Stage and the 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 SoW actually 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)

12. 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 datea
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

13. Price (Estimated Cost)
“Budgeting for Sponsored Projects” course offered by OROS (online version also available)
Fixed Price (FPA) or Cost- Reimbursable—What’s the difference? (Guideline 28)
Most research contracts should use a Cost-Reimbursable structure
Guideline 2 – Budget Assistance
Costs include – salaries, wages, goods & services, travel, computer time, equipment, fringe benefits, subcontractors, F&A costs, etc.
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

14. 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)

15. 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

16. Clauses of “Interest” Confidentiality and Proprietary Information
Data Rights
Intellectual Property
Publication Rights
Indemnification
Governing Law

17. Disclaimer Clauses of “Interest”
The “real world” examples that follow are for discussion purposes only and are NOT to be used as model responses for contract negotiation.

18. 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

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

20. Clauses of “Interest” – Confidentiality Example

21. 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.
note that “works for hire” language goes against the data rights/WSU ownership
Grass burning=Years ago WSU did research for an agency related to whether or not grass burning was hazardous to health. The results of the research found that grass burning did affect health especially those with asthma or other breathing problems and also the elderly. The agreement did not have a clear publication clause and the agency tried to keep WSU from releasing the information as they did not want restrictions to be place on grass burning. Ultimately, WSU maintained their academic freedom and did publicly release the data, however, had we not retained the ownership to our data and the right to publish, the outcome could have been completely different.

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

23. Clauses of “Interest” – Data Rights Example

24. 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.

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

26. Clauses of “Interest” –IP Example

27. Clauses of “Interest” –IP Example

28. Clauses of “Interest” – IP Example Exercise
Protocol is owned by WSU

29. 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
Export Control= Once we give up our ability to publish, we are now moved into a whole new category where we cannot claim the Fundamental Research Exemption. This means that we must be extra sensitive to ensuring that we are not working with export controlled information or materials.

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

31. Clauses of “Interest” – Publication Rights Example…

32. Clauses of “Interest” – Publication Rights Example
“intent is not to restrict however ”

33. Clauses of “Interest” – Publication Rights Exampleta

34. 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

35. Clauses of “Interest” – Indemnification (Article 5.17)

36. Clauses of “Interest” – Indemnification Example

37. Clauses of “Interest” – Indemnification Example
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.

38. 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

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

40. Clauses of “Interest” – Governing Law Example

41. Clauses of “Interest” – Governing Law Example

42. 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)

43. Contract Close-Out – Items to Consider
Financial reports
Invention reports
Technical reports
Property reports

44. 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.

45. 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.

46. 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.

47. EXTRA SLIDES

48. WSU’s SPA
WSU’s standard project agreement template available on the OGRD website
Feel free to provide our template to interested companies who may not have one

49. 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.

50. 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.

51. 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.

52. This has been a WSU Training Videoconference
10/21/2017
This has been a WSU Training Videoconference
If you attended this live training session and wish to have your attendance documented in your training history, please notify Human Resource Services within 24 hours of today's date:
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