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BROWN BAG LUNCHEON SERIES

September 9, 2009

Negotiation of Sponsored Research Contracts at Yale

Presented By:

Donald T. Deyo, Ph.D. Cheryl MagovenyDirector, International Agreements and Senior Grant & Contract ManagerExport Control Licensing Grant & Contract AdministrationGrant & Contract Grant Administration Cheryl.magoveny@yale.edudonald.deyo@yale.edu Phone: 203-436-9146Phone: 203-785-3817 Fax: 203-785-4159Fax: 203-432-7138:

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Agenda

Grant vs. contract GCA process for negotiating and executing

corporate sponsored research contracts Corporate contract challenges Publications Confidential Information Intellectual Property Indemnification Termination Payment Terms

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Grant vs. Contract

Grant - Financial “assistance mechanism”

Awarded by a publicly constituted body– Government – Federal, State, or Local– Non-profit organization - organized for public purpose

foundation, charity, etc.

Purpose– to transfer money, property, services, or anything of value to

recipient – to serve a public purpose and not immediate needs of Federal

Govt. Involvement with Recipient -no substantial programmatic

involvement during performance of activity

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Grant vs. Contract

Contract

A mutually binding legal relationship obligating Yale to furnish deliverables or services in exchange for payment by sponsor

Meeting sponsor’s need include:– specific objectives, – direction, – specifications, – costs, or methods of performance (see PR1304: Distinguishing

Between Gifts and Sponsored Projects)– services to be performed or – products to be delivered

Requires substantial involvement between the sponsor and recipient during performance of the Scope of Work

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Types of Contracts

U. S. Government Contracts Proposal

– Pricing Model– RFP– Other RFP Requirements

Award– Contract terms– FAR Clauses

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Types of Contracts

NON-FEDERAL Contracts Sponsored Research Agreement (SRA) with commercial

sponsor such as Pfizer or IBM Yale faculty member works out details of research plan

and budget with sponsor GCA negotiates terms and conditions with sponsor Other types of agreements are corporate clinical trial

agreements, material transfer agreements, confidentiality agreements.

Note: Contracts must have terms and conditions consistent with Yale’s not-for-profit status and must advance its educational and research objectives.

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GCA Process for Corporate Sponsored Research Contracts

Initiation: Usually through Investigator Department works to get Prosum to GCA with

budget and statement of work Negotiation: Usually takes going back and forth with

a Sponsor to get mutually acceptable terms. Budget and payment terms negotiated by

Investigator and Department Execution/Signature by Officials from both parties PI Signature of acknowledgement and understanding

of Terms and Conditions Yale has standard templates!

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What Usually Causes a Delay in Completing Agreements?

Publication Confidential Information Intellectual Property Indemnification Termination Payment Terms

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Publications

Yale policy protects the right of faculty and students to publish research results

– Neither GCA nor the PI have the authority to give up publication rights

– Sponsor can only review and comment on publications or presentations-NOT Approve content

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Delay of Publication

Should not exceed 90 days

Possible justifications:– To allow sponsor to review and comment– To protect sponsor’s confidential information– To allow a patent to be filed– To allow all parties of collaborative research

to complete their work

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Confidential Information

Yale strongly prefers not to accept confidential information– Complicates our right to publish– Our standards for protecting confidential

information don’t meet industry standards– Graduate students must be able to publish

without delays

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Confidential Information

Yale may agree to protect the confidential information that sponsor identifies in writing

We do not want to classify information which we develop in the course of the research as confidential

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Intellectual Property

IP defined as those “results” of the research that can be protected as:– Patents– Copyrightable works of authorship– “Research results” such as data and

information generally not protectable as IP

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Intellectual Property

Yale intellectual property Sponsor intellectual property Joint intellectual property Background intellectual property

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Handling of Intellectual Property

For patents, sponsor has the right to negotiate a license

Sponsor receives a limited non-exclusive copyright license to research reports generated under the SRA

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Indemnification

Why Indemnify?

What is it:• Terms that contains the phrase “indemnify, defend and

hold harmless”;

• Duty to make good any loss, damage, or liability incurred by another; or

• Right of an injured party to claim reimbursement for its loss, damage or liability from a person who has such duty.

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Indemnification

Sponsor generally should indemnify Yale– Sponsor is usually a commercial entity that will benefit

from the results of the sponsored research project– Yale is not going to commercially benefit and therefore

should not carry the burden of protecting the commercial sponsor

Exceptions to sponsor’s indemnification of Yale– Yale’s negligence or willful misconduct– Yale’s failure to follow applicable law

Yale generally prefers not to indemnify the sponsor

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Termination of Contracts

Termination– Termination for convenience: Both parties

may terminate for any reason (this rarely happens)

– Upon the date of expiration or termination, there shall be a final financial report prepared by Yale

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Termination of Contracts

Usually, within thirty (30) days after receipt of the Final Financial Report or invoice, sponsor will make payment to Yale for:

(1) All appropriate and allowable encumbrances, made by Yale through the date of termination not yet paid for; and

(2) All non-cancelable obligations incurred for the research by Yale prior to the date of termination

– Yale must ensure that its costs are recovered or reimbursed!

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Payment Terms

Fixed price or cost reimbursable contracts Yale, not the sponsor, should determine payment

terms Fixed price contracts obligate Yale to complete the

work without regard to internal cost; the sponsor must pay the full fixed amount regardless of how much it actually costs

Cost reimbursable contracts obligate Yale to work until the work is completed but no more than the agreed-upon cost is reimbursed

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Payment Terms

Advance Payment-large Installments– Minimize losses if there is a later dispute or default– Saves administrative costs and futility of collections

Payment in Full Upon Execution of Contract– Small awards– Short-term contracts – Use short-notice “material breach” language for

quick termination if default of payment

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What can Departments do to help?

Let GCA know as soon as possible regarding plans to initiate a SRA

Provide Yale’s standard agreement template to the sponsor; simultaneously providing sponsor contact information to GCA

Make sure the Prosum is properly completed and submitted with the correct F&A (65.5%) rate

Other concerns? COI, HIC, IACUC

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Questions?