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Contracting - University of Colorado at Boulder

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					 TRAINING MODULE II:
        PART I



CONTRACTING
     Office of Contracts and Grants
  The University of Colorado at Boulder
           February 24, 2011

                                          1
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
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.

   Considered to be Financial Assistance – not
    a procurement.

                                                    3
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
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
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 more problematic:

       more difficult to negotiate
       more difficult to administer because they are governed
        by specific terms and conditions
       require specific standards of performance
       legally binding (We do not have the option to terminate
        the agreement.)
       involve cultural and legal issues of foreign sponsors
                                                                   6
    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
AWARD PROCESSING
       and
  MANAGEMENT


                   8
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.

                                                             9
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.


                                                            10
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
                                                   11
CONTRACT ACCEPTANCE

      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.



                                                            12
CONTRACTS ARE NOT GRANTS


    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




                                             13
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

                                                         14
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

                                                           15
CONTRACT ISSUES




                  16
    TROUBLESOME CLAUSES/ISSUES
   Financial
   Payments
   Scope of Work
   Deliverables: Inspection and Acceptance
   Key Personnel and Technical Direction
   Publication restrictions
   Restricted, Proprietary, and Classified Research
   Intellectual Property/Work for Hire/Rights in Data
   Export Laws/ EAR, ITAR and OFAC
   Use of name/Publicity
   Endorsement of Results
   Disclosure of Sponsorship
   Protection of Students
   Termination
   Audit
   Indemnification/Limitation of Liability/Insurance
                                                         17
TROUBLESOME CLAUSES/ISSUES
Financial
   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.
                                                        18
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.

                                                                19
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.


                                                     20
TROUBLESOME CLAUSES/ISSUES
Publication
   Know the CU policies “inside and out” = the maximum
    acceptable delay is 180 days

   Understand why the right to publish is a legal, practical,
    and philosophical requirement of academic research.

   Understand what types of limitations are appropriate
    and may be accepted:
      To protect the identity of research
       subjects/participants;
      To allow for the protection of intellectual property;
      To allow for the redaction of proprietary information.

                                                                 21
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.

    Separate agreements with the faculty are discouraged.

    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 terms
     must be reviewed by the Restricted, Proprietary, and Classified
     Research Committee and approved by the Chancellor.

                                                                              22
TROUBLESOME CLAUSES/ISSUES
Patents and Invention Rights
   What intellectual property is covered by the agreement?
   Will the institution retain rights to data, publications and
    inventions?
   Are publication rights unduly restricted in the interest of
    protecting commercial interests?
   Are the time periods for sponsor election of rights and
    review of publications kept to the minimum?
   Who pays for patent application costs?
   What types of licenses are appropriate?

                                                                   23
TROUBLESOME CLAUSES/ISSUES
Work for Hire
   Do not enter “work for hire” agreements
    because such agreements cede ownership of
    intellectual property to the sponsor.
   Ownership of reports and other deliverables
    may be awarded to the sponsor only if the
    University retains ownership of the data and
    information contained in such documents and
    the right to publish or, otherwise, disclose the
    data and information.

                                                       24
TROUBLESOME CLAUSES/ISSUES
Export / Import Laws
   The Export/Import Laws are the law and are in effect
    whether or not cited in the contract.
   The application of the law is determined by the
    technology and the nature of the research.
   ITAR, EAR, OFAC and “deemed exports”
   Maintain the University’s fundamental research
    exclusion by:
      Not accepting restrictions on publication or
       disclosure
      Not accepting restrictions on personnel
                                                           25
TROUBLESOME CLAUSES/ISSUES

Protection of Students
   Students must not be allowed to enter into
    confidentiality agreements, if the results of their work are
    intended to be used 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.
   Special vigilance is always required whenever students
    are working on industry funded projects.



                                                                   26
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.
                                                                27
OTHER AGREEMENTS WE ADMINISTER

      Non-disclosure Agreements
      SBIR/STTR Agreements
      Software Licenses
      Data Use Agreements
      Facilities Use Agreements
      Visiting Scholar Agreements



                                     28
NONDISCLOSURE
 AGREEMENTS



                29
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
                                                                 30
NONDISCLOSURE AGREEMENTS
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                          31
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.




                                                                           32
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



                                                                           33
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               34
NONDISCLOSURE AGREEMENTS
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.
                                                              35
DANGER WILL ROBINSON!!!!
   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
    probably 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.
                                                                           36
NONDISCLOSURE AGREEMENTS
 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.
                                                                       37
SMALL BUSINESS
  PROGRAMS



                 38
SMALL BUSINESS PROGRAMS

 SBIR:
 Small Business Innovation Research
  Program

 STTR:
 Small Business Technology Transfer
  Program

                                      39
SMALL BUSINESS PROGRAMS
   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.

                                                            40
SMALL BUSINESS PROGRAMS

   Phase I – Feasibility Study
      $100,000
      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


                                               41
WHICH AGENCIES ARE PARTICIPATING?


   DOD    SBIR/STTR
                         SBIR/STTR
   HHS    SBIR/STTR
   NASA   SBIR/STTR       Proposal
   DOE    SBIR/STTR    guidelines and
   NSF    SBIR/STTR     award terms
   DHS    SBIR /STTR     vary from
   USDA   SBIR           agency to
   DOC    SBIR            agency.
   ED     SBIR
   EPA    SBIR
   DOT    SBIR

                                         42
WHAT CAN BE DONE TO FACILITATE A
HAPPY ENDING?


   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.
                                                      43
WHAT CAN BE DONE TO FACILITATE A
HAPPY ENDING?

   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.
                                                              44

				
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