Handbook for Principal Investigators
CONTRACT PROCESS
Our dealings with the private sector have become increasingly difficult
over the last ten years. Motivated by maximizing profits or other considerations,
companies frequently include contract terms in their agreements that are
problematic in terms of ABOR policy and State law. Reaching mutually satisfactory
arrangements in our partnership with industry can be difficult, given
our different missions. Contentious issues include: publication constraints,
confidentiality clauses, intellectual property rights, payment terms,
liability and insurance issues, arbitration clauses, and requests for
indirect cost reductions. Investigators should understand the University’s
position on these issues before they begin discussions with prospective
sponsors. Clear communication at the initial stage makes the negotiation
process easier and is the most important factor in minimizing processing
turnaround time.
The contract review process can be complicated. University sign off on
contracts is not available on a walk-through basis.
Routing the Proposal
- Submit a fully-approved Proposal Routing Sheet, budget, and statement
of scope of work to Sponsored Projects before beginning the contract
process. The budget is checked and approved, and administrative approval
of arrangements such as space and cost sharing is formally documented
on the Proposal Routing Sheet. Routing the proposal at an early stage
saves the investigator from the awkward situation of proposing a project
to a sponsor that the University will not accept. ORCA and OTT will
not negotiate or sign an agreement with a sponsor until Sponsored Projects
receives and approves the Proposal Routing Sheet.
- Route the proposal according to the Proposal Routing Sheet instructions, whether the award instrument will be a contract,
clinical trial agreement, grant, or purchase order. The proposal package
should include a Proposal Routing Sheet, budget, budget justification, abstract, and application
face page. All requests for reduction in the indirect cost rate are
reviewed by the Office of the Vice President for Research before routing
the proposal to Sponsored Projects. Sponsored Projects Services will
check the format and accuracy of the budget, review the Routing Sheet
for completeness, and sign the Routing Sheet and face page on behalf
of the Vice President for Research. Sponsored Projects will keep the
proposal package on file until the proposal is either rejected, withdrawn,
or awarded.
- The principal investigator takes on a great deal of responsibility when proposing a project on behalf of the University. An investigator would never consider allowing a designee to sign the sponsor’s Application Page when submitting a proposal. Using the same logic, the University requires the principal investigator and co-principal investigator(s) to personally sign the Proposal Routing Sheet, for ALL Proposal Routing Sheets, routed at the preaward or postaward stages. Signature authority for the principal investigator may not be delegated to the unit research administrator for any Proposal Routing Sheet.
Drafting the Agreement
- Provide prospective sponsors with the University standard agreements,
which state our position on acceptable terms and conditions. Standard
agreements are available at the Office of Technology Transfer (OTT),
the Office of Research and Contract Analysis (ORCA) and your department
head. The Directors of OTT and ORCA are the University contacts for explaining University requirements
to sponsors and faculty.
- Negotiate directly with the sponsors only on the budget and scope
of work. Investigators may not negotiate any other terms.
Frequently, companies will not give up terms offered by investigators,
even those terms that are not acceptable to the University, the State,
or ABOR. Prolonged negotiations result.
- Do not offer indirect cost discounts to make a deal.
The University cannot legally subsidize the private sector. Reductions
in indirect costs must be approved in advance at the proposal stage by the Vice
President for Research.
- Inform the sponsor of the University requirement for advance
payment terms at the beginning of the process, before the contract
is written. The University expects the sponsors of research projects
to finance their projects on an advance payment basis. Payment terms
should provide for a cash balance sufficient to meet the expenditure
needs of the project throughout the life of the project. Contract payment
terms should require an initial payment at start up, followed by interim
payments based on milestones or cost.
Principal investigators should consider the risk of default when setting
up the payment terms. If the principal investigator is aware of any
information about the sponsor that is relevant to determining the risk
of default of payment, it is the investigator’s responsibility
to report the information to the Vice President for Research.
Federal sponsors, sub-federal sponsors, non-profit sponsors, and educational
institutions are exempt from this policy. Other exceptions may be
approved by the Vice President for Research or the Director of Sponsored
Projects Services.
Checks must be made payable to The University of Arizona and mailed
to the UA Bursar:
The University of Arizona
Sponsored Projects Services
P.O. Box 3520
Tucson, AZ 85722-3520
- All contracts should contain a property title clause,
even if the proposed budget does not include equipment. This will prevent
a problem should equipment be purchased during the life of the contract.
The standard University property clause states, "Upon termination
of the Agreement, any equipment, material, or supplies remaining in
stock will become the property of the University."
The property title clause should be appropriately worded if equipment
and supplies purchased for projects conducted off-site (e.g., host country,
host university, cooperating U.S. agency, a host governmental agency,
host country research foundation, museum, or relief or aid organization),
are to remain at the off-site location after the termination of the
contract.
- Get ORCA into the loop as early as possible so terms can be prenegotiated.
Investigators are encouraged to forward draft agreements, especially
those with non-standard terms, to ORCA at the earliest
possible stage. Draft agreements may be forwarded directly to the ORCA, independent of the proposal
routing process. If you send the draft agreement to Sponsored Projects,
attached to the Proposal Routing Sheet, clearly indicate that
the draft agreement should be forwarded to ORCA. Otherwise,
the draft agreement will be filed with the proposal.
Negotiating the Agreement
- The University requires the original agreement, including
purchase orders, and original signatures from the sponsor. Photocopies
will not be accepted.
- Be sure that all referenced attachments are present with the agreement.
- The administrative process for awards begins in Sponsored Projects.
The award document, or agreement, is matched to the appropriate proposal
file. A log record is created in the Sponsored Projects database to
track the status of the award document. If the award document does not
require University signature (e.g., grants), then the paperwork is passed
directly to the fund accountant and the University spending account
is set up immediately.
- If the award instrument requires University signature, or if specific
terms or conditions are involved (e.g., contracts, clinical trials,
some purchase orders), Sponsored Projects will first send a copy of
the agreement to the principal investigator for review and approval
of terms, particularly budget, scope of work, effective dates, and reporting
requirements. After Sponsored Projects receives written acceptance from
the principal investigator (SP-226),
Sponsored Projects forwards the package to ORCA for review.
- If non-standard terms are involved, ORCA will forward the agreement
to OTT and/or the University Attorneys Office for review, approval,
and negotiation with the sponsor, if appropriate. OTT or ORCA will notify
the principal investigator immediately if the agreement contains terms
that the University cannot accept.
- After resolving the non-standard terms, OTT or the University Attorneys
Office will return the contract to ORCA for signature.
Signing the Agreement
- Principal investigators are not authorized to sign agreements on behalf
of the University. Only those individuals specifically authorized by
the Arizona Board of Regents may legally sign agreements for the Board,
acting for and on behalf of The University of Arizona.
- If the terms of the agreement are standard, ORCA will sign the documents,
generally within 1-3 days.
- If the sponsor's signature is present on the agreement and if there
are no changes to the agreement, ORCA will sign for the University,
forwarding one original, fully-executed agreement to Sponsored Projects
and an original, fully-executed agreement to the sponsor, with a copy
to the principal investigator. If changes to the contract are required,
ORCA will return the contract to the sponsor to initial the changes
before signing the contract.
- If the sponsor’s signature is not present on the agreement and
if there are no changes to the agreement, ORCA will sign for the University
and return the original documents to the sponsor for signature. ORCA
will return a copy of the partially executed agreement to Sponsored
Projects and a copy of the cover letter to the principal investigator.
When the sponsor returns the fully-executed agreement to the University,
Sponsored Projects will forward a copy of the fully-executed agreement
to the principal investigator and business manager. If changes to the
contract are required, ORCA will return the original agreement to the
sponsor, unsigned. After the sponsor sends the signed agreement to the
University, ORCA will sign the agreement, forwarding one original, fully-executed
agreement to Sponsored Projects and an original, fully-executed agreement
to the sponsor. Sponsored Project will send a copy to the principal
investigator and business manager.
Intellectual Property Issues
- The University does not give up publication rights or sign contracts
that include the contractual requirement that the sponsor must approve
publications. The requirement for sponsor approval of publications is
effectively a bar. A public university has an obligation to make the
results of its research available.
- In extreme cases, The
University Handbook for Appointed Personnel allows for secret
research if approved by the Vice President for Research. To obtain approval
for secret research, the principal investigator(s) must assure that
no students or others whose careers might be affected are involved and
that the investigator(s) acknowledges that the project cannot be used
for promotion and tenure or any other evaluation.
- The University of Arizona is bound by State law and ABOR
policy.
- The University must receive fair market value for intellectual property.
Royalty-bearing exclusive or non-exclusive licenses are strongly encouraged;
however, title can be assigned if absolutely necessary under ABOR specified
terms.
- The University will not agree to contractual terms which require title
or other access (e.g., a non-exclusive license) for the work of individuals
other than the investigator(s) involved in the specific contract (the
so-called non-assert clause).
- Materials transfer agreements, confidentiality agreements, and teaming
agreements should go directly to the Office of Technology Transfer (OTT)
for review; OTT will forward the documents to ORCA or the Vice President
for Research for signature.
Contact the Office of Technology Transfer with issues regarding intellectual
property. Copies of the University patent policy, copyright policy, standard
services agreement, and standard research agreements are available from
the Office of Technology Transfer.
Contact:
Office of Technology Transfer
University Services Building, Room 204
621-5000
Checklist
of Required Documents for Processing a Contract |
- Fully approved Proposal Routing Sheet
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- Approved waiver of indirect costs, if applicable
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- Approved waiver of requirement for advance payment terms, if
applicable
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- Original contract document
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- All attachments referenced in contract
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- Signed SP-226, "Notice of Contract Receipt/Approval"
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