UM Research Relations with Sponsors:
Working with Industry

DRDA is responsible for maintaining sponsored research relations between the University and industry. Proposal development and contract negotiation services are provided by DRDA to faculty members wishing to work with industrial organizations. Efforts are made to keep Michigan industry informed of University research activities of interest and to serve as a point of contact for any industrial organization wishing to take advantage of the various services available through the University. In cooperation with the faculty, research staff, and the various units of the University, DRDA works to achieve more meaningful University-industry relations. Further information can be obtained by calling 764-7250 or visiting the DRDA Project Representatives for industry sponsors at the Wolverine Tower, 3003 South State Street.

Grants and Contracts

Important distinctions must be recognized between grants and contracts--the two principal forms of contractual instruments used in agreements with industrial sponsors:

A grant is an award of funds by a sponsor to achieve some general or specific purpose. The nature of the relationship between the sponsor and the awardee has not explicitly been defined by law. While a grant is not as exacting in its provisions as a contract, it should be treated with the same respect. A grant from a federal sponsor generally is construed to allow greater discretion than a contract in the conduct of the research and to provide less specificity in the definition of the intended outcome of the research. This greater flexibility often is not as evident in research grants from industrial sponsors.
A contract involves a promise, or set of promises, the performance of which is recog-nized in law as a duty and obligation and for breach of which the law provides remedies. Each contract document contains a statement of work or a description of the services to be provided. This work statement should be drafted with great care. Failure by the University/contractor to deliver the results anticipated or to perform the work defined in the statement of work is a breach of contract.

In accordance with Section 3.06 of the Bylaws of the Board of Regents, every grant proposal or contract application (including subcontracts to be issued to the University) must be submitted for prior approval through the appropriate University channels before being sent to the proposed sponsor. Agreement formats and requests for proposals (RFP) or quotations (RFQ) offered by industrial sponsors may contain provisions that are inconsistent with the policies of the University or those of the State of Michigan. It is essential, therefore, that any proposed agreement be reviewed by the Division of Research Development and Administration prior to acceptance or initiation of work thereunder. DRDA will coordinate the review of such agreements with the Office of the General Counsel and the Intellectual Properties Office, as necessary. Documents that contractually bind the University can be signed only by a University official authorized to do so by the Board of Regents. Faculty members are not authorized to negotiate general terms and conditions of agreements with industry sponsors, but should refer such contract negotiations to the Division of Research Development and Administration. Negotiations regarding the technical statement of work will be carried out by the faculty member, subject to general policies and procedures of the University.

General Operating Policies

Several general policies regarding university-industry agreements are outlined below. Any situation that appears to deviate from these policies should be brought to the attention of DRDA prior to any agreement to or implementation of the deviation.

Proposals: A proposal is any oral or written presentation to a potential industrial or commercial sponsor that provides cost estimates. All proposals require review and coordination through DRDA, utilizing a Proposal Approval Form (PAF), prior to presentation to the sponsor.
Funding: Industrial sponsors are expected to pay the appropriate direct costs associated with their sponsored efforts. Employee benefits will be charged at estimated or actual cost. Unless otherwise authorized by the Office of the Vice President for Research, full indirect costs must be recovered at the rate established by the University for industry-sponsored grants and contracts. (See Indirect Costs).
Expenditure of Funds: Funds from an industrial sponsor are under the control of the faculty member identified by the sponsor and must be expended for their intended purpose, as delineated in the award document or proposal. A sponsored project account will be established in the University accounting system for this purpose.
Agreements: Any written agreement committing the University to the performance of a sponsored project forms a contractual relationship. All agreements (grants, contracts, subcontracts, cooperative agreements, letters of commitment) require review by the Division of Research Development and Administration and the Office of Contract Administration and must be signed by a University official who has been delegated signatory authority by the Board of Regents.

Standards for Agreements Involving Human Research
Agreements involving human research must address the following requirements.
1. The sponsor must report to the University, through the relevant Institutional Review Board, any findings that could:
2. The sponsor also must agree to cooperate with the University in communicating results from a research study to participants when those results directly affect their safety or medical care.
The above requirements may be addressed in a master agreement, a project-specific agreement or any of their respective incorporated attachments.
Reporting: The Project Director is responsible for providing progress reports to the sponsor in accordance with terms of the agreement or, if reporting requirements are not explicitly stipulated, on a reasonable basis.
University Name: All agreements will require that the sponsor obtain written permission from the University prior to using the University name or trademarks in any advertising or public statement.
Publication: The University will not accept any sponsored program which denies the University the right to divulge the source of support or to publish the results of the research. However, the University may agree to: exclude sponsor-provided privileged information from such publication; submit the proposed publication to the sponsor for review prior to publication; delay publication for a reasonable period of time to permit patent applications.
Sponsor's Products: Products of a sponsor may be used in a test program if requested by the sponsor.
Confidentiality: Privileged information, specifically identified as such by the sponsor, may be received under promise of confidentiality for a prescribed period of time. Each University employee undertakes this responsibility as a part of the employment agreement. The safeguarding of such information is primarily the responsibility of the Project Director. However, agreements for exchange of confidential information (nondisclosure or secrecy agreements) which involve University personnel, acting within the scope of their employment, must be signed by an authorized University official.
Title/Patents: Provisions regarding access to and ownership of any intellectual property that may result from the research may be included in the agreement entered into by the University and the sponsor. As a general rule, title to all technology developed through a sponsored effort will remain with the University. [See Intellectual Property Policy] The sponsor may be granted certain rights to pursue the further development and commercialization of any intellectual property that may arise during the performance of the sponsored project under agreement. Alternatively, the sponsor may be granted a nonexclusive license for the use of such intellectual property. In the event the sponsor obtains a profit from permitting use of the technology outside of the sponsor's organization, the University expects to receive a reasonable royalty. The University will negotiate specific license terms and conditions with the sponsor upon disclosure of any intellectual property to the sponsor. Provisions regarding the intellectual property rights of the sponsor generally will not be included in grant agreements.

Special care must be exercised in the negotiation and acceptance of research agreements with industry. There are relatively few "standard" provisions for such agreements; the approach of each sponsor to conducting business with the University is often different (even among units of the same corporation). The motivation to sponsor research often is to attain commercial benefits, and therefore, the sponsor may want to exert more control over the way the research effort is conducted and the manner in which the results are utilized.

Industrial Affiliates

Programs for industrial affiliates can be established to gain support from business and industry for broadly defined research or other programs of interest to the member organizations. In addition to research affiliations, members may also be involved in an advisory capacity and interact with senior faculty and leadership of the unit. The development of industrial affiliate or partnership programs, sustained, in part, by corporate membership fees, is a potential area of support that remains largely untapped by some units. Membership offers the opportunity to view in some various aspects of a designated area of research and may include access to reports and technical papers; contact with faculty, technical staff, and graduate students who have relevant research experience; and exposure to a broader area of research than would be possible with individual funding. These programs can provide a strong base for an industrial partnership which may lead to gifts, grants, or more specific contracts for sponsored projects, expanding upon particular aspects of the program which are of interest to individual members. DRDA is responsible for maintaining sponsor research relations between the University and industry.

The Corporate and Foundation Relations (CFR) office in the Development Office is similarly charged with the goal of broadly expanding industrial relationships with the University and enhancing industrial gifts and grants. Both units work in cooperation with the faculty, research staff, and other units of the University to achieve more meaningful University-industry relations. DRDA and CFR coordinate their efforts and strive to keep Michigan industry informed of University research and the many other university activities that may be of interest. DRDA is primarily involved in the administration of grants and contracts. The CFR office is primarily involved in external marketing and partnership of relationship building activities. While these affiliate programs are beneficial to the University, it should be recognized that special care must be exercised in the formulation, negotiation, and approval of affiliate/partnership agreements.

A number of factors must be considered up front in this process, including the motivation of industry partners, services to members, potential commercial benefits, the fee structure, control of the research effort, proprietary interests, and the manner in which the results are disseminated or utilized. It is essential, therefore, that any proposed industrial affiliates or partnership program be reviewed by DRDA prior to its initiation. DRDA maintains a file of "templates" of agreements that have been successfully launched and can be of significant assistance in the early stages in the framing of the program so that the membership fees are clearly in support of a general set of activities and do not involve any contractual obligations. DRDA will coordinate the review of such agreements with the Office of the General Counsel, the CFR office, and other administrative offices, as necessary. DRDA is responsible for maintaining descriptive information and agreements regarding all University industrial affiliates programs.

Any substantive changes in the scope of the program should be discussed with representatives of DRDA. Subsequent research projects of a more proprietary nature on behalf of an individual member of the program should be undertaken as a separate research agreement. Activities funded under an industrial affiliates program usually involve basic research. Therefore, intellectual property is not expected to result and no licenses are automatically granted to members. The University generally elects to recover the recovery of indirect costs at a reduced rate on affiliates programs on the rationale that the contribution to the affiliates program is not expected to foster direct commercial benefit to the members. Membership fees are accepted as grants and are accounted for in an expendable restricted fund. Membership fees are recorded as contributions by the Development Office. Generally, gift receipts are not issued by the University for such grants, however. Since all member funds are commingled, no individual accounting for the expenditure of a member's contribution can be made. For futher information concerning the services provided by DRDA and the CFR office to assist in establishing of industrial affiliate and partnership programs, contact Marvin Parnes, 764-7230 (mgparnes@umich.edu).

Research Consortia

The term "consortium" is not as well defined in practice as are industrial affiliates programs. In general, a consortium has specific, well-defined research objectives which usually involve researchers from different disciplines. Funding for consortium activities may be provided by multiple sponsors, including a combination of public and private sponsors. It may be possible to structure a research consortium to address the specific needs of the sponsor(s). Sponsor contributions may include technical assistance, materials, equipment, and facilities, as well as money. A consortium can be thought of as a single (usually large and/or long-term) research project with multiple sponsors. The recovery of full indirect cost is expected. Rights to intellectual property and other technologies resulting from the research may be negotiated with the sponsors. The major disadvantage of this approach is the effort required to put all of the pieces together. Depending on the contributions of the sponsors and the type of research being conducted, the definition of intellectual property rights could require significant effort. Provisions by sponsors of technical assistance, proprietary information, and materials may require license negotiations before the research efforts begin. Competing interests of the various sponsors may make necessary the provision of formal mechanisms for sponsors and researchers to voice their opinions and to resolve potential disagreements about the research. Since the sponsoring organ-izations have different commercial interests and may not have interacted in business before, this approach may require them to establish new business relationships outside of the research involvement.

Routine/Commercial Testing

Research units/laboratories may receive requests from time to time from industry or other external groups to carry out certain testing activities (including serving as beta test sites) which often involve repetitive, quantitative measurements, the results of which.are of primary interest to the sponsor or client and, in some cases, are only interpretable by the sponsor. Such routine tests or investigations for individuals, firms, corporations, or other organizations may be undertaken at the University of Michigan under certain conditions, as outlined in further detail in Commercial Testing. Any agreement to provide such routine or commercial testing services, including purchase orders constitutes a contract between the University and the recipient of the services, and in accordance with Section 3.06 of the Bylaws of the Board of Regents, should be submitted for review and approval through the appropriate University channels. The DRDA staff is available to work with the faculty or others involved in the provision of such services to ensure that such activities are undertaken in compliance with University policy and procedures.

UM Research Relations with Sponsors:Working with Industry

Grants and Contracts

General Operating Policies

Industrial Affiliates

Research Consortia

Routine/Commercial Testing

UM Research Relations with Sponsors:
Working with Industry