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Sponsored Research Agreements with Industry – Guidance and Policies

Find insight on Sponsored Research Agreements with Industry entities and see descriptions of policies related to industry agreements.

UC Office of the President policies for working with industry can be found at the UCOP website.

Sponsored Research Agreements with Industry

Considerations for working with industry

One of the areas of UC San Diego’s sponsored research portfolio that has been growing in recent years is with industry sponsors such as those in the fields of pharmaceuticals, biotechnology and telecommunications. These business sectors seek to collaborate with the researchers and scientists of a world-class institution such as ours, with opportunities to share information about proprietary technologies and cutting-edge developments, and have the opportunity to be the first to access innovations that emerge out of that sponsorship.

However, working with industry can be complicated, and is different from academic partnerships or sponsorships by federal grants and other funding sources. Here are some insights into the types of issues to be aware of when our researchers and their support teams are preparing to work with a for-profit sponsor.

Negotiating Agreement Terms with Industry Sponsors

Due to the differing missions, cultures, priorities and expectations of Universities and corporations, there is not always a perfect alignment between the objectives of University contract officers and corporate attorneys. Contracts often include complex terms such as rights to intellectual property and future licensing, and usually take longer than other types of agreements to negotiate.

In order to short-cut the extended negotiating process, we encourage our researchers to involve their UC San Diego contract officers in the early stages of discussion as extra time may be required to negotiate terms that protect the interests of our researchers and the institution. Patience is still a virtue, and the results can be very rewarding!

For questions about sponsored research with industry sponsors, please contact an OCGA Contract Officer or OCGA’s Information Desk at OCGAinfo@ucsd.edu.

Best Practices for Budgeting with Industry Sponsors

From the onset of the business relationship, budgets for industry sponsors should include direct AND indirect costs, and here are some reasons why:

  • Industry sponsors typically assume the budget proposed by UC San Diego represents total costs.
  • Industry sponsors might not realize that budgets presented with only direct costs will need indirect costs to be added.
  • UC San Diego is not in a position to negotiate a reduced or waived indirect cost rate for a for-profit entity.

To avoid negotiation delays and/or difficult conversations, it’s best to start off on the right foot by providing a budget that includes direct and indirect costs, and has been reviewed by OCGA prior to presenting to the sponsor.

For more information, visit Policies Affecting Agreements with Industry: Indirect Costs for Industry.

Using Kuali Research

Like all sponsored research projects, those funded by industry must be created and routed using Kuali Research, whether or not there is an external/formal proposal submission required by the company. This includes all extramurally funded clinical trials.

While Kuali Research helps us keep track of all proposals submitted through a formal portal or website, and those that are in response to a solicitation, Kuali Research also functions as our institutional system of record for all potential sponsored projects, whether or not there is a required solicitation or funding announcement.

For additional information regarding Kuali Research, please visit the Kuali Research pages.

Other Sponsored Research Offices

Sponsored Research Agreement Types

Sponsored Research Agreements involve funding for research. For other agreement types, go to the Ancillary Agreements page.

About Sponsored Research Agreements

A research agreement with industry is a contract between UCSD and an external, for-profit entity (sponsor) which provides funding for UCSD, and its subcontractors, as appropriate, to perform a research project based upon a mutually agreed upon scope of work and budget for the benefit of both parties.  The terms and conditions of the research agreement are negotiated between OCGA and the Sponsor, and upon execution, serve as the award document for the proposed research project.

Research agreements with industry typically cover the rights and obligations of each party, including, but not limited to: publication, intellectual property, data rights, indemnification, payment of research costs, confidential information, export controls, and period of performance of the project.

A sponsored research agreement is intended to cover a single research project in the laboratory of a UCSD principal investigator. Commonly, a research collaboration agreement is needed when a company and a principal investigator are engaged in similar or complementary research and the company supports the full cost of research in the UCSD laboratory. The primary focus of this type of agreement is to assure that the rights of the parties are protected with respect to retention of ownership and restrictions on dissemination prior to exchange of such information.

Non-disclosure/confidentiality agreements are generally only negotiated in advance of a formal research agreement and are generally limited to addressing topics such as the definition of confidential/proprietary information, the manner in which the information will be exchanged, information which is excluded from being considered confidential/proprietary. In the event that prior disclosure is not necessary, appropriate non-disclosure/confidentiality terms will typically be included as part of the actual research or collaboration agreement.

Clinical Trial Agreements

For more information on Clincial Trial Agreements, see the Clinical Trials page.

Center Memberships

A contract between UCSD and two or more outside entities, in exchange for the payment of established membership fees, to become a participating member of a program which supports a specific area of research focus at UCSD. In addition, it also includes UCSD researchers who are interested in participating in the designated area, and may include graduate student participation.

To provide the opportunity for certain companies who are interested in the same field of research to combine their financial resources together, assist in the selection of research projects of interest, and share in the resulting data and information generated from the projects.

For example:

UCSD is planning to create a Center that will devote its efforts to state of the art fusion research. The Director of the Center feels that the specific focus of the research would lend itself to the membership approach and decides to contact 6 companies that could potentially benefit from the Center research.

UCSD is responding to an announcement from the National Science Foundation (NSF) for establishment of research Centers which encourage participation of both Universities and industry. Per the announcement guidelines, Industry is required to cost share a portion of the research costs in exchange for membership in the Center. The amount of the award to UCSD from NSF is based upon the number of industry participants and their respective amount of required cost sharing.

Federal Flow-Through (including SBIR/STTR)

Definitions:

  • Federal Flow-Throughan agreement that contains funding provided by a federal agency (e.g. Army, Navy, NASA, DOE, NIH, etc.) to an entity such as a University, For-Profit, or Non-Profit, to UCSD in support of UCSD's participation in a research project.
  • SBIR: Small Business Innovation Research
  • STTR: Small Business Technology Transfer 

Federal Flow-Through Contracts Under SBIR/STTR

Federal Flow-Through Contracts under SBIR/STTR Program Agreements are subaward contracts or grants flowing through a small business entity to provide federal funds to UCSD for a research project.

A proposal is submitted by the small business to the federal agency and UCSD prepares and negotiates an agreement with the small business once the small business receives their Notice of Award from the federal agency.

The flow-through award (subcontract) covers the rights and obligations of UCSD and the funding pass-through entity (PTE), as well as the Prime federal agency. The document provided by the PTE also flows down applicable terms and conditions from the Prime award down to UCSD.

Master Agreements

Master Agreements are research contracts between a single sponsor and UCSD to cover a multitude, or variety, of research projects at UCSD or within a UCSD Department or Center.

The terms and conditions of the master agreement can govern all UCSD projects with the sponsor; therefore, an agreement does not need to be prepared or negotiated for each project, but a master agreement may require a long time to finalize due to its applicability to undefined research projects.

Once the master agreement is finalized, the sponsor will usually require pre-approval of a UCSD principal investigator’s proposal describing the scope of work and other project-specific aspects such as budget and schedule.

Policies Affecting Agreements with Industry

Related Links

Principals Regarding Future Research Results

The University’s Principles Policy establishes the fundamental parameters for negotiating to address the University’s rights and obligations regarding future University research results.

Publication

fundamental principle of the University is to establish an open teaching and research environment so that ideas can be exchanged freely among faculty and students. The University's research activities are an integral part of the total educational program, and often form the basis for peer-reviewed scholarly articles, seminar reports, presentations at professional conferences, and student dissertations and theses. Therefore, the University will conduct research or studies only if the scientific results can be published or otherwise promptly disseminated. Copyrights and publication rights belong to the University and/or the author.

Patents and Other Intellectual Property

The University's intellectual property policies aim to promote the progress of science and technology, to ensure that discoveries and inventions are used to benefit the public, to provide appropriate royalty revenues to the University and the inventor(s), and to support University research and education through invention-related income.

The University retains full patent rights from its sponsored research, and any invention or patentable idea conceived and reduced to practice by University employees in the conduct of a research project belongs to the University. The University may grant to the industry sponsor a time-limited first right to negotiate an exclusive or commercial nonexclusive license, based upon the level of sponsor support. Because the University is a California state university, its inventions are considered real property of the State of California. Therefore, the University follows U.S. Patent Law in the determination of inventorship, and ownership follows inventorship.

To streamline licensing terms and obtain upfront licenses under an industry-sponsored research agreement, companies are invited to review our Innovation Zone Program.

Preparing Budgets with Full Costs

When preparing and presenting proposed budgets to industry sponsors, Principal Investigators must ensure that the budget applies the full indirect cost rate for industry sponsored research agreements and industry funded clinical trials . Draft and preliminary budgets that exclude the applicable indirect cost rates lead industry sponsors to expect a lower overall cost for the research. Such under-funded budgets may lead to reductions in direct costs, revisions to the scope of work for the anticipated research project, and/or delays in the execution of the agreement.

Payments

As a non-profit public entity, the University is unable to work in arrears on privately funded projects. Rather, the University needs to ensure that it has received sufficient funds from the industry sponsor in advance of incurring such expenses and obligations. Therefore, it is the University’s expectation that it will receive, at a minimum, an initial payment upon execution of an agreement. Industry-sponsored projects are performed on a "no-profit--no loss" basis.

Termination of Funding Agreement

In the event a funding agreement is terminated by the industry sponsor for any reason, the sponsor will reimburse the University for all costs incurred to the date of termination and for all uncancellable obligations for cost reimburseable agreements. Agreements that include fixed-priced deliverables dictate the expectation that regardless of the Universities actual expenses, the payment from sponsors is tied to the performance of defined deliverables.

Use of the University's Name

Under no circumstances shall a sponsor be permitted to state or imply in any publication or other published announcement that the University has approved any product that is or might be manufactured, sold, or otherwise distributed. The sponsor also may not use the University’s name and logo in connection with any advertisement, press release, or other form of business promotion or publicity, or reference an existing research agreement, without its prior written approval per California Education Code, Section 92000 as outlined in UCOP references to policies under “Use of University’s Name”.

Liability, Risk, and Best Efforts

Since research by its nature is unpredictable and without guarantee of successful results, University research is conducted on a "best efforts" basis.

The University does not profit on its research. For this reason, and also because it is inconsistent with the best efforts principle, the University is unable to accept contract provisions that guarantee results, impose penalties for failure to make progress by firm deadlines, or provide for withholding of payment if the industry sponsor is not satisfied with the results.

The University may negotiate indemnification clauses appropriate for the project and agreement, in accordance with UCOP policies regarding indemnification. The University cannot accept 3rd party liability.

In certain clinical research projects, the industry sponsor may be requested to share or cover the medical costs of any human subject injured in the performance of the research.

Conflict of Interest (COI)

700-U: Statement of Economic Interests for Principal Investigators

The University has its own Conflict of Interest policies that conforms to applicable conflict of interest regulations, including but not limited to those set forth in by the Fair 3 Political Practices Commission (FPPC) under the State of California. Refer to the University’s policy on conflicts of interest which includes a description of the Principal Investigator’s responsibilities .

Agreements will not be signed until the COI office has determined that there is no conflict or that a conflict has been appropriately managed.

Indirect Costs (IDC) for Industry

UC Policy on IDC

UC policy mandates that an industry sponsor  must cover the full direct and indirect costs of the project. Please note that this policy applies even if the University is receiving the industry funds through a pass-through entity.

For-profit industry sponsors must be charged the full IDC rate applicable to the type of research or clinical trial listed on the UC San Diego Indirect Cost Rates table.

Why IDC Matters

Indirect costs are real costs incurred by the University to acquire and maintain its buildings and equipment, and to provide operational support. These support services include maintenance and operations (utilities, janitorial services, police services, etc.), library operations and administrative services. All of these costs are real, and without them, the University could not exist.

Full cost recovery is necessary to support the University’s physical and administrative capacity to perform research. When indirect costs are not fully recovered, maintaining the University’s research capabilities and infrastructure is compromised.

Since indirect costs are, in essence, actual costs, a reduction of indirect cost rates (or exempting certain costs) on funds received from for-profit organizations in support of research performed at the University are considered a gift of public funds (ex. federal or state funding) for private benefit, as the industry sponsor is not reimbursing the full cost of the project. Without full indirect cost recovery, the University is subsidizing the cost of the project for the sponsor; this is contrary to our public benefit principle and may jeopardize UCSD’s tax-exempt status.

Industry Funded Clinical Trials

Refer to guidance regarding the application of IDC for Industry Funded Clinical Trials.

Waiver of Indirect Costs for Industry Sponsors

Any exception to collecting full IDC from Industry Sponsors can only be approved by the Chancellor, after consultation with the Vice Chancellor for Research and the Assistant Vice Chancellor Contracts & Grants. As a general rule, the University expects for-profit sponsors to pay the full applicable indirect cost rate regardless of the for-profit sponsor’s own policy, as this ensures coverage of all applicable facilities and administrative costs borne by the University.

Industry Funded Fellowships, Scholars, and Educational Grants

For more information, contact our main desk at 858-534-3330 or email ocgainfo@ucsd.edu