Breakout Session # 1707 Dudley Sharp, Contracts Manager, Arizona State University

2. Contracting with Universities – What’s Different? Breakout Session #1707 Dudley Sharp, Contracts Manager, Arizona State University Debbie Shaver, Site Supervisor, Arizona State University Date: April 11, 2006 Time: 4:30 – 5:30 pm NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

3. Agenda • What’s different about universities?Sponsoring vs. purchasing • What are benefits of collaborating between universities and partners? • What are the challenges? • Creating a winning situation NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

4. What’s different about universities? • In most circumstances, universities allow companies and other entities to “sponsor” research rather than “selling” research NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

5. Sponsoring vs. Purchasing Research • . What does it mean to “sponsor” research? • Companies typically pay for university investigators to focus some of their research on a particular objective • The university owns the results • Typically, the company will be granted first right to license the technology NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

6. Sponsoring vs. Purchasing Research • Why not purchasing research (or Work for Hire)? • The particular area on which the company wishes the researcher to focus is only a small part of the total research NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

7. Sponsoring vs. Purchasing Research NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

8. Sponsoring vs. Purchasing Research • Above the water line – current project • Below the line • Previous research • Facility investments • Personnel investments • Faculty • Students NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

9. Contracting with Universities • What are the benefits to Industry-University collaboration? NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

10. Benefits to University • Expand field of knowledge • Develop faculty • Learning experiences for students • Enhance reputation of institution • Attract top talent • Potential for revenue stream NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

11. Benefits to Industry • Access to cutting-edge technological knowledge • Ability to get services of experts in focused areas of research • Ability to gain benefits of previous funded research • Research is typically performed at below true cost NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

12. Benefits to Industry • Access to multiple disciplines • Potential for return on investment • Investment is less than in-house NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

13. Challenges What are the challenges to industry - university collaboration? • Cultural • Statutory • Terms (including flowdown of industry clauses) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

14. Cultural Challenges • Part from predominant procurement instrument • Part from unique culture NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

15. Cultural Challenges Grants are seller-driven • Funding agency provides support for proposal • Intended to benefit public good • Project director (PD) has considerable control/flexibility • Usually require minimal reporting NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

16. Cultural Challenges • Contracts are buyer-driven • Specific direction is developed by funding source • Source solicits proposals • Funding source assumes role of “purchaser” • Performance requirements specific • Project expenditures often restricted NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

17. Cultural Challenges • Industrial Culture • Profit-oriented • Protection of proprietary data • Quick response • Clear lines of authority NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

18. Cultural Challenges • University Culture • Non-profit • Values idea dissemination • Values deliberation and consensus • Diffuse lines of authority NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

19. Cultural Challenges • Lack of understanding of culture • Lack of understanding of other funding sources (including state legislatures) • Work-for-hire mentality • Attempts to restrict publications • Restrictions on the use of foreign students NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

20. Statutory Challenges • Universities are: • Non-profit organizations • Often governed by state law • Educational mission is primary NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

21. Terms Challenges • Payments • Non-profit (no margin to cover risk) • Public institutions must avoid appearance of subsidizing sponsor • Advance payment may be necessary NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

22. Terms Challenges • Termination • Each contract should have a termination clause protecting the university’s non-cancelable obligations • Protect graduate students that are contractually committed through the end of semester NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

23. Terms Challenges • Publication Policy • Dissemination of information is key to the educational environment • Research activities are an integral part of the education process • Faculty need to publish results • Graduate students must fulfill degree requirements • Can allow for sponsor review • Can provide for reasonable delay NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

24. Terms Challenges • Confidentiality • Public records laws hamper some universities • Agreements may be with the individual or the university NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

25. Terms Challenges • Intellectual Property (IP) • Patentable discoveries or inventions are property of the university • Policy/Statute determines how IP can be assigned or licensed (including Bayh-Dole) • Technology Transfer Office is responsible for IP matters NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

26. Terms Challenges • Best Effort • Research is unpredictable and results cannot be guaranteed • Best or reasonable efforts terms are used NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

27. Terms Challenges • Indemnification • Many state institutions are prohibited by statute from providing indemnification for the acts of third parties • University is still responsible for the actions of agents, employees, students NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

28. Terms Challenges • Insurance • Self insurance • Nature of coverage • Additional insured NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

29. Terms Challenges • Arbitration • Many state institutions are prohibited from accepting binding arbitration • Other forms of alternate dispute resolution may be acceptable alternatives NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

30. Creating a Winning Situation • Communication is key – and not just technical issues • Neither side should be afraid the other might make money • Both sides need to look for ways to make it work • Success breeds success NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

31. Creating a Winning Situation • Ensure there is open dialogue on objectives • Each side should look for long-term relationships with mutual benefits • What is the potential for future funding? • Are additional funding sources desirable? NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

32. Creating a Winning Situation • Discuss “field of use” • Understand the potential for exclusive or non-exclusive licensing • Get the right contracting professionals on both sides involved as soon as possible NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

33. Creating a Winning Situation • Identify contributions and needs of each party • Use as a basis for reaching an agreement • Be wary of trying to establish a price for something yet to be invented • Consider options NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

34. SampleBrochure NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

35. Thanks for coming!Any questions? NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management