Industrial Sponsorship FAQs
OSP realizes that a lot of industrial sponsorship is born out of a PI's relationship with the sponsor. If discussions with a potential industrial sponsor reach the point of negotiation (other than technical), we ask that you notify the appropriate OSP personnel. We will provide service and support in negotiating the terms and conditions.
As a state entity that is non-profit there are several terms and conditions that we cannot agree to that are commonly found in agreements with industrial sponsors. Additionally, we would advise that if you are fairly comfortable with the potential industrial sponsor then we would assist you in providing a copy of our standard research agreement.
Secondly, we may already have a "Master Agreement" in place with the sponsor and therefore would not need to negotiate terms.
Thirdly, many smaller companies do not have a standard agreement and we advise that they use ours.
Virginia Tech has a standard "generic" research agreement that should be used in all industrial sponsorship. We would prefer to start our negotiations with an industrial sponsor on our own terms and conditions.
A fixed price agreement is a set price for the defined project. OSP will bill based on a fixed schedule. It is our preference that we negotiate fixed priced payments according to the following format:
- 25% of the total project costs within thirty days of full execution of the contract.
- 25% of the total project costs at the midway point of the project
- 25% of the total project costs approximately three-quarters through the project
- 25% of the total project costs upon completion
Three of the main clauses that we are sensitive to are Intellectual Property (IP) rights, indemnification, and governing laws. Industrial sponsors are usually more aggressive in trying to maintain the ownership of any intellectual property and thus publication rights. We will work to ensure that neither IP nor publication rights are sacrificed.
Industrial sponsors should be aware that, as a state entity, we cannot indemnify or hold harmless. The governing law must be the Commonwealth of Virginia.
No, we should never waive our overhead for an industrial sponsor. If it is the sponsor's policy to not pay overhead, then we require a copy of either the sponsor's policy and/or board minutes identifying their policy.
If you find that you are in need of additional time to meet the sponsored project goals, then a no-cost time extension may be warranted. The PI should initiate a request to the sponsor with a letter, phone call, fax, or email. The PI should state the technical reasons which necessitate this action and request that the approval be formally conveyed in writing to the appropriate OSP Post Award Associate.
If the sponsor fails to pay an invoice or a payment installment, then OSP will follow the steps outlined in our procedure OSP 30002 Accounts Receivable Associated with Sponsored Awards. If we cannot be sufficiently assured that a sponsor intends to pay, then we reserve the right to "freeze" the account to prevent any further expenditures. Failure on part of the sponsor to pay any outstanding debt will result in the account being sent to collections.
The principal investigator and the home department are responsible for any cost overruns the may occur. Principal investigators should be sensitive to the fact that a firm fixed contract is fixed. It is agreed up front that the sponsor will pay a fixed price and therefore the investigators will need to ensure the deliverable is met for the price agreed upon.
Payments should never be linked to deliverables. If the industrial sponsor insists on withholding some amount, we usually do not allow more than 25% of the project costs, then we want to be very clear in the agreement what the sponsor expects when the work is completed. The more detail built into the agreement the better the protection. Some sponsors may not require anything more than an itemized list of expenditures while others may require copies of lab books, final reports, dissertations, etc.
First, a sound agreement specifying all the terms and conditions (payments) is our best insurance against questionable sponsors. Problems of payments typically arise with small companies or new ones in the start-up phase of their lifecycle. However, for many of the small companies we may not be able to find a financial history to determine credit worthiness. In this case, we will work with the department and the principal investigator to determine what risks they are willing to take in the event a sponsor cannot pay.
Failure to pay is almost unilaterally aligned with the smaller companies. Whenever a larger company fails to pay, it is usually a result of a dispute with the deliverables of the project.
Teaming Agreements are created when more than two entities are collaborating on a project or group of projects. This may mean a team of several universities combined with several private entities or public institutions.
A Master Agreement is typically originated by a sponsor who sees that Virginia Tech will provide research support on many different projects. Instead of several mutually exclusive agreements a company may wish to create a Master Agreement identifying the common terms and conditions under which they and Virginia Tech will operate the research.