Contract Services at FAU

The parties in an agreement may need to disclose information deemed confidential during the course of the project. Confidentiality clauses in an agreement prescribe how sensitive and/or proprietary information will be handled. When these clauses are included in an agreement, FAU needs to ensure they do not restrict public disclosure of research results and that any confidential information provided to FAU is marked so it is not inadvertently disclosed. If applicable, Contract Services will work together with the Office of the General Counsel and the Office of Technology Development to negotiate the agreement language to protect both Principal Investigator (PI) and FAU.

Export-controlled information or material is any information or material that cannot be released to foreign nationals or representatives of a foreign entity, without first obtaining an approval or license from the Department of State for items controlled by the International Traffic in Arms Regulations (ITAR), or the Department of Commerce for items controlled by the Export Administration Regulations (EAR). Export-controlled information must be controlled as sensitive information and marked accordingly. Projects that include foreign travel, foreign students, collaboration with foreign entities, and/or potentially export-controlled information or material must be approved by FAU’s Export Control Officer.

Federal grants are generally issued under the Uniform Guidance, which is a set of rules and regulations from the Office of Management and Budget (OMB). Federal contracts are generally issued under the Federal Acquisition Regulation (FAR), which establishes uniform policies and procedures that govern the procurement process of Federal agencies. The FAR is codified in Title 48 of the Code of Federal Regulations (CFR). The FAR has the full force and effect of law. Most federal agencies have issued supplements to the FAR, which contain agency-specific regulations governing the implementation of the FAR for purposes of that agency's contracts and agreements. Examples include the Department of Defense Federal Agency Regulation Supplement (DFARS), National Aeronautics and Space Administration (NASA) Supplement (NFS), and the Department of Energy Acquisition Guide (DEAR).

Within the FAR, there are specific clauses that describe the rules for contracting with the government in specific situations. For example, certain FAR clauses are prescribed for cost-reimbursement contracts, others with fixed-fee agreements. Some FAR clauses are specific to fundamental research, others to controlled information, and so forth. Contract Services must carefully review all FAR and FAR supplement clauses to ensure they are applicable to FAU and to the specific project, and that FAU is compliant or working toward compliance. FAR clauses can be incorporated by full text or by reference and often comprise multiple pages of an agreement and take a considerable time to review. Additionally, the FAR and FAR supplement clauses must frequently be negotiated with the Sponsor to eliminate those that are not applicable and to substitute alternate clauses as needed.

The governing law provision in an agreement indicates what law will govern the research project and where any arbitration or litigation may take place should there be a court dispute. Agreements often specify not only governing law, but the forum or venue for any court proceedings. Venue is often in the state and county of the Sponsor’s primary place of business. As an agency of the State of Florida, FAU is protected by sovereign immunity and therefore is prohibited from agreeing to the law or courts of another state, as this could be a waiver of that immunity. Consequently, FAU will negotiate for Governing Law to be Florida, and venue to be Palm Beach County.

Indemnification and/or liability clauses determine the extent that FAU and the Sponsor will be legally responsible should something go wrong during the project and/or under what circumstances one party will defend the other. Hold harmless and indemnification clauses usually have language whereby the State agrees to assume the risk of liability which might otherwise fall on another party. These clauses are void as both an unauthorized attempt to abrogate Florida’s sovereign immunity and an unauthorized attempt to lend the State’s credit. Contract Services will negotiate to remove all clauses that would require the University to indemnify, defend, or hold harmless other parties.

Sponsors may include terms and conditions that specify an amount of insurance that exceeds the limits of FAU policies or requires FAU to name the Sponsor as additionally insured. FAU cannot agree to either of these requirements, and Contract Services will negotiate the terms for compliance.

Some agreement, especially industry-funded agreements, contain clauses that allow the Sponsor to use or to own any intellectual property (data, patents, inventions, software) arising out of the project and created by FAU. Often, when the Sponsor includes these terms and conditions, it considers the project to be a “work for hire.” Contract Services will negotiate the Intellectual Property clauses to clarify that FAU retains all rights to patents and inventions created solely by FAU employees. If intellectual property is created jointly between the Sponsor and FAU in the project, ownership should be 50/50 with the Sponsor having an option to license FAU’s 50% ownership. If applicable, Contract Services will work together with the Office of the General Counsel and the Office of Technology Development in order to negotiate the agreement language to protect both the PI and FAU.

Publishing is at the core of the University’s mission, and relinquishing publishing rights jeopardizes that mission and the University’s fundamental research exemption for Export Control. In addition, graduate students involved in a research project generally must publish as part of their studies.

Some agreements may fully restrict publication rights, limit publication rights, or not expressly grant publication rights to FAU. Limitation may come in the form of the Sponsor requiring a right of review, but publication restrictions from any source can lead to conflicts for the PI and the loss of the fundamental research exemption for Export Control purposes. Limited rights that may be granted to the Sponsor include the ability to preview any publication for confidential information or patentable inventions, request a 30-90 day delay in publication to file for patent protection, or require FAU to delete any confidential information in the publication that was received from the Sponsor. FAU will reject any greater limitations on publication and if applicable, Contract Services will work together with the Office of the General Counsel to negotiate the agreement language to protect both the PI and FAU.

Projects that include graduate students are carefully negotiated to ensure that their right to publish is protected, as most graduate students must publish to earn their degree.

A warranty or a guarantee is an assurance by one party of an agreement upon which the other party may rely. Although both terms tend to mean the same thing in normal usage, in a legal contract, a warranty is the absolute undertaking of liability on the part of the entity making the warrant, and the contract is void unless the warranty is strictly performed. A guarantee is a commitment as well, but does not impose primary liability on the guarantor, however, a guarantee does bind the guarantor to be answerable for the failure or default of another. Warranty and guarantee clauses appear in many industry-funded agreements with the expectancy that all deliverables are to be met and guaranteed. FAU will negotiate to remove warranty or guarantee clauses in research agreements to protect the PI and FAU from financial and legal risk.

Note: Warranty and guarantee clauses are likely to appear in the fine print of purchase orders, or in referenced online terms and conditions.