One of the main types of awards bestowed upon a research organization is a sponsored research contract. In the previous installment of this blog series, we explored different types of awards, including grants, fellowships, and clinical trials. This entry will detail the main features of a sponsored research contract and the various forms it can take.
Sponsored Research Contract
The recipient of a sponsored research contract is usually identified by the sponsor as a unit that will be able to produce the good or service the sponsor is seeking. The contract is directly beneficial to the sponsor, and there is generally a final deliverable they desire from the research project. It is most common to see private industries issue a sponsored research contract, but there are other instances, such as a federal contract allotted for applied research.
The sponsor is heavily involved in the work that is being funded by the contract. While they are not at the facility conducting research, sponsor personnel are in nearly constant communication with the research team. There are regular “check-ins” to evaluate if the project is progressing appropriately and adhering to the agreed upon timeline. Additionally, the research office can expect to produce more frequent reports when funded by a sponsored research contract. Monthly reporting is often due, and consists of a summary of what you have accomplished that month, how far you have progressed on your goals, and where you expect to be at the end of the following month. Since the deadlines on a contract are so imperative, it is wise to invest in a sponsored project management or grants management system to assist with the management of the award and it’s more stringent requirements. This system can track reporting requirements as well as other deadlines and use an email alert system to warn appropriate administrators of these upcoming due dates.
There are four main forms a sponsored research contract can take: fixed price, cost reimbursable, industry, and time and materials. Each is discussed in greater detail below.
Fixed Price Contract
In a fixed price contract the recipient states that they will be fulfilling the outlined responsibilities and functions and will therefore charge a total set price for the completion of the project. The recipient does not list the specific charges to which they will allot their funding, but instead follow a mantra of “payment for service”. The team should develop the budget internally before proposing it to the sponsor. It is the sponsor who decides whether it is a reasonable price. The two groups then form a binding agreement that states how and when the recipient will provide the service or product.
One of the benefits of engaging in a fixed price contract is not completing an item by item accounting to the sponsor of costs on a project. Additionally, if all of the funds are not used in completing the project, they can often put the remaining money towards advancing other internal research ventures (depending on institutional policies and contractual terms). However, one should proceed with caution when considering this. A proportionately small balance may well be acceptable, however, higher remaining balances may lead to the question of whether the recipient padded the budget for the fixed price contract. The main drawback of this sponsored research contract is if the recipient overspends, the institution performing the project is responsible for covering the overage.
Cost Reimbursable Contract
A cost reimbursable contract allows the institution to be reimbursed by the sponsor for allowable costs incurred during the completion of the project. Note that a reimburseable contract typically does not allow set fees added on to the cost. One major benefit of engaging in a cost reimbursable contract is that there tends to be less risk as expenses are reimbursed as expended and as identified within the approved budget. Reimbursements tend to occur monthly or quarterly. Alternately though, this type of sponsored research contract requires more detail associated with reimbursement through invoicing. This can be a simple summary of each of the cost categories or a detailed itemized list depending on the sponsor requirements
Time and Materials Contract
In a time and materials contract the recipient bills the sponsor for the accrued labor hours and the materials that were purchased to complete the project. These types of contracts tend to be more open ended and the trajectory for accomplishing the end deliverable is more vague. Thus, there is more flux in the scope of work and the duration of the project. There tends to be less risk involved with this sponsored research contract, but it requires more diligence from the recipient, as they must record the effort dedicated towards the project. Unfortunately, most education institutions do not operate on a labor hour basis, so it can be difficult to ensure all involved personnel are regularly documenting and submitting their time.
There are a variety of ways an industry contract can be issued. Some industry contracts are simply a standard industrial agreement formed between two parties. Another example is an industrial sponsor purchasing license rights to intellectual property developed during the life of a research project. Regardless of how the industry contact is issued, it is clearly important to review and understand the obligations and terms set forth therein.
Whether your office was issued a sponsored research contract, or even another type of award such as a grant or a gift, it is imperative to have an understanding of its distinguishing factors. From there the research office can track and manage deliverables such as reports or specified services/products using a sponsored project management software system. To learn how a sponsored project management system can assist with your office’s needs reach out to IT Works today.