Funding agreements with industry sponsors must be negotiated to accurately reflect the costs and value of the research (including indirect costs) that will be conducted. Companies may ask for work to be completed for a limited amount of funding or ask to reduce the proposed budget without reducing the scope of work.  If the company thereafter proposes a reduced budget without amending or adjusting the project scope, the university will be subsidizing the industry research project.

Tips for negotiating industry funded agreements:

• Separate research scope and budget, decide independently. An industry sponsored project should start with the PI and an industry representative discussing the project scope.  When possible, the estimate of cost should occur after a scope is fully developed and agreed. 
• Agree to and document a clear scope of work. In an industry agreement, the SOW is an agreement among the project team. The SOW relates the project to scientific objectives and sets the boundaries of the project in multiple dimensions. These dimensions include approach, deliverables, milestones, and budget.
• For budgets – less is more. Industry sponsors do not always require a detailed line item budget. Oftentimes agreement can be reached by providing the total fixed cost of the research as scoped. It may be beneficial to provide a budget based on milestones, objective completion, or total price.  These budget approaches do not require a specific line item for indirect costs.  Indirect should be built into the total cost estimate in any method chosen. 

Example – Convert a university budget to industry budget. Indirect costs of activities are built into the price of goods and services. Fully burdened budgets where indirect costs are directly applied are universal. This means every budget line item in an industry budget reflects the full costs of the proposed work. Consider the following example, where the bottom-line ends up the same despite the different approaches:

 UTA Sponsored Research Agreement Template. UTA posts an agreement template (SRA, here) that includes a place (a blank Attachment A) to fully describe a project in as much detail as may be needed (e.g., Statement of Work, or SOW). Frequently asked questions regarding the SRA can be found (here), and why and how we structure our agreement, clause by clause is provided in our UTA Grants and Contracts Guide for Industry.