The Model Research Funding Agreement is intended for the conduct of scientific research funded by the QSSB. The Model Research Funding Agreement is structured to govern multiple projects by a single research institution. It can be used, however, for a single project. Below is a discussion of each section with guidance on when and how it may be modified. The discussion is not intended to be exhaustive. Any questions about particular provisions or contracts should be brought to the attention of QSSB’s or USB’s legal counsel. USB’s legal counsel can be particularly helpful regarding the ownership provisions, which are often the subject of negotiation with researchers and research institutions. In general, a QSSB should consult with legal counsel regarding all but the most routine contracts and should have legal counsel review any substantive changes a cooperator asks to make to the Model Research Funding Agreement. 1.1    Project Agreements. The model is structured to govern multiple projects, although it can be used for a single project with modifications. If there will be multiple projects, a Project Agreement is required for each project. 1.2    Project Agreement Terms. The Project Agreement should refer to the master agreement, designate a Principal Investigator, state the funding, and include a project proposal and budget. A QSSB may include anything else it deems necessary. A sample Project Agreement is attached to the model contract. 1.3    Project Management. The research institution or Cooperator generally is solely responsible for managing and supervising the projects and responsible for providing all major equipment. 1.4    Term. The agreement should generally have a one-year term but it can be longer. 2.1    Payment Terms. A QSSB should provide for a payment schedule that best suits its needs. Although it is best to reimburse a Cooperator for money spent, a QSSB can advance funds. In either case, the Cooperator should be required to account for all expenditures. 2.2    Budget Transfers. As a cost-control measure, Principal Investigators should be required to notify the QSSB before reallocating funds among project budget categories. 2.3    Spending Prohibitions. Cooperators may not use funds to influence governmental policy or action and should be prohibited from using funds for anything other than the project for which the funds were provided. Cooperators should also be prohibited, without a QSSB’s permission, from using funds to purchase depreciable equipment, pay overhead costs, or pay the Principal Investigator’s salaries. These issues are discussed in greater detail in the Compliance Manual. 2.4    Records Maintenance & Audit. The Cooperator must be required to maintain and retain financial records and make them available for inspection and audit to the QSSB, USB and USDA. 2.5    Subcontractor Records. The Cooperator also must require subcontractors, if any, to maintain and retain financial records and make them available for inspection and audit to the QSSB, USB and USDA. 2.6    Reports. In order to monitor research progress and the use of funds, a QSSB should require periodic and final reports for each project. At a minimum, USB recommends quarterly reporting to permit adequate monitoring, but a QSSB is free to establish the reporting that best suits its needs. 2.7    Subsequent Funding. A QSSB can make subsequent funding for projects contingent on receiving reports and Cooperator otherwise meeting its obligations under Project Agreements. If a QSSB does not reserve this right, it should include a provision, discussed below, permitting it to terminate the agreement or a Project Agreement if Cooperator commits a breach. 3.1    Indemnification. A QSSB should require a Cooperator to indemnify it, USB and the Secretary for losses related to the project. If a Cooperator is negligent or engages in misconduct in connection with a project, the QSSB could incur significant costs even if it is not found liable. A QSSB might also have to incur costs to enforce an agreement that the Cooperator has breached. Some state universities will insist that they cannot indemnify Cooperator under state law. In almost all states, however, a university can indemnify for its breach of contract and personal or property damages due to its negligence. 3.2    Publication. In general, Cooperators may be permitted to publish results, but the QSSB should receive manuscripts prior to publication so that it can monitor research and publication quality and ensure that appropriate steps have been taken to apply for potentially patentable ideas described in the publication. A QSSB might also reserve the right to publish if the Cooperator chooses not to publish. 3.3    Confidentiality. The agreement should include a confidentiality provision prohibiting the parties from disclosing any information they share with one another. A QSSB probably will not share sensitive information with researchers. Occasionally, however, a QSSB might share such information and a broad confidentiality provision would protect it without requiring a QSSB to specifically designate the information as confidential. 3.4    Acknowledgments. The Cooperator should be required to acknowledge QSSB support in any publication or presentation about a research project unless the QSSB waives the requirement. 3.5    Brand & Trade Names. Cooperators must be prohibited from naming commercial brands or trade names in published results unless absolutely necessary. QSSBs and USB should not create the impression that they favor or disfavor particular brands or companies. 3.6    On-Site Visits. Although not absolutely necessary, a QSSB should reserve the right to conduct on-site visits in order to monitor research projects. 3.7    Termination. The QSSB should reserve the right to terminate funding for a Project Agreement if the Principal Investigator is unable to continue the project or leaves the institution. It should also be able to terminate the agreement and any Project Agreement for any reason with reasonable notice. If it does not have an unqualified right to terminate the agreement, it should have the right to terminate if the Cooperator or Principal Investigator commits a breach and must have the right to terminate if the Secretary terminates the order. A QSSB should also provide for final payment and closing down projects if it terminates the agreement. 3.8    Ownership. As a general rule, QSSBs should retain control over discoveries that result from QSSB-funded research. A QSSB has a fiduciary obligation to producers to ensure that checkoff funds are well spent, the QSSB’s assets are protected and producers benefit from research results. Ownership provisions will vary depending on the research institution, the project and contributors. A QSSB should own all information, materials and discoveries that result from QSSB-funded research with the proviso that Cooperators may own discoveries that can be patented under federal law. If they do so, the QSSB should receive a portion of any royalties or other benefits the Cooperator receives from licensing. The Cooperator should also grant QSSB a non-exclusive, irrevocable, royalty-free license to practice, use and sublicense the Cooperator’s discoveries. In some cases, however, a QSSB might not be able to retain any control if it provides a small proportion of the funding or begins funding a project midstream. Nonetheless, in most cases, the QSSB should retain some measure of control over the results of QSSB-funded research. 4.1    Assignments. Cooperators should not be able to assign or transfer the contract to anyone else without the QSSB’s permission. The QSSB should be able to maintain control over who provides services. 4.2    Independent Contractor. This section states that the contractor is an independent contractor and not an agent or employee. This language protects the QSSB from certain legal liabilities arising out of relationships with agents and employees. 4.3    Waivers. Under this provision, if the QSSB waives a provision or a breach of contract, it does not waive the provision forever or any future breach. 4.4    Equal Employment Opportunity. The language in this section, which has been drafted by USDA, must appear in all contracts. 4.5    Complete Agreement. This section should be included because it can help prevent a contractor from arguing that the parties had an agreement different from what appears in the contract. 4.6    Notices. This section determines when notices are received under the contract. It is useful in preventing and settling disputes about whether a party received a notice. 4.7    Severability. This section permits language that a court finds unlawful to be ignored without voiding the entire contract. 4.8    Governing Law. As a general rule, the laws of the state in which the QSSB is located should govern the contract. 4.9    Headings. This section deals with contract interpretation and is useful, but not absolutely necessary. 4.10   Counterparts. An optional section, it permits the parties to sign and exchange separate signature pages. It makes it easier to sign agreements with non-local contractors, particularly if there are more than two parties and/or time is an important factor. Each party signs two (or more) copies of the signature page and then the parties exchange one (or more) signed signature page. Each party then has a fully executed original. This method takes less time than circulating a set of originals to all the parties for signature.