Bill, you have raised an issue that is of increasing importance for the
University Research community.  We need to clarify the issues and
arguments, and be prepared to educate a number of our constituencies on the
issue, especially industry, legislators, and the public.  I'll "soapbox" a
little!

I see the Research University community (RU) and "contract research
providers" (CR) as two different groups which are needed to satisfy
differing needs of society.  As such, they do business differently, and
have different constituencies.

RU had developed largely because of the social decisions that Academia's
goals of developing, storing and communicating knowledge are a public good,
and that publicly supported fundamental research in the US shall be
conducted in Academia.

CR has developed because of the economic efficiencies of having research
services available for a fee, rather than in-house.

RU receives a public subsidy in the form of tax exemption, because of the
public good it does.  The public good is operationalized in a number of
ways, but particularly  a)  in the commitment to disseminate new knowledge
(which also puts it up for public validation or critique), and  b) in the
tax code and precedents that define "Unrelated Business Income" for tax
purposes.  RU also is usually organized internally such that the "real"
costs of doing research, including any special financial reward for risk
taking, are not reflected in the pricing structures we use.  (A list of
these "real" costs is needed, to educate our various constituencies -- and
not each U. shares them all.)

CR develops full costs for its services which includes costs of creating
the environment for successful research, the higher labor costs for
employees who seek/need a differing reward structure than we have in RU,
and provides a surplus to cover corporate improvement and corporate reward
for risk.

Public policy says RU should not "compete" with CR with price being the
only variable, because of the tax advantage.  RU internal policy should say
RU should not "compete" with CR with price being the only variable, because
RU does not fully cost research (so someone else in the RU is subsidizing
it to some extent).

Hence, if an industrial sponsor wants to own all research output, it should
go to CR rather than to RU.  If they can accept the differences on other
variables than cost, then RU can be a good solution to their needs.

State universities have an added confusion in the matter:  Politicians pay
for U's to enhance the public good.  Economic development is one of those
public goods  When an industry says, "RU will not give us the knowledge we
are paying for), the politician thinks the U is failing in its public
purpose.  So we need to educate politicians that RU's serve several public
goods, and delivering knowledge to one sponsor exclusively (especially at
the cost our systems ascribe) conflicts with a number of other public goods.

Comments, clarifications and expansions are invited.

Chuck

At 08:03 AM 2/21/00 -0600, you wrote:
>I would appreciate hearing from anyone who has experience in handling
>contracts that are essentially "work-for-hire". As a state institution, we
>are instructed that we do not contract for work-for-hire. I would like to
>hear how other institutions manage this issue. Also, if you could share with
>me the reasons you give for not signing work-for-hire contracts, it would be
>helpful.
>Thanks in advance for the info.
>Bill Covington
>Associate VP for Research
>Southwest Texas State University
>San Marcos, Texas 78666
>xxxxxx@swt.edu
>512 245-2314
>
>
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Virginia Commonwealth University
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