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Management Guide for Consortia

This guide is intended to provide practical, detailed instructions for the creation and management of NC State University Consortia. Creation of a new NC State consortium must be approved by the Vice Chancellor for Research and Innovation upon review and recommendation by the Associate Vice Chancellor for Research Infrastructure (AVC) and the Centers and Institutes Specialist (Specialist).

Article I: Creation of an NC State Consortium

An NC State Consortium is an association of a university unit with two or more industrial companies, organizations or governments (or any combination of these entities) with the objective of participating in a common activity or the pooling of resources to achieve a common goal in research, instruction and/or public service.

Prior to submitting a request to form an NC State Consortium the prospective Director must provide documentation demonstrating that at least 3 (three) industry/organization/government partners expressed their intention to participate in Consortium activities. Each interested entity should sign a non-binding Letter of Intent (LOI) Letter of Intent template, and submit this LOI to the AVC and Specialist for review.

If only 2 (two) companies are interested in supporting a single consortium project, the Principal Investigator should contact SPARCS regarding the execution of a standard three-way agreement in lieu of creating a consortium with only 2 (two) members.

An NC State consortium can be created with the intention to establish on its basis a Center/Institute in the future or simply to leverage the efforts and funds of the participants.

Consortia derive most of their research funds from annual dues that are paid by the members and deposited into a common membership dues pool account.

Each participant retains its separate legal status and the Consortium’s control over each participant is generally limited to activities involving the joint endeavor. A Consortium is formed following the signing of a standard non-negotiable Membership Agreement, which delineates the rights and obligations of each member. In addition to this standard Membership Agreement a Consortium may have a Charter that describes the purpose of the Consortium and Bylaws that rule its activities. Examples of these documents may be found below:

The Consortium Membership Agreement should contain a clause that the member agrees to remain a member for multiple years (usually two (2)), with membership fees paid on an annual basis. A Membership Agreement for each new member of a Consortium will be processed as described in Article IV below to obtain a Research Enterprise Data (RED) number and secure the signature of the University before being sent to the member company.  Once signed and returned by a member company, an award notice will be prepared by the Coordinator, and dues may be deposited with the Office of Contracts and Grants (C and G). The original agreement does not have to be executed each year but it may be modified periodically as needed, stipulating changes (i.e., upgrade in membership level, extension of membership period) as an amendment to the original agreement. These modifications also require signatures of the University and the member company. Examples of a membership agreement and an amendment to it may be found below:

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Article II: Organizational Structure

In general, Consortium members are entitled to defined voting rights via their participation on an Industrial Advisory Board (IAB), or other such advisory committee (with duties as described below), and share equally in the results of any research funded from Core and Enhancement (defined later) funds. In addition to the IAB, Consortia may have an Academic Advisory Committee (or a committee of similar name) that has the responsibility of seeing that University policies are followed, particularly with respect to training and education of graduate and undergraduate students.

The Industrial Advisory Board (IAB) is the most important board of a Consortium and normally includes a representative from each of its members. The IAB elects its chairperson from among its members, monitors the financial status of the Consortium, helps in the recruitment of new members, makes recommendations regarding Consortium goals and directions, generates annual plans for the most effective spending of pooled membership dues, and approves changes to the Bylaws and standard Membership Agreement.

To ensure that faculty participants in Consortia obtain recognition from their Deans and Department Heads for Consortium-related research, public service and/or instructional activities, all proposals submitted for internal funding by Consortium membership dues and the resulting awards and rejections will follow normal University procedures for processing such activity (e.g., use of Project Information and Navigation System (PINS) and processing through RED).

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Article III: Use of Membership Funds for Consortium Projects

Members of a Consortium share equally in the results and Intellectual Property (IP) generated from all Core projects funded by membership dues and of any Enhancement projects funded by members in addition to their membership dues. Two types of Consortium projects are described below:

Core Projects

Core projects are funded from the pooled membership dues paid by Consortium members, and require IAB approval. Core projects to be funded for the next year normally are approved at the annual meeting of the IAB.

When, between IAB meetings, members decide to fund a project that was not considered or selected as a Core project at the previous annual meeting, the new project must have IAB approval. The approval of new projects may be obtained by e-mail balloting between IAB meetings, and if approved, the new project would become an additional Core project.

Enhancement Projects

When one or several members want to provide additional funds specifically to enhance or accelerate a currently-funded Core project they may do so as an Enhancement project. The Coordinator will provide assistance preparing an Enhancement Project Agreement. An example of an Enhancement project agreement may be found below:

Limited exclusive rights to any intellectual property resulting from Core or Enhancement funding (as detailed in the Membership Agreement and/or Bylaws) may be requested by a member, but approval must be obtained from the IAB and the University. The IAB can vote to grant restrictive rights to IP to less than ALL Consortium Members ONCE they know about the IP they are forgoing – this can only happen at or near the end of a project. Except for those instances involving limited exclusive rights, Enhancement projects do not require additional approval of the IAB, though the Director generally will keep the IAB informed.

Proposals for Core and Enhancement projects must be processed in accordance with routine University procedures for proposal submission (via PINS/RED) with request to be routed to the Centers and Institutes Specialist.

Non-Core Projects

The Consortium may apply for and conduct sponsored projects funded by a member that is outside of Core or Enhancement projects funded by pooled membership dues and approved by the IAB. Such agreements are executed using a separate Sponsored Project Agreement (SPA), the terms of which are negotiated by the Office of Sponsored Programs and Regulatory Compliance Services (SPARCS) as with any other sponsored project funded by an external Sponsor. The IAB should be apprised of the existence of such agreements on a periodic basis but the results of Non-Core projects need not be shared with other members.

Intellectual Property

All copyrights, patent disclosures, and patent applications generated by a Consortium will be treated in the same manner as those from individual investigators and will be prepared and forwarded to the Office of Research Commercialization (ORC) in accordance with standard NC StateIntellectual Property (IP) procedures. Computer software created by the Consortium will be treated in accordance with established University policy. IP provisions must be included in the Bylaws and Membership Agreement.

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Article IV: Financial Management of Consortia

The annual period for paying membership dues must be clearly identified in the Membership agreement based on calendar (January 1 – December 31) or fiscal (July 1 – June 30) year, and must be the same for all members.  Members joining at times other than those outlined in the standard Membership Agreement and at membership levels defined by NC State will be charged prorated dues for the incomplete first year. Billing is done 30 days prior to the start date of each membership year.  It is the responsibility of the Consortium Director to ensure the timely payment of membership dues as work within the Consortium is dependent on their collection.  The Consortium Director should encourage industrial members to pay their annual dues at the beginning of each year of membership as a lump sum. Should special payment arrangements for one particular member be requested, this must be discussed with the Coordinator and will be reviewed on a case-by-case basis. Funding to Consortium via Membership Agreements and Amendments to them must be processed in accordance with routine University procedures for proposal submission (via PINS/RED) with request to be routed to the Coordinator.

Annual membership dues must be deposited in a pooled (termed “various industries”) account. This prime account is used as a “holding” account for membership dues. These membership dues are then utilized to fund individual Core projects, the Consortium’s administrative budget (if necessary) and future encumbrances (e.g., planned procurement of large-scale instrumentation for the benefit of membership projects, etc.).  A clear breakdown of how membership dues will be allocated should be noted in the minutes of the Consortium annual IAB meeting.

Each Consortium should make a decision at their annual meeting about the percentage of membership dues (up to 16.5%) that will be used during the upcoming year for administrative purposes.  This ratio cannot be changed more often than yearly. When necessary a CI may increase the allocation of membership pool funds to be used for administrative purposes (up to 30% of the pool) subject to approval by the Vice Chancellor for Research (written justification is required). Proposals for funding a Consortium administrative account will be submitted via PINS/RED with a request to be routed to the Coordinator. C and G will establish a separate account for the administration of the Consortium.  This administrative account will receive the IAB-approved administrative funding level derived from the pooled membership dues account free of overhead.

Remaining funds in the pooled membership dues account can be distributed to support Core research or other Consortium projects (i.e., subawards) via moving them into individual project accounts carrying a reduced Facilities and Administration Cost (F&A; i.e., overhead) rate applied to Modified Total Direct Costs (MTDC) but exclusive of the amount of each subcontract above $25,000.

C and G will reconcile the pooled membership dues account against member payments on a monthly basis.  Expenditures should not be transacted against the pooled membership dues account itself.  Instead, all expenditures must be transacted against individual project accounts. Any expenditures noted on the pooled membership dues account during the monthly C and G reconciliation must be moved to an appropriate individual project account.

Additional funds provided by one or several members for Enhancement projects will be placed into separate accounts. Consortium Enhancement projects are subject to a reduced 10% F&A. Residual funds left upon completion of an Enhancement project will be moved back into the pooled membership dues account and be available for re-distribution following the scenario described above.

Residual membership funds that may be left in the pooled membership dues account upon formal closing of a Consortium will be transferred (net of the 10% overhead) to the appropriate college/school/unit for resolution of outstanding institutional commitments and its future use will be determined by college administration.

Upon approval of the Vice Chancellor for Research and Innovation, and a unanimous vote of the membership, a portion (limited by NC State policy) of annual membership dues may be moved to an unrestricted university account (ledger 7) for Consortium marketing purposes only.   No other fund type is allowable (e.g., you may not transfer such funds to a ledger 6 account).  The use of membership dues for marketing expenses should be limited and is only allowed if approved as noted above.

Non-Core Consortium Projects are subject to standard federally negotiated F&A costs (currently 52%).

If at the end of the initial membership cycle (2 years) there are only 2 members willing to renew their participation in the Consortium for another cycle, the remaining members should switch to a 3-way research agreement (see Article I, paragraph 3 above).  If there is only one member left at the end of the initial membership cycle the consortium will be terminated. Should a consortium be terminated, it will have one year to complete any ongoing Core or Enhancement research projects and to spend funds remaining in the membership pool account.

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