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Consortium Agreements

Creating a Consortium Agreement

JISC/Higher Education Academy OER Pilot Programme

Andrew Charlesworth, Centre for IT & Law, University of Bristol.

Introduction

This document discusses the concept of Consortium Agreements (CA) and, in particular, their use by projects within JISC Programmes. It discusses the types of legal/administrative arrangements that could be utilised to meet the CA requirements of JISC’s Generic Terms and Conditions of Grant, and answers some common questions about developing an appropriate CA for your project. It does not contain a CA template. JISC has previously produced such a document, but the variety of JISC-funded projects means that it is not possible to create a meaningful generic template for general use – each CA should ideally reflect the context in which it is being created and used.

Defining a ‘Consortium Agreement’?

A common perception is that a Consortium Agreement is a single formal legal document, agreed and signed by all the parties to a project, and which imposes a set of standard conditions on those signatories. These conditions would include, amongst other things, agreements as to ownership and exploitation of IPRs, and a set of warranties and disclaimers allocating risk between the parties. This interpretation of the term “Consortium Agreement” as a formal multi-signatory document is common across the research/development environment.1

JISC’s Generic Terms and Conditions of Grant state that:

6. The lead institution must also supply a core set of documents to indicate how the project work will be planned and implemented, to report on progress, and to inform future auditing and evaluation. It is the responsibility of the lead institution to agree these documents with its project partners prior to submission.

7. The core project documents are listed below and further information about each document is provided in the Project Management Guidelines.

8. Core project documents are subject to approval by the Programme Manger, and the framework for approval is outlined in the Project Management Guidelines.

9. Core project documents will be deposited in the appropriate records management system and/or project information management system so they are accessible to the JISC and Academy Executive.

Included in the Core Project Document Set is a requirement that projects involving more than one institution should have a Consortium Agreement, and that this should be completed within 3 months of the start date of a successful project.

However, between and within JISC Programmes, there can be significant differences in the nature and scope of multi-partner projects. As a result, the precise content of a CA may need to be varied according to the nature and scope of the project at issue, and the respective roles of the project partners. Thus, while templates do exist for drawing up ‘formal’ CAs, project partners must avoid the temptation of simply adopting a basic CA template and ‘filling in the blanks’. This approach runs the risk of failing to address important issues which are specific to an individual project, or which

1 See, for example, the Lambert Agreements documentation at:

http://www.innovation.gov.uk/lambertagreements/

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stem from the nature of the Programme within which it sits. Rather, it is important for the project partners to spend adequate time assessing the requirements for, and construction of, a project Consortium Agreement in order that they can to work through and understand the implications of the precise agreement mechanism chosen, as regards their particular participation in the project.

Function over Form

The main problem with CA templates is that they tend to focus project staff on the ‘form’ of the agreement between parties rather than upon its ‘function’. In other words, in some circumstances it may be less important to have a ‘formal’ multiparty CA, than it is to have a series of documented agreements, or documented administrative arrangements, that together effectively and efficiently achieve the project’s stated aims and objectives, including providing for appropriate project management and resource/risk allocation. Having such agreements or administrative arrangements in documented form can be invaluable in helping JISC Programme Managers and project administrators identify, evaluate and tackle problems during the lifetime of the project, and also in ensuring that appropriate and timely solutions can be reached to disputes between project members on the basis of pre-agreed processes, or dispute management. (see p.7)

By way of example, a documented agreement approach might consist of separate legal contracts between a Lead Institution and the other parties to the project linked to an administrative strategy document outlining the rationale for such a contract framework. A documented administrative arrangement approach might consist of letters of agreement and memoranda of understanding between a Lead Institution and the other parties to the project, which may or may not have elements which are legally binding, similarly linked to an administrative strategy document outlining the rationale for that method of constructing a consortium.

The use of one approach need not foreclose the use of others. For example, a large project with major partners who will be producing the primary outputs and receiving significant funding, and minor partners with smaller roles and limited or no financing, might use a combination of formal CA (between major partners), legal contracts (between Lead Institution and minor partners) and/or documented non-binding administrative arrangement (between Lead Institution and minor partners).

The important issues from the point of view of JISC, as a Funder, are that whatever its form, an Agreement between parties to a project should:

be coherently documented;

provide an appropriate project management framework;

clearly allocate responsibility for resource allocation and risk management;

reflect the understandings of the parties as to their role, rights and responsibilities;

ensure that the work for which funding is allocated is completed in a timely fashion.

The main focus for ensuring the achievement of those elements will usually be the Lead Institution which received the funding. A Lead Institution needs to be able to ensure that it can meet its obligations to JISC: failure to meet those obligations would usually mean JISC seeking repayment of funding, and would potentially damage the Lead Institution’s ability to successfully bid for future funding. It is thus in the interests of the Lead Institution to have some form of written agreement with other parties working on the project, that enables it to meet its obligation to JISC. In certain circumstances this may go as far as explicitly permitting the JISC to intervene in the arrangements under the agreement between Lead Institution and other Project parties. Whether a Lead Institution will require a highly detailed legal agreement, or something less formal, between itself and another Project party, will usually depend upon the extent to which the Lead Institution considers that relationship to expose it to legal/financial risk in the event of, for example, significant non-performance by the other Project party.

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The type of written agreement with a Lead Institution that a Project party will be likely to finds acceptable will obviously depend upon their assessment of the obligations and risk allocated to them by that agreement, as against the benefits which they are likely to receive under it. Where the benefit is slight (e.g. limited funding, or simply acknowledgement of participation and donation of materials) a Project party may refuse to accept significant binding obligations, or more than minimal levels of legal/financial risk.

Types of legal/administrative arrangement capable of classification as a Consortium Agreement under JISC’s Generic Terms and Conditions of Grant

Figure 1. Formal Consortium Agreement

In this arrangement, the whole Consortium Agreement is contained in one ‘multi-lateral’ legal document.

This type of agreement may be appropriate where the Parties wish to play a role in the adminstration of a Project, e.g. as part of the Project management team or through a Steering Committeee arrangement; or where the Lead Institution requires a uniform approach to key risk issues such as funding, warranties, IPR etc between the Parties. For example:

the Parties all have important roles to play in the delivery of the Project aims and objectives, and any Party’s failure to deliver may jeopardise the Project’s success;

the Parties are all receiving significant funding under the Project, making uniform treatment of the Parties’ liability for failure to deliver, financial mismangement etc. an appropriate approach;

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the lead Instituion intends, or is obliged by JISC, to arrange a uniform approach to IPRs, such as assignment of Project IPRs to itself or to JISC/HEFCE, in order to facilitate the Project’s aims and objectives.

This type of agreement may not be appropriate where there are factors which make a uniform approach to risk factors less appropriate. For example:

the Parties vary widely in their roles and criticallity to the Project, or Parties are expected or are likely to frequently join or leave during the life of the Project;

the Project is of short duration and/or of limited financial value to some of the Parties;

the nature of the Project is such that project risks cannot be shared amongst the Parties in a uniform manner, e.g. where the funding is primarily for a Lead Institution to manage/co-ordinate the actions of other parties who are receiving minimal funding.

Figure 2. Contractual Framework-based Consortium Agreement

In this arrangement, the Consortium Agreement consists of the ‘bi-lateral’ contracts negotiated between the Lead Institution and the other parties, in combination with the Project Administration Document (PAD). The PAD will contain details of the centralised administrative/management framework, funding information, details of the individual contracts (and, ultimately, their outcomes), and such other issues as are necessary for the Lead Institution to effectively and efficiently provide appropriate project management, resource and risk allocation for the purpose of meeting JISC’s objectives in funding the Project.

This type of agreement effectively leaves the organisation of the Project’s development, its management structure, and its records management to the Lead Institution. It is likely to be appropriate for projects where:

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the other Parties have widely varying roles and funding with regard to the project aims and objectives;

the project is of relatively short duration and rapid resolution of the CA process is thus required;

partners have varying tolerance of risk, given their respective roles, and thus attempting to impose a blanket set of warranties and liabilities will be unsuitable.

Figure 3: Memorandum of Understanding/Letter of Agreement-based Consortium Agreement

In this arrangement, the Consortium Agreement consists of the ‘bi-lateral’ agreements negotiated between the Lead Institution and the other parties and expressed as Mou/LoA, in combination with the Project Administration Document (PAD) The PAD will contain details of the centralised administrative/management framework, funding information, details of the individual agreements (and, ultimately, their outcomes), and such other issues as are necessary for the Lead Institution to effectively and efficiently provide appropriate project management, resource and risk allocation for the purpose of meeting JISC’s objectives in funding the Project.

As with the contract-based CA in figure 2, this type of agreement effectively leaves the organisation of the Project’s development, its management structure, and its records management to the Lead Institution. It is likely to be appropriate for projects where:

the project is of relatively short duration and rapid resolution of the CA process is thus required;

the Parties involved are receiving little or no direct funding for their inputs to the project and are thus unlikely to want to sign up to either a formal CA or a bilateral contract with the Lead Institution.

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Figure 4: A hybrid model Consortium Agreement

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In the hybrid arrangement, the full ‘Consortium Agreement’ consists of:

the formal CA negotiated jointly between the Lead Institution and Parties 1-5;

the ‘bi-lateral’ contracts negotiated between the Lead Institution and Parties 6-8;

the ‘bi-lateral’ agreements negotiated between the Lead Institution and Parties 9-11 expressed as Mou/LoA;

the Project Administration Document (PAD).

The formal CA might document that the Lead Institution may enter into the bi-lateral contracts and agreements with other parties for the purpose of the Project. In some circumstances, it might formally authorise the Lead institution to do so and/or allow the other parties to exercise some degree of oversight of such contracts or arrangements. As with figures 2 and 3, the PAD will contain details of the centralised administrative/management framework, funding information, details of the individual contracts and agreements (and, ultimately, their outcomes), and such other issues as are necessary for the Lead Institution to effectively and efficiently provide appropriate project management, resource and risk allocation for the purpose of meeting JISC’s objectives in funding the Project.

FAQs

For the purpose of the following discussion, the term ‘Consortium Agreement’ should be taken to mean not just a formal multiparty document (as per Figure 1 above), but also “any combination of documented agreements, and/or documented administrative arrangements, which the Lead Institution considers to be capable of effectively and efficiently providing appropriate project management, resource and risk allocation for the purpose of meeting the Funder’s objectives, in the circumstances of a particular Programme.”

Q: Why do we need a Consortium Agreement (apart from the fact that JISC wants us to have one)?

A: An effectively developed Consortium Agreement can, and should, fulfil multiple purposes within a project that will help to ensure that the process of producing project deliverables and the achievement of project outcomes are made as efficient as possible. It should not be viewed as simply a piece of administrative paperwork to be completed as an afterthought to the main work of the project – it should be drafted in advance of that work and serve to underpin the process.

When constructing a JISC project with multiple parties, a Consortium Agreement should provide both the institutions and the project team with a clear set of rules for managing the project, and for regulating issues relating to its operation amongst the project partners. If there is no Consortium Agreement, or the Consortium Agreement is unclear or inadequate, project partners and project staff may be unaware of the extent of institutional rights and obligations within the project, including ownership of existing and newly created intellectual property, and the project is likely to lack an effective management structure for its operational, technical and financial aspects. This may result in, for example:

inappropriate decisions being made as regards the internal organisation and management of the project, including improper allocation of financial responsibilities;

failure to properly assess the risk and liability accruing to project partners, leading to failure to make adequate provision, including insurance, for those risks and liabilities;

an inability to settle internal disputes between project partners in a clearly understood, efficient and cost-effective manner;

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difficulties in handling the exit of existing project partners and the inclusion of new project partners;

inadequate attention being paid to intellectual property rights, with the result that the usefulness and exploitability of project deliverables is compromised;

difficulties in continuing the work of the project after the initial funding period has ended, due to lack of mechanisms for agreeing future development and funding options.

Project teams are often assembled after the funding has been obtained. A clear Consortium Agreement between partner institutions will set out clearly, at the earliest possible stage, the management and regulatory framework within which the project team members are to work. It also provides clear guidance to newcomers to the project team on the roles, rights and responsibilities within the project, in the event of staff turnover during the project lifetime. The need for clarity and comprehensibility in a Consortium Agreement cannot be overstressed – all project partners and project team members should be aware of their Consortium Agreement’s content and its implications for their work.

Q: When should we draw up our Consortium Agreement?

A: As early as possible in the project development process. As already noted, a well drafted Consortium Agreement can play a key role in the project process by providing a coherent framework for operational development by the project team. It also requires the project partners to think carefully at an early stage about what they see their role within the project as being, and, if appropriate, where they would like it to go in the future. If the creation of a Consortium Agreement is left until later in the project process, it may become increasingly difficult to obtain agreement from project partners as to their respective responsibilities and future ambitions for project outcomes and deliverables. Equally, failure to agree issues relating to intellectual property at an early stage may result in unnecessary difficulties in use of intellectual property brought to the project by a project partner (often called ‘background’ intellectual property), and intellectual property created in the course of the project (often called ‘foreground’ intellectual property) during and after the project.

Q: What should a Consortium Agreement contain?

A: It is very important that project partners consider carefully at an early stage not just the operational elements of a Consortium Agreement (e.g. the terms which address the internal organisation and management of the project), but also the possible longer-term strategic elements – for example:

what outputs and deliverables do the project partners intend to create, and what is the intended exploitation strategy for those outputs and deliverables?

are the project partners likely to seek further funding to continue the work of the project after the initial funding ceases, and if so, from what sources?

An effective Consortium Agreement should allow the project partners the opportunity to review and address these strategic questions, and make provision for agreed adjustments to the terms of the Consortium Agreement to take account of future strategic developments.

In broad terms, the types of issues that it would be normal to expect a Consortium Agreement to address would include provisions to:

ensure the technical implementation of the project, including the management structure and composition (e.g. project management, steering groups, etc.) required to ensure efficient and effective management of the operational, technical and financial aspects of the project;

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identify the lead institution, detail its role in administering the project funding according to decisions taken by the project partners, and describe the allocation of funding to project participants and to identified activities, including how, when and where funding will be allocated as well as to whom;

provide potential solutions to problems relating to technical implementation (e.g. failure of a project partner to perform) and solutions to potential financial problems;

allow for changes in project partner membership, including modification or extension of the Consortium Agreement to include further contributing partners;

to describe, as precisely as possible, the way in which ‘background’ and ‘foreground’ intellectual property, will be used and/or disseminated by the project partners during, and where appropriate after, the course of the project. This will normally include at least some of the following issues:

o allocation and exercise of ownership, including joint ownership;

o setting out the terms of ‘use’ in a detailed and verifiable manner: e.g. who will exploit what, when and how, and such access rights as may be necessary;

o granting additional or more favourable access rights, e.g. access rights to third parties, or specifying the requirements applicable to access rights, or excluding specific pre-existing know-how from the obligation to grant access rights

o granting of sub-licenses (with the agreement of the party owning the licensed rights)

o payment of royalties on access rights to the results or background

o extending the period within which access rights are to be granted between project parties after the end of the project.

Q: Who should we consult in our Institution?

A: All HE institutions are likely to have institutional contracts officers (e.g. people who oversee the institution’s legal relationships with third parties) and research/ development officers who are usually able to advise on project development, including legal issues.

As part of preparing for a project bid, it is useful to identify the individuals within your organisation who perform these functions. Such people often have significant demands on their time, and it is always worth giving them advance warning of the fact that you may need help in deciding the best model for your Consortium Agreement; and, in the event that you decide that the nature of your project requires a formal Consortium Agreement, that you may need guidance on appropriate drafting.

In-house advisors will have experience of how your institution handles particular types of projects; for example, for particular types of research work, or where funding is above a particular level, an institution may require formal contracts signed off by a Contract Officer or Senior Administrator. Equally where funding is limited, your institution may not wish to take a formal CA/contract route (perhaps for cost or time reasons), and may instead be willing to operate on the basis of a MoU/LoA signed off by a Head of Department. It may be helpful to establish these issues (ideally in writing) in advance of beginning CA discussions with other project partners, as this can save significant time and reduce the need for a formal multi-party CA, if the parties can agree that this approach is unnecessary or undesirable.

Simply dropping your project bid on an in-house advisor’s desk is not usually the best way to proceed with your search for advice. When discussing how to develop an appropriate CA for your project bids and projects with in-house advisors it is important to ensure that you have

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provided them with a concise explanation of the purpose and intended outcomes of the JISC Programme involved, and a concise explanation of your proposed project, including:

the aims and objectives of the project and how these relate to the Programme goals;

the identity and nature of the other parties;

the type of value you expect the project to bring to your institution ( e.g. direct or indirect funding, contribution to staff or institutional experience, high profile publicity);

the likely types of cost of the project to your institution ( e.g. staff time, use of resources, impacts on background and foreground IPR ownership – does the Programme require you to assign © to HEFCE or make material available under a Creative Commons Licence);

legal risks you have identified, or which you think may be relevant to the project (e.g. IPRs, data protection, freedom of information);

an explanation of any specialist project information (e.g. particular technology, Creative Commons licensing, Open source licensing, JORUM deposit), or an indication of where explanatory information can be located ( e.g. websites, JISC documentation, JISC Programme Managers).

It is worth remembering that HE institutions often have other officers with expertise in particular legal subject matter, such as data protection/freedom of information and copyright clearance, who may be able to help you with your project, if only to reassure you (ideally in writing) that your Project will not raise any significant issues for your institution, or need special attention in agreements with the other Parties. As with institutional contracts officers and research/ development officers, it is important when talking to DP officers etc. that you can provide them with a concise explanation of your proposed project including:

the aims and objectives of the project and how these relate to the Programme goals;

the identity and nature of the other parties;

the legal risks you have identified, or which you think may be relevant to the project, that you are seeking advice on;

an explanation of any specialist project information (e.g. in the case of DP, that the project is premised on the use of staff/student personal data in a cloud computing environment, where it is difficult or impossible to state where in the world the data is actually being processed)

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Building and using a CA