Policy 7119 – Authorizing Contracts Between the University and a Member of the Faculty, Research Staff, or Coaching Staff or a Company in Which the Employee had an Interest Under Specified Circumstances
Effective Date: 3/19/2004
Responsible Office: Office of the President/Vice President of Each Division/Personnel Office
Reference: Louisiana R.S. §42:1101 to R.S. §42:1148, especially §42:1111, §42:1112,§42:1113, and §42:1123(10).
A sizable body of Louisiana law (Title 42) addresses the permissible conduct, qualifications, duties, performance, compensation and benefits, and penalties for Public Officers and Employees. Prior to the passage of Act 229 of the 1987 Regular Session of the Louisiana Legislature, Louisiana law prohibited an employee of a university and any company in which he/she owned an interest from bidding on or entering into a contract with the university or involving the university. Act 229, which became R.S. §42:1123 (10), amended the Ethics Code to authorize contracts between a university and members of its faculty or a company in which faculty members have an interest under specified circumstances. Act 1107 of the 1997 Legislative Session broadened §1123(10) to include members of the university’s research staff or athletic coaching staff regarding research activities or athletic coaching activities.
This policy recognizes the benefits of certain types of contracts between Tech and its employees or legal entities in which these employees have an interest. Nothing in this policy is intended to preempt or invalidate any other provision of Tech policy that is considered to be lawful and valid under State of Louisiana law and policies of the Louisiana University System.
The following definitions shall apply throughout the remainder of this policy section:
“Employee” shall mean any member of Tech’s faculty, research staff, or coaching staff.
“Private entity” shall mean any outside foundation, corporation, company, or partnership in which the employee, or a member of his or her immediate family, has an economic interest.
2. Contracts Permitted
For a proposed contract between Tech and a Tech employee or Tech and the private entity to be permitted under this policy, the contract must relate to either:
2.1 The disposition of a patent, copyright, licensing right, or royalty which is attached to a discovery, technique, or technology resulting from research done, in whole or in part, by a Tech employee in the course of his or her employment at Tech, or
2.2 A business activity relating to or resulting from research conducted, in whole or in part, by a Tech employee in the course of his or her employment at Tech, or
2.3 A business activity relating to or resulting from a coaching activity of a Tech employee conducted in the course of his or her employment at Tech.
Other Tech employees may not have an interest in the contract or the private entity if:
2.4 They participated on behalf of Tech in the negotiation of the contract; or
2.5 Members of their immediate family participated in the negotiation of the contract on behalf of Tech.
If an employee or the private entity desires to enter into a contract that conforms to stipulations 2.1, 2.2, or 2.3 above and is not precluded by 2.4 or 2.5, then the following procedures must be followed. All contracts and correspondence must be in writing.
3.1 The ownership interests in the private entity must be disclosed in writing to the appropriate Tech Dean and Vice President. This must be a full and complete disclosure. The owner’s name(s), address, and interest, as well as the names of every officer, director, manager, board member, and five percent (5 %) or larger shareholder, must be stated in the written disclosure.
3.2 All negotiations between an employee, or the private entity, and Tech must be at arm’s length. Therefore, the employee and his or her immediate family when they are also employed by Tech, must recuse himself/herself/themselves in writing from influencing or participating in negotiations or decision making on behalf of Tech with respect to the contract. At Tech’s option, the employee may be consulted by Tech regarding technical or scientific aspects of the proposed contract.
3.3 Another Tech employee, appointed by the President, will negotiate and perfect the contract, which employee shall not be under the direct supervision or a member of the department of the employee submitting the contract.
3.4 A committee, appointed by the President, shall be established to review all such proposed contracts after the Vice President or designee and the employee and/or the private entity have agreed to the terms. Membership on this committee may include representatives from both the public and private sectors. The President or designee shall chair the committee. This committee is empowered by the University of Louisiana System Board of Supervisors to certify to the Board of Regents, per Louisiana R.S. §1123(10)(a), semi-annually that entering into the contract will contribute to the economic development of the state and, among readily available alternatives, entering into the contract serves the public interest.
3.5 The appropriate Tech Vice President or designee shall certify to the committee that entering into the contract will not interfere or conflict with the performance of the employee or the employee’s fulfillment of his/her obligation to Tech.
3.6 An employee with a joint appointment must receive the approval of the other institution, provided, however, that where agreement or approval cannot be reached or is unobtainable, the President of Tech shall make the final decision without such approval.
With respect to payments made pursuant to any contract perfected under this policy, the following standards must be followed:
3.7 Compensation to Tech for the use of services, facilities, equipment, or technology must be paid at the same rate that such services, facilities, equipment, or technology would be made available to the general public or to others under arm’s-length negotiated contracts.
3.8 Compensation from Tech to the employee, or to the private entity, for services rendered cannot be more than normally would be paid for similar services.
3.9 Where Tech and an employee, as a contractor or subcontractor, or Tech and the private entity provide services to a third party, a fair apportionment of the remuneration should be made and specified based on the value of their respective contributions in services, investments, technologies, equipment, or facilities utilized.
4. Agreements with the Louisiana Tech University Research Foundation
The Louisiana Tech University Research Foundation (LTURF), a unit within the Louisiana Tech University Foundation (a public not-for-profit corporation), has been authorized and has agreed to perform certain duties in support of Tech. LTURF is authorized to “accept, buy, sell, lease, license, or otherwise alienate” intellectual property assigned to it by Tech. In performing these duties, LTURF must conform to all stipulated agreements and Tech policies governing Tech intellectual property. As it pertains to intellectual property, this policy becomes part of the body of Tech policy governing intellectual property.
When a contract, or agreement, is proposed that is stipulated in 2.1 or 2.2 above except that it is between the employee and LTURF or the private entity and LTURF, then for purposes of this policy it shall be deemed to be between the private entity and Tech for approval and review purposes. In such cases, all of the above provisions apply and all of the above procedures must be followed within Tech prior to final approval and execution.
5. Relationship to Policy on Outside Employment
Tech Policy 1416, Outside Employment of University Employees, must be independently satisfied before any action under Policy 7119 will be effective. Policy 1416 is not preempted, influenced, eliminated, nor diminished by an action under Policy 7119. Employees should apply under 1416 prior to making application under 7119. In some cases, these two policies can be pursued simultaneously.
6. Relationship to Policy on Conflict of Significant Financial Interest
Tech Policy 7114, Conflict of Significant Financial Interest Policy, defines policy and procedure regarding potential conflicts of interest in sponsored projects involving research, education, and community service. Their purpose is to protect the credibility and integrity of the university’s faculty and staff so that public trust and confidence in the university’s sponsored activities is ensured.
Tech Policy 7119, Authorizing Contracts Between the University and a Member of the Faculty, Research Staff, or Coaching Staff or a Company in Which The Employee Has An Interest Under Specified Circumstances, similarly defines policy and procedure in contracts between a company, in which an employee has an interest, and the university.
When the contemplated contract deals with the licensing or other disposal of intellectual property, then Policy 7119 shall be followed in lieu of Policy 7114.
When the contemplated contract deals with the services or sponsored research funded exclusively by the employee or the employee’s company with private funds, then Policy 7119 shall be followed in lieu of Policy 7114.
When the contemplated contract, or subcontract, deals with services or sponsored research funded in whole or in part by State of Louisiana or federal government funds, then Policy 7114 will take precedent over 7119.