The Rhode Island Legislature passed a bill this year that will allow faculty
members at state colleges and universities to form companies around their inventions,
a move aimed at fostering economic growth.
But some University of Rhode Island faculty members say there remains an even bigger flaw in state laws that govern dealings between URI and the private sector – one they say costs the state millions of dollars in federal research money and private investment.
The issue centers on the state’s purchasing rules, which exist to make sure state agencies use an open bidding process when spending taxpayer dollars.
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The problem arises, some URI faculty say, when the university uses federal grant funding to subcontract services to private companies. State rules require that the university put those contracts out to a competitive bid.
That may seem fair enough. But in some cases, a company might already have partnered with the university in writing the original grant proposal – only to turn around and be forced to bid against other companies to win the contract.
“This has to be seen as a huge stumbling block, if the state’s goal is to help the university work with private industry,” said Malcolm Spaulding, a URI professor of ocean engineering.
Spaulding, who said he recently raised the issue with URI President Robert L. Carothers, uses what he says is a hypothetical but common scenario to illustrate the problem: The Department of Homeland Security issues a request for proposal to develop “centers of excellence” in maritime and port security. The department stipulates that any proposal must be led by a university and must also include participation from federal agencies and the private sector.
URI assembles a team that includes Raytheon, a startup company, the Naval War College and the Naval Undersea Warfare Center, and applies for a five-year, $50 million grant.
In Spaulding’s scenario, the university is awarded the grant based largely on the proprietary technology owned by the two private companies. But state purchasing regulations would require contracts for that work be put out to bid.
“(The university) can use a company’s name, expertise and intellectual property to win a federal grant. Then when it gets the money, it tells the company, ‘Oh, by the way, I can’t award this contract to you, but you’re allowed to bid on it,’” he said. “Why would any private business want to work with the university?”
Helen Christy, assistant director at the state Division of Purchases, said the state’s purchasing laws are designed to give all businesses an opportunity to vie for state contracts.
If URI is going to partner with a private company on a federal grant proposal, it first needs to give other businesses a shot at participating, she said.
“The question is, how does URI pick that company it’s going to partner with?” Christy said. “If someone approaches the university with a great idea, that’s fine. But (URI) needs to extend that opportunity to others. The issue is that everybody has an opportunity to participate.”
The university also can request that a contract be awarded to a specific company because it is a “sole source,” implying that it is the only business out there that can provide the required service or technology.
But convincing the state’s Division of Purchases to agree to a sole-source contract is “very difficult to do,” according to Janett Trubatch, URI’s vice provost for graduate studies, research and outreach.
In September, URI was awarded a five-year, $3.5 million grant to advance the careers of women faculty at the school, part of a national program administered by the National Science Foundation.
Trubatch said the grant proposal was put together with the help of a private company (which she declined to name), which would develop a system to quantify how the climate for women faculty members at URI changes over the life of the grant.
The role of the private firm was highlighted in the grant application, Trubatch said, and drew praise from the National Science Foundation’s review committee. But she said URI will have to issue an RFP for that work, and it’s possible that the contract could go to a different firm.
“I understand that it’s very important for the state to take care not to give away money injudiciously,” Trubatch said. “But these are not state funds. They’re federal funds that were approved after careful review by a federal agency. It doesn’t make sense for the state to step in at that point.”
That is how the University of Massachusetts views things, according to Bruce McCandless, director of research affairs at UMass.
“If a federal sponsor has already accepted the participation of companies A, B and C, we wouldn’t even contemplate putting that out to a competitive bid,” McCandless said. “In our view, there’s already been a determination that the involvement of those companies was critical to the proposal in the first place.”
Spaulding says the biggest problem with the state’s purchasing regulations is lost opportunities.
In 1999, he had an idea for a system that could forecast winds and currents in coastal waters. He assembled a group that included URI, Brown University, the National Oceanic and Atmospheric Administration and Applied Science Associates, a Narragansett company that Spaulding founded and still advises.
Although the system was his idea, Spaulding says he sought out Drexel University in Philadelphia to take the lead when applying for the three-year, $1.5 million grant, which was awarded by the National Ocean Partnership Program.
“I told Drexel that it was going to be impossible for me to do this at URI, so I asked them to take the lead,” Spaulding said.
