This joint report by the Association of American Universities (AAU) and the Council on Governmental Relations (COGR) is based on a survey of 20 U.S. research universities that conduct significant amounts of federal research. It follows up on a 2003/2004 survey of the same institutions. The new report shows that, despite the concerns and recommendations contained in the earlier report, the situation among federal funding agencies, particularly the Department of Defense (DOD), has not improved over the past four years. Federal research funding agencies have not only expanded the nature of the controls imposed in award terms but also extended such terms beyond contracts to grants and cooperative agreements. The findings of the AAU-COGR report reinforce those of the National Academies of Science 2007 report, "Science and Security in a Post 9/11 World," which similarly found increasing use of the "sensitive but unclassified" category and other restrictive language in DOD contracts for fundamental research. AAU and COGR developed the nine recommendations presented herein. The goal is to assist government agencies to balance legitimate concerns of national security while enabling universities' ability to navigate quickly and effectively the government contracting process. Implementation of these recommendations would help avoid lengthy negotiations and reduce the possibility of burdensome restrictions that result in universities refusing to conduct the research. Furthermore, implementation of this report's recommendations would not necessarily resolve all of the issues regarding troublesome clauses, but it would significantly improve what has become an increasingly untenable situation. Such action must be undertaken jointly by the federal government and the university research community. Appended are: (1A) Summary of Troublesome Clauses Reported by All Universities; (1B) Summary of Troublesome Clauses Reported by Task Force Universities; (2) Institutional Reporting of Instances of Troublesome Clauses Included in Analysis; and (3) FDP Data Input Form. (Contains 7 tables and 21 footnotes.)