Federal sponsorship of collaboration between academic institutions and industry is on the rise. Many government programs emphasize cooperation between universities and the commercial sector as a means to merge basic and applied research, promote economic development, and enhance knowledge dissemination. The intersection between academia and industry on federal research projects yields financial, administrative, and regulatory complexities related to cost accounting, program income, audits, equipment, transparency, the distinction between subawards and sub-contracts, and other items. This article discusses foundational compliance issues associated with participation of for-profit firms in grants and cooperative agreements. (Contains 59 endnotes.)