Protecting a Contractor's Rights in their CS/TD Delivered under DoD Contracts

The Defense Federal Acquisition Regulation Supplement (DFARS) requires contractors to take specific procedural actions in a timely manner to safeguard their intellectual property rights in computer software (CS) and technical data (TD) in Department of Defense (DoD) contracts. These actions include asserting restrictions, marking the CS/TD with authorized legends, and providing justification for the marking. Specific steps are required before delivery, while others occur after the delivery of CS/TD to the Government. The process of asserting restrictions is detailed in "Asserting Rights Restrictions in Government Contracts: A Guide for Contractors." In addition, our blog "Nonconforming Restriction Markings Result in Unlimited Rights in DoD Contracts" provides further information on how to mark and deliver CS/TD with authorized legends. To learn more about justifying the marking, refer to "Burden of Proof on Asserted Rights Restrictions Lies with Contractors."

Assertions, markings, and justification only apply to the CS/TD contractually required to be delivered to the Government under the DFARS. Therefore, we will focus on those items. CS/TD that a contractor may voluntarily share with the Government (i.e., not required as part of the contract performance) are exempt from these procedural steps and the marking requirements specified in DFARS. These informal and voluntary exchanges of CS/TD occur more frequently than one might expect.

Contract engineers frequently collaborate with government engineers, sometimes working nearby. As a result, they may share CS/TD that they find valuable even if it is not mandatory to deliver under any contract. These engineers prioritize project efficiency over contractual terms. However, such CS/TD may lack appropriate marking. This can lead to the forfeiture of the contractor's rights to restrict the Government's rights, as unmarked CS/TD provided to the Government is presumed to grant unlimited rights to the Government under DFARS.

Hence, it is crucial to ascertain whether a specific CS/TD is contractually obligated to be delivered and, if so, apply the necessary, applicable restrictive marking before delivering it to the Government. Additionally, contractors are responsible for training their staff to remain attentive to these concerns.

The Government outlines the data delivery requirement as a solicitation component and incorporates it into the awarded contract. Typically, the DoD acquiring activity uses the Contract Data Requirements List (CDRL - DD Form 1423) to identify the CS and/or TD that must be delivered to the Government as part of the contract performance. However, the scope/statement of work may also state any delivery requirements, informing the contractor of the CS/TD to be delivered if awarded the contract. The contractor must then determine which CS/TD necessitates restrictive markings before delivering it to the Government and prepare a list of assertions of restrictions to be submitted as part of its proposal.

The CDRL specifies all data items to be delivered to the Government, including the CS/TD. If the offeror/contractor neglects to assert any restrictions on a required deliverable CS/TD, those items are delivered with unlimited rights for the Government. This is the case regardless of whether the failure to assert was accidental, as the contractor is responsible for making any assertions. Occasionally, a contractor may refuse to deliver certain required CS/TD after accepting the contract due to concerns that the Government will not sufficiently safeguard their intellectual property rights per the markings or because the contractor realized they failed to make necessary assertions. The inability or refusal to deliver the required CS/TD may result in a default termination for failure to fulfill the contract. The Government may evaluate the assertions of data/software rights restrictions during the selection process, depending on how the evaluation factors are established for a given contract.

According to DFARS, if CS/TD is required to be delivered under the contract, but the contractor does not intend for the Government to get unlimited rights, the CS/TD should be marked with one of four designations: Limited Rights (for TD), Restricted Rights (for CS), Government Purpose Rights (for TD and CS), or Specifically Negotiated License Rights (for TD and CS). However, if TD/CS is voluntarily provided to the Government, it is not subject to DFARS and may be marked at the contractor's discretion. The Government may add additional CS/TD delivery requirements after the contract award. These would then fall under DFARS. Any CS/TD without a restrictive marking is assumed to be unlimited rights for the Government. Correcting an accidental omission of marking after providing CS/TD to the Government can be challenging, as the contractor must meet specific conditions.

If you are planning to submit a proposal for an RFP or have an ongoing government contract that requires the delivery of CS/TD, contact us at Veterans Advocacy Law Group. Our team of experienced Government Contracting lawyers will review your proposal or contract and ensure that your rights regarding CS/TD are safeguarded.