Anne Lanteigne
Rights in technical data (TD) are becoming increasingly important in government contracting. The Government seeks to acquire and use TD in the competitive acquisition of products and services. As is well known, lack of competition in federal government procurements often results in outrageously inflated and excessive prices for what the Government buys. This was amply demonstrated by items such as $640 each for plastic toilet seats for military airplanes.[1]
The Government paying excessive prices is not limited to the past but continues today.[2] One of the primary drivers of this unhappy situation – from the taxpayer’s perspective, especially in the Department of Defense (DoD) – is the Government’s lack of rights in technical data that are necessary for it to engage in the competitive acquisition of, for example, spare parts or maintenance services of already-expensive weapon systems. Accordingly, the DoD has been taking a more assertive stance regarding rights in technical data created or delivered by the contractor to the Government under contracts.
In this environment of increased attention from both the Government and the contracting community to technical data and rights, a crucial factor in the success of a contractor in dealing with the DoD is taking all necessary steps to protect its technical data and rights therein under the Defense Federal Acquisition Regulation Supplement (DFARS). The DFARS provisions that apply to technical data and rights are numerous and complex. However, before determining whether these provisions apply to a given piece of data, the gateway question must be answered: What qualifies as TD in the context of the DFARS?
DFARS 252.227-7013(a)(15) defines “technical data” as “recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or financial, administrative, cost or pricing, or management information, or information incidental to contract administration.”
Simple enough? Not necessarily. Depending on the particular data in question, it can be surprisingly complicated to determine whether that data is technical data subject to DFARS 252.227-7013 or excluded from it.
This question of “what qualifies as technical data” was addressed by the Court of Federal Claims in a case decided in June 2022[3]. More specifically, it addressed: are contractor-created vendor lists technical data within the meaning of DFARS 252.227-7013(a)(15)?
The case involved a series of contracts beginning in 2009 between Raytheon and the U.S. Army Contracting Command (Army), under which Raytheon provided engineering services in support of the Patriot weapons system. Further, beginning in 2012, Raytheon became obligated to provide vendor lists to the Army every quarter. These lists outlined the suppliers from whom Raytheon had procured components for the missile system in the preceding two years. Raytheon was to prepare the lists per Data Item Description (DID)[4] DI-MGMT-80894. As applied to the contracts, DI-MGMT-80894 stated that the purpose of requiring the vendor lists was to identify a complete listing of all sources used by Raytheon in procuring any subcontracted items. Additionally, it provided a means for the Government to track the selection, qualification, and identification of parts. It also stated that Raytheon was to obtain the required information from contractor invoices, purchase orders, etc. The Raytheon-submitted lists had markings that limited distribution only to DoD components based on the proprietary nature of the information contained in the lists and export control warnings. They had no technical data rights markings prescribed by the DFARS.
Under the DFARS scheme, the absence of data rights markings on technical data required to be delivered to the Government indicates that the Government has unlimited rights in that technical data. Further, any restrictive marking that is not one of the markings authorized by the DFARS 252.227-7013 is considered a non-conforming marking and subject to removal or correction. At various times, the Army’s contracting officer (CO) disapproved of these submittals because of the proprietary markings and informed Raytheon that the lists did not reflect appropriate DFARS-authorized restrictive markings. The CO instructed Raytheon to mark future lists according to the technical data provisions of the DFARS. Raytheon resisted, claiming that the lists were not technical data.
Thus, the dispute between the parties concerned whether the information on the vendor lists constituted “technical data” within the meaning of that term in DFARS 252.227-7013, which was included in the contracts. In general, the contents of the lists included a generic description of the parts Raytheon purchased, numeric identifiers, identity, address, and DUNS number of the supplier that sold the parts to Raytheon. Each submitted vendor list contained a quarterly purchase history of a two-year look-back period. Raytheon’s position was that such information in the vendor lists consisted entirely of “management, not technical, information,” which it maintained “is and remains Raytheon proprietary data.” As management information, Raytheon argued, it was specifically excluded from being subject to the data rights provisions[5] and the marking requirements of DFARS 252.227-7013(f), thus allowing Raytheon to mark the lists with a proprietary marking of its choosing.[6]
Conversely, the Army argued that the data in vendor lists is technical data because it is “recorded information --- of a scientific or technical nature.” The CO stated that technical data indeed resided in the list of technical parts, part numbers, and sources which were used in conjunction with other technical data, such as engineering drawings, to maintain the weapon system and were necessary “to perform essential technical functions related to the repair and replacement parts.” Thus, the Army considered the vendor lists technical data subject to DFARS 252.227-7013. Accordingly, the CO issued a Contracting Officer’s Final Decision (COFD) in June 2018, instructing Raytheon to remove the non-conforming proprietary markings from the lists and replace them with a marking that is authorized under DFARS 252.227-7013 and specifically recognizes Government Purpose Rights[7] for at least five years. Raytheon challenged the COFD at the Court of Federal Claims.
In the absence of a regulatory definition of “information of a technical nature,” the Court applied plain language interpretation with the assistance of a dictionary. It concluded that the information on the vendor lists is not inherently or essentially technical in nature within the plain meaning of DFARS 252.227-7013(a)(15). It declared that the vendor lists were “just what their name implies—lists of the vendors from which Raytheon purchased parts used in the missile system” and did not even describe the purchased parts in any meaningful way. Characterizing the vendor lists as mere quarterly purchase history with a two-year look-back period, the Court stated that the information on the lists was derived from precisely the type of administrative, financial, or management data that is explicitly excluded from the definition of “technical data” in DFARS 252.227-7013(a)(15).
Regarding the Army’s contention that the vendor lists were nonetheless technical in nature because they demonstrated that a particular part provided by a vendor on the list was qualified to be in the Patriot weapon system and was used by the Army engineers to procure parts from verified or qualified vendors, the Court responded that Raytheon was not required under the contracts to provide a list of qualified suppliers, just quarterly purchase histories. It stated that the fact that the information proved useful to Army personnel in performing technical tasks does not change the non-technical nature of the information in the lists.
Takeaway
The contractor should segregate clearly technical data from non-technical data, such as management, administrative, and financial data which is nonetheless critical to its business success and competitiveness. This will keep the non-technical data, if required to be delivered to the Government, from being subject to the DFARS technical data rights and marking provisions that give the Government certain rights in “technical data.” The contractor should prominently mark the non-technical data delivered to the Government with a proprietary marking that clearly indicates the restrictions on how the Government may use, disclose, copy, etc. that data.
If you are a government contractor and have questions about technical data vs. non-technical data and how each should be marked, contact the Intellectual Property and Government Contracting attorneys at Whitcomb Selinsky, PC. We will review your government contract and technical data deliverables to help you ascertain which data is non-technical and ensure it is marked appropriately before you deliver it to the Government. We help medium-sized and small businesses, including veteran-owned and women-owned, with their federal government contract opportunities.
[1] $37 screws, a $7,622 coffee maker, $640 toilet seats; : suppliers to our military just won't be oversold - Los Angeles Times (latimes.com) – visited on 13 July 2023.
[2] Weapons contractors hitting Pentagon with inflated prices | 60 Minutes - CBS News – visited on 13 July 2023.
[3] Raytheon Company v. The United States of America, U.S. Court of Federal Claims, 160 Fed. Cl. 428; 2022 WL 2353085.
[4] DIDs are standardized forms (DD Form 1664, “Data Item Description”) that describe the content, format and intended use of data a contractor is obligated to supply to the DoD.
[5] DFARS 252.227-7013(a)(15): Technical data “---does not include computer software or financial, administrative, cost or pricing, or management information, or information incidental to contract administration.”
[6] RAYTHEON COMPANY PROPRIETARY DATA
Information contained herein is proprietary to Raytheon Company, is submitted in confidence, and is privileged and exempt from disclosure by the U.S. Government under paragraph (b) of the Freedom of Information Act (5 USC 552) and subject to 18 USC 1905.
[7] Government Purpose Rights allows the Government to use, modify, reproduce, release, display the technical data within the Government and disclose it to outside the Government for U.S. government purposes, such as for competitive acquisition.