Recently, GAO denied a protest in which the contractor asserted that the solicitation contained an overly restrictive data rights clause and should have used an alternate clause. Gallup, Inc. provides a useful reminder that contracts may give the Government extensive rights over a contractor’s data and software–and, in many cases, contractors must either accept the data rights provision or opt out of the procurement. Contractors should be familiar with the relevant FAR provisions and the possible allocations of rights—or risk losing valuable rights in intellectual property.
Gallup is just one example of a contractor confronting a data rights clause. Some of the FAR and DFARS provisions relevant to this often encountered issue are:
- 52.227-14 Rights in Data–General
- 52.227-17 Rights in Data–Special Works
- 52.227-18 Rights in Data–Existing Works
- DFARS 252.227-7013 Rights in Technical Data–Noncommercial Items
Under these provisions, the Government contractor maintains title to the technical data or software, and the Government gets a license. The three categories of license rights are:
- Unlimited Rights: the Government can do whatever it wants with the technical data or software–including granting rights to third parties.
- Limited/Restricted Rights: the Government may reproduce or use the technical data or software but cannot manufacture it or disclose it. Other permitted uses may be listed in the contract.
- Government Purpose Rights: the Government can use the property without restriction within the Government and can authorize other users to use the property for any governmental purpose.
The type of license the Government obtains generally depends on the contracting agency (civilian or DoD), when the software or data was developed, and who funded the development of the data/software. If the contract is with a civilian agency, the Government obtains unlimited rights to technical data or software if the data/software was first produced in the performance of the contract. For a DoD contract, the Government gets unlimited rights if the data/software was developed exclusively with Government funds. Likewise, the Government obtains limited rights to data/software under a civilian contract if the data/software was not developed in the performance of the contract and was developed at private expense. For a DoD contract, the Government obtains limited rights when the data/software was developed at private expense. In both the civilian and DoD contexts, the Government acquires government purpose rights if the data/software was created with mixed funding or if the agency and contractor negotiate for such rights.
In Gallup, Inc., the solicitation incorporated FAR 52.227-14, and the contractor argued that using that provision was unreasonable because it afforded the Government broader rights than necessary and prevented the awardee from delivering data subject to limited rights. The contractor argued that the agency should have used 52.227-14, Alternate II or 52.227-17. GAO rejected both arguments and denied the protest. With respect to 52.227-17, GAO found that the protester’s interpretation of the provision was incorrect and that the provision, like 52.227-14, did not allow a contractor to deliver data subject to limited rights. Although 52.227-14, Alternate II allowed a contract to identify and specify data to be delivered subject to limited rights, the Agency had discretion to determine its needs and the best way to accommodate them. It was not required to accept data subject to limited rights.
Gallup was left with the same choice that other contractors face: grant the Government a broad license or don’t contract with the Government. If an offeror takes exception to a data rights clause in a solicitation, the agency is free to reject the proposal as unacceptable, as shown by the 2009 protest Northern Light Productions. Contractors should pay close attention to the data rights clauses in solicitations and contracts, and carefully consider whether to grant the Government the broad rights demanded in many solicitations.