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The GovCon Bulletin™

Jan, 2021

DFARS Update: Comment Period Reopened For New SBIR Data Rights Rules

Last month, the Department of Defense (DoD) announced (see announcement here) that the comment period was reopened for its August 31 advanced proposed rulemaking under the Defense Federal Acquisition Regulation Supplement (DFARS).  The reopened comment period, extended until January 31, 2021, is intended to provide experts, the public, and the private sector with an opportunity to address anticipated changes to rules under DFARS concerning the rights of the federal government and contractors in data generated under SBIR and STTR awards.  DoD's announcement also scheduled a virtual public meeting to be held on January 14. 

As the public comment period draws to a close on January 31, we take this opportunity to take a quick look at the DFARS changes anticipated by DoD.

On August 31, 2020, DoD issued its advanced notice of proposed rulemaking under which DFARS will be amended in order to implement certain changes made by the Small Business Administration (SBA) to policy directives covering the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) Programs.  The anticipated changes are reflected in an initial draft of the DFARS revisions that DoD made available with its advanced proposed rulemaking.  A copy of the initial draft can be obtained here.

As we have noted previously in webinars and other resources on the SBIR and STTR programs, the rules that govern the two programs are largely set forth, not in federal regulations, but in policy directives published by the Small Business Administration (SBA).  One of the areas in which SBIR/STTR rules are not only reflected in policy directives but also codified in federal regulations concerns the rights of contractors and the federal government in SBIR/STTR data (i.e., data generated under SBIR and STTR projects).

In May 2019, DoD published a combined revised policy directive that covers both programs and that made significant changes, including changes to the SBIR/STTR data rights rules.  As we discussed in our webinar on the May 2019 Policy Directive Amendments (here), those changes included replacing the extendable SBIR/STTR data protection period (which under FAR is limited to four years and under DFARS is limited to 5 years) with a uniform non-extendable 20-year protection period.

Another change made by the revised policy directive concerns the rights in SBIR/STTR data that the federal government acquires once the SBIR/STTR protection period expires.  Under the revised policy directive, the government obtains “government purpose” rights, a departure from the “unlimited rights” the federal government acquires at the end of the SBIR/STTR protection period under the current DFARS regulation.

DoD’s proposed advanced rulemaking, thus, anticipates conforming the DFARS SBIR/STTR regulations to these and other changes made in the May 2019 Policy Directive.  In addition to incorporating the 20-year SBIR/STTR data protection period and the post-protection period “government purpose” data rights, the advanced rulemaking anticipates amending DFARS in order to adopt new rules under the revised May 2019 Policy Directive that apply when contractors omit restrictive markings on the SBIR/STTR data that they transmit to the federal government.

Existing DFARS regulations, as well as the old SBIR & STTR policy directives, are silent on the issue of what happens if a contractor fails to include a required restrictive marking on SBIR/STTR data that is transmitted to the federal government.  Under the May 2019 Policy Directive, however, contractors are given six months to request to have an omitted SBIR/STTR legend placed on the SBIR/STTR data.  DoD’s advanced rulemaking and the accompanying initial draft of the DFARS revisions anticipate amending DFARS to include the six-month window for contractors to request placement of omitted markings.  The draft of the DFARS revisions sets forth detailed procedures for contractors to follow when making the request.  If contractors do not place restrictive markings on their SBIR/STTR data or do not request placement of omitted markings, the anticipated revised DFARS rules incorporate the May 2019 Policy Directive’s instruction that unmarked data transmitted to the federal government will be subject to the federal government’s “unlimited rights.”

Lastly, DoD's notice of advanced rulemaking anticipates amendments to DFARS in order to refer to, and incorporate, new rules under the May 2019 Policy Directive for the handling of prototypes by federal agencies.  These new rules are intended to prevent reverse-engineering and potentially harmful disclosures of innovative technology. 

To read or obtain a copy of the advanced proposed rulemaking go here.

To read other articles from The GovCon Bulletin™ go here.

Mark A. Amadeo