DFARS Proposed Rule on SBIR/STTR Data Rights and the Marking of Unlimited Rights Data

On December 19, 2022, DoD issued a DFARS proposed rule that seeks to (1) implement the data-rights portions of the May 2, 2019 Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive (SBIR/STTR Policy Directive), and (2) impose significant changes to technical data and computer software marking requirements.  The SBIR/STTR portion of the proposed rule follows DoD’s advance notice of proposed rulemaking issued on August 31, 2020 (see 85 FR 53758) and incorporates the eight written public comments that DoD received. The proposed changes to marking requirements go beyond the SBIR/STTR Policy Directive and respond to the Federal Circuit’s decision in The Boeing Co. v. Secretary of the Air Force, 983 F.3d 1321 (Fed. Cir. 2020).

Among other changes, DoD is proposing the following revisions to the DFARS: 

• DFARS 252.227–7018 will be updated to incorporate the SBIR/STTR Policy Directive. These changes include:

adoption of a new term, “SBIR/STTR data,” which encompasses all technical data or computer software developed or generated in the performance of a phase I, II, or III SBIR/STTR contract or subcontract;

adoption of a 20-year SBIR/STTR data protection period;

inclusion of the new SBIR/STTR data category, which specifies (1) Limited rights in SBIR/STTR technical data and (2) Restricted rights in SBIR/STTR computer software during the SBIR/STTR data protection period (thereafter, SBIR/STTR data shall be subject to Government Purpose rights).

• Contracting officers are prohibited from requiring offerors to relinquish SBIR/STTR data rights or from rejecting offerors solely due to SBIR/STTR data rights restrictions.
• Similar to the guidance at DFARS 227.7103–10(a)(5), the proposed rule indicates that the Government may evaluate the impact of restrictions on the Government’s ability to use or disclose technical data or computer software in a manner consistent with acquisition preferences and other guidance applicable to SBIR/STTR offerors during the source selection process.
• The proposed rule also makes changes unrelated to SBIR/STTR or the SBIR/STTR Policy Directive, including revisions to marking requirements to address the holding in The Boeing Co. v. Secretary of the Air Force. The proposed rule:

revises the marking requirements in DFARS 252.227-7013, DFARS 252.227-7014, and DFARS 252.227–7018 to create and require a new ‘‘unlimited rights’’ marking for technical data or computer software furnished to the Government without restrictions;

limits the restrictive markings on noncommercial technical data and computer software to those specified in the relevant clauses (including prohibiting markings on unlimited rights data that would place restrictions on use by non-Governmental third parties); and

updates the DFARS 252.227-7015 marking requirement for technical data pertaining to portions of a commercial item that were developed exclusively at private expense, which gives a contractor discretion to choose and use its favored restrictive marking consistent with commercial practices or other contractor preferences, to clarify that the restrictive marking used must accurately reflect the Government’s license rights.

DoD plans to hold a virtual public meeting on the proposed rulemaking in early February 2023 (with registration closing on January 26, 2023), and will accept public comments until February 17, 2023.