Insights

In Bitmanagement Software GMBH v. United States, Case No. 23-1506 (Fed. Cir. Jan. 7, 2025), the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) denied the appeal of Bitmanagement Software Gmbh (Bitmanagement) challenging the Court of Federal Claims’ (COFC) $154,400 damages award, and denying its demand for $85 million in damages resulting from the Navy’s infringement of Bitmanagement’s software copyright.  The Federal Circuit affirmed the COFC’s (1) use of a hypothetical negotiation approach to compute damages; and (2) decision to award damages using a “per use” rather than a “per copy” approach.

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).

The National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023, signed into law on December 23, 2022, makes numerous changes to acquisition policy. Crowell & Moring’s Government Contracts Group discusses the most consequential changes for government contractors here. These include changes that provide new opportunities for contractors to recover inflation-related costs, authorize new programs for small businesses, impose new clauses or reporting requirements on government contractors, require government reporting to Congress on acquisition authorities and programs, and alter other processes and procedures to which government contractors are subject. The FY 2023 NDAA also includes the Advancing American AI Act, the Intelligence Authorization Act for FY 2023, and the Water Resources Development Act of 2022, all of which include provisions relevant for government contractors.

On September 30, 2022, President Biden signed the SBIR and STTR Extension Act of 2022 (the Act), reauthorizing the Small Business Innovation Research (SBIR), Small Business Technology Transfer (STTR), and six pilot programs for three years, until September 30, 2025.  The Act includes new due diligence and reporting requirements, award restrictions, and clawback provisions related to national security risks—particularly regarding firms with ties to China, Russia, North Korea, and Iran—and increased minimum performance standards for multiple SBIR/STTR award winners.  The passage and signing of the Act averted a potential lapse of these programs, which were set to expire the day of the reauthorization.

As Congress considers legislation prohibiting government contractors from doing business in Russia, over 20 states have already acted. In this alert, we highlight: (i) how different states are defining Russian business operations, and the corresponding risks to differently situated government contractors; and (ii) unique aspects of certain state actions that contractors need to be aware of as they develop their compliance strategy.

As we covered in a prior alert, the recently introduced Federal Contracting for Peace and Security Act (H.R. 7185) could have a profound impact on government contractors. The Act would require termination of existing contracts and prohibit awards, extensions, and renewals of prime contracts and subcontracts with companies doing business in the Russian Federation during its ongoing war of aggression against Ukraine.

As discussed in our previous alert on the Federal Contracting for Peace and Security Act, many state governors and legislatures have issued or are contemplating actions to limit state contracts with companies doing business in Russia.  A growing number of states have already passed legislation that codifies Russia-related prohibitions.  These fast-moving developments could significantly impact government contractors’ operations.   

Thus far, the Russia-Ukraine war’s primary impacts on Government Contractors have largely been in the export control and sanctions arenas.  However, that could change dramatically under new federal and state proposals.  

In Avue Technologies Corp. v. HHS & GSA, CBCA 6360, 6627 (January 14, 2022), the Civilian Board of Contract Appeals dismissed an appeal alleging breach of a license agreement based on a novel jurisdictional issue:  Whether a software license agreement, in isolation, qualifies as a contract for the purpose of finding Contract Disputes Act (“CDA”) jurisdiction.  The Food and Drug Administration (“FDA”) originally purchased a commercial subscription for Avue’s software off of a General Services Administration (“GSA”) Federal Supply Schedule contract held by another contractor, Carahsoft Technology Corp.  The schedule contract incorporated Avue’s Master Subscription Agreement (“MSA”), in the form of an End-User License Agreement (“EULA”), which the Board found to be incorporated into the FDA’s order.  Avue later submitted certified claims directly to the FDA and GSA contracting officers, accusing the FDA of misappropriating proprietary Avue Digital Services data in violation of the MSA. 

During December 2021, the House and Senate reached agreement on a compromise National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2022.  On December 23, 2021, Congress presented S. 1605 to President Biden, which he signed on December 27, 2021. 

In Section 839 of the Fiscal Year 2021 National Defense Authorization Act, Congress directed the Government Accountability Office (“GAO”) to prepare a report evaluating the implementation of Department of Defense (“DoD”) Instruction 5010.44 relating to Intellectual Property Acquisition and Licensing, including but not limited to, DoD’s establishment of a cadre of intellectual property (“IP”) experts previously directed by Congress. On November 30, 2021, GAO issued a final report to Congress entitled “DOD Should Take Additional Actions to Improve How It Approaches Intellectual Property” (“Report”). The Report made four recommendations: (1) DoD’s planned guidebook on IP (currently expected to be published in the first quarter of 2022) should clarify how DoD personnel can pursue detailed manufacturing or process data; (2) DoD should determine the collaboration, staffing, and resources needed to execute DoD’s proposed approach for the IP Cadre; (3) the Director of the IP Cadre should collaborate with the President of Defense Acquisition University (“DAU”) to prioritize IP-related tasks that DAU should undertake between 2023 through 2025; and (4) the Director of the IP Cadre should develop additional guidance to help identify the DoD personnel in key career fields that would benefit most from receiving IP training and credentials. In response to a draft of the Report, DoD concurred with each of these recommendations. 

The U.S. Court of Federal Claims recently dismissed most, but not all, claims of patent infringement brought by JG Technologies, LLC relating to the detection of stealth objects. At issue were four claimed categories of infringement: (1) aircraft detection, (2) passive detection, (3) autonomous vehicles, and (4) vehicle collision detection. In a decision reaching many different issues, from statute of limitations to subject-matter jurisdiction to tolling, only some of the Plaintiff’s claims survived; the Court dismissed the rest. This case is a good reminder of the sometimes-complex pre-litigation procedures a patent owner must follow in order to perfect a § 1498 claim for patent infringement.

On October 22, 2021, the Court of Federal Claims (Court) unsealed a decision awarding contractor SecurityPoint Holdings, Inc. (SecurityPoint) over $100 million in damages for TSA’s infringement of SecurityPoint’s patent No. 6,888,460 (“the ‘460 patent”). The ‘460 patent concerns a system of trays that recycle through security screening checkpoints by use of movable carts, and was first filed with the U.S. Patent and Trademark Office on July 3, 2002 by SecurityPoint CEO Joseph Ambrefe. Ambrefe had offered the TSA a license to use the patent in exchange for the exclusive right to advertise on the trays, but TSA refused the offer.

On December 11, 2020, Congress presented to President Trump H.R. 6395, National Defense Authorization Act for Fiscal Year 2021. On December 23, 2020, President Trump vetoed the bill. Subsequently, the House voted on December 28, 2020 and the Senate voted on January 1, 2021 to override the veto. 

On December 21, 2020, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) held that contractors may include restrictive markings on unlimited rights technical data as long as those markings do not restrict the Government’s rights to that technical data. 

Welcome to our Government Contracts Classroom. Through a variety of media, the Classroom will serve as a resource for government contractors. The Classroom is intended to provide insight and training on issues that government contractors, and their legal and business teams, often face. The Classroom will be updated regularly with new content, host on-demand materials, and have a schedule of upcoming presentations hosted by the Crowell & Moring Government Contracts Group.

Following guidance issued by Under Secretary of Defense Lord, the Defense Contract Management Agency (DCMA) has revised its Contractor Purchasing System Review (CPSR) Guidebook to incorporate new standards DCMA auditors will use to assess contractor supply chain management under the DFARS Safeguarding Clause 252.204-7012.  Notably, the new standards require contractors to “validate” that their subcontractors have information systems “that can receive and protect” Covered Defense Information (CDI) and to “determine” whether subcontractor systems are “acceptable.”  Other new standards require contractors to demonstrate:

On November 28, 2018, the Armed Services Board of Contract Appeals held that certain unique technical data marking legends placed by The Boeing Company and one of its subcontractors on unlimited rights technical data delivered to the Air Force were nonconforming with the Defense Federal Acquisition Regulation Supplement (DFARS).

On December 17, 2018, President Trump signed into law H.R. 6330, Small Business Runway Extension Act of 2018, which amends the Small Business Act to extend the time period over which the size standard is measured for business concerns providing services. Whereas previously the Small Business Act used the annual average receipts over a three-year period to determine size for services contracts, size for services contracts will now be measured by the annual average receipts over a five-year period. The act does not amend any revenue limits or impact size standards for manufacturing contracts which are based on employee count. While the change to the act is effective immediately, the Small Business Administration has yet to implement the corresponding changes to its regulations and we expect them to do so shortly.

Implementing a Department of Defense (DoD) policy preference against the use of lowest priced technically-acceptable (LPTA) procurements that was codified in the National Defense Authorization Acts (NDAAs) for fiscal year 2017 and 2018, last week, the DoD issued a proposed rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to reflect the limitations and prohibitions in the NDAA provisions.