After a final decision on a restriction

← All Insights

1. Ninety days of protection

A contracting officer’s final decision that a restriction on technical data is not justified does not end the matter at once. Under the validation clause in the Defense Federal Acquisition Regulation Supplement (DFARS), the government agrees to stay bound by the asserted restriction for 90 days from issue of that decision (DFARS 252.227-7037(g)(2)(ii)). If the contractor or subcontractor intends to sue in the United States Court of Federal Claims, it agrees to give the contracting officer notice of intent to file within those 90 days.

If the contractor or subcontractor fails within the 90 days to appeal, file suit or give notice of intent to sue, the government may cancel or ignore the restrictive markings based on the asserted restriction (DFARS 252.227-7037(g)(2)(ii)). The clause treats that failure as agreement with the government’s action.

2. Notice of intent and the one-year limit

Where notice of intent to sue in the Court of Federal Claims is given within 90 days, the government agrees to keep respecting the restriction (DFARS 252.227-7037(g)(2)(iii)). It is no longer bound, and may strike or ignore the marking, if the contractor or subcontractor fails to file suit within one year after the final decision. The contractor or subcontractor agrees to that in the clause.

Where an appeal or suit is filed under the Contract Disputes statute, the government agrees to stay bound by the restriction (DFARS 252.227-7037(g)(2)(iv)). That lasts until final disposition by an agency board of contract appeals or the Court of Federal Claims.

3. The urgent or compelling override

Both protections have an exception. While a suit is awaited, the head of an agency may determine, on a nondelegable basis, that urgent or compelling circumstances will not allow waiting for it to be filed (DFARS 252.227-7037(g)(2)(iii)). After notice to the contractor or subcontractor, the agency may then authorize release or disclosure of the data. The same applies while an appeal or suit is pending, where the agency head determines that urgent or compelling circumstances will not allow awaiting the board’s or court’s decision (DFARS 252.227-7037(g)(2)(iv)).

Such a determination may be made at any time after the final decision (DFARS 252.227-7037(g)(2)(iii)). It does not affect the contractor’s or subcontractor’s right to damages against the United States if its restrictions are ultimately upheld, or to other relief the law provides. The DFARS describes the same obligation and exception from the government’s side (DFARS 227.7103-13(d)(6)(iii)).

4. Who pays after the appeal

If the contractor or subcontractor appeals or sues and the contracting officer’s decision is sustained, the restrictive marking based on the assertion is cancelled, corrected or ignored (DFARS 252.227-7037(h)(1)). If the asserted restriction is also found not to be substantially justified, the contractor or subcontractor is liable to the government for two amounts. They are the government’s cost of reviewing the restriction, and the fees and other expenses it incurred in challenging it, as defined in 28 U.S.C. 2412(d)(2)(A). That does not apply where special circumstances would make payment unjust.

If the contracting officer’s decision is not sustained, the government stays bound by the restrictive marking (DFARS 252.227-7037(h)(2)). If the challenge is also found not to have been made in good faith, the government is liable for the fees and other expenses the contractor or subcontractor incurred in defending the marking.

5. What counts as validation

Only the contracting officer’s final decision resolving a formal challenge by sustaining a restrictive marking constitutes validation as addressed in 10 U.S.C. 3785(c) (DFARS 252.227-7037(i)(2)). A government decision, or a contracting officer’s determination, not to challenge a marking or asserted restriction does not constitute validation (DFARS 252.227-7037(j)). A challenge notice must also state when an earlier decision serves as justification. A final decision sustaining an identical restriction within the previous three years does so, if the same contractor or subcontractor, or a licensee of it, asserted it (DFARS 252.227-7037(e)(1)(iii)). For software, the DFARS likewise treats only a final decision, or board or court action, sustaining a restriction as validation (DFARS 227.7203-13(e)(2)). After an urgent or compelling determination, the DFARS points to the software validation clause for the restrictions that apply (DFARS 227.7203-13(e)(1)).

6. How long the right to challenge lasts

The government may review the validity of any restriction asserted by the contractor or subcontractor on data delivered or to be delivered under a contract (DFARS 252.227-7037(i)(1)). The clause measures that period as six years from final payment or from delivery, whichever is later. Data that are public, were furnished or otherwise made available without restriction, or carry a fraudulent restriction can be challenged at any time.

The contractor or subcontractor agrees to flow the validation clause down (DFARS 252.227-7037(l)). It goes in subcontracts and other instruments, including those for commercial products and services, with subcontractors or suppliers at any tier that require delivery of technical data. The earlier steps are covered in the challenge notice and the final decision.

7. Subcontractors’ rights

Under 10 U.S.C. 3771, subcontractors at all tiers have the same protection for their rights in data as prime contractors (DFARS 227.7103-15(a)). A subcontractor may deal directly with the government on validating its restrictions, and contracting officers must deal with it directly when it uses that right (DFARS 227.7103-15(b)). Contracting officers must require primes whose contracts include four clauses to put them, without modification except for identifying the parties, in contracts with subcontractors or suppliers at all tiers furnishing noncommercial technical data in response to a government requirement. The four are the noncommercial data clause, the clause limiting use of government-furnished information, the clause on previously delivered data and the validation clause (DFARS 227.7103-15(c)). Contractors may not be required to have subcontractors give up rights in data as a condition of award, beyond the rights the government obtains under the prime contract’s clause (DFARS 227.7103-15(d)).

Key terms

Ninety-day period	The time the government stays bound after an adverse final decision, pending notice or appeal.
Notice of intent to file suit	The notice that keeps the restriction in place while a Court of Federal Claims suit is prepared.
Urgent or compelling circumstances	An agency head’s nondelegable basis for releasing data before the dispute ends.
Substantially justified	The test for whether a contractor pays the government’s review and challenge costs.
Flowdown	Inserting the validation clause in subcontracts that require delivery of technical data.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

How Sentfore supports this

Data disputes can delay support for fielded equipment. Sentfore works at the delivery end of defense programs in difficult environments, providing secure movement, protective security, facilities and life support. Requirements can be sent through the contact page.