Fixing nonconforming and unjustified markings

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1. Two kinds of bad marking

The Defense Federal Acquisition Regulation Supplement (DFARS) separates markings that are in the wrong form from markings that claim the wrong rights, and fixes the two by different procedures (DFARS 227.7103-12). Authorized markings are those identified in the noncommercial data clause and the small business research clause, and all other markings are nonconforming (DFARS 227.7103-12(a)(1)). An authorized marking that is not in the required form, or differs in substance from the marking requirements, is also nonconforming.

An unjustified marking is an authorized marking that does not accurately show the restrictions that apply to the government’s use of the data (DFARS 227.7103-12(b)(1)). The DFARS gives an example. A limited rights legend on data for items, components or processes developed under a government contract exclusively at government expense, or with mixed funding, is unjustified. In those situations the government obtains unlimited or government purpose rights.

2. Correcting the form of a marking

Correcting nonconforming markings is not subject to the validation clause at DFARS 252.227-7037 (DFARS 227.7103-12(a)(2)). To the extent practicable, the contracting officer should return the data to the person who placed the marking, to let that person correct or strike it at its own expense. If the person does not correct the marking and return the data within 60 days of receiving them, the contracting officer may correct or strike it at that person’s expense. When returning the data is impracticable, contracting officers may correct the marking unilaterally at government expense. Until it is corrected, the data may be used according to the proper restrictive marking.

The clause states a 60-day rule from the contractor’s side (DFARS 252.227-7013(i)(2)). If the contracting officer notifies the contractor of a nonconforming marking and the contractor fails to remove or correct it within 60 days, the government may ignore, remove or correct the marking at the contractor’s expense. The clause defines a nonconforming marking as one not in the format the contract authorizes.

3. Correcting the substance of a marking

Contracting officers have the right to review and challenge the validity of unjustified markings (DFARS 227.7103-12(b)(2)). At any time during performance, and even while a challenge is under way, the contracting officer and the person who asserted the marking may agree that it is not justified. The contracting officer may then strike or correct the marking at that person’s expense. Alternatively, the contracting officer may return the data for correction, and if the corrected data do not come back within 60 days, the marking is corrected or struck at that person’s expense (DFARS 227.7103-12(b)(2)(ii)).

The rights and obligations on validating restrictive markings are in the validation clause (DFARS 252.227-7013(i)(1)). Whatever the contract says about inspection and acceptance, the government may ignore, or correct or strike at the contractor’s expense, a marking that the validation procedures find unjustified.

4. Records behind every marking

The data clauses impose a procedures duty on any contractor, subcontractor or supplier that will deliver data with other than unlimited rights (DFARS 227.7103-11(a)). It must establish and follow written procedures so that restrictive markings are used only when authorized. They must keep records to justify the validity of asserted restrictions on delivered data. The validation clause separately requires contractors and their subcontractors at any tier to keep records sufficient to justify the validity of restrictive markings on data delivered or to be delivered under a government contract (DFARS 227.7103-11(b)).

5. Acceptance and withholding

The statute behind these rules provides for remedies for technical data that are incomplete, inadequate or fail to meet contract requirements (DFARS 227.7103-14(a)). It also authorizes agency heads to withhold payments, or use other remedies, while a contractor does not meet the contract’s data delivery requirements. Solicitations and contracts requiring delivery of technical data must state what the data must satisfy to be acceptable (DFARS 227.7103-14(b)(1)). Contracting officers or their representatives decide whether data tendered conform.

The clause at DFARS 252.227-7030 provides for withholding up to 10 percent of the contract price until nonconforming data are corrected or replaced, or an equitable price reduction is negotiated (DFARS 227.7103-14(b)(2)). The amount may be a fixed sum or a percentage, set according to the relative value and importance of the data. The DFARS gives two examples. Data that are the sole purpose of a contract may be worth considerably more than data produced as a secondary objective. Where the government will maintain or repair items, repair and maintenance data may be worth considerably more than data that only describe the item or give its performance characteristics.

Contracting officers are directed not to accept data that do not conform in all respects (DFARS 227.7103-14(b)(3)). Correction or replacement, or an equitable price reduction where correction or replacement is not practicable or not in the government’s interests, follows the contract’s inspection clause. Where the contract has no inspection clause providing remedies for nonconforming deliverables, FAR 46.407(c) to (g) applies. Where nonconforming markings are the only problem, the marking procedures apply, and the withholding clause may be used to hold back an amount until the markings are corrected (DFARS 227.7103-14(b)(4)).

6. Data warranties

Before deciding to obtain a data warranty, the contracting officer should consider the intended use of the data and the cost of the warranty (DFARS 227.7103-14(c)(1)). Whether the item itself is warranted is not a factor. A data warranty should be considered, for example, if the government intends to repair or maintain an item and defective repair or maintenance data would impair its use of the item or raise its costs. When the government needs a specific warranty of technical data, the clause at DFARS 252.246-7001 and its alternates, or a substantially similar clause, is used (DFARS 227.7103-14(c)(2)). The authorized legends are covered in legends and marking for technical data. The DFARS refers to FAR 46.703 for that decision (DFARS 227.7103-14(c)(1)).

Key terms

Nonconforming marking	A marking not authorized by the clauses, or not in the required form.
Unjustified marking	An authorized marking that misstates the restrictions that actually apply.
Sixty-day rule	The time a contractor has to correct a returned marking before the government acts.
Withholding of payment	Holding back up to 10 percent of the price pending correction of data.
Data warranty	A warranty of technical data, considered by intended use and cost.

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.

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