How funding sets technical data rights

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1. A license in the data

The Defense Federal Acquisition Regulation Supplement (DFARS) sets how the government holds technical data a contractor delivers. The government obtains rights in that data, including a copyright license, under an irrevocable license the contractor grants or obtains for it (DFARS 227.7103-4(a)). The contractor or licensor keeps all rights in the data that are not granted to the government. These rules sit in DFARS subpart 227.71 and in the clause at DFARS 252.227-7013, which governs technical data for items other than commercial products and services.

Technical data means recorded information of a scientific or technical nature, whatever the form or method of recording, including computer software documentation (DFARS 252.227-7013(a)). It does not include computer software. Nor does it include financial, administrative, cost or pricing, or management information, or information incidental to contract administration.

2. Funding decides the scope

For technical data that pertain to items, components or processes, the scope of the license is generally determined by the source of funds used to develop the item, component or process (DFARS 227.7103-4(a)). When the data do not pertain to items, components or processes, the scope is determined by the source of funds used to create the data. The DFARS then ties each funding source to a standard license.

Contractors may, with some exceptions, restrict the government’s rights in data pertaining to items, components or processes developed exclusively at private expense, which gives the government limited rights (DFARS 227.7103-4(a)(1)). They may not restrict the government’s rights in items, components or processes developed exclusively at government expense without the government’s approval, which gives unlimited rights. With mixed funding, the government may use the data within the government without restriction, but may release it outside only for government purposes.

Some contracts call for a conceptual design or similar effort that does not require developing, manufacturing, building or producing anything (DFARS 227.7103-4(a)(2)). For data created under such a contract, the government generally obtains unlimited rights when government funds alone paid for it, government purpose rights for mixed funding, and limited rights when the data were created exclusively at private expense.

3. What the funding terms mean

Developed exclusively at private expense means development was paid for entirely with costs charged to indirect cost pools, costs not allocated to a government contract, or a combination of the two (DFARS 252.227-7013(a)). Private expense determinations should be made at the lowest practicable level. Under fixed-price contracts, when total costs exceed the firm-fixed-price or ceiling price, the additional costs needed to complete development are not considered in deciding whether development was at government, private or mixed expense.

Developed exclusively with government funds means development was not accomplished exclusively or partially at private expense (DFARS 252.227-7013(a)). Developed with mixed funding means development was paid for partly with indirect or unallocated costs and partly with costs charged directly to a government contract. Developed means that an item, component or process exists and is workable, so the item must have been constructed or the process practiced. Workability is generally shown when analysis or testing would show reasonable people skilled in the art a high probability that it will operate as intended. The item need not be ready for sale, or reduced to practice under the patent laws in title 35.

4. The segregation rule

The source of development funds for data pertaining to items, components or processes should be determined at any practical sub-item or subcomponent level, or for any segregable portion of a process (DFARS 227.7103-4(b)). Contractors may assert limited rights in a segregable sub-item, subcomponent or portion of a process that otherwise qualifies.

5. Data the government always receives with unlimited rights

The standard license rights a licensor grants are unlimited rights, government purpose rights or limited rights (DFARS 227.7103-5). Unlimited rights are the rights to use, modify, reproduce, perform, display, release or disclose technical data in any manner and for any purpose, and to authorize others to do so (DFARS 252.227-7013(a)). Beyond data for items developed exclusively with government funds, the DFARS lists categories that carry unlimited rights whatever the funding (DFARS 227.7103-5(a)).

Those categories include studies, analyses, test data or similar data produced under a contract when that work was specified as an element of performance (DFARS 227.7103-5(a)(2)). They include form, fit and function data, and data necessary for installation, operation, maintenance or training, other than detailed manufacturing or process data (DFARS 227.7103-5(a)(4) and DFARS 227.7103-5(a)(5)). Corrections or changes to technical data the government furnished to the contractor are also included (DFARS 227.7103-5(a)(6)).

Further categories are data that are publicly available, or that the contractor or subcontractor released without restrictions on further use (DFARS 227.7103-5(a)(7)). A release resulting from the sale or transfer of an interest, or of all or part of a business, does not count. Data in which the government obtained unlimited rights under another contract or through negotiation are covered too (DFARS 227.7103-5(a)(8)). So are data whose limited or government purpose restrictions have expired (DFARS 227.7103-5(a)(9)).

6. Two definitions that drive the list

Form, fit and function data describe the required overall physical, functional and performance characteristics of an item, component or process, with qualification requirements if applicable (DFARS 252.227-7013(a)). They go only as far as needed to identify physically and functionally interchangeable items. Detailed manufacturing or process data describe the steps, sequences and conditions of manufacturing, processing or assembly the manufacturer uses to produce an item or component or perform a process.

The second definition matters for the maintenance and training category, which carries unlimited rights only for data that are not detailed manufacturing or process data (DFARS 227.7103-5(a)(5)). The other standard licenses are covered in government purpose rights and the nondisclosure form and limited rights and negotiated licenses.

Key terms

Unlimited rights	Rights to use and disclose technical data in any manner and for any purpose.
Private expense	Development paid entirely from indirect cost pools or costs not allocated to a government contract.
Mixed funding	Development paid partly at private expense and partly with direct contract charges.
Developed	An item, component or process that exists and is workable.
Form, fit and function data	Data describing characteristics needed to identify interchangeable items.

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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