Congress Needs To Fix Its Mistake On Technical Data Rights

When Congress passed the 2012 National Defense Authorization Act (NDAA) it made a mistake with serious consequences for national security. Buried in this mammoth bill was a legislative bombshell. It has to do with a relatively arcane subject: ownership of technical data rights. But the consequences of the new provisions for the U.S. military and the defense industrial base could be nothing short of disastrous.

Technical data is the special knowledge created whenever a company designs and develops a platform, system, assembly or even a piece of software for the Department of Defense (DoD). Some of this knowledge is developed by the companies using their own personnel, infrastructure and funds. In some cases, companies will bring to DoD specialized knowledge developed for the commercial market place. Historically, the government has always treated technical data developed in this manner to be the property of the developer.

The federal government encourages defense companies to be innovative and develop the specialized knowledge or technical data to support the fielding of new weapons systems or advanced military capabilities. In fact, the government allows companies to include as part of its cost proposals a relatively small charge for independent research and development (IR&D) and for the preparatory work associated with bid and proposal (B&P) on a government program. The government encourages expenditures on IR&D and B&P precisely as a means of promoting innovation.

The problem is that what government gives it may also try to take away. Some in DoD do not like private ownership of technical data related to military equipment because it limits the government’s ability to promote competition by handing that proprietary knowledge to other companies. The government could pay for the rights to proprietary technical data — and sometimes does — but that can be expensive. On occasion, program managers have even sought to pry from private companies technical data on products that were developed for the commercial world and never involved the use of government funds.

The 2012 NDAA turns the history with respect to technical data rights on its head. The new law allows the government to claim the right to all technical data funded to any degree with government funds. It also permits the government to assert a right to proprietary technical data and software related to any item not wholly commercial in nature without having to pay for it if the intended use is reprocurement, sustainment, modification or the upgrade of an item. Finally, the government is granted greatly expanded rights to pass technical data and software developed at private expense to third parties with a simple assurance that the information will be protected.

These provisions of the new law are nothing more than Congressionally-sanctioned theft of private property. If allowed to stand it will mean the end of innovative research by private companies based on government funds. It also will discourage commercial firms, particularly those with new and highly innovative technical data of software from competing for government contracts. DoD needs to stand shoulder-to-shoulder with industry in seeking to repeal the portions of the NDAA that deal with technical data rights.