a winning game plan for contracting with the federal government

A Winning Game Plan for

Contracting

With the Federal GovernmentJames K. Cowan, Jr.540.443.2860 Direct

Amy P. Wheeler540.443.2857 Direct

[email protected]@cowanperry.com

Christy Cochrane, Virginia TechFederal Contracts Program Coordinator

[email protected]

Types of Federal Government

Contracts

• Background

• Main Items in Contract Type Selection− Amount of risk− Scope of work definitization

• Factors Used by Contracting Officers− Price competition− Price / cost analysis− Requirement complexity and urgency− Acquisition history

Types of Federal Government

Contracts

• Fixed-Price Contracts (FAR 16.2)

• Cost-Reimbursement Contracts (FAR 16.3)

• Incentive Contracts (FAR 16.4)

• Indefinite-Delivery Contracts (FAR 16.5)

• Time-and-Materials and Labor-Hour

Contracts (FAR 16.6)

Fixed-Price ContractsFAR 16.2

• Background / Risk Allocation

• Firm-Fixed-Price Contracts− Commercial items

− Clearly defined scope of work

− Able to determine fair and reasonable price

• Fixed-Price Contracts with Economic Price

Adjustment− Price revision (up or down) at set intervals

− Risk mitigation tool

− Revision due to industry changes

Fixed-Price ContractsFAR 16.3

• Firm-Fixed-Price, Level-of-Effort Term

Contracts− Research & Development

− Deliverable: final report

− Payment based upon level-of-effort

− General description of work

Cost-Reimbursement ContractsFAR 16.3

• Background / Risk Allocation− Allowable incurred costs

− Contract cost ceiling

− Additional requirements for Contracting Officer

• Cost Contracts− Actual, allowable costs

− No profit allowed / Educational Institutions

• Cost Sharing Contracts

Cost-Reimbursement ContractsFAR 16.3

• Cost-Plus-Fixed-Fee Contracts− Fee negotiated at execution

− FAR examples

− Types

• Completion

• Term

• Additional Types / Suggestions

Incentive ContractsFAR 16.4

• Applicability and Purpose− Cost incentive

− Technical performance incentive

− Delivery incentive

• Types− Cost plus incentive fee contracts

− Cost plus award fee contracts

Indefinite-Delivery ContractsFAR 16.5

• Applicability and Types− Definite-quantity contracts

− Requirements contracts

− Indefinite-quantity contracts

• Definite-Quantity Contracts− Defined amount of supplies/services

− Delivery date to be determined

• Requirements Contracts− Government will procure all supplies/services

within scope of work from contractor

− Maximum limit / Estimated amount

− Contractor is legally required to meet

obligations

Indefinite-Delivery ContractsFAR 16.5

• Indefinite-Delivery, Indefinite-Quantity (IDIQ)

Contracts− Delivery/task orders

− Maximum ordering limits

− Minimum award amount (consideration)

− Government prefers multiple award IDIQs

Time-and-Materials and Labor-Hour

Contracts (FAR 16.6)

• Applicability and Use − Negotiate fixed hourly rates that includes

overhead, wages, indirect costs, and profit

− Does not incentivize lower costs

− Prior authorization required to use

− Significant government oversight required

Accounting System• System must be deemed “acceptable” by

the government− Sound internal control environment,

framework and structure

− Segregation of direct costs from indirect costs− Indirect costs are generally categorized as

overhead and general & administrative costs

− Timekeeping system to identify labor efforts by

cost objectives

− Interim determination of costs charged to a

contract

− Ability to exclude “unallowable costs”

− Must follow GAAP

Incurred Cost Submission

• Every contractor who performs one or

more cost-reimbursement and/or time &

materials contracts must file with DCAA

• Due annually within 6 months of end of

contractor’s fiscal year

• Purpose is to report actual costs (both

direct and indirect) incurred on

government contracts and reconcile them

with amounts billed

• Receipt by DCAA begins audit process


• Purpose of audit is to determine if a

contractor’s costs for that year are:− Reasonable;

− Allocable to the contract(s); and

− Allowable.

• Reasonable − A cost is reasonable if, in its nature and

amount, it does not exceed that which

would be incurred by a prudent person in

the conduct of a competitive business.

− Depends on a variety of circumstances

− Burden on contractor to demonstrate


• Allocable

− A cost is allocable if, it is assignable or

chargeable to one or more cost

objectives on the basis of relative

benefits received or another equitable

relationship

− Is generally allocable if: − It is incurred specifically for the contract;

− It benefits both the contract and other work

and can be distributed to them in proportion

to the benefits received; or

− It is necessary to the overall operation of

the business


• Allowable

− A cost is allowable only if it complies with

each of the following:

− Reasonableness;

− Allocability;

− Standards promulgated by the Cost

Accounting Standards Board, if

applicable, otherwise GAAP;

− Terms of the contract; and

− Any limitations set forth in FAR 31.2.

Affirmative Action Regulations

• Affirmative Action regulations are administered by

the Department of Labor’s Office of Federal

Contract Compliance Programs (“OFCCP”).

• http://www.dol.gov/ofccp/aboutof.html

• There is a wealth of information to be found on the

OFCCP’s home page, including sample narrative

affirmative action plans and related materials at:

• www.dol.gov/ofccp/index.htm

• Today, we will focus on recent changes and

a number of new Executive Orders

http://www.dol.gov/ofccp/aboutof.html

http://www.dol.gov/ofccp/index.htm

The New RulesExecutive Order 11246, its Recent Amendments and new Final Rules:

EO 13665, Prohibitions Against Pay Secrecy Policies and

Actions (amended EO 11246; final rule; effective

January 11, 2016)

EO 13672, Prohibiting Discrimination Based on Sexual

Orientation and Gender Identity (amended EO 11246; final

rule as of April 8, 2015)

EO 13658, Establishment of Minimum Wage for Federal

Contractors (final rule as of January 1, 2015; updated

January 1, 2016 & thereafter)

EO 13706, Establishing Paid Sick Leave for Federal Contractors;

Secretary of Labor to issue regulations by September 30,

2016; goes into effect January 1, 2017

EO 13673, Fair Pay and Safe Workplaces Act

The New Rules, cont.

New EEO-1 Report (formerly known as the proposed

Equal Pay Report), to be included in 2017 EEO-1

New Sex Discrimination Guidelines

• Changes to the Rehabilitation Act of

1973 (Section 503)

• Changes to the Vietnam Era Veterans

Readjustment Assistance Act (VEVRAA)

(Section 4212)

Which

rules

apply?

Executive Order 11246

Executive Order 11246 prohibits federal

government contractors and subcontractors from

discriminating in employment on the basis of

race, color, religion, national origin, sex, sexual

orientation, and gender identity, and requires

affirmative action with respect to minorities and

females to ensure nondiscrimination.

41 CFR § 60, et seq.


An amendment to EO 11246, this rule prohibits

discrimination based on sexual orientation and/or gender

identity

Became effective on April 8, 2015 and applies to contracts

entered into on or after April 8, 2015

Amended language in all affirmative action clauses and

notices: race, color, religion, national origin, sex, sexual

orientation, and gender identity

FAQs: http://www.dol.gov/ofccp/LGBT/LGBT_FAQs.html

Complaints of discrimination under this new rule may

be investigated and enforced under both EO 11246 and

under Title VII

http://www.dol.gov/ofccp/LGBT/LGBT_FAQs.html


Prohibitions Against Pay Secrecy and Actions; this rule

amends EO 11246 and became effective on January 11, 2016

Prohibits federal contractors from discharging or discriminating

against employees or applicants for disclosure, inquiry, or

discussion about compensation with others

Prohibits adverse treatment for disclosure, inquiry or discussion

regarding compensation with other employees

Full text of Final Rule:

https://www.gpo.gov/fdsys/pkg/FR-2015-09-11/pdf/2015-22547.pdf

EO 13665 – EEO clause

Requires that the equal opportunity clause included in covered

federal contracts and subcontracts be amended to include that

federal contractors and subcontractors must refrain from

discharging, or otherwise discriminating against, employees or

applicants who inquire about, discuss, or disclose their

compensation or the compensation of other employees or

applicants.

A contractor’s federal contracts, subcontracts, or purchase

orders may incorporate 41 CFR 60–1.4, the equal opportunity clause provision of the regulations, by reference into their contracts and subcontracts.

EO 13665 – Pay Transparency Policy

StatementContractors must incorporate the nondiscrimination provision into

their existing employee manuals or handbooks and disseminate the

nondiscrimination provision to employees and to job applicants,

verbatim, as follows:

PAY TRANSPARENCY POLICY STATEMENT

The contractor will not discharge or in any other manner

discriminate against employees or applicants because they

have inquired about, discussed, or disclosed their own pay or

the pay of another employee or applicant. However, employees

who have access to the compensation information of other

employees or applicants as a part of their essential job

functions cannot disclose the pay of other employees or

applicants to individuals who do not otherwise have access to

compensation information, unless the disclosure is (a) in

response to a formal complaint or charge, (b) in furtherance of

an investigation, proceeding, hearing, or action, including an

investigation conducted by the employer, or (c) consistent with

the contractor’s legal duty to furnish information.


On January 1, 2015, this rule established a new minimum wage for

federal contractors ($10.10/hour) to be increased by the Secretary of

Labor on January 1, 2016 and annual thereafter, as permitted by the

Executive Order.

Applies to new contracts and replacements for expiring contracts with

the Federal Government that result from solicitations issued on or

after January 1, 2015 or to contracts that are awarded outside the

solicitation process on or after January 1, 2015.

FAQs: http://www.dol.gov/whd/flsa/eo13658/faq.htm

Effective January 1, 2016, the minimum wage is $10.15/hour.

Also, beginning January 1, 2016, tipped employees performing

work on or in connection with covered contracts generally

must be paid a minimum cash wage of $5.85/hour.

http://www.dol.gov/whd/flsa/eo13658/faq.htm

Executive Order 13706 Establishes paid sick leave for federal contractors; goes into effect

January 1, 2017.

Contracts and subcontracts must specify, as conditions of payment

in the performance of the contract or subcontract:

• Employees shall not earn less than 1 hour of paid sick leave per

30 hours worked;

• Contractors shall not set a limit of less than 56 hours accrual of

sick leave per year;

• Paid sick leave shall carry over from one year to the next; and

shall be reinstated for employees rehired by a covered

contractor within 12 months after a job separation.

• Use cannot be made contingent upon employee finding a

replacement to cover missed work time

EO 13706 – Enforcement

A contractor may not interfere with or discriminate

against employees for taking, or attempting to take, paid

sick leave as provided for under EO 13706 or in

asserting, or assisting other employees in asserting any

right or claim related to the order.

The Secretary of Labor will investigate potential

violations of, and obtain compliance with, the terms of

this order.

Full text of EO 13706: https://www.whitehouse.gov/the-

press-office/2015/09/08/executive-order-establishing-

paid-sick-leave-federal-contractors

https://www.whitehouse.gov/the-press-office/2015/09/08/executive-order-establishing-paid-sick-leave-federal-contractors

Sections 4212 (VEVRAA) and 503 (Rehabilitation Act of 1973)

• On March 24, 2014, this section was amended to include:

Annual hiring (not incumbent) benchmark for protected veterans

(either equal to percentage of veterans in national civilian

workforce, which varies each year, or by calculated

individualized benchmarks)

Collection, documentation, and analysis of number of protected

veteran applicants and hires

Invitations to protected veterans to self-identify at pre- and post-offer

stages

Required specific language when incorporating the EEO

clause in a subcontract by reference

Job listing requirement to provide information in manner

and format permitted by state/local job services

The VEVRAA Benchmark

As of March 4, 2016, the national percentage of

veterans in the civilian labor force was 6.9%

When considering whether to customize your

benchmark, you should first examine the available

data. For example, the average percentage of veterans

in the civilian labor force for the prior 3 years (2012,

2013 and 2014) in Virginia was 11.4%; in Texas, the

average was 7.4%

Link to VEVRAA Benchmark Database, specifics and

sample data for the 5-factor test:

https://ofccp.dol-esa.gov/errd/VEVRAA.jsp

https://ofccp.dol-esa.gov/errd/VEVRAA.jsp

Veterans’

Infographic

In August 2015, the

OFCCP released “Am I a

Protected Veteran?” This

infographic helps

applicants and

employees determine if

they are eligible to self-

identify as protected

veterans.

Section 503 Reminder

Effective March 24, 2014, this section was amended to require:

Contractors with more than 100 employees have a workforce goal of

7% utilization of persons with disabilities, by job group

Required collection, documentation, and analysis of the

number of disabled applicants and hires

Contractors with fewer than 100 employees have a workforce

goal of 7% utilization of persons with disabilities, workforce-

wide

Application process must be inclusive of applicants with

disabilities

The OFCCP’s new Section 503 compliance

checklist is available here:

http://www.dol.gov/ofccp/regs/compliance/checklistforComplian

cewithSection503_JRF_QA_508c.pdf

http://www.dol.gov/ofccp/regs/compliance/checklistforCompliancewithSection503_JRF_QA_508c.pdf

The OFCCP has posted a 50-second video on its website, called “Disability Inclusion Starts

with You,” to share with employees and applicants who may be reluctant to self-identify, or

who may not understand the reasons for self-identification. It is available with and without

captioning here: http://www.dol.gov/ofccp/SelfIdVideo.html

Contractors may wish to download and post this video on their Intranet or company website to

share with employees and job applicants.

http://www.dol.gov/ofccp/SelfIdVideo.html

VEVRAA and Section 503

Annual Assessment and Audit

Don’t forget! Contractors must design and implement an audit

and reporting system to:

Determine the need for remedial action

Determine whether disabled individuals and protected veterans had

the opportunity to participate in the company's education, training,

recreational and social activities

Measure compliance with affirmative action plan obligations

Document actions taken to comply, and

If deficiencies are found, undertake necessary action to come into

compliance.

To Keep or Not to Keep:

Statistical Reports/Records

Selection and hiring records should be kept for three (3) years,

because federal contractors will now create auditing and reporting

systems under Sections 4212 and 503.

Any employment or personnel record kept by the contractor must be

retained for two (2) years after the record is made or the personnel

action is taken, whichever is later, but

Contractors must evaluate and document the effectiveness of

their recruiting of disabled individuals and protected veterans.

Documentation must include the criteria used to evaluate the

recruiting efforts and conclusions as to the success of those

efforts. Contractors must maintain this data, and the report

created from that data, for three (3) years.

To Keep or Not to Keep:

Statistical Reports/Records

Annual Written Report Required: At the end of the annual

assessment, the contractor will create a written report that

becomes a part of the company's AAP. The report must include:

The criteria used to evaluate the effectiveness of each outreach

and recruitment effort used; and

Provide the contractor's conclusion on the effectiveness of

the program. The criteria in the report must include an

assessment of the annual hiring data for the current year

and the two previous years (this began March 24, 2014)

Revision to EEO-1 Report

The new report, beginning in 2017, includes:

Contractors with 50 to 99 employees: Total number of

workers in a specific EEO-1 job category by race, ethnicity

and gender (same as the current EEO-1)

Contractors with 100+ employees: aggregate W-2 data in

12 pay bands (provided by the EEOC in this proposed rule)

in each EEO-1 job category, and total hours worked by

employees within each of the 12 pay bands

New EEO-1 Report

• Requires reporting of pay data already maintained in the normal

course of business.

• In consultation with the DOJ, the EEOC and OFCCP focused on

how EEO-1 pay data would be used to assess complaints of

discrimination, focus investigations, and identify employers with

existing pay disparities that might warrant further examination.

The EEOC and OFCCP anticipate that the process of reporting

pay data may encourage employers to self-monitor and comply

voluntarily if they uncover pay inequities.

EEO-1 Filing Rule Changes

Effective September 2015, if a company has multiple

establishments located at the same address, and those

establishments have the same NAICS code and the same

EIN, the establishments MUST be combined into only one

report.

Employers must provide the company’s EIN on the EEO-1

report.

EEO-1 Survey Link:

http://www.eeoc.gov/employers/eeo1survey/

Companies can now obtain and reset their EEO-1 filing

passwords. https://egov.eeoc.gov/eeo1/login_help.html

http://www.eeoc.gov/employers/eeo1survey/

https://egov.eeoc.gov/eeo1/login_help.html

On June 14, 2016, the Office of Federal Contract Compliance Programs

announced publication of a Final Rule in the Federal Register that sets forth the

requirements that covered contractors must meet under the provisions of

Executive Order 11246 prohibiting sex discrimination in employment.

This Final Rule updates sex discrimination guidelines from 1970 with new

regulations that align with current law and address the realities of today’s

workplaces.

The Final Rule deals with a variety of sex–based barriers to equal employment

and fair pay, including compensation discrimination, sexual harassment, hostile

work environments, failure to provide workplace accommodations for pregnant

workers, and gender identity and family caregiving discrimination.

The Final Rule became effective on August 15, 2016.

Sex Discrimination Guidelines

Sex Discrimination Guidelines

Leave for childcare must be made available to men on the same

terms as it is available to women.

Contractors must provide workplace accommodations,

ranging from extra bathroom breaks to light-duty

assignments, to women affected by pregnancy, childbirth,

and related medical conditions comparable to the

accommodations that they provide to other workers similar

in their ability or inability to work, such as workers with

disabilities or occupational injuries.

Adverse treatment of an employee based upon gender-

stereotyped assumptions about family caretaking responsibilities

is discrimination.


Will require federal contractors, at the time of bid solicitation for

contracts of $500K+, to disclose certain labor violations during the past

three (3) years

Fair Pay and Safe Workplaces Order

Will require subcontractors whose subcontracts are $500K+ to

make the same disclosures

Among other things, this EO will require the following:

Contractors must make certain disclosures at each pay period

to employees, including the number of hours worked, rate of

pay, deductions from pay, etc.

EO 13673, continued

Contractors must update their disclosures to the government

agency with which they have the contract every six months

during contract performance

Contracting agencies must consult with a Labor Compliance

Advisor and consider the disclosures made by the bidding

contractor before awarding the contract

Federal contractors with contracts over $1M may only enter into

pre-dispute arbitration agreements with employees under Title

VII, or for any tort arising from sexual harassment or assault,

with the agreement of the employee or contractor after the

dispute arises

EO 13673, continued

Phased-In Implementation Schedule:

See Associated Builders and Contractors of Southeast Texas, et al. v. Anne Rung, Administrator, Office of Federal Procurement Policy, Office of Management and Budget, et al.; USDC EDTX, 1:16-cv-00425 was filed on 10/7/16, seeking injunctive relief before the final rule takes effect.

October 25, 2016: The final rule takes effect. Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. The reporting disclosure period is initially limited to one (1) year and will gradually increase to three (3) years by October 25, 2018.

January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to

provide wage statements and notice of any independent contractor relationship to their

covered workers.

April 25, 2017: The total contract value threshold for prime contracts requiring disclosure

and assessment of labor law compliance is reduced to $500,000.

October 25, 2017: Mandatory assessment begins for all subcontractors under

consideration for subcontracts with a total value greater than or equal to $500,000.

“EEO Is the Law” Poster Supplement

The EEOC’s “EEO Is the Law” poster was last revised in November 2009 and

consists of two pages. You must also post the September 2015 supplement

(see image in next slide).

Link to November 2009 “EEO Is The Law” Poster*:

http://www.dol.gov/ofccp/regs/compliance/posters/pdf/eeopost.pdf

Link to September 2015 Supplement*:

http://www.dol.gov/ofccp/regs/compliance/posters/pdf/OFCCP_EEO_Suppleme

nt_Final_JRF_QA_508c.pdf

Link to the DOL’s Poster website, for these and foreign language versions:

http://www.dol.gov/ofccp/regs/compliance/posters/ofccpost.htm

*You should also post these links on your company’s website,

along with your EEO statement, on your employment page.


http://www.dol.gov/ofccp/regs/compliance/posters/pdf/OFCCP_EEO_Supplement_Final_JRF_QA_508c.pdf

http://www.dol.gov/ofccp/regs/compliance/posters/ofccpost.htm

Required Language/Posters

Links to pay transparency language (you may use links on your websites):

Formatted (poster):

http://www.dol.gov/ofccp/pdf/PayTransparencyNotice_JRFQA508c.pdf

Not Formatted (for inclusion as text):

http://www.dol.gov/ofccp/pdf/EO13665_PrescribedNondiscriminationPostingLan

guage_JRFQA508c.pdf

EEO is the Law poster:


EEO is the Law poster supplement:

http://www.dol.gov/ofccp/regs/compliance/posters/pdf/OFCCP_EEO_Supplemen

t_Final_JRF_QA_508c.pdf

You should post your company’s EEO statement.

http://www.dol.gov/ofccp/pdf/PayTransparencyNotice_JRFQA508c.pdf

http://www.dol.gov/ofccp/pdf/EO13665_PrescribedNondiscriminationPostingLanguage_JRFQA508c.pdf


http://www.dol.gov/ofccp/regs/compliance/posters/pdf/OFCCP_EEO_Supplement_Final_JRF_QA_508c.pdf

Minimum EEO Required Tag Line:

EO Employer – M/F/Vets/Disabled, or EO Employer – Veterans/Disabled

and other protected categories

Methods for contacting employer:

Applicants with disabilities must either be able to use your online system

or submit an application in a timely manner through alternative means –

facsimile, email, phone call. This includes providing a means to contact

the contractor, other than through the online system, to request a

reasonable accommodation needed to apply and be considered for the

contractor´s jobs. Fax lines and email addresses must be attended to in

a timely fashion.

Required Language/Posters

Audits• Federal contractors are subject to audit,

generally by DCAA

− Pre-award audits: proposal pricing, forward

pricing rates or survey of accounting system

− Post-award audits: costs incurred under

contract, compliance with the Truth in

Negotiations Act or compliance with Cost

Accounting Standards

− Business system audits: significant business

systems such as accounting, estimating, billing,

purchasing, timekeeping and inventory/supply management

Intellectual Property

• Bayh-Dole Act of 1980

− In contrast with previous law, permits

contractors to retain title to a “subject

invention” developed with federal funding

− Subject invention is “any invention of a

contractor conceived or first actually

reduced to practice in the performance of work under a funding agreement

Patents


• Conception − More than a good idea, must be able to

describe with specific clarity and

precision to enable one skilled in the art

to practice

• First reduced to practice− Must be demonstrated to persons of

ordinary skill in the art that the invention

will perform its intended function beyond

the probability of failure in its intended operating environment

Patents


• Actions to retain title to invention− Must timely disclose existence of subject

invention to government

− Must affirmatively elect to retain title

− Must timely file and prosecute patent

application on invention

• Rights of government in subject invention− Non-exclusive, non-transferable, irrevocable,

paid-up license to practice or have practiced,

for on on behalf of the government, any

subject invention throughout the world

Patents


• If contractor fails to take all affirmative

steps within time frames required, the

government may request assignment

of the subject invention

• March-in-rights− If contractor fails to make reasonable

progress in bringing a technology to the

commercial market, the government can

require the contractor to license the technology to third parties

Patents

Intellectual PropertyCopyrights

• Unless prohibited by the contract,

contractor can generally assert a copyright

in a work first created under a government

contract

• Must always mark with a copyright legend

and acknowledge government’s

sponsorship

• Government gets a paid-up, nonexclusive,

irrevocable, worldwide license to

reproduce, distribute, prepare derivative

works, display, etc.

Intellectual PropertyTechnical Data and Computer Software

• Technical data “means recorded

information, regardless of the form or

method of the recording, of a scientific or

technical nature (including computer

databases and software documentation)”

• Generally, the contractor retains title to both

technical data and software and the

government receives a license to use,

reproduce, modify, release, perform,

display, or disclose the data or software


• The scope of the government’s rights

will depend primarily on:

1) whether the technical data or computer

software is commercial or non-commercial,

and

2) to what extent the data or software was

developed with federal versus private

funds


• Noncommercial Technical Data or

Computer Software

− Was item, component or process

“developed” in whole or in part with

government funds?

− Fact-specific inquiry

− Make determination at “lowest practical

level” by dividing the item, component or

process into segregable components (sub-elements or sub-routines)


• Unlimited Rights− Unlimited Rights are the rights of the

government to use the technical data or

software in any manner and for any

purpose and to permit others to do so

− Government gets unlimited rights in data

and software developed exclusively with

federal funds


• Unlimited Rights − Regardless of funding source, Government

also gets unlimited rights in:− Data first produced in performance of contract

− All data delivered under a contract

− Studies analyses, test data, or similar data produced for

a contract, when the work was specified as an element

of performance

− Form, fit, and function data

− Data necessary for installation, operation, maintenance,

or training purposes)

− Data otherwise publicly available or released or

disclosed by the contractor without restrictions on further

use, release or disclosure

− Data in which the government has obtained unlimited

rights under another government contract

− Note differences in DoD v. non-DoD procurements

Technical Data and Computer Software


• Government Purpose Rights − Government Purpose Rights are the rights

of the government to:

− Use, modify, replace, disclose, display, etc.

technical data or computer software within the

government without restriction; and

− Release or disclose technical data or computer

software outside the government and authorize

those to whom it was released or disclosed to

use, modify, replace, perform, display, etc.

technical data or computer software for U.S.

government purposes


• Government Purpose Rights − The government gets Government Purpose

Rights for a 5-year period in data/software:

− That pertains to items, components, or processes

developed with mixed funding except when the

government is entitled to unlimited rights; or

− Created with mixed funding in the performance of

a contract that does not require the development,

manufacture, construction, or production of items,

components, or processes

− Contractor has exclusive right to use (including to

license) the data for any commercial purpose

− After 5-year period, the government has unlimited

rights


• Restricted Rights − The government gets restricted rights in

computer software developed at private

expense and that is a trade secret, is

commercial or financial and confidential or

privileged, or is copyrighted computer

software

− Restricted rights allow the government to

primarily use the software on one

computer, transfer it, make archive copies,

let other government contractors use it in

support of the government


• Limited Rights − Limited Rights are the government’s rights to

use, modify, replace, perform, display, etc.

technical data, in whole or in part, within the

government

− The government may not release or disclose

the technical data outside the government,

use the data for manufacture, or authorize

the data to be used by another party, unless

necessary for emergency repair/overhaul or

if to a covered government support

contractor in performance of its government

support contract


• Specifically Negotiated License Rights− The standard license rights granted to the

government may be modified by mutual

agreement of the parties, but shall not provide

the government lesser rights than limited rights

− Specifically Negotiated License Rights must be:

− stated in a conspicuous place on the

medium on which the data is recorded;

− stated in the contract and clearly marked; or

− identified in a license agreement made a

part of the contract


• SBIR Data Rights− Unless the government already has unlimited

rights, the government gets special data rights –

called SBIR data rights – in all data/computer

software generated under a contract that is part of

an SBIR or STTR program

− SBIR data rights means the government’s rights to

use, modify, disclose, display, etc. data or software

generated under a SBIR/STTR award as follows:

− Limited rights in SBIR technical data; and

− Restricted rights in SBIR software

− SBIR Data Rights generally end five years after

completion of the project


• Actions to protect rights in data and

software− Proposals should identify any data/software

that contractor intends to deliver with less than

unlimited rights

− For DoD procurements, DFARS 252.227-7017

requires an offer to complete a chart (the “-

7017 chart”) identifying specifically the

data/software to be submitted, the asserted

rights category (i.e., limited rights, government

purpose rights), and the basis for the assertion

(i.e., developed with private funds developed

with mixed funds)

Technical Data and Computer Software



software− The -7017 chart must be delivered with the

proposal and will become part of the contract

− Contractor will not be permitted to deviate from the

-7017 chart unless there were inadvertent

mistakes or changed circumstances (i.e., new

requirements added to scope)

− Data or software delivered under the contract must

also be marked each and every time it is submitted

to the government



software

− Blanket markings are not permitted, only

data/software entitled to restriction may be

marked

− Failure to follow these requirements will result

in the technical data or software being delivered

to the government with unlimited rights

− Markings may be challenged by the government


• Commercial Technical Data or

Computer Software

− Government generally receives the standard

license rights provided by the contractor to

the public

− Government cannot be provided less rights

than given to the public

− If the publicly available rights do not meet

the government’s needs, it will work to

negotiate Specifically Negotiated License

Rights

Intellectual PropertyProtecting Your Rights as a Subcontractor

• Read your entire contract, including the

prime’s standard terms and conditions that

are likely on the internet and only referenced

in the agreement or purchase order

− Prime contractors cannot use their power to grant

contracts as leverage to obtain rights to a

subcontractor’s technology when awarding a

subcontract

− If subcontractor is to deliver data or software in

which it claims restrictions to fulfill an obligation of

the prime contract, subcontractor may deliver that

data/software directly to the government without

providing it to the prime contractor

Contracting Opportunities for

Small Businesses

• U.S. Small Business Administration (SBA)− Founded in 1953 under Small Business Act

− Mission

“…aid, counsel, assist and protect the

interests of small business concerns

(SBCs), to preserve free competitive

enterprise and to maintain and strengthen

the overall economy of our nation.”

• FAR Part 19, Small Business Programs− SBA assists acquisition personnel

− Ensures that small businesses are provided

the opportunity to execute “a fair proportion

of contracts for supplies and services”


Small Businesses

• Determination of Small Business Status− Based upon annual revenue or number of

employees

− Thresholds set for each industry through the

North American Industry Classification System

(NAICS)

• Small Business Categories Include:

Small businesses Small disadvantaged businesses

Veteran-owned small businesses Women-owned small businesses

Service-disabled veteran-owned small businesses

Historically Underutilized Business Zones (HUBZone) small businesses


Small Businesses

• FAR Subpart 19.5, Set-Asides for Small

Business− Exceeds micro-purchase threshold, but is under

the simplified acquisition threshold ($150,000)

− Automatically set-aside for small businesses

• Small Business Subcontracting Plans− $700,000 or more

− Large businesses must submit a plan to show

how they will provide maximum practical

opportunity to use small businesses to execute

their statement of work

− Format at FAR 19.704

Small Business Innovation Research

(SBIR) Program

• Background − Piloted by National Science Foundation (1972)

− Expanded to federal government (1982)

• Extramural budgets for R&D of $100 million

Department of Agriculture

(USDA)

Department of Commerce

Department of Defense (DoD) Department of Education (ED)

Department of Energy (DoE) Department of Health and

Human Services (HHS)

Department of Homeland

Security (DHS)

Department of Transportation

(DOT)

Environmental Protection

Agency (EPA)

National Aeronautics and

Space Administration (NASA)

National Science Foundation

(NSF)

SBIR Program

• SBIR Program Purposes

• Three Phased Program− Milestone-driven

− Phase I: At least two-thirds performed by SBC

− Phase II: Minimum of half performed by SBC

Phase Duration Funding Ceiling Purpose/Deliverable

I Six Months $150,000 Feasibility study or prototype to document technical merit

II 24 Months $1,000,000 Continues R&D from Phase I

III Varies No Federal Assistance

Commercialization effort. Funded privately

Small Business Technology Transfer

(STTR) Program

• Defined at 15 U.S.C. § 638 − “…research and development conducted jointly

by a small business concern and a research

institution….”

− Nonprofit organizations/public universities

• Requirements− Small business concern must execute at least

40% of the work

− Research institution must execute at least

30% of the work

STTR Program

• Three Phased Program− Milestone-driven

• Process of Partnering with University

Phase Duration Funding Ceiling Purpose/Deliverable

I Six Months $150,000 Feasibility study or prototype to document technical merit

II 24 Months $1,000,000 Continues R&D from Phase I

III Varies No Federal Assistance

Commercialization effort. Funded privately

SBIR/STTR Intellectual Property

Contract Clauses

• SBIR: FAR 52.227-20, Rights in Data –

SBIR Program (May 2014)− Terms favorable to small businesses

− Example: FAR 52.227-20(c) allows for the

contractor to assert copyright

• STTR:− No Corresponding FAR IP clause

− Include an agreement pertaining to STTR

Program Allocation of Rights to Intellectual

Property and Rights to Carry Out Follow-On

Research, Development, or

Commercialization in proposal

Working with a Public University

Contract Clauses

• Indemnification− Many public universities will be unable to agree

to clauses that include indemnity.

− The Code of Virginia addresses indemnification

at Va. Code Ann. § 2.2-1837, Risk Management

Plan for Public Liability.

− Virginia Tech prohibited from indemnifying

under a sponsored research project.

• Equipment Ownership− FAR Clause 52.245-1, Government Property

(Apr. 2012) with its Alternate II (Apr. 2012)

Working with a Public University

Contract Clauses

• Publication− The freedom to publish is a key tenant for many

universities

− Sponsors provided with a limited period of time

in which to review and provide comments

regarding items the university intends to publish

− Allows for the identification of any patentable

subject matter or the inadvertent inclusion of the

sponsor’s proprietary information

• Warranties− “Reasonable Efforts” or “Best Efforts” to

perform the research described within the

statement of work

Thank You for Attending

this CLE Presentation

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