[Federal Register Volume 90, Number 11 (Friday, January 17, 2025)]
[Rules and Regulations]
[Pages 5736-5740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00722]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Part 252
[Docket DARS-2022-0030]
RIN 0750-AL67
Defense Federal Acquisition Regulation Supplement: Update of
Challenge Period for Validation of Asserted Restrictions on Technical
Data and Computer Software (DFARS Case 2022-D016)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD is issuing a final rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to implement a section of the
National Defense Authorization Act for Fiscal Year 2012, which
addresses the validation of proprietary data restrictions.
DATES: Effective January 17, 2025.
FOR FURTHER INFORMATION CONTACT: David Johnson, telephone 202-913-5764.
SUPPLEMENTARY INFORMATION:
I. Background
DoD published a proposed rule in the Federal Register at 89 FR
31686 on April 25, 2024, to implement section 815(b) of the National
Defense Authorization Act (NDAA) for Fiscal Year (FY) 2012 (Pub. L.
112-81). Section 815(b) amended 10 U.S.C. 2321 (currently 10 U.S.C.
3782) by increasing the validation period for asserted restrictions
from three years to six years. Section 815(b) also amended 10 U.S.C.
2321 to provide an exception to the prescribed time limit for
validation of asserted restrictions if the technical data involved are
the subject of a fraudulently asserted use or release restriction. Two
respondents submitted public comments in response to the proposed rule.
DoD also held a public meeting on May 17, 2024.
II. Discussion and Analysis
DoD reviewed the public comments in the development of the final
rule. A discussion of the comments and the changes made to the rule as
a result of those comments is provided, as follows:
A. Summary of Significant Changes From the Proposed Rule
There are no significant changes from the proposed rule.
B. Analysis of Public Comments
1. Technical Data or Software Delivered, Furnished, or Otherwise
Provided to the Government
Comment: The respondents suggested that the revisions to the
clauses at DFARS 252.227-7019, Validation of Asserted Restrictions--
Computer Software, and 252.227-7037, Validation of Restrictive Markings
on Technical Data, to consistently reference technical data and
computer software ``delivered or otherwise provided to the Government''
should be removed from the final rule. The existing clause language
already references technical data delivered, software delivered,
technical data required to be delivered, and software required to be
delivered. Respondents assert that the phrase ``otherwise provided to
the Government'' is ambiguous and inconsistent with existing statutes.
The respondents also asserted that this language may result in a
potential chilling effect on the relationship between Government and
contractors.
Response: References to technical data and computer software
``delivered or otherwise provided'' to the Government appear multiple
times in the current contract clauses at DFARS 252.227-7013, Rights in
Technical Data--Other Than Commercial Products and Commercial Services,
and DFARS 252.227-7014, Rights in Other Than Commercial Computer
Software and Other Than Commercial Computer
[[Page 5737]]
Software Documentation. These references cover technical data and
computer software ``delivered or otherwise furnished'', ``delivered or
otherwise provided'', and ``delivered, furnished, or otherwise
provided'' to the Government, and both clauses reference the validation
clauses. In addition, DFARS 252.227-7019(e) currently references
``software delivered, to be delivered under this contract, or otherwise
provided to the Government in the performance of this contract.''
Accordingly, these revisions ensure consistency with existing language
in DFARS 252.227-7019, 252.227-7013, and 252.227-7014, and clearly
signals the scope of the validation clauses. The Government therefore
declines the suggestion to remove these revisions from the final rule.
2. Changes To Align With Statutory Language Related to Restrictions
Asserted
Comment: A respondent suggested that the replacement in several
places in the DFARS of the phrase ``restrictive markings'' with the
phrase ``asserted restriction'' is unnecessary for statutory alignment
and may result in confusion.
Response: The underlying statutes (10 U.S.C. 3781-3786) repeatedly
reference challenge, justification, and validation of ``restriction[s]
asserted'' and ``asserted restriction[s].'' The statutes do not refer
to restrictive markings. The final rule aligns the clauses with the
underlying statutory language, and it creates consistent nomenclature
and syntax throughout the clauses. The final rule references validation
of ``asserted restrictions'', rather than validation of restrictive
markings (which is inconsistent with the statutory language and more
likely to be confused with the separate procedures for ensuring
conformity of those markings). Rather than the confusing syntax of
``striking'' an asserted restriction, the final rule references
striking ``restrictive markings.''
3. Definition of Fraud
Comment: The respondents requested clarification with respect to
when a use or release restriction would be considered ``fraudulently
asserted.'' In addition, the respondents proposed specific requirements
and limitations for the Government when invoking this exception to the
six-year challenge period.
Response: As stated in the proposed rule, the statutory revisions
being implemented in DFARS Case 2022-D016 do not establish a
specialized definition of ``fraudulently asserted'' or a knowledge
requirement. The respondents proposed requirements and limitations on
this exception to the six-year challenge period. The respondents did
not provide, and DoD is not aware of, either an existing statute,
policy, or regulation that includes the proposed requirements or
limitations, or evidence of congressional intent to impose the proposed
requirements or limitations.
As with other instances of the term fraud in the Federal
Acquisition Regulation and DFARS, DoD relies upon the common meaning of
the terminology used in the statute and regulatory implementation,
informed by applicable procurement statutes, other applicable statutes,
and case precedent. In addition, the existing validation procedures
require the Government to state the specific grounds for challenging
the asserted restriction, which includes the grounds for invoking the
exception to the six-year challenge period. Such grounds are subject to
review by a court of competent jurisdiction or the Armed Services Board
of Contract Appeals.
4. Applicability to Commercial Products or Commercial Services
Comment: One respondent recommended revisions to the proposed
language in DFARS 252.227-7037(e)(1) to clarify whether sufficient
information to reasonably demonstrate funding for the development of
commercial products or commercial services must be provided with every
challenge.
Response: The original language indicates that challenges will
``[s]tate the specific grounds for challenging the asserted restriction
including, for commercial products or commercial services, sufficient
information to reasonably demonstrate that the commercial product or
commercial service was not developed exclusively at private expense.''
This requirement related to commercial products or commercial services
is not optional, and the proposed revision was not intended to change
this requirement. For the sake of clarity, the final rule reverts to
the original language.
5. Question About Other Rulemaking Case
Comment: A respondent requested that DoD expedite the issuance of
proposed rule for DFARS Case 2023-D022, Definition of Subcontract.
Response: This comment is outside the scope of this rule, which
implements section 815(b) of the NDAA for FY 2012.
III. Applicability to Contracts at or Below the Simplified Acquisition
Threshold (SAT), for Commercial Products (Including Commercially
Available Off-the-Shelf (COTS) Items), and for Commercial Services
This final rule amends the clauses at DFARS 252.227-7019,
Validation of Asserted Restrictions--Computer Software, and DFARS
252.227-7037, Validation of Restrictive Markings on Technical Data.
However, this final rule does not impose any new requirements on
contracts at or below the SAT, for commercial products including COTS
items, or for commercial services. The clause will continue to apply to
acquisitions at or below the SAT, to acquisitions of commercial
products including COTS items, and to acquisitions of commercial
services.
IV. Expected Impact of the Rule
This final rule includes changes to lengthen the validation period
for asserted restrictions from three years to six years. This final
rule also provides an exception to the prescribed time limit for
validation of asserted restrictions if the technical data or computer
software involved are the subject of a fraudulently asserted
restriction. Therefore, the final rule may increase the number of
challenges to which contractors must respond. However, DoD cannot
quantify the estimated number of the additional challenges at this
time.
V. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is not a significant regulatory action and, therefore, was not
subject to review under section 6(b) of E.O. 12866, Regulatory Planning
and Review, as amended.
VI. Congressional Review Act
As required by the Congressional Review Act (5 U.S.C. 801-808)
before an interim or final rule takes effect, DoD will submit a copy of
the interim or final rule with the form, Submission of Federal Rules
Under the Congressional Review Act, to the U.S. Senate, the U.S. House
of Representatives, and the Comptroller General of the United
[[Page 5738]]
States. A major rule under the Congressional Review Act cannot take
effect until 60 days after it is published in the Federal Register. The
Office of Information and Regulatory Affairs has determined that this
rule is not a major rule as defined by 5 U.S.C. 804.
VII. Regulatory Flexibility Act
A final regulatory flexibility analysis has been prepared
consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.
and is summarized as follows:
DoD is amending the Defense Federal Acquisition Regulation
Supplement (DFARS) to implement section 815(b) of the National Defense
Authorization Act (NDAA) for Fiscal Year (FY) 2012 (Pub. L. 112-81),
which addresses the period for validation of proprietary data
restrictions. The objective of the rule is to implement section 815(b),
which amended 10 U.S.C. 2321 (currently 10 U.S.C. 3782) by increasing
the validation period for asserted restrictions from three years to six
years. Section 815(b) also amended 10 U.S.C. 2321 to provide an
exception to the prescribed time limit for validation of asserted
restrictions if the technical data involved are the subject of a
fraudulently asserted use or release restriction. This rule will ensure
that the Government has adequate opportunity to challenge discrepancies
or inaccuracies in contractor assertions of data and software rights.
The public comments raised no significant issues in response to the
initial regulatory flexibility analysis.
This rule applies to small entities that have contracts with DoD
requiring delivery of data, including technical data and computer
software. DoD obtained data for fiscal years 2020 through 2022 from the
Procurement Business Intelligence Service for all contracts and
modifications that include one or more of the following DFARS clauses:
252.227-7013, Rights in Technical Data--Other Than Commercial Products
or Commercial Services; 252.227-7014, Rights in Other Than Commercial
Computer Software and Other Than Commercial Computer Software
Documentation; 252.227-7015, Technical Data--Commercial Products and
Commercial Services; and 252.227-7018, Rights in Other Than Commercial
Technical Data and Computer Software--Small Business Innovation
Research Program and Small Business Technology Transfer Program. DoD
awarded on average 54,255 contract actions per year that included one
or more of the listed clauses to 9,550 unique entities, of which 28,657
contract awards (53 percent) were made to 6,033 unique small entities
(63 percent).
This rule does not impose any new reporting, recordkeeping, or
other compliance requirements for small entities.
There are no known alternatives that would accomplish the stated
objectives of the applicable statute.
VIII. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. chapter 35) applies to this
final rule. However, these changes to the DFARS do not impose
additional information collection requirements to the paperwork burden
previously approved by the Office of Management and Budget (OMB) under
OMB Control Number 0704-0369, entitled DFARS Subpart 227.71, Rights in
Technical Data; and Subpart 227.72, Rights in Computer Software and
Computer Software Documentation, and related provisions and clauses.
List of Subjects in 48 CFR Part 252
Government procurement.
Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
Therefore, the Defense Acquisition Regulations System amends 48 CFR
part 252 as follows:
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
1. The authority citation for part 252 continues to read as follows:
Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.
0
2. Amend section 252.227-7019--
0
a. By revising paragraph (b);
0
b. In paragraph (d)(2)(i)(B) by revising the second sentence;
0
c. In paragraph (e)(1) by revising the second sentence;
0
d. In paragraph (f)(1)(ii) by removing ``within 60 days'' and adding
``in writing within 60 days'' in its place;
0
e. In paragraph (g)(3)(i)(B) by removing ``government'' and adding
``Government'' in its place.
The revisions read as follows:
252.227-7019 Validation of Asserted Restrictions--Computer Software.
* * * * *
(b) Justification. The Contractor shall maintain records sufficient
to justify the validity of any asserted restrictions on the
Government's rights to use, modify, reproduce, perform, display,
release, or disclose computer software delivered, required to be
delivered, or otherwise provided to the Government under this contract
and shall be prepared to furnish to the Contracting Officer a written
justification for such asserted restrictions in response to a request
for information under paragraph (d) of this clause or a challenge under
paragraph (f) of this clause.
* * * * *
(d) * * *
(2) * * *
(i) * * *
(B) * * * If the Contractor fails to correct or strike the
unjustified marking and return the corrected software to the
Contracting Officer within 60 days following receipt of the software,
the Contracting Officer may correct or strike the marking at the
Contractor's expense;
* * * * *
(e) * * *
(1) * * * Except for software that is publicly available, has been
furnished to the Government without restrictions, has been otherwise
made available without restrictions, or is the subject of a
fraudulently asserted use or release restriction, the Government may
exercise this right only within 6 years after the date(s) the software
is delivered or otherwise furnished to the Government, or 6 years
following final payment under this contract, whichever is later.
* * * * *
0
3. Amend section 252.227-7037--
0
a. By revising the section heading and the clause heading and date;
0
b. By revising paragraphs (c), (d), (e)(1) introductory text, and
(e)(1)(iii);
0
c. In paragraph (e)(4) by removing ``restrictive markings'' and adding
``asserted restrictions'' in its place;
0
d. By revising paragraph (g)(1);
0
e. In paragraph (g)(2)(i) by removing ``restrictive marking'' and ``In
order to'' and adding ``asserted restriction'' and ``To'' in their
places, respectively;
0
f. By revising paragraphs (g)(2)(ii) through (iv);
0
g. In paragraph (h)(1)(i) by removing ``marking'' and adding ``marking
that is based on the asserted restriction'' in its place;
0
h. By revising paragraphs (h)(1)(ii) and (i); and
0
i. In paragraph (k) by removing ``restrictive markings'' and
``subcontractors'' and adding ``restrictions'' and ``subcontractor'' in
their places, respectively.
The revisions read as follows:
252.227-7037 Validation of Asserted Restrictions on Technical Data.
* * * * *
[[Page 5739]]
VALIDATION OF ASSERTED RESTRICTIONS ON TECHNICAL DATA (JAN 2025)
* * * * *
(c) Justification. The Contractor or subcontractor at any tier
is responsible for maintaining records sufficient to justify the
validity of its asserted restrictions on the rights of the
Government and others to use, duplicate, release, or disclose
technical data delivered, required to be delivered, or otherwise
provided to the Government under the contract or subcontract. Except
as provided in paragraph (b) of this clause, the Contractor or
subcontractor shall be prepared to furnish to the Contracting
Officer a written justification for such asserted restrictions in
response to a challenge under paragraph (e) of this clause.
(d) Prechallenge request for information. (1) The Contracting
Officer may request the Contractor or subcontractor to furnish a
written explanation for any asserted restriction on the right of the
United States or others to use, disclose, or release technical data.
If, upon review of the explanation submitted, the Contracting
Officer cannot determine the basis of the asserted restriction, the
Contracting Officer may further request the Contractor or
subcontractor to furnish additional information in the records of,
or otherwise in the possession of or reasonably available to, the
Contractor or subcontractor to justify the validity of any asserted
restriction on technical data delivered, to be delivered, or
otherwise provided to the Government under the contract or
subcontract (e.g., a statement of facts accompanied with supporting
documentation). The Contractor or subcontractor shall submit such
written data as requested by the Contracting Officer within the time
required or such longer period as may be mutually agreed.
(2) If the Contracting Officer, after reviewing the written data
furnished pursuant to paragraph (d)(1) of this clause, or any other
available information pertaining to the validity of an asserted
restriction, determines that reasonable grounds exist to question
the current validity of the asserted restriction and that continued
adherence to the asserted restriction would make impracticable the
subsequent competitive acquisition of the item or process to which
the technical data relates, the Contracting Officer will follow the
procedures in paragraph (e) of this clause.
(3) If the Contractor or subcontractor fails to respond to the
Contracting Officer's request for information under paragraph (d)(1)
of this clause, and the Contracting Officer determines that
continued adherence to the asserted restriction would make
impracticable the subsequent competitive acquisition of the item or
process to which the technical data relates, the Contracting Officer
may challenge the validity of the asserted restriction as described
in paragraph (e) of this clause.
(e) * * *
(1) Notwithstanding any provision of this contract concerning
inspection and acceptance, if the Contracting Officer determines
that a challenge to the asserted restriction is warranted, the
Contracting Officer will send a written challenge notice to the
Contractor or subcontractor making the asserted restriction. The
challenge notice and all related correspondence shall be subject to
handling procedures for classified information and controlled
unclassified information. Such challenge will--
* * * * *
(iii) State that a Contracting Officer's final decision, issued
pursuant to paragraph (g) of this clause, sustaining the validity of
a prior asserted restriction identical to the current asserted
restriction, within the 3-year period preceding the current
challenge, shall serve as justification for the current asserted
restriction if the prior validated restriction was asserted by the
same Contractor or subcontractor (or any licensee of such Contractor
or subcontractor) to which such notice is being provided; and
* * * * *
(g) * * *
(1) If the Contracting Officer determines that the Contractor or
subcontractor has justified the validity of the asserted
restriction, the Contracting Officer will issue a final decision to
the Contractor or subcontractor that sustains the validity of the
asserted restriction and that states that the Government will
continue to be bound by the asserted restriction. The Contracting
Officer will issue this final decision within 60 days after receipt
of the Contractor's or subcontractor's response to the challenge
notice, or within such longer period that the Contracting Officer
has notified the Contractor or subcontractor that the Government
will require. The Contracting Officer will provide notification of
any longer period for issuance of a final decision within 60 days
after receipt of the response to the challenge notice.
* * * * *
(2) * * *
(ii) The Government agrees that it will continue to be bound by
the asserted restriction for a period of 90 days from the issuance
of the Contracting Officer's final decision under paragraph
(g)(2)(i) of this clause. The Contractor or subcontractor agrees
that, if it intends to file suit in the United States Court of
Federal Claims, it will provide a notice of intent to file suit to
the Contracting Officer within 90 days from the issuance of the
Contracting Officer's final decision under paragraph (g)(2)(i) of
this clause. If the Contractor or subcontractor fails to appeal,
file suit, or provide a notice of intent to file suit to the
Contracting Officer within the 90-day period, the Government may
cancel or ignore the restrictive markings that are based on the
asserted restrictions, and the failure of the Contractor or
subcontractor to take the required action constitutes agreement with
such Government action.
(iii) The Government agrees that it will continue to be bound by
the asserted restriction where a notice of intent to file suit in
the United States Court of Federal Claims is provided to the
Contracting Officer within 90 days from the issuance of the final
decision under paragraph (g)(2)(i) of this clause. The Government
will no longer be bound, and the Contractor or subcontractor agrees
that the Government may strike or ignore the restrictive marking
that is based on the asserted restriction, if the Contractor or
subcontractor fails to file its suit within 1 year after issuance of
the final decision. Notwithstanding the foregoing, where the head of
an agency determines, on a nondelegable basis, that urgent or
compelling circumstances will not permit waiting for the filing of a
suit in the United States Court of Federal Claims, the Contractor or
subcontractor agrees that the agency may, following notice to the
Contractor or subcontractor, authorize release or disclosure of the
technical data. Such agency determination may be made at any time
after issuance of the final decision and will not affect the
Contractor's or subcontractor's right to damages against the United
States where its asserted restrictions are ultimately upheld or to
pursue other relief, if any, as may be provided by law.
(iv) The Government agrees that it will be bound by the asserted
restrictions where an appeal or suit is filed pursuant to the
Contract Disputes statute until final disposition by an agency Board
of Contract Appeals or the United States Court of Federal Claims.
Notwithstanding the foregoing, where the head of an agency
determines, on a nondelegable basis, following notice to the
Contractor that urgent or compelling circumstances will not permit
awaiting the decision by such Board of Contract Appeals or the
United States Court of Federal Claims, the Contractor or
subcontractor agrees that the agency may authorize release or
disclosure of the technical data. Such agency determination may be
made at any time after issuance of the final decision and will not
affect the Contractor's or subcontractor's right to damages against
the United States where its asserted restrictions are ultimately
upheld or to pursue other relief, if any, as may be provided by law.
(h) * * *
(1) * * *
(ii) If the asserted restriction is found not to be
substantially justified, the Contractor or subcontractor, as
appropriate, shall be liable to the Government for payment of the
cost to the Government of reviewing the asserted restriction and the
fees and other expenses (as defined in 28 U.S.C. 2412(d)(2)(A))
incurred by the Government in challenging the asserted restriction,
unless special circumstances would make such payment unjust.
* * * * *
(i) Duration of right to challenge. (1) The Government may
review the validity of any restriction on technical data, delivered
or to be delivered under a contract, asserted by the Contractor or
subcontractor. During the period within 6 years of final payment on
a contract or within 6 years of delivery of the technical data to
the Government, whichever is later, the Contracting Officer may
review and make a written determination to challenge the
restriction. The Government may, however, challenge a restriction on
the release, disclosure, or use of technical data at any time if
such technical data--
[[Page 5740]]
(i) Are publicly available;
(ii) Have been furnished to the United States without
restriction;
(iii) Have been otherwise made available without restriction; or
(iv) Are the subject of a fraudulently asserted use or release
restriction.
(2) Only the Contracting Officer's final decision resolving a
formal challenge by sustaining the validity of a restrictive marking
constitutes ``validation'' as addressed in 10 U.S.C. 3785(c).
* * * * *
[FR Doc. 2025-00722 Filed 1-16-25; 8:45 am]
BILLING CODE 6001-FR-P