The GovCon Bulletin™

Oct, 2016

DoD Issues Final Rules On Rights In Major Weapons Systems Technical Data and Prohibiting Cost-Plus Contracts For Family Housing & Construction Projects

October 25, 2016

Late last month, the U.S. Department of Defense (DoD) issued several proposed and final rules to amend the Defense Federal Acquisition Regulation Supplement (DFARS). In this edition of the GovCon Bulletin™ we will summarize two of the final rules, one concerning the government’s rights in technical data and another concerning a prohibition against the use of cost-plus contracts for family housing and construction projects. In the next edition of the GovCon Bulletin™ we will cover the two proposed rules, one concerning the DoD Pilot Mentor-Protégé Program and another concerning DoD’s Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans.

Mark Amadeo

Rights In Technical Data Relating To Major Weapons Systems

On September 23, 2016, DoD issued a final rule (which can be found here) that changes, in some instances, how the government can challenge a contractor’s assertions of restrictions on the government’s rights to use, modify, reproduce, release, or disclose technical data. (For an overview of the government’s rights in technical data and computer software, see our white paper.) Prior to the amendment, a presumption that an item was developed at private expense (and thus properly subject to restrictions on the government’s rights) applied to all commercially available off-the-shelf (COTS) items, as well as to commercial items except major systems (or subsystems or components thereof) that were not COTS items. Contracting officers are required to apply the presumption whether or not a contractor or subcontractor responds to a challenge of an asserted restriction, and a failure to respond to a challenge cannot be the only basis for a decision denying the validity of an asserted restriction. In instances in which the presumption does not apply, however, contracting officers are required to sustain the challenge unless the contractor or subcontractor provides information that demonstrates that the item was developed exclusively at private expense.

As amended by the final rule, DFARS now applies the presumption that an item was developed at private expense to all commercial items and excludes from this presumption a narrower category of items. Specifically, the rule excludes from the presumption major weapons systems (or subsystems or components thereof) that are not (i) a commercial subsystem or component of a major weapon system, if the major weapon system was acquired as a commercial item in accordance with subpart 234.70 (10 U.S.C. 2379(a)); (ii) a component of a subsystem, if the subsystem was acquired as a commercial item in accordance with subpart 234.70 (10 U.S.C. 2379(b)); or (iii) any other component, if the component is a commercially available off-the-shelf item or a commercially available off-the-shelf item with modifications of a type customarily available in the commercial marketplace or minor modifications made to meet the government’s requirements.

Prohibition Against Use of Cost-Plus Contracts for Military Construction and Family Housing Projects

On September 23, 2016, DoD also issued a final rule (which can be found here) that prohibits any form of cost-plus (i.e., “cost-reimbursement” contract types defined in FAR 16.304, 16.305, and 16.306) contracting for military construction projects or military family housing projects. More specifically, for contracts in connection with a military construction project or a military family housing project, contracting officers cannot use cost-plus-fixed-fee, cost-plus-award-fee, or cost-plus-incentive-fee contract types.