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TITLE VIII--ACQUISITION POLICY, ACQUISITION MANAGEMENT, AND RELATED MATTERS

Subtitle B--Amendments to General Contracting Authorities, Procedures, and Limitations

P. L. 114-

House Conference Report. 114-270

“(2) In the case of a challenge to a use or release restriction that is asserted with respect to technical data of a contractor or subcontractor for a major system or a subsystem or component thereof on the basis that the major weapon system, subsystem, or component was developed exclusively at private expense—

“(A) the presumption in paragraph (1) shall apply—

“(i) with regard to a commercial subsystem or component of a major system, if the major system was acquired as a commercial item in accordance with section 2379(a) of this title;

“(ii) with regard to a component of a subsystem, if the subsystem was acquired as a commercial item in accordance with section 2379(b) of this title; and

“(iii) with regard to 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 Federal Government requirements; and

“(B) in all other cases, the challenge to the use or release restriction shall be sustained unless information provided by the contractor or subcontractor demonstrates that the item was developed exclusively at private expense.”.

(b) Government-industry advisory panel.—

(1) ESTABLISHMENT.—Not later than 90 days after the date of the enactment of this Act, the Secretary of Defense, acting through the Under Secretary of Defense for Acquisition, Technology, and Logistics, shall establish a Government-industry advisory panel for the purpose of reviewing sections 2320 and 2321 of title 10, United States Code, regarding rights in technical data and the validation of proprietary data restrictions and the regulations implementing such sections, for the purpose of ensuring that such statutory and regulatory requirements are best structured to serve the interests of the taxpayers and the national defense.

(2) MEMBERSHIP.—The panel shall be chaired by an individual selected by the Under Secretary, and the Under Secretary shall ensure that—

(A) the government members of the advisory panel are knowledgeable about technical data issues and appropriately represent the three military departments, as well as the legal, acquisition, logistics, and research and development communities in the Department of Defense; and

(B) the private sector members of the advisory panel include independent experts and individuals appropriately representative of the diversity of interested parties, including large and small businesses, traditional and non-traditional government contractors, prime contractors and subcontractors, suppliers of hardware and software, and institutions of higher education.

(3) SCOPE OF REVIEW.—In conducting the review required by paragraph (1), the advisory panel shall give appropriate consideration to the following factors:

(A) Ensuring that the Department of Defense does not pay more than once for the same work.

(B) Ensuring that Department of Defense contractors are appropriately rewarded for their innovation and invention.

(C) Providing for cost-effective reprocurement, sustainment, modification, and upgrades to Department of Defense systems.

(D) Encouraging the private sector to invest in new products, technologies, and processes relevant to the missions of the Department of Defense.

(E) Ensuring that the Department of Defense has appropriate access to innovative products, technologies, and processes developed by the private sector for commercial use.

(4) FINAL REPORT.—Not later than September 30, 2016, the advisory panel shall submit its final report and recommendations to the Secretary of Defense. Not later than 60 days after receiving the report, the Secretary shall submit a copy of the report, together with any comments or recommendations, to the congressional defense committees.

The House bill contained no similar provision.

The House recedes.

Senate Report 114-49 to accompany S. 1376 as it was reported out of the Senate Armed Services Committee.

Rights in technical data (sec. 825)

The committee recommends a provision that: (1) Would clarify procedures for the validation of rights in technical data for subsystems and components of major weapon systems; and (2) establish a government-industry advisory panel on rights in technical data.

The provision would amend section 2321 of title 10, United States Code, that establishes procedures for the validation of rights in technical data. Subsection (f) of this section, added by the Federal Acquisition Streamlining Act of 1994 (Public Law 103-355), endeavored to protect intellectual property rights in commercial items by adding a presumption that commercial items are developed exclusively at private expense. Because almost all major weapon systems are developed at government expense, section 802 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364) added an exception to the presumption in subsection (f) in the case of items other than commercially available off-the-shelf (COTS) items that are included in major weapon systems.

The exception for major weapon systems in subsection 2321(f) has created two potential problem areas. First, although almost all major weapon systems are developed at government expense, a few major weapon systems and subsystems of major weapon systems are purchased as commercial items--for example, modified civilian aircraft that are purchased for military uses. Section 2321(f) requires the contractor to demonstrate that components of weapon systems were developed at private expense even in the case of commercial-derivative aircraft, commercial-derivative engines, and other weapon systems and subsystems that are purchased as commercial items.

Second, although subsection 2321(f) includes an exception for COTS items that are included in major weapon systems, this exception does not apply if the COTS item is modified in any way for government use. Consequently, it the government insists on a minor modification of a COTS item for the purpose of including it in a weapon system, the burden will fall on the contractor to demonstrate that the item was developed exclusively at private expense.

The provision recommended by the committee would address these problems by clarifying that the presumption that a commercial item was developed exclusively at private expense applies in the case of: (1) A component of a weapon system or subsystem that was acquired as a commercial item; and (2) any other component that is a COTS item or a COTS item with modifications of a type customarily available in the commercial market place or minor modifications made to meet government requirements.