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

Subtitle B — Department of Defense Acquisition Agility

P. L. 114-

House Conference Report. 114-840

(1) by redesignating subparagraphs (F) and (G) as subparagraphs (H) and (I), respectively;

(2) in subparagraph (B), by striking “Except as provided in subparagraphs (C) and (D),” and inserting “Except as provided in subparagraphs (C), (D), and (G),”;

(3) in subparagraph (D)(i)(II), by striking “is necessary” and inserting “is a release, disclosure, or use of technical data pertaining to an interface between an item or process and other items or processes necessary”;

(4) in subparagraph (E)—

(A) by striking “In the case” and inserting “Except as provided in subparagraphs (F) and (G), in the case”; and

(B) by striking “negotiations). The United States shall have” and all that follows through “such negotiated rights shall” and inserting the following: “negotiations) and shall be based on negotiations between the United States and the contractor, except in any case in which the Secretary of Defense determines, on the basis of criteria established in the regulations, that negotiations would not be practicable. The establishment of such rights shall”; and

(5) by inserting after subparagraph (E) the following new subparagraphs (F) and (G):

“(F) INTERFACES DEVELOPED WITH MIXED FUNDING.—Notwithstanding subparagraph (E), the United States shall have government purpose rights in technical data pertaining to an interface between an item or process and other items or processes that was developed in part with Federal funds and in part at private expense, except in any case in which the Secretary of Defense determines, on the basis of criteria established in the regulations, that negotiation of different rights in such technical data would be in the best interest of the United States.

“(G) MAJOR SYSTEM INTERFACES DEVELOPED EXCLUSIVELY AT PRIVATE EXPENSE OR WITH MIXED FUNDING.—Notwithstanding subparagraphs (B) and (E), the United States shall have government purpose rights in technical data pertaining to a major system interface developed exclusively at private expense or in part with Federal funds and in part at private expense and used in a modular open system approach pursuant to section 2446a of this title, except in any case in which the Secretary of Defense determines that negotiation of different rights in such technical data would be in the best interest of the United States. Such major system interface shall be identified in the contract solicitation and the contract. For technical data pertaining to a major system interface developed exclusively at private expense for which the United States asserts government purpose rights, the Secretary of Defense shall negotiate with the contractor the appropriate and reasonable compensation for such technical data.”.

(c) Amendment Relating To Deferred Ordering.—Subsection (b)(9) of section 2320 of such title is amended—

(1) by striking “at any time” and inserting “, until the date occurring six years after acceptance of the last item (other than technical data) under a contract or the date of contract termination, whichever is later,”;

(2) by striking “or utilized in the performance of a contract” and inserting “in the performance of the contract”; and

(3) by striking clause (ii) of subparagraph (B) and inserting the following:

“(ii) is described in subparagraphs (D)(i)(II), (F), and (G) of subsection (a)(2); and”.

(d) Definitions.—Section 2320 of such title is further amended—

(1) in subsection (f), by inserting “Covered Government Support Contractor Defined.—” before “In this section”; and

(2) by adding at the end the following new subsection:

“(g) Additional Definitions.—In this section, the terms ‘major system component’, ‘major system interface’, and ‘modular open system approach’ have the meanings provided in section 2446a of this title.”.

(e) Amendments To Add Certain Headings For Readability.—Section 2320(a) of such title is further amended—

(1) in subparagraph (A) of paragraph (2), by inserting after “(A)” the following: DEVELOPMENT EXCLUSIVELY WITH FEDERAL FUNDS.—;

(2) in subparagraph (B) of such paragraph, by inserting after “(B)” the following: DEVELOPMENT EXCLUSIVELY AT PRIVATE EXPENSE.—;

(3) in subparagraph (C) of such paragraph, by inserting after “(C)” the following: “EXCEPTION TO SUBPARAGRAPH (B).—”;

(4) in subparagraph (D) of such paragraph, by inserting after “(D)” the following: “EXCEPTION TO SUBPARAGRAPH (B).—”; and

(5) in subparagraph (E) of such paragraph, by inserting after “(E)” the following: DEVELOPMENT WITH MIXED FUNDING.—.

(f) Government-Industry Advisory Panel Amendments.—Section 813(b) of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114–92; 129 Stat. 892) is amended—

(1) by adding at the end of paragraph (1) the following: “The panel shall develop recommendations for changes to sections 2320 and 2321 of title 10, United States Code, and the regulations implementing such sections.”;

(2) in paragraph (3)—

(A) by redesignating subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively; and

(B) by inserting after subparagraph (C) the following new subparagraph (D):

“(D) Ensuring that the Department of Defense and Department of Defense contractors have the technical data rights necessary to support the modular open system approach requirement set forth in section 2446a of title 10, United States Code, taking into consideration the distinct characteristics of major system platforms, major system interfaces, and major system components developed exclusively with Federal funds, exclusively at private expense, and with a combination of Federal funds and private expense.”; and

(3) by amending paragraph (4) to read as follows:

“(4) FINAL REPORT.—Not later than February 1, 2017, the advisory panel shall submit its final report and recommendations to the Secretary of Defense and the congressional defense committees. Not later than 60 days after receiving the report, the Secretary shall submit any comments or recommendations to the congressional defense committees.”.

The House amendment contained a provision (sec. 1705) that would make several amendments to technical data rights conferred in section 2320 of title 10, United States Code. Among other things, the provision would delineate types of interfaces and specify the rights provided to the U.S. Government in such interfaces. It would require the U.S. Government and Department of Defense contractors to negotiate for data rights when items or processes are developed with a mix of Federal and private funds. The provision also would limit deferred ordering of technical data to 6 years after delivery of the last item on a contract and to technical data generated, not utilized, in the performance of the contract.

The Senate bill contained no similar provision.

The Senate recedes with an amendment that would allow the Secretary of Defense to negotiate for rights other than government purpose rights for technical data relating to major system interfaces if it would be in the best interest of the United States. The amendment would require the Department of Defense to identify major system interfaces in contract solicitations and contracts. For major system interfaces developed exclusively at private expense, the amendment would clarify that the Secretary shall negotiate with the developer appropriate compensation for the technical data. The conferees understand that section 2320 sets forth various rights in technical data, and that the price for acquiring technical data to which the U.S. Government is entitled is determined through negotiations between the Department and contractors. The conferees believe that in the case of privately funded major system interfaces for which the Department asserts government purpose rights it is necessary to explicitly require negotiation for compensation. Notwithstanding this amendment, the conferees expect the standard practice of negotiating prices for technical data to continue for all other categories of rights and circumstances set forth in section 2320.

The amendment also would specify the U.S. Government’s rights to technical data pertaining to privately funded general interfaces necessary for the segregation and reintegration of an item or process. Finally, the amendment would extend the duration of the government-industry advisory panel established in section 813 of the National Defense Authorization Act for Fiscal Year 2016 (Public Law 114-92) and require the advisory panel to consider the technical data rights necessary to support the modular open system approach (MOSA) required elsewhere in this Act. The conferees are aware that the advisory panel has not yet completed its review of sections 2320 and 2321 of title 10, United States Code. The conferees recognize there are many issues in technical data rights that this conference agreement does not address, and are encouraged that the panel’s comprehensive and thoughtful analysis thus far will yield promising recommendations.

Additionally, the conferees understand that successful implementation of MOSA necessitates the allocation of technical data rights in major system interfaces, a new concept under MOSA. The use of MOSA relies upon the ability of major system components to be added, removed, or replaced as needed throughout the life cycle of the major weapon system due to evolving technology, threats, sustainment, and other factors. Therefore, major system interfaces that share a boundary between major system components and major system platforms are critical, and it is imperative that the government have appropriate access to the technical data of such interfaces. The conferees understand the importance of technical precision in establishing clear delineation of major system platforms, major system interfaces, and major system components. As such, the conferees urge the Department to carefully consider and take input from the advisory panel and industry on the meanings and implications of these key terms. The conferees expect the Department to include this consideration in its review of the MOSA authorities and its briefing on the implementation of MOSA required in the House report accompanying H.R. 4909 (H. Rept. 114-537) of the National Defense Authorization Act for Fiscal Year 2017.

The conferees also note that the Department recently issued a proposed rule that would implement amendments to section 2320 of title 10, United States Code, enacted in section 815 of the National Defense Authorization Act for Fiscal Year 2012 (Public Law 112-81). Various representatives of industry have expressed concern about the effects on defense acquisition of the amendments made in Public Law 112-81 and the Department’s implementation of such amendments. Therefore, the conferees believe the amendments to technical data rights included in this conference agreement are necessary at this time.