Significant Change in Technical Data Rights - 2011 Natl Defense Authorization Act

In December of 2010, during the Christmas holiday break, a seemingly small change to the 2011 National Defense Authorization Act, Section 824 was made that has significant consequences for 10 U.S.C. 2320, Rights in Technical Data.  This revision will result in unlimited rights to technical data by the government that had previously been considered protected. 

Prior to the revision, section (a)(3) of 10 U.S.C.2320 provided that “amounts spent for independent research and development and bid and proposal costs shall not be considered to be Federal funds for the purposes of definitions under this paragraph.”  The new language in section 824 of the 2011 NDAA states that “amounts spent for independent research and development and bid and proposal costs shall not be considered to be Federal funds for the purposes of paragraph (2)(B), but shall be considered to be Federal Funds for the purposes of paragraph (2)(A).” 

Paragraph (2)(A) explains that “In the case of an item or process that is developed . . . exclusively with Federal funds . . . the United States shall have the unlimited right to – (i) use technical data pertaining to the item or process; or (ii) release or disclose technical data to persons outside the government or permit the use of the technical data by such persons.” Section (2)(B) provides the exception that “. . . in the case of an item or process that is developed by a contractor or subcontractor exclusively at private expense, the contractor or subcontractor may restrict the right of the United States to release or disclose technical data pertaining to the item or process to persons outside the government or permit the use of technical data by such persons.”

Under the new language in section (a)(3), if the original item or process was funded exclusively by Federal funds, the technical data from any future improvements would be subject to being released and disclosed, whether the improvements were created with private funds or Federal funds, unless the item or process was developed under a contract or subcontract to which the regulations under section 9(j)(2) of the Small Business Act (15 U.S.C. 638(j)(2)) apply.   The Aerospace Industries Association and the National Defense Industrial Association are said to be working with the Department of Defense to delay implementing the new regulations and with Senate staffers to develop a technical amendment to correct the issue.