Transcript OfficePhotos - Womble Carlyle Sandridge & Rice

Integrated Dual Use Commercial
Companies
DoD Data and Commercial Item
Handbooks
Holly Emrick Svetz
(703) 394-2261
[email protected]
Outline
• DoD Acquisition Data Management Handbook
• DoD Commercial Item Handbook
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DoD Acquisition Data Management Handbook
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DRAFT MIL-HDBK-X132 available at
https://acc.dau.mil/CommunityBrowser.aspx?id=261828
Long Description: "For the last several years, DOD Service representatives
have been involved in a collaborative effort, to create guidance material for
use by Data Managers, in the arena of Acquisition Data Management. A
Draft Military Handbook has been created (Draft MIL-HDBK-X132), which
has gone through several iterations and review cycles. The latest review
resulted in comments from the DOD Data Management community, which
are currently in the process of being adjudicated. The Draft document
posted here, is provided as advance information for DOD Data
Management personnel, and other interested users; and can be used as a
general guide and approach in day-to-day acquisition data management,
pending formal release of the Handbook. Comments, questions and
discussions on the guidance material are also welcome, and can be
submitted using the Questions/Discussions link at the top of this page."
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Data Handbook Background
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First draft 22 October 2008.
Second draft 12 Dec 2008.
"This handbook is for guidance only. Do not cite this document as a
requirement." (cover)
FORWARD: "This handbook identifies requirements and provides common
guidance for the acquisition and management of contractor prepared data
within DoD components. This handbook is applicable to all forms of data
whether it is digital, hard copy, or data to which access via contractor
provided digital information services is required." (p. i)
Comments were due in August, but the ABA Public Contract Law Section is
preparing comments the agency said would be considered.
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Data Handbook Definitions - Data
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3.1.28 Data. Recorded information regardless of the form or method of
recording. The term includes technical data, computer software
documentation, financial information, management information,
representation of facts, numbers, or datum of any nature that can be
communicated, stored, and processed to form information and other
information required by a contract to be delivered to, or accessed by, the
Government. (p. 5)
FAR 52.227-14(a) “Data” means recorded information, regardless of form or
the media on which it may be recorded. The term includes technical data
and computer software. The term does not include information incidental to
contract administration, such as financial, administrative, cost or pricing, or
management information.
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Data Handbook Definitions - Rights in Technical Data
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3.1.136 Rights in technical data (TD). The minimum essential data rights
acquired under contract by the Government in technical data. Based on the
funding source for development of the technical data, these data rights are
Unlimited Rights (exclusively funded at Government expense), Government
Purpose Rights (mixed Government and contractor funding), Limited Rights
(exclusively funded at contractor expense) or Specifically Negotiated
License Rights (tailored data rights but not less than Limited Rights).The
right for the Government to acquire TD. If the Government has funded or
will fund a part of or the entire development of the item, component, or
process, then the Government is entitled to unlimited rights in the TD.
However, if the above is developed by a contractor or subcontractor
exclusively at private expense, the Government is entitled to limited rights.
Such data should be unpublished and identified as limited rights data. (p.
13)
Blue font = recommended inserts
Red font = recommended deletions
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Data Handbook - Planning for Acquisition of Data
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6.1 General. A critical element of the acquisition process is planning for the
acquisition of data to support the life cycle of a defense system. The
decision to procure data is the result of a careful examination of the
requirements for the data, life cycle cost, and the ability of the Government
to maintain and use the data in the future. Pursuant to DFARS 227.71031(a), DoD policy is to acquire only the technical data, and the rights in that
data, necessary to satisfy agency needs. Since the Government’s ability to
access and use contractor provided data can range from very limited, due to
a lack of data rights, to complete access to or possession of the data, with
unlimitedfull rights to use as needed, it is important that alternative
approaches for providing the data are evaluated to assure that the minimum
essentialnecessary Government data rights are acquired to support full life
cycle needs. (p. 25)
Blue font = recommended inserts
Red font = recommended deletions
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Data Handbook - Data Rights
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9.1 General. Data rights refer to intellectual property rights regarding the
use of the data developed, accessed, and/or delivered under a Government
contract. Data rights involve proprietary, restrictive, Government purpose,
unlimited, limited, and may include patents, copyrights, and other IPdata
rights provisions. Data rights in technical data are necessary in the
determination of release, duplication, and disclosure of technical data. Data
rights in technical data and computer software are generally determined by
whose money is used in the development of the data. If the data is
developed exclusively with Government funding, then the Government has
the right to access and receive the data with unlimited rights. If contract data
is developed with exclusively with private sector funding, the Government,
generally, will be allowed Limited Rights in the technical data and Restricted
Rights in computer software. If a mix of Government and private sector
funding is used to the develop the data then the Government would receive
Government Purpose Rights. (p. 39)
Blue font = recommended inserts
Red font = recommended deletions
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Data Handbook - Requirements for withholding of
technical data
• Covers distribution marking for export control in detail.
• Confused and limited coverage of withholding FOIA
Exemption 4 date.
• No recognition that the data rights markings are sufficient
evidence of FOIA Exemption 4 treatment.
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Data Handbook - Data Access vs. Delivery
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16.1 General. Access to data results from a formal arrangement that allows
the Government to view and read data generated or maintained by a
contractor. Access may apply to contractor data not owned by the
Government, as well as Government owned data held by the contractor.
Access, in itself, does not authorize use, re-production, manipulation,
altering, or transfer of possession of data. The extent and limits of
Government access, Government data rights, and disposition and delivery
requirements, if any, should be delineated in the contract. (p. 47)
• YAY!
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Data Handbook - Deferred Ordering and Delivery
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16.4 Deferred ordering and delivery. Deferred ordering and delivery
techniques should be used with complex or long-term defense system
acquisitions, when exact data requirements are difficult to determine. This
technique is also applicable for cases when delivery of specific data is
difficult to prescribe. Deferred ordering is a technique for delaying the
ordering of data generated in the performance of the contract until the
Government determines what data is actually needed and when it is
needed. This technique ensures the availability of the raw data while
avoiding the cost of buying the data, if the need never arises. Deferred
delivery of data is a technique for delaying delivery and/or access of data
until the Government determines when the data should be delivered or
accessed. Also, deferred delivery is a means of postponing the
delivery/access of data until the design of the related item has stabilized. (p.
51)
• BOO!
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Commercial Item Handbook - Foreword
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"While use of commercial item procedures is an acceptable practice,
misclassification of items as commercial can leave the Department of
Defense (DoD) vulnerable to accepting prices that are not the best value.
Additionally, there were several findings that contracting officials did not
adequately justify the commercial nature of commercial contracts for
defense systems and subsystems. Therefore, contracting actions were
awarded that did not achieve the benefits of buying truly commercial
products and relinquished price and other oversight protections." (p. iv)
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DoD IG Report 2006-115 (p. 5)
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"Contracting officials did not adequately justify the commercial nature of 35
of 42 (83 percent) commercial contracts for defense systems and
subsystems awarded in FYs 2003 and 2004. This occurred because
contracting officials:
– used loopholes in the broad commercial item definition to justify
acquiring defense systems and subsystems without determining that a
commercial market exists, and
– misapplied the commercial item definition to fit their acquisition situation
and otherwise did not document their rationale for using commercial
item acquisition procedures.
As a result, contracting officials inappropriately awarded contracting actions
that did not achieve the benefits of buying truly commercial products and
relinquished price and other oversight protections under the FAR that would
have allowed better visibility to establish fair and reasonable prices."
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Response to DoD IG Report
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2. When commercial item determinations are made, these
determinations should be in writing and included in the contracting
file.
Management Comments. The Under Secretary of Defense for
Acquisition, Technology, and Logistics concurred and stated that a
Defense Procurement and Acquisition Policy letter would be issued within
the next sixty days requiring a written determination that the commercial
item definition has been met for acquisitions exceeding $15 million.
Audit Response. The Under Secretary of Defense for Acquisition,
Technology, and Logistics comments conform to requirements and no
additional comments are required.
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DFARS Revised
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DFARS revised, 73 Fed. Reg. 4114 (Jan. 24, 2008).
212.102 Applicability.
(a) (i)
When using FAR Part 12 procedures for acquisitions
exceeding $1 million in value, the contracting officer shall—
(A) Determine in writing that the acquisition meets the
commercial item definition in FAR 2.101; and
(B) Include the written determination in the contract file.
(ii) Follow the procedures at PGI 212.102(a) (Pop-up Window or PGI
Viewer Mode) regarding file documentation.
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Issue Resolved
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While misclassification of commercial items was an issue in the 2006 DoD
IG report, the IG agreed with the corrective action proposed by USD(AT&L).
The policy letter was issued, followed by a DFARS revision requiring
documentation of commercial item determination for contracts over $1M, a
much lower threshold than originally proposed.
Therefore, the language in the Foreword is OBE and should be deleted.
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Modifications
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"For modifications of a type available in the commercial marketplace, factors
to be considered include value, size, and the comparative value and size of
the final product. Dollar value and percentage may be used as guideposts,
but are not conclusive evidence that a modification is minor." (p. 3)
Plain reading shows this is not correct.
"In either case, the source of funding for the modification does not impact its
qualification as a commercial item."
– This is a HUGE concession.
– If the item retains its commercial item nature even though a very expensive
modification was funded by the Government, the Government will get
commercial item rights rather than unlimited rights in the modification.
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Commercial terms
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"In addition, Government-unique requirements or terms and conditions can
be included, as long as there are sufficient common characteristics between
the commercially available service and the service being acquired." (p. 6)
– Many commercial companies are concerned that making any exception or
change to their commercial license or terms and conditions will endanger the
commercial item status.
– E.g., commercial services can be provided by deployed contractors and so
significant additional requirements and terms and conditions would be required to
protect the contractor as much as to protect the Government.
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Commercial Item Determination
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Alternative approaches to Commercial Item Determination (p. 7)
– Prior Agency or Department Determinations
• But see "For items included on an active Federal Supply Service Multiple-Award
Schedule contract, the firm should include proof that an exception has been granted for
the schedule item." (p. 10)
– Identifying Groups of Items as Commercial
– Contractor Determinations
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Commercial Item Exceptions
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Agree with comments that commercial item determination and
determination of price reasonableness are two separate actions.
– Pricing should not be required to make a commercial item determination.
– Would suggest inserting a sentence in the comments:
Commercial items may be offered in response to solicitations which call for the submission of cost or pricing
data. The Commercial Item determination process is described above. Where an item which qualifies as
commercial is offered, the Contracting Officer is not to require the submission of cost or pricing data in
support of the commercial item determination. Data other than cost or pricing data may be requested to
support the price of a commercial item under the narrow circumstances described in Chapter 4 under the
heading ‘Determining Fair and Reasonable Prices’, and as described in FAR 15.403-3(2).
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Same rationale applies to the requirement that contractor prove that a cost
or pricing information exception has been granted for FSS services. (p. 10)
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Sole Source Procedures
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Commercial buyers can pay "whatever the market will bear" to get a needed
party, although smart buying practices include obtaining reasonable prices.
(p. 39)
– Really true?
– Commercial companies have no credit and tight expenses today.
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Agree with comment but would revise somewhat:
– If the price still cannot be determined to be fair and reasonable, market-based
price analysis techniques may not be sufficient and other price analysis
techniques or, as a last resort, the Contracting Officer should consider requesting
data other than cost or pricing data to support the pricing analysis. The price
analysis, however, does not affect the Commercial Item nature of the product or
service.
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Source of Supply Risks
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Program managers should act early in the product life cycle to mitigate
source-of-supply risks. These risks include business dissolution, product
line elimination, and quality degradation. (Again, in a COTS program,
traditional actions that can reduce these risks including placing design
drawings in escrow with a third party in case a supplier discontinues
production, negotiating contract terms that require the provision of design
drawings to the Government if the business dissolves, and negotiating
contract terms that require prior notice and provide options for product life
buyout if production of an item ends may not be available and must be
addressed in the original COTS selection process.) Since lifetime buys are
very expensive, they should not necessarily be made for the program's
duration, but rather should be employed as an interim measure until a
technology insertion strategy unfolds.
– Agree with this?
– Why only COTS?
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Hats Off!
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As discussed above, the contracting officer shall not tailor any clause or
otherwise include any additional terms or conditions in a solicitation or
contract for commercial items in a manner that is inconsistent with
customary commercial practice for the item being acquired unless a waiver
is approved in accordance with agency procedures. The request for waiver
must describe the customary commercial practice found in the marketplace,
support the need to include a term or condition that is inconsistent with that
practice and includes a determination that use of the customary commercial
practice is inconsistent with the needs of the Government. A waiver may be
requested for an individual or class of contracts for that specific item. The
head of the contracting activity is the approval authority within the DoD for
waivers under FAR 12.302(c). (p. 47)
– Anyone ever heard of such a waiver to INCLUDE a term or condition?
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Questions/Comments
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