SBIR data rights

Are you asking whether a contractor or subcontractor's assertions should be questioned when it asserts rights in technical data or computer software to be delivered under the contract with more restrictive rights that required by the contract requirements?

I'm asking whether a large subcontractor on an SBIR prime contract can deliver data that was developed on its subcontract (i.e. with government funds) with SBIR data rights instead of unlimited rights. If the clause is flowed down into its subcontract without alteration except to identify the parties, then the clause would say it can.

Fara Fasat said:

Scenario – a small business has an SBIR contract. One of its subcontractors is a large business. The SBIR data rights clause (DFARS 252.227-7018) is in the prime contract. The clause grants SBIR data rights to all technical data developed under the contract (essentially equivalent to limited rights). The clause (at (k)(2)) says that it is to be inserted in all subcontracts without alteration except to identify the parties. It also says that no other clause shall be used to enlarge or diminish the rights of the government, or the contractor in any subcontractor's technical data.

The question – can the large business assert SBIR data rights in any data it has to deliver, thus getting the same 20-year protection as the SBIR prime?

On the one hand, the clause does not limit its application to only small business subcontractors. If it goes in the subcontract without alteration, as (k)(2) says, then the large sub can deliver any data it develops with SBIR data rights. Also, SBA materials on its SBIR website do not distinguish between large and small subcontractors, which suggests they get treated the same. I could find nothing that limits the SBIR data rights protection only to a small business subcontractor.

On the other hand, one would think that the favorable treatment of data developed under an SBIR contract would only be extended to the SBIR contractor or to other small businesses.

Based on a reading of the clause, the seemingly obvious answer to your question is yes, which makes me wonder why you asked.

(b) specifies various data right granted to the Government by the subcontractor. No assertion is required. Any assertion to the contrary is an exception to terms and conditions and should be deleted from the contract.

Fara Fasat said:

The question – can the large business assert SBIR data rights in any data it has to deliver, thus getting the same 20-year protection as the SBIR prime?

Fara Fasat said:

Also, SBA materials on its SBIR website do not distinguish between large and small subcontractors, which suggests they get treated the same. I could find nothing that limits the SBIR data rights protection only to a small business subcontractor.

Fara Fasat said:

I'm asking whether a large subcontractor on an SBIR prime contract can deliver data that was developed on its subcontract (i.e. with government funds) with SBIR data rights instead of unlimited rights. If the clause is flowed down into its subcontract without alteration except to identify the parties, then the clause would say it can.

Thinking out loud.   I am with Vern with my additional thought is yes a sub can be a university, Federal lab, private business therefore SBIR rights not just limited to a small business.  Reference - https://www.sbir.gov/tutorials/preparing-proposal/tutorial-4

Fara Fasat said:

I'm asking whether a large subcontractor on an SBIR prime contract can deliver data that was developed on its subcontract (i.e. with government funds) with SBIR data rights instead of unlimited rights.

Subcontractors do not choose what data rights are granted to the Government. The clause specifies what data is delivered with unlimited rights and what data is delivered with SBIR data rights to the Government.

Neil Roberts said:

[Clause paragraph] (b) specifies various data right granted to the Government by the subcontractor. No assertion is required. Any assertion to the contrary is an exception to terms and conditions and should be deleted from the contract.

It is not true that "No assertion is required."

The word assert (or asserting) appears 31 times in the clause. The clause requires the contractor to assert any restrictions on the government's rights. See paragraphs (e) Identification and delivery of technical data or computer software to be furnished with restrictions on use, release, or disclosure; (f) Marking requirements; and (k) Applicability to subcontractors or suppliers, subparagraph (1).

Vern Edwards said:

which makes me wonder why you asked.

I asked because it seems contrary of the intent of the SBIR program, which grants special status to the work of a small business. It also seems that it allows a large business to get a benefit it would not otherwise get. I'm not saying it's wrong or that I disagree with it; I just wanted to confirm my reading, sometimes loosely referred to as a sanity check. 🙂

Fara Fasat said:

I asked because it seems contrary of the intent of the SBIR program...

Oh, for Pete's sake.

@Fara Fasat, I was responding to your use of the word "assert" as follows: "The question – can the large business assert SBIR data rights in any data it has to deliver, thus getting the same 20-year protection as the SBIR prime?" Facts about the data determine what rights the subcontractor grants to Government in (b), not unilateral assertions by a subcontractor. If a subcontractor wishes to negotiate something different, the prime Contractor will need to negotiate a change to the clause in its contract with the Government. In any event, I believe your post has been addressed.

Vern Edwards said:

Oh, for Pete's sake.

Maybe the discussion is beneath you, but I first asked a couple of experienced practitioners, and they said an LB could not do it. When I showed them the clause, their reaction was "hmmm, it does seem to say that. There must be a catch." That's why I thought I would tap into the broader knowledge and experience of this forum. 

I should also point out that the FAR has a definition of SBIR data that is "data first produced by a Contractor that is a small business concern." The DFARS does not have that definition, and just defines SBIR data rights. It also defines "generated" as "technical data or computer software first created in the performance of this contract." It does not say first created by a small business.

So you see, there is a difference in treatment under the FAR and DFARS. Seems like a legitimate area of inquiry, for Pete's sake. 😉

Fara Fasat said:

The question – can the large business assert SBIR data rights in any data it has to deliver, thus getting the same 20-year protection as the SBIR prime?

The answer to that question is yes.

Neil Roberts said:

@Fara Fasat, I was responding to your use of the word "assert" as follows: "The question – can the large business assert SBIR data rights in any data it has to deliver, thus getting the same 20-year protection as the SBIR prime?" Facts about the data determine what rights the subcontractor grants to Government in (b), not unilateral assertions by a subcontractor. If a subcontractor wishes to negotiate something different, the prime Contractor will need to negotiate a change to the clause in its contract with the Government. In any event, I believe your post has been addressed.

If the government asserts facts to the effect that it has unlimited rights in some item of technical data pursuant to, say, DFARS 252.227-7018(b)(1)(ii), and if the contractor or subcontractor disagrees, asserting that the government is entitled only to SBIR rights to that data, then the contractor or subcontractor can submit a claim based on its version of the facts. That is not a matter of wanting to "negotiate something different." It is is a matter of resolving conflicting assertions of fact.

So it is untrue that "No assertion is required" and that "Any assertion to the contrary is an exception to terms and conditions..."

Whether an assertion is required depends on whether the parties disagree on the category in which the data belongs and on the category of rights that apply.

I'm a bit concerned about the difference between the FAR and the DFARS. The FAR definition made me think I might be missing something in the DFARS version. But seeing nothing to the contrary in this discussion, I'll take the clause as it is. Thanks for the contributions.

Fara Fasat said:

I should also point out that the FAR has a definition of SBIR data that is "data first produced by a Contractor that is a small business concern." The DFARS does not have that definition, and just defines SBIR data rights. It also defines "generated" as "technical data or computer software first created in the performance of this contract." It does not say first created by a small business.

So you see, there is a difference in treatment under the FAR and DFARS. Seems like a legitimate area of inquiry, for Pete's sake. 😉

@Fara FasatWhy didn't you point that out in your opening post and ask about the difference? You gave us all the impression that your only problem is that you can't read.

You have been a member of this Forum since 2009, but you haven't learned a thing.

1. because there was no corresponding definition in the DFARS clause and I hadn't found the FAR one at the time of my post.

2. I just learned about that difference. Apparently you just did too.

Let's skip the snark and just stick to the discussion, OK?

Fara Fasat said:

Let's skip the snark and just stick to the discussion, OK?

@Fara FasatNo dice. People who launch half-baked inquiries and then dribble out information deserve all the snark that comes their way.

Generally, I have no interest in the SBIR program. I learned about the difference between the FAR and the DFARS only after you got around to telling us what prompted your inquiry. I would have learned much sooner and before responding to you had you told us at the outset. I responded only to your request to interpret the DFARS clause.

Since your revelatory post I have learned that SBA published a 56-page SBIR "policy directive" in 2019 to, among other things, clarify SBIR data rights. The directive appears to have been  designed, at least in part, to reconcile the FAR and DFARS coverage. I have not read the whole thing, but at first glance it appears that SBA has adopted the DOD approach. See 84 Fed. Reg. 12794, April 2, 2019, effective May 2, 2019. The directive defines "SBIR/STTR data" as follows"

Quote

All Data developed or generated in the performance of an SBIR or STTR award, including Technical Data and Computer Software developed or generated in the performance of an SBIR or STTR award. The term does not include information incidental to contract or grant administration, such as financial, administrative, cost or pricing or management information.

See 84 Fed. Reg.12794, 12808. As you can see, the SBA definition does not include the FAR 52.227-20 requirement that the SBIR data be "first produced by a Contractor that is  a small business concern."

DOD opened a DFARS case to implement the SBA policy directive. See DFARS case number 2019-D043. As of 23 September the status was "12/10/2021 Case manager forwarded draft proposed rule to DARS Regulatory Control Officer. DARS Regulatory Control Officer reviewing." 

There is also an open FAR case. See FAR case number 2020-010. As of 23 September the status was "07/27/2022 Draft proposed FAR rule from FAR analyst to OFPP. OFPP reviewing."

So it appears that my answer to your question is still valid:

Quote

[C]an the large business assert SBIR data rights in any data it has to deliver, thus getting the same 20-year protection as the SBIR prime?

Yes.

But remember, I have not finished reading the SBA directive, and I don't know when I will.

@Vern Edwards@Fara Fasat

Does this help - "Each agency administers its own individual program within guidelines established by Congress. These agencies designate R&D topics in their solicitations and accept proposals from small businesses. Awards are made on a competitive basis after proposal evaluation."   Reference https://www.sbir.gov/about

Here is DoD's stuff, from what I have read there are a 11 other agencies that will have their own stuff.  https://media.defense.gov/2022/Jan/12/2002920964/-1/-1/1/DoD_Annual_SBIR_224.PDF

Edited my original post as I was reading somewhere else and saw this.    Makes me think the rule bar regarding SBIR might be raised even further.  

https://www.defensenews.com/congress/2022/09/15/congress-races-to-reauthorize-innovation-grants-favored-by-pentagon/

C Culham said:

Does this help[?]

@C CulhamI don't see how any of that helps with respect to Fara Fasat's question about the assertion of SBIR data rights by a large business subcontractor.

The best sources of information about the topic at hand are SBA's Federal Register publications, which go into lengthy detail. In addition to 84 FR 12794, which I cited above, SBA has cited 81 FR 20484 (2016) and 77 FR 66342 (2014), but no SBA documents appear at those two locations..

I have located the other two SBA Federal Register publications via Westlaw.

Vern Edwards said:

I don't see how any of that helps with respect to Fara Fasat's question about the assertion of SBIR data rights by a large business subcontractor.

Reading between the lines.  SBA is simply the support mechanism.  Agencies control their own SBIR programs via Congress direction with regard to R&D money.  In the case of a disagreement on who benefits the agency has the say.   15 USC 638 is an interesting read to this extent.

Vern Edwards said:

No dice. People who launch half-baked inquiries and then dribble out information deserve all the snark that comes their way.

@Vern Edwards I am questioning word choice here.  Are you saying that what @Fara Fasatis expressing is being provided too slowly or that it is flat out foolish?

dribble

“Dribble” and “drivel” originally meant the same thing: drool. But the two words have become differentiated. When you mean to criticize someone else’s speech as stupid or pointless, the word you want is “drivel.”

https://brians.wsu.edu/2016/05/25/dribble/

C Culham said:

Reading between the lines.  SBA is simply the support mechanism.  Agencies control their own SBIR programs via Congress direction with regard to R&D money.  In the case of a disagreement on who benefits the agency has the say.   15 USC 638 is an interesting read to this extent.

@C CulhamSee 84 FR 12794, April 2, 2019, Final SBIR and STTR Policy Directives, I. Executive Summary:

Quote

The Small Business Act (the Act) requires that the Small Business Administration (SBA) issue a policy directive setting forth guidance to the Federal Agencies participating in the SBIR and STTR programs (Participating Agencies). The Act provides SBA with broad authority to direct Participating Agencies in the administration of the programs. The SBIR and STTR (SBIR/ STTR) Policy Directives outline how agencies must generally conduct their programs. Each agency, however, can tailor its program to meet the needs of the individual agency, as long as the general principles of the program set forth in the Act and directive are followed. Therefore, when incorporating SBIR/STTR policy into agency-specific regulations and procedures, Participating Agencies may develop and apply processes needed to implement the policy effectively; however, no Participating Agency may develop and apply policies, directives, or clauses, that contradict, weaken, or conflict with the policy as stated in the directive.

Emphasis added.

Now, to what specific language in 15 USC 638 are you referring?

Guardian said:

I am questioning word choice here.  Are you saying that what @Fara Fasatis expressing is being provided too slowly or that it is flat out foolish?

@GuardianI said: 

Vern Edwards said:

People who launch half-baked inquiries and then dribble out information deserve all the snark that comes their way.

Now, what does it look like I said? And why are YOU questioning MY word choice?

Fara Fasat was not foolish, stupid, or pointless, and did not utter drivel.

Vern Edwards said:

@GuardianI said: 

Now, what does it look like I said?

Speaking for myself, I think what Vern meant by “dribble out information” means [see my added, bracketed phrase]: 

“dribble verb [I or T] (FLOW SLOWLY)

to (cause a liquid to) [ in the context here: cause information to] flow very slowly in small amounts: The water was barely dribbling out of the faucet. UK Dribble the remaining olive oil over the tomatoes.

https://dictionary.cambridge.org › d...

DRIBBLE | definition in the Cambridge English Dictionary”

I have traced the FAR 52.227-20 definition of "SBIR data"—

Quote

SBIR data means data first produced by a Contractor that is a small business concern in performance of a small business innovation research contract issued under the authority of 15 U.S.C. 638, which data are not generally known, and which data without obligation as to its confidentiality have not been made available to others by the Contractor or are not already available to the Government

—to a NASA FAR Supp. clause published in 1985, 1852.227–80 Rights in Data—SBRI Program (APRIL 1985), 50 FR 13365.

Quote

“SBIR data,” as used in this clause, means data first produced by a contractor that is a small business firm in the performance of a small business innovation research contract issued under the authority of 15 U.S.C. 638 (Pub. L. 97–219, “Small Business Innovation Development Act of 1982”), and which, without obligation as to its confidentiality, has not been made available to others by the Contractor, or is not already available to the Government.

The definition in FAR clause 52.227-20 dates from June 1987, 52 FR 18140.

DOD added its current definition of "SBIR" data to DFARS 252.227-7018 in 2010, explaining:

Quote

Definitions. A definition of “SBIR data” was added to the proposed clause. This new definition is based on the definition of “SBIR Technical Data” in section 3(bb) of the SBIR Policy Directive, i.e., all data generated during the performance of an SBIR award. The definition of “SBIR data rights” was revised and simplified to provide the Government with limited rights in SBIR technical data, and restricted rights in SBIR computer software, as the most straightforward mechanism to achieve the objective of allowing the SBIR contractor to assert proprietary data restrictions during the SBIR data protection period.

SBA added its definition of "SBIR Technical Data" to the SBIR program directive in 2002, 67 FR 60072: "All data generated during the performance of an SBIR award."

I think that's the complete history. Or close.

Thank you, Joel, for helping Guardian.

On 9/29/2022 at 9:37 AM, Fara Fasat said:

I first asked a couple of experienced practitioners, and they said an LB could not do it. [I.e., a large business subcontractor could not assert SBIR data rights.] When I showed them the clause, their reaction was "hmmm, it does seem to say that. There must be a catch." That's why I thought I would tap into the broader knowledge and experience of this forum.

What that goes to show is that experience practitioners only know what they have researched.

A large business subcontractor under an SBIR prime contract that disputes an agency's decision to assert unlimited rights to the subcontractor's data— delivered to the prime contractor, which then delivered it to the government—would have to submit a FAR Subpart 33.2 claim under the prime's sponsorship.

I think the definition of SBIR data in DFARS 252.227-7018 may have been designed to ensure that large businesses would not be deterred from working with an SBIR prime by fear that the government would grab their data.

Those interested in all this might start by reading

https://www.sbir.gov/birth-and-history-of-the-sbir-program

https://www.sbir.gov/about

https://www.sbir.gov/tutorials/program-basics/tutorial-5

https://en.wikipedia.org/wiki/Small_Business_Innovation_Research

On 9/29/2022 at 7:44 AM, Fara Fasat said:

I asked because it seems contrary of the intent of the SBIR program, which grants special status to the work of a small business. It also seems that it allows a large business to get a benefit it would not otherwise get. I'm not saying it's wrong or that I disagree with it; I just wanted to confirm my reading, sometimes loosely referred to as a sanity check.

A CO who is going to doubt or question a regulation as contrary to some intent must know how to research regulatory history. The tools are readily available on the internet, but the work is very tedious. And even after doing the research, you will have unanswered questions.

In the case of SBIR data rights, it seems clear that the phrase "first produced by a contractor that is a small business firm" in the FAR 52.227-20 definition of "SBIR data"—which is what prompted Fara Fasat's question—was intentionally dropped by the SBA. I can only assume that SBA understood the significance its decision.

Thanks for all the information. It is very useful. The only thing I will add is that I did not dribble anything out. I posted what I knew at that time. Since I was dealing with DoD, I focused on their clause and SBA supporting materials. I then went to the Nash 3-volume IP treatise to see what it said about SBIR. That's where I noticed the FAR language. Interestingly it did not comment on the difference between the FAR and DFARS treatment of a large business's SBIR data, especially since it is a significant difference. 

Once I found it, I added it to the discussion. If that's a dribble, so be it.

joel hoffman said:

to (cause a liquid to) [ in the context here: cause information to] flow very slowly in small amounts: The water was barely dribbling out of the faucet. UK Dribble the remaining olive oil over the tomatoes.

@joel hoffman It seems that's what he meant.  I have never seen the word "dribble" used to describe the flow of words.  Its standard definition applies to liquids.

I am simply another individual who enjoys this forum.  In another life, I was a section editor of what was at the time one of the top four scholastic newspapers in the country.  I was also editor-in-chief of my school's literary magazine.  By no means does this render me an expert in anything or an apt judge of another's writings.  Nonetheless, I have a strong interest in words and etymology.  If I was that intelligent, I would speak six languages like another CO I know.  When my false pride fools me into thinking that I am so smart, I remind myself that I do not.  My wife speaks three.  She is truly my better half.

Fara Fasat said:

Thanks for all the information. It is very useful.

You're welcome.

Vern Edwards said:

Now, to what specific language in 15 USC 638 are you referring?

(g)

@C Culham15 USC 638(g) is a nice list of 12 things agencies "shall" do when conducting SBIR acquisitions. And they should do fine as long as they do those things in conformity with SBA's Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive of May 2, 2019.

On 9/30/2022 at 5:22 PM, Vern Edwards said:

@C Culham15 USC 638(g) is a nice list of 12 things agencies "shall" do when conducting SBIR acquisitions. And they should do fine as long as they do those things in conformity with SBA's Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive of May 2, 2019.

Thanks Vern. From my view SBA "administers"  a couple of other programs where Congress has established criteria, yet it would seem that the limited power vested in SBA is just a nice shine.   The control in reality will not rest in the directive but what an agency does much like the 8(a) Program.  Probably even the SBA loan Program while not administered by agencies the banks that do control.   Afterall in all three cases its "their" money and he who holds the gold........

C Culham said:

From my view SBA "administers"  a couple of other programs where Congress has established criteria, yet it would seem that the limited power vested in SBA is just a nice shine.

@C CulhamI don't know what point you are trying to make or what your view has to do with the topic of this thread, which is SBIR data rights, but...

SBA has the kind of power over agency SBIR and STTR programs that the FAR Council has over other agency acquisition programs. See Global Aerospace Corp., B- 414514, 2017 CPD P 198, July 3, 2017:

Quote

The FAR does not address SBIR procurements. The Small Business Administration (SBA), not the FAR Council, has the statutory obligation to issue policy directives for the general conduct of the government's SBIR programs. See 15 U.S.C. § 638(j); AR, Tab 2, SBIR Program Policy Directive, at 213.

And see Lite Machines Corp. v. U.S., 143 Fed. Cl. 267, 284 (2019):

Quote

The statute at 15 U.S.C. § 638(j) requires the Small Business Administration to issue policy directives regarding the “general conduct of small business innovation research programs.” 15 U.S.C. § 638(j). In the Small Business Administration's policy directive in effect when the 2013 Contract was awarded to Lite Machines, which was published on August 6, 2012, the Small Business Administration reiterates that the government and prime contractors “that pursue R/R & D or production developed under the SBIR Program, shall issue Phase III awards relating to technology, including sole source awards, to the SBIR awardee that developed the technology” to “the greatest extent practicable.” See Small Business Innovation Research Program Policy Directive, 77 Fed. Reg. 46,806, 46,820 (Aug. 6, 2012). The Small Business Administration's August 6, 2012 policy directive also indicates that, if the government or a prime contractor intends “to pursue R/R & D, production, services, or any combination thereof of a technology developed under an SBIR award, with an entity other than that SBIR awardee,” the government or prime contractor must notify in writing the Small Business Administration prior to award and must indicate “why the follow-on funding agreement with the SBIR awardee is not practicable.” Id.

The FAR Council does not manage agency acquisition programs, and neither does the SBA. But pursuant to legislation, the FAR Council and the SBA have the power to make policy with which agencies must comply when managing their programs and the power to demand that agencies explain their decisions.

It strikes me that the power to make policy with which agencies must comply and to demand explanations of programmatic decisions is more that "just a nice shine."

But I doubt that SBA is very proactive. I doubt they have the staff for much proactivity in either the 8(a) Program or the SBIR Program, and they probably prefer that agencies go about their business as they see fit as long as they use reasonable discretion. There have been a few bid protests in which the SBA has weighed-in on the agency's side concerning interpretation of the SBA policy directive. There was one in which the GAO disagreed with SBA's interpretation of its directive.