Of XX Data Rights, Intellectual Property, Information Technology and Export Controls in Government...

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Data Rights, Intellectual Property, Information Technology and Export Controls in Government Contracting W. Jay DeVecchio, Partner, Jenner & Block LLP

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• Since 1994, a statutory and regulatory preference for commercial items

– FASA, 41 U.S.C. § 3307; 10 USC §2377; FAR Part 12

• Particularly significant for commercial computer software

– For example, GSA IT Schedule 70 = $14 Billion or 42% of all GSA buys

• Also, a regulatory preference for contractors’ standard commercial licenses – e.g., EULAs, TOS

• But a caveat for terms inconsistent with federal law. FAR 27.405-3(b); 12.212(a); DFARS 227.7202-1(a)

– What clauses and what laws?

– Some obvious ones: disputes, indemnity, automatic renewal, penalties.

– Why care? Unenforceable against USG anyway.

• Agencies more recently have been wrestling with this

– 2013: FAR 52.232-39 “Unenforceability of Unauthorized Obligations” and FAR 52.212-4(u).

– 2012: GSA required submission of EULAs for review in editable Word format.

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As a result, GSA identified 15 principal unacceptable commercial terms, creating an internal “fail chart.”

1. Definition of contracting parties (USG & K’er);

2. Contract formation;

3. Vendor indemnity (vendor assumes control of proceedings);

4. Automatic renewals of term-limited agreements;

5. Future fees or penalties;

6. Taxes;

7. Payment terms or invoicing (late payment)

8. Automatic incorporation/deemed acceptance of third party terms;

9. State/foreign law governed contracts;

10. Equitable remedies, injunctions, binding arbitration;

11. Unilateral termination of supplier agreement by supplier;

12. Unilateral modification of supplier agreement by supplier;

13. Assignment of supplier agreement on Government contract by supplier;

14. Confidentiality of supplier agreement terms and conditions; and

15. Audits (automatic liability for payment).


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• On July 31, 2015, GSA issued a “Class Deviation” creating a new clause to address these – GSAR 552.232-78 “Commercial Supplier Agreements – Unenforceable Clauses.”

– Also created new commercial item clause 552.212-4 by adding three new sections – (g)(2), (u) and (w) to FAR 52.212-4. Subsection “w” has 12 provisions covering the 15 areas.

• What’s the problem?

1. Order of precedence changed. License agreements now are subordinate to solicitation provisions and to 552.212-4.

2. 552.212-4 has a number of categories that could override the license, although this is plainly contrary to the principle of using commercial terms and is contrary to FAR 52.212-4. E.g.: Warranty ● Title● Patent Indemnity ● Definitions ● System for Award Management

• Contractors now may have to negotiate terms never previously applicable

• Complicating, not streamlining. Precedential for other agencies?

Of XX Data Rights, Intellectual Property, Information Technology and Export Controls in Government...

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