Final DOD Rule Codifies 20-Year SBIR Data Protection Period and Other SBIR Program Protections While Punting Potential Changes To Marking Requirements

On December 17, 2024, the Department of Defense (DOD) published a final rule amending the Defense Federal Acquisition Regulation Supplement (DFARS) to implement the data rights portions of the Small Business Innovation Research Program (SBIR) and Small Business Technology Transfer (STTR) Program Policy Directive, which itself was most recently amended in May 2023.  The changes from this final rule will be effective as of January 17, 2025. 

First, the final rule amends the DFARS to clarify that, except for certain pre-award and post-award submission requirements, the contract provisions governing data rights for the SBIR and STTR programs are the same.  

Additionally, the final rule amends DFARS 252.227-7018 to codify the 20-year data protection period applicable to SBIR/STTR data, which has been in place since 2020 via DOD Deviation 2020-O0007 and the Policy Directive.  This makes permanent the 20-year data protection period as the replacement for the prior 5-year period, which was extendable indefinitely via subsequent SBIR awards derived from, extending, or completing the underlying SBIR technology.  The rule also changes the license the government receives after the expiration of the SBIR/STTR data protection period from Unlimited Rights to perpetual Government Purpose Rights.

Beyond the above, the final rule makes several other changes that SBIR and STTR contractors should be aware of, including:

• The amended DFARS 227.7104-1 provides that an offeror cannot, as a condition of being considered responsive to a solicitation or condition of award, be required to relinquish to the government any rights in technical data or computer software developed or generated under a SBIR/STTR contract. However, cutting against this in 227.7104-1(c), “the Government may use information provided by offerors in response to a solicitation in the source selection process to evaluate the impact of proposed restrictions on the Government's ability to use or disclose technical data or computer software.”  Essentially, the government cannot require a contractor to relinquish greater than SBIR/STTR rights in connection with a procurement but can consider the government’s more restricted rights (i.e. SBIR/STTR rights) as a factor in the evaluation process.  The government included this evaluative consideration in the final rule despite industry objections. 
• As a less equivocal protection against contractors being coerced into relinquishing SBIR/STTR rights, DFARS 227.7104-2 is clarified to ensure that “[t]he Government and contractor or subcontractor may negotiate special license rights only after contract award” and that “[t]he Government shall not make contract award conditional on the contractor or subcontractor negotiating or consenting to negotiate special license rights” which “is authorized only after contract award by mutual agreement of the parties.”
• Various DFARS provisions were modified to harmonize with the SBIR/STTR Policy Directive and ensure that consistent definitions of terms such as “SBIR/STTR data” and “generated” are used. “Generated” was revised to mean “with respect to technical data or computer software, first created in the performance of this contract.”
• DFARS 227.7104-1 was modified with regard to the scope of SBIR/STTR data rights to make clear that SBIR Phase III projects are covered: “SBIR/STTR data rights apply to SBIR/STTR data that are delivered, developed, or generated in the performance of a contract or agreement that is covered by SBIR/STTR policies, including contracts and subcontracts that include phase III work.”

Notably, the final version of the rule did not incorporate some significant changes that had been proposed with respect to marking of technical data.  For instance, the proposed rule had sought to require the inclusion of a specific marking on Unlimited Rights data delivered under SBIR/STTR and other DOD contracts.  Following significant public comments, the final rule does not include this change, which DOD says will be addressed in a separate process.