27.404-2 Limited rights data and restricted computer software
Source: FAR 27.404-2 on acquisition.gov
FAR 27.404-2 ensures contractors can protect proprietary data and software while allowing the government to obtain and use such data/software only under clearly defined, contractually specified rights and restrictions.
Overview
FAR 27.404-2 addresses the handling of limited rights data and restricted computer software in government contracts. It outlines how contractors can protect proprietary data and software, the circumstances under which the government may require delivery of such data/software, and the rights and restrictions that apply to both parties. The section details the use of specific FAR clauses and their alternates (52.227-14 and 52.227-15), the process for identifying and delivering protected data, and the limitations on government use and disclosure. It also provides guidance for contracting officers on when and how to use these clauses and alternates, including during negotiations and contract modifications.
Key Rules
- Protection of Limited Rights Data and Restricted Computer Software
- Contractors may withhold qualifying data/software, delivering only form, fit, and function data, unless the government requires delivery via contract clauses.
- Alternate Definitions and Clauses
- Agencies may use alternate definitions and clause alternates (Alternate I, II, III) based on contract requirements and the nature of the data/software.
- Government Rights and Restrictions
- The government’s use and disclosure of delivered limited rights data or restricted software is strictly limited by the contract and associated notices.
- Contractor Declarations
- Offerors must declare the likelihood of delivering limited rights data or restricted software, guiding the contracting officer’s clause selection.
- Modification and Negotiation
- Clauses and alternates can be added or modified during negotiations or contract performance if needed.
Responsibilities
- Contracting Officers: Must select appropriate clauses/alternates, specify deliverables, and ensure rights and restrictions are clearly stated in contracts.
- Contractors: Must identify and declare limited rights data/restricted software, comply with delivery requirements, and mark data/software appropriately.
- Agencies: Must enforce restrictions on use/disclosure and may supplement notices for specific purposes.
Practical Implications
- Ensures protection of contractor intellectual property while meeting government needs.
- Impacts proposal preparation, contract negotiation, and data/software delivery processes.
- Common pitfalls include failure to properly declare, mark, or negotiate rights, leading to disputes or loss of protection.
(a) General. The basic clause at 52.227-14, Rights in Data-General, enables the contractor to protect qualifying limited rights data and restricted computer software by withholding the data from the Government and instead delivering form, fit, and function data.
(b) Alternate definition of limited rights data. For contracts that do not require the development, use, or delivery of items, components, or processes that are intended to be acquired by or for the Government, an agency may adopt the alternate definition of limited rights data set forth in Alternate I to the clause at 52.227-14. The alternate definition does not require that the data pertain to items, components, or processes developed at private expense; but rather that the data were developed at private expense and embody a trade secret or are commercial or financial and confidential or privileged.
(c) Protection of limited rights data specified for delivery.
(1) The clause at 52.227-14 with its Alternate II enables the Government to require delivery of limited rights data rather than allow the contractor to withhold the data. To obtain delivery, the contract may identify and specify data to be delivered, or the contracting officer may require, by written request during contract performance, the delivery of data that has been withheld or identified to be withheld under paragraph (g)(1) of the clause. In addition, the contract may specifically identify data that are not to be delivered under Alternate II or which, if delivered, will be delivered with limited rights. The limited rights obtained by the Government are set forth in the Limited Rights Notice contained in paragraph (g)(3) of Alternate II. Agencies shall not, without permission of the contractor, use limited rights data for purposes of manufacture or disclose the data outside the Government except as set forth in the Notice. Any disclosure by the Government shall be subject to prohibition against further use and disclosure by the recipient. The following are examples of specific purposes that may be adopted by an agency in its supplement and added to the Limited Rights Notice of paragraph (g)(3) of Alternate II of the clause:
(i) Use (except for manufacture) by support service contractors.
(ii) Evaluation by nongovernment evaluators.
(iii) Use (except for manufacture) by other contractors participating in the Government’s program of which the specific contract is a part.
(iv) Emergency repair or overhaul work.
(v) Release to a foreign government, or its instrumentalities, if required to serve the interests of the U.S. Government, for information or evaluation, or for emergency repair or overhaul work by the foreign government.
(2) The provision at 52.227-15, Representation of Limited Rights Data and Restricted Computer Software, helps the contracting officer to determine whether the clause at 52.227-14 should be used with its Alternate II. This provision requests that an offeror state whether limited rights data are likely to be delivered. Where limited rights data are expected to be delivered, use Alternate II. Where negotiations are based on an unsolicited proposal, the need for Alternate II of the clause at 52.227-14 should be addressed during negotiations or discussions, and if Alternate II was not included initially it may be added by modification, if needed, during contract performance.
(3) If data that would otherwise qualify as limited rights data is delivered as a computer database, the data shall be treated as limited rights data, rather than restricted computer software, for the purposes of paragraph (g) of the clause at 52.227-14.
(d) Protection of restricted computer software specified for delivery.
(1) Alternate III of the clause at 52.227-14, enables the Government to require delivery of restricted computer software rather than allow the contractor to withhold such restricted computer software. To obtain delivery of restricted computer software the contracting officer shall-
(i) Identify and specify the deliverable computer software in the contract; or
(ii) Require by written request during contract performance, the delivery of computer software that has been withheld or identified to be withheld under paragraph (g)(1) of the clause.
(2) In considering whether to use Alternate III, contracting officers should note that, unlike other data, computer software is also an end item in itself. Thus, the contracting officer shall use Alternate III if delivery of restricted computer software is required to meet agency needs.
(3) Unless otherwise agreed (see paragraph (d)(4) of this subsection), the restricted rights obtained by the Government are set forth in the Restricted Rights Notice contained in paragraph (g)(4) (Alternate III). Such restricted computer software will not be used or reproduced by the Government, or disclosed outside the Government, except that the computer software may be-
(i) Used or copied for use with the computers for which it was acquired, including use at any Government installation to which the computers may be transferred;
(ii) Used or copied for use with a backup computer if any computer for which it was acquired is inoperative;
(iii) Reproduced for safekeeping (archives) or backup purposes;
(iv) Modified, adapted, or combined with other computer software, provided that the modified, adapted, or combined portions of the derivative software incorporating any of the delivered, restricted computer software shall be subject to the same restricted rights;
(v) Disclosed to and reproduced for use by support service contractors or their subcontractors, in accordance with paragraphs (3)(i) through (iv) of this section; and
(vi) Used or copied for use with a replacement computer.
(4) The restricted rights set forth in paragraph (d)(3) of this subsection are the minimum rights the Government normally obtains with restricted computer software and will automatically apply when such software is acquired under the Restricted Rights Notice of paragraph (g)(4) of Alternate III of the clause at 52.227-14. However, the contracting officer may specify different rights in the contract, consistent with the purposes and needs for which the software is to be acquired. For example, the contracting officer should consider any networking needs or any requirements for use of the computer software from remote terminals. Also, in addressing such needs, the scope of the restricted rights may be different for the documentation accompanying the computer software than for the programs and databases. Any additions to, or limitations on, the restricted rights set forth in the Restricted Rights Notice of paragraph (g)(4) of Alternate III of the clause at 52.227-14 shall be expressly stated in the contract or in a collateral agreement incorporated in and made part of the contract, and the notice modified accordingly.
(5) The provision at 52.227-15, Representation of Limited Rights Data and Restricted Computer Software, helps the contracting officer determine whether to use the clause at 52.227-14 with its Alternate III. This provision requests that an offeror state whether restricted computer software is likely to be delivered under the contract. In addition, the need for Alternate III should be addressed during negotiations or discussions with an offeror, particularly where negotiations are based on an unsolicited proposal. However, if Alternate III is not used initially, it may be added by modification, if needed, during contract performance.