Appeal challenging the government’s assertion to rights in software developed under several technology investment agreements is granted, where the contractor’s costs for developing software under the TIAs were not allocable to a government contract and therefore the end product met the DFARS definition of “developed exclusively at private expense.” Though the government provided a significant portion of the funding for the TIAs, the board held that the government’s own regulations rendered this distinction irrelevant. The board also found that the TIAs clearly specified the rights granted to the government, which the agency failed to negotiate at the time the agreements were signed.
The Boeing Company moved the Armed Services Board of Contract Appeals for partial summary judgment seeking a determination that software developed with costs charged to a Technology Investment Agreement constitutes software developed “exclusively at private expense” as defined in the DFARS. Boeing also sought a declaration that the TIAs at issue in this appeal did not make a blanket grant of government purpose rights in non-deliverable software developed with costs charged to the TIAs. The Army opposed.
The Army awarded Boeing a low-rate initial production contract for the remanufacture of AH-64D Block I model aircraft into AH-64D model aircraft utilizing remanufactured government furnished equipment fuselages. The contract did not contain a specially-negotiated clause addressing license rights in the software developed under the TIAs, but incorporated by reference DFARS 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation.
This DFARS clause defines “developed exclusively at private expense” as development accomplished entirely with costs charged to indirect cost pools, costs not allocated to a government contract, or any combination thereof. The regulation provides that the government will receive only restricted rights in software delivered under such circumstances.
Later, Boeing and the Army entered into another TIA for the Airborne Manned-Unmanned System Technology-Demonstration research and development effort. The government contributed $8.8 million to the effort, which Boeing was not required to commit funding. The TIA document stated that the agreement was a cooperative agreement for the development of software for the Apache helicopter and that the agreement was not a procurement contract or grant. The agreement also stated that other independent research and development costs incurred during performance were not to be construed as sponsored by or required in performance of a procurement contract or grant agreement.
A third TIA for the Manned/Unmanned Common Architecture Program (MCAP) research and development effort also contained language to this effect.
In December 2014, Boeing delivered to the government certain software pursuant to the LRIP Contract. Boeing marked portions of the software with restricted rights, asserting that the software was developed exclusively at private expense pursuant to the TIAs discussed above. The government challenged Boeing’s assertion, arguing that the government possessed government purpose rights in the software because it was developed with mixed funding. The contracting officer issued a final decision to this effect, which Boeing appealed.
Boeing asked the board for a declaration that software developed with costs charged to a TIA constitute development at private expense according to DFARS 252.227-7014(a)(8), even if the government contributed funds to the TIA.
The board agreed, finding that the TIAs explicitly provided that they were not procurement contracts as defined in the FAR. Therefore, the costs were not allocated to a government contract, and the funding satisfied the definition of “developed exclusively at private expense.” The expenditures did not satisfy the definition of “developed with mixed funding” because the costs charged to the TIAs were not charged directly to a government contract.
The government argued that summary judgment was inappropriate because Boeing failed to establish that the software was developed with costs charged to the AMUST-D and MCAP TIAs. However, the board noted that the actual funding of the software was not a subject of Boeing’s motion and therefore this argument was irrelevant. The government also argued that the fact that the TIAs were not procurement contracts was irrelevant because the government funded part of the costs of the TIAs. According to the government, a TIA funded entirely by the government cannot be developed “exclusively at private expense.” It did not matter if the costs were not allocated to a government contract because they were not Boeing’s costs to allocate. To the extent the government challenged its own regulation, the board found the language clearly defined the terms “developed,” “exclusively with Federal Funds” and “exclusively at private expense.”
Additionally, Boeing sought summary judgment in part that the TIA agreements at issue in this appeal do not make a blanket grant of government purpose rights in software developed with costs charged to the TIAs.
The board agreed, finding that the TIAs at issue specifically set forth the rights that would be provided to the Army in software developed with the TIA funding. Because no provision of the TIAs granted to the Army blanket data rights beyond the rights granted by DFARS 252.227-7014, the board granted summary judgment in favor of Boeing.
In opposition, the government argued that certain provisions of the TIAs grant the government rights in software without requiring delivery. However, the board found these provisions irrelevant to the rights in software at issue. The government also raised the point that the government is entitled to government purpose rights in the deliverable software developed with TIA funds, but the board noted that Boeing did not assert restricted rights in software that was required to be delivered to the government with other than restricted rights.
The government argued that the grant of data rights in the TIAs conveys an intent to confer broad rights on the government, but the board found the TIAs were carefully written to delineate the specific data rights conveyed to the government. The express grant of specific rights contained in the TIAs, implies that the rights were not granted in software not specifically addressed in the TIAs and not deliverable to the government. The limited grant of data rights in the TIAs does not imply that there was an unexpressed intent between the parties to create unspecified blanket rights in all other software, the board explained. While the DFARS provides that the parties may negotiate specific data rights, the government failed to do so.
The Boeing Company is represented by Scott A. Felder, Kevin P. Anderson, and Craig Smith of Wiley Rein LLP. The government is represented by Raymond M. Saunders, Army Chief Trial Attorney and ChristinaLynn E. McCoy, Trial Attorney.
