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DFARS Part 227 — Tech Data / IP Rights (explainer)

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DFARS Part 227 — Tech Data, IP, and Computer Software Rights

What this Part does

If DFARS 204 is the cyber center of gravity for defense advisory, Part 227 is the intellectual property center of gravity. The government’s license in contractor-developed technical data and computer software is one of the highest-stakes recurring battles in defense contracting, and Part 227 is where that license is defined.

The default FAR IP regime (FAR Part 27) gives the government relatively broad “unlimited rights” in deliverables funded with appropriated dollars. Defense contractors have for decades pushed back on that default, and the result is a specialized DoD regime that creates three main license tiers:

  1. Unlimited Rights (UR) — the government can use, disclose, reproduce, and authorize others to do the same, worldwide, without restriction. Default for anything developed exclusively at government expense.
  2. Government Purpose Rights (GPR) — the government can use internally and disclose to competitors for government purposes only, not commercial. Applies to “mixed funding” (any private + government funding). GPR has a statutory 5-year sunset under DFARS 252.227-7013(b)(2) after which GPR converts to unlimited rights — unless the contractor has negotiated a longer period.
  3. Limited Rights (LR) for technical data / Restricted Rights (RR) for software — the government’s narrowest license. Applies when the deliverable was developed exclusively at private expense. Government can use internally but can’t disclose outside without contractor consent.

Plus two specialized regimes:

  • SBIR Data Rights (DFARS 252.227-7018) — SBIR/STTR awardees get enhanced protection: 20-year government license, stronger than ordinary GPR, with specific rules for Phase III transitions.
  • Commercial items — commercial products deliver under a much narrower license (DFARS 252.227-7015), tracking the contractor’s commercial practice.

The mechanics

License level is determined at deliverable level, not contract level. A single contract can deliver technical data with Unlimited Rights (fully government-funded), Limited Rights (fully private-funded), GPR (mixed), SBIR (from SBIR Phase I/II funds), and commercial (pre-existing commercial product) — all in the same Contract Data Requirements List (CDRL).

The assertion table. Under DFARS 252.227-7017 (Identification and Assertion of Use, Release, or Disclosure Restrictions), the contractor must identify — at proposal time — every piece of data they will assert as anything other than Unlimited Rights, along with the basis for the assertion (funding source, prior development, etc.). Data not on the assertion list is presumed Unlimited.

This is the single highest-leverage document a defense contractor files. Assertions made at proposal can be challenged by the government, but the challenge must happen under DFARS 252.227-7019 within a constrained timeline. Assertions NOT made at proposal are essentially forfeited unless the contractor establishes post-hoc that the assertion was always valid — a much harder burden.

When you’d look here

  • Your client is preparing a proposal and needs an assertion table under 252.227-7017. Get this right, everything else falls into place.
  • A program office is demanding Unlimited Rights in something your client claims as Limited Rights — government’s challenge process under 252.227-7019.
  • An SBIR Phase III transition is in play and the client needs to understand SBIR data-rights preservation.
  • A client is being asked to surrender rights in a mod negotiation — refuse or negotiate with a specific counter-offer.
  • The contract is mid-performance and the 5-year GPR sunset clock is approaching — negotiate an extension or accept conversion to UR.

Case study: the assertion miss that cost the IP

Vector Labs (hypothetical) developed an advanced signal-processing algorithm under a mix of internal R&D and a series of small Navy R&D contracts over 4 years. The signal-processing library embedded in a production contract deliverable worth $44M was, by Vector’s engineering reckoning, 70% developed at Vector’s expense before any Navy work.

The production contract’s 252.227-7017 assertion table listed Vector’s proprietary encryption module as GPR but omitted the signal-processing library entirely. Vector’s proposal team had assumed the library fell under a blanket “background IP” assertion, but the assertion table’s schema under 7017 required each specific item to be listed by classification, basis, and asserted rights.

The contract was awarded and signed. One year in, the Navy transferred the deliverable’s signal-processing library to a competitor building a complementary system — asserting Unlimited Rights on the basis that no assertion had been made. Vector disputed and demanded Limited Rights, citing internal R&D funding records.

The dispute went to ASBCA. The Board held against Vector. The assertion process in DFARS 252.227-7017 is claims-presentation- based: the contractor has the affirmative obligation to identify restricted data. Failure to assert, even in good faith, defaults the data to Unlimited. Vector’s evidence of private funding was not admissible to establish Limited Rights because the procedural gate at proposal had not been satisfied.

Vector lost the IP. The competitor built the complementary system using Vector’s algorithm. Vector’s downstream commercial product, which had used the same library, faced a government-licensed competitor in the open market.

Teaching points:

  1. The assertion table is the whole ball game. Get every asserted item on the list, with a specific legal basis (exclusive private expense, mixed funding, commercial item, SBIR, etc.).
  2. “Background IP” is not a recognized assertion category. Don’t use informal terms. Use the categories in 7017.
  3. Cure is available, but narrow. DFARS 252.227-7019 allows the contractor to add assertions post-award, but only for data developed at private expense that the contractor “inadvertently” omitted — and only until the government has materially relied on the absence. Relief is discretionary.

Case study: the SBIR Phase III transition

Cirrus Photonics (hypothetical) completed an SBIR Phase I and Phase II developing a compact laser for DoD sensor applications. At Phase II completion, Cirrus held SBIR Data Rights under DFARS 252.227-7018 — a 20-year government license with specific restrictions on disclosure.

A DoD program office wanted to procure 200 lasers for a production program. Under the SBIR statute (15 USC 638(r)), Phase III awards can be made on a sole-source basis to the SBIR firm to preserve the continuity of development. Cirrus negotiated the Phase III contract sole-source at $180M.

Key issue: the Phase III contract used mixed funding — Cirrus had added private capital during the transition. Some of the new engineering at Phase III was jointly funded. A naive approach would have let mixed Phase III funding trigger GPR (and start a 5-year sunset clock), potentially diluting the 20-year SBIR protection on the downstream deliverables.

Cirrus’s counsel negotiated a specific contract clause preserving SBIR data rights through Phase III and beyond, using a carve-out that distinguished Phase III-funded derivative work (which became GPR) from the underlying Phase I/II IP (which retained SBIR Data Rights through the 20-year statutory term).

Teaching points:

  1. SBIR Data Rights persist through Phase III by default, but only if the contract language preserves the distinction. Mixed-funded Phase III contracts can dilute SBIR protection if the boundaries aren’t documented.
  2. Phase III sole-source is a gift granted to SBIR firms. Congressional intent is that commercialization success of SBIR be rewarded. Agencies occasionally push back; push back on the pushback.
  3. 20-year SBIR term >> 5-year GPR sunset. If a deliverable can be anchored to SBIR Data Rights, that’s always better than GPR for the contractor.

Key sections

Key clauses

  • DFARS 252.227-7013 — Rights in Technical Data — Noncommercial Items. The main license for tech data.
  • DFARS 252.227-7014 — Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation. The software-side analog to 7013.
  • DFARS 252.227-7015 — Technical Data — Commercial Items.
  • DFARS 252.227-7017 — Identification and Assertion of Use, Release, or Disclosure Restrictions. THE assertion table clause.
  • DFARS 252.227-7018 — Rights in Noncommercial Technical Data and Computer Software — SBIR.
  • DFARS 252.227-7019 — Validation of Asserted Restrictions (government’s challenge process).
  • DFARS 252.227-7020 — Rights in Special Works.
  • DFARS 252.227-7025 — Limitations on the Use or Disclosure of Government-Furnished Information.
  • DFARS 252.227-7037 — Validation of Restrictive Markings.
  • FAR Part 27 — The civilian baseline IP regime.
  • DFARS Part 235 — R&D contracts (where most IP issues originate before production).
  • DFARS Part 212 — Commercial items — overrides Part 227 IP rules when commercial-item determination holds.
  • Statutory authority:

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