Defense Federal Acquisition Regulation Supplement; Presumption of Development at Private Expense, 25161-25165 [2010-10764]

Agencies

• Defense Acquisition Regulations System
• DEPARTMENT OF DEFENSE

[Federal Register Volume 75, Number 88 (Friday, May 7, 2010)]
[Proposed Rules]
[Pages 25161-25165]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-10764]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

[DFARS Case 2007-D003]

48 CFR Parts 212, 227, and 252

RIN 0750-AF84


Defense Federal Acquisition Regulation Supplement; Presumption of 
Development at Private Expense

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Proposed rule with request for comments.

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SUMMARY: DoD proposes to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to implement section 802(b) of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2007 and 
section 815(a)(2) of the NDAA for FY 2008. This proposed rule 
implements special requirements and procedures related to the 
validation of a contractor's or subcontractor's asserted restrictions 
on technical data and computer software.

DATES: Comments on the proposed rule should be submitted to the address 
shown below on or before July 6, 2010, to be considered in the 
formulation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2007-D003, 
using any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: dfars@osd.mil. Include DFARS Case 2007-D003 in the 
subject line of the message.
     Fax: 703-602-0350.
     Mail: Defense Acquisition Regulations System, Attn: Ms. 
Amy Williams, OUSD(AT&L)DPAP(DARS), 3060 Defense Pentagon, Room 3B855, 
Washington, DC 20301-3060.
    All comments received will be posted generally without change to 
https://www.regulations.gov, including any personal information 
provided.

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, 703-602-0328.

SUPPLEMENTARY INFORMATION: 

A. Background

    Section 802(b) of the National Defense Authorization Act (NDAA) for 
Fiscal Year (FY) 2007 (Pub. L. 109-364) modified 10 U.S.C. 2321(f) with 
regard to the presumption of development at private expense for major 
systems; and section 815(a)(2) of the NDAA for FY 2008 (Pub. L. 110-
181) revised 10 U.S.C. 2321(f)(2) to exempt commercially available off-
the-shelf items from the requirements that section 802(b) had 
established for major systems. This proposed rule implements special 
requirements and procedures related to the validation of a contractor's 
or subcontractor's asserted restrictions on technical data and computer 
software. More specifically, the proposed rule affects these validation 
procedures in the context of two special categories of items: 
Commercial items, (including commercially available off-the-shelf 
items); and major systems (including subsystems and components of major 
systems).

[[Page 25162]]

1. Procedures and Presumptions Regarding Development at Private 
Expense--Technical Data

    The validation of asserted restrictions on technical data is based 
on statutory requirements, codified primarily at 10 U.S.C. section 
2321. In 1994, the Federal Acquisition Streamlining Act (Pub. L. 103-
355) revised these requirements to include specialized presumptions and 
procedures for technical data related to commercial items. For 
discussion purposes, these specialized requirements will be referred to 
as the ``Commercial Rule'' (see 10 U.S.C. 2320(b)(1) and 2321(f)).
    Under the Commercial Rule, a contracting officer is required to 
presume that a commercial item has been developed entirely at private 
expense, unless shown otherwise in accordance with the procedures at 10 
U.S.C. 2321(f). The detailed procedures at 10 U.S.C. 2321(f)(1) require 
the contracting officer to presume that the asserted restrictions have 
been justified (on the basis that the item was developed exclusively at 
private expense), whether or not the contractor or subcontractor 
submits a justification in response to the challenge notice issued by 
the contracting officer. The contracting officer's challenge may be 
sustained only if information provided by DoD demonstrates that the 
item was not developed exclusively at private expense.
    Section 802(b) of the FY 2007 NDAA established another set of 
procedures for technical data related to major systems (including 
subsystems or components thereof). For discussion purposes, these 
specialized requirements will be referred to as the ``Major Systems 
Rule.'' Under the Major Systems Rule, codified at 10 U.S.C. 2321(f)(2), 
a contracting officer's challenge to asserted restrictions on technical 
data relating to a major system shall be sustained unless the 
contractor or subcontractor submits information demonstrating that the 
item was developed exclusively at private expense. In the initial 
statutory implementation of section 802(b), the Major Systems Rule also 
covered all contracts for commercial items (i.e., serving as a complete 
exception to the otherwise applicable Commercial Rule).
    However, section 815(a)(2) of the FY 2008 NDAA altered the 
relationship between these two special rules in cases of overlap--
revising the Major Systems Rule so that it does not apply to 
commercially available off-the-shelf (COTS) items (as defined at 41 
U.S.C. 431(c)). Since COTS items are a subtype of commercial items, 
this change results in COTS items being governed by the Commercial Rule 
in all cases, regardless of whether the COTS items are included in a 
major system.
    The proposed implementation in the DFARS of these special rules for 
technical data is modeled closely after this two-pronged statutory 
scheme. The detailed requirements for each special rule, and the 
relationship between the two rules, are consolidated in the regulatory 
coverage at 227.7103-13(c), and in the associated clause language at 
252.227-7037(b). In each case, the implementing language combines the 
relevant preexisting DFARS coverage (e.g., for the Commercial Rule, or 
for validation procedures generally) with the additional language 
necessary to implement the new Major Systems Rule and to clarify which 
rule governs in cases of overlap.
    For example, preexisting DFARS coverage for the Commercial Rule at 
227.7102 is relocated primarily to new 227.7103-13(c)(2), where it is 
combined with new language to address the Major Systems Rule (new 
paragraph (c)(2)(ii)). The language at proposed new 227.7103-13(c)(1) 
is a combination of preexisting language regarding initiation of 
challenges from preexisting 227.7102 and 227.7103-13(c) (the latter is 
redesignated as paragraph (d)).
    Several other conforming or clarifying revisions are included. 
Preexisting language from 227.7102 is adapted to serve as proposed new 
subsection 227.7102-3, which highlights and cross-references the 
regulatory coverage for validation of asserted restrictions on 
technical data for commercial items, which is now consolidated at 
227.7103-13. The prescriptive language at proposed 227.7102-4 and 
227.7103-6(a) was revised for clarity and consistency. The language 
``other than a failure to respond under a contract for commercial 
items'' was deleted from 252.227-7037(f) in order to eliminate 
confusion as to when a contracting officer is required to issue a final 
decision. The contracting officer must issue a final decision, even 
when the contractor or subcontractor fails to respond to a challenge 
notice under a contract for commercial items. Paragraph (f) of 252.227-
7037 was amended to state positively that the contracting officer's 
final decision will adhere to the requirements set forth in paragraph 
(b) of the clause.

2. Flowdown of Requirements to Subcontracts for Commercial Items--
Technical Data

    The Federal Acquisition Streamlining Act (FASA) requires the FAR to 
identify statutes that are not to apply to contracts or subcontracts 
for commercial items (see FAR 12.503 and 12.504). The corresponding 
DFARS implementation of these requirements at 212.503 and 212.504 made 
10 U.S.C. 2320 and 2321 inapplicable to subcontracts for commercial 
items, even though these requirements remained applicable to such 
acquisitions at the prime contract level. Accordingly, the associated 
technical data clauses used in prime contracts have not been flowed 
down to lower tier subcontracts for commercial items, pursuant to 
current 227.7102-3, 252.227-7013(k)(2), and 252.227-7037(l). DoD has 
reviewed the merits of this approach and has determined that these 
statutory requirements should remain applicable to acquisitions of 
technical data related to commercial items regardless of whether that 
data is provided by the prime contractor or by a lower tier 
subcontractor.
    It is well established policy and practice in Federal and DoD 
acquisitions that the treatment of intellectual property rights creates 
a special, direct, relationship between the Government and 
subcontractors (at any tier). For example, the Government's license 
rights may be granted directly from the subcontractor to the 
Government, and the Government and subcontractor are allowed to 
transact business directly with one another on issues related to the 
subcontractor's intellectual property (such as delivery of technical 
data directly to the Government, and regarding the validation of 
asserted restrictions).
    Detailed review of the statutory provisions also supports the 
conclusion that these requirements are intended to apply to all 
acquisitions of technical data, including both commercial and 
noncommercial, and at both the prime contract level and lower tier 
subcontract level. 10 U.S.C. 2320 and 2321 have always applied 
expressly to prime contractors and subcontractors. When FASA amended 
these sections to address special requirements for technical data 
related to commercial items (e.g., the Commercial Rule discussed 
previously), the statutory amendments retained this approach, 
explicitly applying at the prime contract and subcontract levels (see 
10 U.S.C. 2320(a) and (b)(1), and 2321(f)).
    This congressional intent is reinforced by the recent amendments to 
these statutes. Section 802(b) of the FY07 NDAA, which created the new 
Major Systems Rule, expressly and explicitly cited application to prime 
contractors and subcontractors ``whether or not under a contract for 
commercial items.'' Section 815(a)(2) retained all of the language that 
expressly applies to subcontracts, and revised the language

[[Page 25163]]

only to clarify that the Major Systems Rule is not intended to apply to 
COTS items, which, under the existing statutory language, would be 
covered under the Commercial Rule at both the prime contract and 
subcontract level.
    Accordingly, this proposed rule revises section 212.504 to 
eliminate 10 U.S.C. 2320 and 2321 from the list of statutes that are 
inapplicable to subcontracts for commercial items, and makes 
corresponding changes to the flowdown requirements at 227.7102-4, and 
to the associated clauses at 252.227-7013(k)(2), -7015(e), and -
7037(l).

3. Procedures and Presumptions Regarding Development at Private 
Expense--Computer Software

    Although 10 U.S.C. 2320 and 2321 apply only to technical data and 
not to computer software (which is expressly excluded from the 
definition of technical data), it is longstanding Federal and DoD 
policy and practice to apply the same or analogous requirements to 
computer software, whenever appropriate. Many issues are common to both 
technical data and computer software, and in such cases, conformity of 
coverage between technical data and computer software is desirable.
    For example, although the DFARS provides separate coverage for 
technical data and computer software--subparts 227.71 and 227.72, 
respectively--the policies and procedures are identical or analogous in 
most respects. Regarding the procedures for validation of asserted 
restrictions on computer software, the DFARS adapts the technical data 
procedures only for application to noncommercial computer software (see 
227.7203-13 and 252.227-7019), but provides no similar or analogous 
coverage for commercial computer software (see 227.7202). This 
applicability model is used to guide the implementation of revisions 
analogous to those discussed previously for technical data (i.e., 
analogous revisions are made to the validation procedures only for 
noncommercial technologies).
    Accordingly, it is only the new Major Systems Rule that is 
applicable to, and implemented for, the validation procedures for 
noncommercial computer software. These new procedures are added at 
proposed 227.7203-13(d) and the associated clause at 252.227-7019(f). 
In each case, the paragraph numbers in the affected coverage are 
revised to incorporate the new paragraph. In addition, a conforming 
amendment is also made at 252.227-7019(g)(5) to state positively that 
the contracting officer's final decision will adhere to the new 
requirements.
    This rule was subject to Office of Management and Budget review 
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD does not expect this rule to have a significant economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., based on the 
historically low incidence of formal challenges to validate asserted 
restrictions by small businesses on major systems or subsystems or 
components thereof. Therefore, DoD has not performed an initial 
regulatory flexibility analysis. DoD invites comments from small 
business concerns and other interested parties on the expected impact 
of this rule on small entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2007-D003) in 
correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
changes to the DFARS do not create new information collection 
requirements, and do not affect the scope of existing information 
collection requirements in a manner that may require the approval of 
the Office of Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 212, 227, and 252

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

    Therefore, DoD proposes to amend 48 CFR parts 212, 227, and 252 as 
follows:
    1. The authority citation for 48 CFR parts 212, 227, and 252 
continues to read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR chapter 1.

PART 212--ACQUISITION OF COMMERCIAL ITEMS


212.504  [Amended]

    2. Amend section 212.504 by removing and reserving paragraphs 
(a)(v) and (a)(vi).

PART 227--PATENTS, DATA, AND COPYRIGHTS


227.7102  [Removed]

    3. Remove section 227.7102.


227.7102-3  [Redesignated as 227.7102-4]

    4. Redesignate section 227.7102-3 as section 227.7102-4.
    5. Add new section 227.7102-3 to read as follows:


227.7102-3  Government right to review, verify, challenge and validate 
asserted restrictions.

    Follow the procedures at 227.7103-13 and the clause at 252.227-
7037, Validation of Restrictive Markings on Technical Data, regarding 
the validation of asserted restrictions on technical data related to 
commercial items.
    6. Revise newly designated section 227.7102-4 to read as follows:


227.7102-4  Contract clause.

    (a)(1) Except as provided in paragraph (b) of this subsection, use 
the clause at 252.227-7015, Technical Data- Commercial Items, in all 
solicitations and contracts when the Contractor will be required to 
deliver technical data pertaining to commercial items, components, or 
processes.
    (2) Use the clause at 252.227-7015 with its Alternate I in 
contracts for the development or delivery of a vessel design or any 
useful article embodying a vessel design.
    (b) In accordance with the clause prescription at 227.7103-6(a), 
use the clause at 252.227-7013, Rights in Technical Data--Noncommercial 
Items, in lieu of the clause at 252.227-7015 if the Government has paid 
or will pay any portion of the development costs of a commercial item.
    (c) Use the clause at 252.227-7037, Validation of Restrictive 
Markings on Technical Data, in all solicitations and contracts for 
commercial items that include the clause at 252.227-7015 or the clause 
at 252.227-7013.
    7. Amend section 227.7103-6 by revising paragraph (a) to read as 
follows:


227.7103-6  Contract clauses.

    (a) Use the clause at 252.227-7013, Rights in Technical Data--
Noncommercial Items, in solicitations and contracts when the successful 
offeror(s) will be required to deliver to the Government technical data 
pertaining to noncommercial items, or pertaining to commercial items 
for which the Government has paid or will pay any portion of the 
development costs. Do not use the clause when the only deliverable 
items are computer software or computer software documentation (see 
227.72), commercial

[[Page 25164]]

items developed exclusively at private expense (see 227.7102-4), 
existing works (see 227.7105), special works (see 227.7106), or when 
contracting under the Small Business Innovation Research Program (see 
227.7104). Except as provided in 227.7107-2, do not use the clause in 
architect-engineer and construction contracts.
* * * * *
    8. Amend section 227.7103-13 as follows:
    a. By redesignating paragraph (c) as paragraph (d);
    b. By adding new paragraph (c);
    c. By revising newly redesignated paragraph (d) introductory text;
    d. By revising the first sentence of (d)(2)(i); and
    e. By revising paragraph (d)(4).
    The addition and revisions read as follows:


227.7103-13  Government right to review, verify, challenge and validate 
asserted restrictions.

* * * * *
    (c) Challenge considerations and presumption. (1) Requirements to 
initiate a challenge. Contracting officers shall have reasonable 
grounds to challenge the validity of an asserted restriction. Before 
issuing a challenge to an asserted restriction, carefully consider all 
available information pertaining to the assertion. The contracting 
officer shall not challenge a contractor's assertion that a commercial 
item, component, or process was developed exclusively at private 
expense unless the Government can demonstrate that it contributed to 
development of the item, component or process.
    (2) Presumption regarding development exclusively at private 
expense. 10 U.S.C. Sections 2320(b)(1) and 2321(f) establish a 
presumption and procedures regarding validation of asserted 
restrictions for technical data related to commercial items, and to 
major systems, on the basis of development exclusively at private 
expense.
    (i) Commercial items. For commercially available off-the-shelf 
items (defined at 41 U.S.C. Section 431(c)) in all cases, and for all 
other commercial items except as provided in paragraph (c)(2)(ii) of 
this section, contracting officers shall presume that the items were 
developed exclusively at private expense whether or not a contractor 
submits a justification in response to a challenge notice. When a 
challenge is warranted, a contractor's or subcontractor's failure to 
respond to the challenge notice cannot be the sole basis for issuing a 
final decision denying the validity of an asserted restriction.
    (ii) Major systems. The presumption of development exclusively at 
private expense does not apply to major systems or subsystems or 
components thereof, except for commercially available off-the-shelf 
items (which are governed by paragraph (c)(2)(i) of this section). When 
the contracting officer challenges an asserted restriction regarding 
technical data for a major system or a subsystem or component thereof 
on the basis that the technology was not developed exclusively at 
private expense, the contracting officer shall sustain the challenge 
unless information provided by the contractor or subcontractor 
demonstrates that the item was developed exclusively at private 
expense.
    (d) Challenge and validation. All challenges shall be made in 
accordance with the provisions of the clause at 252.227-7037, 
Validation of Restrictive Markings on Technical Data.
* * * * *
    (2) * * *
    (i) After consideration of the situations described in paragraph 
(d)(3) of this subsection, contracting officers may request the person 
asserting a restriction to furnish a written explanation of the facts 
and supporting documentation for the assertion in sufficient detail to 
enable the contracting officer to ascertain the basis of the 
restrictive markings . * * *
* * * * *
    (4) Challenge notice. The contracting officer will not issue a 
challenge notice unless there are reasonable grounds to question the 
validity of an assertion. The contracting officer may challenge an 
assertion whether or not supporting documentation was requested under 
paragraph (d)(2) of this section. Challenge notices shall be in writing 
and issued to the contractor or, after consideration of the situations 
described in paragraph (d)(3) of this section, the person asserting the 
restriction. The challenge notice shall include the information in 
paragraph (e) of the clause at 252.227-7037.
* * * * *
    9. Revise section 227.7203-13 by redesignating paragraphs (d), (e), 
and (f) as (e), (f), and (g) respectively; and by adding new paragraph 
(d) to read as follows:


227.7203-13  Government right to review, verify, challenge and validate 
asserted restrictions.

* * * * *
    (d) Major systems. When the contracting officer challenges an 
asserted restriction regarding noncommercial computer software for a 
major system or a subsystem or component thereof on the basis that the 
computer software was not developed exclusively at private expense, the 
contracting officer shall sustain the challenge unless information 
provided by the contractor or subcontractor demonstrates that the 
computer software was developed exclusively at private expense.
* * * * *

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    8. Amend section 252.227-7013 by revising the clause date and 
paragraph (k)(2) to read as follows:


252.227-7013  Rights in Technical Data--Noncommercial Items.

* * * * *

RIGHTS IN TECHNICAL DATA--NONCOMMERCIAL ITEMS (DATE)

* * * * *
    (k) * * *
    (2) Whenever any technical data is to be obtained from a 
subcontractor or supplier for delivery to the Government under this 
contract, the Contractor shall use this same clause in the 
subcontract or other contractual instrument, and require its 
subcontractors or suppliers to do so, without alteration, except to 
identify the parties. No other clause shall be used to enlarge or 
diminish the Government's, the Contractor's, or a higher-tier 
subcontractor's or supplier's rights in a subcontractor's or 
supplier's technical data.
* * * * *

    9. Amend section 252.227-7015 by revising the clause date and the 
introductory text, and adding new paragraph 227.7015(e) to read as 
follows:


252.227-7015   Technical Data-Commercial Items.

    As prescribed in 227.7102-4(a)(1), use the following clause:

TECHNICAL DATA--COMMERCIAL ITEMS (DATE)

* * * * *
    (e) Applicability to subcontractors or suppliers.
    (1) The Contractor shall recognize and protect the rights 
afforded its subcontractors and suppliers under 10 U.S.C. 2320 and 
10 U.S.C. 2321.
    (2) Whenever any technical data will be obtained from a 
subcontractor or supplier for delivery to the Government under this 
contract, the Contractor shall use this same clause in the 
subcontract or other contractual instrument, and require its 
subcontractors or suppliers to do so, without alteration, except to 
identify the parties.

(End of clause)


[[Page 25165]]


    10. Amend section 252.227-7019 by revising the clause date; 
redesignating paragraphs (f) through (i) as (g) through (j) 
respectively; adding new paragraph (f); and revising newly redesignated 
paragraphs (g)(5), (h)(1), and (h)(3) to read as follows:

Validation of Asserted Restrictions--Computer Software

* * * * *

VALIDATION OF ASSERTED RESTRICTIONS--COMPUTER SOFTWARE (DATE)

* * * * *
    (f) Major systems. When the Contracting Officer challenges an 
asserted restriction regarding noncommercial computer software for a 
major system or a subsystem or component thereof on the basis that 
the computer software was not developed exclusively at private 
expense, the Contracting Officer shall sustain the challenge unless 
information provided by the Contractor or subcontractor demonstrates 
that the computer software was developed exclusively at private 
expense.
    (g) * * *
    (5) If the Contractor fails to respond to the Contracting 
Officer's request for information or additional information under 
paragraph (g)(1) of this clause, the Contracting Officer shall issue 
a final decision, in accordance with paragraph (f) of this clause 
and the Disputes clause of this contract, pertaining to the validity 
of the asserted restriction.
* * * * *
    (h) * * *
    (1) The Government agrees that, notwithstanding a Contracting 
Officer's final decision denying the validity of an asserted 
restriction and except as provided in paragraph (h)(3) of this 
clause, it will honor the asserted restriction--
* * * * *
    (3) The agency head, on a nondelegable basis, may determine that 
urgent or compelling circumstances do not permit awaiting the filing 
of suit in an appropriate court, or the rendering of a decision by a 
court of competent jurisdiction or Board of Contract Appeals. In 
that event, the agency head will notify the Contractor of the urgent 
or compelling circumstances. Notwithstanding paragraph (h)(1) of 
this clause, the Contractor agrees that the agency may use, modify, 
reproduce, release, perform, display, or disclose computer software 
marked with government purpose legends for any purpose, and 
authorize others to do so; or restricted or special license rights 
for government purposes only. The Government agrees not to release 
or disclose such software unless, prior to release or disclosure, 
the intended recipient is subject to the use and non-disclosure 
agreement at 227.7103-7 of the Defense Federal Acquisition 
Regulation Supplement (DFARS), or is a Government contractor 
receiving access to the software for performance of a Government 
contract that contains the clause at DFARS 252.227-7025, Limitations 
on the Use or Disclosure of Government-Furnished Information Marked 
with Restrictive Legends. The agency head's determination may be 
made at any time after the date of the Contracting Officer's final 
decision and shall not affect the Contractor's right to damages 
against the United States, or other relief provided by law, if its 
asserted restrictions are ultimately upheld.
* * * * *

    11. Amend section 252.227-7037 by revising the clause date and 
revising paragraphs (b), (c), (f), and (l) to read as follows:
* * * * *


252.227-7037   Validation of Restrictive Markings on Technical Data.

* * * * *

VALIDATION OF RESTRICTIVE MARKINGS ON TECHNICAL DATA (DATE)

* * * * *
    (b) Presumption regarding development exclusively at private 
expense.
    (1) Commercial items. For commercially available off-the-shelf 
items (defined at 41 U.S.C. Section 431(c)) in all cases, and for 
all other commercial items except as provided in paragraph (b)(2) of 
this clause, the Contracting Officer shall presume that a 
Contractor's asserted use or release restrictions are justified on 
the basis that the item, component, or process was developed 
exclusively at private expense. The Contracting Officer shall not 
challenge such assertions unless information provided by the 
Contracting Officer demonstrates that the item, component, or 
process was not developed exclusively at private expense.
    (2) Major systems. The presumption of development exclusively at 
private expense does not apply to major systems or subsystems or 
components thereof, except for commercially available off-the-shelf 
items (which are governed by paragraph (b)(1) of this clause). When 
the Contracting Officer challenges an asserted restriction regarding 
technical data for a major system or a subsystem or component 
thereof on the basis that the item, component, or process was not 
developed exclusively at private expense, the Contracting Officer 
shall sustain the challenge unless information provided by the 
Contractor or subcontractor demonstrates that the item, component, 
or process was developed exclusively at private expense.
    (c) Justification. The Contractor or subcontractor at any tier 
is responsible for maintaining records sufficient to justify the 
validity of its markings that impose restrictions on the Government 
and others to use, duplicate, or disclose technical data delivered 
or required to be delivered under the contract or subcontract. 
Except as provided in paragraph (b) of this clause, the Contractor 
or subcontractor shall be prepared to furnish to the Contracting 
Officer a written justification for such restrictive markings in 
response to a challenge under paragraph (e) of this clause.
* * * * *
    (f) Final decision when Contractor or subcontractor fails to 
respond. Upon a failure of a Contractor or subcontractor to submit 
any response to the challenge notice, the Contracting Officer shall 
issue a final decision to the Contractor or subcontractor in 
accordance with paragraph (b) of this clause and the Disputes clause 
of this contract pertaining to the validity of the asserted 
restriction. This final decision shall be issued as soon as possible 
after the expiration of the time period of paragraph (e)(1)(ii) or 
(e)(2) of this clause. Following issuance of the final decision, the 
Contracting Officer shall comply with the procedures in paragraphs 
(g)(2)(ii) through (iv) of this clause.
* * * * *
    (l) Flowdown. The Contractor or subcontractor agrees to insert 
this clause in contractual instruments with its subcontractors or 
suppliers at any tier requiring the delivery of technical data.

(End of clause)

[FR Doc. 2010-10764 Filed 5-6-10; 8:45 am]
BILLING CODE 5001-08-P