Government Contracts Software Development Costs Were “Exclusively at Private Expense”
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Monday, September 3, 2018

Software Development Costs Were “Exclusively at Private Expense”

By Government Contracts Editorial Staff

A contractor’s motion for partial summary judgment with regard to software development costs was granted by the Armed Services Board of Contract Appeals because costs charged to technology investment agreements constituted software developed “exclusively at private expense,” and the TIAs did not make a blanket grant of government purpose rights in non-deliverable software. The contractor sought determinations, as a matter of law, that software developed with costs charged to a TIA pursuant to 10 USC 2358 constituted software developed “exclusively at private expense” as that term is defined at DFARS 252.227-7014(a)(8), and that the TIAs did not make a blanket grant of government purpose rights in non-deliverable software developed with costs charged to the TIAs.

TIA Funding. The board agreed. Although the government contributed to the software development costs, to the extent the software was funded by the TIAs, the costs were not allocated to a government contract as required by DFARS 252.227-7014(a)(10), because the TIAs were not “contracts” as defined in FAR 2.101. Therefore, the funding satisfied the definition of “developed exclusively at private expense” at DFARS 252.227-7014(a)(8), which does not provide the government with any specific rights in noncommercial software developed exclusively at private expense and not delivered or required to be provided to the government. In addition, because no provision of the TIAs granted the government blanket data rights beyond the rights granted by DFARS 252.227-7014, the TIAs did not confer on the government blanket government purpose rights, or greater rights, in the software developed with costs charged to the TIAs. The board rejected the government’s argument that the grant of data rights in the TIAs conveyed an “intent to confer broad rights on the government.” The limited grant of data rights in the TIAs did not imply there was an unexpressed intent between the parties to create unspecified blanket rights in all other software. (Boeing Co., ASBCA, ¶95,546).

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