Proprietary Rights and Competition in Procurement

by James W. McKie

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The problem of private ownership of nonpatentable technical rights and its effect on the Government's effort to enlarge the scope of competition in procurement. Under the Government's present policy it is difficult to determine specifically which data are developed at private expense; thus there is danger of confiscation of private data under R&D contracts, or of overpayment for private data. Alternative policies are that rights could be ignored, lump-sum payments for rights might be made, or licenses might be used. Under a suggested compromise policy, the Government might be satisfied if contractors would supply complete form, fit, and function data as well as Government-financed R&D data. The Government would only acquire detailed manufacturing data on internal components of items procured as units when the processes and designs were developed at Government expense. If a transfer of private processing information were necessary, the Government could arrange a licesnsing agreement, including fees and royalties commensurate with the values given up by the licensor. The problem of private ownership of nonpatentable technical rights and its effect on the government's effort to enlarge the scope of competition in procurement. Under the government's present policy it is difficult to determine specifically which data are developed at private expense; thus there is danger of confiscation of private data under R&D contracts, or of overpayment for private data. Alternative policies are that rights could be ignored, lump-sum payments for rights might be made, or licenses might be used. Under a suggested compromise policy, the government might be satisfied if contractors would supply complete form, fit, and function data as well as government-financed R&D data. The government would only acquire detailed manufacturing data on internal components of items procured as units when the processes and designs were developed at government expense. If a transfer of private processing information were necessary, the government could arrange a licensing agreement, including fees and royalties commensurate with the values given up by the licensor.

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