The United States Department of Defense’s (DoD) supplement to the Federal Acquisition Regulation (DFARS) requires the DoD to adopt a Modular Open System Approach (MOSA), which is a technical and business strategy for open and adaptable system design. To the maximum extent practicable for relevant modular systems, DoD solicitations and contracts must include a modular design with modular system interfaces.
The changes to the DFARS provide the DoD with greater intellectual property (IP) rights to data and computer software for those modular system interfaces. The modular systems approach is intended to reduce or avoid costs, reduce time for system integration, allow for system upgrades, and increase the opportunity for system interoperability. These changes decrease barriers to entry by non-traditional defense innovation companies if they can deliver on lower cost, on-time, and improved solutions.
Conceptually, the proposed regulations would give DoD visibility and expansive rights to top-level data and code of proprietary modules without revealing or granting rights to the core of the proprietary module. The reality of how the MOSA regulations would be implemented in a system’s architecture and contract terms could play out differently.
While this summary is intended to provide a high-level introduction, defense innovation companies should ensure a deeper understanding of the upcoming changes because they are detailed and nuanced with game-changing implications for product development and intellectual property rights.
To lay the groundwork for the sets of rights DoD will require, the proposed DFARS changes include numerous new and revised definitions. These are:
The regulations would revise the definition of form, fit, and function data and add a new definition of form, fit, and function software.
To understand what rights would attach to which data and code, keep in mind that form, fit, function data and software are intended to help identify physically or functionally equivalent items or processes and are higher-level than the interface implementation data and software, which would be much more detailed to help implement an interface.
The new definition of interface specifications would be a subset of form, fit, and function data or software and would merely describe an interface.
Expect significant changes to the existing DFARS licensing framework for commercial and non-commercial technical data and computer software, as well as Small Business Innovation Research rights. A few key points include:
DoD’s protocols for asserting restrictions on rights for developments at private expense—either exclusively private or partially with government funds—would be revised to include some of the newly defined terms and a method for defense innovation companies to articulate any modular system interfaces.
For technical data, the proposed revisions also indicate that a decision by DoD or a determination by a contracting officer to not challenge a restrictive marking or asserted restriction will not foreclose DoD from requiring delivery of that technical data.