Intellectual property rights issues hamper contracting process

Industry and Bush administration officials on Friday told a House panel that federal procurement officers require more training on the intellectual property (IP) issues involved in government contracts if they want to attract more commercial firms for information technology work.

The increasing role of technology in homeland security means that government agencies will need to outsource more projects to private firms. But many major IT firms fear that they will lose their intellectual property rights while doing business with the government.

"The pervasive view in my experience," said Richard Carroll, CEO of Virginia-based Digital Systems Resources, "is one of 'We paid for it, we own it.'" In other words, he told members of the House Government Reform Subcommittee on Technology and Procurement Policy, "the government owns the intellectual property rights to any research and development funded with government dollars."

If that mindset makes commercial firms fear government work, experts said efforts like homeland security might suffer because agencies will not be able to procure the best technologies.

The law that sets the framework for the transfer of government-developed technologies to the commercial sector instructs agencies to gather only the minimum IP rights necessary for a given project. But some firms are reluctant to relinquish rights to work on projects that they could not benefit from it in the marketplace. Meanwhile, procurement officers are inclined to negotiate contracts that give agencies all the IP rights for research that they fund.

Jack Brock, managing director of acquisition and sourcing management at the General Accounting Office, said that a GAO study released Friday found that companies generally are reluctant to contract with the government because of IP concerns that stem in part from "poor definitions" of the government's needs. Firms also perceive government contracting officials as inflexible.

Ben Wu, the Commerce Department's deputy undersecretary for technology, and industry panelists said the biggest problem is that procurement officers are unaware of the flexibility they do have in negotiating IP licenses with contractors. Inadequate training and expertise on IP issues also leave them uncertain of how much authority they have to negotiated deals, panelists said.

Subcommittee members questioned whether current procurement law should be changed.

Tony Tether, director of the Defense Advanced Research Projects Agency, said that while the law has worked "reasonably well," it does result in IP licensing agreements that are "largely determined by regulations." He noted that the law also fails to address a large part of intellectual property: trade secrets.

Wu, however, said that "current policy is sufficient and allows for trade secret protection," and that modifications would be a "major policy shift." He said some of the problems with the law might be the result of poor implementation, which is tied to employee training.

Panelists supported a suggestion made by Subcommittee Chairman Tom Davis, R-Va., to designate training for procurement officers dealing in specialized IP areas.