## Facts

- General Atronics Corporation (Atronics) contracted with the United States Navy (Navy) to design, develop, manufacture, and deliver AN/USQ-XXX data terminals and associated software.
- In its technical proposal, Atronics identified certain additional features beyond the Navy’s specifications, including a “wireline interface,” and provided a price matrix listing various items as separately priced options, including software packages tied to the wireline interface.
- The proposal also referenced Atronics’s proprietary rights in its intellectual property.
- A memorandum of negotiations describing the options accepted by the Navy did not list the wireline interface as an option the Navy purchased.
- The contract incorporated DFARS clauses addressing rights in technical data and computer software, including provisions that granted the Government unlimited rights unless the contractor (1) marked software with the required restricted-rights legend and (2) before delivery, included any restrictions in a license agreement made part of the contract.
- Atronics delivered the wireline-related software and related software applications, but did not mark the software with the DFARS-prescribed restricted-rights legend and did not include a license agreement with restrictions as a contract term.
- Some delivered items included “confidential” or “proprietary” statements, but the markings did not meet the DFARS legend requirements.
- In an earlier dispute involving the same contract, the ASBCA determined the wireline interface had been offered as an option; the parties then modified the contract so the Navy paid Atronics additional compensation to settle that interface-cost claim.
- After the modification, Atronics submitted a CDA claim seeking an equitable adjustment of $327,000 as license fees for the wireline-related software applications.
- The contracting officer did not issue a final decision; the claim was deemed denied and Atronics appealed to the ASBCA, which the parties submitted on the written record.

## Issues

1. Whether the Navy obtained unlimited rights in the wireline-related software under the contract’s DFARS data-rights clauses because Atronics did not use the required restricted-rights legend and did not make any license restrictions part of the contract before delivery.
2. Whether Atronics was entitled to an equitable adjustment for post-delivery software license fees where the contract (as modified) did not require the Navy to pay such fees for its use of the delivered software.

## Decision

- The ASBCA denied Atronics’s appeal and rejected the $327,000 license-fee claim.
- The Board held that, under the DFARS clauses incorporated into the contract, the Navy received unlimited rights in the software because Atronics neither applied the DFARS restricted-rights legend nor established any enforceable license restrictions as contract terms prior to delivery.
- The Board found that generalized “confidential” or “proprietary” statements were not a substitute for the DFARS-prescribed legend and procedures.
- Because the Navy already had the rights provided by the contract’s data-rights regime, the Board found no contractual basis to require additional license-fee payments through an equitable adjustment.

## Legal Principles

- When a DoD contract includes DFARS data-rights clauses, a contractor that seeks to limit Government rights in delivered computer software must use the DFARS-prescribed restrictive legend and follow the clause procedures.
- General confidentiality or proprietary notices that do not match the DFARS legend requirements do not restrict the Government’s rights under the DFARS scheme.
- Restrictions on Government use (and any related payment obligations such as license fees) must be established through contract terms, including a license agreement made part of the contract where the DFARS clause requires it.
- A contractor cannot obtain an equitable adjustment for license fees absent a contractual basis requiring such fees, especially where the Government’s rights are already defined as unlimited by the contract’s data-rights clauses due to the contractor’s failure to properly mark and contractually condition delivery.

## Conclusion

In *In re General Atronics Corp.*, the ASBCA denied Atronics’s $327,000 claim for software license fees because Atronics delivered the wireline-related software without the DFARS-required restricted-rights legend and without any contract-made license restrictions, so the Navy obtained unlimited rights and owed no additional license payments beyond the amounts already paid under the contract and its modification.


In re General Atronics Corp., 2002 WL 450441, ASBCA No. 49196 (2002)