COVID-19 and Unsolicited Proposals: Protecting Your Confidential Information
The impact of the novel coronavirus (COVID-19) pandemic on the government contracting community is widespread. From shelter-in-place directives, to stop work orders, telework, and delays, contractors are necessarily navigating uncharted territory. The calculated decision to scale back operations or layoff/furlough employees is also an unfortunate scenario playing out in many management meetings.
Despite these complexities, however, some government contractors are looking to other contracting mechanisms not only to help the Federal government––and the taxpayer––in a time of dire need but also to bolster their bottom line to stave off unsettling management decisions. For example, simplified acquisition and unsolicited proposals are but a couple of areas where some contractors are seeking refuge.
Where utilizing the unsolicited proposal approach, contractors should pay close attention to how this mechanism is outlined in the Federal Acquisition Regulation ("FAR"), including the requirements for protecting from disclosure your intellectual property or confidential/proprietary data. As briefly discussed below, proper use of restrictive legends and markings is paramount.
Under the FAR, an unsolicited proposal is defined as a:
written proposal for a new or innovative idea that is submitted to an agency on the initiative of the offeror for the purpose of obtaining a contract with the Government, and that is not in response to a request for proposals, Broad Agency Announcement, Small Business Innovation Research topic, Small Business Technology Transfer Research topic, Program Research and Development Announcement, or any other Government-initiated solicitation or program.
FAR § 2.101.
With that in mind, FAR Subpart 15.6 sets forth the general procedures regarding unsolicited proposals. For example, a valid unsolicited proposal must:
Be innovative and unique;
Be independently originated and developed by the offeror;
Be prepared without Government supervision, endorsement, direction, or direct Government involvement;
Include sufficient detail to permit a determination that Government support could be worthwhile and the proposed work could benefit the agency’s research and development or other mission responsibilities;
Not be an advance proposal for a known agency requirement that can be acquired by competitive methods; and
Not address a previously published agency requirement.
FAR § 15.603. In addition, your unsolicited proposal should conform with FAR § 15.605 and include basic information––e.g., name, date, contact information, identification of proprietary data, and signature––technical information, such as title and abstract, objectives of the effort, names and bios of key personnel, and various other pieces of supporting information. See FAR § 15.605 (Content of unsolicited proposals).
Where your unsolicited proposal satisfies these requirements (there are more), the FAR also outlines the procedures for agencies to follow upon receiving an unsolicited proposal. These procedures can be generally characterized as a three-step process: (1) receipt and initial review; (2) evaluation of your unsolicited proposal; and (3) criteria for acceptance and negotiation. See FAR §§ 15.606-1, 15.606-2, and 15.607.
While this seems like a relatively straightforward process––particularly where you have already opened a dialogue with your contracting officer and other agency personnel prior to drafting your proposal––contractors must also be aware of, and pay close attention to data rights issues under FAR § 15.609 (Limited use of data). First, it's important to note that FAR § 15.608 outlines the prohibitions on the use of contractor data, including:
(a) Government personnel shall not use any data, concept, idea, or other part of an unsolicited proposal as the basis, or part of the basis, for a solicitation or in negotiations with any other firm unless the offeror is notified of and agrees to the intended use. However, this prohibition does not preclude using any data, concept, or idea in the proposal that also is available from another source without restriction.
(b) Government personnel shall not disclose restrictively marked information (see 3.104 and 15.609) included in an unsolicited proposal. The disclosure of such information concerning trade secrets, processes, operations, style of work, apparatus, and other matters, except as authorized by law, may result in criminal penalties under 18 U.S.C.1905.
FAR § 15.608. With that in mind, the FAR expressly cautions offerors that,
An unsolicited proposal may include data that the offeror does not want disclosed to the public for any purpose or used by the Government except for evaluation purposes. If the offeror wishes to restrict the data, the title page must be marked with the following legend:
Use and Disclosure of Data
This proposal includes data that shall not be disclosed outside the Government and shall not be duplicated, used, or disclosed-in whole or in part-for any purpose other than to evaluate this proposal. However, if a contract is awarded to this offeror as a result of-or in connection with-the submission of these data, the Government shall have the right to duplicate, use, or disclose the data to the extent provided in the resulting contract. This restriction does not limit the Government's right to use information contained in these data if they are obtained from another source without restriction. The data subject to this restriction are contained in Sheets [insert numbers or other identification of sheets].
FAR § 15.609. As the last sentence in the legend indicates, the data subject to the restriction should be specifically listed. This is consistent with FAR § 15.609(b), which provides that, "[t]he offeror shall also mark each sheet of data it wishes to restrict with the following legend: Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal." FAR § 15.609(b) (emphasis added). Notably, contractors should carefully read the entirety of FAR § 15.609 to understand this important issue.
Critically, contractors who fail to follow this format when submitting an unsolicited proposal could lose protections to their proprietary, confidential, trade secret, or other intellectual property. See Grayton v. United States, 92 Fed. Cl. 327, 335 (2010) ("precedent holds that a federal agency is under no obligation to keep unsolicited proposals confidential, when restrictive legends that could identify the proprietary information therein are inadequate or missing") (citing Xerxe Group, Inc. v. United States, 278 F.3d 1357, 1360 (Fed. Cir. 2002) (holding that the plaintiff's “failure to identify and clearly demarcate what it considered restricted data is fatal to its [trade secret] claim”)).
Given this exacting standard––that restrictive material markings/banner appear on the title page as well on each page of your proposal that contains protected material––contractors should carefully review any unsolicited proposals prior to submission. Otherwise, you may inadvertantly forefit any protections afforded to you under the FAR.
Takeaway
COVID-19 is profoundly impacting the manner in which government contractors do business. Despite these interesting times, the FAR provides a mechanism for contractors to take advantage of their unique skillsets though the submission of an unsolicited proposal to their Federal customers.
As shown above, the FAR not only outlines the requirements that contractors must satisfy for their unsolicited proposal to be valid but also outlines what the agency's evaluation process entails. Moreover, the FAR also provides clear directions with respect to how contractors can protect their confidential and proprietary information (e.g., trade secrets) through the use of restrictive legends and markings. Where those markings are inadequate or absent, however, the Government is under no obligation to keep your information confidential. Be safe and take heed!
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