A recent dispute between a government contractor and the Army in the Court of Federal Claims has raised the issue of whether procedures for validating restrictions on technical data apply to military contractors’ vendor lists. In Raytheon Co. v. United States, Raytheon had a contract with the Army to provide engineering support for the Patriot weapon system. The contract required Raytheon to supply the Army with vendor lists. The company, however, attached legends to those lists which purported to limit the Army’s ability to disclose the lists’ contents. The Army objected to these markings, and a contracting officer eventually ordered Raytheon to replace the offending legends with a standardized legend granting the Army “government purpose rights,” in their vendor lists.

Federal law grants military contractors the right to limit the government from disclosing their proprietary, technical data and provides a procedure for exercising that right. Per 10 U.S.C. § 2320(a)(2), a contractor may restrict the government’s disclosure of technical data pertaining to the item or process underlying the contract provided that the item or process was developed at least partly with private funds. This right is subject to the procedural safeguards of 10 U.S.C. § 2321, which includes an obligation for the government to state specific grounds for challenging the restriction and grant the contractor 60 days to respond to the challenge.

The current dispute centers on whether Raytheon’s vendor list is technical data, and thus entitled to the procedural protections of 10 U.S.C. § 2321. The court did not answer this question decisively in this case, as it merely denied a Rule 12(b)(6) motion to dismiss. However, the case’s resolution is sure to significantly affect government contractors with commercially valuable vendor lists.

If you have questions about disclosing vendor lists or other topics related to conducting business as a government contractor, please contact Todd Overman.