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Can the Government Buy Commercial Software with Source Code?

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Can the Government (specifically, a Civilian Agency) buy Commercial Software (which was developed at private expense) along with the Source Code?   I know that DOD has DFARS 227.7203-1 which says offerors shall not be required to "relinquish" software developed at private expense (and note, the DFARS puts this provision under a section for "noncommercial" software, so it is aimed at noncommercial software that was still developed at private expense, and then there is a different section, DFARS 227.7202-3, that addresses "commercial" software and that section only talks about licensing, not purchase outright, the software).  I can find no such provision like FARS 27.7203-1 (cannot require the offeror to "relinquish" software developed at private expense) that applies to civilian agencies.  It seems like it is discouraged by FAR 12.212, FAR 27.405-3, and FAR 52.227-19, but it is not forbidden/prohibited.  So a Civilian Agency is allowed to issue a Solicitation that requires the contractor to deliver their Commercial Software with Source Code (all of which was developed at private expense and all of which is "commercial" in that they have been selling it to the public for years), right?

Edited by govt2310

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C Culham:

Yes, I know of that cio.gov link to the OMB Memo where OMB says that agencies that purchase "custom software" developed at Government Expense must make the software "OSS" so that it is available to other agencies across the Government.  But what about software that is already in existence, was developed at private expense, and the Government just wants to outright purchase that software (not get a license, but just buy the entire software with source code)?

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4 hours ago, govt2310 said:

So a Civilian Agency is allowed to issue a Solicitation that requires the contractor to deliver their Commercial Software with Source Code

Do you think you will get many takers on this?  Companies spend a lot of money developing software.

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Have you done a dollarized buy vs license and risk analysis that would justify it?

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Yes you can do it.  That is if you find willing company to gives up the code.  But it goes against good practices and marketplace philosophy.  That and it looks like government bullying, which is why DoD doesn’t do it.  

Know what happens often when government has source code?  It modifies it.  Then the commercial software goes through several releases and the version the government has no longer works.  Then a contractor comes in and fixes everything at a huge cost and it still isn’t as good as the developers current software.

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14 hours ago, Neil Roberts said:

Have you done a dollarized buy vs license and risk analysis that would justify it?

My question is limited to "can or can't" the Govt do this.

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3 hours ago, govt2310 said:

My question is limited to "can or can't" the Govt do this.

Ok, understood. Can you share with us what commercial item computer software related clauses are required ( by FAR and/or or your Civilian Agency rules and regulations) to be incorporated into the contract to be issued by the civilian agency? You mention 52.227-19 and indicate that it does not forbid the government to require delivery of the software code. In my view since the language of the clause does not require the contractor to sell its software code to the government, an approved variation to the clause would be needed for the contract to require delivery of source code. So, for the time being, my answer to your question is "NO." 

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20 hours ago, Neil Roberts said:

You mention 52.227-19 and indicate that it does not forbid the government to require delivery of the software code. In my view since the language of the clause does not require the contractor to sell its software code to the government, an approved variation to the clause would be needed for the contract to require delivery of source code. So, for the time being, my answer to your question is "NO." 

Neil Roberts, this doesn’t make sense.  Delivering software code is apart from purchase or lease of the software.  Saying that because the clause doesn’t say the contractor has to sell code, an approved variation of the clause is needed?  The clause merely addresses rights of the government in using the clause.  So the government can comply with the clause and obtain source code if the contractor agrees.

govt2310, I can tell you right now agencies are buying source code of commercial products.  They, and their contractors, are using modified versions of commercial products, as part of large integrated systems.   But these are exceptions to standard practices I mentioned earlier.  

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On 8/2/2019 at 10:36 AM, govt2310 said:

So a Civilian Agency is allowed to issue a Solicitation that requires the contractor to deliver their Commercial Software with Source Code (all of which was developed at private expense and all of which is "commercial" in that they have been selling it to the public for years), right?

To clarify, govt2310, you wish to transfer ownership of the source code from the contractor to the civilian agency? Is this a continuation of your previous 2012 post same apparent topic? See,

 

Edited by Neil Roberts
left off sentence

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I don’t see the issue as transferring ownership of software by providing the source code.  Details of how software works can by a mystery without seeing the code.  Giving the source code to the government allows for modifications and enhancements.

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14 hours ago, Neil Roberts said:

To clarify, govt2310, you wish to transfer ownership of the source code from the contractor to the civilian agency? Is this a continuation of your previous 2012 post same apparent topic? See,

To Neil Roberts:

Yes, this 2019 wifcon thread/question is a continuation of my original wifcon thread/question from 2012.  Here, the specific hypothetical is now this: what if the agency (a civilian agency) has a current contractor that is using software developed at private expense to service an agency need/requirement.  The agency has had to award several sole source contracts to this contractor, because no one else has this specific software.  To end this situation, the agency wishes to "buy" the software with "source code" from the contractor.  

 

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From a contractor view, I sympathize with the situation because prime contractors deal with that concern with subcontractors. However, transferring ownership of the code to the government puts the software company out of business with respect to that software item. They can no longer service another customer's needs/requirements unless you license them for continued use and their advances of the code. Typically, you would not be entitled to their software code updated advances they develop (sometimes called "maintenance") unless you paid for it through a license. So, I believe you are back to square one. If the civilian agency has the software coders to "maintain" the code to fit the agencies future needs and changes that would be different. I recommend the agency seek advice from its intellectual property attorney.

You could issue an RFI and RFP to seek solutions. Perhaps their is now open software that can substitute.

What has been your experience since 2012 with this concept of transferring code ownership?   

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Neil Roberts: 

Thanks!  My experience since 2012 is that there are agencies out there that are still grappling with this issue.  There are still agencies using legacy systems/software.

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thanks for the update, govt2310.

 

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gov2310,

Your questions aren’t very clear and the issue keeps evolving.  By “buy” the software, do you mean purchase a license to use the software indefinitely along with a copy of source code, or do you mean taking ownership from the contractor by being the only possessor of the source code?

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15 hours ago, formerfed said:

gov2310,

Your questions aren’t very clear and the issue keeps evolving.  By “buy” the software, do you mean purchase a license to use the software indefinitely along with a copy of source code, or do you mean taking ownership from the contractor by being the only possessor of the source code?

formerfed,

 

Sorry for not being clear.  I didn't know there was a way to buy a "license" that comes with the "source code."  That's usually not "customary" in the marketplace for commercial software.  So I think I mean the agency wants to "buy" the software with source code (take ownership from the contractor).

 

 

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7 hours ago, govt2310 said:

formerfed,

 

Sorry for not being clear.  I didn't know there was a way to buy a "license" that comes with the "source code."  That's usually not "customary" in the marketplace for commercial software.  So I think I mean the agency wants to "buy" the software with source code (take ownership from the contractor).

 

 

You can purchase the software outright with source code as part of the deal.  But the thread mentions commercial software and I assume from prior posts, the contractor has other customers.  That means the contractor will be reluctant to give up complete ownership.  Normally in similar situations, you buy a perpetual license, which is a one time charge like purchase and you have the software.  The source code often goes along with the license for customers that want to maintain and do enhancements on their own. That way, you are free to do what you want, except for things like giving it away to other customers, and the contractor continues to support other customers.

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On 8/7/2019 at 2:07 PM, formerfed said:

You can purchase the software outright with source code as part of the deal.  But the thread mentions commercial software and I assume from prior posts, the contractor has other customers.  That means the contractor will be reluctant to give up complete ownership.  Normally in similar situations, you buy a perpetual license, which is a one time charge like purchase and you have the software.  The source code often goes along with the license for customers that want to maintain and do enhancements on their own. That way, you are free to do what you want, except for things like giving it away to other customers, and the contractor continues to support other customers.

Ah, you wrote, "except for things like giving it away to other customers . . . ."  What if the agency wants to be able to "share" the source code with other contractors, in fact, make it OSS and available to the public?

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8 hours ago, govt2310 said:

Ah, you wrote, "except for things like giving it away to other customers . . . ."  What if the agency wants to be able to "share" the source code with other contractors, in fact, make it OSS and available to the public?

Then you would have to be the owner and buy outright.

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Federal Source Code Policy does not seem to favor the government transferring ownership of proprietary commercial software code from the private sector to the government. See https://obamawhitehouse.archives.gov/sites/default/files/omb/memoranda/2016/m_16_21.pdf

The first sentence of the second paragraph reads as follows:

When Federal agencies are unable to identify an existing Federal or commercial software solution that satisfies their specific needs, they may choose to develop a custom software solution on their own or pay for its development.

 

Edited by Neil Roberts
revise ist sentence structure

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4 hours ago, Neil Roberts said:

Federal Source Code Policy does not seem to favor the government transferring ownership of proprietary commercial software code from the private sector to the government. See https://obamawhitehouse.archives.gov/sites/default/files/omb/memoranda/2016/m_16_21.pdf

The first sentence of the second paragraph reads as follows:

When Federal agencies are unable to identify an existing Federal or commercial software solution that satisfies their specific needs, they may choose to develop a custom software solution on their own or pay for its development.

 

To Neil Roberts: 

That's a good point.  But it looks like that is "policy," that it is saying agencies "may choose" to develop custom software etc.  It does not say there is an outright prohibition from purchasing commercial software that was developed at private expense.  Note, DOD put into DFARS a clause that does indeed prohibit the purchasing of commercial software that was developed at private expense (it specifically forbids DOD contracts from requiring delivery of the source code).  But civilian agencies don't have such a clause, so far as I know.

 

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