what FAR can be cited if a Prime selling commercial software does not pay for licenses it is delivering?

[inaz]

I have a small business and our licensed software is a package a Prime is selling to the government. In litigation, a judge deemed the Prime must pay me upfront for licences going forward. They are not current.  Some of the licenses they are selling to *.mil customers.    

I see:  32.112 Nonpayment of subcontractors under contracts other than for commercial products and commercial services  and i looked around FAR Part 12 where the Prime can be misrepresenting their right to sell the commercial product. Also this may apply:  52.242-5.    I am not listed as a subcontractor, the Prime represents they own the software to the government. 

Is there a FAR which may more specially mandate the Prime to have full rights to sell the license (as in paying your subcontractors) ?  

 

Edited August 19 by inaz
located more info

[C Culham]

21 hours ago, inaz said:

I have a small business and our licensed software is a package a Prime is selling to the government. In litigation, a judge deemed the Prime must pay me upfront for licences going forward. They are not current.  Some of the licenses they are selling to *.mil customers.    

I see:  32.112 Nonpayment of subcontractors under contracts other than for commercial products and commercial services  and i looked around FAR Part 12 where the Prime can be misrepresenting their right to sell the commercial product. Also this may apply:  52.242-5.    I am not listed as a subcontractor, the Prime represents they own the software to the government. 

Is there a FAR which may more specially mandate the Prime to have full rights to sell the license (as in paying your subcontractors) ?  

 

My initial reaction is you should pursue further legal action. 

As is per usual I do want to offer a few other thoughts.

First I suspect folks are reluctant to respond based on my initial thought, you have complicated matter.  However as it goes in Forum many times those that respond to an original post get frustrated when the poster basically disappears.   I have a similar view that a original post should not languish and go unanswered as well so here I am.

I am not sure there is a specific FAR clause in a contract that will help you.  Others may find something to assist.  I say this as you are attempting to find "an in" as a subcontractor yet indicate that you are not listed as a subcontractor.   As such it would seem that your only course is direct to the company you note as being prime on some military contracts. 

Another option would be to appeal your facts directly to the contracting officer (CO) of the contracts in question.  There may not be a specific FAR clause that the CO can apply but if in fact the prime contractor is representing the software as theirs then there are matters of good faith and fair dealing, operating in a business like manner (honesty) and even the possibility, based on the limited facts in your post,  of using stolen property in the performance of the work.   Each may or may not have a FAR clause to hang a hat on but do reach to the ideal of a responsible contractor.  Reference FAR part 9.  Alerting a CO to the facts would put them in a position to review and decide what may or may not apply and the actions then might take.

All said just my thoughts and again it would seem that seeking further legal counsel is the number one best approach.

 

[Neil Roberts]

22 hours ago, inaz said:

I have a small business and our licensed software is a package a Prime is selling to the government. In litigation, a judge deemed the Prime must pay me upfront for licences going forward. They are not current.

Apparently your company sued another company, won a judgement for money damages but the other company has not paid off the debt to you. From your post information, I don't see what the federal government has to do with your situation, so looking for a FAR solution does not make sense to me. You should contact your attorney to find out how to enforce the judgement you obtained.  

[inaz]

Actually i was sued as prime was trying to get out of obligations unsuccessfully. I am working on an updated payment demand (with my attorney) and wanted to hammer on the seriousness of being delinquent for one customer base. The prime is only 10% in federal clients.  They are in arrears and continue to sell under new guidelines. Far 9 was a good tip that led me to 42.1501.  

[General.Zhukov]

 

As I understand the question, three facts:

1. a contractor has sold your third-party software to the government, and your software is currently being used by a government customer.
2. the prime has not paid you for the software that you owned, they sold, and is now being used by government.
3. the licenses have expired, so the government users are in violation of something (probably the EULA) and probably not allowed to use it.

• Can I use these facts as leverage to get the contractor to pay me?

 

Probably yes, however, I'm not a lawyer, certainly not your lawyer, nor will I be paying your legal fees.

If I want to immediately cause a crisis, I would identify the government end-users and the cognizant contracting authorities and then notify them that use of your software must immediately stop.  That will motivate them to discuss the issue with your prime.  Or, if technically possible and even more crisis-inducing, just active the kill switch remotely without warning.   

A more reasonable suggestion: It is very likely that the contractor is in violation of some part of their contract with the government.  You will probably need their specific contract to find out exactly what the contract states, and hence what part of the contract they are breaking.   You can (probably) get that contract - speak to a lawyer about it. In the meantime, it's very easy to find other publicly available federal contracts that may be pretty similar - that cover third party software.   This may help you get a general, generic, sense of what the terms and conditions are.  These contracts have terms and conditions, clauses, and often a separate software licensing agreement- where the issue of third-party software is discussed.  In there somewhere, you will find something to the effect of "You can't sell us third party software with expired licenses, and if you do, here are the bad things that will happen to you."  

ESI.MIL is probably the best source.  But GSA, NASA SEWP, NITAAC and many, many, other federal civilian and DoD entities have these types of contracts available online.

 

Add On:  The FAR is not good about software.  The FAR clauses that may apply to your situation are very broad, lacking important details, and I doubt you will find them helpful.  However, there are layers of regulations and some of the second and third layer regulations ARE pretty good about software, particularly within DoD.  If you know they government customer and can identify the applicable sub-FAR, you might be able to find some regulations/clauses that would be useful.  

 

For example, three levels of regs:

1. FAR (Everyone)

2. DFAR (DoD)

3. AFAR (Army)

 

 

 

[Neil Roberts]

On 8/21/2023 at 12:11 PM, General.Zhukov said:

If I want to immediately cause a crisis, I would identify the government end-users and the cognizant contracting authorities and then notify them that use of your software must immediately stop. 

@inaz, I would be real cautious and concerned about the above backfiring on you with a claim against you for intentional interference with contractual relations, a common law no.no. See https://en.wikipedia.org/wiki/Tortious_interference.

Your attorney's advice would be your best bet.

[inaz]

Thanks - sound advice.  I have learned a lot i prefer not to these past few months.