Risk Avoidance: The Importance of Marking Proprietary Information

On Tuesday, the Court of Federal Claims sent another reminder of the importance of always marking proprietary information throughout the duration of contract performance and not just during the proposal phase.

In Dyncorp International, LLC v. United States, DynCorp protested the Air Force’s release of its proprietary indirect cost and profit data as part of a new solicitation for Dyncorp’s incumbent contract.  DynCorp had been the incumbent contractor on the Air Force’s War Reserve Materiel contract to manage and maintain stockpiles of war reserve materiel and other government equipment.  As part of the contract requirements, DynCorp was responsible for submitting  a life cycle management plan.  When DynCorp submitted its life cycle reports to the Air Force, it included DynCorp’s indirect rate and award fee data, but DynCorp did not mark the life cycle report as proprietary and not to be released.  When preparing the solicitation for the follow-on contract, the Air Force asked DynCorp for a current life cycle report and stated that it intended to use the new submission as part of the solicitation for the new contract.  As per prior practice, DynCorp sent a life cycle report with its indirect rates and award fee data and did not indicate that it objected to the life cycle report being released.

The Air Force argued that DynCorp had waived any protections for its proprietary information because DynCorp itself did not treat the information as confidential.  The Court agreed,finding that DynCorp consistently failed to identify the life cycle management reports as proprietary over several years despite the contract’s specific indications that the contractor could do so, raised no objections when the Air Force indicated it would release this information, and failed to object to the inclusion of this information on FedBizOpps for more than five months.  This, to the Court, indicated that DynCorp knowingly waived protection for this proprietary information.

Fortunately, the problems presented in DynCorp are easily solved.  First, know what is considered proprietary information and make sure all members of the team that have access to the information know that special protections are required.  Second, always, always, always, mark that information as proprietary.  This allows your team to be aware that the information they are handling is treated in a unique way, and it provides the Government with a red flag prior to release.  This not only protects against situations such as these, but it also provides valuable FOIA protections.

Image Courtesy of Flickr (licensed) by mynetx