Court Protects Closely Guarded Vendor Lists.

• Author: Rikkers, David
• Position: VIEWPOINT

Successful companies are investing in efforts to create and maintain effective supply bases that best meet their needs, as well as replace suppliers that do not, creating benefits and reducing costs.

A good supply chain provides a competitive advantage, and many companies closely guard their lists of preferred suppliers.

A June 30 court decision provides a significant victory for these companies, enabling industry to have preferred supplier lists treated as protected business data, just like proprietary cost and pricing information.

The case is Raytheon Company v. U.S., published by the Court of Federal Claims on June 30. (No. 19-883C; 2022 U.S. Claims LEXIS 138s; 2022 WL 2353085)

The Army was attempting to declare vendor lists to be "technical data," seeking a very broad license to share the information with any other contractor. The court rejected this, finding in favor of Raytheon Technologies Corp. that the lists are not technical data.

The way the court decided the case suggests three steps for contractors seeking to protect their competitive advantage while delivering data to the government.

First, the company should review the data it plans to provide to the government or other contractors. Evaluate whether there would be a negative competitive impact if others have unrestricted use of that data. For example, giving competitors cost or price information or a list of preferred suppliers that would allow them to place competitive bids would undermine a business position.

Second, for the data identified in step one, determine what rules apply to the recipients' use. If this has been done in the past, it is important to use the updated perspective the court case provides.

Specifically, technical data is not an all-encompassing category to all non-financial data. That a vendor list is not technical data is significant to industry because of the extensive rights the government can receive in technical data delivered under contract.

Importantly, technical data is defined the same way across most government contracts--and most other transaction authority agreements. It is defined both in the laws passed by Congress as well as the Defense Federal Acquisition Regulation Supplement regulations. The case is likely to have broad applicability, as the Federal Acquisition Regulation has a similar definition. Since the regulations are designed as contract clauses, often incorporated in government contracts, they provide uniformity to both the...