Grumman Corporation Computer Software Development Costs and Licensing Fees Paid by the Government

PSAD-79-69: Published: May 18, 1979. Publicly Released: May 18, 1979.

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According to Defense Acquisition Regulations, the government is to have unlimited rights in computer software required to be developed under or generated as a necessary part of performing a government contract. No license fees payment is to be made where the government has obtained unlimited rights.

The government paid $1,858,000 for the use of special-purpose computer software packages called Telescope 340, Telescope 350, and TeleDynamic, even though these packages had been developed primarily at Government expense. Additionally, these packages were acquired with restricted rights. This occurred because the Defense Acquisition Regulations did not provide adequate guidance on ownership rights in computer software developed under a government contract and because contracting officials did not enforce certain provisions of the acquisition regulations. In addition, the regulations provide no guidance about the government's rights in computer software developed for support of government work and indirectly charged to government contracts. The government also paid license fees and costs on software so developed and charged by Grumman Data and Grumman Aerospace.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should determine the extent to which the Navy and Air Force may have acquired unlimited rights to Telescope software developed under their contracts, and determine whether any equitable adjustments may be due in license fees or in restrictions on using Telescope software. The Secretary should coordinate with the Administrator of the National Aeronautics and Space Administration to seek and obtain any appropriate adjustments for the license fee and restrictions on using TeleDynamic software. The Secretary should alert the procuring activities of the possibility that similar situations may exist with other contractors who are doing substantial amounts of government work and who are supplying special-purpose software packages. Finally, the Secretary of Defense should consider the need to modify the Defense Acquisition Regulations to provide clear guidance as to the Departmental policy in obtaining rights in, and paying license fees for, software developed by contractors through overhead costs charged to government work.

    Agency Affected:


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