Reducing government access to IP causes vendor lock and increases monopolization in defense industry

Gaining Leverage over Vendor Lock to Improve Acquisition Performance and Cost Efficiencies; The MITRE Corporation; https://www.mitre.org/sites/default/files/publications/gaining-leverage-over-vendor-lock-14-1262.pdf

The term “vendor lock” describes the situation in which customers depend on a single manufacturer or supplier for some product (i.e., a good or service), and cannot shift to another vendor without incurring substantial costs or inconvenience. This can grant the vendor what amounts to monopoly power and thus creates the opportunity for the vendor to earn far greater profits than it could in the absence of such dependence.1 Vendor lock frees vendors to establish noncompetitive prices, since they have become in effect the “sole source” of a given product or service. Admittedly, some of the downside of vendor lock may be offset by savings resulting from 1) shorter learning curves, 2) development costs absorbed by the vendor because of the advantage of controlling a large business base, and 3) investment costs for commercial technologies and derivative product lines that can benefit military products. However, those savings can be minor compared to the typical cost growth associated with single-source acquisition programs. A recent GAO report revealed that the average acquisition for a major Defense weapons system experienced a 38% cost growth from original estimates and a 27-month schedule overrun2. Vendor lock often rests on proprietary data and supposed intellectual property (IP) rights; it may also result from standards controlled by the vendor. Recently the Government made significant changes to U.S. Federal Statute relative to IP rights: the Government may now challenge restrictions placed on the IP by the vendor.3 Previously, vendors simply declared ownership, forcing the government to disprove the allegations. This change in the law may be vital to breaking or mitigating vendor lock in the future.4 Recently, the Air Force released their Sixth Edition of the Technical Data and Computer Software Rights Handbook for Acquisition Professionals, March 2014, where they emphasized the value of owning technical data rights: “Specifically, if program office personnel do not acquire sufficient rights in technical data and computer software prior to award, they may relinquish the opportunity to enhance competition and preserve core logistics capabilities as required by 10 U.S.C. §§ 2464 and 2466. If the Government relinquishes that opportunity prior to award, the a Program Office will lock itself into a position where the incumbent can force it to pay an exorbitant price years or decades hence to be able to use, release or disclose that technical data or computer software to individuals outside the Government. Of course, that assumes the incumbent is willing to sell the Program Office a license to use, release or disclose that technical data or computer software to individuals other than Government employees at any price.5” Avoiding vendor lock or minimizing its effects is consistent with ensuring affordability in military systems, as directed by the Under Secretary of Defense for Acquisition, Technology and Logistics (USD AT&L) Memorandum of September 14, 2010, “Better Buying Power” (BBP). There are several considerations which can drive affordability and mitigate or control the impact of vendor lock. These considerations, with specific emphasis on owning IP and continually introducing competition into the process, are address in this paper.