ment I should raise for committee consideration in this regard is that there is a relatively new law on the books, Public Law 95-224, which seeks for the first time to draw a line between when you should be using grant mechanisms as opposed to contract mechanisms.

I would think that the committee, in light of that law, might avoid using the terms "contract" and "grant" interchangeably. For example, the law says you shouldn't be using grants in the future unless the purpose of the transaction is to help the recipients. That is a different method, and different kinds of informational issues arise in that context if the law is being appropriately implemented. That should be taken into account as the committee looks at this situation.

Mr. WEISS. Who owns the data developed under a Federal contract? Is there a different answer for different types of data and different types of contracts? Would you cover that area for us?

Mr. FETTIG. It is generally correct that the circumstances will dictate the ownership or disposition rights. Taken from a most general viewpoint, data generated in the course of executing a Federal contract is essentially owned by the contractor. That is the basic situation.

As I mentioned, however, depending on the contractor, a wide variety of explicit requirements may be levied on him both to deliver data and make sure that data in his possession is made available for a variety of purposes. For example, in the case of the Defense Department, there is a great deal of renewed interest in being sure that complete data packages are made available when major weapons or subsystems are produced, so that the Government, at its option at a future date, can buy essentially the entire product right down through the processes that are being used for purposes of later recompetition. As the case varies, different data will be stipulated.

Mr. WEISS. What is a contractor's obligation with regard to data that is not delivered under a contract? Can the contractor use it, sell it, discard it? Do contracts usually specify disposition schedules? Are there different practices for research contracts than for weapons development contracts?

Mr. FETTIG. There are a wide variety of different stipulations. It is really difficult to generalize. Barring any explicit stipulations, it is generally up to the contractor to dispose of the information. Mr. WEISS. Or sell it or do anything that he wants with it? It is totally his product at that point?

Mr. FETTIG. That is correct, unless otherwise stipulated. I might point out that oftentimes it is certainly not an undesirable situation. For example, we are heavily involved in seeking to bolster and make more effective the Federal Government's contract setasides for minority and small business. In many cases we want to use the Federal contracts to stimulate an expertise and knowledge and a viability on the part of these firms.

If a Federal contractor in the course of executing that pumppriming contract acquires data, learns to do work well, develops processes and materials, we would want him to retain that data, that expertise, so he can market it in the commercial marketplace so he can generate some expertise which is, in effect, transferable.

In many cases, that expertise will relate to materials and processes and surveys he might have done, so I want to raise the opposite side of the issue as well. In many cases, we explicitly seek to generate indigenous talent and expertise in the firm.

Mr. WEISS. It is sort of ironic, because there have been two items that have come to light in recent months. One I think deals with the University of Wisconsin. Some research they had undertaken, I think pursuant to contract, and the Federal Government has taken the position that they cannot release the product of their research. The second was an incident recently where some individual, I think, had filed a patent application, and the Government has decided that the person who developed the idea cannot use it in any fashion whatsoever. So there seems to be sort of an inherent contradiction here.

Mr. FETTIG. I am not familiar with the specifics of the two cases, but you are absolutely correct. The business community and most notably in recent months small businesses have pointed to some of these restrictive Government information policies as among the biggest impediments that keep them from coming to the Federal marketplace. They risk having to give up patent rights and proprietary data.

So it is a real fear in the mind of particularly small business who may put their whole focus on a particular product or process, and they certainly don't want to run the risk of having it disseminated any more broadly. It is a difficult issue to raise, but one which should be raised.

Mr. WEISS. Will contract information controls necessarily increase contract costs unreasonably? Is it possible that stricter controls over information may result in reduced costs by permitting contractors to discard data that is not needed?

Mr. FETTIG. I couldn't agree with you more. To answer the question positively, it is exactly on that premise that we have started to promulgate this new OMB circular. There is data we collect as a matter of routine, which is worthless and expensive. It is mountains of computer printout and raw data which you need to buy expertise to interpret in the first place, which is just constantly put into contracts as a matter of course, and we pay dearly for it in many cases.

On the other hand, as in the case I mentioned earlier, contract data that can be used to recompete for certain products can also be expensive but, down the road, can also show its worth many times over as well.

I think the general observation is correct. We are being rather indiscriminate on what data we do and don't require.

Mr. WEISS. Are the uncertainties about data ownership, in your opinion, serious enough to warrant congressional action, or can they be handled by agencies in the normal course of procurement activities? Will agencies need guidance from your office or us? Mr. FETTIG. I think the current situation is not one where I would say it requires any type of urgent or immediate intervention, either statutorily or by my office. The circular I referenced, for example, has been in process, and is proceeding in an orderly fashion. I don't think any particular incidents of grievous proportions have driven us to take any more urgent action. By the same

token, it is an area where there is potential for concern. I think it is mitigated against by the fact that the Government virtually can behave as a sovereign in its contracts.

As I said, going into any, contract negotiations the Government can, at its wherewithal, attempt to insert any type of restrictive data clause and does so in many areas that I mentioned, for purposes of national security, and so forth.

I think as individual problems come to light in a local setting, a particular NASA field center, or particular defense command, protection can be easily constructed and easily imposed. That doesn't say we have retroactive protection. For example, in a contract which omitted an essential protection and later gave rise to abuse, there would be no way to close the barn door. But in general we have good flexibility in the system.

I guess on balance, then, my reaction to that question would be some attention on the part of interested congressional bodies and my office is probably in order.

Mr. WEISS. What role should the National Archives and Record Service have in developing a policy on contractor disposition of records?

Mr. FETTIG. I certainly think they would be one of the key parties to be consulted with respect to the impact of any substantial modifications in policy. They would certainly be among the first to tell us if we are inadvertently proposing any undue burdens of a collection or retention nature. So they would be among the key parties to be consulted, I am sure.

Mr. WEISS. If you are familiar with the recommendations of the Privacy Commission and the Paperwork Commission relating to the use and disposition of records by contractors, would you have any comments on their recommendations?

Mr. FETTIG. We have a few comments. I think probably it would be appropriate to let Mr. Williamson comment on those areas. Mr. WEISS. Mr. Williamson?

Mr. WILLIAMSON. The paperwork recommendation, as I recall, was that the National Archives and Record Service promulgate some sort of general policy with regard to retention and disposition of contractor records. That particular_recommendation is being handled by the Regulatory, Policy and Records Management Division of OMB. It is not being followed through by our office.

The recommendation strikes me as having merit. I was unable to find out exactly what that division has done with the recommendation and where it stands, but will be glad to find out and supplement the record.

Mr. WEISS. I would appreciate that.

[The information follows:]

The Regulatory Policy and Reports Management Division of OMB has responsibility for the recommendation. Nothing has been done to date but that group is now following up the recommendation. The subcommittee staff has been given the names of the persons in OMB responsible for the recommendation.

Mr. WILLIAMSON. Certainly. The Privacy Commission recommendation, as I read and understand it, basically says that the Privacy Act principles should be applied to contracts where systems of individualized records are being kept or developed.

Now, I think the Privacy Act statements and clauses that are currently in the procurement regulations pretty much take care of that. I think we need to know more about how well the agencies are following the instructions to insert these clauses in the proper contracts. But I think the clauses, themselves, assuming they are being used properly, should take care of that recommendation. Mr. WEISS. Thank you.

Would you, Mr. Fettig, describe your work on a Federal policy for copyrights-or Mr. Williamson?

Mr. WILLIAMSON. There is a committee called, the Committee on Intellectual Property, or something like that. It is headed up by Jordan Baruch, the Assistant Secretary of Commerce. That committee is dealing right now with a number of issues regarding patents and copyrights. Now, we have a draft statement of copyright policy, which I think is pretty good. It was developed by a subcommittee of Dr. Baruch's committee. Basically, it says that, where copyrighted material is produced under a Government contract, if the material is either required by statute to be produced or is for Government use, the contractor should not be allowed to copyright it. In other words, it would be in the public domain. Other material not required by statute and not for the use of the Government would be copyrightable by the contractor subject perhaps to appropriate rights or restrictions to allow Government use of it, if necessary.

I would be glad to insert in the record a copy of that copyright statement. Right now, we hope it may be approved at the next meeting of the Committee on Intellectual Property. We may then be in a position to promulgate it.

Mr. WEISS. We would appreciate that. Have you developed a draft policy on rights-in-data?

Mr. FETTIG. Yes, this is the one I referred to earlier, which has already been included in the record.

Mr. WEISS. Fine.

Mr. FETTIG. I might point out on the earlier question, Dr. Baruch's committee, which is a Subcommittee of the Federal Coordinating Council for Science, Engineering and Technology, is raising this issue in a much larger context and probably means that any final actions will be delayed. That broader context is what is happening to American industrial innovation. That is being led up by Dr. Press, the President's science adviser, and the whole issue of how we handle copyrights, patents and rights-in-data will be considered in that context.

Mr. WEISS. Does your office have any responsibility toward advising agencies on the implementation of the Privacy Act contractor provision? Have you done anything informally?

Mr. FETTIG. The central responsibility for the Privacy Act resides in the OMB General Counsel's office. Without a doubt, if for no other reason than the statutory requirement placed on my office. Yes, we have a basic responsibility to be the focal point as issues arise. To my knowledge, we have not intervened either formally or informally on Privacy Act matters. Is that right? Mr. WILLIAMSON. That is correct.

Mr. WEISS. Have you received any complaints from agencies or from contractors about difficulties with the Privacy Act requirements, and, if so, would you elaborate?

Mr. FETTIG. No, again not to my knowledge, neither formally nor informally.

Mr. WILLIAMSON. I have heard of none. But I might point out again that it is the OMB General Counsel's office, which is the central repository of the complaints that come in, and it is very conceivable that they know of things that we don't.

Mr. WEISS. Thank you. Does counsel have any further questions? Mr. GELLMAN. No.

Mr. WEISS. Minority counsel?

Ms. SANDS. No.

Mr. WEISS. Gentlemen, thank you very much. We appreciate your testimony.

[Mr. Fettig's prepared statement follows:]

PREPARED STATEMENT OF LESTER A. FETTIG, ADMINISTRATOR_FOR_FEDERAL PROCUREMENT POLICY, OFFICE of Management and Budget

Mr. Chairman and Members of the Subcommittee-

It is a pleasure for me to appear before this subcommittee to discuss the question of Federal agency policies regarding the ownership and disposition of contractor data which is not delivered to the Government as part of the contractor's

final product.

OFFICE OF FEDERAL PROCUREMENT POLICY

Let me at the outset note that the Office of Federal Procurement Policy (OFPP) is a part of the Office of Management and Budget. The Office carries directive authority for Federal contracting policies, procedures, regulations and forms under Public Law 93-400, which created the Office in 1974. As such, we are often looked to as a spokesman for Government-wide contracting issues, such as Government contractor data policy, which transcend the programs or problems of