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The mystery surrounding data rights stems from the fact that intellectual property (IP) and data rights are among the more complex issues in acquisition management.
This article presents an economic model analyzing the impact of research and development (R & D) costs, production costs, and quantity requirements on the price of a Technical Development Package (TDP). It compares payoffs in a game involving a duopoly of defense firms and the government to analyze potential cost savings to the government by purchasing a TDP. It concludes that the price of a TDP depends primarily on rival firms’ R&D as well as production costs. The government is most likely to achieve cost savings in the case where a rival firm has lower production costs, but would lose a competitive bid without a TDP. However, a TDP does not automatically lead to competition-based savings. The author then discusses the implications of relaxing key assumptions of the model.
In September 2010, then-Under Secretary of Defense for Acquisition, Technology and Logistics Ashton Carter directed program managers (PM) to routinely analyze the business cases behind procuring the technical data packages and rights to new weapon systems. In this article, the author recounts some of the historical difficulties with procuring technical data for fielded systems, and presents a heuristic economic model outlining the problems that PMs should consider before making an offer.