Who owns what when support contracts end?

Eventually, Japanese companies succeeded in producing so-called plug-compatible
mainframes--clones--to compete with IBM machines.

In the federal market, the Competition In Contracting Act required federal agencies to
buy such computers competitively, and the clone makers won lots of these procurements.

Over time, third party companies sprang up to provide maintenance and support for IBM
and clone systems.

In Japan, buyers of mainframe hardware typically buy the maintenance and support from
the same vendor, or from a captive company within the manufacturer's keiretsu, or
intertwined group of suppliers.

But for federal agencies, CICA once again applies. The result is that in several
instances, U.S. units of Japanese mainframe companies were displaced in competition for
maintenance and support contracts.

But one clone maker's maintenance subsidiary, and possibly another, seems to have
responded to these competitive losses in a surprising way. Some federal managers report
increasing evidence of a corporate policy of removing key pieces of software from the
government's machines at the end of the contract. In some instances, manuals and printed
material associated with the machines have disappeared.

The image that comes to mind is of an outgoing contractor purposely vacuuming out the
marrow of the system. The mainframe sits there, still working when the new contractor
arrives, but only one step away from a crash. Conveniently, the original product
manufacturer can claim with greater credibility that it is best able to keep its hardware

Assuming that such a stripping practice exists, the interesting issue is whether this
practice is unlawful or a breach of the maintenance contract.

The Federal Acquisition Regulations, both civilian and Defense Department, make it
clear that Uncle Sam believes it has the rights to the manuals and software that are
mysteriously disappearing. The government also believes it can provide these materials to
its support contractors.

But the rub is that there are seldom complete inventories of everything that comes with
the computers. So the questions become: Is that box of missing disks and manuals simply
misplaced? Did the last contractor employee out the door take it with intent? Did he or
she have the right to take these materials?

Technical data rights aren't the only limitation on such business conduct. U.S.
antitrust law has been vigilantly applied in the private sector against such abuses.

For example, the seminal Supreme Court decision in this area is the 1992 case of
Eastman Kodak Co. vs. Image Technology Services Inc. Kodak tried to restrict the
availability of its spare parts and know-how for maintaining its copiers. The court upheld
the Sherman Antitrust Act's application to Kodak.

The issue was whether the market is for servicing the copiers of one company or of all

Perhaps Uncle Sam ought to take a careful look at whether the vacuum cleaner has been
run over its mainframes when there is a change in the contractor providing maintenance and

It should be relatively easy for the government to find a clone maker's service
technician who may have received instructions, in writing, to remove software and
documentation. After an inventory of the system establishes what's missing, the government
should examine whether this loss is consistent with its claims of technical data rights or
whether the missing items truly belong to the vendor and may be removed.

Perhaps agencies will take strong action. In an environment where the government
regularly grades past performance, it would certainly be something DOD and agencies could
take into account before another award is made to a company with such a policy.

Given the government's broad authority to look at such conduct, one is reminded of the
anonymous poem: The law detains both women and men who steal the goose from off the
common, but lets the greater felon loose who steals the common from the goose.

What is good for the goose is good for the gander.

Stephen M. Ryan is a partner in the Washington law firm of Brand, Lowell & Ryan. He
has long experience in federal information technology issues. E-mail him at smr@blrlaw.com.

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