The Battle Over Proprietary Interests in Defense Contracts

by Harold Petrowitz



Recent changes in the U.S. Armed Services Procurement Regulations have done much to instill in the industrial community increased confidence that the Government will recognize and respect proprietary rights, at least those of contractors to the military agencies. In a competitive economy, the most significant factor in the free allocation of industrial resources and in the generation of business incentive is the expectatation of profits. This is especially true during prosperous peacetime periods when freedom from industrial mobilization permits a reasonable choice of business activity and when there is a minimum of government control and war psychology. The protection of proprietary rights is a matter of great importance to any business concern because its profit position and earning prospects are usually directly related to the competitive advantage which results from proprietary factors. The goal should be to permit proprietary data to remain undisturbed with its owner insofar as is possible. Where use of such information by the Government is necessary, maximum use of licensing agreements should be encouraged. It has also been viewed that defense contractors also have an obligation toward the Government.

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