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The Government Accountability Office (“GAO”) recently made clear that it is the responsibility of contractors to protect their own proprietary data.  In Digital Healthcare, Inc., B-296489, August 24, 2005, the GAO ruled that a protestor deserved no relief from an agency’s alleged misappropriation of information because the protestor was unable to establish that the disputed data was proprietary.

The protestor in Digital submitted an unsolicited contract proposal to the Veterans Health Administration, among other entities.  Digital Healthcare stated in its proposal that the process it used for identifying and billing certain types of insurance coverage “was proprietary by virtue of its patients, non-competition agreements, and other intellectual property.”  Thereafter, the VA issued a Request for Proposals (“RFP”).  The protestor claimed that the VA had copied “the essential process of the electronic identification of all known insurance sources covering VA beneficiaries.” 

The GAO denied the protest on the ground that information can only be considered proprietary if it is not publicly available.  Since the information was no longer in the owner’s unique possession – as well as questionably innovative – Digital Healthcare’s protest was denied.  In the opinion, the GAO stated that, to prevail on a claim that the government violated its proprietary rights, a protestor must, first, ensure that “its material was marked proprietary or confidential or that it was disclosed to the government in confidence” and, second, “the material involved significant time and expense in preparation and contained material or concepts that could not be independently obtained from publicly available literature or common knowledge.”

Therefore, a contractor must be careful to label proprietary information as such and ensure that it has systems in place to maintain the integrity of information it wants to keep confidential.

This update is published by Venable LLP. Venable publications are not intended to provide legal advice or opinion. Such advice may only be given when related to specific fact situations. © Copyright by Venable LLP 2005.