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FAR and DFARS › DFARS Part 227: Patents, Data, and Copyrights › Subpart 227.6

DFARS 227.674 Supply contracts between the Government and a foreign government or concern.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section tells contracting officers how to handle certain charges when negotiating or reimbursing costs under a supply contract with a foreign government or concern acting as a second source. The contracting officer must get a detailed statement of royalties, license fees, and other compensation paid to a primary source, and must not accept or allow charges for patents, data, or technical assistance where the Government already has rights or has already paid. This matters because it limits what a second source can charge the Government for technology obtained from a primary source.

Applies to: Contracting officers negotiating or determining costs under supply contracts with a foreign government or concern as a second source

What it requires

  • Obtain from the second source a detailed statement of royalties, license fees, and other compensation paid or to be paid to a primary source or its subcontractors for patent rights, rights in data, and other technical assistance, including identification and description of such patents, data, and te
  • Not accept or allow charges for royalties or amortization for patents or inventions in which the Government holds a royalty-free license
  • Not accept or allow charges for data which the Government has a right to possess, use, and disclose to others
  • Not accept or allow charges for any technical assistance provided to the second source for which the Government has paid under a contract between the Government and a primary source

Key terms: second source · primary source · royalties · license fees · technical assistance

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

In negotiating contract prices with a second source, including the redetermination of contract prices, or in determining the allowability of costs under a cost-reimbursement contract with a second source, the contracting officer:

(a) Shall obtain from the second source a detailed statement (see FAR 27.204-1(a)(2)) of royalties, license fees, and other compensation paid or to be paid to a primary source (or any of his subcontractors) for patent rights, rights in data, and other technical assistance provided to the second source, including identification and description of such patents, data, and technical assistance; and

(b) Shall not accept or allow charges which in effect are—

(1) For royalties or amortization for patents or inventions in which the Government holds a royalty-free license; or

(2) For data which the Government has a right to possess, use, and disclose to others; or

(3) For any technical assistance provided to the second source for which the Government has paid under a contract between the Government and a primary source.

Sections it refers to

  • 27.204-1 Use of patented technology under the United States-Mexico-Canada Agreement.

Sections that refer to it

← 227.673 Foreign license and technical assistance agreements between the Government and domestic concerns. · 227.675 Foreign license and technical assistance agreements between a domestic concern and a foreign government or concern. →

Rule changes for DFARS Part 227

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

DFARS 227.674 Supply contracts between the Government and a foreign government or concern · SpendQuery