FAR 27.405-3—Commercial computer software.
Plain-English Summary
FAR 27.405-3 addresses how the Government acquires commercial computer software and what must be done when the software is bought outside GSA Multiple Award Schedule contracts. It explains that the contract must specifically state the Government’s rights to use, disclose, modify, distribute, and reproduce the software, and it ties that approach to FAR 12.212, which generally requires acquisition under the vendor’s customary commercial license unless that license conflicts with Federal law or does not meet the Government’s needs. The section also discusses when the clause at 52.227-19, Commercial Computer Software License, may be used, how to negotiate greater or lesser rights, and when unlimited rights must be expressly stated. It further requires the contract to adequately describe the software, databases, media, and documentation being acquired. In addition, it warns contracting officers to scrutinize vendor standard lease, license, or purchase agreements, ensure they do not conflict with the contract, and make the contract terms control over vendor terms. Finally, it provides a special rule for subcontractor-provided restricted computer software acquired under a prime contract containing 52.227-14 with Alternate III, allowing the contracting officer to approve collateral agreements that add to or limit restricted rights. In practice, this section is about making sure the Government’s software rights are clear, enforceable, and aligned with both commercial licensing practices and Federal requirements.
Key Rules
State Government software rights
When buying commercial computer software outside GSA Schedule contracts, the contract must specifically address the Government’s rights to use, disclose, modify, distribute, and reproduce the software. Those rights cannot be left vague or assumed from the vendor’s standard terms.
Use customary commercial licenses
FAR 12.212 directs agencies to acquire commercial computer software and documentation under licenses customarily provided to the public, but only to the extent the license is consistent with Federal law and meets the Government’s needs. If there is uncertainty, 52.227-19 may be used to clarify the license terms.
Negotiate needed deviations
If the Government needs greater rights than the minimum in 52.227-19, or fewer rights, those differences must be negotiated and written into the contract. This includes any additions to or limitations on the rights described in paragraph (b) of the clause when it is used.
Unlimited rights must be explicit
If the software is being acquired with unlimited rights, the contract must say so expressly. The Government should not rely on implication or general language to obtain unlimited use rights.
Describe the software precisely
The contract must adequately identify the computer programs and/or databases, the media on which they are recorded, and all necessary documentation. Clear identification helps avoid disputes over what was actually purchased and what rights attach to it.
Review vendor standard agreements
If the contract incorporates or references a vendor’s standard lease, license, or purchase agreement, the contracting officer must ensure it is consistent with the FAR requirements in this subsection. Any conflict must be resolved in the contract, and the contract terms control over the vendor’s standard agreement.
Handle subcontractor restricted software carefully
If a prime contractor acquires restricted computer software from a subcontractor for delivery to or use on behalf of the Government under a contract containing 52.227-14 with Alternate III, the contracting officer may approve additions to or limitations on the restricted rights notice through a collateral agreement incorporated into the contract.
Responsibilities
Contracting Officer
Ensure the contract clearly states the Government’s software rights; decide whether 52.227-19 is needed; negotiate and document any greater or lesser rights; state unlimited rights expressly when applicable; verify the software, media, and documentation are adequately described; review vendor license terms for consistency; resolve conflicts in favor of the contract; and, when appropriate, approve collateral agreements affecting restricted rights in subcontractor software.
Agency/Government
Define its actual needs for use, disclosure, modification, distribution, reproduction, networking, and remote access rights before award so the contract can be written to match those needs and comply with Federal law.
Contractor/Prime Contractor
Provide or accept software under the negotiated license and contract terms; ensure any vendor standard agreement does not override the Government’s required rights; and, when acquiring restricted software from subcontractors for Government use, flow the issue through the contract structure and any approved collateral agreement.
Subcontractor/Vendor
Offer commercial software under customary license terms where applicable, but recognize that Government contracts may require negotiated changes, contract-specific rights language, and terms that differ from ordinary commercial sales agreements.
Practical Implications
Do not assume a commercial EULA is automatically acceptable for the Government; it often needs review and revision to fit Federal law and mission needs.
The biggest risk is unclear rights language. If the contract does not spell out use, reproduction, disclosure, modification, distribution, networking, or remote-terminal rights, disputes are likely later.
Vendor boilerplate can conflict with Government requirements, especially on copying, disclosure, audit, indemnity, or transfer restrictions; the contract must override those conflicts.
If the Government needs broader operational use, such as networked or remote access, those rights should be negotiated up front rather than treated as an afterthought.
For subcontractor software under a prime contract with 52.227-14 Alternate III, any special restricted-rights arrangement should be formally approved and incorporated, not handled informally.
Official Regulatory Text
(a) When contracting other than from GSA’s Multiple Award Schedule contracts for the acquisition of commercial computer software, no specific contract clause prescribed in this subpart need be used, but the contract shall specifically address the Government’s rights to use, disclose, modify, distribute, and reproduce the software. Section 12.212 sets forth the guidance for the acquisition of commercial computer software and states that commercial computer software or commercial computer software documentation shall be acquired under licenses customarily provided to the public to the extent the license is consistent with Federal law and otherwise satisfies the Government’s needs. The clause at 52.227-19 , Commercial Computer Software License, may be used when there is any confusion as to whether the Government’s needs are satisfied or whether a customary commercial license is consistent with Federal law. Additional or lesser rights may be negotiated using the guidance concerning restricted rights as set forth in 27.404-2 (d), or the clause at 52.227-19 . If greater rights than the minimum rights identified in the clause at 52.227-19 are needed, or lesser rights are to be acquired, they shall be negotiated and set forth in the contract. This includes any additions to, or limitations on, the rights set forth in paragraph (b) of the clause at 52.227-19 when used. Examples of greater rights may be those necessary for networking purposes or use of the software from remote terminals communicating with a host computer where the software is located. If the computer software is to be acquired with unlimited rights, the contract shall also so state. In addition, the contract shall adequately describe the computer programs and/or databases, the media on which it is recorded, and all the necessary documentation. (b) If the contract incorporates, makes reference to, or uses a vendor’s standard commercial lease, license, or purchase agreement, the contracting officer shall ensure that the agreement is consistent with paragraph (a) of this subsection. The contracting officer should exercise caution in accepting a vendor’s terms and conditions, since they may be directed to commercial sales and may not be appropriate for Government contracts. Any inconsistencies in a vendor’s standard commercial agreement shall be addressed in the contract and the contract terms shall take precedence over the vendor’s standard commercial agreement. If the clause at 52.227-19 is used, inconsistencies in the vendor’s standard commercial agreement regarding the Government’s right to use, reproduce or disclose the computer software are reconciled by that clause. (c) If a prime contractor under a contract containing the clause at 52.227-14 , Rights in Data-General, with paragraph (g)(4) (Alternate III) in the clause, acquires restricted computer software from a subcontractor (at any tier) as a separate acquisition for delivery to or for use on behalf of the Government, the contracting officer may approve any additions to, or limitations on the restricted rights in the Restricted Rights Notice of paragraph (g)(4) in a collateral agreement incorporated in and made part of the contract.