Talend, a licensor of open source enterprise software, has recently received a ruling from the U.S. Customs Service corroborating that its software complies with the Trade Agreements Act 0f 1979 (19 USC 2511 et seq.) (“TAA”). Open source software adoption by the US Federal government must comply with many regulations, some of which can be difficult given the nature of modern software development. And these rules are frequently used as a barrier, or a bar, to the use of FOSS in federal government procurement. One of these issues is the ability of the FOSS company to certify compliance with the TAA which requires a product to be manufactured or “substantially transformed” in the United States or a “designated country”. A “designated country” is one of a handful of countries with which the U.S. has a trade agreement on government procurement or a similar arrangement. However FOSS frequently contains routines or other components whose origin is not sufficiently certain to “certify” compliance with these requirements, or if certain, the origin is a non-designated country such as India or China (as a matter of transparency, my partner, Fern Lavallee, represented Talend in the approval process).
Like many companies, Talend has a substantial part of the source code of some of its products written in the People’s Republic of China. However, virtually all other aspects and steps in the “manufacture” of its software – and particularly the complex activities fundamental to manufacturing the software - are performed in the United States or the “designated countries” of France or Germany. The letter goes into significant detail about the process of designing, developing and testing the Talend software. Talend successfully argued that the steps performed in the US, France and Germany constituted the “substantial transformation” of the source code into the “product”, i.e., the machine-readable object code software product, in a designated country for federal government procurement purposes sufficient to certify TAA compliance. The U.S. Customs Service agreed in its advisory letter.
This decision is timely because U.S. Department of Defense (DoD) is currently revising the “DoD Open Systems Architecture, Contract Guidebook for Program Managers” which was issued in draft in December, 2011. This Contract Guide is specifically intended to be used by DoD Program Managers who are incorporating Open System Architecture principles into National Security Systems. The new version is currently expected to be released by the end of this calendar year. A copy of the decision can be obained from Talend at http://www.talend.com/about-us/press/us-customs-and-border-protection-decision-boosts-open-source-software-for-government
My French partner, Sandrine Rambaud, brought to my attention a decision dated December 29, 2010, that leveled the playing field for open source vendors: the Administrative Court of Lille, France cancelled a public procurement procedure because the procedure excluded the possibility of proposing open source software in bid responses. Instead, the municipalities that put out the bid expressly required bidders to propose an Oracle database and Business Objects environments for the generation of reports.
The French company, Nexedi, which offers open source solutions, alleged that the tendering of the public procurement under such terms does not comply with the principles of equal treatment and non-discrimination, and in particular with Article 6 of the French Public Procurement Code. Article 6 provides that technical specifications included in a public bid cannot include the reference to a trademark or a patent, as such reference could favor or exclude some bidders or products. Such reference is only possible in very specific cases.
Nexedi challenged the validity of such procedure before the Administrative Court of Lille, which ruled to cancel the procedure. This decision is great news for open source companies and open procurement!