Non-Disclosure Agreement (NDA) in Government Contracting

Non-Disclosure Agreements are legally binding contracts in which one or more parties agree not to disclose confidential information received from the other party to third parties. In the federal contracting environment, NDAs appear in several distinct contexts: between teaming partners sharing proprietary capabilities, between a contractor and the government when the government shares sensitive market research or draft solicitation materials, and between contractors and subcontractors during proposal preparation. Each context carries different legal foundations and compliance considerations.

What is an NDA in government contracting?

In pre-award teaming and subcontracting relationships, NDAs protect each party's proprietary information, such as pricing data, technical solutions, intellectual property, and personnel details, from being shared outside the partnership or used competitively if the team dissolves. These are private commercial agreements governed by state contract law. FAR 9.603 encourages early teaming but the regulation does not mandate NDAs; industry practice has made them standard.

When the government hosts industry days, one-on-one sessions, or requests for information (RFIs) in advance of a solicitation, it may share sensitive acquisition information that is protected under FAR 3.104 as source selection information. Government personnel who share such information improperly, and contractors who receive and exploit it improperly, can face criminal penalties under 41 USC 2102-2107, the Procurement Integrity Act. While the government does not typically sign contractor-drafted NDAs (agencies generally cannot bind themselves through NDA instruments in the same way private parties can), contractors who receive pre-solicitation information in structured one-on-one settings may be asked to sign government-prepared non-disclosure statements.

NDAs must be carefully reviewed for scope, duration, and exclusions. Overly broad NDAs in teaming contexts have triggered organizational conflict of interest (OCI) concerns when the receiving party later competes on the same procurement. FAR Subpart 9.5 governs OCIs, and a poorly drafted NDA that crosses into technical direction can create an impaired objectivity or biased ground rules OCI.

Why it matters for contractors

Contractors who participate in pre-solicitation market research, attend industry days, or enter teaming discussions regularly receive and share sensitive information. Managing this information improperly creates legal, competitive, and compliance risks. A contractor that improperly uses source selection information received from a government official can be debarred and face criminal prosecution. A contractor that breaches an NDA with a teaming partner can face civil liability and lose a subcontractor relationship critical to a bid.

Conversely, refusing to sign reasonable NDAs can exclude a company from teaming opportunities with prime contractors who control key vehicle access or incumbency advantages. Legal review of NDA terms before signing is standard practice at mature GovCon firms.

Example

A systems integrator hosting an industry day for a classified IT modernization program invites potential subcontractors to one-on-one sessions where it shares a draft technical architecture. Before each session, the integrator requires each prospective subcontractor to sign a mutual NDA covering the architecture details. One prospective subcontractor declines to sign and is excluded from the session. Another signs, receives the architecture, and later decides not to team with the integrator. The NDA prohibits the second company from sharing the architecture with a competing prime. When the competing prime asks for details, the company must decline or face breach of contract liability.