Protecting Trade Secrets in Small Manufacturing Shops with DoD Aerospace Customers

For small, advanced manufacturing businesses supplying both automotive and aerospace industries, trade secrets are often a competitive edge. But if you work with Department of Defense (DoD) aerospace clients, the bar has just been raised. The DoD’s new 2025 Intellectual Property Guidebook for Acquisition, released in May 2025, underscores that managing IP—especially trade secrets and data rights—is now a critical part of contract performance.

Here’s how small manufacturers can adapt to this new guidance while protecting their proprietary methods, processes, and know-how.

What Counts as a Trade Secret in Your Shop?

In a high-precision manufacturing environment, trade secrets often include:

• CNC programming, CAM files, or toolpaths for high-tolerance components

• Custom fixtures or finishing techniques developed in-house

• Process methods for bonding, forming, or heat-treating advanced materials

• Inspection procedures, quoting strategies, or supply chain sources

If the information isn’t publicly known, provides a business advantage, and you take reasonable steps to keep it confidential—it likely qualifies for trade secret protection.

What's The 2025 DoD IP Guidebook Changes

The new DoD IP Guidebook changes the game in key ways:

• IP Strategy Is Now Mandatory

DoD expects a formal Intellectual Property Strategy (IPS) from both contractors and government teams—starting at the acquisition planning stage. Contractors must articulate what IP/data they will deliver, what they will retain, and how it will be handled throughout the lifecycle of the product.

• Data Rights Assertions Get More Scrutiny

You’ll need to clearly specify whether technical data or software is being delivered with unlimited rights, government purpose rights (GPR), limited rights, or specially negotiated rights. The government may challenge vague or overbroad assertions.

• Lifecycle IP Management Is Required

The Guidebook promotes ongoing IP management—not just at delivery but throughout sustainment, upgrades, and disposal. That means keeping good records, tracking what was delivered and when, and preparing for future audits or license transfers.

Best Practices for Protecting Trade Secrets

• Label and Track Proprietary Content

Mark trade secret files as “Proprietary – Not for Delivery” where appropriate. Maintain a confidential IP log that distinguishes between internal use and contract deliverables. Be precise in proposals: If it’s not being delivered, say so—and why

• Define Data Rights in Proposals

In every proposal, clearly identify which items are being delivered with limited or restricted rights. Attach a data rights assertion table that matches the contract SOW. Align this with your IP strategy to avoid disputes or disqualifications

• Flow Down Compliance to Vendors

Ensure subcontractors and job shops sign NDAs and are bound by the same IP restrictions. If you use outside programmers or toolmakers, verify that you own the IP or have clear use rights. For DoD contracts, make sure suppliers also understand NIST 800-171 and CUI handling if applicable

• Protect Physical and Digital Access

Segregate DoD workspaces with limited access. Use controlled systems for storing CNC programs, inspection reports, and material traceability logs. Prohibit uploading files to unauthorized cloud tools or AI assistants.

• Train and Monitor

Teach employees the basics of trade secret law and DoD IP rules. Highlight the risk of inadvertently delivering proprietary data. Monitor file movements and system access to flag red flags early.

Why This Matters for Small Shops

Complying with the 2025 IP Guidebook isn't just about avoiding contract violations—it's about preserving your competitive advantage. You’ve invested years developing your proprietary processes. Without the right policies and declarations, you risk unintentionally handing over rights to the government or a competitor.

A well-defined IP strategy helps you:

• Retain ownership of valuable trade secrets

• Reduce the risk of disputes over deliverables

• Strengthen your standing with DoD primes and program officers

• Stay eligible for future high-value contracts

Final Thoughts

Trade secrets are the backbone of innovation in small manufacturing shops. The 2025 DoD IP Guidebook makes it clear: protecting those secrets now requires formal planning, disciplined execution, and full lifecycle awareness.

If you’re working in the aerospace and defense ecosystem, don’t wait until a DFARS audit or contract dispute forces a reaction. Build a proactive IP protection strategy now—with documentation, training, and contractual clarity.