Published 2026 | TIKC NewsWire
Government contracting is a tight community. People move between competitors, teams form and dissolve, and everyone wants an edge on the next recompete. That environment makes it dangerously easy to cross a line that carries criminal penalties: the theft of trade secrets. Taking a competitor’s proprietary information, or welcoming a new hire who brings their old employer’s secrets with them, is not sharp business. Under federal law it can be a felony, and it can also trigger the procurement-integrity rules that protect nonpublic information.
The laws that make it a crime
The Economic Espionage Act criminalizes the theft of trade secrets. It has two main parts. One targets economic espionage, theft of trade secrets to benefit a foreign government or instrumentality, which is treated with particular severity. The other targets commercial trade-secret theft, stealing trade secrets for the economic benefit of someone other than the owner, intending to injure the owner. On top of the criminal law, the Defend Trade Secrets Act gives owners a federal civil claim, so a victim company can sue as well. A trade secret, broadly, is valuable information a company keeps secret and takes reasonable steps to protect.
How honest contractors stumble into it
Few firms set out to steal. They back into it. The most common path is the new hire who arrives from a competitor carrying files, pricing models, proposal libraries, or technical data from the old job. If you use that material, you may be trafficking in stolen trade secrets even though you did not take anything yourself. Another path is overeager competitive intelligence, where legitimate market research tips into acquiring information the competitor protects. And in contracting specifically, mishandling another company’s proprietary or source-selection information ties directly into the procurement-integrity rules.
The two-way risk
This is a threat you both face and can commit, which is why it connects so tightly to insider risk. Your own departing employees can walk out with your trade secrets, so you need to protect what you own. And incoming employees can bring someone else’s, exposing you to liability for receiving it. The same offboarding and onboarding moments drive both risks. A disciplined firm guards its own crown jewels and refuses to touch anyone else’s, treating both sides as one problem.
Build clean hiring and clean exits
The protection is practical. When you hire from a competitor, tell the new employee in writing not to bring or use their former employer’s confidential information, and mean it. When employees leave you, remind them of their obligations, recover devices and data, and watch for bulk downloads before departure. Use NDAs and confidentiality agreements, mark and limit access to your own trade secrets, and train your team that competitive intelligence stops at the edge of what a competitor protects. If a new hire offers you a former employer’s files, the right answer is a firm no.
What to do now
- Protect your own secrets. Mark them, limit access, and use NDAs so they qualify as protected trade secrets.
- Onboard cleanly. Instruct new hires in writing not to bring or use a former employer’s confidential information.
- Offboard carefully. Recover data and devices from departing staff and watch for pre-exit downloads.
- Keep competitive intelligence legal. Research the public market, never acquire what a competitor protects.
- Refuse stolen material. If someone offers a competitor’s files, say no and document that you declined.
Your edge should come from what you build, not from what you take. Protect your own secrets, refuse everyone else’s, and you compete hard and stay clean at the same time. Brick by brick.
FAQ
What law makes trade secret theft a crime?
The Economic Espionage Act. It criminalizes stealing trade secrets to benefit a foreign government (economic espionage) and stealing them for the economic benefit of someone other than the owner (commercial theft). The Defend Trade Secrets Act adds a federal civil claim.
Can I be liable for what a new hire brings?
Yes. If an employee brings a former employer’s trade secrets and you use them, you may be trafficking in stolen trade secrets even though you did not take them yourself.
What counts as a trade secret?
Broadly, valuable information a company keeps secret and takes reasonable steps to protect, such as pricing models, technical data, and proprietary processes.
How does this relate to procurement integrity?
Mishandling another company’s proprietary or source-selection information in a procurement ties directly into the Procurement Integrity Act, adding contract-specific exposure on top of the criminal law.
Sources
U.S. Congress. (2026). Economic Espionage Act, 18 U.S.C. 1831 and 1832.
U.S. Congress. (2026). Defend Trade Secrets Act, 18 U.S.C. 1836.
This article is general information, not legal advice.
About the Author
Melanie Patterson
Founder and CEO of Team Integrity Knowledge Center and creator of GovCon iSource. Former nurse turned entrepreneur with over 10 years guiding small, women-owned, and minority-owned businesses to over $10 million in government awards. Build, grow, scale, brick by brick. Contact
