A-57098, AUGUST 13, 1934, 14 COMP. GEN. 118

A-57098: Aug 13, 1934

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CONTRACTS FOR PURCHASE OF EXPERIMENTAL MATERIAL AND SUPPLIES - PATENTS WHEREVER CONTRACTS ARE ENTERED INTO BY WHICH THE WAR DEPARTMENT AGREES TO MAKE PAYMENT FOR EXPERIMENTAL MATERIALS AND SUPPLIES. THAT IS. 1934: THERE IS BEFORE THIS OFFICE CONTRACT W ORD-215. THIS CONTRACT APPEARS TO HAVE BEEN ENTERED INTO WITHOUT COMPETITION BASED ON AN OFFER OF JUNE 8. THAT THE PURCHASE COULD BE MADE WITHOUT COMPETITION BECAUSE THE VEHICLE WAS AN EXPERIMENTAL ONE. THAT THERE WAS NO COMMERCIAL CONCERN IN THE UNITED STATES NOW PRODUCING VEHICLES SIMILAR TO THE PROPOSED VEHICLE. THIS OFFICE WILL MAKE NO OBJECTION TO THE FAILURE TO ADVERTISE FOR THIS EXPERIMENTAL VEHICLE. THAT SHOULD THE EXPERIMENT PROVE TO BE A SUCCESS QUANTITY PURCHASES WILL BE MADE IN ACCORDANCE WITH SECTION 3709.

A-57098, AUGUST 13, 1934, 14 COMP. GEN. 118

CONTRACTS FOR PURCHASE OF EXPERIMENTAL MATERIAL AND SUPPLIES - PATENTS WHEREVER CONTRACTS ARE ENTERED INTO BY WHICH THE WAR DEPARTMENT AGREES TO MAKE PAYMENT FOR EXPERIMENTAL MATERIALS AND SUPPLIES, THAT IS, TO ASSUME ALL OF THE COST WITHIN STATED LIMITS OF THE EXPERIMENT, THERE SHOULD BE OBTAINED FOR THE UNITED STATES UNDER THE TERMS OF THE CONTRACT A LICENSE TO USE THE DESIGNS OR PATENTS INVOLVED SHOULD THE EXPERIMENT PROVE TO BE A SUCCESS AND IT BE DETERMINED TO MAKE QUANTITY PURCHASES OF THE PARTICULAR APPLIANCE, VEHICLE, ETC.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF WAR, AUGUST 13, 1934:

THERE IS BEFORE THIS OFFICE CONTRACT W ORD-215, DATED JUNE 16, 1934, WITH JAMES CUNNINGHAM, SON AND CO., ROCHESTER, N.Y., FOR THE MANUFACTURE AND DELIVERY OF ONE 4.2-INCH MORTAR MOTOR CARRIAGE, F.O.B. ROCHESTER, N.Y., FOR THE SUM OF $9,840, AND THIS CONTRACT APPEARS TO HAVE BEEN ENTERED INTO WITHOUT COMPETITION BASED ON AN OFFER OF JUNE 8, 1934, FROM JAMES CUNNINGHAM, SON AND CO., AND A LETTER DATED JUNE 8, 1934, FROM THE CHIEF OF ORDNANCE TO THE ASSISTANT SECRETARY OF WAR, WITH HIS APPROVAL THEREON OF JUNE 9, 1934, THAT THE PURCHASE COULD BE MADE WITHOUT COMPETITION BECAUSE THE VEHICLE WAS AN EXPERIMENTAL ONE, DESIGNED TO ACCOMPANY MECHANIZED MILITARY UNITS DURING MANEUVERS, AND THAT THERE WAS NO COMMERCIAL CONCERN IN THE UNITED STATES NOW PRODUCING VEHICLES SIMILAR TO THE PROPOSED VEHICLE.

IN VIEW OF THE FACTS APPEARING, THIS OFFICE WILL MAKE NO OBJECTION TO THE FAILURE TO ADVERTISE FOR THIS EXPERIMENTAL VEHICLE, WITH THE UNDERSTANDING, OF COURSE, THAT SHOULD THE EXPERIMENT PROVE TO BE A SUCCESS QUANTITY PURCHASES WILL BE MADE IN ACCORDANCE WITH SECTION 3709, REVISED STATUTES.

HOWEVER, AN EXAMINATION OF THE CONTRACT DISCLOSES THAT IT FAILED TO RESERVE TO THE UNITED STATES, OR TO OBTAIN FOR THE GOVERNMENT, ANY RIGHT TO USE THE DESIGN OR PATENT FOR THE VEHICLE IN EVENT IT SHOULD PROVE TO BE A SUCCESS AND QUANTITY PURCHASES SHOULD BE DEEMED DESIRABLE. IN FACT, THERE IS NOTHING WHATEVER IN THE CONTRACT WITH RESPECT TO THIS FEATURE OF THE MATTER, WITH THE RESULT THAT IN EVENT THE EXPERIMENT SHOULD PROVE TO BE A SUCCESS, THE GOVERNMENT MAY BE CONFRONTED WITH A SITUATION SIMILAR TO THAT BROUGHT TO YOUR ATTENTION IN MY LETTER OF JUNE 8, 1934, A-51068, CONCERNING CONTRACT W-978-ENG 546, DATED NOVEMBER 2, 1933, WITH THE SPERRY GYROSCOPE CO., INC., WHERE THE GOVERNMENT WAS REQUIRED TO PAY A HIGHER PRICE FOR THE PATENTED PRODUCT WHICH HAD BEEN DEVELOPED IN PART AT LEAST AT THE EXPENSE OF THE UNITED STATES. YOUR REPLY OF JULY 10, 1934, INCLOSED A COPY OF LETTER OF MAY 7, 1934, FROM THE CHIEF OF ENGINEERS TO THE CONTRACTING OFFICER IN HIS OFFICE, WHEREIN INSTRUCTIONS WERE GIVEN TO INCORPORATE IN EXPERIMENTAL CONTRACTS A STIPULATION TO PROTECT THE UNITED STATES IN THIS MATTER AND, ALSO, TO PREVENT THE CONTRACTOR FROM SELLING ANY OF THE NEWLY DEVELOPED FEATURES TO FOREIGN GOVERNMENTS WITHOUT PRIOR APPROVAL OF THE CHIEF OF ENGINEERS.

APPARENTLY, THERE IS A LACK OF COORDINATION WITH RESPECT TO THIS MATTER IN THE WAR DEPARTMENT, AND IT IS REQUESTED THAT THE PROPER ADMINISTRATIVE ACTION BE TAKEN TO SECURE OBSERVANCE BY ALL OF THE VARIOUS CONTRACTING OFFICERS IN THE WAR DEPARTMENT OF THE PRINCIPLES WHICH WERE THE SUBJECT OF MY DECISION OF JUNE 8, 1934, AND YOUR REPLY OF JULY 10, 1934, IN THE SPERRY GYROSCOPE CO. CASE; THAT IS, WHEREVER CONTRACTS ARE ENTERED INTO BY WHICH THE WAR DEPARTMENT AGREES TO MAKE PAYMENT FOR EXPERIMENTAL MATERIALS AND SUPPLIES; THAT IS, TO ASSUME ALL OF THE COST WITHIN STATED LIMITS OF THE EXPERIMENT, THE UNITED STATES OBTAIN UNDER THE TERMS OF THE CONTRACT FOR THE EXPERIMENTAL WORK A LICENSE TO USE THE DESIGNS OR PATENTS INVOLVED SHOULD THE EXPERIMENT PROVE TO BE A SUCCESS AND IT BE DETERMINED TO MAKE QUANTITY PURCHASES OF THE PARTICULAR APPLIANCE, VEHICLE, ETC.

IF POSSIBLE, THE CONTRACT OF JUNE 16, 1934, SHOULD BE AMENDED ACCORDINGLY.