B-111644, JANUARY 17, 1955, 34 COMP. GEN. 336

B-111644: Jan 17, 1955

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OR PROPRIETARY ARTICLE ARE NOT RESTRICTIVE OF COMPETITION MERELY BECAUSE THEY INCLUDE ARTICLES WHICH CAN BE MANUFACTURED ONLY UNDER A PATENTED PROCESS. 1955: REFERENCE IS MADE TO LETTERS DATED APRIL 22. WHEREIN THERE IS QUESTIONED YOUR LIABILITY TO THE UNITED STATES FOR THE EXCESS COSTS. THAT THE LOUNGE CHAIR DESCRIBED OPPOSITE THE ITEM REFERRED TO WAS PROPRIETARY IN CHARACTER. YOU CLAIM THAT YOUR FAILURE TO PERFORM WAS ATTRIBUTABLE TO CAUSES ALLEGEDLY BEYOND YOUR CONTROL AND WITHOUT YOUR FAULT OR NEGLIGENCE. OR TO CAUSES WHICH ARE EXCUSABLE WITHIN THE INTENT AND MEANING OF ARTICLE 11. YOU ASSERT THAT ONE OF THE PARTIES WHO ASSISTED IN PREPARING THE DRAWINGS FOR CERTAIN OF THESE ITEMS OF FURNITURE NOW IS IN THE EMPLOY OF THE LOCAL DISTRIBUTOR OF THE BARCALO LINE OF PRODUCTS.

B-111644, JANUARY 17, 1955, 34 COMP. GEN. 336

CONTRACTS - SPECIFICATIONS - RESTRICTIVE INVITATIONS FOR BIDS AND SPECIFICATIONS WHICH SET OUT THE MINIMUM NEEDS OF THE GOVERNMENT IN GENERAL TERMS WITHOUT REFERENCE TO ANY PATENTED DEVICE, TRADE NAME, OR PROPRIETARY ARTICLE ARE NOT RESTRICTIVE OF COMPETITION MERELY BECAUSE THEY INCLUDE ARTICLES WHICH CAN BE MANUFACTURED ONLY UNDER A PATENTED PROCESS.

ASSISTANT COMPTROLLER GENERAL WEITZEL TO STERN OFFICE FURNITURE COMPANY, JANUARY 17, 1955:

REFERENCE IS MADE TO LETTERS DATED APRIL 22, MAY 18 AND OCTOBER 21, 1954, FROM YOUR ATTORNEY, WHEREIN THERE IS QUESTIONED YOUR LIABILITY TO THE UNITED STATES FOR THE EXCESS COSTS, AMOUNTING TO $3,344.33, INCURRED IN PROCURING 38 ADJUSTABLE BACK LOUNGE CHAIRS FROM THE W. D. CAMPBELL COMPANY AFTER YOUR FAILURE TO DELIVER THE EQUIPMENT SPECIFIED UNDER ITEM NO. 59 OF CONTRACT NO. GS-03S-3896, DATED NOVEMBER 1, 1951.

YOU CONTENT, IN SUBSTANCE, THAT THE LOUNGE CHAIR DESCRIBED OPPOSITE THE ITEM REFERRED TO WAS PROPRIETARY IN CHARACTER, AND THAT IT COULD BE MANUFACTURED ONLY UNDER A PATENT HELD BY THE BARCALO MANUFACTURING COMPANY, BUFFALO, NEW YORK. HENCE, YOU CLAIM THAT YOUR FAILURE TO PERFORM WAS ATTRIBUTABLE TO CAUSES ALLEGEDLY BEYOND YOUR CONTROL AND WITHOUT YOUR FAULT OR NEGLIGENCE, OR TO CAUSES WHICH ARE EXCUSABLE WITHIN THE INTENT AND MEANING OF ARTICLE 11, GENERAL PROVISIONS OF THE CONTRACT.

FURTHER, YOU ASSERT THAT ONE OF THE PARTIES WHO ASSISTED IN PREPARING THE DRAWINGS FOR CERTAIN OF THESE ITEMS OF FURNITURE NOW IS IN THE EMPLOY OF THE LOCAL DISTRIBUTOR OF THE BARCALO LINE OF PRODUCTS, AND YOU THEREFORE IMPLY COMPLICITY OF SUCH PARTY IN A SCHEME DESIGNED TO RESTRICT COMPETITION AND TO BUILD THE SPECIFICATIONS AROUND THE PRODUCTS OF THAT COMPANY.

THE RECORD IN THE CASE DISCLOSES THAT BY INVITATION NO. 8A-99260-R-8-20 51, ISSUED JULY 19, 1951, THE GENERAL SERVICE ADMINISTRATION SOLICITED QUOTATIONS ON 88 DIFFERENT ITEMS OF QUALITY FURNITURE, SCHEDULED FOR INSTALLATION IN THE NEW UNITED STATES COURT HOUSE ERECTED AT 3RD STREET AND CONSTITUTION AVENUE, NW., THIS CITY. AMONG THE EXTENSIVE AND VARIED TYPES OF FURNITURE DESCRIBED WERE SEVERAL DESIGNS AND CATEGORIES OF QUALITY LOUNGE CHAIRS, AS DESCRIBED PARTICULARLY OPPOSITE ITEMS NOS. 57 THROUGH 88 OF THE BID SCHEDULE. INCLUDED WITHIN THIS LATTER CATEGORY OF LOUNGE OR EASY CHAIRS WERE THOSE WITH FIXED AND ADJUSTABLE BACKS, ROTARY AND FIXED TYPES OF CHAIRS, SOME WITH AND WITHOUT ARM RESTS, SOME WITH LEGS, OTHERS WITHOUT, BUT EACH ARTICLE DIFFERING ACCORDING TO THE PARTICULAR NEED SOUGHT TO BE SERVED. HOWEVER, NONE OF THE ARTICLES OF FURNITURE DESCRIBED IN THE BID SCHEDULE WAS IDENTIFIED BY THE USE OF ANY PARTICULAR TRADE NAME, THAT OF ITS MANUFACTURER, OR BY ANY OTHER NOMENCLATURE.

FURTHER, THE RECORD SHOWS THAT YOU BID ON 24 DIFFERENT ITEMS OF DAVENPORTS AND LOUNGE CHAIRS, AND WERE AWARDED 13 DIFFERENT ITEMS OF A CONTRACT VALUE OF $64,024. ALSO, THE RECORD SHOWS THAT YOU DELIVERED ONLY A SMALL PROPORTION OF THOSE ITEMS AWARDED YOU, THE TOTAL VALUE OF WHICH AMOUNTED TO ONLY $7,543.96. UPON YOUR DEFAULT, THE DELINQUENT ITEMS WERE PROCURED BY THE GENERAL SERVICES ADMINISTRATION FROM ANOTHER SOURCE AT A TOTAL EXCESS COST TO THE GOVERNMENT OF $13,191.58. AGAINST THIS LATTER AMOUNT, THERE WAS OFFSET THE AMOUNT OF $7,543.96, LESS DISCOUNT OF ONE PERCENT, OTHERWISE DUE YOU UNDER THE INSTANT CONTRACT, LEAVING A NET BALANCE OF $5,723.06 DUE THE GOVERNMENT. YOU PRIMARILY SEEK TO AVOID LIABILITY FOR THE EXCESS COSTS OF $3,344.33 INCURRED IN THE REPURCHASE OF ITEM NO. 59 OF THE CONTRACT, WHICH CALLED FOR THE DELIVERY OF 38 LOUNGE CHAIRS, EQUIPPED WITH AN ADJUSTABLE BACK AND SEAT, AS SPECIFIED, WHICH ALLEGEDLY CAN BE MANUFACTURED ONLY UNDER A PATENT OWNED BY THE BARCALO MANUFACTURING COMPANY. YOU CONTEND, THEREFORE, THAT THE SPECIFICATIONS APPLICABLE TO THIS ITEM WERE RESTRICTIVE OF COMPETITION, AND CONSEQUENTLY FAULTY.

CONCERNING THIS CONTENTION, ATTENTION IS INVITED TO ARTICLE 7, SPECIAL CONDITIONS OF THE CONTRACT, WHICH READS, IN PERTINENT PART:

PATENTS.--- THE CONTRACTOR SHALL HOLD AND SAVE THE GOVERNMENT, ITS OFFICERS, AGENTS, SERVANTS, AND EMPLOYEES, HARMLESS FROM LIABILITY OF ANY NATURE OR KIND, INCLUDING COSTS AND EXPENSES, FOR OR ON ACCOUNT OF ANY PATENTED OR INVENTION, ARTICLE, AND OR APPLIANCE MANUFACTURED OR USED IN THE PERFORMANCE OF THE CONTRACT, INCLUDING THEIR USE BY THE GOVERNMENT.

THE QUOTED PROVISION, WHICH WAS INCORPORATED INTO THE GOVERNMENT'S INVITATION FOR BIDS AND MADE AN ESSENTIAL PART OF THE RESULTING CONTRACT, EXPRESSLY CAUTIONED THE BIDDERS THAT THE USE OF PATENTED PROCESSES OR DEVICES MIGHT BE NECESSARY IN THE MANUFACTURE OF THE REQUIRED ITEMS OF FURNITURE, AND ALSO PLACED UPON THE CONTRACTOR THE RESPONSIBILITY OF SAFEGUARDING THE INTERESTS OF THE UNITED STATES AGAINST THE UNAUTHORIZED OR ILLEGAL USE OF A PATENTED ARTICLE.

IT SHOULD BE POINTED OUT THAT THE GOVERNMENT OF THE UNITED STATES CANNOT BE LIMITED IN ITS PROCUREMENT ONLY TO THOSE ITEMS WHICH ARE NOT PATENTED, OR AS TO WHICH NO PATENTED PROCESSES OR DEVICES ARE INVOLVED IN THEIR MANUFACTURE. AS A MATTER OF FACT, IF THE DEPARTMENTS OR AGENCIES OF THE GOVERNMENT WERE TO BE RESTRICTED TO THE PURCHASE OF ONLY NONPATENTED ARTICLES, ITS SOURCE OF SUPPLY OF NEEDED ARTICLES WOULD INDEED BE LIMITED, ESPECIALLY IN THE PRESENT DAY OR MODERN FIELD OF COMMERCIAL MANUFACTURE.

IT LONG HAS BEEN RECOGNIZED BY THE COURTS, AND THIS OFFICE AS WELL, THAT INVITATIONS AND THE ACCOMPANYING SPECIFICATIONS SHOULD BE SO DRAWN AS TO PERMIT THE BIDDERS TO COMPETE UPON A COMMON BASIS AND, IN THIS CONNECTION, IT ALSO HAS BEEN HELD THAT CONDITIONS OR LIMITATIONS WHICH HAVE NO REASONABLE RELATION TO THE ACTUAL NEEDS OF THE GOVERNMENT, AND WHICH ARE DESIGNED TO LIMIT BIDDING TO ONE OF SEVERAL SOURCES OF SUPPLY ARE OBJECTIONABLE AND MIGHT RENDER A CONTRACT VOIDABLE. UNITED STATES V. BROOKRIDGE FARM, INC., 111F 2D 461; 32 COMP. GEN. 384.

HERE, THE RECORD INDICATES THAT THE PROCUREMENT AGENCY ADVERTISED THE MINIMUM NEEDS OF THE GOVERNMENT FOR COURT HOUSE FURNITURE AND EQUIPMENT, AND DESCRIBED THOSE NEEDS IN BROAD AND GENERAL TERMS. MOREOVER, IT WILL BE NOTED THAT NEITHER THE INVITATION FOR BIDS, NOR THE SPECIFICATIONS FORMING A PART THEREOF, MADE ANY MENTION OF A TRADE NAME OR THE NAME OF ANY PROPRIETARY ARTICLE OR PATENTED DEVICE. INCLUDED AMONG THE ITEMS LISTED FOR PROCUREMENT WAS AN EASY CHAIR (LOUNGE), EQUIPPED WITH AN ADJUSTABLE BACK AND SEAT, AS DESCRIBED GENERALLY OPPOSITE ITEM NO. 59, AND AS SHOWN IN DETAIL ON GOVERNMENT DRAWING NO. 36-31. IF THE MANUFACTURE OF THIS CHAIR, OR FOR THAT MATTER, ANY OTHER ITEM OF THE INVITATION, REQUIRED THE USE OF A SPECIAL OR PATENTED PROCESS, IT WOULD SEEM THAT YOU, AS AN EXPERIENCED DEALER IN OFFICE FURNITURE AND EQUIPMENT, SHOULD HAVE KNOWN OR PRODUCT OF ANY ONE MANUFACTURER.

NOR WOULD THE MERE FACT THAT ONE OF THE GOVERNMENT EMPLOYEES WHO ASSISTED IN PREPARING THE DRAWINGS HAS SINCE LEFT THE EMPLOY OF THE UNITED STATES AND FOUND WORK WITH A LOCAL DISTRIBUTOR FOR THE BARCALO LOUNGE CHAIR CONSTITUTE EVIDENCE OF FAVORITISM OR COMPLICITY IN WRITING THE SPECIFICATIONS AROUND THE PRODUCT OF THAT PARTICULAR MANUFACTURER. THE EMPLOYEE TO WHOM YOU REFER IN YOUR COMMUNICATIONS OF MAY 18 AND OCTOBER 21, 1954, TO THIS OFFICE, WAS NOT IN THE EMPLOY OF THE BARCALO MANUFACTURING COMPANY AT THE TIME THE DRAWINGS AND SPECIFICATIONS WERE WRITTEN, AND IN ANY EVENT, THE ADJUSTABLE LOUNGE CHAIR DESCRIBED UNDER ITEM NO. 59 OF THE BID SCHEDULE WAS ONLY ONE OF THE NUMEROUS ITEMS UPON WHICH YOU DEFAULTED.

CONCERNING YOUR CONTENTIONS, GENERALLY, THERE WOULD APPEAR PROPER FOR APPLICATION THE ESTABLISHED LEGAL PRINCIPLE ANNOUNCED BY THE SUPREME COURT IN THE CASE OF CARNEGIE STEEL COMPANY V. UNITED STATES, 240 U.S. 156, AT PAGE 164: " IT WOULD SEEM THAT THE VERY ESSENCE OF THE PROVISION OF A CONTRACT TO DELIVER ARTICLES IS ABILITY TO PROCURE OR MAKE THEM.' AND, IF THE MANUFACTURE OF ANY OF THE ITEMS AWARDED YOU ACTUALLY INVOLVED THE USE OF ANY PATENTED PROCESS, UNDER THE PLAIN TERMS OF ARTICLE 7 OF THE CONTRACT SPECIAL CONDITIONS, THAT WAS YOUR RESPONSIBILITY.

ACCORDINGLY, IT IS REQUESTED THAT YOU MAKE SUITABLE ARRANGEMENTS WITH THE CLAIMS DIVISION OF THIS OFFICE TO LIQUIDATE YOUR ESTABLISHED INDEBTEDNESS TO THE UNITED STATES WITHOUT FURTHER DELAY.