B-143711, DEC. 22, 1960

B-143711, DEC. 22, 1960

TO THE SECRETARY OF THE AIR FORCE:

BY LETTER DATED NOVEMBER 8, 1960, THE DEPUTY FOR PROCUREMENT AND PRODUCTION, FURNISHED A REPORT CONCERNING THE PROTEST OF THE GAYSTON CORPORATION AGAINST THE PROPOSED PROCUREMENT OF NYLON STATIC DISCHARGERS UNDER INVITATION FOR BIDS NO. 33-604-61-101, ISSUED ON JULY 20, 1960, BY DAYTON AIR FORCE DEPOT, GENTILE AIR FORCE STATION, DAYTON, OHIO. THE PROTEST IS DIRECTED TO THE ALLEGED IMPROPER USE OF AN EXHIBIT "A" TO SPECIFICATION MIL-S-9129A WHICH HAD BEEN PREPARED BY GAYSTON BUT USED IN A COMPETITIVE TWO-STEP PROCUREMENT CONTRARY TO THE GOVERNMENT'S OBLIGATION TO TREAT THE EXHIBIT IN A CONFIDENTIAL MANNER.

ON SEPTEMBER 3, 1959, GAYSTON SUBMITTED AN UNSOLICITED PROPOSAL ON ARDC FORM 91 COVERING ITS STATIC DISCHARGER, MODEL 279, TO THE COMMUNICATIONS AND NAVIGATION LABORATORY (C AND N LAB) OF THE WRIGHT AIR DEVELOPMENT CENTER (WADC). THE PROPOSAL WAS SUBMITTED FOR THE PURPOSE OF HAVING THE C AND M LAB CONSIDER WHETHER MODEL 279 WAS A PRODUCT IMPROVEMENT TO REPLACE THE EXISTING STATIC DISCHARGER COVERED BY SPECIFICATION MIL-S-9129A AND WHETHER SUCH MODEL WAS A POSSIBLE NEW PRODUCT FOR USE IN STATIC DISSIPATION ON HIGH-SPEED AIRCRAFT. ARDC FORM 91, ISSUED PURSUANT TO ARDC REGULATION 80-8, AS EXECUTED BY GAYSTON, CONTAINED THE FOLLOWING PROVISIONS:

"1. THE AIR RESEARCH AND DEVELOPMENT COMMAND WILL EXERCISE DUE CARE IN THE HANDLING AND TESTING OF UNSOLICITED ARTICLES AND DISCLOSURES. THE GOVERNMENT WILL, HOWEVER, ASSUME NO RESPONSIBILITY OR LIABILITY TO SUBMITTERS OR OTHERS FOR:

"A. DAMAGE TO, DESTRUCTION OF, OR LOSS OF UNSOLICITED ARTICLES OR DISCLOSURES RESULTING FROM TESTING ACTIVITIES OR OTHERWISE.

"B. DAMAGES OR INJURIES, DUE TO NEGLIGENCE OR OTHERWISE, WHICH ARE INCURRED OR SUFFERED BY SUBMITTERS, SUBMITTERS' EMPLOYEES, OR INVITEES DURING ANY TEST OF SUCH ARTICLE OR DISCLOSURE WHICH IS UNDER THE CONTROL OF THE SUBMITTER OR HIS AUTHORIZED AGENTS OR EMPLOYEES, WHETHER OR NOT AIR FORCE PERSONNEL ARE PARTICIPATING IN THE TEST.

"2. THE MANUFACTURE, TRANSPORTATION AND MAINTENANCE OF ARTICLES SUBMITTED TO THE GOVERNMENT FOR EVALUATION OR TESTING WILL BE ACCOMPLISHED WITHOUT COST TO THE GOVERNMENT.

"3. SUBMITTERS MAY FURNISH INSTRUCTIONS TO THE GOVERNMENT CONCERNING THIS DISPOSAL OF ARTICLES OR DISCLOSURES, PROVIDED SUCH INSTRUCTIONS ARE FURNISHED PRIOR TO COMPLETION OF THE TESTS OR EVALUATION. ANY DISPOSAL IN ACCORDANCE WITH SUCH INSTRUCTIONS SHALL BE AT THE EXPENSE OF THE SUBMITTER. IN THE ABSENCE OF SUCH INSTRUCTIONS PRIOR TO THE COMPLETION OF THE TESTS OR EVALUATION, THE GOVERNMENT WILL, AT THE SUBMITTER'S EXPENSE, DISPOSE OF SUCH PROPERTY IN ACCORDANCE WITH ESTABLISHED PROCEDURES.

"4. THE EVALUATION OR TESTING OF SUCH ARTICLES OR DISCLOSURES WILL IN NO WAY OBLIGATE THE GOVERNMENT TO PROCURE EXPERIMENTAL, PRODUCTION, OR OTHER QUANTITIES OF THE ARTICLE SUBMITTED OR THE ITEM COVERED BY THE DISCLOSURE.

"5. THE ARTICLES OR DISCLOSURES SUBMITTED WILL BE HANDLED IN ACCORDANCE WITH ESTABLISHED GOVERNMENTAL PROCEDURES FOR SAFEGUARDING SUCH ARTICLES OR INFORMATION AGAINST UNAUTHORIZED DISCLOSURE. THE SUBMITTER AGREES THAT ANY LIABILITY BY REASON OF UNAUTHORIZED DISCLOSURE BY THE GOVERNMENT WILL NOT EXTEND BEYOND THE ACTUAL DAMAGE TO THE SUBMITTER CAUSED BY ACTS OF THE GOVERNMENT.

"6. UNSOLICITED ARTICLES OR DISCLOSURES ARE SUBMITTED AND RECEIVED IN ACCORDANCE WITH THIS POLICY AGREEMENT NOTWITHSTANDING ANY CONTRARY OR INCONSISTENT CONDITIONS IMPRINTED ON OR SUBMITTED TOGETHER WITH SUCH ARTICLES OR DISCLOSURES, OR ORALLY EXPRESSED.

"7. REPORTS COVERING THE RESULTS OF EVALUATIONS OR TESTS WILL BE FURNISHED TO SUBMITTERS UPON REQUEST. SUCH REPORTS SHALL NOT BE CONSTRUED AS AN INDORSEMENT OF ARTICLES OR OF THE SUBJECT MATTER OF DISCLOSURES BY THE GOVERNMENT NOR SHALL THEY BE USED IN WHOLE OR IN PART FOR ADVERTISING PURPOSES.

"8. THE ACCEPTANCE OF ARTICLES OR DISCLOSURES FOR EVALUATION OR TESTING IS NOT TO BE CONSTRUED IN ANY WAY AS AN ACCEPTANCE OR OFFER TO ACCEPT SUCH ARTICLES OR DISCLOSURES FOR GOVERNMENT USE.

"9. THE TERMS OF THIS POLICY AGREEMENT SHALL APPLY TO THE ARTICLES AND DISCLOSURES LISTED BELOW, AND SHALL ALSO APPLY TO ALL UNSOLICITED ARTICLES AND DISCLOSURES SUBMITTED HEREAFTER UNTIL THIS AGREEMENT IS TERMINATED IN WRITING OR REVISED.'

IN JANUARY 1960, THE C AND N LAB REQUESTED GAYSTON TO SUBMIT ITS PROPOSAL AS A REVISION OF THE EXISTING MILITARY SPECIFICATION COVERING AN/ASA-3C STATIC DISCHARGERS. GAYSTON SUBMITTED A REVISED SPECIFICATION MIL-S-9129A BY LETTER DATED JANUARY 26, 1960, AND STATED:

"WE ARE SUBMITTING SPECIFICATION MIL-S-9129 REVISED TO MEET PERFORMANCE AND MECHANICAL CHARACTERISTICS OF STATIC DISCHARGER AN/ASA-3C. WE ALSO ARE ENCLOSING OUR DRAWING C-3164.

"GAYSTON CORPORATION HEREBY GIVES THE GOVERNMENT THE RIGHT TO USE THIS INFORMATION AS REQUIRED. HOWEVER, IT IS REQUESTED THAT ANY CHANGES REQUIRED BE COORDINATED WITH GAYSTON CORPORATION.'

ON FEBRUARY 5, 1960, THE C AND N LAB ADVISED GAYSTON THAT:

"1. REVIEW OF THE TEST REPORT ON, AND WRIGHT AIR DEVELOPMENT DIVISION FLIGHT TESTS OF, THE STATIC DISCHARGER DESCRIBED IN SUBJECT PROPOSAL INDICATES SIGNIFICANTLY IMPROVED PERFORMANCE OVER THAT OF THE PRESENT AN/ASA/3B STATIC DISCHARGER.

"2. IN VIEW OF THE SUPERIOR RUGGEDNESS, LIFE AND OVERALL PERFORMANCE OF YOUR IMPROVED STATIC DISCHARGER, THE AIR FORCE WILL CONSIDER SUBSTITUTION OF YOUR IMPROVED DISCHARGER FOR THE AN-ASA-3B ON ANY AIR FORCE CONTRACTS THAT YOU MAY HAVE FOR THIS ITEM.

"3. CURRENT DEVELOPMENT WORK BY COMM AND NAV LABORATORY ON DISCHARGER TECHNIQUES (SEE ATTACHED COPY OF WADC TECHNICAL REPORT 59 521) IS EXPECTED TO CULMINATE IN A DISCHARGER WHICH WILL OBSOLETE CURRENTLY-USED TYPES IN THE NOT-TOO-DISTANT FUTURE. FOR THIS REASON, POSSIBLE REVISION OF PROCUREMENT DOCUMENTS FOR STATIC DISCHARGERS IS BEING HELD IN ABEYANCE UNTIL THE REFERENCED DEVELOPMENT WORK IS COMPLETED.'

SUBSEQUENTLY, GAYSTON CONTACTED THE PROCUREMENT OFFICE AT DAYTON AND FURNISHED THE CONTRACTING OFFICER WITH THE TEST REPORTS ON ITS IMPROVED PRODUCT, INCLUDING REPORTS OF THE C AND N LAB. APPARENTLY AFTER ANALYSIS OF SUCH REPORTS, THE CONTRACTING OFFICER REQUESTED GAYSTON TO PREPARE AN EXHIBIT TO SPECIFICATION MIL-S-9129A WHICH WOULD INCORPORATE GAYSTON'S IMPROVEMENTS. SUCH EXHIBIT WAS PREPARED AND FORWARDED BY GAYSTON BY LETTER DATED MAY 13, 1960, TO THE CONTRACTING OFFICER, WHEREIN REFERENCE WAS MADE TO THE UNSOLICITED PROPOSAL SUBMISSION OF SEPTEMBER 3, 1960, ON ARDC FORM 91.

IT IS FURTHER REPORTED THAT THE CONTRACTING OFFICER REQUESTED GAYSTON TO SUBMIT A PROPOSAL FOR 133,500 STATIC DISCHARGERS TO BE MANUFACTURED IN ACCORDANCE WITH MIL-S-9129A AND GAYSTON'S EXHIBIT. THE DEPUTY FOR PROCUREMENT AND PRODUCTION STATED IN HIS NOVEMBER 8 LETTER THAT:

"* * * HOWEVER, MR. DAVE (CONTRACTING OFFICER) SUBSEQUENTLY DETERMINED THAT SINCE DAYTON AIRCRAFT PRODUCTS, INC., WAS A QUALIFIED SOURCE UNDER SPECIFICATION MIL-S-9129A, THAT FIRM SHOULD ALSO HAVE AN OPPORTUNITY TO SUBMIT A TECHNICAL PROPOSAL FOR EVALUATION. UNDER THE TWO-STEP METHOD OF ADVERTISING, DAYTON AIRCRAFT PRODUCTS SUBMITTED A TECHNICAL PROPOSAL IN RESPONSE TO THE SPECIFICATION AND EXHIBIT WHICH WAS APPROVED. GAYSTON AND DAYTON SUBMITTED BIDS ON THE PROPOSED PROCUREMENT AND DAYTON WAS THE LOW BIDDER.'

WHILE WE HAVE SOME DOUBTS, WHICH HAVE NOT BEEN RESOLVED BY THE PRESENT RECORD, WHETHER THE PROCEDURES PRESCRIBED BY SECTION 2-503, ASPR, WERE FOLLOWED HERE, WE DO NOT FIND IT NECESSARY TO CONSIDER THAT MATTER. CF. B -143277, JULY 20, 1960.

THE EXHIBIT PREPARED BY GAYSTON TO SPECIFICATION MIL-S-9129A WAS FURNISHED THE GOVERNMENT PURSUANT TO THE PROVISIONS OF ARDC REGULATION 80- 8. PARAGRAPHS 5 (F) AND (G) OF THE REGULATION PROVIDE, IN PERTINENT PART:

"F. UNSOLICITED PROPOSALS, ARTICLES, AND DISCLOSURES WILL NOT BE REPRODUCED, COPIED, PHOTOGRAPHED, OR REDUCED TO DRAWINGS, EXCEPT FOR RECORD OR NECESSARY ADMINISTRATIVE PURPOSE. * *

"G. AFTER CONSIDERATION AND EVALUATION, ALL BUT ONE COPY (RETAINED FOR RECORD PURPOSES) OF UNSOLICITED PROPOSALS, DISCLOSURES, OR OTHER SUBMISSION WILL BE RETURNED TO THE SUBMITTER. INSTRUCTIONS FURNISHED BY THE SUBMITTER PRIOR TO COMPLETION OF THE EVALUATION AND TEST WILL BE FOLLOWED, BUT AT NO UNUSUAL EXPENSE TO THE GOVERNMENT. IF, AFTER EVALUATION, THE SUBJECT MATTER OF A PARTICULAR UNSOLICITED DISCLOSURE OR OTHER SUBMISSION IS DESIRED FOR ANY PURPOSE OTHER THAN RECORD PURPOSES, ACTION SHOULD BE TAKEN TO OBTAIN THAT SUBJECT MATTER BY NORMAL PROCUREMENT CONTRACTING PROCEDURES.'

PROPRIETARY RIGHTS ARE DEFINED IN PARAGRAPH 3 (B) OF REGULATION 80 8 AS "EXCLUSIVE RIGHTS OF OWNERSHIP IN INTELLECTUAL PROPERTY ARISING BY VIRTUE OF AUTHORSHIP, INVENTION OR DISCOVERY AND INCLUDES INVENTIONS, IDEAS, SCHEMES, TECHNIQUES, OR METHODS, WHETHER OR NOT PATENTABLE, SUBMITTED FOR CONSIDERATION AND EVALUATION, WHICH MAY OR MAY NOT BE IN THE FORM OF A PROPOSAL SUITABLE FOR ADOPTION AS A PART OF THE APPROVED R AND D PROGRAM.'

WE ARE UNABLE TO AGREE THAT GAYSTON'S TRANSACTIONS WITH DAYTON AIR FORCE DEPOT PROCUREMENT PERSONNEL HAD THE EFFECT OF RELEASING THE AIR FORCE FROM THE RESPONSIBILITY TO PROTECT GAYSTON'S TECHNICAL DATA FROM UNAUTHORIZED DISCLOSURE. ON THE CONTRARY, THE PROCUREMENT PERSONNEL WERE NO NOTICE THAT THE GAYSTON EXHIBIT WAS NOT TO BE DISCLOSED SINCE THE CONTRACTING OFFICER WAS SPECIFICALLY ADVISED IN LETTER OF MAY 13, 1960, THAT THE DATA HAD BEEN SUBMITTED PURSUANT TO ARDC FORM 91. THE DUTY AND RESPONSIBILITY TO PREVENT UNAUTHORIZED DISCLOSURE OF THE DATA INVOLVED HERE WAS NOT CONFINED TO THE C AND N LAB BUT EXTENDED ALSO TO THE PROCUREMENT ACTIVITY.

WE DO NOT REGARD THE STATEMENT IN GAYSTON'S LETTER OF JANUARY 26, 1960, SUPRA, AS INCONSISTENT WITH ITS CLAIM OF PROPRIETARY PROTECTION. THAT STATEMENT WHEN READ IN CONTEXT WITH THE ENTIRE LETTER LEAVES LITTLE DOUBT THAT IT WAS DESIGNED TO ALLOW THE GOVERNMENT TO USE ITS DATA "AS REQUIRED" TO EVALUATE ITS PRODUCT IN THE LIGHT OF SPECIFICATION MIL-S-9129A SO AS TO DETERMINE WHETHER THE PRODUCT, IN FACT, WAS AN IMPROVEMENT OVER THE ONE CALLED FOR BY THE EXISTING SPECIFICATION.

THE STATEMENT OF DAYTON AIRCRAFT PRODUCTS THAT THE INFORMATION INCLUDED IN THE EXHIBIT DOES NOT, IN ITS OPINION, CONSTITUTE PROPRIETARY DATA IS NOT PERSUASIVE. THE DISCLOSURE OF THE EXHIBIT TO DAYTON AIRCRAFT WOULD APPEAR TO HAVE PLACED THE INFORMATION IN THE PUBLIC DOMAIN BUT THIS DOES NOT REFUTE THE FACT THAT THE DATA WAS PROPRIETARY AT THE TIME IT WAS MADE AVAILABLE TO THE AIR FORCE. MOREOVER, DAYTON AIRCRAFT'S STATEMENT IS INCONSISTENT WITH THE STATEMENTS MADE BY THE C AND N LAB IN ITS LETTER OF FEBRUARY 5, 1960, TO GAYSTON, QUOTED ABOVE.

WE THEREFORE ARE OF THE OPINION THAT THE INCLUSION OF GAYSTON'S EXHIBIT TO SPECIFICATION MIL-S-9129A IN INVITATION NO. 33-604-61-101 WITHOUT ITS CONSENT, EXPRESSED OR IMPLIED, CONSTITUTED A DISCLOSURE CONTRARY TO ARDC REGULATION 80-8 AND ARDC FORM 91. ON THE RECORD BEFORE US THE AIR FORCE WAS OBLIGATED, UNDER ESTABLISHED PROCEDURES, TO MAINTAIN THE CONFIDENTIAL CHARACTER OF THE DATA OR TRADE SECRETS SUBMITTED BY GAYSTON FOR EVALUATION.

10 U.S.C. 2305 (C) PROVIDES THAT AWARDS SHALL BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID CONFORMS TO THE INVITATION AND "WILL BE MOST ADVANTAGEOUS TO THE UNITED STATES," PRICE AND OTHER FACTORS CONSIDERED. WE ARE OF THE VIEW THAT AN AWARD UNDER THE INSTANT INVITATION WOULD NOT BE ,MOST ADVANTAGEOUS TO THE UNITED STATES" UNDER THE CIRCUMSTANCES INVOLVED. ANY RESULTING CONTRACT TO THE LOW BIDDER WOULD EMBODY SPECIFICATIONS WHICH WERE NOT RIGHTFULLY THE PROPERTY OF THE GOVERNMENT AND WOULD UNREASONABLY COMPOUND THE INJURY ALREADY SUFFERED BY GAYSTON. ALSO WE DO NOT BELIEVE THAT THE GOVERNMENT SHOULD INFRINGE A PROPRIETARY RIGHT BY COMPETITIVE PROCUREMENT. IT SHOULD BE NOTED THAT GAYSTON HAS NO READILY AVAILABLE STATUTORY REMEDY TO PURSUE AS WOULD BE THE CASE WHERE A PATENT IS BEING INFRINGED UNDER A GOVERNMENT CONTRACT. 38 COMP. GEN. 276; 28 U.S.C. 1498. COMPARE, IN THIS CONNECTION, PUBLIC LAW 85-726, 74 STAT. 855, WHICH EXTENDS THE PROVISIONS OF 28 U.S.C. 1498, TO INFRINGEMENTS BY THE GOVERNMENT, OR BY ANY CONTRACTOR ACTING WITH ITS CONSENT, OF ANY WORK PROTECTED UNDER THE COPYRIGHT LAWS. SEE, ALSO, TOWLE V. ROSS, 32 F.SUPP. 125. WHILE DAYTON AIRCRAFT IS THE LOWEST BIDDER UNDER THE INVITATION AND WOULD BE ORDINARILY ENTITLED TO AN AWARD, WE BELIEVE THAT THE INTEGRITY OF THE GOVERNMENT AS A CONTRACT REQUIRES THAT THE INVITATION BE CANCELED.

IN VIEW OF THE PARTICULAR CIRCUMSTANCES HERE INVOLVED, WE THINK THAT THE PROPERTY INTEREST OF GAYTON IN EXHIBIT "A" TO SPECIFICATION MIL-S-9129A PROPERLY COULD BE ACQUIRED BY THE GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF PART 2, SECTION IX, ASPR, UNDER A CONTRACT NEGOTIATED PURSUANT TO 10 U.S.C. 2304 (A) (10) AND SECTION 3-210.2 (II), ASPR.