B-156959, DEC. 6, 1965

B-156959: Dec 6, 1965

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FOUR PROPOSALS WERE RECEIVED ON JUNE 1. YOUR OFFER WAS THE HIGHEST RECEIVED IN THE AMOUNT OF $51. THE LOW OFFER WAS ACCEPTED ON JUNE 4. THAT THE AWARD WAS IMPROPER AND SHOULD BE CANCELED SINCE IT CONSTITUTED AN UNWARRANTED USURPATION AND/OR CONFISCATION OF YOUR PROPERTY WITHOUT JUST COMPENSATION. PARTICULARLY BECAUSE THE END ITEM AND THE DRAWINGS THEREOF ARE PROPRIETARY TO YOUR COMPANY. THIS PROTEST WAS THE SUBJECT OF AN EXHAUSTIVE INVESTIGATION BY THE DEPARTMENT AND. THE RECORD BEFORE US SHOWS THAT YOUR CLAIM THAT THE INVOLVED DRAWINGS WERE PROPRIETARY TO YOUR COMPANY WAS THE SUBJECT OF CORRESPONDENCE BETWEEN YOUR COMPANY AND THE LOCKHEED MISSILES AND SPACE COMPANY. LOCKHEED WAS A PRIME COST-PLUS-A-FIXED-FEE CONTRACTOR WITH THE AIR FORCE.

B-156959, DEC. 6, 1965

TO ALL AMERICAN ENGINEERING COMPANY:

BY LETTER DATED JUNE 4, 1965, WITH ENCLOSURES, AND SUBSEQUENT CORRESPONDENCE, YOU PROTESTED AGAINST THE USE OF YOUR PROPRIETARY DRAWINGS BY THE DEPARTMENT OF THE AIR FORCE IN SOLICITING OFFERS UNDER REQUEST FOR PROPOSALS NO. 65-08561, ISSUED BY THE SACRAMENTO AIR MATERIEL AREA, MCCLELLAN AIR FORCE BASE, CALIFORNIA.

THE REQUEST COVERED A REQUIREMENT FOR A MAXIMUM AND MINIMUM QUANTITY OF RETAINER HOOKS FOR AERIAL RECOVERY SYSTEMS IN ACCORDANCE WITH DRAWING LIST NO. 65C40533. FOUR PROPOSALS WERE RECEIVED ON JUNE 1, 1965, AND IT APPEARED THAT ADVANCED MATERIALS TECHNOLOGY, INC., SUBMITTED THE LOWEST OFFER IN THE AMOUNT OF $13,530. YOUR OFFER WAS THE HIGHEST RECEIVED IN THE AMOUNT OF $51,395.85. THE LOW OFFER WAS ACCEPTED ON JUNE 4, 1965.

YOU CONTEND, IN EFFECT, THAT THE AWARD WAS IMPROPER AND SHOULD BE CANCELED SINCE IT CONSTITUTED AN UNWARRANTED USURPATION AND/OR CONFISCATION OF YOUR PROPERTY WITHOUT JUST COMPENSATION, PARTICULARLY BECAUSE THE END ITEM AND THE DRAWINGS THEREOF ARE PROPRIETARY TO YOUR COMPANY. THIS PROTEST WAS THE SUBJECT OF AN EXHAUSTIVE INVESTIGATION BY THE DEPARTMENT AND, BASED UPON THE FACTS DISCLOSED BY SUCH INVESTIGATION, THE DEPARTMENT HAS RECOMMENDED TO OUR OFFICE THAT THE PROTEST BE DENIED. UPON REVIEW OF THE RECORD BEFORE US, WE FIND NO LEGAL BASIS TO QUESTION THE ACTIONS TAKEN BY THE DEPARTMENT WHICH CULMINATED IN THE AWARD MADE TO ADVANCED MATERIALS TECHNOLOGY, INC.

THE RECORD BEFORE US SHOWS THAT YOUR CLAIM THAT THE INVOLVED DRAWINGS WERE PROPRIETARY TO YOUR COMPANY WAS THE SUBJECT OF CORRESPONDENCE BETWEEN YOUR COMPANY AND THE LOCKHEED MISSILES AND SPACE COMPANY. LOCKHEED WAS A PRIME COST-PLUS-A-FIXED-FEE CONTRACTOR WITH THE AIR FORCE, AND IT APPEARS THAT YOU WERE A SUBCONTRACTOR TO LOCKHEED DURING 1963 AND 1964. IN THAT CORRESPONDENCE WITH LOCKHEED, YOU MAKE THE POINT THAT THE ORIGINAL DESIGN OF THE RETRIEVAL MECHANISM WAS PAID FOR AND FUNDED BY YOUR COMPANY AND WAS NOT DEVELOPED OR PAID FOR WITH GOVERNMENT FUNDS.

YOUR CLAIM THAT THE RETRIEVAL MECHANISM AND ITS DRAWING ARE PROPRIETARY TO YOUR FIRM MUST BE RESOLVED IN THE LIGHT OF THE CONDITIONS UNDER WHICH THE DATA WAS FURNISHED BY YOU AND THE PERTINENT CONTRACTUAL RELATIONSHIP BETWEEN YOU AND LOCKHEED WITH REFERENCE TO SUCH END ITEM AND DATA. UNDER DATE OF DECEMBER 21, 1960, LOCKHEED ENTERED INTO A COST-PLUS-A-FIXED-FEE SUBCONTRACT (NO. 28-623, AS AMENDED) WITH YOUR FIRM UNDER ITS PRIME CONTRACT NO. AF 04/647/-563. UNDER YOUR SUBCONTRACT, YOU WERE REQUIRED TO "CONDUCT A PROGRAM OF DESIGN DEVELOPMENT, TEST, MANUFACTURE COORDINATION AND DELIVERY RESULTING IN THE DELIVERY TO LMSD (LOCKHEED) OF ONE PROTOTYPE AND SIX PRODUCTION UNITS OF AN AIR-TO-AIR RECOVERY SYSTEM FOR THE RECOVERY OF A DESCENDING PARACHUTE SUSPENDED CAPSULE * * *.' SPECIFICATION NO. 1069029 C TO YOUR SUBCONTRACT REQUIRED YOU TO FURNISH DESIGN SPECIFICATIONS WHEREIN DESIGN OF THE EQUIPMENT IS ESTABLISHED BY THE APPROVED ENGINEERING DRAWINGS COVERING THE ITEM AND ALSO A COMPLETE SET OF DRAWINGS AND DRAWING INDEX. IT WAS FURTHER PROVIDED THAT THE SPECIFICATIONS AND DRAWINGS "WILL BE USED FOR PROCUREMENT OF ADDITIONAL EQUIPMENT," AND THAT THE "UNITED STATES AIR FORCE WILL HAVE ALL PROPRIETARY AND REPRODUCTION RIGHTS TO THIS DATA, AND MANUFACTURING RIGHTS FOR THE EQUIPMENT.'

ARTICLE 37 OF YOUR SUBCONTRACT PROVIDED WITH RESPECT TO DATA:

"A. THE TERM "SUBJECT DATA" AS USED HEREIN INCLUDES WRITINGS, SOUND RECORDINGS, PICTORIAL REPRODUCTIONS, DRAWINGS OR OTHER GRAPHICAL REPRESENTATIONS, AND WORKS OF ANY SIMILAR NATURE (WHETHER OR NOT COPYRIGHTED) WHICH ARE SPECIFIED TO BE DELIVERED UNDER THIS SUBCONTRACT. THE TERM DOES NOT INCLUDE FINANCIAL REPORTS, COST ANALYSIS, AND OTHER INFORMATION INCIDENTAL TO CONTRACT ADMINISTRATION.

"B. SUBCONTRACTOR AGREES TO AND DOES HEREBY GRANT TO THE GOVERNMENT, AND TO ITS OFFICERS, AGENTS, AND EMPLOYEES ACTING WITHIN THE SCOPE OF THEIR OFFICIAL DUTIES, A ROYALTY-FREE, NONEXCLUSIVE AND IRREVOCABLE LICENSE THROUGHOUT THE WORLD FOR GOVERNMENT PURPOSES TO PUBLISH, TRANSLATE, REPRODUCE, DELIVER, PERFORM, DISPOSE OF, AND TO AUTHORIZE OTHERS SO TO DO, ALL SUBJECT DATA NOW OR HEREAFTER COVERED BY COPYRIGHT; PROVIDED, THAT WITH RESPECT TO THE SUBJECT DATA NOW OR HEREAFTER COVERED BY COPYRIGHT AND NOT ORIGINATED IN THE PERFORMANCE OF THIS SUBCONTRACT, SUCH LICENSE SHALL BE ONLY TO THE EXTENT THAT THE SUBCONTRACTOR, ITS EMPLOYEES, OR ANY INDIVIDUAL OR CONCERN SPECIFICALLY EMPLOYED OR ASSIGNED BY SUBCONTRACTOR TO ORIGINATE AND PREPARE SUCH DATA UNDER THIS SUBCONTRACT, NOW HAS, OR PRIOR TO COMPLETION OF FINAL SETTLEMENT OF THIS SUBCONTRACT MAY ACQUIRE, THE RIGHT TO GRANT SUCH LICENSE WITHOUT BECOMING LIABLE TO PAY COMPENSATION TO OTHERS SOLELY BECAUSE OF SUCH GRANT.

"C. SUBCONTRACTOR SHALL EXERT ALL REASONABLE EFFORT TO ADVISE THE CONTRACTING OFFICER, AT THE TIME OF DELIVERY OF THE SUBJECT DATA FURNISHED UNDER THIS SUBCONTRACT, (I) OF ALL INVASIONS OF THE RIGHT OF PRIVACY CONTAINED THEREIN AND (II) OF ALL PORTIONS OF SUCH DATA COPIED FROM WORK NOT COMPOSED OR PRODUCED IN THE PERFORMANCE OF THIS SUBCONTRACT AND NOT LICENSED UNDER THIS ARTICLE 37.

"D. SUBCONTRACTOR SHALL REPORT TO LOCKHEED AND THE CONTRACTING OFFICER, PROMPTLY AND IN REASONABLE WRITTEN DETAIL, EACH NOTICE OR CLAIM OF COPYRIGHT INFRINGEMENT RECEIVED BY SUBCONTRACTOR WITH RESPECT TO ALL SUBJECT DATA DELIVERED UNDER THIS SUBCONTRACT.

"F. SUBJECT TO THE PROVISO OF B. ABOVE AND UNLESS OTHERWISE LIMITED BELOW, THE GOVERNMENT MAY DUPLICATE, USE, AND DISCLOSE IN ANY MANNER AND FOR ANY PURPOSE WHATSOEVER, AND HAVE OTHERS SO DO, ALL SUBJECT DATA DELIVERED UNDER THIS SUBCONTRACT.

"G. NOTWITHSTANDING ANY PROVISIONS OF THIS SUBCONTRACT CONCERNING INSPECTION AND ACCEPTANCE, THE GOVERNMENT AND LOCKHEED SHALL HAVE THE RIGHT AT ANY TIME TO MODIFY, REMOVE, OBLITERATE OR IGNORE ANY MARKING NOT AUTHORIZED BY THE TERMS OF THIS SUBCONTRACT ON ANY PIECE OF SUBJECT DATA FURNISHED UNDER THIS SUBCONTRACT.

"H.DATA NEED NOT BE FURNISHED FOR STANDARD COMMERCIAL ITEMS OR SERVICES WHICH ARE NORMALLY OR HAVE BEEN SOLD OR OFFERED TO THE PUBLIC COMMERCIALLY BY ANY SUPPLIER AND WHICH ARE INCORPORATED AS COMPONENT PARTS IN OR TO BE USED WITH THE PRODUCT OR PROCESS BEING DEVELOPED IF IN LIEU THEREOF IDENTIFICATION OF SOURCE AND CHARACTERISTICS (INCLUDING PERFORMANCE SPECIFICATIONS, WHEN NECESSARY) SUFFICIENT TO ENABLE THE GOVERNMENT TO PROCURE THE PART OR AN ADEQUATE SUBSTITUTE, ARE FURNISHED; AND FURTHER,"PROPRIETARY DATA" NEED NOT BE FURNISHED FOR OTHER ITEMS WHICH WERE DEVELOPED AT PRIVATE EXPENSE AND PREVIOUSLY SOLD OR OFFERED FOR SALE, INCLUDING MINOR MODIFICATIONS THEREOF, WHICH ARE INCORPORATED AS COMPONENT PARTS IN OR TO BE USED WITH THE PRODUCT OR PROCESS BEING DEVELOPED IF IN LIEU THEREOF SUBCONTRACTOR SHALL IDENTIFY SUCH OTHER ITEMS AND THAT "PROPRIETARY DATA" PERTAINING THERETO WHICH IS NECESSARY TO ENABLE REPRODUCTION OR MANUFACTURE OF THE ITEM OR PERFORMANCE OF THE PROCESS. FOR THE PURPOSE OF THIS CLAUSE ,PROPRIETARY DATA" MEANS DATA PROVIDING INFORMATION CONCERNING THE DETAILS OF A CONTRACTOR'S SECRETS OF MANUFACTURE, SUCH AS MAY BE CONTAINED IN BUT NOT LIMITED TO ITS MANUFACTURING METHODS OR PROCESSES, TREATMENT AND CHEMICAL COMPOSITION OF MATERIALS, PLANT LAYOUT AND TOOLING, TO THE EXTENT THAT SUCH INFORMATION IS NOT DISCLOSED BY INSPECTION OR ANALYSIS OF THE PRODUCT ITSELF AND TO THE EXTENT THAT SUBCONTRACTOR HAS PROTECTED SUCH INFORMATION FROM UNRESTRICTED USE BY OTHERS.'

APPARENTLY, IN FURNISHING DATA TO LOCKHEED PURSUANT TO THE SUBCONTRACT REQUIREMENTS, YOU APPENDED A PROPRIETARY STAMP, PARTICULARLY ON YOUR DRAWING NO. 11SK295, WHICH READ:

"THIS DRAWING IS LOANED SUBJECT TO RETURN ON DEMAND, AND IS NOT TO BE USED OR COPIED IN WHOLE OR IN PART EXCEPT AS EXPRESSLY AUTHORIZED BY ALL AMERICAN ENGINEERING COMPANY.'

WHETHER THIS RESTRICTIVE LEGEND IN FACT PRECLUDED LOCKHEED AND/OR THE GOVERNMENT FROM EXERCISING UNLIMITED RIGHTS WITH RESPECT TO SUCH DATA IS DEPENDENT UPON WHETHER SUCH DATA WAS ,SUBJECT DATA" WITHIN THE MEANING OF ARTICLE 37. IN VIEW OF THE DELIVERY REQUIREMENTS OF YOUR SUBCONTRACT, COUPLED WITH THE SUBCONTRACT PROVISION RELATING TO THE UNRESTRICTED USE OF "SUBJECT DATA" BY THE GOVERNMENT, WE SEE NO SUBSTANTIAL BASIS FOR REGARDING THE DATA INVOLVED HERE AS OTHER THAN "SUBJECT DATA.' SEE 38 COMP. GEN. 667. THAT BEING THE CASE, BOTH LOCKHEED AND THE GOVERNMENT COULD PROPERLY IGNORE ANY SUCH RESTRICTIVE LEGENDS ON ANY PIECE OF "SUBJECT DATA" PURSUANT TO ARTICLE 37G. IN THIS CONNECTION, THE STAFF JUDGE ADVOCATE GENERAL, AIR FORCE LOGISTICS COMMAND, REVIEWED THE RESULTS OF THE INVESTIGATION MADE OF YOUR COMPLAINT AND HAS CONCLUDED, IN PERTINENT PART, THAT:

"4. PARTICULAR REFERENCE IS MADE TO THE 12 APRIL 1963 LOCKHEED MISSILES AND SPACE COMPANY LETTER TO ALL AMERICAN ENGINEERING WHEREIN LOCKHEED FIRMLY ESTABLISHED THAT THE "SUBJECT DATA" TO BE DELIVERED UNDER LOCKHEED'S SUBCONTRACT 28-623 WITH ALL AMERICAN ENGINEERING WAS TO BE DELIVERED UNDER THE TERMS OF THE STANDARD ASPR R AND D DATA CLAUSE (ASPR 9 -203.1 AND 9-203.4) UNDER WHICH DATA RIGHTS CLAUSE THE SUPPLIER OF ENGINEERING DATA MAY WITHHOLD CERTAIN CLASSES AND TYPES OF ENGINEERING DATA FROM DELIVERY BUT SAID SUPPLIER MAY NOT DELIVER TO THE PRIME CONTRACTOR ENGINEERING DRAWINGS WHICH BEAR AN ASPR PROPRIETARY STAMP OR A CORPORATE PROPRIETARY STAMP. THE LOCKHEED MISSILES AND SPACE COMPANY LETTER DATED 26 JUNE 1963 TO THE AIR FORCE SPACE SYSTEMS DIVISION FULLY ESTABLISHED THAT THE DATA SPECIFIED FOR DELIVERY UNDER THE ALL AMERICAN ENGINEERING SUBCONTRACT WAS IN FACT CONTROLLED BY THE STANDARD ASPR R AND D DATA CLAUSE. IN ADDITION, LOCKHEED OFFICIALS HAVE STATED THAT BY THE TERMS OF THEIR PURCHASE ORDER THEY ASKED FOR ALL DRAWINGS RELATED TO THE INITIAL CONFIGURATION OF THE RETRIEVAL DEVICE AND DRAWING 11SK295 WAS IN FACT DELIVERED TO LOCKHEED UNDER THE DATA RIGHTS TERMS OF THE SUBCONTRACT. STATED OTHERWISE, UNDER THE STANDARD ASPR R AND D DATA CLAUSE, ALL AMERICAN ENGINEERING COULD HAVE ELECTED TO RETAIN CERTAIN TYPES AND CLASSES OF DATA RELATED TO STANDARD COMMERCIAL ITEMS AND OTHER CLASSES OF PROPRIETARY DATA RELATED TO OTHER ITEMS WHICH WERE DEVELOPED AT PRIVATE EXPENSE AND PREVIOUSLY SOLD OR OFFERED FOR SALE. IF DATA WITHHOLDING OF THIS TYPE OF DATA IS ELECTED, THE SUBCONTRACTOR WOULD BE OBLIGATED TO IDENTIFY SUCH OTHER ITEMS IN TERMS OF IDENTIFICATION OF SOURCE AND CHARACTERISTICS SUFFICIENT TO ENABLE THE GOVERNMENT TO PROCURE THE PART OR AN ADEQUATE SUBSTITUTE. THE RECORD OF THIS CASE INDICATES THAT THE ENGINEERING DATA ALL AMERICAN ENGINEERING FURNISHED TO THE PRIME CONTRACTOR LOCKHEED MISSILES AND SPACE COMPANY WAS THE ENGINEERING DATA AS ILLUSTRATED BY ALL AMERICAN ENGINEERING DRAWING 11SK295. THIS BEING THE CASE, ALL AMERICAN ENGINEERING HAS ELECTED TO FURNISH THE ENGINEERING DRAWINGS REQUIRED BY THE SUBCONTRACT UNDER THE CONTROL OF THE STANDARD ASPR R AND D DATA CLAUSE WHICH CLAUSE BY ITS OWN TERMS IS CLEARLY A RIGHTS IN DATA UNLIMITED CLAUSE. IF THE ENGINEERING INFORMATION DEPICTED ON THE ALL AMERICAN ENGINEERING DRAWING 11SK295 CAN BE CONSIDERED AS MEETING THE ASPR DEFINITION OF "PROPRIETARY DATA" SUCH PROPRIETARY DATA WAS CONVERTED TO NON-PROPRIETARY DATA BY THE ACT OF ALL AMERICAN ENGINEERING IN DELIVERING THE ENGINEERING DRAWINGS TO LOCKHEED MISSILES AND SPACE COMPANY UNDER THE CONTROL OF THE ASPR R AND D RIGHTS IN DATA UNLIMITED CLAUSE. IS CONCLUDED THAT ALL AMERICAN ENGINEERING DRAWING 11SK295 REVISION F WAS IN LAW AND FACT A NON-PROPRIETARY DRAWING AT THE TIME IT WAS USED TO ACCOMPLISH THE REVERSE ENGINEERING BY THE SMAMA ENGINEERS. ON THIS BASIS, NO LEGAL OR FACTUAL GROUNDS ARE APPARENT WHICH SUPPORTS THE ALL AMERICAN ENGINEERING ALLEGATION OF MISUSE OF PROPRIETARY DATA.

"6. THE ONLY MANNER IN WHICH THE ALL AMERICAN ENGINEERING DRAWING COULD HAVE RETAINED ITS PROPRIETARY CHARACTER WOULD HAVE BEEN FOR ALL AMERICAN ENGINEERING TO SUPPLY SUCH ENGINEERING DRAWINGS TO LOCKHEED MISSILES AND SPACE COMPANY ON A "VOLUNTARY BASIS" AND EXTERNAL TO A CONTRACTUAL REQUIREMENT FOR THE DELIVERY OF DATA FOR THE ENTIRE PERIOD DURING WHICH ALL AMERICAN ENGINEERING WAS IN FACT UNDER A SUCCESSIVE SEQUENCE OF SUBCONTRACTS WITH LOCKHEED MISSILES AND SPACE COMPANY. SUCH CONDITION OF VOLUNTARY SUBMITTALS HAS NOT BEEN ESTABLISHED BY RE EXAMINATION OF THIS CASE WITH THE LOCKHEED MISSILES AND SPACE COMPANY CONTRACTING OFFICER AND KNOWLEDGEABLE LOCKHEED ENGINEERS RESPONSIBLE FOR MONITORING THE SUBCONTRACT WITH ALL AMERICAN ENGINEERING. IT IS THE LOCKHEED POSITION THAT ALL OF THE ENGINEERING DRAWINGS RELATED TO THE INITIAL CONFIGURATION OF THE RETRIEVAL DEVICE TO BE USED WITH JC 130B AIRCRAFT WOULD BE DELIVERED UNDER THE DATA RIGHTS CLAUSE AND THE DATA REQUIREMENTS OF THE RESPECTIVE SUBCONTRACTS. SUCH CONDITION AS ABOVE RECITED AFFORDS THE DELIVERY OF RIGHTS IN DATA UNLIMITED OR NON PROPRIETARY DATA BOTH TO THE PRIME CONTRACTOR LOCKHEED AND THE AIR FORCE.' WHILE THE RECORD BEFORE US REVEALS THAT, IN ADDITION TO THE STANDARD REVERSE ENGINEERING TECHNIQUES, AIR FORCE ENGINEERS DID IN FACT RESORT TO THE USE OF YOUR DRAWING 11SK295, REVISION F" IN PREPARING THE SUBJECT REQUEST FOR PROPOSALS, WE ARE INFORMED THAT THE DRAWING WAS USED ONLY AS A BASIS TO UPGRADE AND REVISE A REDESIGNED HOOK TO WHICH NEW TOLERANCES WERE APPLIED. HOWEVER, SINCE THE DRAWING WAS NOT, IN FACT OR IN LAW, A PROPRIETARY DRAWING, WITHIN THE DEFINITION OF "PROPRIETARY DATA," BUT RATHER A PART OF SUBCONTRACT "SUBJECT DATA," WE ATTACH NO PARTICULAR SIGNIFICANCE TO THE FACT THAT THE DRAWING WAS USED IN A REVERSE ENGINEERING TECHNIQUE WHICH PRODUCED TECHNICAL RESULTS SUBSTANTIALLY SUPERIOR TO THE ORIGINAL DRAWING.

IN ARRIVING AT OUR CONCLUSION THAT THE USE OF THE DRAWINGS, AS UPGRADED, BY THE GOVERNMENT IN REQUEST FOR PROPOSALS NO. 65-08561 WAS PROPER, WE ALSO CONSIDERED THE OBLIGATION OF LOCKHEED UNDER ITS PRIME CONTRACT TO FURNISH ALL "SUBJECT DATA" TO THE GOVERNMENT AS PART OF THE TOTAL CONTRACT CONSIDERATION. WE AGREE THAT AN OWNER OF PROPRIETARY INFORMATION MAY PROTECT HIMSELF BY CONTRACT AGAINST THE UNAUTHORIZED DISCLOSURE OF HIS TRADE SECRETS (B-155884, MAY 18, 1965); BUT AN OWNER OF PROPRIETARY INFORMATION MAY ALSO BY CONTRACT, AS HERE, OBLIGATE HIMSELF TO DELIVER SUCH INFORMATION FOR UNRESTRICTED USE AS PART OF THE CONTRACT CONSIDERATION--- AND SUCH UNRESTRICTED USE IS NOT THEN A MATTER OF GENERAL LAW BUT OF CONTRACT.