B-157808, DEC. 16, 1965

B-157808: Dec 16, 1965

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BIDS UNDER BOTH INVITATIONS WERE OPENED ON SEPTEMBER 24. IT APPEARED THAT HATHAWAY WAS THE LOWEST BIDDER UNDER BOTH INVITATIONS. YOU PROTESTED AGAINST ANY AWARD TO HATHAWAY BECAUSE IT WAS NOT THE LOWEST QUALIFIED BIDDER. IT IS ALLEGED THAT PERFORMANCE OF THE RESULTING CONTRACTS BY HATHAWAY WOULD VIOLATE THE ORDER OF THE DISTRICT COURT OF TULSA COUNTY. "AND SAID AGREEMENT IS HEREBY APPROVED AND INCORPORATED IN THIS ORDER OF DISMISSAL.'. WE UNDERSTAND THAT THE PRESIDENT OF HATHAWAY AND CERTAIN OF ITS KEY PERSONNEL (ALL OF WHOM WERE THE DEFENDANTS IN THE ABOVE-ENTITLED CASE) REPRESENTED. WARRANTED IN THE REFERRED-TO MUTUAL RELEASE AND AGREEMENT: "/4) THAT THEY HAVE NOT HAD. DO NOT NOW HAVE.

B-157808, DEC. 16, 1965

TO MR. MICHAEL LEO LOONEY:

BY LETTER DATED OCTOBER 7, 1965, AND SUBSEQUENT CORRESPONDENCE, YOU PROTESTED, ON BEHALF OF CENTURY ELECTRONICS AND INSTRUMENTS, INC., AGAINST THE AWARDS MADE TO HATHAWAY INSTRUMENTS, INC., UNDER DEPARTMENT OF THE NAVY INVITATION FOR BIDS NOS. 251-77-66 AND 251-166-66, ISSUED ON AUGUST 10 AND 25, 1965, RESPECTIVELY, BY THE PUGET SOUND NAVAL SHIPYARD, BREMERTON, WASHINGTON.

THE INVITATION REQUESTED BIDS FOR QUANTITIES OF OSCILLOGRAPHS TYPE II AND TYPE IV, IN ACCORDANCE WITH SPECIFICATION MIL-O-23560A, BUREAU OF WEAPONS DRAWING AND KEYPORT NAVAL TORPEDO STATIONS REVISIONS. BIDS UNDER BOTH INVITATIONS WERE OPENED ON SEPTEMBER 24, 1965, AND IT APPEARED THAT HATHAWAY WAS THE LOWEST BIDDER UNDER BOTH INVITATIONS. YOU PROTESTED AGAINST ANY AWARD TO HATHAWAY BECAUSE IT WAS NOT THE LOWEST QUALIFIED BIDDER. IN SUPPORT THEREOF, IT IS ALLEGED THAT PERFORMANCE OF THE RESULTING CONTRACTS BY HATHAWAY WOULD VIOLATE THE ORDER OF THE DISTRICT COURT OF TULSA COUNTY, OKLAHOMA (DOCKET NO. 109924), ENTERED ON JULY 14, 1965, IN THE CASE OF CENTURY GEOPHYSICAL CORPORATION, ET AL. V. T. A. MAHART, ET AL. THE ORDER READS AS FOLLOWS:

"ORDER OF DISMISSAL

"THE COURT UPON MOTION BY THE PLAINTIFFS AND UPON EXAMINATION OF THE MUTUAL RELEASE AND AGREEMENT ATTACHED TO THEIR MOTION, HEREBY ORDERS THIS SUIT DISMISSED UPON THE GROUNDS OF SAID AGREEMENT.

"AND SAID AGREEMENT IS HEREBY APPROVED AND INCORPORATED IN THIS ORDER OF DISMISSAL.'

WE UNDERSTAND THAT THE PRESIDENT OF HATHAWAY AND CERTAIN OF ITS KEY PERSONNEL (ALL OF WHOM WERE THE DEFENDANTS IN THE ABOVE-ENTITLED CASE) REPRESENTED, AGREED, AND WARRANTED IN THE REFERRED-TO MUTUAL RELEASE AND AGREEMENT:

"/4) THAT THEY HAVE NOT HAD, AND DO NOT NOW HAVE, ANY INTENTION OF COPYING OR USING AND WILL NOT COPY OR USE THE DESIGNS OR DESIGN SPECIFICATIONS OF CENTURY'S OR CENTURY ELECTRONIC'S COMPONENTS, SUB- ASSEMBLIES OR EQUIPMENT AND WILL NOT MANUFACTURE, SELL OR USE ANY DUPLICATES OF THE DESIGNED EQUIPMENT OR ANY COMPONENT OR SUB-ASSEMBLY DESIGNED OR MANUFACTURED BY CENTURY OR CENTURY ELECTRONICS, (5) THAT FOR A PERIOD OF EIGHTEEN MONTHS FROM THE DATE OF TERMINATION OF EMPLOYMENT BY CENTURY OR CENTURY ELECTRONICS, THEY WILL NOT MANUFACTURE OR SELL ANY PRODUCTS OR COMPONENTS HAVING THE SAME OR SUBSTANTIALLY THE SAME PERFORMANCE SPECIFICATIONS OF ANY PRODUCTS OR COMPONENTS DEVELOPED BY CENTURY OR CENTURY ELECTRONICS, NOR MANUFACTURE OR SELL ANY PRODUCTS OR COMPONENTS EMBODYING OR EMPLOYING CONCEPTS OR PROCEDURES DEVELOPED BY CENTURY OR CENTURY ELECTRONICS WHICH ARE NOW OR WHICH HAVE CENTURY OR CENTURY ELECTRONICS, AND (6) THEY WILL NEITHER SEEK NOR USE ANY INFORMATION OBTAINED BY THEM OR ANY OF THEM IN THE FUTURE BELONGING TO CENTURY OR CENTURY ELECTRONICS WHICH MIGHT BE USED TO DUPLICATE COMPONENTS OR SUB-ASSEMBLIES OR PRODUCTS OF CENTURY OR CENTURY ELECTRONICS ACCORDING TO THE DESIGNS IN EXISTENCE AT THE TIME SECOND PARTIES (DEFENDANTS) TERMINATED THEIR EMPLOYMENT WITH CENTURY AND CENTURY ELECTRONICS.'

IT APPEARS THAT THE COURT DID NOT ADJUDICATE THE ALLEGED PROPERTY RIGHTS OF CENTURY IN THE OSCILLOGRAPHS COVERED BY THE INVITATIONS OR OTHERWISE CONSIDER THE PROCUREMENT RESPONSIBILITIES OF THE UNITED STATES. WE FIND NOTHING IN THE MUTUAL RELEASE AND AGREEMENT WHICH SPECIFICALLY PROHIBITS HATHAWAY FROM PRODUCING THE ADVERTISED OSCILLOGRAPHS FOR THE GOVERNMENT IN ACCORDANCE WITH GOVERNMENT SPECIFICATIONS AND DRAWINGS. IN OUR OPINION, THE COURT'S ORDER OF DISMISSAL WHICH INCORPORATED THE MUTUAL RELEASE AND AGREEMENT CANNOT BE CONSTRUED AS HAVING PRECLUDED THE GOVERNMENT FROM MAKING VALID AWARDS TO HATHAWAY UNDER THE MILITARY PROCUREMENT STATUTE (10 U.S.C. 2305 (C) ( AS THE LOWEST RESPONSIVE, RESPONSIBLE BIDDER.

WHILE IT IS CONTENDED THAT THE "PROHIBITIONS" OF THE MUTUAL RELEASE AND AGREEMENT ARE DIRECTLY APPLICABLE TO THESE PROCUREMENTS, WE FIND NOTHING IN THE RECORD WHICH WOULD INDICATE THAT THE END ITEMS WERE IN ANY WISE PROPRIETARY TO CENTURY OR THAT THE SPECIFICATIONS AND DRAWINGS MADE PART OF THE INVITATIONS COULD NOT BE USED BY THE GOVERNMENT FOR COMPETITIVE PROCUREMENT PURPOSES. IF ANY REMEDY IS AVAILABLE TO CENTURY, IT WOULD APPEAR TO BE ONE FOR BREACH OF CONTRACT AS TO WHICH THE GOVERNMENT IS NOT INVOLVED. WE, THEREFORE, CONCLUDE THAT THE ORDER OF DISMISSAL AND THE MUTUAL RELEASE AND AGREEMENT AFFORD NO LEGAL BASIS FOR OBJECTING TO THE AWARDS AS MADE TO HATHAWAY. SEE 38 COMP. GEN. 59; 39 ID. 254.