B-162385, NOV. 20, 1967

B-162385: Nov 20, 1967

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AWARD TO LOW BIDDER WHO DID NOT HOLD PATENT WAS IN CONFORMANCE WITH DECISIONS OF THE COMP. THE REPORT FURNISHED OUR OFFICE BY GSA IN THIS MATTER STATES THAT THE REFERENCED CONTRACT WAS AWARDED TO THE LOWEST BIDDER. WHICH WAS DESIGNED TO COMPENSATE. CERTAIN GOVERNMENT AGENCIES HAVE BEEN SPECIFICALLY AUTHORIZED BY THE CONGRESS TO RESORT TO OTHER METHODS FOR COMPENSATING PATENT HOLDERS. IS NOT A MATTER FOR CONSIDERATION BY THE GENERAL ACCOUNTING OFFICE. IN YOUR LETTER OF AUGUST 29 YOU ALSO REFER TO THE SYSTEM OF "QUICK LICENSING" DEVELOPED BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) UNDER WHICH LICENSES ARE PROCURED. FROM PATENT HOLDERS AND THE COSTS OF SUCH LICENSES ARE TAKEN INTO CONSIDERATION IN BID EVALUATION.

B-162385, NOV. 20, 1967

BIDS - PATENTS, PROPRIETARY RIGHTS, ETC. DECISION TO NORTHROP CORP. PROTESTING THAT AWARD BY GSA TO BOSTON PNEUMATIC TOOL CO., FOR FURNISHING PROTABLE CABLE SWAGERS INFRINGES PROTESTANT'S PATENT. AWARD TO LOW BIDDER WHO DID NOT HOLD PATENT WAS IN CONFORMANCE WITH DECISIONS OF THE COMP. GEN. ALTHOUGH NASA HAS BEEN AUTHORIZED ON TRIAL BASIS TO PURCHASE LICENSES FROM PATENT HOLDERS AND TO TAKE THE COSTS OF SUCH LICENSES INTO CONSIDERATION IN BID EVALUATION, GSA HAS NOT INSTITUTED SUCH PROCEDURE. FURTHER THE CONSIDERATIONS IN RESEARCH IN THE AEROSPACE FIELD DO NOT APPEAR APPLICABLE TO GSA.

TO NORTHROP CORPORATION:

WE AGAIN REFER TO YOUR LETTER OF AUGUST 29, 1967, AND ENCLOSURES, IN WHICH YOU ALLEGE THAT PORTABLE CABLE SWAGERS FURNISHED THE GOVERNMENT BY BOSTON PNEUMATIC TOOL COMPANY UNDER GENERAL SERVICES ADMINISTRATION (GSA) CONTRACT NO. GS-065-0390 INFRINGE YOUR U.S. PATENT NO. 2,831,377, DATED APRIL 22, 1958. YOUR LETTER REQUESTS OUR OPINION AS TO THE APPROPRIATENESS OF A PATENT LICENSE AGREEMENT BETWEEN YOUR EXCLUSIVE LICENSEE AND GSA IN LIEU OF THE AVAILABLE REMEDIES.

THE REPORT FURNISHED OUR OFFICE BY GSA IN THIS MATTER STATES THAT THE REFERENCED CONTRACT WAS AWARDED TO THE LOWEST BIDDER, BOSTON PNEUMATIC, NOTWITHSTANDING THE FACT THAT IT DID NOT HOLD A PATENT OR LICENSE TO MANUFACTURE THE CABLE SWAGERS. THE ADMINISTRATION CONTENDS, AND YOUR LETTER ALSO ACKNOWLEDGES, THAT THIS AWARD CONFORMS TO THE DECISIONS OF OUR OFFICE WHICH HOLD THAT IN COMPETITIVE BIDDING ON GOVERNMENT CONTRACTS POSSIBLE PATENT INFRINGEMENT CLAIMS DO NOT JUSTIFY REJECTION OF BIDS OTHERWISE FOR ACCEPTANCE, PARTICULARLY IN VIEW OF THE OBVIOUS PURPOSE AND INTENT OF 28 U.S.C. 1498, WHICH WAS DESIGNED TO COMPENSATE, ADEQUATELY AND EFFECTIVELY, THE PATENT HOLDER IN SUCH SITUATIONS. 39 COMP. GEN. 760.

CERTAIN GOVERNMENT AGENCIES HAVE BEEN SPECIFICALLY AUTHORIZED BY THE CONGRESS TO RESORT TO OTHER METHODS FOR COMPENSATING PATENT HOLDERS, SUCH AS THE PURCHASE OF LICENSE AGREEMENTS OR ADMINISTRATIVE SETTLEMENT OF INFRINGEMENT CLAIMS. HOWEVER, THE EXTENT TO WHICH THE VARIOUS DEPARTMENTS AND AGENCIES OF THE GOVERNMENT, HAVING SUCH AUTHORITY, DECIDE TO EXERCISE IT RESTS ENTIRELY IN THEIR DISCRETION; AND AN AGENCY DECISION TO LEAVE A CLAIMANT TO THE LEGAL RELIEF PROVIDED IN 28 U.S.C. 1498, IS NOT A MATTER FOR CONSIDERATION BY THE GENERAL ACCOUNTING OFFICE. SEE B-141459, AUGUST 5, 1960.

IN YOUR LETTER OF AUGUST 29 YOU ALSO REFER TO THE SYSTEM OF "QUICK LICENSING" DEVELOPED BY THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) UNDER WHICH LICENSES ARE PROCURED, IN APPROPRIATE CASES, FROM PATENT HOLDERS AND THE COSTS OF SUCH LICENSES ARE TAKEN INTO CONSIDERATION IN BID EVALUATION. IN THE PRESENT CASE (IN WHICH A CONTRACT HAS ALREADY BEEN AWARDED) THE AGENCY INVOLVED IS GSA, WHICH HAS NOT CHOSEN TO INSTITUTE SUCH A PROCEDURE. ALTHOUGH THIS OFFICE APPROVED THE USE OF THE NASA PROCEDURE (SEE 46 COMP. GEN. 206), WE POINTED OUT THE POSSIBILITY OF ABUSES OR QUESTIONS WHICH MIGHT BE ENCOUNTERED, AND OUR APPROVAL WAS SPECIFICALLY LIMITED TO USE OF THE PROCEDURE FOR A TRIAL PERIOD. ADDITION, IT IS CLEAR FROM OUR DECISION THAT THE PRINCIPAL CONSIDERATION ADVANCED BY NASA AS INDUCING ITS INITIATION OF THE PROCEDURE WAS ITS CONCERN THAT PRIOR PRACTICES WERE ADVERSELY AFFECTING PRIVATE RESEARCH EFFORTS IN THE AEROSPACE FIELD, WHICH IS THE PRIMARY CONCERN OF THAT AGENCY. IT DOES NOT APPEAR THAT THE SAME CONSIDERATIONS WOULD BE APPLICABLE TO GSA, AND THAT AGENCY'S REPORT TO OUR OFFICE IN THIS CASE EXPRESSES THE VIEW THAT THE GOVERNMENT'S BEST INTERESTS WOULD NOT BE SERVED BY ITS ADOPTION OF THE NASA PROCEDURES.

IN THE CIRCUMSTANCES, WE FIND NO REASON FOR THIS OFFICE TO OBJECT TO THE CONCLUSIONS OF GSA WITH RESPECT TO THE APPROPRIATENESS OF THE PATENT LICENSE AGREEMENT WHICH YOU HAVE PROPOSED, OR TO ITS ACTIONS IN CONNECTION WITH THE PROCUREMENT IN QUESTION.