B-162399, MAY 3, 1968

B-162399: May 3, 1968

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO LABRUM AND DOAK: FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 1. REQUESTING OUR CONSIDERATION OF AN ALLEGED VIOLATION BY THE DEPARTMENT OF THE NAVY OF BENDIX- PROPRIETARY RIGHTS IN DATA WHICH WERE FURNISHED TO THE GOVERNMENT UNDER NAVAL AIR SYSTEMS COMMAND (NAVAIR) CONTRACT NOW (A) 65-0528-F AWARDED ON MAY 28. THE CONTRACT ALSO EXPRESSLY REQUIRED THAT ALL DATA WAS TO BE SUBJECT TO THE CLAUSE ENTITLED "RIGHTS IN TECHNICAL DATA. THE "RIGHTS IN TECHNICAL DATA" CLAUSE WHICH IS APPLICABLE TO THE DRAWINGS FURNISHED UNDER THE BENDIX CONTRACT PROVIDES. AS FOLLOWS: "/2) THE GOVERNMENT SHALL HAVE LIMITED RIGHTS IN (I) TECHNICAL DATA. WHICH THE PARTIES HAVE AGREED WILL BE FURNISHED WITH LIMITED RIGHTS.

B-162399, MAY 3, 1968

TO LABRUM AND DOAK:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 1, 1967, AND SUBSEQUENT CORRESPONDENCE, ON BEHALF OF THE BENDIX CORPORATION, REQUESTING OUR CONSIDERATION OF AN ALLEGED VIOLATION BY THE DEPARTMENT OF THE NAVY OF BENDIX- PROPRIETARY RIGHTS IN DATA WHICH WERE FURNISHED TO THE GOVERNMENT UNDER NAVAL AIR SYSTEMS COMMAND (NAVAIR) CONTRACT NOW (A) 65-0528-F AWARDED ON MAY 28, 1965, FOR AN/ARC-101 COMMUNICATIONS SYSTEMS. ON THE BASIS THEREOF YOU PROTEST THE PROPRIETY OF THE PROPOSED AWARD OF A CONTRACT FOR AN/ARC-101 EQUIPMENT TO DAYTON AVIATION RADIO AND EQUIPMENT CORPORATION (DARE), THE LOW OFFEROR UNDER REQUEST FOR PROPOSALS N00383-68- Q-0010 (RFP 0010), ISSUED BY NAVAIR, PHILADELPHIA, ON JULY 12, 1967, AND ASK THAT WE DIRECT THE NAVY TO NEGOTIATE WITH YOU TO DETERMINE COMPENSATION TO BE PAID.

THIS CONTROVERSY STEMS FROM THE GOVERNMENT'S FURNISHING DARE CERTAIN DRAWINGS ACQUIRED UNDER THE 1965 BENDIX CONTRACT IN AN EFFORT TO ASSIST DARE TO MEET ITS DELIVERY SCHEDULE FOR THE EQUIPMENT UNDER A CONTRACT AWARDED NOVEMBER 9, 1966.

THE RECORD INDICATES THAT PRIOR TO EXECUTION OF THE 1965 BENDIX CONTRACT THE CORPORATION CLEARLY COMMUNICATED TO THE GOVERNMENT DURING NEGOTIATIONS AND BY SEVERAL LETTERS THAT ALL DATA TO BE DELIVERED ON ANY RESULTING CONTRACT WOULD BE FURNISHED ONLY FOR SPECIFIED LIMITED USES. ALSO, THE CONTRACT INCLUDED A SPECIAL OPTION PREVISION WHEREBY THE GOVERNMENT COULD ACQUIRE A MORE INCLUSIVE DATA PACKAGE WITH UNLIMITED RIGHTS FOR AN AMOUNT NOT TO EXCEED $467,450 BUT WHICH COULD BE NEGOTIATED DOWNWARD. THE CONTRACT ALSO EXPRESSLY REQUIRED THAT ALL DATA WAS TO BE SUBJECT TO THE CLAUSE ENTITLED "RIGHTS IN TECHNICAL DATA," EXCEPT FOR DATA FURNISHED PURSUANT TO THE UNLIMITED RIGHTS OPTION, WHICH THE GOVERNMENT NEVER EXERCISED.

THE "RIGHTS IN TECHNICAL DATA" CLAUSE WHICH IS APPLICABLE TO THE DRAWINGS FURNISHED UNDER THE BENDIX CONTRACT PROVIDES, IN PERTINENT PART, AS FOLLOWS: "/2) THE GOVERNMENT SHALL HAVE LIMITED RIGHTS IN

(I) TECHNICAL DATA, LISTED OR DESCRIBED IN AN AGREEMENT INCORPORATED INTO THE SCHEDULE OF THIS CONTRACT, WHICH THE PARTIES HAVE AGREED WILL BE FURNISHED WITH LIMITED RIGHTS; AND

(II) EXCEPT AS PROVIDED IN (1) ABOVE, OTHER TECHNICAL DATA PERTAINING TO ITEMS, COMPONENTS OR PROCESSES DEVELOPED AT PRIVATE EXPENSE; PROVIDED THAT EACH PIECE OF SUCH DATA IS MARKED WITH THE FOLLOWING LEGEND IN WHICH IS INSERTED THE NUMBER OF THE PRIME CONTRACT UNDER WHICH THE TECHNICAL DATA IS TO BE DELIVERED AND THE NAME OF THE CONTRACTOR OR SUBCONTRACTOR BY WHOM THE TECHNICAL DATA WAS GENERATED:

FURNISHED UNDER UNITED STATES GOVERNMENT CONTRACT NO. SHALL NOT BE EITHER RELEASED OUTSIDE THE GOVERNMENT, OR USED, DUPLICATED, OR DISCLOSED IN WHOLE OR IN PART FOR MANUFACTURE OR PROCUREMENT, WITHOUT THE WRITTEN PERMISSION OF , EXCEPT FOR: (I) EMERGENCY REPAIR OR OVERHAUL WORK BY OR FOR THE GOVERNMENT, WHERE THE ITEM OR PROCESS CONCERNED IS NOT OTHERWISE REASONABLY AVAILABLE TO ENABLE TIMELY PERFORMANCE OF THE WORK; OR (II) RELEASE TO A FOREIGN GOVERNMENT, AS THE INTEREST OF THE UNITED STATES MAY REQUIRE; PROVIDED THAT IN EITHER CASE THE RELEASE, USE, DUPLICATION OR DISCLOSURE HEREOF SHALL BE SUBJECT TO THE FOREGOING LIMITATIONS. THIS LEGEND SHALL BE MARKED ON ANY REPRODUCTION HEREOF IN WHOLE OR IN PART. LEGEND SHALL BE MARKED ON, NOR SHALL ANY LIMITATION ON RIGHTS OF USE BE ASSERTED AS TO, ANY DATA WHICH THE CONTRACTOR HAS PREVIOUSLY DELIVERED TO THE GOVERNMENT WITHOUT RESTRICTION. THE LIMITED RIGHTS PROVIDED FOR BY THIS PARAGRAPH (B) (2) SHALL NOT IMPAIR THE RIGHT OF THE GOVERNMENT TO USE SIMILAR OR IDENTICAL DATA ACQUIRED FROM OTHER SOURCES.'

THE RECORD ESTABLISHES THAT ON AUGUST 15, 1966, BENDIX DELIVERED 956 DRAWINGS TO THE NAVAL AIR TECHNICAL SERVICES FACILITY, PHILADELPHIA, WHICH IS REPORTED TO BE THE CENTRAL RECEIVING LOCATION FOR ALL DATA PACKAGES FURNISHED UNDER THIS TYPE OF CONTRACT. THE PRESCRIBED RESTRICTIVE LEGEND WAS AFFIXED TO ONLY SIX OF THESE DRAWINGS.

THE NAVY'S REPORT IN THIS MATTER EXPLAINS THE BACKGROUND AND CIRCUMSTANCES CONNECTED WITH THE FURNISHING OF AN/ARC-101 DRAWINGS TO DARE, AS FOLLOWS:

"THE CONTRACT WITH DARE CALLED FOR DELIVERIES TO COMMENCE IN JUNE 1967. THIS DELIVERY SCHEDULE WAS CONSIDERED TO BE TIGHT. BECAUSE OF THE DESIRE FOR PROMPT DELIVERIES AND IN AN EFFORT TO ASSIST DARE IN ITS EFFORTS TO MEET SUCH DELIVERY SCHEDULE (AND FOLLOWING A COURSE OF ACTION NORMALLY TAKEN WHETHER OR NOT DELIVERY IS URGENT), MR. ZDOBYSZ, NAVAIR, CONTACTED MR. SPENCE, NAVAIR, WITH A VIEW TO DETERMINING WHETHER OR NOT AN/ARC-101 DRAWINGS COULD BE FURNISHED DARE. MR. SPENCE HAD THE DATA PACKAGE IN ISSUE, AND MR. ZDOBYSZ SENT MR. SOLEN, NAVAIR, TO OBTAIN THE DATA FROM MR. SPENCE. MR. SPENCE INFORMED MR. SOLEN THAT THE DATA PACKAGE WAS PURCHASED WITH LIMITED RIGHTS AND FURTHER INDICATED TO MR. SOLEN (AS HE HAD BEEN LED TO UNDERSTAND) THAT SOME OF THE DOCUMENTS INCLUDED IN THE DATA PACKAGE COULD BE RESTRICTED BY BENDIX BY USE OF A RESTRICTIVE LEGEND.

"ACCORDINGLY, MR. SOLEN REVIEWED THE DATA PACKAGE WITH A VIEW TO DETERMINING WHETHER OR NOT THE DRAWINGS CONTAINED THEREIN INCORPORATED RESTRICTIVE LEGENDS AND SHOULD, THEREFORE, BE CONSIDERED RESTRICTED. EACH DRAWING FOUND TO CONTAIN A RESTRICTIVE LEGEND WAS REMOVED FROM THE DATA PACKAGE BY MR. SOLEN. THE DATA PACKAGE WAS THEN DELIVERED TO MR. ZDOBYSZ.

"MR. ZDOBYSZ REVIEWED THE DATA PACKAGE, AS HAD MR. SOLEN. HAVING ASCERTAINED THAT NONE OF THE DRAWINGS NOW CONTAINED RESTRICTIVE LEGENDS HE RELEASED THE DATA PACKAGE TO DARE, INC. MR. ZDOBYSZ HAD STATED THAT HE WAS WITHOUT KNOWLEDGE REGARDING THE TERMS UNDER WHICH THE DATA PACKAGE WAS FURNISHED THE GOVERNMENT BY BENDIX.'

UNDER DATE OF MARCH 22, 1968, MR. ZDOBYSZ SUBMITTED A STATEMENT REGARDING THE CONDITIONS OR LIMITATIONS IMPOSED BY HIM UPON DARE'S USE OF THE DATA PACKAGE. HE STATES AS FOLLOWS:

"IT IS STANDARD PROCEDURE WITHIN THE AVIONICS DIVISION TO ASSIST, IF POSSIBLE, ALL CONTRACTORS WHO HAVE BEEN AWARDED CONTRACTS BY NAVAIRSYSCOM BY THE FURNISHING OF NON-PROPRIETARY MATERIAL OR DATA. THE BENDIX DATA PACKAGE WAS MADE AVAILABLE TO DARE, INC. AS A RESULT OF ITS REQUEST. CONDITIONS WERE PLACED UPON DARE WITH RESPECT TO THE USE OF THE DATA PACKAGE, HOWEVER, DARE WAS REQUESTED TO RETURN THE SPECIFIC DATA PACKAGE WITHIN A FEW WEEKS BECAUSE IT WAS THE ONLY COPY AVAILABLE IN NAVAIR.'

WITH RESPECT TO YOUR PROTEST AGAINST AWARD TO DARE, AND REQUEST THAT A CONTRACT BE AWARDED TO BENDIX UNDER RFP 0010 RATHER THAN TO DARE, IRRESPECTIVE OF THE PRICES OFFERED, WE BELIEVE THAT SUCH RELIEF WOULD BE INAPPROPRIATE, SINCE THE SUBJECT DATA WAS FURNISHED TO DARE IN CONNECTION WITH PERFORMANCE OF A PRIOR CONTRACT, THROUGH NO APPARENT WRONGDOING OF ITS OWN AND SOLELY AS THE RESULT OF BENDIX- FAILURE TO TAKE THE PRECAUTIONS PRESCRIBED IN ITS 1965 CONTRACT WITH THE GOVERNMENT, WHICH WOULD HAVE INSURED ADEQUATE PROTECTION OF ITS PROPRIETARY RIGHTS. IN THIS CONNECTION, THE NAVY ADVISES THAT IT WILL NOT AGAIN PROVIDE DARE WITH SUCH DATA FOR USE IN PERFORMANCE OF THE CURRENT CONTRACT.

IN OUR OPINION THE ACTION YOU NOW REQUEST COULD BE JUSTIFIED ONLY UPON THE GROUND THAT THE DISCLOSURE OF THE BENDIX DATA TO DARE BY THE GOVERNMENT WAS A CLEAR VIOLATION OF BENDIX- RIGHTS, AND THAT BENDIX HAS A CONTINUING RIGHT TO PREVENT USE THEREOF FOR THE BENEFIT OF EITHER THE GOVERNMENT OR DARE.

SO FAR AS DARE IS CONCERNED WE FIND NO POSSIBLE BASIS FOR IMPUTING ANY WRONGDOING TO IT IN CONNECTION WITH ITS ACQUISITION OR USE OF THE SUBJECT DATA, SINCE IT DOES NOT APPEAR TO HAVE BEEN ON NOTICE OF ANY RESTRICTION ON THE GOVERNMENT'S RIGHTS IN THE DRAWINGS FURNISHED TO IT, NONE OF WHICH CONTAINED THE PRESCRIBED NOTICE.

AS TO THE GOVERNMENT, IT IS YOUR CONTENTION THAT THE PROVISO IN THE ABOVE -QUOTED "RIGHTS IN TECHNICAL DATA" CLAUSE SHOULD NOT BE READ AS OVERCOMING THE CLEAR INTENT OF THE PARTIES, CONCLUSIVELY ESTABLISHED BY THE TERMS OF THE OPTION TO ACQUIRE UNLIMITED RIGHTS UPON PAYMENT OF ADDITIONAL COMPENSATION, THAT THE GOVERNMENT SHOULD ACQUIRE ONLY LIMITED RIGHTS IN THE BENDIX DATA UNLESS IT EXERCISED ITS OPTION. AT THE LEAST, YOU ARGUE THAT THE CLAUSE CREATED AN AMBIGUITY WHICH SHOULD BE RESOLVED IN FAVOR OF THE "MANIFEST INTENTION" OF THE PARTIES.

THE CLAUSE IN QUESTION, HOWEVER, IS ONE WHICH IS REQUIRED BY THE MANDATORY PROVISIONS OF ASPR 9-203 TO BE INCLUDED IN EVERY CONTRACT IN WHICH TECHNICAL DATA IS SPECIFIED TO BE DELIVERED (WITH CERTAIN EXCEPTIONS NOT HERE APPLICABLE). IN ADDITION, ASPR 9-202.3 (B) PROHIBITS THE INCLUSION OF ANY OTHER PROVISION TO ENLARGE OR DIMINISH THE RIGHTS ESTABLISHED BY THE APPROPRIATE CLAUSE PRESCRIBED BY ASPR 9 203. THE FACT THAT THE CLAUSE ITSELF REQUIRES THAT THE ITEMS TO WHICH THE GOVERNMENT'S RIGHTS ARE LIMITED MUST BE "LISTED OR DESCRIBED IN AN AGREEMENT INCORPORATED IN THE SCHEDULE OF THIS CONTRACT" CLEARLY NEGATIVES THE CONTENTION THAT SUCH AN OPTION AGREEMENT WOULD ELIMINATE THE REQUIREMENT FOR THE RESTRICTIVE MARKING STIPULATED IN THE PROVISO.

IN THIS CONTEXT, WE BELIEVE IT TO BE CLEAR THAT THE PROVISION OF ASPR 9- 202.3 (D) (1), THAT TECHNICAL DATA RECEIVED WITHOUT A RESTRICTIVE LEGEND SHALL BE DEEMED TO HAVE BEEN FURNISHED WITH UNLIMITED RIGHTS, WAS INTENDED TO BE FULLY APPLICABLE TO ALL SUCH DATA DELIVERED UNDER A CONTRACT REGARDLESS OF THE SPECIFIC LISTING OF SUCH DATA IN THE CONTRACT. THIS IS EMPHASIZED BY THE SUBSEQUENT SENTENCE, UNDER WHICH AN INADVERTENT OMISSION OF THE LEGEND FROM DATA ON WHICH ITS USE WAS AUTHORIZED MAY BE CORRECTED WITHIN SIX MONTHS.

SINCE IN THIS INSTANCE THE DELIVERY OF THE DRAWINGS TO DARE WAS MADE BEFORE ANY EFFORT BY BENDIX TO CORRECT ITS OMISSION OF THE LEGEND AND IN APPARENT RELIANCE UPON THE FACT THAT THE GOVERNMENT HAD THE RIGHT TO DO SO IN THE ABSENCE OF A RESTRICTIVE LEGEND ON THE DRAWINGS, AND SINCE THE DRAWINGS WERE DELIVERED BACK TO THE GOVERNMENT BY DARE AND THE RFP FOR THE CURRENT PROCUREMENT DID NOT INCLUDE THE DRAWINGS OR PROVIDE FOR THEM TO BE FURNISHED FOR USE IN PERFORMANCE OF THE CONTEMPLATED CONTRACT, WE DO NOT BELIEVE WE WOULD BE JUSTIFIED IN OBJECTING TO AWARD OF A CONTRACT TO DARE.

WE ARE AWARE OF NO JUDICIAL AUTHORITY WHICH WOULD PERMIT OF INJUNCTIVE RELIEF AGAINST SUCH AN AWARD. SEE SPEVACK V STRAUSS, 257 F.2D 208, HOLDING THAT THE PLAINTIFF'S RIGHT TO RECOVER COMPENSATION FOR THE ALLEGED TAKING OF HIS PROPRIETARY RIGHTS BY ACTION IN THE COURT OF CLAIMS WAS AN ADEQUATE LEGAL REMEDY WHICH PRECLUDED INJUNCTIVE RELIEF. IT SHOULD ALSO BE NOTED THAT IN A PREVIOUS DECISION IN THE SAME CASE, 248 F.2D 752, IT APPEARS THAT THE LOWER COURT HAD DISMISSED THE SUIT ON THE GROUND THAT THE PUBLICATION SOUGHT TO BE ENJOINED HAD ALREADY OCCURRED.

WE HAVE IN SEVERAL CASES DIRECTED CANCELLATION OF SOLICITATIONS OF BIDS OR PROPOSALS WHERE PROPRIETARY RIGHTS OF THE KIND HERE INVOLVED WERE THREATENED, BUT IN ALL THOSE CASES THE SOLICITATION ITSELF, EITHER MADE OR OFFERED DISCLOSURE OF THE PROTECTED DATA, AND IT DID NOT APPEAR THAT THERE HAD BEEN ANY PREVIOUS DISCLOSURE. THE PRESENT CASE MORE CLOSELY RESEMBLES THAT INVOLVED IN OUR DECISION B-157300, NOVEMBER 19, 1965, WHEREIN WE REFUSED TO INTERFERE WITH A PROCUREMENT BY THE NATIONAL AERONAUTICS AND SPACE AGENCY, ON THE GROUND, AMONG OTHERS, THAT THE PROTESTING PARTY HAD NOT TAKEN MEASURES REASONABLY CALCULATED AND NECESSARY TO PROTECT HIS RIGHTS.

IN THE CIRCUMSTANCES WE SEE NO VALID BASIS FOR QUESTIONING AN AWARD TO DARE.

AS TO YOUR RIGHTS TO COMPENSATION, WE CANNOT CONSIDER THE DISCLOSURE OF YOUR DATA TO DARE AS AN ELECTION BY THE NAVY TO EXERCISE ITS OPTION TO ACQUIRE UNLIMITED RIGHTS THEREIN. AS TO THE QUESTION OF DAMAGES, WE BELIEVE THE REASONS INDICATED ABOVE, THAT THE GOVERNMENT'S LIABILITY, BASED UPON BREACH OF ANY CONTRACTUAL OBLIGATION TO BENDIX, IS TOO DOUBTFUL TO JUSTIFY ADMINISTRATIVE SETTLEMENT OF A CLAIM IN ANY AMOUNT ON THAT BASIS.