B-163445, JUL. 23, 1968

B-163445, JUL. 23, 1968

TO PACE, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 30, 1968, AND TO SUBSEQUENT CORRESPONDENCE FROM YOUR CORPORATION AND COUNSEL PROTESTING THE AWARD OF A CONTRACT UNDER REQUEST FOR PROPOSALS (RFP) NO. N00156 68-R-0346, ISSUED BY THE NAVAL AIR ENGINEERING CENTER, PHILADELPHIA, PENNSYLVANIA, FOR A QUANTITY OF PACE PORTABLE AVIONICS MODULE REPAIR KITS, OR EQUAL.

YOUR PROTEST PRESENTS ESSENTIALLY TWO CONTENTIONS: FIRST, THAT THE NAVY VIOLATED PACE'S PROPRIETARY RIGHTS IN EFFECTING THIS PROCUREMENT; AND SECOND, THAT YOU WERE PREJUDICED IN THE SUBMISSION OF YOUR PROPOSAL BY THE FAILURE OF THE PROCURING OFFICE TO MAKE AVAILABLE TO YOU CERTAIN PROCUREMENT INFORMATION FURNISHED TO OTHER OFFERORS, WHICH, IF KNOWN, WOULD HAVE RESULTED IN A SIGNIFICANT REDUCTION IN YOUR PRICE PROPOSAL. FOR THIS REASON YOU CONTEND THAT YOU WERE PREVENTED FROM SUBMITTING A PROPOSAL ON AN EQUAL BASIS WITH OTHER OFFERORS.

THE RECORD ESTABLISHES THAT ON JUNE 8, 1966, YOU ACCEPTED NAEC'S PROPOSED CONTRACT (NUMBER N-156-47602) WHEREBY THE ACTIVITY PROCURED TWO MOBILE REPAIR CENTERS, TWO PORTABLE REPAIR UNITS, AND INSTRUCTION MANUALS COVERING THE OPERATION AND MAINTENANCE OF THE KITS FURNISHED UNDER THE CONTRACT. IT IS REPORTED THAT IN NOVEMBER 1967, A REQUISITION WAS ISSUED FOR THE PURCHASE OF AN ADDITIONAL QUANTITY OF PORTABLE KITS AS SPECIFIED IN PURCHASE DESCRIPTION AS-1427 DATED MARCH 16, 1967. THE PURCHASE DESCRIPTION CALLED FOR A PACE, INC. MODEL PK 100B KIT, OR EQUAL, AND SET FORTH DETAILED ESSENTIAL REQUIREMENTS FOR THE VARIOUS COMPONENTS OF THE KIT. IT WAS INITIALLY DETERMINED TO PROCURE THESE KITS ON A SOLE SOURCE BASIS AND AN RFP WAS ISSUED TO PACE. HOWEVER, THIS RFP WAS SUBSEQUENTLY CANCELLED BECAUSE THE CONTRACTING OFFICER DETERMINED THAT THE KITS COULD BE PROCURED ON A COMPETITIVE BASIS IN VIEW OF THE INTEREST DEMONSTRATED BY ANOTHER FIRM IN FURNISHING AN EQUIVALENT KIT AT A LOWER COST. SHORTLY THEREAFTER THE RFP, WHICH IS THE SUBJECT OF THIS PROTEST, WAS ISSUED TO SEVERAL PROSPECTIVE SUPPLIERS. THE SUBJECT RFP INCLUDED "ATTACHMENT A" IN WHICH THE TECHNICAL REQUIREMENTS FOR THE KIT WERE DEFINED AND WHICH PROVIDES ESSENTIALLY THE SAME INFORMATION AS CONTAINED IN PURCHASE DESCRIPTION AS-1427.

IT IS YOUR CONTENTION THAT THE DETAILED INFORMATION CONTAINED IN ATTACHMENT A REPRESENTS A VERBATIM COPY OF INFORMATION PREVIOUSLY FURNISHED TO THE NAVY BY PACE WHICH CARRIED A LEGEND RESTRICTING ITS USE. FURTHERMORE, YOU HAVE ALLEGED THAT PURSUANT TO THE JUNE 1966 CONTRACT, NAEC WAS NOT AUTHORIZED TO DISPLAY THE PACE KITS FOR THE PURPOSE OF PERMITTING MEASUREMENTS TO BE MADE AGAINST IT BY OTHER PROSPECTIVE SUPPLIERS IN THE PRESENT PROCUREMENT; THAT NAEC MAY HAVE DONE CONSIDERABLE REVERSE ENGINEERING AND DIVULGED, EITHER DIRECTLY OR INDIRECTLY, THE NAMES OF PACE'S MAJOR SUBCONTRACTORS AND CERTAIN CRITICAL DIMENSIONS AND ENGINEERING DATA WHICH WOULD NOT NORMALLY BE REVEALED BY A CASUAL INSPECTION OF PACE'S EQUIPMENT; AND THAT DRAWINGS AND BILLS OF MATERIALS AND VENDORS WERE ALSO FURNISHED TO PROSPECTIVE SUPPLIERS.

IN HIS REPORT TO THIS OFFICE THE CONTRACTING OFFICER STATES THAT IN EFFECTING THIS PROCUREMENT NAEC DISPLAYED A PACE PK-100A UNIT TO OTHER SUPPLIERS AND MADE MEASUREMENTS OF CERTAIN OF THE ITEMS IN THE KIT, BUT THAT THE UNIT USED THEREFOR WAS PURCHASED FROM PACE BY THE NAVAL SUPPLY CENTER (NSC), NORFOLK, VIRGINIA, AND WAS UNENCUMBERED BY ANY SUCH RESTRICTIONS AS YOU ALLEGE WERE IMPOSED BY THE 1966 CONTRACT WITH NAEC. WHILE YOU HAVE BEEN FURNISHED A COPY OF THE CONTRACTING OFFICER'S REPORT IN THIS MATTER YOU DO NOT CONTEST HIS UNDERSTANDING CONCERNING THE RIGHTS TO THE UNITS ACQUIRED UNDER THE PACE-NSC CONTRACT AND OUR REVIEW OF THIS CONTRACT SUPPORTS HIS CONCLUSION. THE CONTRACTING OFFICER ALSO STATES THAT HE FURNISHED PROSPECTIVE SUPPLIERS WITH THE NAMES AND PART NUMBERS OF ITEMS IN THE KIT OR THEIR EQUIVALENTS BUT THAT NO DRAWINGS WERE FURNISHED BY NAEC TO ANY SUPPLIER. HE STATES THAT THE ONLY WRITTEN DATA GENERATED BY PACE WHICH WAS USED BY NAEC IN CONNECTION WITH THIS PROCUREMENT WAS A SHIPPING AND PARTS LIST WHICH WAS FURNISHED BY PACE UNDER THE NSC CONTRACT AND THAT THERE WAS NO PROVISION IN SAID CONTRACT OR IN THE LIST ITSELF IMPOSING ANY RESTRICTION ON ITS USE.

WITH REGARD TO THE PUBLICATION OF THE KIT'S SPECIFICATIONS IN ATTACHMENT A TO THE RFP, IT IS REPORTED THAT THE MATERIAL INCLUDED IN THE ATTACHMENT WAS FORWARDED TO NAEC BY THE NAVAL AIR SYSTEMS COMMAND (NASC) AND DID NOT BEAR ANY TYPE OF RESTRICTIVE LEGEND. COGNIZANT PERSONNEL AT NASC HAVE ADVISED THAT THE DESCRIPTIVE INFORMATION WAS OBTAINED FROM THE MARINE CORPS WITHOUT ANY RESTRICTIVE LEGEND ATTACHED THERETO. IT IS REPORTED THAT MARINE CORPS PERSONNEL WROTE THE DESCRIPTION INVOLVED AND IT WAS ALSO USED AS AN ATTACHMENT TO MARINE CORPS IFB M0027-67-B-0046, FOR A PACE KIT OR EQUAL. WHILE PACE PARTICIPATED IN THIS PROCUREMENT NO OBJECTION WAS RAISED AGAINST THE USE OF THE DESCRIPTION INVOLVED AT THAT TIME.

IT IS CLEAR THAT THE GOVERNMENT AND ITS PROSPECTIVE CONTRACTORS MERELY USED INFORMATION OBTAINED BY INSPECTION AND ANALYSIS OF THE PRODUCT ITSELF WHICH WAS NOT RESTRICTED UNDER THE TERMS OF EITHER THE MARINE CORPS OR NAS CONTRACTS. IT IS OUR POSITION THAT THE BASIS FOR PROTECTING PROPRIETARY INFORMATION IS THAT THE RECIPIENT HAS GAINED THE INFORMATION THROUGH A CONFIDENTIAL DISCLOSURE, BUT THAT THE UNQUALIFIED PUBLIC SALE OR PUBLIC EXHIBITION OF A PRODUCT TERMINATES THE LIFE OF SECRECY AND CONSEQUENTLY THE RIGHT OF THE PRODUCERS TO CLAIM THE SUBJECT MATTER AS A TRADE SECRET. DOLAC CORPORATION V MORGAN CORPORATION, 164 F.SUPP. 41, 60; SKOOG V MCCRAY REFRIGERATOR CO., 211 F.2D 254; B-156727, OCTOBER 7, 1965, AND THE COURT DECISIONS CITED THEREIN. FOR ALL OF THESE REASONS WE ARE UNABLE TO PERCEIVE ANY VIOLATION OF YOUR PROPRIETARY RIGHTS AND WE SEE NO NEED TO CONSIDER WHETHER YOUR JUNE 1966 CONTRACT WITH NAEC RESTRICTED THE GOVERNMENT IN ITS USE OF THE KITS PROCURED THEREUNDER.

WHILE YOU COUNSEL HAS QUESTIONED THE "FAIRNESS OF THE COMPETITIVE BIDDING PROCEDURE FOLLOWED BY THE ARMY IN EFFECTING THE PROCUREMENT," WE CANNOT AGREE WITH THIS CONTENTION SINCE THE EFFORT BY THE AGENCY TO ENCOURAGE OTHERS TO SIMULATE PACE'S KIT DOES NOT VIOLATE ANY CONTRACTUAL OBLIGATION OR OTHER CONFIDENTIAL DISCLOSURE AND IS JUSTIFIED AND CONSISTENT WITH THE STATUTORY REQUIREMENT THAT PROPOSALS SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES. 10 U.S.C. 2304 (G).

IT IS YOUR POSITION THAT THIS PROCUREMENT WAS NOT EFFECTED ON A TRULY EQUAL BASIS SINCE PACE WAS THE ONLY PROSPECTIVE CONTRACTOR WHO WAS NOT FURNISHED A COPY OF AN NAEC COMPILATION ENTITLED ,LIST CONTAINING A COMMERCIAL EQUIVALENT FOR PARTS CONTAINED IN PACE, INC., ELECTRONIC MODULE MAINTENANCE SYSTEM, MODEL PK-100B," WHICH YOU CLAIM UNDOUBTEDLY RELIEVED ALL OTHER BIDDERS OF THE ESSENTIAL REQUIREMENTS CONTAINED IN ATTACHMENT A OF THE RFP. MOREOVER, YOUR ATTORNEY CONTENDS THAT THE CONTRACT CLEARLY DEMONSTRATES ON ITS FACE THAT NAEC IN FACT HAS AGREED TO ACCEPT SPECIFICALLY IDENTIFIED COMPONENTS WHICH DO NOT COMPLY WITH THE REQUIREMENTS OF ATTACHMENT A. IN THIS REGARD THE CONTRACTING OFFICER HAS REPORTED AS FOLLOWS:

"* * * THE CONTRACTING OFFICER CONSIDERS THAT FURNISHING THE PARTIAL LIST OF COMMERCIAL PARTS EQUIVALENT TO THE PACE, INC. PART NUMBERS LISTED IN THE REQUEST FOR PROPOSALS WAS PROPER IN ORDER TO PLACE SUCH OTHER SUPPLIERS IN A POSITION FAIRLY TO COMPETE WITH PACE, INC. UNDER THE TERMS OF THE REQUEST FOR PROPOSALS, PARTICULARLY SINCE THERE WAS NOT AVAILABLE ANY COMMERCIAL CATALOG WHICH DEFINED THE PACE, INC. PART NUMBERS REFERENCED IN THE REQUEST FOR QUOTATIONS. THE INFORMATION IN SUCH LIST IDENTIFYING THE PACE, INC. PART NUMBERS OR THEIR COMMERCIAL EQUIVALENTS WAS NOT NECESSARY TO ENABLE PACE, INC. TO PRESENT ITS PROPOSAL AND THE FAILURE TO FURNISH SUCH INFORMATION TO PACE, INC. WAS NOT PREJUDICIAL SINCE PACE, INC., THE PREVIOUS SUPPLIER OF THE KIT, WAS FULLY AWARE OF THE NATURE OF THE ITEMS INVOLVED IN THE KIT AND OF THE SOURCES FROM WHICH THOSE ITEMS OR THEIR EQUIVALENTS COULD BE OBTAINED.

"* * * IT IS CLEAR THAT REQUEST FOR PROPOSAL NO. N00156-68-R-0346 DATED 19 JANUARY 1968 (EXHIBIT E TO CONTRACTING OFFICER'S STATEMENT) REQUIRED PROPOSALS WHICH INCLUDED THE ESSENTIAL REQUIREMENTS SPECIFIED IN ATTACHMENT A. AT THE CLOSE OF THE NEGOTIATIONS SPECIFIED IN PARAGRAPH 11 OF THE STATEMENT OF THE CONTRACTING OFFICER DATED 9 FEBRUARY 1968 IT WAS DETERMINED THAT THE PROPOSAL OF CENTURY TOOL COMPANY AS WELL AS THE PROPOSALS OF ALL AMERICAN ENGINEERING COMPANY AND THE JNL COMPANY MET THE REQUIREMENTS REQUESTED FOR PROPOSAL NO. N00156-68-R-0346. CONTRACT N00156 -68-C-1352 (EXHIBIT K TO CONTRACTING OFFICER'S STATEMENT) BINDS CENTURY TOOL COMPANY TO FURNISH EQUIPMENT IN CONFORMANCE WITH THE PURCHASE DESCRIPTION CONTAINED IN REQUEST FOR PROPOSAL NO.N00156-68-R-0346, INCLUDING THE ESSENTIAL REQUIREMENTS SPECIFIED IN ATTACHMENT A THEREOF.' WITH REGARD TO THE SUPPLIES TO BE FURNISHED, THE CONTRACT AWARDED TO CENTURY TOOL PROVIDES, IN PERTINENT PART, AS FOLLOWS: "PORTABLE AVIONICS MODULE REPAIR KIT: CONSISTING OF THE FOLLOWING COMPONENTS AND CONFORMING TO THE ESSENTIAL REQUIREMENTS SPECIFIED IN ATTACHMENT A HERETO.' LETTER DATED JUNE 20, 1968, THE COMMANDING OFFICER, NAEC, HAS ADVISED THIS OFFICE THAT THE FIRST 40 KITS DELIVERED UNDER THE SUBJECT CONTRACT COMPLY WITH THE REQUIREMENTS OF ATTACHMENT A TO THE CONTRACT SCHEDULE.

SINCE IT IS CLEAR FROM THE RECORD THAT BOTH THE ORIGINAL RFP AND THE CONTRACT AWARDED TO CENTURY TOOL SPECIFICALLY REQUIRE THAT ALL COMPONENTS OF THE KIT COMPLY WITH THE SPECIFICATIONS OF ATTACHMENT A AND SINCE THE COMPANY HAS IN FACT PROVIDED COMPONENTS WHICH HAD BEEN MODIFIED TO COMPLY THEREWITH, WE DO NOT THINK YOU WERE PREJUDICED TO ANY MEANINGFUL DEGREE BY THE CONTRACTING OFFICER'S FAILURE TO SUPPLY YOU WITH THE LIST OF EQUIVALENTS.

WHILE YOU ALSO CONTEND THAT ANY OTHER SUPPLIER'S PRODUCT WOULD NOT BE TRULY EQUIVALENT IN THE ABSENCE OF PACE'S QUALITY TESTING AND CONTROL,WE NOTE THAT ATTACHMENT A OF THE RFP DOES NOT SPECIFY ANY SUCH REQUIREMENTS, FROM WHICH WE CAN CONCLUDE THAT NO NEED EXISTS FOR SUCH TESTING AND CONTROL IN THE PRESENT PROCUREMENT. IN ANY EVENT, THE SUPPLIES FURNISHED UNDER THE CONTRACT ARE SUBJECT TO INSPECTION FOR DETERMINATION OF THEIR COMPLIANCE WITH THE CONTRACT REQUIREMENTS AND WE MUST ASSUME THAT THE CONTRACT WILL BE PROPERLY ADMINISTERED AND ENFORCED.