B-165369, B-165947, JULY 11, 1969, 49 COMP. GEN. 20

B-165369,B-165947: Jul 11, 1969

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UNSOLICITED PROPOSALS ALTHOUGH THE LINE-OF-SIGHT (LOS) TELECOMMUNICATIONS SYSTEM DATA SUBMITTED AS AN UNSOLICITED PROPOSAL UNDER THE FIRST STEP OF A TWO-STEP NEGOTIATED PROCUREMENT THAT STIPULATED IF THE DATA WAS USED THE OFFEROR WOULD BE ENTITLED TO AN AWARD ON A SOLE-SOURCE BASIS WAS SIGNIFICANT IN CAUSING THE AIR FORCE UPON CONSIDERATION OF THE FEASIBILITY STUDY AND THE FUNDING DATA SUBMITTED TO PROCURE A TOTAL LOS SYSTEM RATHER THAN THE LOS/TROPOSCATTER SYSTEM ORIGINALLY PLANNED INCIDENT TO THE RELOCATION OF THE NORTH ATLANTIC TREATY ORGANIZATION. THE OFFEROR IS NOT ENTITLED TO AN AWARD ON THE BASIS OF THE IMPROPER USE OF PROPRIETARY DATA. THE ONLY UNSOLICITED INFORMATION REQUIRING PROTECTION WAS THE FUNDING DATA.

B-165369, B-165947, JULY 11, 1969, 49 COMP. GEN. 20

CONTRACTS -- DATA, RIGHTS, ETC. -- STATUS OF INFORMATION FURNISHED -- UNSOLICITED PROPOSALS ALTHOUGH THE LINE-OF-SIGHT (LOS) TELECOMMUNICATIONS SYSTEM DATA SUBMITTED AS AN UNSOLICITED PROPOSAL UNDER THE FIRST STEP OF A TWO-STEP NEGOTIATED PROCUREMENT THAT STIPULATED IF THE DATA WAS USED THE OFFEROR WOULD BE ENTITLED TO AN AWARD ON A SOLE-SOURCE BASIS WAS SIGNIFICANT IN CAUSING THE AIR FORCE UPON CONSIDERATION OF THE FEASIBILITY STUDY AND THE FUNDING DATA SUBMITTED TO PROCURE A TOTAL LOS SYSTEM RATHER THAN THE LOS/TROPOSCATTER SYSTEM ORIGINALLY PLANNED INCIDENT TO THE RELOCATION OF THE NORTH ATLANTIC TREATY ORGANIZATION, THE OFFEROR IS NOT ENTITLED TO AN AWARD ON THE BASIS OF THE IMPROPER USE OF PROPRIETARY DATA. THE FEASIBILITY STUDY, A REASEARCH AND DEVELOPMENT EFFORT, SUBJECT ONLY TO CONFIDENTIAL TREATMENT, AND THE TECHNICAL DATA CONSISTING OF WELL-KNOWN SCIENTIFIC PRINCIPLES, THE ONLY UNSOLICITED INFORMATION REQUIRING PROTECTION WAS THE FUNDING DATA, AND ITS USE NOT CONSTITUTING A VIOLATION OF THE PROPRIETARY DATA RESTRICTION, THERE IS NO JUSTIFICATION TO SUPPORT A SOLE-SOURCE PROCUREMENT.

TO THE LENKURT ELECTRIC CO., INC., JULY 11, 1969:

REFERENCE IS MADE TO YOUR TELEGRAM AND LETTERS OF OCTOBER 2, 1968, AND TELEGRAM OF JANUARY 13, 1969, AND SUBSEQUENT CORRESPONDENCE, PROTESTING THE USE OF TECHNICAL DATA WHICH YOU SUBMITTED TO THE DEPARTMENT OF THE AIR FORCE AS BEING PROPRIETARY TO YOUR FIRM. YOUR CORRESPONDENCE OF OCTOBER (OUR FILE B-165369) PROTESTED ANY USE OF THE DATA IN QUESTION BY THE GOVERNMENT FOR COMPETITIVE PROCUREMENT PURPOSES. YOUR TELEGRAM OF JANUARY 13 (OUR FILE B-165947) PROTESTED THE ISSUANCE OF A LETTER REQUEST FOR TECHNICAL PROPOSALS ON JANUARY 10, 1969, AS THE FIRST STEP OF A TWO-STEP NEGOTIATED PROCUREMENT WHICH YOU CONTEND WAS BASED ON YOUR PROPRIETARY DATA BY THE OKLAHOMA CITY AIR MATERIEL AREA (OCAMA) DURING THE PENDENCY OF YOUR INITIAL PROTEST.

THE PERTINENT FACTS AND CIRCUMSTANCES WHICH ARE CONSIDERED AND DISCUSSED BELOW WERE OBTAINED FROM COGNIZANT GOVERNMENT ACTIVITIES. WE ALSO CONDUCTED, AT THE REQUEST OF CONGRESSMAN PAUL N. MCCLOSKEY, JR., AN INDEPENDENT INVESTIGATION AT THE VARIOUS ENGINEERING AND PROCURING ACTIVITIES INVOLVED IN YOUR PROTESTS.

BY REASON OF THE WITHDRAWAL OF THE REPUBLIC OF FRANCE FROM THE NORTH ATLANTIC TREATY ORGANIZATION IN 1966, AN IMMEDIATE NEED AROSE TO RECONFIGURE THE VARIOUS COMMUNICATION NETWORKS. THIS WITHDRAWAL GAVE RISE TO A PLAN BY THE DEFENSE COMMUNICATIONS AGENCY (DCA) TO DEVELOP A RELOCATION SCHEDULE FOR THE AFFECTED DEFENSE COMMUNICATIONS SYSTEM (DCS) FACILITIES BETWEEN GREAT BRITAIN AND THE EUROPEAN CONTINENT. INCLUDED IN THE PLAN AS IT WAS SUBSEQUENTLY DEVELOPED AND REFINED WERE UPDATED TELECOMMUNICATIONS REQUIREMENTS. A PORTION OF THE DCS REDESIGN UPDATING EFFORT DESIGNATED AS TASK 21 WAS ASSIGNED BY DCA TO THE AIR FORCE FOR ENGINEERING, FURNISHING AND INSTALLATION (EF&I). THE ENGINEERING FACET OF THE REDESIGN EFFORT WAS SUBSEQUENTLY ASSIGNED BY HEADQUARTERS USAF TO THE AIR FORCE COMMUNICATION SERVICE (AFCS), SCOTT AIR FORCE BASE, ILLINOIS. AS ORIGINALLY PORTRAYED IN THE DCA OVERALL PLAN, TASK 21 WAS TO CONSIST OF LINE-OF-SIGHT (LOS) MICROWAVE EQUIPMENT AND TROPOSCATTER EQUIPMENT DESIGNED TO PROVIDE A HIGH GRADE COMMUNICATIONS SYSTEM UTILIZING TROPOSCATTER EQUIPMENT OVER THE ENGLISH CHANNEL, AND LOS ELSEWHERE WITHIN THE DCS. THE LOS/TROPOSCATTER SYSTEM WAS APPROVED BY THE COGNIZANT OFFICIALS BOTH WITHIN THE AIR FORCE AND DCA AND APPROPRIATE IMPLEMENTATION ACTIONS WERE TAKEN ON THE BASIS OF SUCH APPROVAL TO EF&I SUCH A SYSTEM UNTIL MARCH 21 OR 22, 1968.

IN THE MEANWHILE, ON AUGUST 22, 1967, REPRESENTATIVES OF LENKURT PRESENTED AN INFORMAL BRIEFING TO AFCS ON THE FEASIBILITY OF UTILIZING A COMPLETE LOS SYSTEM FOR TASK 21 INSTEAD OF LOS/TROPOSCATTER AS PROGRAMMED. THEREAFTER, ON OCTOBER 2, 1967, LENKURT SUBMITTED TO AFCS A NUMBER OF COPIES OF AN UNSOLICITED PROPOSAL DATED SEPTEMBER 13, 1967, (YOUR REFERENCE NO. 60884), COVERING THE SUBJECT OF THE AUGUST 22, 1967, TECHNICAL BRIEFING.

YOUR UNSOLICITED PROPOSAL OFFERED, AS A SINGLE PROGRAM, A FEASIBILITY TEST DESCRIBED AS PHASE I TO BE FUNDED JOINTLY AND CONDUCTED WITH AIR FORCE AND LENKURT PERSONNEL PRIOR TO THE PROCUREMENT OF THE SYSTEM, AND, UPON SUCCESSFUL COMPLETION THEREOF, EF&I OF THE TOTAL LOS SYSTEM (PHASE II) ON A SOLE-SOURCE BASIS TO LENKURT. TO PROTECT YOUR RIGHTS AND INTERESTS REPRESENTED BY THE UNSOLICITED PROPOSAL, YOU ATTACHED, AS A PREFIX THERETO, THE FOLLOWING STATEMENT:

THIS DOCUMENT CONTAINS LENKURT ELECTRIC CO., INC., PROPRIETARY DATA, AND IS NOT TO BE COPIED, REPRODUCED, USED OR DIVULGED TO UNAUTHORIZED PERSONS, IN WHOLE OR IN PART, WITHOUT PROPER AUTHORIZATION IN WRITING FROM LENKURT. THIS INFORMATION IS THE PROPERTY OF LENKURT ELECTRIC CO., INC., WHICH RESERVES ALL RIGHTS TO IT.

IF THIS INFORMATION IS FURNISHED IN RESPONSE TO A REQUEST FOR PROPOSAL FROM THE U.S. GOVERNMENT, IT SHALL NOT BE DISCLOSED OUTSIDE THE GOVERNMENT OR USED FOR ANY PURPOSE OTHER THAN TO EVALUATE THE PROPOSAL. HOWEVER, IF A CONTRACT IS AWARDED TO THIS OFFERER, BASED ON THIS INFORMATION, THE PROVISIONS OF THE CONTRACT SHALL OVERRULE THESE PROVISIONS. ALSO, THESE PROVISIONS DO NOT LIMIT THE GOVERNMENT'S RIGHT TO USE THIS INFORMATION IF IT IS OBTAINED FROM ANOTHER SOURCE.

COPIES OF YOUR UNSOLICITED PROPOSAL WERE DISTRIBUTED WITHIN AFCS FOR THE PURPOSE OF EVALUATING THE PROPOSED TELECOMMUNICATION SYSTEM IN ANTICIPATION OF A FORMAL BRIEFING TO BE PRESENTED BY LENKURT TO TECHNICAL PERSONNEL OF AFCS ON OCTOBER 13, 1967.

IN A COMMUNICATION DATED OCTOBER 28, 1967, TO HEADQUARTERS USAF, AFCS RECOMMENDED ADOPTION OF THE LENKURT TOTAL LOS SYSTEM APPROACH FOR TASK 21 AS PRESENTED IN ITS UNSOLICITED PROPOSAL AND PROCUREMENT OF SUCH SYSTEM ON A SOLE-SOURCE BASIS FROM LENKURT. ON DECEMBER 15, 1967, AFCS (THE ENGINEERING ACTIVITY) RECOMMENDED THAT WORK ON THE LOS/TROPOSCATTER SYSTEM BE SUSPENDED AND THAT THE LENKURT TOTAL LOS SYSTEM BE ADOPTED FOR UTILIZATION BY THE AIR FORCE IN THE DCS. ON JANUARY 8, 1968, THE AIR FORCE LOGISTICS COMMAND (AFLC), WRIGHT PATTERSON AIR FORCE BASE, OHIO (THE PROCURING ACTIVITY), ADVISED HEADQUARTERS USAF AND DCA OF ITS CONCURRENCE WITH THE APPROACH OUTLINED BY LENKURT AND AFCS. ON JANUARY 11, 1968, DCA RECOMMENDED TO HEADQUARTERS USAF THAT THE PROPOSED LOS/TROPOSCATTER SYSTEM BE HELD IN ABEYANCE AND IT ALSO ADVISED THAT IT CONCURRED IN THE TOTAL LOS SYSTEM CONCEPT AS PREVIOUSLY RECOMMENDED BY AFCS.

ON FEBRUARY 8, 1968, AT ANOTHER AFCS BRIEFING BY LENKURT, IT ADVISED THAT, BASED UPON FURTHER CONSIDERATION OF THE ENGINEERING DATA AND OTHER INFORMATION DEVELOPED BY LENKURT IN THE COURSE OF ITS PREPARATION OF THE UNSOLICITED PROPOSAL, THE TESTING EFFORT DESCRIBED IN THE PROPOSAL (PHASE I) WOULD BE ELIMINATED. AS AN ADJUNCT THERETO, LENKURT OFFERED INSTEAD TO GUARANTEE THAT THE PROPOSED TOTAL LOS SYSTEM WOULD BE 99.99 PERCENT RELIABLE.

BASED ON THE INFORMATION SUPPLIED BY LENKURT AND IN VIEW OF THE 99.99 PERCENT PERFORMANCE GUARANTEE, THE DCA ENGINEERING OFFICE (DCEO) ON APRIL 3, 1968, RECOMMENDED TO DCA (WITH ADVICE TO THE AIR FORCE) THAT LENKURT'S UNSOLICITED PROPOSAL "SHOULD BE BASIS FOR THE DESIGN, INSTALLATION, AND ACCEPTANCE OF THE *** LOS RADIO SYSTEM." SUBSEQUENTLY, HEADQUARTERS USAF DIRECTED AFCS TO PREPARE AN IMPLEMENTATION PLAN UTILIZING THE DCEO APRIL 3, 1968, LETTER AS A GUIDE. THE PLAN, AS DEVELOPED BY AFCS, CONTEMPLATED A SOLE-SOURCE PROCUREMENT FROM LENHURT AND ADOPTED VERBATIM TECHNICAL AND FUNDING DATA FROM THE UNSOLICITED PROPOSAL. HOWEVER, THE PLAN SPECIFICALLY STATED THAT "THIS IS PROPRIETARY INFORMATION FROM LENKURT ELECTRIC COMPANY AND THIS DATA CANNOT BE USED TO DEVELOP A WORK STATEMENT FOR COMPETITIVE PROCUREMENT."

HEADQUARTERS USAF PROCUREMENT OFFICIALS APPROVED THE TOTAL LOS SYSTEM ENVISAGED BY THE AFCS IMPLEMENTATION PLAN BUT REJECTED WITHOUT QUALIFICATION THE LENKURT SOLE-SOURCE REFERENCES CONTAINED THEREIN. THE ACCEPTANCE DIRECTIVE DATED MAY 23, 1969, PROVIDED AT PARAGRAPH 7B THAT:

SOLE SOURCE CONTRACTOR EF&I IS NOT AUTHORIZED. AFCS AND AFLC/GEEIA WILL REWRITE THE (IMPLEMENTATION PLAN) DELETING ANY SOLE SOURCE REFERENCE. REQUIREMENTS SHOULD BE WRITTEN IN TERMS THAT WILL PERMIT COMPETITIVE CONTRACTOR EF&I *** REVISED (IMPLEMENTATION PLAN) WILL BE FOR RECORD PURPOSES ONLY.

AS A RESULT OF THE FOREGOING AND AT THE DIRECTION OF HEADQUARTERS USAF, THE GROUND ELECTRONICS ENGINEERING INSTALLATION AGENCY (GEEIA), GRIFFISS AIR FORCE BASE, N.Y., AN ENGINEERING AFFILIATE OF AFLC, DRAFTED A STATEMENT OF WORK EMBODYING A TOTAL LOS SYSTEM FOR TASK 21 WHICH WAS SUBSEQUENTLY SUBMITTED TO AFLC AND THEN TO OCAMA FOR UTILIZATION IN THE JANUARY 10, 1969, LETTER REQUEST FOR TECHNICAL PROPOSALS.

THE BASIS OF LENKURT'S PROTEST IS SUCCINCTLY STATED IN YOUR LETTER OF JANUARY 16, 1969, AS FOLLOWS:

THE ESSENCE OF THE LENKURT PROTEST IS THAT LENKURT INDEPENDENTLY DEVELOPED TECHNICAL MATERIAL TO SHOW FEASIBILITY OF A LINE-OF-SIGHT COMMUNICATIONS SYSTEM IN A GEOGRAPHIC AREA WHERE SUCH A SYSTEM HAD NOT BEEN PREVIOUSLY UTILIZED AND WHERE, IN FACT, ANOTHER TYPE OF SYSTEM, NAMELY TROPOSCATTER, HAD BEEN RECOMMENDED FOR USE BY THE GOVERNMENT; THAT THIS MATERIAL WAS DISCLOSED ON A RESTRICTED BASIS TO THE AIR FORCE; THAT RELYING ON THIS INFORMATION, A DETERMINATION WAS MADE BY THE GOVERNMENT THAT SUCH A MICROWAVE SYSTEM WOULD NOT ONLY BE FEASIBLE, BUT THAT A MICROWAVE SYSTEM WOULD, IN FACT, BE PROCURED IN PREFERENCE TO A NEW TROPOSCATTER SYSTEM; THAT BECAUSE OF THIS USE OF THE LENKURT INFORMATION, LENKURT WAS ENTITLED TO A SOLE SOURCE NEGOTIATION FOR SUCH A LINE-OF-SITE MICROWAVE SYSTEM AS OTHERWISE THE DETERMINATION WOULD HAVE BEEN A USE BY THE GOVERNMENT OF INFORMATION CONTRARY TO THAT PERMITTED BY THE PROCUREMENT REGULATIONS; ***

YOU CONCLUDED THAT THE ABOVE-DESCRIBED ACTIONS OF THE VARIOUS AIR FORCE OFFICIALS EVIDENCED "OPEN AND OBVIOUS" VIOLATIONS OF THE FOLLOWING PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR):

3-507 TREATMENT OF PROCUREMENT INFORMATION.

3-507.1 RESTRICTIONS ON DISCLOSURE AND USE OF DATA IN PROPOSALS AND QUOTATIONS.

(A) A PROPOSAL, WHETHER SOLICITED OR UNSOLICITED, MAY INCLUDE DATA, SUCH AS A TECHNICAL DESIGN OR CONCEPT OR FINANCIAL AND MANAGEMENT PLAN, WHICH THE OFFEROR DOES NOT WANT DISCLOSED TO THE PUBLIC FOR ANY PURPOSE OR USED BY THE GOVERNMENT FOR ANY PURPOSE OTHER THAN EVALUATION OF THE PROPOSAL. IF AN OFFERER WISHES SO TO RESTRICT HIS PROPOSAL, HE SHALL MARK THE TITLE PAGE WITH THE FOLLOWING LEGEND: *** CONTRACTING OFFICERS AND OTHER GOVERNMENT PERSONNEL SHALL NOT REFUSE TO CONSIDER ANY PROPOSAL MERELY BECAUSE IT OR THE DATA SUBMITTED WITH IT IS SO MARKED. THOSE PORTIONS OF THE PROPOSAL AND DATA WHICH ARE SO MARKED (EXCEPT FOR INFORMATION WHICH IS ALSO OBTAINED FROM ANOTHER SOURCE WITHOUT RESTRICTION) SHALL BE USED ONLY TO EVALUATE THE PROPOSAL AND SHALL NOT BE DISCLOSED OUTSIDE THE GOVERNMENT WITHOUT THE WRITTEN PERMISSION OF THE OFFEROR. IF IT IS DESIRED TO DUPLICATE, USE, OR DISCLOSE THE DATA OF THE OFFEROR TO WHOM THE CONTRACT IS TO BE AWARDED, FOR PURPOSES OTHER THAN TO EVALUATE THE PROPOSAL, THE CONTRACT SHOULD SO PROVIDE. ***

4-106 SELECTION OF RESEARCH AND DEVELOPMENT CONTRACTS.

4-106.1 SELECTION OF SOURCES.

(E) UNSOLICITED PROPOSALS.

(1) UNSOLICITED PROPOSALS MAY BE THE PRODUCT OF ORIGINAL THINKING AND GENERALLY ARE THE PROPERTY OF THE ORGANIZATION OR INDIVIDUAL WHO PRESENTS THEM. THEY ARE OFFERED IN THE HOPE THAT THE GOVERNMENT WILL CONTRACT WITH THE OFFEROR FOR FURTHER RESEARCH ON, OR DEVELOPMENT OF, THE IDEAS THEY CONTAIN. ACCORDINGLY, IT IS IMPORTANT THAT SUCH PROPOSALS RECEIVED BY PURCHASING ACTIVITIES BE HANDLED IN A MANNER WHICH WILL ENCOURAGE PROSPECTIVE CONTRACTORS TO DISCLOSE TO THE GOVERNMENT IDEAS WHICH THEY HAVE ORIGINATED, CONCEIVED, OR DEVELOPED.

(2) THE SUBMITTER OF AN UNSOLICITED PROPOSAL MAY MARK IT WITH A LEGEND, SUCH AS THAT PROVIDED IN 3-507.1(A), RESTRICTING THE DISCLOSURE AND USE OF DATA IN THE PROPOSAL. IF A PROPOSAL IS SO MARKED, THE TERMS OF THE LEGEND SHALL BE COMPLIED WITH.

(6) THE SUBMITTER OF AN UNSOLICITED PROPOSAL IS NOT NECESSARILY ENTITLED TO PREFERENTIAL TREATMENT IN THE AWARD OF ANY CONTRACT BECAUSE OF HIS SUBMISSION OF SUCH A PROPOSAL. SEE 4-106.2(D)(II).

ASPR 4-106.2(D)(II), CITED ABOVE, PROVIDES THAT ONE "ILLUSTRATION OF CIRCUMSTANCES WHERE THERE MAY BE NO SUBSTANTIAL QUESTION AS TO CHOICE OF SOURCE" IS WHEN:

(II) THE PURPOSE OF THE CONTRACT IS TO EXPLORE AN UNSOLICITED PROPOSAL WHICH OFFERS SIGNIFICANT SCIENTIFIC OR TECHNOLOGICAL PROMISE, REPRESENTS THE PRODUCT OF ORIGINAL THINKING, AND WAS SUBMITTED IN CONFIDENCE BY ONE SOURCE.

ALSO FOR CONSIDERATION IN THIS CASE ARE THE PROVISIONS OF 10 U.S.C. 2304, THE STATUTE GOVERNING PROCUREMENT BY NEGOTIATED METHODS BY THE MILITARY DEPARTMENTS OF THE GOVERNMENT. PERTINENT PORTIONS OF THAT STATUTE PROVIDE AS FOLLOWS:

(A) PURCHASES OF AND CONTRACTS FOR PROPERTY OF SERVICES COVERED BY THIS CHAPTER SHALL BE MADE BY FORMAL ADVERTISING IN ALL CASES IN WHICH THE USE OF SUCH METHOD IS FEASIBLE AND PRACTICABLE UNDER THE EXISTING CONDITIONS AND CIRCUMSTANCES. IF USE OF SUCH METHOD IS NOT FEASIBLE AND PRACTICABLE, THE HEAD OF AN AGENCY, *** MAY NEGOTIATE SUCH A PURCHASE OR CONTRACT, IF--

(10) THE PURCHASE OR CONTRACT IS FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION;

(G) IN ALL NEGOTIATED PROCUREMENTS IN EXCESS OF $2,500 IN WHICH RATES OR PRICES ARE NOT FIXED BY LAW OR REGULATION AND IN WHICH TIME OF DELIVERY WILL PERMIT, PROPOSALS, INCLUDING PRICE, SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, AND WRITTEN OR ORAL DISCUSSIONS SHALL BE CONDUCTED WITH ALL RESPONSIBLE OFFERORS WHO SUBMIT PROPOSALS WITHIN A COMPETITIVE RANGE, PRICE, AND OTHER FACTORS CONSIDERED: *** BY LETTER DATED DECEMBER 19, 1968, THE AIR FORCE REPORTED TO OUR OFFICE, THAT THE ONLY DATA IN YOUR UNSOLICITED PROPOSAL WHICH COULD CONCEIVABLY BE TREATED AS PROPRIETARY WERE THE ENGINEERING CONCLUSIONS CHARTED ON PAGE 18 OF YOUR "TECHNICAL DATA" WHICH "PURPORTS TO SHOW THAT LOCAL VARIATIONS IN ATMOSPHERIC CONDITIONS IN THE VICINITY OF THE CHANNEL CROSSING WOULD NOT PRECLUDE AN LOS MICROWAVE SYSTEM FROM REACHING AN OPERATIONAL RELIABILITY OF 99.99 PERCENT IN THAT LOCALITY."

IN ANY EVENT, THE REPORT OF DECEMBER 19 CONCLUDES THAT NONE OF THE DATA CONTAINED IN THE LENKURT UNSOLICITED PROPOSAL, INCLUDING THE INFORMATION ON THE "PAGE 18 CHART," WAS OR WILL BE USED BY THE AIR FORCE IN THE PREPARATION OF A COMPETITIVE PROCUREMENT FOR TASK 21.

BY SUPPLEMENTAL REPORT OF FEBRUARY 24, 1969, THE AIR FORCE CLARIFIED ITS POSITION WITH RESPECT TO YOUR PROTEST BY STATING, IN PART, AS FOLLOWS:

THE BASIS OF LENKURT'S PROTEST IS ITS CONTENTION THAT BECAUSE LENKURT INDEPENDENTLY DEVELOPED TECHNICAL MATERIAL TO SHOW FEASIBILITY OF A LINE- OF-SIGHT COMMUNICATIONS SYSTEM IN A GEOGRAPHIC AREA WHERE SUCH A SYSTEM HAD NOT BEEN PREVIOUSLY UTILIZED AND WHERE, IN FACT, ANOTHER TYPE OF SYSTEM, NAMELY TROPOSCATTER, HAD BEEN RECOMMENDED FOR USE BY THE GOVERNMENT ... , LENKURT IS ENTITLED AS A MATTER OF RIGHT TO SOLE SOURCE NEGOTIATION. WITH THIS CONTENTION WE CANNOT AGREE. THE AIR FORCE CONCEDES THAT THE LENKURT PROPOSAL, INSOFAR AS IT PURPORTED TO GUARANTEE THE FEASIBILITY OF AN LOS SYSTEM ACROSS THE ENGLISH CHANNEL, DID PLAY SOME PART IN INFLUENCING THE DECISION TO PROCURE AN LOS SYSTEM. BUT IN OUR VIEW, THE DETERMINATION TO INVITE PROPOSALS ON AN LOS BASIS AFTER CONSIDERATION OF THE LENKURT UNSOLICITED PROPOSAL DOES NOT CONSTITUTE "USE" OF SUCH CHARACTER AS TO VIOLATE THE RESTRICTIVE LEGEND CONTAINED IN ASPR 3-507 AND DICTATE A SOLE SOURCE PROCUREMENT FROM LENKURT. THERE IS NOTHING NEW OR NOVEL IN THE IDEA OF USING LOS ACROSS THE ENGLISH CHANNEL. IN FACT, BOTH COLLINS RADIO AND PHILCO HAD SUBMITTED, PRIOR TO THE GOVERNMENT'S DECISION TO PROCURE AN LOS SYSTEM ACROSS THE ENGLISH CHANNEL, UNSOLICITED PROPOSALS THAT INCLUDED AN LOS SYSTEM ACROSS THE ENGLISH CHANNEL. IN OUR VIEW, IT WOULD BE IMPROPER TO DENY THESE OTHER FIRMS AN OPPORTUNITY TO COMPETE. WE BELIEVE THAT IT WOULD SERIOUSLY UNDERMINE THE UTILITY OF UNSOLICITED PROPOSALS AND OUR WILLINGNESS TO ACCEPT THEM, AND BE CONTRARY TO OUR POLICY FAVORING COMPETITIVE PROCUREMENT, IF THE MERE SUBMISSION OF A SUGGESTION OR RECOMMENDATION INVOLVING A WELL-KNOWN COMMUNICATIONS TECHNIQUE, WHICH WAS PERSUASIVE IN ARRIVING AT A DECISION TO EMPLOY THAT TECHNIQUE FOR A PARTICULAR PROCUREMENT, COULD BE SUFFICIENT TO REQUIRE SOLE SOURCE PROCUREMENT. WE POINT OUT AGAIN THAT THE LENKURT PROPOSAL WAS NOT DISCLOSED OUTSIDE THE GOVERNMENT, AND WILL NOT BE INCORPORATED IN ANY WAY IN THE MATERIAL TO BE DISTRIBUTED IN CONNECTION WITH THIS PROCUREMENT. LENKURT WILL CLEARLY NOT BE DEPRIVED OF THE BENEFIT OF ITS EFFORTS IN EVALUATING THE FEASIBILITY OF AN LOS SYSTEM, SINCE PRESUMABLY COMPETITORS WHO HAVE NOT PERFORMED SUCH STUDIES WILL HAVE TO DO SO TO ENABLE THEMSELVES TO BID AND GUARANTEE PERFORMANCE IN THE EVENT OF SUCCESS IN THE COMPETITION.

AT A CONFERENCE ON MAY 26, 1969, ARRANGED BY CONGRESSMAN MCCLOSKEY, AND ATTENDED BY REPRESENTATIVES OF OUR OFFICE, THE AIR FORCE AND LENKURT, RESPONSIBLE AIR FORCE OFFICIALS STATED THAT THE DATA PRESENTED ON THE LENKURT "PAGE 18 CHART," SOME ADDITIONAL UNSPECIFIED TECHNICAL DATA, AND THE BUDGETARY PRICING DATA CONTAINED IN THE ORIGINAL UNSOLICITED PROPOSAL WERE PROPRIETARY TO LENKURT. OUR REVIEW OF THE FUNDING DATA ESTABLISHED THAT CONSIDERABLE SAVINGS WOULD ACCRUE TO THE GOVERNMENT BY ADOPTION OF THE TOTAL LOS TELECOMMUNICATIONS SYSTEM AS PROPOSED BY LENKURT IN LIEU OF THE PREVIOUSLY PLANNED MIXED LOS/TROPOSCATTER SYSTEM. THE AIR FORCE STATED AT THE MEETING THAT LENKURT'S COST DATA WAS USED BY AFCS IN PLANNING FOR THE PROCUREMENT AND THAT THE RESULTS OF LENKURT'S FEASIBILITY STUDY HAD BORNE A SIGNIFICANT, IF NOT DOMINANT, ROLE IN CAUSING THE AIR FORCE TO PROCURE A TOTAL LOS SYSTEM INSTEAD OF LOS/TROPOSCATTER. OUR REVIEW OF ALL ASPECTS OF THIS PROTEST SUBSTANTIATES THE FOREGOING USES OF LENKURT INFORMATION BY THE AIR FORCE. SPECIFICALLY, IT IS CLEAR THAT THE LENKURT FUNDING DATA USED BY AFCS IN ITS IMPLEMENTATION PLAN FOR THE TOTAL LOS SYSTEM PROCUREMENT WAS NOT REJECTED BY HEADQUARTERS USAF IN ITS INSTRUCTIONS TO GEEIA TO REWRITE THE IMPLEMENTATION PLAN "DELETING ANY SOLE-SOURCE REFERENCE." LIKEWISE, THE LENKURT FEASIBILITY STUDY AND ITS AMENDMENT TO THE UNSOLICITED PROPOSAL GUARANTEEING THAT THE SYSTEM WOULD BE 99.99 PERCENT RELIABLE, PLAYED AN EXTREMELY IMPORTANT ROLE IN THE DCA AND AIR FORCE DECISION-MAKING PROCESSES UNDER WHICH THE ORIGINAL CONCEPT WAS DISCARDED IN FAVOR OF A TOTAL LOS TELECOMMUNICATIONS SYSTEM.

THE AIR FORCE CONCLUDED THEIR REMARKS AT THE MAY 26 MEETING BY STATING THAT THE ADMITTED "USE" BY THE GOVERNMENT OF LENKURT'S PROPRIETARY INFORMATION AND DATA WAS STRICTLY INTERNAL FOR THE SOLE PURPOSE OF EVALUATING THE PROPOSAL, WHICH EVALUATION WAS CONTEMPLATED BY LENKURT, AND THAT SUCH A "USE" WAS NOT A VIOLATION OF THE PERTINENT ASPR PROVISIONS QUOTED ABOVE.

THE GENERAL TENOR OF THE APPLICABLE PROVISIONS IS THAT AN UNSOLICITED PROPOSAL CONTAINING DATA RESTRICTED BY THE OFFEROR SHOULD BE USED BY THE GOVERNMENT ONLY FOR EVALUATION OF THAT PROPOSAL AND SHALL NOT BE "USED BY THE GOVERNMENT FOR ANY (OTHER) PURPOSE *** ." ASPR 3 507.1(A). THE REGULATIONS AT ASPR 4-106.1(E)(1) EXPLAIN THAT ONE OF THE REASONS OFFERORS SUBMIT UNSOLICITED PROPOSALS IS IN THE HOPE THAT THE RECEIVING AGENCY WILL CONTRACT WITH THEM "FOR FURTHER RESEARCH ON, OR DEVELOPMENT OF, THE IDEAS THEY CONTAIN." WHILE IT IS POINTED OUT AT SUBPARAGRAPH (6) OF THE ABOVE- CITED ASPR THAT SUCH PROPOSAL EVIDENCING A RESEARCH AND DEVELOPMENT (R&D) EFFORT SHOULD BE HANDLED IN A CONFIDENTIAL MANNER, THE OFFEROR IS CLEARLY NOT "NECESSARILY ENTITLED TO PREFERENTIAL TREATMENT IN THE AWARD OF ANY CONTRACT BECAUSE OF HIS SUBMISSION OF SUCH A PROPOSAL." CONTRACTING OFFICIALS OF THE GOVERNMENT ARE ADVISED, HOWEVER, THAT THE LAST-CITED PROVISION IS NOT FOR CONSIDERATION IN CERTAIN CIRCUMSTANCES. SEE ASPR 4- 106.2(D)(II), SUPRA.

WITH RESPECT TO THE PROPRIETARY TECHNICAL DATA CONTAINED ON THE "PAGE 18 CHART" (AND POSSIBLY ELSEWHERE IN THE LENKURT PROPOSAL), THE FORMAT OF THE PROPOSAL, AS INDICATED ABOVE, PRESENTED THE TOTAL LOS SYSTEM CONCEPT IN TWO PHASES. PHASE I, THE TESTING REQUIREMENT, EMBODIED THE FEASIBILITY STUDY AND ALL DATA AND INFORMATION PERTINENT THERETO THAT MIGHT POSSIBLY BE CHARACTERIZED AS AN R&D EFFORT. PHASE II, THE REMAINING EFFORT UNDER THE LENKURT PROPOSAL, IS MERELY A "TEXTBOOK" APPLICATION OF WELL-KNOWN SCIENTIFIC PRINCIPLES OF MICROWAVE TRANSMISSION AND, AS REPORTED BY GEEIA, IS CLEARLY WITHIN THE UPPER LIMITS OF THE CURRENT STATE OF THE ART AND COULD BE ENGINEERED BY ANY RELATIVELY COMPETENT TRANSMISSION ENGINEER ONCE HE WAS SHOWN THAT THE RESULTING SYSTEM WOULD MEET THE CRITICALLY HIGH DCS STANDARDS.

FURTHERMORE, IT IS REPORTED THAT ACCOMPLISHMENT OF PHASE II AS CONTEMPLATED BY LENKURT CALLED FOR THE NORMAL UTILIZATION AND INSTALLATION OF OFF-THE-SHELF TYPE EQUIPMENTS MANUFACTURED AND STOCKED BY A NUMBER OF RELIABLE PROSPECTIVE GOVERNMENT CONTRACTORS. BECAUSE OF THE RELATIVELY COMMON SCIENTIFIC NATURE OF THE EFFORT DESCRIBED IN PHASE II OF THE PROPOSAL, NO JUSTIFICATION WOULD EXIST TO SUPPORT A SOLE-SOURCE PROCUREMENT. SEE, IN THIS REGARD OUR DISCUSSION OF 10 U.S.C. 2304(A)(10) IN 41 COMP. GEN. 484 (1965) AT PAGES 491-492.

AS TO PHASE I (FEASIBILITY TESTING) IT IS CRITICAL TO NOTE THAT SUCH EFFORT WAS EFFECTIVELY DELETED FROM THE UNSOLICITED PROPOSAL BY LENKURT'S OWN ACTION AFTER THE AFCS MEETING ON FEBRUARY 9, 1968. THE LENKURT PROPOSAL AFTER FEBRUARY 9, 1968, BUT PRIOR TO THE AIR FORCE/DCA TOTAL LOS SYSTEM COMMITMENT, CONSISTED OF AN EF&I EFFORT AS DESCRIBED ABOVE COUPLED WITH A GUARANTEED RELIABILITY STANDARD COMMENSURATE WITH THE DCA REQUIREMENTS. MOREOVER, AND POSSIBLY OF EVEN MORE IMPORTANCE, IS THE FACT THAT THE AIR FORCE (GEEIA) DURING THE LATTER PART OF 1968, AND EARLY 1969, REQUESTED AND RECEIVED FROM THE DEPARTMENT OF COMMERCE, ENVIRONMENTAL SCIENCE SERVICES ADMINISTRATION (ESSA), A COMPLETE FEASIBILITY STUDY SPECIFYING THE NECESSARY DESIGN PARAMETERS TO MEET THE DCA REQUIREMENTS. IN THIS REGARD, THE CHIEF, TROPOSPHERIC RADIO SYSTEMS PREDICTIONS, INSTITUTE FOR TELECOMMUNICATION SCIENCES, ESSA, REPORTED TO GEEIA "ON THE BASIS OF THE ESTIMATES GIVEN IN THIS LETTER WE THINK THAT THIS (LOS) LINK, WITH THE PARAMETERS SPECIFIED, WILL PROVIDE SATISFACTORY PERFORMANCE AT LEAST FOR THE STANDARD (DEFENSE COMMUNICATIONS SYSTEM) LOADING." AS A FOOTNOTE THERETO, THE AUTHOR OF THE ABOVE QUOTATION ADVISED OUR OFFICE, THAT HE "HAD ABSOLUTELY NO KNOWLEDGE OF ANY PREVIOUS LENKURT PROPOSAL, OR WORK ON THE MATTER."

RESTATED, ALL OF THE FOREGOING CLEARLY EVIDENCES THAT THE AIR FORCE/DCA DECISION TO PROCURE A TOTAL LOS TELECOMMUNICATIONS SYSTEM TURNED SIGNIFICANTLY, IF NOT ENTIRELY, ON THE BASIS OF THE FEASIBILITY STUDY PRESENTED IN PHASE I OF THE UNSOLICITED PROPOSAL WHICH LENKURT HAD WITHDRAWN. THEREFORE, AND SINCE THE ESSA DATA CONSTITUTED THE SOLE BASIS FOR THE STATEMENT OF WORK, WE CONCLUDE THAT THE AIR FORCE EVALUATION OF THE TECHNICAL DATA CONTAINED IN PHASE I OF THE UNSOLICITED PROPOSAL PROVIDES NO JUSTIFICATION FOR SUPPORTING A SOLE SOURCE PROCUREMENT TO LENKURT.

THE ONLY INFORMATION IN YOUR UNSOLICITED PROPOSAL WHICH, IN OUR OPINION, WAS ENTITLED TO SOME DEGREE OF PROTECTION IS THE FUNDING DATA. THE RECORD SHOWS THAT THIS DATA WAS USED BY AFCS IN THE IMPLEMENTATION PLAN PREPARED BY THAT COMMAND. HOWEVER, WE FIND NO BASIS ON THE RECORD TO CONCLUDE THAT THE USE OF THE LENKURT FUNDING DATA BY THE AIR FORCE CONSTITUTES A LEGAL BASIS UPON WHICH A SOLE SOURCE PROCUREMENT MAY BE CONSUMMATED. WE BELIEVE THAT SUCH A CONCLUSION IS REQUIRED BECAUSE THE CONSEQUENCES WHICH FLOW FROM THE IMPROPER USE OF DATA RELATE BACK TO TECHNICAL INFORMATION WHICH CONSTITUTED THE VERY ESSENCE OF THE PROCUREMENT. SEE 41 COMP. GEN. 148 (1961); 42 ID. 346 (1963); 43 ID. 193 (1963). FUNDING DATA CANNOT BE REGARDED AS IN THE SAME CATEGORY AS MANUFACTURING OR DESIGN DATA.

ACCORDINGLY, AND IN VIEW OF THE COMPLETE RECORD BEFORE US WHICH REVEALS NO ABUSE OF LENKURT'S LEGAL RIGHTS IN THE DATA CONTAINED IN THE UNSOLICITED PROPOSAL OR THAT SUCH DATA WAS INCLUDED IN ..END :