B-166022, MAY 22, 1969

B-166022: May 22, 1969

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SECRETARY: REFERENCE IS MADE TO LETTER OF APRIL 24. THE REPORT ADMITS THAT INFORMATION IN THE PURCHASE DESCRIPTION OF THE HYDRAULIC JACKS WAS OBTAINED FROM A SANCOR DRAWING FURNISHED TO THE GOVERNMENT FOR USE ON A RESTRICTIVE BASIS. THE REPORT STATES THAT SANCOR HAD ALSO SOLD AND DELIVERED A NUMBER OF JACKS TO THE NAVY WITHOUT ANY RESTRICTION BEFORE THE PURCHASE DESCRIPTION WAS PUBLISHED IN THE INVITATION FOR BIDS AND THAT THE INFORMATION COULD HAVE BEEN OBTAINED FROM AN EXAMINATION OF THE JACK ITSELF. IT IS CONTENDED. THAT UTILIZATION OF THE INFORMATION IN THE DRAWING WAS NOT PREJUDICIAL TO SANCOR. IT WAS ASSURED BY LETTER FROM THE NAVY THAT ITS PROPRIETARY RIGHTS WOULD BE PROTECTED AGAINST IMPROPER DISCLOSURE.

B-166022, MAY 22, 1969

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER OF APRIL 24, 1969, FROM THE ACTING DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, FURNISHING A REPORT ON THE PROTEST OF THE SANCOR CORPORATION THAT THE CONTRACT AWARDED TO ANOTHER COMPANY UNDER INVITATION FOR BIDS SBSA N00383-69-B 0050 BE CANCELED BECAUSE THE PURCHASE DESCRIPTION CONTAINS PROPRIETARY INFORMATION OBTAINED FROM A DRAWING PREVIOUSLY FURNISHED TO THE NAVY BY SANCOR ON A RESTRICTIVE BASIS.

THE REPORT ADMITS THAT INFORMATION IN THE PURCHASE DESCRIPTION OF THE HYDRAULIC JACKS WAS OBTAINED FROM A SANCOR DRAWING FURNISHED TO THE GOVERNMENT FOR USE ON A RESTRICTIVE BASIS. HOWEVER, THE REPORT STATES THAT SANCOR HAD ALSO SOLD AND DELIVERED A NUMBER OF JACKS TO THE NAVY WITHOUT ANY RESTRICTION BEFORE THE PURCHASE DESCRIPTION WAS PUBLISHED IN THE INVITATION FOR BIDS AND THAT THE INFORMATION COULD HAVE BEEN OBTAINED FROM AN EXAMINATION OF THE JACK ITSELF. IT IS CONTENDED, THEREFORE, THAT UTILIZATION OF THE INFORMATION IN THE DRAWING WAS NOT PREJUDICIAL TO SANCOR.

BEFORE SANCOR FURNISHED THE DRAWING TO THE GOVERNMENT, IT WAS ASSURED BY LETTER FROM THE NAVY THAT ITS PROPRIETARY RIGHTS WOULD BE PROTECTED AGAINST IMPROPER DISCLOSURE. THEREAFTER, THE DRAWING WAS FURNISHED TO THE NAVY BEARING THE FOLLOWING LEGEND: "THE PROPRIETARY RIGHTS OF THE SANCOR CORPORATION ARE INCLUDED IN THIS DOCUMENT. THE INFORMATION HEREIN CONTAINED SHALL NOT BE REPRODUCED, TRANSFERRED, DISCLOSED TO OTHERS, OR USED FOR MANUFACTURING OR ANY OTHER PURPOSE, EXCEPT AS SPECIFICALLY AUTHORIZED IN WRITING BY THE SANCOR CORPORATION.'

IN 43 COMP. GEN. 193, WE HELD THAT WHERE DRAWINGS CONTAINING PROPRIETARY DATA WERE ACCEPTED BY THE GOVERNMENT WITH THE KNOWLEDGE THAT THEY WERE FURNISHED BY THE OWNER THROUGH SPECIAL CONFIDENCE REPOSED IN THE GOVERNMENT IN RELIANCE UPON ASSURANCES GIVEN THAT SUCH DRAWINGS WOULD BE USED ONLY IN SUCH MANNER AS TO PROTECT THE RIGHTS OF THE OWNER IN THE PROPRIETARY DATA, SUCH DATA MAY NOT BE DISCLOSED IN AN INVITATION FOR BIDS. IN OUR LATER DECISION B-153941, AUGUST 27, 1964, WE HELD IN PERTINENT PART THAT:

"* * * WHILE IT MAY BE THAT THE ROCK CRUSHER PLANTS COULD HAVE BEEN PROCURED WITHOUT OBTAINING THE DATA AND THE DRAWINGS PERTAINING THERETO AND THAT CERTAIN DATA AND DESIGN INFORMATION MIGHT HAVE BEEN OBTAINED THEREAFTER BY -REVERSE ENGINEERING- METHODS, NEVERTHELESS, IT SEEMS ABUNDANTLY CLEAR AS POINTED OUT IN OUR DECISION OF AUGUST 22, 1963 (43 COMP. GEN. 193), THIS IS NOT WHAT WAS DONE. INSTEAD, WHEN THE ROCK CRUSHERS WERE INITIALLY PROCURED, DETAILED DATA AND DRAWINGS WERE ALSO PROCURED UNDER A CONFIDENTIAL RELATIONSHIP AND EXPRESS CONTRACT STIPULATIONS WHEREBY THE GOVERNMENT BECAME DUTY-BOUND AND CONTRACTUALLY OBLIGATED NOT TO USE SUCH DATA AND DRAWINGS FOR COMPETITIVE PROCUREMENT PURPOSES. IN OUR OPINION, THE USE OF SUCH DATA AND DESIGNS FOR THE PROCUREMENT NOW PROPOSED UNDER THE IFB WOULD VIOLATE THIS DUTY AND BREACH THE CONTRACT. MOREOVER, WE BELIEVE SUCH ACTION REASONABLY MAY NOT BE REGARDED AS CONSISTENT WITH RECOGNIZED STANDARDS OF FAIR DEALING. CF. FRANKE V WILTSCHEK (2 C.A. 1953), 209 F.2D 493, AND THE AUTHORITIES REFERRED TO AND QUOTED WITH APPROVAL AT PAGES 495 496 IN SUPPORT OF THE PRINCIPLE THAT WHERE SECRET INFORMATION IS OBTAINED BY MEANS OF A CONFIDENTIAL RELATIONSHIP, HE WHO SO OBTAINS IT AND USES IT TO HIS OWN ADVANTAGE AT THE EXPENSE OF THE RIGHTFUL OWNER IS ACCOUNTABLE THEREFOR.' SEE, ALSO, PAGES 202-203 IN 43 COMP. GEN., SUPRA.

IT IS APPARENT TO US THAT THERE WAS A CLEAR BREACH OF THE CONFIDENCE REPOSED IN THE GOVERNMENT BY SANCOR. ALTHOUGH ORDINARILY OUR OFFICE HAS REQUIRED CANCELLATION OF INVITATIONS FOR BIDS WHERE DATA FURNISHED IN CONFIDENCE TO THE GOVERNMENT HAS BEEN USED IN A SUBSEQUENT INVITATION FOR BIDS (SEE THE DECISIONS CITED ABOVE), WHERE, AS HERE, AN AWARD HAS BEEN MADE BEFORE THE PROTEST IS LODGED IN OUR OFFICE, NO CANCELLATION ACTION IS REQUIRED BY OUR OFFICE AND THE PROTESTANT IS LEFT TO HIS REMEDY IN THE COURTS. B-152410, JUNE 9, 1964. ASIDE FROM REDRESS TO THE COURTS, WE DIRECT YOUR ATTENTION TO THE AUTHORITY IN 10 U.S.C. 2386 FOR THE USE OF APPROPRIATED FUNDS TO ACQUIRE "DESIGNS, PROCESSES, AND MANUFACTURING DATA.' WITHOUT AN ADMINISTRATIVE SETTLEMENT OF THE MATTER, THE GOVERNMENT WOULD BE PRECLUDED FROM UTILIZING SANCOR'S PROPRIETARY INFORMATION IN FUTURE PROCUREMENTS. SEE 41 COMP. GEN. 148; 42 ID. 346.

WE WISH TO POINT OUT THAT NEARLY 3 MONTHS ELAPSED BETWEEN THE TIME OUR OFFICE REQUESTED A REPORT ON THE PROTEST AND THE TIME THE REPORT WAS FURNISHED. WE RECOMMEND THAT APPROPRIATE STEPS SHOULD BE TAKEN TO INSURE THAT FUTURE REPORTS ARE SUBMITTED AS PROMPTLY AS POSSIBLE UNDER THE PARTICULAR CIRCUMSTANCES. SEE B-163084, B-165691 DATED APRIL 11, 1969, 48 COMP. GEN. -----. ..END :