B-167020, AUGUST 26, 1969, 49 COMP. GEN. 124

B-167020: Aug 26, 1969

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PROPERLY WAS USED TO SOLICIT BENCHMARK TESTS TO CREATE COMPETITION. WHEN A MIXTURE OF PRIVATE AND GOVERNMENT FUNDS ARE USED TO DEVELOP DATA. THE RIGHTS ARE NOT ALLOCATABLE ON AN INVESTMENT PERCENTAGE BASIS AND THE GOVERNMENT ACQUIRES UNLIMITED RIGHTS TO THE DATA. IT WILL NOT DO SO WHEN CANCELLATION IS NOT JUSTIFIED. 1969: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 20. CURRENT SOFTWARE AND OTHER UNIQUE PROGRAMS CURRENTLY USED FOR OPERATION WILL BE PROVIDED AS NECESSARY FOR BENCHMARK AND EVENTUAL CONTRACT PERFORMANCE. THE OBJECTIVE OF THE BENCHMARK TEST WAS TO REQUIRE BIDDERS TO DEMONSTRATE TO THE GOVERNMENT THAT THEY COULD PROCESS LITE SEARCHES THROUGH THE SYSTEM SATISFACTORILY. NINE BIDS WERE RECEIVED AND OPENED ON APRIL 3.

B-167020, AUGUST 26, 1969, 49 COMP. GEN. 124

CONTRACTS -- DATA, RIGHTS, ETC. -- STATUS OF INFORMATION FURNISHED -- GOVERNMENT PARTICIPATION IN DEVELOPMENT COSTS THE SOFTWARE AND RELATED PROGRAMS DEVELOPED PARTIALLY AT GOVERNMENT EXPENSE SOLELY FOR THE OPERATION OF THE COMPUTER SERVICE PROGRAM "LEGAL INFORMATION THROUGH ELECTRONICS" (LITE) WHEN THE CONTRACTOR EXPERIENCED DIFFICULTY IN PERFORMING, PROPERLY WAS USED TO SOLICIT BENCHMARK TESTS TO CREATE COMPETITION. NOT ONLY DID THE RIGHTS IN DATA CLAUSE OF THE CONTRACT PROVIDE THAT THE DATA BECOME THE SOLE PROPERTY OF THE GOVERNMENT, BUT WHEN A MIXTURE OF PRIVATE AND GOVERNMENT FUNDS ARE USED TO DEVELOP DATA, THE RIGHTS ARE NOT ALLOCATABLE ON AN INVESTMENT PERCENTAGE BASIS AND THE GOVERNMENT ACQUIRES UNLIMITED RIGHTS TO THE DATA. THE FORMER CONTRACTOR DELAYED UNREASONABLY IN WAITING UNTIL AFTER AWARD OF A NEW LITE CONTRACT TO OBJECT TO THE USE OF THE DATA, AND AS GENERAL ACCOUNTING OFFICE HAS NEVER ORDERED CANCELLATION OF A CONTRACT FOR THE IMPROPER DISCLOSURE OF PROPRIETARY DATA, IT WILL NOT DO SO WHEN CANCELLATION IS NOT JUSTIFIED.

TO THE MCDONNELL AUTOMATION COMPANY, AUGUST 26, 1969:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 20, 1969, WITH ENCLOSURES, PROTESTING THE USE OF YOUR PROGRAMS AND RELATED SOFTWARE IN CONNECTION WITH INVITATION FOR BIDS NO. F05602-69-B-0011 ISSUED ON FEBRUARY 26, 1969, BY THE U.S. AIR FORCE ACCOUNTING AND FINANCE CENTER, DENVER, COLORADO, TO PROVIDE THE AIR FORCE WITH COMPLETE COMPUTER SERVICES FOR PRODUCING THE PROGRAM ENTITLED, "LEGAL INFORMATION THROUGH ELECTRONICS" (LITE).

THE SUBJECT INVITATION UNDER PART I, ENTITLED "LITE TECHNICAL STATEMENT," PROVIDED:

C. CURRENT SOFTWARE AND OTHER UNIQUE PROGRAMS CURRENTLY USED FOR OPERATION WILL BE PROVIDED AS NECESSARY FOR BENCHMARK AND EVENTUAL CONTRACT PERFORMANCE. THE OBJECTIVE OF THE BENCHMARK TEST WAS TO REQUIRE BIDDERS TO DEMONSTRATE TO THE GOVERNMENT THAT THEY COULD PROCESS LITE SEARCHES THROUGH THE SYSTEM SATISFACTORILY.

NINE BIDS WERE RECEIVED AND OPENED ON APRIL 3, 1969. THE LOW BIDDER, COMPUTER MANAGEMENT AND SERVICES CORPORATION, WAS FURNISHED THE NECESSARY PROGRAMS AND RELATED SOFTWARE AS PROVIDED IN PART I OF THE INVITATION FOR THE PERFORMANCE OF BENCHMARK TESTS. FOLLOWING SUCCESSFUL COMPLETION OF THE BENCHMARK TESTS, AND REJECTION BY THE AIR FORCE OF YOUR PROTEST DATED MAY 7, 1969, WHICH WAS ON COMPLETELY DIFFERENT GROUNDS, THE CONTRACT WAS AWARDED TO THE LOW BIDDER ON MAY 8, 1969.

BY LETTER OF MAY 20, 1969, YOU STATED THAT THE GOVERNMENT IMPROPERLY SUPPLIED THE LOW BIDDER WITH CERTAIN PROGRAMS AND RELATED SOFTWARE FOR THE PERFORMANCE OF TH BENCHMARK TESTS. YOU CONTEND THAT THESE PROGRAMS AND RELATED SOFTWARE, WHICH HAD BEEN FURNISHED TO THE GOVERNMENT BY YOU UNDER A PRIOR CONTRACT, WERE NOT SUBJECT TO THE RIGHTS IN DATA CLAUSE OF YOUR CONTRACT BECAUSE THEY DID NOT CONSTITUTE DATA SPECIFIED TO BE DELIVERED, AND HAD BEEN SUBMITTED TO THE GOVERNMENT FOR USE BY THE GOVERNMENT ONLY. LASTLY, YOU PROTEST THE INCLUSION OF PART I, SUPRA, IN THE SUBJECT INVITATION AND CITE TWO OF OUR DECISIONS, B-143711 AND 43 COMP. GEN. 193 TO SUPPORT YOUR POSITION THAT THE AWARD WAS ILLEGAL AND SHOULD BE CANCELED.

THE HISTORY OF DEVELOPMENT OF THE EMULATION PROGRAMS AND RELATED SOFTWARE IN DISPUTE, APPEARS FROM THE RECORD TO BE AS FOLLOWS:

CONTRACT NO. F05602-67-C-0025 FOR COMPUTER SEARCH SERVICES AND NEW DATA BASE CREATION AND UPDATING SERVICES FOR EXISTING BASES, WAS AWARDED TO MCDONNELL AUTOMATION COMPANY (MCDONNELL) ON MARCH 23, 1967, AND EXPIRED ON JUNE 30, 1969. IT IS REPORTED THAT, INITIALLY, MCDONNELL COULD NOT MAKE THE LITE IBM 1410 EMULATION PROGRAMS WORK ON ITS RCA SPECTRA 70/45 SYSTEM. THE MONTHS OF MAY, JUNE, JULY AND PART OF AUGUST 1967 WERE SPENT DEVELOPING EMULATION PROGRAMS COMPATIBLE WITH RCA SPECTRA 70/45, THROUGH THE JOINT EFFORTS OF MCDONNELL, RCA AND THE AIR FORCE. THE MANPOWER INVESTED BY THE RESPECTIVE PARTIES WAS UNKNOWN. HOWEVER, THE AIR FORCE DID NOT INSIST UPON FULL PRODUCTION PERFORMANCE BY MCDONNELL DURING THESE MONTHS AND CONTINUED TO PAY THE CONTRACT PRICE OF $17,750 PER MONTH FOR COMPUTER SERVICES, EVEN THOUGH SUCH SERVICES WERE NOT OPERATIONAL.

MEANWHILE, THE AIR FORCE WAS CONCERNED WITH OBTAINING COMPUTER PROGRAM SOURCE DECKS AND DOCUMENTATION FOR ALL MCDONNELL PROGRAMS WHICH WOULD ENABLE THE AGENCY TO OPERATE ELSEWHERE ON AN IDENTICAL RCA SPECTRA 70/45 SYSTEM, SINCE WITHOUT SUCH EMULATION PROGRAMS AND RELATED SOFTWARE, THE AGENCY WAS COMPLETELY DEPENDENT ON MCDONNELL TO RUN THE LITE PROGRAM. MEMORANDUM, DATED JULY 31, 1968, STATED THAT THE AIR FORCE MUST HAVE ACCESS TO ALL PROGRAMS REQUIRED FOR OPERATING THE LITE SYSTEM AND CONCLUDED THAT CLAUSE 37, RIGHTS IN DATA, ENTITLED THE AGENCY TO THE CURRENT VERSIONS OF ALL PROGRAMS AT THE END OF THIS CONTRACT PERFORMANCE.

THE AIR FORCE FILES SHOW THAT IN JUNE 1968 THE AIR FORCE REQUESTED SOURCE DECKS AND DOCUMENTATION FOR ALL MCDONNELL PROVIDED PROGRAMS AND TAPE AND INSTRUCTIONS FOR A COMPLETE SYSTEM GENERATION FOR LITE AND STANDARD 70/45 SOFTWARE, FOR STORAGE BY THE AIR FORCE. IN REPLY, BY LETTER OF JULY 16, 1968, YOU EXPRESSED WILLINGNESS TO MAKE AVAILABLE OBJECT DECKS FOR STORAGE BY AIR FORCE LITE AGAINST EMERGENCY AND CATASTROPHIC EVENTS THAT WOULD ENABLE MCDONNELL TO PERFORM CONTRACT SERVICES AT ITS DENVER FACILITY, BUT STATED THAT "THE SOURCE DECKS FOR THE SPECIFIC EMULATION PROGRAMS WHICH MCDONNELL DEVELOPED AT THEIR COST TO MEET CONTRACT SPECIFICATIONS WILL BE STORED BY MCDONNELL AT A SEPARATE FACILITY FOR EMERGENCY BACKUP."

THIS WAS DETERMINED BY AIR FORCE TO BE UNACCEPTABLE, AND A FURTHER REQUEST WAS MADE BY LETTER OF JULY 24, 1968, WHICH REQUESTED DELIVERY OF SOURCE DECKS, DOCUMENTATION, AND TAPE CURRENTLY BEING USED TO OPERATE THE LITE SYSTEM, CONSISTING OF TEN SPECIFICALLY ENUMERATED ITEMS, INCLUDING EMULATOR MASTER TAPE (MODIFIED LITE VERSION); ALSO UPDATED VERSIONS THEREOF AND/OR ADDITIONAL MATERIALS PROVIDED PERIODICALLY AND AS REQUESTED BY AIR FORCE LITE. A MEMORANDUM TO THE FILE DATED AUGUST 7, 1968, REPORTS ADVICE RECEIVED BY TELEPHONE THAT MCDONNELL HAD SUBMITTED THE QUESTION OF ITS RIGHTS TO EMULATOR PROGRAMS TO ITS GENERAL COUNSEL. A FURTHER MEMORANDUM DATED AUGUST 15 STATES THAT MR. FULLERTON, MCDONNELL'S PRESIDENT, CALLED COLONEL KELLEY ON AUGUST 13 AND REQUESTED WITHDRAWAL OF HIS LETTER OF AUGUST 12 CONCERNING THE RIGHTS TO COMPUTER PROGRAM. THE LETTER REFERRED TO DOES NOT APPEAR IN THE FILE.

SO FAR AS APPEARS FROM THE RECORD, THE MATTER WAS CLOSED BY THE DELIVERY BY MCDONNELL TO THE AIR FORCE ON AUGUST 21, 1968, OF ALL THE REQUESTED MATERIAL THEN IN USE.

THEREAFTER, THE AIR FORCE DECIDED TO FORMALLY ADVERTISE FOR CONTINUATION OF THE LITE SYSTEM SERVICES, AND THE SUBJECT INVITATION FOR BIDS WAS ISSUED ON FEBRUARY 26, 1969. ON APRIL 7, 1969, THE AIR FORCE REQUESTED FROM MCDONNELL COPIES OF CURRENTLY UPDATED VERSIONS OF SOFTWARE USED FOR THE PERFORMANCE OF CONTRACT F05602-67-C-0025. BY LETTER DATED APRIL 8, 1969, MCDONNELL FORWARDED THE REQUESTED SOFTWARE, BUT REFERRED TO IT AS MATERIAL DEVELOPED BY MCDONNELL WHOLLY AT ITS EXPENSE, AND STATED THE FOLLOWING RESERVATION:

THIS SOFTWARE IS SUPPLIED FOR THE SOLE USE OF THE UNITED STATES GOVERNMENT AND ACCESS IS NOT TO BE GIVEN TO ANYONE OUTSIDE THE GOVERNMENT.

SINCE THE AIR FORCE MAINTAINED THAT MCDONNELL WAS REQUIRED UNDER THE CONTRACT TO FURNISH THE SOFTWARE INVOLVED, THE RESTRICTION WAS DISREGARDED AND THE COMPUTER MANAGEMENT AND SERVICES CORPORATION WAS PERMITTED TO USE THE ITEMS TO QUALIFY UNDER THE BENCHMARK TESTS.

THE QUESTION FOR OUR RESOLUTION IS WHETHER UNDER THE TERMS OF THE 1967 CONTRACT THE AIR FORCE HAD TITLE TO OR THE RIGHT TO DELIVER OR DISCLOSE TO OTHERS THE PROGRAMS AND RELATED SOFTWARE OBTAINED BY THE AIR FORCE FROM MCDONNELL, INCLUDING THOSE FURNISHED WITH THE LETTER OF APRIL 8, 1969.

THE MCDONNELL CONTRACT CONTAINED A "RIGHTS IN DATA" CLAUSE, ADDED AS SECTION 37 TO THE GENERAL PROVISIONS, WHICH INCLUDED THE FOLLOWING STIPULATIONS:

(B) ALL SUBJECT DATA FIRST PRODUCED IN THE PERFORMANCE OF THIS CONTRACT SHALL BE THE SOLE PROPERTY OF THE GOVERNMENT. THE CONTRACTOR AGREES NOT TO ASSERT ANY RIGHTS AT COMMON LAW OR EQUITY AND NOT TO ESTABLISH ANY CLAIM TO STATUTORY COPYRIGHT IN SUCH DATA. THE CONTRACTOR SHALL NOT PUBLISH OR REPRODUCE SUCH DATA IN WHOLE OR IN PART OR IN ANY MANNER OR FORM, NOR AUTHORIZE OTHERS SO TO DO, WITHOUT THE WRITTEN CONSENT OF THE GOVERNMENT UNTIL SUCH TIME AS THE GOVERNMENT MAY HAVE RELEASED SUCH DATA TO THE PUBLIC.

(C) THE CONTRACTOR AGREES TO GRANT AND DOES HEREBY GRANT TO THE GOVERNMENT AND TO ITS OFFICERS, AGENTS AND EMPLOYEES ACTING WITHIN THE SCOPE OF THEIR OFFICIAL DUTIES, A ROYALTY-FREE NONEXCLUSIVE, AND IRREVOCABLE LICENSE THROUGHOUT THE WORLD (I) TO PUBLISH, TRANSLATE, REPRODUCE, DELIVER, PERFORM, USE, AND DISPOSE OF, IN ANY MANNER, AND ANY AND ALL DATA NOT FIRST PRODUCED OR COMPOSED IN THE PERFORMANCE OF THIS CONTRACT BUT WHICH IS INCORPORATED IN THE WORK FURNISHED UNDER THIS CONTRACT; AND (II) TO AUTHORIZE OTHERS SO TO DO.

IN ADDITION, THIS CONTRACT PROVIDED UNDER ITEM 1 OF THE TECHNICAL STATEMENT "EDPS" THAT:

*** PROGRAM CHANGES NECESSARY TO PROVIDE COMPUTER CAPABILITY FOR LOADING AND SEARCHING DATA BASIS *** WILL BE ACCOMPLISHED BY THE CONTRACTOR FROM AIR FORCE DOCUMENTATION AND PROGRAM DECKS. IF THE VENDOR'S EQUIPMENT CANNOT EMULATE OR TRANSLATE PRESENT PROGRAMS, THE VENDOR MAY REPROGRAM OR PROVIDE ALTERNATIVE PROGRAMS OR SUBSYSTEMS AT NO EXPENSE TO THE GOVERNMENT.

THE ONLY GROUND STATED BY YOU IN SUPPORT OF YOUR CLAIMED RIGHT TO RESTRICT USE OF THE SOFTWARE IS THAT AT LEAST SOME MATERIAL PART WAS DEVELOPED BY YOU AT YOUR OWN EXPENSE. THE PROVISIONS OF THE RIGHTS IN DATA CLAUSE DO NOT APPEAR TO RECOGNIZE THIS AS A BASIS FOR EXCEPTING ANY OF THE MATERIAL OTHERWISE COVERED BY THE TERMS OF THE CLAUSE, AND TO THE EXTENT THAT THE MATERIAL WAS DEVELOPED PURSUANT TO THE PROVISIONS OF ITEM 1 OF THE TECHNICAL STATEMENT QUOTED ABOVE IT WAS REQUIRED TO BE AT YOUR EXPENSE. IN ANY EVENT, IT APPEARS FROM THE ADMINISTRATIVE REPORT THAT THE GOVERNMENT PAID FOR A SUBSTANTIAL PART OF THE COMPUTER TIME USED IN DEVELOPING THE MATERIAL. WHERE THERE IS A MIXTURE OF PRIVATE AND GOVERNMENT FUNDS, THE DEVELOPED DATA CANNOT BE SAID TO HAVE BEEN DEVELOPED AT PRIVATE EXPENSE. THE RIGHTS WILL NOT BE ALLOCATED ON AN INVESTMENT PERCENTAGE BASIS AND THE GOVERNMENT WILL GET UNLIMITED RIGHTS TO SUCH DATA. SEE HINRICHS, PROPRIETARY DATA AND TRADE SECRETS UNDER DEPARTMENT OF DEFENSE CONTRACTS, 36 MILITARY LAW REVIEW, 61, 76.

REGARDLESS OF THE RELATIVE INVESTMENT OF THE THREE PARTIES INVOLVED, IT IS CLEAR THAT THESE PROGRAMS AND RELATED SOFTWARE WERE DEVELOPED SOLELY FOR THE PURPOSE OF OPERATING THE LITE SYSTEM. IN THIS REGARD, THE RIGHTS IN DATA CLAUSE INCORPORATED IN THE SUBJECT CONTRACT STATES THAT ALL SUBJECT DATA FIRST PRODUCED IN THE PERFORMANCE OF THIS CONTRACT SHALL BE THE SOLE PROPERTY OF THE GOVERNMENT.

YOUR LETTER CITES THE FOLLOWING DECISIONS OF OUR OFFICE AS SUPPORTING YOUR POSITION: B-143711, DATED DECEMBER 22, 1960, AND 43 COMP. GEN. 193, DATED AUGUST 22, 1963.

IN B-143711, THE GOVERNMENT HAD RECEIVED UNSOLICITED TECHNICAL DATA FROM THE CONTRACTOR UNDER CONDITIONS WHICH CLEARLY INDICATED THAT THE GOVERNMENT HAD AGREED NOT TO USE THE DATA WITHOUT CONSENT. THEREFORE, OUR OFFICE HELD IN THAT DECISION THAT THE GOVERNMENT COULD NOT PROCEED WITH AN INVITATION FOR BIDS IN WHICH SUCH DATA WOULD HAVE BEEN DISCLOSED. YOUR PROTEST IS DISTINGUISHED FROM B-143711, IN THAT THERE IS NO AGREEMENT THAT THE GOVERNMENT WOULD CONSIDER THE PROGRAMS AND RELATED SOFTWARE AS YOUR PROPRIETARY DATA; ON THE CONTRARY, THE AIR FORCE INSISTED THROUGHOUT THE PERFORMANCE OF YOUR CONTRACT, THAT IT HAD A RIGHT TO ALL PROGRAMS REQUIRED FOR OPERATING THE LITE SYSTEM AND THAT THE RIGHTS IN DATA CLAUSE ENTITLED THE GOVERNMENT THERETO.

IN 43 COMP. GEN. 193, THE GOVERNMENT USED PROPRIETARY DATA IN AN INVITATION FOR BIDS WHICH HAD BEEN OBTAINED UNDER A PRIOR CONTRACT ON THE BASIS OF ASSURANCES FROM CONTRACTING OFFICIALS THAT THE DATA WOULD BE HELD CONFIDENTIAL AND USED ONLY FOR A PRESCRIBED PURPOSE. IN THE INSTANT CASE, THERE IS NO EVIDENCE THAT THE GOVERNMENT EVER IN ANY WAY INDICATED THAT THE PROGRAMS AND THE RELATED SOFTWARE DEVELOPED UNDER YOUR CONTRACT WOULD BE CONSIDERED AS PROPRIETARY TO YOU.

ON THE BASIS OF THE FACTS AS DISCLOSED BY THE RECORD BEFORE US, IT IS OUR VIEW THAT THE AIR FORCE ACQUIRED UNLIMITED RIGHTS, UNDER THE RIGHTS IN DATA CLAUSE, IN ALL PROGRAMS AND RELATED SOFTWARE DEVELOPED IN THE PERFORMANCE OF YOUR CONTRACT, AND THAT THE USE OF SUCH DATA IN THE FORMALLY ADVERTISED PROCUREMENT UNDER INVITATION FOR BIDS NO. F05602-69 B- 0011 WAS NOT IN VIOLATION OF ANY RIGHTS VESTED IN YOU. SEE 38 COMP. GEN. 667 (1959). FURTHERMORE, WE NOTE THAT WHILE THE INVITATION WAS ISSUED ON FEBRUARY 26, 1969, AND YOU RAISED QUESTIONS AS TO THE RELATIVE MERITS OF YOUR BID AND THAT OF COMPUTER MANAGEMENT AND SERVICES CORPORATION BY A PROTEST DATED MAY 6, PRIOR TO AWARD, YOU DID NOT THEN OR AT ANY TIME BEFORE THE AWARD NOTE ANY OBJECTION TO THE TERMS OF THE IFB WHICH ANNOUNCED THE AVAILABILITY TO THE SUCCESSFUL BIDDER OF ALL CURRENT SOFTWARE. THE COURTS HAVE TAKEN THE POSITION THAT A PARTY TO MAINTAIN HIS PROPRIETARY RIGHTS IN INFORMATION MUST TAKE REASONABLE ACTION TO PREVENT OR SUPPRESS ITS UNAUTHORIZED USE. SEE FERROLINE CORPORATION V GENERAL ANILINE AND FILM CORPORATION, 207 F. 2D 912; GLOBE TICKET COMPANY V INTERNATIONAL TICKET COMPANY, 104 A 92. WHILE WE HAVE IN SEVERAL CASES DIRECTED CANCELLATION OF A PROCUREMENT WHERE IT APPEARED THAT IT INVOLVED DISCLOSURE OF PROPRIETARY DATA WHICH THE GOVERNMENT HAD NO RIGHT TO DISCLOSE, WE HAVE NEVER DONE SO AFTER A CONTRACT HAD BEEN AWARDED. SEE 46 COMP. GEN. 885 (1967). IN OUR VIEW SUCH ACTION WOULD NOT BE JUSTIFIED IN THIS INSTANCE.

FOR THE FOREGOING REASONS YOUR PROTEST IS DENIED.