B-168485, OCT. 29, 1970

B-168485, OCT. 29, 1970

BID PROTEST - PROPRIETARY DATA DENIAL OF PROTEST AGAINST THE AWARD OF A RESEARCH AND DEVELOPMENT CONTRACT BY THE AIR FORCE TO SIGNATRON, INC. PROTESTANT SEEKS MONETARY REDRESS FOR EXPENSES AND LOSS OF EARNED FEES BASED ON ALLEGATION THAT THE GOVERNMENT DID NOT DEAL WITH PROTESTANT IN GOOD FAITH, THE CONTRACT BEING AWARDED TO SUCCESSFUL BIDDER WHILE AN INITIAL PROTEST WAS PENDING CONCERNING THE UNAUTHORIZED USE OF PROTESTANT'S PROPRIETARY DATA. EVIDENCE SHOWS THAT THE CHARGE IS UNSUBSTANTIATED AND IN FACT CONTRACT WAS NOT AWARDED UNTIL AFTER INITIAL PROTEST WAS DENIED. FURTHER WHERE CONTRACTING OFFICER PROVIDES EVIDENCE THAT THERE WAS NO INFRINGEMENT ON PROPRIETARY RIGHTS AND THIS ISSUE WAS NOT SUBMITTED BY PROTESTANT IN A TIMELY FASHION TO SUPPRESS THE ALLEGED UNAUTHORIZED USE OF SUCH DATA, THE REFUSAL OF GAO TO QUESTION THE ACTION OF THE AIR FORCE MUST BE SUSTAINED.

TO TELEDYNE, ADCOM:

THIS IS IN REPLY TO YOUR LETTER OF JUNE 2, 1970, REQUESTING FURTHER CONSIDERATION IN THE MATTER OF YOUR PROTEST AGAINST THE AWARD OF AIR FORCE CONTRACT NO. F30602-70-C-0008, TO SIGNATRON, INC.

THIS PROCUREMENT WAS THE SUBJECT OF A PROTEST PREVIOUSLY FILED WITH THIS OFFICE WHICH RESULTED IN OUR DECISION B-168485, MARCH 30, 1970. CONCLUDED THEREIN THAT OUR OFFICE WOULD NOT QUESTION THE AIR FORCE ACTIONS REGARDING THE DATA ALLEGED BY YOU TO BE PROPRIETARY, SINCE YOU HAD REFRAINED FROM OBJECTING UNTIL IT APPEARED THE CONTRACT WOULD BE AWARDED TO SOMEONE ELSE. WE ALSO HELD THAT THIS OFFICE DID NOT HAVE THE TECHNICAL EXPERTISE TO RESOLVE THE DISPUTE AS TO WHETHER YOUR PROPOSAL CONTAINED PROPRIETARY DATA, AND THAT THERE WAS NO ADEQUATE BASIS FOR OUR DISAGREEING WITH THE AIR FORCE'S TECHNICAL EVALUATIONS OF THE PROPOSALS AND ITS SELECTION OF SIGNATRON FOR THIS RESEARCH AND DEVELOPMENT PROJECT.

ESSENTIALLY, YOU CONTEND THAT THE CONTRACT AWARDED IS VOID BECAUSE OF VARIOUS IRREGULARITIES WHICH ARE DISCUSSED BELOW AND YOU REQUEST MONETARY REDRESS FOR EXPENSES AND LOSS OF EARNED FEE BECAUSE OF THE GOVERNMENT'S ALLEGED FAILURE TO DEAL WITH ADCOM IN GOOD FAITH. YOU ALSO REQUEST THAT WE RECEDE FROM OUR POSITION NOT TO QUESTION WHETHER THE AIR FORCE MISUSED YOUR PROPOSAL.

YOUR LETTER POINTS OUT THAT NOTICE OF AWARD OF A CONTRACT DATED JULY 7, 1969, TO SIGNATRON APPEARED IN THE COMMERCE BUSINESS DAILY PUBLICATION OF APRIL 21, 1970. YOU CONTEND THE AWARD TO SIGNATRON IS INVALID SINCE, SUBSEQUENT TO THE CONTRACT DATE OF JULY 7, 1969, YOUR FIRM AND THIS OFFICE WERE ERRONEOUSLY ADVISED THAT NO CONTRACT HAD BEEN AWARDED WHILE YOUR PROTEST WAS PENDING, WHICH ACTION VIOLATED THE PROCEDURES IN ARMED SERVICES PROCUREMENT REGULATION (ASPR) 3-509 AND 2 407.8 FOR AWARDING A CONTRACT NOTWITHSTANDING A PENDING PROTEST. YOU FURTHER CONTEND THAT SIGNATRON WAS ACTIVELY PURSUING THE WORK AND THE GOVERNMENT WAS ACCEPTING THE FRUITS OF THOSE EFFORTS DURING THE PENDENCY OF THE PROTEST. YOU ALSO POINT OUT THAT THE CONTRACT DATE PRECEDED IN TIME THE TECHNICAL NEGOTIATIONS CONDUCTED WITH YOUR FIRM. ON THE BASIS OF YOUR BELIEF THAT THE NOTICE OF AWARD EVIDENCES A CONTRACT WHICH CAME INTO BEING ON JULY 7, 1969, YOU HAVE QUESTIONED THE GOVERNMENT'S GOOD FAITH IN ITS SUBSEQUENT DEALINGS WITH YOUR FIRM AND YOU SUBMIT THAT YOU ARE ENTITLED TO REIMBURSEMENT OF $80,000 FOR EXPENSES AND LOSS OF EARNED FEE.

BASICALLY, THE VALIDITY OF YOUR POSITION HINGES UPON WHETHER A CONTRACT WITH SIGNATRON EXISTED ON JULY 7, 1969. ALTHOUGH IT IS CLEAR THAT YOU HAVE A SUBSTANTIAL BASIS FOR YOUR BELIEF, THE RECORD BEFORE US INDICATES THAT THE CONTRACT WAS ACTUALLY FINALIZED ON APRIL 3, 1970, WHEN THE GOVERNMENT FORMALLY EXECUTED THE DOCUMENTS AND MAILED SIGNATRON A FULLY EXECUTED COPY OF THE CONTRACT. THE CONTRACTING OFFICER REPORTS THAT THE JULY 7, 1969, DATE WAS INSERTED ON THE CONTRACT UPON ADVICE OF THE PROCUREMENT COMMITTEE, BECAUSE OF THE EXTENSIVE DELAY FROM THE TIME OF SIGNATURE BY SIGNATRON AND THE TIME OF AWARD. DOCUMENTATION PROVIDED BY THE AIR FORCE FURTHER SHOWS THAT SIGNATRON ACKNOWLEDGED RECEIPT OF THE EXECUTED CONTRACT ON APRIL 6, 1970. THE CONTRACTING OFFICER HAS ALSO REPORTED THAT HE ADVISED SIGNATRON ON SEVERAL OCCASIONS, IN RESPONSE TO ITS INQUIRIES ABOUT THE STATUS OF THE AWARD, NOT TO COMMENCE ANY WORK PRIOR TO OFFICIAL NOTICE TO PROCEED AND THAT ANY WORK ACCOMPLISHED PRIOR TO RECEIPT OF A SIGNED CONTRACT WOULD BE SOLELY AT SIGNATRON'S RISK. FURTHER REPORTS THAT NO WORK HAD BEEN ACCOMPLISHED BY SIGNATRON PRIOR TO THE AWARD ON APRIL 3, 1970.

SINCE THE RECORD SHOWS THAT THE CONTRACT DID NOT COME INTO BEING PRIOR TO APRIL 3, 1970, WE FIND NO BASIS FOR QUESTIONING THE VALIDITY OF THE CONTRACT AWARDED AND WE DO NOT BELIEVE THAT THE INSERTION OF AN EARLIER EFFECTIVE DATE AT THE TIME OF AWARD ADVERSELY REFLECTS UPON THE GOVERNMENT'S GOOD FAITH IN DEALING WITH YOUR FIRM.

IN FURTHER SUPPORT OF YOUR CONTENTION THAT THE GOVERNMENT FAILED TO DEAL WITH YOU IN GOOD FAITH, YOU STATE THAT THE CONTRACTING OFFICER REFUSED TO DISCUSS ANY MATTER CONCERNING THIS PROCUREMENT AT THE TIME YOU CONTACTED HIM FOR THE PURPOSE OF DISCUSSING THE POSSIBILITY OF MULTIPLE OR PARTIAL AWARDS. IN THIS REGARD THE CONTRACTING OFFICER STATES THAT AT NO TIME DID THE GOVERNMENT PLAN ANY POSSIBLE MULTIPLE OR PARTIAL AWARDS ON THIS REQUIREMENT. IT IS FURTHER REPORTED THAT THE PROVISIONS IN THE SOLICITATION RESERVING THE RIGHT IN THE GOVERNMENT TO MAKE MULTIPLE AWARDS ARE STANDARD PROVISIONS INCLUDED IN ALL REQUESTS FOR QUOTATIONS ISSUED BY THAT INSTALLATION. THE CONTRACTING OFFICER ALSO STATES THAT HE DECLINED TO ENGAGE IN ANY DISCUSSIONS CONCERNING YOUR PROPOSAL AT THE TIME OF YOUR TELEPHONE CONTACT AS HE THEN CONSIDERED THAT ANY SUCH DISCUSSIONS SHOULD BE INITIATED AT A HIGHER LEVEL AND COULD RESULT IN PROTESTS FROM OTHER OFFERORS.

FOR THE ABOVE REASONS WE FIND NO BASIS TO SUPPORT YOUR POSITION THAT THE GOVERNMENT FAILED TO DEAL WITH YOU IN GOOD FAITH, NOR DO WE PERCEIVE ANY SOUND BASIS FOR CONCLUDING THAT THERE WAS "A CONTRACT IMPLIED-IN-FACT" WITH YOUR FIRM AS YOU CONTEND. IN SUCH CONNECTION, YOU ARE ADVISED THAT WE KNOW NO BASIS FOR ALLOWING DAMAGES FOR THE LOSS OF A FEE WHERE A CONTRACT HAS NOT BEEN AWARDED BY THE GOVERNMENT TO THE PARTY SEEKING REIMBURSEMENT. IN THIS REGARD SEE KECO INDUSTRIES, INC. V UNITED STATES, COURT OF CLAIMS NO. 173-69, DECIDED JULY 15, 1970, WHEREIN THE COURT REFUSED TO ALLOW RECOVERY OF LOST PROFITS IN SUCH CIRCUMSTANCES, CITING THE CASE OF HEYER PRODUCTS CO., INC. V UNITED STATES, 135 CT. CL. 63 (1956). ACCORDINGLY, YOUR CLAIM FOR EXPENSES AND LOSS OF EARNED FEE MUST BE DENIED.

YOUR LETTER ALSO NOTES THAT A SUBCONTRACTOR OF SIGNATRON HAD TECHNICAL PERSONNEL AT THE GOVERNMENT FACILITY DURING THE PERIOD OF PROTEST, IMPLYING THAT THEY OBTAINED INFORMATION WHICH SHOULD NOT HAVE BEEN AVAILABLE TO THEM. THE CONTRACTING OFFICER, HOWEVER, HAS ADVISED THAT THESE CONTRACTOR REPRESENTATIVES HAD SEPARATE WORK AREAS AT THE ACTIVITY AND AT NO TIME WERE THEY ALLOWED INTO AREAS WHERE POLICY, PROGRAMMING OR PROCEDURAL DECISIONS WERE MADE.

FINALLY, YOUR LETTER REQUESTS THAT THIS OFFICE RECEDE FROM ITS POSITION, THAT YOU DID NOT MAKE A TIMELY ISSUE OF INFRINGEMENT OF PROPRIETARY RIGHTS, SINCE YOU HAD BEEN ASSURED BY UNNAMED PERSONS IN THE GOVERNMENT THAT NO OTHER COMPANY WOULD ADEQUATELY RESPOND TO THE SOLICITATION. YOU CONTEND THAT ORAL ASSURANCES WERE GIVEN TO PREVENT ANY PROTEST BY YOUR FIRM, AND YOU BELIEVE AN INQUIRY BY THIS OFFICE WOULD BE APPROPRIATE SINCE THE PROCURING ACTIVITY INITIALLY HAD RECOMMENDED THAT THE WORK BE CONTRACTED TO YOUR FIRM ON A SOLE SOURCE BASIS BECAUSE OF THE PROPRIETARY INFORMATION CONTAINED THEREIN.

THE CONTRACTING OFFICER HAS REPORTED TO THIS OFFICE THAT NO ORAL ASSURANCES WERE MADE BY PROCUREMENT PERSONNEL OR THE PROJECT ENGINEER'S OFFICE WITH RESPECT TO THE ABILITY OF OTHERS TO SUCCESSFULLY COMPETE. WHILE IT IS OUR CONSISTENT RULE TO ACCEPT THE ADMINISTRATIVE VERSION OF THE FACTS IN THE ABSENCE OF EVIDENCE SUFFICIENTLY CONVINCING TO OVERCOME THE PRESUMPTION OF ITS CORRECTNESS, WHICH WE DO NOT FIND HERE, WE DO NOT FEEL THAT YOU WOULD HAVE BEEN JUSTIFIED, EVEN IF SUCH ASSURANCES HAD BEEN GIVEN, IN REFRAINING FROM TAKING REASONABLE ACTION TO PREVENT OR SUPPRESS UNAUTHORIZED USE OF THE DATA ON THE BASIS OF SUCH OBVIOUS SPECULATION AND CONJECTURE.

MOREOVER, THE FACT THAT THERE MAY HAVE BEEN SOME CONFLICT WITHIN THE AIR FORCE AS TO WHETHER YOUR PROPOSAL WAS PROPRIETARY, DOES NOT IN OUR OPINION EXCUSE YOUR FAILURE TO TIMELY OBJECT TO THE OFFICIAL AIR FORCE POSITION ULTIMATELY REVEALED BY THE ISSUANCE OF THE SOLICITATION. IT WAS FOUR MONTHS AFTER ISSUANCE OF THE SOLICITATION THAT YOU VOICED OBJECTION. THEREFORE, SINCE WE ARE STILL NOT CONVINCED THAT YOU TOOK REASONABLE ACTION TO SUPPRESS THE ALLEGED UNAUTHORIZED USE OF YOUR PROPOSAL, WE MUST SUSTAIN OUR REFUSAL TO QUESTION THE ACTIONS OF THE AIR FORCE IN THIS REGARD.

ACCORDINGLY, WE FIND NO BASIS FOR GRANTING THE RELIEF REQUESTED IN YOUR LETTER.