B-170276, MAR 25, 1971

B-170276: Mar 25, 1971

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WHILE ONLY BFG WAS SOLICITED. ADDITIONAL COMPANIES REQUESTED AND WERE FURNISHED COPIES OF THE RFP. ADVISES THAT THE FAILURE TO ADVISE BFG THAT COMPETITION HAD BEEN OBTAINED WAS IMPROPER IN THAT BFG WAS THEREBY DENIED AN OPPORTUNITY TO SUBMIT AN OFFER ON A COMPETITIVE BASIS. THE RFP SHOULD HAVE BEEN AMENDED TO INCLUDE ACCEPTABILITY OF AN "OR EQUAL" ITEM WITH NOTICE THEREOF TO BOTH OFFERORS. SECRETARY: REFERENCE IS MADE TO A LETTER SPPLA DATED SEPTEMBER 2. THE RFP WAS ISSUED MARCH 16. THE APPLICABLE EQUIPMENT WAS SPECIALLY DESIGNED BY THE B. THE ESTIMATED COST OF THE PROPOSED PROCUREMENT IS $98. THE RESULTING CONTRACT WILL INCLUDE OPTIONS FOR INCREASED QUANTITIES NOT TO EXCEED 200 PERCENT OF THE INITIAL QUANTITY SET FORTH AS INCREMENT A.

B-170276, MAR 25, 1971

BID PROTEST - SOLE SOURCE V COMPETITIVE PROCUREMENT CONCERNING PROTEST BY B. F. GOODRICH COMPANY, (BFG), AGAINST THE AWARD OF A CONTRACT TO NASCO ENGINEERING, INC., FOR DISC BRAKE REPLACEMENT PARTS IN SUPPORT OF THE T-38 AIRCRAFT, INCIDENT TO AN RFP ISSUED BY OGDEN AIR MATERIEL AREA, ON A SOLE SOURCE BASIS. WHILE ONLY BFG WAS SOLICITED, ADDITIONAL COMPANIES REQUESTED AND WERE FURNISHED COPIES OF THE RFP. THE COMP. GEN. ADVISES THAT THE FAILURE TO ADVISE BFG THAT COMPETITION HAD BEEN OBTAINED WAS IMPROPER IN THAT BFG WAS THEREBY DENIED AN OPPORTUNITY TO SUBMIT AN OFFER ON A COMPETITIVE BASIS; AND THE RFP SHOULD HAVE BEEN AMENDED TO INCLUDE ACCEPTABILITY OF AN "OR EQUAL" ITEM WITH NOTICE THEREOF TO BOTH OFFERORS. APPROPRIATE MEASURES SHOULD BE TAKEN TO PRECLUDE A RECURRENCE OF THIS SITUATION.

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER SPPLA DATED SEPTEMBER 2, 1970, FROM THE CHIEF, CONTRACT PLACEMENT DIVISION, DIRECTORATE OF PROCUREMENT POLICY, DEPUTY CHIEF OF STAFF, SYSTEMS AND LOGISTICS, FURNISHING A REPORT ON A PROTEST BY THE B. F. GOODRICH COMPANY (BFG) AGAINST THE AWARD OF A CONTRACT TO ANOTHER OFFEROR UNDER REQUEST FOR PROPOSALS (RFP) F42600-70 R- 1938, ISSUED BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, OGDEN AIR MATERIEL AREA (OOAMA), HILL AIR FORCE BASE, UTAH.

THE RFP WAS ISSUED MARCH 16, 1970, PURSUANT TO A DETERMINATION AND FINDINGS OF THE CONTRACTING OFFICER DATED MARCH 5, 1970, WHICH READS AS FOLLOWS:

"UPON THE BASIS OF THE FOLLOWING FINDINGS AND DETERMINATION, THE PROPOSED CONTRACT DESCRIBED BELOW MAY BE NEGOTIATED WITHOUT FORMAL ADVERTISING PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304(A)(10), AS IMPLEMENTED BY PARAGRAPH 3-210.2(II) OF THE ARMED SERVICES PROCUREMENT REGULATION.

"FINDINGS

"1. THE OGDEN AIR MATERIEL AREA PROPOSES TO PROCURE BY NEGOTIATION CERTAIN PARTS OR COMPONENTS AS REPLACEMENT PARTS IN SUPPORT OF THE T-38 ACFT, DISC, BRAKE. THE APPLICABLE EQUIPMENT WAS SPECIALLY DESIGNED BY THE B. F. GOODRICH COMPANY AND MANUFACTURED BY QUALIFIED SOURCES. THE ESTIMATED COST OF THE PROPOSED PROCUREMENT IS $98,940.60 FOR 3420 EACH OF INCREMENT A OR $114,649.59 FOR 3963 EACH OF ALTERNATE INCREMENT A. THE RESULTING CONTRACT WILL INCLUDE OPTIONS FOR INCREASED QUANTITIES NOT TO EXCEED 200 PERCENT OF THE INITIAL QUANTITY SET FORTH AS INCREMENT A, REFER TO ASPR 1-1504(A).

"2. THIS PROCUREMENT IS FOR SPARE PARTS SPECIALLY DESIGNED BY THE MANUFACTURER WHERE GOVERNMENT RIGHTS TO UTILIZE DATA ARE LIMITED BECAUSE OF THE EXISTENCE OF PATENT RIGHTS, COPYRIGHTS, SECRET PROCESSES AND/OR PROPRIETARY DATA DEVELOPED AT CONTRACTOR'S EXPENSE.

"3. USE OF FORMAL ADVERTISING IS IMPRACTICABLE BECAUSE RIGHTS TO USE DATA FOR PROCUREMENT OF THIS ITEM FROM ADDITIONAL SOURCES ARE LEGALLY UNAVAILABLE AND CANNOT BE ACQUIRED BY PURCHASE.

"DETERMINATION

"THE PROPOSED CONTRACT IS FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION BY FORMAL ADVERTISING."

THE PROCUREMENT REQUESTED PROPOSALS FOR AIRCRAFT BRAKE PARTS IDENTIFIED AS "16309092247 DISC, BRAKE P/N 133-50-1 APPL T-38 ACFT." THE REFERENCE "16309092247" IS THE FEDERAL SUPPLY NUMBER, AND THE NUMBER "133-50-1" IS THE BFG PART NUMBER. THE REQUIREMENT WAS CODED FOR PROCUREMENT FROM THE PRIME MANUFACTURER ONLY. SINCE THE REQUIREMENT WAS SOLE-SOURCE CODED, OOAMA INITIALLY SOLICITED ONLY BFG. HOWEVER, AS A RESULT OF THE PROCUREMENT BEING SYNOPSIZED IN THE COMMERCE BUSINESS DAILY FOR SUBCONTRACTING PURPOSES, ADDITIONAL COMPANIES REQUESTED AND WERE FURNISHED COPIES OF THE RFP.

IN RESPONSE TO THE RFP, BFG OFFERED TO FURNISH 3,420 UNITS FOR $34.47 EACH FOR A TOTAL AMOUNT OF $117,887.40. TWO OTHER FIRMS ALSO SUBMITTED OFFERS; HOWEVER, AERO INDUSTRIES, INC., WHICH HAD SUBMITTED THE LOWEST OF ALL THE OFFERS RECEIVED, WITHDREW ITS OFFER SINCE IT BELIEVED THAT IT WAS INCAPABLE OF MANUFACTURING THE ITEM. THE SECOND LOW OFFER WAS SUBMITTED BY NASCO ENGINEERING INC. (NASCO) AT A PRICE OF $33.76 EACH FOR 3,420 UNITS FOR A TOTAL PRICE OF $115,459.20.

NASCO SUBMITTED A COPY OF DRAWING 133-50-1 TO THE OOAMA SERVICE ENGINEERING DIVISION FOR REVIEW. THE ENGINEERING DIVISION DETERMINED THAT THE DRAWING WAS TECHNICALLY ADEQUATE AND SATISFACTORY FOR MANUFACTURE OF THE ITEM. FURTHER, THE ENGINEERING DIVISION DECIDED THAT AN EQUIVALENT PART WOULD BE FURNISHED IF THE ITEM WERE MANUFACTURED FROM FORGINGS OF THE PARK DROP FORGE COMPANY WHICH HAD PREVIOUSLY FURNISHED IDENTICAL FORGINGS TO BFG. NASCO ASSURED OOAMA THAT IT WOULD FURNISH A CERTIFICATION FROM THE FORGING COMPANY THAT THE FORGINGS WERE IN ACCORDANCE WITH DRAWING 133- 50-1. THE CONTRACT AWARDED TO NASCO ON JUNE 26, 1970, CONTAINED THE FOLLOWING PROVISION:

"NOTE: WITHIN 60 DAYS FROM DATE OF RECEIPT BY CONTRACTOR OF WRITTEN NOTICE OF AWARD, CONTRACTOR SHALL OBTAIN FROM PARK DROP FORGE, A WRITTEN CERTIFICATION THAT THE FORGINGS FURNISHED ON THIS CONTRACT ARE IDENTICAL TO THOSE PREVIOUSLY FURNISHED B. F. GOODRICH FOR THE SAME PART. *** "

BY LETTER DATED JULY 10, 1970, BFG PROTESTED TO OUR OFFICE THE AWARD OF THE CONTRACT. BFG STATED THAT FOR THE PAST 12 YEARS THE BRAKE DISC COMPONENT HAD BEEN PROCURED FROM BFG ON A SOLE-SOURCE BASIS AND THAT FROM A READING OF THE RFP NO OTHER CONCLUSION COULD BE REACHED THAN THAT THE PROCUREMENT ALSO WOULD BE MADE ON A SOLE-SOURCE BASIS. BFG CONTENDS THAT THE FAILURE TO ADVISE IT THAT COMPETITION HAD BEEN OBTAINED WAS IMPROPER IN THAT IT WAS THEREBY DENIED AN OPPORTUNITY TO SUBMIT AN OFFER ON A COMPETITIVE BASIS. FURTHER, BFG STATED THAT DRAWING 133-50-1 IS BFG PROPRIETARY DATA AND THAT NASCO HAD NO RIGHT TO USE IT. BFG CONTENDS THAT OOAMA PROCUREMENT PERSONNEL SHOULD HAVE INQUIRED AS TO WHETHER NASCO HAD A LEGAL RIGHT TO USE THE DRAWING. ALSO, IT IS CONTENDED THAT THE OFFERS WERE NOT EVALUATED ON AN EQUAL BASIS SINCE THE RFP DID NOT RESTRICT, AS THE CONTRACT DID, THE SOURCE OF SUPPLY FOR THE FORGINGS OR PROVIDE FOR THE ACCEPTABILITY OF A PART NUMBER 133-50-1 "OR EQUAL."

WE BELIEVE THAT UNDER THE FACTS OF RECORD, BFG HAD EVERY REASON TO ASSUME THAT THE RFP RESTRICTED COMPETITION TO IT AS THE SOLE SOURCE OF SUPPLY. THE END ITEM WAS DESCRIBED IN THE RFP BY BFG PART NUMBER WITHOUT REFERENCE TO ANY SPECIFICATIONS, STANDARDS OR DRAWINGS AND WITHOUT AN "OR EQUAL" DESIGNATION. FURTHER, THE RFP REQUIRED A DD FORM 633 COST BREAKDOWN WHICH IS CUSTOMARY WHEN THE SOLICITATION IS TO BE SOLE SOURCE.

THE DECISION IN 47 COMP. GEN. 778 (1968) INVOLVED A CASE WITH A FACTUAL SITUATION STRIKINGLY SIMILAR TO THE IMMEDIATE ONE. IN THAT CASE, A REQUEST FOR QUOTATIONS WAS ISSUED FOR 71 DIGITAL VOLTMETERS DESCRIBED AS CIMRON DIVISION PART NUMBER 7300A-631. THE PROCUREMENT WAS SYNOPSIZED IN THE COMMERCE BUSINESS DAILY AND A COMPETITOR OF CIMRON OFFERED AN ALLEGEDLY EQUAL ITEM. NO DISCUSSIONS WERE CONDUCTED WITH CIMRON AND A CONTRACT WAS AWARDED TO THE COMPETITOR AFTER PROCUREMENT OFFICIALS SATISFIED THEMSELVES THAT THE COMPETITOR'S EQUIPMENT WAS ACCEPTABLE. THAT DECISION OUR OFFICE STATED:

"FROM THE FOREGOING IT IS APPARENT THAT THE RFQ SOLICITED A QUOTATION FROM CIMRON FOR AN ITEM MANUFACTURED ONLY BY CIMRON, AND IT MUST THEREFORE BE ASSUMED CIMRON'S QUOTATION WAS SUBMITTED IN THE BELIEF THAT ONLY ITEMS MANUFACTURED BY CIMRON WOULD BE ACCEPTABLE AND THAT THE PROCUREMENT WAS THEREFORE NONCOMPETITIVE. IT FOLLOWS THAT THE DECISION TO CONSIDER QUOTATIONS BASED UPON ITEMS DETERMINED TO BE EQUAL TO THOSE MANUFACTURED BY CIMRON OPERATED NOT ONLY TO RELAX THE SPECIFICATION REQUIREMENTS BUT ALSO TO TRANSFORM THE PROCUREMENT FROM A NONCOMPETITIVE TO A COMPETITIVE ONE. IN SUCH CIRCUMSTANCES, IT IS OUR OPINION THAT THE PROVISIONS OF ASPR 3-805.1(B) AND (E) REQUIRE AMENDMENT OF THE RFQ, NOTICE OF THE AMENDMENT TO THE SUPPLIER INITIALLY SOLICITED, AND AN EQUITABLE OPPORTUNITY FOR THE SUPPLIER TO AMEND HIS QUOTATION TO REFLECT SUCH CHANGES AS HE MAY CONSIDER APPROPRIATE IN THE LIGHT OF THE CHANGES ACCOMPLISHED BY THE AMENDMENT TO THE RFQ. *** " SEE, ALSO, 48 COMP. GEN. 605, 611 (1969), WHEREIN IT WAS SAID:

" *** OFFERS MUST BE EVALUATED ON AN EQUAL BASIS. AUTOMATIC SPRINKLER'S OFFER WAS SUBMITTED UNDER A MISAPPREHENSION THAT THERE WAS TO BE NO COMPETITION WHILE LIFT PARTS KNEW THAT ITS OFFER NECESSARILY IMPLIED COMPETITION. THE INITIAL OFFERS WERE NOT SUBMITTED ON AN EQUAL BASIS AND COULD NOT HAVE BEEN EQUALLY EVALUATED UNLESS AUTOMATIC SPRINKLER WAS NOTIFIED OF THE COMPETITION AND GIVEN AN OPPORTUNITY TO RESPOND TO IT. IF THAT COMPANY, ARMED WITH THE KNOWLEDGE THAT IT WAS IN FACT COMPETING WITH ANOTHER, WOULD BE WILLING TO OFFER THE GOVERNMENT A BETTER BARGAIN THAN THAT IN ITS ORIGINAL PROPOSAL, IT WOULD BE IN THE GOVERNMENT'S INTEREST TO PROVIDE THE COMPANY WITH THAT KNOWLEDGE." THE PERTINENT HOLDINGS IN THOSE TWO CASES ARE EQUALLY APPLICABLE HERE.

AS INDICATED ABOVE, BFG CONTENDED THAT THE INCLUSION IN THE CONTRACT OF A PROVISION NOT CONTAINED IN THE RFP RESTRICTING THE SOURCE OF SUPPLY FOR THE FORGINGS DEMONSTRATED THAT THE EVALUATION WAS NOT ON AN "EQUAL BASIS." HOWEVER, THE RESTRICTION WAS NOT INTENDED TO CHANGE THE REQUIREMENTS OF THE DESIGNATED PART, BUT WAS INTENDED ONLY TO INSURE THAT THE PART WAS EQUIVALENT TO THE DESIGNATED PART. UNLIKE FORMAL ADVERTISING, IT IS PERMISSIBLE DURING THE NEGOTIATION PROCESS TO AGREE MUTUALLY AS TO CERTAIN TERMS OR CONDITIONS NOT SPECIFICALLY CONTEMPLATED BY THE SOLICITATION. 47 COMP. GEN. 279, 284 (1967).

THE DECISION IN 49 COMP. GEN. 471 (1970) CONSIDERED CONTENTIONS SIMILAR TO THAT MADE BY BFG THAT THE PROCUREMENT OFFICIALS SHOULD HAVE INQUIRED AS TO WHETHER NASCO WAS AUTHORIZED TO USE THE 133-50-1 DRAWING. IN THAT CASE, HAMILTON STANDARD HAD BEEN THE SOLE SUPPLIER OF A PART TO THE AIR FORCE UNDER SEVERAL PREVIOUS SOLICITATIONS BECAUSE THE PART HAD BEEN PROCURED FROM IT ON AN "ENGINEERING CRITICAL" BASIS. "ENGINEERING CRITICAL" WAS LATER REMOVED, BUT THE AIR FORCE CONSIDERED THAT THE HARDNESS DATA FOR THE ITEM WAS STILL PROPRIETARY INFORMATION AND THE NEXT RFP FOR THE PART DID NOT SET FORTH THE HARDNESS DATA IN THE SPECIFICATIONS. AFTER THE RFP WAS ISSUED, A COMPETITOR OF HAMILTON STANDARD, AEROKITS, INFORMED THE CONTRACTING OFFICER THAT IT WAS IN POSSESSION OF THE HARDNESS DATA. AFTER COMPARING THE HARDNESS DATA FURNISHED BY AEROKITS WITH THAT CONTAINED IN THE HAMILTON STANDARD SPECIFICATION TO VERIFY ITS ACCURACY, A STATEMENT WAS APPENDED TO THE RFP SETTING OUT THE HARDNESS DATA AS FURNISHED BY HAMILTON STANDARD'S COMPETITION.

IN RESPONSE TO HAMILTON STANDARD'S CONTENTION THAT ACCEPTANCE BY THE AIR FORCE OF THE DATA FURNISHED BY AEROKITS WAS IMPROPER AS THE AIR FORCE KNEW OR SHOULD HAVE KNOWN THAT THE DATA WAS IMPROPERLY OBTAINED, OUR OFFICE STATED:

"WE SEE NO MERIT IN THE SECOND GROUND OF YOUR PROTEST, I.E., THAT THE DATA FURNISHED THE GOVERNMENT BY AEROKITS WAS IMPROPERLY OBTAINED, AS THE PRESENT RECORD CONTAINS NO EVIDENCE THAT ANY CONTRACTUAL OR CONFIDENTIAL RELATIONSHIP EXISTED BETWEEN HAMILTON STANDARD AND AEROKITS CONCERNING PROTECTION OF THE DATA'S SECRECY; NEITHER DOES THE RECORD ESTABLISH THAT AEROKITS OBTAINED THE DATA IMPROPERLY.

"AMONG THE LEGAL PRINCIPLES GOVERNING THE USE AND DISSEMINATION OF PROPRIETARY DATA, THE PRIMARY RULE IS THAT THE PROPRIETARY NATURE OF A PARTICULAR ITEM OF DATA IS LOST ONCE KNOWLEDGE THEREOF IS OBTAINED BY ANOTHER BY FAIR MEANS WITHOUT BREACH OF A CONTRACTUAL OR CONFIDENTIAL RELATIONSHIP WITH THE OWNER OF THE DATA. IN THIS REGARD, THE COURT STATED AS FOLLOWS IN SPEEDRY CHEMICAL PRODUCTS, INC. V CARTER'S INK COMPANY, 306 F. 2D 328, 330 (1962):

"' *** THERE IS A "PROPERTY RIGHT" IN TRADE SECRETS, WHICH MAY BE PROTECTED AGAINST THOSE WHO ACQUIRE AND USE THE KNOWLEDGE THEREOF WRONGFULLY. FERROLINE V GENERAL ANILINE & FILM CORP., 207 F. 2D 912 (7 CIR. 1953), CERT. DENIED 347 U.S. 953, 74 S. CT. 678, 98 L. ED. 1098 (1954). HOWEVER, THE DISCOVERER OF SUCH SECRETS HAS NO EXCLUSIVE RIGHT AGAINST ANOTHER WHO UNCOVERS THE SECRET BY FAIR MEANS, OR AGAINST THOSE WHO ACQUIRE KNOWLEDGE OF IT WITHOUT A BREACH OF CONTRACT OR OF A CONFIDENTIAL RELATIONSHIP WITH THE DISCOVERER, AMERICAN DIRIGOLD CORP. V DIRIGOLD METALS CORP., 125 F. 2D 446 (6 CIR. 1942); NIMS, UNFAIR COMPETITION AND TRADE-MARKS, 4TH ED. P. 418.'

SEE, ALSO, JUNKER V PLUMMER, 67 N.E. 2D 667, 670 (1946); ELLIS, TRADE SECRETS, SECTION 14."

WE HAVE BEEN ADVISED INFORMALLY THAT THE DRAWING FURNISHED TO OOAMA PROCUREMENT OFFICIALS BORE NO RESTRICTIVE MARKINGS OF PROPRIETARY INTEREST OR THAT SUCH DRAWING APPEARED TO BE AN UNAUTHORIZED COPY OF BFG'S DRAWING. THE PROCUREMENT OFFICIALS REASONABLY ASSUMED UNDER THESE CIRCUMSTANCES THAT NASCO HAD A RIGHT TO USE THE DRAWING.

THE CIRCUMSTANCES OF THIS PROCUREMENT, DISCUSSED ABOVE, REQUIRED THE EXTENSION OF EQUAL NEGOTIATION OPPORTUNITY TO BOTH BFG AND NASCO WHEN THE CHARACTER OF THE PROCUREMENT CHANGED FROM SOLE SOURCE TO COMPETITIVE. VIEW OF THIS, AND IN CONSONANCE WITH PARAGRAPH 3 805.1(B) AND (E) OF THE ARMED SERVICES PROCUREMENT REGULATION, WE BELIEVE THAT THE RFP SHOULD HAVE BEEN AMENDED TO INDICATE THE ACCEPTABILITY OF AN "OR EQUAL" ITEM OR TO INCLUDE SOME TECHNICAL DESCRIPTION OF THE ITEM, WITH NOTICE THEREOF TO BOTH OFFERORS AND ADVICE THAT BEST AND FINAL OFFERS WOULD BE CONSIDERED UP TO A FIXED CLOSING DATE. WE TRUST THAT APPROPRIATE MEASURES WILL BE TAKEN TO PRECLUDE A RECURRENCE OF THIS SITUATION.