B-172159, MAY 4, 1971

B-172159: May 4, 1971

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WITH RESPECT TO PROTESTANT'S CLAIM THAT A PATENT INFRINGEMENT WILL OCCUR IF RAPISTAN PRODUCES THE HANDLING SYSTEM. THE PROTEST IS DENIED. THE STEP-ONE LETTER REQUEST FOR TECHNICAL PROPOSALS WAS ISSUED OCTOBER 6. THE PROPOSAL WAS DETERMINED TO BE ACCEPTABLE. WAS SUPPLIED TO RAPISTAN. WE DEEM IT IS ADVISABLE TO NOTIFY YOU THAT THE ENCLOSED TRACK POWER AND FREE CONVEYOR SYSTEM OF OUR TECHNICAL PROPOSAL INCORPORATES FEATURES COVERED BY OUR U.S. THESE FEATURES HAVE BEEN INCORPORATED IN A SIMILAR CONVEYOR SYSTEM RECENTLY OFFERED AND ADVERTISED BY RAPISTAN. WE HAVE NOTIFIED THEM OF OUR PATENT RIGHTS.". BIDS WERE OPENED ON MARCH 9. WERE AS FOLLOWS: RAPISTAN INCORPORATED $ 991. 985 WITH RESPECT TO THE CLAIM THAT PATENT INFRINGEMENT WILL OCCUR IF RAPISTAN PRODUCES THE HANDLING SYSTEM.

B-172159, MAY 4, 1971

BID PROTEST - AWARDS - PATENT INFRINGEMENT DENYING PROTEST OF JERVIS B. WEBB COMPANY AGAINST THE AWARD OF A CONTRACT TO RAPISTAN INCORPORATED, UNDER AN IFB ISSUED BY NEW CUMBERLAND ARMY DEPOT FOR AN AUTOMATED MATERIAL HANDLING SYSTEM. WITH RESPECT TO PROTESTANT'S CLAIM THAT A PATENT INFRINGEMENT WILL OCCUR IF RAPISTAN PRODUCES THE HANDLING SYSTEM, THE COMP. GEN. HAS CONCLUDED THAT GOVERNMENT CONTRACTS SHOULD NOT BE RESTRICTED TO PATENT HOLDERS AND THEIR LICENSEES, BUT RATHER ALL POTENTIAL SOURCES SHOULD BE PERMITTED TO COMPETE FOR GOVERNMENT CONTRACTS REGARDLESS OF POSSIBLE PATENT INFRINGEMENT.

TO JERVIS B. WEBB COMPANY:

WE REFER TO YOUR LETTER OF APRIL 23, 1971, AND COPIES OF YOUR LETTERS OF MARCH 18, 1971, AND EARLIER, TO THE CONTRACTING OFFICER, PROCUREMENT DIVISION, NEW CUMBERLAND ARMY DEPOT, PROTESTING AGAINST THE PROPOSED AWARD OF A CONTRACT TO RAPISTAN INCORPORATED FOR THE MANUFACTURE AND OPERATIONAL INSTALLATION OF AN AUTOMATED MATERIAL HANDLING SYSTEM UNDER INVITATION FOR BIDS (IFB) NO. DAAG36-71-B-0037, THE SECOND STEP OF A TWO-STEP FORMAL ADVERTISING PROCUREMENT.

FOR THE REASONS STATED BELOW, THE PROTEST IS DENIED.

THE STEP-ONE LETTER REQUEST FOR TECHNICAL PROPOSALS WAS ISSUED OCTOBER 6, 1970. AFTER RAPISTAN SUBMITTED A LETTER CLARIFYING THE FIRM'S PROPOSAL ON FEBRUARY 8, 1971, THE PROPOSAL WAS DETERMINED TO BE ACCEPTABLE. SHORTLY THEREAFTER THE STEP-TWO IFB, WHICH HAD BEEN ISSUED ON JANUARY 29, 1971, TO THE ACCEPTABLE FIRST-STEP OFFERORS, WAS SUPPLIED TO RAPISTAN. THE IFB CONTAINED THE USUAL AUTHORIZATION AND CONSENT AND PATENT INDEMNITY CLAUSES.

PRIOR TO BID OPENING, BY LETTER OF FEBRUARY 25, 1971, YOUR COMPANY ADVISED THE CONTRACTING OFFICER THAT:

"WITH REGARD TO RAPISTAN, INC., WE DEEM IT IS ADVISABLE TO NOTIFY YOU THAT THE ENCLOSED TRACK POWER AND FREE CONVEYOR SYSTEM OF OUR TECHNICAL PROPOSAL INCORPORATES FEATURES COVERED BY OUR U.S. PATENTS NOS. 3,523,504 AND 3,559,585. THESE FEATURES HAVE BEEN INCORPORATED IN A SIMILAR CONVEYOR SYSTEM RECENTLY OFFERED AND ADVERTISED BY RAPISTAN, INC. AND WE HAVE NOTIFIED THEM OF OUR PATENT RIGHTS." NOTWITHSTANDING THE LETTER, BIDS WERE OPENED ON MARCH 9, 1971, AND WERE AS FOLLOWS:

RAPISTAN INCORPORATED $ 991,987

JERVIS B. WEBB COMPANY 1,297,731

APPROVED ALTERNATE 1,298,630

COLUMBUS MCKINNON CORP. 1,383,848

APPROVED ALTERNATE 1,379,522

MID-WEST CONVEYOR CO., INC. 1,500,000

EATON, YALE & TOWNE, INC. 2,237,985

WITH RESPECT TO THE CLAIM THAT PATENT INFRINGEMENT WILL OCCUR IF RAPISTAN PRODUCES THE HANDLING SYSTEM, ATTENTION IS INVITED TO 46 COMP. GEN. 205, 206 (1966), WHEREIN IT WAS STATED:

"CONSIDERING THE ACT (28 U.S.C. 1498) AND ITS PURPOSES, THIS OFFICE HAS CONCLUDED THAT GOVERNMENT CONTRACTS SHOULD NOT BE RESTRICTED TO PATENT HOLDERS AND THEIR LICENSEES WHERE PATENTS ARE HELD, BUT RATHER ALL POTENTIAL SOURCES SHOULD BE PERMITTED TO COMPETE FOR GOVERNMENT CONTRACTS REGARDLESS OF POSSIBLE PATENT INFRINGEMENT. 38 COMP. GEN. 276; 39 ID. 760. SPECIFICALLY, WE HELD IN 38 COMP. GEN. 276 THAT A PROCURING AGENCY MAY NOT REFUSE TO ADVERTISE FOR AN ITEM BECAUSE OF A PATENT NOR REFUSE TO MAKE AWARD TO THE LOW BIDDER BECAUSE HE WAS NOT LICENSED BY THE PATENT HOLDER TO MANUFACTURE THE PATENTED ARTICLE. THE PROCURING AGENCY, OF COURSE, IS FREE TO REQUIRE PATENT INDEMNITY AGREEMENTS FROM ITS SUPPLIERS, PERHAPS SHOULD REQUIRE SUCH AGREEMENTS IN SOME CASES. EVEN THOUGH PATENT INDEMNITY IS NOT PROVIDED FOR IN THE INVITATION, IT HAS BEEN OUR VIEW THAT A LOW BID MAY NOT BE REJECTED ON THE BASIS THAT THE GOVERNMENT MIGHT INCUR LIABILITY FOR PATENT INFRINGEMENT. 45 COMP. GEN. 13." FURTHERMORE, IN 48 COMP. GEN. 403, 407 (1968), OUR OFFICE SAID:

" *** LIKEWISE, IF THE SPANISH WRENCHES INFRINGE RIDGE'S PATENT, AS YOU CONTEND, IT DOES NOT AFFECT R & O'S ENTITLEMENT TO THE AWARD SINCE IT IS WELL ESTABLISHED THAT AWARD IS REQUIRED TO BE MADE TO THE LOWEST BIDDER WITHOUT REGARD TO POSSIBLE PATENT INFRINGEMENT."

YOU CONTEND FURTHER THAT RAPISTAN MAY "HAVE NOT QUOTED ON THE SAME MATERIAL IN STEP-TWO THAT WAS APPROVED UNDER STEP-ONE AND THEY ARE, THEREFORE, NON-RESPONSIVE." PART II, SECTION "E," OF THE IFB ISSUED TO RAPISTAN AND UPON WHICH RAPISTAN BID ON AN UNQUALIFIED BASIS DISPELS YOUR CONTENTION. SECTION "E" STATES:

"SERVICES: MANUFACTURE AND OPERATIONAL INSTALLATION OF AN AUTOMATED MATERIAL HANDLING SYSTEM IN BLDG. 84, NEW CUMBERLAND ARMY DEPOT, NEW CUMBERLAND, PA. IN ACCORDANCE WITH PURCHASE DESCRIPTION NO. D/DT 71-1 DATED 24 AUGUST 1970 WITH ADDENDUM NOS. 1,2,3,4 AND 5 AND RAPISTAN INCORPORATED TECHNICAL PROPOSAL NO. RSQ-703-7566 AND LETTER OF CLARIFICATION DATED 8 FEBRUARY 1971 WITH INCLOSURES INCORPORATED HEREIN BY REFERENCE. NOTHING CONTAINED IN SAID TECHNICAL PROPOSAL SHALL CONSTITUTE A WAIVER OF ANY OF THE PROVISIONS OF SAID PURCHASE DESCRIPTION AND ADDENDUMS 1 THRU 5."

IN RESPONSE TO THE OTHER BASES OF THE PROTEST, WE CONCUR WITH THE CONCLUSIONS OF THE CONTRACTING OFFICER THAT SINCE RAPISTAN FURNISHED THE REQUIRED CONTINGENT FEE FORM SUBSEQUENT TO BID OPENING, VERIFIED ITS BID PRICE, DID NOT DEVIATE FROM THE SPECIFICATIONS, AND WAS DETERMINED TO BE A RESPONSIBLE CONTRACTOR, THERE ARE NO PROPER GROUNDS FOR OBJECTING TO THE PROPOSED AWARD TO RAPISTAN. SEE B-168881, MARCH 31, 1970; PARAGRAPH 2- 406.1 OF THE ARMED SERVICES PROCUREMENT REGULATION; 17 COMP. GEN. 554, 557 (1938); AND 37 ID. 430, 435 (1957), RESPECTIVELY. WITH RESPECT TO YOUR CONTENTION THAT RAPISTAN WAS ALLOWED TO CHANGE ITS TECHNICAL PROPOSAL AFTER AN INITIAL DETERMINATION THAT IT WAS UNACCEPTABLE IN STEP ONE, OUR OFFICE HAS BEEN ADVISED THAT RAPISTAN DID NOT MAKE ANY CHANGES BUT MERELY SUBMITTED CLARIFICATIONS OF A MINOR SUPPLEMENTAL NATURE. SEE 43 COMP. GEN. 255 (1963).