Bureau of Federal Supply and Babcock and Wilcox Tube Company, Inc.

B-82907: May 20, 1949

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The Bureau of Federal Supply requests the Comptroller General's decisions regarding entering into an agreement with Babcock and Wilcox Tube Company, Inc., and Gasoline Products Company, Inc., which would provide for the payment of Babcock and Wilcox Tool Company to Gasoline Products Company the sum of $42,499.66, collected from the Bureau of Federal Supply as a part of the royalty provided for in certain contracts between that Bureau and Babcock and Wilcox Tube Company, and the release, in consideration of such payments, of Babcock and Wilcox Tube Company and the Bureau of Federal Supply from further claim for royalty payments by Gasoline Products Company, which alleges to be the authorized licensor under the patent involved.

Inasmuch as it is not established that the Dixon patent is applicable to the supplies furnished under the contracts, the contractor cannot be said to be legally entitled to any part of the royalty payments provided for in the contracts. It follows that there is no legal authority for the execution of a compromise agreement which would permit the contractor to retain the royalty payments of $42,499.66 heretofore made under the contracts but that such amount should be recovered from the contractor, leaving Gasoline Products Company to such legal remedy as it might elect to employ. If Babcock and Wilcox Tube Company should refuse to repay the amount of royalty held by them, the matter should be referred to this Office for the institution of proceedings looking to collection thereof.