B-177436, MAR 12, 1974

B-177436: Mar 12, 1974

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PARTY ALLEGING VIOLATION OF PROPRIETARY RIGHTS BY CONTRACTING AGENCY MUST ESTABLISH SUCH VIOLATION BY CLEAR AND CONVINCING EVIDENCE BEFORE GAO WILL INTERFERE WITH AGENCY'S USE OF DISPUTED PROCESS IN COMPETITIVE PROCUREMENT EVEN THOUGH GOVERNMENT MAY HAVE BURDEN OF PROOF TO ESTABLISH INDEPENDENT DEVELOPMENT OF PROCESS IN COURT ACTION FOR DAMAGES. ARGUES THAT THERE IS NO EVIDENCE IN THE RECORD TO SUPPORT OUR FINDINGS THAT THE AIR FORCE INDEPENDENTLY DEVELOPED ALL THE ELEMENTS OF THE T.K. IT IS T.K.'S POSITION THAT IF THE AIR FORCE HAD DEVELOPED THE COMPLETE PROCESS. TECHNICAL PERSONNEL WOULD HAVE SAID SO AND THE AIR FORCE WOULD NOT HAVE RELIED ON T.K. STATES THAT WHERE THERE IS A SIMILARITY BETWEEN DISPUTED DESIGNS OR PROCESSES.

B-177436, MAR 12, 1974

1. ALTHOUGH PROCESS FOR REPAIR OF COMBUSTION CASE DEVELOPED BY PROTESTER MAY BE SUBJECT TO TRADE SECRET PROTECTION USE OF PROCESS BY AGENCY IN COMPETITIVE PROCUREMENT DOES NOT ESTABLISH VIOLATION OF PROTESTER'S PROPRIETARY RIGHTS WHERE RECORD SHOWS THAT GOVERNMENT INDEPENDENTLY DEVELOPED SAME PROCESS. 2. PARTY ALLEGING VIOLATION OF PROPRIETARY RIGHTS BY CONTRACTING AGENCY MUST ESTABLISH SUCH VIOLATION BY CLEAR AND CONVINCING EVIDENCE BEFORE GAO WILL INTERFERE WITH AGENCY'S USE OF DISPUTED PROCESS IN COMPETITIVE PROCUREMENT EVEN THOUGH GOVERNMENT MAY HAVE BURDEN OF PROOF TO ESTABLISH INDEPENDENT DEVELOPMENT OF PROCESS IN COURT ACTION FOR DAMAGES.

TO T. K. INTERNATIONAL, INC.:

T. K. INTERNATIONAL, INCORPORATED (T.K.), HAS REQUESTED RECONSIDERATION OF OUR DECISION, 53 COMP. GEN. , B-177436, DATED SEPTEMBER 10, 1973, DENYING ITS PROTEST AGAINST THE ISSUANCE OF REQUEST FOR PROPOSALS (RFP) NO. F34601-73-R-2561, ISSUED AT TINKER AIR FORCE BASE, OKLAHOMA.

T. K. ARGUES THAT THERE IS NO EVIDENCE IN THE RECORD TO SUPPORT OUR FINDINGS THAT THE AIR FORCE INDEPENDENTLY DEVELOPED ALL THE ELEMENTS OF THE T.K. REPAIR PROCESS, INCLUDING THE ORDER AND METHOD OF PROCESSING THE COMBUSTION CASE DURING REPAIR. IT IS T.K.'S POSITION THAT IF THE AIR FORCE HAD DEVELOPED THE COMPLETE PROCESS, TECHNICAL PERSONNEL WOULD HAVE SAID SO AND THE AIR FORCE WOULD NOT HAVE RELIED ON T.K. TO PERFORM THE REPAIRS FOR FIVE YEARS. FURTHER, T.K. CITES MONSANTO CHEMICAL CO. V. MILLER, 118 U.S.P.Q. 74 (D UTAH 1958), AND STATES THAT WHERE THERE IS A SIMILARITY BETWEEN DISPUTED DESIGNS OR PROCESSES, THE BURDEN IS PLACED ON THE PARTY ALLEGING INDEPENDENT DEVELOPMENT TO ESTABLISH LEGAL ENTITLEMENT TO ITS USE.

T.K. ALSO URGES THAT OUR CONCLUSION THAT THE T.K. PROCESS IS NOT A DEVELOPED PROCESS CAPABLE OF TRADE SECRET PROTECTION IS ERRONEOUS. T.K. ARGUES THAT THIS CONCLUSION, WHICH IS BASED PARTIALLY ON THE ABOVE MENTIONED FINDING THAT THE AIR FORCE INDEPENDENTLY DEVELOPED THIS PROCESS, IS NOT IN ACCORD WITH THE PRINCIPLE, EXPRESSED IN A.O. SMITH CORP. V. PETROLEUM IRON WORKS CO., 73 F.2D 531 (6TH CIR. 1935) THAT A TRADE SECRET NEED NOT CONSIST OF UNIQUE OR UNKNOWN ELEMENTS BUT NEED ONLY GIVE RISE TO AN ASCERTAINABLE BUT PREVIOUSLY UNKNOWN RESULT.

IT IS OUR VIEW THAT THE AIR FORCE HAS PROVIDED THIS OFFICE WITH SUFFICIENT DOCUMENTATION, ALL OF WHICH IS REFERENCED IN SOME DETAIL IN OUR SEPTEMBER 10 DECISION, TO SUPPORT THE CONCLUSION THAT IT HAD INDEPENDENT KNOWLEDGE OF ALL THE PRINCIPLE STEPS INVOLVED IN THE REPAIR PROCESS. FURTHERMORE, THIS DOCUMENTATION ENCOMPASSES THE 7 ESSENTIAL STEPS INCLUDED IN THE SOLICITATION STATEMENT OF WORK. ALTHOUGH WE DID NOT FIND THAT THE AIR FORCE HAD SUCCESSFULLY COMPLETED THE REPAIR PROCESS BY APPLICATION OF THESE STEPS, WE CITED AN AIR FORCE MEMO OF SEPTEMBER 11, 1968, WHICH REFERRED TO A PROTOTYPE REPAIR OF 2 SAMPLE CASES WITH THE ONLY NEGATIVE FINDING BEING THAT THE RESULTING OUTSIDE DIAMETER WAS .016 INCHES SMALLER THAN REQUIRED AND "WOULD BE RESIZED TO MEET REQUIREMENTS." MOREOVER, WE NOTED THAT THE OPERATION SEQUENCE APPEARED TO BE DETERMINED IN LARGE PART BY NORMAL SHOP PRACTICE. THEREFORE, EVEN THOUGH IT APPEARED THAT T.K. WAS THE FIRST TO SUCCESSFULLY IMPLEMENT THE PROCESS, WE WERE UNABLE TO CONCLUDE THAT IT WAS A PROCESS PROPRIETARY TO T.K. WHILE T.K. STILL DISPUTES THIS CONCLUSION, ITS REQUEST FOR RECONSIDERATION DOES NOT INCLUDE ANY EVIDENCE REFUTING THE FACTS UPON WHICH THE CONCLUSION RESTS AND, THEREFORE, WE ADHERE TO THAT VIEW.

CONCERNING T.K.'S "BURDEN OF PROOF" ARGUMENT, WHILE THE ABOVE-CITED JUDICIAL TEST MAY WELL BE VALID IN COURT PROCEEDINGS FOR MONEY DAMAGES OR INJUNCTIVE RELIEF, WE HAVE HELD THAT A PARTY ATTEMPTING TO HALT A COMPETITIVE PROCUREMENT BECAUSE OF AN ALLEGED VIOLATION OF PROPRIETARY RIGHTS MUST PRESENT CLEAR AND CONVINCING EVIDENCE THAT THE PROCUREMENT WILL VIOLATE THOSE RIGHTS. 52 COMP. GEN. 773 (1973). WE DO NOT BELIEVE THAT T.K. HAS MET THIS BURDEN.

T.K. ALSO CONTENDS THAT IT WAS IMPROPER FOR THIS OFFICE TO BASE ITS CONCLUSION, IN PART, ON THE REASONING THAT T.K.'S SUCCESSFUL IMPLEMENTATION OF THE PROCESS MAY HAVE RESULTED FROM T.K.'S EMPLOYMENT OF SKILLED PERSONNEL RATHER THAN FROM THE INTELLECTUAL DEVELOPMENT OF THE PROCESS ITSELF. IT IS T.K.'S VIEW THAT SINCE THE POINT WAS NOT ARGUED BY EITHER PARTY, "WHO ARE MOST KNOWLEDGEABLE OF THE FACTS AND WHO FRAMED THE ISSUES," IT IS NOT SUPPORTABLE AND SHOULD NOT HAVE BEEN USED AS A BASIS FOR OUR DECISION.

THIS STATEMENT WAS MADE TO POINT OUT OUR VIEW THAT BECAUSE T.K. WAS THE FIRST TO IMPLEMENT THE PROCESS, IT DID NOT NECESSARILY FOLLOW THAT T.K. WAS THE FIRST TO DEVELOP THE PROCESS. IN OTHER WORDS, SUCCESSFUL IMPLEMENTATION MAY HAVE RESULTED FROM OTHER FACTORS, SUCH AS THE EMPLOYMENT OF SKILLED PERSONNEL. FURTHERMORE, THIS WAS NOT, AS T.K. SAYS, "THE ONLY SUPPORT" FOR OUR CONCLUSION THAT T.K. HAD NOT ESTABLISHED ANY VIOLATION OF ITS PROPRIETARY RIGHTS. THE BASIS FOR THIS CONCLUSION IS AS SET FORTH ABOVE. THEREFORE, WE AGAIN CONCLUDE THAT EVEN THOUGH THE DEVELOPMENT OF A WORKABLE PROCESS MAY BE SUBJECT TO TRADE SECRET PROTECTION (SEE A.O. SMITH CORP. V. PETROLEUM IRON WORKS CO., SUPRA), THE FACTS OF THE INSTANT CASE DO NOT WARRANT THE APPLICATION OF THAT PRINCIPLE.

T.K. DISPUTES OUR CONCLUSION THAT THE "PROPRIETARY" LEGEND STAMPED BY THE AIR FORCE ON ITS WORK SPECIFICATION CONTAINING THE REPAIR PROCESS DOES NOT ESTABLISH AGENCY RECOGNITION OF T.K.'S PROPRIETARY RIGHTS. T.K. ARGUES THAT OUR REFERENCE TO THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) PROVISION CONCERNING UNSOLICITED PROPOSALS SUBMITTED WITHOUT PROPER MARKING IS INAPPLICABLE SINCE, IN THIS CASE, THE AIR FORCE USED THE T.K. PROPOSAL FOR PURPOSES FAR BEYOND MERE EVALUATION. IN THIS REGARD, T.K. INSISTS, CITING INTERNATIONAL ENGINEERING CO. V. RICHARDSON, F. SUPP.(D.C. D.C., JULY 10, 1973), THAT THE AIR FORCE FAILED TO COMPLY WITH ITS OBLIGATION TO EXPLAIN TO T.K. THE REASON FOR ITS SUBSEQUENT REMOVAL OF THE "PROPRIETARY" LEGEND FROM THE AIR FORCE WORK SPECIFICATION. FURTHERMORE, T.K. CONTENDS THAT IT IS THE AIR FORCE'S OBLIGATION, WHICH IT HAS NOT MET, TO PROVE THAT THE "PROPRIETARY" MARKING DID NOT CONVEY THE CONCLUSION THAT IT RECOGNIZED T.K.'S PROPRIETARY RIGHTS.

WE BELIEVE THAT THE ASPR PROVISION (4-106.1(E)(4)) IS RELEVANT BECAUSE IT SETS FORTH THE EFFECT OF A GOVERNMENT AFFIXED PROPRIETARY STAMP ON AN UNMARKED UNSOLICITED PROPOSAL, SUCH AS THAT SUBMITTED BY T.K., AND PROVIDES FOR MORE THAN MERE EVALUATION OF THE PROPOSAL, AS EXPLAINED IN OUR PRIOR DECISION. WE DO NOT AGREE THAT INTERNATIONAL ENGINEERING CO. V. RICHARDSON, SUPRA, IS APPLICABLE TO THE CASE AT HAND SINCE IT INVOLVED A CONTRACTOR'S RIGHTS UNDER THE "RIGHTS IN TECHNICAL DATA" CLAUSE AND A DIFFERENT REGULATION, WHICH SETS FORTH A SPECIFIC PROCEDURE FOR APPEAL FROM THE GOVERNMENT'S REMOVAL OF A CONTRACTOR AFFIXED PROPRIETARY LEGEND. IN THESE CIRCUMSTANCES, WE DO NOT AGREE THAT THE EFFECT OF SUCH MARKING WAS TANTAMOUNT TO RECOGNITION OF T.K.'S PROPRIETARY RIGHTS.

T.K. ALSO CONTESTS THE VALIDITY OF OUR CONCLUSION THAT THE SOLE SOURCE AWARDS TO T.K. WERE NOT NECESSARILY PROMPTED BY AN AIR FORCE RECOGNITION OF ITS PROPRIETARY RIGHTS. IN THIS CONNECTION, T.K. NOTES THAT OUR OFFICE WAS MISINFORMED BY THE AIR FORCE IN THAT T.K. RECEIVED FIVE RATHER THAN FOUR SOLE-SOURCE AWARDS, AS INITIALLY REPORTED BY THE AIR FORCE, AND THAT THE JUSTIFICATION FOR THE NEGOTIATION OF ONE OF THE CONTRACTS CITED THE PROPRIETARY NATURE OF THE T.K. PROCESS. THE AIR FORCE ADMITS THAT THE INITIAL INFORMATION WHICH WAS PROVIDED OUR OFFICE WAS ERRONEOUS IN THIS REGARD. IT IS AIR FORCE HEADQUARTERS' POSITION THAT THE DETERMINATION AND FINDINGS (D & F) DATED DECEMBER 22, 1970, INCORRECTLY PREDICATED THE USE OF SOLE-SOURCE NEGOTIATION ON THE PROPRIETARY NATURE OF THE T.K. PROCESS WHEN URGENCY, AS IN THE OTHER FOUR PROCUREMENTS, JUSTIFIED NEGOTIATIONS. THE CONTRACTING OFFICER INDICATES THAT THE "PROPRIETARY" JUSTIFICATION WAS THE RESULT OF THE AGENCY'S RELUCTANCE TO USE THE PROCESS AS A BASIS FOR A COMPETITIVE PROCUREMENT BEFORE THE VALIDITY OF T.K.'S PROPRIETARY CLAIM COULD BE ESTABLISHED. IT IS REPORTED, IN THIS CONNECTION, THAT BECAUSE THE "PROPRIETARY" MARKING FIRST APPEARED ON THE SPECIFICATION IN 1970, THE QUESTION OF T.K.'S PROPRIETARY RIGHTS WAS UNDER ACTIVE CONSIDERATION AT THE TIME THE D & F WAS EXECUTED.

WE NOTE, HOWEVER, THAT TWO SUBSEQUENT D & FS WERE NOT PREDICATED UPON A "PROPRIETARY" JUSTIFICATION AND THAT ON JUNE 14, 1972, AIR FORCE LEGAL COUNSEL ADVISED THE PROCURING ACTIVITY OF HIS OPINION, BASED UPON A THOROUGH REVIEW OF THE HISTORY OF THE REPAIR PROCESS, THAT THE OCAMA SPECIFICATION DID NOT INCLUDE PROPRIETARY INFORMATION AND COULD BE USED FOR COMPETITION. THEREFORE, WE DO NOT ASCRIBE ANY CONCLUSIVE SIGNIFICANCE TO THE ONE D & F.

FINALLY, T.K. SUBMITS THAT THE TOTALITY OF THE FACTUAL FINDINGS, INCLUDING THE DISCUSSIONS IN 1970 CONCERNING THE POSSIBLE PURCHASE BY THE AIR FORCE OF ITS PROCESS, IN SUPPORT OF T.K.'S POSITION PROVIDES CONCLUSIVE PROOF OF THE AIR FORCE'S RECOGNITION OF T.K.'S PROPRIETARY RIGHTS AND THAT THE AIR FORCE HAS FAILED TO FULFILL THE BURDEN OF PROOF REQUIRED OF IT TO OVERCOME ESTABLISHMENT OF T.K.'S PROPRIETARY RIGHTS.

AS NOTED PREVIOUSLY, WE BELIEVE THAT IN ATTEMPTING TO HALT A COMPETITIVE PROCUREMENT THE PARTY ALLEGING VIOLATION OF PROPRIETARY RIGHTS MUST ESTABLISH BY CLEAR AND CONVINCING EVIDENCE THAT THE PROCUREMENT WILL VIOLATE THOSE RIGHTS. SINCE WE DO NOT FIND THAT T.K. HAS SUSTAINED THAT BURDEN, OUR DECISION OF SEPTEMBER 10, 1973, IS AFFIRMED.

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