B-143427, NOVEMBER 17, 1960, 40 COMP. GEN. 294

B-143427, NOVEMBER 17, 1960, 40 COMP. GEN. 294

CONTRACTS - SPECIFICATIONS - ADEQUACY - PROPRIETARY RIGHTS IN DATA - BIDDER'S QUALIFICATIONS SPECIFICATIONS WHICH ARE OUTLINE, PERFORMANCE-TYPE DRAWINGS INDICATING CONTROL DIMENSIONS TO MEET SAFETY, RELIABILITY AND INTERCHANGEABILITY OF PARTS REQUIREMENTS OF THE PROCURING AGENCY BUT WHICH ARE DETERMINED TO BE ADEQUATE TO PERMIT OR REQUIRE MANUFACTURE OF A PRODUCT TO MEET THE NEEDS OF THE AGENCY, EVEN THOUGH THEY LEAVE TO THE MANUFACTURER THE DETERMINATION OF THE MATERIALS, PROCESSES, CONTROLS AND TESTS NECESSARY TO PRODUCE A SAFE AND RELIABLE PRODUCT, WILL NOT BE REGARDED AS DEFICIENT OR INADEQUATE IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE THAT THE AGENCY DETERMINATION IS IN ERROR OR THAT THE AWARD OF A CONTRACT UNDER THE SPECIFICATIONS WOULD BE UNDULY RESTRICTIVE OF COMPETITION OR IN VIOLATION OF LAW. THE FACT THAT A BIDDER--- WHO, TOGETHER WITH ITS SUBSIDIARY, IS DETERMINED TO BE CAPABLE OF PRODUCING AN ITEM IN ACCORDANCE WITH THE SPECIFICATIONS--- INTENDS TO OBTAIN A COMPONENT FROM A SOURCE OTHER THAN ITS SUBSIDIARY IS NOT A BASIS FOR QUESTIONING THE CORRECTNESS OF THE ADMINISTRATIVE DETERMINATION NOR IS THERE AN ADDITIONAL RESPONSIBILITY IMPOSED ON THE CONTRACTING AGENCY TO EVALUATE THE CAPABILITY OF ALTERNATE SOURCES OF SUPPLY WHICH THE BIDDER IS NOT OBLIGATED TO USE UNDER THE TERMS OF ITS CONTRACT; THEREFORE, IN THE ABSENCE OF EVIDENCE THAT THE BIDDER DOES NOT POSSESS SUCH CAPABILITY, THE DETERMINATION THAT THE BIDDER IS A RESPONSIBLE BIDDER IS PROPER. EVIDENCE WHICH SHOWS THAT PROPRIETARY DATA SUBMITTED TO ONE MILITARY DEPARTMENT WAS NOT USED DIRECTLY BY ANOTHER DEPARTMENT IN THE DRAFTING OF SPECIFICATIONS AND THAT THE COMPANY PROTESTING VIOLATION OF ITS RIGHTS IN PROPRIETARY DATA NOT ONLY WITHDREW ITS CLAIMS TO THE DRAWINGS INVOLVED, BUT ITS PERSONNEL PARTICIPATED WITH GOVERNMENT PERSONNEL IN DRAFTING THE SPECIFICATIONS, DOES NOT AFFORD A BASIS FOR QUESTIONING THE PROPRIETY OF THE ISSUANCE OF THE SPECIFICATIONS.

TO DAVID FROMSON, NOVEMBER 17, 1960:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 30, 1960, AND SUBSEQUENT CORRESPONDENCE WRITTEN IN BEHALF OF THE KEMODE MANUFACTURING COMPANY, INC; AND PROTESTING AGAINST THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. SC-36-039-60-1622-C3 TO ANY OTHER BIDDER.

THE INVITATION IN QUESTION WAS ISSUED BY THE U.S. ARMY SIGNAL SUPPLY AGENCY ON MAY 18, 1960, AND REQUESTED BIDS FOR FURNISHING VARIOUS QUANTITIES OF NONELECTRIC SOLDERING IRONS AND COMPONENTS, COMPLYING WITH SIGNAL CORPS DRAWINGS NUMBERED SC-D-76331, SC-B-76332, AND SC-C 76333-5 THROUGH SC-C-76333-7. FOUR BIDS WERE RECEIVED, HOWEVER THE LOW BID ON ALL QUANTITIES WAS REJECTED BY THE CONTRACTING OFFICER AND, FOR THE PURPOSES OF THE PRESENT DISCUSSION, THE REMAINING BIDS TO BE CONSIDERED ARE AS FOLLOWS:

CHART -------------------------------------------------------------- ----

QUANTITY

BIDDER -------------------------------------------- ---

4650-6999 7000-9299 9300-11625 11626 13950 ------------------------------ ----------------------------------- --------- CLARK ----------------- $14.25 $12.95 $11.90$11.19 BRISTOL --------------- 16.50 15.50 15.00 14.50 KEMODE ---------------- 18.75 17.25 14.85 14.40 --------------------------

YOU ADVISE THAT THERE IS REASON TO BELIEVE THE ACTUAL PROCUREMENT WILL BE IN THE QUANTITY RANGE OF 9,300 TO 11,625, IN WHICH CASE KEMODE'S BID IS SECOND LOW. SINCE THE REPORT BY THE DEPARTMENT OF THE ARMY TO THIS OFFICE NEITHER CONFIRMS NOR DENIES THAT IT INTENDS TO PROCURE SUCH QUANTITY, WE ASSUME YOUR INFORMATION IS CORRECT. OUR DISCUSSION WILL, THEREFORE, BE DIRECTED TO THE QUESTIONS ARISING OUT OF A PROCUREMENT OF 9,300 OR MORE ITEMS, ON WHICH QUANTITIES KEMODE'S BID IS SECOND LOW, RATHER THAN TO ANY COLLATERAL QUESTIONS WHICH MIGHT ARISE IN THE EVENT THE PROCUREMENT CONSISTED OF LESS THAN 9,300 ITEMS, ON WHICH QUANTITIES THE BID OF BRISTOL WAS SECOND LOW.

STATED BRIEFLY, IT APPEARS THAT DEVELOPMENT OF THE NONELECTRIC SOLDERING IRON WAS THE RESULT OF THE COMBINED EFFORTS OF KEMODE AND OTHERS FROM 1948 TO 1954, AND THAT KEMODE OWNS A PATENT ON THE HANDLE OF THE IRON AND IS THE EXCLUSIVE LICENSEE OF CATALYST RESEARCH CORPORATION, WHICH APPARENTLY HOLDS A PATENT ON THE CARTRIDGE. YOU ADVISE THAT KEMODE HAS ALREADY SUPPLIED THE GOVERNMENT OVER 6,100 NONELECTRIC SOLDERING IRONS AND OVER 72,000 HEARING CARTRIDGES. ADDITIONALLY, YOU ADVISE THAT KEMODE, BY REQUEST, FURNISHED ESSENTIAL TECHNICAL DATE TO THE COMMANDING OFFICER, FORT MONMOUTH, NEW JERSEY, ON NOVEMBER 4, 10, AND 14, 1958, THEREBY ENABLING THE GOVERNMENT TO PREPARE APPROPRIATE INVITATIONS FOR BIDS IN SEVERAL PREVIOUS UNSUCCESSFUL ATTEMPTS TO PROCURE THESE ARTICLES ON A COMPETITIVE BASIS. YOU CONTEND KEMODE HAD ADVISED THE GOVERNMENT THAT THE DATA AND SAMPLES FURNISHED WERE CONFIDENTIAL AND, UNDER DATE OF APRIL 21, 1960, KEMODE PROTESTED TO THE COMMANDING OFFICER, FORT MONMOUTH, NEW JERSEY, AGAINST THE USE OF ITS DRAWINGS FOR COMMERCIAL PURPOSES. WITH RESPECT TO THE DRAWINGS ACCOMPANYING THE CURRENT INVITATION FOR BIDS, KEMODE ADVISED THE CONTRACTING OFFICER ON APRIL 20, 1960, THAT PROPRIETARY AND TECHNICAL DATA PREVIOUSLY FURNISHED AND CURRENTLY BEING SUBMITTED WAS THE PROPERTY OF KEMODE AND THE GOVERNMENT HAD NO AUTHORITY TO USE IT FOR THE BENEFIT OF OTHER BIDDERS. HOWEVER, ON APRIL 28, 1960, KEMODE FURTHER ADVISED THE ARMY SIGNAL SUPPLY AGENCY AS FOLLOWS:

WITH REFERENCE TO OUR LETTER DATED 20 APRIL 1960, AND YOUR REPLY THERETO, PLEASE BE ADVISED THAT WE HEREBY WITHDRAW CLAIMS TO THE DRAWING NUMBERS SC -C-76333, SC-D-76331, AND SC-B-76332 TO AVOID ANY POSSIBLE INFERENCE WITH YOUR PROCUREMENT PROGRAM.

IN ADDITION TO THE QUESTIONS OF PATENT INFRINGEMEMT AND USE OF PROPRIETARY DATA, AS SET OUT ABOVE, YOUR PROTEST POINTS OUT THAT THE NATURE OF ITS COMPONENTS MAKES A NONELECTRIC SOLDERING IRON INHERENTLY DANGEROUS, AND THAT A SAFE AND RELIABLE IRON CAN BE PRODUCED ONLY BY A MANUFACTURER, SUCH AS KEMODE, WHICH HAS ACTUAL EXPERIENCE IN ITS DEVELOPMENT AND MANUFACTURE. IN THIS CONNECTION, YOU CONTEND THAT THE SPECIFICATIONS ARE INCOMPLETE AND ERRONEOUS IN CERTAIN RESPECTS AND THAT ANY ATTEMPT TO PRODUCE IN ACCORDANCE WITH THESE SPECIFICATIONS WILL RESULT EITHER IN AN UNACCEPTABLE PRODUCT OR IN THE ACCEPTANCE OF A PRODUCT WHICH WILL BE UNSAFE IN OPERATION AND LIKELY TO RESULT IN INJURIES TO GOVERNMENT EMPLOYEES AND IN LIABILITY OF THE GOVERNMENT FOR SUCH INJURIES. YOU CONTEND THAT CLARK CABLE CORPORATION, THE LOW BIDDER, DOES NOT HAVE THE EXPERIENCE, CAPABILITY, OR SOURCES OF SUPPLY NECESSARY TO PRODUCE A SAFE AND RELIABLE IRON; THAT THE LOW BIDDER THEREFORE MAY NOT BE CONSIDERED A RESPONSIBLE BIDDER OR ELIGIBLE FOR A CONTRACT AWARD; AND THAT THE GOVERNMENT WOULD THEREFORE BE JUSTIFIED IN PAYING THE HIGHER PRICE BID BY KEMODE TO OBTAIN THE SUPERIOR QUALITY AND KNOWN RELIABILITY OF KEMODE'S PRODUCT. IN VIEW OF THE ABOVE, IT IS YOUR OPINION THAT THE CUMULATIVE EFFECT OF THE "KNOW-HOW" OF KEMODE, ITS PATENT AND LICENSE POSITION, AND THE ASSISTANCE IT HAS RENDERED THE GOVERNMENT IN FRAMING SPECIFICATIONS, DRAWINGS, AND DATA, INDICATE THAT IT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT TO AWARD THE CONTRACT TO KEMODE AT ITS HIGHER BID PRICE. YOU, THEREFORE, SUGGEST THAT IT WOULD BE WITHIN THE PROVINCE OF THIS OFFICE TO PROHIBIT AN AWARD TO THE LOW BIDDER ON THE GROUND THAT THE FINDING, MADE BY THE CONTRACTING AGENCY, THAT CLARK CABLE CORPORATION IS A RESPONSIBLE BIDDER IS ERRONEOUS, AND THAT THE EXPENDITURE OF PUBLIC FUNDS FOR A DANGEROUS ARTICLE BASED UPON SUCH ERRONEOUS FINDING WOULD NOT BE IN THE PUBLIC INTEREST.

TURNING FIRST TO THE MATTER OF THE ADEQUACY OF THE SPECIFICATIONS TO PRODUCE THE ITEMS IN QUESTION, THE REPORT TO THIS OFFICE FROM THE DEPARTMENT OF THE ARMY STATES THAT THE VARIOUS DRAWINGS WHICH INCORPORATE FEDERAL SPECIFICATION GGG-S-60 ARE ESSENTIALLY OUTLINE PERFORMANCE TYPE DRAWINGS SPECIFYING CONTROL DIMENSIONS TO REALIZE SAFETY, RELIABILITY, AND INTERCHANGEABILITY OF PARTS. ADDITIONALLY, IT IS THE DEPARTMENT'S OPINION THAT THE PERTINENT DRAWINGS SPECIFY PROPER MATERIALS FOR HANDLE, FIRING ROD, AND TIP, AND IT IS LEFT TO THE MANUFACTURER TO DETERMINE ANY MATERIALS, PROCESSES, CONTROLS, AND TESTS WHICH ARE NOT LISTED IN THE DRAWINGS, SPECIFICATIONS, OR TEST REQUIREMENTS BUT WHICH ARE NECESSARY TO PRODUCE A SAFE AND RELIABLE PRODUCT. IN SUPPORT THEREOF, CLARK CALBE CORPORATION HAS EXPRESSED THE OPINION THAT THE SPECIFICATIONS ARE ADEQUATE FOR MANUFACTURING PURPOSES.

THE RULE IS SETTLED THAT SPECIFICATIONS IN AN ADVERTISED PROCUREMENT MUST BE DRAWN SO AS TO REFLECT THE ACTUAL NEEDS OF THE GOVERNMENT AND, WHERE ARTICLES ARE OFFERED WHICH CONFORM TO SUCH SPECIFICATIONS, AN AWARD MAY BE MADE ONLY TO THE LOWEST RESPONSIBLE BIDDER. UNDER SUCH CIRCUMSTANCES, THERE IS NO AUTHORITY IN THIS OFFICE OR IN THE CONTRACTING AGENCY TO AUTHORIZE AN AWARD TO A HIGHER BIDDER ON THE GROUND THAT THE ARTICLES OFFERED BY SUCH BIDDER ARE OF SUPERIOR QUALITY. 37 COMP. GEN. 550.

WHETHER SPECIFICATIONS ARE ADEQUATE TO PERMIT OR REQUIRE MANUFACTURE OF A PRODUCT WHICH WILL MEET THE NEEDS OF AN AGENCY IS A QUESTION WHICH IS PRIMARILY WITHIN THE JURISDICTION OF THE CONTRACTING AGENCY, AND IN ANY GIVEN PROCUREMENT THIS QUESTION MAY WELL BE SUBJECT TO A DIFFERENCE OF EXPERT TECHNICAL OPINION. WHERE SUCH DIFFERENCE OF OPINION EXISTS, THIS OFFICE WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF THE CONTRACTING AGENCY UNLESS THERE IS CLEAR AND CONVINCING EVIDENCE THAT THE AGENCY OPINION IS IN ERROR AND THAT A CONTRACT AWARDED ON THE BASIS OF SUCH SPECIFICATIONS WOULD, BY UNDULY RESTRICTING COMPETITION OR OTHERWISE, BE A VIOLATION OF LAW. 17 COMP. GEN. 554, 557. AS INDICATED BY THE PORTION OF THE REPORT FROM THE DEPARTMENT OF THE ARMY REFERRED TO ABOVE, THE TESTING REQUIREMENTS OBLIGATE THE SUCCESSFUL BIDDER TO FURNISH A PRODUCT WHICH, IN THE OPINION OF THE CONTRACTING AGENCY, WILL MEET ITS NEEDS, AND THE FACT THAT THE SPECIFICATIONS MAY BE INCOMPLETE OR DEFICIENT WITH RESPECT TO THE MANNER IN WHICH THE CONTRACTOR IS TO ACHIEVE SUCH REQUIREMENTS DOES NOT RELIEVE THE CONTRACTOR FROM ITS OBLIGATION TO FURNISH AN ACCEPTABLE PRODUCT. UNDER THE CIRCUMSTANCES, WE ARE UNABLE TO SAY THAT THE CONTRACTING AGENCY IS IN ERROR IN ITS OPINION THAT THE SPECIFICATIONS ARE ADEQUATE, OR TO SAY THAT AN AWARD BASED UPON THE SPECIFICATIONS AS DRAWN WOULD BE ILLEGAL.

CONCERNING THE CAPABILITY OF CLARK CABLE CORPORATION TO PRODUCE ACCEPTABLE ARTICLES UNDER THE SPECIFICATIONS, THE RECORDS OF THE DEPARTMENT OF THE ARMY INDICATE THAT A SURVEY OF CLARK CABLE CORPORATION WAS CONDUCTED BY A CONTRACTOR EVALUATION BOARD ON JUNE 20 AND 21, 1960, AND A FINDING WAS MADE ON JUNE 27, 1960, THAT THIS BIDDER WAS TECHNICALLY AND FINANCIALLY CAPABLE OF PRODUCING IN ACCORDANCE WITH THE CONTRACT REQUIREMENTS. BASED THEREON, THE CONTRACTING OFFICER ON JUNE 27, 1960, FOUND, IN ACCORDANCE WITH ARMED SERVICES PROCUREMENT REGULATION SECTION 1, PART 9, THAT CLARK WAS A RESPONSIBLE BIDDER. WHETHER A BIDDER IS, OR IS NOT, CAPABLE OF PRODUCING IN ACCORDANCE WITH CONTRACT REQUIREMENTS IS A QUESTION OF FACT AND, IN THE ABSENCE OF EVIDENCE THAT THE DETERMINATION OF A BIDDER'S CAPABILITY WAS BASED UPON ERROR, FRAUD, OR FAVORITISM, THIS OFFICE WILL ACCEPT THE FINDINGS OF THE CONTRACTING AGENCY. THE DECISIONS OF THIS OFFICE WHICH SUSTAINED DETERMINATIONS BY THE CONTRACTING OFFICER THAT THE LOW BIDDER WAS NOT RESPONSIBLE, A NUMBER OF WHICH ARE CITED IN YOUR LETTER DATED JULY 8, 1960, TO THE CONTRACTING OFFICER, ARE BASED UPON THIS PREMISE. NOR DOES THAT FACT THAT THE ARTICLE TO BE PROCURED IS INHERENTLY DANGEROUS, WHICH APPEARS TO BE THE CASE IN THE PRESENT PROCUREMENT, ALTER ITS APPLICATION.

WE FIND NO EVIDENCE OR FRAUD OR FAVORITISM IN THE RECORD BEFORE US BEARING ON THE DETERMINATION THAT CLARK CABLE CORPORATION IS A RESPONSIBLE BIDDER ON THIS PROCUREMENT. NOR DO WE FIND ANY SUBSTANTIAL EVIDENCE THAT THE INFORMATION RELIED ON BY THE CONTRACTING AGENCY, OR ITS CONCLUSIONS, WERE IN ERROR. IN THIS CONNECTION, THE REPORT SUBMITTED TO THIS OFFICE BY THE DEPARTMENT OF THE ARMY INCLUDES A LETTER DATED AUGUST 1, 1960, FROM THE SIGNAL MATERIAL SUPPORT AGENCY, WHICH INDICATES THAT THE CONTRACTING AGENCY MAY HAVE ASSUMED CLARK WOULD FURNISH CARTRIDGES MANUFACTURED BY PROOF INDUSTRIES, A SUBSIDIARY OF CLARK, AND BASED A DETERMINATION THAT PROOF INDUSTRIES WAS CAPABLE OF PRODUCING AN ACCEPTABLE CARTRIDGE ON PREVIOUS TESTS IN WHICH CARTRIDGES MANUFACTURED BY PROOF INDUSTRIES FAILED TO MEET TEST REQUIREMENTS SUBSTANTIALLY DIFFERENT FROM THOSE IN THE PRESENT INVITATION. ADDITIONALLY, THE ARMY'S REPORT TO THIS OFFICE INCLUDES A LETTER DATED JULY 26, 1960, FROM CLARK WHICH STATES AN INTENTION TO PURCHASE THE CARTRIDGE FROM THE BERMITE POWDER COMPANY, RATHER THAN FROM PROOF INDUSTRIES. YOUR LETTER OF OCTOBER 25, 1960, CALLS ATTENTION TO THESE CIRCUMSTANCES AND APPEARS TO TAKE THE POSITION THAT A CAPABILITY DETERMINATION BASED ON AN INCORRECT ASSUMPTION THAT A SUBSIDIARY WILL MANUFACTURE THE CARTRIDGE IS A SUFFICIENT BASIS TO QUESTION THE CORRECTNESS OF SUCH DETERMINATION.

WE ARE UNABLE TO AGREE WITH THIS CONCLUSION. IT IS OBVIOUS THAT, UNDER CERTAIN CIRCUMSTANCES, THE AVAILABILITY OF QUALIFIED SOURCES OF COMPONENTS TO A BIDDER WHO DOES NOT HIMSELF POSSESS THE FACILITIES OR "KNOW-HOW" NECESSARY TO COMPLETE FABRICATION OF THE END ITEM MAY WELL BE A FACTOR IN DETERMINING IF SUCH BIDDER IS A RESPONSIBLE BIDDER. HOWEVER, WHERE IT IS DETERMINED THAT A BIDDER DOES POSSESS THE NECESSARY FACILITIES AND SKILLS TO PRODUCE A COMPONENT PART, WE SEE NO JUSTIFICATION FOR IMPOSING THE ADDITIONAL RESPONSIBILITY UPON A CONTRACTING AGENCY TO EVALUATE THE CAPABILITY OF ALTERNATE SOURCES OF SUPPLY WHICH THE BIDDER IS NOT OBLIGATED TO USE UNDER THE TERMS OF ITS CONTRACT. IN THE PRESENT CASE, THE DEPARTMENT OF THE ARMY APPEARS TO BE SATISFIED THAT CLARK CABLE CORPORATION, TOGETHER WITH ITS SUBSIDIARY, PROOF INDUSTRIES, IS CAPABLE OF PRODUCING ACCEPTABLE IRONS AND CARTRIDGES IN ACCORDANCE WITH THE PRESENT SPECIFICATION REQUIREMENTS. WHETHER THE NATURE OF THE CARTRIDGES PREVIOUSLY PRODUCED BY PROOF INDUSTRIES, THE TESTS TO WHICH SUCH CARTRIDGES WERE SUBMITTED, AND THE DIFFERENCES IN THE PRESENT TEST REQUIREMENTS ARE THE BEST CRITERIA FOR DETERMINING THE BIDDER'S CAPABILITY TO PRODUCE ACCEPTABLE CARTRIDGES UNDER THE PRESENT INVITATION WOULD APPEAR TO BE OPEN TO QUESTION. HOWEVER, THE RECORD BEFORE US CONTAINS NO CONVINCING EVIDENCE THAT CLARK DOES NOT POSSESS SUCH CAPABILITY, AND WE ARE UNABLE TO STATE THAT THE EVIDENCE RELIED UPON BY THE DEPARTMENT OF THE ARMY WAS INSUFFICIENT TO SUPPORT THE CONCLUSION THAT CLARK IS CAPABLE OF PRODUCING ACCEPTABLE IRONS AND CARTRIDGES. WE MUST THEREFOR CONCUR WITH THE FINDING OF THE CONTRACTING OFFICER THAT CLARK IS A RESPONSIBLE BIDDER. THE REMAINING PORTION OF YOUR PROTEST APPEAR TO BE BASED UPON YOUR CLAIM THAT THE PROCUREMENT WILL RESULT IN IMPROPER USE OF PROPRIETARY INFORMATION FURNISHED BY KEMODE TO THE GOVERNMENT, AND THAT MANUFACTURE OF NONELECTRIC SOLDERING IRONS BY ANY PRODUCER OTHER THAN KEMODE UNDER THE SPECIFICATIONS IN THE INVITATION WILL RESULT IN INFRINGEMENT OF KEMODE'S PATENT RIGHTS.

CONCERNING THE INFRINGEMENT OF KEMODE'S PATENT RIGHTS, THE RECORD INDICATES, NOTWITHSTANDING YOUR ADVICE THAT A SUIT FOR PATENT INFRINGEMENT BY KEMODE AGAINST CLARK CABLE CORPORATION AND PROOF INDUSTRIES IS PRESENTLY PENDING THE UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF OHIO, THAT THERE IS CONSIDERABLE DOUBT AS TO THE VALIDITY OF KEMODE'S PATENT INFRINGEMENT CLAIMS. IN THIS CONNECTION CLARK HAS SUBMITTED THE OPINION OF REPUTABLE PATENT ATTORNEYS THAT IT MAY FREELY MANUFACTURE IN ACCORDANCE WITH ITS SAMPLE WITHOUT INFRINGING KEMODE'S PATENT. BE THAT AS IT MAY, THE CONTRACT TO BE AWARDED UNDER IFB SC-36-039-1622-C3 WILL CONTAIN BOTH THE STANDARD PATENT INDEMNITY CLAUSE (1PREDETERMINED) (1ASPR 9-103.1) AND THE STANDARD AUTHORIZATION AND CONSENT CLAUSE (1ASPR 9- 102.1). UNDER THESE CIRCUMSTANCES, IT IS OUR OPINION THAT ALLEGED INFRINGEMENT OF PATENT RIGHTS IS NOT A SUFFICIENT JUSTIFICATION FOR DEPARTING FROM THE GENERAL RULE THAT PROCUREMENTS ARE TO BE MADE AFTER FORMAL ADVERTISING WITH AWARD TO THE LOWEST RESPONSIBLE BIDDER AND, WHERE SUCH BIDDERS ARE WILLING TO INDEMNIFY THE GOVERNMENT AGAINST INFRINGEMENT OF PATENT RIGHTS, THE INTEREST OF THE GOVERNMENT REQUIRES THAT IT SECURE THE MAXIMUM AMOUNT OF COMPETITION FROM FIRMS QUALIFIED AND WILLING TO PRODUCE ON THAT BASIS. 38 COMP. GEN. 276.

WITH RESPECT TO WHETHER THE DEPARTMENT OF THE ARMY HAS VIOLATED KEMODE'S RIGHTS IN PROPRIETARY DATA BY USING, OR INCORPORATING, SUCH DATA IN DRAWING UP THE SPECIFICATIONS USED IN IFB SC-36-039-60-1662-C3, THE REPORT BY THE DEPARTMENT OF THE ARMY STATES THAT ALL DRAWINGS AND DATA SUBMITTED TO THE NAVY BY KEMODE WITH NAVY BID 390-59 AND FORWARDED TO THE SIGNAL MATERIAL SUPPORT AGENCY, HEADQUARTERS, FORT MONMOUTH, NEW JERSEY, FOR EVALUATION WERE TREATED AS CONFIDENTIAL, WERE RETURNED TO THE DEPARTMENT OF THE NAVY FOLLOWING EVALUATION, AND NO DATA WAS USED DIRECTLY FROM THE DRAWINGS TO PREPARE SIGNAL CORPS DRAWINGS OR SPECIFICATIONS. THE REPORT FURTHER STATES THAT SIGNAL CORPS DRAWINGS SC-C-76333, SC-B-76332, AND SC-D -76331 WERE PREPARED AFTER CANCELLATION OF THE NAVY BID, AND THESE DRAWINGS WERE BASED ON ACTUAL MEASUREMENTS AND TESTS ON KEMODE SAMPLES PREVIOUSLY SUPPLIED BY KEMODE AT NO COST OF OBLIGATION TO THE GOVERNMENT; ON SAMPLES AS PART OF TOOL KITS PROCURED BY THE GOVERNMENT; AND IN CONFERENCE WITH KEMODE PERSONNEL WHEREIN SALIENT FEATURES ON DRAWING SKETCHES WERE DISCUSSED. THERE IS NO SUBSTANTIAL EVIDENCE TO INDICATE THAT PROPRIETARY DATA WAS IN FACT USED IN THE PRESENT PROCUREMENT, OR THAT THE EXPLANATION BY THE DEPARTMENT OF THE ARMY IS NOT A COMPLETE AND ACCURATE ACCOUNT OF THE MANNER IN WHICH THE SPECIFICATIONS IN THE CURRENT INVITATION WERE DRAWN. IT WOULD THEREFORE APPEAR KEMODE WAS AWARE OF THE FACT THAT SPECIFICATIONS WERE BEING DRAWN AROUND ITS PRODUCT, ASSISTED AND ACQUIESCED IN THEIR PREPARATION AND, IN VIEW OF KEMODE'S LETTER OF APRIL 28, 1960, QUOTED ABOVE, ADVISING OF ITS WITHDRAWAL OF CLAIMS TO THE DRAWINGS INVOLVED IN SUCH SPECIFICATIONS, WAIVED ANY ENFORCEABLE RIGHTS TO ITS PROPRIETARY DATA. IT IS THEREFORE OUR OPINION THAT THE CONTRACTING AGENCY WAS FULLY JUSTIFIED IN ISSUING IFB SC-36-039-60-1622-C3.

WHETHER THERE IS ANY BASIS UPON WHICH KEMODE MIGHT BE ENTITLED TO COMPENSATION UNDER THE PROVISIONS OF ASPR, SECTION 2, PART 9, IS NOT A QUESTION BEFORE THIS OFFICE, AND WE EXPRESS NO OPINION THEREON. HOWEVER, IN VIEW OF THE ABOVE WE ARE AWARE OF NO JUSTIFIABLE GROUND UPON WHICH IT COULD NOW BE CONTENDED THAT AN AWARD TO THE LOWEST RESPONSIBLE BIDDER UNDER THE INVITATION WOULD BE IN VIOLATION OF ANY RIGHTS WHICH HAVE BEEN ESTABLISHED AND RETAINED BY KEMODE, OR THAT SUCH AWARD WOULD BE UNAUTHORIZED OR INVALID. ACCORDINGLY, YOUR PROTEST AGAINST AN AWARD TO ANY BIDDER OTHER THAN KEMODE MUST BE DENIED.