B-165542, JULY 11, 1969, 49 COMP. GEN. 28

B-165542, JULY 11, 1969, 49 COMP. GEN. 28

CONTRACTS -- DATA, RIGHTS, ETC. -- DISCLOSURE -- UNSOLICITED PROPOSALS THE SIMILARITY BETWEEN PROCUREMENT SPECIFICATIONS SOLICITING AN ELECTRIC LIFT TRUCK DESIGNED TO INSTALL, TRANSPORT, AND REMOVE BOMBS AND MISSILES FROM IGLOOS AND REVETMENTS AND AN UNSOLICITED PROPOSAL SUBMITTED TO FURNISH THE ITEM THAT CONTAINED RESTRICTIVE LEGENDS RAISES THE PRESUMPTION THE OFFEROR'S PROPRIETARY DATA WAS IMPROPERLY DISCLOSED, AND THE CONTRACTING OFFICER UNABLE TO IDENTIFY THE SOURCES OF THE MATERIAL USED IN WRITING THE SPECIFICATIONS, THEIR USE BY THE GOVERNMENT TO CONSUMMATE A COMPETITIVE PROCUREMENT WITHOUT THE DEVELOPER'S CONSENT WOULD VIOLATE THE OBLIGATION OF THE GOVERNMENT NOT TO DIVULGE THE PROPRIETARY DATA AND, THEREFORE, A SOLE-SOURCE CONTRACT SHOULD BE NEGOTIATED WITH THE OFFEROR OF THE PROPRIETARY DATA, OR COMPETITIVE PROPOSALS SHOULD BE RESOLICITED ON THE BASIS OF SPECIFICATIONS WHICH DO NOT USE THE PROPRIETARY DATA.

TO THE SECRETARY OF THE AIR FORCE, JULY 11, 1969:

REFERENCE IS MADE TO A LETTER DATED MAY 20, 1969, WITH ENCLOSURES, FROM THE CHIEF, PROCUREMENT OPERATIONS DIVISION, DIRECTORATE, PROCUREMENT POLICY, REPORTING ON THE PROTEST BY STANDARD MANUFACTURING COMPANY, INC. (STANDARD), AGAINST ANY AWARD BY THE ARMAMENT DEVELOPMENT & TEST CENTER, EGLIN AIR FORCE BASE, UNDER REQUEST FOR PROPOSALS NO. F08635-69-R-0058.

ESSENTIALLY, THE COMPANY ALLEGES THROUGH ITS ATTORNEYS THAT THE AIR FORCE IS PROCURING AN ITEM, THE SPECIFICATIONS FOR WHICH HAVE BEEN BASED UPON A PROPRIETARY DESIGN SUBMITTED BY STANDARD AS AN UNSOLICITED PROPOSAL, AND IT IS REQUESTED THAT THE SOLICITATION BE CANCELED AND A CONTRACT BE PLACED WITH STANDARD.

THE REFERENCED SOLICITATION, WHICH WAS ISSUED ON OCTOBER 11, 1968, FROM EGLIN AIR FORCE BASE, FLORIDA, REQUESTS SUBMISSION OF TECHNICAL AND COST PROPOSALS FOR ACCOMPLISHING THE DESIGN, DEVELOPMENT, AND FABRICATION OF ONE TEST MODEL ELECTRIC LIFT TRUCK DESIGNED TO INSTALL, TRANSPORT, AND REMOVE BOMBS AND MISSILES FROM IGLOOS AND REVETMENTS. SPECIFICATION ATZ 69-113 DATED JUNE 29, 1968, WAS MADE A PART OF THE SOLICITATION AND DESCRIBES VARIOUS PERFORMANCE, MATERIAL, AND DESIGN CRITERIA FOR THE LIFT VEHICLE. ESSENTIALLY, THE PROCUREMENT SPECIFICATION DESCRIBES A REQUIREMENT FOR A COMPACT ELECTRIC VEHICLE INCORPORATING A CANTILEVER TELESCOPING BOOM MECHANISM TO WHICH IS ATTACHED A TILTABLE FORK CAPABLE OF LIFTING A BOMB, MISSILE OR SHIPPING CONTAINER WEIGHING UP TO 3,000 POUNDS WHILE ALLOWING THE ARTICLE BEING LIFTED TO REMAIN IN A GIVEN ATTITUDE. THE TRUCK'S BOOM AND FORK MUST BE CAPABLE OF AZIMUTH AND YAW ADJUSTMENTS, RESPECTIVELY, ENABLING THE VEHICLE TO HORIZONTALLY POSITION THE RAISED ARTICLE SO THAT IT CAN BE TRANSPORTED IN A POSITION PARALLEL TO THE VEHICLE'S LENGTH.

IT HAS BEEN POINTED OUT IN STANDARD'S ORIGINAL BRIEF OF JANUARY 6, 1969, THAT THE NEED FOR NEW AND ADVANCED STORAGE AREA LIFTING EQUIPMENT WAS RECOGNIZED BY THE COMPANY AND, IN EARLY 1964, IT UNDERTOOK AT PRIVATE EXPENSE AN ENGINEERING STUDY TO ACCUMULATE THE WEAPONS DATA, IGLOO AND REVETMENT DIMENSIONS, AND OTHER STATISTICS ON WHICH TO BASE A WORKABLE DESIGN. IT IS SUBMITTED THAT THE COMPANY THEN CONCEIVED A DESIGN, BUILT A SCALE MODEL AND CONDUCTED STUDIES OF THE USE OF A POWERED LIFT TRUCK HAVING THE SPECIAL SIZE, SHAPE, POWER, CAPACITY, MANEUVERABILITY, AND SAFETY FEATURES NECESSARY FOR SUCH USE. IT THEN REDUCED THIS CONCEPT INTO A WRITTEN PROPOSAL FOR THE MJ5 LIFT TRUCK AND, WITHOUT PRIOR SOLICITATION, SUBMITTED IT TO THE AIR FORCE, WITH APPROPRIATE RESTRICTIVE LEGENDS, FOR EVALUATION ON SEPTEMBER 8, 1964.

IT IS FURTHER STATED THAT AT THE REQUEST OF HEADQUARTERS, TACTICAL AIR COMMAND (HTAC), THE DEPARTMENT WAS FURNISHED 25 ADDITIONAL COPIES OF STANDARD'S CONFIDENTIAL TECHNICAL PROPOSAL ON NOVEMBER 24, 1964, AND AN ADDITIONAL 22 COPIES ON DECEMBER 16, 1964. IT IS THE PROTESTOR'S POSITION THAT ON SEVERAL DIFFERENT OCCASIONS IT WAS TOLD BY OFFICERS AT HTAC THAT THEY WERE USING THE 47 COPIES OF THE UNSOLICITED PROPOSAL AND TECHNICAL DOCUMENTATION VERBATIM IN THE CIRCULATION AND WRITE-UP OF THE STATEMENT OF THE AIR FORCE REQUIREMENT.

SINCE THE LIFT TRUCK CONCEPT AS EMBODIED IN STANDARD'S DESIGNS AND SPECIFICATIONS WAS ITS ORIGINAL WORK PRODUCT AND AFFORDS A COMPETITIVE ADVANTAGE TO STANDARD IN PROVIDING MECHANIZATION OF STORAGE AREA MUNITIONS HANDLING OPERATIONS WHICH IN THE PAST AND TODAY ARE DONE BY HAND AND HAND TRUCKS, STANDARD TAKES THE POSITION THAT THE UNSOLICITED PROPOSAL WAS ENTITLED TO THE LEGAL PROTECTION AFFORDED TRADE SECRETS AND DISCLOSURES OF PROPRIETARY DATA MADE IN RELIANCE UPON A CONFIDENTIAL RELATIONSHIP. SUPPORT THEREOF, THE COMPANY REFERS TO AN AIR FORCE LETTER DATED SEPTEMBER 29, 1964, WHEREIN IT WAS STATED THAT THE PROPOSED TECHNIQUES AND DESIGN APPEAR TO OFFER SIGNIFICANT IMPROVEMENT OVER EXISTING EQUIPMENT IN THE FIELD. HOWEVER, THE COMPANY CLAIMS TO HAVE BEEN DENIED THIS PROTECTION SINCE ITS OFFICIALS ARE CONVINCED THAT THE AIR FORCE HAS USED THE UNSOLICITED PROPOSAL IN THE WRITE-UP OF THE REQUIREMENT WHICH WAS THE BASIS FOR OBTAINING APPROVAL OF THE PROJECT, AND IN FORMULATING THE SUBJECT SPECIFICATION WHICH THEREAFTER WAS MADE AVAILABLE TO INDUSTRY FOR PURPOSES OF COMPETITIVE PROCUREMENT.

STANDARD'S ATTORNEYS HAVE CITED AUTHORITY FOR THE GENERAL RULES OF LAW THAT ANY COMBINATION OF DESIGNS AND COMPONENTS WHICH AFFORDS ONE A COMPETITIVE ADVANTAGE OR REPRESENTS IN SOME CONSIDERABLE DEGREE, INDEPENDENT EFFORTS, IS A PROTECTIBLE SECRET AND THAT SUFFICIENT SIMILARITY BETWEEN TWO DESIGNS PROVIDES A LEGAL BASIS FOR FINDING MISAPPROPRIATION. CF. SMITH V DRAVO CORPORATION, 202 F. 2D 369, 373; IMPERIAL CHEMICAL INDUSTRIES LTD. V NATIONAL DISTILLERS AND CHEMICAL CORPORATIONS, 342 F. 2D 737, 742; AND INTERNATIONAL INDUSTRIES V WARRENT PETROLEUM CORPORATION, 99 F. SUPP. 907, 914, AFF'D. 248 F. 2D 696. MOREOVER, THE ORIGINAL BRIEF SUBMITTED GIVES A DETAILED COMPARISON OF THE SIMILARITIES BETWEEN THE UNSOLICITED PROPOSAL AND THE PROCUREMENT SPECIFICATIONS. IN THIS REGARD WE ARE PARTICULARLY IMPRESSED BY THE SIMILARITY BETWEEN THE BASIC DESIGN CONCEPT OF STANDARD'S PROPOSAL AND THE PROCUREMENT SPECIFICATION IN THAT BOTH INCORPORATE A CANTILEVER BOOM PROVIDED WITH AN AZIMUTH MECHANISM TO WHICH IS ATTACHED A TILTABLE FORK WITH A YAW CAPABILITY OF 90 DEGREES TO EACH SIDE OF CENTER.

IN THE REPORT TO THIS OFFICE DATED MAY 20, 1969, IT IS THE POSITION OF YOUR DEPARTMENT THAT STANDARD'S UNSOLICITED PROPOSAL DOES NOT DISCLOSE ANYTHING WHICH CAN BE CLASSED AS A TRADE SECRET SINCE THE NEED FOR THIS EQUIPMENT AND BOTH THE COMPONENTS AND THE COMPONENTS IN COMBINATION ARE "BELIEVED" TO HAVE BEEN WELL KNOWN IN THE STATE OF THE ART AT THE TIME THE UNSOLICITED PROPOSAL WAS SUBMITTED. MOREOVER, IT IS STATED THAT TO THE EXTENT THE PROCUREMENT SPECIFICATION IS SIMILAR TO THE UNSOLICITED PROPOSAL, THE INFORMATION CONTAINED THEREIN WAS NOT COPIED BUT WAS DERIVED FROM DATA AVAILABLE TO THE GOVERNMENT UNDER PRIOR CONTRACTS FOR LIFT TRUCKS, FROM THE STATE OF THE ART, AND FROM THE CONFIGURATION OF THE MUNITIONS STORAGE AREAS AND THE DEMANDS OF MILITARY SPECIFICATIONS.

THERE IS ENCLOSED WITH YOUR REPORT A POINT-BY-POINT RESPONSE TO THE COMPARISON OF SIMILARITIES SUBMITTED BY STANDARD'S ATTORNEYS. THE REPLY WAS PREPARED BY MR. ANTHONY, WHO STATES THAT HE FIRST BECAME AWARE OF THE NEED FOR A MUNITIONS HANDLING SYSTEM IN AUGUST 1966, AND WHO WAS SUBSEQUENTLY (APPARENTLY IN 1968) ASSIGNED THE RESPONSIBILITY FOR WRITING THE SUBJECT SPECIFICATIONS. WE HAVE THOROUGHLY EXAMINED MR. ANTHONY'S REPLY AND OTHER DOCUMENTATION INCLUDED IN THE REPORT, AND WE ARE CONCERNED ABOUT AND INFLUENCED BY: (1) THE DEPARTMENT'S FAILURE TO ADEQUATELY EXPLAIN THE USES TO WHICH THE 47 COPIES OF STANDARD'S UNSOLICITED PROPOSAL WERE PUT; (2) THE NONRESPONSIVENESS OF THE "ATZS COMMENTS" TO VARIOUS POINTS IN THE PROTEST, AND THE LIMITATION OF COMMENTS TO AFATL RECORDS, RATHER THAN TO OVERALL AIR FORCE RECORDS; (3) THE ABSENCE OF ANY DETAILED EXPLANATION OF THE STEPS AND PROCEDURES FOLLOWED IN THE DEVELOPMENT AND APPROVAL OF THIS REQUIREMENT WITHIN THE AIR FORCE; (4) THE FAILURE OF THE REPORT TO PROVE EITHER THAT A SUBSTANTIALLY SIMILAR VEHICLE IS IN EXISTENCE OR THAT STANDARD'S DESIGN CONCEPT DID NOT REPRESENT A CONSIDERABLE DEGREE OF INDEPENDENT EFFORT, NOTWITHSTANDING THE STATEMENTS IN THE REPORT THAT THE COMPONENTS IN COMBINATION ARE "BELIEVED" TO HAVE BEEN WELL KNOWN IN THE STATE OF THE ART; AND (5) THE FAILURE OF THE RECORD, INCLUDING MR. ANTHONY'S REPORT, TO INDICATE THE EXACT SOURCE OF ALL INFORMATION USED IN WRITING SPECIFICATION ATZ 69-113.

WE ARE THEREFORE COMPELLED TO REACH THE CONCLUSION THAT THE REPORT FROM YOUR DEPARTMENT DOES NOT IDENTIFY THE SOURCES OF SPECIFICATION MATERIAL SUFFICIENTLY TO OVERCOME THE PRESUMPTION RAISED BY THE PERSUASIVE PROTEST THAT THE AIR FORCE DID, AT THE VERY LEAST, ADOPT AND USE THE BASIC PROPRIETARY DESIGN CONCEPT SET OUT IN STANDARD'S PROPOSAL. IN THIS CONNECTION WE HAVE GIVEN CONSIDERATION TO THE STATEMENT IN MR. ANTHONY'S AFFIDAVIT TO THE EFFECT THAT, ALTHOUGH HE RECALLS HAVING SEEN STANDARD'S UNSOLICITED PROPOSAL SOMETIME PRIOR TO PREPARATION OF THE SPECIFICATION, HE DID NOT REFER TO IT OR ANY OTHER REQUIREMENT DOCUMENT STATING SPECIFIC DESIGN INFORMATION WHILE WRITING THE SPECIFICATION. HOWEVER, WE ARE ALSO IMPRESSED BY THE AFFIDAVITS FURNISHED BY TWO OFFICIALS OF STANDARD TO THE EFFECT THAT MR. ANTHONY HAD BEEN BRIEFED ON THE DESIGN OF THE UNSOLICITED PROPOSAL APPROXIMATELY 2 YEARS PRIOR TO THE WRITING OF THE SPECIFICATION.

FOR THE REASONS STATED ABOVE WE MUST CONCLUDE THAT STANDARD'S PROPRIETARY PROPOSAL HAD A MATERIAL BEARING ON THE PROCUREMENT SPECIFICATIONS, AND THAT USE OF SUCH SPECIFICATIONS TO CONSUMMATE THE PRESENT COMPETITIVE PROCUREMENT WOULD VIOLATE THE OBLIGATION OF THE GOVERNMENT NOT TO DIVULGE THIS INFORMATION UNLESS IT FIRST OBTAINED STANDARD'S CONCURRENCE WITH SUCH USE.

ADDITIONALLY, IT APPEARS THAT THE DESIGN SUBMITTED IN RESPONSE TO THE SOLICITATION WHICH YOUR DEPARTMENT NOW PROPOSES TO ACCEPT DEVIATES IN CERTAIN MATERIAL RESPECTS FROM THE DESIGN REQUIREMENTS STATED IN THE PROCUREMENT SPECIFICATIONS. FOR EXAMPLE, THE PROPOSED VEHICLE WOULD NOT (1) INCORPORATE THE USE OF A CANTILEVER BOOM MEETING THE AZIMUTH MANEUVERABILITY REQUIREMENT;(2) POSSESS THE REQUIRED FOUR WHEELS; OR (3) FEATURE A TELESCOPING BOOM.

ACCORDINGLY, IT IS OUR OPINION THAT AN AWARD BASED UPON SUCH A DESIGN UNDER THE PRESENT SPECIFICATION WOULD BE IMPROPER. WE THEREFORE BELIEVE IT WOULD BE APPROPRIATE UNDER THE CIRCUMSTANCES FOR YOUR DEPARTMENT TO EITHER NEGOTIATE A SOLE SOURCE CONTRACT WITH STANDARD OR TO RESOLICIT PROPOSALS ON THE BASIS OF SPECIFICATIONS WHICH WOULD NOT INVOLVE THE USE OF PROPRIETARY DATA AND WOULD GIVE ANY INTERESTED PARTIES THE OPPORTUNITY TO SUBMIT PROPOSALS AND HAVE THEM CONSIDERED ON AN EQUAL BASIS.