Link: GAO Decision
Protestor: Colt Defense, LLC
Agency: Department of the Army
Disposition: Protest Dismissed.
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GAO Digest:
- GAO will not resolve a dispute involving interpretation of a license agreement, even where the amount of the royalty fee under the agreement bears upon evaluation factors of the current solicitation, because this involves a matter of contract administration not subject to GAO’s review.
- A price evaluation scheme included in a solicitation for weapons that accounts for technical data royalty fees that will be due if award is made to an offeror who is not the owner of the technical data is not objectionable, even though the royalty may not represent the ultimate royalty paid by the government under the terms of a technical data license agreement because the parties to the license agreement have not yet agreed upon the applicable royalty fee.
General Counsel PC Highlight:
Colt Defense, LLC protested the terms of an RFP for the production of a minimum of 10,000 carbines and a maximum of 120,000 in any combination of multiple M4/M4A1 configurations. The initial solicitation notified offerors that the technical data package for the M4/M4A1 carbines includes licensed technology for which the government must pay a royalty amount pursuant to a licensing agreement with Colt. The RFP indicated that offerors who did not own or have a license for the Colt technology would have their proposed prices increased by a 5% royalty rate.
A protest by Colt of an initial award to Remington Arms Company, LLC was sustained, on the grounds that the agency had departed from the RFP’s price evaluation criteria when it created its own undisclosed formula to apply the 5% royalty to only those portions of the M4/M4A1 carbine which it had independently determined were proprietary to Colt. In response, the agency amended the solicitation, setting forth the methodology for the evaluation of price with regards to the 5% royalty and requesting revised price proposals. Colt now objects to the revised price evaluation terms.
Colt argued that the agency’s royalty evaluation provisions no longer purport to include the actual royalty provided for in the license agreement and are therefore inconsistent with FAR § 27.202-2(b)(1). Colt argued that, because there is no agreed upon royalty amount between the government and Colt, the agency is not authorized to evaluate the royalty. The GAO declined to resolve a dispute involving interpretation of a licensing agreement, even where the amount of the royalty fee bears upon evaluation factors of the current solicitation. It found reasonable the agency’s method for accounting for the to-be-determined cost in determining the relative prices under the RFP, despite the remaining uncertainty as to the exact amount to be paid to Colt.
The GAO’s jurisdiction does not extend to matters of contract administration, which are properly within the discretion of the contracting agency and for review by the cognizant board of contract appeals or the Court of Federal Claims. Where a solicitation relies in part on the terms of a licensing or similar contract, the GAO will not intervene in disputes between the licensing company and the government. The GAO will only hear protests of the terms of the solicitation itself, and not the licensing agreement.