Infotech and the Law

As budgets for homeland security continue to grow, companies across the country are searching for effective ways to present their products and ideas to federal and state agencies. Savvy contractors continue to focus on the actual "buyers" of homeland security: the federal and state agencies that have the requirements, funding and authority to conduct such acquisitions.One time-tested method of presenting new ideas to these agencies is the unsolicited proposal. As the name suggests, an unsolicited proposal is not submitted in response to an agency's formal or informal request. Rather, it is a written offer that a company prepares and submits, on its own initiative, for the purpose of obtaining a contract. Thus, an unsolicited proposal is particularly well-suited to situations in which a contractor has identified an innovative or unique method of satisfying an agency's operational requirements.In many cases, unsolicited proposals are based on creative applications of existing technology, such as the use of integrated computer and communications systems to coordinate the efforts of first responders. In other cases, unsolicited proposals focus on newly developed products and technology, such as detection and testing devices for biological threats.In either case, an unsolicited proposal allows a company to formally present its product or concept ? in a noncompetitive environment ? to a specific government agency. If the proposal meets certain minimum criteria, the agency is required to promptly evaluate both the merits of the proposal and the company's capability to perform the proposed work.A favorable evaluation, however, does not necessarily justify the award of a contract without providing for full and open competition. In fact, an agency must reject an unsolicited proposal if it is available to the government without restriction from another source or if it closely resembles a pending competitive acquisition.Therefore, when preparing an unsolicited proposal, a company must focus not only on how its proposal will serve the agency's mission in an innovative fashion, but also on why it is solely capable of providing the product or concept. If a company meets both of these tests, then it may negotiate and receive a contract, without competition, on the basis of its unsolicited proposal.One factor that can contribute to a "sole source" justification is the company's retention of intellectual property rights in the unsolicited product or concept. In other words, if the company retains exclusive patent rights, data rights, or copyrights in the proposed idea, then it will more easily justify its position as a sole-source supplier.It is critical, therefore, that a company carefully protects its intellectual property rights when submitting an unsolicited proposal. If it fails to do so, the company may lose not only its competitive advantage on the particular proposal, but also its substantive rights in the innovative product or concept.To protect its rights in the federal context, a company must mark its unsolicited proposal in two distinct ways (as described in FAR 15.609). First, it must include a specific, restrictive legend on the cover page of its proposal. Second, it must mark each page of the proposal that contains sensitive data.The importance of marking each page was highlighted recently when the Court of Appeals for the Federal Circuit held that a contractor had waived its rights ? valued by the contractor at $72 million ? in an unsolicited proposal. In that case, the contractor properly marked the cover page of its proposal, but failed to mark each individual page.It was a harsh result for the contractor, but an important cautionary tale for the rest of the procurement community.