## Facts

- The Air Force used the SBIR program to fund research into panoramic night-vision goggles (PNVGs) with an expanded field of view.
- Night Vision Corp. (NVC) received a Phase I SBIR contract and produced a working PNVG prototype.
- NVC then received a Phase II SBIR contract to produce additional prototypes; it subcontracted parts of design/manufacture to Insight Technology and lacked independent production capability.
- NVC completed Phases I and II and marked certain technical data as proprietary but did not place restrictive legends on the delivered physical prototypes.
- The Air Force initially considered a Phase III follow-on award to NVC, but later chose to pursue PNVG production through an open competition.
- During source selection, the Air Force provided NVC’s prototypes to Insight and solicited proposals from multiple offerors.
- The Air Force awarded the production contract to Insight.
- NVC sued in the Court of Federal Claims alleging (among other theories) breach of an asserted Phase III commitment, violation of SBIR data rights, and procurement improprieties; the government moved to dismiss and for summary judgment.

## Issues

1. Whether NVC’s Phase I and II SBIR contracts, the SBIR statute, or SBIR policy created an express or implied contractual right to receive a Phase III follow-on contract upon successful performance.
2. Whether oral assurances or conduct by an Air Force contracting officer formed an enforceable implied-in-fact contract obligating a Phase III award to NVC.
3. Whether the government violated SBIR data rights by sharing NVC’s prototypes (and related information) with a competitor during a competitive procurement.
4. Whether the decision to compete Phase III production and the award to Insight were unlawful under bid-protest standards.

## Decision

- The court granted the government’s motions (dismissal and/or summary judgment) and entered judgment for the United States.
- The court held the Phase I and II contracts contained no express or implied term requiring a Phase III award to NVC.
- The court held no enforceable implied-in-fact (or oral) agreement to award Phase III was shown, including because the alleged government representative lacked authority to bind the United States to such a commitment.
- The court held SBIR data-rights protections did not bar the government from sharing unmarked physical prototypes; NVC did not place restrictive legends on the prototypes it delivered.
- The court rejected NVC’s procurement challenges, finding no basis to overturn the agency’s choice to use competition or its award decision on the record presented.

## Legal Principles

- SBIR statutes and policy directives encouraging follow-on awards to the original SBIR firm “to the extent practicable” do not, without an authorized contractual commitment, create an enforceable right to a Phase III award.
- Government contract obligations are determined by the contract’s plain terms; courts will not infer a major procurement constraint (such as a guaranteed sole-source follow-on) absent clear contractual language.
- An implied-in-fact contract with the United States requires mutual intent, consideration, unambiguous offer and acceptance, and actual authority of the government representative; unauthorized oral assurances cannot bind the government.
- SBIR “data rights” protect properly marked technical data, not unmarked physical prototypes; contractors must use required legends/markings to restrict disclosure or use.
- In bid-protest review, an agency’s procurement choices are upheld absent a clear and prejudicial legal violation or a lack of rational basis.

## Conclusion

The Court of Federal Claims held that successful SBIR Phase I and II performance did not entitle NVC to a Phase III production award, that no authorized implied-in-fact agreement required such an award, and that the government could use and share unmarked prototypes in a competitive procurement; accordingly, NVC’s contract and procurement claims were dismissed or rejected on summary judgment.


Night Vision Corp. v. United States, 68 Fed. Cl. 368 (2005)