FN Manufacturing, Inc. v. United States

The government (defendant) entered into a licensing agreement with Colt’s Manufacturing Company (Colt’s) to use the technical data for the M16 rifle in competitive procurement contracts. The government’s use was limited to contracts involving the manufacture and delivery of the M16 rifle or M16 parts. FN Manufacturing, Inc. (FNM) (plaintiff) was a principal contractor manufacturing M16s for the government. After entering into the licensing agreement, Colt’s developed the M4 carbine, a compact rifle, which was based off the M16. Colt’s allegedly used its own funds to develop the M4. Initially, because the M4 was derived from the M16, Colt’s and the government agreed that the M4 was covered by the existing M16 licensing agreement. Subsequently, the Navy issued a competitive solicitation involving an unauthorized use of M4 technical data. Colt’s considered the Navy’s unauthorized use to be a material breach of the M16 licensing agreement and sought damages. To settle the dispute, Colt’s and the government executed the M4 Addendum to the M16 licensing agreement, which barred the government from using M4 technical data in competitive procurements for approximately 13 years. Because of the M4 Addendum’s restrictions, the government granted Colt’s a sole-source contract to manufacture M4s. FNM protested the sole-source award, arguing that (1) the government violated 10 U.S.C. § 2320 by relinquishing its rights to the M4 technical data; and (2) the M4 Addendum violated the Competition in Contracting Act (CICA) because it limited competition. To help resolve FNM’s protest, FNM and the government asked the court for an interim ruling on the relevant legal issues.