Citation or inclusion of name in conference paper I am part of a team working on the second phase of a project. The project hasn't been published in any journals or conferences yet, mainly because not a lot of work has been done completely. Practical work of a certain significant part has been done by a previous team. My team started two months ago and we have enough exposure to write a conference paper proposing the design and the theoretical work completely. 

My project guide asked us to start writing a publish-ready paper encompassing everything, including the previous years practical work. He says, cite their term project and use their data. He was the guide of their term project too. I'm unsure as to whether it's right to just cite their unpublished thesis work. I think maybe they should be co-authors too since their work does comprise a significant part in the paper. 

Am I right and should I bring it up to the professor? If so, how should I do it without offending him? If the question is vague, I could give more specifics. 

EDIT: The field is control and robotics. The practical work is calibration of the equipment in question. The overall paper does include control strategy, dynamics and other sections that the previous researchers have not touched upon.
That's a delicate question. My own rule is to offer a co-authorship to anybody with whom I discussed the problem unless I use only the results they have already published and took the official credit for. However I don't insist and if they decline, I just give them extended thanks in the paper. So, I would definitely contact the (leader of) the previous team and offer to include all the names in the author line.

As to ow to approach your professor, it is not entirely unlikely that he is reading this very thread at the same time as you already, so once you decided to go public with it, just show him the replies you get here and ask what he thinks and what his arguments are. If he is a good man, he'll be straight with you and hold no grudges. If not, well, then you are in trouble already...