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B-223798, DEC 16, 1986

B-223798 Dec 16, 1986
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SAND TO BE USED BY CORPS OF ENGINEERS FOR BEACH NOURISHMENT ON BEACHES OF PRESQUE ISLE PARK IS A "CONSTRUCTION MATERIAL" UNDER PROVISIONS OF 33 U.S.C. AUTOMATIC WAIVERS PROVIDED IN SOME INTERNATIONAL AGREEMENTS ARE INAPPLICABLE HERE. 3. THE HONORABLE TOM RIDGE: THIS IS IN REPLY TO YOUR LETTER OF JULY 25. YOU ASK WHETHER THE SAND IN QUESTION IS "CONSTRUCTION MATERIAL" UNDER THE ACT. A WAIVER OF THE PROVISIONS OF THE ACT IS AUTOMATIC. IN OUR VIEW THE SAND IS "CONSTRUCTION MATERIAL" UNDER THE ACT. A WAIVER UNDER THE ACT IS NOT AUTOMATIC. HAVE RECEIVED THE INFORMAL VIEWS OF THE CORPS ABOUT THE BACKGROUND. WE WERE ADVISED THAT THE CORPS HAS DEPLETED ITS PRIOR DOMESTIC SOURCE OF SAND. YOU STATED IN YOUR LETTER THAT PRELIMINARY FIGURES INDICATE THAT THE COSTS OF PURCHASE AND PLACEMENT OF THE CANADIAN SAND ON THE BEACHES ARE "CONSIDERABLY LOWER" THAN COSTS FOR COMPARABLE SAND PURCHASED DOMESTICALLY.

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B-223798, DEC 16, 1986

PROCUREMENT - SOCIO-ECONOMIC POLICIES - PREFERRED PRODUCTS/SERVICES - DOMESTIC PRODUCTS - INTERPRETATION DIGEST: 1. SAND TO BE USED BY CORPS OF ENGINEERS FOR BEACH NOURISHMENT ON BEACHES OF PRESQUE ISLE PARK IS A "CONSTRUCTION MATERIAL" UNDER PROVISIONS OF 33 U.S.C. SEC. 426E(C) FOR PURPOSES OF THE BUY AMERICAN ACT, 41 U.S.C. SECS. 10A-10D. PROCUREMENT - SOCIO-ECONOMIC POLICIES - PREFERRED PRODUCTS/SERVICES DOMESTIC PRODUCTS - WAIVER - ADMINISTRATIVE DISCRETION 2. PROVISIONS OF BUY AMERICAN ACT, 41 U.S.C. SECS. 10A-10D, CANNOT BE WAIVED AUTOMATICALLY, BUT MAY BE WAIVED ONLY FOR REASONS PRESCRIBED BY STATUTE. AUTOMATIC WAIVERS PROVIDED IN SOME INTERNATIONAL AGREEMENTS ARE INAPPLICABLE HERE. 3. A WAIVER OF BUY AMERICAN ACT MAY BE GRANTED ONLY FOR REASONS PRESCRIBED BY STATUTE, 41 U.S.C. SECS. 10A-10D.

THE HONORABLE TOM RIDGE:

THIS IS IN REPLY TO YOUR LETTER OF JULY 25, 1986, REQUESTING OUR OPINION ON WHETHER THE PROVISIONS COMMONLY REFERRED TO AS THE BUY AMERICAN ACT (THE ACT), 41 U.S.C. SECS. 10A-10D, APPLY TO A CANADIAN PROPOSAL TO SELL SAND TO THE U.S. CORPS OF ENGINEERS FOR USE IN ITS ANNUAL SHORELINE PROTECTION AND REPLENISHMENT ACTIVITIES AT PRESQUE ISLE PARK IN ERIE, PENNSYLVANIA. IN SUMMARY, YOU ASK WHETHER THE SAND IN QUESTION IS "CONSTRUCTION MATERIAL" UNDER THE ACT; WHETHER, ASSUMING THE SAND OTHERWISE QUALIFIES FOR PURCHASE, A WAIVER OF THE PROVISIONS OF THE ACT IS AUTOMATIC; AND, IF NOT, WHAT ADDITIONAL CONDITIONS MUST BE MET TO OBTAIN A WAIVER.

IN BRIEF, IN OUR VIEW THE SAND IS "CONSTRUCTION MATERIAL" UNDER THE ACT; A WAIVER UNDER THE ACT IS NOT AUTOMATIC; AND A WAIVER MAY BE GRANTED ONLY FOR THE REASONS PRESCRIBED BY STATUTE. IN REACHING THESE CONCLUSIONS, WE EXAMINED THE ACT AND IMPLEMENTING REGULATIONS, AND OTHER RELEVANT LEGISLATION, AND HAVE RECEIVED THE INFORMAL VIEWS OF THE CORPS ABOUT THE BACKGROUND, FACTS AND ISSUES INVOLVED.

BACKGROUND

UNDER ITS STATUTORY AUTHORITY TO UNDERTAKE PROJECTS TO PREVENT EROSION AND FLOODING OF COASTAL AREAS, INCLUDING THE SHORES OF THE GREAT LAKES, 33 U.S.C. SEC. 426E, THE CORPS CARRIES OUT PERIODIC BEACH NOURISHMENT PROJECTS TO RESTORE AND REPLENISH THE BEACHES OF PRESQUE ISLE PARK ON LAKE ERIE, AMONG OTHERS. SUBSECTION (C) OF SECTION 426E PROVIDES THAT THE PERIODIC DEPOSIT OF SAND FOR THESE PURPOSES SHALL BE INCLUDED IN THE TERM "CONSTRUCTION."

WE WERE ADVISED THAT THE CORPS HAS DEPLETED ITS PRIOR DOMESTIC SOURCE OF SAND, AND HAS RECEIVED AN OFFER FROM THE LOCAL GOVERNMENT OF PORT BURWELL, ONTARIO PROVINCE, CANADA, TO PROVIDE REPUTEDLY HIGH QUALITY SAND TO THE CORPS FOR AN APPARENTLY LOW COST.

YOU STATED IN YOUR LETTER THAT PRELIMINARY FIGURES INDICATE THAT THE COSTS OF PURCHASE AND PLACEMENT OF THE CANADIAN SAND ON THE BEACHES ARE "CONSIDERABLY LOWER" THAN COSTS FOR COMPARABLE SAND PURCHASED DOMESTICALLY. OFFICIALS OF THE CORPS ADVISE US THAT THEY ARE AWAITING INFORMATION BOTH FROM SEVERAL POTENTIAL DOMESTIC SOURCES ON THE COSTS AND QUALITY OF THE SAND THEY CAN PROVIDE, AND FROM LABORATORY TESTS OF SAMPLES OF THE CANADIAN SAND TO DETERMINE WHETHER THE SAND WILL SUIT THE ENVIRONMENTAL CONDITIONS OF THE BEACHES. FOR THESE REASONS, THE CORPS CANNOT YET STATE WHETHER THE CANADIAN SAND WILL BE A LESS EXPENSIVE AND SUITABLE PURCHASE.

DISCUSSION

SAND AS "CONSTRUCTION MATERIAL"

YOUR FIRST QUESTION IS WHETHER SAND TO BE USED FOR BEACH NOURISHMENT IS A "CONSTRUCTION MATERIAL" UNDER THE BUY AMERICAN ACT. WE HAVE BEEN ADVISED INFORMALLY BY THE CORPS THAT SINCE ITS PREVIOUS SUPPLIER OF SAND WAS A DOMESTIC FIRM, IT NEVER HAS MADE A FORMAL DETERMINATION OF WHETHER THE SAND IS A CONSTRUCTION MATERIAL UNDER THE BUY AMERICAN ACT. UNDER ITS AUTHORIZING LEGISLATION, AS MENTIONED ABOVE, WHEN THE CORPS DETERMINES SHORE PROTECTION MAY BE PROVIDED BEST BE PERIODIC BEACH NOURISHMENT, THE TERM "CONSTRUCTION" MAY, FOR PURPOSES OF THIS LEGISLATION, BE CONSTRUED TO INCLUDE THE DEPOSIT OF SAND FILL ON THE BEACHES. 33 U.S.C. SEC. 426E(C). SINCE UNDER THIS AUTHORIZING LEGISLATION THE DEPOSIT AND DISTRIBUTION OF SAND FILL IS CONSTRUCTION, AND SINCE IT HIRES CONTRACTORS UNDER CONSTRUCTION CONTRACTS TO DISTRIBUTE THE SAND AT PRESQUE ISLE PARK, THE CORPS CONSIDERS THE SAND TO BE A CONSTRUCTION MATERIAL UNDER THE BUY AMERICAN ACT ALSO.

THE ACT DOES NOT CONTAIN THE SPECIFIC PHRASE "CONSTRUCTION MATERIAL," BUT DOES APPLY TO MATERIALS USED FOR CONSTRUCTION. IN BRIEF, THE ACT REQUIRES THAT ONLY UNMANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES MINED OR PRODUCED IN THE UNITED STATES SHALL BE ACQUIRED FOR PUBLIC USE, UNLESS THE HEAD OF THE PURCHASING AGENCY DETERMINES THAT THE PARTICULAR ACQUISITION IS INCONSISTENT WITH THE PUBLIC INTEREST, OR ITS COST IS UNREASONABLE. U.S.C. SEC. 10A. THE FEDERAL ACQUISITION REGULATION (FAR) DEFINES "CONSTRUCTION MATERIALS" FOR BUY AMERICAN PURPOSES AS FOLLOWS:

"'CONSTRUCTION MATERIALS', AS USED IN THIS SUBPART, MEANS ARTICLES, MATERIALS, AND SUPPLIES BROUGHT TO THE CONSTRUCTION SITE FOR INCORPORATION INTO THE BUILDING OR WORK." 48 C.F.R. SEC. 25.201.

GIVEN THE INTENT OF THE ACT THAT DOMESTIC CONSTRUCTION MATERIALS BE USED IN PUBLIC CONSTRUCTION IN THE UNITED STATES, AND THE BROAD DEFINITION OF "CONSTRUCTION MATERIALS" CONTAINED IN THE FAR PROVISION QUOTED ABOVE, WE CONCLUDE THAT THE SAND PURCHASED AND DEPOSITED AT PRESQUE ISLE PARK FOR USE IN BEACH NOURISHMENT ACTIVITIES IS A CONSTRUCTION MATERIAL UNDER THE ACT.

AUTOMATIC WAIVER OF BUY AMERICAN PROVISIONS

YOUR SECOND QUESTION IS WHETHER THE BUY AMERICAN PROVISIONS WOULD BE WAIVED AUTOMATICALLY, ASSUMING THAT THE SAND OFFERED FOR SALE BY THE CANADIANS IS OF A HIGHER QUALITY AND LESS EXPENSIVE THAN DOMESTIC SAND, AND MEETS ENVIRONMENTAL STANDARDS.

ALTHOUGH YOU DID NOT DEFINE THE TERM "AUTOMATIC WAIVER" IN YOUR LETTER, WE PRESUME YOU REFER TO A COMPLETE WAIVER OF THE APPLICABILITY OF ALL BUY AMERICAN PROVISIONS TO THE PROPOSED TRANSACTION, SUCH AS THE WAIVERS THAT APPLY TO CERTAIN PURCHASES MADE UNDER THE TERMS OF THREE INTERNATIONAL AGREEMENTS: THE U.S. - CANADA AGREEMENT OF JULY 27, 1956, AS AMENDED, FOR CONTRACTS PLACED WITH THE CANADIAN COMMERCIAL CORPORATION (SEE DEPARTMENT OF DEFENSE SUPPLEMENT TO THE FAR (DFAR), 48 C.F.R. CH. 2, SUBPART 225.71 (1985)); THE MEMORANDUM OF UNDERSTANDING BETWEEN THE U.S. AND CANADA AS A PARTICIPATING COUNTRY IN NATO (DFAR, SUBPART 225.74); AND THE TRADE AGREEMENTS ACT OF 1979, 19 U.S.C. SECS. 2501-2589 (FAR, SUBPART 25.4). THE FIRST TWO AGREEMENTS ARE INAPPLICABLE TO THE QUESTION BEFORE US BECAUSE EACH IS DIRECTED EXCLUSIVELY TO THE FURTHERING OF MUTUAL DEFENSE INTERESTS THROUGH THE PURCHASE OF DEFENSE EQUIPMENT AND MATERIALS, DFAR, SECS. 225.7101, 225.7102(C), AND 225.7401, AND THE CANADIAN PROPOSAL INVOLVES ONLY THE CIVIL WORKS PORTION OF THE CORPS' ACTIVITIES.

FURTHER, ALTHOUGH CANADA IS A "DESIGNATED COUNTRY" FOR THE PURPOSE OF THE TRADE AGREEMENTS ACT, SUPRA, FAR SEC. 25.401, THE ACT DOES NOT APPLY TO THE CANADIAN PROPOSAL AT ISSUE SINCE, AS IMPLEMENTED IN THE REGULATIONS, IT DOES NOT APPLY TO "CONSTRUCTION CONTRACTS" OR TO ANY PURCHASES MADE BY THE CORPS OF ENGINEERS. 19 U.S.C. SEC. 2511 NOTE, FAR SEC. 25.403(E) AND (H). THEREFORE, THERE ARE NO "AUTOMATIC" WAIVER PROVISIONS APPLICABLE TO THE CANADIAN PROPOSAL.

CONDITIONS FOR BUY AMERICAN WAIVER

YOUR LAST QUESTION IS WHAT ADDITIONAL CONDITIONS MUST BE MET TO OBTAIN A WAIVER, IF THE ASSUMPTIONS SET FORTH IN THE PREVIOUS QUESTION DO NOT RESULT IN AN AUTOMATIC WAIVER. THE ACT PROVIDES THAT THE HEAD OF THE PURCHASING AGENCY MUST MAKE CERTAIN DETERMINATIONS JUSTIFYING THE PURCHASE OF FOREIGN CONSTRUCTION MATERIALS. SECTION 2 OF THE ACT, 41 U.S.C. SEC. 10A, REQUIRES THAT ONLY AMERICAN MATERIALS BE ACQUIRED "UNLESS THE HEAD OF THE DEPARTMENT *** CONCERNED SHALL DETERMINE IT TO BE INCONSISTENT WITH THE PUBLIC INTEREST, OR THE COST TO BE UNREASONABLE." A DETERMINATION IN THIS CASE THAT THE COST OF DOMESTIC SAND IS UNREASONABLE WOULD BE THE RESULT OF THE CORPS' APPLICATION OF PRESCRIBED BUY AMERICAN ACT EVALUATION DIFFERENTIALS TO COMPETING OFFERS. SEE FAR SEC. 25.105. IF THE CANADIAN OFFER IS STILL LOWEST AFTER BEING ADJUSTED IN ACCORDANCE WITH THESE DIFFERENTIALS, THE OFFER COULD BE ACCEPTED UNDER SECTION 2 OF THE ACT, ASSUMING THE SAND IS OTHERWISE ACCEPTABLE.

CONCLUSION

BASED ON OUR EXAMINATION OF THE RELEVANT LEGISLATION AND APPLICABLE REGULATIONS, AND ON THE INFORMAL VIEWS PROVIDED BY THE CORPS, WE CONCLUDE THAT (1) SAND TO BE USED BY THE CORPS FOR BEACH NOURISHMENT ON THE BEACHES OF PRESQUE ISLE PARK IS A "CONSTRUCTION MATERIAL" UNDER THE PROVISIONS OF THE BUY AMERICAN ACT; (2) THE PROVISIONS OF THAT ACT CANNOT BE WAIVED AUTOMATICALLY; AND (3) TO GRANT A WAIVER OF THE ACT FOR CANADIAN SAND FOR THIS PROJECT, THE HEAD OF THE CORPS MUST DETERMINE THAT ONE OF THE STATUTORY EXCEPTIONS TO THE ACT APPLIES IN THIS CASE.

IN ACCORDANCE WITH OUR USUAL PROCEDURES, AND WITH THE AGREEMENT OF MS. LUANNE CHAPMAN OF YOUR STAFF, COPIES OF THIS OPINION WILL BE MADE AVAILABLE UPON REQUEST TO INTERESTED PARTIES 10 DAYS AFTER IT IS ISSUED.

WE HOPE THIS INFORMATION IS USEFUL TO YOU.

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