B-156082, JULY 20, 1966, 46 COMP. GEN. 47

B-156082, JULY 20, 1966, 46 COMP. GEN. 47

BUY AMERICAN ACT - APPLICABILITY - LEASES. THE BUY AMERICAN ACT, DATED MARCH 3, 1933, AS AMENDED, DESIGNED TO ACCORD PREFERENTIAL TREATMENT IN GOVERNMENT PROCUREMENT TO DOMESTIC MANUFACTURERS, PRODUCERS, AND CONTRACTORS, THE LEASING OF VEHICLES BY THE POST OFFICE DEPARTMENT PURSUANT TO 39 U.S.C. 2006 IS SUBJECT TO THE ACT, THE USE OF THE WORD "PURCHASE" RATHER THAN "ACQUIRE" NOT EXCLUDING THE APPLICABILITY OF THE ACT TO LEASES, THE LEGISLATIVE HISTORY ALTHOUGH FAILING TO MENTION LEASES EVIDENCING CONGRESSIONAL INTENT THAT AVAILABLE AMERICAN-MADE PRODUCTS BE USED WHETHER OBTAINED BY PURCHASE OR LEASE; HOWEVER, ONLY FUTURE LEASE AGREEMENTS NEED APPLY THE PROHIBITION AGAINST PURCHASE OF FOREIGN MANUFACTURED ARTICLES WHERE THOSE OF DOMESTIC MANUFACTURE ARE AVAILABLE.

TO THE POSTMASTER GENERAL, JULY 20, 1966:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 27, 1966, REQUESTING OUR DECISION CONCERNING THE APPLICABILITY OF THE BUY AMERICAN ACT TO THE LEASING OF VEHICLES USED BY THE POST OFFICE DEPARTMENT IN THE CITY DELIVERY SERVICE. YOU STATE THAT PURSUANT TO 39 U.S.C. 2006, THE POST OFFICE DEPARTMENT LEASES VEHICLES FOR TERMS UP TO 4 YEARS FOR USE IN THE CITY DELIVERY SERVICE. SUCH VEHICLES ARE LEASED FROM NON SUPERVISORY POSTAL EMPLOYEES, AS EXPRESSLY PERMITTED BY 39 U. S. C. 2008, AND ALSO FROM PRIVATE PERSONS. HERETOFORE, IN THE AWARD OF SUCH CONTRACTS, THE DEPARTMENT HAS NOT BELIEVED THAT THE BUY AMERICAN ACT IS APPLICABLE. HOWEVER, YOU STATE THAT YOU HAVE BEEN INFORMALLY ADVISED THAT THE GENERAL SERVICES ADMINISTRATION AND THE DEPARTMENT OF DEFENSE BELIEVE THAT THE ACT IS APPLICABLE TO THE LEASING OF VEHICLES. THIS OFFICE HAS NOT PREVIOUSLY CONSIDERED THE QUESTION WHETHER THE BUY AMERICAN ACT IS APPLICABLE TO THE LEASING OF EQUIPMENT.

THE ACT OF MARCH 3, 1933, 47 STAT. 1520, AS AMENDED, 41 U.S.C. 10A TO 10D, WAS DESIGNED TO ACCORD PREFERENTIAL TREATMENT TO DOMESTIC MANUFACTURERS AND PRODUCERS IN THE PROCUREMENT OF ARTICLES, MATERIALS OR SUPPLIES BY FEDERAL DEPARTMENTS AND AGENCIES, AS WELL AS BY CONTRACTORS WITH SUCH DEPARTMENTS AND AGENCIES.

SECTION 10A OF THE BUY AMERICAN ACT PROVIDES IN PART AS FOLLOWS:

NOTWITHSTANDING ANY OTHER PROVISION OF LAW, AND UNLESS THE HEAD OF THE DEPARTMENT OR INDEPENDENT ESTABLISHMENT CONCERNED SHALL DETERMINE IT TO BE INCONSISTENT WITH THE PUBLIC INTEREST, OR THE COST TO BE UNREASONABLE, ONLY SUCH MANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES AS HAVE BEEN MINED OR PRODUCED IN THE UNITED STATES, AND ONLY SUCH MANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES AS HAVE BEEN MANUFACTURED IN THE UNITED STATES SUBSTANTIALLY ALL FROM ARTICLES, MATERIALS, OR SUPPLIES MINED, PRODUCED, OR MANUFACTURED, AS THE CASE MAY BE, IN THE UNITED STATES, SHALL BE ACQUIRED FOR PUBLIC USE. * * *

THE GENERAL INTENT OF CONGRESS IN ENACTING THE "BUY AMERICAN" ACT WAS TO PROTECT THE AMERICAN MANUFACTURER AND WORKER. IN THE HOUSE DEBATE ON H. R. 10743 WHICH APPEARS IN 76 CONG. REC. PART 2, PAGES 1891-9, MR. WILSON STATES AT PAGE 1893 THAT "THE PURPOSE OF THIS BILL IS TO ESTABLISH A POLICY BY THE GOVERNMENT ASSURING THE USE OF AMERICAN MATERIALS FOR THE EXECUTION AND CARRYING ON OF PUBLIC WORKS IN EVERY PLACE WHERE THE UNITED STATES HAS JURISDICTION;, MR. HOLLISTER STATED AT PAGE 1894 THAT "WE REALIZED THAT THE IMPORTANT THING TO DO WAS TO LAY DOWN IN GENERAL TERMS THE INTENTION OF CONGRESS, THAT THE FEDERAL GOVERNMENT AND ALSO CONTRACTORS HAVING TO DO WITH THE FEDERAL GOVERNMENT, SHOULD USE AMERICAN GOODS WHERE POSSIBLE AND WHERE IT WAS A REASONABLE AND PROPER THING TO DO;,

SECTION 633 OF THE ACT OF OCTOBER 29, 1949, CHAPTER 787, 63 STAT. 1024 (WHICH IS CODIFIED AS SECTION 10D OF TITLE 41, UNITED STATES CODE), WAS ENACTED TO CLARIFY THE INTENT OF CONGRESS IN PASSING THE BUY AMERICAN ACT. SECTION 10D PROVIDES:

IN ORDER TO CLARIFY THE ORIGINAL INTENT OF CONGRESS, HEREAFTER,SECTION 10A OF THIS TITLE AND THAT PART OF SECTION 10B (A) OF THIS TITLE PRECEDING THE WORDS "PROVIDED, HOWEVER," SHALL BE REGARDED AS REQUIRING THE PURCHASE, FOR PUBLIC USE WITHIN THE UNITED STATES, OF ARTICLES, MATERIALS, OR SUPPLIES MANUFACTURED IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE COMMERCIAL QUANTITIES AND OF A SATISFACTORY QUALITY, UNLESS THE HEAD OF THE DEPARTMENT OR INDEPENDENT ESTABLISHMENT CONCERNED SHALL DETERMINE THEIR PURCHASE TO BE INCONSISTENT WITH THE PUBLIC INTEREST OR THEIR COST TO BE UNREASONABLE.

YOU STATE THAT THE QUESTION OF APPLICABILITY OF THE BUY AMERICAN ACT TO THE LEASING OF VEHICLES WAS FORMALLY CONSIDERED BY THE POST OFFICE DEPARTMENT IN 1961. AT THAT TIME YOUR GENERAL COUNSEL CAME TO THE CONCLUSION THAT THE ACT SHOULD NOT BE CONSIDERED TO APPLY. YOU CONTEND THAT IN REACHING THIS CONCLUSION, HE CONSIDERED THE FACT THAT IN SECTION 633 OF THE ACT OF OCTOBER 29, 1949, CHAPTER 787, 63 STAT. 1024, WHICH WAS INTENDED TO CLARIFY THE INTENT OF CONGRESS IN PASSING THE BUY AMERICAN ACT, THE CONGRESS USED THE WORD "PURCHASE" RATHER THAN THE WORD "ACQUIRE;, FURTHER, IT WAS BELIEVED THAT WHEN PRESIDENT EISENHOWER USED THE WORD "PURCHASE" IN SECTIONS 2 (B), 3 (B) AND 5 OF EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954, 19 F. R. 8723, HE RECOGNIZED AND UNDERSTOOD THAT THE BUY AMERICAN ACT WAS LIMITED TO PURCHASES, I. E; THE PASSAGE OF TITLE.

A REVIEW OF THE REASONS FOR ENACTING SECTION 10D DISCLOSE THE FOLLOWING INFORMATION. UNDER DATE OF MARCH 8, 1949, THE SECRETARY OF THE NAVY REQUESTED A DECISION OF THE COMPTROLLER GENERAL AS TO WHETHER THERE WAS ANY AUTHORITY OF LAW FOR GRANTING PREFERENTIAL TREATMENT TO DOMESTIC MANUFACTURERS IN THE PURCHASE OF CORKBOARD. IT WAS STATED THAT SOME OF THE BIDS RECEIVED IN RESPONSE TO AN INVITATION FOR BIDS ON CORKBOARD OFFERED CORKBOARD MANUFACTURED IN THE UNITED STATES, WHILE OTHERS OFFERED CORKBOARD MANUFACTURED IN FOREIGN COUNTRIES. IT APPEARS THAT CORKBOARD IS MANUFACTURED ENTIRELY FROM CORK, THE BARK OF A TREE WHICH DOES NOT GROW IN THE UNITED STATES. THE QUESTION AT ISSUE WAS WHETHER, UNDER THE CIRCUMSTANCES, THE PROCUREMENT OF CORKBOARD MANUFACTURED IN FOREIGN COUNTRIES WAS PROHIBITED BY SECTION 2 OF THE BUY AMERICAN ACT OF 1933.

BY DECISION OF APRIL 19, 1949, 28 COMP. GEN. 591, THE SECRETARY OF THE NAVY WAS ADVISED THAT THE FIRST SENTENCE OF SAID SECTION CONSTITUTES A PROHIBITION AGAINST THE PURCHASE OF UNMANUFACTURED ARTICLES, ETC; OF FOREIGN PRODUCTION, AS WELL AS AGAINST THE PURCHASE OF MANUFACTURED ARTICLES OF FOREIGN PRODUCTION. HOWEVER, IT WAS POINTED OUT, FURTHER, THAT THE SECOND SENTENCE OF THE SAME SECTION REMOVES THE PROHIBITION AGAINST THE PURCHASE OF ANY ARTICLES WHERE THEY ARE FOR USE OUTSIDE THE UNITED STATES OR IF THE ARTICLES,MATERIALS, OR SUPPLIES, TO BE USED, OR THE ARTICLES, MATERIALS, OR SUPPLIES FROM WHICH THEY ARE MANUFACTURED, ARE NOT MINED, PRODUCED, OR MANUFACTURED, AS THE CASE MAY BE, IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE COMMERCIAL QUANTITIES, AND OF A SATISFACTORY QUALITY. HENCE, IT WAS CONSIDERED THAT THE PURCHASE OF CORKBOARD FROM FOREIGN MANUFACTURERS IS NOT PROHIBITED BY SAID SECTION 2.

VARIOUS MEMBERS OF CONGRESS LATER EXPRESSED THE VIEW THAT THE ACT OF MARCH 3, 1933, WAS DESIGNED TO PROTECT AMERICAN MANUFACTURERS IN CASES SUCH AS INVOLVED IN THE MENTIONED DECISION, AND A MEMBER OF THE STAFF OF FORMER SENATOR EDWARD MARTIN REQUESTED A DRAFT CONTAINING LANGUAGE WHICH, IF ENACTED, WOULD PROHIBIT THE PURCHASE OF ARTICLES MANUFACTURED ABROAD UNDER THE FOREGOING CIRCUMSTANCES. IN COMPLIANCE WITH THAT REQUEST, THIS OFFICE SUBMITTED A DRAFT FOR CONSIDERATION AS A SEPARATE BILL AND, AS AN ALTERNATIVE, IT WAS SUGGESTED THAT THE PROVISION BE INCLUDED IN AN APPROPRIATION BILL. THE LANGUAGE SUGGESTED BY THIS OFFICE FOR CONSIDERATION WAS SUBSEQUENTLY ENACTED IN SECTION 633 OF THE ACT OF OCTOBER 29, 1949, CHAPTER 787, 63 STAT. 1024 (WHICH IS CODIFIED AS SECTION 10D OF 41 U. S. CODE).

THUS THE PURPOSE OF ENACTING THE PROVISION WAS TO PROTECT AMERICAN MANUFACTURERS IN CASES SUCH AS INVOLVED IN 28 COMP. GEN. 591. UNDER SECTION 10D, PURCHASE OF ARTICLES OF FOREIGN MANUFACTURE IS PROHIBITED WHERE ARTICLES OF DOMESTIC MANUFACTURE ARE AVAILABLE, WITHOUT REGARD TO WHETHER THE MATERIALS FROM WHICH SUCH ARTICLES ARE MANUFACTURED ARE PRODUCED DOMESTICALLY OR ABROAD. THERE IS NOTHING IN THE TERMS OF SECTION 10D OR IN THE LEGISLATIVE HISTORY TO INDICATE WHY THE WORD ,PURCHASE" RATHER THAN THE TERM "ACQUISITION" WAS USED. HOWEVER, TAKING INTO CONSIDERATION THE PURPOSE OF ENACTING SECTION 10D AS EXPLAINED ABOVE, IT WOULD BE UNREASONABLE TO PRESUME THAT CONGRESS INTENDED TO NARROW THE PROTECTION AFFORDED TO AMERICAN MANUFACTURERS BY ALLOWING THE LEASING OF FOREIGN-MADE PRODUCTS WHERE THE PURCHASE OF SUCH PRODUCTS IS PROHIBITED. IN OUR DECISION A-43493, AUGUST 23, 1932, WE HELD THAT THE WORD "PURCHASE" AS USED IN AN APPROPRIATION ACT MUST BE CONSTRUED BROADLY AS INCLUDING NOT ONLY PURCHASES BUT RENTALS AS WELL. IN THE PRESENT MATTER, TAKING INTO CONSIDERATION THE SUBJECT MATTER INVOLVED, AND THE PURPOSE AND INTENT OF ENACTING SECTION 10D, THERE WOULD APPEAR TO BE WARRANTED THE CONCLUSION THAT THE USE OF THE WORD ,PURCHASE" INCLUDES LEASES.

IN ORDER THAT THE PROVISIONS OF THE ACT BE UNIFORMLY ADMINISTERED, AND FOR OTHER PURPOSES, THE ACT WAS IMPLEMENTED BY EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954, SETTING FORTH, AMONG OTHER THINGS, CRITERIA FOR DETERMINING WHETHER A PRODUCT IS TO BE REGARDED AS DOMESTIC OR FOREIGN AND WHETHER THE PRICE OFFERED FOR A DOMESTIC PRODUCT IS UNREASONABLE. SEE B- 116193, JUNE 4, 1963. THERE IS NO INDICATION THAT THE USE OF THE WORD "PURCHASE" IN THE EXECUTIVE ORDER WAS INTENDED TO EXCLUDE ACQUISITIONS BY LEASE.

SECTION 1-6.102, FEDERAL PROCUREMENT REGULATIONS (FPR), STATES THAT THE BUY AMERICAN ACT REQUIRES THAT IN THE PROCUREMENT OF SUPPLIES AND SERVICES ONLY DOMESTIC SOURCE END PRODUCTS SHALL BE ACQUIRED FOR PUBLIC USE. FPR SEC. 1-1209 STATES THAT "PROCUREMENT" MEANS THE ACQUISITION AND DIRECTLY RELATED MATTERS, FROM NON-FEDERAL SOURCES, OF PERSONAL PROPERTY AND NONPERSONAL SERVICES (INCLUDING CONSTRUCTION) BY SUCH MEANS AS PURCHASING, RENTING, LEASING (INCLUDING REAL PROPERTY), CONTRACTING, OR BARTERING. THUS, UNDER THE ABOVE-CITED REGULATIONS, THE LEASING OF VEHICLES WOULD COME WITHIN THE REQUIREMENT OF THE BUY AMERICAN ACT.

IN OUR OPINION, THE USE OF THE WORD "ACQUIRED" IN FPR SEC. 1-6.102 IS NOT INCONSISTENT WITH SECTION 10D OF TITLE 41, U. S. CODE, AND EXECUTIVE ORDER NO. 10582. CONGRESS IN PASSING THE BUY AMERICAN ACT DESIRED THAT AMERICAN -MADE PRODUCTS BE USED IN GOVERNMENT PROCUREMENT WHERE AVAILABLE. IT IS A WELL-ESTABLISHED RULE OF STATUTORY CONSTRUCTION THAT SINGLE WORDS USED IN A STATUTE MUST BE TAKEN WITH THE CONTEXT AND GENERAL SCOPE AND OBJECT OF THE PROVISION IN ORDER TO ASCERTAIN THE INTENTION OF THE LEGISLATURE. BINNEY V. THE CHESAPEAKE AND OHIO CANAL COMPANY, 8 PET. 201, 8 L. ED. 917. ALTHOUGH THE LEGISLATIVE HISTORY FAILS TO MENTION "LEASES," WE THINK THAT CONGRESS INTENDED THAT AMERICAN-MADE PRODUCTS BE USED IF AVAILABLE WHETHER THESE PRODUCTS ARE OBTAINED BY PURCHASE OR LEASE. VOLUME 76 CONG. REC. 1893 CONTAINS A STATEMENT BY MR. WILSON THAT THE PURPOSE OF H. R. 10743 IS TO ESTABLISH A POLICY BY THE GOVERNMENT ASSURING THE USE OF AMERICAN MATERIALS.

IN THE CASE OF SMULL V. DELANEY, 25 N.Y.S. 2D 387, WHICH YOU CITE, THE COURT STATED THAT THE PROVISION OF THE PUBLIC SERVICE LAW APPLICABLE TO THE CITY OF NEW YORK AUTHORIZING THE BOARD OF TRANSPORTATION TO "PURCHASE" ALL NECESSARY MATERIALS AND SUPPLIES FOR OPERATION OF THE TRANSIT SYSTEM, WHEN READ IN CONNECTION WITH THE WHOLE LAW TO WHICH IT REFERS, DOES NOT INCLUDE THE AUTHORITY TO LEASE. HOWEVER, IN OUR OPINION THE USE OF THE WORD "PURCHASE" IN SECTION 10D OF THE BUY AMERICAN ACT, WHEN READ IN CONNECTION WITH THE STATUTE AS A WHOLE, INCLUDES LEASES.

ACCORDINGLY, THE BUY AMERICAN ACT, AS AMENDED, IS APPLICABLE TO THE LEASING OF VEHICLES. UNDER THE CIRCUMSTANCES, HOWEVER, THE CONCLUSION REACHED NEED NOT BE APPLIED TO EXISTING CONTRACTS BUT ONLY TO FUTURE LEASE AGREEMENTS.