B-128915, OCTOBER 18, 1956, 36 COMP. GEN. 323

B-128915, OCTOBER 18, 1956, 36 COMP. GEN. 323

CONTRACTS - BUY AMERICAN ACT - FOREIGN PRODUCT DETERMINATION AN ITEM TO BE FURNISHED THE GOVERNMENT BY A LOW BIDDER, WHO INDICATES THAT THE COST OF THE FOREIGN PRODUCTS USED IN THE MANUFACTURE OF THE ITEM IS 47.34 PERCENT OF THE TOTAL COST, IS OF DOMESTIC MANUFACTURE WITHIN THE PURVIEW OF EXECUTIVE ORDER NO. 10582, WHICH DEFINES, FOR BUY AMERICAN ACT PURPOSES, PRODUCTS AS FOREIGN IF THE FOREIGN MATERIALS CONSTITUTE 50 PERCENT OR MORE OF THE COST OF ALL PRODUCTS USED IN THE MANUFACTURE OF THE ITEM, AND, THEREFORE, AN AWARD TO THE LOW BIDDER WOULD NOT BE IN VIOLATION OF THE BUY AMERICAN ACT. ALTHOUGH PROSPECTIVE BIDDERS WERE NOT APPRISED IN AN INVITATION OF THE ADMINISTRATIVE INTERPRETATION OF THE BUY AMERICAN ACT, THE PUBLICATION IN THE FEDERAL REGISTER OF EXECUTIVE ORDER NO. 10582, WHICH DEFINED FOREIGN PRODUCTS TO INSURE UNIFORM DETERMINATIONS UNDER THE ACT, CONSTITUTED PUBLIC NOTICE OF ITS CONTENTS TO ALL BIDDERS.

TO SOCIETY BRAND HAT COMPANY, OCTOBER 18, 1956:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 9, AUGUST 13, AND SEPTEMBER 11, 1956, PROTESTING THE PROPOSED AWARD BY THE CONTRACTING OFFICER FOR THE PHILADELPHIA QUARTERMASTER DEPOT OF A CONTRACT FOR SERVICE CAPS TO THE BANCROFT CAP COMPANY UNDER INVITATION FOR BIDS NO. QM36-030-56 -771 ISSUED JUNE 8, 1956.

THE INVITATION REFERRED TO CALLED FOR QUOTATIONS ON 10,008 SERVICE CAPS, FUR FELT, AG-244, FIELD GRADE OFFICER, AND 50,004 CAPS, SERVICE, FUR FELT, AG-244, COMPANY GRADE OFFICER, DESIGNATED ITEMS NOS. 1 AND 2, RESPECTIVELY. UPON OPENING OF THE BIDS ON JULY 2, 1956, IT WAS FOUND THAT SIX FIRMS SUBMITTED BIDS UNDER THE INVITATION. UNDER ITEM NO. 1 THE BANCROFT CAP COMPANY SUBMITTED THE LOWEST UNIT BID PRICE OF $14.11 FOR THE FIRST 5,000 AND $14.86 FOR THE REMAINING 5,008; THE IDEAL UNIFORM CAP COMPANY SUBMITTED THE SECOND LOWEST UNIT PRICE BID OF $17.30 ON THE TOTAL QUANTITY SPECIFIED, AND THE THIRD LOWEST UNIT BID PRICE OF $17.99 WAS SUBMITTED BY THE SOCIETY BRAND HAT COMPANY.

IT APPEARS THAT THE MANUFACTURE OF THE FIELD GRADE OFFICERS' SERVICE CAPS, AS DESCRIBED OPPOSITE ITEM NO. 1 OF THE INVITATION, REQUIRES A DESIGN OF GOLD TO BE EMBROIDERED ON THE CAP VISOR, AND THAT THE BANCROFT CAP COMPANY CONTEMPLATES HAVING THIS EMBROIDERY WORK PERFORMED BOTH IN HONG KING, CHINA, AND JAPAN. HENCE, IT IS CONTENDED BY YOU THAT ANY AWARD TO THAT FIRM WOULD BE VIOLATIVE OF THE ACT OF MARCH 3, 1933, 47 STAT. 1520, AS AMENDED, 41 U.S.C. I0A-D, OTHERWISE KNOWN AS THE BUY-AMERICAN ACT, AND CONTRARY TO THE PROVISIONS OF PARAGRAPH 51 OF THE ADDITIONAL GENERAL PROVISIONS OF THE INVITATION WHICH READ, IN PERTINENT PART:

51. BUY AMERICAN ACT. REPLACES GENERAL PROVISION NO. 14 STANDARD FORM 32) THE CONTRACTOR AGREES THAT THERE WILL BE DELIVERED UNDER THIS CONTRACT * * * ONLY SUCH MANUFACTURED SUPPLIES AS HAVE BEEN MANUFACTURED IN THE UNITED STATES SUBSTANTIALLY ALL FROM SUPPLIES MINED, PRODUCED, OR MANUFACTURED AS THE CASE MAY BE, IN THE UNITED STATES. * * *

IN RESPONSE TO OUR REQUEST FOR A COMPLETE ADMINISTRATIVE INVESTIGATION INTO THE FACTS SURROUNDING THIS PROPOSED AWARD, WE HAVE RECEIVED FROM THE QUARTERMASTER GENERAL OF THE UNITED STATES ARMY A REPORT, IN PART AS FOLLOWS:

4. THE ONLY DIFFERENCE BETWEEN THE FIELD GRADE AND COMPANY CAPS IS THAT THE FIELD GRADE CAP REQUIRES A DESIGN OF GOLD TO BE EMBROIDERED ON THE CAP VISOR. THE BASIC CONTENTION OF THE PROTESTANTS IS THAT SINCE THE BANCROFT CAP COMPANY CONTEMPLATES HAVING THIS EMBROIDERY WORK PERFORMED IN HONG KONG AND JAPAN, ANY AWARD TO THAT FIRM WOULD BE VIOLATIVE OF THE BUY- AMERICAN ACT. ALL BIDDERS INDICATED THAT THEY WOULD PROCURE THE NECESSARY GOLD BULLION FROM FOREIGN SOURCES, PRINCIPALLY ENGLAND AND FRANCE. THE BANCROFT CAP COMPANY ADVISED THE PHILADELPHIA QUARTERMASTER DEPOT THAT ITS BID WAS ALSO BASED UPON HAVING THE EMBROIDERY WORK PERFORMED IN HONG KONG AND JAPAN, AND STATED THAT THE COST OF THESE FOREIGN ELEMENTS WOULD COMPRISE 48 PERCENT OF THE TOTAL COST OF ALL PRODUCTS IN THE CAP. UPON REQUEST OF THE PHILADELPHIA QUARTERMASTER DEPOT, THE BANCROFT CAP COMPANY SUBMITTED A DETAILED BREAKDOWN OF THE MATERIAL COSTS TO BE INCURRED BY IT IF AWARDED A CONTRACT FOR THE SUPPLY OF THIS ITEM. THIS COST BREAKDOWN, WHICH DOES NOT INCLUDE THE COST OF THE CHIN STRAPS ($3.50) AND OTHER MISCELLANEOUS MATERIALS ($0.30) TO BE FURNISHED BY THE GOVERNMENT, INDICATES THAT BANCROFT WILL INCUR A TOTAL COST OF $8.661 FOR SUPPLIES TO BE USED IN THE MANUFACTURE OF THIS CAP. OF THIS TOTAL AMOUNT $4.561 WILL BE EXPENDED FOR SUPPLIES OF DOMESTIC ORIGIN AND THE REMAINING $4.10 WILL BE EXPENDED IN PROCUREMENT OF THE GOLD BULLION AND EMBROIDERY WORK, BOTH OF FOREIGN ORIGIN. ON THE BASIS OF THIS COST BREAKDOWN, THE COST OF THE FOREIGN PRODUCTS USED WILL CONSTITUTE 47.34 PERCENT OF THE COST OF ALL PRODUCTS USED BY THE BANCROFT CAP COMPANY IN THE MANUFACTURE OF THIS ITEM. EXECUTIVE ORDER NO. 10582, 19 F.R. 8723, 17 DECEMBER 1954, PROVIDES THAT MATERIALS, WHICH INCLUDES ARTICLES AND SUPPLIES, ARE NOT TO BE CONSIDERED AS OF FOREIGN ORIGIN UNLESS THE COST OF THE FOREIGN PRODUCTS USED IN SUCH MATERIALS CONSTITUTES 50 PERCENT OR MORE OF THE COST OF ALL THE PRODUCTS USED IN SUCH MATERIALS. THIS DEFINITION OF MATERIALS OF FOREIGN ORIGIN WAS PROMULGATED IN THE EXECUTIVE ORDER TO INSURE UNIFORM DETERMINATIONS UNDER THAT PORTION OF THE BUY-AMERICAN ACT PERMITTING THE ACQUISITION FOR PUBLIC USE OF 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. BY APPLYING THE EXECUTIVE ORDER DEFINITION OF MATERIALS OF FOREIGN ORIGIN TO THE BILL OF MATERIALS SUBMITTED BY THE BANCROFT CAP COMPANY, IT IS SEEN THAT THE CAPS OFFERED BY BANCROFT ARE ARTICLES 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. BY APPLYING THE EXECUTIVE ORDER DEFINITION OF MATERIALS OF FOREIGN ORIGIN TO THE BILL OF MATERIALS SUBMITTED BY THE BANCROFT CAP COMPANY, IT IS SEEN THAT THE CAPS OFFERED BY BANCROFT ARE ARTICLES MANUFACTURED IN THE UNITED STATES SUBSTANTIALLY ALL FROM ARTICLES, MATERIALS, OR SUPPLIES, MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES, AND AS SUCH ARE NOT PROHIBITED BY THE BUY-AMERICAN ACT FROM PROCUREMENT FOR PUBLIC USE.

THUS, IT WILL BE SEEN THAT THE ACTION OF THE CONTRACTING OFFICER IN CONSIDERING FOR AWARD THE PROPOSAL OF THE BANCROFT CAP COMPANY WAS NOT PREDICATED SOLELY UPON CHANGE NO. 9, ARMY PROCUREMENT PROCEDURES, DATED MARCH 3, 1955, AS HIS LETTER OF AUGUST 6, 1956, TO YOU, WOULD INDICATE, BUT UPON CERTAIN PERTINENT PROVISIONS OF EXECUTIVE ORDER NO. 10582 WHICH WERE DESIGNED SPECIFICALLY TO CLARIFY THE ISSUE OF WHETHER GOODS OR SUPPLIES OFFERED FOR SALE TO THE GOVERNMENT ARE OR ARE NOT OF FOREIGN ORIGIN, WITHIN THE CONTEMPLATION OF THE STATUTE. SINCE, ACCORDING TO THE FORMULA PRESCRIBED BY THE PRESIDENT IN THE EXECUTIVE ORDER CITED, THE CAPS PROPOSED TO BE FURNISHED BY THE BANCROFT CAP COMPANY ARE OF DOMESTIC MANUFACTURE, WITHIN THE MEANING OF THE BUY AMERICAN ACT, AND ALSO OF PARAGRAPH 51 OF THE ADDITIONAL GENERAL PROVISIONS OF THE INVITATION, THERE EXISTS NO LEGAL OR PROPER BASIS UPON WHICH WE COULD OBJECT TO THE PROPOSED AWARD.

AS TO THE CONTENTION THAT THE INVITATION FAILED PROPERLY TO APPRISE PROSPECTIVE BIDDERS OF THE ADMINISTRATIVE INTERPRETATION OF THE BUY AMERICAN ACT, WE ARE CONSTRAINED TO HOLD THAT, SINCE EXECUTIVE ORDER NO. 10582 WAS DULY PUBLISHED IN THE FEDERAL REGISTER ACCORDING TO LAW, ALL BIDDERS MUST BE CONSIDERED TO HAVE BEEN ON NOTICE OF ITS CONTENTS. SEE FEDERAL CROP INSURANCE CORP. V. MERRILL, 332 U.S. 380.

ACCORDINGLY, UPON THE RECORD, WE MUST CONCLUDE THAT THERE IS NO LEGAL JUSTIFICATION FOR ANY ACTION BY OUR OFFICE UPON YOUR PROTEST.

REFERRING TO YOUR REQUEST FOR INFORMATION AS TO YOUR RIGHTS OF APPEAL, YOU ARE ADVISED THAT WE ARE AWARE OF NO OTHER ADMINISTRATIVE REMEDIES AVAILABLE TO YOU.