B-122519, MARCH 16, 1955, 34 COMP. GEN. 448

B-122519: Mar 16, 1955

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PURCHASES - BUY AMERICAN ACT - APPLICATION TO LEASED BASES THE BUY AMERICAN ACT WHICH GIVES PREFERENCE TO DOMESTIC PRODUCTION IN GOVERNMENT PROCUREMENT IS NOT FOR APPLICATION IN THE PROCUREMENT OF SUPPLIES FOR USE AT BASES LEASED FROM FOREIGN GOVERNMENTS WHERE THE UNITED STATES DOES NOT HAVE COMPLETE SOVEREIGN CONTROL. 1955: REFERENCE IS MADE TO LETTER OF JANUARY 7. IS APPLICABLE TO THE PROCUREMENT OF SUPPLIES FOR USE IN CONNECTION WITH A PUBLIC WORK AT BASES LEASED BY THE UNITED STATES FROM FOREIGN GOVERNMENTS. THERE WAS FORWARDED WITH THE LETTER A " MEMORANDUM OF LAW" IN WHICH IT IS CONCLUDED THAT THE BUY AMERICAN ACT IS NOT APPLICABLE TO THE LEASED BASES. MATERIALS AND SUPPLIES AS HAVE BEEN MINED OR PRODUCED IN THE UNITED STATES.

B-122519, MARCH 16, 1955, 34 COMP. GEN. 448

PURCHASES - BUY AMERICAN ACT - APPLICATION TO LEASED BASES THE BUY AMERICAN ACT WHICH GIVES PREFERENCE TO DOMESTIC PRODUCTION IN GOVERNMENT PROCUREMENT IS NOT FOR APPLICATION IN THE PROCUREMENT OF SUPPLIES FOR USE AT BASES LEASED FROM FOREIGN GOVERNMENTS WHERE THE UNITED STATES DOES NOT HAVE COMPLETE SOVEREIGN CONTROL.

COMPTROLLER GENERAL CAMPBELL TO THE SECRETARY OF THE NAVY, MARCH 16, 1955:

REFERENCE IS MADE TO LETTER OF JANUARY 7, 1955, FROM THE ASSISTANT SECRETARY OF THE NAVY ( MATERIAL), STATING THAT QUESTION HAS ARISEN WHETHER THE SO-CALLED BUY AMERICAN ACT, 47 STAT. 1520, AS AMENDED, 41 U.S.C. 10A ET SEQ., IS APPLICABLE TO THE PROCUREMENT OF SUPPLIES FOR USE IN CONNECTION WITH A PUBLIC WORK AT BASES LEASED BY THE UNITED STATES FROM FOREIGN GOVERNMENTS. THERE WAS FORWARDED WITH THE LETTER A " MEMORANDUM OF LAW" IN WHICH IT IS CONCLUDED THAT THE BUY AMERICAN ACT IS NOT APPLICABLE TO THE LEASED BASES, AND THE ASSISTANT SECRETARY REQUESTS AN OPINION AS TO THE CORRECTNESS OF THAT CONCLUSION.

SECTION 2 OF THE ACT, 47 STAT. 1520, 41 U.S.C. 10A, PROVIDES, IN PERTINENT PART, THAT---

NOTWITHSTANDING ANY OTHER PROVISION OF LAW * * * ONLY SUCH UNMANUFACTURED 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 * * * SHALL BE ACQUIRED FOR PUBLIC USE. THIS SECTION SHALL NOT APPLY WITH RESPECT TO ARTICLES, MATERIALS, OR SUPPLIES FOR USE OUTSIDE THE UNITED STATES. * *

SECTION 3 OF THE ACT, 47 STAT. 1520, 1521, CONTAINS SIMILAR REQUIREMENTS FOR CONTRACTS FOR PUBLIC WORKS AND BUILDINGS, AND THE TERM " UNITED STATES" AND THE TERMS "PUBLIC USE," "PUBLIC BUILDING," AND "PUBLIC WORK" ARE DEFINED IN SECTION 1 OF THE ACT AS FOLLOWS:

(A) THE TERM " UNITED STATES," WHEN USED IN A GEOGRAPHICAL SENSE, INCLUDES THE UNITED STATES AND ANY PLACE SUBJECT TO THE JURISDICTION THEREOF:

(B) THE TERMS "PUBLIC USE," "PUBLIC BUILDING," AND "PUBLIC WORK" SHALL MEAN USE BY, PUBLIC BUILDING OF, AND PUBLIC WORK OF, THE UNITED STATES, THE DISTRICT OF COLUMBIA, HAWAII, ALASKA, PUERTO RICO, AMERICAN SAMOA, THE CANAL ZONE, AND THE VIRGIN ISLANDS.

IN VIEW OF THE DEFINITION IN THE ACT GIVEN TO THE TERM " UNITED STATES" THE QUESTION WHETHER THE ACT IS APPLICABLE TO THE LEASED BASES DEPENDS UPON WHETHER SUCH BASES ARE PLACES SUBJECT TO THE JURISDICTION OF THE UNITED STATES. NO DEFINITION OF THE TERM "JURISDICTION" IS CONTAINED IN THE ACT AND, LIKE MANY OTHER WORDS IN GENERAL USE, IT HAS BEEN GIVEN DIFFERENT MEANINGS, DEPENDENT UPON THE CONNECTION IN WHICH IT IS FOUND AND THE SUBJECT MATTER TO WHICH IT IS DIRECTED. SEE COMMONWEALTH V. BREAKWATER COMPANY, 100 N.E. ( MASS.) 1034, AND VERMILYA-BROWN V. CONNELL, 335 U.S. 377. CONSEQUENTLY, AND SINCE THE COURTS HAVE NOT CONSIDERED THE SCOPE OF THE GEOGRAPHICAL APPLICABILITY OF THE BUY AMERICAN ACT, IT IS APPARENT THAT THOSE COURT CASES WHICH INVOLVE AN INTERPRETATION OF THE TERM "JURISDICTION" AS USED IN OTHER STATUTES WOULD BE OF LITTLE USE IN DISPOSING OF THE QUESTION HERE INVOLVED. ACCORDINGLY, THE MEANING OF THAT TERM AS USED IN THE BUY AMERICAN ACT MUST BE DETERMINED FROM THE LANGUAGE OF THE STATUTE AND ITS PURPOSE AS DISCLOSED BY ITS LEGISLATIVE HISTORY.

WITH RESPECT TO THE LEGISLATION HERE INVOLVED, IT IS STATED IN HOUSE REPORT 882, 72D CONGRESS, ST SESSION, THAT---

THE BILL REQUIRES THAT THE UNITED STATES AND ITS TERRITORIES AND POSSESSIONS SHALL PURCHASE THE PRODUCTS OF THE INDUSTRIES, MINES, FORESTS, AND AGRICULTURE OF THE UNITED STATES AND ITS TERRITORIES AND POSSESSIONS, AND THAT SUCH PRODUCTS SHALL BE USED BY CONTRACTORS IN THE CONSTRUCTION, ALTERATION, OR REPAIR OF PUBLIC BUILDINGS, AND WORKS OF THE UNITED STATES AND ITS TERRITORIES AND POSSESSIONS. IT DOES NOT APPLY TO USES OR TO BUILDINGS AND WORKS OUTSIDE THE JURISDICTION OF THE UNITED STATES.

SECTION 1 OF THE BILL SETS FORTH DEFINITIONS OF THE TERMS USED IN THE BILL. UNITED STATES IS DEFINED SO AS TO INCLUDE THE CONTINENTAL UNITED STATES AND ALL PLACES SUBJECT TO THE JURISDICTION THEREOF. THE TERMS "PUBLIC USE," "PUBLIC BUILDING," AND "PUBLIC WORK" ARE DEFINED SO AS TO INCLUDE USES BY AND BUILDINGS AND WORKS OF ALL THE GOVERNMENTAL UNITS SUBJECT TO THE CONTROL OF THE LEGISLATIVE POWER OF CONGRESS. * * *

IT IS THUS CLEAR THAT THE PRIMARY, IF NOT THE SOLE, PURPOSE OF THE LEGISLATION WAS TO GIVE PREFERENCE TO DOMESTIC PRODUCTION OVER FOREIGN COMPETITION IN FILLING GOVERNMENT PROCUREMENT NEEDS.

TO CARRY OUT SUCH PURPOSE THE ACT PROVIDES, IN EFFECT, THAT ONLY "MANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES" PRODUCED IN THE UNITED STATES SHALL BE ACQUIRED FOR PUBLIC USE IN THE UNITED STATES, AND THAT THE ACT SHOULD NOT APPLY IF THE SUPPLIES AND MATERIALS ARE FOR USE "OUTSIDE THE UNITED STATES.'

AS POINTED OUT IN THE MEMORANDUM FORWARDED BY THE ASSISTANT SECRETARY, THE SENTENCE WHICH SETS FORTH THE APPLICABILITY OF THE ACT AND THE SENTENCE WHICH SETS FORTH THE NONAPPLICABILITY OF THE ACT BOTH USE THE WORD " UNITED STATES" IN A GEOGRAPHICAL SENSE AND, THEREFORE, BOTH MUST BE CONSTRUED IN THE SAME MANNER. IT THUS FOLLOWS THAT ANY AREA OF THE WORLD CONSTRUED TO COME WITHIN THE MEANING OF THE PHRASE " UNITED STATES AND ANY PLACE SUBJECT TO THE JURISDICTION THEREOF" WOULD BE ENTITLED TO ALL THE PROTECTION OR PREFERENCE AFFORDED BY THE ACT. IN OTHER WORDS, THE PURCHASING ACTIVITIES OF THE GOVERNMENT WOULD BE REQUIRED TO CONSIDER BIDS FROM SOURCES WITHIN SUCH AREAS ON AN EQUAL FOOTING WITH AND IN COMPETITION WITH BIDS FROM BIDDERS WITHIN THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS. IN VIEW THEREOF, IT SEEMS CLEAR THAT TO CONSTRUE THE PHRASE "THE UNITED STATES AND ANY PLACE SUBJECT TO THE JURISDICTION THEREOF" AS MEANING AN AREA, OTHER THAN THAT OVER WHICH THE UNITED STATES HAD COMPLETE SOVEREIGN JURISDICTION IN THE FULLEST SENSE, WOULD RESULT IN INCREASING COMPETITION FOR AMERICAN INDUSTRY RATHER THAN AFFORDING IT THE PROTECTION CLEARLY INTENDED BY THE STATUTE. TO APPLY THE PROVISIONS OF THE ACT TO AREAS OVER WHICH THE UNITED STATES HAS LIMITED JURISDICTION WOULD BE TO BRING WITHIN THE SCOPE OF THE ACT SUCH AREAS AS OCCUPIED COUNTRIES, WHICH WOULD OFFER SERIOUS COMPETITION TO AMERICAN INDUSTRY.

IT WOULD THEREFORE SEEM LOGICAL TO VIEW THE LANGUAGE "JURISDICTION OF THE UNITED STATES" AS GEARING THE COVERAGE OF THE ACT TO THE SOVEREIGNTY OF THE UNITED STATES. WHETHER MILITARY BASES LEASED FROM FOREIGN SOVEREIGNS ARE PLACES SUBJECT TO THE JURISDICTION OF THE UNITED STATES--- THAT IS, WHETHER THE UNITED STATES MAY EXERCISE COMPLETE SOVEREIGN CONTROL OVER SUCH AREAS--- WOULD APPEAR TO DEPEND UPON THE TERMS OF THE VARIOUS AGREEMENTS UNDER WHICH THE BASES WERE ACQUIRED.

THE AUTHORITY GRANTED THE UNITED STATES UNDER THE TERMS OF THE SEVERAL AGREEMENTS RELATING TO THE LEASED BASES VARIES CONSIDERABLY. IT IS STATED IN THE MEMORANDUM, HOWEVER, THAT SOVEREIGNTY IS NOT INVOLVED IN THE LEASES ENTERED INTO AFTER 1941 AND THAT, EXCEPT FOR THE CANAL ZONE (AND POSSIBLY GUANTANAMO BAY), THE VARIOUS AGREEMENTS GIVE THE UNITED STATES NO LEGISLATIVE OR SOVEREIGN JURISDICTION OVER MILITARY BASES LEASED FROM FOREIGN SOVEREIGNS. THE UNITED STATES APPEARS TO HAVE BEEN GRANTED BROAD AUTHORITY IN THE AGREEMENT COVERING THE NAVAL BASE AT GUANTANAMO BAY, CUBA, IN WHICH THIS GOVERNMENT IS GIVEN ALL "SOVEREIGN" RIGHTS, POWER, AND AUTHORITY OVER THE BASE. HOWEVER, THE JURISDICTION OF THE UNITED STATES IS NOT UNLIMITED EVEN HERE SINCE THE BASE MAY BE USED ONLY FOR THE PURPOSE SPECIFIED AND THE UNITED STATES IS BOUND TO PERMIT NO ONE TO ESTABLISH OR MAINTAIN COMMERCIAL, INDUSTRIAL, OR OTHER ENTERPRISES THEREIN. SEE 35 OP. ATTY. GEN. 536. THE BERMUDA AGREEMENT (55 STAT. 1560, 1572) PROVIDES FOR THE "LEASE FOR IMMEDIATE ESTABLISHMENT AND USE OF NAVAL AND AIR BASES" AND FOR SUCH POWERS AND AUTHORITY AS ARE NECESSARY OR APPROPRIATE FOR THEIR ESTABLISHMENT, USE, OPERATION, DEFENSE, AND CONTROL. WITH RESPECT TO THE UNITED STATES LEASED BASE IN BERMUDA, THE COURT IN THE VERMILYA BROWN CASE, CITED ABOVE, IN CONSIDERING THE TERMS OF THE LEASE AGREEMENT, STATED THAT IT WAS CLEAR THAT THE UNITED STATES EXERCISED NO SOVEREIGNTY OVER THE BASE. IT THUS APPEARS THAT THE UNITED STATES DOES NOT HAVE COMPLETE SOVEREIGN CONTROL OVER THE LEASED BASES AS SEEMS TO BE REQUIRED BY A PROPER CONSTRUCTION OF THE TERM "JURISDICTION.'

IT IS STATED BY THE ASSISTANT SECRETARY THAT THE MILITARY DEPARTMENTS HAVE CONSISTENTLY CONSTRUED THE PROVISIONS OF THE BUY AMERICAN ACT AS NOT APPLYING TO THE PROCUREMENT OF SUPPLIES FOR USE AT BASES LEASED BY THE UNITED STATES FROM FOREIGN GOVERNMENTS AND, IN SUPPORT OF THIS POSITION, REFERENCE IS MADE IN THE ACCOMPANYING MEMORANDUM TO THAT PART OF HOUSE REPORT 882, QUOTED ABOVE. THE CONCLUSIONS DRAWN THEREFROM ARE SET FORTH IN THE MEMORANDUM AS FOLLOWS:

THE ABOVE QUOTED REPORT INDICATES THAT THE ACT WAS INTENDED TO MEAN "THAT THE UNITED STATES AND ITS TERRITORIES AND POSSESSIONS (AS GOVERNING ENTITIES) SHALL PURCHASE THE PRODUCTS . . . OF THE UNITED STATES AND ITS TERRITORIES AND POSSESSIONS (AS GEOGRAPHICAL AREA)...' ( BRACKETED MATERIAL ADDED). SINCE THE ACT IN SECTION 10C (B) DEFINES THE GOVERNMENTAL ENTITIES TO WHICH THE ACT IS APPLICABLE AS BEING THE UNITED STATES, THE DISTRICT OF COLUMBIA, HAWAII, ALASKA, PUERTO RICO, AMERICAN SAMOA, THE CANAL ZONE, AND THE VIRGIN ISLANDS, IT MAY BE CONCLUDED THAT SUCH ENTITIES ARE THE SAME AS THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS REFERRED TO IN THE REPORTS. THE REPORTS ALSO STATE THAT "THE TERMS "PUBLIC USE," "PUBLIC BUILDING," AND "PUBLIC WORKS" ARE DEFINED SO AS TO INCLUDE USES BY ... ALL THE GOVERNMENTAL UNITS SUBJECT TO THE CONTROL OF THE LEGISLATIVE POWER OF CONGRESS.' HENCE, IT MAY ALSO BE CONCLUDED THAT THE CONGRESS THOUGHT OF THE NAMED TERRITORIES AND POSSESSIONS AS CONSTITUTING ALL THE GOVERNMENTAL UNITS SUBJECT TO THE LEGISLATIVE POWER OF CONGRESS. IT THEREFORE, ALSO FOLLOWS THAT THE PHRASE "ANY PLACE SUBJECT TO THE JURISDICTION" OF THE UNITED STATES MEANS ANY PLACE SUBJECT TO THE LEGISLATIVE POWER OF CONGRESS, I. E., THE NAMED TERRITORIES AND

THE DEPARTMENT OF DEFENSE, AND PRIOR THERETO THE DEPARTMENTS OF WAR AND NAVY, APPARENTLY INTERPRETING THE ABOVE-QUOTED PORTION OF THE CONGRESSIONAL REPORTS IN THE SAME MANNER, CONCLUDED THAT THE ACT WAS INTENDED TO BE LIMITED TO THE UNITED STATES AND THOSE TERRITORIES AND POSSESSIONS NAMED IN THE ACT. SUCH CONCLUSION IS EVIDENCED BY THE FACT THAT THE PORTION OF THE ARMED SERVICES PROCUREMENT REGULATION SETTING FORTH THE GEOGRAPHICAL APPLICABILITY OF THE ACT PROVIDES AS FOLLOWS:

"6-103.3 GEOGRAPHICAL APPLICATION.

"THE BUY AMERICAN ACT APPLIES ONLY TO (I) SUPPLIES FOR PUBLIC USE WITHIN THE UNITED STATES AND (II) CONSTRUCTION WORK ON PUBLIC BUILDINGS OR PUBLIC WORKS WITHIN THE UNITED STATES. AS USED IN THE BUY AMERICAN ACT AND IN THIS SECTION, THE TERM " UNITED STATES" INCLUDES THE UNITED STATES, ITS TERRITORIES AND POSSESSIONS.'

IN VIEW OF THE PURPOSE OF THE ACT AS PREVIOUSLY SET FORTH, THE NATURE OF THE LEASE AGREEMENTS, AND THE EXPLANATION GIVEN ABOVE, IT DOES NOT APPEAR THAT THE ADMINISTRATIVE INTERPRETATION OF THE TERM " UNITED STATES AND ANY PLACE SUBJECT TO THE JURISDICTION THEREOF," INSOFAR AS THE LEASED BASES ARE CONCERNED, IS UNREASONABLE OR CONTRARY TO THE LETTER OR SPIRIT OF THE ACT. FURTHER, IT MUST BE PRESUMED THAT THE CONGRESS HAS BEEN AWARE OF THE MANNER IN WHICH THE ACT HAS BEEN CONSTRUED ADMINISTRATIVELY AND IT IS NOTED THAT NO ATTEMPT HAS BEEN MADE TO BROADEN THE GEOGRAPHICAL SCOPE OF THE ACT EVEN THOUGH THE ORIGINAL INTENT OF THE CONGRESS HAS IN CERTAIN OTHER RESPECTS BEEN CLARIFIED. SEE SECTION 633 OF THE NATIONAL MILITARY ESTABLISHMENT APPROPRIATION ACT, 1950, 63 STAT. 1024. SEE ALSO THE ACT OF AUGUST 16, 1941, 55 STAT. 622, AS AMENDED, 42 U.S.C. 1651, WHEREIN THE BASES LEASED AFTER JANUARY 1, 1940, AND THE BASE AT GUANTANAMO BAY ARE SPECIFICALLY COVERED BY THE LONGSHOREMEN'S AND HARBOR WORKERS' COMPENSATION ACT.

FOR THE FOREGOING REASONS, WE AGREE THAT THE ACT IS NOT FOR APPLICATION IN THE PROCUREMENT OF MATERIALS AND SUPPLIES FOR USE AT LEASED BASES.