B-135176, MAR. 19, 1958

B-135176: Mar 19, 1958

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TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 7. THE RESOLUTION OF THIS QUESTION IS NECESSARY AS A PREREQUISITE TO MAKING AN AWARD ON INVITATION TO BID NO. 8603 FOR WIRE AND CABLE. THIRTY-THREE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND WERE OPENED ON JANUARY 8. THE LOWEST BID ON GROUP I WAS IN THE AMOUNT OF $77. THE SECOND LOW BIDS WERE TIED IN THE AMOUNT OF $82. WERE SUBMITTED BY STUBBS ELECTRIC COMPANY. BIDDERS WERE ALSO REQUIRED TO SPECIFY THE POINT OF PRODUCTION OF MATERIAL BID UPON. THE STUBBS ELECTRIC COMPANY AND GENERAL CABLE CORPORATION BIDS EACH SPECIFY THAT THE GROUP I ITEMS WILL BE PRODUCED AT THE GENERAL CABLE CORPORATION PLANT AT PERTH AMBOY.

B-135176, MAR. 19, 1958

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 7, 1958, REQUESTING AN ADVANCE DECISION CONCERNING THE PROVISIONS OF EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954. THE RESOLUTION OF THIS QUESTION IS NECESSARY AS A PREREQUISITE TO MAKING AN AWARD ON INVITATION TO BID NO. 8603 FOR WIRE AND CABLE, ISSUED BY THE BONNEVILLE POWER ADMINISTRATION ON DECEMBER 7, 1957.

THIRTY-THREE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND WERE OPENED ON JANUARY 8, 1958. THE SCHEDULE INCLUDED FIVE GROUPS OF ITEMS OF VARIOUS TYPES OF WIRE AND CABLE, AND SPECIFIED THAT AWARD WOULD BE MADE BY GROUP OR AS A WHOLE WHICHEVER PROVES TO BE IN THE BEST INTEREST OF THE GOVERNMENT. NINETEEN OF THE BIDDERS SUBMITTED PRICES ON GROUP I, WHICH INCLUDED 10 ITEMS FOR A TOTAL OF 178,000 FEET OF LEAD SHEATHED, POLYCHLOROPRENE COVERED CONTROL CABLE.

THE LOWEST BID ON GROUP I WAS IN THE AMOUNT OF $77,152 F.O.B. DESTINATION, SUBMITTED BY THE BRITISH INSULATED CALLENDER'S CABLES, LTD., LONDON, ENGLAND, WITH A DISCOUNT OF 1 PERCENT FOR PAYMENT WITHIN THIRTY DAYS. THE SECOND LOW BIDS WERE TIED IN THE AMOUNT OF $82,413 F.O.B. DESTINATION, NET, AND WERE SUBMITTED BY STUBBS ELECTRIC COMPANY, PORTLAND, OREGON, AND GENERAL CABLE CORPORATION, PORTLAND, OREGON.

THE PROVISION ENTITLED "REGULATIONS APPLYING TO DETERMINATIONS UNDER THE "BUY AMERICAN ACT" " ON PAGES 14 AND 15 OF THE SCHEDULE SPECIFIED THAT FOR THE PURPOSE OF "BUY AMERICAN ACT" DETERMINATIONS, 6 PERCENT WOULD BE ADDED TO BIDS OFFERING FOREIGN MATERIALS AND 12 PERCENT WOULD BE ADDED IF THE LOWEST RESPONSIVE BIDDER OFFERING DOMESTIC MATERIALS WOULD PRODUCE SUCH MATERIALS IN AREAS OF SUBSTANTIAL UNEMPLOYMENT AS DETERMINED BY THE SECRETARY OF LABOR. BIDDERS WERE ALSO REQUIRED TO SPECIFY THE POINT OF PRODUCTION OF MATERIAL BID UPON.

THE BRITISH INSULATED CALLENDER'S CABLES BID SPECIFIES THE POINT OF PRODUCTION FOR GROUP I AS LEIGH, LANCS, ENGLAND, THEREBY ESTABLISHING AN INTENT TO FURNISH MATERIALS OF FOREIGN ORIGIN. THE STUBBS ELECTRIC COMPANY AND GENERAL CABLE CORPORATION BIDS EACH SPECIFY THAT THE GROUP I ITEMS WILL BE PRODUCED AT THE GENERAL CABLE CORPORATION PLANT AT PERTH AMBOY, NEW JERSEY.

ADDITION OF A 6 PERCENT DIFFERENTIAL TO THE BRITISH INSULATED CALLENDER'S CABLES BID PRICE RESULTS IN AN EVALUATION AMOUNT OF $80,963.31, WHICH IS LOWER THAN THE LOWEST RESPONSIVE DOMESTIC MATERIAL BIDS OF $82,413. HOWEVER, IF THE LOWEST RESPONSIVE DOMESTIC BIDDER WILL PRODUCE SUBSTANTIALLY ALL MATERIALS IN AREAS OF SUBSTANTIAL UNEMPLOYMENT AND A DIFFERENTIAL OF 12 PERCENT IS ADDED TO THE FOREIGN BID THE EVALUATION AMOUNT BECOMES $85,546.14, WHICH IS HIGHER THAN THE LOW DOMESTIC BIDS.

THE NOVEMBER 1957 LISTING OF "AREAS OF SUBSTANTIAL LABOR SURPLUS" BY THE U.S. DEPARTMENT OF LABOR WAS THE LATEST AVAILABLE LISTING ON THE BID OPENING DATE. THAT LISTING DID NOT INCLUDE PERTH AMBOY, NEW JERSEY. HOWEVER, SINCE IT IS KNOWN THAT THESE LISTINGS ARE PUBLISHED BIMONTHLY THE DEPARTMENT OF LABOR WAS CONTACTED FOR THE LATEST RATING AND YOUR DEPARTMENT WAS ADVISED THAT PERTH AMBOY CONTINUES TO BE RATED GROUP C, NOT CONSIDERED AS AN AREA OF SUBSTANTIAL LABOR SURPLUS FOR "BUY AMERICAN ACT" PURPOSES.

SUBSEQUENT TO BID OPENING A REPRESENTATIVE OF THE GENERAL CABLE CORPORATION VERBALLY ADVISED THE BONNEVILLE POWER ADMINISTRATION THAT IF AWARD IS MADE TO THEM OR TO THE STUBBS ELECTRIC COMPANY THEY WOULD UNDERTAKE TO PRODUCE THE GROUP I ITEMS IN THEIR PLANT AT ROME, NEW YORK, WHICH IS IN THE LABOR CLASSIFICATION AREA OF UTICA-ROME, NEW YORK, DECLARED IN THE JANUARY 1958 DEPARTMENT OF LABOR LISTING TO BE AN AREA OF SUBSTANTIAL LABOR SURPLUS. A WRITTEN REQUEST FOR ADDITION OF THE 12 PERCENT DIFFERENTIAL TO THE FOREIGN BID WAS MADE IN THEIR LETTER OF JANUARY 28, 1958. THE NOVEMBER 1957 LISTING BY THE DEPARTMENT OF LABOR INDICATES A GROUP C RATING FOR UTICA-ROME. THEREFORE, AT A TIME SUBSEQUENT TO THE BID OPENING, BUT PRIOR TO AWARD, THE EFFECTIVE CLASSIFICATION OF THIS AREA BY THE LABOR DEPARTMENT HAS CHANGED. THE REGULATIONS OF THE DEPARTMENT OF THE INTERIOR PROVIDE THAT THE LATEST AVAILABLE UNEMPLOYMENT REPORT OF THE DEPARTMENT OF LABOR AT THE TIME OF AWARD WILL BE USED IN APPLYING "BUY AMERICAN ACT" PERCENTAGES.

THE GENERAL CABLE CORPORATION CONTENDS THAT UNDER THE PROVISIONS OF EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954, THEY HAVE THE RIGHT AT ANY TIME PRIOR TO AWARD TO DESIGNATE THE POINT OF PRODUCTION SO ASTO OBTAIN THE ORDER AND PLACE IT IN A LABOR DISTRESSED AREA. SINCE THE UNEMPLOYMENT REPORT OF THE DEPARTMENT OF LABOR WHICH MUST BE USED IN DETERMINING THE AWARD WAS NOT AVAILABLE ON THE DATE OF BID OPENING, THEY FEEL THEY WERE PLACED IN A DISADVANTAGEOUS AND UNFAIR POSITION AT THE TIME OF BID PREPARATION. IT IS STATED THAT THE PLANT AT ROME, NEW YORK, HAS THE EQUIPMENT AND CAPACITY TO MEET ALL THE REQUIREMENTS OF THE BID PROPOSAL.

THE ACT OF MARCH 3, 1933, 41 U.S.C. 10 (A/-/D), COMMONLY KNOWN AS THE "BUY AMERICAN ACT," PROVIDES THAT PREFERENCE IN THE AWARD OF GOVERNMENT CONTRACTS SHALL BE GIVEN TO DOMESTIC SUPPLIERS AS AGAINST FOREIGN SUPPLIES, UNLESS THE DOMESTIC SUPPLIER'S BID IS UNREASONABLE OR THE AWARD TO HIM WOULD BE INCONSISTENT WITH THE PUBLIC INTEREST. EXECUTIVE ORDER NO. 10582 WAS DESIGNED TO BRING ABOUT THE GREATEST POSSIBLE UNIFORMITY AMONG EXECUTIVE AGENCIES IN APPLYING THE "BUY AMERICAN ACT.' TWO METHODS ARE PROVIDED IN THE ORDER FOR DETERMINING WHETHER THE DOMESTIC SUPPLIER'S BID IS UNREASONABLE. UNDER METHOD APPLICABLE TO THIS CASE THE BID OF A DOMESTIC SUPPLIER IS DEEMED UNREASONABLE IF IT IS GREATER THAN 106 PERCENT OF THE BID OF THE FOREIGN SUPPLIER. ALSO, SECTION 3 (C) OF EXECUTIVE ORDER NO. 10582 PROVIDES:

"SEC. 3. NOTHING IN THIS ORDER SHALL AFFECT THE AUTHORITY OR RESPONSIBILITY OF AN EXECUTIVE AGENCY:

"/C) TO REJECT A BID OR OFFER TO FURNISH MATERIALS OF FOREIGNORIGIN IN ANY SITUATION IN WHICH THE DOMESTIC SUPPLIER OFFERING THE LOWEST PRICE FOR FURNISHING THE DESIRED MATERIALS UNDERTAKES TO PRODUCE SUBSTANTIALLY ALL OF SUCH MATERIALS IN AREAS OF SUBSTANTIAL UNEMPLOYMENT, AS DETERMINED BY THE SECRETARY OF LABOR IN ACCORDANCE WITH SUCH APPROPRIATE REGULATIONS AS HE MAY ESTABLISH AND DURING SUCH PERIOD AS THE PRESIDENT MAY DETERMINE THAT IT IS IN THE NATIONAL INTEREST TO PROVIDE TO SUCH AREAS PREFERENCE IN THE AWARD OF GOVERNMENT CONTRACTS.'

IN ISSUING EXECUTIVE ORDER NO. 10582, THE PRESIDENT ANNOUNCED THAT HE HAD MADE A DETERMINATION THAT IT WAS IN THE NATIONAL INTEREST TO GIVE A PREFERENCE TO DOMESTIC LOW BIDDERS WHO WILL PRODUCE SUBSTANTIALLY ALL OF THE MATERIALS CONTRACTED FOR IN A LABOR SURPLUS AREA. THE EXECUTIVE ORDER DID NOT SPECIFY HOW MUCH "PREFERENCE" OVER AND ABOVE THE INITIAL 6 PERCENT DIFFERENTIAL SHOULD BE APPLIED IN THOSE CASES WHERE THE LOWEST DOMESTIC BIDDER IS TO MANUFACTURE THE GOODS IN A SURPLUS LABOR AREA. THE DEPARTMENT OF THE INTERIOR REGULATIONS ISSUED PURSUANT TO SECTION 4 OF EXECUTIVE ORDER NO. 10582 PROVIDE THAT AN ADDITIONAL 6 PERCENT WILL BE ADDED TO THE INITIAL 6 PERCENT DIFFERENTIAL IN THIS SITUATION. THESE REGULATIONS, OF WHICH ALL BIDDERS WERE NOTIFIED, PROVIDE FURTHER THAT THE LATEST UNEMPLOYMENT REPORT OF THE DEPARTMENT OF LABOR AVAILABLE AT THE TIME THE AWARD IS MADE WILL BE USED IN DETERMINING IF THIS 12 PERCENT DIFFERENTIAL IS FOR APPLICATION.

THE LANGUAGE OF THE EXECUTIVE ORDER, QUOTED ABOVE, SEEMS TO BE SUSCEPTIBLE OF THE INTERPRETATION THAT THE LOWEST DOMESTIC BIDDER MAY AGREE, AFTER OPENING OF BIDS, TO PRODUCE THE MATERIALS BID UPON IN AREAS OF SUBSTANTIAL UNEMPLOYMENT. THERE WAS NO SPECIFIC REQUIREMENT IN THE INVITATION THAT THE BIDDER WOULD BE OBLIGATED TO PRODUCE THE MATERIAL AT THE FACTORY INDICATED IN THE BID, AND THE COST TO THE GOVERNMENT WAS NOT AFFECTED IN ANY MANNER BY THE SELECTION OF THE POINT OF MANUFACTURE SINCE BID PRICES WERE REQUIRED TO THE SUBMITTED F.O.B. DESTINATION. ACCORDINGLY AND SINCE THE DEPARTMENT OF THE INTERIOR REGULATIONS SPECIFICALLY PROVIDE THAT THE LATEST UNEMPLOYMENT REPORT OF THE DEPARTMENT OF LABOR AVAILABLE AT THE TIME THE AWARD IS MADE WILL BE USED IN DETERMINING THE AWARD, IT IS OUR VIEW THAT IN CIRCUMSTANCES SUCH AS INVOLVED IN THIS CASE THE LOW DOMESTIC BIDDER MAY BE PERMITTED AFTER OPENING TO DESIGNATE A POINT OF PRODUCTION OTHER THAN THAT NAMED IN ITS BID IF SUCH SUBSTITUTED POINT IS WITHIN AN AREA OF SUBSTANTIAL LABOR SURPLUS. THE INVITATIONS FOR BIDS ARE RETURNED AS REQUESTED.