B-137189, JANUARY 27, 1959, 38 COMP. GEN. 506

B-137189: Jan 27, 1959

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SHOULD HAVE BEEN ACCEPTED AS THE LOWEST BID UNDER THE INVITATION. 1959: REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 21 AND SEPTEMBER 12. EIGHT BIDS WERE RECEIVED. YOUR BID WAS REJECTED BY THE CONTRACTING OFFICER BECAUSE IT OFFERED A FOREIGN PRODUCT AND AWARD WAS MADE TO THE MCWHYTE COMPANY ON AUGUST 20. WE HAVE BEEN ADVISED THAT DELIVERY OF THE ROPE WAS ACCOMPLISHED ON OCTOBER 2. PAYMENT THEREFOR WAS MADE ON OCTOBER 8. THIS PROCUREMENT WAS EFFECTED BY THE CORPS OF ENGINEERS FOR THE SAINT LAWRENCE SEAWAY DEVELOPMENT CORPORATION AS ITS DESIGNATED CONSTRUCTION AGENT. FUNDS OF THAT CORPORATION WERE OBLIGATED FOR THE PROCUREMENT. AWARD PROPERLY SHOULD HAVE BEEN TO YOU AS THE LOWEST BIDDER UNDER THE INVITATION.

B-137189, JANUARY 27, 1959, 38 COMP. GEN. 506

BIDS - BUY AMERICAN ACT - PRICE DIFFERENTIAL A BID SUBMITTED IN RESPONSE TO AN INVITATION INCORPORATING, BY REFERENCE, THE BUY AMERICAN ACT, WHICH OFFERS AN ITEM OF FOREIGN MANUFACTURE AT A PRICE MORE THAN SIX PERCENT LOWER THAN THE NEXT LOWEST BID WHICH OFFERS AN ITEM OF DOMESTIC MANUFACTURE, COMES WITHIN THE SIX PERCENT PRICE DIFFERENTIAL EXCEPTION TO THE BUY AMERICAN ACT ESTABLISHED BY EXECUTIVE ORDER NO. 10582 AND SECTION 6-104.4 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION AND, THEREFORE, SHOULD HAVE BEEN ACCEPTED AS THE LOWEST BID UNDER THE INVITATION.

TO THE POWELL ANCHOR AND CHAIN COMPANY, JANUARY 27, 1959:

REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 21 AND SEPTEMBER 12, 1958, PROTESTING AGAINST THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS NO. CIVENG-30-023-59-8 FOR A QUANTITY OF WIRE ROPE.

THE INVITATION DATED JULY 30, 1958, REQUESTED BIDS--- TO BE OPENED ON AUGUST 20, 1958--- FOR FOUR LENGTHS OF WIRE ROPE FOR USE ON THE DREDGE PARAISO. EIGHT BIDS WERE RECEIVED, INCLUDING YOUR BID IN THE AMOUNT OF $2,040 FOR ROPE MANUFACTURED IN BELGIUM, AND THE BID OF THE MCWHYTE COMPANY IN THE AMOUNT OF $2,836 FOR FURNISHING DOMESTIC ROPE. YOUR BID WAS REJECTED BY THE CONTRACTING OFFICER BECAUSE IT OFFERED A FOREIGN PRODUCT AND AWARD WAS MADE TO THE MCWHYTE COMPANY ON AUGUST 20, 1958, AS THE LOWEST DOMESTIC BIDDER. WE HAVE BEEN ADVISED THAT DELIVERY OF THE ROPE WAS ACCOMPLISHED ON OCTOBER 2, 1958, AND PAYMENT THEREFOR WAS MADE ON OCTOBER 8, 1958.

THIS PROCUREMENT WAS EFFECTED BY THE CORPS OF ENGINEERS FOR THE SAINT LAWRENCE SEAWAY DEVELOPMENT CORPORATION AS ITS DESIGNATED CONSTRUCTION AGENT, AND FUNDS OF THAT CORPORATION WERE OBLIGATED FOR THE PROCUREMENT. SECTION 4 (A) (9) OF PUBLIC LAW 358, APPROVED MAY 13, 1954, 68 STAT. 92, 94, 33 U.S.C. 984 (A) (9), PROVIDES THAT THE CORPORATION:

(9) SHALL DETERMINE THE CHARACTER OF AND THE NECESSITY FOR ITS OBLIGATIONS AND EXPENDITURES, AND THE MANNER IN WHICH THEY SHALL BE INCURRED, ALLOWED AND PAID, SUBJECT TO PROVISIONS OF LAW SPECIFICALLY APPLICABLE TO GOVERNMENT CORPORATIONS.

WHILE THE INVITATION INCORPORATED BY REFERENCE THE STANDARD BUY AMERICAN ACT, 41 U.S.C. 10A-D, ARTICLE, THE CONTRACTING OFFICER FAILED TO APPLY THE EXCEPTION TO THAT ACT BASED ON THE UNREASONABLENESS OF PRICE OF THE DOMESTIC ARTICLE PURSUANT TO EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954, AND SECTION 6-104.4 (B) OF THE ARMED SERVICES PROCUREMENT REGULATION. HAD THE CONTRACTING OFFICER APPLIED THE 6 PERCENT DIFFERENTIAL FACTOR TO YOUR BID AS REQUIRED BY THE CITED ORDER AND REGULATION, AWARD PROPERLY SHOULD HAVE BEEN TO YOU AS THE LOWEST BIDDER UNDER THE INVITATION.

HOWEVER, WHILE IT IS TRUE THAT UNDER THE TERMS OF THE INVITATION YOU WERE THE ULTIMATE LOWEST BIDDER AND, HENCE, ENTITLED TO AWARD, INASMUCH AS THE CONTRACT NOW HAS BEEN COMPLETED WE BELIEVE THAT NO USEFUL PURPOSE COULD BE SERVED AT THIS TIME IN QUESTIONING THE AWARD AS MADE.

THE MATTER IS BEING BROUGHT TO THE ATTENTION OF THE SECRETARY OF THE ARMY TO PREVENT A REPETITION OF THIS SITUATION WITH THE SUGGESTION THAT PROCUREMENT RESPONSIBILITIES OF THE CORPS OF ENGINEERS WHEN ACTING AS CONSTRUCTION AGENT FOR THE CORPORATION BE RE-EXAMINED IN THE LIGHT OF THIS PROCUREMENT.