B-143026, SEP. 12, 1960

B-143026: Sep 12, 1960

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TO WALTHAM PRECISION INSTRUMENT COMPANY: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 26 AND LETTER DATED MAY 27. YOUR PROTEST WILL BE CONSIDERED ON THE BASIS OF THE PRESENT RECORD. " PROSPECTIVE BIDDERS WERE ADVISED AS FOLLOWS: " "A. AND/OR CONTRACT PRICES OF THE CONTRACT ARE BASED UPON THE EXPECTATION THAT SUCH DOMESTIC JEWEL BEARINGS WILL BE UTILIZED AS PRESCRIBED HEREIN ABOVE.' " "B. IN PLACING ANY SUBCONTRACTS OR PURCHASE ORDERS UNDER THIS CONTRACT WHICH INVOLVE THE UTILIZATION OF JEWEL BEARINGS HE WILL INCLUDE THEREIN APPROPRIATE PROVISIONS TO OBTAIN RIGHTS COMPARABLE TO THOSE GRANTED TO THE GOVERNMENT BY THIS CLAUSE. AGREES THAT HE WILL EXERCISE SUCH RIGHTS FOR THE BENEFIT OF THE GOVERNMENT.

B-143026, SEP. 12, 1960

TO WALTHAM PRECISION INSTRUMENT COMPANY:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF MAY 26 AND LETTER DATED MAY 27, 1960, PROTESTING AGAINST THE AWARD OF A CONTRACT BY THE FRANKFORD ARSENAL, DEPARTMENT OF THE ARMY, PHILADELPHIA, PENNSYLVANIA, TO A FOREIGN COMPANY UNDER INVITATION NO. ORD-36-038-60-M-214, COVERING PROCUREMENT OF A QUANTITY OF AIRCRAFT CLOCKS. IN YOUR LETTER YOU REQUESTED A MEETING WITH REPRESENTATIVES OF THIS OFFICE AND BY LETTER DATED JULY 26, 1960, WE ADVISED YOU THAT WE HAD RECEIVED A REPORT FROM THE DEPARTMENT OF THE ARMY AND THAT IF YOU STILL DESIRED A MEETING RELATIVE TO YOUR PROTEST, YOU SHOULD NOTIFY US AS TO THE TIME YOUR REPRESENTATIVE PLANNED TO CALL AT OUR OFFICE. SINCE NO REPLY HAS BEEN RECEIVED TO OUR LETTER OF JULY 26, 1960, WE ASSUME THAT YOU NO LONGER DESIRE SUCH A MEETING AND, THEREFORE, YOUR PROTEST WILL BE CONSIDERED ON THE BASIS OF THE PRESENT RECORD.

THE INVITATION DATED FEBRUARY 25, 1960, REQUESTED BIDS--- TO BE OPENED MARCH 25, 1960--- FOR FURNISHING AN ESTIMATED QUANTITY OF 5,000 AIRCRAFT CLOCKS, A-11A. ON PAGE 5 OF THE INVITATION, UNDER THE HEADING "JEWEL HEARINGS UTILIZATION," PROSPECTIVE BIDDERS WERE ADVISED AS FOLLOWS:

" "A. THE CONTRACTOR SHALL ACQUIRE FROM THE GOVERNMENT-DESIGNATED DOMESTIC JEWEL BEARINGS FACILITY FOR USE IN CONNECTION WITH THE PERFORMANCE OF THIS CONTRACT, ANY JEWEL BEARINGS DESCRIBED IN THE SCHEDULE OR SPECIFICATIONS NOT DESCRIBED BUT INCLUDED IN THE PRODUCT, OR AS MAY BE REASONABLY REQUESTED BY THE CONTRACTING OFFICER. THE DELIVERY, PERFORMANCE, AND COMPLETION DATES, AND/OR CONTRACT PRICES OF THE CONTRACT ARE BASED UPON THE EXPECTATION THAT SUCH DOMESTIC JEWEL BEARINGS WILL BE UTILIZED AS PRESCRIBED HEREIN ABOVE.'

" "B. THE CONTRACTOR AGREES THAT, IN PLACING ANY SUBCONTRACTS OR PURCHASE ORDERS UNDER THIS CONTRACT WHICH INVOLVE THE UTILIZATION OF JEWEL BEARINGS HE WILL INCLUDE THEREIN APPROPRIATE PROVISIONS TO OBTAIN RIGHTS COMPARABLE TO THOSE GRANTED TO THE GOVERNMENT BY THIS CLAUSE, AND AGREES THAT HE WILL EXERCISE SUCH RIGHTS FOR THE BENEFIT OF THE GOVERNMENT, AS THE CONTRACTING OFFICER MAY DIRECT.'

"THE GOVERNMENT-DESIGNATED JEWEL BEARING FACILITY IS: THE TURTLE MOUNTAIN ORDNANCE PLANT, DIVISION, OF THE BULOVA WATCH CO., INC., ROLLA NORTH DAKOTA, OFFICES, BULOVA WATCH CO. INC., BULOVA PARK, NEW YORK.'

THE INVITATION INCORPORATED BY REFERENCE THE STANDARD BUY AMERICAN ACT ARTICLE. THE BUY AMERICAN ACT, 41 U.S.C. 10A ET SEQ., PROVIDES, IN PERTINENT PART, THAT---

"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 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.'

IN ORDER THAT THE PROVISIONS OF THAT ACT BE UNIFORMLY ADMINISTERED, AND FOR OTHER PURPOSES, THE PRESIDENT OF THE UNITED STATES ISSUED EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954, WHICH IS, IN PERTINENT PART, AS FOLLOWS:

"SEC. 2 (B) FOR THE PURPOSES OF THE SAID ACT OF MARCH 3, 1933, AND OTHER LAWS REFERRED TO IN THE FIRST PARAGRAPH OF THE PREAMBLE OF THIS ORDER, THE BID OR OFFERED PRICE OF MATERIALS OF DOMESTIC ORIGIN SHALL BE DEEMED TO BE UNREASONABLE, OR THE PURCHASE OF SUCH MATERIALS SHALL BE DEEMED TO BE INCONSISTENT WITH THE PUBLIC INTEREST, IF THE BID OR OFFERED PRICE THEREOF EXCEEDS THE SUM OF THE BID OR OFFERED PRICE OF LIKE MATERIALS OF FOREIGN ORIGIN AND A DIFFERENTIAL COMPUTED AS PROVIDED IN SUBSECTION (C) OF THIS SECTION.

"/C) THE EXECUTIVE AGENCY CONCERNED SHALL IN EACH INSTANCE DETERMINE THE AMOUNT OF THE DIFFERENTIAL REFERRED TO IN SUBSECTION (B) OF THIS SECTION ON THE BASIS OF ONE OF THE FOLLOWING-DESCRIBED FORMULAS, SUBJECT TO THE TERMS THEREOF:

(1) THE SUM DETERMINED BY COMPUTING SIX PERCENTUM OF THE BID OR OFFERED PRICE OF MATERIALS OF FOREIGN ORIGIN.'

THE RECORD DISCLOSES THAT YOU WERE THE ONLY DOMESTIC BIDDER AND THAT YOU QUOTED A UNIT PRICE OF $41.745 FOR A CLOCK OF AMERICAN MANUFACTURE, AS COMPARED TO A PRICE OF $14.48 EACH SUBMITTED BY THE LOWEST FOREIGN BIDDER, LONGINES-WITTNAUER WATCH CO., INC., WHO OFFERED A CLOCK CONTAINING A CASE AND MOVEMENT OF SWISS PRODUCTION. PURSUANT TO THE BUY AMERICAN ACT AND THE RELATED EXECUTIVE ORDER, THE FOREIGN BID WAS EVALUATED BY ADDING THERETO THE SIX PERCENT DIFFERENTIAL FIXED BY THE ORDER, RESULTING IN AN ADJUSTED QUOTATION OF $76,744 FOR 5,000 CLOCKS. BY COMPARISON YOUR PROPOSAL EXCEEDED THE FOREIGN BID BY $130,941, OR 186 PERCENT. IT IS REPORTED THAT PURSUANT TO SECTION 2, TITLE III OF THE BUY AMERICAN ACT, AND SECTION 6-104.4 (C) OF THE ARMED SERVICES PROCUREMENT REGULATION, THE ASSISTANT SECRETARY OF THE ARMY DETERMINED THAT THE COST OF SUPPLIES OF DOMESTIC ORIGIN OFFERED BY YOU WAS UNREASONABLE AND HE AUTHORIZED AWARD OF THE CONTRACT TO LONGINES-WITTNAUER WATCH CO., INC. ON JUNE 29, 1960, CONTRACT NO. DA-36 038-ORD-21132M WAS AWARDED TO THAT COMPANY WITH THE ISSUANCE OF TASK ORDER NO. 1 IN THE AMOUNT OF $56,472 FOR 3,900 UNITS.

UNDER THE TERMS OF THE ACT AND EXECUTIVE ORDER, THE COST ELEMENT IS MADE A MATERIAL FACTOR FOR CONSIDERATION IN DETERMINING THE REQUIREMENTS OF THE PUBLIC INTEREST IN SUCH CASES, AND CERTAINLY THE PAYMENT TO A DOMESTIC PRODUCER OF AN AMOUNT EXCEEDING BY 186 PERCENT THE COST OF A FOREIGN PRODUCT, IN THE ABSENCE OF OTHER CONSIDERATIONS NOT PRESENT IN THIS CASE, WOULD, IN OUR OPINION, BE UNWARRANTED. IF, AS YOU CONTEND, THIS PROCUREMENT IS INCONSISTENT WITH THE PUBLIC INTEREST ON OTHER GROUNDS WHICH MIGHT TAKE PRECEDENCE OVER THE UNREASONABLENESS OF YOUR BID, THE DUTY AND AUTHORITY PROVIDED FOR IN THE ACT TO MAKE SUCH FINDING IS VESTED IN THE HEAD OF THE DEPARTMENT OR AGENCY CONCERNED. ALSO, YOUR FURTHER CONTENTION THAT CONTINUED AWARDS TO FOREIGN BIDDERS WILL ADVERSELY AFFECT YOUR BUSINESS AS A MANUFACTURER OF MILITARY CLOCKS IS AN ARGUMENT OF AN ECONOMIC NATURE WHICH CANNOT BE CONSIDERED BY US EXCEPT AS IT MAY BE EMBODIED IN PERTINENT STATUTORY ENACTMENTS.

A FURTHER BASIS FOR YOUR PROTEST IS THAT THE FOREIGN BIDDERS ARE NOT FULLY RESPONSIVE TO ALL OF THE REQUIREMENTS OF THE SUBJECT INVITATION. SUPPORT OF THIS CONTENTION YOU REFER TO THE REQUIREMENT OF THE INVITATION THAT THE JEWEL BEARINGS FOR THE PRODUCT TO BE PRODUCED ARE TO BE PROCURED FROM A GOVERNMENT OPERATED PLANT AT ROLLA, NORTH DAKOTA. IN THAT CONNECTION, IT IS REPORTED THAT NONE OF THE BIDDERS, INCLUDING YOUR COMPANY, RAISED ANY OBJECTIONS OR INDICATED ANY INTENTION TO DEVIATE FROM THE CONTRACTUAL REQUIREMENT OF "JEWEL BEARINGS UTILIZATION," SET OUT AT PAGE 5 OF THE INVITATION. WHILE THE MATTER OF COMPLIANCE WITH SPECIFICATIONS IS PRIMARILY FOR DETERMINATION BY THE CONTRACTING AGENCY WHICH HAS THE RESPONSIBILITY OF ADMINISTERING THE CONTRACT, WE HAVE BEEN ADVISED THAT THE DEPARTMENT HAS ESTABLISHED PROCEDURES TO ASSURE COMPLIANCE WITH THE REQUIREMENT REFERRED TO.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THERE IS NO BASIS UPON WHICH THIS OFFICE CAN PROPERLY OBJECT TO THE ACTION TAKEN BY THE DEPARTMENT OF THE ARMY.