B-144058, DEC. 7, 1960

B-144058: Dec 7, 1960

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IT WAS INDICATED THAT POST PURCHASES HAVE BEEN MADE THROUGH COMPETITIVE BID PROCEDURES. NOW IT IS ADMINISTRATIVELY DETERMINED THAT THE PURCHASE OF ORIGINAL EQUIPMENT MANUFACTURERS' PARTS FROM THE FEDERAL SUPPLY SCHEDULE WOULD BE JUSTIFIED. IT IS REPORTED THAT THE PURCHASE OF REPLACEMENT PARTS FROM THE FEDERAL SUPPLY SCHEDULE WILL ACCOMPLISH A SAVINGS OF AN ESTIMATED THREE TO FIVE PERCENT. 000 WHICH WILL EXTEND OVER A FOUR TO EIGHT MONTH PERIOD. THAN IS PRESENTLY AVAILABLE TO US. THESE ARE PRIMARILY MATTERS FOR ADMINISTRATIVE DETERMINATION ON WHICH WE ARE NOT NOW IN A POSITION TO EXPRESS A DEFINITE OPINION. UNDER THE CURRENT APPLICABLE FEDERAL SUPPLY SCHEDULE COVERING THE PURCHASE OF REPAIR PARTS FROM THE ORIGINAL EQUIPMENT MANUFACTURERS THE DETERMINATION TO USE THE SCHEDULE FOR PURCHASES IN EXCESS OF THE OPEN MARKET LIMITATION IS LEFT TO THE ADMINISTRATIVE DISCRETION OF THE USING AGENCY.

B-144058, DEC. 7, 1960

TO THE SECRETARY OF COMMERCE:

BY LETTER OF SEPTEMBER 22, 1960, THE ASSISTANT SECRETARY FOR ADMINISTRATION FURNISHED FOR OUR CONSIDERATION A JUSTIFICATION PREPARED BY THE BUREAU OF PUBLIC BONDS FOR THE PROPOSED PURCHASE OF ROAD BUILDING- EQUIPMENT REPLACEMENT PARTS FROM THE FEDERAL SUPPLY SCHEDULE ON BEHALF OF CERTAIN FOREIGN GOVERNMENTS RECEIVING TECHNICAL ASSISTANCE FROM THE BUREAU.

IT WAS INDICATED THAT POST PURCHASES HAVE BEEN MADE THROUGH COMPETITIVE BID PROCEDURES, BUT NOW IT IS ADMINISTRATIVELY DETERMINED THAT THE PURCHASE OF ORIGINAL EQUIPMENT MANUFACTURERS' PARTS FROM THE FEDERAL SUPPLY SCHEDULE WOULD BE JUSTIFIED. IN STATING THE JUSTIFICATION FOR THE PROPOSED PROCEDURE, IT IS REPORTED THAT THE PURCHASE OF REPLACEMENT PARTS FROM THE FEDERAL SUPPLY SCHEDULE WILL ACCOMPLISH A SAVINGS OF AN ESTIMATED THREE TO FIVE PERCENT, OR APPROXIMATELY $160,000 IN THE ADMINISTRATIVE COST OF HANDLING AND ADVERTISING FORMALLY A CONTEMPLATED PROCUREMENT FOR THE PHILIPPINE GOVERNMENT OF $4,000,000 WHICH WILL EXTEND OVER A FOUR TO EIGHT MONTH PERIOD.

THE NUMEROUS AND COMPLEX FACTORS WHICH WOULD BE INVOLVED IN OUR REACHING AN INDEPENDENT DECISION IN AN AREA SUCH AS THIS WOULD REQUIRE A MORE INTIMATE KNOWLEDGE OF THE PROBLEMS OF ESTABLISHING SPECIFICATIONS, INSPECTION, IDENTIFICATION OF PARTS, ETC., THAN IS PRESENTLY AVAILABLE TO US. IN OTHER WORDS, THESE ARE PRIMARILY MATTERS FOR ADMINISTRATIVE DETERMINATION ON WHICH WE ARE NOT NOW IN A POSITION TO EXPRESS A DEFINITE OPINION.

HOWEVER, UNDER THE CURRENT APPLICABLE FEDERAL SUPPLY SCHEDULE COVERING THE PURCHASE OF REPAIR PARTS FROM THE ORIGINAL EQUIPMENT MANUFACTURERS THE DETERMINATION TO USE THE SCHEDULE FOR PURCHASES IN EXCESS OF THE OPEN MARKET LIMITATION IS LEFT TO THE ADMINISTRATIVE DISCRETION OF THE USING AGENCY. EVEN MORE SIGNIFICANT IS THE FACT THAT PAYMENT FOR THE PROPOSED PARTS PROCUREMENT IN QUESTION IS TO BE MADE FROM THE FUNDS SUPPLIED BY THE PHILIPPINE GOVERNMENT FOR WHOM THE PURCHASES ARE TO BE MADE RATHER THAN FROM APPROPRIATED FUNDS OF THE UNITED STATES. IN VIEW OF THESE FACTS AND ASSUMING THE CORRECTNESS OF YOUR DETERMINATION THAT A SUBSTANTIAL SAVINGS IN ADMINISTRATIVE EXPENSES WOULD BE REALIZED BY PROCURING THE PARTS UNDER GSA CONTRACTS, WHICH SAVINGS WOULD BE MORE THAN OFFSET BY THE RELATIVELY SMALL SAVINGS WHICH WOULD RESULT FROM THE USE OF COMPETITIVE BIDDING PROCEDURES, WE WOULD NOT BE JUSTIFIED IN QUESTIONING THE USE OF GSA CONTRACTS AS PROPOSED IN THIS PARTICULAR CASE.

WE UNDERSTAND THAT IN ADDITION TO PROCUREMENT ON BEHALF OF THE PHILIPPINE GOVERNMENT, THERE WILL BE INSTANCES WHERE REPLACEMENT PARTS WILL BE PURCHASED FOR CERTAIN OTHER FOREIGN COUNTRIES WITH GRANTS FROM APPROPRIATED FUNDS BY THE ICA, AND THE JUSTIFICATION FOR RESORTING TO THE FEDERAL SUPPLY SCHEDULE IS INTENDED TO APPLY TO THOSE SITUATIONS AS WELL. IN THAT CONNECTION, SECTION 533 OF THE MUTUAL SECURITY ACT OF 1954, 22 U.S.C. 1793, AUTHORIZED THE PRESIDENT TO WAIVE THE STATUTES REGULATING THE AWARDING OF CONTRACTS AND THE EXPENDITURE OF GOVERNMENT FUNDS RELATING TO THE FOREIGN AID PROGRAM. THIS SECTION WAS IMPLEMENTED BY EXECUTIVE ORDER 10784 WHICH WAIVED THE APPLICATION OF THE COMPETITIVE BIDDING STATUTES. THEREFORE, SINCE THE BUREAU OF PUBLIC ROADS IS A SERVICING AGENT TO ICA AND ICA IS FREE TO DISREGARD THE COMPETITIVE BIDDING STATUTES, WE WOULD NOT BE JUSTIFIED IN QUESTIONING THE PROPOSED PURCHASES WITH ICA FUNDS PROVIDED SUCH PROCEDURE IS SIMILARLY JUSTIFIED AND IS AGREED TO BY THE ICA.