B-149004, JUL. 10, 1962

B-149004, JUL. 10, 1962

TO MR. JOHN W. FINN, AUTHORIZED CERTIFYING OFFICER, DEPARTMENT OF HEALTH, EDUCATION, AND ELFARE:

REFERENCE IS MADE TO YOUR LETTER DATED MAY 24, 1962, WITH ENCLOSURES, CONCERNING A CLAIM FOR PAYMENT IN THE AMOUNT OF $34,134.20 DUE GEORGE TANIER, INC., OF NEW YORK CITY, A CONTRACTOR WHO WAS AWARDED A CONTRACT ON SEPTEMBER 5, 1961, TO FURNISH VARIOUS PIECES OF OFFICE FURNITURE TO THE NATIONAL INSTITUTES OF HEALTH (NIH). YOU STATE THAT SUBSEQUENT TO THE DELIVERY OF THIS FURNITURE, BUT PRIOR TO PAYMENT THEREOF, THE NATIONAL INSTITUTES OF HEALTH BECAME AWARE THAT THE FURNITURE HAD BEEN MADE IN AND SHIPPED FROM A FOREIGN COUNTRY. YOU REQUEST TO BE ADVISED WHETHER PAYMENT MAY BE MADE IN VIEW OF THE VIOLATION OF THE BUY AMERICAN ACT, 41 U.S.C. 10A-D.

THIS QUESTION AROSE AS A RESULT OF A REVIEW BY OUR CIVIL ACCOUNTING AND AUDITING DIVISION OF THE PROCUREMENT OF FURNISHINGS FOR THE PUBLIC AREAS OF THE RECENTLY COMPLETED GENERAL OFFICE BUILDING AT NIH.

YOUR LETTER DOES NOT INCLUDE BACKGROUND INFORMATION RELATING TO THE TANIER PROCUREMENT. HOWEVER, THE NECESSARY DETAILS HAVE BEEN FURNISHED BY OUR CIVIL ACCOUNTING AND AUDITING DIVISION. IT IS REPORTED THAT ON MARCH 23, 1961, NIH ENTERED INTO A CONTRACT WITH THE FIRM OF KEYES, LETHBRIDGE AND CONDON, THE ARCHITECT-ENGINEERS FOR THE GENERAL OFFICE BUILDING, TO FURNISH SERVICES IN CONNECTION WITH THE SELECTION, LAYOUT AND SPECIFICATIONS FOR FURNISHINGS FOR THE PUBLIC AREAS OF THE BUILDING. THE FIRM SELECTED THE FURNITURE, CARPETING AND OTHER FURNISHINGS FOR THE PUBLIC AREAS, SUBJECT TO NIH APPROVAL; HOWEVER, NIH CONTRACTED DIRECTLY WITH THE SUPPLIERS FOR THE PURCHASE OF THE FURNISHINGS. IT IS REPORTED THAT THE CONTRACT WITH TANIER WAS NEGOTIATED BY NIH PRIMARILY ON THE GROUNDS THAT NO USEFUL PURPOSE WOULD BE SERVED BY ADVERTISING DUE TO THE PARTICULAR STYLE OF FURNITURE DESIRED. AT THE TIME OF THE PROCUREMENT, SPECIFICATIONS NECESSARY TO OBTAIN FORMAL BIDS ON THE STYLE OF FURNITURE DESIRED WERE NOT AVAILABLE.

OUR AUDIT REVIEW DISCLOSED THAT, IN ADDITION TO THE FOREIGN-MADE FURNITURE PURCHASED FROM TANIER, FOREIGN-MADE CARPETING WAS SUPPLIED AS ONE OF THE END ITEMS UNDER A NEGOTIATED CONTRACT WITH ROBERT W. ENHOLM, ANOTHER CONTRACTOR, AND THE CARPETING SPECIFICATIONS FURNISHED TO NIH BY MR. ENHOLM CLEARLY STATED THIS FACT. THE FOREIGN-MADE CARPETING HAD ALREADY BEEN PAID FOR BY NIH AT THE TIME OF OUR REVIEW AT A NET COST OF $1,977.15.

ON THE FIRST PAGE OF THE SUBJECT CONTRACT (STANDARD FORM 33, (OCTOBER 1957 EDITION) ( APPEARS THE FOLLOWING CLAUSE WITH REGARD TO SMALL-BUSINESS STATUS:

"BIDDER REPRESENTS: (CHECK APPROPRIATE BOXES)

(1) THAT HE ( ( IS, ( ( IS NOT, A SMALL BUSINESS CONCERN. (SEE DEFINITION ON REVERSE HEREOF.) IF BIDDER IS A SMALL BUSINESS CONCERN AND IS NOT THE MANUFACTURER OF THE SUPPLIES BID UPON, HE ALSO REPRESENTS THAT ALL SUPPLIES TO BE FURNISHED HEREUNDER ( ( WILL, ( ( WILL NOT, BE MANUFACTURED OR PRODUCED BY A SMALL BUSINESS CONCERN IN THE UNITED STATES, ITS TERRITORIES, ITS POSSESSIONS, OR THE COMMONWEALTH OF PUERTO RICO.'

IN CHECKING THE APPROPRIATE BOXES GEORGE TANIER, INC., INDICATED THAT IT WAS A SMALL-BUSINESS CONCERN AND THAT THE SUPPLIES TO BE FURNISHED WOULD NOT BE MANUFACTURED BY A SMALL-BUSINESS CONCERN IN THE UNITED STATES, ITS TERRITORIES, ITS POSSESSIONS, OR THE COMMONWEALTH OF PUERTO RICO. IN A LETTER DATED MARCH 23, 1962, FROM MR. CHESTER DAVISON, SECRETARY-TREASURER OF GEORGE TANIER, INC., TO THE CHIEF, PROCUREMENT SECTION, NIH, IT IS STATES:

"WHEN WE SUBMITTED OUR BID WE INDICATED THAT:

1. WE WERE A SMALL BUSINESS CONCERN AND

2. THAT THE SUPPLIES WE WERE PROPOSING TO FURNISH WOULD NOT BE PRODUCED BY A SMALL BUSINESS CONCERN IN THE UNITED STATES, ITS TERRITORIES, POSSESSIONS OR THE COMMONWEALTH OF PUERTO RICO.

"IN MAKING THE ABOVE REPRESENTATION, IT WAS OUR INTENTION TO INDICATE, BASED UPON OUR UNDERSTANDING OF THE QUESTION, THAT THE SUPPLIES WERE BEING PRODUCED OUTSIDE THE UNITED STATES. IN FACT, THESE SUPPLIES WERE MANUFACTURED IN DENMARK.'

IN YOUR LETTER OF MAY 24, 1962, YOU STATE THAT UPON COMPLETION OF AN INVESTIGATION INTO THE MATTER IT HAS BEEN DETERMINED THAT THE PRICE OF THE FURNITURE BEING BILLED IS LESS THAN OR EQUAL TO THE PRICE OF FURNITURE OF THE SAME QUALITY THAT IS CONSTRUCTED IN THE UNITED STATES. IN SUPPORT OF THIS STATEMENT YOU SUBMITTED A DOCUMENT SHOWING THE COMPARATIVE LIST PRICES OF FURNITURE MANUFACTURED BY FOUR DOMESTIC FURNITURE COMPANIES SIMILAR TO THAT FURNISHED BY TANIER. HOWEVER, IN A MEMORANDUM DATED APRIL 17, 1962, FROM THE ASSISTANT EXECUTIVE OFFICER TO THE CHIEF, FINANCIAL MANAGEMENT BRANCH, IT IS STATED THAT DIFFICULTIES WERE EXPERIENCED IN MAKING SUCH COMPARISONS DUE TO: (1) CUSTOM CHANGES IN STOCK ITEMS FURNISHED BY TANIER AND (2) DIFFICULTY IN COMPARATIVE PRICING. THE MEMORANDUM FURTHER STATES THAT IN INFORMAL DISCUSSIONS WITH FURNITURE SUPPLIERS IN THE WASHINGTON AREA NIH WAS INFORMED THAT THE TANIER PRICES APPEARED TO BE REASONABLE AND THE INVESTIGATION INDICATED THAT NIH HAD OBTAINED FURNITURE FROM TANIER AT OR BELOW THE PRICE OF COMPARABLE ITEMS WHICH MIGHT HAVE BEEN FURNISHED BY OTHER MANUFACTURERS. IN CONNECTION WITH THIS ASPECT OF THE CASE OUR AUDITORS REPORT THAT INSOFAR AS THEY COULD DETERMINE NO COMPARISONS WITH OTHER FURNITURE AS TO PRICES WERE MADE AT THE TIME OF THE PROCUREMENT; THAT THE ONLY COMPARISON WAS WITH TANIER'S OWN LIST PRICES; AND THAT IN ADDITION TO THE DIFFICULTY MENTIONED IN THE MEMORANDUM OF APRIL 17 OF COMPARING DIFFERENT MAKES OF FURNITURE FOR WHICH SPECIFICATIONS ARE NOT AVAILABLE, A FURTHER FACTOR OF NONCOMPARABILITY IS THAT PRICES PAID TO TANIER WERE ADJUSTED FOR THE USE OF COVERING MATERIALS OTHER THAN THOSE SHOWN IN THE PRICE LISTS. IN VIEW OF THESE DIFFICULTIES WE DO NOT BELIEVE THAT THE DOCUMENT SHOWING THE COMPARATIVE LIST PRICES OF FURNITURE MANUFACTURED BY FOUR DOMESTIC FURNITURE COMPANIES SIMILAR TO THAT FURNISHED BY TANIER CAN BE CONSIDERED AS MEANINGFUL EVIDENCE TO SUPPORT YOUR CONCLUSION THAT TANIER'S PRICES WERE LESS THAN OR EQUAL TO THE PRICES OF FURNITURE OF THE SAME QUALITY THAT IS CONSTRUCTED IN THE UNITED STATES. WE DO NOT MEAN TO SAY, HOWEVER, THAT TANIER'S PRICES WERE NOT IN FACT LESS THAN OR EQUAL TO THE PRICES OF DOMESTIC MANUFACTURERS BUT IT MUST BE CONCLUDED THAT ON THE BASIS OF THE EVIDENCE SUBMITTED IN SUPPORT OF THAT PROPOSITION WE ARE UNABLE TO EITHER REJECT OR ACCEPT YOUR CONCLUSION IN THAT REGARD.

WE UNDERSTAND THAT THE FURNITURE DELIVERED BY TANIER IS PRESENTLY BEING USED BY NIH AND HAS BEEN IN CONTINUOUS USE SINCE DELIVERY. FURTHERMORE, THE RECORD INDICATES THAT THROUGHOUT THE EVENTS HEREIN DESCRIBED TANIER HAS ACTED IN GOOD FAITH IN THE BELIEF THAT NIH WAS AWARE THAT THE FURNITURE WAS FOREIGN MADE. IN OUR OPINION, TANIER'S INTERPRETATION OF THE REPRESENTATIONS AS TO SMALL BUSINESS ON STANDARD FORM 33, ALTHOUGH ERRONEOUS, WAS NOT UNREASONABLE. THE REPRESENTATION AS TO SMALL-BUSINESS STATUS APPEARING ON THE FACE OF STANDARD FORM 33 IS SUBJECT TO MISUNDERSTANDING WHEN CONSIDERED IN THE LIGHT OF THE REQUIREMENTS OF THE BUY AMERICAN ACT.

IN VIEW OF THE CONTRACTOR'S GOOD FAITH AND THE FACT THAT THE FURNITURE HAS BEEN USED BY NIH SINCE DELIVERY, THERE APPEARS NO JUSTIFICATION FOR WITHHOLDING PAYMENT FOR THE FURNITURE AND TANIER'S CLAIM MAY BE PAID, IF OTHERWISE CORRECT.