B-150655, MARCH 7, 1963, 42 COMP. GEN. 467

B-150655: Mar 7, 1963

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THAT THE VESSELS ARE A DOMESTIC SOURCE END PRODUCT. IS MATERIALLY LESS THAN THE BID OF ANOTHER DOMESTIC BIDDER PROPOSING "ALL" DOMESTIC COMPONENTS WOULD BE A PROPER AWARD AND. IS REGARDED AS A DOMESTIC BID. THE PROVISION FOR FAVORING A DOMESTIC BIDDER OVER A LOWER FOREIGN BIDDER DOES NOT VEST AN AGENCY OF THE GOVERNMENT UNDER AN ADVERTISED PROCUREMENT WITH DISCRETIONARY AUTHORITY TO FAVOR A HIGHER DOMESTIC BIDDER OFFERING AN ALL DOMESTIC PRODUCT OVER THE LOW DOMESTIC BIDDER PROPOSING TO FURNISH A PRODUCT THAT IS SUBSTANTIALLY ALL DOMESTIC. WHETHER THE ALTERATION OF TWO NAVAL VESSELS IS PROCURED UNDER SECTION 2 OF THE BUY AMERICAN ACT. IS IMMATERIAL. BOTH SECTIONS RESTRICTING PURCHASES OF FOREIGN PRODUCTS AND PROVIDING EXCEPTION TO THE RESTRICTIONS WHEN THE COST OF THE DOMESTIC PRODUCTS IS UNREASONABLE.

B-150655, MARCH 7, 1963, 42 COMP. GEN. 467

BIDS - BUY AMERICAN ACT - CRITERIA OTHER THAN PRICE. BIDS - BUY AMERICAN ACT - REJECTION. BIDS - BUY AMERICAN ACT - PROCUREMENT OF PUBLIC WORKS V. SUPPLIES UNDER AN ADVERTISED PROCUREMENT FOR THE CONVERSION OF TWO NAVAL VESSELS, REQUIRING CERTIFICATION PURSUANT TO SECTION 2 OF THE BUY AMERICAN ACT, 41 U.S.C. 10A, THAT THE VESSELS ARE A DOMESTIC SOURCE END PRODUCT, AN AWARD TO THE LOW DOMESTIC BIDDER WHOSE BID ON A "SUBSTANTIALLY ALL" DOMESTIC PRODUCT, INCLUDING MIDSECTIONS OF THE VESSELS CONSTRUCTED IN JAPAN, IS MATERIALLY LESS THAN THE BID OF ANOTHER DOMESTIC BIDDER PROPOSING "ALL" DOMESTIC COMPONENTS WOULD BE A PROPER AWARD AND, ALTHOUGH THE SECRETARY OF THE NAVY HAS DISCRETIONARY AUTHORITY UNDER ADVERTISED PROCUREMENTS TO CONSIDER FACTORS OTHER THAN PRICE, HE MAY NOT AWARD A CONTRACT TO OTHER THAN THE LOW, RESPONSIBLE, QUALIFIED BIDDER; THEREFORE, THE DOMESTIC BIDDER OFFERING TO FURNISH AN "ALL" DOMESTIC PRODUCT MAY NOT BE FAVORED OVER THE DOMESTIC BIDDER OFFERING A "SUBSTANTIALLY ALL" DOMESTIC PRODUCT, WHICH UNDER THE TERMS OF SECTION 2 (A) OF EXECUTIVE ORDER NO. 19582, DATED DECEMBER 17, 1954, AS AMENDED, IS REGARDED AS A DOMESTIC BID, THE COST OF THE DOMESTIC COMPONENTS EXCEEDING THE COST OF THE FOREIGN ORIGIN COMPONENTS. WHILE SECTION 3 (A) OF EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954, AS AMENDED, IMPLEMENTING THE BUY AMERICAN ACT OF MARCH 3, 1933, AS AMENDED, 41 U.S.C. 10A-10D, EXPRESSES THE INTENT NOT TO INTERFERE WITH ANY EXISTING AUTHORITY OR RESPONSIBILITY OF AN EXECUTIVE AGENCY TO REJECT ANY BID OR OFFER FOR REASONS OF NATIONAL SECURITY, THE SECTION DID NOT, AND LEGALLY COULD NOT, CONFER ON EXECUTIVE AGENCIES ANY NEW OR ADDITIONAL AUTHORITY; THEREFORE, THE PROVISION FOR FAVORING A DOMESTIC BIDDER OVER A LOWER FOREIGN BIDDER DOES NOT VEST AN AGENCY OF THE GOVERNMENT UNDER AN ADVERTISED PROCUREMENT WITH DISCRETIONARY AUTHORITY TO FAVOR A HIGHER DOMESTIC BIDDER OFFERING AN ALL DOMESTIC PRODUCT OVER THE LOW DOMESTIC BIDDER PROPOSING TO FURNISH A PRODUCT THAT IS SUBSTANTIALLY ALL DOMESTIC. WHETHER THE ALTERATION OF TWO NAVAL VESSELS IS PROCURED UNDER SECTION 2 OF THE BUY AMERICAN ACT, 41 U.S.C. 10A, COVERING CONTRACTS FOR SUPPLIES, OR SECTION 3 OF THE ACT, 41 U.S.C. 10B, COVERING CONTRACTS FOR PUBLIC WORKS, IS IMMATERIAL, BOTH SECTIONS RESTRICTING PURCHASES OF FOREIGN PRODUCTS AND PROVIDING EXCEPTION TO THE RESTRICTIONS WHEN THE COST OF THE DOMESTIC PRODUCTS IS UNREASONABLE; THEREFORE, THE LOW BID ON A PRODUCT THAT IS SUBSTANTIALLY ALL DOMESTIC NEED NOT BE REJECTED IN FAVOR OF A HIGHER BID OFFERING AN ALL DOMESTIC PRODUCT ON THE BASIS THAT THE INVITATION SOLICITED BIDS ON SUPPLIES, AND ABSENT A DETERMINATION WHETHER CONTRACTS FOR CONSTRUCTION, ALTERATION, OR REPAIR OF NAVAL VESSELS IS GOVERNED BY SECTION 2 OR 3, THE NAVY'S ACTION IN CLASSIFYING THE WORK AS THE PROCUREMENT OF ITEMS OF SUPPLIES COVERED BY SECTION 2 OF THE ACT WILL BE ACCEPTED UNDER THE RULE OF STATUTORY CONSTRUCTION THAT WHEN A STATUTE IS SUSCEPTIBLE OF DIFFERENT CONSTRUCTIONS, THE ADMINISTRATIVE CONSTRUCTION WILL NOT BE DISTURBED UNLESS ERRONEOUS OR FOR THE MOST COGENT REASONS.

TO THE SUN SHIPBUILDING AND DRY DOCK COMPANY, MARCH 7, 1963:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 17, 1963, AND TO YOUR SUBSEQUENT LETTERS OF JANUARY 19 AND 24, FEBRUARY 13 (INCLUDING ACCOMPANYING SUPPORTING MEMORANDUM OF YOUR COUNSEL, MR. JOHN D. M. HAMILTON), AND FEBRUARY 25, 1963, PROTESTING THE PROPOSED AWARD OF A CONTRACT TO PUGET SOUND BRIDGE AND DRY DOCK COMPANY UNDER INVITATION FOR BIDS NO. 600-531-63-S, DATED OCTOBER 8, 1962, ISSUED BY THE BUREAU OF SHIPS, DEPARTMENT OF THE NAVY, FOR THE CONVERSION OF TWO NAVAL FLEET OILERS.

THE RECORD SHOWS THAT THE CITED INVITATION COVERS, IN ADDITION TO PRESCRIBED INCIDENTAL SERVICES AND WORK, THE SO-CALLED "JUMBOIZING" OF THE VESSELS, A PROCESS INVOLVING THE REMOVAL OF THE MIDSECTION AND THE INSTALLATION OF A NEW AND LARGER MIDSECTION IN EACH OF THE VESSELS. THE SEVEN BIDS RECEIVED FROM THE 23 FIRMS SOLICITED, THE LOWEST BID, IN THE TOTAL AMOUNT OF $14,949,563, WAS SUBMITTED BY PUGET SOUND AND THE SECOND LOW BID, IN THE TOTAL AMOUNT OF $16,548,900, WAS SUBMITTED BY YOUR FIRM. THE GROUNDS UPON WHICH YOU PREDICATE YOUR PROTEST TO THE PROPOSED AWARD OF THE CONTRACT TO PUGET SOUND, AS THE LOWEST RESPONSIVE BIDDER, ARE HEREINAFTER SEPARATELY CONSIDERED.

YOU CONTEND THAT THE SECRETARY OF THE NAVY HAS DISCRETIONARY AUTHORITY UNDER THE LAW TO CONSIDER FACTORS OTHER THAN PRICE IN MAKING AN AWARD UNDER THIS INVITATION AND THAT, BASED ON THE FACT THAT A PORTION OF THE MATERIAL PROPOSED TO BE FURNISHED BY PUGET SOUND IS OF FOREIGN ORIGIN WHEREAS YOUR BID IS BASED ON FURNISHING MATERIAL ENTIRELY OF DOMESTIC ORIGIN, THIS FACTOR, INVOLVING CONSIDERATIONS OF ALLEGED NATIONAL INTEREST OR NATIONAL DEFENSE, MAY PROPERLY FORM AND SHOULD FORM THE BASIS OF AN AWARD OF THE CONTRACT TO YOUR FIRM. IN SUPPORT OF YOUR POSITION, THE FOLLOWING AUTHORITIES ARE CITED IN YOUR LETTER OF FEBRUARY 13, 1963:

1. UNDER SECTION 2305 OF THE ARMED SERVICES PROCUREMENT ACT OF 1956 (10 U.S.C.A. PAR. 2305) AND ASPR 2-407.1, OTHER FACTORS THAN PRICE MAY BE CONSIDERED IN THE AWARD OF COMPETITIVELY BID CONTRACTS;

2. UNDER SUBSECTION 3 (A) OF EXECUTIVE ORDER NO. 19582 OF DECEMBER 17, 1954, AS PROPERLY CONSTRUED, ALL EXECUTIVE AGENCIES ARE GIVEN THE AUTHORITY TO REJECT ANY BID "FOR REASONS OF THE NATIONAL INTEREST," AND

3. UNDER SECTION 1 OF THE NATIONAL DEFENSE CONTRACTS ACT OF 1958 (50 U.S.C.A. PAR. 1431) AND EXECUTIVE ORDER NO. 10789, DATED NOVEMBER 14, 1958, AS AMENDED SEPTEMBER 28, 1962, THE SECRETARY IS AUTHORIZED "TO ENTER INTO CONTRACTS . . . . WITHOUT REGARD TO OTHER PROVISIONS OF LAW RELATING TO THE MAKING . . . . OF CONTRACTS, WHENEVER HE DEEMS THAT SUCH ACTION WOULD FACILITATE THE NATIONAL DEFENSE.'

CONCERNING THIS CONTENTION, IT IS EVIDENT YOU RECOGNIZE THAT ANY AUTHORITY WHICH MAY BE VESTED IN THE SECRETARY OF THE NAVY TO MAKE AN AWARD, UNDER THE FACTS AND CIRCUMSTANCES OF THIS CASE, TO OTHER THAN THE LOW BIDDER IS COMPLETELY DISCRETIONARY. IN THAT CONNECTION IT IS ADMINISTRATIVELY REPORTED THAT "THE SECRETARY OF THE NAVY HAS DETERMINED THAT, SUBJECT TO THE DISPOSITION OF THE PROTEST FILED WITH YOUR OFFICE, AWARD SHOULD BE MADE TO THE LOW RESPONSIBLE AND RESPONSIVE BIDDER, PUGET SOUND.' FURTHER, WITH SPECIFIC REFERENCE TO THE ALLEGED DISCRETIONARY AUTHORITY TO MAKE AN AWARD TO YOUR FIRM UNDER THE TERMS OF THIS INVITATION, THE ADMINISTRATIVE REPORT ON BEHALF OF THE SECRETARY OF THE NAVY IN EFFECT DENIES THE EXISTENCE OF THIS AUTHORITY, STATED THAT---

* * * IT MUST BE BORNE IN MIND THAT THE BID OF PUGET SOUND IS A DOMESTIC BID AND NOT A FOREIGN ONE UNDER THE EXPRESS PROVISIONS OF THE INVITATION. CONSEQUENTLY, THERE IS NO BASIS FOR THE REJECTION OF THE PUGET SOUND BID AND THE AWARD TO SUN SHIPBUILDING COMPANY CONTRARY TO THE TERMS OF SUCH INVITATION. AWARD TO SUN SHIPBUILDING COMPANY UNDER THIS ADVERTISEMENT WOULD BE IN VIOLATION OF THE ARMED SERVICES PROCUREMENT REGULATION AND THE CARDINAL PRINCIPLE OF FORMAL ADVERTISING THAT BIDDERS BE PERMITTED TO BID ON AN EQUAL BASIS AND THAT THE GROUND RULES FOR BIDDING NOT BE CHANGED AFTER BID OPENING.

IN THE LIGHT OF THE FOREGOING AND SINCE THE FAILURE OR REFUSAL TO EXERCISE DISCRETIONARY AUTHORITY IS NOT SUBJECT TO REVIEW BY THIS OFFICE, WE WOULD ORDINARILY DECLINE TO COMMENT ON WHETHER, UNDER THE FACTS OF A PARTICULAR CASE, AN ATTEMPT TO EXERCISE SUCH DISCRETIONARY AUTHORITY WOULD BE LEGAL AND PROPER. 41 COMP. GEN. 70; 39 ID. 309. IN THIS CASE, HOWEVER, IN SUPPORT OF YOUR REQUEST FOR A RULING ON YOUR CONTENTION, IT IS STATED IN YOUR LETTER OF FEBRUARY 13, 1963, THAT---

WE REQUEST A RULING FROM YOU THAT THE SECRETARY OF THE NAVY DOES HAVE DISCRETION UNDER THE LAW TO AWARD THIS CONTRACT TO OUR COMPANY IF HE FEELS SUCH AN AWARD TO BE ADVISABLE FOR NATIONAL DEFENSE REASONS. IF A RULING TO THIS EFFECT IS FORTHCOMING WE ARE CONFIDENT THAT AN AWARD TO US WILL THEN BE MADE.

WHILE WE HAVE NO KNOWLEDGE OF THE BASIS FOR YOUR CONFIDENCE AS TO THE EFFECT OF A FAVORABLE RULING ON THE MATTER BY THIS OFFICE, IN VIEW OF THE OTHERWISE INDICATED IMPORTANCE OF A DECISION ON THIS ISSUE AND FOR THE PURPOSE OF SERVING AS A GUIDELINE IN ANY FUTURE SIMILAR CASE, WE FEEL CALLED UPON TO MAKE THE FOLLOWING COMMENTS.

THE BUY AMERICAN ACT OF MARCH 3, 1933, AS AMENDED, 41 U.S.C. 10 10D, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

10A. AMERICAN MATERIALS REQUIRED FOR PUBLIC USE.

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 UNMANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES AS HAVE BEEN MINED OR PRODUCED IN THE UNITED STATES, AND 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. THIS SECTION SHALL NOT APPLY WITH RESPECT TO ARTICLES, MATERIALS, OR SUPPLIES FOR USE OUTSIDE THE UNITED STATES, OR IF ARTICLES, MATERIALS, OR SUPPLIES OF THE CLASS OR KIND TO BE USED OR THE ARTICLES, MATERIALS, OR SUPPLIES FROM WHICH THEY ARE MANUFACTURED ARE NOT MINED, PRODUCED, OR MANUFACTURED, AS THE CASE MAY BE, IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE COMMERCIAL QUANTITIES AND OF A SATISFACTORY QUALITY.

10B. CONTRACTS FOR PUBLIC WORKS; SPECIFICATION FOR USE OF AMERICAN MATERIALS; BLACKLISTING CONTRACTORS VIOLATING REQUIREMENTS.

(A) EVERY CONTRACT FOR THE CONSTRUCTION, ALTERATION, OR REPAIR OF ANY PUBLIC BUILDING OR PUBLIC WORK IN THE UNITED STATES GROWING OUT OF AN APPROPRIATION HERETOFORE MADE OR HEREAFTER TO BE MADE SHALL CONTAIN A PROVISION THAT IN THE PERFORMANCE OF THE WORK THE CONTRACTOR, SUBCONTRACTORS, MATERIAL MEN, OR SUPPLIERS, SHALL USE ONLY SUCH UNMANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES AS HAVE BEEN MINED OR PRODUCED IN THE UNITED STATES, AND 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 EXCEPT AS PROVIDED IN SECTION 10A OF THIS TITLE: PROVIDED, HOWEVER, THAT IF THE HEAD OF THE DEPARTMENT OR INDEPENDENT ESTABLISHMENT MAKING THE CONTRACT SHALL FIND THAT IN RESPECT TO SOME PARTICULAR ARTICLES, MATERIALS, OR SUPPLIES IT IS IMPRACTICABLE TO MAKE SUCH REQUIREMENT OR THAT IT WOULD UNREASONABLY INCREASE THE COST, AN EXCEPTION SHALL BE NOTED IN THE SPECIFICATIONS AS TO THAT PARTICULAR ARTICLE, MATERIAL, OR SUPPLY, AND A PUBLIC RECORD MADE OF THE FINDING WHICH JUSTIFIED THE EXCEPTION.

(B) IF THE HEAD OF A DEPARTMENT, BUREAU, AGENCY, OR INDEPENDENT ESTABLISHMENT WHICH HAS MADE ANY CONTRACT CONTAINING THE PROVISION REQUIRED BY SUBSECTION (A) OF THIS SECTION FINDS THAT IN THE PERFORMANCE OF SUCH CONTRACT THERE HAS BEEN A FAILURE TO COMPLY WITH SUCH PROVISIONS, HE SHALL MAKE PUBLIC HIS FINDINGS, INCLUDING THEREIN THE NAME OF THE CONTRACTOR OBLIGATED UNDER SUCH CONTRACT, AND NO OTHER CONTRACT FOR THE CONSTRUCTION, ALTERATION, OR REPAIR OF ANY PUBLIC BUILDING OR PUBLIC WORK IN THE UNITED STATES OR ELSEWHERE SHALL BE AWARDED TO SUCH CONTRACTOR, SUBCONTRACTORS, MATERIAL MEN, OR SUPPLIERS WITH WHICH SUCH CONTRACTOR IS ASSOCIATED OR AFFILIATED, WITHIN A PERIOD OF THREE YEARS AFTER SUCH FINDING IS MADE PUBLIC.

IN ORDER THAT THE PROVISIONS OF THE BUY AMERICAN ACT MIGHT BE UNIFORMLY ADMINISTERED, AND FOR OTHER PURPOSES, THE PRESIDENT OF THE UNITED STATES ISSUED EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954, 19 F.R. 8723, WHICH, AS AMENDED BY EXECUTIVE ORDER NO. 11051, DATED SEPTEMBER 28, 1962, 27 F.R. 9683, PROVIDES, IN PART, AS FOLLOWS:

SEC. 2 (A) FOR THE PURPOSES OF THIS ORDER MATERIALS SHALL BE CONSIDERED TO BE OF FOREIGN ORIGIN IF THE COST OF THE FOREIGN PRODUCTS USED IN SUCH MATERIALS CONSTITUTE FIFTY PERCENTUM OR MORE OF THE COST OF ALL PRODUCTS USED IN SUCH MATERIALS.

(B) FOR THE PURPOSES OF THE SAID ACT OF MARCH 3, 1933, * * * 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 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.

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

(A) TO REJECT ANY BID OR OFFER FOR REASONS OF THE NATIONAL INTEREST NOT DESCRIBED OR REFERRED TO IN THIS ORDER; OR

(D) TO REJECT ANY BID OR OFFER FOR MATERIALS OF FOREIGN ORIGIN IF SUCH REJECTION IS NECESSARY TO PROTECT ESSENTIAL NATIONAL-SECURITY INTERESTS AFTER RECEIVING ADVICE WITH RESPECT THERETO FROM THE PRESIDENT OR FROM THE DIRECTOR OF THE OFFICE OF EMERGENCY PLANNING. IN PROVIDING THIS ADVICE THE DIRECTOR SHALL BE GOVERNED BY THE PRINCIPLE THAT EXCEPTIONS UNDER THIS SECTION SHALL BE MADE ONLY UPON A CLEAR SHOWING THAT THE PAYMENT OF A GREATER DIFFERENTIAL THAN THE PROCEDURES OF THIS SECTION GENERALLY PRESCRIBE IS JUSTIFIED BY CONSIDERATION OF NATIONAL SECURITY.

SEC. 5. * * * IN ANY CASE IN WHICH THE HEAD OF AN EXECUTIVE AGENCY PROPOSING TO PURCHASE DOMESTIC MATERIALS DETERMINES THAT A GREATER DIFFERENTIAL THAN THAT PROVIDED IN THIS ORDER BETWEEN THE COST OF SUCH MATERIALS OF DOMESTIC ORIGIN AND MATERIALS OF FOREIGN ORIGIN IS NOT UNREASONABLE OR THAT THE PURCHASE OF MATERIALS OF DOMESTIC ORIGIN IS NOT INCONSISTENT WITH THE PUBLIC INTEREST, THIS ORDER SHALL NOT APPLY. * * *

THE RECORD SHOWS THAT, AS PRESCRIBED BY ASPR 6-104.5, IMPLEMENTING SECTION 2 (41 U.S.C. 10A) OF THE BUY AMERICAN ACT AND THE CITED EXECUTIVE ORDER, COVERING THE PROCUREMENT OF SUPPLIES, BIDDERS WERE ADVISED OF THE REQUIREMENT THAT THEY CERTIFY THAT "THE VESSELS ARE A DOMESTIC SOURCE END PRODUCT," DEFINED IN CLAUSE 37 OF THE ACCOMPANYING GENERAL PROVISIONS AS "AN END PRODUCT MANUFACTURED IN THE UNITED STATES IF THE COST OF THE COMPONENTS THEREOF WHICH ARE MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES OR CANADA EXCEEDS FIFTY PERCENT (50 PERCENT) OF THE COST OF ALL ITS COMPONENTS.' IN DOCUMENTS ACCOMPANYING ITS BID, PUGET SOUND SHOWED THAT THE MIDSECTIONS FOR THE TWO VESSELS WOULD BE CONSTRUCTED IN JAPAN AT A TOTAL COST, INCLUDING TOWING, DUTY, AND MISCELLANEOUS EXPENSES, OF $2,610,350. SINCE THE COST SHOWN FOR THE DOMESTIC COMPONENTS MATERIALLY EXCEEDED THE COST OF THE COMPONENTS OF FOREIGN ORIGIN, UNDER THE TERMS OF SECTION 2 (A) OF THE EXECUTIVE ORDER AND THE PROVISIONS OF THE INVITATION, THE BID WAS PROPERLY REGARDED AS A DOMESTIC BID. BASED ON THE TERMS OF THE INVITATION WHICH, IN COMPLIANCE WITH THE REQUIREMENTS OF 10 U.S.C. 2305, PROVIDE THAT "THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED," THE NAVY PROPOSES TO MAKE THE AWARD TO PUGET SOUND. IT IS YOUR CONTENTION THAT, ON THE BASIS OF THE AUTHORITIES CITED, SUCH ACTION IS NOT REQUIRED AND THAT THE DEPARTMENT HAS DISCRETIONARY AUTHORITY TO AWARD THE CONTRACT TO YOUR FIRM UNDER THIS INVITATION. WE DO NOT AGREE WITH THIS VIEW. IT HAS BEEN CONSISTENTLY HELD BY OUR OFFICE AND THE COURTS THAT THE RULES OF COMPETITIVE ADVERTISED BIDDING AND THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM REQUIRE THAT BIDDERS BE INFORMED OF THE BASIS UPON WHICH THEIR BIDS WILL BE EVALUATED AND THE AWARD WILL BE MADE. THE INVITATION HERE INVOLVED COMPLIES WITH THAT REQUIREMENT. WE HAVE ALSO UNIFORMLY HELD THAT IF BIDS ARE TO BE EVALUATED ON SOME BASIS IN ADDITION TO PRICE THESE ADDITIONAL FACTORS AND THE WEIGHT TO BE GIVEN THEM SHOULD BE CLEARLY STATED IN THE INVITATION SO THAT ALL BIDDERS MAY BE AWARE THEREOF IN THE PREPARATION OF THEIR BIDS. THE PURPOSE OF STATUTES REQUIRING THE AWARD OF CONTRACTS TO THE LOWEST, RESPONSIVE, RESPONSIBLE BIDDER AFTER ADVERTISING IS TO GIVE ALL PERSONS EQUAL RIGHT TO COMPETE FOR GOVERNMENT CONTRACTS, TO PREVENT UNJUST FAVORITISM, COLLUSION, OR FRAUD IN AWARDING GOVERNMENT CONTRACTS, AND TO SECURE FOR THE GOVERNMENT THE BENEFITS WHICH FLOW FROM FREE AND UNRESTRICTED COMPETITION. SEE UNITED STATES V. BROOKRIDGE FARM, 111 F.2D 461. ALSO, THE APPLICATION OF THESE PRINCIPLES PROTECTS THE ADMINISTRATIVE OFFICERS THEMSELVES FROM CHARGES OF FAVORITISM, THUS PRESERVING TO THE GOVERNMENT THE CONFIDENCE AND TRUST OF THE PEOPLE. 8 COMP. GEN. 252. WE REGARD IT OF PARAMOUNT IMPORTANCE IN THE PROTECTION OF THE INTERESTS OF THE GOVERNMENT THAT THESE RULES AND PRINCIPLES OF THE COMPETITIVE BIDDING SYSTEM BE STRICTLY AND IMPARTIALLY ENFORCED. NOR DO WE FIND, WITH RESPECT TO THE COMPREHENSIVE PROCEDURES PRESCRIBED BY THE CONGRESS GOVERNING PROCUREMENT BY THE MILITARY AGENCIES 10 U.S.C. 2301-2314, EITHER IN THE EXPRESS LANGUAGE USED OR IN THE LEGISLATIVE HISTORY THEREOF, ANY INTENT TO DEPART FROM OR WEAKEN THESE RULES AND PRINCIPLES IN MAKING AWARDS UNDER FORMALLY ADVERTISED PROCUREMENTS.

WITH SPECIFIC REFERENCE TO THE FORCE AND EFFECT OF THE PHRASE "OTHER FACTORS CONSIDERED" AS USED IN 10 U.S.C. 2305, IT SHOULD BE NOTED THAT THIS STATUTORY PROVISION FIRST APPEARED IN SECTION 3 (B) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 23, 41 U.S.C. 152 (1952 ED.), AND THE LEGISLATIVE HISTORY OF THAT STATUTE INDICATES CLEARLY THAT IT WAS NOT INTENDED TO BROADEN THE SCOPE OF THEN EXISTING AUTHORITY OR TO INTRODUCE NEW FACTORS INTO THE EVALUATION OF BIDS SUBMITTED IN RESPONSE TO ADVERTISED PROCUREMENTS. RATHER, AS SET FORTH IN 28 COMP. GEN. 662, WHEREIN WE REVIEWED THE LANGUAGE OF THE ACT, AS WELL AS ITS LEGISLATIVE HISTORY, THE PHRASE "OTHER FACTORS CONSIDERED" DOES NOT AUTHORIZE AND WAS NOT INTENDED TO AUTHORIZE THE AWARDING OF CONTRACTS UNDER ADVERTISED PROCUREMENTS TO OTHER THAN THE LOW, RESPONSIBLE, QUALIFIED BIDDER. WHILE, AS REFLECTED IN YOUR CORRESPONDENCE, YOU DISAGREE WITH THE CONCLUSION REACHED THEREIN, YOU HAVE PRESENTED NO FACTS OR LEGAL AUTHORITY IN SUPPORT OF A CONTRARY CONCLUSION. ALSO, SEE 37 COMP. GEN. 550 AND SEC. 523 OF THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1963, PUBLIC LAW 87-577, 76 STAT. 318, 332, WHICH EXPRESSLY PROVIDES "THAT NONE OF THE FUNDS APPROPRIATED IN THIS ACT SHALL BE USED EXCEPT THAT, SO FAR AS PRACTICABLE, ALL CONTRACTS SHALL BE AWARDED ON A FORMALLY ADVERTISED COMPETITIVE BID BASIS TO THE LOWEST RESPONSIBLE BIDDER.'

LIKEWISE, IN OUR OPINION, SECTION 3 (A) OF EXECUTIVE ORDER NO. 10582, IN PROVIDING THAT NOTHING IN THAT ORDER SHALL AFFECT THE "AUTHORITY OR RESPONSIBILITY" OF AN EXECUTIVE AGENCY TO REJECT ANY BID OR OFFER "FOR REASONS OF THE NATIONAL INTEREST" NOT DESCRIBED OR REFERRED TO IN THAT ORDER, AFFORDS NO AUTHORITY IN ADVERTISED PROCUREMENTS TO AWARD THE CONTRACT TO ONE DOMESTIC BIDDER IN DISREGARD OF THE LOWER BID QUOTED BY ANOTHER RESPONSIBLE DOMESTIC BIDDER. THE CITED SECTION OF THE EXECUTIVE ORDER, WHILE EXPRESSING THE INTENT NOT TO INTERFERE WITH ANY EXISTING AUTHORITY OR RESPONSIBILITY OF EXECUTIVE AGENCIES TO REJECT ANY BID FOR REASONS OF THE NATIONAL INTEREST, DID NOT AND LEGALLY COULD NOT CONFER ON EXECUTIVE AGENCIES ANY NEW OR ADDITIONAL AUTHORITY CONTRARY TO THE MANDATES OF THE CONGRESS. WHILE, UNDER THE PROVISIONS OF THE BUY AMERICAN ACT AND THE IMPLEMENTING EXECUTIVE ORDER, EXECUTIVE AGENCIES ARE AUTHORIZED BY THE CONGRESS AND THE PRESIDENT TO FAVOR A DOMESTIC BID OVER A LOWER FOREIGN BID, NEITHER THAT ACT, THE LAWS APPLICABLE TO ADVERTISED PROCUREMENTS, NOR ANY OTHER ENACTMENT OF THE CONGRESS OF WHICH WE ARE AWARE, AUTHORIZES ANY AGENCY OF THE GOVERNMENT TO FAVOR ONE DOMESTIC BIDDER OVER ANOTHER DOMESTIC BIDDER UNDER ADVERTISED PROCUREMENTS. NECESSARILY FOLLOWS THAT WHERE, AS HERE, THE LOW DOMESTIC BIDDER, PUGET SOUND, PROPOSES TO FURNISH, AS AUTHORIZED BY THE ACT AND THE INVITATION FOR DS,"SUBSTANTIALLY ALL" DOMESTIC PRODUCTS, AS DEFINED BY THE EXECUTIVE ORDER, AN EXECUTIVE AGENCY IS NOT VESTED WITH ANY DISCRETIONARY AUTHORITY TO AWARD THE CONTRACT TO A HIGHER DOMESTIC BIDDER ON THE GROUND THAT THE LATTER WILL FURNISH "ALL" DOMESTIC PRODUCTS.

FINALLY, WITH RESPECT TO THE ACT OF AUGUST 28, 1958, PUBLIC LAW 85 804, 72 STAT. 972, 50 U.S.C. 1431-1435, PROVIDING AUTHORITY DURING TIME OF NATIONAL EMERGENCY FOR AGENCIES DESIGNATED BY THE PRESIDENT "TO ENTER INTO CONTRACTS . . . WITHOUT REGARD TO OTHER PROVISIONS OF LAW RELATING TO THE MAKING . . . OF CONTRACTS . . .' THIS AUTHORITY IS CONFINED TO THE NEGOTIATION OF CONTRACTS AND PROVIDES NO AUTHORITY FOR THE EXERCISE OF ADMINISTRATIVE DISCRETION IN MAKING AN AWARD UNDER A FORMALLY ADVERTISED PROCUREMENT SUCH AS HERE INVOLVED. MOREOVER, WHILE ADMITTEDLY THE NEGOTIATION AUTHORITY UNDER THIS ACT IS BROAD, YOUR ATTENTION IS INVITED TO THE FACT THAT THE CONGRESS HAS EXPLICITLY PROVIDED THAT NOTHING CONTAINED THEREIN "SHALL BE CONSTRUED TO CONSTITUTE AUTHORIZATION . . . FOR . . . THE NEGOTIATION OF . . . CONTRACTS . . . REQUIRED BY LAW TO BE PROCURED BY FORMAL ADVERTISING AND COMPETITIVE BIDDING.' THE PROCUREMENT HERE INVOLVED IS, AT LEAST AT THIS TIME, THE SUBJECT OF "FORMAL ADVERTISING AND COMPETITIVE BIDDING.'

IN SUMMARIZATION, THE EVALUATION OF BIDS IN THIS CASE HAS BEEN MADE BY THE DEPARTMENT OF THE NAVY IN ACCORDANCE WITH THE PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION, THE TERMS OF THE INVITATION, AND THE EXECUTIVE ORDER INVOLVED, AND DOES NOT, IN OUR OPINION, VIOLATE THE PROVISIONS OR INTENT OF THE BUY AMERICAN ACT. IT NECESSARILY FOLLOWS THAT, EXCEPT FOR REASONS HEREAFTER TO BE DISCUSSED IN CONNECTION WITH ANOTHER GROUND ADVANCED BY YOU FOR THE REJECTION OF PUGET SOUND'S BID, AWARD, IF ANY, UNDER THIS INVITATION MUST BE MADE TO THAT FIRM.

SEPARATE AND APART FROM THE FOREGOING, WE, OF COURSE, RECOGNIZE AND HAVE CONSISTENTLY HELD THAT NO BIDDER HAS AN ABSOLUTE RIGHT TO PUBLIC BUSINESS BUT, RATHER, THAT THE PUBLIC INTEREST IS OF PRIMARY CONSIDERATION IN DETERMINING WHETHER ANY AWARD SHOULD BE MADE UNDER AN INVITATION FOR BIDS. AN INVITATION FOR BIDS DOES NOT IMPORT AN OBLIGATION TO ACCEPT ANY OF THE OFFERS RECEIVED AND, CONSEQUENTLY, AS EXPRESSLY AUTHORIZED BY 10 U.S.C. 2305 (C),"ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC INTEREST.' SEE 37 COMP. GEN. 12 AND THE COURT DECISIONS AND OTHER OFFICE DECISIONS CITED THEREIN. MAKING THE ABOVE OBSERVATION, IT SHOULD BE CLEARLY UNDERSTOOD BOTH BY YOU AND THE SECRETARY OF THE NAVY THAT WE ARE NOT RECOMMENDING SUCH ACTION IN THIS CASE. IN VIEW OF THE OBVIOUS ADVERSE EFFECTS ON THE SPIRIT AND PURPOSE OF THE COMPETITIVE BIDDING SYSTEM BY THE REJECTION OF ALL BIDS AND THE READVERTISEMENT OR, IF AUTHORIZED BY 10 U.S.C. 2304, THE NEGOTIATION OF THE NEEDS OF THE GOVERNMENT, THIS DISCRETIONARY AUTHORITY SHOULD AND MUST BE EXERCISED WITH THE GREATEST OF CARE AND ONLY UPON A BONA FIDE DETERMINATION THAT THE PUBLIC INTEREST, WHICH MUST ALWAYS BE THE PARAMOUNT CONSIDERATION, WOULD THEREBY BE SERVED. MASSMAN CONSTRUCTION CO. V. UNITED STATES, 102 CT.CL. 699.

YOU FURTHER PROTEST THE PROPOSED AWARD OF THIS CONTRACT TO PUGET SOUND ON THE GROUND THAT THE WORK INVOLVED, THE ALTERATION OF TWO VESSELS, IS GOVERNED BY SECTION 3 OF THE BUY AMERICAN ACT, 41 U.S.C. 10B, COVERING CONTRACTS FOR PUBLIC WORKS, AND UNDER THAT PROVISION OF THE LAW THE USE OF JAPANESE MIDBODIES, AS PROPOSED BY PUGET SOUND, IS PROHIBITED. YOU, THEREFORE, CONTEND THAT, ON THAT BASIS, THE NAVY MUST REJECT PUGET SOUND'S BID WITH THE RESULT THAT YOU WILL THEN BE THE LOW BIDDER AND THUS ENTITLED TO THE AWARD.

ASSUMING, ARGUENDO, THAT THE WORK INVOLVED IS GOVERNED BY SECTION 3 OF THE ACT, RATHER THAN BY SECTION 2, 41 U.S.C. 10A, COVERING CONTRACTS FOR SUPPLIES, AS SET FORTH IN THE INVITATION FOR BIDS, WE DO NOT AGREE THAT, STANDING ALONE, THIS WOULD NECESSARILY REQUIRE THE REJECTION OF PUGET SOUND'S BID. WHILE CONCEDING THAT UNDER SECTION 3 OF THE ACT THE JAPANESE MIDBODIES WOULD BE REGARDED AS A FOREIGN PRODUCT, YOUR CONTENTION OVERLOOKS THE FACT THAT, WHILE THE ACT GIVES PREFERENCE TO DOMESTIC PRODUCTS, IT DOES NOT PROHIBIT, WITHOUT ANY EXCEPTION, THE USE OF FOREIGN PRODUCTS. TO THE CONTRARY, THE ACT EXPRESSLY PROVIDES UNDER SECTION 3 FOR THE SAME EXCEPTIONS AS PROVIDED UNDER SECTION 2, INCLUDING THAT THE RESTRICTIONS AGAINST THE PURCHASE OF FOREIGN PRODUCTS DO NOT APPLY WHERE IT IS DETERMINED THAT THE COST OF DOMESTIC PRODUCTS IS UNREASONABLE, AS WELL AS A FURTHER EXPRESS PROVISION, TO THE SAME EFFECT, THAT THOSE RESTRICTIONS DO NOT APPLY IF IT IS FOUND "THAT IT WOULD UNREASONABLY INCREASE THE COST.' THE PROVISIONS OF EXECUTIVE ORDER NO. 19582, SETTING FORTH CRITERIA FOR USE IN MAKING SUCH DETERMINATIONS APPLY EQUALLY TO BOTH SECTIONS 2 AND 3 OF THE ACT. FURTHER, WHILE SECTION 3A, 41 U.S.C. 10 (B) (A), REQUIRES THAT THE EXCEPTIONS SO AUTHORIZED SHALL BE NOTED IN THE SPECIFICATIONS, WE DO NOT AGREE, AS APPARENTLY URGED ON YOUR BEHALF, THAT THEY MUST BE NOTED IN THE SPECIFICATIONS OF THE INVITATION. RATHER, A PROPER DETERMINATION MAY BE MADE AT ANY TIME, INCLUDING AT THE TIME OF AWARD, OR DURING PERFORMANCE OF THE CONTRACT, TO ADD ITEMS TO, OR DELETE THEM FROM, THE EXEMPT LIST. SEE 40 COMP. GEN. 644. THE INVITATION FOR BID FORM PRESCRIBED BY THE ARMED SERVICES PROCUREMENT REGULATION FOR CONSTRUCTION CONTRACTS SPECIFICALLY REQUESTS BIDDERS TO INDICATE WHETHER THEY INTEND TO FURNISH ANY FOREIGN PRODUCTS IN ADDITION TO THOSE LISTED IN THE INVITATION AND, IF SO, SUPPORTING DATA FROM WHICH A DETERMINATION CAN BE MADE WHETHER THE COST OF SIMILAR DOMESTIC PRODUCTS WOULD BE UNREASONABLE. THE FACT REMAINS, HOWEVER, THAT SINCE A SUPPLY INVITATION FORM WAS USED, PUGET SOUND DID NOT FURNISH NECESSARY DATA FROM WHICH IT MAY NOW BE DETERMINED WHETHER THE COST OF DOMESTIC MIDBODIES WOULD BE REASONABLE OR UNREASONABLE. UNDER SUCH CIRCUMSTANCES,WERE WE TO HOLD THAT SECTION 3 OF THE ACT IS APPLICABLE THE EFFECT WOULD NOT BE, AS STATED BY YOU, THAT PUGET SOUND'S BID MUST BE REJECTED BUT THAT ALL BIDS MUST BE REJECTED. IF BY REASON OF A DEFECT IN THE INVITATION AWARD CANNOT BE MADE IN ACCORDANCE THEREWITH, THE PRINCIPLE OF FAIRNESS TO BIDDERS AND THE INTEGRITY OF THE FORMAL ADVERTISING SYSTEM REQUIRE THAT ALL BIDS BE REJECTED AND THE GOVERNMENT'S NEEDS READVERTISED ON THE BASIS OF PROPER SPECIFICATIONS. 35 COMP. GEN. 7.

WHETHER CONTRACTS FOR THE CONSTRUCTION, ALTERATION OR REPAIR OF NAVAL VESSELS SHOULD BE GOVERNED BY SECTION 3 (PUBLIC WORKS), OR SECTION 2 (SUPPLIES), OF THE BUY AMERICAN ACT IS NOT AN EASY MATTER TO RESOLVE. RECOGNIZE THAT THERE ARE STRONG AND CONVINCING ARGUMENTS ON BOTH SIDES AS ABLY PRESENTED IN THE DETAILED BRIEFS BY YOUR COUNSEL ON YOUR BEHALF AND BY THE COUNSEL, BUREAU OF SHIPS, PRESENTING A CONTRARY VIEW ON BEHALF OF THE NAVY. BOTH SIDES ADMIT THAT THE QUESTION HAS NEVER BEEN SUBMITTED TO A COURT FOR JUDICIAL DETERMINATION AND A MOST THOROUGH REVIEW OF THE LEGISLATIVE HISTORY OF THIS ACT DISCLOSES NO POSITIVE STATEMENT BY ANY MEMBER OF THE CONGRESS AS TO THE INTENDED MEANING OF THE TERM "PUBLIC WORKS" AS USED IN THIS ACT. IN ITS COMMONLY ACCEPTED MEANING, A "PUBLIC WORK" IS A FIXED IMPROVEMENT, IS ASSOCIATED WITH REAL PROPERTY, AND DOES NOT INCLUDE MOVABLE OR PERSONAL PROPERTY, SUCH AS NAVAL VESSELS. LIKEWISE, AS STATED BY YOUR COUNSEL,"SUPPLIES" AS DEFINED AS "PROVISIONS, CLOTHING, ARMS, RAW MATERIALS, ETC. SET ASIDE TO BE DISPENSED AT NEED; STORES; AS, TO LAY IN SUPPLIES FOR THE WINTER; IN CHARGE OF SUPPLIES IN A FACTORY.' WE AGREE THAT THIS DEFINITION SCARCELY INCLUDES VESSELS.

THE MOST PERSUASIVE ARGUMENT PRESENTED IN SUPPORT OF YOUR VIEW IS THE OPINION OF THE SUPREME COURT IN TITLE GUARANTY AND TRUST CO. V. CRANE, 219 U.S. 24 (1910), WHEREIN, HOLDING THAT THE HEARD ACT, ACT OF AUGUST 13, 1894, 28 STAT. 278, AS AMENDED BY THE ACT OF FEBRUARY 24, 1905, 33 STAT. 811, REQUIRING THAT A PENAL BOND BE FURNISHED FOR THE PROTECTION OF LABORERS AND MATERIALMEN UNDER GOVERNMENT CONTRACTS FOR ANY "PUBLIC WORK," APPLIED TO THE CONSTRUCTION OF A VESSEL, IT WAS STATED THAT "WHETHER A WORK IS PUBLIC OR NOT DOES NOT DEPEND UPON ITS BEING ATTACHED TO THE SOIL" AND "WE DO NOT THINK THAT . . . WE ARE BOUND TO READ "ANY PUBLIC WORK" AS CONFINED TO WORK ON THE LAND.' THE COURT THEREIN APPLIED A SO-CALLED "TITLE" CRITERIA IN DETERMINING WHAT WAS A "PUBLIC WORK.' IF TITLE TO THE WORK PASSED TO THE GOVERNMENT DURING THE PROGRESS OF THE WORK, OR IF THE WORK BELONGED TO THE GOVERNMENT, IT WAS A PUBLIC WORK. FOLLOWING THAT DECISION, THE ATTORNEY GENERAL HELD IN 38 OP.ATTY.GEN. 418 (1936), THAT THREE OTHER ACTS CONTAINING THE TERM "PUBLIC WORK" OR "PUBLIC WORKS," INCLUDING THE MILLER ACT (SUPPLANTING THE HEARD ACT) OF AUGUST 24, 1935, 49 STAT. 793, 40 U.S.C. 270A-270D, AND THE DAVIS-BACON ACT OF AUGUST 30, 1935, 49 STAT. 1011, AS AMENDED, 40 U.S.C. 276A--- 276A-5, APPLIED TO THE CONSTRUCTION OF VESSELS. UNTIL THE SUBSEQUENT PASSAGE OF LEGISLATION, SPECIFICALLY REMOVING OR AUTHORIZING THE WAIVER OF THOSE ACTS FROM APPLYING TO CONTRACTS FOR THE CONSTRUCTION OR ALTERATION OF VESSELS, WE LIKEWISE SO HELD. THE ARGUMENT THAT THE TERM "PUBLIC WORKS" UNDER THE BUY AMERICAN ACT SHOULD BE SIMILARLY INTERPRETED IS, AT LEAST, PERSUASIVE. SUPPORT OF NAVY'S VIEW THAT A NAVAL VESSEL IS NOT A "PUBLIC WORK" WITHIN THE MEANING OF THE BUY AMERICAN ACT, ATTENTION HAS BEEN INVITED TO THE ARMED SERVICES PROCUREMENT ACT OF 1947, AS AMENDED, CODIFIED AS PERMANENT LAW IN 10 U.S.C. 2301, ET SEQ., WHICH LISTS UNDER 10 U.S.C. 2303 THE PROPERTY COVERED BY THE ACT AS: (1) PUBLIC WORKS; (2) BUILDINGS; (3) FACILITIES; (4) VESSELS; (5) FLOATING EQUIPMENT; (6) AIRCRAFT; (7) PARTS; (8) ACCESSORIES; (9) EQUIPMENT; AND (10) MACHINE TOOLS. IT IS CONTENDED THAT IN LISTING VESSELS SEPARATELY FROM PUBLIC WORKS, THE CONGRESS CLEARLY INDICATED THAT UNDER THAT ACT THE TERM "PUBLIC WORKS" DID NOT INCLUDE NAVAL VESSELS. IT IS FURTHER STATED THAT SINCE THE ENACTMENT OF THAT ACT IN 1947, CONTRACTS FOR THE CONSTRUCTION OR ALTERATION OF VESSELS HAVE BEEN UNIFORMLY CONSIDERED AS SUPPLY CONTRACTS UNDER THAT ACT AS WELL AS THE BUY AMERICAN ACT. IT IS ALSO STATED, AND CONFIRMED BY OUR REVIEW THEREOF, THAT INDICATED PROVISIONS OF THE ARMED SERVICES PROCUREMENT REGULATION AS WELL AS THE FEDERAL PROCUREMENT REGULATIONS AUTHORIZE THIS ACTION. THESE REGULATIONS HAVE THE FORCE AND EFFECT OF LAW. SEE 38 COMP. GEN. 248 AND G. L. CHRISTIAN AND ASSOCS. V. UNITED STATES, CT.CL.NO. 56-59, DECIDED JANUARY 11, 1963. IT IS FURTHER POINTED OUT THAT THE CONGRESS, ON THREE SEPARATE OCCASIONS, TO OVERCOME THE EFFECT OF DECISIONS HOLDING THAT THE CONSTRUCTION OR ALTERATION OF VESSELS WAS SUBJECT TO THE DAVIS-BACON ACT, SUPRA, ENACTED LEGISLATION, 1938 NAVAL EXPANSION ACT, 52 STAT. 403, 34 U.S.C. 498K (1952 ED.); 1940 NAVAL EXPANSION ACT, 54 STAT. 395, 34 U.S.C. 498L (1952 ED.); AND 10 U.S.C. 7299, PROVIDING THAT CONTRACTS FOR SUCH WORK WERE SUBJECT TO THE WALSH-HEALEY ACT OF JUNE 30, 1936, 49 STAT. 2036, AS AMENDED, 41 U.S.C. 35-45, COVERING SUCH MATTERS AS MINIMUM WAGES AND MAXIMUM HOURS UNDER ALL CONTRACTS EXCEEDING $10,000 FOR THE MANUFACTURE OR FURNISHING OF SUPPLIES. LIKEWISE, THE NAVY BRIEF REFERS TO THE FACT THAT, FOR THE SAME REASON, THE CONGRESS ENACTED LEGISLATION ON APRIL 29, 1941, 55 STAT. 147, 40 U.S.C. 270E, AUTHORIZING THE ARMY AND THE NAVY TO WAIVE THE REQUIREMENTS OF THE MILLER ACT, SUPRA, UNDER CONTRACTS FOR THE CONSTRUCTION, ALTERATION OR REPAIR OF VESSELS. THOUGH NO MENTION IS MADE THEREOF BY THE NAVY, WE NOTE THAT BY THE AMENDMENT OF THIS WAIVER AUTHORITY, ACT OF JUNE 3, 1955, 69 STAT. 83, 40 U.S.C. 270E, TO EXTEND ITS APPLICATION TO OTHER AGENCIES, THIS LEGISLATION NOW READS THAT THE AGENCIES DESIGNATED THEREIN ARE AUTHORIZED TO WAIVE THE MILLER ACT WITH RESPECT TO CERTAIN TYPES OF CONTRACTS "FOR THE CONSTRUCTION, ALTERATION, OR REPAIR OF ANY PUBLIC BUILDING OR PUBLIC WORK OF THE UNITED STATES AND WITH RESPECT TO CONTRACTS FOR THE . . . CONSTRUCTION, ALTERATION, REPAIR . . . OF VESSELS.' WE DEEM IT SIGNIFICANT THAT HERE AGAIN THE CONGRESS HAS DELIBERATELY DIFFERENTIATED BETWEEN "PUBLIC WORKS" AND "VESSELS.' WHILE A NUMBER OF OTHER SIGNIFICANT FACTORS HAVE BEEN PRESENTED IN SUPPORT OF NAVY'S VIEW THAT THE CONGRESS DID NOT AND DOES NOT INTEND THAT THE CONSTRUCTION OF VESSELS BE CHARACTERIZED AS "PUBLIC WORKS," WE SHALL, IN CLOSING THE ARGUMENTS IN SUPPORT THEREOF, ONLY REFER TO THE FACT THAT IN THE MILITARY APPROPRIATION BILLS, CONGRESS DISTINGUISHES BETWEEN "PUBLIC WORKS" AND NAVAL VESSELS BY MAKING SEPARATE APPROPRIATIONS THEREFOR. SEE THE MILITARY CONSTRUCTION APPROPRIATION ACT, 1963, PUBLIC LAW 87-684, 76 STAT. 576, AND TITLE III, PROCUREMENT, UNDER SUBHEADING "SHIPBUILDING AND CONVERSION, NAVY," IN THE DEPARTMENT OF DEFENSE APPROPRIATION ACT, 1963, PUBLIC LAW 87 577, 76 STAT. 318, 324, RESPECTIVELY.

IT IS A WELL-ESTABLISHED RULE OF STATUTORY CONSTRUCTION THAT WHEN A STATUTE IS FAIRLY SUSCEPTIBLE OF DIFFERENT CONSTRUCTIONS, THE CONSTRUCTION GIVEN IT BY THOSE CHARGED WITH ITS ADMINISTRATION IS ALWAYS ENTITLED TO THE HIGHEST RESPECT AND, THOUGH NOT CONTROLLING, IF ACTED UPON FOR A NUMBER OF YEARS WILL NOT BE DISTURBED EXCEPT FOR THE MOST COGENT REASONS AND UNLESS CLEARLY ERRONEOUS. SEE WEBSTER V. LUTHER, 163 U.S. 331, 342; MCLAREN V. FLEISCHER, 256 U.S. 477; NATIONAL LAND CO. V. UNITED STATES, 102 CT.CL. 180; PLUNKET V. UNITED STATES, 58 CT.CL. 359; AND DAY V. UNITED STATES, 123 CT.CL. 10. SINCE WE FIND NO SUCH BASES FOR DISTURBING THE ACTION FOLLOWED BY THE NAVY FOR APPROXIMATELY 15 YEARS IN CLASSIFYING THE CONSTRUCTION OR ALTERATION OF NAVAL VESSELS AS THE PROCUREMENT OF ITEMS OF SUPPLIES COVERED BY SECTION 2 OF THE BUY AMERICAN ACT AND SINCE SUCH ACTION HAS AT LEAST RECEIVED THE TACIT APPROVAL OF THE CONGRESS, WE FIND NO LEGAL BASIS FOR OBJECTION TO THE PROPOSED AWARD OF THE CONTRACT TO PUGET SOUND.