B-157916, NOV. 24, 1965

B-157916, NOV. 24, 1965

TO NEW YORK SHIPBUILDING CORPORATION:

BY LETTER DATED OCTOBER 26, 1965, WITH ENCLOSURES, YOU PROTESTED AGAINST ANY AWARD TO CANADIAN VICKERS INDUSTRIES LTD. UNDER INVITATION FOR BIDS NO. 189-5-66, ISSUED ON JULY 8, 1965, BY THE NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA.

THE INVITATION, AS AMENDED, REQUESTED BIDS FOR ONE SUBMARINE MODEL, .2333 SCALE; ONE SUBMARINE STERN SECTION, 1/2 SCALE; AND ONE SECTION NO. 7, FULL SCALE. BIDDERS WERE ADVISED THAT:

"SUBJECT TO THE PROVISIONS OF PARAGRAPH 8 OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS, AWARD WILL GENERALLY BE MADE TO A SINGLE BIDDER ON EACH ENTIRE LOT. HOWEVER, THE GOVERNMENT RESERVES THE RIGHT TO AWARD BY ITEM WHEN THE CONTRACTING OFFICER DETERMINES THAT IT IS ADVANTAGEOUS TO THE GOVERNMENT.'

PARAGRAPH 8 OF THE TERMS AND CONDITIONS PROVIDED IN PERTINENT PART THAT:

"8. AWARD OF CONTRACT.--- (A) 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.

"/C) THE GOVERNMENT MAY ACCEPT ANY ITEM OR GROUP OF ITEMS OF ANY BID, UNLESS THE BIDDER QUALIFIES HIS BID BY SPECIFIC LIMITATIONS. * * *"

BY AMENDMENT NO. 2 TO THE INVITATION, THE DUTY-FREE ENTRY--- CANADIAN SUPPLIES CLAUSE PRESCRIBED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 6-605.2 WAS INCORPORATED IN THE INVITATION BECAUSE THE PROCUREMENT INVOLVED THE PURCHASE OF END ITEMS CONTAINED IN THE LIST MAINTAINED BY THE NAVY UNDER ASPR 6-103.5 (A) OF CANADIAN SUPPLIES (ASPR 6-101 (E) ( DETERMINED TO BE OF A MILITARY CHARACTER.

SIX BIDS WERE RECEIVED AND OPENED ON SEPTEMBER 17, 1965, AND THE TWO LOWEST BIDS WERE AS FOLLOWS:

CHART

ITEM 1 ITEM 2 ITEM 3 TOTAL NEW YORK SHIPBUILDING $344,488 $281,750 $132,674 $758,912 CANADIAN VICKERS 275,290 280,950 213,725 769,965

YOU PROTEST AGAINST ANY AWARD TO CANADIAN VICKERS SINCE THE INVITATION DOES NOT PERMIT A RESPONSIVE BID BY A CANADIAN FIRM AS A PRIME CONTRACTOR; THAT THE DUTY-FREE CLAUSE MERELY PERMITS A DOMESTIC FIRM TO IMPORT CANADIAN END PRODUCTS DUTY FREE; AND THAT THE AMOUNT OF DUTY REQUIRED TO BE PAID MUST BE TAKEN INTO CONSIDERATION IN THE EVALUATION OF BIDS AS REQUIRED BY ASPR WHETHER THE DUTY IS PAYABLE OR NOT.

AN EXAMINATION OF CANADIAN VICKERS' BID DOES NOT INDICATE THAT IT TOOK ANY EXCEPTION TO THE REQUIREMENTS OF THE INVITATION. AS TO THE APPLICABILITY OF CERTAIN CLAUSES TO A CANADIAN BIDDER, WE NOTE THAT THE PROCUREMENT ACTIVITY ADVISED YOU ON OCTOBER 20, 1965, OF THE REASONS WHY THE SPECIFIC CLAUSES OF THE INVITATION ARE NOT APPLICABLE IN THE CASE OF A FOREIGN CONTRACTOR PERFORMING A GOVERNMENT CONTRACT OUTSIDE OF THE UNITED STATES. THE FACT THAT A FOREIGN BIDDER CANNOT COMPLY WITH SUCH INAPPLICABLE CLAUSES DOES NOT RENDER ITS BID NONRESPONSIVE SINCE ITS OBLIGATIONS TO PERFORM ARE NOT SUBJECT TO THE CLAUSES MENTIONED BY YOU. WE, THEREFORE, AGREE WITH THE PROCUREMENT ACTIVITY AS TO THE RESPONSIVENESS OF THE CANADIAN VICKERS' BID. ADDITIONALLY, WE FIND NOTHING IN THE PERTINENT PROVISIONS OF SECTION VI OF ASPR WHICH WOULD PRECLUDE AN AWARD OF A CONTRACT FOR A LISTED MILITARY END ITEM TO A PRIVATE CANADIAN FIRM SUBMITTING THE LOWEST RESPONSIVE BID.

WE ARE INFORMED BY THE PROCUREMENT ACTIVITY THAT THE END ITEMS INVOLVED WILL BE USED IN THE PERFORMANCE OF TESTS UNDER LABORATORY CONDITIONS AND, IF DESTROYED, WILL NOT BE REPLACED. MORE PARTICULARLY, THE ITEMS TO BE SUPPLIED ARE CHAMBERS REQUIRED FOR TEST AND EXPERIMENTAL PURPOSES. ITEM 1 IS A SIMPLIFIED SCALE MODEL OF AN ATTACK-TYPE SUBMARINE AND WILL BE USED IN A STUDY OF NOISE AND VIBRATION EMANATING FROM THE MAJOR STRUCTURAL COMPONENTS AND NOISE CREATED IN THE WATER DIRECTLY ATTRIBUTABLE TO THE VELOCITY OF THE ITEM. ITEM 2, WHICH IS A MODEL OF THE STERN PORTION OF A SUBMARINE, IS TO BE USED AS A TEST VEHICLE IN WHICH CERTAIN EQUIPMENT WILL BE INSTALLED FOR WEAPON IMPACT TESTS AND FOR HIGH EXPLOSIVE TESTS. GOVERNMENT-OWNED SIMULATED EQUIPMENT SUCH AS HYDRAULIC SYSTEM, SHAFT, SHAFT BEARING, HYDRAULIC GEAR, ETC., WILL BE INSTALLED IN THE VEHICLE AT THE CONTRACTOR'S PLANT. AFTER DELIVERY OF THE ITEM, THE GOVERNMENT WILL INSTALL CERTAIN INSTRUMENTATION IN THE VEHICLE TO RECORD THE RESULTS OF THE TESTS. ITEM 3 WILL BE USED PRIMARILY FOR TESTING STRENGTH OF WELDS.

ASPR 6-103.5 PROVIDES IN PERTINENT PART AS FOLLOWS:

"/A) LISTED. THE SECRETARIES OF THE DEPARTMENTS HAVE DETERMINED THAT IT WOULD BE INCONSISTENT WITH THE PUBLIC INTEREST TO APPLY THE RESTRICTIONS OF THE BUY AMERICAN ACT WITH RESPECT TO CERTAIN SUPPLIES, WHICH HAVE BEEN DETERMINED TO BE OF A MILITARY CHARACTER OR INVOLVED IN PROGRAMS OF MUTUAL INTEREST TO THE UNITED STATES AND CANADA, WHERE SUCH SUPPLIES ARE MINED, PRODUCED, OR MANUFACTURED IN CANADA AND EITHER (I) ARE CANADIAN END PRODUCTS OFFERED BY THE LOWEST ACCEPTABLE BID OR PROPOSAL OR (II) ARE INCORPORATED IN END PRODUCTS MANUFACTURED IN THE UNITED STATES. EACH DEPARTMENT MAINTAINS A LIST OF THESE SUPPLIES, WHICH IS APPROVED BY THE SECRETARY CONCERNED. (THE DEPARTMENTAL LISTS PROVIDE THAT PARTS AND EQUIPMENT FOR LISTED SUPPLIES ARE CONSIDERED TO BE INCLUDED IN THE LISTS, EVEN THOUGH NOT SEPARATELY LISTED, WHEN THEY ARE PROCURED UNDER A CONTRACT THAT ALSO CALLS FOR LISTED SUPPLIES.)

"/C) APPLICATION OF CANADIAN EXCEPTION. THE EFFECT OF (A) AND (B) ABOVE MAY BE SUMMARIZED AS FOLLOWS.

"/2) LISTED CANADIAN END PRODUCTS ARE TREATED AS DOMESTIC SOURCE END PRODUCTS AND NEITHER DUTY NOR THE EVALUATION FACTORS PRESCRIBED BY 6-104.4 SHALL BE USED FOR EVALUATION.'

THE END ITEMS INVOLVED HERE WERE DETERMINED TO BE CANADIAN LABORATORY EQUIPMENT CONTAINED IN THE LIST APPEARING IN NAVY PROCUREMENT DIRECTIVES 6 -103.5. SINCE THIS DETERMINATION WAS BASED UPON TECHNICAL CONSIDERATIONS, WE OBVIOUSLY ARE NOT IN A POSITION TO QUESTION SUCH JUDGMENT. THAT BEING THE CASE, THE ADVERTISED END ITEMS CONSTITUTE LISTED CANADIAN PRODUCTS WHICH ARE REQUIRED TO BE TREATED AS DOMESTIC SOURCE END ITEMS; AND, UNDER ASPR 6-103.5 (C) (2), NEITHER DUTY NOR THE USUAL BUY AMERICAN ACT BID EVALUATION FACTORS ARE FOR CONSIDERATION.

CONCERNING THE USE OF THE DUTY-FREE CLAUSE, YOUR ATTENTION IS INVITED TO ASPR 6-605.1 (A) WHEREIN THE POLICY GOVERNING THE DUTY-FREE ENTRY OF CANADIAN SUPPLIES IS STATED AS FOLLOWS:

"/A) IN KEEPING WITH THE POLICY TO ENHANCE ECONOMIC COOPERATION WITH CANADA IN THE INTERESTS OF CONTINENTAL DEFENSE (6-504), DUTY-FREE ENTRY SHOULD GENERALLY BE ACCORDED CANADIAN SUPPLIES THAT CONSTITUTE, OR THAT ARE DIRECTLY OR INDIRECTLY INCORPORATED IN, END ITEMS INCLUDED IN THE DEPARTMENTAL LISTS OF SUPPLIES MAINTAINED PURSUANT TO 6-103.5 (A). (THESE DEPARTMENTAL LISTS INCLUDE SUPPLIES OF A MILITARY CHARACTER OR WHICH ARE INVOLVED IN PROGRAMS OF MUTUAL INTEREST TO THE UNITED STATES AND CANADA. * * * DUTY-FREE ENTRY SHOULD BE ACCORDED SUCH SUPPLIES BY THE ISSUANCE OF DUTY-FREE ENTRY CERTIFICATES IN ACCORDANCE WITH THIS PARAGRAPH 6-605 AND, IN PARTICULAR, AS PROVIDED IN THE CONTRACT CLAUSE PRESCRIBED IN 6-605.2.'

THIS PROVISION, WHEN READ IN THE LIGHT OF ASPR 6-103.5, CLEARLY CONTEMPLATES THE FREE ENTRY OF LISTED CANADIAN PRODUCTS FURNISHED BY A CANADIAN SUPPLIER; HENCE, NO REQUIREMENT EXISTS FOR THE APPLICATION OF A DUTY EVALUATION FACTOR IN THIS SITUATION.

ACCORDINGLY, WE FIND NO LEGAL BASIS TO QUESTION CONSIDERATION OF THE BID OF CANADIAN VICKERS UNDER THE SUBJECT INVITATION.