B-158155, JAN. 27, 1966

B-158155: Jan 27, 1966

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INC.: REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 8. YOU STRESS THAT DIFFICULTIES ARE STILL BEING ENCOUNTERED BY THE GROUNDFISH INDUSTRY OF NEW ENGLAND IN COMPETING WITH FIRMS OFFERING PRODUCTS DERIVED FROM IMPORTED FROZEN FISH BLOCKS AND YOU STATE THAT IN THE ABOVE INVITATION THE VETERANS ADMINISTRATION "DECIDED TO AMEND THE "BUY AMERICAN ACT" FOR FISH PRODUCTS BY STATING "BIDDER MAY SUBMIT OFFERS ON A FOREIGN PRODUCT AS WELL AS DOMESTIC * * *.'" YOU ALSO ENCLOSE A COPY OF A LETTER DATED DECEMBER 6. RECEIVED BY YOU FROM THE PROCUREMENT AGENT AT THE HINES ACTIVITY IN WHICH IT IS STATED "WE CONSIDER OFFERS ON FOREIGN FISH PRODUCTS AS DOMESTIC PRODUCTS ARE NOT PRODUCED IN SUFFICIENT AND REASONABLY AVAILABLE QUANTITIES.

B-158155, JAN. 27, 1966

TO NORTH ATLANTIC FISH CO., INC.:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 8, 1965, PROTESTING THE AWARD OF CONTRACTS FOR TEN ITEMS OF FROZEN FISH PORTIONS TO OTHER THAN A DOMESTIC FISH PRODUCING FIRM UNDER INVITATION FOR BIDS NO. M4 174-66 ISSUED NOVEMBER 17, 1965, BY THE VETERANS ADMINISTRATION SUPPLY DEPOT, HINES, ILLINOIS.

YOU STRESS THAT DIFFICULTIES ARE STILL BEING ENCOUNTERED BY THE GROUNDFISH INDUSTRY OF NEW ENGLAND IN COMPETING WITH FIRMS OFFERING PRODUCTS DERIVED FROM IMPORTED FROZEN FISH BLOCKS AND YOU STATE THAT IN THE ABOVE INVITATION THE VETERANS ADMINISTRATION "DECIDED TO AMEND THE "BUY AMERICAN ACT" FOR FISH PRODUCTS BY STATING "BIDDER MAY SUBMIT OFFERS ON A FOREIGN PRODUCT AS WELL AS DOMESTIC * * *.'" YOU ALSO ENCLOSE A COPY OF A LETTER DATED DECEMBER 6, 1965, RECEIVED BY YOU FROM THE PROCUREMENT AGENT AT THE HINES ACTIVITY IN WHICH IT IS STATED "WE CONSIDER OFFERS ON FOREIGN FISH PRODUCTS AS DOMESTIC PRODUCTS ARE NOT PRODUCED IN SUFFICIENT AND REASONABLY AVAILABLE QUANTITIES. THIS IS IN ACCORDANCE WITH THE BUY AMERICAN ACT WHICH IS INCORPORATED IN OUR INVITATIONS FOR BIDS.' YOU TAKE ISSUE WITH THE REMARK THAT SUFFICIENT DOMESTIC PRODUCTS ARE NOT AVAILABLE. IT IS NOTED, HOWEVER, THAT THE PROCUREMENT AGENT WENT ON IN HIS LETTER OF DECEMBER 6 TO EXPLAIN THAT IN EVALUATING BIDS HE ADJUSTS EACH FOREIGN BID BY ADDING 6 PERCENT, EXCEPT THAT A 12 PERCENT FACTOR IS USED INSTEAD OF A 6 PERCENT FACTOR IF THE FIRM SUBMITTING THE LOW ACCEPTABLE DOMESTIC BID IS A SMALL BUSINESS CONCERN OR A LABOR SURPLUS AREA CONCERN.

SECTION 2 OF THE BUY AMERICAN ACT, AS INCORPORATED BY REFERENCE IN THE INVITATION, IS CODIFIED IN 41 U.S.C. 10A AS FOLLOWS:

"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 LITY.'

IN OUR LETTER TO YOU OF MARCH 10, 1965, B-155812, CONCERNING YOUR PROTEST AGAINST A SIMILAR PROCUREMENT OF FROZEN FISH PORTIONS BY THE DISTRICT OF COLUMBIA WE ALSO SET FORTH OR CITED THE APPLICABLE IMPLEMENTING PROVISIONS OF EXECUTIVE ORDER NO. 10582, DECEMBER 17, 1954, AND OF THE FEDERAL PROCUREMENT REGULATIONS (SECTION 1-6.104-4) WHICH PROVIDE FOR ADDING 6 PERCENT AND 12 PERCENT DIFFERENTIALS TO BIDS ON FOREIGN PRODUCTS (AS DESCRIBED IN THE PROCUREMENT AGENT'S LETTER OF DECEMBER 6) IN DETERMINING WHETHER THE COST TO THE GOVERNMENT FOR DOMESTIC PRODUCTS SHALL BE CONSIDERED UNREASONABLE. IN THE INTEREST OF BREVITY WE WILL NOT AGAIN OUTLINE THOSE PROVISIONS IN THIS LETTER.

CONTRARY TO YOUR CONTENTION WE ARE INCLINED TO VIEW THE STATEMENT IN THE INVITATION, THAT BIDDERS MAY SUBMIT OFFERS ON FOREIGN AS WELL AS DOMESTIC PRODUCTS, AS BEING IN THE NATURE OF A CLARIFICATION OF THE SPECIFICATION REGARDING PRODUCTS WHICH WOULD BE CONSIDERED RESPONSIVE TO THE INVITATION, RATHER THAN AN ATTEMPT BY THE VETERANS ADMINISTRATION TO EITHER AMEND THE PROVISIONS OF THE BUY AMERICAN ACT OR TO ENCOURAGE BIDDERS TO OFFER FOREIGN PRODUCTS INSTEAD OF DOMESTIC PRODUCTS. IT SHOULD BE NOTED THAT SUCH STATEMENT IS SET FORTH IN PARAGRAPH 31 OF THE ADDITIONAL BIDDING INSTRUCTIONS, TERMS AND CONDITIONS, AS ONE OF SEVERAL AMENDMENTS TO VA FORM 10-1130, RATHER THAN AS AN AMENDMENT TO THE BUY AMERICAN ACT AS SUCH, AND THAT UNDER PARAGRAPH 7 ON PAGE 2 OF THE IFB (STANDARD FORM 33) PROVISION WAS ALSO MADE FOR BIDDERS TO DESIGNATE THE END PRODUCTS OFFERED WHICH WERE NOT DOMESTIC SOURCE END PRODUCTS.

AS YOU WERE ADVISED IN OUR LETTER OF MARCH 10, 1965, THE BUY AMERICAN ACT DOES NOT PROHIBIT THE PURCHASE OF FOREIGN SUPPLIES BY A FEDERAL AGENCY BUT WAS DESIGNED TO ACCORD CERTAIN PREFERENTIAL TREATMENT TO DOMESTIC ITEMS. SUCH PREFERENCE WAS ACCORDED YOUR BID ON ALL-DOMESTIC PRODUCTS WHEN THE VETERANS ADMINISTRATION CONSIDERED THE 6 PERCENT AND 12 PERCENT FACTORS IN EVALUATING THOSE BIDS OFFERING PRODUCTS DERIVED FROM FOREIGN FISH BLOCKS. A REVIEW OF THE BIDDING DOCUMENTS SHOW THAT THE LOW ALL-DOMESTIC BID OF YOUR FIRM (REPRESENTED TO BE A SMALL BUSINESS CONCERN) EXCEEDS THE LOW FOREIGN-PRODUCT BID BY MORE THAN A 12 PERCENT DIFFERENTIAL ON EACH OF THE TEN ITEMS CONCERNED.

REGARDING THE PROCUREMENT AGENT'S REMARK THAT DOMESTIC PRODUCTS ARE NOT PRODUCED IN SUFFICIENT AND REASONABLY AVAILABLE QUANTITIES, SUCH REMARK IS OBVIOUSLY NOT COMPATIBLE WITH HIS SUBSEQUENT STATEMENTS CONCERNING THE BUY AMERICAN ACT AND HIS APPLICATION OF THE 6 PERCENT AND 12 PERCENT EVALUATION FACTORS TO THE FOREIGN BIDS, INASMUCH AS THE LAST SENTENCE OF SECTION 2 OF THE ACT SPECIFICALLY PROVIDES THAT SUCH SECTION SHALL NOT APPLY TO SUPPLIES WHICH ARE NOT PRODUCED IN SUFFICIENT AND REASONABLY AVAILABLE COMMERCIAL QUANTITIES. FURTHER, SUBPART 8-6.1 OF THE VETERANS ADMINISTRATION PROCUREMENT REGULATIONS PROVIDES THAT, WHILE CONTRACTING OFFICERS MAY REQUEST THAT CERTAIN SUPPLIES BE EXCEPTED FROM THE BUY AMERICAN ACT, SUCH DETERMINATIONS WILL BE MADE BY THE ADMINISTRATOR OF VETERANS AFFAIRS. A LIST OF THE SUPPLIES WHICH THE ADMINISTRATOR HAS DETERMINED MAY BE ACQUIRED BY THE VETERANS ADMINISTRATION WITHOUT REGARD TO SOURCE IS SET OUT UNDER PARAGRAPH 8-6.105 OF THE REGULATIONS. FROZEN FISH PORTIONS ARE NOT INCLUDED IN THAT LIST, AND WE HAVE BEEN INFORMALLY ADVISED BY THE VETERANS ADMINISTRATION THAT NO REQUEST TO EXEMPT FROZEN FISH FROM THE BUY AMERICAN ACT HAS BEEN MADE BY ITS MARKETING DIVISION AND THAT NO SUCH EXEMPTION HAS BEEN MADE BY THE ADMINISTRATOR.

IN VIEW OF THE FOREGOING WE PERCEIVE NO VIOLATIONS OF THE BUY AMERICAN ACT IN THE AWARDING OF THE CONTRACTS TO 40 FATHOMS SEAFOODS, INC., CHESTNUT HILL, MASSACHUSETTS (ITEMS 1 THROUGH 3) AND TO VIKING SEAFOODS, INC., BOSTON, MASSACHUSETTS (ITEMS 4 THROUGH 10), ON FROZEN FISH PORTIONS DERIVED FROM FOREIGN FISH BLOCKS, AND YOUR PROTEST IS THEREFORE DENIED.