B-161061, MAY 22, 1967, 46 COMP. GEN. 813

B-161061: May 22, 1967

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OF A FOREIGN MOTOR COSTING LESS THAN 50 PERCENT OF THE PUMP UNIT TO WHICH IT WAS MOUNTED AND ALIGNED FOR INSTALLATION IN AN AIR- CONDITIONING SYSTEM DOES NOT VIOLATE THE BUY AMERICAN CLAUSE OF THE CONTRACT. THE COMPLETED PUMP IS WITHIN THE CONTRACT DEFINITION OF A "DOMESTIC CONSTRUCTION MATERIAL. 1967: REFERENCE IS MADE TO YOUR LETTER OF MARCH 9. WAS AWARDED TO KLEFSTAD ENGINEERING COMPANY. THE CONTRACTOR AGREES THAT ONLY DOMESTIC CONSTRUCTION MATERIAL WILL BE USED (BY THE CONTRACTOR. AN UNMANUFACTURED CONSTRUCTION MATERIAL IS A "DOMESTIC CONSTRUCTION MATERIAL" IF IT HAS BEEN MINED OR PRODUCED IN THE UNITED STATES. A MANUFACTURED CONSTRUCTION MATERIAL IS A "DOMESTIC CONSTRUCTION MATERIAL" IF IT HAS BEEN MANUFACTURED IN THE UNITED STATES AND IF THE COST OF ITS COMPONENTS WHICH HAVE BEEN MINED.

B-161061, MAY 22, 1967, 46 COMP. GEN. 813

CONTRACTS - BUY AMERICAN ACT - CONSTRUCTION CONTRACTS - DOMESTIC MATERIAL REQUIREMENT UNDER A CONSTRUCTION CONTRACT CONTAINING A BUY AMERICAN CLAUSE REQUIRING THE USE OF DOMESTIC CONSTRUCTION MATERIAL, SO DEFINED WHEN THE COST OF THE COMPONENTS OF THE MATERIAL MANUFACTURED IN THE UNITED STATES EXCEEDS 50 PERCENT OF THE COST OF ALL THE COMPONENTS BROUGHT TO THE SITE FOR INCORPORATION IN THE BUILDING OR WORK, THE USE BY A SUBCONTRACTOR, WITHOUT PRIOR APPROVAL, OF A FOREIGN MOTOR COSTING LESS THAN 50 PERCENT OF THE PUMP UNIT TO WHICH IT WAS MOUNTED AND ALIGNED FOR INSTALLATION IN AN AIR- CONDITIONING SYSTEM DOES NOT VIOLATE THE BUY AMERICAN CLAUSE OF THE CONTRACT, THE ASSEMBLED PUMP UNIT DELIVERED TO THE CONSTRUCTION SITE CONSTITUTING MANUFACTURED CONSTRUCTION MATERIAL, AND THE COST OF THE NONDOMESTIC COMPONENT COSTING LESS THAN 50 PERCENT, THE COMPLETED PUMP IS WITHIN THE CONTRACT DEFINITION OF A "DOMESTIC CONSTRUCTION MATERIAL," THEREBY ENTITLING THE CONTRACTOR TO COMPENSATION FOR HIS REASONABLE COSTS OF REPLACING THE FOREIGN MOTORS ORDERED BY THE CONTRACTING OFFICER.

TO THE ADMINISTRATOR, VETERANS ADMINISTRATION, MAY 22, 1967:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 9, 1967, REQUESTING A DECISION AS TO THE APPLICABILITY OF THE PROVISIONS OF THE BUY AMERICAN ACT, 41 U.S.C. 10A-D, TO THE FACTS ESTABLISHED BY THE RECORD IN A CONSTRUCTION CONTRACT APPEAL MATTER CURRENTLY PENDING BEFORE THE VETERANS ADMINISTRATION CONTRACT APPEALS BOARD, VACAB-551.

THE SUBJECT CONTRACT, V1006C-601, PROJECT NO. 37-5387, WAS AWARDED TO KLEFSTAD ENGINEERING COMPANY, INC., AND BLACKHAWK HEATING AND PLUMBING COMPANY, INC. (A JOINT VENTURE), ON FEBRUARY 7, 1964, FOR A CENTRAL CHILLED WATER AIR-CONDITIONING SYSTEM FOR VARIOUS BUILDINGS, AND FOR MISCELLANEOUS CONSTRUCTION, AT THE VETERANS ADMINISTRATION HOSPITAL (NP), PITTSBURGH, PENNSYLVANIA. CLAUSE 19 OF THE CONTRACT'S GENERAL PROVISIONS (STANDARD FORM 23-A, APRIL 1961 EDITION) PROVIDES:

(A) AGREEMENT. IN ACCORDANCE WITH THE BUY AMERICAN ACT (41 U.S.C. 10A- 10D) AND EXECUTIVE ORDER 10582, DECEMBER 17, 1954 (3 CFR SUPP.), THE CONTRACTOR AGREES THAT ONLY DOMESTIC CONSTRUCTION MATERIAL WILL BE USED (BY THE CONTRACTOR, SUBCONTRACTORS, MATERIALMEN, AND SUPPLIERS) IN THE PERFORMANCE OF THIS CONTRACT, EXCEPT FOR NONDOMESTIC MATERIAL LISTED IN THE CONTRACT.

(B) DOMESTIC CONSTRUCTION MATERIAL. "CONSTRUCTION MATERIAL" MEANS ANY ARTICLE, MATERIAL, OR SUPPLY BROUGHT TO THE CONSTRUCTION SITE FOR INCORPORATION IN THE BUILDING OR WORK. AN UNMANUFACTURED CONSTRUCTION MATERIAL IS A "DOMESTIC CONSTRUCTION MATERIAL" IF IT HAS BEEN MINED OR PRODUCED IN THE UNITED STATES. A MANUFACTURED CONSTRUCTION MATERIAL IS A "DOMESTIC CONSTRUCTION MATERIAL" IF IT HAS BEEN MANUFACTURED IN THE UNITED STATES AND IF THE COST OF ITS COMPONENTS WHICH HAVE BEEN MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES EXCEEDS 50 PERCENT OF THE COST OF ALL ITS COMPONENTS. "COMPONENT" MEANS ANY ARTICLE, MATERIAL, OR SUPPLY DIRECTLY INCORPORATED IN A CONSTRUCTION MATERIAL.

(C) DOMESTIC COMPONENT. A COMPONENT SHALL BE CONSIDERED TO HAVE BEEN "MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES" (REGARDLESS OF ITS SOURCE IN FACT) IF THE ARTICLE, MATERIAL OR SUPPLY IN WHICH IT IS INCORPORATED WAS MANUFACTURED IN THE UNITED STATES AND THE COMPONENT IS OF A CLASS OR KIND DETERMINED BY THE GOVERNMENT TO BE NOT MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE COMMERCIAL QUANTITIES AND OF A SATISFACTORY QUALITY. THESE DEFINITIONS AGREE WITH THOSE SET FORTH IN PARAGRAPH 1-6.201 OF THE FEDERAL PROCUREMENT REGULATIONS, WHICH ALSO PROVIDE UNDER PARAGRAPH 1-6.202-2 THAT IN DETERMINING WHETHER A CONSTRUCTION MATERIAL IS A DOMESTIC CONSTRUCTION MATERIAL ONLY THE CONSTRUCTION MATERIAL AND ITS COMPONENTS SHALL BE CONSIDERED.

THE BUY AMERICAN ACT REQUIRES (SEE 41 U.S.C. 10B) THAT EVERY CONTRACT FOR CONSTRUCTION, ALTERATION, OR REPAIR OF ANY PUBLIC BUILDING OR PUBLIC WORK SHALL CONTAIN A PROVISION THAT THERE SHALL BE USED IN PERFORMANCE OF THE WORK 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 IN THE UNITED STATES, EXCEPT IN CERTAIN CIRCUMSTANCES SPECIFIED IN THE ACT. TO ASSIST IN THE ADMINISTRATION OF THOSE PROVISIONS, AND OF THE PROVISIONS OF EXECUTIVE ORDER NO. 10582, DECEMBER 17, 1954, THE ABOVE-QUOTED DEFINITIONS IN CLAUSE 19 AND FPR 1-6.201 WERE FORMULATED.

THE RECORD SHOWS THAT ON MARCH 17, 1964, THE PRIME CONTRACTOR ENTERED INTO A SUBCONTRACT WITH ,DEMMING (SIC) PUMP COMPANY C/O ROBERT SCHWARTZ CO., INC. 5916 WEST MONROE ST. MORTON GROVE, ILLINOIS," FOR ALL PUMPS AS CALLED FOR IN THE PLANS AND SPECIFICATIONS OF THE PRIME CONTRACT, INCLUSIVE OF "ALL PUMPS, MOTORS, AND CONDENSATE PUMPS; ALL COMPLETELY OPERABLE UNITS AS PER NUMBER, SIZE AND KIND AS CALLED FOR ON PLANS AND DESCRIBED IN SPECIFICATIONS. SUBMIT TEN (10) COPIES OF LITERATURE OF ALL COPIES OF MATERIAL AND EQUIPMENT WITHIN TEN (10) DAYS AFTER DATE OF THIS CONTRACT FOR SUBMITTAL AND APPROVAL.'

PARAGRAPH 683-24 (H) OF THE SPECIFICATIONS PROVIDES: CLOSE COUPLED CIRCULATING PUMP UNITS SHALL HAVE PUMP AND MOTOR MOUNTED ON THE SAME BASE (EXTENDED FRAME CONSTRUCTION) WITH THE MOTOR SHAFT MECHANICALLY EXTENDED TO THE PUMP IMPELLER WITH THE REQUIRED SHAFT BEARING AS AN INTEGRAL PART OF THE MOTOR. MOTOR AND PUMP SHAFT SHALL BE COMPLETELY ALIGNED, SECURELY FITTED AND MECHANICALLY LOCKED INTO POSITION. SHAFT SEAL SHALL BE OF THE HEAVY MECHANICAL TYPE. PARAGRAPH 683-24 (B) ALSO PROVIDES IN PART THAT "PUMPS SHALL BE TYPE INDICATED OR REQUIRED TO SUIT INSTALLATION CONDITIONS WITH ADEQUATE INTEGRAL OR EXTERNAL SUPPORT TO BEAR THE LOAD OF PUMP AND MOTOR, SUPPRESS VIBRATION AND PREVENT NOISE.'

IT APPEARS THAT THE SCHWARTZ COMPANY PURCHASED ENGLISH-MADE ELECTRIC MOTORS, FOR DELIVERY TO DEMING DIVISION OF CRANE COMPANY, SALEM, OHIO, WHICH FIRM MOUNTED AND ALIGNED THE MOTORS AT ITS FACTORY IN SALEM TO PUMPS OF ITS OWN MANUFACTURE, IN ACCORDANCE WITH SPECIFICATION 683-24. THE COMPLETELY MOUNTED AND ALIGNED PUMP UNITS WERE THEN DELIVERED TO THE SITE AND INSTALLED IN THE PROJECT WORK. THE RECORD CONTAINS THE STATEMENT OF THE PRESIDENT OF THE SCHWARTZ COMPANY THAT THE COST OF THE DOMESTIC MATERIALS DIRECTLY INCORPORATED IN THE PUMP UNITS AMOUNTED TO AT LEAST $3,526.20 AND THE COST OF THE FOREIGN MATERIALS (MOTORS) DIRECTLY INCORPORATED IN SUCH UNITS AMOUNTED TO NO MORE THAN $3,463.68. THESE FIGURES DO NOT APPEAR TO BE DISPUTED.

UNDER DATE OF JULY 17, 1964, DEMING SUBMITTED TO BOYD C. WAGNER, INC., THE VA'S ARCHITECT-ENGINEER (A-E) FOR THE PROJECT, DETAILS OF THE "CENTRIFUGAL SECTION" OF THE CONTRACT WORK, COMPRISING THE PUMPS AND MOTORS. ALTHOUGH ARTICLE 9 OF THE STANDARD FORM 23A, WHICH WAS INCORPORATED INTO THE CONTRACT, CALLED FOR "THE NAME OF THE MANUFACTURER, THE MODEL NUMBER, AND OTHER IDENTIFYING DATA AND INFORMATION RESPECTING THE PERFORMANCE, CAPACITY, NATURE, AND RATING OF THE MACHINERY AND MECHANICAL AND OTHER EQUIPMENT WHICH THE CONTRACTOR CONTEMPLATES INCORPORATING IN THE WORK," THE SUBMITTAL CONTAINED NO INFORMATION AS TO THE MANUFACTURER OF THE MOTORS WHICH DEMING INTENDED TO USE. DESPITE THIS DEFICIENCY, THE SUBMITTAL WAS APPROVED BY THE WAGNER ORGANIZATION AND BY THE VA RESIDENT ENGINEER.

IN JANUARY 1965, THE CONTRACTING OFFICER WAS ADVISED BY THE A-E THAT THE MOTORS, WHICH HAD THEN BEEN INSTALLED, WERE OF FOREIGN MANUFACTURE. AFTER CONSIDERING THE CONTRACTOR'S CONTENTIONS THAT USE OF SUCH MOTORS WAS PERMISSIBLE, THE CONTRACTING OFFICER HELD, BY DECISION DATED DECEMBER 21, 1965, THAT USE OF SUCH MOTORS VIOLATED THE BUY AMERICAN ACT, AND DIRECTED THE PRIME CONTRACTOR TO REPLACE THE FOREIGN MOTORS WITH DOMESTIC MOTORS. WHILE THE PRIME CONTRACTOR REPLACED THE MOTORS AS DIRECTED, HE ENTERED A TIMELY APPEAL FROM THE CONTRACTING OFFICER'S DECISION AND CLAIMED INCREASED COSTS IN THE AMOUNT OF $8,745.99. THE VETERANS ADMINISTRATION CONTRACT APPEALS BOARD UPHELD THE GOVERNMENT'S POSITION BY DECISION ISSUED NOVEMBER 28, 1966, IN WHICH IT DENIED THE APPEAL. THEREAFTER, THE PRIME CONTRACTOR FILED A MOTION FOR RECONSIDERATION BASED ON THE ALLEGATION THAT THE BOARD'S DECISION CONTAINED MATERIAL ERRORS OF LAW. THAT MOTION IS NOW PENDING BEFORE THE BOARD.

IN YOUR LETTER YOU STATE THAT YOU HAVE FOUND NO AUTHORITATIVE PRECEDENT FOR RESOLUTION OF THE QUESTION AT ISSUE, WHICH YOU DEFINE AS FOLLOWS:

IN THE CASE AT ISSUE APPELLANT CONTENDS THAT THE ASSEMBLED PUMP UNIT IS THE END-PRODUCT TO BE CONSIDERED BECAUSE THE ALIGNMENT AND COUPLING OF PUMP TO MOTOR WAS A MANUFACTURING OPERATION. THE CONTRACTING OFFICER CONTENDS THAT THE ASSEMBLY OF PUMPS AND MOTORS WAS NOT A MANUFACTURING OPERATION AND THAT THE END-PRODUCTS TO BE CONSIDERED ARE THE FOREIGN MOTORS WHICH WERE EVENTUALLY INCORPORATED IN THE CONSTRUCTION WORK AT THE SITE WITHOUT EXCEPTION FROM THE PROVISIONS OF THE BUY AMERICAN ACT.

A REVIEW OF THE BOARD'S DECISION INDICATES THAT WHILE IT CONSIDERED AND REJECTED APPELLANT'S CONTENTIONS, ITS DECISION APPEARS TO BE BASED UPON GROUNDS OTHER THAN THOSE ADVANCED BY GOVERNMENT COUNSEL. THE BASES FOR BOTH THE BOARD'S DECISION AND FOR ITS REJECTION OF APPELLANT'S CONTENTIONS ARE SET OUT AS FOLLOWS AT PAGE 11 OF ITS DECISION:

APPELLANT RELIES UPON 39 COMP. GEN. 435 (DECEMBER 11, 1959), WHICH STATES:

"* * * IT HAS NOW BEEN HELD THAT EVEN THE MERE ASSEMBLY OF PARTS PREVIOUSLY MANUFACTURED MAY BE REGARDED AS THE MANUFACTURE OF THE COMPLETE ARTICLE * * *" APPELLANT ACKNOWLEDGES THAT THE SOURCE OF THE MOTORS IS NEWMAN ELECTRIC MOTORS, INC., A FOREIGN CORPORATION WITH HOME OFFICES IN ENGLAND. HOWEVER, IT ARGUES THAT WHEN DEMMING PUMP COMPANY OF SALEM, OHIO, INCORPORATED THE FOREIGN-MADE MOTOR INTO THE CIRCULATING WATER PUMP UNIT, DEMMING PUMP COMPANY PERFORMED A MANUFACTURING FUNCTION TO BRING THE PUMP UNIT WITHIN PARAGRAPH (B) OF THE BUY AMERICAN CLAUSE. IN OUR OPINION, THIS ARGUMENT IS NOT VALID BECAUSE THE FOREIGN MOTORS FURNISHED DID NOT MEET NOR SATISFY THE REQUIREMENTS OF PARAGRAPH (C), DOMESTIC COMPONENT, OF THE BUY AMERICAN ACT.

THE CIRCUMSTANCES IN 39 COMP. GEN. 435 WERE DIFFERENT FROM THE FACTS HERE. THERE THE INTENTION TO USE MATERIALS OF FOREIGN SOURCE WAS MADE KNOWN TO THE CONTRACTING OFFICER AT THE TIME OF BIDDING. WE DO NOT BELIEVE THAT IN THE ABSENCE OF (1) A REQUEST FOR EXCEPTION TO THE BUY AMERICAN ACT OR (2) INFORMATION THAT AN ITEM OF FOREIGN ORIGIN WILL BE USED WITHOUT OBTAINING AN EXCEPTION, A CONTRACTOR CAN CIRCUMVENT THE PROVISIONS OF THE ACT BY LIMITING HIS FOREIGN PRODUCTS TO LESS THAN 50 PERCENT OF THE COST OF ALL MATERIALS.

FROM OUR REVIEW OF THE RECORD IT IS OUR OPINION THAT THE INITIAL QUESTION FOR DETERMINATION IS WHETHER THE MOTORS OR THE COMPLETE PUMP UNITS ARE TO BE CONSIDERED THE "CONSTRUCTION MATERIAL" WHICH THE SUBCONTRACTOR "BROUGHT TO THE CONSTRUCTION SITE FOR INCORPORATION IN THE BUILDING," WITHIN THE MEANING OF THOSE TERMS AS USED IN CLAUSE 19 (B) OF THE GENERAL PROVISIONS OF THE CONTRACT. IN THIS CONNECTION, IT APPEARS THAT BOTH THE CONTRACTING OFFICER AND THE BOARD HAVE FOUND THAT THE "ARTICLE, MATERIAL, OR SUPPLY BROUGHT TO THE CONSTRUCTION SITE FOR INCORPORATION IN THE BUILDING OR WORK" WAS A COMPLETE CIRCULATING WATER PUMP UNIT, WITH MOTOR MOUNTED ON THE SAME BASE WITH THE PUMP, AND THE SHAFTS ALIGNED AND COUPLED AS REQUIRED FOR OPERATION. SEE PAGE 10 OF THE BOARD'S DECISION OF NOVEMBER 28, WHERE IT IS STATED:

WE DO NOT DISAGREE WITH THE APPELLANT THAT THE FOREIGN-MADE MOTORS ARE AN INTEGRAL PART OF THE CIRCULATING WATER PUMP UNITS. MOTORS MANUFACTURED DOMESTICALLY WOULD ALSO FORM AN INTEGRAL PART OF THE PUMP UNITS. THE GOVERNMENT CONTRACTED FOR A UNIT, A CIRCULATING WATER PUMP, WHICH, OF NECESSITY, INCLUDED A MOTOR, OTHERWISE THE PRODUCT WOULD BE USELESS. THE QUESTION HERE IS, DID THE TERMS OF THE CONTRACT PERMIT THE UTILIZATION OF A FOREIGN-MADE MOTOR IN LIEU OF A DOMESTIC MOTOR? SINCE SUCH CONSTRUCTION OF THE UNIT WAS REQUIRED BY THE CONTRACT SPECIFICATIONS, AND DELIVERY OF SUCH COMPLETELY OPERABLE UNITS TO THE CONSTRUCTION SITE WAS REQUIRED, AND MADE, UNDER THE PRIME CONTRACTOR'S SUBCONTRACT FOR PUMPS, WE FIND NO BASIS TO DISAGREE WITH THE ADMINISTRATIVE FINDINGS AND MUST CONCLUDE THAT EACH DELIVERED CIRCULATING WATER PUMP UNIT WAS A ,CONSTRUCTION MATERIAL" AS DEFINED IN CLAUSE 19 (B). WHERE A NONDOMESTIC ITEM IS MERELY A COMPONENT OF A CONSTRUCTION MATERIAL, AND CONSTITUTES LESS THAN 50 PERCENT OF ALLITS COMPONENTS, THE MATERIAL IS DOMESTIC UNDER THE DEFINITION SET OUT IN CLAUSE 19 (B), AND ITS USE IS NOT A VIOLATION OF THE BUY AMERICAN STIPULATION OF THE CONTRACT. UNDER SUCH CIRCUMSTANCES THE FACT THAT DOMESTIC COMPONENTS WERE AVAILABLE WHICH COULD HAVE BEEN USED IN PLACE OF THE FOREIGN COMPONENTS IS IMMATERIAL, SINCE NEITHER THE STATUTE, NOR THE IMPLEMENTING EXECUTIVE ORDER, NOR THE REGULATIONS PROVIDE FOR ANY CONSIDERATION OF DEGREES OF DOMESTICITY, AND SINCE 1954 THE FIFTY PERCENT RULE HAS BEEN ACCEPTED AS THE SOLE TEST OF WHETHER A MANUFACTURED ARTICLE OF SUPPLY OR MATERIAL HAS BEEN MANUFACTURED "SUBSTANTIALLY ALL" FROM DOMESTIC ARTICLES, MATERIALS OR SUPPLIES WITHIN THE MEANING OF THE STATUTE. IN THE INSTANT CASE, SINCE THE MOTOR WAS DIRECTLY INCORPORATED INTO THE UNIT, IT WOULD ALSO SEEM TO CONFORM TO THE DEFINITION OF "COMPONENT" SET FORTH IN CLAUSE 19 (B).

SUCH CONCLUSIONS, HOWEVER, LEAVE UNRESOLVED THE QUESTION WHETHER THE ASSEMBLY (MOUNTING, ALIGNMENT, COUPLING, ETC.) OF THE VARIOUS COMPONENTS PRODUCED A CONSTRUCTION MATERIAL WHICH WAS ,MANUFACTURED" IN THE UNITED STATES, AND THEREFORE QUALIFIED AS A "DOMESTIC CONSTRUCTION ATERIAL" UNDER THE CRITERIA SET OUT IN CLAUSE 19 (B) OF THE GENERAL PROVISIONS OF THE CONTRACT.

NEITHER THE ACT NOR THE PERTINENT REGULATIONS DEFINE THE TERM "MANUFACTURED," AND IT IS NO EASIER TODAY TO DETERMINE WHAT CONSTITUTES THE MANUFACTURE OF AN ITEM, AS IT PERTAINS TO A PARTICULAR LAW AND SET OF CIRCUMSTANCES, THAN IT WAS IN DECEMBER 1959 WHEN WE OBSERVED THE DIFFICULTIES ATTENDANT TO SUCH DETERMINATIONS IN 39 COMP. GEN. 435, CITED BY THE PRIME CONTRACTOR, CONCERNING A SMALL BUSINESS MANUFACTURER. COMMENTING ON THAT DECISION AND THE AUTHORITY CITED THEREIN, 55 C.J.S. 680 -685, YOU STATE THAT SUCH AUTHORITY INDICATES THERE ARE THREE ESSENTIAL ELEMENTS OF A MANUFACTURE; (1) AN ORIGINAL SOURCE OF MATERIAL, (2) A PROCESS WHEREBY THE ORIGINAL MATERIAL IS CHANGED OR TRANSFORMED, AND (3) AN ARTICLE WHICH BY REASON OF PROCESSING IS TO SOME EXTENT DIFFERENT FROM THE ORIGINAL MATERIAL. WE FEEL THAT THE LANGUAGE "IN CONSIDERING WHAT CONSTITUTES A MANUFACTURE OR MANUFACTURING, THE MORE COMPREHENSIVE DEFINITIONS WHICH ARE SET OUT SUPRA SEC. 1 INDICATE THAT GENERALLY THERE ARE THREE MAIN OR ESSENTIAL ELEMENTS" WHICH PRECEDES THE LISTING OF THE THREE ELEMENTS AT PAGE 681 OF THE CITATION SHOWS ONLY A GENERAL, RATHER THAN A UNIFORM APPLICATION OF THOSE ELEMENTS. WHILE SUCH CITATION PERTAINS TO DECISIONS ON LAWS GENERALLY WHICH HAVE EMPLOYED "MANUFACTURE" OR LIKE TERMS, THE CONTROLLING FACTORS IN DETERMINING THE APPLICATION OF SUCH A TERM TO A PARTICULAR SITUATION ARE THE SPECIFIC LAWS INVOLVED AND, WHEN DETERMINABLE, THE LEGISLATIVE INTENT IN THE USE OF THE TERM. A CLEAR ANALYSIS OF THE PROBLEM IS SET FORTH AS FOLLOWS IN THE OPENING TWO PARAGRAPHS OF THE 55 C.J.S. 680-685 CITATION:

IT HAS BEEN WELL STATED THAT IT IS SOMETIMES DIFFICULT TO DETERMINE WITH LEGAL EXACTNESS WHAT IS OR WHAT IS NOT MANUFACTURING. THE SUBJECT NOT ONLY IS A LARGE ONE, BUT THERE IS CONSIDERABLE CONFLICT IN THE DECISIONS HAVING TO DO WITH PARTICULAR PHASES OF IT, AND THERE IS NOT A LITTLE CONFUSION OF THOUGHT WITH RESPECT TO IT. IN DETERMINING WHAT CONSTITUTES MANUFACTURE THERE IS NO HARD AND FAST RULE WHICH CAN BE APPLIED GENERALLY. EACH CASE MUST BE DECIDED UNDER ITS OWN FACTS, HAVING REGARD FOR THE SENSE IN WHICH THE TERM MAY BE USED IN THE PARTICULAR INSTANCE, AND THE INTENT OR PURPOSE TO BE ACCOMPLISHED. THE FACT THAT A GIVEN THING OR INDUSTRY HAS BEEN HELD TO BE "MANUFACTURE" UNDER ONE SET OF CIRCUMSTANCES IS NO ASSURANCE THAT IT WILL BE SO HELD UNDER ANOTHER. WHAT MIGHT BE A MANUFACTURING INDUSTRY WHEN DEFINED OR CONSTRUED IN CONNECTION WITH AN INSTRUMENT OR A STATUTE MIGHT NOT BE SO HELD WHEN CONSIDERED IN CONNECTION WITH ANOTHER INSTRUMENT OR STATUTE HAVING A DIFFERENT PURPOSE OR OBJECT. THERE IS, OF COURSE, A MULTITUDE OF CASES IN WHICH PARTICULAR INDUSTRIES AND PRODUCTS HAVE BEEN HELD RESPECTIVELY TO BE OR NOT TO BE ,MANUFACTURE.'

IT IS CLEAR THAT THE DEFINITION OF THE WORD "MANUFACTURE" IS A QUESTION OF LAW FOR THE COURTS, AND THAT THE VARIOUS DEFINITIONS WHICH ARE SET OUT SUPRA SEC. 1 A EMBODY THE GENERAL IDEA THAT MAY BE FOUND IN ALL OF THE CASES WHERE THE WORD HAS COME UP FOR CONSTRUCTION, BUT THE DEFINITIONS AS GIVEN BY THE LEXICOGRAPHERS OR WHAT MIGHT BE CALLED THE "STANDARD DEFINITIONS," CANNOT BE STRICTLY AND SAFELY APPLIED. THE COURTS MUST CONSIDER THAT THE LEGISLATURES IN EMPLOYING THE WORD HAD IN MIND NOT ONLY THE LEXICOGRAPHICAL DEFINITIONS, BUT ALSO THE POPULAR CONCEPTION OF WHAT CONSTITUTES MANUFACTURING. THUS THE COURTS HAVE FREQUENTLY FOUND IT NECESSARY IN CARRYING OUT THE LEGISLATIVE INTENT IN THE USE OF THE WORD TO LIMIT MATERIALLY THE SCOPE OF THE GENERAL DEFINITIONS, AND IN MANY CASES HAVE FOUND THAT THE LEGAL DEFINITION IS THE MORE APPROPRIATE.

WE HAVE BEEN UNABLE TO FIND ANY HOLDINGS BY THE COURTS, OR IN PREVIOUS DECISIONS OF OUR OFFICE, WHICH ARE CONTROLLING, OR EVEN MATERIALLY HELPFUL, TO US HERE. SINCE THE BUY AMERICAN ACT DOES NOT DEFINE THE TERM "MANUFACTURED" AS USED THEREIN, WE HAVE REVIEWED THE LEGISLATIVE HISTORY OF THE ACT. ON FEBRUARY 3, 1933, 76 CONG. REC. 3267, THE SENATE CONSIDERED A PROPOSED AMENDMENT WHICH WOULD HAVE OMITTED THE PROVISION SPONSORED BY SENATOR HIRAM W. JOHNSON TO REQUIRE THE ACQUISITION OF ONLY SUCH ARTICLES 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.' WHEN ASKED TO COMMENT ON THE PROPOSED AMENDMENT, SENATOR JOHNSON MADE THE FOLLOWING STATEMENT:

MR. PRESIDENT, THE SENATOR FROM WISCONSIN STRIKES OUT, AS I RECALL, LINES 7 TO 12 OF SECTION 2 OF THE BILL. HE INSERTS IN LIEU THEREOF:

"ARTICLES OF THE GROWTH, PRODUCTION, AND/OR MANUFACTURE OF THE UNITED STATES.'

FROM MY STANDPOINT, THE VICE OF HIS AMENDMENT IS THAT FROM OUTSIDE, FROM A FOREIGN COUNTRY, COULD BE BROUGHT INTO THIS COUNTRY THE MATERIAL WHICH COULD BE MANUFACTURED AS SEEN FIT, AND THEN IT WOULD NOT BE WITHIN THE PROHIBITION OF THE LAW.

FOR INSTANCE, AS I HAVE REPEATEDLY STATED UPON THE FLOOR, THE IMPELLING CAUSE OF THIS MEASURE WAS THE SITUATION AT THE BOULDER DAM, WHERE IT WAS EXPECTED THAT THE LOWEST BID WOULD BE FROM GERMANY FOR THE TURBINES OR GENERATING MACHINERY AND THE LIKE--- A TRANSACTION INVOLVING ABOUT $6,000,000. NOW, ASSUME THAT THEY BROUGHT OVER FROM GERMANY PART OF THE MACHINERY, AND ASSUME THAT THEY BROUGHT OVER THEN IN ANOTHER SHIP ANOTHER PART OF IT, AND IN ANOTHER SHIP ANOTHER PART OF IT, AND THEN, IN SOME FACTORY IN THIS COUNTRY IT WAS ASSEMBLED AND MANUFACTURED. THEN, THERE WOULD BE NO PROHIBITION UPON IT SUCH AS I DESIRE TO PUT IN THIS BILL UPON BIDS OF THAT SORT. IT DOES NOT APPEAR FROM HIS USE OF THE TERMS "ASSEMBLED" AND "MANUFACTURED" THAT SENATOR JOHNSON INTENDED ANY SPECIAL DISTINCTION BETWEEN THOSE TERMS IN THE APPLICATION OF THE PROPOSED LEGISLATION, NOR DOES HIS ILLUSTRATION INDICATE THAT THE REFERENCED TURBINES OR GENERATING MACHINERY WERE NOT TO BE CONSIDERED AS "MANUFACTURED" IN THE UNITED STATES UPON ASSEMBLY THEREIN OF THEIR FOREIGN -MANUFACTURED COMPONENTS.

IN VIEW OF THE FOREGOING, WE FIND NO COMPELLING REASON FOR NARROWING THE MEANING OF THE TERM ,MANUFACTURED" AS USED IN THE BUY AMERICAN ACT TO EXCLUDE WHAT THE SCHWARTZ COMPANY, THROUGH DEMING, DID IN THE INSTANT CASE. ACCORDINGLY, EACH COMPLETE PUMP UNIT DELIVERED BY THAT COMPANY TO THE CONSTRUCTION SITE SHOULD BE REGARDED AS CONSTITUTING A MANUFACTURED CONSTRUCTION MATERIAL, WHICH HAD BEEN MANUFACTURED AT DEMING'S FACTORY IN THE UNITED STATES, AND THEREFORE AS BEING WITHIN THE DEFINITION OF A "DOMESTIC CONSTRUCTION MATERIAL," SINCE ITS U.S. MANUFACTURED COMPONENTS EXCEEDED 50 PERCENT OF THE COST OF ALL ITS COMPONENTS.

FOR THE REASONS STATED WE CONCLUDE AS A MATTER OF LAW THAT THE USE OF FOREIGN MOTORS IN THE CIRCULATING PUMP UNITS WAS NOT IN VIOLATION OF THE BUY AMERICAN CLAUSE OF THE CONTRACT HERE INVOLVED, AND THE CONTRACTOR IS THEREFORE ENTITLED TO COMPENSATION FOR HIS REASONABLE COSTS OF REPLACING THEM UNDER THE ORDER OF THE CONTRACTING OFFICER.