B-161191, JUN. 9, 1967

B-161191: Jun 9, 1967

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INC.: REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 3. THE BASES OF YOUR PROTEST ARE THAT DOMESTIC SOURCES ARE AVAILABLE FOR THIS PROCUREMENT. THAT AN AWARD TO A FOREIGN BIDDER WILL DESTROY AN ESSENTIAL INDUSTRIAL BASE FOR NATIONAL SECURITY. PROCUREMENT NOTICES WERE SENT TO 74 FIRMS. 38 FIRMS WERE SOLICITED AND 10 BIDS WERE RECEIVED AT TIME OF BID OPENING ON MARCH 14. AN AIRMAIL REGISTERED BID ENVELOPE WAS RECEIVED FROM ELIE ADES. THE ENVELOPE WAS PROPERLY ADDRESSED TO THE PROCURING AGENCY AND CONTAINED A LABEL INDICATING INVITATION NO. THE ENVELOPE BORE A REGISTERED MAIL RECEIPT AND WAS POST-MARKED AT SAN FRANCISCO. THE BIDDER WAS REQUESTED TO FURNISH THE REGISTERED MAIL RECEIPT. ON THE BASIS THAT THE DELAY IN RECEIPT OF THE BID WAS DUE SOLELY TO A DELAY IN THE MAILS FOR WHICH THE BIDDER WAS NOT RESPONSIBLE.

B-161191, JUN. 9, 1967

TO STEBCO INDUSTRIES, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF APRIL 3, 1967, PROTESTING AGAINST AWARD OF CONTRACT TO ANY FOREIGN BIDDER UNDER INVITATION FOR BIDS NO. DSA100-67-B-1476, ISSUED BY THE DEFENSE PERSONNEL SUPPORT CENTER, DEFENSE SUPPLY AGENCY.

THE BASES OF YOUR PROTEST ARE THAT DOMESTIC SOURCES ARE AVAILABLE FOR THIS PROCUREMENT; THAT AN AWARD TO A FOREIGN BIDDER WILL DESTROY AN ESSENTIAL INDUSTRIAL BASE FOR NATIONAL SECURITY; AND THAT SUCH AN AWARD WOULD BE INCONSISTENT WITH THE PUBLIC INTEREST AND WOULD IMPEDE OUR BALANCE OF INTERNATIONAL PAYMENTS DEFICITS. AS WE INDICATED IN OUR CONFERENCE WITH MR. BISHAF ON APRIL 26, 1967, SEVERAL OTHER FIRMSHAVE SIMILARLY PROTESTED TO THE PROCURING AGENCY.

THE INVITATION ISSUED ON FEBRUARY 9, 1967, REQUESTING BIDS FOR THE MANUFACTURE AND DELIVERY OF 708,590 MATTRESSES, PNEUMATIC, NYLON, OG 207, WITH BID OPENING FIXED AT 3 P.M., E.S.T., MARCH 14, 1967. THE INVITATION ALSO SET ASIDE 288,060 ITEMS FOR AWARD UNDER LABOR SURPLUS AREA PROCEDURES. PROCUREMENT NOTICES WERE SENT TO 74 FIRMS; 38 FIRMS WERE SOLICITED AND 10 BIDS WERE RECEIVED AT TIME OF BID OPENING ON MARCH 14, 1967.

THEREAFTER, ON MARCH 15, 1967, AT 7:30 A.M; AN AIRMAIL REGISTERED BID ENVELOPE WAS RECEIVED FROM ELIE ADES, 1201 SANCHEZ STREET, SAN FRANCISCO, CALIFORNIA. THE ENVELOPE WAS PROPERLY ADDRESSED TO THE PROCURING AGENCY AND CONTAINED A LABEL INDICATING INVITATION NO. DSA100-67-B-1476, WITH DATE OF OPENING MARCH 14, 1967, 3 P.M., FOR MATTRESSES, PNEUMATIC. THE ENVELOPE BORE A REGISTERED MAIL RECEIPT AND WAS POST-MARKED AT SAN FRANCISCO, CALIFORNIA, ON MARCH 13, 1967. IN ACCORDANCE WITH ASPR 2-303.3 (A), THE BIDDER WAS REQUESTED TO FURNISH THE REGISTERED MAIL RECEIPT. A RESULT OF INFORMATION FURNISHED BY BOTH THE BIDDER AND THE POST OFFICE STATIONS INVOLVED, THE CONTRACTING OFFICER EXECUTED A LATE BID CERTIFICATE AND ACCEPTED THE BID OF ELIE ADES AS AGENT FOR DAVIDSON AND CO., LTD., TAIPEI, TAIWAN, ON THE BASIS THAT THE DELAY IN RECEIPT OF THE BID WAS DUE SOLELY TO A DELAY IN THE MAILS FOR WHICH THE BIDDER WAS NOT RESPONSIBLE. IN THIS REGARD, THE RECORD SHOWS THAT THE BID WAS MAILED IN SUFFICIENT TIME TO HAVE BEEN RECEIVED AT THE PHILADELPHIA POST OFFICE NO LATER THAN 12 NOON ON MARCH 14, AND THAT THERE WAS, IN ACCORDANCE WITH NORMAL PRACTICE, A MAIL PICKUP AT THE POST OFFICE AT 1 P.M. AND 2 P.M. UNDER THESE FACTS, THE PICKUP SCHEDULE WOULD HAVE PERMITTED THE BID TO ARRIVE AT THE BID OPENING ROOM IN TIME FOR THE 3 P.M. OPENING. WE THEREFORE FIND NO BASIS TO DISAGREE WITH THE ADMINISTRATIVE CONCLUSION THAT THIS BID WAS AN ACCEPTABLE LATE BID.

THE BID OF ELIE ADES AS AGENT FOR DAVIDSON AND CO., LTD., TAIPEI, TAIWAN, INCLUDED WITH IT A LETTER OF MARCH 13, 1967, REFERRING TO THE SUBJECT INVITATION, TOGETHER WITH AUTHORITY FOR ELIE ADES TO SIGN BIDS AS AGENT FOR DAVIDSON AND CO., LTD., AND CONTEMPLATED THE FURNISHING OF A FOREIGN END PRODUCT. THE BIDDER OFFERED AN ACCELERATED DELIVERY SCHEDULE WHICH WAS ADMINISTRATIVELY DETERMINED TO CONFORM TO OR BE BETTER THAN THE DELIVERY SCHEDULE REQUIRED BY THE INVITATION AND, CONSEQUENTLY, WAS CONSIDERED TO BE RESPONSIVE. THE BID AND PRICE ANALYSIS BRANCH, DIRECTORATE OF PROCUREMENT AND PRODUCTION, BY LETTER DATED APRIL 7, 1967, INFORMED THE CONTRACTING OFFICER THAT THE BID OF DAVIDSON AND CO. FOR THE ENTIRE UNRESTRICTED QUANTITY IN THE AMOUNT OF $3,446,398.95 WAS THE LOWEST RECEIVED AFTER CONSIDERATION OF DISCOUNTS OFFERED, FREIGHT COSTS, BIDDER'S QUALIFICATIONS, AND AFTER THE ADDITION OF THE 50-PERCENT EVALUATION FACTOR, EXCLUSIVE OF DUTY, IN ACCORDANCE WITH ASPR 6-104.4.

THEREAFTER, THE CONTRACTING OFFICER REQUESTED A PREAWARD PLANT SURVEY OF DAVIDSON AND CO. AND WAS INFORMED BY THE CHIEF, TAIWAN FIELD OFFICE, UNITED STATES ARMY PROCUREMENT AGENCY, THAT THE BIDDER HAS THE ABILITY TO DELIVER IN ACCORDANCE WITH THE SCHEDULE OF THE INVITATION AND HAS THE ABILITY FOR ACCELERATED DELIVERY. THE TAIWAN FIELD OFFICE ALSO RECOMMENDED THAT AWARD BE MADE ON THE INVITATION DELIVERY SCHEDULE WHICH PROVIDED FOR ACCELERATION. THE COST AND PRICE ANALYSIS UNIT OF THE DIRECTORATE OF PROCUREMENT AND PRODUCTION INFORMED THE CONTRACTING OFFICER THAT DAVIDSON WAS FINANCIALLY RESPONSIBLE TO PERFORM THE PROPOSED AWARD.

SINCE THE BID OF ELIE ADES CONTEMPLATES THE FURNISHING OF FORMOSAN PRODUCTS, THERE IS FOR CONSIDERATION THE BUY AMERICAN ACT, 41 U.S.C. 10A, ET SEQ. THIS ACT PROVIDES, IN PERTINENT PART, THAT---

"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 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.'

PAGE 35 OF THE INVITATION INCORPORATED BY REFERENCE STANDARD FORM 32, JUNE 1964 EDITION (GENERAL PROVISIONS, SUPPLY CONTRACT), AND DSA FORM 222, NOVEMBER 1964, ADDITIONAL GENERAL PROVISIONS AND ALTERATIONS TO GENERAL PROVISIONS. AS ALTERED BY DSA FORM 222, ARTICLE 14 OF THE GENERAL PROVISIONS, MADE A PART OF THE INVITATION AND ANY SUCCEEDING CONTRACT, PROVIDES:

"BUY AMERICAN ACT

"/A) IN ACQUIRING END PRODUCTS, THE BUY AMERICAN ACT (41 U.S.C. 10 A-D) PROVIDES THAT THE GOVERNMENT GIVE PREFERENCE TO DOMESTIC SOURCE END PRODUCTS. FOR THE PURPOSE OF THIS CLAUSE:

"/I) "COMPONENTS" MEANS THOSE ARTICLES, MATERIALS, AND SUPPLIES, WHICH ARE DIRECTLY INCORPORATED IN THE END PRODUCTS;

"/II) "END PRODUCTS" MEANS THOSE ARTICLES, MATERIALS, AND SUPPLIES, WHICH ARE TO BE ACQUIRED UNDER THIS CONTRACT FOR PUBLIC USE; AND

"/III) A "DOMESTIC SOURCE END PRODUCT" MEANS (A) AN UNMANUFACTURED END PRODUCT WHICH HAS BEEN MINED OR PRODUCED IN THE UNITED STATES AND (B) 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 EXCEEDS 50 PERCENT OF THE COST OF ALL ITS COMPONENTS. FOR THE PURPOSES OF THIS (A) (III) (B), COMPONENTS OF FOREIGN ORIGIN OF THE SAME TYPE OR KIND AS THE PRODUCTS REFERRED TO IN (B) (II) OR (III) OF THIS CLAUSE SHALL BE TREATED AS COMPONENTS MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES.

"/B) THE CONTRACTOR AGREES THAT THERE WILL BE DELIVERED UNDER THIS CONTRACT ONLY DOMESTIC SOURCE END PRODUCTS, EXCEPT END PRODUCTS:

"/I) WHICH ARE FOR USE OUTSIDE THE UNITED STATES;

"/II) WHICH THE GOVERNMENT DETERMINES ARE NOT MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE COMMERCIAL QUANTITIES AND OF A SATISFACTORY QUALITY;

"/III) AS TO WHICH THE SECRETARY DETERMINES THE DOMESTIC PREFERENCE TO BE INCONSISTENT WITH THE PUBLIC INTEREST; OR

"/IV) AS TO WHICH THE SECRETARY DETERMINES THE COST TO THE GOVERNMENT TO BE UNREASONABLE.

"/THE FOREGOING REQUIREMENTS ARE ADMINISTERED IN ACCORDANCE WITH EXECUTIVE ORDER NO. 10582, DATED DECEMBER 17, 1954. SO AS TO ALLEVIATE THE IMPACT OF DEPARTMENT OF DEFENSE EXPENDITURES ON THE UNITED STATES BALANCE OF INTERNATIONAL PAYMENTS, BIDS OFFERING DOMESTIC SOURCE END PRODUCTS NORMALLY WILL BE EVALUATED AGAINST BIDS OFFERING OTHER END PRODUCTS BY ADDING A FACTOR OF FIFTY PERCENT (50 PERCENT) TO THE LATTER, EXCLUSIVE OF IMPORT DUTIES. DETAILS OF THE EVALUATION PROCEDURE ARE SET FORTH IN SECTION VI OF THE ARMED SERVICES PROCUREMENT REGULATION.)"

PURSUANT TO ASPR 6-104.4 (B), THE LOW BID OF ELIE ADES AS AGENT FOR DAVIDSON WAS EVALUATED ON THE BASIS THAT A FOREIGN PRODUCT WAS BEING OFFERED BY APPLICATION FIRST OF THE 12-PERCENT FACTOR WHICH IS INCLUSIVE OF DUTY AND THEN BY APPLICATION OF THE 50-PERCENT FACTOR WHICH IS EXCLUSIVE OF DUTY. SINCE THE USE OF THE 50-PERCENT FACTOR RESULTED IN A GREATER EVALUATED PRICE, THIS PRICE WAS USED AS A BASIS FOR PRICE COMPARISON WITH OTHER DOMESTIC BIDS. AS STATED ABOVE, EVEN WITH APPLICATION OF THIS 50-PERCENT FACTOR, THE BID OF ELIE ADES AS AGENT FOR DAVIDSON REMAINED THE LOWEST BID RECEIVED UNDER THE INVITATION. THEREFORE CONCLUDE THAT THE METHOD OF BID EVALUATION USED WAS PROPER AND REQUIRED UNDER THE REGULATIONS CITED ABOVE.

WITH REFERENCE TO YOUR CONTENTIONS CONCERNING DESTRUCTION OF THE INDUSTRIAL BASE (APPARENTLY IN THE LIGHT OF ASPR 6-104.4 (D) (3) (, THE CONTRACTING OFFICER MADE THE FOLLOWING FINDING:

"A. THERE ARE CURRENTLY 14 PRODUCERS IN THE MOBILIZATION PLAN CAPABLE OF PRODUCING SUBJECT ITEM. AMONG THESE ARE FOUR OF OUR CURRENT PRODUCERS:

(1) FLEXIBLE TUBING CORPORATION

(2) INFLATED PRODUCTS CO., INC.

(3) STEBCO INDUSTRIES, INC.

(4) RUBBER FABRICATORS, INC.

"B. THE COMBINED POTENTIAL OF THE 14 MOBILIZATION PRODUCERS IS 525 M UNITS PER MONTH. THE COMBINED POTENTIAL OF THE ABOVE FOUR CURRENT PRODUCERS IS 189 M UNITS PER MONTH, WHICH ALSO APPROXIMATES THEIR CURRENT CONTRACT CAPABILITIES. FURTHERMORE, THERE ARE OTHER FIRMS IN THE U.S. CAPABLE OF PRODUCING THE INFLATABLE MATTRESS, AMONG WHICH IS INTERNATIONAL LATEX, WHO HAS RECENTLY BID ON THE ABOVE I/B.

"C. THE QUANTITIES OF MATTRESSES WHICH WILL BE NEEDED FROM PRODUCTION SOURCES DURING EMERGENCY PERIODS ARE BASED UPON A CONCEPT WHICH CONSIDERS APPLICATION OF ASSETS. IT HAS BEEN ASCERTAINED THROUGH MOBILIZATION PLANNING THAT INDUSTRY POTENTIAL FAR EXCEEDS THIS REQUIREMENT.

"D. THE MATTRESS PNEUMATIC IS A MOLDED ITEM WHICH CAN BE MANUFACTURED BY PRODUCERS OF MOLDER-RUBBER-COATED ITEMS, SUCH AS INFLATED PADS, LIFE JACKETS, ETC. THE ITEM IS RELATIVELY SIMPLE TO MAKE REQUIRING PRESSES, CURING OVENS, AND MOLDS. THE PRESSES AND CURING OVENS ARE USED BY THESE PRODUCERS IN THEIR COMMERCIAL WORK. MOLDS MUST BE MADE TO MEET THE SPECIFICATION OF THE END ITEM. THE MOLD IS A RELATIVELY SIMPLE TYPE MADE OF STEEL WITH ALUMINUM CONDUCTORS AND RIBS. THE COST OF MOLDS ARE FROM $1500 - $2000 EACH, WITH A PRODUCTION LEAD TIME OF 4-6 WEEKS. CONTRACTOR MUST HAVE A NUMBER OF MOLDS DEPENDING UPON THE QUANTITY TO BE MADE, SINCE THE MOLDING CYCLE IS 18-20 MINUTES PER MATTRESS.

"E. PERSONNEL ENGAGED IN THE MANUFACTURE OF THIS ITEM DO NOT HAVE TO POSSESS A GREAT DEGREE OF SKILL. WITH THE EXCEPTION OF THE ENGINEERS WHO CONTROL THE PRESSURES AND TEMPERATURES OF THE OVENS AND PRESSES, THE PERSONNEL ARE SEMI-SKILLED OR NON-SKILLED. TRAINING CAN BE ACCOMPLISHED WITHIN SEVERAL WEEKS.

"F. AWARD OF THIS PROCUREMENT TO A FOREIGN BIDDER WILL NOT RESULT IN ANY MATERIAL SHRINKAGE OF THE DOMESTIC PRODUCTIVE CAPABILITY BECAUSE:

"/1) OUR NATIONAL POTENTIAL FAR EXCEEDS OUR MOBILIZATION REQUIREMENTS.

"/2) THE EQUIPMENT USED CAN ALSO BE USED IN COMMERCIAL WORK.

"/3) THE MOLDS CAN BE MANUFACTURED IN A COMPARATIVELY SHORT LEAD TIME.

"/4) THE HELP EMPLOYED IN MOST OF THE OPERATIONS ARE SEMI AND NON SKILLED, AND CAN BE TAUGHT IN A MINIMUM AMOUNT OF TIME.'

IN VIEW OF ALL THE FOREGOING, THE CONTRACTING OFFICER DETERMINED THAT DAVIDSON AND CO. WAS A RESPONSIBLE BIDDER WITHIN THE MEANING OF ASPR 1-903 AND IS OTHERWISE ENTITLED TO AWARD OF THE ENTIRE UNRESTRICTED PORTION OF THE PROCUREMENT IN ACCORDANCE WITH ASPR 6 104.4.

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

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT THERE IS NO BASIS UPON WHICH OUR OFFICE COULD PROPERLY OBJECT TO THE ACTION CONTEMPLATED BY THE DEFENSE SUPPLY AGENCY. SEE 43 COMP. GEN. 217.