B-165440, JANUARY 8, 1969, 48 COMP. GEN. 458

B-165440: Jan 8, 1969

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BIDS - BUY AMERICAN ACT - EVALUATION - COMPONENTS OF UNKNOWN ORIGIN UNDER AN INVITATION FOR ALUMINUM SULPHATE THAT CONTAINED THE STANDARD BUY AMERICAN ACT CLAUSE AND A BUY AMERICAN CERTIFICATE TO THE EFFECT THE END PRODUCTS OFFERED WERE DOMESTIC AND THAT COMPONENTS OF UNKNOWN ORIGIN HAD BEEN CONSIDERED AS MINED. PROPERLY WAS EVALUATED AS A FOREIGN END PRODUCT AND REJECTED BECAUSE IT WAS NOT THE LOW BID. OR TO ACCEPT THE ALTERED CERTIFICATE AS A GUARANTEE THE COMPONENTS WERE PRODUCED IN THE UNITED STATES WOULD GIVE THE BIDDER THE COMPETITIVE ADVANTAGE OF SUPPLYING COMPONENTS OF UNKNOWN ORIGIN. 1969: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED OCTOBER 15. SINCE THE BASIC INGREDIENTS OF ALUMINUM SULPHATE ARE BAUXITE AND SULPHURIC ACID.

B-165440, JANUARY 8, 1969, 48 COMP. GEN. 458

BIDS - BUY AMERICAN ACT - EVALUATION - COMPONENTS OF UNKNOWN ORIGIN UNDER AN INVITATION FOR ALUMINUM SULPHATE THAT CONTAINED THE STANDARD BUY AMERICAN ACT CLAUSE AND A BUY AMERICAN CERTIFICATE TO THE EFFECT THE END PRODUCTS OFFERED WERE DOMESTIC AND THAT COMPONENTS OF UNKNOWN ORIGIN HAD BEEN CONSIDERED AS MINED, PRODUCED, OR MANUFACTURED OUTSIDE THE UNITED STATES, A BID THAT SUBSTITUTED THE WORD "INSIDE" FOR "OUTSIDE," THUS CERTIFYING THE COMPONENTS OF UNKNOWN ORIGIN HAD BEEN CONSIDERED DOMESTIC, PROPERLY WAS EVALUATED AS A FOREIGN END PRODUCT AND REJECTED BECAUSE IT WAS NOT THE LOW BID. TO PERMIT THE BIDDER TO EXPLAIN AFTER BID OPENING THE MEANING OF THE CERTIFICATE ALTERATION WOULD JEOPARDIZE THE INTEGRITY OF THE COMPETITIVE SYSTEM, OR TO ACCEPT THE ALTERED CERTIFICATE AS A GUARANTEE THE COMPONENTS WERE PRODUCED IN THE UNITED STATES WOULD GIVE THE BIDDER THE COMPETITIVE ADVANTAGE OF SUPPLYING COMPONENTS OF UNKNOWN ORIGIN.

TO THE MIDLAND CHEMICAL CORPORATION, JANUARY 8, 1969:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED OCTOBER 15, 1968, AND LETTER DATED OCTOBER 16, 1968, PROTESTING THE AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. DSA-400-69-B-0698, ISSUED BY THE DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA.

THE INVITATION, FOR A REQUIREMENTS TYPE CONTRACT, REQUESTED BIDS ON AN ESTIMATED QUANTITY OF 12,700 ONE HUNDRED-POUND BAGS OF ALUMINUM SULPHATE. SINCE THE BASIC INGREDIENTS OF ALUMINUM SULPHATE ARE BAUXITE AND SULPHURIC ACID, MATERIALS WHICH ARE MINED, PRODUCED AND MANUFACTURED BOTH INSIDE AND OUTSIDE THE UNITED STATES, THE INVITATION AND CONTRACT CONTAINED THE STANDARD PROVISION ENTITLED BUY AMERICAN CERTIFICATE, WHICH STATES:

7. BUY AMERICAN CERTIFICATE.

THE OFFEROR HEREBY CERTIFIES THAT EACH END PRODUCT, EXCEPT THE END PRODUCTS LISTED BELOW, IS A DOMESTIC SOURCE END PRODUCT (AS DEFINED IN THE CLAUSE ENTITLED "BUY AMERICAN ACT"); AND THAT COMPONENTS OF UNKNOWN ORIGIN HAVE BEEN CONSIDERED TO HAVE BEEN MINED, PRODUCED, OR MANUFACTURED OUTSIDE THE UNITED STATES.

EXCLUDED END PRODUCTS COUNTRY OF ORIGIN ALSO, THE INVITATION AND CONTRACT INCLUDED THE BUY AMERICAN ACT CLAUSE REQUIRED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 6-104.5, WHICH PROVIDES, IN PERTINENT PART, AS FOLLOWS:

(A) IN ACQUIRING END PRODUCTS, THE BUY AMERICAN ACT (41 U.S.C. 10A 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 OR CANADA 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 IN (B) (II) OR (III) OF THE 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 * * *.

IN YOUR BID AS SUBMITTED, YOU ALTERED THAT PART OF THE BUY AMERICAN CERTIFICATE READING,"THE OFFEROR HEREBY CERTIFIES * * * THAT COMPONENTS OF UNKNOWN ORIGIN HAVE BEEN CONSIDERED TO HAVE BEEN MINED, PRODUCED AND MANUFACTURED OUTSIDE THE UNITED STATES," TO "MANUFACTURED INSIDE THE UNITED STATES.' THE CONTRACTING OFFICER STATES THAT THE CLEAR IMPLICATION AND ONLY REASONABLE INTERPRETATION IS THAT MIDLAND IS OFFERING (1) AN END PRODUCT MANUFACTURED IN THE UNITED STATES, AND (2) THAT DOMESTIC COMPONENTS CONSTITUTE 51 PERCENT OF THE COST OF ALL ITS COMPONENTS ONLY IF COMPONENTS OF UNKNOWN ORIGIN ARE DEEMED DOMESTIC. CONSEQUENTLY, MIDLAND COULD HAVE INSISTED UPON SUPPLYING COMPONENTS OF UNKNOWN ORIGIN THUS ACHIEVING A COMPETITIVE ADVANTAGE OVER OTHER BIDDERS. THEREFORE, MIDLAND'S BID WAS EVALUATED AS ONE OFFERING A FOREIGN END PRODUCT BY ADDING 50 PERCENT TO ITS BID PRICE LESS DUTY ON BAUXITE. MIDLAND'S BID SO EVALUATED IS NOT LOW.

IN YOUR LETTER OF PROTEST DATED OCTOBER 16, 1968, YOU CONTEND THAT THE INSERTION OF THE WORD ,INSIDE" WAS NOT AN ERROR ON YOUR PART BUT A RESTRICTION ON YOUR COMPANY TO ASSURE THE GOVERNMENT THAT YOUR END PRODUCT WOULD BE ACCEPTABLE UNDER THE "BUY AMERICAN ACT," 41 U.S.C. 10A-D, THAT TO APPLY THE 50 PERCENT INCREASE TO YOUR OFFERED PRICE IS UNJUST AND THAT YOU SHOULD BE GIVEN AN OPPORTUNITY TO VERIFY THE COMPONENTS WHICH MAKE UP YOUR END PRODUCT. YOU ALSO CONTEND THAT IF THIS IS CONSIDERED AN ERROR IN YOUR BID, AN EXPLANATION OR VERIFICATION SHOULD BE CONSIDERED.

THE QUESTION FOR DETERMINATION IN CASES SUCH AS THIS IS WHETHER THE ACCEPTANCE OF THE BID AS SUBMITTED WILL RESULT IN A CONTRACT BINDING ON THE BIDDER REQUIRING PERFORMANCE IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE CONTRACT.

IN OUR DECISION, 36 COMP. GEN. 535, WE CONSIDERED THE EFFECT OF CERTAIN TYPEWRITTEN PROVISIONS AND PRINTED CONDITIONS IN A BID ON THE GOVERNMENT'S RIGHTS UPON ACCEPTANCE. THESE PROVISIONS AND CONDITIONS WERE SIMILAR TO THOSE INCORPORATED IN YOUR BID. AS YOU DID IN THIS INSTANCE, THE BIDDER REQUESTED THAT SUCH PROVISIONS AND CONDITIONS BE WAIVED ON THE GROUND THAT HIS BID WAS INTENDED TO COMPLY STRICTLY WITH THE ADVERTISED SPECIFICATIONS. IT WAS HELD THAT UNDER THE PRINCIPLES OF LAW FOR APPLICATION IN SUCH CASES, THE BIDDER'S TYPEWRITTEN PROVISIONS AND PRINTED CONDITIONS WOULD CONTROL THE GOVERNMENT'S RIGHTS IN THE MATTER AND THAT THE BID, CONDITIONED AS IT WAS, MUST BE REJECTED AS NOT RESPONSIVE TO THE INVITATION.

IN THE INSTANT CASE, YOU APPEAR TO HAVE INTERPRETED THE LANGUAGE OF THE SECOND PART OF THE BUY AMERICAN CERTIFICATE AS A GUARANTEE OR CERTIFICATION BY YOU AS TO WHETHER COMPONENTS OF UNKNOWN ORIGIN WOULD BE PRODUCED INSIDE OR OUTSIDE THE UNITED STATES. UNFORTUNATELY, THIS IS NOT THE MEANING OR PURPOSE OF THAT LANGUAGE. THE FIRST PART OF THE CERTIFICATE REQUIRES YOU TO CERTIFY THAT EACH END PRODUCT OFFERED IS OF DOMESTIC ORIGIN, EXCEPT THOSE END PRODUCTS LISTED BELOW. IN THE PRESENT CASE THERE IS ONLY ONE END PRODUCT, ALUMINUM SULPHATE.

THE CERTIFICATE REFERS TO THE DEFINITION OF DOMESTIC SOURCE END PRODUCT IN THE BUY AMERICAN CLAUSE, AND IT IS ONLY IN CONNECTION WITH THAT DEFINITION THAT THE SOURCE OF COMPONENTS OF AN END PRODUCT BECOMES IMPORTANT. BY DEFINITION, AN END PRODUCT MAY QUALIFY AS DOMESTIC IF THE COST OF ITS DOMESTIC COMPONENTS EXCEEDS 50 PERCENT OF THE COST OF ALL ITS COMPONENTS. THE PURPOSE OF THE SECOND PART OF THE CERTIFICATE WAS TO MAKE SURE THAT BIDDERS, IN DETERMINING WHETHER THEIR END PRODUCT WAS DOMESTIC BY COMPARING THE COSTS OF DOMESTIC AND FOREIGN COMPONENTS GOING INTO THE END PRODUCT, WOULD INCLUDE AS DOMESTIC COMPONENTS ONLY THOSE THEY KNEW TO BE OF DOMESTIC ORIGIN AND WOULD COUNT AS FOREIGN COMPONENTS BOTH THOSE THEY KNEW TO BE OF FOREIGN ORIGIN AND THOSE WHOSE ORIGIN WAS UNKNOWN.

BY REASON OF THE CHANGE YOU MADE IN THE LANGUAGE OF THE CERTIFICATE, YOU CERTIFIED ONLY THAT ALL COMPONENTS YOU KNEW TO BE OF FOREIGN ORIGIN HAD BEEN COUNTED ON THE FOREIGN SIDE, AND THAT YOU HAD INCLUDED ALL COMPONENTS OF UNKNOWN ORIGIN ON THE DOMESTIC SIDE. IF YOU HAD STATED IN YOUR BID, THAT THERE WERE NO COMPONENTS OF UNKNOWN SOURCE, THEN THE SECOND PART OF THE CERTIFICATE WOULD HAVE BEEN INAPPLICABLE AND YOU WOULD HAVE BEEN CERTIFYING THAT 50 PERCENT OR MORE OF THE COMPONENTS WERE KNOWN TO BE OF DOMESTIC ORIGIN. HOWEVER, YOUR BID DOES NOT STATE WHETHER THERE WERE OR WERE NOT COMPONENTS OF UNKNOWN ORIGIN IN YOUR END PRODUCT AND THERE OBVIOUSLY WAS NOT WAY FOR THE CONTRACTING OFFICER TO DETERMINE THIS FROM YOUR BID.

IN OTHER WORDS, UNDER THE CERTIFICATE YOU FURNISHED YOU COULD SUPPLY AN END PRODUCT ACTUALLY INCLUDING 90 PERCENT FOREIGN COMPONENT COST SO LONG AS YOU DID NOT KNOW THE SOURCE OF THOSE COMPONENTS. AS STATED ABOVE, THE PURPOSE OF THE SECOND PART OF THE CERTIFICATE WAS TO PREVENT JUST THIS AND TO REQUIRE BIDDERS TO KNOW BEFORE THEY CERTIFY THAT OVER 50 PERCENT OF ALL COMPONENT COST IS DOMESTIC.

WE HAVE NO DOUBT THAT YOUR INTENTIONS WERE AS YOU HAVE STATED THEM. HOPE YOU WILL APRECIATE, HOWEVER, THAT BIDS MUST BE INTERPRETED AS SUBMITTED. TO GIVE BIDDERS THE OPPORTUNITY TO VARY THE APPARENT MEANING OF STATEMENTS INCLUDED IN THEIR BIDS BY EXPLANATIONS OR EVIDENCE SUBMITTED AFTER BID OPENING WOULD JEOPARDIZE THE INTEGRITY OF THE COMPETITIVE BID SYSTEM.

SINCE THE METHOD OF EVALUATION OF YOUR BID WAS PROPER UNDER THE APPLICABLE PROVISIONS OF ASPR, NO LEGAL BASIS EXISTS TO QUESTION THE ADMINISTRATIVE DETERMINATION THAT YOUR BID WAS NOT THE LOWEST RESPONSIVE BID.