B-169660, JUL. 16, 1970

B-169660, JUL. 16, 1970

BID PROTEST -- WALSH-HEALY ACT ETC. -- COMPLIANCE DECISION DENYING PROTEST OF TRESCO, INC. AGAINST AWARD TO SUMMIT INDUSTRIES, LOW BIDDER, FOR FURNISHING AUDIO TRANSFORMERS TO TOBYHANNA ARMY DEPOT. A LOW BIDDER WHO, PURSUANT TO AN INVITATION CONTAINING A WALSH-HEALY PUBLIC CONTRACT ACT CLAUSE AND AN EQUAL OPPORTUNITY CLAUSE, CERTIFIED THAT IT WAS A REGULAR DEALER ALTHOUGH HE INTENDS TO SUBCONTRACT WITH A CANADIAN MANUFACTURER, WAS PROPERLY AWARDED A CONTRACT SINCE NOTHING REQUIRED ITEM TO BE COMPLETELY FABRICATED IN U.S., AND CANADIAN MANUFACTURED SUPPLIES COME WITHIN BUY AMERICAN ACT EXEMPTION. FURTHER ALTHOUGH CONTRACTOR MUST COMPLY WITH CERTAIN REQUIREMENTS OF EQUAL OPPORTUNITY CLAUSE, THE CONTRACTOR WHO EMPLOYS LESS THAN 50 EMPLOYEES IS EXEMPT FROM THE AFFIRMATIVE ACTION PROGRAM AND HIS CANADIAN SUBCONTRACTOR WOULD ALSO BE EXEMPT.

TO TRESCO, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM AND LETTER OF APRIL 27 AND MAY 8, 1970, RESPECTIVELY, PROTESTING AGAINST THE AWARD OF A CONTRACT UNDER INVITATION FOR BIDS (IFB) NO. DAAG36-70-B-0092, ISSUED BY THE TOBYHANNA ARMY DEPOT.

THE IFB COVERED THE PROCUREMENT OF 32,400 EACH AUDIO TRANSFORMERS WITH DELIVERY OF THE FIRST INCREMENT DUE 6 WEEKS AFTER AWARD AND SUBSEQUENT INCREMENTS DUE ON A MONTHLY BASIS THEREAFTER. SEVENTEEN BIDS WERE OPENED ON MARCH 13, 1970, AND AWARD WAS MADE TO THE SECOND LOW BIDDER, SUMMIT INDUSTRIES, ON APRIL 24, 1970, AFTER THE LOWEST BIDDER HAD BEEN REJECTED AS NONRESPONSIVE FOR FAILURE TO CONFORM TO THE REQUIRED DELIVERY SCHEDULE. SUMMIT'S PRICE WAS $1.82 PER UNIT WHILE THAT OF TRESCO, THE THIRD LOWEST BIDDER, WAS $1.92 PER UNIT.

YOU CONTEND THAT SUMMIT, FOR VARIOUS REASONS, WILL NOT BE ABLE TO MEET THE REQUIRED DELIVERY SCHEDULE. WE ARE INFORMALLY ADVISED, HOWEVER, THAT THE FIRST INCREMENT OF 4,900 UNITS WAS TIMELY DELIVERED ON JUNE 5, 1970, AND NO PROBLEMS WITH FUTURE DELIVERIES ARE ANTICIPATED. YOUR CONTENTION IN THIS REGARD, THEREFORE, APPEARS TO BE ACADEMIC.

SECONDLY, YOU MAINTAIN THAT THE WALSH-HEALY PUBLIC CONTRACTS ACT CLAUSE AND THE EQUAL OPPORTUNITY CLAUSE OF THE IFB IMPLY THAT PROCUREMENT OF THE AUDIO TRANSFORMERS WILL BE MADE IN THE UNITED STATES AND THAT AMERICAN MANUFACTURERS WOULD BE DISCRIMINATED AGAINST IF A DEALER WERE PERMITTED TO SUBCONTRACT WITH A FOREIGN MANUFACTURER AND THEREBY AVOID COMPLIANCE WITH THESE CLAUSES.

THE GENERAL OBJECTIVE OF THE WALSH-HEALY ACT, 41 U.S.C. 35, ET SEQ., IS THE ELIMINATION OF SWEATSHOPS THROUGH THE IMPOSITION OF CERTAIN MINIMUM LABOR STANDARDS. FURTHERMORE, THAT PORTION OF THE ACT REQUIRING A CONTRACTOR TO BE A MANUFACTURER OR REGULAR DEALER WAS DESIGNED TO "ELIMINATE THE EVIL OF BID BROKERAGE AND BID PEDDLING." HOUSE REPORT NO. 2946, 74TH CONGRESS, 2ND SESSION. THERE IS NO INDICATION THAT THE ACT WAS DESIGNED TO PROTECT AMERICAN INDUSTRY FROM FOREIGN COMPETITION. NOR DO WE FIND SUCH A PURPOSE IN THE EQUAL OPPORTUNITY PROVISIONS OF PARAGRAPH 12- 800, ET SEQ., OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), WHICH IMPLEMENT THE POLICIES AND PROCEDURES OF THE EXECUTIVE ORDERS AND THE REGULATIONS OF THE SECRETARY OF LABOR CITED THEREIN.

THE INCLUSION OF THE ABOVE-CITED CLAUSES IN AN IFB DOES NOT, IN OUR VIEW, GIVE RISE TO AN INFERENCE THAT THE PROCUREMENT WILL BE ACCOMPLISHED IN THE UNITED STATES. MOREOVER, IT IS EVIDENT FROM THE RECORD THAT THE CONTRACT IS BEING PERFORMED BY A DOMESTIC CONTRACTOR SINCE SUMMIT INDUSTRIES IS INCORPORATED UNDER THE LAWS OF THE STATE OF OHIO. IN SUMMARY, WE FIND NOTHING IN THESE CLAUSES WHICH WOULD AFFORD A BASIS FOR CONCLUDING THAT THE ITEM TO BE PROCURED HAD TO BE COMPLETELY FABRICATED IN THE UNITED STATES BY A DOMESTIC CONTRACTOR.

THERE ARE FOR CONSIDERATION, HOWEVER, THE PROVISIONS OF THE BUY AMERICAN ACT CLAUSE (ADDITIONAL GENERAL PROVISION NO. 26) OF THE IFB. ASPR 6- 102.1, WHICH IMPLEMENTS THE BUY AMERICAN ACT (41 U.S.C. 10A-D), REQUIRES THAT ONLY DOMESTIC SOURCE END PRODUCTS BE ACQUIRED FOR PUBLIC USE WHERE THE PROCUREMENT IS FOR SUPPLIES AND SERVICES. BUT THE RESTRICTIONS OF SUCH CLAUSE ARE INAPPLICABLE IN THE CASE OF CANADIAN SUPPLIES PURSUANT TO ASPR 6-103.5. SINCE THE LOW BID OF SUMMIT INDUSTRIES OFFERED PRODUCTS OF CANADIAN MANUFACTURE, I.E., CANADIAN END PRODUCTS, THE ASPR EXCEPTION IS APPLICABLE. CONSEQUENTLY, WE MAY NOT OBJECT TO THE AWARD ON THE BASIS THAT THE PROCUREMENT VIOLATES THE BUY AMERICAN ACT.

YOU NEXT CONTEND THAT AN AWARD TO A DOMESTIC DEALER WHO THEN SUBCONTRACTS FOR THE FOREIGN MANUFACTURE OF THE DESIRED ITEM DISCRIMINATES AGAINST AMERICAN BUSINESSES IN THAT THE DEALER AND FOREIGN MANUFACTURER ESCAPE THE REQUIREMENTS OF THE WALSH-HEALY ACT AND EQUAL OPPORTUNITIES CLAUSES OF THE CONTRACT WHICH ARE OTHERWISE BINDING ON DOMESTIC FIRMS, INSOFAR AS THE WALSH-HEALY ACT IS CONCERNED, WE BELIEVE THAT THE SUBMISSION OF A BID CONTAINING GENERAL PROVISION NO. 17, WALSH-HEALY PUBLIC CONTRACTS ACT, WITHOUT EXCEPTION OR QUALIFICATION RELATING THERETO, BINDS THE SUBMITTING BIDDER TO CONFORM TO ALL THE REPRESENTATIONS AND STIPULATIONS OF THE ACT. SINCE SUMMIT SUBMITTED AN UNQUALIFIED BID IN THIS REGARD, IT IS BOUND TO COMPLY WITH THE REQUIREMENTS OF THE GENERAL PROVISION.

FURTHER, SUMMIT CERTIFIED IN ITS BID THAT IT IS A REGULAR DEALER AS REQUIRED BY THE ACT. A DETERMINATION AS TO THE VALIDITY OF THAT CERTIFICATION RESTS IN THE FIRST INSTANCE WITH THE CONTRACTING AGENCY SUBJECT, HOWEVER, TO REVIEW BY THE DEPARTMENT OF LABOR WHICH IS CHARGED WITH ADMINISTRATION OF THE ACT. DEPARTMENT OF LABOR WALSH-HEALY PUBLIC CONTRACTS ACT RULINGS AND INTERPRETATIONS NO. 3, SECTION 29; ASPR 12 604(A)(1). CONSEQUENTLY, OUR OFFICE HAS NO AUTHORITY TO REVIEW SUCH A DETERMINATION (B-168035, DECEMBER 24, 1969) AND MUST, THEREFORE, ACCEPT IT IN THE ABSENCE OF A CONTRARY DETERMINATION BY THE DEPARTMENT OF LABOR. WHILE SUMMIT'S STATUS AS A MANUFACTURER IS BEING REVIEWED BY THE DEPARTMENT OF LABOR, THE FACT REMAINS THAT SUMMIT IS A REGULAR DEALER OF THE SUPPLIES BID UPON.

AS A REGULAR DEALER, SUMMIT IS OBLIGATED TO FURNISH THE REQUIRED ITEMS NOT MANUFACTURE THEM ITSELF. MANUFACTURE OF THE ITEMS IS, IN THIS CASE, SUBCONTRACTED TO A CANADIAN FIRM. RECOGNIZING THE SEPARATE LEGAL ENTITIES OF SUMMIT AND ITS SUBCONTRACTOR, AND THAT THE WALSH HEALY ACT APPLIES IN GENERAL ONLY TO PRIMARY GOVERNMENT CONTRACTS AND NOT TO THE LABOR STANDARDS OF SUBCONTRACTORS (UNITED STATES V DAVISON FUEL AND DOCK COMPANY, 371 F. 2D 705, 710 (1967), WE ARE OF THE OPINION THAT IT IS IMMATERIAL WHETHER A FOREIGN OR DOMESTIC SUBCONTRACTOR MANUFACTURES THE AUDIO TRANSFORMERS FOR THE ACCOUNT OF SUMMIT.

WE BELIEVE THAT SUMMIT IS OBLIGATED TO COMPLY WITH CERTAIN REQUIREMENTS OF THE EQUAL OPPORTUNITY PROVISIONS OF ITS CONTRACT AND WE FIND NO BASIS TO SUSTAIN YOUR CLAIM OF DISCRIMINATION. IN ADDITION, WE ARE INFORMALLY ADVISED THAT SUMMIT EMPLOYS LESS THAN 50 EMPLOYEES. CONSEQUENTLY, IT IS EXEMPTED FROM THE AFFIRMATIVE ACTION PROGRAM REQUIREMENTS OF THE EQUAL OPPORTUNITY CLAUSE. SEE, ASPR 12-815. SUMMIT'S CANADIAN SUBCONTRACTOR IS, OF COURSE, EXEMPT FROM THE REQUIREMENTS OF THE EQUAL OPPORTUNITY CLAUSE. SEE, ASPR 12-805(C).

FOR THE FOREGOING REASONS, WE FIND NO BASIS ON WHICH TO SUSTAIN YOUR PROTEST. ACCORDINGLY, IT IS DENIED.