B-174851, FEB 29, 1972, 51 COMP GEN 538

B-174851: Feb 29, 1972

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BUY AMERICAN ACT - APPLICABILITY - CONTRACTORS PURCHASES FROM FOREIGN SOURCES - ITEMS NOT FOR INCLUSION IN CONTRACT PERFORMANCE SINCE THE AWARD BY A GOVERNMENT JOINT VENTURE PRIME CONTRACTOR OF A SUBCONTRACT TO A CANADIAN FIRM FOR MOBILE OFFICE UNITS MANUFACTURED IN CANADA FOR ITS OWN USE WHILE CONSTRUCTING AN ANTI-BALLISTIC MISSILE SITE IN MONTANA WAS NOT SUBJECT TO THE BUY AMERICAN ACT. AS THEY ARE NOT TO BECOME A PERMANENT PART OF THE STRUCTURE BEING CONSTRUCTED FOR THE GOVERNMENT. THE MOBILE UNITS ARE NOT CONSIDERED COMPONENTS OF THE CONSTRUCTION MATERIAL AS DEFINED IN THE BUY AMERICAN CLAUSE OF THE CONTRACT. THE CONTRACT IS DACA87-72 C-0019. THE SUBCONTRACTOR IS ATCO INDUSTRIES. YOU MAINTAINED IN THE ABOVE LETTER THAT INASMUCH AS THE PRIME CONTRACT IS BEING FINANCED BY UNITED STATES TAXPAYERS.

B-174851, FEB 29, 1972, 51 COMP GEN 538

BUY AMERICAN ACT - APPLICABILITY - CONTRACTORS PURCHASES FROM FOREIGN SOURCES - ITEMS NOT FOR INCLUSION IN CONTRACT PERFORMANCE SINCE THE AWARD BY A GOVERNMENT JOINT VENTURE PRIME CONTRACTOR OF A SUBCONTRACT TO A CANADIAN FIRM FOR MOBILE OFFICE UNITS MANUFACTURED IN CANADA FOR ITS OWN USE WHILE CONSTRUCTING AN ANTI-BALLISTIC MISSILE SITE IN MONTANA WAS NOT SUBJECT TO THE BUY AMERICAN ACT, 41 U.S.C. 10A D, THE AWARD DID NOT VIOLATE THE ACT NOR THE ARMED SERVICES PROCUREMENT REGULATION, NOTWITHSTANDING ANY ADVERSE EFFECT ON THE DOMESTIC TRAILER INDUSTRY. NOT ONLY DOES THE ACT NOT APPLY TO THE CONTRACTOR'S PURCHASES FOR HIS OWN USE, AS THEY ARE NOT TO BECOME A PERMANENT PART OF THE STRUCTURE BEING CONSTRUCTED FOR THE GOVERNMENT, THE MOBILE UNITS ARE NOT CONSIDERED COMPONENTS OF THE CONSTRUCTION MATERIAL AS DEFINED IN THE BUY AMERICAN CLAUSE OF THE CONTRACT, WHICH CONFORMS TO THE ACT, AND THE PROCUREMENT REGULATIONS, NOR DO THEY CONSTITUTE END PRODUCTS ACQUIRED FOR PUBLIC USE AS CONTEMPLATED BY THE ACT.

TO MICO MOBILE SALES AND LEASING COMPANY, FEBRUARY 29, 1972:

WE REFER TO YOUR PROTEST, BY LETTER OF DECEMBER 17, 1971, ADDRESSED TO THE DEPARTMENT OF THE ARMY, AGAINST AWARD BY THE JOINT VENTURE OF PETER KIEWIT SONS COMPANY AND ASSOCIATES, A GOVERNMENT PRIME CONTRACTOR, OF A SUBCONTRACT TO A CANADIAN FIRM FOR THE FURNISHING OF MOBILE OFFICE UNITS MANUFACTURED IN CANADA. THE CONTRACT IS DACA87-72 C-0019, WHICH INVOLVES CONSTRUCTION OF AN ANTI-BALLISTIC MISSILE (ABM) SITE AT CONRAD, MONTANA, AND THE SUBCONTRACTOR IS ATCO INDUSTRIES.

YOU MAINTAINED IN THE ABOVE LETTER THAT INASMUCH AS THE PRIME CONTRACT IS BEING FINANCED BY UNITED STATES TAXPAYERS, THE BUY AMERICAN ACT, 41 U.S.C. 10A-D, SHOULD APPLY TO PRECLUDE AWARD OF THE SUBCONTRACT IN QUESTION. RESPONSE TO YOUR PROTEST THE CONTRACTING OFFICER FOR THE HUNTSVILLE DIVISION, CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY, ADVISED YOU AS FOLLOWS:

AS CONTRACTING OFFICER FOR THE PRIME CONTRACT FOR A.B.M. SITE CONSTRUCTION WORK NEAR CONRAD, MONTANA, I AM REPLYING TO YOUR LETTER OF DECEMBER 11, 1971, WHICH YOU ADDRESSED TO MR. DELL MCCUAIG. MR. MCCUAIG, AS MY AUTHORIZED REPRESENTATIVE, CONSENTED TO AWARD OF THE SUBCONTRACT TO WHICH YOU PROTEST.

THE BUY AMERICAN ACT DOES NOT APPLY TO PURCHASES MADE BY A CONTRACTOR SOLELY FOR HIS OWN USE AND WHICH ARE NOT TO BECOME A PERMANENT PART OF THE STRUCTURE OR FACILITY BEING CONSTRUCTED FOR THE GOVERNMENT. THE OFFICE SPACE PROCURED UNDER THE SUBCONTRACT WITH ATCO INDUSTRIES IS FOR THE SOLE USE OF THE CONTRACTOR AND DOES NOT BECOME A PART OF THE PERMANENT FACILITIES BEING CONSTRUCTED FOR THE GOVERNMENT.

MR. MCCUAIG WAS AWARE OF THE FOREIGN ORIGIN INVOLVED IN THE PROPOSED SUBCONTRACT AND CAREFULLY CONSIDERED APPLICABILITY OF BUY AMERICAN ACT RESTRICTIONS PRIOR TO CONSENTING TO THE AWARD OF THE PROPOSED SUBCONTRACT.

THERE ARE INCLOSED FOR YOUR FURTHER INFORMATION EXCERPTS FROM THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) WHICH CONTROLLED APPROVAL ACTION ON THE ATCO SUBCONTRACT.

IN THE PROTEST PAPERS WHICH A MEMBER OF CONGRESS HAS FORWARDED TO OUR OFFICE FOR CONSIDERATION, YOU SPECIFICALLY QUESTION WHETHER THE SUBCONTRACT AWARD IS IN ACCORD WITH THE INTENT OF THE BUY AMERICAN ACT.

THE RECORD INDICATES THAT THE PRIME CONTRACT, WHICH WAS AWARDED ON DECEMBER 2, 1971, WAS FOR PHASE II CONSTRUCTION AT THE MALMSTROM SAFEGUARD SITES, AND INCLUDED THE FOLLOWING CLAUSE PRESCRIBED BY ARMED SERVICES PROCUREMENT REGULATION (ASPR) 18-509.5 FOR USE IN CONSTRUCTION CONTRACTS:

BUY AMERICAN ACT (1966 OCT)

A. AGREEMENT. IN ACCORDANCE WITH THE BUY AMERICAN ACT (41 U.S.C. 10A- 10D), THE CONTRACTOR AGREES THAT ONLY DOMESTIC CONSTRUCTION MATERIAL WILL BE USED (BY THE CONTRACTOR, SUBCONTRACTORS, MATERIALMEN, AND SUPPLIES) IN THE PERFORMANCE OF THIS CONTRACT, EXCEPT FOR NONDOMESTIC CONSTRUCTION MATERIAL LISTED IN "NON-DOMESTIC CONSTRUCTION MATERIALS" CLAUSE, IF ANY, OF THIS 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. (ASPR 7-602.20)

THE RECORD FURTHER INDICATES THAT THE SUBCONTRACT, WHICH COVERS PROCUREMENT OF OFFICE TRAILERS AND RELOCATABLE STEEL BUILDINGS, WAS AWARDED TO ATCO INDUSTRIES, HOUSTON, TEXAS, ON OR ABOUT DECEMBER 15, 1971, WITH APPROVAL OF THE CONTRACTING ACTIVITY, WHICH WAS ON NOTICE THAT THE TRAILERS WERE TO BE MANUFACTURED IN CANADA.

THE CONTRACTING OFFICER STATES THAT NEITHER THE TRAILERS NOR THE RELOCATABLE STEEL BUILDINGS WERE SPECIFIED AS A REQUIREMENT OF THE PRIME CONTRACT; THAT THERE IS NO INTENT THAT THE GOVERNMENT ACQUIRE TITLE THERETO; AND THAT WHILE THE ITEMS WILL BE BROUGHT TO THE CONSTRUCTION SITE, THEY ARE NOT FOR INCORPORATION IN THE BUILDING OR THE WORK BUT ARE BEING PROCURED SOLELY FOR THE CONTRACTOR'S USE. IN ADDITION, THE CONTRACTING OFFICER URGES THAT THE ITEMS DO NOT CONSTITUTE CONSTRUCTION MATERIAL BUT ARE ANALOGOUS TO CONTRACTOR PLANT EQUIPMENT SUCH AS SCAFFOLDING FORMS, TOOLS AND VEHICULAR EQUIPMENT WHICH, WHETHER ALREADY OWNED OR NEWLY ACQUIRED BY THE CONTRACTOR, ARE USED IN PERFORMANCE OF THE CONTRACT. THE CONTRACTING OFFICER ACCORDINGLY CONTENDS THAT THE GOVERNMENT HAD NO RIGHT TO PREVENT THE PRIME CONTRACTOR FROM PURCHASING THE TRAILERS OF CANADIAN MANUFACTURE, AND THAT THE SUBCONTRACT PROCUREMENT WAS LAWFULLY EFFECTED AND WAS NOT IN VIOLATION OF THE CONTRACT PROVISIONS OR ASPR.

THE BUY AMERICAN ACT INCLUDES THE FOLLOWING PERTINENT PROVISIONS:

AMERICAN MATERIALS REQUIRED FOR PUBLIC USE.

NOT WITHSTANDING 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. *** (41 U.S.C. 10A)

CONTRACTS FOR PUBLIC WORKS; SPECIFICATION FOR USE OF AMERICAN MATERIALS; BLACKLISTING CONTRACTORS VIOLATING REQUIREMENTS.

(A) EVERY CONTRACT FOR THE CONSTRUCTION, ALTERATION, OR REPAIR OF ANY PUBLIC BUILDING OR PUBLIC WORK IN THE UNITED STATES GROWING OUT OF AN APPROPRIATION HERETOFORE MADE OR HEREAFTER TO BE MADE SHALL CONTAIN A PROVISION THAT IN THE PERFORMANCE OF THE WORK THE CONTRACTOR, SUBCONTRACTORS, MATERIALMEN, OR SUPPLIERS, SHALL USE 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 *** . (41 U.S.C. 10B)

THE LANGUAGE OF THE BUY AMERICAN ACT CLAUSE USED IN THE PRIME CONTRACT IS CONSISTENT WITH THE PROVISIONS OF THE BUY AMERICAN ACT.

SINCE THE TRAILERS AND THE RELOCATABLE OFFICE BUILDINGS WHICH THE PRIME CONTRACTOR IS PROCURING FROM ATCO INDUSTRIES ARE NOT TO BECOME PART OF THE BUILDINGS OR OTHER STRUCTURES WHICH ARE BEING CONSTRUCTED UNDER THE PRIME CONTRACT, IT IS APPARENT THAT THEY ARE NOT COMPONENTS OF THE CONSTRUCTION MATERIAL, AS DEFINED IN THE BUY AMERICAN ACT CLAUSE AND THE PROCUREMENT REGULATIONS. FURTHER, SINCE THE ITEMS DO NO CONSTITUTE PROPERTY WHICH IS REQUIRED BY THE CONTRACT TO BE FURNISHED TO THE GOVERNMENT, AND WE ARE ADVISED THAT TITLE WILL NOT VEST IN THE GOVERNMENT, IT IS ALSO APPARENT THAT THEY ARE NOT END PRODUCTS ACQUIRED FOR PUBLIC USE AS CONTEMPLATED BY THE BUY AMERICAN ACT.

IN THE CIRCUMSTANCES, ALTHOUGH THE IMPORTATION INTO THE UNITED STATES OF THE FOREIGN SOURCE TRAILERS UNDOUBTEDLY HAS AN ADVERSE IMPACT ON THE DOMESTIC TRAILER INDUSTRY, WE ARE UNABLE TO CONCLUDE THAT THERE HAS BEEN ANY VIOLATION OF THE EXISTING PROVISIONS OF THE BUY AMERICAN ACT AND THE ASPR IN THE AWARD OF THE SUBCONTRACT. YOUR PROTEST IS THEREFORE DENIED.