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B-175496, NOV 10, 1972

B-175496 Nov 10, 1972
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IT IS OBVIOUSLY NOT POSSIBLE TO ELIMINATE THE ADVANTAGE WHICH MIGHT ACCRUE TO A GIVEN FIRM BY VIRTUE OF OTHER FEDERAL. THERE IS NO REQUIREMENT FOR EQUALIZING COMPETITION BY TAKING INTO CONSIDERATION THESE TYPES OF ADVANTAGES. NOR IS THERE ANY POSSIBLE WAY IN WHICH SUCH EQUALIZATION COULD BE EFFECTED. TO TELEDYNE LEWISBURG: REFERENCE IS MADE TO YOUR LETTER OF MAY 2. IN WHICH YOU CLAIM THAT CANADIAN FIRMS WHICH BID ON AMERICAN PROCUREMENTS ARE UNFAIRLY SUBSIDIZED BY THE CANADIAN COMMERCIAL CORPORATION (CCC). YOU STATE THAT YOU WERE INFORMED THAT COLLINS RADIO OF CANADA RECEIVED A SUBSIDY OF APPROXIMATELY $1 MILLION FROM CCC ON A PARTICULAR CONTRACT. WE HAVE BEEN INFORMED THAT THE STATEMENT MADE TO YOU WAS IN REFERENCE TO A RESEARCH AND DEVELOPMENT CONTRACT.

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B-175496, NOV 10, 1972

CONTRACTS - SUBSIDIES TO CANADIAN FIRMS - UNFAIR ADVANTAGE CONCERNING ALLEGED UNFAIR SUBSIDIES PROVIDED BY THE CANADIAN COMMERCIAL CORPORATION TO CANADIAN FIRMS WHICH BID ON AMERICAN PROCUREMENTS. IT IS OBVIOUSLY NOT POSSIBLE TO ELIMINATE THE ADVANTAGE WHICH MIGHT ACCRUE TO A GIVEN FIRM BY VIRTUE OF OTHER FEDERAL, STATE OR LOCAL PROGRAMS. THERE IS NO REQUIREMENT FOR EQUALIZING COMPETITION BY TAKING INTO CONSIDERATION THESE TYPES OF ADVANTAGES, NOR IS THERE ANY POSSIBLE WAY IN WHICH SUCH EQUALIZATION COULD BE EFFECTED.

TO TELEDYNE LEWISBURG:

REFERENCE IS MADE TO YOUR LETTER OF MAY 2, 1972, IN WHICH YOU CLAIM THAT CANADIAN FIRMS WHICH BID ON AMERICAN PROCUREMENTS ARE UNFAIRLY SUBSIDIZED BY THE CANADIAN COMMERCIAL CORPORATION (CCC).

YOU REFER TO THREE SPECIFIC INSTANCES WHICH YOU SAY INDICATE THE EXISTENCE OF SUCH SUBSIDIES. FIRST, YOU STATE THAT YOU WERE INFORMED THAT COLLINS RADIO OF CANADA RECEIVED A SUBSIDY OF APPROXIMATELY $1 MILLION FROM CCC ON A PARTICULAR CONTRACT. HOWEVER, WE HAVE BEEN INFORMED THAT THE STATEMENT MADE TO YOU WAS IN REFERENCE TO A RESEARCH AND DEVELOPMENT CONTRACT, AND NOT THE PRODUCTION CONTRACT YOU CITE, AND THAT IT WAS MADE TO INDICATE THAT THE RESEARCH AND DEVELOPMENT CONTRACT PRICE WAS NOT COMPLETELY REPRESENTATIVE OF THE TOTAL DEVELOPMENT COSTS. SECOND, YOU STATE THAT ONE TYPE OF SUBSIDY IS IN THE FORM OF RENT-FREE EQUIPMENT PROVIDED BY CCC. THIS IS COVERED BY THE LETTER OF AGREEMENT SET FORTH IN ASPR 6-506, WHICH PROVIDES IN PARAGRAPH 7 THAT THE INCLUSION IN THE CONTRACT PRICE OF CHARGES FOR USE OF GOVERNMENT OWNED FACILITIES AND TOOLS IS FOR DETERMINATION THROUGH NEGOTIATION OF INDIVIDUAL CONTRACTS. THAT PARAGRAPH ALSO PROVIDES THAT CHARGES FOR USE OF GOVERNMENT FURNISHED FACILITIES WILL BE AVOIDED TO THE EXTENT CONSISTENT WITH THE POLICIES OF THE CANADIAN GOVERNMENT AND MILITARY DEPARTMENTS. THIRD, YOU MENTION A PROGRAM OF FINANCIAL ASSISTANCE TO CANADIAN COMPANIES IN THE AREA OF NEW TECHNOLOGY. THE MEMORANDUM OF UNDERSTANDING SET FORTH IN ASPR 6-507 PROVIDES FOR JOINT U.S. AND CANADIAN FUNDING OF RESEARCH AND DEVELOPMENT PROJECTS, AND WE ARE NOT AWARE OF ANY SPECIFIC "NEW TECHNOLOGY" FINANCIAL ASSISTANCE PROGRAMS NOT COVERED BY THE MEMORANDUM.

IT MAY WELL BE THAT THE FURNISHING BY CCC OF EQUIPMENT TO A CANADIAN FIRM IN CONNECTION WITH A UNITED STATES DEPARTMENT OF DEFENSE PROCUREMENT PROVIDES A COMPETITIVE ADVANTAGE TO THE CANADIAN OFFEROR. IN THIS CONNECTION, HOWEVER, WE NOTE THAT THE LETTER OF AGREEMENT PROVIDES THAT "EXCESS PROFITS" MADE BY CANADIAN FIRMS SHALL BE REFUNDED TO THE UNITED STATES MILITARY DEPARTMENTS. IN ANY CASE, WHILE IT IS THE POLICY OF THE UNITED STATES GOVERNMENT TO ELIMINATE THE COMPETITIVE ADVANTAGE THAT ACCRUES TO A PROSPECTIVE CONTRACTOR FROM THE USE OF UNITED STATES GOVERNMENT FURNISHED PROPERTY AND FACILITIES, IT IS OBVIOUSLY NOT POSSIBLE TO ELIMINATE THE ADVANTAGE WHICH MIGHT ACCRUE TO A GIVEN FIRM BY VIRTUE OF OTHER FEDERAL, STATE OR LOCAL PROGRAMS. FOR EXAMPLE, ONE FIRM MIGHT BE IN A MORE FAVORABLE INCOME TAX SITUATION AS COMPARED TO ANOTHER OR HIS PLANT MIGHT BE LOCATED IN AN AREA WHICH GRANTS REAL ESTATE TAX CONCESSIONS TO ENCOURAGE INDUSTRY TO MOVE IN. THERE ARE UNDOUBTEDLY MANY OTHER SIMILAR EXAMPLES. WE KNOW OF NO REQUIREMENT FOR EQUALIZING COMPETITION BY TAKING INTO CONSIDERATION THESE TYPES OF ADVANTAGES, NOR DO WE KNOW OF ANY POSSIBLE WAY IN WHICH SUCH EQUALIZATION COULD BE EFFECTED.

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