B-175863, AUG 17, 1972

B-175863, AUG 17, 1972

BID PROTEST - BUY AMERICAN ACT - PURCHASE OF FOREIGN ARTICLES DENIAL OF PROTEST BY MILMARK SERVICES, INC., FOURTH LOWEST BIDDER, AGAINST PROPOSED AWARD OF A CONTRACT TO INDHACO, INC., UNDER AN IFB ISSUED BY THE ENVIRONMENTAL PROTECTION AGENCY FOR KEYPUNCH SERVICES ON DATA PROCESSING CARDS. SINCE THE CONTRACTING OFFICER CONSIDERED INDHACO'S OFFER TO BE A FOREIGN BID, HE FOUND THE BUY AMERICAN ACT APPLICABLE AND ADJUSTED THAT CONCERN'S BID UPWARD BY THE 12 PERCENT FACTOR SET FORTH UNDER FPR 1 6.104-4(B). NOTWITHSTANDING SUCH PREFERENCE, PROTESTANT'S BID WAS STILL HIGHER THAN INDHACO'S OFFER AND THAT OF TWO OTHER CONCERNS, AND UNDER THE CIRCUMSTANCES, GAO CANNOT CONCLUDE THAT PROTESTANT WAS TREATED UNFAIRLY.

TO MILMARK SERVICES, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 3, 1972, AND SUBSEQUENT CORRESPONDENCE, CONCERNING YOUR PROTEST UNDER INVITATION FOR BIDS (IFB) WA -72-E304, ISSUED BY THE ENVIRONMENTAL PROTECTION AGENCY (EPA) ON APRIL 11, 1972, FOR AN INDEFINITE REQUIREMENT OF KEYPUNCHING SERVICES ON DATA PROCESSING CARDS TO BE FURNISHED BY THE CONTRACTOR.

INDHACO, INC., OF HAITI, WEST INDIES, SUBMITTED THE LOWEST BID FOR THE SERVICES AT $20,460 AND CERTIFIED THAT EACH END PRODUCT, EXCEPT "KEYPUNCHING SERVICES," WAS A DOMESTIC SOURCE END PRODUCT FOR PURPOSES OF THE BUY AMERICAN ACT, 41 U.S.C. 10A-D. YOU SUBMITTED THE FOURTH LOWEST BID AT $27,250.

SINCE THE CONTRACTING OFFICER CONSIDERED INDHACO'S OFFER TO BE A FOREIGN BID, HE ADJUSTED THAT CONCERN'S BID BY THE 12 PERCENT FACTOR SET FORTH IN FEDERAL PROCUREMENT REGULATIONS (FPR) 1-6.104-4(B), QUOTED IN PERTINENT PART:

"*** EACH FOREIGN BID SHALL BE ADJUSTED FOR PURPOSES OF EVALUATION BY ADDING TO THE FOREIGN BID (INCLUSIVE OF DUTY) A FACTOR OF 6 PERCENT OF THAT BID, EXCEPT THAT A 12 PERCENT FACTOR SHALL BE USED INSTEAD OF THE 6 PERCENT FACTOR IF THE FIRM SUBMITTING THE LOW ACCEPTABLE DOMESTIC BID IS A SMALL BUSINESS CONCERN OR A LABOR SURPLUS AREA CONCERN ***."

INASMUCH AS THE APPLICATION OF THAT FACTOR TO INDHACO'S BID DID NOT DISPLACE THAT CONCERN'S STANDING AS THE LOWEST BIDDER, THE CONTRACTING OFFICER PROPOSES TO MAKE AWARD TO INDHACO.

YOU STATE THAT THE GOVERNMENT DOES NOT HAVE ON-SITE INSPECTION FACILITIES IN HAITI TO MONITOR THE WORK OF INDHACO, IF THAT CONCERN IS AWARDED THE CONTRACT. FURTHER, YOU MAINTAIN THAT INDHACO WILL NOT BE ABLE TO LIST EMPLOYMENT OPENINGS WITH THE LOCAL OFFICE OF THE STATE EMPLOYMENT SERVICE SYSTEM AS REQUIRED BY THE CODE OF FEDERAL REGULATIONS (CFR) AT 41 CFR 50- 250.

EPA REPORTS THAT THERE IS NO REQUIREMENT IN THE IFB FOR AN ONSITE GOVERNMENT INSPECTION FACILITY AND THAT THE NATURE OF THE REQUIRED SERVICES DOES NOT DEMAND SUCH INSPECTION. IT FURTHER STATES THAT THE LISTING OF EMPLOYMENT OPENINGS IS NOT REQUIRED FOR OPENINGS WHICH OCCUR OUTSIDE OF THE 50 STATES, THE DISTRICT OF COLUMBIA, GUAM, PUERTO RICO, AND THE VIRGIN ISLANDS, AND THAT INDHACO WOULD THEREFORE NOT BE REQUIRED TO LIST JOB OPENINGS OCCURRING IN HAITI. WE CANNOT DISAGREE WITH EPA'S POSITIONS IN THESE MATTERS.

YOU ALSO ALLEGE THAT INDHACO REPRESENTS UNFAIR COMPETITION AND CANNOT QUALIFY FOR THE AWARD UNDER THE TERMS OF THE BUY AMERICAN ACT.

THE BUY AMERICAN ACT, AS IMPLEMENTED BY EXECUTIVE ORDER 10582 OF DECEMBER 17, 1954, AS AMENDED, WAS DESIGNED TO ACCORD PREFERENTIAL TREATMENT TO DOMESTIC SUPPLIERS AND MANUFACTURERS IN PURCHASES OF MATERIALS AND SUPPLIES BY FEDERAL AGENCIES AND ESTABLISHMENTS. HOWEVER, THE ACT DOES NOT CONSTITUTE AN ABSOLUTE PROHIBITION AGAINST THE PURCHASE OF FOREIGN SUPPLIES AS YOU CONTEND. THUS, UNDER ONE OF THE EXCEPTIONS CONTAINED IN THE FIRST SENTENCE OF 41 U.S.C. 10A, THE PURCHASE OF DOMESTIC ARTICLES IS NOT REQUIRED WHEN THE HEAD OF THE DEPARTMENT CONCERNED DETERMINES THAT THE COST OF DOMESTIC ITEMS WOULD BE "UNREASONABLE." EXECUTIVE ORDER NO. 10582 SPECIFIES, IN PART, THAT THE PRICE OF DOMESTIC ARTICLES IS UNREASONABLE IF IT EXCEEDS THE PRICE OF LIKE FOREIGN ARTICLES PLUS A DIFFERENTIAL OF SIX PERCENT. BY IMPLEMENTING REGULATION, FPR 1-6.104-4(B), NOTED ABOVE, FURTHER PROVIDES A DIFFERENTIAL OF 12 PERCENT FOR SMALL BUSINESS OR LABOR SURPLUS AREA CONCERNS.

AS NOTED ABOVE, THE CONTRACTING OFFICER APPLIED THE "BUY AMERICAN" DIFFERENTIAL PRESCRIBED BY FPR 1-6.104-4(B) TO INDHACO'S BID. ASSUMING, FOR THE PURPOSE OF DISCUSSION, THAT THE BUY AMERICAN ACT IS APPLICABLE TO A PROCUREMENT OF THE TYPE HERE INVOLVED, AND THAT THE DIFFERENTIAL THEREFORE WAS PROPERLY APPLIED TO INDHACO'S BID, IT IS CLEAR THAT YOUR CONCERN RECEIVED THE ONLY PREFERENCE WHICH IS TO BE CONFERRED ON DOMESTIC CONCERNS UNDER THE BUY AMERICAN ACT. NOTWITHSTANDING SUCH PREFERENCE, YOUR CONCERN'S BID WAS STILL HIGHER THAN INDHACO'S OFFER, AND THAT OF TWO OTHER CONCERNS. UNDER THE CIRCUMSTANCES, WE CANNOT CONCLUDE THAT YOUR CONCERN WAS TREATED UNFAIRLY, OR THAT THE PUBLIC POLICY EXPRESSED IN THE BUY AMERICAN ACT WAS CONTRAVENED.

FOR THE REASONS SET FORTH ABOVE, YOUR PROTEST MUST BE DENIED.