B-179939, JUN 6, 1974

B-179939: Jun 6, 1974

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WAS ASSEMBLED IN VIRGIN ISLANDS FROM MANUFACTURED PARTS OF FOREIGN ORIGIN. WATCH IS DOMESTIC SOURCE END PRODUCT AND BID NOT SUBJECT TO ADDITIONAL EVALUATION FACTOR PRESCRIBED BY ACT AND REGULATIONS FOR FOREIGN SOURCE END PRODUCT. QUESTION CONCERNING BIDDER'S INTENTION TO COMPLY WITH "REQUIRED SOURCE FOR JEWEL BEARINGS" CERTIFICATION IS MATTER OF CONTRACT ADMINISTRATION AND NOT DETERMINATIVE OF BID ACCEPTABILITY. WAS ISSUED BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION. TWO BIDS WERE RECEIVED AND OPENED AUGUST 20. PARAGRAPH 7) WAS A BUY AMERICAN CERTIFICATE REQUIRING IDENTIFICATION OF END PRODUCTS OF OTHER THAN DOMESTIC SOURCE. BENRUS' BID SPECIFICALLY INDICATED THAT IT WAS OFFERING AN END PRODUCT OF DOMESTIC ORIGIN BY SPECIFYING "NONE" UNDER THE BUY AMERICAN CERTIFICATE.

B-179939, JUN 6, 1974

1. UNDER INVITATION FOR BIDS TO SUPPLY WRIST WATCHES THAT CONTAINED BUY AMERICAN CERTIFICATE REQUIRING IDENTIFICATION OF END PRODUCTS OF OTHER THAN DOMESTIC SOURCE, FACT THAT WATCH MOVEMENT, WHICH COMPRISES SUBSTANTIAL PORTION OF ALL COMPONENTS, WAS ASSEMBLED IN VIRGIN ISLANDS FROM MANUFACTURED PARTS OF FOREIGN ORIGIN, CONSTITUTES "MANUFACTURE" OF COMPLETE WATCH MOVEMENT IN U.S. WITHIN CONTEMPLATION OF BUY AMERICAN ACT AND REGULATIONS. SINCE COST OF WATCH MOVEMENT EXCEEDS 50 PERCENT OF COST OF ALL COMPONENTS, WATCH IS DOMESTIC SOURCE END PRODUCT AND BID NOT SUBJECT TO ADDITIONAL EVALUATION FACTOR PRESCRIBED BY ACT AND REGULATIONS FOR FOREIGN SOURCE END PRODUCT. SEE COMP. GEN. CASES CITED. 2. QUESTION CONCERNING BIDDER'S INTENTION TO COMPLY WITH "REQUIRED SOURCE FOR JEWEL BEARINGS" CERTIFICATION IS MATTER OF CONTRACT ADMINISTRATION AND NOT DETERMINATIVE OF BID ACCEPTABILITY. HOWEVER, PREAWARD SURVEY INDICATES BIDDER'S INTENTION TO COMPLY.

TO HAMILTON WATCH CO., INC.:

ON JULY 17, 1973, INVITATION FOR BIDS (IFB) NO. DSA-400-74-B-0122, WAS ISSUED BY THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA. THE IFB SOLICITED BIDS FOR A REQUIREMENTS-TYPE CONTRACT FOR AN ESTIMATED MAXIMUM QUANTITY OF 50,000 GENERAL PURPOSE WRIST WATCHES.

IN RESPONSE TO THE SUBJECT IFB, TWO BIDS WERE RECEIVED AND OPENED AUGUST 20, 1973, AS SCHEDULED. THE BID SUBMITTED BY THE HAMILTON WATCH COMPANY, INCORPORATED (HAMILTON), OFFERED A PRICE OF $17.76 FOR EACH WATCH WITH A ONE PERCENT DISCOUNT FOR PAYMENT WITHIN 20 DAYS. THE OTHER BID SUBMITTED BY BENRUS CORPORATION (BENRUS) OFFERED A NET PRICE OF $19.95 PER UNIT. INCLUDED IN THE IFB (SECTION B, PARAGRAPH 7) WAS A BUY AMERICAN CERTIFICATE REQUIRING IDENTIFICATION OF END PRODUCTS OF OTHER THAN DOMESTIC SOURCE. BENRUS' BID SPECIFICALLY INDICATED THAT IT WAS OFFERING AN END PRODUCT OF DOMESTIC ORIGIN BY SPECIFYING "NONE" UNDER THE BUY AMERICAN CERTIFICATE. IN ITS BUY AMERICAN CERTIFICATE HAMILTON INDICATED THAT THE MOVEMENT FOR THE WATCH WOULD BE OF SWISS ORIGIN AND THUS SPECIFICALLY EXCLUDED THE MOVEMENT AS A DOMESTIC SOURCE END PRODUCT TO WHICH THE BUY AMERICAN CERTIFICATION WOULD APPLY. MOREOVER, BY LETTER DATED SEPTEMBER 20, 1973, HAMILTON CONFIRMED THAT THE COST OF THE FOREIGN COMPONENTS EXCEEDED THAT OF THE DOMESTIC COMPONENTS FOR THE ITEM IT INTENDED TO FURNISH. CONSEQUENTLY, ON OCTOBER 18, 1973, HAMILTON WAS NOTIFIED BY THE PROCURING AGENCY THAT IN CONFORMANCE WITH ARMED SERVICES PROCUREMENT REGULATION (ASPR) 6 104.4(B), AN ADDITIONAL EVALUATION FACTOR WAS ADDED TO ITS BID, AS PRESCRIBED BY THE BUY AMERICAN ACT (41 U.S.C. 10A -D) AND IMPLEMENTING REGULATIONS, AND ITS BID WAS BEING ADJUSTED UPWARD SO AS TO GIVE PREFERENCE TO BENRUS' DOMESTIC BID. AS ADJUSTED, HAMILTON'S BID IS $25.02 PER UNIT AND BENRUS IS THEREFORE THE LOW BIDDER AT A UNIT PRICE OF $19.95.

ALTHOUGH HAMILTON HAS PROTESTED THE PROPOSED AWARD TO BENRUS, IT IS OUR VIEW AS DISCUSSED BELOW THAT ITS PROTEST SHOULD BE DENIED.

BY TELEFAX OF OCTOBER 24, 1973, AND LETTER OF NOVEMBER 5, 1974, FROM ITS COUNSEL, HAMILTON FURNISHED THE DETAILS OF ITS PROTEST AGAINST THE AWARD OF A CONTRACT TO BENRUS, CONTENDING THAT THE BID SUBMITTED BY BENRUS IS NOT BASED UPON FURNISHING A DOMESTIC SOURCE END PRODUCT AND MUST THEREFORE BE ADJUSTED UPWARD FOR EVALUATION PURPOSES IN ORDER TO COMPLY WITH THE BUY AMERICAN ACT AND IMPLEMENTING REGULATIONS, IN WHICH EVENT HAMILTON'S BID AS ADJUSTED WOULD BE LOW. IN ESSENCE, IT IS THE CONTENTION OF THE PROTESTER THAT THE WATCH BENRUS INTENDS TO FURNISH UNDER THE INSTANT PROCUREMENT SHOULD NOT BE CONSIDERED A DOMESTIC SOURCE END PRODUCT BECAUSE THE MOVEMENT TO BE INCORPORATED IN THE WATCH WILL ARRIVE AT THE PLANT OF BENRUS' SUBSIDIARY, QUALITY PRODUCTS, IN THE UNITED STATES VIRGIN ISLANDS, IN A SUBSTANTIALLY COMPLETED ASSEMBLY AND WILL REQUIRE ONLY A FEW MECHANICAL PROCESSES OF VERY LIMITED SIGNIFICANCE. SPECIFICALLY, HAMILTON ASSERTS THAT BENRUS INTENDS TO ASSEMBLE ITS WATCH MOVEMENTS BY IMPORTING TO ITS SUBSIDIARY A SUB ASSEMBLY TO WHICH THE SUBSIDIARY WOULD ADD ONLY A BARREL AND MAIN SPRING, WITH THE VAST MAJORITY OF THE MOVEMENT'S PARTS ALREADY ASSEMBLED PRIOR TO ARRIVAL IN THE VIRGIN ISLANDS TO CREATE WHAT IT CALLS THE "ASSEMBLED" MOVEMENT. IN THIS CONNECTION, HAMILTON STATES:

"THE FOREIGN SUB-ASSEMBLY CONTAINS THE VAST MAJORITY OF ALL THE PARTS WHICH WILL BECOME THE WATCH MOVEMENT. NO MATTER HOW IT IS ASSEMBLED, THE MOVEMENT WILL CONTAIN THE VAST MAJORITY OF ALL THE PARTS OF THE COMPLETED WATCH. TYPICALLY, A MOVEMENT CONTAINS OVER SIXTY COMPONENTS, SOME OF WHICH ARE SUB-ASSEMBLIES OF TWO OR MORE IDENTIFIABLE PARTS. THE COMPLETED WATCH ITSELF CONSISTS OF ONLY EIGHT OTHER PARTS: A DIAL, THREE HANDS, A CASE, A STEM, A CROWN AND A STRAP. ALTOGETHER, THE MOVEMENT REPRESENTS ABOUT 90% OF THE SEPARATE PARTS IN ANY WATCH; BENRUS' MOVEMENT WILL BE MADE COMPLETELY OF FOREIGN PARTS AND, ACCORDING TO THE METHOD OF ASSEMBLY BENRUS INTENDS TO USE, IT WILL BE SUBSTANTIALLY OR ALMOST WHOLLY ASSEMBLED IN A FOREIGN COUNTRY. IT IS KNOWN THAT THE ACTUAL COST OF THE FOREIGN PARTS IS IN AN AMOUNT WHICH IS MUCH GREATER THAN ONE HALF OF THE COST OF ALL OF THE WATCH'S COMPONENTS."

IT IS HAMILTON'S POSITION THAT UNDER THESE CIRCUMSTANCES, BENRUS' BID SHOULD BE SUBJECTED TO THE APPLICATION OF A BUY AMERICAN ACT EVALUATION FACTOR IN THE SAME MANNER AS HAMILTON'S AND ADJUSTED UPWARD UNDER ASPR 6- 104.4(B).

IN RESPONSE TO HAMILTON'S PROTEST, THE DEFENSE SUPPLY AGENCY FURNISHED OUR OFFICE AN ADMINISTRATIVE REPORT WHICH INCLUDES THE CONTRACTING OFFICER'S REPORT, IN PERTINENT PART, AS FOLLOWS:

"THE MATERIAL AND OPERATIVE FACTS IN THE INSTANT CASE ARE NOT IN CONTENTION. THE PROTEST IS DIRECTED SOLELY TO THE CONCLUSION TO BE DRAWN FROM THOSE FACTS, I.E., DOES ASSEMBLY OF THE MOVEMENT IN THE VIRGIN ISLANDS RENDER THE MOVEMENT A DOMESTIC COMPONENT OF THE END ITEM MANUFACTURED IN THE UNITED STATES? IN THE INSTANT CASE IT IS THE POSITION OF THE CONTRACTING OFFICER THAT THE ASSEMBLED WATCH MOVEMENT IS A COMPONENT OF THE WATCH, THE END PRODUCT. THE ASSEMBLED MOVEMENT IS PROCURED BY BOTH THE PROTESTANT AND BENRUS (FROM ITS SUBSIDIARY) AND DIRECTLY INCORPORATED INTO THE END ITEM IN THE COURSE OF THE MANUFACTURE OF THE END ITEM. *** UNLIKE THE PROTESTANT, BENRUS PROCURES A COMPLETELY ASSEMBLED WATCH MOVEMENT FROM A DOMESTIC, ALBEIT WHOLLY OWNED, SUBSIDIARY WHICH HAS ASSEMBLED THE MOVEMENT IN THE UNITED STATES. THE MOVEMENT IS PURCHASED BY BENRUS' WHOLLY OWNED SUBSIDIARY IN A DISASSEMBLED FORM AND SUBSEQUENTLY BILLED TO BENRUS AT A PRICE MORE THAN DOUBLE THE ACQUISITION COST OF THE DISASSEMBLED MOVEMENT."

THUS, IT IS DSA'S CONTENTION THAT THE END ITEM, THE WATCH, IS A DOMESTIC SOURCE END PRODUCT BY VIRTUE OF THE FACT THAT THE MOVEMENT WAS MANUFACTURED IN THE UNITED STATES VIRGIN ISLANDS.

ON JANUARY 22, 1974, WE REQUESTED THAT DSA FURNISH OUR OFFICE WITH A SUPPLEMENTAL REPORT CONCERNING THE NATURE AND EXTENT OF THE WATCH MOVEMENT ASSEMBLY OPERATIONS BENRUS' SUBSIDIARY PROPOSES TO PERFORM IN THE VIRGIN ISLANDS. BY LETTER DATED MARCH 4, 1974, WE WERE INFORMED THAT IN RESPONSE TO OUR REQUEST FOR ADDITIONAL INFORMATION, THE DEFENSE CONTRACT ADMINISTRATION SERVICES OFFICE (DCASO), MIAMI, FLORIDA, WAS REQUESTED TO PERFORM A PREAWARD SURVEY OF QUALITY PRODUCTS COMPANY, INCORPORATED (BENRUS' SUBSIDIARY), IN THE VIRGIN ISLANDS. THE REPORT STATED, IN PERTINENT PART, THE FOLLOWING:

"THE COMPANY RECEIVES PARTS IN A COMPLETELY DISASSEMBLED STATE EXCEPT FOR THE BALANCE WHEEL ASSEMBLY WHICH COMES ASSEMBLED FOR CONVENIENCE PURPOSES. THIS PART IS DISASSEMBLED DURING THE FIRST STEP OF MANUFACTURING, AND LATER RE-ASSEMBLED IN THE MANUFACTURING PROCESS ***."

"THE BASIC WATCH IS COMPLETELY ASSEMBLED FROM THE VARIOUS PARTS RECEIVED UP TO THE POINT OF INSTALLATION OF THE CASE AND WATCH BAND. *** IT IS ESTIMATED THAT 85% OF THE WORK WILL BE ACCOMPLISHED BY QUALITY PRODUCTS, INC., IN ST. THOMAS, VIRGIN ISLANDS; THE BALANCE OF WORK (15%) CONSISTING OF INSTALLATION OF THE BAND, FINAL TEST AND PACKAGING FOR FINAL DELIVERY TO THE GOVERNMENT WILL BE ACCOMPLISHED AT THE RIDGEFIELD FACILITY OF BENRUS."

A SUPPLEMENTAL REPORT OF THE CONTRACTING OFFICER DATED APRIL 4, 1974, PROVIDED ADDITIONAL DETAILS CONCERNING THE DCASO FINDINGS WITH RESPECT TO QUALITY PRODUCTS OPERATIONS. HAMILTON ASSERTS, HOWEVER, THAT THE COST OF THE FOREIGN BALANCE WHEEL ASSEMBLY, AS RECEIVED FROM THE SWISS SOURCE, IS SUBSTANTIALLY GREATER THAN THE COST OF THE DOMESTIC ASSEMBLY OPERATIONS WHICH ARE PERFORMED ON THE BALANCE WHEEL ASSEMBLY IN THE VIRGIN ISLANDS AND THUS THE ALLEGEDLY "COMPLETE" ASSEMBLY WHICH THE AGENCY CONCLUDES IS PERFORMED BY BENRUS' SUBSIDIARY IS ACTUALLY FAR BELOW EVEN ONE-HALF OF THE ASSEMBLY OF THE COMPLETE WATCH. IN SHORT, IT IS HAMILTON'S POSITION THAT THE MERE FACT THAT BENRUS' SUBSIDIARY ATTACHES CERTAIN PARTS TO THE FOREIGN BALANCE WHEEL ASSEMBLY CANNOT JUSTIFY CALLING THAT ASSEMBLY THE "COMPLETE ASSEMBLY" OF THE MOVEMENT, WHICH HAMILTON CONTENDS IS SUBSTANTIALLY PERFORMED IN SWITZERLAND PRIOR TO SHIPMENT TO THE VIRGIN ISLANDS. THUS, THE RECEIPT OF ASSEMBLED BALANCE WHEEL ASSEMBLY CONSTITUTES THE RECEIPT OF A SUBSTANTIALLY ASSEMBLED WATCH MOVEMENT OF FOREIGN ORIGIN, THE COST OF WHICH MUST BE CONSIDERED AS THE COST OF A FOREIGN COMPONENT UNDER THE BUY AMERICAN ACT AND IMPLEMENTING REGULATIONS.

INSOFAR AS IT CONCERNS THE SUBJECT PROCUREMENT, THE PERTINENT PROVISION OF THE BUY AMERICAN ACT (41 U.S.C. 10A) REQUIRES THAT 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 IN THE UNITED STATES SHALL BE ACQUIRED FOR PUBLIC USE UNLESS IT IS DETERMINED THAT THE COST IS UNREASONABLE OR THAT IT IS INCONSISTENT WITH THE PUBLIC INTEREST. TO ASSIST IN THE UNIFORM ADMINISTRATION OF THE ACT, EXECUTIVE ORDER NO. 10582, DECEMBER 17, 1954, PROVIDES THAT A MATERIAL WILL BE TREATED AS FOREIGN FOR PURPOSES OF THE ACT IF THE COST OF THE FOREIGN COMPONENTS OF THAT MATERIAL AGGREGATE 50 PERCENT OR MORE OF THE TOTAL COMPONENT COST OF THAT MATERIAL. FURTHERMORE, TO ASSIST IN DETERMINING WHETHER ARTICLES, MATERIALS, AND SUPPLIES (END PRODUCTS) TO BE ACQUIRED BY THE GOVERNMENT FOR PUBLIC USE ARE TO BE REGARDED AS BEING OF A FOREIGN OR A DOMESTIC SOURCE, THE IMPLEMENTING REGULATION, ASPR 6-102.1, PROVIDES THAT ONLY THE END PRODUCT AND ITS COMPONENTS SHALL BE CONSIDERED. COMPONENTS ARE DEFINED BY ASPR 6- 001(B) AS THOSE ARTICLES, MATERIALS, AND SUPPLIES WHICH ARE DIRECTLY INCORPORATED INTO END PRODUCTS; AND FINALLY ASPR 6-101(A) DEFINES A DOMESTIC SOURCE END PRODUCT AS AN END PRODUCT MANUFACTURED IN THE UNITED STATES IF THE COST OF ITS COMPONENTS WHICH ARE MINED, PRODUCED, OR MANUFACTURED IN THE UNITED STATES EXCEEDS 50 PERCENT OF THE COST OF ALL ITS COMPONENTS.

THE DEFINITION OF FOREIGN MATERIALS SET FORTH IN EXECUTIVE ORDER NO. 10582 HAS BEEN LABELED THE 50 PERCENT RULE AND HAS BEEN ACCEPTED AS THE TEST TO DETERMINE WHETHER A MANUFACTURED ARTICLE HAS BEEN MANUFACTURED "SUBSTANTIALLY ALL" FROM DOMESTIC ARTICLES, MATERIALS OR SUPPLIES WITHIN THE MEANING OF THE STATUTE. THE QUESTION AS TO WHETHER THE ASSEMBLY OF VARIOUS COMPONENTS PRODUCES A PRODUCT WHICH CAN BE CONSIDERED AS "MANUFACTURED" IN THE UNITED STATES, AND THEREFORE QUALIFY AS A "DOMESTIC SOURCE END PRODUCT" UNDER THE 50 PERCENT RULE WAS CONSIDERED BY OUR OFFICE IN 46 COMP. GEN. 813, 818-19 (1967). WE CONCLUDED IN THAT DECISION THAT "MANUFACTURED IN THE UNITED STATES," AS USED IN THE ACT AND THE FEDERAL PROCUREMENT REGULATIONS IMPLEMENTING THE ACT, INCLUDED THE ASSEMBLY IN THE UNITED STATES OF ARTICLES FROM FOREIGN MANUFACTURED COMPONENTS. IN THAT CASE THE MOUNTING AND ALIGNMENT IN THE UNITED STATES OF FOREIGN-MADE ELECTRIC MOTORS ONTO DOMESTICALLY MANUFACTURED CIRCULATING PUMP UNITS CONSTITUTED A "MANUFACTURE" OF THE COMPLETE PUMP UNITS (END PRODUCT) IN THE UNITED STATES. ALTHOUGH THAT CASE INVOLVED CONSTRUCTION MATERIAL, THE PROVISIONS OF THE BUY AMERICAN ACT WITH RESPECT TO THE REQUIREMENT CONCERNING "MANUFACTURE" ARE THE SAME FOR BOTH CONSTRUCTION AND SUPPLY CONTRACTS. SEE ALSO, 39 COMP. GEN. 435 (1959). IN THIS REGARD, WE CONCLUDED IN 52 COMP. GEN. 13 (1972), THAT THE HAND SEWING IN HAITI OF THE COVER COMPONENT AROUND THE CORE COMPONENT OF SOFTBALLS, WHICH WERE CUT, ASSEMBLED, WOUND AND VULCANIZED IN THE UNITED STATES, CONSTITUTED A "MANUFACTURE" OF THE SOFTBALLS (END PRODUCT) OUTSIDE THE UNITED STATES, THEREBY PRECLUDING THEM FROM QUALIFYING AS "U.S. END PRODUCTS," EVEN THOUGH THE HAND SEWING PROCESS AMOUNTED TO LESS THAN 3 PERCENT OF THE COST OF THE SOFTBALLS.

IN THE INSTANT CASE, IN ORDER TO DETERMINE WHETHER THE WATCH INTENDED TO BE FURNISHED BY BENRUS IS A FOREIGN OR DOMESTIC SOURCE END PRODUCT, IT IS NECESSARY THAT THE ORIGIN OF THE WATCH MOVEMENT, WHICH CONSTITUTES THE SUBSTANTIAL PORTION (COSTWISE) OF ALL COMPONENTS, BE DETERMINED. IN THIS CONNECTION, IT MUST BE DETERMINED WHETHER THE ASSEMBLY OPERATION OF THE VARIOUS FOREIGN MANUFACTURED PARTS IN THE VIRGIN ISLANDS CONSTITUTES THE MANUFACTURE OF THE MOVEMENT COMPONENT IN THE UNITED STATES SO AS TO CONSIDER ITS COST AS THE COST OF A DOMESTIC COMPONENT UNDER THE BUY AMERICAN ACT AND IMPLEMENTING REGULATIONS. IN THIS CONNECTION, THE MIAMI DCASO OFFICE SURVEYED THE QUALITY PRODUCTS OPERATION IN THE VIRGIN ISLANDS AND CHECKED WITH THE LOCAL CUSTOMS OFFICIALS CONCERNING THE IMPORTATION OF THE PARTS. PERTINENT PORTIONS OF THE SURVEY TEAMS' REPORT ARE QUOTED ABOVE. FROM THIS REPORT IT APPEARS THAT THE MOVEMENT PARTS ARE IMPORTED IN TWO LOTS: LOT A CONSISTS OF 26 PARTS IN AN UNASSEMBLED CONDITION, AND LOT B IS THE MAIN PLATE WITH BALANCE WHEEL AND BRIDGE SUBASSEMBLY. ALTHOUGH HAMILTON DISPUTES THE EXTENT AND SIGNIFICANCE OF ANY ASSEMBLY OPERATIONS PERFORMED BY QUALITY PRODUCTS, THE SURVEY TEAM OBTAINED COMPANY DOCUMENTATION WHICH SHOWS SOME 20 "ASSEMBLE OPERATIONS", INCLUDING STEPS 1 AND 12 WHICH LIST BALANCE WHEEL DISASSEMBLY AND REASSEMBLY, RESPECTIVELY. FURTHERMORE, IT IS REPORTED THAT THE BALANCE WHEEL OPERATIONS ACCOUNT FOR ONLY ABOUT 10 PERCENT OF THE TOTAL ASSEMBLY TIME FOR THE COMPLETE MOVEMENT. THEREFORE, CONTRARY TO HAMILTON'S ASSERTIONS, IT DOES NOT APPEAR THAT RECEIPT OF THE BALANCE WHEEL ASSEMBLY CONSTITUTES THE RECEIPT OF A SUBSTANTIALLY ASSEMBLED WATCH MOVEMENT. IT IS OUR VIEW, THEREFORE, JUST AS IN THE ABOVE CITED CASES, THAT THE ASSEMBLY OPERATIONS TO BE PERFORMED BY QUALITY PRODUCTS WILL CONSTITUTE A "MANUFACTURE" OF THE COMPLETE MOVEMENT IN THE UNITED STATES WITHIN THE CONTEMPLATION OF THE BUY AMERICAN ACT AND IMPLEMENTING REGULATIONS. THEREFORE, IT IS OUR VIEW THAT IT WAS PROPERLY DETERMINED THAT BENRUS' BID IS BASED UPON FURNISHING A DOMESTIC SOURCE END PRODUCT AND THE ADDITIONAL EVALUATION FACTOR IS NOT APPLICABLE.

WE HAVE EXAMINED THE COMPTROLLER GENERAL DECISIONS CITED BY HAMILTON AND DO NOT BELIEVE THEY ARE CONTROLLING HERE AS THEY DID NOT TURN ON WHETHER AN ASSEMBLY OF PARTS OR COMPONENTS CONSTITUTED "MANUFACTURE" AS IN THE INSTANT CASE AND IN 46 COMP. GEN. 813 AND 52 ID. 13, SUPRA. FOUR OF THE CITED DECISIONS INVOLVED THE MANUFACTURE OF AN END ITEM FROM MATERIALS OF FOREIGN ORIGIN, SUCH AS STEEL OR ALUMINUM INGOTS, BY VARIOUS PROCESSES OR OPERATIONS, AND THE QUESTION INVOLVED WAS WHETHER THE MANUFACTURING PROCESS OR OPERATION PERFORMED IN THE UNITED STATES PRODUCED A BASICALLY NEW OR DIFFERENT ARTICLE, MATERIAL, OR SUPPLY. SEE 48 COMP. GEN. 727 (1969); B-169279, JUNE 1, 1970; B-166613, MAY 26, 1969; B-150652, JULY 19, 1963. CF. 45 COMP. GEN. 658 (1966). IN THE OTHER CASE CITED BY HAMILTON, B-167572, SEPTEMBER 23, 1969, THE ONLY RELEVANT QUESTION AT ISSUE WAS WHETHER THE AGENCY HAD PROPERLY COMPUTED THE COSTS OF ADMITTEDLY DOMESTIC SOURCE COMPONENTS.

FINALLY, HAMILTON HAS QUESTIONED BENRUS' INTENTION TO COMPLY WITH THE CERTIFICATION IN ITS BID TO USE LANGER JEWEL BEARINGS AS REQUIRED BY THE "REQUIRED SOURCE FOR JEWEL BEARINGS" CLAUSE. THE PREAWARD SURVEY OF BENRUS' PLANT IN RIDGEFIELD, CONNECTICUT, INCLUDED CONSIDERATION OF THIS QUESTION AT THE REQUEST OF THE CONTRACTING OFFICER. IT IS REPORTED THAT BENRUS EXHIBITED PURCHASE ORDERS FOR JEWEL BEARINGS PURCHASED FROM THE WILLIAM LANGER JEWEL BEARING PLANT AND THAT THEY ARE TO BE SENT TO BENRUS TECHNICAL IN SWITZERLAND WHERE THEY ARE TO BE INCORPORATED IN THE PARTS SENT TO THE VIRGIN ISLANDS. IN ANY EVENT, THIS IS A MATTER OF CONTRACT ADMINISTRATION AND NOT DETERMINATIVE OF THE ACCEPTABILITY OF BENRUS' BID.

ACCORDINGLY, THE PROTEST IS DENIED.

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