B-167635, AUG. 13, 1969

B-167635: Aug 13, 1969

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CONTRACTS - BUY AMERICAN ACT - BALANCE OF PAYMENTS DECISION TO UNITED STATES INFORMATION AGENCY CONCERNING WHETHER USE OF STRUCTURAL STEEL IN ANTENNA TOWERS TO BE CONSTRUCTED IN GREECE IS CONSISTENT WITH BALANCE OF PAYMENTS POLICY IN 41 CFR 1-18.601. IS AS FOLLOWS: "PURSUANT TO AGENCY BALANCE OF PAYMENTS POLICY. THE CONTRACTOR AGREES THAT ONLY UNITED STATES DOMESTIC CONSTRUCTION MATERIAL (AS THAT TERM IS DEFINED IN 41 CFR 1-6.201) SHALL BE USED IN THE PERFORMANCE OF THIS CONTRACT WITH THE EXCEPTION OF THE ITEMS LISTED BELOW WHICH ARE EXEMPT FROM THE BALANCE OF PAYMENTS POLICY. CONCERNS THE BUY AMERICAN ACT AND REFERS TO 41 CFR 1-18.6 WHEREIN THE FOLLOWING PERTINENT DEFINITIONS ARE SET OUT WITH RESPECT TO CONSTRUCTION CONTRACTS (1-18.601): "CONSTRUCTION MATERIAL" MEANS ANY ARTICLE.

B-167635, AUG. 13, 1969

CONTRACTS - BUY AMERICAN ACT - BALANCE OF PAYMENTS DECISION TO UNITED STATES INFORMATION AGENCY CONCERNING WHETHER USE OF STRUCTURAL STEEL IN ANTENNA TOWERS TO BE CONSTRUCTED IN GREECE IS CONSISTENT WITH BALANCE OF PAYMENTS POLICY IN 41 CFR 1-18.601.

TO MR. SHAKESPEARE:

WE REFER TO A LETTER DATED AUGUST 4, 1969, FROM YOUR ASSISTANT DIRECTOR (ADMINISTRATION), REQUESTING OUR OPINION AS TO WHETHER THE USE OF STRUCTURAL STEEL IN ANTENNA TOWERS TO BE CONSTRUCTED IN GREECE AS PROPOSED BY PAGE COMMUNICATIONS ENGINEERS, INC., UNDER CONTRACT 1A 13516, WOULD BE CONSISTENT WITH THE BALANCE OF PAYMENTS PROVISION OF THE CONTRACT.

THE SUBJECT PROVISION, ARTICLE XLVIII, IS AS FOLLOWS: "PURSUANT TO AGENCY BALANCE OF PAYMENTS POLICY, THE CONTRACTOR AGREES THAT ONLY UNITED STATES DOMESTIC CONSTRUCTION MATERIAL (AS THAT TERM IS DEFINED IN 41 CFR 1-6.201) SHALL BE USED IN THE PERFORMANCE OF THIS CONTRACT WITH THE EXCEPTION OF THE ITEMS LISTED BELOW WHICH ARE EXEMPT FROM THE BALANCE OF PAYMENTS POLICY, AND THOSE SET FORTH IN THE BALANCE OF PAYMENTS CERTIFICATE. THE ITEMS LISTED BELOW MAY BE PURCHASED FROM ANY SOURCE, EXCEPT COMMUNIST CONTROLLED COUNTRIES, WITHOUT APPLICATION OF THE 50 PERCENT FACTOR STATED IN PARAGRAPH 3 UNDER INFORMATION REGARDING BIDDING MATERIAL:"

THE ABOVE-MENTIONED SECTION 1-6.201, TITLE 41, OF THE CODE OF FEDERAL REGULATIONS, CONCERNS THE BUY AMERICAN ACT AND REFERS TO 41 CFR 1-18.6 WHEREIN THE FOLLOWING PERTINENT DEFINITIONS ARE SET OUT WITH RESPECT TO CONSTRUCTION CONTRACTS (1-18.601): "CONSTRUCTION MATERIAL" MEANS ANY ARTICLE, MATERIAL, OR SUPPLY BROUGHT TO THE CONSTRUCTION SITE FOR INCORPORATION IN THE BUILDING OR RK.'COMPONENT" MEANS ANY ARTICLE, MATERIAL, OR SUPPLY DIRECTLY INCORPORATED IN CONSTRUCTION MATERIAL.'DOMESTIC CONSTRUCTION MATERIAL" MEANS AN UNMANUFACTURED CONSTRUCTION MATERIAL WHICH HAS BEEN MINED OR PRODUCED IN THE UNITED STATES, OR A MANUFACTURED CONSTRUCTION MATERIAL WHICH HAS BEEN 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 COST OF COMPONENTS SHALL INCLUDE TRANSPORTATION COSTS TO THE PLACE OF INCORPORATION INTO THE CONSTRUCTION MATERIAL AND, IN THE CASE OF COMPONENTS OF FOREIGN ORIGIN, DUTY (WHETHER OR NOT A DUTY-FREE ENTRY CERTIFICATE MAY BE ISSUED).'

STRUCTURAL STEEL IS NOT SPECIFICALLY EXEMPTED FROM THE BALANCE OF PAYMENTS POLICY, AND IT IS NOT LISTED IN THE BALANCE OF PAYMENTS CERTIFICATES.

PAGE HAS PLACED AN ORDER WITH UNITED STATES STEEL CORPORATION (IN THE UNITED STATES) FOR THE MANUFACTURE OF THE STRUCTURAL STEEL MEMBERS. SUCH ORDER WAS PREPARED FROM A DETAILED MATERIAL TAKEOFF FROM THE DRAWING SPECIFICATIONS FURNISHED BY YOUR AGENCY, AND SHOWS PRECISE DIMENSIONS FOR EACH INDIVIDUAL PIECE, EACH OF WHICH HAS A SPECIFIC PLACE IN THE TOWERS. SINCE IT IS UNDERSTOOD THAT NEITHER UNITED STATES STEEL NOR ANY OTHER DOMESTIC STEEL MILL MANUFACTURES STRUCTURAL STEEL TO PRECISE HORIZONTAL LENGTHS BUT GUARANTEES THAT IT WILL BE AT LEAST THE LENGTH ORDERED, TRIMMING OF THE ENDS OF VARIOUS STRUCTURAL MEMBERS TO THE EXACT SPECIFICATION MEASUREMENTS IS GENERALLY REQUIRED. IT IS STATED THAT PAGE'S ORDER TO UNITED STATES STEEL CONTAINS 20,008 DISTINCT AND INDIVIDUAL SIZED COMPONENTS OF THE TOWER, INCLUDING 344 PREDESIGNATED SHAPES FOR ANGLES, RODS, PLATES, CHANNELS, TUBES, AND BEAMS OF ALL TYPES WHICH ARE SHOWN ON THE BILL OF MATERIAL.

PAGE PROPOSES TO HAVE THESE STEEL MEMBERS DELIVERED TO A SUBCONTRACTOR IN THE UNITED KINGDOM, WHICH WILL TRIM THE ENDS OF THE STEEL MEMBERS, WHERE NECESSARY, TO THE PRECISE MEASUREMENTS SET FORTH IN THE SHOP DRAWINGS; PUNCH BOLTING HOLES IN DESIGNATED MEMBERS; ATTACH (BY WELDING) BOLTING PLATES, GUSSETS, CAPS, ETC.; AND GALVANIZE TO PREVENT RUST. THE STRUCTURAL MEMBERS WILL THEREAFTER BE DELIVERED TO THE CONSTRUCTION SITE WHERE FIELD MEASUREMENT, STRAIGHTENING, AND ERECTION OF THE MEMBERS WILL BE PERFORMED, INVOLVING CONSTRUCTION FITTING AND WELDING, TOUCH-UP GALVANIZING AND PAINTING.

THE QUESTION PRESENTED IN YOUR ASSISTANT DIRECTOR'S LETTER IS WHETHER THE VARIOUS STRUCTURAL MEMBERS PRODUCED BY UNITED STATES STEEL, AND EVENTUALLY DELIVERED TO THE CONSTRUCTION SITE, MAY BE CONSIDERED AS HAVING BEEN "MANUFACTURED" IN THE UNITED STATES UNDER THE ABOVE DEFINITION OF DOMESTIC CONSTRUCTION MATERIAL IN VIEW OF THE OPERATIONS PERFORMED ON THOSE MEMBERS IN THE UNITED KINGDOM.

THE LETTER REFERS TO VARIOUS DECISIONS OF THIS OFFICE CONSIDERING THE TERM "MANUFACTURED" AS USED IN THE BUY AMERICAN CLAUSE IN GOVERNMENT CONTRACTS, PARTICULARLY B-166613, MAY 26, 1969, INVOLVING THE PROCESSING WITHIN THE UNITED STATES OF FOREIGN TUBING BY VARIOUS OPERATIONS INCLUDING THE CUTTING INTO SECTIONS, BENDING THOSE SECTIONS TO VARIOUS PLANES, JOINING THE SECTIONS BY WELDING, APPLYING FINS, ETC., TO FORM A MANUFACTURED CONSTRUCTION MATERIAL MEETING THE SPECIFICATIONS REQUIREMENTS.

IT IS CONTENDED IN THE LETTER OF AUGUST 4 THAT THE DECISION OF MAY 26 MAY NOT BE CONSIDERED AS PRECEDENT IN THE DISPOSITION OF THE SUBJECT CASE AS THE FACTS ARE DISTINGUISHABLE IN THAT THE ABOVE MENTIONED ACTIONS PERFORMED ON THE FOREIGN TUBING TO PRODUCE THE MATERIAL REQUIRED ARE MUCH MORE SUBSTANTIVE AND EXTENSIVE THAN THE WORK PERFORMED ON THE STRUCTURAL MEMBERS IN THE CASE AT HAND. WE AGREE WITH THAT CONTENTION. IN THAT CASE THE TUBING WAS NOT PRODUCED SPECIFICALLY FOR THE CONTRACT WORK, WHEREAS HERE THE BASIC STRUCTURAL MEMBERS ARE TO BE INDIVIDUALLY PRODUCED IN ACCORDANCE WITH DRAWING SPECIFICATIONS (EXCEPT FOR A SLIGHT VARIATION IN LENGTH) AND DELIVERED TO THE CONSTRUCTION SITE WITHOUT ANY FUNDAMENTAL CHANGES, AND IN SUBSTANTIALLY THE DIMENSIONS AS WHEN PRODUCED BY THE MANUFACTURER, UNITED STATES STEEL.

ACCORDINGLY, IT IS OUR OPINION THAT THE INTERMEDIATE HOLE PUNCHING, BOLTING PLATE ATTACHMENTS, AND OTHER OPERATIONS PERFORMED ON THE STRUCTURAL MEMBERS OF THE TOWERS IN THE UNITED KINGDOM WOULD NOT SUFFICIENTLY ALTER THOSE MEMBERS AS TO CHANGE THE UNITED STATES AS THE PLACE OF THEIR MANUFACTURE.