B-191838, NOVEMBER 1, 1978, 58 COMP.GEN. 49

B-191838, NOVEMBER 1, 1978, 58 COMP.GEN. 49

BIDS - BUY AMERICAN ACT - BUY AMERICAN CERTIFICATE - ACCEPTANCE - NOT REVIEWABLE BY GAO - EXCEPTIONS GENERAL ACCOUNTING OFFICE (GAO) WILL REVIEW PROTEST CHALLENGING SUCCESSFUL BIDDER'S INTENDED COMPLIANCE WITH REPRESENTATION IN ITS BUY AMERICAN CERTIFICATE THAT DOMESTIC END PRODUCTS WILL BE SUPPLIED WHERE BASIS OF PROTEST IS THAT SUCCESSFUL BIDDER'S BID SAMPLES INDICATED THAT IT IS OFFERING OTHER THAN DOMESTIC END PRODUCTS. BIDS - BUY AMERICAN ACT - FOREIGN PRODUCT DETERMINATION - SAMPLE SUBMITTED - REVIEW BY GAO GAO REVIEW OF INFORMATION CONSIDERED PROPRIETARY, INCLUDING DETAILED COST BREAKDOWN, SUBMITTED BY SUCCESSFUL BIDDER IN RESPONSE TO PROTEST, INDICATES THAT COST OF DOMESTIC COMPONENTS CONTAINED IN AND PRODUCT OFFERED BY SUCCESSFUL BIDDER EXCEEDS 50 PERCENT OF TOTAL COST OF COMPONENTS. SUCCESSFUL BIDDER WAS THEREFORE PROPERLY EVALUATED BY AGENCY AS OFFERING DOMESTIC END PRODUCT UNDER BUY AMERICAN ACT.

IN THE MATTER OF NEW BRITAIN HAND TOOLS DIVISION, LITTON INDUSTRIAL PRODUCTS, INC., NOVEMBER 1, 1978:

NEW BRITAIN HAND TOOLS DIVISION, LITTON INDUSTRIAL PRODUCTS, INC. (LITTON), PROTESTS THE AWARD TO AMERICAN KAL ENTERPRISES, INC. (AMERICAN KAL) OF ITEMS 5 AND 7 UNDER INVITATION FOR BIDS (IFB) NO. FTAN-E5-10016-A- 3-7-78, ISSUED BY THE GENERAL SERVICES ADMINISTRATION, FEDERAL SUPPLY SERVICE. THE IFB SOLICITED BIDS FOR REQUIREMENTS CONTRACTS TO SUPPLY VARIOUS SOCKET WRENCH SETS.

ITEM 5 IS A 3/8 INCH SQUARE DRIVE SOCKET WRENCH SET CONSISTING OF 23 CHROME PLATED COMPONENTS TO BE FURNISHED IN A BOX. ITEM 7 IS A 1/2 INCH SQUARE DRIVE SOCKET WRENCH SET CONSISTING OF 20 CHROME PLATED COMPONENTS ALSO TO BE FURNISHED IN A BOX. FOR EACH OF THESE ITEMS, THE BIDDERS WERE REQUIRED BY THE SOLICITATION TO SUBMIT TWO BID SAMPLES FROM THE PRODUCTION OF THE MANUFACTURER WHOSE PRODUCT IS TO BE SUPPLIED.

LITTON REQUESTS THAT WE FIND THE AWARD TO AMERICAN KAL TO BE IN VIOLATION OF THE BUY AMERICAN ACT, 41 U.S.C. 10A-D (1976), AND THAT WE SET ASIDE THE AWARD. SPECIFICALLY, AS TO ITEM 5, LITTON ALLEGES THAT COMPONENTS 16 AND 17 (1/2 INCH AND 9/16 INCH U-JOINT SOCKETS RESPECTIVELY) OF AMERICAN KAL'S BID SAMPLES WERE MARKED "KAL-JAPAN" WHICH, ALONG WITH THE OTHER COMPONENTS SO MARKED (AT LEAST 15 OF THE 23 COMPONENTS) INDICATE THAT THE COST OF THE FOREIGN COMPONENTS OFFERED IN AMERICAN KAL'S BID SAMPLES EXCEEDED 50 PERCENT OF THE COST OF ALL OF THE COMPONENTS. AMERICAN KAL AND THE AGENCY MAINTAIN THAT COMPONENTS 16 AND 17 OF THE SAMPLE WERE MARKED "KAL" RATHER THAN "KAL-JAPAN" AND ARE OF DOMESTIC ORIGIN. AS TO ITEM 7, LITTON POINTS TO THE FACT THAT 17 OF THE 20 COMPONENTS OF THAT SET WERE ALSO MARKED "KAL -JAPAN" (THE REMAINING 3 COMPONENTS, A 9 INCH AND A 14 1/2 INCH HINGED HANDLE, AND A RATCHET, WERE SIMPLY MARKED "KAL") AND QUESTIONS WHETHER AMERICAN KAL WILL COMPLY WITH ITS BUY AMERICAN CERTIFICATE (SF 33, PARA. 7) BY SUPPLYING DOMESTIC END ITEMS.

UNDER EXECUTIVE ORDER 10582, DECEMBER 17, 1954, ARTICLES, MATERIALS AND SUPPLIES SHALL BE CONSIDERED TO BE OF FOREIGN ORIGIN IF THE COST OF FOREIGN PRODUCTS USED IN THEM CONSTITUTES 50 PERCENT OR MORE OF THE COST OF ALL COMPONENT PRODUCTS USED IN THEM. UNDER THIS ORDER, A BUY AMERICAN ACT DIFFERENTIAL MUST BE APPLIED IF THE END PRODUCT TO BE FURNISHED (1) IS NOT MANUFACTURED IN THE UNITED STATES OR (2) IS MANUFACTURED IN THE UNITED STATES BUT CONSISTS OF FOREIGN COMPONENTS WHICH MAKE UP 50 PERCENT OR MORE OF THE TOTAL COMPONENT COST. BLODGETT KEYPUNCHING COMPANY, 56 COMP.GEN. 18 (1976), 76-2 CPD 331. WE HAVE RECOGNIZED TOOL KITS AS END PRODUCTS FOR BUY AMERICAN ACT PURPOSES. IMPERIAL EASTMAN CORPORATION - THORSEN TOOL COMPANY, 53 COMP.GEN. 726 (1974), 74-1 CPD 153.

WE HAVE HELD THAT WHERE A BIDDER EXCLUDES NO END PRODUCTS FROM ITS BUY AMERICAN CERTIFICATE AND DOES NOT OTHERWISE INDICATE IT IS OFFERING ANYTHING OTHER THAN DOMESTIC END PRODUCTS, ACCEPTANCE OF ITS BID, IF OTHERWISE RESPONSIVE, RESULTS IN AN OBLIGATION ON ITS PART TO FURNISH DOMESTIC END PRODUCTS, AND COMPLIANCE WITH THAT OBLIGATION IS A MATTER OF CONTRACT ADMINISTRATION WHICH HAS NO EFFECT ON THE VALIDITY OF THE CONTRACT AWARD. 50 COMP.GEN. 697 (1971); BECKER INSTRUMENTS & PHOTOGRAPHIC OPTICS, B-185411, JULY 14, 1976, 76-2 CPD 43.

HOWEVER, LITTON, IN EFFECT, ALLEGES THAT IN THE BID SAMPLES, FURNISHED AS PART OF ITS BID, AMERICAN KAL INDICATED THAT IT WAS OFFERING OTHER THAN A DOMESTIC END PRODUCT. ACCORDINGLY, WE HAVE CONSIDERED THE MATTER.

WE HAVE EXAMINED ONE OF THE TWO BID SAMPLES FOR EACH ITEM AT A CONFERENCE HELD IN CONNECTION WITH THIS CASE, AND WE HAVE BEEN FURNISHED A DETAILED BREAKDOWN OF THE COMPONENT COSTS OF THE TWO SOCKET WRENCH SETS. FURTHER, AMERICAN KAL HAS SUBMITTED DETAILS WHICH IT CONSIDERS PROPRIETARY CONCERNING THE BID SAMPLES, IT SUBCONTRACTOR RELATIONSHIPS AND SOURCES OF SUPPLY, INCLUDING SPECIFIC PURCHASE ORDERS AND BANK COMMITMENTS. ALSO INCLUDED WERE THE SOURCES OF SUPPLY OF ONE OF AMERICAN KAL'S SUBCONTRACTORS, DELLACOR CO., INC., ALLEGED BY LITTON TO BE AN AFFILIATED FIRM MERELY ASSEMBLING IMPORTED JAPANESE COMPONENTS SUPPLIED TO IT BY AMERICAN KAL.

WE FIND, AS TO ITEM 5, THAT COMPONENTS 16 AND 17 WERE SIMPLY MARKED "KAL" IN THE BID SAMPLES WITHOUT COUNTRY OF ORIGIN INDICATED AS ALLEGED BY LITTON. WE FURTHER FIND, BASED ON OUR INSPECTION OF THE INFORMATION CONSIDERED BY AMERICAN KAL TO BE PROPRIETARY, INCLUDING A DETAILED COST BREAKDOWN, THAT THESE COMPONENTS, AS WELL AS COMPONENT 21, A U-JOINT, ARE OF AMERICAN ORIGIN, AND THAT THEIR COST ALONG WITH 3 OF THE OTHER ADMITTEDLY AMERICAN MADE COMPONENTS (1/2 INCH, 9/16 INCH AND 5/8 INCH THORSEN DEEP SOCKETS) AND THE AMERICAN METAL BOX, EXCEED 50 PERCENT OF THE COST OF ALL OF THE COMPONENTS OF THE ITEM 5 SOCKET WRENCH SET. AS TO ITEM 7, WE FIND, ALSO BASED ON OUR INSPECTION OF THE PROPRIETARY INFORMATION FURNISHED BY AMERICAN KAL, THAT THE 9 INCH AND 14 1/2 INCH HINGED HANDLES AND THE RATCHET QUESTIONED BY LITTON ARE OF AMERICAN ORIGIN AND THAT THE FORGED RATCHET HANDLE SUBCOMPONENTS ARE PRODUCED BY AMERICAN FIRMS. THE COST OF THESE COMPONENTS TO AMERICAN KAL, AS REPRESENTED TO US, ALONG WITH THE METAL BOX, EXCEEDS 50 PERCENT OF THE COST OF ALL OF THE COMPONENTS OF THE ITEM 7 SOCKET WRENCH SET. WE FIND NO BASIS FOR LITTON'S ALLEGATION THAT DELLACOR CO., INC. MERELY ASSEMBLES IMPORTED JAPANESE COMPONENTS SUPPLIED TO IT BY AMERICAN KAL.

BASED ON THE RECORD BEFORE US, WE CONCLUDE THAT THE TWO ITEMS OFFERED BY AMERICAN KAL WERE PROPERLY DETERMINED TO BE DOMESTIC END PRODUCTS.

ACCORDINGLY, THE PROTEST IS DENIED.