B-128501, SEP. 4, 1956

B-128501, SEP. 4, 1956

TO WAKMANN WATCH COMPANY, INC.:

REFERENCE IS MADE TO YOUR TELEGRAM OF JULY 3, 1956, ADVISING THAT YOU WERE THE LOWEST QUALIFIED RESPONSIVE BIDDER UNDER INVITATIONS FOR BIDS NOS. ORD-36-038-56-SP-568 AND ORD-36-038-56-SP-643, ISSUED BY FRANKFORD ARSENAL, PHILADELPHIA, PENNSYLVANIA, FOR THE PROCUREMENT OF NAVIGATION TIMER STOP WATCHES AND NAVIGATION HACK WRIST WATCHES, AND QUESTIONING THE LEGALITY OF CONTRACTS AWARDED TO HIGHER BIDDERS THEREFOR.

UNDER DATE OF AUGUST 22, 1956, THE DEPARTMENT OF THE ARMY REPORTED THAT YOUR BIDS WERE REJECTED UPON THE ADVICE OF THE DIRECTOR OF DEFENSE MOBILIZATION, PURSUANT TO SECTION 3 (D) OF EXECUTIVE ORDER NO. 10582, BECAUSE THE ARTICLES YOU OFFERED WERE NOT MANUFACTURED IN THE UNITED STATES WITHIN THE MEANING OF THE BUY-AMERICAN ACT, 41 U.S.C. 10 (A) (D).

PROVISION FOR APPLICATION OF THE BUY-AMERICAN ACT TO PURCHASE OF THE ARTICLES IN QUESTION IS CONTAINED IN STANDARD FORM 32, GENERAL PROVISIONS (SUPPLY CONTRACT), WHICH WAS INCORPORATED BY REFERENCE INTO THE GENERAL PROVISIONS OF BOTH OF THE INVITATIONS REFERRED TO. SECTION 3/D) OF EXECUTIVE ORDER NO. 10582, WHICH WAS ISSUED IN IMPLEMENTATION OF THE BUY- AMERICAN ACT, PROVIDES AS FOLLOWS:

"SEC. 3. NOTHING IN THIS ORDER SHALL AFFECT THE AUTHORITY OR RESPONSIBILITY OF AN EXECUTIVE AGENCY:

"/D) TO REJECT ANY BID OR OFFER FOR MATERIALS OF FOREIGN ORIGIN IF SUCH REJECTION IS NECESSARY TO PROTECT ESSENTIAL NATIONAL SECURITY INTERESTS AFTER RECEIVING ADVICE WITH RESPECT THERETO FROM THE PRESIDENT OR FROM ANY OFFICER OF THE GOVERNMENT DESIGNATED BY THE PRESIDENT TO FURNISH SUCH ADVICE.'

BY MEMORANDUM DATED APRIL 7, 1955, THE PRESIDENT ADVISED THE DIRECTOR OF THE OFFICE OF DEFENSE MOBILIZATION AS FOLLOWS:

"PURSUANT TO SECTION 3/D) OF EXECUTIVE ORDER 10582, DECEMBER 17, 1954, YOU ARE HEREBY DESIGNATED TO FURNISH ADVICE TO EXECUTIVE AGENCIES WITH RESPECT TO THE REJECTION OF BIDS OR OFFERS TO FURNISH MATERIALS OF FOREIGN ORIGIN UPON THE GROUND THAT SUCH REJECTION IS NECESSARY TO PROTECT ESSENTIAL NATIONAL SECURITY INTERESTS.

"IT IS MY CONVICTION THAT EXCEPTIONS UNDER THIS PROVISION OF THE EXECUTIVE ORDER SHOULD BE MADE ONLY UPON A CLEAR SHOWING THAT THE PAYMENT OF A GREATER DIFFERENTIAL THAN THE ORDER PROVIDES FOR IS JUSTIFIED BY CONSIDERATION OF NATIONAL SECURITY.'

THE RECORD FURNISHED BY THE DEPARTMENT OF THE ARMY SHOWS THAT THE QUESTION OF CONTRACT AWARDS UNDER THESE INVITATIONS WAS SUBMITTED TO THE DIRECTOR, OFFICE OF DEFENSE MOBILIZATION. UNDER DATE OF JUNE 26, 1956, THAT OFFICIAL ADVISED THE SECRETARY OF DEFENSE THAT THE THEN CURRENT PRODUCTION IN THE AMERICAN JEWELED WATCH INDUSTRY DID NOT APPEAR TO BE SUFFICIENTLY HIGH TO PROVIDE A FULLY ADEQUATE MOBILIZATION BASE AND IT WAS THEREFORE HIS OPINION THAT BIDS PROPOSING FULFILLMENT OF THE INVITATION REQUIREMENTS WITH MATERIALS OF FOREIGN ORIGIN SHOULD BE REJECTED IN THE INTEREST OF NATIONAL SECURITY.

ON THE BASIS OF THE PRESENT RECORD, THE PROCEDURES OF THE ADMINISTRATIVE AGENCIES IN THIS MATTER APPEAR TO HAVE BEEN IN ACCORDANCE WITH AND ADEQUATELY AUTHORIZED BY LAW. IT IS THEREFORE APPARENT THAT THERE IS NO BASIS ON WHICH THIS OFFICE MAY QUESTION THE LEGALITY OF CONTRACT AWARDS TO THE LOWEST QUALIFIED BIDDERS OFFERING MATERIALS OF DOMESTIC ORIGIN.

WITH RESPECT TO YOUR REQUEST FOR ADVICE ON THE FUTURE POLICY OF THE GOVERNMENT IN THE PROCUREMENT OF CLOCKS AND WATCHES, IT IS SUGGESTED THAT YOUR INQUIRY BE DIRECTED TO THE DIRECTOR, OFFICE OF DEFENSE MOBILIZATION, WASHINGTON 25, D.C. ..END :