B-142162, APRIL 29, 1960, 39 COMP. GEN. 733

B-142162, APRIL 29, 1960, 39 COMP. GEN. 733

MARITIME MATTERS - CONSTRUCTION DIFFERENTIAL SUBSIDIES - EXCLUSIVE USE OF AMERICAN PRODUCTS THE PHRASE "SO FAR AS PRACTICABLE" IN THE REQUIREMENT FOR THE USE OF AMERICAN PRODUCTS IN THE CONSTRUCTION OF VESSELS USING CONSTRUCTION DIFFERENTIAL SUBSIDY AID IN SECTION 505 (A) OF THE MERCHANT MARINE ACT, 1936, 46 U.S.C. 1155 (A), IS, IN THE ABSENCE OF ANY INDICATION OF A LEGISLATIVE INTENT TO THE CONTRARY, TO BE CONSTRUED AS A MODIFICATION OF THE RIGID REQUIREMENT FOR EXCLUSIVE USE OF AMERICAN PRODUCTS AND TO PERMIT ADMINISTRATIVE DISCRETION IN THOSE AREAS WHERE THE FACTS JUSTIFY THE PURCHASE OF FOREIGN COMPONENTS FOR DOMESTICALLY MANUFACTURED EQUIPMENT; THEREFORE, THE PURCHASE OF AN AMERICAN MANUFACTURED VESSEL GYROCOMPASS SYSTEM WHICH CONTAINS A COMPONENT OF FOREIGN MANUFACTURE WOULD NOT VIOLATE THE STATUTORY REQUIREMENT IN VIEW OF THE REPRESENTATION THAT IT IS IMPRACTICAL TO REDESIGN THE EQUIPMENT OR TO PRODUCE THE COMPONENT IN THE UNITED STATES.

TO THE CHAIRMAN, FEDERAL MARITIME BOARD, APRIL 29, 1960:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 26, 1960, REQUESTING OUR INTERPRETATION OF THAT PORTION OF SECTION 505 (A) OF THE MERCHANT MARINE ACT, 1936, AS AMENDED, 46 U.S.C. 1155 (A), WHICH READS, IN PERTINENT PART, AS FOLLOWS:

* * * IN ALL SUCH CONSTRUCTION THE SHIPBUILDER, SUBCONTRACTORS, MATERIALMEN OR SUPPLIERS SHALL USE, SO FAR AS PRACTICABLE, ONLY ARTICLES, MATERIALS, AND SUPPLIES OF THE GROWTH, PRODUCTION, OR MANUFACTURE OF THE UNITED STATES * * *. ( ITALICS SUPPLIED.)

IN CONSONANCE WITH THE FOREGOING, YOU ADVISE THAT IN THE CONSTRUCTION OF VESSELS WITH CONSTRUCTION-DIFFERENTIAL SUBSIDY AID, THE CONSTRUCTION CONTRACTS TO WHICH THE FEDERAL MARITIME BOARD BECOMES A PARTY INCLUDE THE FOLLOWING CONTRACT PROVISION:

IN THE PERFORMANCE OF THE CONTRACT WORK THE CONTRACTOR, SUBCONTRACTORS, MATERIALMEN, OR SUPPLIERS SHALL USE SO FAR AS PRACTICABLE, ONLY ARTICLES, MATERIALS, AND SUPPLIES OF THE GROWTH, PRODUCTION OR MANUFACTURE OF THE UNITED STATES AS DEFINED IN PARAGRAPH K, SECTION 401 OF THE TARIFF ACT OF 1930. ( ITALICS SUPPLIED.)

YOU STATE THAT THE RADIO CORPORATION OF AMERICA, THE MANUFACTURER OF CERTAIN TYPES OF NAVIGATION EQUIPMENT SUITABLE FOR VESSELS CONSTRUCTED UNDER CONTRACTS OF THE FEDERAL MARITIME BOARD, PROPOSES TO SUPPLY TO THE CONTRACTOR FOR THE VESSELS CERTAIN AUTOMATIC PILOT AND GYROCOMPASS SYSTEMS. RCA ADVISES THAT THE CONTRACT PRICE OF THE AUTOMATIC PILOT AND GYROCOMPASS SYSTEM IS APPROXIMATELY $23,500 PER VESSEL; BUT IT IS STATED THAT ONE OF THE COMPONENTS OF THE GYROCOMPASS SYSTEM MANUFACTURED FOR RCA BY THE BE LOCK INSTRUMENT CORPORATION, NAMELY, THE GYROSPHERE, WAS OBTAINED IN GERMANY, AS WERE OTHER SMALL PARTS WHICH WERE MACHINED AND ASSEMBLED AND USED BY BE LOCK IN THE MANUFACTURE OF THE GYROCOMPASS SYSTEM. THE VALUE GIVEN TO THE GYROSPHERE AND THE OTHER SMALL PARTS, INCLUDING UNITED STATES DUTY AND THE HANDLING CHARGES, IS ABOUT $1,700.

YOU ADVISE THAT THERE IS AVAILABLE FOR PURCHASE BY A SHIPBUILDER CONSTRUCTING VESSELS UNDER FEDERAL MARITIME BOARD CONTRACTS, AN AUTOMATIC PILOT AND GYROCOMPASS SYSTEM MANUFACTURED BY THE SPERRY GYROSCOPE COMPANY WHICH DOES NOT INCLUDE PARTS PROCURED FROM OUTSIDE THE UNITED STATES. HOWEVER, THE SPERRY GYRO SYSTEM HAS A LESSER SPEED THAN THE ONE USED BY THE BE LOCK INSTRUMENT CORPORATION SO THAT THE PARTS MANUFACTURED BY SPERRY ARE NOT ADJUSTABLE TO OR INTERCHANGEABLE WITH THE BE LOCK-DESIGNED EQUIPMENT. THE RADIO CORPORATION OF AMERICA STATES THAT BECAUSE OF THE LIMITED MARKET FOR EQUIPMENT OF THIS TYPE, IT IS NOT "PRACTICABLE" FOR THE BE LOCK INSTRUMENT CORPORATION OR THE RADIO CORPORATION OF AMERICA TO REDESIGN THIS EQUIPMENT OR TO PRODUCE THE MACHINE TOOLS FOR THE MANUFACTURE OF A FEW PARTS IN THE UNITED STATES; AND, THEREFORE, IT REQUESTS TO BE ADVISED WHETHER IT IS PROPER FOR THE SHIPBUILDER, UNDER THE ABOVE-QUOTED PROVISIONS OF THE CONSTRUCTION CONTRACT, TO PURCHASE FOR FEDERAL MARITME BOARD CONTRACTS THE RCA GYROCOMPASS SYSTEM.

THE LANGUAGE OF THE ACT WHICH APPEARS TO HAVE GIVEN RISE TO YOUR QUESTION, IS, AS INDICATED ABOVE, THE PHRASE "SO FAR AS PRACTICABLE.'

WHILE WE HAVE FOUND NOTHING IN THE LEGISLATIVE HISTORY OF SECTION 505 (A) OF THE ACT TO INDICATE THE SPECIFIC INTENT OF THE CONGRESS IN USING THE PHRASE IN QUESTION, IT SEEMS TO US THAT THE MOST LOGICAL CONCLUSION IS THAT SUCH PHRASE SHOULD BE GIVEN ITS ORDINARY CUSTOMARY MEANING.

THE WORD "PRACTICABLE" HAS BEEN DEFINED AS THAT WHICH MAY BE DONE, PRACTICED OR ACCOMPLISHED. BUT, AS STATED IN THE CASE OF WOODY V. SOUTH CAROLINA POWER COMPANY 24 S.E.2D 121," IT DOES NOT NECESSARILY MEAN THAT WHICH IS PHYSICALLY POSSIBLE OR MECHANICALLY PRACTICABLE, BUT RATHER THAN WHICH IS POSSIBLE OF REASONABLE PERFORMANCE.' ( ITALICS SUPPLIED.) SEE, ALSO, WILCOX V. SUPREME COUNCIL OF ROYAL ARCANUM, 123 NEW YORK SUPP. 83. IN THE PRESENT INSTANCE THE PHRASE, IN OUR OPINION, IN ITS USUAL AND ORDINARY SENSE WOULD REQUIRE THE USE OF DOMESTIC MATERIALS AND COMPONENTS IN DOMESTICALLY MANUFACTURED ARTICLES TO THE EXTENT THAT SUCH MATERIALS AND COMPONENTS COULD READILY BE USED AT A REASONABLE AND ORDINARY COST, AND WITHOUT UNDULY INCREASING THE NORMAL MANUFACTURING BURDEN.

AS A MATTER OF HISTORICAL BACKGROUND CONCERNING THE OVERALL PURPOSE OF THIS PORTION OF SECTION 505 (A), ATTENTION IS INVITED TO THE REPORT OF THE INTERDEPARTMENTAL COMMITTEE ON SHIPPING POLICY, APPEARING IN HOUSE DOCUMENT NO. 118, 74TH CONGRESS, ST SESSION, AND PRACTICULARLY TO THE FOLLOWING LANGUAGE IN CONNECTION WITH ITS RECOMMENDATION NO. 2:

THE CONSTRUCTION OF VESSELS IN AMERICAN SHIPYARDS MEANS THE UTILIZATION OF AMERICAN MATERIAL AND THE EMPLOYMENT OF AMERICAN WORKMEN. BECAUSE OF THE WIDE DIVERSITY OF MATERIAL USED, PRACTICALLY EVERY STATE IN THE UNION CONTRIBUTES TO THE BUILDING OF AN AMERICAN VESSEL.

AND IN HOUSE REPORT NO. 1277, 74TH CONGRESS, ST SESSION, ACCOMPANYING H.R. 8555, THE COMMITTEE, IN FOLLOWING THE ABOVE-QUOTED RECOMMENDATION, STATED:

THERE IS NO INDUSTRY IN THE UNITED STATES WHERE SO MUCH GOOD COULD BE DONE THROUGHOUT THE COUNTRY AND SO MANY OF THE UNEMPLOYED TAKEN OFF THE RELIEF ROLLS AS IN THE SHIPBUILDING INDUSTRY, WITH ALL OF ITS RAMIFICATIONS. IN THIS BILL WE HAVE PROVIDED FOR THE USE OF AMERICAN PRODUCTS SO FAR AS PRACTICABLE. ( ITALICS SUPPLIED).

IT IS MANIFEST, THEREFORE, THAT WHILE THE CONGRESS CONTEMPLATED THAT DOMESTIC LABOR AND MATERIALS BE UTILIZED IN SHIPS BEING CONSTRUCTED UNDER THE ACT, IT ALSO WAS AWARE THAT THERE WOULD BE INSTANCES WHEREIN A RIGID REQUIREMENT FOR THE EXCLUSIVE USE OF AMERICAN PRODUCTS WOULD BE UNREALISTIC FROM A PRACTICAL POINT OF VIEW. CONSEQUENTLY, WHILE NOT SPECIFICALLY INDICATED IN THE LEGISLATIVE HISTORY, IT WOULD APPEAR REASONABLE TO ASSUME THAT A CONGRESSIONAL RECOGNITION OF THE DIFFICULTIES IN CONTEMPLATING EVERY EXCEPTION WHICH MIGHT SUBSEQUENTLY ARISE LED TO THE INCORPORATION INTO THE STATUTE OF THE MODIFICATION "SO FAR AS PRACTICABLE.' WE ALSO ARE OF THE OPINION THAT THE PHRASE WAS INTENDED TO AUTHORIZE ADMINISTRATIVE DISCRETION IN THOSE AREAS WHEREIN THE FACTS AND CIRCUMSTANCES ARE FOUND REASONABLY TO JUSTIFY THE PURCHASE OF COMPONENTS OF CERTAIN PROPOSED EQUIPMENT FROM A FOREIGN SOURCE WITHOUT DOING VIOLENCE TO THE OVERALL INTENDMENT OF THE ACT. OTHERWISE, THERE WOULD HAVE BEEN NO OCCASION FOR SUCH LANGUAGE.

IN THE LIGHT OF THE FACTS STATED, WE FIND NO REASON TO DISAGREE WITH YOUR OPINION THAT THE PURCHASE OF THE GYROCOMPASS SYSTEM FROM THE RADIO CORPORATION OF AMERICA WOULD NOT BE IN VIOLATION OF THE STATUTORY AND CONTRACT PROVISIONS QUOTED ABOVE.