B-159467, OCT. 10, 1966

B-159467, OCT. 10, 1966

TO PORTA-CAMP, INCORPORATED:

REFERENCE IS MADE TO YOUR PROTEST AGAINST THE AWARD BY B. B. MCCORMICK AND SONS, INCORPORATED, SUBCONTRACTOR UNDER AIR FORCE CONTRACT NO. 62/111/ -714, OF A CONTRACT TO WORLD WIDE CAMPS OF AUSTRALIA, A SUBSIDIARY OF NORTHLAND CAMPS, INCORPORATED, FOR DELIVERY AND ERECTION OF PORTABLE CAMP STRUCTURES AT A CONSTRUCTION SITE IN SOUTHEAST ASIA FOR HOUSING THE CONSTRUCTION CONTRACTOR'S EMPLOYEES. YOUR PROTEST WAS THE SUBJECT OF A LETTER DATED JUNE 15, 1966, FROM CONGRESSMAN BOB CASEY.

PROPOSALS FOR THESE CAMP FACILITIES WERE SOLICITED FROM FIVE FIRMS. TWO PROPOSALS WERE NOT EVALUATED AS ONE WAS CONSIDERED UNREASONABLY HIGH AND THE OTHER WAS NONRESPONSIVE. THE REMAINING THREE PROPOSALS WERE EVALUATED ON THE BASIS OF COST OF THE CAMPS AT DOCKSIDE, AIR-FREIGHT COST FOR THE 80 TO 100 MAN TEMPORARY CAMP FROM DOCKSIDE TO THE CONSTRUCTION SITE, AND SURFACE FREIGHT COST AND ERECTION COST FOR THE APPROXIMATELY 700 MAN CAMP. EVALUATED ON THIS BASIS, THE THREE PROPOSALS WERE AS FOLLOWS:

TABLE

NORTHLAND CAMPS, INC. $1,374,151

PANELFAB 2,147,306

PORTA-CAMP, INC. 2,403,635

IN ADDITION, DELIVERY AND ERECTION TIME WERE CONSIDERED IN THE EVALUATION AND IT WAS DETERMINED THAT NORTHLAND OFFERED THE SHORTEST DELIVERY TIME, AND ERECTION TIME AT LEAST AS SHORT AS THE OTHER OFFERORS. THE GENERAL LAYOUT OF THE CAMP AND COMFORT FOR THE WORKERS WERE ALSO CONSIDERED. BASED ON THESE FACTORS, THE NORTHLAND OFFER WAS CONSIDERED THE MOST ADVANTAGEOUS AND AWARD WAS MADE TO IT. NORTHLAND'S SUBSIDIARY, WORLD WIDE CAMPS, LOCATED IN ADELAIDE, AUSTRALIA, WILL BUILD THE FACILITY, ALLEGEDLY USING 65 PERCENT AMERICAN MANUFACTURED PRODUCTS. THE AWARD WAS CONCURRED IN BY THE PRIME CONTRACTOR AND APPROVED BY THE AIR FORCE CONTRACTING OFFICER.

IT IS YOUR CONTENTION THAT AWARD OF THIS CONTRACT CONTRAVENES THE POLICY OF THE DEPARTMENT OF DEFENSE TO ACCORD PREFERENTIAL TREATMENT TO DOMESTIC PRODUCERS AND MANUFACTURERS IN DEFENSE PROCUREMENTS, WHICH IS COMMONLY REFERRED TO AS THE "GOLD FLOW" OR BALANCE OF PAYMENTS POLICY. THE SAME CONTENTION IS MADE WITH REGARD TO ANOTHER AIR FORCE CONTRACT, TO WHICH THE FOLLOWING DISCUSSION IS ALSO APPLICABLE.

THE "GOLD-FLOW" OR BALANCE OF PAYMENTS POLICY, WHICH YOU CONTEND HAS BEEN VIOLATED BY THIS PROCUREMENT, IS SET OUT IN DEFENSE PROCUREMENT CIRCULAR (DPC) NO. 29 DATED JUNE 4, 1965, AND PROVIDES, IN SUBSTANCE, THAT PROCUREMENT OF SUPPLIES AND SERVICES USING DEPARTMENT OF DEFENSE APPROPRIATED FUNDS WHICH WOULD RESULT IN EXPENDITURES OUTSIDE THE UNITED STATES, ITS POSSESSIONS AND PUERTO RICO, SHOULD BE HELD TO AN ABSOLUTE MINIMUM. WITH REGARD TO CONTRACTS FOR CONSTRUCTION, PARAGRAPH 6-804.1 PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"/A) REVIEW OF PROJECTS. ALL PROJECTS FOR CONSTRUCTION AND MAINTENANCE OF REAL PROPERTY OUTSIDE THE UNITED STATES WILL BE REVIEWED IN ACCORDANCE WITH PARAGRAPH 6-804.2 TO INSURE, PRIOR TO THE APPROVAL OF INDIVIDUAL PROJECTS, THAT:

"/I) FACILITIES ARE DESIGNED AND CONSTRUCTED AT MINIMUM STANDARDS NECESSARY TO ACHIEVE PROJECT OBJECTIVES UNDER LOCAL CONDITIONS AND TO REDUCE EXPENDITURES ENTERING THE INTERNATIONAL BALANCE OF PAYMENTS. REDUCTION IN BALANCE OF PAYMENTS EXPENDITURES WILL BE ACHIEVED BY THE APPLICATION OF INTERNATIONAL BALANCE OF PAYMENTS (IBOP) CONSTRUCTION PROCEDURES TO THE MAXIMUM EXTENT FEASIBLE. THESE PROCEDURES INCLUDE USE OF:

(A) U.S. CONTRACTORS;

(B) U.S. MATERIALS AND END PRODUCTS;

(C) U.S. GOVERNMENT-FURNISHED MATERIAL AND EQUIPMENT;

(D) U.S. FLAG OCEAN SURFACE AND AIR CARRIERS;

(E) PREFABRICATED INSTALLATIONS AND STRUCTURES MANUFACTURED IN THE UNITED STATES; AND

(F) COMPETENT AVAILABLE TROOP LABOR.'

HOWEVER, THE BALANCE OF PAYMENTS POLICY HAS BEEN MODIFIED WITH RESPECT TO SOUTHEAST ASIA PROCUREMENTS IN A MESSAGE FROM HEADQUARTERS USAF (AFOCE) TO THE COMMANDER, PACIFIC AIR FORCE (CINCPACAF), WHICH WAS COORDINATED WITH AND CONCURRED IN BY THE OFFICE OF THE SECRETARY OF DEFENSE. THIS MODIFICATION IS EMBODIED IN MESSAGE NO. 85064 DATED APRIL 25, 1966, WHICH READS AS FOLLOWS:

"UNCLAS AFOCE-LB 85064 APR 66 CINCPACAF FOR DCEE. OCE AT DA. SUBJ: INTERNATIONAL BALANCE OF PAYMENTS (IBOP) - SEA PACKAGES. AFOCE-LB 83637, 18 APR 66, SAME SUBJ. THIS CLARIFIES AF GUIDANCE ON FOREIGN EXCHANGE WHICH HAS BEEN TAKEN OUT OF CONTEXT IN REF MSG. BALANCE OF PAYMENTS CONTINUE TO BE OF GREAT CONCERN TO THE DEPT OF DEFENSE BUT MUST REMAIN SECONDARY TO SEA DEPLOYMENT PLANS. APPLICATION OF IBOP PROCEDURES FOR ALL PROJECTS IN SEAAMOPS WILL BE AS FOLLOWS:

"A. MAKE MAXIMUM PROCUREMENT OF U.S. CONSTRUCTION MATERIALS AND EQUIPMENT AND SHIP IN U.S. BOTTOMS WHERE ESTABLISHED BOD'S AND DEPLOYMENT SCHEDULES ALLOW.

"B. FOR URGENT REQUIREMENTS THAT CANNOT BE FILLED BY A ABOVE, AUTHORITY IS GRANTED TO PROCURE CONSTRUCTION MATERIAL AND EQUIPMENT FROM WHATEVER SOURCES NECESSARY TO MEET REQUIRED BODS AND DEPLOYMENT SCHEDULES.' VIEW OF THE EXIGENT SITUATION PREVAILING IN SOUTHEAST ASIA AND THE DETERMINATION THAT NORTHLAND OFFERED THE MOST ADVANTAGEOUS DELIVERY AND ERECTION TIMES, AS WELL AS THE LOWEST COST, WE BELIEVE THE AWARD OF A CONTRACT TO NORTHLAND CANNOT BE SAID TO CONTRAVENE THE BALANCE OF PAYMENTS POLICY AS EXPRESSED IN THE FOREGOING REGULATION AND MESSAGE.

RECOGNITION MUST ALSO BE GIVEN TO THE FACT THAT THE CONTRACT IN QUESTION IS NOT A CONTRACT WITH THE UNITED STATES BUT IS A SUB SUBCONTRACT. VIEW OF WHAT HAS BEEN SAID ABOVE, WE FIND NO BASIS UPON WHICH OUR OFFICE MAY PROPERLY OBJECT TO THE ADMINISTRATIVE ACTION IN CONNECTION WITH THESE PROCUREMENTS. THEREFORE, YOUR PROTEST MUST BE AND IS DENIED.