B-180262, B-180305, APR 18, 1975

B-180262, B-180305, APR 18, 1975

UNSUCCESSFUL BIDDER'S PROTESTS, THAT AWARDS OF CONTRACTS FOR THREE CAR WASHING MACHINES VIOLATED BUY AMERICAN ACT AND BALANCE OF PAYMENTS PROGRAM BECAUSE SUCCESSFUL BIDDER'S PRODUCT IS NOT A DOMESTIC SOURCE END PRODUCT, ARE DENIED. WHEN BIDDER HAS CERTIFIED THAT OFFERED PRODUCTS ARE DOMESTIC SOURCE END PRODUCTS, AND NO INDICATION EXISTS TO THE CONTRARY, ACCEPTANCE OF OTHERWISE RESPONSIVE BIDS RESULTED IN OBLIGATION TO FURNISH DOMESTIC END PRODUCT, AND COMPLIANCE WITH OBLIGATION IS MATTER OF CONTRACTS ADMINISTRATION WHICH DOES NOT AFFECT VALIDITY OF AWARDS.

UNICARE HEALTH SERVICES, INC.:

THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, DEPARTMENT OF THE AIR FORCE, ISSUED INVITATIONS FOR BIDS F41699-74-B-0007 AND F41699-73-B 0314 FOR A TOTAL OF THREE CAR WASHING MACHINES DESTINED FOR CLARK AIR FORCE BASE, LUZON, PHILIPPINES; RAMSTEIN AIR BASE, LANDSTUHL, GERMANY; AND KADENA, OKINAWA, RYUKYU ISLANDS. AWARD WAS MADE TO MR. SCRUB CAR WASH SYSTEMS (SCRUB) UNDER BOTH INVITATIONS. SCRUB DELIVERED THE MACHINES TO THE AIR FORCE UNDER INVITATION -0314 ON DECEMBER 21, 1973, AND UNDER INVITATION -0007 ON MARCH 4, 1974.

UNICARE HEALTH SERVICES, INC. (UNICARE), SUCCESSOR-IN-INTEREST TO AN UNSUCCESSFUL BIDDER, U-PROFIT INDUSTRIES, INC., PROTESTED THE AWARD UNDER INVITATION -0314 TO THE AIR FORCE. UNICARE CONTENDED THAT THE CAR WASHING MACHINE OFFERED BY SCRUB WAS NOT MANUFACTURED DOMESTICALLY. THE AIR FORCE DENIED THE PROTEST.

BY LETTER DATED DECEMBER 7, 1973, AND SUBSEQUENT CORRESPONDENCE, UNICARE PROTESTED THE ABOVE DECISION BY THE AIR FORCE TO OUR OFFICE. BY LETTER DATED DECEMBER 13, 1973, UNICARE ALSO PROTESTED THE AWARD UNDER INVITATION -0007 TO OUR OFFICE. UNICARE STATED THAT THE LATTER PROTEST WAS BASED UPON THE SAME CONTENTION AS ITS PROTEST OF THE AWARD UNDER INVITATION - 0314.

BY LETTER DATED FEBRUARY 22, 1974, COUNSEL FOR UNICARE REQUESTED THAT OUR OFFICE RELEASE COPIES OF DOCUMENTS FURNISHED TO OUR OFFICE BY THE AIR FORCE IN ITS REPORTS REGARDING THESE PROTESTS, INCLUDING A PREAWARD SURVEY ON SCRUB CONDUCTED BY THE DEFENSE CONTRACT ADMINISTRATION SERVICE DISTRICT, BALTIMORE, MARYLAND, AND CERTAIN COST BREAKDOWNS SUBMITTED BY SCRUB TO THE PROCURING AGENCY. THE AIR FORCE ADVISED OUR OFFICE INFORMALLY THAT THE DOCUMENTS WERE NOT CONSIDERED APPROPRIATE FOR RELEASE UNDER THE FREEDOM OF INFORMATION ACT, 5 U.S.C. SEC. 552 (1970), AND BY DECISION DATED APRIL 5, 1974, WE DETERMINED THAT OUR OFFICE WAS RIGHTFULLY WITHHOLDING THE DOCUMENTS UNDER 4 C.F.R. SEC. 20.7 (1974) OF OUR INTERIM BID PROTEST PROCEDURES AND STANDARDS.

BY LETTER DATED APRIL 12, 1974, COUNSEL FOR UNICARE REQUESTED THAT OUR OFFICE RECONSIDER ITS APRIL 5 DECISION. FOLLOWING FURTHER COMMUNICATIONS BETWEEN OUR OFFICE AND COUNSEL FOR UNICARE AND BETWEEN OUR OFFICE AND THE AIR FORCE, THE AIR FORCE, BY LETTER DATED AUGUST 13, 1974, ADVISED US THAT CERTAIN DOCUMENTS REQUESTED BY COUNSEL FOR UNICARE WERE RELEASABLE AT THE DISCRETION OF OUR OFFICE. OUR OFFICE PROVIDED COUNSEL FOR UNICARE A COPY OF THE AUGUST 13 AIR FORCE LETTER AND COPIES OF THE RELEASABLE DOCUMENTS ON AUGUST 23, 1974, AND COUNSEL FOR UNICARE, BY LETTER DATED SEPTEMBER 6, 1974, WITHDREW ITS REQUEST FOR RECONSIDERATION OF OUR APRIL 5 DECISION.

AFTER SUBMITTING COMMENTS ON THE AIR FORCE REPORT, ON OCTOBER 11, 1974, COUNSEL ADVISED OUR OFFICE THAT A CONFERENCE ON THE MERITS OF THE PROTEST WAS DESIRED IN THE LAST WEEK OF NOVEMBER 1974. HOWEVER, BY LETTER DATED NOVEMBER 18, 1974, COUNSEL WITHDREW HIS REQUEST FOR A CONFERENCE. DECEMBER 6, 1974, OUR OFFICE REQUESTED CONFIRMATION FROM COUNSEL OF A STATEMENT MADE IN ITS MATERIALS FURNISHED TO OUR OFFICE IN SUPPORT OF THE PROTEST. ON JANUARY 3, 1975, WE RECEIVED AN ANSWER TO OUR CONFIRMATION REQUEST FROM COUNSEL.

COUNSEL FOR UNICARE CONTENDS THAT THE AWARDS OF THESE CONTRACTS ARE IN VIOLATION OF THE BUY AMERICAN ACT, 41 U.S.C. SEC. 10A-D (1970), ALLEGING THAT REASSEMBLY OF THE SCRUB MACHINES IN THE UNITED STATES, WHICH ARE MANUFACTURED IN ITALY, DOES NOT CONSTITUTE MANUFACTURE OF A UNITED STATES END PRODUCT, AND THAT THE COST OF FOREIGN COMPONENTS UTILIZED IN THE MANUFACTURE OF THE MACHINES EXCEEDS 50 PERCENT OF THE COST OF ALL THE COMPONENTS THEREOF. IN SUPPORT OF THESE ALLEGATIONS, COUNSEL REFERS TO PERSONAL KNOWLEDGE OF A RECENT BUY AMERICAN ACT VIOLATION BY SCRUB AT MOUNTAIN HOME AIR FORCE BASE AND CORRESPONDENCE INDICATING THAT THE AIR FORCE MADE AN ERROR SIMILAR TO THAT ALLEGED HERE, CONCERNING THE APPLICATION OF THE PROVISIONS OF THE BUY AMERICAN ACT AT WRIGHT-PATTERSON AIR FORCE BASE.

IT SHOULD BE NOTED THAT THE BUY AMERICAN ACT IS INAPPLICABLE TO THESE PROCUREMENTS BECAUSE THE ITEMS HAVE BEEN PROCURED FOR USE OUTSIDE THE UNITED STATES. SEE SEC. 6-103.1 OF THE ARMED SERVICES PROCUREMENT REGULATION (1973 ED.) (ASPR). NOTWITHSTANDING, BOTH INVITATIONS CONTAINED THE STANDARD "BUY AMERICAN CERTIFICATE" AND A CLAUSE ENTITLED "EVALUATION PROCEDURES UNDER BUY AMERICAN ACT." IN SUBMITTING ITS BIDS UNDER THE INVITATIONS AND IN THE RESULTING CONTRACTS, SCRUB CERTIFIED THAT EACH END PRODUCT WAS TO BE A DOMESTIC SOURCE END PRODUCT IN ACCORDANCE WITH THE DEFINITION CONTAINED IN ASPR SEC. 7-104.3 (1973 ED.). HOWEVER, SINCE THIS IS A PROCUREMENT FOR SUPPLIES REQUIRED FOR USE OUTSIDE THE UNITED STATES, IT WOULD APPEAR THAT ASPR PART 6-800 (1973 ED.), IN FURTHERANCE OF THE BALANCE OF PAYMENTS PROGRAM, IS APPLICABLE HERE. IN THIS REGARD, ASPR SEC. 6-805.1 (1973 ED.) REQUIRES THAT, EXCEPT IN CERTAIN CIRCUMSTANCES NOT RELEVANT HERE, THE PROPOSED PROCUREMENT OF SUPPLIES FOR USE OUTSIDE THE UNITED STATES SHALL BE RESTRICTED TO UNITED STATES END PRODUCTS. THE DEFINITION CONTAINED IN THE BALANCE OF PAYMENTS CLAUSE STEMS FROM THE BUY AMERICAN ACT, AS IMPLEMENTED BY EXECUTIVE ORDERS AND GOVERNMENT PROCUREMENT REGULATIONS, AND THE RESTRICTIONS CONTAINED THEREIN ARE VIRTUALLY IDENTICAL TO THOSE IN THE BUY AMERICAN ACT. SEE ASPR SEC. 7- 104.3 AND SEC. 7-104.57 (1973 ED.).

THE RECORD IS CLEAR IN THAT THE SCRUB CONTRACTS REQUIRED THAT DOMESTIC SOURCE END PRODUCTS WERE TO BE DELIVERED. MOREOVER, IN-PLANT SURVEYS, CONDUCTED BY DEFENSE CONTRACT ADMINISTRATION SERVICES AT THE REQUEST OF AIR FORCE CONTRACTING OFFICIALS, UNCOVERED NO FACTS WHICH DETRACTED FROM THE CERTIFICATIONS CONTAINED IN THE SCRUB BIDS. ADDITIONALLY, THE CONTRACTING OFFICER DETERMINED THAT THE EQUIPMENT IN QUESTION SHOULD BE CONSIDERED A UNITED STATES END PRODUCT.

SINCE THE SCRUB BIDS CONTAINED CERTIFICATION THAT THE ITEMS TO BE DELIVERED WOULD BE DOMESTIC END PRODUCTS AND DID NOT OTHERWISE INDICATE TO THE CONTRARY, AND PREAWARD SURVEYS CONFIRMED THIS INFORMATION, ACCEPTANCE OF THE BIDS, IF OTHERWISE RESPONSIVE, RESULTED IS AN OBLIGATION ON THE PART OF SCRUB TO FURNISH DOMESTIC END PRODUCTS. COMPLIANCE WITH THAT OBLIGATION IS A MATTER OF CONTRACTS ADMINISTRATION AND DOES NOT AFFECT THE VALIDITY OF THE AWARDS TO SCRUB. MATTER OF UNICARE VEHICLE WASH, INC., B- 181852, DECEMBER 3, 1974.

ACCORDINGLY, THE PROTESTS ARE DENIED. IN ADDITION, WE ASSUME THAT, THE ITEMS HAVING BEEN DELIVERED, COGNIZANT ADMINISTRATION CONTRACTING OFFICIALS TOOK STEPS TO INSURE THAT A DOMESTIC SOURCE END PRODUCT WAS DELIVERED.