B-184785, NOVEMBER 19, 1976, 56 COMP.GEN. 102

B-184785, NOVEMBER 19, 1976, 56 COMP.GEN. 102

BUY AMERICAN ACT - APPLICABILITY - CONTRACTORS' PURCHASES FROM FOREIGN SOURCES - COMPUTER TAPES A COMPUTER PROGRAM, CONSISTING OF AN ENHANCED MAGNETIC TAPE PRODUCED IN THE UNITED STATES FROM A MASTER TAPE, AND ASSOCIATED DOCUMENTATION PRINTED IN THE UNITED STATES, IS PROPERLY CONSIDERED TO BE A DOMESTIC SOURCE END PRODUCT FOR PURPOSES OF THE BUY AMERICAN ACT, EVEN THOUGH PROGRAM WAS DEVELOPED IN A FOREIGN COUNTRY.

IN THE MATTER OF THE MRI SYSTEMS CORPORATION, NOVEMBER 19, 1976:

MRI SYSTEMS CORPORATION (MRI) PROTESTS A DETERMINATION BY THE GENERAL SERVICES ADMINISTRATION (GSA) IN CONNECTION WITH THE AWARD OF ADP SCHEDULE CONTRACT NO. GS-00C-00631 TO SOFTWARE AG OF NORTH AMERICAN, INC. (SOFTWARE -AMERICA). THE GRAVAMEN OF MRI'S COMPLAINT IS THAT GSA HAS PERMITTED SOFTWARE-AMERICA'S PRODUCT, ADABAS, TO BE LISTED AS A DOMESTIC SOURCE END PRODUCT, WHEN IN MRI'S VIEW THE PRODUCT IS ACTUALLY A FOREIGN END PRODUCT WITHIN THE MEANING OF THE BUY AMERICAN ACT.

SOFTWARE-AMERICA MARKETS ADABAS, A SOFTWARE PACKAGE WHICH PROVIDES THE FUNCTIONS OF A DATA BASE MANAGEMENT SYSTEM WHEN USED IN PROGRAMMING ANY OF A NUMBER OF CENTRAL DATA PROCESSING MACHINES. A DATA BASE MANAGEMENT SYSTEM CONTROLS AND ORGANIZES INFORMATION STORAGE IN AN AUTOMATIC DATA PROCESSING SYSTEM. THE SYSTEM ALSO CONTROLS ACCESS TO DATA. SOFTWARE- AMERICA IS A UNITED STATES AFFILIATE OF SOFTWARE AG OF DARMSTADT, FEDERAL REPUBLIC OF GERMANY (SOFTWARE-GERMANY).

IT IS ADMITTED THAT THE ORIGINAL DESIGN AND CODING OF ADABAS WAS DEVELOPED BY SOFTWARE-GERMANY. ACCORDING TO GSA,

* * * IT WAS FORWARDED TO THE UNITED STATES ON MAGNETIC TAPE ALONG WITH A LIST OF APPROXIMATELY 100,000 INSTRUCTIONS. IN 1972, THE ORIGINAL DOCUMENTATION WAS TRANSLATED IN THE UNITED STATES FROM GERMAN TO ENGLISH AND A NEW DOCUMENT WAS PRODUCED WHICH BORE LITTLE RESEMBLANCE TO THE ORIGINAL. WE HAVE BEEN ADVISED THAT DOCUMENTATION STANDARDS IN GERMANY ARE QUITE DIFFERENT FROM ACCEPTED PRACTICES IN THE UNITED STATES AND THEREFORE, THE NEW DOCUMENT CONTAINED A CONSIDERABLE AMOUNT OF WRITING OVER AND ABOVE THAT REQUIRED BY TRANSLATION. SINCE 1972, THE ADABAS MANUALS HAVE BEEN COMPLETELY REWRITTEN IN THE UNITED STATES TO INCLUDE CHANGES TO THE PROGRAM AND TO BRING ABOUT BETTER UNDERSTANDING OF THE DOCUMENTATION.

GSA ALSO REPORTS THAT THE DOCUMENTATION (USER'S MANUALS) ARE PRINTED AND ASSEMBLED IN THE UNITED STATES, AND THAT THE MAGNETIC TAPES ARE COPIED IN THE UNITED STATES FROM A MASTER TAPE OF THE PROGRAM. GSA IS OF THE OPINION THAT WHAT IS DELIVERED TO THE GOVERNMENT AS AN END PRODUCT IS A "SOFTWARE SYSTEM" CONSISTING OF A MAGNETIC TAPE AND ASSOCIATED DOCUMENTATION (THE USER'S MANUALS). WHAT IS PROCURED IN THIS INSTANCE IS A STANDARD, COMMERCIALLY AVAILABLE COMPUTER PROGRAM, AS OPPOSED TO PROGRAMMING SERVICES REQUIRED TO MEET THE SPECIFIC NEEDS OF A SPECIFIC CUSTOMER.

ALTHOUGH THE CREATION OF THE PROGRAM INVOLVES ESSENTIALLY INTELLECTUAL PROCESSES, AS WOULD THE CREATION OF A MANUSCRIPT FOR A BOOK, ONCE CREATED, THE PROCESS OF DUPLICATING THE RESULT FOR SALE OR LEASE IS, IN OUR OPINION, A MANUFACTURING PROCESS.

IN BLODGETT KEYPUNCHING CO., 56 COMP.GEN. 18 (1976), 76-2 CPD 332, WE HELD THAT A CONTRACT FOR THE CONVERSION OF DATA TO MACHINE READABLE FORM WAS NOT THE PURCHASE OF A MANUFACTURED PRODUCT, EVEN THOUGH A MAGNETIC TAPE WAS DELIVERED TO THE GOVERNMENT, BECAUSE THE PRIMARY PURPOSE OF THE PROCUREMENT WAS THE CONVERSION OF INFORMATION FROM ONE FORM TO ANOTHER. IN THIS CASE, WHAT IS TO BE PURCHASED IS NOT A SERVICE AS IN BLODGETT, BUT RATHER A PRODUCT CONSISTING OF A COPY OF THE PROGRAM ON MAGNETIC TAPE AND THE USER'S MANUALS (EACH USELESS WITHOUT THE OTHER). ALTHOUGH BOTH THE PROGRAM AND THE MANUALS RESULT FROM THE SERVICE REQUIRED TO CREATE THE COMPUTER PROGRAM IN THE FIRST INSTANCE, THE OBJECT OF THE PROCUREMENT IS NOT THE PURCHASE OF THE SERVICE ITSELF. MOREOVER, WHILE THE MAJOR COST OF THE END PRODUCT MAY BE ATTRIBUTABLE TO THE DEVELOPMENT EFFORT, THE PROCESS OF DEVELOPING THE SOFTWARE SYSTEM IS A SERVICE NOT SUBJECT TO THE BUY AMERICAN ACT. WE THEREFORE AGREE WITH THE AGENCY THAT THE END PRODUCT CONSISTS OF THE ENHANCED MAGNETIC TAPE AND THE USER'S MANUALS, EACH BEING THE COMPONENTS OF THE PROGRAM OR "SOFTWARE SYSTEM." IN 45 COMP.GEN. 658 (1966), WE STATED IN PERTINENT PART:

MANUFACTURED ARTICLES ARE DOMESTIC IN ORIGIN UNDER THE ACT IF THEY HAVE BEEN MANUFACTURED IN THE UNITED STATES "SUBSTANTIALLY ALL FROM ARTICLES, MATERIALS, OR SUPPLIES MINED, PRODUCED OR MANUFACTURED, AS THE CASE MAY BE, IN THE UNITED STATES." IN THE CASE OF MANUFACTURED PRODUCTS, THE ACT IS APPLIED TO THE END PRODUCT ITSELF AND TO THE COMPONENTS DIRECTLY INCORPORATED IN THE END PRODUCT BUT IS NOT APPLIED TO THE SUPPLIES THAT ARE USED IN THE MANUFACTURE OF ANY SUCH COMPONENT.

SINCE WE BELIEVE THAT THE "END PRODUCT" IS THE "SOFTWARE SYSTEM" WHOSE COMPONENTS ARE THE ENHANCED MAGNETIC TAPE AND THE USER'S MANUALS, BOTH OF WHICH HAVE BEEN PRODUCED IN THE UNITED STATES, IT IS NOT NECESSARY TO CONSIDER THE SOURCE OF THE SUPPLIES THAT ARE USED IN THE MANUFACTURE OF THE COMPONENTS. CONSEQUENTLY, WE ARE OF THE OPINION THAT THE SUPPLIES WERE CORRECTLY CERTIFIED TO BE A DOMESTIC SOURCE END PRODUCT.

THE PROTEST IS DENIED.