B-20840, OCTOBER 6, 1941, 21 COMP. GEN. 298

B-20840, OCTOBER 6, 1941, 21 COMP. GEN. 298

CONTRACTS - FOREIGN PRODUCTS - WAIVER OF CONTRACT STIPULATIONS IN VIEW OF THE SPECIFIC FINDING AND CERTIFICATION BY THE SECRETARY OF WAR TO THE EFFECT THAT ALUMINUM IS NOT DOMESTICALLY PRODUCED IN QUANTITIES SUFFICIENT TO MEET THE NEEDS OF THE DEFENSE PROGRAM, THE WAR DEPARTMENT MAY, WITH RESPECT TO ALUMINUM, WAIVE BY WRITTEN NOTICE TO CONTRACTORS IN LIEU OF FORMAL CONTRACT AMENDMENTS THE DOMESTIC ORIGIN STIPULATIONS, INCORPORATED PURSUANT TO THE ACT OF MARCH 3, 1933, IN EXISTING CONTRACTS, AND PAYMENTS UNDER SUCH CONTRACTS WILL NOT BE QUESTIONED ON ACCOUNT OF THE DELIVERY OF ALUMINUM OF FOREIGN ORIGIN AND AFTER THE DATE OF THE SECRETARY'S CERTIFICATE.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, OCTOBER 6, 1941: I HAVE YOUR LETTER OF SEPTEMBER 29, 1941, AS FOLLOWS:

"BY CERTIFICATE DATED JULY 23, 1941, PURSUANT TO THE BUY-AMERICAN ACT OF MARCH 3, 1933, THE SECRETARY OF WAR MADE THE FOLLOWING ADMINISTRATIVE DETERMINATION WITH RESPECT TO ALUMINUM:

"1. IT HAS BEEN ADMINISTRATIVELY DETERMINED THAT SECTION 2, ARTICLE III, ACT OF MARCH 3, 1933, IS INAPPLICABLE DURING THE EXISTING EMERGENCY, TO THE PURCHASE OF ARTICLES, MATERIALS, OR SUPPLIES PRODUCED SUBSTANTIALLY ALL FROM ANY OF THE HEREIN DESIGNATED ESSENTIAL MATERIALS WHICH HAVE BEEN MINED, PRODUCED, OR MANUFACTURED, AS THE CASE MAY BE, IN FOREIGN COUNTRIES, SINCE IT APPEARS THAT SUCH MATERIALS ARE NOT MINED, PRODUCED,OR MANUFACTURED, AS THE CASE MAY BE, IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE QUANTITIES TO MEET THE NEEDS OF THE PRESENT DEFENSE PROGRAM.

"2. THE FOLLOWING MATERIALS ARE DESIGNATED AS ESSENTIAL MATERIALS:

ALUMINUM

"3. PURSUANT TO THE FOREGOING, AUTHORITY IS HEREBY GRANTED, DURING THE EXISTING EMERGENCY:

"A. TO MAKE AWARDS OF CONTRACTS TO BIDDERS FURNISHING ARTICLES, MATERIALS, OR SUPPLIES USING ANY OF THE HEREIN DESIGNATED MATERIALS OF FOREIGN ORIGIN WHICH MEET THE REQUIREMENTS OF THE SPECIFICATIONS.

"B. TO NEGOTIATE SUPPLEMENTAL CONTRACTS OR TO MAKE CHANGES IN EXISTING CONTRACTS SO AS TO PERMIT IN THE INTEREST OF THE UNITED STATES, THE FURNISHING OF ARTICLES, MATERIALS, OR SUPPLIES USING ANY OF THE HEREIN DESIGNATED ESSENTIAL MATERIALS OF FOREIGN ORIGIN WHICH MEET THE REQUIREMENTS OF THE SPECIFICATIONS.'

THERE ARE A LARGE NUMBER OF OUTSTANDING UNCOMPLETED WAR DEPARTMENT DEFENSE CONTRACTS FOR SUPPLIES, ENTERED INTO BETWEEN SEPTEMBER 8, 1939, AND JULY 23, 1941, WHICH CONTAIN, SUBSTANTIALLY, THE FOLLOWING CLAUSE TAKEN FROM U.S. STANDARD FORM NO. 32:

"ARTICLE 13. DOMESTIC ARTICLES.--- UNLESS THE HEAD OF THE DEPARTMENT OR INDEPENDENT ESTABLISHMENT CONCERNED SHALL DETERMINE IT TO BE INCONSISTENT WITH THE PUBLIC INTEREST, OR THE COST TO BE UNREASONABLE, ONLY SUCH UNMANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES AS HAVE BEEN MINED OR PRODUCED IN THE UNITED STATES, AND ONLY SUCH MANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES AS 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 SHALL BE DELIVERED PURSUANT TO THIS CONTRACT, EXCEPT AS NOTED IN THE SPECIFICATIONS AND/OR OTHER PAPERS HERETO ATTACHED. THE PROVISIONS OF THIS ARTICLE SHALL NOT APPLY WITH RESPECT TO ARTICLES, MATERIALS, OR SUPPLIES FOR USE OUTSIDE THE UNITED STATES, OR IF ARTICLES, MATERIALS, OR SUPPLIES OF THE CLASS OR KIND TO BE USED, OR THE ARTICLES, MATERIALS, OR SUPPLIES FROM WHICH THEY ARE MANUFACTURED ARE NOT MINED, PRODUCED, OR MANUFACTURED, AS THE CASE MAY BE, IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE COMMERCIAL QUANTITIES AND OF A SATISFACTORY QUALITY.'

IN MANY CASES, THE BIDS, SPECIFICATIONS AND/OR THE INVITATIONS FOR BIDS REQUIRE THE USE OF DOMESTIC MATERIALS ONLY.

IN VIEW OF THE LARGE NUMBER OF SUCH CONTRACTS, THEIR AMENDMENT TO PERMIT THE USE OF OTHER THAN DOMESTIC ALUMINUM WOULD INVOLVE A LARGE AMOUNT OF PAPER WORK AND CONSIDERABLE DELAY WHICH IT IS DESIRED TO AVOID. IT HAS BEEN SUGGESTED THAT PERHAPS THIS MIGHT BE ACCOMPLISHED BY:

A WAIVER BY THE SECRETARY OF WAR OF THE BUY-AMERICAN PROVISIONS OF THE CONTRACT IN RESPECT TO ALUMINUM. IN THIS CONNECTION, IT IS PROPOSED TO ISSUE TO THE SEVERAL CHIEFS OF SUPPLY ARMS AND SERVICES OF THE WAR DEPARTMENT A DIRECTIVE SUBSTANTIALLY IN THE FOLLOWING FORM:

"BY CERTIFICATE OF JULY 23, 1941, THE SECRETARY OF WAR ADMINISTRATIVELY DETERMINED WITH RESPECT TO ALUMINUM AND CERTAIN OTHER MATERIALS "THAT THEY ARE NOT MINED, PRODUCED OR MANUFACTURED IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE QUANTITIES TO MEET THE NEEDS OF THE PRESENT DEFENSE PROGRAM.'

"WHILE SECTION 2 OF THE BUY-AMERICAN ACT IS THEREBY RENDERED INAPPLICABLE TO WAR DEPARTMENT SUPPLY CONTRACTS WITH RESPECT TO ALUMINUM, AND SECTION 3 THEREBY RENDERED INAPPLICABLE, IN A SIMILAR WAY, AS TO CONSTRUCTION AND PUBLIC WORKS CONTRACTS, NEVERTHELESS MANY EXISTING WAR DEPARTMENT CONTRACTS CONTAIN THE STANDARD CLAUSES PROHIBITING OR AFFECTING THE PROCUREMENT OF SUCH MATERIALS OUTSIDE OF THE UNITED STATES. IT IS DESIRED TO PROCURE ALUMINUM FROM CANADA OR OTHER FOREIGN COUNTRIES WITHOUT LOSING THE TIME AND WITHOUT THE FORMALITIES REQUIRED TO AMEND SUCH EXISTING CONTRACTS. IN THAT CONNECTION, THE COMPTROLLER GENERAL HAS RULED THAT THE SECRETARY OF WAR MAY, IN THE INTEREST OF THE UNITED STATES AND IN EXPEDITION OF THE NATIONAL DEFENSE PROGRAM, BY DIRECTIVE, WAIVE THE BUY- AMERICAN PROVISIONS OF SUCH CONTRACTS WITH RESPECT TO ALUMINUM, AND THAT THIS WAIVER MAY EXTEND AS WELL TO THE SUBCONTRACTORS AND THE FURNISHERS OF MATERIALS AS TO THE PRIME CONTRACTORS.

"THE CHIEFS OF THE SUPPLY ARMS AND SERVICES WILL ACCORDINGLY ADVISE SUCH CONTRACTORS THAT SUCH PROVISION IN WAR DEPARTMENT CONTRACTS WILL NOT APPLY TO ALUMINUM, WHICH MAY, THEREFORE, BE PURCHASED OR PROCURED WITHOUT REGARD TO THE COUNTRY OF ORIGIN.'

INFORMATION IS DESIRED WHETHER YOUR OFFICE WOULD QUESTION THE VALIDITY OF VOUCHERS FOR PAYMENTS UNDER SUCH CONTRACTS BECAUSE OF THE PURCHASE AND USE IN CONNECTION THEREWITH OF OTHER THAN DOMESTIC ALUMINUM BY CONTRACTORS, SUB-CONTRACTORS, OR MATERIALMEN.

IT IS BELIEVED THAT IF THIS METHOD OF PROCEDURE COULD BE ADOPTED, THE NATIONAL DEFENSE WOULD BE EXPEDITED THEREBY, AND THAT THE INTERESTS OF THE UNITED STATES WOULD BE SERVED.

IT IS UNDERSTOOD INFORMALLY THAT THE NAVY DEPARTMENT IS SIMILARLY INTERESTED. YOUR EARLY CONSIDERATION AND REPLY WILL BE APPRECIATED.

THE STIPULATIONS RESTRICTING THE USE OF MATERIALS TO THOSE OF DOMESTIC ORIGIN WERE INCORPORATED IN THE ABOVE DISCUSSED CONTRACTS SOLELY FOR THE BENEFIT OF THE UNITED STATES. HOWEVER, SAID RESTRICTIONS WERE INCORPORATED IN THE CONTRACTS PURSUANT TO THE ACT OF MARCH 3, 1933, 47 STAT. 1520, WHICH ACT CONTAINS A SPECIFIC EXCEPTION WITH RESPECT TO ARTICLES WHICH ARE NOT MANUFACTURED IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE QUANTITIES, AND IT IS CLEAR THAT A WAIVER BY THE GOVERNMENT OF THE SAID CONTRACT STIPULATIONS COULD NOT IN ANY MANNER ADVERSELY AFFECT THE RIGHTS OF THE OTHER PARTIES TO THE CONTRACTS. THEREFORE, IT IS REASONABLE TO ASSUME THAT A CONTRACTOR, WHO HAS RECEIVED A PROPER NOTICE IN WRITING TO THE EFFECT THAT THE GOVERNMENT HAS DETERMINED IT TO BE NECESSARY AND EXPEDIENT TO WAIVE THE PARTICULAR CONTRACT PROVISION HERE INVOLVED, WOULD ACCEPT SUCH NOTICE IN LIEU OF A FORMAL CONTRACT AMENDMENT.

ACCORDINGLY, IN VIEW OF YOUR SPECIFIC FINDINGS IN THE MATTER, AS INCORPORATED IN THE CERTIFICATE OF JULY 23, 1941, WHICH INDICATE THAT CERTAIN MATERIALS NECESSARY TO MEET THE NEEDS OF THE DEFENSE PROGRAM ARE NOT PRODUCED IN THE UNITED STATES IN SUFFICIENT AND REASONABLY AVAILABLE QUANTITIES, THIS OFFICE IS NOT REQUIRED TO OBJECT TO THE ADOPTION OF THE PROCEDURE OUTLINED IN YOUR LETTER. ALSO, YOU ARE ADVISED THAT THIS OFFICE WILL NOT QUESTION THE VALIDITY OF OTHERWISE PROPER VOUCHERS COVERING PAYMENTS UNDER SUCH CONTRACTS ON ACCOUNT OF DELIVERIES OF OTHER THAN DOMESTIC ALUMINUM ON AND AFTER JULY 23, 1941.