Matter of: Olympic Container Corporation File: B-250403 Date: January 29, 1993

Matter of: Olympic Container Corporation File: B-250403 Date: January 29, 1993

PROCUREMENT Socio-Economic Policies Foreign/domestics product distinctions Preferences Trade agreements PROCUREMENT Socio-Economic Policies Preferred products/services Domestic products Applicability The Trade Agreements Act of 1979 and implementing regulations generally prohibit contract award to a party offering products from a non-designated country, with the result that no application of the Buy American Act's differential to offers of products from non-designated countries is permitted.

Attorneys

DECISION Olympic Container Corporation (OCC) protests the decision of the Department of the Navy to no longer consider its proposal due to application of Title III of the Trade Agreements Act of 1979 (TAA), 19 U.S.C. Secs. 2511 et seq. (1988).

We deny the protest.

The Navy issued the request for proposals (RFP) No. N00033-92-R-3036, on June 8, 1992, for purchase of 120 new, collapsible, flatrack containers.

The RFP cover sheet stated that the procurement was subject to the TAA. Under the TAA, products from designated countries are treated no less favorably than domestic products. Purchase of products from non-designated countries is generally prohibited unless offers of U.S. or designated country products are not received or are insufficient to meet the government's needs. 19 U.S.C. Secs. 2511, 2512; Department of Defense Federal Acquisition Regulation Supplement Sec. 225.402(c).

OCC's proposal offered containers from Mexico, a non-designated country. By letter of September 9, 1992, the Navy informed OCC that its proposal would no longer be considered for award because the containers it offered "are not manufactured in an eligible TAA country, and containers from qualifying countries are available to fulfill the requirement of this solicitation."

On September 18, 1992, OCC filed this protest. While conceding that the products it offered were from a non-designated country, OCC alleges that its proposal was excluded erroneously. OCC contends, based on its reading of Federal Acquisition Regulation (FAR) Sec. 25.403(b), that its offer was excluded from further consideration for award without a determination having been made of whether its offer would be low after application of the Buy American Act differential. Therefore, OCC contends that the contracting officer's decision was in error. We disagree.

The TAA implements U.S. commitments under the Agreement on Government Procurement (Agreement) reached during the 1979 Tokyo Round of multilateral trade negotiations. Becton Dickinson AcuteCare, B-238942, July 20, 1990, 90-2 CPD Para. 55. It grants the President broad discretion, with respect to government procurement, to waive for designated countries the Buy American Act and other laws, regulations, procedures, and practices which give preference to U.S. products. The net effect is that products and supplies of designated countries--that is, TAA -eligible products-receive the same treatment as American products. Hung Myung (USA) Ltd., Inc.; Containertechnik Hamburg GmbH & Co., 71 Comp.Gen. 64 (1991), 91-2 CPD Para. 434. The TAA also provides that "in order to encourage additional countries to become parties to the Agreement and to provide appropriate reciprocal competitive government procurement opportunities to U.S. products and suppliers of such products," procurement of products from non-designated countries is prohibited, with certain exceptions not applicable here. 19 U.S.C. Sec. 2512.

OCC argues nevertheless that procurement from non-designated countries is not prohibited by application of FAR Sec. 25.403(b), which provides

"This subpart [regulations implementing the TAA] does not apply to --

(b) Products of countries (1) not listed in [FAR Sec.] 25.401, or (2) barred by 25.402(c) . . . ."

FAR Sec. 25.401 lists designated countries; FAR Sec. 25.402(c) generally prohibits the acquisition of products from non-designated countries.

OCC asserts, without further support, that FAR Sec. 25.403(b) exempts from application of FAR Sec. 25.402(c) products of countries not listed in FAR Sec. 25.401. Thus, so the argument goes, not only are products of non- designated countries not covered by the TAA, but also the prohibition on procuring products of non-designated countries does not apply. As a result, OCC contends that it still could have been awarded the contract if, after application of the Buy American Act differential, its offer remained low.

We find that OCC's interpretation of FAR Sec. 25.403(b) is unreasonable whether read alone or in context. The FAR provision merely states that the TAA regulations do not apply to products of countries barred by FAR Sec. 25.402(c). We see no intent in this language to negate the provisions of 25.402(c). Moreover, the effect of OCC's interpretation would be to defeat a principal purpose of the TAA, which is to encourage other countries to participate in the underlying Agreement. See S. Rep. No. 249, 96th Cong., 1st Sess. 135, 129, reprinted in 1979 U.S. Code Cong. & Admin. News 381, 521. FAR Sec. 25.403(b) is intended to reinforce the prohibition in FAR Sec. 25.402(c) against awarding contracts for the products of non- designated countries. The effect of this is not to treat the products of non-designated countries less favorably, but to exclude them altogether. Thus, no application of the Buy American Act's differential to offers of products from non-designated countries is permitted.

Therefore, we find that the contracting officer's decision was proper.

The protest is denied.