B-138415, MARCH 11, 1959, 38 COMP. GEN. 603

B-138415, MARCH 11, 1959, 38 COMP. GEN. 603

CONTRACTS - AWARDS - SMALL BUSINESS - FOREIGN PRODUCTS A LOW BID SUBMITTED IN RESPONSE TO A SMALL BUSINESS SET-ASIDE PROCUREMENT FOR THE DEPARTMENT OF THE ARMY BY A BIDDER WHO OFFERS TO FURNISH MATERIAL OF FOREIGN MANUFACTURE WAS PROPERLY REJECTED PURSUANT TO ARMED SERVICES PROCUREMENT REGULATION 1-701.4 WHICH PROVIDES THAT A SMALL BUSINESS CONCERN WHO PROPOSES TO FURNISH A PRODUCT NOT MANUFACTURED BY ITSELF SHALL BE DEEMED TO BE A SMALL BUSINESS CONCERN ONLY IF IT AGREES TO FURNISH PRODUCTS MANUFACTURED IN THE UNITED STATES OR ITS TERRITORIES OR POSSESSIONS BY OTHER SMALL BUSINESS CONCERNS.

TO THE POWELL ANCHOR AND CHAIN COMPANY, MARCH 11, 1959:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 2, 1959, PROTESTING THE AWARD OF A CONTRACT BY THE DEPARTMENT OF THE ARMY PURSUANT TO INVITATION FOR BIDS NO. DA-ENG-11-184-59-C/D-175, DATED OCTOBER 3, 1958, FOR THE FURNISHING OF HOLDFAST CHAINS AND PICKETS. AS A BASIS FOR YOUR PROTEST, IT WAS POINTED OUT IN YOUR LETTER THAT YOUR PRICES FOR DELIVERY OF 1,000 UNITS TO MARION, OHIO, AND 500 UNITS TO MEMPHIS, TENNESSEE, BOTH F.O.B. DESTINATION, RESULTED IN A TOTAL NET PRICE OF $35,762.50, AS COMPARED TO THE TOTAL NET BID PRICE OF $49,580 SUBMITTED BY THE NEXT LOWEST BIDDERS, AND THAT THEREFORE YOU FEEL THAT YOU ARE ENTITLED TO THE AWARD OF THE CONTRACT.

IT APPEARS FROM THE RECORD BEFORE US THAT BY THE CITED INVITATION BIDS WERE INVITED FOR FURNISHING 1,000 UNITS F.O.B. SHIPPING POINT OR F.O.B. DESTINATION, TO MARION, OHIO, AND FOR 500 UNITS, F.O.B. SHIPPING POINT OR F.O.B. DESTINATION, TO MEMPHIS, TENNESSEE. AS TO THE FORMER YOU SUBMITTED A UNIT BID PRICE OF $28.20, F.O.B. DESTINATION, AND AS TO THE LATTER A UNIT BID PRICE OF $27.70, F.O.B. DESTINATION. THE NEXT LOWEST BID FOR THE 1,000 UNITS WAS MADE BY THE AMERICAN ANCHOR AND CHAIN CORPORATION, FIELDSBORO, NEW JERSEY, AT A UNIT PRICE OF $31.69 NET F.O.B. ORIGIN AND WITH FREIGHT CHARGES EVALUATED FOR DELIVERY TO MARION FOR A TOTAL NET PRICE OF $34.36 PER UNIT. THE NEXT LOW BID FOR DELIVERY OF 500 UNITS F.O.B. MEMPHIS WAS MADE BY THE NIXDORFF-KREIN MANUFACTURING COMPANY, ST. LOUIS, MISSOURI, AT A UNIT PRICE OF $35.78, LESS TWO PERCENT DISCOUNT, OR A NET OF $35.06.

IT WAS STATED IN YOUR LETTER THAT YOUR BID PRICES WERE BASED UPON FURNISHING MATERIAL MADE IN LEIDEN, HOLLAND, AND PAYING OCEAN AND INLAND FREIGHT TRANSPORTATION CHARGES TO DESTINATION. THIS IS CONFIRMED BY YOUR BID DATED OCTOBER 27, 1958, A COPY OF WHICH WAS TRANSMITTED HERE BY THE DEPARTMENT OF THE ARMY, EXCEPT THAT YOUR BID INDICATED THAT YOU WERE SUPPLYING MATERIAL FROM ROTTERDAM, HOLLAND. THE RECORD INDICATES THAT YOUR BID WAS REJECTED FOR THE REASON THAT YOU PROPOSED TO FURNISH MATERIAL FROM A FOREIGN SOURCE.

IT IS REPORTED THAT THIS PROCUREMENT WAS 100 PERCENT SET-ASIDE FOR SMALL BUSINESS. SEE, IN THIS CONNECTION, SECTION 15 OF THE SMALL BUSINESS ACT, PUBLIC LAW 85-536, APPROVED JULY 18, 1958, 72 STAT. 384, 395, 15 U.S.C. 645, WHICH PROVIDES IN PART AS FOLLOWS:

SEC. 15. TO EFFECTUATE THE PURPOSES OF THIS ACT, SMALL-BUSINESS CONCERNS WITHIN THE MEANING OF THIS ACT SHALL RECEIVE ANY AWARD OR CONTRACT OR ANY PART THEREOF, AND BE AWARDED ANY CONTRACT FOR THE SALE OF GOVERNMENT PROPERTY, AS TO WHICH IT IS DETERMINED BY THE ADMINISTRATION AND THE CONTRACTING PROCUREMENT OR DISPOSAL AGENCY (1) TO BE IN THE INTEREST OF MAINTAINING OR MOBILIZING THE NATION'S FULL PRODUCTIVE CAPACITY, (2) TO BE IN THE INTEREST OF WAR OR NATIONAL DEFENSE PROGRAMS, (3) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES FOR THE GOVERNMENT ARE PLACED WITH SMALL-BUSINESS CONCERNS, OR (4) TO BE IN THE INTEREST OF ASSURING THAT A FAIR PROPORTION OF THE TOTAL SALES OF GOVERNMENT PROPERTY BE MADE TO SMALL -BUSINESS CONCERNS. * * *

PARAGRAPH 1-701.4 OF THE ARMED SERVICES PROCUREMENT REGULATION--- PROMULGATED PURSUANT TO THE PROVISIONS OF THE ACT OF JULY 18, 1958--- PROVIDES THAT---

ONE WHO SUBMITS BIDS OR OFFERS IN ITS OWN NAME, BUT WHO PROPOSES TO FURNISH A PRODUCT NOT MANUFACTURED BY ITSELF, SHALL BE DEEMED TO BE A SMALL BUSINESS CONCERN ONLY IF * * * IT AGREES TO FURNISH IN THE PERFORMANCE OF THE CONTRACT PRODUCTS MANUFACTURED OR PRODUCED IN THE UNITED STATES, ITS TERRITORIES, ITS POSSESSIONS, OR PUERTO RICO, BY SMALL BUSINESS CONCERNS; * * *

THE INVITATION IN THIS INSTANCE CLEARLY STATED THAT THE PROCUREMENT HAD BEEN SET ASIDE FOR SMALL BUSINESS AND THAT THE DETERMINATION REQUIRED BY THE STATUTE HAD BEEN MADE. IT ALSO CONTAINED THE SUBSTANCE OF THE ABOVE- QUOTED REGULATION.

IT THUS APPEARS THAT UNDER THE EXPRESS TERMS OF THE INVITATION, WHICH WERE AUTHORIZED BY LAW, YOUR OFFER TO FURNISH MATERIAL OF FOREIGN MANUFACTURE DISQUALIFIED YOUR BID FROM CONSIDERATION, AND WE ARE OF THE VIEW THAT THE ACTION TAKEN IN REJECTION YOUR BID WAS PROPER.

WITH REFERENCE TO PARAGRAPH 6-104, ARMED SERVICES PROCUREMENT REGULATION- -- EXCERPT QUOTED ON PAGE THREE OF YOUR LETTER--- WE HAVE EXAMINED THESE REGULATIONS--- REVISED MARCH 17, 1958--- AND DO NOT FIND THE QUOTED LANGUAGE. PARAGRAPH 6-103.3 (PAGE 602) PROVIDES THAT THE RESTRICTIONS OF THE BUY AMERICAN ACT, 41 U.S.C. 10C, DO NOT APPLY WHEN IT IS DETERMINED BY THE SECRETARY CONCERNED THAT THE COST OF A DOMESTIC SOURCE END PRODUCT WOULD BE UNREASONABLE OR THAT ITS ACQUISITION WOULD BE INCONSISTENT WITH THE PUBLIC INTEREST. THESE REGULATIONS WOULD APPEAR NOT TO BE APPLICABLE TO PROCUREMENT SET-ASIDE FOR SMALL BUSINESS PARTICIPATION IN ACCORDANCE WITH THE SMALL BUSINESS ACT.