B-168333, MAY 27, 1970

B-168333, MAY 27, 1970

BIDS--BUY AMERICAN ACT--EVALUATION--BALANCE OF PAYMENTS PROGRAM RESTRICTIONS UNDER AIR FORCE'S INVITATION FOR BIDS FOR AMMUNITION PARTS WHERE FOREIGN ITEMS FOR DELIVERY IN UNITED STATES WITHOUT GUARANTEED RESHIPMENT OVERSEAS WERE NOT FOREIGN END PRODUCTS UNDER ASPR 6-104.4 (B), IMPLEMENTING BUY AMERICAN ACT, AND OTHERWISE GAO CONCLUDED PROCUREMENT WAS FOR USE OUTSIDE UNITED STATES, APPLICABLE BALANCE OF PAYMENTS PROGRAM REPRESENTS RESTRICTION ON PROCUREMENT ACTIVITY'S CONTRACT AWARD POWER, REGARDLESS OF WARNING TO UNAWARE BIDDER, SINCE, ALTHOUGH DEPARTMENT OF DEFENSE POLICY PROCUREMENT FOR USE OUTSIDE UNITED STATES IS RESTRICTED TO UNITED STATES END PRODUCTS, REGULATIONS IMPLEMENTING PROGRAM RESTRICT PROCUREMENT AGENCY'S POWER IN CONTRACT AWARDS, NOT PROSPECTIVE CONTRACTOR'S RIGHT TO BID.

TO WEISLER & WEISLER:

THIS CONCERNS YOUR PROTEST OF NOVEMBER 5, 1969, AND THE SUBSEQUENT COMMUNICATIONS ON BEHALF OF SUMTER INDUSTRIES, INCORPORATED, AGAINST THE CONTRACT AWARDED TO DVA CORPORATION UNDER INVITATION FOR BIDS NO. F42600- 69-B-3759, ISSUED BY THE HILL AIR FORCE BASE.

YOUR CLIENT SUBMITTED THE LOW BID FOR AMMUNITION PARTS, DRIVE ASSEMBLY ATU-35AIB, ON AN F.O.B. ORIGIN BASIS FOR DELIVERY TO HERLONG, CALIFORNIA. HOWEVER, THE CONTRACTING OFFICER BELIEVED THAT A 20 PERCENT IMPORT DUTY FACTOR WAS REQUIRED TO BE ADDED TO THAT BID AND AS A RESULT DID NOT CONSIDER THE BID BY SUMTER TO BE LOW. THIS OFFICE REJECTED THAT POSITION IN OUR LETTER, B-168333, DATED APRIL 7, 1970, A COPY OF WHICH WAS FURNISHED YOU. THE ORIGINAL ADMINISTRATIVE REPORT FURNISHED BY THE DEPARTMENT OF THE AIR FORCE ALSO CONCLUDED THAT THE PROVISIONS OF THE BUY AMERICAN ACT, 41 U.S.C. 10A-10D, WERE APPLICABLE AND THAT THE ADDITION OF THE 50 PERCENT DIFFERENTIAL AS PROVIDED BY ASPR 6-104.4 (B) ALSO WOULD MAKE SUMTER'S BID NOT LOW. THEREFORE, WE REQUESTED THEIR VIEWS AS TO WHY THAT ACT WAS APPLICABLE.

BY LETTER DATED APRIL 22, 1970, WE WERE FURNISHED A SECOND REPORT FROM THE DEPARTMENT OF THE AIR FORCE ON THE APPLICATION OF THE BUY AMERICAN ACT. ESSENTIALLY, THAT REPORT, WHICH WAS FURNISHED TO YOU FOR COMMENT, STATES THAT THE ACT APPLIES BECAUSE THE ITEMS BEING PROCURED ARE FOR DELIVERY IN THE UNITED STATES, NOT DIRECTLY TO OVERSEAS ACTIVITIES, AND THAT NOT ALL OF THE ITEMS WERE INTENDED TO BE RE SHIPPED OVERSEAS NOR WAS THERE ANY GUARANTEE THAT THOSE INTENDED FOR OVERSEAS DESTINATIONS ACTUALLY WOULD BE RE-SHIPPED. ALTERNATIVELY, THE REPORT STATES THAT IN THE EVENT IT IS DETERMINED THESE ITEMS ARE FOR USE OVERSEAS THEN THE REGULATIONS IMPLEMENTING THE BALANCE OF PAYMENTS PROGRAM APPLY (ASPR 6-800 TO 807), AND THAT UNDER THOSE REGULATIONS SUMTER'S BID MUST BE REJECTED SINCE IT DOES NOT FALL INTO ANY OF THE CATEGORIES PERMITTING PROCUREMENT OF FOREIGN END PRODUCTS FOR USE OUTSIDE THE UNITED STATES.

RESPECTING THE APPLICATION OF THE PROVISIONS OF THE BUY AMERICAN ACT, WE MUST REJECT THE POSITION TAKEN BY THE DEPARTMENT OF THE AIR FORCE. WHILE THIS OFFICE WAS INFORMALLY ADVISED THAT AN ESTIMATED 5 PERCENT OF THESE ITEMS WILL BE USED IN THE UNITED STATES FOR TRAINING PURPOSES, THE MAJOR PORTION OF THE DRIVE ASSEMBLIES WERE INTENDED AT THE TIME OF PROCUREMENT FOR USE OVERSEAS. THIS CONCLUSION IS SUPPORTED BY THE FACT THAT THE DRIVE ASSEMBLIES WERE REQUIRED TO BE PACKAGED FOR USE IN SOUTHEAST ASIA. MORE IMPORTANT IS THE FACT THAT THIS PROCUREMENT WAS LET TO FULFILL A NEED FOR DRIVE ASSEMBLIES OVERSEAS AND THE SUBSEQUENT USE OF ANY ITEMS IN THE UNITED STATES FOR TRAINING IS INCIDENTAL TO THE PROCUREMENT. THEREFORE, SINCE A SUBSTANTIAL PORTION OF THE DRIVE ASSEMBLIES ARE NOT INTENDED FOR USE IN THE UNITED STATES, WE DO NOT BELIEVE THE DIFFERENTIAL PROVIDED BY ASPR 6-104.4 (B), IMPLEMENTING THE BUY AMERICAN ACT, SHOULD BE APPLIED IN THIS PROCUREMENT.

IN VIEW OF OUR CONCLUSION THAT THE ITEMS BEING PROCURED ARE FOR USE OUTSIDE OF THE UNITED STATES, WE MUST CONSIDER WHETHER THE BALANCE OF PAYMENTS PROGRAM IS APPLICABLE. YOU CONTEND THAT THOSE PROVISIONS DO NOT APPLY SINCE THE INVITATION FOR BIDS NEITHER DESIGNATED THE PROCUREMENT AS BEING MADE PURSUANT TO THE PROGRAM AS REQUIRED BY ASPR 6 806, NOR CONTAINED THE CLAUSE OR CERTIFICATE SET FORTH IN ASPR 6 806.3.

THE POLICY OF THE DEPARTMENT OF DEFENSE IS THAT PROCUREMENT OF SUPPLIES FOR USE OUTSIDE THE UNITED STATES SHALL BE RESTRICTED TO UNITED STATES END PRODUCTS. ASPR 6-805.1. CERTAIN SPECIFIED EXCEPTIONS TO THAT MANDATORY POLICY ARE SET FORTH IN ASPR 6-805.2 (A). HOWEVER, IT APPEARS NONE OF THOSE EXCEPTIONS IS APPLICABLE IN THIS INSTANCE AND IN ANY EVENT THE PREREQUISITE DETERMINATION BY THE APPROPRIATE OFFICIAL WAS NEVER IN FACT MADE. ASPR 6-805.2 (6) (C). THEREFORE, WE MUST CONCLUDE THAT THE BALANCE OF PAYMENTS PROGRAM WAS FOR APPLICATION IN THIS PROCUREMENT. YOUR OBJECTION IS THAT THE INVITATION DID NOT PROVIDE FOR THE APPLICATION OF THE PROGRAM. IN THIS REGARD WE DIRECT YOUR ATTENTION TO ASPR 6-806.1 WHICH RESTRICTS PROCUREMENT TO UNITED STATES END PRODUCTS EVEN WHERE THE CLAUSES CONTAINED IN ASPR 6-806.3 ARE NOT INCLUDED IN THE SOLICITATION. MOREOVER, THE REGULATIONS IMPLEMENTING THE BALANCE OF PAYMENTS PROGRAM REPRESENT A RESTRICTION ON THE PROCURING ACTIVITIES' POWER TO MAKE CONTRACT AWARDS, NOT UPON THE RIGHT OF PROSPECTIVE CONTRACTORS TO BID. BIDDERS OFFERING FOREIGN END PRODUCTS MAY BID AND RECEIVE AWARD IN THE APPROPRIATE CIRCUMSTANCES SUCH AS UNREASONABLE COST FOR DOMESTIC PRODUCTS. ASPR 6-805.1 (A) (XI). HOWEVER, THE FACT THAT BIDDERS MAY BE UNAWARE, DUE TO AN ABSENCE OF WARNING IN THE INVITATION FOR BIDS, OF THE RESTRICTION ON THE PROCURING ACTIVITIES' POWER TO MAKE A CONTRACT AWARD DOES NOT RENDER THAT RESTRICTION INEFFECTIVE OR INOPERATIVE. THEREFORE, THE AIR FORCE COULD NOT HAVE ACCEPTED THE BID OF YOUR CLIENT, SUMTER INDUSTRIES, UNDER THIS INVITATION FOR BIDS.