Protest Alleging Method of Bid Evaluation Violates Buy American Act

A firm protested the award of a fixed price contract to a foreign company for the manufacture and installation of two hydraulic turbines and spare parts. The protester alleged that the Army Corps of Engineers' method of evaluating bids violated the Buy American Act and the Executive Orders (EO's) and procurement regulations which implemented the Act. A protest was filed with GAO more than 2 months before the award was made; about 1 week after the award, the protester filed a complaint for declaratory and injunctive relief in the U.S. District Court for the Middle District of Pennsylvania. This court requested the opinion of GAO on the matter. Prices were submitted for all items listed in the invitation for bids (IFB) which included those items grouped together and labeled as hydraulic turbines and those grouped and labeled as spare parts. Award was made on the basis of the total bid. Because the awardee's turbines were not domestic end products, the implementing EO's and regulations of the Act require that the Buy American Act differential of 6 percent of the bid price be added to the bid for evaluation purposes. An additional 6 percent would have been added if the low domestic bidder were to incur 50 percent of its costs in a labor surplus area (LSA). The installation price was subtracted before the six percent differential was added because installation was considered a post-delivery service, not a part of the end product. The protester contended that the agency should have applied a 12-percent differential to the awardee's bid, and that the implementing regulations and EO's require the differential to be applied to the entire bid price including installation. GAO found that post-delivery costs of installing foreign turbines may be excluded from the application of the Act differential, because turbines cannot be delivered or installed fully assembled due to their large size. The IFB required all domestic bidders to identify the actual location of the plant where the items were to be produced. The protester specified a plant not located in a LSA, and then notified the agency after bid opening that over 50 percent of the contract costs would be incurred in LSA's. Where an IFB does not elicit enough information to determine if a bidder qualifies as a LSA bidder, his post-opening information should be considered. Since the protester did not prevail on both issues, the protest was denied.