FAR 25.001:  Buy American Act

Comptroller General - Key Excerpts

New The protester primarily contends that its bid met the essential requirements of the solicitation, including those governing requests for exceptions to the Buy American Act based on the unreasonable cost of domestic material. In this regard, the protester asserts that its bid fully declared its intent to provide foreign-manufactured construction materials and also provided pricing and location information demonstrating that the material qualified for the applicable exception.

Clause 52.225-9 of the FAR requires a contractor requesting an exception to the Buy American Act construction materials requirement on the basis of unreasonable cost to include, with its bid, the price, quantity, unit of measure, and a description of the foreign and domestic materials at issue, along with a detailed justification for the use of foreign construction materials, a “reasonable survey of the market,” and a completed price comparison table in the format provided in FAR clause 52.225-9(d). In addition, the clause requires the contractor to provide the time of delivery or availability of the materials, the location of the construction project, specific supplier information (including the name, address, and telephone number for the supplier, and a copy of the supplier’s response or a summary thereof), and “other applicable supporting information.” FAR clause 52.225-9(c), (d).

At issue here, Addison’s bid included a chart that listed, for both the foreign construction material included in the bid, and the corresponding domestic material, the following categories of information: the description of the material, unit of measure, quantity, unit price, total cost, and country or state of origin. See AR, Tab C.1, Addison Bid, at 32. Addison’s bid, however, did not include the name, address, telephone number, and contact information for the suppliers that had been surveyed, a copy of such suppliers’ responses, or any other supporting information. See id.

The agency argues that Addison’s bid was missing information required by the FAR and that, without this information, it could not determine whether a Buy American Act exception applied. DOE contends that, as a result, it properly determined that Addison’s bid did not qualify for the requested exception and rejected it as nonresponsive for failing to meet the domestic construction material requirement.

To be considered for award, a bid requesting the use of foreign construction material, on the basis of the unreasonable cost of domestic construction material, must establish on its face the amount of foreign material to be used and the price of that material. Illinois Constructors Corp., B-209214, Feb. 28, 1983, 83-1 CPD ¶ 197 at 2. This eliminates the opportunity for the bidder to manipulate its overall price--and thus relative standing--after bid opening. See Manatts, Inc., B-237532, Feb. 16, 1990, 90-1 CPD ¶ 287 at 4. A bid should not be rejected as nonresponsive simply because it does not include all of the information needed to determine whether a Buy American Act exception applies, however, where the missing information can be obtained by the agency through its own investigation and would not affect the relative standing of the bidder. See Key Constructors, Inc., B-205280, B-205280.2, Apr. 8, 1982, 82-1 CPD ¶ 328 at 7.

Here, we find that, based on the information provided in Addison’s bid, the bid was responsive. In this regard, while the bid did not include all of the information required under FAR clause and provision 52.225-9 and 52.225-10 respectively, it nonetheless included sufficient information for the agency to understand the foreign material being provided, and the quantity and costs of such material. Thus, while the bid was missing required supporting documentation and details, the omission of this information would not enable Addison to alter the price, or relative standing, of its bid.

The agency argues that our prior decisions--where we found that a bid should not be deemed nonresponsive simply because it does not contain all of the information necessary to perform a Buy American Act evaluation--do not apply in light of the FAR requirements included in the IFB. The agency contends that these requirements, which were added in 1997, create an inflexible requirement for bidders to submit specific information to support any request for a Buy American Act exception. COS/MOL at 7 n.4.

Based on our review, we see no support for the agency’s argument that all of the information listed under FAR clause 52.225-9 is required to be submitted for the bid to be deemed responsive. While these requirements clearly require the submission of such information in order “[t]o permit evaluation of [exception] requests,” FAR clause 52.225-9(d), nothing in either the clause or the provision requires an agency to reject a bid as nonresponsive simply because it does not include such information. While FAR provision 52.225-10(d)(3) does contemplate the rejection of a bid as nonresponsive where the bid is based on the use of foreign construction material, and the agency has determined that no requested exceptions apply, this provision does not require the agency to reject a requested exception simply because the bidder did not provide every piece of information listed under FAR clause 52.225-9(c) and (d).

Instead, in our view, the agency is permitted to conduct its own investigation to determine the applicability of the requested Buy American Act exception provided that the information not included would not be the type that would enable a bidder to alter or amend the price, or relative standing, of its bid. See Key Constructors, Inc., supra. Here, the missing information, which includes such information as the contact information for the foreign supplier contacted by the protester, would not allow Addison to alter its acceptance of the IFB terms. Accordingly, we conclude that the agency erred in determining that the missing information required the rejection of the exception request.  (Addison Construction Company B-416525, B-416525.2: Sep 4, 2018)

FitNet contends that the agency erred in rejecting its quote for failing to certify whether its proposed products were domestic end products from the United States, foreign end products from a qualifying country, or foreign end products from a non‑qualifying country. In this regard, FitNet argues that the RFQ did not include the relevant FAR clauses for application of the Buy American statute, to which such certifications apply, and even if the statute did apply, FitNet’s quote still represented the lowest-priced, technically acceptable quote. Protester’s Response to ARD at 1, 4‑6. As discussed below, these arguments are without merit.

In support of its contention that the Buy American statute did not apply to the subject procurement, FitNet highlights the fact that the RFQ did not include FAR clause 52.225-1, Buy American--Supplies. Protest at 3, 7. FitNet, however, fails to recognize that the RFQ incorporated by reference DFARS clause 252.225-7001, which expressly states that it “implements 41 U.S.C. chapter 83, Buy American” and requires contractors to deliver only domestic end products, unless they certify that they are delivering other end products. In fact, DOD contracting officers are required to use DFARS clause 252.225-7001, instead of FAR clause 52.252-1. DFARS § 225.1101(2)(i). Thus, the RFQ made apparent that the Buy American statute applied.

Alternatively, FitNet contends that its quote should have been evaluated as lowest‑priced even when the rules of the Buy American statute are applied. In this regard, the protester contends that its Taiwan-made equipment was exempt from the provisions of the Buy American statute, and even if its equipment was not exempt, its quote was entitled to award after applying the evaluation preference of the Buy American statute. Protest at 4-6. These arguments fail as they do not address the underlying reason why the protester’s quote was rejected, and moreover, rely on flawed interpretations of the applicable regulations.

The Buy American statute establishes a preference for the acquisition of domestic end products over foreign end products. The preference is implemented by adding, solely for evaluation purposes, a specified percentage premium to the price of foreign end products if there is an offer of a domestic end product that is not otherwise lowest-priced. For civilian agency procurements, the price adjustment is either 6 or 12 percent. For DOD procurements, the price adjustment is 50 percent. DFARS § 225.105. If the price of the domestic offer remains higher than the price of the foreign offer after applying the evaluation preference, the price of the domestic offer is deemed to be unreasonably high and award is made to the foreign offer. FAR §§ 25.103(c), 25.105(c); DFARS §§ 225.103(c), 225.502(c)(ii)(E)(2).

To the extent FitNet argues that its quote should have been evaluated as lowest‑priced under the Buy American provisions, the argument is misplaced. The quote was rejected based on FitNet’s failure to submit the certification required under DFARS clause 252.225-7000. Although FitNet asserts that its quote indicated that the equipment it offered was manufactured in Taiwan, DFARS clause 252.225-7000 required vendors to provide more than just the place of manufacture. As noted above, under DFARS clause 252.225-7000, vendors were required to certify their proposed products as domestic end products, qualifying country end products, or other foreign end products. The protester does not dispute that it did not provide this information. Furthermore, the RFQ informed vendors that if they failed “to furnish required representations or information” their quotes “may be excluded from consideration.” RFQ at 6. Under these circumstances, we find that the agency reasonably rejected the protester’s quote for failing to include the required certification. It is an offeror’s responsibility to submit a well-written quote, with adequately detailed information which clearly demonstrates compliance with the solicitation requirements and allows a meaningful review by the procuring agency. See, e.g., Int’l Med. Corps, B-403688, Dec. 6, 2010, 2010 CPD ¶ 292 at 7.

Moreover, even assuming the agency had considered FitNet’s quote with the understanding that its equipment was manufactured in Taiwan, it would not have been evaluated as lowest-priced under the applicable Buy American regulations. According to FitNet, products manufactured in Taiwan are exempt from the provisions of the Buy American statute. Protester’s Response to ARD at 4-6. The protester’s argument, however, confuses the term “qualifying country” under the DFARS, with the term “designated country” under the World Trade Organization Government Procurement Agreement (WTO GPA).

An exception to the Buy American statute exists where the head of an agency has determined that application of the statute would be inconsistent with the public interest. 41 U.S.C. § 8302(a); FAR § 25.103(a); DFARS § 225.103(a). Consistent with this exception, DOD has exempted from the Buy American statute end products from countries that have entered into “a reciprocal defense procurement memorandum of understanding or international agreement with the United States in which both countries [have] agree[d] to remove barriers to purchases of supplies produced in the other country.” See DFARS § 225.003(10) (defining and identifying qualifying countries); DFARS § 225.872-1 (exempting qualifying country end products from the Buy American statute). Thus, in DOD procurements, the prices of end products from qualifying countries are not subject to the price adjustment normally applied to foreign end products under the Buy American statute. DFARS § 225.502(c). Taiwan is not listed as a qualifying country. DFARS § 225.003(10).

Taiwan is, however, a designated country for the purposes of the WTO GPA. See FAR § 25.003 (defining designated countries to include WTO GPA countries and listing Taiwan as a WTO GPA country). Products from designated countries are exempt from the provisions of the Buy American statute if the WTO GPA is applicable. FAR § 25.402(a)(1). The WTO GPA, however, is only applicable to procurements for supplies valued at $204,000 or more, FAR § 25.402(b), which is well above the value of the procurement at issue. As such, the WTO GPA was not applicable and the protester’s Taiwan-made fitness equipment was not exempt from the Buy American statute.

FitNet also asserts that its quote should have been evaluated as the lowest-priced even after application of the price preference established by the Buy American statute. In this regard, FitNet relies on the evaluation preferences prescribed in FAR § 25.105(b), arguing that even if its quote price is increased by 12 percent, it is still lower than the awardee’s quote price. Protest at 4. As discussed above, however, the DFARS, which applies to this Air Force procurement, provides for a larger price adjustment than the FAR, requiring contracting officers to increase the evaluated price of foreign end products by 50 percent. DFARS § 225.105. Accordingly, after applying the 50 percent price preference, the protester’s evaluated price would not be lower than the awardee’s evaluated price.  (FitNet Purchasing Alliance B-410797: Feb 12, 2015)  (pdf)

The Navy also contends that, in any event, the agency was not required to provide Sea Box with the Buy American Act preference because of Hyundai’s intervening quotation of an eligible end product. Specifically, the Navy cites FAR § 25.502(c)(3), which provides that if the low offer is a noneligible offer and there is an eligible offer that is lower in price than the lowest domestic end item, then award is made to the lower priced eligible offer without application of the preference.

Sea Box responds that Hyundai’s quotation could not be considered in the agency’s Buy American Act analysis under FAR § 25.502(c)(3), because Hyundai’s quotation was not technically acceptable. Specifically, Sea Box states that, contrary to the criteria set forth in the RFQ, Hyundai provided no technical information, commercial literature, or other data to show that the end product in its quotation satisfied the identified configuration changes, including minimum interior dimensions. Comments at 12.

The Navy argues that Hyundai’s quotation was technically acceptable, because, although the firm did not provide the requested information, Hyundai did not take exception to any of the requirements. Contracting Officer’s Statement at 19. The Navy contends, citing Pacific Lock Co., B-405800, Dec. 27, 2011, 2011 CPD ¶ 286, that an agency may properly rely upon a vendor’s representation that it will furnish products that comply with the RFQ’s requirements. Id. We disagree.

Here, the RFQ sought quotations for TRICON II containers with numerous configuration changes, including specific minimum interior measurements. RFQ at 7. Vendors were specifically required to provide information demonstrating that the vendor’s quotation would satisfy these requirements. In this regard, the RFQ stated that failure to meet the minimum technical requirements would render a quotation technically unacceptable. Id. at 8. The RFQ also stated that proposals failing to meet these requirements would not be further evaluated. Id. We have found that where an RFQ contains such requirements, blanket statements of compliance without submission of requested technical information is insufficient to show compliance with identified requirements. See ProMar; Urethane Prods. Corp., B-292409 et al., Aug. 25, 2003, 2003 CPD ¶ 187 at 7; see also Koehring Cranes & Excavators; Komatsu Dresser Co., B-245731.2, B-245731.3, Nov. 23, 1992, 92-2 CPD ¶ 362 at 7.

Furthermore, the Navy’s reliance on our Pacific Lock decision is misplaced. In Pacific Lock, we recognized that an agency may rely upon a vendor’s affirmative certification that it would provide a domestic part, where the solicitation only required such a certification, absent some reason to question the certification. Here, the RFQ required vendors to demonstrate their technical compliance, which Hyundai did not do. Moreover, Hyundai made no affirmative representations concerning the compliance of its product.

In short, the record does not support the Navy’s determination that Hyundai’s quotation was technically acceptable. Accordingly, Hyundai’s quotation should not have been considered an intervening eligible quotation in the agency’s determination under FAR § 25.502(c)(3) that Sea Box’s quotation was not entitled to a Buy American Act preference. Applying the Buy American Act preference here would increase Caru’s evaluated price to $238,050 ($158,700 plus the 50 percent evaluation preference). See Contracting Officer’s Statement at 18-19. Thus, under this analysis, Sea Box should have been found to have submitted the lowest-priced, technically acceptable quotation.  (Sea Box, Inc., B-405711.2, Mar 19, 2012)  (pdf)

PDS asserts that the award to Caribe was improper because Caribe will not supply eyeglasses that meet the definition of a domestic end item. The award was proper. Under the terms of the provisions incorporated into the solicitation, offerors that did not take exception to the domestic end item requirement by listing foreign end products were certifying that they would comply with the Act’s domestic product requirements. The solicitation did not require any separate certification document unless the offer was not submitted on SF 1449. Therefore, Caribe’s signed offer on SF 1449 indicated its intention to supply a domestic end item, and obligated the firm to comply with the requirement. Continental Forest Products, Inc., B-217548, Mar. 19, 1985, 85-1 CPD para. 324 at 4. It follows that the agency properly accepted the offer for award. PDS maintains that VA should have investigated whether Caribe intended to supply a domestic end item, since PDS advised VA in a letter dated August 25, 2005 that several offerors under the solicitation would violate the Act. Letter from PDS to VA (Aug. 25, 2005), at 1-2. This argument is without merit. The contracting officer states that he was unaware of the letter in August (he states that he subsequently found the letter in his records), and thus had no reason to question any offeror’s compliance with the Act. In any case, the letter did not specifically identify Caribe (or any other offeror) as a firm PDS believed would not supply a domestic end item. Thus, even if we would otherwise consider information from one offeror sufficient to impose on an agency an obligation to investigate another offeror’s compliance with the Act, it is clear that the agency here had no such obligation because it did not have any information, or reason to believe, that Caribe would not furnish a domestic end product. We conclude that the agency reasonably relied upon Caribe’s self‑certification, without further investigation. Intermagnetics Gen. Corp., B‑255741.2, B-255741.3, May 10, 1994, 94‑1 CPD para. 302. (PDS Consultants, Inc., B-297890, April 4, 2006) (pdf)

For manufactured end products, the FAR uses a two-part test to define a domestic end product: (1) the article must be manufactured in the United States, and (2) the cost of domestic components ( i.e. , components mined, produced, or manufactured in the U.S.) must exceed 50 percent of the cost of all components. FAR Sections 25.003 and 25.101; see also DFARS Section 225.101. The FAR defines "component" as an article, material, or supply incorporated directly into an end product. FAR Section 25.003. The protester contends that it satisfies both prongs of the test and that its end product therefore qualifies as a domestic end product. In this regard, the protester argues that it proposes to import a raw material from [deleted] and then modify it through a series of processes (which the protester does not define). According to the protester, these processes yield a "processed mixture," which is the only component of the end product. It then subjects the "processed mixture" to an "end product manufacturing process," which consists of "sifting and selecting the contract compliant material." Protest at 7. In cases involving an end product derived from a single component or material, we have looked to whether the component/material has undergone substantial changes in physical character in determining whether manufacturing has occurred. A. Hirsh, Inc. , B-237466, Feb. 28, 1990, 90-1 CPD paragraph 247 at 3; 45 Comp. Gen. 658 (1966). See also General Kinetics, Inc., Cryptek Div. , B-242052.2, May 7, 1991, 91-1 CPD paragraph 445 (where we looked at whether the "essential nature" of the core component of the end product was altered in determining whether manufacturing had occurred). Further, since the BAA requires both that the end product have been manufactured in the U.S. and that the cost of components mined, produced, or manufactured in the U.S. exceed 50 percent of the cost of all components, where it is alleged that a foreign material has been manufactured into a component domestically and the component in turn manufactured into an end item domestically, we have also looked at whether the manufacturing process consists of two distinct phases, the first yielding a component that is distinguishable from the original material and the second yielding an end item that is distinguishable from the component. Davis Walker Corp., B-184672, Aug. 23, 1976, 76-2 CPD paragraph 182 at 4-6; 45 Comp. Gen. 658. Where the original material is of foreign origin and we have failed to find two distinct manufacturing phases yielding two distinct products, we have found noncompliance with the two-pronged test for defining a domestic end product. 48 Comp. Gen. 727 (1969); 46 Comp. Gen. 784 (1967). To prevail in its protest, then, City Chemical must demonstrate not simply that it manufactures the dye, but that it manufactures the "processed mixture" from the "raw" dye, and then, in a second stage, manufactures the end product dye from the "processed mixture." In our view, we need not address the more difficult question of whether the steps that the protester performs in transforming the "raw" dye into the "processed mixture" are sufficient to constitute manufacturing because we are persuaded that the processes performed by the protester in transforming the "processed mixture" into the final product are not. In this regard, the only processes that the protester claims to perform in the second stage are sifting and selecting the "contract compliant" material. [6] We do not think that sifting to select the portion of the mixture that meets the specification's particle size standard can reasonably be regarded as manufacturing since it involves no changes--let alone substantial changes--to the physical character of the dye. Because there is no second stage manufacturing process, the raw dye from [deleted], as opposed to the "processed mixture," must be regarded as the principal component of the protester's end product, meaning that the second prong of the domestic end product test is not met. The protester further argues that even to the extent that the raw material from [deleted] may be viewed as a component of its end product, its end product still satisfies the requirement that the cost of domestic components exceed 50 percent of the cost of all components because domestic labor is also a component of its end product and its labor costs exceed the cost of the imported material. Labor is not a component of the end product within the definition set forth at FAR Section 25.003, however, because it is not an article, material, or supply incorporated directly into an end product. See Consolidated Tanneries, Ltd. , B-166786, June 24, 1969; see also Glazer Constr. Co., Inc. v. United States , 50 F. Supp. 2d 85, 98 (D. Mass. 1999). (City Chemical LLC, B-296135.2; B-296230.2, June 17, 2005) (pdf)

In sum, under the circumstances here, which include, among other things, Golden’s completion of the Buy American Act certificate in its proposal, the pre‑award investigation of Golden and its manufacturing process by the VA OIG and Customs, the requested post‑award submissions by Golden concerning its component costs (that were consistent with the pre-award information), and the lack of specifics (with the exception of its transaxle argument) from Leisure‑Lift in support of its allegation that the majority of the components comprising Golden’s scooter are of foreign manufacture, we find the agency had adequate information to, and did, reasonably determine that Golden’s scooter was a domestic end product as relevant here. See Cryptek, supra, at 4 (awardee’s confirmation by telephone that its Buy American Act certificate was correct, without the submission of any additional information, was adequate given the level of detail provided by the protester prior to the award of the contract regarding its allegation that the awardee’s product was not Buy American Act compliant).  (Leisure-Lift, Inc., B-291878.3; B-292448.2, September 25, 2003) (pdf)

Agency reasonably determined that protester's refurbished foreign-made cargo containers were not domestic products eligible for an evaluation preference pursuant to the Buy American Act where the steps the protester takes to refurbish the imported containers in the United States do not constitute "manufacturing" within the meaning of the Act.  (TRS Research, B-285514, August 7, 2000)

The Department of Defense has determined it inconsistent with the public interest to apply restrictions of the Act to the acquisition of defense equipment which is mined, produced, or manufactured in certain "qualifying countries," one of which is Turkey. Department of Defense FAR Supplement (DFARS) sect. 225.872-1(a). Thus, although MTI did represent in its offer that it intended to furnish containers manufactured in Turkey, application of a Buy American evaluation factor to its offer would not have been appropriate.  (Charleston Marine Containers, Inc., B-283393, November 8, 1999)

Comptroller General - Listing of Decisions

For the Government For the Protester
FitNet Purchasing Alliance B-410797: Feb 12, 2015  (pdf) New Addison Construction Company B-416525, B-416525.2: Sep 4, 2018
PDS Consultants, Inc., B-297890, April 4, 2006 (pdf) Sea Box, Inc., B-405711.2, Mar 19, 2012  (pdf)
City Chemical LLC, B-296135.2; B-296230.2, June 17, 2005 (pdf)  
Leisure-Lift, Inc., B-291878.3; B-292448.2, September 25, 2003 (pdf)  
TRS Research, B-285514, August 7, 2000  
Charleston Marine Containers, Inc., B-283393, November 8, 1999  
Canadian Commercial Corporation/ Liftking Industries, Inc., B-282334; B-282334.2; B-282334.3, June 30, 1999  


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