RAOT argues that the agency improperly evaluated proposals for compliance with the requirements of the [Trade Agreements Act]  TAA. According to the protester, because the RFP did not include DFARS § 252.225-7020, the agency was precluded from evaluating whether or not it proposed to furnish fuel from a non-designated country. The protester argues that DFARS § 252.225-7021 is a post-award provision, under which the agency can require a contractor that has been awarded a contract to provide fuel from a designated country. RAOT further contends that it could be awarded the contract, and could perform without violating the terms of DFARS 252.225-7021, provided the agency waived the requirements of the TAA.

We deny this aspect of RAOT’s protest. In reviewing protests challenging an agency’s evaluation of proposals, our Office does not independently evaluate proposals; rather, we review the agency’s evaluation to ensure that it is reasonable and consistent with the terms of the solicitation and applicable statutes and regulations. SOS Int’l, Ltd., B-402558.3, B-402558.9, June 3, 2010, 2010 CPD ¶ 131 at 2.

Although the protester is correct that the RFP did not incorporate DFARS § 252.225-7020, all offerors were on notice that the agency intended to evaluate proposals for compliance with the terms of the TAA. In this connection, all firms were provided an identical letter when the agency requested final proposal revisions (FPRs). That letter included the following statement:

DFARS 252.225-7021 TRADE AGREEMENTS applies to this procurement unless the requirement is waived. The waiver decision will be determined after receipt of FPRs. Therefore, by submission of an offer, the offeror must either: (1) Certify that each end product to be delivered is a U.S.-made, qualifying country, or designated country end product; or (2) List, by country name, the non-U.S., non-qualifying country(ies), or non-designated country(ies) in paragraph (c)(2) of the provision and submit to the Contracting Officer for review. A listing of qualifying/designated countries may be found in DFARS Part 225. For those offerors who have proposed product sources from non-designated/non-qualifying countries, please be advised that a waiver may or may not be approved. Offerors are assuming a risk that these proposals may not be accepted upon final evaluation.

AR, exh. 33, Closing of Negotiations Letter, at 1 (emphasis supplied). Although this letter did not expressly incorporate DFARS § 252.225-7020, it nonetheless effectively advised offerors that the agency considered the acquisition to be subject to the requirements of the TAA; advised offerors that the agency intended to evaluate proposals for compliance with the TAA; and also advised offerors that firms proposing fuel from non-designated countries assumed the risk that their proposals could be found unacceptable. In light of these considerations, we conclude that the agency properly could evaluate proposals for compliance with the TAA. We therefore deny this aspect of RAOT’s protest.  (Refinery Associates of Texas, Inc. B-410911.2: Mar 18, 2015)  (pdf)

Sea Box argues that the agency erred in determining that Sea Box was not compliant with the [Trade Agreements Act of 1979] TAA, and that Sea Box, as the only compliant TAA vendor, was entitled to award. We have reviewed Sea Box’s arguments and find that none provides a basis to sustain the protest.

When a vendor or offeror represents that it will furnish end products of designated or qualifying countries (including domestic end products) in accordance with the Trade Agreements Act, it is obligated under the contract to comply with that representation. If, prior to award, an agency has reason to believe that a firm will not provide compliant products, the agency should go beyond the firm’s representation of compliance with the Act; however, where the contracting officer has no information prior to award that would lead to such a conclusion, the contracting officer may properly rely upon an offeror’s representation without further investigation. Leisure-Lift, Inc., B-291878.3, B-292448.2, Sept. 25, 2003, 2003 CPD ¶ 189 at 8. Where an agency is required to investigate further, we will review the evaluation and resulting determination as to whether the item offered is a domestic end product to ensure that they were reasonable. Klinge Corporation, B-309930.2, Feb. 13, 2008, 2008 CPD ¶ 102 at 5; See Pacific Lock Co., B-309982, Oct. 25, 2007, 2007 CPD ¶ 191 at 4.

Sea Box first argues that the agency should have accepted the country listed on the protester’s Trade Agreements Certificate (DFARS § 252.225-7020) because the agency had no reason to question the information. Protest at 9. We disagree.

Contrary to the protester’s assertion, the record shows that Sea Box’s documentation, provided to DLA during the corrective action process and reevaluation, indicated that China was the source of various components used in the protester’s manufacturing process. AR, Tab 11, Questions and Answers regarding Sea Box, 1, 5. Thus, the record shows that the agency had information prior to its revised award decision that provided a basis to question the certification.

Next, Sea Box argues that DLA used the wrong standard for determining whether Sea Box would comply with TAA qualifications, and that DLA should have relied on previous determinations by other agencies. Specifically, the protester alleges that DLA should have used SBA’s test for determining whether a concern is a manufacturer of an end item for size purposes, which examines whether a concern performed the primary activities in transforming inorganic or organic substances into the end item being acquired. Protest at 13; See 13 C.F.R. § 121.406(b)(2). Sea Box also asserts that the agency should have relied on an SBA size determination concluding that Sea Box was a manufacturer of Tricon containers, and a Defense Contract Management Agency (DCMA) pre-award survey finding that Sea Box could perform contracts to manufacture Tricons. Protest at 11, 13; See Protest, Attach. O, DCMA Survey; Attach. L, SBA Size Determination.

In response, the agency notes that the purposes of the SBA and DCMA determinations (and the standards to make the determinations) differ from a review of compliance with the TAA. The SBA’s standard, although similar to the TAA substantial transformation test, does not turn on the origin of the component parts used to assemble end items. In addition, Customs and Border Protection (CBP), rather than SBA or DCMA, has the authority to make country of origin determinations relating to government procurements under the TAA. AR, Legal Memorandum at 13-14; 19 C.F.R. § 177.21 et seq.

We agree with the agency. The SBA test for size determinations, SBA’s resulting determinations, and DCMA pre-award surveys do not determine the country of origin of an end product for TAA purposes. Rather, as indicated by the agency when it requested additional information from Sea Box, the test to determine country of origin in the context of trade agreements is “substantial transformation,” i.e., whether an article is transformed into a new and different article of commerce, with a name, character, or use distinct from the original article. AR, Tab 11, Questions and Answers regarding Sea Box, at 4; See FAR § 25.001(c)(2); DFARS § 252.225-7021.

Sea Box acknowledges that CBP is the agency responsible for making final determinations of country of origin and substantial transformation in response to written requests by non-government parties; there is no evidence in the record, however, showing that Sea Box requested a country of origin final determination from CBP. Instead, Sea Box argues that DLA’s evaluation of Sea Box’s manufacturing process was unreasonable because DLA did not use the “totality of the circumstances” standard that CBP applies as part of its evaluations. Comments at 2. We find this argument unpersuasive. As set forth below, neither the solicitation, nor the FAR or the DFARS required the agency to use this particular approach in its analysis.

First, neither the DFARS, nor the FAR provide additional guidance or examples to illustrate the circumstances under which an article is “substantially transformed” into a new and different item. Pacific Lock Co., supra, at 3. Accordingly, the agency looked to the protester’s descriptions of the origin of the components and the protester’s manufacturing process. Additionally, the agency relied on a CBP decision regarding when assembly of parts or materials constitutes substantial transformation. See CBP HQ Ruling 559432, Apr. 19, 1996. In that decision, CBP concluded that the imported components of a steel split sleeve repair clamp were not substantially transformed as a result of U.S. operations such as finishing, assembly, and painting, because the foreign items had a predetermined use at the time of importation and the U.S. operations did not change the character of the item.

Moreover, the agency considered the protester’s documentation on the country of origin of the item and its individual components, and determined that the major components, i.e., front and side walls, doors, floor and roof, were sourced in China. The agency also considered the protester’s manufacture and assembly process, including a cost breakdown and the manhours required for performance, and determined that while those processes added value to the end item, they did not substantially transform the components into a new and different article, as the predetermined use for each component part was its inclusion in the assembly of the finished Tricon. While Sea Box disagrees with the agency’s analysis and conclusions, without more, it has not provided a basis for us to determine that the agency’s judgment was unreasonable. Based on this record, we conclude the agency reasonably determined that the protester’s manufacturing process did not constitute substantial transformation of those components into new and different articles of commerce with a use distinct from the original articles. Accordingly, we find no basis to sustain the protest.  (Sea Box, Inc. B-409963.3: Feb 4, 2015)  (pdf)

The Buy American Act requires, with certain exceptions, that only domestic end products be acquired for public use. Federal Acquisition Regulation (FAR) sections 25.102, 25.103 (exceptions). In comparison, the Trade Agreements Act provides that eligible products from World Trade Organization Government Procurement Agreement (WTO GPA) countries are entitled to "nondiscriminatory treatment," FAR sect. 25.403(a), and for those eligible products, the President is authorized to and, in fact, has waived the requirements of the Buy American Act. See 19 U.S.C. sect. 2511; Exec. Order No. 12,260, 46 Fed. Reg. 1,653 (Dec. 31, 1980); FAR sect. 25.402(a)(1).

The Trade Agreements Act exemption is applicable to procurements by federal agencies designated as covered by the WTO GPA. See FAR sections 25.400(a)(1), 25.402(a)(1); Final Act Embodying the Results of the Uruguay Round of Multinational Negotiations, Apr. 15, 1994, 33 I.L.M. 1125, Annex 4(b), Agreement on Government Procurement, Article I (stating that the GPA applies to any procurement by entities specified in Appendix I to the GPA). As a signatory to the agreement, the United States maintains a list of procuring entities covered by the WTO GPA; that list does not include the GPO. See id. at Appendix I, United States, Annex 1 (Oct. 1, 2004).[2] Since the procurement at issue in the protest here is being conducted by the GPO, and the GPO is not a covered agency under the WTO GPA, the Trade Agreements Act exemption from the Buy American Act domestic preference provisions does not apply.

In arguing that the Trade Agreements Act and the associated exemption from the Buy American Act do apply to this procurement, HID maintains that the State Department is a de facto procuring agency for this procurement, along with the GPO. Since the State Department (unlike the GPO) is included on the list of federal agencies covered by the WTO GPA, id. at 1, HID argues that the provisions of the Trade Agreements Act apply and supersede the Buy American Act domestic preferences. We disagree.

In support of its position, the protester points to the State Department's "intimate involvement" in outlining its requirement here, drafting the solicitation specifications, conducting the procurement, evaluating offerors, and personalizing the passports. Comments, July 19, 2010, at 5. The protester also notes that the RFP introduction states that the GPO, "in cooperation with its partner the Department of State," has a requirement for passport cover material. RFP para. C1. The GPO is procuring fabric and creating passport covers for the State Department, and presumably that transformation of fabric into an item of value for the State Department will involve a cooperative partnership. It does not follow, however, that the State Department is a de facto procuring agency. In the absence of any compelling indicia that the State Department was a co-procuring agency, we will not ascribe to the State Department a status that the agencies themselves did not.

In sum, the GPO is not listed as an agency covered by the WTO GPA, the exemption to the Buy American Act domestic preference provisions applicable to covered agencies under the Trade Agreements Act does not apply to procurements by the GPO. Further, we see no merit to the protester's argument that the State Department, whose procurements are subject to the Trade Agreements Act exemption, is an actual procuring entity here. We therefore see nothing improper in the RFP's inclusion of the BAA preferences, without also including the exemption provision of the TAA.  (HID Global, Inc., B-403103, September 15, 2010)  (pdf)

Tiger argues that the agency violated the TAA and its implementing regulations when it considered price before determining TAA compliance, evaluated Vantage’s and [REDACTED] quotations even though their vehicles were not TAA-compliant, and awarded the contract to Vantage without obtaining the required non-availability determination from the head of the contracting activity. Tiger also complains that the agency failed to affirmatively determine that Tiger’s vehicles complied with the TAA. Tiger’s Post‑Hearing Comments at 6-8.

The agency contends that the TAA requirements are not applicable here because there were no TAA-compliant quotations that were eligible for award, since Tiger (whose vehicles were the only arguably TAA-compliant ones) quoted a price that was not fair and reasonable. Contracting Officer’s Statement at 18.

As an initial matter, we note that it is not clear from the record that Tiger’s vehicles are, in fact, TAA-compliant. Consistent with this record, the contracting officer’s determination was only that Tiger’s vehicles “may” be TAA-compliant. AR, Tab 56, Price Negotiation Memorandum, at 11. Nonetheless, as noted above, the FAR requires that the agency consider only TAA-compliant products, which necessarily requires that the agency first determine whether Tiger’s vehicles were TAA‑compliant in order to ascertain whether any TAA-compliant products were available. If the agency had determined here that Tiger’s vehicles were TAA‑compliant, then the remaining vendors’ quotations for non-TAA-compliant vehicles should have been eliminated from consideration and the agency should have evaluated only Tiger’s quotation against the RFQ’s evaluation criteria, including evaluating Tiger’s price for reasonableness as further discussed below. If, however, the agency had determined that Tiger’s vehicles, like the other vendors’ vehicles, were not TAA‑compliant, the head of the contracting activity would have been required to issue a non‑availability determination, if he or she found it was warranted, before the agency could have selected a quotation for non-TAA-compliant vehicles for award. None of these events occurred here. Instead, in violation of FAR sect. 25.502, the agency failed to determine whether Tiger’s vehicles complied with the TAA and made award based on a quotation for non‑TAA-compliant vehicles without first obtaining a non‑availability determination from the head of the contracting activity. We sustain the protest on these bases.  (Tiger Truck, LLC, B-400685, January 14, 2009) (pdf)

When a bidder or offeror represents that it will furnish end products of designated or qualifying countries (including domestic end products) in accordance with the Trade Agreements Act, it is obligated under the contract to comply with that representation. If prior to award an agency has reason to believe that a firm will not provide compliant products, the agency should go beyond the firm’s representation of compliance with the Act; however, where the contracting officer has no information prior to award that would lead to such a conclusion, the contracting officer may properly rely upon an offeror’s representation without further investigation. Leisure-Lift, Inc., B-291878.3; B-292448.2, Sept. 25, 2003, 2003 CDP para. 189 at 8. Where an agency is required to investigate further, we will review the evaluation and resulting determination regarding compliance with the requirements of the Act to ensure that they were reasonable. See Pacific Lock Co., B-309982, Oct. 25, 2007, 2007 CPD para. 191 at 4; cf. General Kinetics, Inc., Cryptek Div., B-242052, B‑242052.2, May 7, 1991, 91-1 CPD para. 445 at 7 (GAO reviews the evaluation and resulting determination of country of origin under the Buy American Act to ensure they were reasonable).

The agency’s evaluation and resulting determination of compliance was reasonable. As we noted in a recent decision, Pacific Lock Co., supra, at 3, neither the FAR nor DFARS provides guidance or examples to illustrate the circumstances under which an article is “substantially transformed” into a new and different item. Here, the contracting agency, in determining whether under Sea Box’s proposal there would be a substantial transformation in the U.S., looked to whether significant work or processes necessary to the functioning as a refrigerated container system would occur in the U.S. Agency Supplemental Report, Jan. 24, 2008, at 13.

In this regard, our review of the record supports the agency’s determination that the information available to contracting officials concerning Sea Box’s production process indicated that significant production activity would take place in the U.S. before Sea Box’s LFRS could be delivered to the agency. Specifically, as noted by the agency, while the work breakdown structure included in Sea Box’s FPR allotted 5 days for “Final Assembly” after the Chinese manufacturer of the containers received the first 3 refrigeration units, 10 days were allotted to “Install[ing] Interior components” after the joined refrigeration units and containers were received at Sea Box’s facility in the U.S. (in New Jersey). Sea Box FPR, Work Breakdown Structure, at 1-2. Likewise, as noted above, Sea Box’s discussion response stated that once the joined refrigeration units and containers were received in the U.S., Sea Box would perform “all additional and necessary manufacturing processes (e.g., electrical, CARC . . . painting, finishing) and parts integration as well as quality assurance testing and preparation for inspection and final shipment to the government.” Sea Box Discussions Response, Sept. 12, 2007, at 3. Further, Sea Box estimated in its discussion response that “[t]he parts, materials and labor for those manufacturing processes which Sea Box performs in New Jersey so as to render the end item into a fully-functioning LFRS,” accounted for a significant portion of the overall cost of LFRS, amounting to approximately [REDACTED] percent, with the cost of the Singapore refrigeration unit accounting for another [REDACTED] percent of overall cost and the “cost of the basic [Chinese] ISO container” itself accounting for [REDACTED] percent of the overall cost. Id.

Finally, the record indicates that the agency verified with Sea Box prior to award that significant, essential production activity remained to take place in the U.S. In this regard, agency counsel contacted Sea Box’s director of contracts, who had prepared the firm’s discussion response, to reconcile the detailed information showing substantial production activity in the U.S. with the general reference in Sea Box’s discussion response to the Singapore RU’s being “mechanically and electrically integrated within the basic ISO container structure” in China. The record indicates that counsel for the agency was advised by Sea Box’s director of contracts, apparently after verification by the company’s president, that, in fact, no work other than bolting the refrigeration unit in place onto the container was to be accomplished at the Chinese container factory. Declaration of Agency Counsel, Jan. 24, 2008.[3] Agency counsel advised the contracting officer of this clarification. Declaration of Contracting Officer, Jan. 29, 2008. The agency ultimately concluded that the joined unit subsequently shipped to the U.S. amounted to only two components bolted together, and not an LFRS, since, absent the significant work performed at the Sea Box facility in New Jersey, the two components could not perform as a refrigerated container system. Agency Report, Jan. 24, 2008, at 13.

Thus, it appears from the record that the information available to the contracting agency prior to award concerning Sea Box’s contemplated production process indicated that the Singapore refrigeration units would be simply bolted to the Chinese containers in China, and that the work and processes necessary to combine the two components into a functioning refrigerated container systems, which would be substantial in terms of effort (whether measured by time required or cost), instead would first occur in the United States. Based on this information, the USMC determined that the components of Sea Box’s LFRS would be substantially transformed in the U.S. and thus meet the U.S.-made end product requirement. Given the information available to the agency, the agency’s ultimate determination that there was no basis on which to question Sea Box’s Trade Agreement Certificate of compliance with the Trade Agreements requirements was reasonable.  (Klinge Corporation, B-309930.2, February 13, 2008) (pdf)

PLC contends that DLA improperly rejected its proposal because the agency used the wrong criteria in assessing whether PLC’s padlocks could be considered U.S.-made end products. More specifically, PLC objects to DLA’s determination that, because the company did not use any domestic components in its padlocks and/or incur significant production costs in the United States, PLC’s padlocks could not be viewed as substantially transformed in the United States. Protest at 4.  As discussed above, the solicitation requires an offeror to either (1) produce an item in the United States (or other designated or qualifying country), or (2) show that the item was substantially transformed here. Since PLC acknowledges that the components of its padlocks were manufactured in China for assembly in the United States, it is clear that, for PLC’s padlocks to meet the U.S.-made end product requirement, the company must be able to establish that the Chinese-made lock components are “substantially transformed” during the assembly process in the United States.

Neither the FAR nor DFARS provides guidance or examples to illustrate the circumstances under which an article is “substantially transformed” into a new and different item. Therefore, for clarification DLA looked to determinations by the OIT, which is responsible for issuing advisory and final determinations relating to whether an article can be considered a U.S.-made end product. [3] OIT decisions have held that, with respect to locks, substantial transformation occurs when (1) foreign components are combined with significant domestic components and/or (2) significant domestic production costs are involved.[4] Prior decisions of our Office have also looked to these determinations for guidance. See, e.g., Becton Dickinson AcuteCare, B-238942, July 20, 1990, 90-2 CPD para. 55.

The protester contends that more assembly of its locks occurs in the United States than occurred in the first scenario discussed in the above-referenced OIT decision, and that, therefore, its locks should be viewed as substantially transformed in the United States. We disagree. The OIT decision did not establish the cited scenario as a bright line beyond which any additional assembly would automatically constitute substantial transformation. Instead, the decision outlines several scenarios so that agencies and vendors offering products can look to these scenarios for guidance.

In our view, the determination reviewed by DLA, which specifically addressed locks, reasonably led the agency to conclude that--as to locks--the agency should look for a showing that at least a portion of the lock components were domestically produced and/or that significant domestic production costs were involved. Since PLC failed to make either of these showings, we conclude that DLA reasonably decided that PLC’s proposal did not comply with the terms of the solicitation. See CSK International, Inc., B-278111; B-278111.2, Dec. 30, 1997, 97-2 CPD para. 178.  (Pacific Lock Company, B-309982, October 25, 2007) (pdf)