BNUMBER:  B-266207
DATE:  February 5, 1996
TITLE:  Canadian Commercial Corporation/Freeze-Dry Foods,
Limited

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Matter of:Canadian Commercial Corporation/Freeze-Dry Foods,
               Limited

File:     B-266207

Date:     February 5, 1996

Richard L. Moorhouse, Esq., Dorn C. McGrath III, Esq., and Ross W. 
Dembling, Esq., Holland & Knight, for the protester.
Michael Trovarelli, Esq.,and Steven B. Hilkowitz, Esq., Defense 
Logistics Agency, for the agency.
Peter A. Iannicelli, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Procuring agency properly rejected offer of Canadian food products 
where the offer violated the Berry Amendment's prohibition on 
purchases of certain foreign products, 10 U.S.C.  sec.  2241 note (1994), 
and the agency head had not waived the restriction by determining that 
domestic food items could not be obtained in satisfactory quality and 
sufficient quantity at United States market prices.

DECISION

The Canadian Commercial Corporation (CCC), on behalf of its endorsed 
subcontractor, Freeze-Dry Foods, Limited,[1] protests the Defense 
Personnel Support Center's (DPSC)[2] rejection of Freeze-Dry's low 
offer submitted in response to request for proposals (RFP) No. 
SPO300-95-R-9003.  The protester alleges that the agency improperly 
determined that Freeze-Dry's offer of Canadian food products was 
ineligible for contract award under the terms of the solicitation and 
the "Buy American" provisions of the Berry Amendment.  The protester 
contends that DPSC waived the Berry Amendment with respect to 
Freeze-Dry for this procurement and, therefore, Freeze-Dry should have 
been awarded the contract on the basis of its low price.

We deny the protest.

Issued by DPSC on May 19, 1995, the RFP requested offers for supplying 
diced chicken and dehydrated beef patties to various locations in the 
United States (U.S.) for use as B-rations.  The RFP contemplated award 
of several fixed-price, indefinite quantity contracts on a line 
item-by-line item basis and indicated that price would be the sole 
factor in selecting contractors for each line item.  The RFP 
incorporated DFARS  sec.  252.225-7012 (DAC 91-6), Preference for Certain 
Domestic Commodities,[3] which states, in pertinent part:

     "(a) The Contractor agrees to deliver under this contract only 
     such of the following articles that have been grown, reprocessed, 
     reused, or produced in the United States, its possessions, or 
     Puerto Rico--

        (1) Food . . .

     "(b) This clause does not apply--

        (1) To supplies listed in FAR 25.108(d)(1),[4] or other 
        supplies for which the Government has determined that a 
        satisfactory quality and sufficient quantity cannot be 
        acquired as and when need at U.S. market prices;

        (2) To foods which have been manufactured or processed in the 
        United States, its possessions, or Puerto Rico. . . ."

Six firms submitted offers by the June 22, 1995, closing date for 
receipt of initial proposals.  The contracting officer determined that 
Freeze-Dry's offer was ineligible because it offered food products 
that were produced in Canada.  However, on advice of counsel, all six 
offers were considered to be in the competitive range.  Negotiations 
were held with the competitive range offerors, and best and final 
offers were received from all six firms.[5]  Upon receipt of best and 
final offers, Freeze-Dry's offer was the lowest priced for line items 
1 and 2.  However, the contracting officer determined that 
Freeze-Dry's offer was ineligible for award because the offer was for 
food products produced outside of the U.S.  By letter of August 29, 
Freeze-Dry was notified that contracts were awarded to the next low 
offerors for these line items.  On September 19, the CCC filed this 
protest.     

The protester contends that DPSC waived application of the Berry 
Amendment's prohibition with regard to Freeze-Dry when DPSC entered 
into a memorandum of understanding (MOU) with Freeze-Dry on June 19, 
1995, shortly before initial offers were due.  The MOU established 
Freeze-Dry as a planned producer of various dehydrated meat items as 
part of the U.S. industrial mobilization base.  The protester asserts 
that, under the terms of the MOU, Freeze-Dry may be required, as a 
planned producer, to accept a military contract for freeze-dehydrated 
meat items in a declared U.S. national emergency.  The protester also 
notes that the MOU states that the items are considered critical to 
support American warfighting capabilities.  Because DPSC recognized 
Freeze-Dry as a planned producer of freeze dehydrated meat 
products--the very items being purchased in this procurement--the 
protester asserts that DPSC has waived application of the Berry 
Amendment prohibition on its behalf. 

The contracting agency states that it never intended the June 19 MOU 
with Freeze-Dry to serve as a waiver of the RFP's buy American 
provisions, and the agency points out that the MOU does not contain 
the required factual determination that these food products cannot be 
procured in satisfactory quality and sufficient quantity at U.S. 
market prices.  The agency also states that the person who signed the 
MOU on DPSC's behalf--the Chief of the Industrial Support Branch, 
Directorate of Subsistence, DPSC--had no authority to waive Berry 
Amendment restrictions as such authority is vested solely in the DPSC 
Commander. 

The Berry Amendment is very specific concerning the circumstances 
under which a waiver may be made and who is empowered to make such a 
waiver.  The statute provides that the Secretary of the procuring 
department may waive the prohibition on foreign purchases only after 
determining that "satisfactory quality and sufficient quantity of . . 
. items of food . . . grown, reprocessed, reused, or produced in the 
United States or its possessions cannot be procured as and when needed 
at United States market prices . . . ."  10 U.S.C.  sec.  2241 note.  These 
conditions are repeated in both the implementing regulation, DFARS  sec.  
225.7002-2(a), and the RFP (quoted above).  The decision whether to 
waive the restriction is basically a factual determination concerning 
the quality, quantity, and price of goods produced in the U.S.   See 
Dash Eng'g, Inc.; Engineered Fabrics Corp., B-246304.8; B-246304.9, 
May 4, 1993, 93-1 CPD  para.  363.[6]

We have reviewed the June 19 MOU wherein DPSC agrees that Freeze-Dry 
will be considered a planned producer for industrial mobilization base 
purposes.  We have also reviewed a 1970 MOU between the U.S. 
Department of Defense and the CCC wherein the parties agreed, among 
other things, that the U.S. and Canada would cooperate in industrial 
mobilization planning to support their mutual defense in time of war 
or other military emergency and that Canadian firms would be allowed 
to participate in the U.S. Industrial Mobilization Production Planning 
Program.  We find no language in either document that reasonably can 
be construed as a waiver of the Berry Amendment restrictions on behalf 
of Freeze-Dry.

Contrary to the protester's arguments, the gist of both MOUs is that a 
planned producer (such as Freeze-Dry) may be required to accept a 
contract to provide its products to the U.S. in time of war.  Under 
the MOUs, it is clear that, in return for a planned producer's 
maintaining the capacity to provide a specified product, the U.S. 
might award it a contract for supplying that product at some future 
time (e.g., in wartime).  In fact, the 1970 MOU specifically states 
that the U.S. is not obligated to award a planned producer a contract 
even in time of war.  Thus, neither MOUs, which concern planning for 
future mobilization contingencies, cannot reasonably be read as 
constituting a de facto determination that there is at present a 
shortage of freeze-dehydrated meat products produced by domestic firms 
so that U.S. market prices cannot be obtained.  In this connection, 
the record shows that five of the offers received in response to this 
RFP were offers of domestic products, thus supporting DPSC's decision 
not to waive the RFP's domestic preference provisions.  Because 
neither MOU contains any statement to the effect that, at the present 
time, diced chicken and dehydrated beef patties cannot be procured in 
satisfactory quality and sufficient quantity at United States market 
prices, the RFP's restriction to domestic products was applicable and 
Freeze-Dry's offer was properly determined ineligible.  Cf., Dash 
Eng'g, Inc.; Engineered Fabrics Corp., supra (agency properly waived 
the Berry Amendment restriction where the agency urgently needed to 
acquire helicopter fuel cells in order to minimize dangers to flight 
crews and passengers and the item was available more quickly from a 
foreign source than a domestic source.)

Furthermore, we think that the present case is governed by, and DPSC 
reasonably relied upon, the holding in Southern Packaging and Storage 
Co., Inc. v. U.S., 588 F. Supp. 532 (D.S.C. 1984).  In that case, the 
court declared null and void a contract for supplying food products 
(diced turkey and beef stew) for use as combat rations, awarded by 
DPSC to the CCC and subcontracted to a Canadian firm, because the 
purchase of food items produced in Canada violated the buy American 
provisions of the Berry Amendment contained in the then-current 
Defense Appropriations Act and DPSC had not waived the domestic 
product restriction.  The court held that the award violated the Berry 
Amendment in spite of the fact that the end items were produced from 
ingredients obtained from sources within the U.S. and, as in the 
present case, the Canadian firm was a planned producer of the items 
being procured.  See also F.J. O'Hara & Sons, Inc., 69 Comp. Gen. 274 
(1990), 90-1 CPD  para.  197.

The protest is denied.

Comptroller General 
of the United States

1. Pursuant to the Defense Federal Acquisition Regulation Supplement 
(DFARS),  sec.  225.870-3 (DAC 91-3), contracts with Canadian firms 
generally are to be made with the CCC, which then subcontracts 
performance of the contract to a specific firm.  In this case, CCC's 
proposed subcontractor is Freeze-Dry.

2. DPSC is a field activity of the Defense Logistics Agency (DLA).

3. DFARS  sec.  252.225-7012 implements the Berry Amendment, which has been 
included in annual Defense Appropriations Acts since 1941, and 
generally prohibits the purchase of foreign products for items listed 
therein.  The Berry Amendment is presently codified at 10 U.S.C.  sec.  
2241 note (1994).  

4. Diced chicken and dehydrated beef patties are not among the items 
listed.

5. In an affidavit submitted with the protest report, the contracting 
officer attests that he specifically informed Freeze-Dry on two 
separate occasions during negotiations that its offer was ineligible 
for award and would remain ineligible unless the firm revised the 
offer to subcontract with a U.S. contractor.  The contracting officer 
also states that Freeze-Dry's representative indicated that it would 
not subcontract with a U.S. firm, but would instead pursue waiver of 
the Berry Amendment.  Freeze-Dry denies that it was ever expressly 
advised during discussions that its offer was ineligible.  Freeze-Dry 
does not argue here that it would have changed its offer if it had 
been so informed.   

6. We note that there is some language in the legislative history of 
the Berry Amendment indicating congressional intent that Defense 
agencies should exercise extreme caution in granting waivers.  See 
Dash Eng'g, Inc.; Engineered Fabrics Corp--Recon., B-246304.12; 
B-246304.13, Sept. 27, 1993, 93-2 CPD  para.  184.