BNUMBER:  B-275643
DATE:  March 11, 1997
TITLE:  Goddard Industries, Inc.

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Matter of:Goddard Industries, Inc.

File:     B-275643

Date:March 11, 1997

Gary Goddard for the protester.
Richard A. Couch, Esq., and Vera Meza, Esq., Department of the Army, 
for the agency.
Wm. David Hasfurther, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Sole source procurement was proper where it involved a foreign 
military sale and the foreign government on whose behalf the 
procurement was conducted requested purchase from the specified 
source.

DECISION

Goddard Industries, Inc. protests a sole source procurement of M151 
vehicle spare parts by the U.S. Army Tank-Automotive and Armaments 
Command on behalf of the Republic of the Philippines (ROP).  Goddard 
contends that the procurement should have been conducted 
competitively. 
 
We deny the protest.

The procurement involves a foreign military sale (FMS) conducted under 
the Arms Export Control Act.  22 U.S.C.  sec.  2751-2799aa-2 (1994).  The 
Act authorizes the Department of Defense, acting as an agent for a 
foreign country and using funds of that country that have been 
deposited in the FMS Trust Fund Account, to enter into contracts for 
purposes of resale to foreign countries.  The Competition in 
Contracting Act of 1984, which generally requires agencies to obtain 
full and open competition through the use of competitive procedures, 
exempts procurements from competition where "written directions of a 
foreign government reimbursing the agency for the cost of the 
procurement of the property or services for such government, have the 
effect of requiring the use of procedures other than competitive 
procedures."  10 U.S.C.  sec.  2304(c)(4) (1994); Pilkington Aerospace, 
Inc., B-260397, June 19, 1995, 95-2 CPD  para.  122; Optic-Elec. Corp., 
B-235885, Oct. 6, 1989, 89-2 CPD  para.  326.  The Federal Acquisition 
Regulation (FAR) reiterates this exemption and provides for its use in 
circumstances such as "[w]hen a contemplated acquisition is to be 
reimbursed by a foreign country that requires that the product be 
obtained from a particular firm as specified in an official written 
direction such as a Letter of Offer and Acceptance [LOA]."  FAR 
 sec.  6.302-4(b)(1).

The record shows that the Armed Forces of the Philippines (AFP) 
requested in writing that the United States Government cancel a prior 
initiated purchase of M151 spare parts, that an LOA be obtained, and 
that Red River Parts and Equipment Co. be designated as the sole 
source supplier for the spare parts.  The AFP further stated that Red 
River is an accredited supplier of the parts and can provide the parts 
packaged as required for integration into the inventory of the AFP, 
can quickly supply the parts within the time frames required, and has 
an exclusive distributor in the Philippines which can give immediate 
warranty support and any technical assistance or training needed.  An 
LOA was issued under which the United States government agreed to sell 
the ROP these spare parts.  The purchase is being funded with 
$1,105,643 of military assistance funds, which are available from the 
canceled purchase, and with an FMS credit of $281,479.

Goddard does not dispute that the ROP requested that the United States 
Government obtain the parts on a sole source basis as part of an FMS; 
Goddard argues that the sole source purchase is improper, however, 
because the United States government and not the ROP is financing the 
purchase using MAP funds.  Goddard thus asserts that this procurement 
does not qualify as one for which the cost is "reimbursed" by a 
foreign country under CICA and the implementing regulations.  

We have addressed this precise issue previously.  The Foreign 
Assistance Act, 22 U.S.C.  sec.  2311(a)(3) (1994), specifically permits 
transfer of military assistance funds to a country's FMS trust account 
for use in meeting the obligations of that FMS customer arising from 
purchases made under the Arms Export Control Act.    Once funds are 
deposited in a foreign country's account to be used to meet the 
obligations of the FMS customer, FMS rules and procedures apply, 
including the honoring of a customer's designation of a sole source 
supplier as provided for in FAR  sec.  6.302-4.  Optic-Elec. Corp., supra; 
International Logistics Group, Ltd.,
 B-214676, Sept. 18, 1984, 84-2 CPD  para.  314.  Accordingly, there is no 
basis to object to the  agency's actions here.

The protest is denied.[1]

Comptroller General
of the United States 

1. Goddard also argues that the LOA does not include certain delivery, 
warranty, and other terms which ROP initially specified in its 
request.  Since these terms would at best require only modifications 
of the LOA and do not affect the legality of the sole source award to 
Red River, we need not address these matters since Goddard cannot 
compete in any event.  See  EEV, Inc., B-261297; B-261297.2, Sept. 11, 
1995, 95-2 CPD  para.  107.