TITLE:  TRS Research, B-283342, November 4, 1999
BNUMBER:  B-283342
DATE:  November 4, 1999
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TRS Research, B-283342, November 4, 1999

Decision

Matter of: TRS Research

File: B-283342

Date: November 4, 1999

Robert G. Fryling, Esq., and Edward J. Hoffman, Esq., Blank Rome Comisky &
McCauley, for the protester.

Col. Nicholas P. Retson and Maj. Ralph J. Tremaglio, III, Department of the
Army, for the agency.

Jacqueline Maeder, Esq., and Paul I. Lieberman, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

Under small business set-aside, agency properly rejected quotation which
indicated that the vendor would supply foreign-made end item because such
set-asides are restricted to sources supplying domestically produced
products.

DECISION

TRS Research protests the rejection of its quotation under request for
quotations (RFQ) No. DABT51-99-Q-0193, issued by the Department of the Army
for certain freight containers. The agency rejected TRS's quotation because
it indicated noncompliance with the requirement that all end items furnished
be manufactured or produced by a small business concern within the United
States.

We deny the protest.

The RFQ was issued as a small business set-aside for 74 steel dry freight
containers [1] under the streamlined commercial acquisition procedures set
forth in Subpart 12.6 of the Federal Acquisition Regulation (FAR), using a
combined synopsis/solicitation which was posted on the Commerce Business
Daily Net on March 29, 1999. As amended, the RFQ provided that the Buy
American Act applied to the procurement and required that firms provide a
unit and total price for the containers. RFQ amend. 3, at 2. The amended
solicitation also incorporated the clause at FAR sect. 52.212-3, captioned
"Offeror Representations and Certifications – Commercial Items," which
requires the vendor to certify its status as a small business, and the
provisions at Defense Federal Acquisition Regulation Supplement (DFARS)
sect. 252.225-7000, which implement the Buy American and Trade Agreements Acts.

The agency received 12 quotes, including 3 from TRS, by the amended July 2
due date. Contracting Officer's Statement at 1. TRS's first quote, dated May
25, offered 74 containers manufactured in China and its second quote, dated
June 25, offered 74 containers manufactured in Turkey. The protester's third
quote, also submitted on June 25 and labeled "Alternate Bid # 1," offered 24
containers manufactured in Turkey, with the remaining 50 containers
manufactured at an unspecified location. This last quote stated that the 50
units of unspecified origin "shall be once used containers significantly
transformed with more than 51% U.S. content and effort thus qualifying [as]
domestic end units." Agency Report, Tab 6, TRS Quotation at 1.

By e-mail dated July 13, the agency requested that the protester certify
that its overseas supplier was a small business and also requested
information regarding TRS's statement that it would "significantly
transform" 50 of the required 74 containers so that the units would qualify
as domestic units. Agency Report, Memorandum from Agency to TRS 1 (July 13,
1999). The agency noted that for small business set-asides, such as this,
FAR sect. 19.502-2(c) requires that any firm proposing to furnish a product that
it did not itself manufacture must furnish the product of a small business
manufacturer and referenced FAR sect. 19.102(f), which requires that
nonmanufacturer suppliers in small business set-asides must furnish "the
product of a small business manufacturer or producer, which end product must
be manufactured or produced in the United States." FAR sect. 19.102(f)(1). Under
the regulation, a manufacturer of the end item being acquired is defined as
the concern which, with its own forces, transforms inorganic or organic
substances including raw materials and/or miscellaneous parts or components
into such an end item. Id.

By memorandum dated July 16, TRS responded that it purchased containers
"originally manufactured in foreign countries" and shipped the containers to
a U.S. small business remanufacturing facility. Agency Report, Tab 20,
Memorandum from TRS to Agency 1 (July 16, 1999). TRS explained that:

The remanufacturing facility removes the previous [owner's] markings and
decals, pre-masks the weight panels, serial numbers and all required
[Industrial Standards Organization] ISO markings, straightens any possible
dents, steam cleans [where] necessary, sand blasts any [possible] surface
rust which may have occurred in transportation or handling, then paints the
unit, thus providing TRS with a conforming, completed container pursuant to
your specification in the solicitation which is a domestic end product. This
end product consists of more than 51% U.S. product, effort, and content
inclusive of transportation from our source in the U.S. to the point of
final assembly of this domestic end product.

Id.

The agency determined that TRS's quotations were unacceptable because TRS
offered containers which were not manufactured or produced by a small
business concern within the United States, as required by the small business
set-aside regulations. The agency issued a purchase order to Sea Box as the
low-priced acceptable vendor and this protest followed.

TRS complains that the procurement is "irretrievably flawed" since the Army
issued the solicitation as a small business set-aside, and included the Buy
American Act provisions in the RFQ, but failed to analyze the quotations in
accordance with both the Buy American Act and the requirements of small
business set-asides. Protester's Supplemental Comments at 5. TRS argues that
the agency improperly rejected its quotation since it proposed to
"remanufacture" 50 containers and this remanufacturing effort would
transform the units into domestic products under the Buy American Act.
Protester's Comments at 2. Thus, TRS contends that its quotation met the
small business and the Buy American Act requirements of the solicitation.

The protester's argument is without merit. As noted above, the regulations
require that only domestically produced products be furnished under all
small business set-asides where a contract is awarded or a purchase order is
issued to a non-manufacturer. FAR sect. 19.102(f)(1); Kaysam Worldwide, Inc.,
B-247743, June 8, 1992, 92-1 CPD para. 500 at 2; Bulloch Int'l, Inc., B-237369,
Feb. 5, 1990, 90-1 CPD para. 153 at 3, recon. denied, B-237369.2, Apr. 10, 1990,
90-1 CPD para. 377. Consequently, a contracting activity may not properly
purchase a foreign-made product from a domestic small business supplier
under such a procurement vehicle. Kaysam Worldwide, Inc., supra.

Here, TRS properly was found to be ineligible for award because the three
quotations that it submitted offered to supply freight containers which are
foreign-made. Specifically, TRS's first two quotes offered containers from
China and Turkey, respectively, and are unacceptable. The protester's third
quotation offered 24 containers from Turkey and offered to "remanufacture"
50 containers, which as noted above, TRS stated were "originally
manufactured in foreign countries." Agency Report, Tab 20, supra. The 24
containers from Turkey are foreign-made and unacceptable, and TRS's proposed
"remanufacturing" of the 50 remaining foreign-made containers does not allow
TRS to satisfy the definition of a manufacturer under FAR sect. 19.102(f)(1),
which requires that a business concern transform inorganic or organic
substances, including raw materials, and/or miscellaneous parts or
components into the end item. Attaching corner protectors, steam cleaning,
straightening dents, and repainting do not meet this requirement. Moreover,
although the RFQ referenced the Buy American Act and TRS argues that its
remanufactured containers satisfy the domestic product definition under the
Buy American Act, this does not constitute satisfying the relevant, more
stringent requirement under this small business set-aside. As noted above,
the small business set-aside restrictions do not permit an agency to issue
an order for a foreign product. Thus, even though the Buy American Act was
incorporated in the solicitation, the fact that the procurement was a small
business set-aside put recipients on notice that only quotations providing
domestically produced products could be considered for award. Accordingly,
TRS's quotations were properly rejected as noncompliant by the agency.

TRS also challenges the evaluation of Sea Box's quotation, alleging that Sea
Box's quote also did not comply with the small business set-aside
restrictions and therefore should have been rejected. We will not consider
this issue since, under our Bid Protest Regulations, a party is not
interested to maintain a protest if it would not be in line to be issued a
purchase order were the protest sustained. 4 C.F.R. sect.sect. 21.0(a), 21.1(a)
(1999); Peterson Constr. Co., B-256841, Aug. 3, 1994, 94-2 CPD para. 55 at 4.
Since TRS's quotation was properly determined to be unacceptable and there
is another acceptable vendor besides Sea Box [2] that would be issued the
purchase order even if this protest ground were sustained, TRS is not an
interested party to challenge the issuance of a purchase order to Sea Box.

The protest is denied.

Comptroller General

of the United States

Notes

1. The solicitation contained detailed requirements regarding the containers
including, for example, construction materials, dimensions, corner castings,
floor, roof and side panel requirements, and paint and sealant requirements.

2. While TRS purports to challenge the acceptability of this second vendor,
the protesters arguments lack the specificity required to form a valid basis
of protest under our Bid Protest Regulations. 4 C.F.R. sect. 21.1(c)(4).
Specifically, TRS argues only that this second vendor "may have been"
unacceptable and that "there is no adequate support" for the agency's
assertion that this second vendor would be issued the purchase order if Sea
Box's quotation were unacceptable. Protester's Supplemental Comments at 3
n.1. This speculative general allegation provides no valid basis to call
into question the agency's determination that this vendor submitted an
acceptable quotation.