TITLE:  TRS Research, B-285514, August 7, 2000
BNUMBER:  B-285514
DATE:  August 7, 2000
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TRS Research, B-285514, August 7, 2000

Decision

Matter of: TRS Research

File: B-285514

Date: August 7, 2000

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

Col. Nicholas P. Retson, and Raymond M. Saunders, Esq., Department of the
Army, for the agency.

Aldo A. Benejam, Esq., and Christine S. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.

DIGEST

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.

DECISION

TRS Research protests the agency's determination under request for
quotations (RFQ) No. DAMT01-00-T-0016, issued by the Department of the Army
for cargo containers, that TRS's containers are not domestic end products
eligible for an evaluation preference pursuant to the Buy American Act,
41 U.S.C. sect.sect. 10a-10d (1994).

We deny the protest.

The RFQ was issued on an unrestricted basis for 18 used ammunition-grade
cargo containers 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 May 10, 2000. See FAR sect. 12.603(a); Agency Report (AR) exh. 3.
The RFQ required that the containers be designed to facilitate the
transportation of hazardous/explosive cargo by road, rail, and sea, and
contained detailed specifications including, for instance, dimensions,
construction materials, primary structural components (e.g., flooring,
corner fittings, corner posts, door sill and header, top and bottom end
rails, and forklift pockets), and paint. AR exh. 3, RFQ, at 2. The RFQ also
contained FAR sect. 52.225-3, which implements the Act by providing an
evaluation preference for domestic end products. [1]

The agency received quotes from five firms, including two from TRS, by the
May 18 due date. In its first quote, TRS stated that the major components of
the containers were produced in China, then shipped to the United States and
purchased by TRS in scrap condition. AR exh. 6, TRS Quotation, at 1. TRS
also stated in that quote that the new product "shall contain more than 51%
domestic content and effort," and that, therefore, "this product [is] a
newly manufactured US domestic end product." Id. In its second quote, TRS
stated that the offered containers were manufactured in China, then shipped
to the United States with cargo and purchased by TRS. AR exh.6, TRS
Alternate Quotation, at 1.

The contracting officer (CO) concluded that the foreign-made containers TRS
offered were not domestic end products eligible for an evaluation preference
pursuant to the Act. In fact, the CO determined that none of the vendors
offered a domestic end product, and issued a purchase order to CIR-NAV
Agencies, Inc. as the low-priced, acceptable vendor. AR exh. 1, CO's
Statement, para. 5, at 2-3. This protest followed.

TRS argues that the agency improperly determined that the foreign containers
it offered were not domestic products since it refurbishes the containers in
the United States to make them compliant with the RFQ requirements, thus
transforming the containers into domestic end products. In this connection,
TRS states that the refurbishing includes replacing top rails and side
panels, straightening dents, replacing cross member and/or forklift pockets
as required, undercoating bases and undercarriage, and replacing flooring
and roof panels. Protest at 2-3. TRS maintains that its refurbishing effort
constitutes "manufacturing" in the United States for purposes of applying
the Act's evaluation preference.

The Act restricts the purchase of supplies that are not domestic end
products. For manufactured products, the DFARS uses a two-part test to
define a "domestic end product" for purposes of the Act. Under that test, to
qualify as domestic, an end product (1) must be manufactured in the United
States, and (2) the cost of its domestic components must exceed 50 percent
of the cost of all its components. DFARS sect. 225.105(5)(i); see also FAR
sect. 25.101; Computer Hut Int'l, Inc., B-249421 et al., Nov. 23, 1992, 92-2 CPD
para. 364 at 4. Here, we think that the agency properly determined that the
containers TRS proposed were not domestic products. As explained below, the
"refurbishing" actions TRS describes do not constitute manufacturing, and
are insufficient to render the containers domestic end products for purposes
of applying the Act's evaluation preference.

The term "manufacture" means completion of the article in the form required
for use by the government. General Kinetics, Inc., Cryptek Div., B-242052.2,
May 7, 1991, 91-1 CPD para. 445 at 7. We have recognized that minimal operations
such as assembly of certain components may constitute manufacturing for
purposes of the Act, where they are necessary for the product to meet the
operational or performance requirements of the solicitation. See, e.g.,
Saginaw Machine Sys. Inc., B-238590, June 13, 1990, 90-1 CPD para. 554 at 4. We
have explained, however, that limited domestic assembly or manufacturing
operations which do not alter the essential nature of a component which is
the core or essence of the end product being procured may not be used to
circumvent the plain requirement of the Act that the end product be
manufactured "substantially all" from domestic articles, material or
supplies. 41 U.S.C. sect. 10a; General Kinetics, Inc., Cryptek Div., supra, at
9. In General Kinetics, Inc., Cryptek Div, a case relied upon by TRS, we
found that the essential nature of a Japanese commercial fax machine was
unchanged by the relatively limited domestic manufacturing operations
performed on it. In that case, although the awardee took certain steps to
make the machine conform to the solicitation requirements, we found that
those steps--the disassembly, removal of a circuit board and replacement of
memory chips, and reassembly in the United States--did not change the
essential function of the unit as a fax machine, nor did they appear
significant with respect to the level of effort and materials required. We
thus concluded that the core component of the end product being procured--a
fax machine--remained a foreign manufactured component. Id.; see also Ampex
Corp., B-203021, Feb. 24, 1982, 82-1 CPD para. 163 at 5 (disassembly,
substitution of parts, and reassembly of a foreign video recorder base unit
did not change the fact the base unit was a foreign-made component of the
overall video recorder system being procured by the agency).

We reach a similar conclusion here. Replacing wooden floors, side panels, or
straightening dents, as needed for some of the containers, and repainting to
comply with the RFQ requirements, do not constitute assembly of components
or "manufacturing" operations, as the protester would have us conclude,
since these refurbishing measures do not in any way transform or alter the
essential nature of the containers being procured here. General Kinetics,
Inc., Cryptek Div., supra. Since the refurbishing actions performed in the
United States do not constitute

"manufacturing," we conclude that the agency reasonably determined that
TRS's containers were not domestic end products eligible for an evaluation
preference under the Act.

The protest is denied.

Robert P. Murphy

General Counsel

Notes

1. The preference is implemented by adding, for evaluation purposes only, a
specified percentage premium to the price of the foreign item--either 6 or
12 percent for civilian agency procurements, FAR sect. 25.105(a), and 50 percent
for Department of Defense procurements, such as the one at issue here.
Defense FAR Supplement (DFARS) sect. 225.105.