B-309982, Pacific Lock Company, October 25, 2007

B-309982 Oct 25, 2007 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Pacific Lock Company (PLC) protests the rejection of its proposal from the competitive range under request for proposals (RFP) No. SPM5L5-07-R-0056, issued by the Defense Logistics Agency (DLA), Defense Supply Center Philadelphia (DSCP), to purchase low security padlocks and padlock sets. PLC contends that the agency failed to use the proper criteria in determining that its products were not "U.S.-made end-products," as required by the RFP. We deny the protest. View Decision B-309982, Pacific Lock Company, October 25, 2007 DOCUMENT FOR PUBLIC RELEASE The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release. Decision Matter of: Pacific Lock Company File: B-309982 Date: October 25, 2007 James H. Roberts, III, Esq., Van Scoyoc Kelly PLLC, for the protester. Nicole E. Goldstein, Esq., Edward H. Meyers, Esq., and Robert S. Ryland, Esq., Kirkland & Ellis LLP, an intervenor. Robert L. Mercadante, Esq., Defense Logistics Agency, for the agency. Paula J. Haurilesko, Esq., and Ralph O. White, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protestor's allegation that the agency failed to apply the proper criteria in determining that protestor's offered padlocks did not comply with the solicitation's requirement for U.S.-made locks is denied where the agency reasonably concluded that a lock consisting of components made in China but assembled in the United States did not meet the requirements of the Trade Agreements Act. DECISION Pacific Lock Company (PLC) protests the rejection of its proposal from the competitive range under request for proposals (RFP) No. SPM5L5-07-R-0056, issued by the Defense Logistics Agency (DLA), Defense Supply Center Philadelphia (DSCP), to purchase low security padlocks and padlock sets. PLC contends that the agency failed to use the proper criteria in determining that its products were not –U.S.-made end-products,— as required by the RFP. We deny the protest. The RFP, issued on February 5, 2007, contemplated the award of one or more fixed-price, indefinite-quantity contracts for low security padlocks and padlock sets. RFP at 1, 7, and 55. The solicitation required offerors to provide –U.S.-made, qualifying country, or designated country end products...—[1] RFP at 79. The solicitation also incorporated the clause at DFARS 232.225-7021(a)(12), which provides that U.S.-made end product means an article that -- (1) Is mined, produced, or manufactured in the United States; or (2) Is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. RFP at 35.[2] [Emphasis added.] PLC and three other companies submitted offers in response to the solicitation. Agency Report (AR) at 10. The other three companies indicated that their parts were manufactured in the United States, Germany, and Mexico, respectively. Id.PLC's proposal was less clear about where its locks would be made; the initial proposal advised only that PLC was relocating its manufacturing operations from China to the United States, leaving the agency uncertain about whether the company intended to provide a U.S.-made end product. AR, Tab 6, Proposal. In response to a request for clarification from the agency, PLC advised that all of the components used in its locks would be manufactured in China and assembled in the United States, and provided cost information. AR, Tab 12, PLC letter, May 3, 2007, at 2, 5, and 7. In evaluating PLC's proposal, the contracting officer looked to prior determinations by the Bureau of Customs and Border Protection, Office of International Trade (OIT), and particularly to one OIT determination addressing four scenarios for manufacturing locks. AR at 6. In two of these scenarios, OIT found that substantial transformation did not occur where locking devices were assembled in the United States from imported parts. TydenBrammall, 41 Cust. B. & Dec. No. 10 at 8, (Feb. 28, 2007) at 4, 5. In the other two scenarios, locking devices were assembled in the United States, and domestic parts comprised a significant portion of the lock or a significant percentage of the total cost, leading OIT to conclude that the locking devices were substantially transformed. Id. at 4, 6. Based on its review of the OIT decision and the materials provided by PLC, DLA found that PLC's plan to use components made in China but assembled in the United States did not meet the requirement for a U.S.-made end product. AR at 6. DLA notified PLC by letter that its proposal had been rejected.