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Guest carl r culham

Don - Thanks I guess in my haste I forgot how to spell as I looked but overlooked the definition.

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Don - Thanks I guess in my haste I forgot how to spell as I looked but overlooked the definition.

Gents, I know what a commercial item is. Most all emergency life safety systems such as fire protection systems are composed of standard components that are individually considered commercial items.

While The fire alarm control panels are usually custom built for the project, they are made up from standard components.

So, if all such systems would be considered to be COTS, and if there is no requirement to quantify the portion of domestic and non-domestic "items" or "components" for a system that is COTS, how would anyone be able to determine if the system is domestic or not?

Yes, I know that items manufactured in "qualified countries" count as domestic items, when Trade Acts are applicable.

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Joel,

I think the whole point of this topic is how you apply the standard Buy American Act test to emergency systems, since they are treated as single items. If a fire alarm system could meet the COTS definition (and I doubt it), then the component test is waived, and the item (system) only needs to meet the "manufactured in the US" part of the test. See the definition of domestic construction material at FAR 25.003. That brings us back to the original question, which is how and where a "system" is manufactured for purposes of the BAA test. I maintain that the system, as a single item of construction material per the definition, is "manufactured" where it is assembled and installed in a building.

Yes, that is somewhat artificial, but how else do you apply the BAA test to a system, since the definition of construction material tells you to look at the system as a single item?

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This was the original question:

[W]hat happens if the assembled product is viewed as a COTS product? In that case, you don't care about the cost of the components test. What test do you apply then?

I think Ron has given the correct answer, assuming that the system is COTS. The question is where was it manufactured. This is what the GAO had to say in TRS Research, B-285514, August 7, 2000, 2000 CPD ? 128:

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 ? 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 ? 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. ? 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 ? 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).

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Under Ron's approach, the manufacturing takes place at the construction site. If that's the right answer and if the item is COTS, it would allow you to use 100% Chinese parts because the manufacturing took place in the US. I can't imagine that's the intended result.

On the other hand, that approach seems to make sense for a non-COTS system -- you have to provide domestic components that exceed 50% of the cost of all the components and you manufacture those components into the system at the site. But, I can't think of any basis to use different approaches to Buy American compliance for COTS and non-COTS items.

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Just to be clear, I'm not saying that the place of manufacture of each product is considered to be the construction site. I'm saying that for purposes of the BAA test, the place of manufacture of the system has to be considered the construction site. I think we are forced into that becuase of how an entire system is defined as a single item, and that item has to be manufactured somewhere for purposes of the BAA test.

I also think it would be rare for an entire emergency safety system, treated as a single item, to meet the COTS definition. The individual products in that system are likely to be COTS, but I doubt that a whole system, piece for piece, would be the same as another. The FAR COTS definition requires the item to be the same, without modification, as one sold commercially.

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Just to be clear, I'm not saying that the place of manufacture of each product is considered to be the construction site. I'm saying that for purposes of the BAA test, the place of manufacture of the system has to be considered the construction site. I think we are forced into that becuase of how an entire system is defined as a single item, and that item has to be manufactured somewhere for purposes of the BAA test.

I also think it would be rare for an entire emergency safety system, treated as a single item, to meet the COTS definition. The individual products in that system are likely to be COTS, but I doubt that a whole system, piece for piece, would be the same as another. The FAR COTS definition requires the item to be the same, without modification, as one sold commercially.

Then I will disagree with Ron. I think that if a system is rarely a COTS item, then one can determine how much of its previously manufactured components are "domestic" for a determination that the overall system is domestic. That determination can be made from the quantities of materials and equipment estimated to be needed for the construction installation. If you have a fire alarm control panel, X horns, Y speakers, Z feet of wire, CC sensors and detectors, FF feet of pipe. NN fittings, UU hangars, RR sprinkler heads, etc. I don't think it involves rocket science to determine whether the "system" composed of the various manufactured components is domestic or not.

As for a COTS system composed of various components gathered from various sources, I dont know. i suppose it depends upon the circumstances and whether or not one can tell where the COTS system was assembled, manufactured, or whatever, for delivery to the site for installation.

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Under Ron's approach, the manufacturing takes place at the construction site. If that's the right answer and if the item is COTS, it would allow you to use 100% Chinese parts because the manufacturing took place in the US. I can't imagine that's the intended result.

On the other hand, that approach seems to make sense for a non-COTS system -- you have to provide domestic components that exceed 50% of the cost of all the components and you manufacture those components into the system at the site. But, I can't think of any basis to use different approaches to Buy American compliance for COTS and non-COTS items.

Let's not go down the road to "intended results," because that's going to take us to nowhere. Let's just read the FAR.

If I understand FAR Part 25 correctly, and I'm not sure that I do, COTS items do not have to meet the 50 percent domestic component test for a domestic end product. The exemption is statutory. See FAR 25.101(a)(2) and 25.200(a)(3). That, as I understand it, is the basis for using different approaches to Buy American compliance for COTS and non-COTS, and leaves only the "manufactured in the United States" test.

Am I wrong? Have I missed your point?

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That's correct. A COTS item does not need to meet the component test. It only needs to be "manufactured" in the US.

However, the COTS issue is a side issue from the original question. The complication that started this topic is how to apply the BAA tests to an emergency system, which is treated as a single item. If an entire fire alarm system is one item, where is that "item" manufactured? I haven't yet heard anyone unequivocally agree that it is the construction site, so if it's not the construction site, then where is it?

Where this gets interesting is in the FAR's implementation of the Recovery Act at clauses 52.225-21 through 24. The FAR carried forward its definition of construction material, and an emergency system as a single item. The Recovery Act has no component test, so it only asks where the item of construction material was manufactured. If a system's place of manufacture is the construction site, and that site is in the US, then all emergency systems are automatically compliant. Note that this only works under the FAR's definition of construction material, not for anything else funded by the Recovery Act.

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Then the question is whether assembly would constitute "manufactured." A half-baked review of the case law suggests that the answer is no unless the components were "substantially transformed" during the assembly process. Most of the case law is from GAO, which means that it's all over the map, but there is an interesting discussion in U.S. v. Rule Indus., Inc. et al., 879 F.2d 535 (C.A. 1, 1989), which has been frequently cited.

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Thanks, but Rule concerns a single product and is inapplicable to our discussion (btw, it's 878 F2d). The question here is where is a system, that may consist of several if not hundreds of individual products, manufactured? To use our fire alarm system again, a smoke detector is a single product. If this was a supply contract, that product by itself would have to meet the BAA domestic test. But under the FAR definition of construction material, the entire system, consisting of smoke detectors, alarms, annunciators, strobes, control panels, etc. is "evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site."

Where is that system, consisting of all of those parts, manufactured?

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Thanks, but Rule concerns a single product and is inapplicable to our discussion (btw, it's 878 F2d). The question here is where is a system, that may consist of several if not hundreds of individual products, manufactured? To use our fire alarm system again, a smoke detector is a single product. If this was a supply contract, that product by itself would have to meet the BAA domestic test. But under the FAR definition of construction material, the entire system, consisting of smoke detectors, alarms, annunciators, strobes, control panels, etc. is "evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site."

Where is that system, consisting of all of those parts, manufactured?

If you are making a distinction between a system comprised of individual items and what you call a "single product," I don't think you can do it. The rule about "emergency life safety systems" is in the definition of construction material, which means "an article, material, or supply." The purpose of the rule is to make the system of components "a single and distinct construction material." I see no distinction between a system and what you call a "single product." A "single product" may consist of several if not hundreds of separately manufactured individual products.

Again, the question is whether assembly, by itself, constitutes being "manufactured." According to Formation of Government Contracts 3d, at 1483, the test of being manufactured is "whether the operations performed on the foreign items create a basically new material or result in a fundamental change in the item." The authors cited A. Hirsch, Inc., Comp. Gen. Dec. B-237466, 90-1 CPD ? 247.

I understand your argument, and I like it, but the question remains. You can now either continue to assert, without support, or you can produce something in support that is persuasive. Do you have anything? If not, then the question remains open. How about Hamilton Watch Co., Inc., Comp. Gen. Dec. B-179939, 74-1 CPD ? 306 (watch made of foreign parts assembled in U.S. Virgin Islands considered manufactured in U.S.)?

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I definitely see a difference between a single product and a system, and I think it has an impact on how you evaluate construction material when it is a system that is treated as a single item.

A single product, as most construction material is, is either manufactured, or gets its final assembly, in one place. It is composed of components that generally are not completed, usable items on their own. They are boards, cases, wiring, screws, connectors, flanges, etc. They have no stand-alone function other than as components of something else. In fact the definitions of "manufactured" and "substantially transformed" include the concept of the components being changed into something that is different in form and function. Short version: components go into one end of the factory; finished product comes out the other end.

A system, on the other hand, is composed mostly of products that are finished, stand-alone products on their own. They are smoke detectors, alarms, control boxes, panels, etc. They come from many different factories as finished products, and they do not come together until they reach a construction site. Furthermore, they don't come together in the sense of a product in a factory. They are connected by wires across all the rooms and locations in a building.

The FAR treats this system as a single item, a product. Logically, it is no more a single item than an electric grid is a single item, even though every part is connected to the rest by wires. Concentually though, if you look at the building as the factory, and the connection and wiring as the assembly, then that item, the system, was manufactured at the site. Furthermore, the components of that single item, the system, are the individual products that go into it. If at least 50% of those products, by cost, were made in the US, then the system has met the rest of the BAA test.

My authority? I searched bid protest cases for any references to "emergency life safety system"? None. I also searched board and claims court cases. None. I'm left with the FAR's definition, and what I believe are the conclusions you have to draw from it.

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My authority? I searched bid protest cases for any references to "emergency life safety system"? None. I also searched board and claims court cases. None. I'm left with the FAR's definition, and what I believe are the conclusions you have to draw from it.

You don't have to draw any such conclusions from the FAR definition. You're drawing that conclusion because you want to, and your reasoning, while interesting, is not compelling. As I said, I am supportive, but I am not fully persuaded. We may have to leave it at that.

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"quote 'ron vogt' Jul 2 2010, 05:31 PM post='5627'

"...A system, on the other hand, is composed mostly of products that are finished, stand-alone products on their own. They are smoke detectors, alarms, control boxes, panels, etc. They come from many different factories as finished products, and they do not come together until they reach a construction site. Furthermore, they don't come together in the sense of a product in a factory. They are connected by wires across all the rooms and locations in a building.

The FAR treats this system as a single item, a product. Logically, it is no more a single item than an electric grid is a single item, even though every part is connected to the rest by wires"

"...Furthermore, the components of that single item, the system, are the individual products that go into it. If at least 50% of those products, by cost, were made in the US, then the system has met the rest of the BAA test."

Yes - if 50% of the manufactured products that go into the system were made in the US, then the ststem has met the rest of the BAA test.

These products are not substantailly transformed into anything different than what they were when they arrived at the construction site. A horn blows, a controller controls, a wire carries amperage, a smoke detector detects smoke, a heat detector detects heat, a hangar hangs things, a pipe carries foam, water or gas, screws and bolts screw into stuff and bolt things together.

The difference is that the individual manufactured parts now are considered a system, no matter what configuration they are in when they arrive at the site. "If at least 50% of those (already manufactured) products, by cost, were made in the US, then the system has met the rest of the BAA test."

Why make it so dadgummed difficult? It isn't extensively difficult to calculate for compliance using the above concept.

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Thank you Joel, that is exactly what I have been getting at. It just got sidetracked by discussions on COTS and other things. Also, it didn't seem like some agreed with the concept.

There may not be definitive proof in the way of GAO and board cases, but if a CO accepts it at a site, I'm not looking for more. I am happy to agree with Vern and "leave it at that."

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Thank you Joel, that is exactly what I have been getting at. It just got sidetracked by discussions on COTS and other things. Also, it didn't seem like some agreed with the concept.

There may not be definitive proof in the way of GAO and board cases, but if a CO accepts it at a site, I'm not looking for more. I am happy to agree with Vern and "leave it at that."

Ron, I think the primary difference between a an "life safety system" and individual items is that the system is accepted or rejected on a system basis vs. accepting or rejecting individual items used for other construction purposes.

But, if certain items cause a life safety system to be rejected as non-domestic, the contractor might be able to substitute a domestic product to achieve the necessary conditions for acceptability.

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For the record, I thought that our most recent discussions were about the life safety system as COTS.

At the risk of dragging this thread on, (hopefully not), I'll say that I wasn't discussing a COTS life safety system. Like I said earlier, I don't have a pat answer for evaluating such a system and would have to look at each situation as it arose. :huh:

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.

I imagine that he exception for life safety systems was added to the definition of what "construction material" means on behalf of a specific "foreign" manufacturer. I'm guessing that manufacturer is Staefa Systems.

Somehow, this looks to open up enough debate that their products will be able to be brought together into a system that is technically American manufactured.

.

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