In view of the fact that section 412 (a) was addressed to "officers *** specially commended for their performance of duty" in actual combat, the conclusion appears warranted that such commendation must relate to service performed as an officer. In any event, its benefits apply only when he is retired as an officer. Apparently, Lieutenant Russell served as an enlisted man during World War I and it is our view that he was retired as an enlisted man.

The Correction Board's action in this case was based on an opinion by the Judge Advocate General of the Navy that Lieutenant Russell could be legally advanced to the rank of lieutenant commander under section 412(a). That conclusion apparently was based on the view that 31 Comp. Gen. 54, 58, applies only where a permanent enlisted member, serving under a temporary commission, was "retired in enlisted grade," and that such retired enlisted man's advancement on the retired list upon his return to an inactive status under section 10 of the act of July 24, 1941, as amended, 34 U.S.C. 350i (1952 Ed.), was not a retirement such as would permit an advancement on the retired list as authorized to "officers *** when retired" under section 412(a) of the 1947 act. While Lieutenant Russell had not been placed on the retired list prior to his release from active duty in May 1946, he was retired as an enlisted man and we view the ruling in 31 Comp. Gen. 54-58, as being equally applicable to his situation. Compare 26 Comp. Gen. 5.

In the recent case of Jones v. United States, Ct. Cl. No. 300-56, decided October 5, 1960, the court held that a retired enlisted man who was promoted to a temporary commissioned grade under the act of July 24, 1941, after being recalled to active duty, was "re-retired" upon his release to inactive duty and that although he was advanced on the retired list to his commissioned grade, he actually was re-retired as an enlisted man and hence, was not an "officer *** hereafter retired" within the meaning of the fourth paragraph of section 15 of the Pay Readjustment Act of 1942, 56 Stat. 368, 37 U.S.C. 115. In view of that holding, we see no basis for a conclusion that Lieutenant Russell is one of the "officers" who are entitled to the benefits of section 412(a) of the 1947 act "when retired." He was not retired as an officer but was placed on the retired list under provisions of the 1938 act relating to enlisted men.

While 10 U.S.C. 1552 provides that a correction of records "under this section is final and conclusive on all officers of the United States," except when procured by fraud, the fact that Lieutenant Russell was advanced on the retired list is not sufficient for this Office to apply the pay provisions of section 412(a) of the 1947 act and authorize payment to him of 75 percent of the active duty pay of the grade in which he was serving at the time of retirement, since it is our view

that the provisions of that section are not applicable to him. Hence, the Correction Board action taken is ineffective to grant entitlement to retired pay computed under the provisions of section 412(a) of the Officer Personnel Act of 1947. Your first question is answered in the negative and the second question requires no answer.

[B-145769]

Bids-Buy American Act-Price Differential

In the evaluation of bids subject to the foreign product differential of the Buy American Act, 41 U.S.C. 10a-d, and Executive Order No. 10582, consideration of the import duty which the bidder would be required to pay to the United States upon entry into the United States of components manufactured in a foreign country is not required when the head of the procuring agency makes a determination to use the formula prescribed in section 2(c) (1) of the Executive order which requires the 6 percent differential to be computed on the delivered, dutypaid price, rather than the alternative formula in section 2(c) (2) which requires a 10 percent differential to be computed on the bid price, exclusive of duty and costs after arrival of the material in the United States.

Bids-Buy American Act-Commercial Treaty Effect

Advice from the Department of State that the application of the Buy American Act, 41 U.S.C. 10a-d, and Executive Order No. 10582 in the evaluation of bids for items to be manufactured by an Italian affiliate of an American company does not constitute a violation of the Treaty of Friendship, Commerce and Navigation, concluded between the United States and Italy in 1948, in view of the fact that commercial treaties, such as this, are specifically drafted with the Buy American Act in mind and are designed to exempt cases of Government procurement from general treaty requirements, does not present any basis for a different conclusion.

Bids-Buy American Act-Criteria Other Than Price

In the rejection of a bid of a foreign company such factors as the adverse affect on international trade, the weakening of an allied nation and the discouragement of foreign competition are political or economic factors which may not be considered except as they are embodied in specific statutes; also, whether a particular purchase is inconsistent with the public interest and should be exempt from the limitation in the Buy American Act, 41 U.S.C. 10a, et seq., is for determination by the head of the department or agency concerned and failure to exercise that vested authority is not subject to review by the Comptroller General.

To Fairbanks, Morse & Company, August 3, 1961:

Reference is made to your letter of April 28, 1961, and to the brief submitted on your behalf under covering letter of May 16, 1961, from Muller Davis, attorney, both protesting against the award of a contract to the General Electric Company under Invitation for Bids No. DS5522, issued by the Department of the Interior, Bureau of Reclamation. It is contended, in substance, that since your offer was the lowest bid received, and having regard for the import duty which would be paid on the equipment furnished by your foreign affiliate, it should have been accepted as being in the best interest of the Government. Also it is alleged, and more fully argued in the referred-to brief, that the addition to your bid price of a foreign-product dif

ferential for purposes of evaluation, under the authority of the Buy American Act (41 U.S.C. 10a-d) and Executive Order No. 10582 of December 17, 1954, was in violation of the Treaty of Friendship, Commerce and Navigation, 63 Stat. 2255, concluded between the United States and Italy in 1948.

The subject invitation sought bids to furnish and install eight hydraulic turbine generators for the Glen Canyon Dam. Seven bids were received of which the three lowest (unadjusted) offers were yours in the sum of $7,467,705; ASEA Electric, Incorporated, $7,895,000; and, General Electric Company, $8,007,798, all f.o.b. job site. Since all, or substantially all, of the equipment you and ASEA Electric proposed to furnish was of foreign manufacture, evaluation of those proposals was undertaken pursuant to the following provisions of article B-6 of the Special Requirements of the invitation:

Whenever applicable, equalizing elements or factors not specifically mentioned or provided for herein, such as the cost of transportation, or installation, or of any other element or factor in addition to that of price which would affect the final cost to the Government, may be taken into consideration in making award of contract.

a. In addition to the foregoing, the following specific factors will be used for the purpose of comparison of bids:

(1) To cover the additional cost of inspection, $40,000 will be added to the lump-sum price bid under Item 1 for each bidder offering equipment to be manufactured outside of the United States or Canada.

(2) Cost of applicable spare parts.

(3) In evaluating efficiency warranties for the generators, all bids warranting an efficiency, at 100 percent of rated output and 90-percent power factor, of 97.35 percent or higher will be considered on an equal basis. Bids warranting an efficiency, at 100 percent rated output and 90-percent power factor, less than 97.35 percent will not be acceptable.

b. For foreign bids only, the following additional factors will be used for the purpose of comparison of bids. On November 14, 1955, the Secretary of the Interior issued regulations providing in substance as follows:

(1) When the articles, materials, and supplies shall be determined to be of foreign origin, 6 per centum of the total bid price shall be added.

(2) An additional differential of 6 per centum, making a total of 12 per centum, will be added when the lowest responsive bidder offering domestic materials will produce substantially all such materials in areas of substantial unemployment as determined by the Secretary of Labor.

The so-called "Buy American Act“, 41 U.S.C. 10a, et seq., provides in pertinent part that "Notwithstanding any other provision of law, and unless the head of the department or independent establishment concerned shall determine it to be inconsistent with the public interest, or the cost to be unreasonable, *** only such manufactured articles, materials, and supplies as have been manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured, as the case may be, in the United States, shall be acquired for public use." In order that the provisions of that act be uniformly administered, and for other purposes, the President of the United States issued Executive Order No. 10582, dated December 17, 1954, which provides in part as follows:

SEC. 2 (b) For the purposes of the said act of March 3, 1933, and other laws referred to in the first paragraph of the preamble of this order, the bid or offered price of materials of domestic origin shall be deemed to be unreasonable, or the purchase of such materials shall be deemed to be inconsistent with the public

interest, if the bid or offered price thereof exceeds the sum of the bid or offered price of like materials of foreign origin and a differential computed as provided in subsection (c) of this section.

(c) The executive agency concerned shall in each instance determine the amount of the differential referred to in subsection (b) of this section on the basis of one of the following-described formulas, subject to the terms thereof: (1) the sum determined by computing six per centum of the bid or offered price of materials of foreign origin.

In addition to the foregoing formula established for computing the differential between foreign and domestic bids, section 3 of the said Executive order further provides that-"Nothing in this order shall affect the authority or responsibility of an executive agency; (c) To reject a bid or offer to furnish materials of foreign origin in any situation in which the domestic supplier offering the lowest price for furnishing the desired materials undertakes to produce substantially all of such materials in areas of substantial unemployment.

The regulations of the Secretary of the Interior referred to in the quoted provisions of the invitation appear to be consistent with the quoted provision of the Executive order, and with similar regulations issued pursuant thereto by other departments and agencies of the Government.

Since the General Electric Company certified that 97 percent of its end product would be produced in a labor surplus area determined by the Secretary of Labor, the two lower foreign bids were evaluated pursuant to the above provisions by adding to the bids an amount equal to 12 percent of the offering price, plus $40,000 for inspection cost as provided by paragraph B-6a (1). As a result of such evaluation the bid of the General Electric Company became the lowest responsive offer received and therefore a contract was awarded to it on April 26, 1961.

You contend that in the evaluation of the bids consideration should have been given to an import duty of $704,400 which it is alleged would be paid to the United States by you or by your foreign associate upon entry into this country of the components fabricated in Italy. In that connection the Executive order involved provides in section. 1(c) that "the term 'bid or offered price of materials of foreign origin' means the bid or offered price of such materials delivered at the place specified in the invitation to bid including applicable duty and all costs incurred after arrival in the United States." The six percent differential prescribed by section 2(c) (1) of the order was therefore properly for computation on your delivered, duty-paid price. Section 2(c) (2) also authorized the use of an alternative computation of the differential on the basis of the bid price "exclusive of applicable duty and all costs incurred after arrival in the United States," but the differential in that case would be computed at ten percent. The Secretary of the Interior has seen fit to adopt the formula stated in section.

2(c) (1); but according to information informally furnished by the Bureau of Reclamation it does not appear that the alternative computation, even if it had been adopted by the Department of the Interior, would have affected the relative standing of your bid.

Your second contention, and that emphasized by your counsel in the brief submitted with covering letter of May 16, 1961, is that failure to award the contract to your company violates the Treaty of Friendship, Commerce and Navigation concluded between the United States and Italy in 1948, since fabrication of the equipment was contemplated by your Italian affiliate, Ansaldo San Giorgio Company of Genoa, Italy. The directly pertinent provision of the Treaty appears to be paragraph 2 of Article XVIII, 63 Stat. 2283, February 2, 1948, which provides as follows:

2. Each High Contracting Party, in the awarding of concessions and other contracts, and in the purchasing of supplies, shall accord fair and equitable treatment to the nationals, corporations and associations and to the commerce of the other High Contracting Party as compared with the treatment which is or may hereafter be accorded to the nationals, corporations and associations and to the commerce of any third country.

The Department of State has advised that it is its view that the quoted provision is applicable to the subject transaction, and that it in no way restricts the application by either party to the treaty of provisions of its national laws favoring its own nationals or companies over nationals or companies of the other party as regards such Government procurements. It further advises that the quoted provision and similar provisions in various other commercial treaties were specifically drafted with the provisions of the Buy American Act in mind, and are designed and generally understood to exempt cases of Government procurement from the general requirements of the treaty pertaining to "national treatment." It was concluded by the department that the application of the provisions of the subject act in this case would not constitute a violation of the treaty. We find no basis. for a different conclusion, and have no record that a contrary view has been presented in any previous Buy American case considered by us.

The further contentions of your counsel that refusal to make an award for this procurement to you for fulfillment by the Ansaldo company will discourage foreign competition; weaken an allied nation; and adversely affect international trade are aspects of a political or economic nature which cannot be considered by us except as they may be embodied in pertinent statutory enactments. Also, the question whether a particular purchase is inconsistent with the public interest, and should be exempt from the limitation fixed by law, is for determination by the head of the department or agency concerned, and failure to exercise that vested authority, as in this case, is not subject to review by the accounting officers of the Government.