Protest of tech contract upheld over trade law provisions

The Government Accountability Office this week sustained a protest from a technology company which argued that its competitor had failed to properly certify that products it offered did not contain parts manufactured in Taiwan or China.

The case showcases the difficulty that federal contracting officers have in complying with all relevant acquisition regulations; some officers and acquisition experts say compliance is especially difficult because the rules are so complicated.

GAO's ruling responds to a protest filed by Wyse Technology Inc., a San Jose, Calif.-based company, against its competitor, CDW Government Inc. Wyse argued that CDWG supplied the Justice Department with Hewlett Packard equipment manufactured in Taiwan or China.

Under the Trade Agreements Act, the federal government can only purchase goods manufactured in certain approved countries; Taiwan and China are not on that list. Justice's contract solicitation required the vendor to comply with the act, but CDWG did not agree to do so, GAO said.

The contracting officer therefore should not have awarded work to CDWG, GAO said.

"Ultimately, the failure is on the part of the agency to verify that they're awarding a contract to a product that complies [with the Trade Agreements Act]," said Brian Darst, Wyse Technology's lawyer.

Kevin Adams, vice president of program management for CDWG, said the company takes the Trade Agreements Act very seriously and when it provides country-of-origin information, it relies on the reports of manufacturers. CDWG did not intervene in the protest because it never claimed that the products in question were compliant with the Trade Agreements Act, he said.

The decision also points to the challenges that companies face when attempting to comply with the Trade Agreements Act, because computer equipment often is made in countries that are not on the approved list. Technology and defense companies often argue that the costs of compliance are too high, and hurt American companies' ability to compete in the global market.

Other companies have run into similar legal trouble: In early 2003, Safina Office Products, a small Houston-based company, filed a complaint against 10 companies, including Office Depot and Staples, alleging that they violated the Trade Agreements Act and the related Buy American Act by selling products to the federal government that were made in Asia. Staples, Office Depot, and OfficeMax all settled their cases with multimillion-dollar payments to the government.

Because CDWG's contract with Justice already has been completed, GAO recommended that the department reimburse Wyse Technology for its bid and protest costs. Wyse would have 60 days to document and submit those costs to the agency.

Calls to Hewlett Packard were not returned.