A U.S. CONTRACT BRITISH FIRM’S LOWEST TENDER NOT ACCEPTED

Press, Volume LXXXIX, Issue 27035, 9 May 1953, Page 6

A U.S. CONTRACT BRITISH FIRM’S LOWEST TENDER NOT ACCEPTED

[From the "Economist" Intelligence Unit)

The saga of the Chief Joseph Dam becomes more engrossing and more instructive as one episode succeeds another. It all began in Seattle on We Pacific coast last December, when United States Army district engineers invited bids for contracts to supply generators and transformers for the Chief Joseph Dam on the Columbia river in the State of Washington. The tenders duly came in and it was found that Britain’s English Electric Company had put in the lowest bid, beating its nearest American competitor by 931,788 dollars, or 13 per cent. The English Electric Company s bid included the import duties, wnicn would have amounted to rather more than half a million dollars, so that by accepting the English bid the United States would have made a saving of nearly 1,000,100 dollars, and, in addition, secured revenue of 500.000 dollars. Though the decision whether or not to accept the English tender could have been made by the outgoing Democratic Administration, it was decided, and probably wisely, that this was a proper matter to be referred to the incoming Republican machine, if only to give it as clear a test as could be desired of its foreign economic policy. A Ts«t It provided such a test because this was a matter which called for a definite policy decision. The Buy American Act lays it down that Federal purchases must be of United States goods unless the United States price is unreasonably higher than that of competing imported articles. What is “unreasonable” in this context is obviously a matter for varying interpretation. At times it has been suggested that a 25 per cent, differential would still require the order to be placed with the dearer American product; but during the latter part of the Truman Administration any decisions on contracts involving expenditure of more than 25,000 dollars had to be referred to the highest authorities in the Defence Department. On a number of occasions, including a successful British bid by the firm of Ferranti for electrical equipment, also in the State of Washington, preference was given to the imported product, though the margin was appreciably less than 25 per cent. On this latest occasion the margin was about one half the specified figure of 25 per cent. The Eisenhower Administration, going back to earlier interpretations of the Buy American Act, could have rejected the British tender out of hand. Vt chose, however, to follow other tactics. It rejected all earlier tenders and asked for a new set of bids, advancing as its excuse the fact that specifications in the earlier tenders had not been sufficiently detailed, so that it was impossible to make exact and fair comparisons between the American and British offers. By this device the Eisenhower administration has admittedly succeeded in avoiding a definite decision, which would show its hand to the world on the crucial issue of foreign economic policy. But it may also have succeeded in bowing to the pressure of the American Electrical Manufacturers' Association, whose powerful lobby in Washington sprang into vigorous and effective activity as soon as the result of the original tenders were published. The American firms bidding for this contract now know what competition they have to meet The understanding between them is probably sufficient to ensure that when the new tenders are put in, one or other of the American firms will put in a bid that will secure the business for it Satisfaction of American Interests

By this technique every American Interest will be satisfied. The, order will have gone to United States industry, the watchdogs of protection on Capitol Hill will have done their job well and the Administration will hot

have blotted its policy Everyone will be satisfied except thnu who had been hoping against that the United States was in prepared to assume the responsibifiS and duties of its position on econow, and political leadership in the world. If all this is to be believed, It m., be as well to pigeonhole indefinite)’,, the generous and ambitious plans th« have been conceived for making currencies of Europe convertible <2 freeing trade from the frictions of discriminatory imnort controls. The kind of multilateral trading world for which the United States has pleaded with such eloquent and with some supporting evident in its tariff policy, can never h* achieved if Chief Joseph Dam is to 2 the symbol of American fore)™ economic policy in the years to com. Th£ one excuse and justification that can be advanced for the policy of the American Administration in thu matter is that the new men are still playing for time. They cannot begin the new Administration by a head on clash with the most vocifern®' sections of Congress. They have mitted the whole problem of America, foreign- economic policy to the ®. alysis of a committee headed by Lewis Douglas, former United State Ambassador in London; and they c® plead that pending the report of this committee and its study nothing should be done to commit the Administratlen either way. An Explanation? This may be the explanation of the attitude of President Eisenhower and his colleagues in Washington. It it it it sheds very little credit on ths persons concerned. It provides little «. flection of the fact that last November the President was elected by ( majority which overwhelmed tbit accorded to hi* party in the concur, rent Congressional elections. results of those elections seemed to give President Eisenhower a measure of personal authority, of which, ® the evidence so far available, he h« made curiously little use. It is, however, too early yet to ay havoc on this issue. As always, it is impossible to define the policy of the United States in terms of white aad black. If Chief Joseph Dam suggeita the more sombre of these shad* there are other scraps of evidence which point to a more construed* and hopeful conclusion. Among then are the solid plans which have be® made at the recent ministerial meetiaj of the North Atlantic Council Thii show* that in the realm of military and industrial collaboration the partnership 'of the North Atlantic Community remains undisturbed. It also shows that the United States b Brepared8 repared to pujl its very full weigh i meeting the common coit of tb programme and is «lso going out rt its way to distribute the orders hr equipment in such * manner a* to reconcile the maximum military efficiency with the greatest possible economic assistance to Europe. Evidence of that 1* to be found In the announcement that orders an being placed in Britairufor 550 aircraft valued at 150,0®,000 doll*n. Smaller but, nonetheless, substantbl orders are also being placed fa military aircraft in France, Italy, Belgium and the Netherlands. 1W figures involved cause those of the Chief Joseph Dam contract to pale into comparative insignificance. TN», however, is not a matter in whkh one right wholly excuses a wrong. The North Atlantic Treaty Organitetiai programme is, it is to be Iwm, essentially a passing phenomenon. The American official attitude to ford®! imports is a more permanent aspect of American foreign economic poMa. The Eisenhower Administration wW have to do a great deal better th® this performance on the Chief Joseph Dam contract if the high hopes Pte® on it when it swept in earlier W year are to be realised. 'J-g