A resource on public procurement practice, policy and law, from around the globe.
Author: Christopher Yukins
Professor Christopher Yukins teaches in the government procurement law program (founded in 1960) at The George Washington University Law School in Washington, D.C.
On October 28, 2019, a training session was held in Tbilisi, Georgia on anti-corruption efforts. The session was convened by the European Union’s “twinning” project, “Strengthening Public Procurement Practices in Georgia,” and moderated by Ms. Dana Mitae, Legal Advisor and Consultant for the Department for Consulting, e-Procurement and International Affairs, Federal Procurement Agency of Austria, Austria. The session built on Georgia’s Association Agreement with the European Union, which calls in Chapter 8 for Georgia to incorporate important elements of the European Union’s procurement directives into Georgia’s own laws and institutions. The session was opened by Mr. Levan Razmadze – Chairman of State Procurement Agency of Georgia, and outside experts included Prof. Christopher Yukins, George Washington University (USA), Mr. Mihai Dragutescu, President of the Senate for Administrative Cases (Romania), and Ms. Maja Kuhar, President of the State Commission for Supervision of Public Procurement Procedures, Zagreb (Croatia).
Mihai Dragutescu, President of the Senate for Administrative Cases (Romania)
On October 23-24, 2019, Professor Andrea Sundstrand (U. Stockholm) hosted the annual public procurement conference in Stockholm. Michael Bowsher QC (King’s College, London/Monckton Chambers), Marta Andhov (U. Copenhagen) and Chris Yukins (presentation below) were keynote speakers.
Proposals to the U.S. General Services Administration are due soon in a $6 billion procurement under which multiple no-cost contracts will be awarded to vendors that will open electronic marketplaces to federal users making micro-purchases (generally up to $10,000). Although federal purchase card holders have long been able to make micro-purchases with few regulatory constraints regarding competition, transparency or socioeconomic requirements, this new GSA initiative appears likely to normalize and expand those purchases—and so may revolutionize small purchases in the federal market. This article assesses some of the key concerns — including a lack of competition and transparency, cybersecurity threats, most-favored-customer pricing, and open issues regarding bid protests — that still surround this important initiative. 61 Government Contractor ¶ 303 (Oct. 16, 2019). Available at https://ssrn.com/abstract=3471405 , and below.
On September 30, 2019, at the University of Warsaw, the Public Procurement Law Association of Poland held a conference (program below) on exclusion of contractors (called “debarment” in the United States and elsewhere), which looked at rules and practices in the European Union (EU), the European Free Trade Association (EFTA) and the United States. The conference featured a report (below) summarizing procedures used in 31 EU and EFTA nations, which was sponsored by the Association. The presentation by Professor Christopher Yukins is also set forth below.
Prof. Michal Kania (U. Silesia) and Collin Swan (World Bank), presenters at the conference
The U.S. Defense Department will on September 26, 2019 publish
a long-awaited final
rule to implement Congress’ curbs on low-price awards. Unlike European
governments, since World War II the U.S. government has come to rely heavily
on multilateral competitive
negotiations which trade off price and quality to ensure best value. Recent years, however, saw a resurgence of “lowest
price technically acceptable” (LPTA) procurement –
an award to the vendor that offers the cheapest good or service that is
technically acceptable. The final rule,
which reflects Congress’ concerns that the low-price method is used too often
and inappropriately, may slow the use of LPTA awards.
Many have argued
that the LPTA procurement method is a throwback to a more primitive form of
procurement based on low price.
Contracting officials, however, have embraced this return to low-price
procurement. Critics have suggested
that this is because low-price awards are easier to implement and explain, they
reduce the nominal prices paid by the government, and awards based on low price
allow contracting officials to avoid the often sticky questions raised by
technical and past
performance evaluations. Because
price is simple and technical issues are often quite difficult for contracting
officials to master, critics of the LPTA method have argued
that focusing on low price reduces administrative costs and risks for
contracting officials, even if the award does
not result in the best value for users – a classic “agency”
problem in procurement.
After long debate and numerousstudies noting industry’sopposition to low-priced awards, Congress passed a series of laws intended to curb the use of the LPTA method in federal procurement. Despite early Pentagon guidance urging caution in the use of the LPTA method, Defense Department regulators took long (several years, though Congress had called for swift action) to prepare and publish a final rule implementing those statutory restrictions. Operational guidance for Defense Department contracting officials is being published as well, and civilian agency requirements will be addressed separately under a government-wide rule currently under review.
The final rule reflects a restrictive implementation of Congress’
curbs on low-price awards; in fact, the new rule is in many ways merely a
“copy-and-paste” of the statutory requirements.
Regulators repeatedly rejected suggestions to clarify, for example, that
low-price awards should be limited to non-complex acquisitions. Regulators argued that where Congress did not
impose a specific bar on low-price awards, further limitations should not
appear in the rule – a markedly narrow approach, given the broad discretion allowed U.S. regulators when
implementing legislation.
Despite regulators’ cautious approach, the final rule does impose
important limitations on the use of the LPTA method:
Contracting officials will have to document (but
not necessarily publish) why they chose to use the LPTA method.
Certain goods (such as personal protective
equipment to be used in combat) are not to be purchased using the LPTA method.
The LPTA method is to be avoided in contracts
and orders unless:
Requirements can be described “clearly and
comprehensively”
Little value will be gained from a proposal that
exceeds minimum technical requirements
The technical requirements require little
subjective assessment
Review of the technical proposals is probably
not valuable
A different procurement method is unlikely to
spur innovation
The goods to be purchased are expendable or
non-technical
The contract file explains why the lowest price will
reflect full life-cycle costs
Regulators’ comments to the final rule acknowledged that the government does not hold data on how often the LPTA method is actually used in practice. If, in response to this final rule, industry continues to press Congress for further limitations on low-price awards, future reforms may focus on the need for data on LPTA awards, and on greater transparency in contracting officials’ decisions to make awards based on low price.
Editor’s note: This post was updated on September 26, 2019 to include the two charts from GAO Report GAO-19-691, which was published after the final DFARS rule was released.
Join a special presentation on the United States’ international trade agreements in procurement. Chris Yukins and Allen Green will present on their chapter in The Contractor’s Guide to International Procurement (American Bar Association 2018) (Erin Loraine Felix & Marques Peterson, eds.). They will give an overview of international trade agreements, and discuss recent “Buy American” developments in the Trump administration. The program will be held at the Dentons law firm, 1900 K Street NW, from 12-1:30 pm. Lunch will be served.
Some of the most difficult issues in U.S. procurement law stem from the nation’s several centuries of accumulated protectionist measures, and from a patchwork of trade agreements meant to contain that protectionism. These conflicting measures reflect a push-and-pull in U.S. procurement policy, between those who favor closed procurement markets and those who favor open competition; the compromises reached between the two camps have created a Byzantine set of rules and requirements. At the same time, though, this area of law holds a special promise for the future of procurement, for cross-border agreements currently offer the readiest means of erasing anti-competitive differences between national rules, by bringing many nations to a common standard of international best practice. To make sense of this complex area, this chapter proceeds in three parts. Part II reviews the major pieces of protectionist legislation passed by Congress, focusing first on the Buy American Act of 1933; this discussion also references some of the most important implementing regulations. Part III reviews the most important U.S. trade agreements which have limited the force of that protectionist legislation, including the World Trade Organization’s Agreement on Government Procurement (GPA). Because barriers to procurement can also arise from structural factors — “non-tariff barriers to trade” which, in practice, may protect domestic vendors — this part also explains how the trade agreements mitigate those non-tariff barriers. Finally, Part IV concludes by offering some practical suggestions for those working in this field, and suggests a possible road ahead for cooperation in international procurement markets.
Yukins, Christopher R. and Green, Allen, International Trade Agreements and U.S. Procurement Law (2018). Chapter 9 to The Contractor’s Guide to International Procurement (American Bar Association 2018) (Erin Loraine Felix & Marques Peterson, eds.); GWU Law School Public Law Research Paper No. 2019-55; GWU Legal Studies Research Paper No. 2019-55. Available at SSRN: https://ssrn.com/abstract=3443244
In an editorial published in Italian newspaper Il Sole 24 Ore, Professor Gustavo Piga of the University of Rome – Tor Vergata, an activist in Italian politics and and a leader in the international procurement community, responded to an article by Christopher Yukins assessing the Trump administration’s latest Buy American initiative. Professor Piga argued that, though the actual impact of the Trump order might be minimal (as Professor Yukins pointed out), Italian policymakers should emulate U.S. support for small businesses, which the U.S. undertakes through protectionist preferences. Professor Piga closed: “GliStatiUniti lo insegnano chiaramente: non pensando per le piccole, smettiamo di pensare in grande.” (“The United States clearly teaches this: by not thinking of the small, we stop thinking big.”).
International procurement training led by the Ministry of Finance, Republic of Maldives (Minister Ibrahim Ameer, pictured below), and coordinated by the U.S. Department of Commerce – Commercial Law Development Program was held in Male, capital of the Maldives, on August 4-5, 2019. Chris Yukins’ slides for the program are included here.
Professor Yukins leads exerciseMinister Ibrahim Ameer, with Glenn Penfold, Esq. (South Africa)
Our colleagues at the Public Procurement Research Group at the University of Nottingham, led by Professors Sue Arrowsmith and Peter Trepte, will be hosting the ninth of their “Global Revolution” conferences on June 17-18. Academics and practitioners from around the globe (including a team from GWU Law School) will join the program for one of the world’s leading conferences on emerging developments in public procurement law.
