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.
Rethinking Bid Protests — International Webinar and Article
Join an hourlong webinar on Tuesday, June 15, 2021, 9 am ET / 14:00 UK / 15:00 CET to discuss next steps in bid challenges internationally. The free session, sponsored by GW Law School and King’s College, London, will feature leading experts in procurement from three continents: Europe, Africa and North America. Among other global developments, the panel will discuss a pending congressionally mandated study of bid protests at the U.S. Department of Defense — a study, Chris Yukins argued in a recent essay in the University of Pennsylvania’s Regulatory Review, that should recognize that governments increasingly look to bid challenges for early warnings of failure in a procurement system.
NASPO Study of State Procurement in the Pandemic – Key Lessons Learned
In a groundbreaking academic study coordinated by the National Association of State Procurement Officials (NASPO), private and public supply chain professors from across the United States conducted a nationwide survey of states’ responses to the pandemic. The study was based on over 100 hours of interviews conducted by the academic research team (Professors Robert Handfield (North Carolina State University), Zhaohui Wu (Oregon State University), Andrea Patrucco (Florida International University), Christopher Yukins (George Washington University) and Thomas Kull (Arizona State University)) with many states’ procurement staff, suppliers, and other state officials. Key takeaways from the study:
Assessing state procurement systems through a maturity model. Different states responded very differently to the pandemic, based in part on their organizational structures and preparations for the disaster. To help states better prepare, the researchers developed a “maturity model” to assess state procurement systems, in preparation for future catastrophes.
Courage and professionalism in the face of catastrophe. The researchers’ interviews with state procurement officials and suppliers “corroborate observations made in much of the disaster science research: disasters often bring out the best in us, and people rise to the occasion.” The study noted “how private citizens collaborated with entrepreneurial state employees to identify innovative and little-known PPE suppliers and often established innovative solutions to seemingly hopeless situations where PPE could not be found. Purchasing managers, staff members, and CPOs [Chief Procurement Officers] emerged as heroes. Our interviews revealed the pride and renewed sense of professional identity . . . . We observed a growing sense of camaraderie as people faced a common crisis.”
Centralization of the state procurement function was a key factor in success. The study’s results suggested “that increased centralized governance of state procurement led to a more effective response in tackling large-scale supply chain disruptions.” Centralized procurement “enabled increased coordination, improved leveraging of the volume of the state’s purchasing power, and provided for more efficient application of contracting expertise to a difficult market situation.” A centralized approach, the study found “also led to better coordination among disaster relief entities, PPE suppliers and hospitals, counties, and agencies requiring PPE to operate.”
Constitutional issues in federal-state confrontations over critical supplies. In principle, the federal government should have helped better coordinate states’ responses to the pandemic. In practice, however, during the early stages of the pandemic the federal government was repeatedly accused of abusing its powers under the Defense Production Act to seize and redirect emergency supplies that had been purchased by individual states — although, under the U.S. federalist system of government, the states bear first responsibility for the health and welfare of their citizens, constitutionally, practically, and politically. The study argued that “[s]erious consideration should be given to whether the Defense Production Act should be amended to recognize the deference owed by the federal government to the states under the Constitution, much as many other federal laws (such as those governing federal grants, use of National Guard troops, etc.) recognize and defer to the sovereign authority of the states.”
Organizational Conflict of Interest (OCI) Proposed Rule Is Withdrawn, Ten Years Later
Regulators have withdrawn a proposed rule, first published a decade ago, which would have revamped federal rules on contractors’ organizational conflicts of interest.
The current OCI regulations, which have been developed since the 1960s, are set forth at Subpart 9.5 of the Federal Acquisition Regulation. The OCI regulations leave it to contracting officials to exclude bidders if those vendors have corporate conflicts of interest – competing business interests, for example, which will keep the contractor from providing unbiased advice, or if a vendor would be helping draw specifications against which the vendor (or its affiliate) will be bidding in the future. The OCI rules also allow contracting officials to exclude vendors that have an unfair competitive advantage due to unequal access to information.
Daniel Gordon, who as head of the bid protest unit at the Government Accountability Office (GAO) helped shape the GAO caselaw on OCI’s, also wrote a leading article on OCI’s. Dan Gordon took over as head of the White House’s Office of Federal Procurement Policy (OFPP) (where his work was highly regarded) in 2009, and in 2011 the proposed rule was published. Dan Gordon left the White House shortly thereafter, to serve as an associate dean at George Washington University Law School.
The proposed rule (76 Fed. Reg. 23236 (2011)) reflected opposition at the time, in both government and industry, to stringent application of OCI rules. Recognizing the practical problems that overly strict enforcement could bring, the proposed rule called for a more measured approach, which would tolerate apparent conflicts when they did not pose significant reputational or performance risks to the government.
Since the proposed rule was published in 2011, much has changed. The Defense Department separately addressed congressional concerns about conflicts of interest in a major defense acquisition programs (MDAP’s) by issuing the Department’s own regulations on OCI’s in MDAP’s. At the same time, the popular concern that contractors play an outsize role in government – a concern which informed the proposed rule, and which helped drive GAO’s prior decisions – has subsided. As observers have noted, GAO is less likely to sustain protests regarding OCI’s, and agencies now regularly grant waivers regarding apparent conflicts of interest. While OCI’s remain an important issue, there seems less appetite to revamp the existing OCI law – and so the proposed rule was withdrawn.
The Rebirth of British Procurement: Comments
U.S. Perspectives on the UK “Green Paper” — Post-Brexit Public Procurement Reforms
On March 10, 2021, Chris Yukins submitted comments to the UK Cabinet Office in response to the United Kingdom’s plan for transforming its public procurement laws after Brexit, in the “green paper” entitled Transforming Public Procurement. These comments respond to consultation questions posed by the Cabinet Office, and provide a U.S. perspective on the proposed reforms.
While our UK-based colleagues Sue Arrowsmith, Anne Davies and Ruairi Macdonald, Jane Jenkins, Michael Bowsher QC and Albert Sanchez-Graells, among others, have published very useful comments on the green paper, these comments focus on points of special interest and concern for the U.S. procurement community — and especially on points of potential cooperation between the United States and the United Kingdom. The two nations have cooperated very effectively in related areas of legal regulation, such as corporate compliance; the green paper presents other areas of potential intergovernmental cooperation, which could improve procurement outcomes, open trade opportunities, and enhance anti-corruption efforts in both nations.
Transforming Public Procurement is the Cabinet Office’s plan (or “green paper”) for a new public procurement legal regime in the United Kingdom after Brexit. Lord Agnew, the Minister of State for the Cabinet Office, called this “an historic opportunity to overhaul” the United Kingdom’s “outdated public procurement regime” – a “dividend,” as it were, “from the UK leaving the EU,” to rebuild the procurement system to make it easier for “innovative companies to win business” and to improve public goods and services by making it simpler “to exclude suppliers that have performed poorly in the past.” Id. at 5-6.
The comments deal with specific questions thematically, with reference (as appropriate) to parallel procedures in the U.S. government’s procurement system, and – most importantly – to how the United Kingdom’s proposed reforms may affect ongoing cooperation with the United States as our two nations reaffirm their special relationship.
Trade Policy in Procurement in the Biden Administration
“Assessing the Trade Agenda for Government Procurement in the Biden Administration,” paper presented by Chris Yukins at the Thomson Reuters Government Contracts Year in Review Conference (Feb. 2021)
The attached paper, prepared shortly before President Biden was inaugurated, discussed key trade issues for the incoming administration in public procurement. The piece reviewed major trade measures in procurement taken during the Trump administration – most of which were predictable from the time Trump was elected. The paper turned to the major trade challenges that face the Biden administration, in areas as diverse as climate change, cybersecurity and the protectionism in post-Brexit Europe, and then assessed how the Biden administration might address these challenges, especially given Joe Biden’s support for “Buy American” policies during the 2020 campaign. The paper also assessed how the new administration might cooperate on these difficult issues with the United States’ allies abroad. The paper concluded that the Biden administration’s main challenge was restoring confidence abroad in the United States as a responsible trading partner in procurement; once that goal was met, the paper argued, the more technical issues of trade in procurement would be much easier to address.
The paper’s concerns that the new administration might take a protectionist turn, per Joe Biden’s campaign promises, soon proved well-founded. On January 25, 2021, only a few days after entering office, President Biden signed an executive order calling for strengthened “Buy American” policies in U.S. procurement. Commenting on the order, The Economist wrote that while the order was “protectionist in spirit,” the United States’ existing trade commitments “mean that Mr Biden’s measures may not have much effect.” For background on the executive order– including the history of the Trump administration trade policies in procurement, and questions raised by the new order — please see the slides attached here.
The denouement to the Biden executive order suggests that, in the short term at least, the Biden administration will not go beyond the tighter Buy American Act requirements imposed by the Trump administration
The denouement to the Biden executive order suggested that, while it called for closer scrutiny of waivers and exceptions to the Buy American Act, in the short term at least the Biden administration would not go beyond the tighter Buy American requirements launched by President Trump in July 2019 under Executive Order 13881. President Trump’s order calling for stricter “Buy American” requirements was published as a proposed implementing Federal Acquisition Regulation (FAR) rule on September 14, 2020 (85 FR 56558), and the final FAR rule was published on January 19, 2021 (86 FR 6180). The final Trump rule, in keeping with his executive order, aggressively tightened domestic content requirements under the Buy American Act. President Biden took office the next day, on January 20, 2021. President Biden issued his “Buy American” executive order (EO 14005) several days later, on January 25, 2025. On or about that same date, the Biden administration undertook a FAR review to assess whether the Trump regulations needed to be reconsidered. By February 25, 2021 (roughly one month later) the Biden administration concluded that no further changes were needed to the “Buy American” regulations. FAR Case 2021-004, closed 2/25/21. The Biden administration thus appeared to close the book on further changes to the FAR “Buy American” rules, at least temporarily — perhaps at least until the broader policy reviews called for by the Biden order (such as a review of the “Buy American” exception for commercial information technology) are concluded.
GSA’s “Commercial Platforms” Initiative
From “GSA’s Commercial Marketplaces Initiative: Opening Amazon & Other Private Marketplaces To Direct Purchases By Government Users,” by Christopher Yukins, Kristen Ittig, Abraham Young & Eric Valle (Thomson Reuters – Briefing Papers, December 2020)
The authors — Chris Yukins, Kristen Ittig, Abraham Young and Eric Valle — will join a webinar on the GSA “commercial platforms” at noon Eastern on Monday, March 22, 2021 — register here
Article is also available on the Social Sciences Research Network (SSRN)
The U.S. General Services Administration (GSA) opened a new chapter in public procurement by awarding three contracts—to Amazon Business, Overstock.com, and Fisher Scientific—which will allow federal users to buy directly from online electronic marketplaces, with sales anticipated to total $6 billion annually. This proof-of-concept effort, dubbed the “commercial platforms” initiative by GSA, marks a radical departure from traditional procurement practices because it will allow individual Government users (not necessarily procurement officials) to make “micro-purchases” (generally up to $10,000) using Government purchase cards. By removing the federal procurement system as an intermediary in the purchasing process, and in essence outsourcing the selection of available sources to private providers of electronic platforms, GSA’s initiative has both reshaped procurement and potentially redrawn a marketplace.
This paper reviews the purpose and history of GSA’s commercial platforms initiative, which began with a mandate from Congress to explore electronic commerce options and evolved through long exchanges with industry, users, and other stakeholders. In assessing the reasons for the initiative, the paper notes a longstanding concern that users’ needs were not being met by the traditional procurement system. The paper discusses GSA’s decision to steer the initiative to existing commercial platforms and reviews key elements of the solicitation used to frame the “no-cost” contracts with the online marketplaces. Because Amazon Business was by far the most prominent of the awardees—indeed, Amazon had played an ongoing role in pressing for the procurement—and vendors may want to sell through the commercial platforms to reach federal customers, this paper focuses on Amazon Business’ procedures in discussing how vendors might join the commercial platforms. The paper concludes with a series of Guidelines that vendors and other market participants might use, as they enter this new corner of the federal marketplace.
Additional information:
Abraham L. Young, Empowering the End-User as Procurement Agent Through E-Commerce, Public Contract Law Journal, Vol. 49:4 (2020)
Response from Michael Tregle, Buyer Incentives and Administrative Burdens in the Commercial Platforms Initiative – In response to the published piece, Mike Tregle argues that “GSA may have gone a step too far by devolving buying authority down to end-users. In partial rebuttal . . . I will address the impact such a change may have on best value determinations and the related administrative burdens of oversight and management of the program. The [commercial platforms initiative], as currently implemented, may in fact reduce overall value while increasing the risk of waste and the administrative burdens on agencies.”
GSA Delays “Electronic Marketplaces” Contract Awards
Webinar: Opening Online Marketplaces to Government Micro-Purchases — June 30, 2020
Webinar – Cybersecurity Challenges – February 2, 2021 – 9:00 ET / 15:00 CET
Webinar – European Commission White Paper on Foreign Government Subsidies – December 1, 2020
King’s College London and GW Law will be presenting a free webinar on the European Commission’s “White Paper” on foreign government subsidies, which would impose new EU measures to address foreign subsidies, including in public procurement.
Comment on European Commission White Paper That Could Exclude “Subsidized” Foreign Vendors from EU Public Procurement
In a guest post in the International Economic Law and Policy Blog, Professors Andrea Biondi and Michael Bowsher QC, King’s College London, Professor Christopher Yukins, George Washington University, Dr Luca Rubini, University of Birmingham, and PhD candidate Gabriele Carovano, King’s College London, addressed a European Commission “White Paper” which proposes (among other measures) to exclude foreign competitors from EU procurements if those vendors receive government “subsidies” (very broadly defined) that boost their ability to compete for public contracts in the European Union.
The European Commission’s proposal could harm U.S. vendors that receive support from the U.S. government — such as COVID-19 relief — because European competitors might claim that U.S. firms were receiving barred government subsidies.
The European Commission’s proposal would define government “subsidies” to include any “financial contribution by a government . . . of a non-EU State . . . which confers a benefit to a recipient . . . and which is limited, in law or in fact, to an individual undertaking or industry.” The commentators pointed out the European Commission’s proposal could badly harm U.S. vendors that receive “subsidies” — which some might argue includes CARES Act relief (related to COVID-19) from the U.S. government — in no small part because European competitors could claim that vendors from abroad were receiving subsidies, and thus in effect disable competition from the United States and other nations.
On June 17, 2020, the European Commission published the “White Paper” that called for “levelling the playing field as regards foreign subsidies.” The White Paper has several modules, only one of which (Module 3) addresses public procurement directly. Module 1 would establish a general regulatory instrument to address distortive effects of foreign subsidies, and Module 2 would specifically address distortions caused by foreign subsidies which facilitate the acquisition of EU companies.
The academics submitted their comments to the European Commission as part of the public comment process. While they were generally supportive of Modules 1 and 2, the academic commentators were sharply critical of Module 3, which the Commission described as follows:
Foreign subsidies could also have a harmful effect on the conduct of EU public procurement procedures. This issue is addressed under Module 3. Foreign subsidies may enable bidders to gain an unfair advantage, for example by submitting bids below market price or even below cost, allowing them to obtain public procurement contracts that they would otherwise not have obtained. Under this Module, the White Paper proposes a mechanism where bidders would have to notify the contracting authority of financial contributions received from non-EU countries. The competent contracting and supervisory authorities would then assess whether there is a foreign subsidy and whether it made the procurement procedure unfair. In this case, the bidder would be excluded from the procurement procedure.
The academic commentators noted:
While foreign subsidies may distort the market regarding undertakings (Module 1) and the acquisition of undertakings (Module 2), foreign subsidies in public procurement markets in effect reduce the costs of public services – and so should be separately assessed. Distortions that may be caused by foreign subsidies (displacing higher-cost local producers, for example) are regularly resolved through sustainability measures allowed by the European procurement directives. . . . The framework proposed under the White Paper may . . . displace the legislative regime contemplated by the existing procurement directives, and thus up-end the careful policy decisions that are reflected in those directives.
. . . Module 3 would exclude – disqualify – vendors from public procurements in the European Union, on the grounds that the vendors have received a subsidy from a foreign government. In practical terms the proposal would revise the European Union’s procurement directives by adding an additional ground for exclusion – foreign subsidy – without a normal legislative process. In doing so, the proposal could raise costs for Member States, impair competition in procurement markets across the European Union, open the door to strategic interference by competitors, delay and disrupt ongoing procurements, deprive Member States of best value in their public procurements, and undermine Europe’s relations with key trading partners internationally.
. . . [T]he proposal would defer to the European Union’s obligations under free trade agreements, but assumes – incorrectly – that those obligations are well-defined under instruments such as the WTO Government Procurement Agreement. They are not. For example, the United States covers tens of billions of dollars in preferences by a single sentence in the GPA annexes, which states that the United States’ obligations do not extend to “any set aside on behalf of a small- or minority-owned business.” If the European Commission and Member States, in implementing the proposed measures, read that reservation narrowly and excluded U.S. vendors because other procurement preferences were considered government subsidies not reserved under the GPA, trade relations with the United States and other important trading partners could be badly disrupted.
The White Paper was addressed in a GW Law webinar on EU-U.S. trade, and was discussed in detail in an October 8, 2020 webinar sponsored by Wolters Kluwer, the publishing house. While the public comment period on the White Paper has closed, Eddy De Smijter, Head of the International Relations Unit in DG Competition at the European Commission, made clear during the October 8 session that the Commission continues to welcome informal comments on the proposal.