Stockholm Public Procurement Conference 2024 – U.S./EU Convergence on Debarment and Beyond

Stockholm City Hall photo: Julian Herzog

Andrea Sundstrand

David Drabkin, Daniel Schoeni and Christopher Yukins spoke at the “Upphandlings-Konferensen” (“Public Procurement Conference”) held in Stockholm on April 25-26, 2024. The conference was very kindly hosted by Professor Andrea Sundstrand of Stockholm University.

David Drabkin

Dave Drabkin and Chris Yukins’ presentation, drawing on their report on debarment for the Acquisition Innovation Research Center, addressed convergence of the contractor exclusion/debarment systems in the United States and the European Union. A recent decision by the Court of Justice for the European Union, Infraestruturas de Portugal SA, explained that the EU Public Procurement Directive should be read to mean that procuring agencies in the EU have clear first authority to handle vendor exclusions and to assess vendors’ misconduct and remedial measures — from the U.S. perspective, a critical step in building effective risk-based debarment regimes in Europe to allow agencies to manage supply chain risk. (For background on the Infraestruturas decision, see Adrian Brown‘s recent piece in the Public Procurement Law Review and Albert Sanchez-Graell’s insightful analysis.)

Daniel Schoeni

Daniel Schoeni’s presentation — which was very well-received by the assembly of Swedish procurement attorneys — reviewed the parallels between the EU and the U.S. systems. Drawing on his PhD thesis at the University of Nottingham, Dan Schoeni explained that while the legal frameworks in the U.S. and the EU are remarkably similar, their foundations and implementations vary widely because of their different histories, politics and perspectives.


King’s College, London / GW Law Symposium: Anti-Corruption and the New UK Procurement Rules

Live and Online – Free
Wednesday, May 25, 2022 – 14:00-17:00 UK
Streaming Online: 9:00-12:00 Eastern US / 15:00-18:00 CET

Join us at King’s College London for a discussion of proposed anti-corruption measures in the United Kingdom’s new procurement regime, post-Brexit.

Topics

King’s College, London – Somerset House – 25 May 2022

Moderator

Michael Bowsher

Panelists

  • Sue Hawley, Executive Director, Spotlight on Corruption
  • Gavin Hayman, Executive Director, Open Contracting Partnership
  • Albert Sanchez-Graells, Professor of Economic Law, University of Bristol Law School
  • Jessica Tillipman, Assistant Dean for Government Procurement Law Studies & Professorial Lecturer in Law, George Washington University Law School
  • Sope Williams-Elegbe, Professor and Head of Department of Mercantile Law, and Deputy Director of the African Procurement Law Unit, Stellenbosch University
  • Christopher Yukins, Lynn David Research Professor in Government Procurement Law, George Washington University Law School

Registration is for the online session; health conditions permitting, a limited number of spaces for the in-person session will be made available

Resources

Official

UK Cabinet Office, Transforming Public Procurement (Dec. 2020) (the “Green Paper, calling for public consultation)

UK Cabinet Office, Transforming Government Procurement: Government Response to Consultation (Dec. 2021)

The Queen’s Speech (May 10, 2022) (announcing new legislation)

Prince Charles Delivers The Queen’s Speech (May 10, 2022)

UK Government resource page on new procurement legislation.

Procurement Bill

UK Government Cost Impact Assessment

House of Lords — Collected Materials on Bill

House of Lords — Summary of the Procurement Bill (May 20, 2022)

House of Lords Debate (Second Reading of the Bill) (May 25, 2022)

Academic/COMMENTARY

Sue Arrowsmith, Constructing Rules on Exclusions (Debarment) Under a Post-Brexit Regime on Public Procurement: A Preliminary Analysis (July 24, 2020), https://ssrn.com/abstract=3659909 

Nigel Boardman, Review of Government Procurement in the COVID-19 Pandemic (May 2021) (independent report published by UK Cabinet Office)

Alison Jones, Combatting Corruption and Collusion in UK Public Procurement: Proposals for Post-Brexit Reform, 84 Modern L. Rev. 667 (July 2021), https://doi.org/10.1111/1468-2230.12626

Albert Sanchez-Graells, UK Procurement Law Reform: Queen’s Speech Update (May 10, 2022).

Albert Sanchez-Graells, Initial comments on the UK’s Procurement Bill: A lukewarm assessment (May 2021)

Jessica Tillipman & Samantha Block, Canada’s Integrity Regime: The Corporate Grim Reaper, 53 Geo. Wash. Int’l L. Rev. 475 (2022), https://ssrn.com/abstract=4081297

King’s College, London / GW Law on Exclusion and Debarment (March 2019)

Open Contracting Partnership, Mythbusting Confidentiality in Public Contracting

John Pachter, Christopher Yukins & Jessica Tillipman, U.S. Debarment:  An Introduction (discussion draft 24 February 2019), published in Cambridge Handbook of Compliance (Cambridge University Press, Daniel Sokol & Benjamin van Rooij eds.).

UK Anti-Corruption Coalition, Our Ten-Point Improvement Plan for the UK Procurement Bill (May 2021)

Christopher Yukins & Michal Kania, Suspension and Debarment in the U.S. Government: Comparative Lessons for the EU’s Next Steps in Procurement, 19-2 UrT 47 (2019), https://ssrn.com/abstract=3422499


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.”

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.

GW Law Webinar Discussed European White Paper

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.

Book Discussion – “Joint Public Procurement and Innovation: Lessons Across Borders” – September 24, 2020 (webinar)

Held on Thursday, September 24, 2020
https://youtu.be/hMDiCrHm6r0
Session Recording – Captioning available in 100+ languages – instructions for auto-translate

Join an online discussion of a recently published book on new approaches to procurement, Joint Public Procurement and Innovation: Lessons Across Borders (Bruylant 2019). Selected chapters from the book are available here.

Clockwise: Professors Gabriella Racca, Jean-Bernard Auby, Christopher Yukins, Laurence Folliot Lalliot

Introductions

Jean-Bernard Auby University SciencePo, Paris, France

Gabriella M. Racca University of Torino, Italy

Christopher R. Yukins George Washington University, USA

Laurence Folliot-Lalliot Paris Nanterre University, France

Discussants: Caroline Nicholas, Paulo Magina (photo: Flickr-Lisbon Council), Rozen Nogellous, Stéphane De La Rosa

Discussion

Caroline Nicholas Senior Legal Officer, UNCITRAL

Rozen Noguellou University Paris 1, France

Paulo Magina Head of the Public Procurement Unit, OECD

Stéphane De La RosaUniversity Paris-Est Créteil, France