On January 15, 2020, Overstock.com, Inc., a competitor in the pending U.S. General Services Administration (GSA) procurement for “electronic marketplaces” reportedly protested the reissued (and revised) solicitation at the U.S. Government Accountability Office. Per GAO’s rules on the public availability of records, 4 Code of Federal Regulations (CFR) Part 81, Professor Yukins submitted a formal request to GAO for electronic versions of the redacted materials filed in the referenced pending bid protest (attached). These records were requested so that information and analysis regarding the subject procurement – a multi-billion dollar procurement to open commercial electronic marketplaces to federal users – can be made available to the public. If these records are not released, key information on this major procurement may be blocked from the public for roughly three months – the 100-day period for a GAO bid protest to be decided.
On January 22, 2020, GAO denied the request, saying that it is estimated that the documents will not be available until the proceedings are concluded, projected to be on or about April 24, 2020, over three months later. In practical terms, this means that the thousands of vendors and customers which need to prepare for the new electronic markets to be opened by GSA’s procurement may need to wait months for information on the ongoing procurement and protest — even though that information (because redacted) is otherwise publicly releasable.
Roger Waldron, Coalition for Government Procurement
Editor’s Note: On January 24, 2020, the Federal News Network published an op-ed by Roger Waldron of the Coalition for Government Procurement which concluded: “. . . there are broad implications for the procurement system associated with the e-Marketplace acquisition, and those implications extend into other areas of importance, like supply chain security, socioeconomic programs, and the protection of proprietary data. Yukins is right. Absent the release of these [GAO protest] records, ‘key information on this major procurement may be blocked from the public for roughly three months – the 100-day period for a GAO bid protest to be decided.’ So too, from the perspective of Coalition members, it highlights that more review and reflection on the acquisition is needed. “
Jessica Tillipman, GWU Law School – Co-chair, ABA SIL Anti-Corruption Committee
On February 13, 2020, at 12:00 noon ET, the American Bar Association (ABA) Section of International Law (SIL) Anti-Corruption Committee will join with the ABA Public Contract Law Section (PCLS) Suspension and Debarment Committee, for an informal lunchtime session on developments in international debarment. The session will be moderated by Assistant Dean Jessica Tillipman, George Washington University Law School, Washington DC.
Christopher Yukins, George Washington University Law School (who co-teaches courses on anti-corruption with Dean Tillipman), will discuss emerging international models for debarment, and the impact that new electronic marketplaces may have on debarment globally. With regard to the U.S. experience, he has drafted a book chapter with John Pachter and Jessica Tillipman, for a forthcoming book on compliance by Cambridge University Press. Professor Yukins has also co-written a piece with Professor Michal Kania (U. Silesia – Katowice), comparing debarment in the United States and the European Union.
Pascal Friton, a partner in the BLOMSTEIN firm, Berlin, will discuss how the European Union’s member states are addressing exclusion and debarment, drawing on a piece he presented at the Thomson Reuters Government Contracts Year in Review in February 2019. He also will be speaking on the afternoon of Tuesday, February 18, 2020 at this year’s Year in Review conference.
Collin Swan, World Bank
Collin Swan, of the World Bank’s Office of Suspension & Debarment, will discuss his office’s debarment survey and the office’s ongoing research into other debarment systems (beyond the United States and the World Bank). See his FCPA Blog post on the survey.
Grace Sullivan, a third-year student at the George Washington University Law School, recently won first prize in the Public Contract Law Journal annual writing contest for her note (which was also accepted for publication in the Journal). Her note analyzes three case studies of foreign contractors debarred by the U.S. government: Chinese telecommunications giants ZTE and Huawei, and Russian cybersecurity firm Kaspersky. Ms. Sullivan will be presenting on her note at the March 2020 ABA PCLS Federal Procurement Institute in Annapolis, MD.
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Debarment – the exclusion of a firm or individual from working with a government – allows governments to protect themselves from the reputational and performance risks posed by unqualified firms and individuals. As a March 2019 conference at King’s College, London made clear, governments the world over are reforming their debarment systems, though often in strikingly different ways. The U.S. government is now moving to reform its debarment system, by more closely aligning the rules that govern debarments for grants and contracts. The rules would be revised “to improve consistency between the procurement and non-procurement procedures on suspension and debarment, based on recommendations of the Interagency Suspension and Debarment Committee,” under a pending Federal Acquisition Regulation (FAR) reform case No. 2019-015. Many have long argued for this reform, and a 2017 Public Contract Law Journal article by Robert Meunier and Trevor Nelson described the issue in detail. A report on the pending FAR case is currently due in January 2020, and the U.S. Office of Management and Budget anticipates that a Notice of Proposed Rulemaking (NPRM) will be published in February 2020. We will be tracking this issue closely in a special short seminar that George Washington University Law School offers online, on suspension and debarment.
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.
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
On April 30, 2019, the U.S. Department of Justice’s Criminal Division announcedrevised guidance for assessing corporate compliance systems. The guidance goes to what authorities abroad sometimes call corporate “self-cleaning” — efforts by private firms to identify and remediate improper behavior. (See, for example, Article 57 of European Public Procurement Directive 2014/24/EU.) The new guidance expands on the 2017 guidance (below), and elaborates on the Justice Department’s summary discussion of corporate compliance programs in the Justice Manual § 9-28.800.
The new guidance is noteworthy, though, for stressing (at pages 9-12) that a firm with an effective compliance system should maintain a strong compliance function, either in-house or through an outsourced vendor. As companies around the world move to implement compliance systems, they should recognize that enforcement authorities will often expect to see a robust compliance function in place, with the autonomy and authority necessary to address emerging risks of corruption and misconduct.
Senior Economist, Chief Trade Economist Unit,
European Commission
Most debates over protectionism
look only at the direct effects of “Buy National” laws — how do those laws
help specific domestic producers, and how do they raise costs and reduce
choice?
The European Commission is taking
a new approach. Building on other
transnational studies, the Commission has undertaken a multi-year effort to
assess the economy-wide impact of
domestic preferences in procurement.
Through this effort, the European Commission will be able to predict the
costs, direct and indirect, of new “Buy National” laws around the world.
Please join Zornitsa Kutlina-Dimitrova, a senior trade economist at the European Commission, in an interactive discussion of this important development in international trade.
On April 5, 2019, scholars from Pace University, the University of Copenhagen and George Washington University hosted an all-day roundtable on emerging issues in sustainable public procurement, through Pace University’s Elisabeth Haub School of Law.
The First Annual Transatlantic Roundtable on Sustainable Public Procurement was hosted by:
Pace Environmental Law and the Elisabeth Haub School of Law,
The Centre of Enterprise Liability, Faculty of Law, University of Copenhagen, and
The George Washington University Law School’s Government Procurement Law Program.
Researchers and renowned specialists from around the globe discussed recent developments in the field of sustainable public procurement. The global value of public procurement spending is enormous. OECD countries alone spend a total of a trillion U.S. dollars per year, and each year their governments spend around 14-19% of GDP on the purchase of services, works and supplies. In many sectors such as energy, transport, waste management, social welfare, education and health services, public authorities are the principal buyers. The sheer scale of public procurement spending can literally create and shape markets, impact lives of citizens across the country, and foster greater sustainability in terms of environmental protection, public health, and economic equality.
Speakers included:
Professor Jason J. Czarnezki, Kerlin Distinguished Professor of Environmental Law and Associate Dean, Elisabeth Haub School of Law at Pace University,
Marta Andhov, Assistant Professor, Faculty of Law, University of Copenhagen, Denmark,
Professors Steven Schooner and Christopher Yukins, George Washington University Law School, Washington, D.C., and
Nicole Darnall, Associate Dean and Professor, School of Sustainability Arizona State University
This event was held at Pace University’s Downtown Campus – 1 Pace Plaza, on the 18th floor in the North and South Boardrooms.
Introductions Jason J. Czarnezki –Kerlin Distinguished Professor and Associate Dean, The Elisabeth Haub School of Law at Pace University, New York
Marta Andhov – Assistant Professor, Faculty of Law, University of Copenhagen, Denmark; Haub Visiting Scholar at Pace University’s Elisabeth Haub School of Law
Session 1 : Does the United States need a sustainable public procurement legal framework?
U.S. Federal Public Procurement – A lack of interest in sustainable purchasing? – Steven Schooner, Nash & Cibinic Professor of Government Procurement Law, The George Washington University Law School
Do state level and local contracting authorities drive the sustainable procurement agenda in the United States? – Jason J. Czarnezki, Kerlin Distinguished Professor and Associate Dean, The Elisabeth HaubSchool of Law at Pace University, New York City
Sustainable Procurement in Local Governments – Nicole Darnall Associate Dean and Professor, School of Sustainability, Arizona State University
Session 2: European Union – A leader in sustainable purchasing?
How we got to the Strategic Public Procurement Agenda-Understanding the EU legal framework – Roberto Caranta, Professor of Administrative Law, University of Turin, Italy
All that glitters is not gold – Paradoxes of EU Public Procurement Law – Marta Andhov, Assistant Professor, Faculty of Law, University of Copenhagen, Denmark; Haub Visiting Scholar at the Pace University’s Elisabeth Haub School of Law
The Evolution of Sustainable Procurement in the United Kingdom: From Thatcherism to the Social Value Act and a widening and deepening policy agenda. Where next post-Brexit? – Michael Bowsher QC – Director of the Distance Learning Diploma and Masters in Public Procurement Law at King’s College London; Visiting Professor, Dickson Poon School of Law, King’s College London; Barrister (Monckton Chambers), England & Wales, Northern Ireland, Republic of Ireland
Session 3: WTO & UNCITRAL
SPP: International perspectives, including under the UNCITRAL Model Law and the WTO Government Procurement Agreement – Christopher R. Yukins – Professor of Public Procurement Law and Co-Director, Government Procurement Law Program, George Washington University Law School
Sustainable public procurement under the OECD and the multilateral development banks- Carol Cravero, PhD student at the University of Turin, Italy and University of Paris Nanterre (CRDP), France
Sustainable procurement at UNOPS –Benedetta Audia, Corporate Legal Advisor, Head of the Commercial and Institutional Law Practice, Legal Group, United Nations Office for Project Services, New York
Session 4: Selected Countries and Their Experiences
Canadian experience with Sustainable Public Procurement –Paul Emanuelli,General Counsel and Managing Director, Procurement Office, Toronto
Challenges and the future of sustainable public procurement in Poland – Michal Kania, Professor, Silesian University, Poland; Fulbright Visiting Scholar The George Washington University Law School
Brazilian experience with SPP – Luciana Stocco Betiol, Professor – Department of Social and Legal Sciences, São Paulo School of Business Administration – FGV/EAESP
