In the conference report which accompanied section 886 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2021, Congress called for the Defense Department to launch a new study of bid protests, to follow up on an earlier report by the RAND Corporation. Congress called for a new study to address:
The rate at which protestors are awarded the contract that was the subject of the bid protest;
The time it takes the Defense Department to implement corrective actions after a ruling or decision, the percentage of those corrective actions that are subsequently protested, and the outcomes of those protests;
Analysis of the time spent at each phase of the procurement process attempting to prevent a protest, addressing a protest, or taking corrective action in response to a protest, including the efficacy of any actions attempted to prevent the occurrence of a protest; and
Analysis of the number and disposition of protests filed within the Defense Department.
The conferees also emphasized “the potential benefits of a robust agency-level bid protest process.” The conferees further said that the study “should review existing law, the Federal Acquisition Regulation, and agency policies and procedures,” and should “solicit input from across the DOD and industry stakeholders.”
The first of several public meetings will be held on the study on Tuesday, April 19, 2022 at 12:00 – 1:30 Eastern. Principal investigators David Drabkin and Christopher Yukins will discuss initial steps from the study, and will seek input on the questions posed by Congress, above. The meeting will be virtual and will not be recorded, and attendance is limited.
President Biden recently signed into law the Infrastructure Investment and Jobs Act, Public Law 117-58 (Nov. 15, 2021), trillion-dollar legislation intended to rebuild U.S. infrastructure. This webinar will focus on Title IX of the new law, the “Build America, Buy America” Act (BABA), which will impose much broader domestic-preference requirements on items purchased using federal grants, tighten federal procurement requirements under the Buy American Act, and launch a review of U.S. agreements that have opened defense markets with U.S. allies around the world.
Part I of the BABA addresses procurement for infrastructure supported by federal financial assistance. As commentator Dustin Painter noted, unlike the “Buy American” requirements of Section 1605 of the 2009 American Recovery and Reinvestment Act, the domestic content requirements imposed by the BABA are “not limited to the funds appropriated or authorized” by the new legislation — and so the new law likely will have a broader impact on all federally funded infrastructure programs.
Under the new legislation, all iron and steel products and construction materials must be produced in the United States. Manufactured products will need to be manufactured in the United States, and at least 55 % of their component costs will need to be U.S.-origin.
Domestic-content waivers on projects funded with federal assistance will need to be published for comment (much as the Biden administration has begun to publish federal waivers for Buy American Act purposes). Waivers will be available only if applying the U.S. preference (1) will be inconsistent with the public interest, (2) iron, steel, manufactured products or construction materials are not produced in U.S. in sufficient and reasonably available quantity or satisfactory quality, or (3) inclusion of domestic products or materials will increase overall project cost by 25 percent.
In line with the new legislation, the U.S. Office of Management & Budget (OMB) guidance for federal grantees (set forth in Title 2 of the Code of Federal Regulations) may be amended to reflect the new domestic content requirements, which are to be applied consistently with international trade agreements. In the meantime, in a December 20, 2021 memorandum, OMB asked federal agencies for extensive data on the iron and steel, manufactured goods and construction materials used in federally supported infrastructure projects.
As former U.S. trade official Jean Heilman Grier noted in a recent post, under most current free trade agreements the United States has already excepted highways, mass transit and airport projects. This has meant that foreign firms may “participate in such projects but must comply with the ‘Buy America’ requirements.” Under the new legislation, Ms. Grier wrote, the “broader implication of the expansion of domestic preferences to all infrastructure projects that receive federal funds is that the U.S. would not likely be able to offer [those projects as market-opening concessions] in future procurement negotiations.”
Part II of the the BABA includes a suite of “Make It In America” provisions, which echo President Biden’s January 2021 Executive Order 14005. Under the legislation, a new “Made in America Office” is to be established in OMB, which will oversee more rigorous standards for Buy American Act (BAA) waivers. The new legislation also reflects a sense of Congress that the Buy American Act should be applied with a 75% domestic content requirement — a substantial increase from the traditional 50% requirement, which was increased by President Trump.
As with the requirements for federal grants, Buy American Act requirements under the new law are to be implemented consistently with standing international trade agreements. This means that the stronger Buy American requirements will not apply to procurements over the Trade Agreements Act threshold, which per FAR 25.402 is generally $183,000 for supplies.
Notably, the new legislation calls for a review of the impact of free trade agreements on U.S. procurement. That review will include reciprocal defense procurement agreements, which are the key to open international trade in defense materiel and services between the United States and its allies. Existing trade agreements are to be assessed for “equal and proportionate” access by U.S. suppliers. The new law also codifies longstanding exceptions to Buy American requirements, such as those for U.S. allies under the reciprocal defense procurement agreements, and general exemptions for least developed nations.
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
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.
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.
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
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.
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.”
Alfreda Robinson, President, National Bar Association & Associate Dean, GW Law
Please join the National Bar Association, in conjunction with George Washington University Law School’s Government Procurement Program, for a one-hour webinar on federal contracting and the COVID-19 pandemic — a review of emerging issues, in law and business, for thousands of federal contractors and their employees.
Thursday, April 23, 2020, 9 am Pacific/10 Mountain/11 Central/12 noon Eastern
Program Recording –Instructions on Using Auto-Captioning in 100+ Languages
Tuesday, April 21, 2020, 9:00 ET/14:00 UK/15:00 CET/21:00 CST
Governments around the world are imposing trade controls that may cut off access to life-saving equipment. GW Law held an open webinar on protectionism in the COVID-19 pandemic – the barriers to imports and exports that threaten to deepen the pandemic. The program materials are below.
Program Recording –Instructions on Using Auto-Captioning in 100+ Languages
Tom McSorley, Arnold & Porter (Washington DC) – BioHumanitarian aid US Export Controls
Zornitsa Kutlina-Dimitrova, European Union – DG for Trade – Bio – Works
Moderators: Christopher Yukins, GW Law School; Vanessa Sciarra, National Foreign Trade Council; Laurence Folliot Lalliot (University of Paris Nanterre (joining from Dakar))
In an April 1, 2020 letter to U.S. Secretary of Defense Mark Esper and Under Secretary of Defense for Acquisition and Sustainment Ellen Lord, a bipartisan group from Ohio’s congressional delegation (including both senators) asked the Defense Department to provide more guidance to line contracting officials, so that they can deal effectively with contractors in the COVID-19 crisis. The letter noted:
U.S. Secretary of Defense Mark Esper (photo: US Army/DoD)
We appreciate the guidance issued by the Office of Management and Budget (OMB) within the last two weeks as well as the memorandum released by Under Secretary Lord on March 20, 2020 regarding designation of the Defense Industrial Base as Essential Critical Infrastructure. Despite the prompt release of this instruction, we are concerned that guidance to the defense contractor workforce remains ambiguous and lacks uniformity in application.
The letter asked for specific guidance on handling employees (allowing them to telework, for example), and on how to seek financial relief (if necessary) under Section 3610 of the CARES Act:
Under Secretary of Defense Ellen Lord (photo: US Army/DoD)
In the event working on-site or telework is not possible, direct contracting officers to exercise the available authorities found in OMB Memorandum M-20-17 [NB: probably should be M-20-18] and Section 3610, Federal Contractor Authority of the CARES Act of 2020 to maintain a source of cashflow to keep this vital workforce intact and prevent avoidable reductions in forces during this crisis.
The letter noted that the DoD policy of leaving these decisions to the discretion of individual contracting officers — a potentially critical problem in deploying contractor relief under Section 3610 — had created uncertainty in a time of crisis:
Thus far, the DoD policy of delegating key decision-making authorities to the lowest levels has caused the contractor workforce great concern because of uncertain, and often conflicting guidance. The defense contractor community needs stability and continuity in this time of crisis and these steps will enable contractors to meet their obligations while protecting their workforce.
The Defense Department issued an initial memorandum on implementation of Section 3610 on March 30, 2020, and further guidance is expected.
On March 27, 2020, Congress sent to the President the Coronavirus
Aid, Relief, and Economic Security (CARES) Act, which
will provide over $2.2 trillion in government funding as the United States
weathers the COVID-19 pandemic. President
Trump promptly signed the Act, the product of a bipartisan compromise between
the White House and Congress. Among many
other forms of relief, the CARES Act provides funding to preserve public health
and economic stability in various sectors, including federal contracting – a market
sector that employs several
million American workers.
The CARES Act stands as an important example for the
international procurement community – a COVID-19 measure that both reduces health
risk and drives economic recovery through existing public contracts.
Rep. Anthony Brown (D-Md.), speaker pro tempore, gavels $2 trillion CARES Act’s passage in House by voice vote
The challenge now is for federal agencies to deploy the CARES
Act’s funding, consistent with the goals of President
Trump and Congress
to use the CARES Act to —
Preserve workers’ health: Section
3610 of the CARES Act protects workers’ health by allowing contractors to send
their non-essential employees home during the pandemic, using leave paid for by
the federal government.
Minimize the spread of the coronavirus: Keeping contractor employees at home will
retard the spread of the COVID-19 virus, by reducing social exposure to the
virus in millions of offices, factories and homes.
COVID-19 Cases as of 24 March 2020 – Source: World Health Organization data – Wikimedia
Save the contracting base: The CARES Act directs funding to fragile sectors
of the U.S. economy, including the thousands of companies that support the federal
government. Without CARES Act funding, many
contractors – including vulnerable small businesses – may collapse, destroying
vital parts of the government’s contracting base.
Jump-start the stalled economy: When President Trump signed
the CARES Act, he pointed out that the legislation ultimately may cost over $6
trillion – stimulus funding which is critically needed, as the President noted,
for the American economy to rebound in the coming months.
In the next few weeks, procurement leaders from across government will need to implement the CARES Act. This article assesses some of the key questions those leaders will need to address. To make sense of the CARES Act, we will examine the Act and its purposes in an integrated way, looking both at Section 3610 (which authorized contractor reimbursement) and at other, parallel provisions of the Act. As the late Supreme Court Justice Antonin Scalia (an expert on statutory interpretation) explained:
“Statutory construction . . . is a
holistic endeavor. A provision that may seem ambiguous in isolation is often
clarified by the remainder of the statutory scheme—because the same terminology
is used elsewhere in a context that makes its meaning clear, or because only
one of the permissible meanings produces a substantive effect that is
compatible with the rest of the law.”
What does the CARES Act call on agencies to do for contractors? Under Section 3610 of the Act, agencies may in their discretion use any “funds made available to the agency” by Congress to modify any contract or other agreement to reimburse contractors for workers’ lost time up to September 30, if the contractor provides leave to its employees or subcontractors “to protect the life and safety of Government and contractor personnel.”
What work locations are covered for reimbursement? A contractor may recover only if its work
location has been approved by the government – in other words, a contractor
cannot “game” the government by unilaterally naming a work site (such as New
York City or New Orleans) where it may be impossible to perform.
What if the contractor employees can telework? The government has strongly encouraged contractor
telework, through policies issued by the Office
of Management and Budget and the Defense
Department. If employees can do telework
from home, then reimbursement may not be available.
How will contractors’ reimbursement be calculated? Section 3610 is clear: the CARES Act allows agencies to reimburse contractors at “minimum applicable contract billing rates” for up to an average of 40 hours per week for paid leave (including sick leave).
What kinds of contracts will be covered? The CARES Act does not exclude any
contract types, or provide detail on how different contract types should be handled. This may have been due to the rushed
legislative process. S. 3548, the prior
Senate bill, was introduced late the prior week, and then was blocked by a
partisan battle in the Senate. The final
language of the CARES Act reflects rapid legislative drafting, which naturally
left gaps in the statutory language. Applying
the maxims of statutory interpretation explained above by Justice Scalia, we
can look to other sections of the CARES Act (discussed below), which also
address contractor reimbursement but do not distinguish between types of
contracts.
What’s to keep contractors from cheating ? The CARES Act makes relief under the Act subject to audit by the Government Accountability Office (Congress’ watchdog agency), and nothing in the Act suggests that contractors seeking reimbursement will be exempt from the criminal and civil fraud laws, debarment and exclusion rules that the government normally uses to block bad actors.
Although Section 3610 is silent on the mechanics of reimbursement . . . other provisions of the Act shed light on Congress’ intent.
How should contractors seek reimbursement? Although Section 3610 is silent on the mechanics of reimbursement — a detail normally left to the agencies — other provisions of the Act may shed light on Congress’ intent. Section 18006, for example, says that educational institutions that receive funding “shall, to the greatest extent practicable” continue to pay their contractors during the period of any disruptions or closures related to the coronavirus. Section 4113 explains how contractors in the aviation industry are to seek reimbursement by applying for an amount, “using sworn financial statements or other appropriate data, as to the amount of wages, salaries, benefits, and other compensation” that the contractors paid their employees. Section 19005 says that the Architect of the Capitol is to “continue to make payments provided for under . . . contract for the weekly salaries and benefits of . . . [contractor] employees” who are “furloughed or otherwise unable to work” during closures. Finally, Section 3610 itself explains that any contractor’s reimbursement will need to be reduced by the value of other credits the contractor receives, such as the tax credits afforded for employee leave under the Coronavirus Families First Response Act.
Taking these provisions together – “holistically,” to use Justice Scalia’s famous term – it becomes clearer how in practice agencies can afford contractors relief under the Act. What Congress and the President clearly expect is that contracting agencies will move quickly to advance the nation’s recovery – and Americans’ health – by allowing contractors to seek reimbursement for covered COVID-19 losses.
Editor’s note: On April 2, a free GW Law webinar will discuss these and other emerging international developments in COVID-19 emergency procurement, with panelists from government, business, economics and the law, who will join us from Europe, Asia, Africa and the Americas.
On March 10, 2020, Caroline Nicholas (UNCITRAL) and Christopher Yukins joined King’s College, London’s online course in procurement, by videoconference.
