This year has seen an unprecedented rise in trade barriers – both direct and indirect – involving public procurement. Join a free 60-minute webinar sponsored by George Washington University Law School’s Government Procurement Law Program, to hear leading experts on emerging trade barriers affecting grants and procurement.
These measures, driven in part by the broadening role of foreign firms in the U.S. government’s supply chain, and in part by the specific challenges posed by Huawei and other Chinese high-technology firms to U.S. security, impose substantial compliance burdens on contractors and grantees in U.S. procurement. For many in the U.S. government, it would be “nothing less than madness to allow Huawei to worm its way into one’s next-generation telecommunications networks,” and Section 889 and parallel initiatives (such as the “Clean Network” initiative) are intended to shield the United States.
In practical terms, the Cybersecurity Maturity Model Certification (CMMC) and Section 889 may make it very difficult – if not impossible – for foreign vendors to compete in U.S. markets
In practical terms, the CMMC and Section 889 may make it very difficult – if not impossible – for foreign vendors to compete in U.S. markets, raising questions under the United States’ international free trade agreements and reciprocal defense procurement agreements. (The vulnerabilities in the U.S. government’s information technology supply chain are the subject of an upcoming GAO report, and a separate private-sector study is assessing barriers to procurement trade generally.) Although the Trump administration, bowing to industry pressure and the Defense Department’s concerns, extended the Section 889 implementation deadline to September 30, 2020 for Defense Department contractors, the compliance burdens remain quite serious.
Donald Trump in Ypsilanti, Michigan
Trump Administration’s “Buy American” Order for Medicines – and the Biden Plan: From its start, the Trump administration has adopted a broad range of “Buy American” measures, including a recent change to federal grants rules which says that grantees should, when possible, buy U.S. goods. Although even some supporters have criticized the Trump administration’s “Buy American” efforts as ineffective, Trump’s protectionist rhetoric has undoubtedly affected the international debate over free trade in procurement.
In response to the COVID-19 pandemic, on August 6, 2020 President Trump issued an executive order for “on-shoring” the manufacture of essential medicines bought by the U.S. government. The order calls for limiting U.S. market-opening commitments under the World Trade Organization (WTO) Government Procurement Agreement (GPA) and free trade agreements – a process which could trigger months of renegotiations with trading partners and result in limiting U.S. access to foreign markets. Jean Heilman Grier, former procurement negotiator at the Office of the U.S. Trade Representative, has written on the Executive Order.
Impact of the Pandemic: Of course controversial trade measures have been driven in part by the COVID-19 pandemic.
By Rosario “Charo” Gutierrez (USAF)
Robert Anderson co-wrote an article with Anna Mueller of the WTO on the constraints and flexibility afforded by the WTO’s Government Procurement Agreement. For their part, co-moderators Laurence Folliot Lalliot and Christopher Yukins co-wrote a piece in Concurrences, the competition periodical, on the pandemic’s lessons for international markets, including especially the pandemic’s disruptive effect on protectionism. While the pandemic exacerbated economic nationalism and trade barriers, the pandemic also pointed up the sometimes mortal dangers of cutting off international supply chains.
European Trade Measures: Roland Stein (of the BLOMSTEIN firm, Berlin) and Professor Michal Kania (University of Silesia/Poland) will discuss important developments in access to European procurement markets:
White Paper — Possible Exclusion of Subsidized Foreign Firms: Following on 2019 guidance from the European Commission to member states on abnormally low bids from vendors from outside the European Union, in June 2020 the Commission issued a white paper on “levelling the playing field as regards foreign subsidies.” The white paper launches an EU-wide consultation on how to address foreign subsidies which distort EU procurement markets; among other measures under consideration, member states might exclude vendors that receive foreign subsidies. The white paper notes that the EU continues to assess the proposed International Procurement Instrument, a measure which has received cautious support from European industry and which would allow member states to raise new barriers against vendors from nations (including potentially the United States and China) that do not cooperate in EU efforts to open procurement markets.
Exclusion for Non-Domestic Content: Article 85 of EU Directive 2014/25/EU, which governs utilities’ procurement, says that a bid may be rejected if more than 50% of the products being offered would come from nations that have not entered into a free trade agreement with the EU (such as China) – a rarely enforced restriction which, as codified in German law, was recently applied by an important German court, the Brandenburg higher regional court.
The Government Procurement Review, one of the leading compilations of procurement laws from around the world, is now available in its 8th edition. Congratulations to the editors, Jonathan Davey and Amy Gatenby of the law firm of Addleshaw Goddard.
Amy Gatenby
The volume, published annually, covers procurement law from fourteen countries and the European Union, including reviews by leading procurement practitioners from Australia, Austria, Belgium, Brazil, Canada, the Dominican Republic, Germany, Greece, Italy, Mexico, Russia, Switzerland, the United Kingdom and the United States.
For further information on foreign and international sources on public procurement law, please see the research guide prepared by GW Law’s government procurement research librarian, Mary Kate Hunter.
In this piece in the Government Contractor, Christopher Yukins and Kristen Ittig reviewed key issues under Section 3610 of the CARES Act, a provision which allows agencies to modify existing contracts, under appropriate circumstances, to reimburse contractors for leave paid to employees during the COVID-19 pandemic. 62 Government Contractor para. 156 (June 10, 2020).
On Tuesday, June 30, 2020, at noon Eastern time, join a free hour-long webinar sponsored by George Washington University Law School’s Government Procurement Program to discuss GSA’s recent contract awards in the “commercial platforms” initiative — contracts estimated to be worth $6 billion annually, which were awarded to Amazon Business and two other online marketplaces.
Moderator Christopher Yukins (GWU) will introduce GSA’s “commercial platforms” initiative, and discuss potential challenges in implementation.
Robert Handfield, the Bank of America University Distinguished Professor of Supply Chain Management at North Carolina State University, and Director of the Supply Chain Resource Cooperative, will discuss how the government’s use of commercial platforms could improve the resilience of public supply chains in times of crisis.
Thomas Kull, professor of supply chain management at the W. P. Carey School of Business at Arizona State University, will review the training that will be needed under this initiative, as non-procurement professionals take on substantial purchasing responsibilities through the new platforms.
Andrea Patrucco, professor of project and supply chain management at Penn State Beaver, will discuss the potential impact of this initiative in state and local governments, and internationally.
Roger Waldron, Coalition for Government Procurement
Special guest Roger Waldron, president of the Coalition for Government Procurement (a leading industry association of commercial contractors who sell regularly to the federal government), will join the panel to discuss industry’s perspectives on GSA’s initiative. The Coalition has raised a number of concerns regarding the new commercial platforms initiative, including concerns regarding agency accountability, pricing, supply chain security, counterfeit goods, and market concentration.
The panelists have co-authored a background article for the seminar in the Government Contractor; the piece was published in the days before GSA announced the contract awards. In the article, Professors Christopher Yukins (George Washington University), Robert Handfield (North Carolina State University), Thomas Kull (Arizona State University) and Andrea Patrucco (Penn State University Beaver) discuss key themes for the upcoming webinar: challenges in what is, in essence, a new method of procurement; improvements that the initiative will bring to supply chain resilience; training that will be needed for federal purchasers; and, the possible impacts on procurement markets, both in the United States and abroad.
GSA’s commercial platforms initiative, by opening online marketplaces to federal users’ micro-purchases, could have an enormous impact on broad portions of the federal marketplace. If the challenges can be met—if GSA’s commercial platforms initiative succeeds – it may serve as a model for other public purchasers across the United States, and across the globe.
On June 5, 2020, Professors Michal Kania (University of Silesia in Katowice, Poland, and a former Fulbright Scholar at GWU Law) and Christopher Yukins joined to discuss lessons learned in procurement from the COVID-19 pandemic.
The European Union has launched important initiatives in response to the COVID-19 pandemic, in joint procurement and funding innovation to drive the recovery. In the United States, governments’ initial response was marred by fierce competition between federal and state governments for critical medical supplies. But U.S. governments have a long tradition of joint procurement (called “cooperative purchasing”) among governments, and in funding innovation through various initiatives including the Small Business Innovation Research (SBIR) program. International organizations, including the United Nations, have also played an important part in coordinating international relief efforts in procurement.
Registrants were from over thirty countries across five continents
Panelists
Lucian Cernat
Lucian Cernat, Chief Trade Economist, European Commission – welcoming remarks.
Bertrand Wert
Bertrand Wert, PhD, Innovation Maker for the European Innovation Council, Accelerator, in the Business Acceleration Services team, where he has been in charge since 2015 of supporting innovative SMEs that are members of the Accelerator to gain access to public and private procurers of innovation. The EIC Accelerator programme supports the most innovative European SMEs, via grants and equity, to commercialise their innovative solutions and to look for investors. Bertrand worked from 2009 to 2015 for Directorate General GROW of the European Commission, in the team developing the “Innovation Union” strategy. Meanwhile, piloting demand-driven policy interventions, he managed several public procurement networks or “buyers’ groups” of innovation (Pre-Commercial Procurement & Public Procurement of Innovation).
Jekaterina Novikova
Jekaterina Novikova is Innovation Policy Coordinator at the European Commission, Directorate General for Research and Innovation in the newly created European Innovation Council Task Force. Her areas of responsibility include innovation procurement and the connection of innovation ecosystems under the Horizon Europe program. An EU official since 2005, she spent five years in management positions implementing FP-7 and Horizon 2020 research projects. As an EU fellow, she spent the academic year 2018-2019 in the US, at the University of California, Berkeley where she conducted research on how the US government, universities and industry facilitate the transition of research results to market. Jekaterina is a Certified Chartered Accountant and holds an MA in European Affairs from Lund University, Sweden.
Ivo Locatelli
Ivo Locatelli, Senior Expert–Team Leader in innovation procurement at the European Commission (DG GROW (Internal Market, Industry, Entrepreneurship and SMEs)). Ivo has written on innovative procurement in the European Union, and will draw on his assessment of Europe’s experience to discuss next steps in joint procurement among the member states.
Stephan Corvers
Stephan Corvers (s.corvers@corvers.com), managing director of Corvers Procurement Services (Netherlands), a private company which has been operating in the field of European procurement since 2000. Corvers has been involved in a wide range of procurement projects, relating to new markets, new products or services, new distribution channels, and new technology. Corvers is a contractor for the EAFIP-initiative of the European Commission.
Discussants
Benedetta Audia
Benedetta Audia, United Nations Office for Project Services (UNOPS) as Corporate Legal Advisor, where she heads the commercial and institutional law practice and has played a lead role in UNOPS’ response to the COVID-19 pandemic. She is an adjunct professor at George Washington University Law School, a Visiting Professor of Public International Law at LUISS Guido Carli University. She holds a Juris Doctor degree in Public International Law and two Masters Degrees (in Corporate Law and Legal Advanced World Studies).
Justin Kaufman
Justin Kaufman, General Counsel, NASPO ValuePoint, leading U.S. publicly led “cooperative purchasing” vehicle, coordinated through the National Association of State Procurement Officers (NASPO) and used by all 50 states and hundreds of local governments across the United States. Justin has worked for many years in cooperative purchasing in the United States, and was a contributing author to Joint Public Procurement and Innovation: Lessons Across Borders (G. Racca & C. Yukins, eds., 2019).
Thomas Hendrix
Thomas Hendrix, Managing Partner, Decisive Point, a venture advisory and investment firm focused on advanced technology. Tommy works regularly with emerging companies in the SBIR program, building innovative solutions for government. Tommy served in the US Army for nearly 10 years as a Ranger, Green Beret, and Commander in a counter-terrorism response force. He holds an MBA from Columbia Business School and a BS in Law and Legal Systems from the United States Military Academy at West Point, and is a candidate for a Master of Studies in Law at George Washington University. Prior research he has done on improving innovation in government-funded research and development is here.
Moderators
Gabriella Racca
Professors Gabriella Racca (University of Turin) and Christopher Yukins (George Washington University
A special note to the international procurement community — the World Bank needs your help in its worldwide survey of emergency procurement practices for the COVID-19 pandemic, available here
Join another outstanding 60-minute webinar with the National Bar Association and George Washington University Law School’s Government Procurement Program, to discuss contractors’ road to recovery – the challenges and opportunities facing government contractors as the country emerges from the COVID-19 pandemic
Michael Bennett, Evans & Chambers Technology, LLC; Chair, DC Board of Elections
Michelle Coleman, Counsel, Crowell & Moring
Dominique Casimir
Danielle Conway, Dean, Penn State Dickinson Law
Dominique Casimir, Partner, Blank Rome LLP
Liza Craig, Counsel, Reed Smith
Judge Jeri Somers
Kendra Perkins Norwood, Wiley. For an earlier webinar on Section 3610 reimbursement in which Kendra Perkins Norwood and other attorneys from the government and the private sector participated, click here.
Judge Jeri Somers, Chair, US Civilian Board of Contract Appeals
Moderators: National Bar Association President Alfreda Robinson (GW Law School) & Christopher Yukins (GW Law School)
On April 17, 2020, the U.S. Office of Management and Budget, part of the White House, issued guidance on how agencies should implement contractor reimbursement for employees granted leave to mitigate the COVID-19 pandemic. This is a major milestone in COVID-19 procurement developments, and a detailed analysis is available here.
The first phase of the COVID-19 pandemic brought a new wave of trade controls, as countries imposed new barriers against trade in vital supplies such as masks and ventilators. Now as the COVID-19 pandemic enters its next phase – as the disease recedes in some populations, and attacks others with new ferocity – a simple but critical question has come into focus: do trade barriers make sense in a pandemic?
One striking aspect of the pandemic has been the global supply chain needed for supplies essential to fight the virus. In an April 2020 report, the World Trade Organization highlighted the global sources for medical supplies, and the World Health Organization and other international organizations have stressed the need for international cooperation in fighting the COVID-19 pandemic.
Zornitsa Kutlina-Dimitrova
Concerns over new protectionism in the United States arose earlier this year, when the Trump administration signaled that the United States might withdraw from the WTO Government Procurement Agreement (GPA) in response to a GAO study which suggested that European exporters enjoy lop-sided access to the federal procurement market. Lucian Cernat and Zornitsa Kutlina-Dimitrova, trade economists at the European Commission, have responded that the U.S.-EU trade balance in procurement, if read broadly, is actually much more favorable to the United States.
Another potential Trump administration initiative would impose new trade controls to force pharmaceutical companies to bring their production to the United States. This initiative, long pressed by senior White House trade advisor Peter Navarro, appears to have faded as well.
The Trump administration instead took a focused approach to trade controls, when on April 10, 2020 the Federal Emergency Management Agency imposed export controls under the Defense Production Act on personal protection equipment, including certain masks and gloves. At the same time, companies such as 3M were being savaged by President Trump for shipping emergency supplies abroad, even when (as 3M made clear) those shipments might be critical to other countries’ efforts to fight the pandemic.
Tom McSorley
But even the Trump administration’s most aggressive export controls, such as those aimed at Iran, Cuba, Venezuela and other sanctioned nations, will not necessarily block life-saving supplies. As Tom McSorley and his colleagues have pointed out, exceptions built into the U.S. export regime will still allow humanitarian supplies to reach Iran and other nations under U.S. sanctions. The FEMA ban on exports of PPE also allows for exceptions – under FEMA’s approval – for humanitarian purposes, Tom McSorley and his colleagues have noted. [Editor’s update: FEMA’s exceptions to the export ban — including a blanket exception for shipments to Canada and Mexico — are published in draft form here.]
Even more striking was the Trump administration’s decision to waive certain import controls – long the heart of Trump’s “Buy American” rhetoric – on vital items in short supply, from N95 masks to bleach. In normal times, the U.S. General Services Administration, which runs “schedule” contracts used by federal agencies for tens of billions of dollars in annual sales, complies with the Trade Agreements Act (TAA) by banning supplies from countries that have not entered into free trade agreements with the United States (“non-TAA” countries). Because of acute shortages in fighting the pandemic, however, GSA has temporarily lifted that ban for certain supplies. [Editor’s note: Jean Grier’s summary of this development is at Perspectives on Trade: ‘US Temporarily Lifts Procurement Ban’] The Trump administration’s abrupt volte face suggests that trade controls can raise dangerous barriers in times of crisis.
Even more striking was the Trump administration’s decision to waive certain importcontrols – long the heart of Trump’s “Buy American” rhetoric – on federal procurements of vital items in short supply
Simon Evenett – University of St. Gallen (Switzerland)
U.S. trade controls in the pandemic are part of a broader trend around the world, as nations try to reshape trade flows to husband supplies needed to address the COVID-19 disease. Those trade controls, which Simon Evenett of the University of St. Gallen calls “sickening-thy-neighbor” measures, raise serious humanitarian and political questions now that some countries no longer need equipment that is desperately sought in other nations. With the pandemic receding, New York will now share ventilators it no longer needs with Maryland and Ohio; should the United States do the same for Senegal, or for new hotspots such as Sweden? And what role should international institutions, such as the WTO, the World Bank and the OECD, play in facilitating international cooperation rather than trade barriers – global cooperation, as Laurence Folliot Lalliot has argued, that will be needed to save lives. (An update: EU Commissioner Phil Hogan on April 16, 2020 called for a temporary international ban on tariffs for vitally needed COVID-19 supplies, and made clear that European Union cannot “on-shore” its manufacturing in the long term — it will continue to rely on an international supply chain for key medical supplies.)
Laurence Folliot Lalliot – University of Paris Nanterre
Solving that puzzle – weighing protectionism in the pandemic – may require a new set of policy metrics. Zornitsa Kutlina-Dimitrova of the European Commission has argued that trade restraints make little sense when weighed against the secondary economic effects (e.g., the industrial atrophy, the isolation from innovation) that trade controls cause. Her research bears special attention now, when human lives – not just dollars – weigh in the balance.
Editor’s note: Join a free GW Law webinar on Tuesday, April 21, 2020 at 9:00 ET/14:00 UK/15:00 CET/21:00 CST. Simon Evenett, Robert Anderson, Jean Heilman Grier, Tom McSorley and Zornitsa Kutlina-Dimitrova (invited) will convene before a worldwide audience to discuss “Protectionism in the Pandemic.” The program will be moderated by Laurence Folliot Lalliot, Vanessa Sciarra of the NFTC and Christopher Yukins. Program information and registration.
