Public Procurement International

Webinar — Buy American and the New U.S. Infrastructure Legislation

Program Recording

GW Law Webinar – Wed. 19 January 2022 – 9 am Eastern – 14:00 UK – 15:00 CET

500+ webinar registrants from five continents

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.

For a closer look at BABA issues:
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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.

Panelists

Webinar — Brazil’s Public Procurement Market: New Opportunities, New Challenges

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GW Law Summer Series – Introduction to U.S. Bid Protests

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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.

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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.”

NASPO Report Download

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.

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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.

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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

GSA Commercial Platforms - An Assessment - Cover Image

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 Commercial Platforms Contracts — Performance Work Statements Submitted by Amazon Business, Overstock.com and Fisher Scientific

GSA Awards Contracts to Open Amazon and Other Commercial Platforms to Billions of Dollars in Federal Micro-Purchases

GSA Delays “Electronic Marketplaces” Contract Awards

Trump Administration’s Fight Against Counterfeit Trade May Impact GSA’s Electronic Marketplaces Initiative — Which Is No Longer Stalled by Protest

Request Denied by GAO for Documents in Pending Protest Regarding GSA “Electronic Marketplaces” Procurement

Webinar: Opening Online Marketplaces to Government Micro-Purchases — June 30, 2020