Thanks
to the extraordinary efforts of government contracts program director Karen
Thornton and Judge Jeri Somers (Chair of the U.S. Civilian Court of Contract
Appeals (CBCA)), and of course the student-contestants and many moot judges
from the U.S. procurement community, the memorable 2020 Arnold & Porter Government
Contracts Moot Court competition was able to proceed online. The finalists:
Gabriella Paez & Rita
(JD’21, GMU Law) & Regelbrugge (JD’21, GMU Law), U.S. Government
We
hope you will tune in to watch these exceptionally skilled and polished
advocates argue the topical issues in this Other Transaction Authority case of
first impression on
Please
help us spread the word to create a large virtual audience for this important
event!
Our
presiding judges will be Kyle Chadwick (Judge, Civilian Board of Contract
Appeals), Timothy McIlmail (Judge, Armed Services Board of Contract Appeals),
and Beverly Russell (Judge, Civilian Board of Contract Appeals).
The
student bios are below:
• Justin
Baird is a 2L at GWLaw, where he is a member of the Public
Contract Law Journal and treasurer of the Corporate and Business Law
Society. He will join Foley & Lardner as a summer associate.
• Amanda
McDowell is a 2L at GWLaw, where she was
recently appointed Editor in Chief of the Public Contract Law Journal.
She is currently a law clerk at DLA Piper and will join Crowell & Moring as
a summer associate.
• Gabriella
Paez is a 2L at the George Mason University, Antonin Scalia Law
School, where she is a member of the Trial Advocacy Association and the Moot
Court Board, as well as an articles editor on the GMU Civil Rights Law
Journal. She is currently an intern at the United States
Attorney’s Office for the District of Columbia.
• Rita
Regelbrugge is a 2L at the George Mason
University, Antonin Scalia Law School, where she is a member of the Trial
Advocacy Association and the Moot Court Board, as well as Editor in Chief of
the Journal for Law Economics and Policy. She is currently a
judicial intern at the Civilian Board of Contract Appeals. She will
divide her summer as a summer associate at Wiley and Pillsbury.
At a press briefing on March 19, President Trump brushed aside demands that the federal government take the lead in buying medical equipment – including the coronavirus tests, ventilators and protective gear – critically needed to save lives in the current pandemic. “We are not a shipping clerk” Trump said, and left it to the states to take first responsibility for procuring life-saving equipment.
Is President Trump right – should state governments be left to procure emergency equipment – or is this one of the most serious mistakes he has made in this pandemic?
The need for emergency equipment is desperate. On March 18, for
example, the New York Times reported that there are only roughly 170,000
ventilators in this country, although many hundreds of thousands of coronavirus
patients may need them soon. In a March 19 interview,
Governor Andrew Cuomo of New York was brutally direct. “We now have about
5,000, 6,000 ventilators in New York State,” Cuomo reported. “We are going to
need about 30,000 ventilators because these people who come in all have
respiratory illnesses.” Experience
in Italy, already overwhelmed by the pandemic, shows that if emergency
equipment is not procured immediately, thousands of American patients and healthcare
providers may die unnecessarily.
Trump’s comment deflecting responsibility for buying emergency
equipment came at a March 19 White House press
briefing, when he was asked why the federal government had (by executive
order) invoked, but not triggered, the Defense
Production Act. The Act allows
the federal government to direct manufacturers to produce vitally needed items.
The states’ governors, Trump responded, “are supposed to be doing a lot of this
work.” The federal government, he continued,
“is not supposed to be out there buying vast amounts of items and then
shipping.” “You know,” Trump said, “we’re
not a shipping clerk. The governors are supposed to be – as with testing, the governors
are supposed – are supposed to be doing it.”
Trump’s insistence that the states take the lead in emergency procurement contradicts his own administration’s “Crimson Contagion” study, confidentially drafted before the pandemic and disclosed on March 19 by the New York Times. The Trump administration draft report clearly foresaw that the federal government would have to coordinate equipment requests from the states in times of pandemic. Public health experts now reinforce the administration’s own conclusion: the federal government must take the lead in purchasing emergency equipment such as ventilators.
Trump’s approach
also contradicts what other nations facing the same pandemic are doing. Italy, for
example, has centralized
(and radically simplified) procurements of emergency equipment. CONSIP,
the Italian centralized purchasing agency, has taken charge of buying
thousands of ventilators, and it has open
requests to the market for emergency equipment.
By pushing
procurement responsibility out to the states, Trump’s approach also ignores a critical
tool available to the federal government: the United States’ unmatched ability
to assure vendors that if they build equipment, the manufacturers’ costs will
be covered even if the equipment is never used.
While the
Defense Production Act allows the government to direct the production process –
always a risky prospect – the federal government’s contracting tools include the
power to “terminate for convenience.” This simple, largely unknown contracting
power became a central part of U.S.
procurement after World War I, when the federal government canceled large numbers
of wartime contracts. The termination for convenience clause – now
required
in every federal supply contract – says that while the government may terminate
contracts for its own convenience (a right most commercial parties do not have),
the United States will make its contractors whole if the federal government
does prematurely end a contract.
This simple
termination right is extremely powerful in a time of crisis, because it means
that manufacturers – from Ford
to Tesla – can incur huge cost risks in retooling to build vital equipment. Although contractors may lose commercial
opportunities by temporarily retooling their production lines, at least those companies
know their sunk costs will be covered
by the United States – and here, that federal government guarantee may enable
many more manufacturers to join this battle against death by disease.
“This simple termination right is extremely powerful in a time of crisis, because it means that manufacturers . . . can incur huge cost risks in retooling to build vital equipment.”
This simple
procurement tool also explains why the federal government must take the lead in
procuring emergency equipment. State governments
typically have the same contract clause
– the same right of termination for convenience – but state governments do not
have the federal government’s massive resources backing the promise to make
manufacturers whole, or the United States’ preeminent market position. In
contrast to the states’ limited resources, the U.S. government’s procurement rules
channel the federal government’s nearly unlimited resources – its commitment to
pay, and the world’s largest procurement apparatus – to drive procurement of
equipment that will save lives. The time
for the federal government to exercise that procurement power is now.
By Christopher Yukins, the Lynn David Research Professor
in Government Procurement Law at the George Washington University Law School,
Washington, DC. The Law School’s
government procurement program will host an international online
colloquium on public procurement and the COVID-19 pandemic on Tuesday,
March 24, 2020, at 12:00 ET.
The international procurement community is grappling with the COVID-19 coronavirus and its effects. To learn from procurement leaders in Europe and the United States how agencies and contractors are responding, GW Law held a free online colloquium (Zoom webinar) on Tuesday, March 24, 2020, at 12 noon ET.
Wednesday, February 19, 2020, 9 am – GWU Law Learning Center – Room LLC006 – 2028 G Street NW
Join Andrea Sundstrand (Stockholm University) and Colette Langos (University of Adelaide) to discuss developments in Europe and Australia in defense procurement. Professor Sundstrand will discuss how defense procurement is treated under European law, including under the leading decisions of the Court of Justice for the European Union. Colette Langos will present a “snapshot” of the law and policy landscape surrounding Australian defense procurement. The session is free, and light refreshments will be served.
Session will be held downstairs at the GWU Law Learning Center, 2028 G Street NW
Tuesday, February 18, 2020, 9 to 11 am – GWU Law School, Law Learning Center, 2028 G Street NW, Room LLC006
WTO Government Procurement Agreement Members and Observers
According to press reports, the Trump administration is mulling an executive order that would trigger U.S. withdrawal from the WTO Agreement on Government Procurement (GPA). This free colloquium will assess the United States’ potential withdrawal from the GPA, which would deprive U.S. suppliers of a key point of access to public procurement markets internationally — although the GPA, experts note, has set global standards and opened an estimate $1.7 trillion dollars annually in business opportunities. The United States could forfeit access to important public procurement markets in Canada and many other countries, and the United States could lose its leadership role (which dates back to World War II) in shaping global standards in public procurement, even as more countries (such as Brazil) are joining the GPA.
Colloquium will be held downstairs at the GWU Law Learning Center – 2028 G Street NW (photo: Google)
Jean Heilman Grier is a leading internationally recognized expert on the World Trade Organization’s (WTO) Government Procurement Agreement (GPA), bilateral and regional agreements, international trade negotiations and international procurement systems. She has more than 30 years of experience in international trade as a U.S. trade negotiator, lawyer, adviser and consultant, including as the government procurement negotiator for the U.S. government. For a decade, she represented the United States in the WTO Committee on Government Procurement where she played a leading role in the revision of the GPA and accessions to the Agreement. Since 2013, she has been the Trade Principal with Djaghe, LLC., where she advises and provides technical assistance to governments, international organizations, businesses and trade groups on international procurement and trade issues. She writes extensively on international procurement and other international trade topics, and maintains a blog, Perspectives on Trade, at http://trade.djaghe.com; there, she recently published a piece on the impacts that the United States leaving the GPA could have.
Robert Anderson
Robert Anderson is a teacher and independent researcher on matters relating to the multilateral trading system, competition policy and government procurement. He previously worked in the Secretariat of the World Trade Organization from 1997 through 2019, and held the position of Counsellor and Team Leader for Government Procurement and Competition Policy in the Organization from 2005 through 2019.
Current academic positions include that of Honorary Professor in the School of Law at the University of Nottingham (United Kingdom). Mr Anderson also is an external faculty member at the World Trade Institute, the University of Bern (Switzerland); the University of Rome Tor Vergata (Italy); and the Catholic University of Lyon (France). He also has been a guest speaker, on multiple occasions, in relevant courses of the George Washington University Law School (United States).
Roundtable Participants: Michael Bowsher QC (Monckton Chambers, London) – Andrea Sundstrand (University of Stockholm) – Pascal Friton (Blomstein, Berlin) – Paul Lalonde (Dentons, Toronto) – Colette Langos (University of Adelaide) – Christopher Yukins (GWU Law School)
Program information: Cassandra Crawford, ccrawford@law.gwu.edu
United Nations ILO Training – Sustainable Procurement
On 4 February 2020, Professor Yukins taught students from the sustainable procurement masters’ program at the UN training center in Turin, Italy. His slides — an introduction to U.S. procurement — are attached.
A major Brazilian newspaper has reported that the Brazilian Federal Government wants to exclude from Brazil’s commitments under the WTO Government Procurement Agreement (GPA) Brazilian procurements for defense and health-related goods and services (link to the article in Portuguese). It is also said that, for now, Brazil`s accession proposal contemplates only procurements by the federal government. State and local governments’ procurements would not be included.
Compared
to other procurement defense markets, Brazil`s is not that big. In 2019, the
budget of the Federal Government`s Ministry of Defense was approximately USD 25
billion, but more than half of this was used to pay personnel expenses (according
to the Federal Government`s website: http://www.portaltransparencia.gov.br/funcoes/05-defesa-nacional?ano=2019).
The money spent with goods and services (not necessarily weapons or
defense-specific) was around USD 3 billion.
Ricardo Campello – GWU Law LLM Candidate
The budget of the Brazilian Ministry of Health is bigger — around USD 35 billion in 2019 (according to the Federal Government`s website: http://www.portaltransparencia.gov.br/funcoes/10-saude?ano=2019). This is due mainly to Brazil`s public healthcare system, called “SUS,” under which citizens are entitled to receive almost any treatment for free (including drugs, medical devices and medical procedures). A substantial portion of these funds goes to pay for healthcare-related goods and services. It is a huge procurement market.
The official reason for the exclusion of these sectors is that they are too strategic. But strategic how? The newspaper piece does not clarify. Is it a question of national security strategy? Or are these sectors strategic for industrial policy purposes? And is this true for absolutely all procurements of these departments of the Federal government? Also, why would enhancing competition and, consequently, reducing corruption and the government`s procurement costs – all potential outcomes from Brazil`s accession to GPA – not be desired in these strategic sectors? The GPA has flexibilities for developing countries to protect their industrial bases by making the transition to the GPA’s free markets smoother. Why not use these tools instead of excluding entire procurement sectors from coverage?
Finally, the newspaper piece also noted that discussions regarding GPA coverage between the Federal Government and GPA members is just part of the necessary negotiations. Brazil’s Congress will have to approve Brazil`s accession to the agreement as well. As one can see, the Brazilian government’s announcement that it will seek to join the GPA is just the beginning of a long and complex negotiation process, both internationally and nationally. There is a lot more to come.
Editor’s Note: For the United States, trade with its allies in defense items – materiel, services and research/development – is normally opened (and opened comprehensively) through separate reciprocal defense procurement agreements. Thus, while the United States may resist Brazil’s efforts to protect its public health markets under the GPA, the United States may prove willing to reserve defense issues to negotiation of a separate Brazil–U.S. reciprocal defense procurement agreement, which has been raised as a possibility by industry.
For GWU Law students interested in publishing excellent papers, the Law School maintains a special service for students, described below, excerpted from an email from the head of the Law Library, Associate Dean Scott Pagel:
George Washington University Law School, Washington, DC
I am writing to share information about a new service that the Law School will be offering to our students and recent graduates, effective immediately.
In order to promote student scholarship and to subsidize student efforts to be published, the Dean has agreed to permit students to submit a manuscript to up to 25 journals using the Law School’s Scholastica account. This offer also will be extended to alumni/alumnae for a period of six months following their graduation. As those of [the faculty] who use Scholastica know, it charges for each submission. This is where [faculty] assistance is required.
In order for a student to participate in this program, she must have a full-time faculty member as a “sponsor” for the manuscript. The faculty member will be expected to read the manuscript and ascertain whether it is likely to be accepted for publication by a journal. The faculty member also will be expected to meet with the student to discuss which journals are appropriate targets for submission of the manuscript. Please note that students are not limited in the number of manuscripts that they may submit, but they must obtain sponsorship from a full-time faculty member for each manuscript.
[After a full-time faculty member has discussed the manuscript] with the student, [the faculty member should] simply send [Dean Pagel] her name and email address and [he] will take it from there. [He] will add the student to [the] Scholastica list, contact the student, and monitor use of the service.
Students in the GWU
Law Government Procurement Program also may want to contact the procurement-focused
journals listed on our program page, https://www.law.gwu.edu/government-procurement-law. And as always, Mary Kate
Hunter, the lead librarian for the program, is a wonderful resource too.
In a surprising break from decades of protectionism regarding its public procurement markets, Brazil has announced that it will seek to join the World Trade Organization (WTO) Government Procurement Agreement (GPA). Accession to the GPA (see J. Heilman Grier, The WTO Government Procurement Agreement (Djaghe 2020)) could open Brazil’s public procurement markets, which have been estimated to total over US$150 billion annually, to competition from other GPA members; it would also give Brazilian exporters access to the public markets in other GPA members, including the United States. If it overcomes concerns in Brazilian industry and succeeds in acceding (China’s accession has been pending for over a decade), Brazil would be one of the first major low-cost producers to join the GPA, which could cause shifts in public procurement markets worldwide.
George Washington University Law School LLM candidate and Brazilian attorney Ricardo Campello commented:
Ricardo Campello
The Brazilian Minister of Economy, Mr. Paulo Guedes, announced yesterday (January 21, 2020) during the World Economic Forum in Davos that Brazil will formally request to join the GPA as a full member (since 2017, Brazil has had an “observer” status). The announcement was reported in Brazil`s biggest newspaper for corporate matters, called “Valor Econômico” (link to the article in Portuguese). As reported, the request is being prepared and can be submitted soon, maybe even before the end of the Forum. Joining the GPA will help Brazil to incorporate best procurement practices and will also be a full attack against corruption, said Mr. Guedes. When asked about the possible impact to local companies, Mr. Guedes answered that Brazil can no longer have this type of mentality which only contributes to the exploitation of Brazilian consumers and taxpayer funds by local companies. In this regard, it`s mentioned that the fact that Brazil will soon no longer be able to have price preferences in favor of local suppliers against European companies, due to the free-trade agreement signed between Mercosur and the European Union, contributed to the decision to join the GPA. This is the first time Brazil`s government officials have expressed the country`s intention to join the GPA as a full member. As Brazil`s Senate is currently discussing the country`s new procurement system, it would not hurt to consider the GPA’s requirements in such discussions.
Robert Anderson, formerly Senior Counsellor and Team Leader for Government Procurement at the World Trade Organization and now Honorary Professor at the School of Law of the University of Nottingham (UK), commented as follows:
Robert Anderson
The announcement yesterday by the Brazilian Minister of the Economy, Mr. Paulo Guedes, during the World Economic Forum in Davos, that Brazil will seek to join the WTO Agreement on Government Procurement (GPA) represents a huge step forward for Brazil. Joining the GPA will align Brazil’s procurement system with best practices internationally, provide Brazilian suppliers with unfettered access to huge markets for goods and services in the US, Europe and elsewhere, and send a powerful signal to the global community regarding Brazil’s determination to grapple successfully with past corruption and supplier collusion problems in its procurement system. It will establish Brazil as an important thought and practice leader in this area across Latin America and the developing world. The announcement also shows the continuing vitality of the GPA itself, which was modernized in 2012 and continues to gain new members, year by year. Minister Guedes’ announcement will be enthusiastically welcomed by advocates of good governance and procurement reforms across the globe.
