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.
On March 10, 2020, Caroline Nicholas (UNCITRAL) and Christopher Yukins joined King’s College, London’s online course in procurement, by videoconference.
As a result of its January 2020 trade deal with China, under which the United States agreed to find new ways to stop counterfeit goods in online marketplaces, the Trump administration has stepped up its fight to stop counterfeit goods from China – and that fight may have a direct impact on a pending GSA procurement (no longer under protest) to open commercial online marketplaces to federal purchasers.
In a
recent piece,
Jason Miller of Federal News Network asked whether President Trump’s January
31, 2020 Executive Order, Ensuring Safe & Lawful E-Commerce for US
Consumers, Businesses, Government Supply Chains, and Intellectual Property
Rights, may affect the U.S. General Services Administration (GSA) “electronic
marketplaces” acquisition.
Counterfeit goods (photo: USCBP)
GSA’s “electronic marketplaces” procurement was previously stalled by a protest by Overstock.com at the U.S. Government Accountability Office (GAO). The grounds for that protest may never be known, since the protest was withdrawn on February 24, 2020. The “electronic marketplaces” procurement would allow federal officials (users – not necessarily contracting officials) to make billions of dollars in micro-purchases (generally below $10,000) directly from the awardee commercial e-commerce platforms.
President Donald J. Trump (Official White House photo by Shealah Craighead)
Section 1. Policy. E-commerce,
including transactions involving smaller express-carrier or international mail
packages, is being exploited by traffickers to introduce contraband into the
United States, and by foreign exporters and United States importers to avoid
applicable customs duties, taxes, and fees.
* * * *
It is the policy of the United States Government that any person
who knowingly, or with gross negligence, imports, or facilitates the
importation of, merchandise into the United States in material violation of Federal
law evidences conduct of so serious and compelling a nature that it should be
referred to U.S. Customs and Border Protection (CBP) of the Department of
Homeland Security for a determination whether such conduct affects that
person’s present responsibility to participate in transactions with the Federal
Government.
It is the policy of the United States Government, as reflected
in Executive Order 12549 of February 18, 1986 (Debarment and Suspension), and
elsewhere, to protect the public interest and ensure the integrity of Federal
programs by transacting only with presently responsible persons. In
furtherance of this policy, the nonprocurement debarment and suspension system
enables executive departments and agencies to exclude from Federal programs persons
who are not presently responsible. CBP implements this system by
suspending and debarring persons who flout the customs laws, among other
persons who lack present responsibility. To achieve the policy goals
stated herein, the United States Government shall consider all appropriate
actions that it can take to ensure that persons that CBP suspends or debars are
excluded from participating in the importation of merchandise into the United
States.
It is the policy of the United States Government that express consignment operators, carriers, hub facilities, international posts, customs brokers, and other entities, including e-commerce platform operators, should not facilitate importation involving persons who are suspended or debarred by CBP.
Peter Navarro
Senior White House trade adviser Peter Navarro said this on CNN on the same day:
The DHS will
immediately begin working to combat trafficking in counterfeit and pirated goods
by: aggressively applying civil fines and penalties to bad actors, suspending
and debarring repeat offenders and treating foreign sellers of goods as
responsible parties subject to sanctions.
As this new
report documents, the private sector can do much more to combat counterfeit and
pirated products trafficking. It sets forth a set of private sector
“best practices” that include: significantly enhanced third-party
marketplace vetting; limits on high-risk products such as prescription drugs,
infant formula and airbag components; rapid notice and takedown procedures; and
pre-sale identification of third-party sellers. The administration also
wants e-commerce platforms to provide clearly identifiable country of origin
disclosures, which brick-and-mortar retail providers are required to
provide but online sellers often are not.
These best
practices are not meant as mere suggestions. The federal government will use
all means necessary to encourage rapid adoption and to monitor progress.
Taken together, these announcements suggest:
GSA’s assessment of the electronic marketplaces bidders may include the “best practices” outlined by Peter Navarro. Navarro called on Amazon and other e-commerce platforms to fight counterfeits in the wake of the recent U.S. trade agreement with China, and he again cited those “best practices” in an interview with the Washington Post, in which he sharply criticized Amazon and others for not having adequate protections against counterfeiters. GSA’s “Statement of Objectives” for the electronic marketplaces procurement already calls on the e-marketplaces to control supply chain risk; the revised solicitation was not explicit as to whether these new anti-counterfeit concerns would also be part of the technical evaluation and/or the contracting officer’s responsibility assessment for award.
The Trump administration’s focus on preventing counterfeits suggest that federal users buying directly with government purchase cards may be required, or at least strongly encouraged, to use the e-commerce platforms eventually approved under GSA’s “electronic marketplaces” initiative. Federal users, in other words, may be discouraged from making direct purchases outside the GSA-approved platforms.
Mass debarments of vendors on the e-commerce platforms — which are very possible, because the government has no other ready means (e.g., past performance or technical evaluations, responsibility determinations, etc.) to protect itself when federal users make rapid purchases from the e-commerce platforms — may begin with Customs and Border Protection (CBP) debarments:
CBP may target for debarment any third-party vendor on an e-commerce platform that “knowingly, or with gross negligence, imports, or facilitates the importation of, merchandise into the United States in material violation of Federal law.” While the Executive Order focuses on counterfeits and contraband, in principle a wider array of importing firms may be at risk if they facilitate violations of federal law.
The e-commerce platforms themselves may be targeted for debarment, on the same grounds. Since each user micro-purchase is a new purchase, debarment (a bar against purchasing) may in effect disable an e-commerce platform from selling to further federal purchasers.
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.
