NOVEMBER 4, 2000

The meeting of the Council of the Section of Public Contract Law (“SPCL”) was called to order by Chair Greg Smith. Chair Smith commended Bill Woods and Allen Samelson, Co-Chairs of the fall program for a fine and well-attended educational experience. The minutes for the meeting on July 8, 2000 and the new Council meeting on July 11, 2000 were approved on motion and seconded without reading.

Chair Greg Smith invoked the privilege of the Chair in commemorating Judge Marion T. Bennett who died during 2000. Judge Bennett was a judge of the Court of Claims, both at the trial and appellate levels and later was a member of the Court of Appeals for the Federal Circuit. A copy of Chair Smith’s remarks is attached to these minutes.

Chair Smith recognized Robert H. Stein, Executive Director of the American Bar Association, who attended the fall Council meeting. Mr. Stein reported to the Council concerning the American Bar Association operations and initiatives. He discussed the importance of Sections and their activities. He noted that the membership of the ABA is at its highest level ever, reaching 407,741 members in 2000. He discussed other issues, including the multi-jurisdictional practice and the multi-disciplinary practice which are being considered by the Board of Governors and the House of Delegates. He also reported on the Futures Committee which has been given increased vitality by ABA President, Martha Barnett, to investigate the course which the ABA may take in the future. He also referred to corporate sponsorships and the experience of other Sections, and discussed the status of the ABA website.

Chair Smith recognized Jerry Walz who reported on the revisions to the Section’s website. He recommended that a Section Listserv be established and that access to revise the Listserv be restricted to the Section’s Chair and Director. Access to the Listserv will be restricted to members of the Section and cannot be used for commercial purposes. He recommended also that the Section’s website be used for registration for programs at quarterly and annual meetings and to conduct surveys of the membership to collect information useful to the Section. It was noted that this capability is not yet available at the American Bar Association and Executive Director Stein stated that this is an issue being investigated at this time. Jerry Walz moved to establish a Section Listserv, to explore registration for programs, including credit card payment, and to develop the capability to collect information for membership. This motion was seconded and approved after some discussion by the Council.

John Pavlick, Co-Chair of the Debarment and Suspension Committee, reported on the activities of the committee and discussed a new project with the Council. The committee proposes to revise and produce the third edition of the Practitioner’s Guide to Debarment and Suspension. The proposal by the Debarment and Suspension Committee was included in the Council meeting’s agenda at Tab 4. The committee expects to produce the third edition by summer of 2001. Pavlick asked the Council for authority and support for writing this document. A motion was made to authorize and support the writing of the third edition, which was seconded and approved by the Council.

The Council was briefed by Past Chair John Miller concerning the proposal that the Section participate as a member in the American Infrastructure Consortium. Past Chair Miller reported that the Council was briefed at the July 11, 2000 meeting in New York City concerning the AIC. He noted that this is a way to promote the revised Model Procurement Code and to urge its adoption by every state. The AIC would write the regulations implementing the MPC, with the SPCL retaining the right to comment, review and control the content. The title to the regulations will be held by the American Bar Association with a license to AIC for use incidental to its other publications. In exchange for this license, the SPCL would be a special Association Member at a reduced rate of $10,000.00 per annum for three years instead of the usual $25,000.00 per year. The agreement proposed by Past Chair Miller includes a provision that the SPCL can unilaterally terminate its participation.

Past Chair Miller projects approximately $50,000.00 net income to SPCL over the next three years resulting from sales of the MPC and the implementing regulations. It was noted that this agreement would require approval by the ABA Board of Governors. Chair Elect Norman Thorpe moved to approve the proposal that the Section become a special Association Member of the AIC, subject to the Board of Governors’ approval. The motion was seconded by Fred Moss.

Discussion concerning the Article 9 license to the Massachusetts Institute of Technology ensued. Many comments noted that the license needed revision to ensure that MIT cannot sell the Model Procurement Code or the regulations in competition with the ABA but can only excerpt and derivitize. The advantages to the ABA are that its Model Procurement Code will be a complete package once the regulations are completed, it can maintain control over the content of the MPC and the regulations, will control the revenue, and, finally, the AIC members and local legislatures will encourage the states to adopt the MPC. Concerns were expressed that the focus on infrastructure as opposed to all forms of procurement was too narrow. It was noted that these concerns can be addressed in the regulations implementing the MPC.

Chair Elect Thorpe amended his motion to have the Chair appoint a working group to address issues of license, commitment and source of funds and scope of regulations. This motion was seconded and the amendment was approved. The motion, as amended, was brought to a vote and was approved by the Council.

Helaine Elderkin, Co-Chair of the Membership Outreach and Diversity Committee reported that the committee is developing a package to present to local entities for programs to encourage participation. These information packages will be distributed to local bar and industry associations in the area where the Section’s programs would be presented. The committee also recommended establishment of liaison with the National Bar Association, the Asian-American Bar Association and others, including the National League of Cities. Finally, the committee recommended that a survey be conducted to collect information concerning the interest, practice areas and activities of all those concerned with public contracting.

Carl Vacketta reported on plans for the Federal Procurement Institute to be held in Annapolis, Maryland on March 2 and 3, 2001. He noted that it would include a special Construction Division luncheon on Thursday and would include during the main program a discussion of ethics and electronic government and commerce. He also reported that the spring meeting in Cambridge, Massachusetts would be concerned with competition, A-76 procedures and an international topic.

Lynda Troutman O’Sullivan discussed the Section’s comment letter to the Cost Accounting Standards Board regarding accounting for Employee Stock Ownership Plans. The CASB has proposed a modification of the cost accounting standards to address whether the interest component of an employer’s contribution to a pension trust of a leveraged ESOP is an allowable cost under a government contract. The proposed comments by the Cost and Accounting Standards Committee are attached to these minutes. There was a motion to approve the comments prepared by the Cost and Accounting Standards Committee, which was seconded and approved by the Council.

John Pavlick and Karen Manos reported on proposed changes to the FAR concerning labor relations. The comments which are in draft and which are unfiled are included in the agenda at Tab 11. These were concerning the proposal that certain labor relations costs could not be included as costs allowable on government contracts. Since many government agencies opposed the comments, they have generated considerable interest. The comments were not submitted by the SPCL because the Section of Labor and Employment Law objected.

John Pavlick noted that the proposed FAR revision conflicts with current standards for debarment and suspension and provide little guidance to the contracting officer in making a responsibility determination. It would insert the contracting officer into the debarment process. The changes would also require that bidders certify that the bidder and its principals have not violated within the previous three years any environmental, anti-trust, labor, tax or consumer protection laws.

Karen Manos reported on the allowability of labor relations costs. She stated that these comments are personal and do not reflect the view of her firm or of her firm’s client, the American Federation of Labor – Congress of Industrial Organizations.

She noted that the change in allowability of labor relations costs is inconsistent with the government’s policy of neutrality in labor disputes and conflicts with the cost principle allowing costs of shop stewards, labor-management committees and employment publications which would remain in effect, while costs incurred to influence employees’ decisions regarding unionization would be unallowable. The changes would also disallow legal expenses in proceedings where the contractor is found by federal or state government to have violated or to have failed to comply with law or regulation. All of this was deemed to be vague and without guidance to the contracting officer.

Dan Gordon of the General Accounting Office reported on A-76 cost issues. He divided his presentation into three areas: Audit, Bid Protests and the DoD Authorization Act direction to convene a panel to study public-private competitions. He said that the GAO has been looking at broad issues affecting privatization, outsourcing and public-private competition because of the ambitious program by the Department of Defense to conduct studies involving 203,000 full time equivalent positions. In the protest area, GAO has sustained a remarkably high percentage of protests involving A-76 comparisons. GAO has received a very high number of cases where the agency takes corrective action while the protest is pending, thus obviating a decision by the GAO.

Pursuant to Section 832 of the DoD Authorization Act for FY 2001, GAO is convening a study group to assess cost comparisons and public-private competitions. The report is due by May 2002. Members and Chair of the Council expressed interest in the Section’s possible involvement with this study, including commenting on the issues.

Section finance and budget officer, Pat Meagher, reported concerning corporate sponsorship. She had two comments: first, a standing committee on sponsorship proposals has been appointed by Chair Smith and second, an ad hoc committee chaired by Meagher has been appointed to identify sponsorship opportunities.

Member Elizabeth Fleming reported on activities of the Legislative Coordinating Committee. She described the impact of the Department of Defense Authorization Act and discussed the Debt Payment Incentive Act which is pending before the current Congress. If enacted, it would bar contracts with delinquent federal debtors, including those not having paid withholding taxes, and would require another certification by a bidder that it is in compliance with the Debt Payment Inventive Act. She also noted that the Truth in Regulating Act has been enacted which requires the GAO to study all proposed regulations for impact and costs.

Editor Bobbie Pollack reported on the status of The Procurement Lawyer, noting that she has received a variety of articles of high quality.

Past Chair Marcia Madsen reported that the Court of Federal Claims Judicial Conference meets in Washington, D.C. on November 14, 2000. She encouraged members of the Section to attend to raise the SPCL profile. Chair Smith noted that at a recent luncheon with Chief Judge Baskir of the Court of Federal Claims, Judge Baskir stated that he would appoint the Chair and Chair Elect of the SPCL to the Judicial Council of the COFC. The Chair and Chair Elect of the Section will be ex officio members of the Judicial Council in the future.

Carl Vacketta reported that the journal of the SPCL has produced substantial success in the advertising which was authorized by the Council at its meeting on July 8, 2000 in New York City. The advertising has produced $32,000.00 in revenue which exceeded projections of $15,000.00. That, in addition to royalties from West Publishing and Lexis, has caused the Journal to contribute approximately $42,000.00 in revenue toward its $60,000.00 budget cost for the Section.

Pat Wittie, Co-Chair of the E-Commerce Committee, reported on the committee’s activities and its survey of current practices concerning e-government and e-commerce.

Comments were provided concerning alternative dispute resolution confidentiality issues. Past Chair Ruth Burg is working on a task force to respond to recently published Department of Justice guidelines concerning ADR confidentiality.

Donna Lee Yesner, Co-Chair of the Health Care Contracting Committee, reported on its activities, particularly on the Veterans Administration request that the Section comment on the VA master agreements with pharmaceutical manufacturers and the propriety of making substantive changes by amending these agreements rather than by using the regulatory process.

Past Chair David Churchill reminded members in attendance that a hike at Point Lobos had been organized and would begin after the Council meeting.

Council member Mark Langevin reported that recent legislation requires the President to establish a commission on the future of the aerospace industry. The commission is appointed by the President and the legislative branch to study, among other things, the acquisition process in the aerospace industry. Chair Smith noted that the Council should follow this process and comment when appropriate.

Finally, Chair Elect Norman Thorpe noted that Bob Hirshon, President Elect of the American Bar Association, has requested comments on improving the annual meeting and has requested nominees for standing committees of the ABA. All those interested in nominating or providing comments should contact Norman Thorpe.

The motion was made, seconded and approved unanimously to adjourn the Council meeting at 11:50 a.m. A copy of the roster of those attending is attached to and made a part of these minutes.

Action was taken by the Council after the New York meeting in July 2000 on an item included in the Council agenda but not taken up at that time. A Resolution was approved by the Council on September 11, 2000 authorizing payment of certain additional administrative and travel costs for the Model Procurement Code Revision Project. A copy of the Resolution and supporting documents are attached and incorporated in these minutes.

Hubert J. Bell, Jr.

Secretary