AMERICAN BAR ASSOCIATION

SECTION OF PUBLIC CONTRACT LAW

Minutes of May 16, 1998 Council Meeting

The May 16, 1998 meeting of the Section Council was held at the LeMeridien Hotel, New Orleans, Louisiana. Council and Section members who attended are identified in Attachment 1.

The meeting of the Council was called to order by the Section Chair, Ms. Marcia Madsen, at 8:30 A.M.

Approval of Minutes

The minutes of the March 14, 1998 Section Council meeting were approved as presented in the meeting agenda. [Agenda; Tab 1]

Report re: Comments on Competition in Commercial Activities Act

Ms. Agnes Dover, Chair of the Privatization & Outsourcing Committee, reported on the Section comments to the Subcommittee on Government Management, Information and Technology, House Committee on Government Reform and Oversight, concerning the March 16, 1998 Discussion Draft: "Competition in Commercial Activities Act of 1998." Ms. Dover stated that to date a bill had not yet been introduced but that the Section was asked to comment on a "draft bill." Ms. Dover summarized the Section’s comments as enunciating four major points. First, to the extent that public-private competitions take place, there should be a level playing field when private industry and Government compete. The selection process should be fair, open and unbiased to both public and private entities. The differences between Government and private entities must be accommodated. Second, public-private competition should be structured so as to allow the Government to identify and select the source that is most cost effective, or best value, for the government. Third, the bill should ensure adequate oversight of the public-private competition process and the oversight review process clarified. Fourth, the bill should more clearly specify which existing provisions of statute are overridden. [Agenda; Tab 4]

Report re: Comments on Defense Authorization Bill

Mr. Scott Pickens, Chair, Research and Development Committee, and Mr. Alan Gourley, Chair, Judicial Remedies Committee, reported on the Section comments to the Senate Armed Services Committee and the House Committee on National Security concerning the FY 1999 Defense Authorization Act. The Section expressed serious concern with Section 706 of the bill which would modify the interest provision of the Contract Disputes Act. The bill would reintroduce disputes over whether a claim has been properly certified and undo the original 1978 legislative compromise that established a single point from which to calculate interest. The comments provided that Congress should leave unchanged the date from which CDA interest begins or, permit, in all cases, recovery of interest from the date the costs were incurred. Although the bill did not address Other Transactions, the comments anticipated that certain provisions regarding use of Other Transactions authority for production may be added and submitted the recommendations that the Council adopted concerning Other Transactions.

Report re: Comments on California Alternative Bid Protest Pilot Project

Ms. Patricia Meagher reported on the Section comments to the California Procurement Division concerning the draft regulations to implement the alternative protest pilot project (Assembly Bill No. 1159, Chapter 762, Statutes of 1997). The Section commented under the special authority concerning the Model Procurement Code. The goal of the pilot project is to reduce the number of frivolous protests by 10 percent, reduce the length of time to resolve a protest by 20 percent and to reduce the total number of protests filed. The Assembly Bill contains a provision to bar companies who file frivolous protests or unsuccessful protests in procurements over $1M. The Section comments were coordinated with the State and Local Government Law Section and the California Bar. Since the California Legislature already passed Assembly Bill 1159, the Section comments compared interpretations not required by the statute with the Model Procurement Code concerning the following: over inclusion of alternative procedures; definition of the term "frivolous" and disqualification from subsequent procurements; discovery; grounds for protest; costs; and standard of review. Ms. Meagher stated that if the State conducts a hearing, representatives from the Section may attend.

Report of the Legislative Coordinating Committee

Ms. Angela Styles, Vice Chair, Legislative Coordinating Committee, reported on the status of various pieces of legislation. Of particular note was the fact that the interest and protests provisions were out of the House and Senate Authorization bills as reported out of Committee. Ms. Styles also stated that the Competition in Commercial Activities Act was not moving. Additionally, it appeared that an Other Transaction provision would be included in the Department of Transportation legislation.

Report of the Regulatory Coordinating Committee

Mr. Alexander Brittin, Chair, Regulatory Coordinating Committee, provided a summary of the activities of the Committee and the Section concerning regulations. Fifty-four procurement actions were published in the Federal Register. The Section submitted two comments this quarter: one on the Final Rule, Federal Employees Health Benefits Program Acquisition Regulation; Truth in Negotiations Act and Related Changes; and the second concerning the potential removal of the Service Contract from the commercial item subcontract waiver list. [Agenda; Tab 3]

Approval of Competition Principles

The Section Chair discussed the need for consensus building in Committee work and commended Ms. Ruth Burg, Chair of the Ad Hoc Committee on Procurement Principles, for her leadership in reaching closure on the Principles which are a consensus effort. The Section Chair further commended Ms. Burg for her work in completing the Controversy Principles report in time for the Council meeting.

Ms. Burg reported that the Ad Hoc Committee on Procurement Principles had 12 meetings since the last Section Council meeting with some 25 Section members participating in the process. She thanked all participants for their hard work. Ms. Burg said that all comments submitted on the principles were considered and an effort was made to accommodate them all.

Ms. Burg further pointed out the need to expedite blanket authority for Section comments. Adoption of the Principles by the House of Delegates will facilitate this end, especially regarding state and local matters. Ms. Burg informed the Council that the House of Delegate would only adopt the Principles. The reports accompanying the Principles were explanatory but would not be formally adopted. The Section, thus, could later modify the report language without returning to the House. Ms. Burg then moved that the Section approve the Competition Principles and authorize the accompanying report with authority for the Chair to make language changes consistent with the Section Council’s discussion of today. The motion was seconded.

Ms. Burg read the Resolution and Competition Principles. An extensive discussion followed. Mr. Dave Churchill reminded the Council that the prior Administrator of the Office of Federal Procurement Policy had once told representatives of the Section that the Public Contract Law Section were defenders of the status quo who really did not stand for anything. Mr. Churchill stated that adoption of the Procurement Principles would counter this perception and constitute "first principles of procurement."

There was considerable discussion of the use of the term "full and open competition" in the Principles. Mr. Tom Barletta stated that "full and open competition" is a term of art in federal procurement and need not be extended to other government entities. He said that the section should adopt competition as a bed rock principle, but not attempt to impose the federal standard on state and local government entities. The term is not used in the Model Procurement Code and would cut off experimentation in new directions. Mr. Kent Morrison and COL Alexander Purdue also expressed reservation about use of the term "full and open competition." Ms. Maggie McConnell also expressed concern about the difference between the Model Procurement Code and Principle #1. Mr. Craig Othmer stated that the Principles do not overrule the Model Procurement Code or require that it be changed.

Several attendees commented on the accompanying report. Ms. Agnes Dover expressed concern on some of the authorities cited, such as a 1940 case. Mr. Barletta was of the view that the discussion in the report concerning Principle #10, at page 9, "sweeps too broadly" and was not an accurate statement of the law. Ms. Cadieux stated that the Principles should speak for themselves and not be justified by the report’s citation to cases interpreting statutes. Ms. Patricia Wittie was concerned the report was a fairly aggressive statement of the law in some areas. Mr. Tony Gamboa stated that the report should avoid language implying a requirement to treat bidders and offerors "equally."

Mr. Rob Humphrey asked why the Principles did not address socio-economic issues. Mr. Kurt Frazier and Ms. Laura Kennedy stated the Principles ## 2 and 3 addressed socio-economic issues. Ms. Meagher felt that Principle #3 covered the matter and Mr. Mark Colley confirmed that the Ad Hoc Committee addressed the issue and drafted Principle #3 to cover it. Ms. Burg stated that the Principles are not intended to be that specific. Mr. John Pachter argued that appending too much specificity to the Principles would defeat their purpose.

Other discussion centered around Principle #10. Mr. Barletta felt that it was different in scope from Principles ##1-9. Ms. McConnell and Mr. Morrison also expressed reservations about including Principle #10. Mr Frazier was of the view that Principle #10 should stay.

The issue was raised whether the new flexible procedures implemented as a result of acquisition reform [discussed during the May 15 program], such as IDIQ contracts, BPA’s and commercial procedures were inconsistent with the Principles. Ms. Burg responded that the principles do not cover them and that they would have to be addressed by the Council on a case by case basis. Mr. Carl Vacketta was of the view that these reforms did not violate the principles but are ordering mechanisms after initial competition. Mr. Stuart Nibley pointed out the competition must be balanced with transparency, flexibility and efficiency. COL Purdue felt that the Principles were sufficiently broad to allow for flexible procedures.

Mr. Dan Gordon expressed the view that the process in developing the Principles worked very well and confirmed Ms. Burg’s representation stating that she got back to him on all his comments. Mr. Gordon was of the view that the principles had the proper level of generality. The following expressed their support for immediate adoption of the Principles notwithstanding the concerns raised: Meagher, Kennedy, Pachter, Wittie, Morrison, and Othmer. Ms. Meagher stated that the Principles will give the Section greater flexibility in preparing comments, especially concerning state and local matters, and Mr. Pachter and Mr. Othmer reiterated this view. Ms. Kennedy stressed the importance of adopting the Principles and praised the consensus building process that produced them.

The Section Chair called for a vote by the Council on the motion to approve the Competition Principles, to change the word "the" before "principles" in Principle #10 to "these’, and to allow the Section Chair to make changes to the report. All present voted in favor of the Principles. Absentee written votes were submitted by those Council members that were absent [Collins, Menaker, Allen, Preston, Smith, Doke, and Kuelbs]. All absentees voted for approval except for one council member who voted against Principles ##1 and 10.

Report of the Accounting, Cost and Pricing Committee

Ms. Angela Styles, Vice Chair, Accounting, Cost and Pricing Committee, reported that the Committee held 3 monthly luncheon meetings during the quarter. The Committee worked with the Health Care Contracting Committee and the Commercial Products and Services Committee to draft the Section comments relating to the Office of Personnel Management’s final rule amending the Federal Employees Health Benefits Acquisition Regulation to impose Truth in Negotiations Act requirements on the negotiation of rates for community-rated FEHBP contracts. The Committee plans to hold a program on cost and audit issues in health care contracting.

Report on the Public Contract Law Journal

Mr. Carl Vacketta, Editor in Chief, Public Contract Law Journal, reported that Volume 27, No. 2, the Commercial Item single subject issue, was mailed out to Section members in the Winter of 1998. Volume 27, No. 3, the Spring 1998 issue, will be published in June 1998 and will contain the Journal’s annual Federal Circuit Year-in-Review, written this year by Scott McCaleb. Volume 27, No. 4, is near completion and is due out by the summer. Mr. Vacketta commended the George Washington University Student Board which does so much of the work in the publication of the Journal. The Journal is popular with the students, second behind the GW Law Review, and currently has a roster of 40. The Section has a mentoring program whereby Section members mentor students writing notes for the Journal by helping them understand Government contract law, hopefully sparking an interest for a career in public contract law. The Journal has a group working on a Contract Disputes Act special issue for the tenth year anniversary of the CDA. [Agenda; Tab 14]

Report of the Books and Monographs Committee

Ms. Barbara Pollack, Chair, Books and Monographs Committee, reported that the Committee had two books in the pipeline. The Government Contract Law Deskbook continues to sell briskly. The Judge Advocate General’s School recently rewrote the desk book and Mr. John Jones is working with the JAG School to enable the Section to use the revised version. The Committee is working on the Construction Law Source Book. Ms. Pollack pointed out that the input from all 50 states was expensive to incorporate due to the differences in the format of the input. However, the Committee has obtained the help of a person who can "desk top" the material to allow the section to sell the Source Book economically.

Approval of the Principles for Resolving Controversies

Ms. Ruth Burg, assisted by Mr. Richard Rector, Chair, Federal Claims and Remedies Committee, and Alan Gourley, Chair, Judicial Remedies Committee, presented the Principles for Resolving Controversies in Public Procurements and accompanying report for approval of the Section Council. Ms. Burg read the Principles for the Council and attendees and then moved for adoption with authority for the Section Chair to make changes to the report. The motion was seconded.

Mr. Rector stated that the purpose of the Principles was to set forth first principles for resolving controversies. The Ad Hoc Committee avoided use of the term "disputes" due to the "baggage" associated with that term. Instead the term controversy was used as in the Model Procurement Code. The six principles went through a consensus building process and represent a consensus of the Committee. The Committee reviewed Section comments since 1978 for which blanket authority was sought from the House of Delegates and Section comments on FAR proposals involving CDA matters to insure that the Principles were consistent with past Section comments. COL Purdue stated that the only controversy in Committee was on Principle #6 involving sovereign immunity. There was no intent to change the current federal law.

Ms. Burg amended her motion to allow the Section Chair to make changes to the report accompanying the Controversy Principles in consultation with the Ad Hoc Committee which was seconded. All Council members present voted for approval. All absentee votes were for approval except one Council member who voted against Principles ##2,3,5,and 6.

Approval of Section Comments on HCFA proposed Rule

Mr. Lloyd Weinerman, Vice Chair, Health Care Contracting Committee, reported that the Committee had prepared Section comments on HFCA’s proposed rule on Medicare Integrity Program, Intermediary and Carrier Functions, and Conflict of Interest Requirements. Mr. Weinerman stated that Mr. Brittin had obtained a two week extension for the comments and that the comments had to be coordinated with the Health Law Section. The Committee is concerned about how far HCFA has departed from the FAR OCI rules, and is of the view that the detail required to be disclosed is burdensome. The Section comments spell out the extent of the burdensome requirements, suggest ways for HCFA to stay within FAR OCI rules, and address other inconsistencies with statutes and case law.

Ms. Wittie, Mr. Frazier and Mr. Brittin questioned whether as a matter of law HCFA was limited by the FAR coverage on OCI. Mr. Weinerman responded that there was no specific language but that the conclusion must be reached by inference. Mr. Hubert Bell recommended proceeding with approval today and Mr. Frazier agreed with proceeding to approval. Mr. Morrison moved that the Council approve and forward the comments which was seconded. The comments were approved by a vote of 9 in favor and 2 opposed.

Report of the Construction Division

Mr. Hubert Bell, Chair, Construction Division, reported that the construction Source Book is near completion. The Source Book has been in process for four years and is an 18 volume set. Mr. Bell stated that there will be a construction program at the annual meeting in Toronto and that the Biannual Construction Law Summit will be held in Chicago in October. Comments were submitted on NASA’s proposal to cap overhead which were not adopted by NASA.

Report on Section Programs

Mr. John Burkholder, Annual, Quarterly Program Committee Co-Chair, reported that the May 15, 1998, Program on Negotiated Procurements: Life After Procurement Reform, made a modest profit with 75 to 80 attendees. The Section Chair thanked Mr Burkholder and the Program Co-Chairs Ms. Pollack and Mr. Kent Morrison, for their hard work in developing an excellent program. Mr. Burkholder stated that planning on the Toronto program is proceeding and handed out fliers on the program to those in attendance. Sponsors have contributed to the Section reception in Toronto. Mr. Burkholder informed the Council and attendees that there will be a Bid Protest Program on June 29, 1998, at the Mayflower Hotel in Washington, D.C.

Report of the Pro Bono Committee

Ms. Patricia Wittie, Chair, Pro Bono Committee, reported that the Committee had its first organizational meeting and is seeking members and suggestions. The Committee will meet again in June to prepare proposals for the Council at its August meeting. Projects under consideration are assistance to the District of Columbia and to boards of Contract Appeals encountering difficulties with pro se contractors.

Report of the Membership Committee

Mr. Ross Branstetter reported that associate membership remained steady and that law student membership increased by 14% over last year while regular membership decreased 7% over last year compared to a 10% decrease over the last 2 years. The Committee is looking into ways to increase membership by reducing barriers such as reducing dues for Government attorneys and new lawyers. Additional measures may be to look to groups of lawyers not currently represented, such as health care and intellectual property practitioners. Mr. Branstetter stated that 9 out of 10 of those who dropped Section membership also dropped ABA membership. The Committee will have a program plan for the August meeting.

Financial Report

Ms. Patricia Meagher, Budget and Finance Officer, reported upon the financial condition of the section. [Agenda; Tab 25] Ms. Meagher stated that the Section will not achieve its dues budget as a result of the drop in membership. However, income from stock market investments will help the situation.

Adjournment

The Council meeting was adjourned at 12:00 P.M. following a motion that was seconded and passed.

Respectfully submitted

Anthony H. Gamboa

ABA/SECTION OF PUBLIC CONTRACT LAW

MEETING - MAY 16, 1998

Marcia Madsen	Chair
Dave Churchill	Chair-Elect
Patricia Meagher	Budget & Finance Officer
Tom Barletta	Council Member
Kurt Frazier	Council Member
Tony Gamboa	Council Member
Laura Kennedy	Council Member
Kent Morrison	Council Member
Craig Othmer	Council Member
Al Purdue	Council Member
Mary Ellen Koster Williams	Council Member
Pat Wittie	Council Member
Hubert Bell	Council Member
Ruth Burg	Past chair
John Pachter	Past Chair
Carl Vacketta	Editor in Chief, Public Contract Law Journal
Rich Rector	Chair, Federal Claims & Remedies Committee
David Dowd	Chair, Operations Division
Stephen Daoust	Member
Mark Langevin	Vice Chair, Accounting, Cost & Pricing Committee
Michael Hordell	Vice Chair, Experimental Procurement Processes Committee
Ross Branstetter	Vice Chair, International Procurement Committee
Michael Mutek	Chair, International Procurement Committee
Melanie Dooley	Managing Editor, Federal Contracts Report, BNA Inc.
Herman Levy	Vice Chair, Regulatory Coordinating Committee
Charles Wilkins	Arthur, Ernst & Young
Dirk Haire	Member
Mary McShea	Member: Federal Publications
Allen Samelson	Vice Chair, Region VII, Northern California
Dan Gordon	Vice Chair, Bid Protest Committee
John Burkholder	Co-Chair, Annual, Quarterly Program Committee
Barbara Pollack	Chair, Books & Monographs Committee
Maggie McConnell	Co-Chair, Model Procurement Code
Stu Nibley	Chair, Experimental Procurement Techniques Committee
Mike Mason	Member
Agnes Dover	Chair, Privatization & Outsourcing Committee
Frederick Moss	Chair, Proceedings Committee
Alex Brittin	Chair, Regulatory Coordinating Committee
Lloyd Weinerman	Vice Chair, Health Care Contracting Committee
Scott Pickens	Chair, Research & Development Committee
Alan Gourley	Chair, Judicial Remedies Committee
Angela Styles	Vice Chair, Accounting, Cost & Pricing Committee, and Legislative Coordinating Committee
Marilyn Neforas	Section Director
Stephen Ross	Vice Chair, Bonding & Insurance Committee
Don Kinlin	Past Chair
Karen Kinlin	Member
Tom Hill	Vice Chair, ADR Committee (Construction)
Jeff Hildebrant	Vice Chair, Accounting, Cost & Pricing Committee
Peter Balch	Chair, Federal Subcontracting Committee
Allan Land	Chair, Region VII
Norm Thorpe	Vice Chair, Research & Development Committee