MINUTES OF THE
COUNCIL
SECTION OF PUBLIC CONTRACT LAW
February 28, 2004
Loews Annapolis Hotel
Annapolis, Maryland
Chair Hugh Bell called the meeting to order at 9:15am. The reading of the minutes of the November 8, 2003 Fall Council meeting was waived. A motion to approve the minutes was seconded and approved by the Council unanimously.
Past Chair Stanley Dees presented a detailed report and analysis concerning non-appropriated fund instrumentalities (NAFIs) reform legislation. The report of the subcommittee to the Contract Claims and Dispute Resolution Committee is attached to the minutes. Attachment A. This was a result of the Council's November 8 request that the Committee should continue to refine its position.
Past Chair Dees discussed revisions requested during the Fall Council Meeting and provided some history of the "NAFI Doctrine". At various intervals in the presentation there were a number of motions and amendments thereto refining the focus of the discussion and the eventual task for the Committee. The Council was comfortable with the Committee's proposed changes to 28 USC §1346; 28 USC §1491 and 28 USC §2517.
The majority of the comments and discussion focused on the proposed changes to 31 USC §1304, specifically §1304 (d)(2) (A) and (B). The availability of Contract Disputes Act interest was a part of the discussion. Council members Peter Balch and Karen Manos raised issues concerning the NAFIs procurement authority, logistics for removal of the authority (including the requirement to report to Congress) and an override provision in certain instances where a NAFI is performing a critical function(s).
Council member Tom Hill questioned the need to include the judgment fund in the proposed change to the legislation. Past Chair Dees, after pointing to various provisions included in the Committee's report, concluded that "all leads to the judgment fund." Thereafter, Council member Mark Colley proposed that the penalty mechanism be dropped from the proposed revisions.
At that point, Chair Bell, taking into consideration Alan Peterson's travel schedule, requested a suspension of discussion to honor Alan and Mildred Peterson. Chair Bell noted that the Section received another $15,000 donation from The Alan and Mildred Peterson Charitable Foundation. (See Agenda Item 10). Chair Bell then introduced Chair-Elect Pat Wittie, who read the following:
Resolution Regarding Alan and Mildred Peterson
BE IT RESOLVED, that the Council of the Section of Public Contract Law hereby recognizes and salutes the generosity and support that Alan and Mildred Peterson have provided to the Section over the past 14 years. Alan and Milly's presence at Section events has added grace, warmth and intelligence to our proceedings, and they have both nurtured our tradition of lively but civil discourse. Donations from The Alan and Mildred Peterson Charitable Foundation to the ABA's Fund for Justice and Education's Public Contract Law Education Project have enabled the Section to fund, among other things:
· prize awards for the winning entries in the Public Contract Law Journal Writing competitions for the years 1997, 1999, 2000, 2001, 2002 and 2003;
· travel expenses for more than 150 government speakers at more than 40 Section educational programs since 1990; and
· a substantial portion of the expenses for the 2000 Model Procurement Code Revision Project.
Through their thoughtfulness, generosity and quiet humility, Alan and Milly set the highest of standards. Its is with gratitude and affection that we recognize and salute them for their many contributions to the Section.
Upon completion of the reading of the resolution, Chair-Elect Wittie moved for Council approval, which was unanimous. Chair Bell then requested that Alan Peterson come forward to receive an award for Milly and Alan Peterson. Alan Peterson walked toward Chair Bell, the Council and all attendees rose and gave him a standing ovation. After the receipt of the award, Alan Peterson thanked everyone and then discussed briefly the fun surrounding the Wright Brothers Trial Presentation, and a little known problem surrounding the cracked wooden propeller prop. At the conclusion of his remarks, Lynda O'Sullivan added a fitting closing tribute; "Working with Alan made the Wright Brothers Trial special." Thereafter Alan Peterson left the meeting.
The NAFI reform legislation discussion continued with the goal of synthesizing the positions presented by various Council members, without adding new concerns and increasing the chance of the Department of Justice's objecting to the Section's solution to the NAFI problem.
A final motion was proposed which once again noted the acceptance of the changes to 28 USC §1346, 28 USC §1491 and 28 USC §2517. The motion then focused on revising the alternatives found in 31 USC §1304(d)(2)(A) and (B). Alternative 1- revise 1304(d)(2)(A) to require NAFI's to pay their own judgment. This requirement resolved the government attorneys' concerns about a "raid on the treasury" when Congress did not intend such to occur. While there appeared to be a consensus that Alternative 1, together with the other statutory reforms, resolved the issue; there was a desire to include 1304(d)(2)(B)-revised to address the enforcement procedure to be utilized if a NAFI refused to pay its judgment (Alternative 2). The rationale for including the alternative was to provide this information, which was well thought out and thoroughly vetted, to the government in case it desired to go further than what was set forth in Alternative 1. Specifically, Alternative 2 focuses on what will transpire if a NAFI does not pay the judgment within 60 days -- its procurement authority will be automatically suspended. Nonetheless, there would be an override process, if the NAFI is performing a critical function. Under these circumstances, the head of the agency would be required to report to Congress and explain the basis for nonpayment, and why the override process was implemented.
The motion was passed by vote of the Council, subject to approval by the Chair of changes by the Committee to conform to the guidance of the Council. When the Committee's final draft is approved by the Chair, the Section will apply for blanket authority. It is anticipated that Patricia McCarthy, Assistant Director for Commercial Litigation, will receive the Section's comments and proposal.
Ed Gallagher, Vice Chair, Construction Division, Bonding and Insurance Committee presented his Committee's report concerning the amendment of the Anti-Assignment Act (Agenda Item 3). He advised that the catalyst for the report were various board decisions which resulted in the surety not being treated or placed on the same footing as a bank when it came to raising issues that arose prior to the takeover of a project. Ed Gallagher also noted that American Banking Association will not oppose this action. Chair-Elect Wittie moved to accept the Committee's report. The Council voted unanimously to approve the motion. It was noted that the Section would seek blanket authority.[1]
Chair Bell then requested that Mary Beth Lowe and Susan Dunne, Co-Chairs Health Care Contracting Committee discuss the February 11, 2004 response (Attachment 2 to Minutes) to the Section's January 28, 2004 letter to William Winkenwerder, Jr. MD, Assistant Secretary of Defense for Health Affairs concerning procurement of covered drugs under The TRICARE Retail Pharmacy Benefit Program. (Agenda Item 8).
Susan Dunne provided background concerning The TRICARE Program and the manufactures' concerns of the extension of FSS pricing under The Veterans Health Care Act. Mary Beth Lowe advised of the Committee's concerns that DOD's actions are inadequate and ignore the issue of whether this is a procurement. Both requested guidance from the Council. Council member Donna Yesner pointed out the differences between a Depot type contract and The Medicare Trust Fund. She then explained that under the latter the government was paying under an assistance program and not receiving the drugs. She inquired as to how DOD intended to measure refunds. Thereafter, she requested that the Committee review that issue and discuss what additional comments needs to be made concerning the February 11 response.
Co-Chairs Dunne and Lowe inquired as to whether a meeting with DOD was appropriate. Marilyn Neforas, Section Administration, advised that they need to speak with the ABA's Policy Administration Office in Chicago and the Governmental Affairs Office in Washington, DC. Prior to arranging any meeting with DOD, Chair Bell noted that Blanket Authority permits contact with DOD on this issue for 90 days, so long as the Committee stays within the limits of the authority. The Committee will proceed, as noted above, and keep the Council advised thereof.
Chair Bell advised the Council that the Special Committee that has been advising California's Department of General Services has requested, due to the election of Governor Arnold Schwarzenegger and a number of personnel changes, a letter be written to the governor explaining our Section's prior work and our willingness to assist him in any way he might find useful. Budget and Finance Officer Pat Meagher advised that she will put the letter in final form. Chair Bell agreed to sign it.
Chair-Elect Wittie presented the Strategic Communication Plan. (Agenda Item 14). She explained that the draft plan resulted from a meeting of the officers and others in New Orleans. The plan was created to help the Section achieve its goals. Thereafter, there was discussion concerning how to fund membership fees for students, sponsors, the need to build bridges to the Young Lawyers Division and a mentor program. Chair-Bell suggested that these issues should be addressed by the Membership Committee and coordinated with Carl Vacketta.
Past Chair Norm Thorpe gave a status on the ABA Task Force to develop procurement procedures for the ABA. (Agenda Item 9). He advised that there were a number of meetings of the Task Force and the information gathering phase is almost complete. A draft report is to be created and provided as a courtesy to the Council and sent to the Board of Governors' Special Working Group. The members of the task force are Mark Langevin, John Currier, Michael Love, Peter Balch and Melissa Copeland.
Chair Bell advised that the Nomination Committee has been formed. The members of the Committee are: Past Chair Mary Ellen Coster Williams, who will chair the Committee, and Lannie Elderkin and Bill Walsh. (Agenda Item 20)
Chair-Elect Wittie presented the Long Range Planning Committee 5 Year Plan. She recognized her co-chair, Rob Schaefer, and Lynda O'Sullivan. Chair-Elect Wittie explained that the plan established the Committee's Mission Statement, was a rolling 5 year plan for the Section, and a working document that accurately reflected the Section's goals. The next step is to create an implementation strategy. Once this strategy is incorporated into the plan, the existing document will be presented to the Council for approval and funding.
Liz Fleming presented the Legislative Coordinating Committee Report. She advised that bioterrorism countermeasures ("Bioshield") will pass within the next 30 days. She then predicted that competitive sourcing will remain a controversial issue for at least the next session. Thereafter, she noted that provisions related to off shoring and outsourcing will be attached to appropriation bills and that "Buy America" will continue as an issue for the next fiscal year.
Chair Bell provided the Council with an update on the progress of the revised ABA Blanket Authority in the House of Delegates. He advised that the proposal to change the comment authority procedures has been tabled. It is now scheduled to be taken up in August at the annual meeting. The Section's special comment authority will continue at least until August.
Past Chair Greg Smith discussed the progress of the revisions to the Section's Bylaws. The revisions, which will acknowledge the electronic age and tie up some loose ends, will be presented to the Council at the Portland meeting. Once the revisions are approved by the Council, they will be sent to the Board of Governors for approval.
Mike Love reported on the review of the Iraqi Procurement System. This project was presented to the Section by CEELI. He advised that Rand Allen was co-chairing this effort. He also provided that the following topics were being addressed by members of the review team:
Transparency/Predictability Steve Knight
Work Description Jim Pankovics
Full and Open Competition Karen Manos
Procurement Organization Mike Love
Procurement Integrity and Ethics Jim Kearney
The comments were to be submitted to CEELI by March 5, 2004. The initial comments will be submitted to CEELI by the individuals involved in drafting of the comments. At the same time, members of the Council are to receive copies of the comments for review. The Council will address the issue of authority and determine whether to adopt the comments. The review and comment period for the Council will end on March 8, 2004. At this time, it is anticipated that the Section will request expedited blanket authority.[2]
Chair Bell announced that the 10th Annual Federal Procurement Institute was the most highly attended of all -- 175 paid registrants. Chair Bell congratulated all of the FPI co-chairs and the annual co-chairs. Thereafter, he called upon Michael Mutek to discuss the Portland Program. (Agenda Item 35).
Chair Bell then commended the committee reports contained in the Agenda Book to all Section members. He also advised the Council and Section members of the special award received by the Section during the December 2003 Federal Acquisition Alternative Dispute Resolution Awards Ceremony. A picture of the award presentation is in The Procurement Lawyer, Winter 2004 Edition, at p. 26.
Norm Thorpe then commended the Procurement Fraud Committee for its willingness to memorialize their meetings in report form. He specifically noted that the substantive material was very useful, encouraged more committees to follow the Procurement Fraud Committee's lead and questioned whether their reports should be placed on the Sections' website.
Chair Bell asked if there was any additional business.
Chair Bell adjourned the meeting at 12:30pm.
Michael A. Hordell
Secretary
Section of Public Contract Law