AMERICAN BAR ASSOCIATION
SECTION OF PUBLIC CONTRACT LAW
FALL COUNCIL MEETING MINUTES - 2002
November 16, 2002
Meeting called to order at 8:55 am by Section Chair, Mary Ellen Coster Williams.
Minutes of the August 10, 2002, Washington D.C., meeting were approved.
[Agenda Item 1]
[Agenda Item 5]
Mr. Crowley reported that the law student reception at The George Washington University was a great success with about 70 students attending. OFPP Administrator Angela Styles, Chair Williams, Chair-Elect Bell, Vice-Chair Wittie, and Section members attended to talk about the benefits of membership in the Section of Public Contract Law. Chris Yukins, from GW, asked that we hold similar receptions in the future and Mr. Crowley said they intend to do so.
The reception for young lawyers that was held last summer was also a success. Mr. Crowley believes these types of receptions are an effective way to make the benefits of Section membership known.
Chair Williams agreed that the law student reception was a tremendous success and we should think about a suggestion made by Marshall Doke that we set up a mentor program for the law students to introduce them to our practice, with Section members serving as mentors.
[Agenda Item 31]
The Chair introduced Aaron Drabkin, the new Section Liaison from the Law Student Division who is a first year student at American University Law School.
Board of Governors Liaison Report - Pamela Roberts
[Agenda Item 9]
The annual meeting structure is under discussion by the Board of Governors. The annual meeting will keep a similar organizational structure as that used in 2002. The registration fee for the annual meeting in 2003 will be increased from $95 to $150 to cover some of the $500K ABA shortfall at the 2002 meeting. The Section Officers Conference was a strong participant in these discussions and ably represented the interests of the Sections.
An ad hoc committee of the ABA Board of Governors has been appointed to review the blanket authority process. No date has been established for a report from the committee.
Part III of the ABA Pulse of the Profession, considering ABA membership issues, will be released soon.
On the financial side, the Board of Governors will be analyzing a number of ABA entities to encourage their self-sufficiency, e.g., ABA publishing. Financial self-sufficiency could have a financial impact on the Sections in the form of higher costs for services.
A-76 Report - Dan Gordon
OMB has issued its proposed revisions to A-76, Public/Private Cost Comparisons, which was published in the Federal Register on 11/15/02. The changes will be effective for solicitations issued after 1/3/03. The 30 day notice comment period begins 11/15/02. The revisions are an effort to level the playing field in public/private competitions, making them more fair and faster and is an effort to represent the recommendations of the Commercial Activities Panel. There is a stronger statement that the functions of government employees are presumed to be commercial unless they are inherently governmental. This circular will supercede the old A-76 document.
Standard competition is the heart of the new act - a FAR like process with very tight time frames. There is an 8 month deadline from announcement to issuance of the solicitation (has been 20 months) and the agency then has 4 months to issue a decision on the award. The new act provides that the agency can use an IFB or RFP approach, including low cost technical evaluations or cost/technical trade-off evaluations. The phased evaluation process allows a proposal to include increased requirements, with an increased price. If the agency is interested in the proposal, it can reissue the solicitation for another round of proposals.
Cost calculation is to remain largely as it is under the current system. The 12% overhead figure is still being used in calculating in-house costs, and plug-in for certain other costs will be used, too (although in some cases different from those currently used). Also, the 10%/$10M test for movement between public and private sectors is still to be used.
DISCUSSION: If the Section wants to comment, it has a short 30-day window. Gordon did not know if the OMB will extend the comment period.
ACTION: Chair Williams sent the issue to the Privatization and Outsourcing Committee to consider whether it wants to draft comments.
Section's Task Force on the Services Acquisition Reform Act (SARA) - Gerry Doyle [Reference Tab 2, Agenda Book]
Chair Williams recused herself, and Chair Elect Hugh Bell received the report and conducted the discussion.
The Task Force received a substantial number of comments on the draft report. It is expected that SARA will be reintroduced in the next session of Congress. The Task Force has backed off from commenting on a number of sections in SARA, as they appeared to involve policy or did not present legal issues. This position was taken in response to concerns raised in the comments received by the Task Force. The comments on SARA have been made consistent with prior Section comments on FASA. Doyle reviewed the revisions made on the various sections since the August draft of the Task Force's comments.
Motion: Pat Wittie moved to adopt the comments of the SARA Task Force. There was a second to the Motion.
DISCUSSION: Pat Wittie commented that the Section frequently comments on issues of policy and that there doesn't seem to be such a limitation. She suggested that parts of the report that say we have no comment because there is no legal issue simply be deleted, rather than giving that reason. Doyle said the Section traditionally does comment on policy and legal issues. The consensus of the Council is that we follow Pat Wittie's suggestion, although we have an issue when commenting on policy, in light of the diverse membership of the Section. It is the role of the Section to express the consensus of the Section, based on full and open discussion. The Section has also submitted minority reports as part of its final comments, when the minority position is particularly strong and warrants recognition. Gerry Doyle said that he did not think the issue on whether to comment on policy issues changed the opinion of the Task Force when reaching its final comments.
Motion to Amend: Marshall Doke moved to delete any reference to sections in the proposed legislation on which we are not making comments and that the report only include reference to sections of the Act upon which we are commenting.
Motion to Reopen Discussion: Moved by Norm Thorpe with a second by Pat Wittie.
DISCUSSION: Norm Thorpe suggested that the comments on page 5, to section 103 - Government-Industry Exchange Program, include references to Section 1905, Trade Secrets Acts, and that government employees be subject to this provision when dealing with unpatented contractor proprietary information. The Chair-Elect ruled this recommendation a technical correction to the comments and not requiring a motion or amendment to the Motion.
Lynda O'Sullivan pointed to sections 503 and 504 and suggested that the Task Force consider deleting the final paragraph relating to the extension of other transaction authority to civilian agencies as no longer being timely. Dan Gordon raised issues relating to contract type and catalogue and market pricing, section 402. Norm Thorpe, referring to page 8, 1st paragraph, and the text saying the Government is improving its leveraging capability, asked what does this mean and suggested this phrase be clarified.
The Chair-Elect asked for a motion to table this report and that revisions to the report be circulated to the Councill by e-mail and then voted upon by the Council.
Motion: Pat Meager moved to amend the motion to the effect that the Task Force consider the comments made by the Council during the discussion and circulate the revised draft to the Council, via e-mail, within 3 weeks. Motion to amend accepted by Pat Wittie and motion passed.
[Reference Tab 44 and 35, Agenda Book]
The Section should have a surplus of about $17K when a deficit was projected. The Section had a surplus from the Annual meeting programs and the Public Contract Law Journal contributed by controlling its expenses and income from advertising.
To date, the Westlaw relationship for recording selected Section programs has had no cost and no revenue.
With regard to ABA Sponsorship Policies and Procedures (reported at Tab 35 of the Agenda Book) the Section has not engaged long term sponsors, although we do have sponsors for discrete events.
Program Chair Report - Kent Morrison
[Reference Tab 41, Agenda Book]
Yesterday's program on Homeland Security was a great success. We attracted some new talent as presenters and the presentations were simply first rate. Coordinating this program was particularly difficult because the speakers kept changing right up to the day of the program. There are other exciting programs coming up, including the Federal Procurement Institute.
The Chair expressed her appreciation to Greg Smith, Kent Morrison and the program chairs for an excellent program, noting that it was probably the most modified program in history.
[Reference Tab 41, Agenda Book]
The program is called "Whatever Happened to Competition?" The Institute will start with a practicum on bankruptcy and government contractors on Wednesday night. John reviewed all of the panels to be held during the Institute and made special note of the high quality of the panelists and moderators.
Contract Claims and Disputes Resolution Committee - Past Performance Survey - David Kasanow
[Reference Tab 21, Agenda Book]
The goal of the past performance survey, a revisit of the survey last done in 1997, is to find whether the government believes the efforts of documenting past performance has been useful to the government and whether the use of the disputes or protest process, as part of the past performance evaluation, have had a chilling effect on contractors, that would otherwise be using the disputes and protest processes. The survey is also looking at the procedural processes relating to past performance. A draft of the survey should be distributed for comment this week.
The Committee will try and get as broad a distribution of the survey, government and private sector, as possible.
[Agenda Item 38]
Lynda reviewed the Disputes Resolution program scheduled for December 4th. People will be allowed to take part in the program by telephone conference call.
Update from the Emerging Issues Committee on Homeland Security Task Force - Dave Churchill
[Agenda Item 4]
The Task Force still has a lot to do. Three subgroups have been established: Contractor Indemnification, Acquisition Structure Issues, and State and Local Issues. The Task Force is still looking for new members. E-mail Marcia Madsen, if interested in participating on this Task Force.
Approval of Comments Regarding GSA Policy Memorandum Concerning the Acquisition of Construction Services as a Commercial Item - Hugh Bell
[Agenda Item 3]
Chair Williams recused herself from this agenda item as it relates to GSA issues. The gavel was passed to Chair-Elect Hugh Bell.
David Drabkin, GSA Associate Administrator for Procurement Policy, presented the GSA's rationale for acquiring construction services as a commercial item. GSA has not withdrawn its letter announcing that it intends to purchase construction services under FAR Part 12 instead of Part 36, but is looking for some more guidance from people who work in this area on such topics as when is it appropriate to procure construction under Part 12 and how is the Miller Act applied?
GSA is already buying construction services under the GSA schedules. The GSA letter is not going to be withdrawn but GSA will not implement the letter immediately. GSA wants to get nontraditional construction contractors into the GSA market place, e.g., small businesses and women owned businesses. These groups have complained that it is too complicated to get a government contract. Another reason for having a contract awarded under Part 12 is that the contractor can get advance payments.
DISCUSSION: The Section needs to look at the process and contract clauses related to buying construction services under Part 12. Maybe we should consider working on a model contract that is more commercial-like in its approach. There are concerns that a Part 12 contract does not have customary risk-allocation clauses and that each contracting officer may draw up a different contract form, resulting in confusion and uncertainty in the contracting community.
ACTION: Chair-Elect Bell suggested that the Section should offer its comments and appoint a task force to address these issues. The following Section members have been appointed to this Construction as a Commercial Item Task Force: Mark Hanson, Geoffrey Keating, Christine McAnney, Gilbert Ginsburg, Tom Kelleher, Phillip Harrington, Larry Baker, and Eric Nelson. Dave Lane has been designated Chair of this Task Force. Bell asked for a report from this Task Force at the Mid-year meeting in Annapolis.
Chair Williams resumed control of the meeting.
[Agenda Item 36]
The purpose of the Committee is to create a state procurement law database of procurement law and resources for each state. Pat introduced the members of the Committee. The goal is to have this site up and running with a minimum of 12 state databases.
Jerry Walz is working with the ABA to set up this database on the Section website.
One of the issues that the Committee still must address is how to give credit on the web site to the people and law firms that create and nurture the database in each state. This attribution / advertising may be an issue to be addressed at the ABA level. Another issue is the cost that the ABA will levy on the section for redesigning and servicing our website.
The Chair expressed her thanks to the Database Committee for an extraordinary accomplishment is such a short period of time.
[Not on Agenda]
While everyone was feeling good about the accomplishments of the Database Committee, Carl Vacketta solicited articles for the Journal and Mark Langevin said that, if people were not inclined to do a law review article, the Procurement Lawyer, the Section Newsletter, is also soliciting articles.
Report on ABA Comments to Office of Government Ethics and Current OGE Initiatives Relating to Ethics Laws - Alison Doyle
[Report at Tab 8, Agenda Book]
The ABA report is titled "Response to the U.S. Office of Government Ethics, May 2002 Correspondence - July 26, 2002. The report by the ABA was submitted in response to questions posed by the Office of Government Ethics regarding problems and possible changes to existing criminal conflicts of interest laws. The ABA comments submitted to the OGE incorporated the Section Task Force's suggestion that the question of legislative remedies to address this perceived inequity, different ethics rules for government and private sector employees working side by side, be studied carefully and that regulatory or contractual remedies may be more appropriate.
Amy Comstock, OGE Director, is looking for a proposed revision in time for the next Congress. Alison is considering a Section Committee Responsibility and Contracting Ethics program relating to the conflicts law review.
[Agenda Book Tab 28]
Much to everyone's surprise, the lame duck session of Congress is moving legislation. There will be a Committee meeting on December 5th with a guest to discuss Homeland Security legislation.
Report of Section Representative to the National Construction Dispute Resolution Council of the American Arbitration Association - Hugh Bell
[Agenda Book Item 12]
The meeting of the Dispute Resolution Council was held last week in D.C. The major focus of the meeting was mediation, which seems to be more popular than arbitration. The construction practitioners are likely to see reduced fees for mediations from the American Arbitration Association. Another issue is the disproportionate cost of arbitration associated with consumer disputes and the requirement in the AAA clause that the business party for the cost of the arbitration.
[Reference Tab 7, Agenda Book]
Rob reported on the May 9, 2002 DCAA Memorandum for Regional Directors, DCAA, PAC 730.31/2002-9, subject: Audit Guidance on Documentation Requirements under FAR 31.205-33(f). The guidance provides that FAR 31.205-33(f) requires that there be three specific documentation requirements for consultant and professional service costs, if the costs are to be determined allowable. The three categories are: (1) evidence of what work was planned to be performed, (2) evidence supporting the invoice, and (3) evidence of what work was actually performed.
The memorandum states that some contractors have argued that documentation of work performed by attorneys and/or certified public accountants is exempt from the requirements of this FAR section. The application of this Guidance raises the concern that an auditor can hold a determination of allowability of consultant fees hostage until the contractor discloses attorney-client privileged information, asserting that there is no other information that is adequate to meet the support requirements set forth in the three enumerated categories of information to support the consultant's invoice. The Memorandum opines that attorney-client information is not privileged for purposes of establishing the allowability of the consultant's costs.
DISCUSSION: The NDIA is already commenting on this Memorandum as it appears that this Memo is already becoming a problem for industry. A Section member commented that DCAA audit guidance is only guidance. Rob opined that the Memo is probably to be applied retroactively, as the Memo does not say it applies only prospectively.
ACTION: The Chair referred the Memo to the Accounting Cost and Pricing Committee for review and comment. Mark Langevin said he would take charge of referral.
Appointments by the Chair:
[Agenda Items 30, 31 32, 33, and 40]
Chair Williams announced that she has made the following appointments:
Jeri K. Somers as Section Liaison to the ABA Commission on Racial and Ethnic Diversity in the Profession.
Judge Ruth Burg as Section Liaison to the ABA Commission on Women in the Profession.
Judge Carol Park-Conroy as Section Liaison to the Section of Dispute Resolution
Report from Judge Carol Park-Conroy, Liaison to Section of Dispute Resolution, re Resolution on Mediation and the Unauthorized Practice of Law - Dave Churchill
[Reference Tab 40, Agenda Book]
This is an action item for the Section of Dispute Resolution, which is taking the position that mediation is not the unauthorized practice of law. When they take action, it will come to the SPCL for comment. We don't think this Resolution will be brought forward at the ABA Mid-Year Meeting.
[Off Agenda Item]
The Chair recognized Jerry upon his retirement from the Commerce Department's Office of General Counsel after more than 30 years of government service. The Section presented Jerry with a gift clock at his retirement party, which had been held earlier. The Chair took the opportunity to also recognize Jerry for the service he has given to the Section over the last 11 years.
A sustained round of thunderous applause in approval of the Chair's accolades followed from the Council and the Section members.
Chair entertained a Motion to Adjourn: There were numerous seconds. Passed by enthusiastic unanimous acclamation at 11:45 a.m.
Respectfully submitted,
Robert L. Schaefer
Secretary