The meeting was opened by Chair David Churchill at 9:05 AM. The minutes of the Nov. 7, 1998 council meeting at Colorado Springs were considered and approved.

John Clark, PCL Section Liaison from the ABA Board of Governors reported that the ABA at its mid-year meeting in Los Angeles in February had approved a dues increase for the ABA. Details will be communicated to all members by the ABA. The new dues program includes additional incentives for section membership by new members. The ABA also is grappling with the issue of unauthorized practice as it is raised by growth of international accounting and consulting firms, and with the formulation of an ABA recommendation on the continuation or sunset of the Special Prosecutor authorization.

Chair Churchill reported that the Section’s proposed principles on Disputes and Competition were also approved by the ABA at its mid-year meeting, and invited Don Gavin to present and explain the proposal for an ABA policy on the principles of allocation of risk in Government contracts. The Section’s concern is that local and even state purchasing methods often lack the fairness rules which are imbedded in Federal procurement rules and practice. Mr. Gavin reported that his working group felt that the adoption of the principle would enable the Section more conveniently to comment on state and local regulatory and procurement actions which might otherwise require time consuming blanket authority process, making the Section’s comments untimely and less effective.

It was moved and seconded that the Section adopt the proposed Principle on Risk Allocation. During the discussion, there appeared to be general approval of the concept that public procurements should seek to avoid gross disparity in the allocation of risk and values exchanged, but there were widespread concerns that

Col. Purdue moved to amend the motion by substituting the following language for the entire language of the proposed report:

The amendment was seconded and discussed. Mr. Doke expressed concern that the ABA might find the proposed principle overly broad and suggested it would attract some opposition. The Chair noted that the clause "like their private counterparts" in the first sentence could be deleted to narrow the focus. Agnes Dover noted that public contracts operate in a regulated environment and many of them–for example, utility contracts–are required by regulators to be unbalanced. Mr. Gavin noted that the proposed principle would enable the Section to oppose such regulations. Mr. Dauer spoke in favor of the principle and gave some examples of practices he considers abusive, such as a California requirement for the posting of a bond in order to qualify to file a protest. Kevin Flanagan observed that we were focussing on government abuse and not the concurrent problem of abuse by contractors. A member from Massachusetts reported that many local procurement officials are amateurs dealing with very sophisticated contractors, for example, waste disposal companies. Mr. Langevin inquired whether the principle was intended to apply to prime/sub transactions. Mr. Barletta indicated that if it is a principle it should apply to subcontracts. Mr. Gavin noted the difficulty of doing this. Mr. Hordell wondered how we would distinguish abuse from a bad deal. Pat Meagher and Don Featherstun also addressed issues of application of the principle at the local level and with subcontractors.

The Purdue amendment to substitute report language was voted and approved. Mr. Doke warned that the report in this form was not sufficient to take to the House. He suggested a need for examples of the problem which we are trying to solve. It was moved and seconded that the resolution and report be referred back to committee for further work consistent with the views expressed at the meeting. This motion was approved.

Legislative Coordinating Committee. Angela Styles reported on the restructuring of committees in the House and Senate, and personnel changes occurring among the staffs. She also briefed four legislative proposals of interest to the Section:

Larson Frisby, ABA Lobbyist in the Washington office with responsibility for PCL Section issues, discussed the status of the Thornburg memo/McDade Amendment repeal issues. Sen. Hatch has introduced S-250 as requested by DOJ to repeal the McDade amendment and reinforce the rights of Federal prosecutors to communicate with employees of companies represented by counsel, notwithstanding state professional ethics requirements. Mr. Frisby requested Section members coordinate their lobbying efforts on this issue with him. His phone number is 202-662-1098. Mr. Frisby also distributed and discussed the complete list of actions taken by the ABA House of Delegates at the Mid-year meeting in Los Angeles.

Conflicts of Interest and Ethics Committee Mary Lou Soller spoke on behalf of the Section’s working group on Ethics 2000 and the ABA Standing Committee. She supplemented Mr. Frisby’s report on S-250 and Section 4.2 of the Standing Committee’s recommended ethics approach. She indicated that the ABA group intends to finalize its views prior to the next meeting of the Section in Scottsdale and that it will likely return to a position more closely aligned with DOJ interests.

Federal Claims and Remedies/Judicial Remedies Committees Rich Rector presented the Past Performance Survey and Recommendations. He noted that the committee considered but did not endorse a recommendation for judicial remedies where contractors are dissatisfied with their past performance ratings. Rick Vacura presented a detailed review of the responses obtained in the survey of contractors, law firms and contracting officers. Kent Morrison moved approval of the committees’ report and recommendations and the motion was seconded. Hugh Bell commended the report’s thoroughness and offered three suggestions: (1) the proposed Ombudsman would not likely be effective in the protection of contractor’s interests because he was given no authority, (2) any pending litigation concerning a matter which effected the performance rating should be the subject of a mandatory note in the file, and (3) the entire past performance record available to the source selection authority should be available for review by the contractor. Mr. Rector responded that the committee believed the Ombudsman would be a senior agency official who could be effective and noted that judicial remedies would remain if not. Several members expressed concern that the

Section would be micromanaging organizational matters within agencies by recommending the appointment of an Ombudsman. Mr. Thorpe cautioned that "mandatory" reference to pending litigation might not be in the best interest of competitors and might not be desired by them, but where they did wish to refer to it they could do so under the committee’s recommendation. Mr. Bell and Mr. Rector agreed that the "complete" record desired for release to the contractor need not include the names of individuals reporting information for the evaluation.

It was moved and seconded to allow the Chair to amend the report consistent with the discussion and this was approved. Rand Allen requested clarification of comments concerning possibility of appeal under the CDA in the event of a disagreement with the Ombudsman. Mr. Rector indicated this area was difficult and required further analysis. The Report of the Survey and Recommendations, as amended, was voted and approved.

The Chair noted Marshall Doke’s recommendation for a new Section award for outstanding Government procurement office. The Chair will appoint a committee to examine and implement the suggestion.

Pro Bono Committee Pat Wittie reported on the recommendation of the Pro Bono Committee that the Section team with the DC Bar to produce a Pro Se practice manual for use in the Boards of Contract Appeal. The recommendation was moved, seconded, voted and approved.

The Pro Bono Committee also requested the adoption of Section policy for criteria to be used by the committee to determine that a project is appropriate for designation as a pro bono project. The committee suggested three criteria:

Marcia Madsen questioned a requirement that all members be able to participate, since in fact not all will do so. Mr. Thorpe suggested the disqualification of certain government members from assisting with claims against their agencies is not much different than conflicts of interest analysis normally faced by counsel. Rand Allen wondered how this issue would arise if the Section were merely a clearinghouse for Pro Bono requests. Pat Wittie warned that the Section has not decided to find the resources to staff/man a clearinghouse operation. Paul Dauer noted that most of the Section’s activity is in fact Pro Bono in the sense that we work for the betterment of law and legislation. But if we are talking about actual representation we will run into ABA policies and restrictions on Section activity. The issue was referred back to the Committee for further consideration.

Navy Presentation The Chair introduced Mr. Art Hildebrant, Director of the Navy Litigation Office, thanked him for the participation by Navy attorneys in the Annapolis meeting, and expressed the hope that this cooperation between the Section and the Navy could continue and grow. Mr. Hildebrant described the functions of his office, which include litigation arising from government contract claims in excess of $400,000 and qui tam cases, environmental claims, and civilian personnel claims which are certified as class actions. He noted that base closures have created multiple major litigation, sometimes requiring court consideration to permit a unit to leave one base and a second court to consider whether the unit may be relocated at another. Caseload and backlog are trending downward and he attributes this in part to the success of ADR. Of approximately 80 cases now in backlog, some 15% are in ADR. The Navy strongly supports the use of ADR for government contract claims, but must work through DOJ which often wants to proceed through discovery before turning to ADR. The Director noted that the abolition of the M Account has forced program managers to consider where the claim settlement would come from. He noted that Navy is also using ADR effectively in civilian personnel claims and he believes they are ahead of other DoD agencies in this regard. They have achieved this result by using regional groups to examine claims and steer them into ADR and also by conducting extensive training of staff to familiarize them with ADR and give them confidence in its use. With regard to Y2K he indicated the Navy view was that the first priority is to fix the machinery, and let liability questions arise later if they will.

Program Report Michael Hordell reported that the Annapolis program, the 5^th Annual Federal Procurement Institute, cosponsored with NCMA, was highly successful in attendance, quality of presentations, and audience participation and acceptance. Upcoming programs planned include the Section supported program of the Judicial Conference of the US Court of Appeals for the Federal Circuit on April 6; the April 26 joint program with the ABA Dispute Resolution Section on "ADR: A Quiet Revolution in Managing Government Contract Controversies" at the Washington Hilton; and the Section program cosponsored with the Intellectual Property Law Section scheduled for Scottsdale, Arizona, May 20, 21. This program, titled "Information Technology Procurement Issues: Speed Bumps on the Information Highway," will focus on information technology and current legal issues relating to it. At the Atlanta annual meeting, the 4 programs planned cover: (1) the revised Model Procurement Code cosponsored with the Section of State and Local Government Law; (2) R&D Tax Credit, cosponsored by the Section of Taxation; (3) Limits on Consolidation in the Defense Industry; and (4) Price Based Acquisition. The Chair noted that the increased emphasis on cosponsorship is beneficial to the Section.

Trial Advocacy Course It was noted that the Trial Advocacy Course is scheduled for March 28 to April 2 and the Chair urged members to consider attending or sending their associates for this course which is recognized as one of the best quality courses of its kind available to attorneys and even judges.

Transition Plans Rand Allen reported some of his thinking about the future organization and activity of the Section, his transition plans and proposed committee structure and appointments. He welcomes input, views, and recommendations from all members to assist with this effort.

London 2000 Tony Gamboa reported for the Section’s working group for the London meeting July 17-20, 2000. In conjunction with other sections, PCL will cosponsor a program on health care which has been designated a Plenary Program, meaning it is sponsored and funded by the ABA. PCL also intends to put on a program on Defense Industry Consolidation in which the Sections of Antitrust Law and International Law have expressed an interest in cosponsoring. Other plans include a Section reception and possibly a tour of Air Traffic Control Facilities sponsored by Lockheed Martin. The New York portion of the meeting will precede the London meeting and will therefore be unusually early.

International Procurement Committee Michael Mutek and Ross Branstetter reported on efforts to reengineer the Foreign Military Sales program and its regulatory framework. The Section is participating in this effort, jointly with the International Law Section of the ABA, and they have been formally accepted by DoD as a participant in the process of reviewing the proposed changes. The Government is changing its process and expects industry to change as well. New regulations are expected to deal with government-to-government-sales, commercial sales, and hybrid programs. The former DSAA is now known as the Defense Security Cooperation Agency. White papers are being prepared on the following subjects: (1) Partnering, (2) Transparency, (3) Pricing and USG Cost Recovery, (4) Technology Transfer, and (5) Process Reengineering. The Chair complemented the committee on the extent and quality of its work, noted its importance and urged them to remain closely engaged in the process with DoD,

Task Force on Cost Accounting Standards Board Lynda T. O’Sullivan reported that the Section’s two white papers intended to state the Section’s views for the information of the Cost Accounting Standards Board Review Panel were forwarded to the Panel on Jan 28 after modifications were incorporated which had been requested by the Administrative Law Section. It is expected that the Panel will issue its report in mid-March and the Task Force will examine it and make recommendations to the Section at the next council meeting in May.

Task Force on Price Based Contracting The Chair noted that Price Based Contracting had continued to be a matter of high emphasis by DoD and high interest to contractors and the Section. Accordingly, a Section task force has been created to examine the issues and assist the Section in reacting to developments in this fast moving area. Tom Barletta has agreed to chair the task force. The group met during the Annapolis meeting and plans another meeting jointly with the Accounting, Cost and Pricing Committee at McKenna & Cuneo on March 11. It is expected that a DoD representative will attend and describe the current state of DoD effort in this area.

Y2K Subcommittee Donna Yesner described the pending legislative proposal for a safe haven for companies sharing information to support Y2K corrective actions. The Section has written to Government agencies inviting dialog on the Y2K issues, and has met with OFPP Administrator, Deidre Lee, who is considering an executive order which would extend the safe haven to actions not based on fraud, but it could include gross negligence. DOJ has an interest in this issue and is consulting with OFPP.

FAA Disputes Procedures The Federal Claims and Remedies committee reported that they are continuing their review of the proposed FAA regulations and the committee welcomes input from Section members.

Model Procurement Code Revision Project Tom Madden reported that the revision work is on schedule. Subsequent to the Colorado meeting initial revisions have been made and are available on the web page for review and analysis by interested parties. April 15 is the deadline for comment on the proposed changes which are mainly in the areas of cooperative procurement, electronic commerce and flexible procurement practices for purchases of infrastructure and major public works. The goal is to approve the revised Code at the Council meeting in May. The Chair requested the Division Chairs to insure timely committee review of the changes. David Lane indicated the Construction Division would be actively reviewing Art. V changes regarding construction contracting. Carl Vacketta noted that Section 3 appears to go very far in permitting sole source procurement. Rand Allen observed that the Code does not reflect Federal improvements made by FARA and FASA, particularly with regard to TINA and the purchase of commercial items. Therefore the Federal Division committees should be working closely on the revision project until it is completed.

Regional Programs Don Featherstun reported on regional programs in California and Virginia. A program is scheduled in March cosponsored with NCMA and Federal Bar Assn. on contracting issues raised by new technology. Paul Dauer briefed Kajima v. R. A. Wilson Co, in which it was held that a disappointed bidder may recover lost profits, legal fees, and B&P costs of $800,000. The decision was based on Art. 90 of the restatement of contracts.

Peterson Foundation The Chair acknowledged the continuing support of the Alan and Mildred Peterson Foundation for the educational activities of the Section, including an additional recent contribution which will be very helpful.

There being no further business, the meeting was adjourned at 12:45 PM.

Norman Thorpe

Secretary

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