The meeting was opened by Chair David Churchill at 9:05 AM. The minutes of the Council meetings at the Toronto Annual Meeting, Aug 1-4, were considered and approved.

Marshall Doke introduced John Clark, new ABA Board of Governors Liaison to the PCL Section. Mr. Clark observed that the Section has become quite visible within the ABA, particularly because of the work of Section Delegate Marshall Doke and Allan Joseph, who concluded his term as Chair of the Finance Committee of the ABA at the Toronto Annual Meeting. Mr. Clark reported the following issues are receiving the full attention of the Board of Governors at this time:

Committee Reports:

Conflicts of Interest and Ethics Committee: Alison Doyle and Mary Lou Soller reported on the status of the long playing ethics issues regarding contact by Federal prosecutors with employees of companies represented by counsel, and related issues. The Ethics 2000 Committee has withdrawn its proposal and is now working with the ABA Standing Committee on Ethics and Professional Responsibility to prepare a joint draft. Meetings were scheduled during December to receive committee comments and the views of DOJ. It is expected a proposal will be opened for comment from February to May, with a target of ABA action at the next annual meeting. The issues of interest to the Section are:

The issues are of wide interest in the ABA, e.g., Sections of Criminal Justice, Litigation, Antitrust, and Business Law are eager to be heard on the issues. A legislative proposal (McDade Bill) would clarify that government attorneys are subject to state rules of professional conduct. Allan Joseph reported that the Ethics 2000 committee has the responsibility to formulate the ABA position, in consultation with other interested groups, and the probability is that minimum changes will be recommended to prior ABA positions on the matter.

The Chair determined by consensus that the Council approved Section support for minimum change to existing rules of professional responsibility in this area.

Program Committee: Michael Hordell brought the report of the Program Committee. Al Purdue and Alan Gourley were recognized for their work in organizing the extremely successful fall program on the Contract Disputes Act at its twentieth birthday. The program was very well attended and well received by the large group of attendees in Colorado Springs. For the February program in Annapolis, the committee of Linda Maramba, Gina Cadieux and John Pachter is assembling panels to include some judges. It is intended that Deidre Lee and Eleanor Spector will be invited to participate as speakers. For the spring program, Agnes Dover and Maryanne Lavan are working up presentations on information technology, including Y2K, internet issues, intellectual property, and related state/local issues. Co-sponsorship by the Intellectual Property Section is under consideration. For the Atlanta Annual Meeting, John Miller is committed to present a major program on the revision effort for the Model Procurement
Code. Program Co-Chairs are Hugh Bell, Bill Stoughton, and Mark Langevin. The health care programs which had been intended for this year have been canceled because other organizations beat us to the target audience. The Chair emphasized the need for advance planning, and consideration of conflicts and competition with other Sections and organizations, and co-sponsorship.

In Memoriam: The Section departed from its business agenda to honor two recently deceased members.

Larry Caruso was remembered by Stanley Dees, who recalled Mr. Caruso's activities in the earliest days of the PCL Section. His career included positions of great responsibility in the Office of the General Counsel, US Air Force, and also the Washington office of the General Electric company. He served as General Counsel of Princeton University and he also served the University of Chicago in various capacities. Mr. Caruso was remembered for his good humor, his commitment to service, and his selfless approach to his work and all his activities. He was an early supporter of programs for spouses at PCL meetings, and in later years he practiced law in partnership with his wife.

Paul Shnitzer was remembered by Bob Murphy and Kent Morrison. During his years at the GAO, Paul Shnitzer was esteemed by his colleagues as the conscience of the agency. His personal integrity was the basis of effective advocacy. He was known for his remarkable patience and sense of humor, and commitment to his profession and his practice. After joining Crowell & Moring he continued to enjoy a reputation for civility, expertise and love of his work. He was a mentor for the young and old alike. His contribution to the PCL Section and the ABA was massive and contributed directly to the successes of the PCL Section which he helped to establish.

Judge Burg suggested letters of condolence from the Section would be appropriate, and the Chair agreed.

CAS Board Review: Lynda O'Sullivan reported on the Section's participation in the Congressionally mandated review of the Cost Accounting Standards Board, including the statutory authority of the CAS Board, and placement of the Board within the constitutional structure of the government. Mark Langevin reported on the Section's research into difficult constitutional issues resulting from the fact that rule-making authority is limited by Constitutional Law to principal officers of the United States. There is a considerable body of jurisprudence on the definition of principal officers and inferior officers, and the Section's committee is concerned that these issues be recognized in the statutory review, as well as any recommendations concerning the role of the various officials concerned, including the Director of OMB, the Administrator of the OFPP, and the head of the Board itself. Additional issues are raised by the inclusion in the CAS Board membership of persons who are not even employees of the Government. It was noted that the Congressional inquiry is expected to focus on the issue of whether the Board should have responsibility for procurement policy issues as well as responsibility for defining accounting standards, and indeed, whether it is appropriate for any body to attempt to regulate both. The council determined that the White Paper presented by the committee would be revised to take account of the views of the council and would be submitted to the GAO in the form of an analysis of these difficult issues without a recommendation. It was noted that in order to be useful to the GAO in its review, it would have to be submitted in early January. Accordingly, it was agreed that the paper would be revised by Nov. 25 and circulated for Council approval before the end of the year.

The Committee also reviewed the issues raised by the DoD price based contracting initiative. The Section representatives are participating with representatives of DLA, DCAA, the CAS Board, Industry Associations, and firms in a study group Chartered on October 15 by Mr. Jacques Gansler. The group is expected to produce a draft report by February and a final report in March. One of the issues facing this group is the question whether there should be a CAS Board. The Section subcommittee will work on these issues during the 90 day period, and participate in the development of the draft.

Model Procurement Code Revision Project: John Miller reported the revision activity continues to enjoy adequate funding and is expected to conclude on schedule. Interested Section members may log on the website to review the status of the revision activity, or better yet, to participate in it. Issues under consideration include proposed changes to Art. 10 re cooperative procurement, electronic commerce at the state level, flexible procurement methods, and issues related to the funding and delivery of infrastructure. There is in progress a fundamental change in the way governments buy construction services, new roles for industry and government, and innovative financing methods. It is important that the Model Code recognize and accommodate these changes. David Lane noted that bidders are required to make large investments in bid and proposal costs, leading him to express concern that any revision to the MPC must consider and clarify the correct timing of source selection in the bidding process. Mr. Miller agreed that construction is materially different than the procurement of supplies or other standard FAR contracting processes. Accordingly, it is necessary to recognize the need to integrate design, finance, construction, and operation, and to provide the contracting officer with the tools he needs to act effectively. This is a new approach, which replaces design/bid/build as the accepted approach. Tom Madden emphasized the need for broad consensus before taking the revisions to the ABA for approval. The Chair noted that the program at the annual meeting is a crucial element in the drive for that consensus. Allan Joseph suggested the need to address also the question of electronic updates to the Code in the future, and a strategy for encouraging adoption of the Code by the states. Rand Allen noted that participation by the State and Local Division and the Construction Division is necessary and asked for suggestions to improve participation and consensus.

PCL Section Website: Peter Balch reported on the progress in developing interesting and innovative presentations and material for the Section's website, to include committee information, minutes, publications and updates. Chair Churchill emphasized that the Section is committed to maintain and improve the utility of its website. Jerry Walz reported that the new ABA in-house net management system will facilitate and reduce the cost of Section web activity, and make it more user friendly. Most Section Committees now have a webpage, and The Federal Subcontracting Committee is launching its sub-committee website. Of course, these sites will be only as useful as the information posted by committee leadership.

New FAA Bid Protest and Contract Dispute Procedures: The Judicial Remedies Committee reported its review of new FAA dispute and protest procedures, and expressed strong criticism of the new process as inconsistent with the Contract Disputes Act and the Tucker Act. FAA Assistant Chief counsel Tony Palladino attended the meeting to present the FAA view of the need and authority for the new procedures. He expressed the wish of the FAA that the public, the bar, and the ABA should have full information about the new process and full opportunity to criticize and offer improvements. Mr. Palladino made the following points:

Alan Gourley presented the Committee's concerns about the new disputes procedures. FAA did not recognize the applicability of the CDA, and the new procedures lack important safeguards, specifically there is no discovery, no right to a hearing, and a 6 month statute of limitations on claims, which is unreasonably short. As a drafting matter there is also concern about the ambiguity of the term "accrual" of claims. Finally, the requirement for final review of claims decisions by the Administrator of the FAA is inconsistent with the regulation's ADR provision, which embraces binding arbitration. In response to Mr. Kinlin's question, Mr. Gourley indicated the rules concerning interest on claims were less favorable to the claimant than FAR rules.

Jim Regan presented the Committee's concerns about the new protest procedures. The volume of work resulting from the FAA programs, and the reliance on sole source procurement for material parts of it, are producing numerous protests. A recent case of Hewlett Packard required court decision. The use of terms such as "oral presentation" rather than "hearing" is a concern because it tends to downgrade the rights of the protester. There is a presumption against suspension of the work which requires a showing of specific harm and is difficult to overcome.

Judge Mary Ellen Coster Williams called on the Council to carefully consider the basic issue presented, which is whether the PCL will go on record as supporting innovation in the procurement process. Mr. Gourley stated that the new process would be more acceptable if it were considered an alternative remedy, and not a substitute for the CDA. He noted that the Section has previously objected to efforts to diminish the CDA and has also raised the issue of the meaning of "accrual" in the context of FASA.

Mr. Morrison inquired whether the FAA would be able to accept any of the Section’s recommendations. Mr. Palladino committed to take back the Section's views, but could not predict which ones would be persuasive in view of the strong Congressional pressure on the Agency to avoid mandatory stays due to protest and other similar issues which impact procurement lead time. Rand Allen and Mr. Palladino discussed what the Section could do to assist the Agency, and it was agreed that the area of ADR is a central issue. Past Chair Marcia Madsen observed that the Section should step up to its responsibility to assess the legal issues of statutory application, but should not go on record as opposing innovation. Agnes Dover suggested that an appropriate position for the Section would be to commend rather than oppose agency efforts to improve the
ADR process. She expressed concern that we were heading toward a report that would lack credibility because the Section supports ADR, but only as an alternative to the CDA. Rand Allen suggested the Section must always support the inclusion of the basic elements of due process for contract disputes. Mr. Nibley clarified that the FAA process is not itself "ADR" but rather a regulated process, which is prescribed by the agency in lieu of the CDA. ADR is permitted under the FAA rule as an alternative to the stated process, and in fact is being used by 70% of claimants, perhaps because the regulatory process is not sufficiently well defined in the FAA rules. Mr. Barletta expressed strong opposition to the presumption against suspension of performance. Marshall Doke recommended the Section should make a recommendation to the FAA consisting of three parts: (1) the CDA applies, and state the legal case for this conclusion, (2) the Section supports ADR as an alternative remedy, and (3) if there is to be a new regulatory disputes process in the FAA it should include the basic principles previously endorsed by the Section.

It was moved by John Miller and seconded by Rand Allen:

The motion was approved by the Council and the Chair directed Rich Rector to circulate the revised report to the Council for approval.

Principles of Dispute Resolution. The Section's proposed Principles of Dispute Resolution will be cosponsored by the Section of State and Local Government. At the request of that Section and staff of the House, the Principles will be amended to include specific reference to the Model Procurement Code. The Chair indicated that Section officers would need to attend the ABA Mid-Year Meeting in Los Angeles to support the submission of the Principles to the House of Delegates.

Alternative Dispute Resolution: Greg McKenna reported for the Special Committee on ADR that great progress was made during 1998 in establishing the validity of ADR as an approved dispute settlement method for use by the government. DoD has encouraged ADR and the Air Force is moving out very quickly. In April a memo was issued by the Secretary of the Air Force requiring contracting officers to seek ADR pledges from Tier I and II suppliers. The committee is working on a monograph.

New Methods of Construction/Infrastructure Delivery. David Lane reported on the conference in Chicago co-sponsored with the Forum Committee on Construction. The conference dealt with new and innovative financing and delivery methods. The Blue Fox case, pending at the US Supreme Court was explained. The case is a suit by a subcontractor directly against the Army, without privity, seeking a remedy against funds remaining after termination of the prime contract. Theories asserted are equitable lien, money damages, and in rem action. Many amicus briefs have been filed, because the case is of great importance.

The Chair commended Bobby Pollock for her work on the Section Newsletter

On motion of Fred Moss, the meeting was adjourned at 1:00 PM.

Norman Thorpe

Secretary