The Diminished Sanctity Of Government Contracts: A Comparative View of Changing Formation Regimes That Shows Strengthening of Overarching Goals

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1 The Diminished Sanctity Of Government Contracts: A Comparative View of Changing Formation Regimes That Shows Strengthening of Overarching Goals This article traces the evolution of the latest wave of procurement reforms in the European Union relating to competition in and formation of government contracts, contrasting aspects of this reform to similar aspects of law and regulation in the United States. BY Gabriel D. Soll Recent changes in the procurement laws and regulations of the European Union (EU) have created an environment where scholars and practitioners alike are reconsidering some of the fundamental aspects of the formation of a government contract and competition. Until recently, Europe and the United States had approaches that differed in significant aspects, especially in regards to review of contracts let under inappropriate circumstances. In both systems, significant changes have reopened discussion of contract formation which warrant closer examination. This article will discuss and contrast two major aspects of reforms that have occurred recently. Specifically, it will discuss the EU s changed remedies directives which were required to be implemented by member states before December 20, 2009, and mandate, among other things, a standstill period prior to finalization of a contract and a judicial mechanism for overturning an improperly-let contract. Aspects of the reforms will be compared to the United States changing model, especially regarding procurement under indefinite delivery/indefinite quantity (IDIQ) contract vehicles (similar to framework agreements in Europe). The article will conclude that the discussion surrounding competition and the formation of contracts is necessarily alive and well. It will look to the current reforms in Europe to note a convergence in legal thought. The reforms show that, despite the negative views that they erode the sanctity of a contract, they actually promote competition and better contracting in the public sphere. About the Author GABRIEL D. SOLL is an associate of McCarthy, Sweeney & Harkaway, PC, concentrating his practice on government contracts administration, claims, disputes, bid protests, and matters involving subcontracting (i.e., non-disclosure agreements, teaming agreements, subcontracts, etc.). He is a coauthor of The Government Contracts Forms Book and will soon be completing a degree in government procurement law through the George Washington University Law School. Journal of Contract Management / Summer

2 History and Genesis of the New Remedies Directive The groundwork for this discussion is laid by understanding the history of the European Court of Justice s (ECJ) ruling in the Alcatel case. 1 This section will review the significant changes put in place by EU Directive 2007/66, which entered into effect on December 11, Aspects of this directive are direct legislative results 3 of the Alcatel case. The Alcatel Decision Before turning to the analysis of the New Remedies Directive, it is important to understand the historic framework from which it arose. In 1998, the Bundesvergabeamt (Federal Procurement Office) of the Austrian government referred a case to the ECJ, asking it to interpret the national law of Austria and its compliance with the then-effective remedy directive (89/665). This decision, Alcatel Austria AG v. Bundesministerium furwissenschaft und Verkehr, has become one of the most important decisions concerning the formation of public contracts in Europe. 4 The Alcatel decision of the ECJ was recently upheld noting that the Kingdom of Spain s national procurement provisions did not provide for effective review of a contract award decision. 5 The significant finding that was upheld stated that a member state s national law must provide for review of an award decision prior to the conclusion of a contract. 6 At issue in Alcatel was whether the national laws of Austria at the time, which essentially declared a contract concluded upon notification to the successful tenderer, precluded an effective review, as required under the remedy directive of the EU. 7 Because notification and conclusion occurred simultaneously, the ECJ reasoned that a disappointed offeror or other interested party would not have an opportunity to mount any sort of challenge, and thus would be undermining the very purpose of the directive. 8 The Austrian law was found to violate the directives because it systematically removed the possibility for losing bidders to challenge the award decision. 9 The Court was careful to note the importance of this type of review while there was still lawful action which could remedy a situation of an improperly awarded contract. 10 Consequently, the ruling of the Court was that Member States had to make available provisions which allowed for review and for contracts which were made following illegal decisions to be overturned. 11 The ECJ, however, did not define for the member states which unlawful decisions would require a setting-aside of a contract. 12 One of the major lines of reasoning on which the ECJ based its ruling is the principle of effectiveness. 13 While not explicitly defined in statute, regulation, or ECJ ruling, effectiveness means that member states must apply EU rules in a manner as to give them full force and effect. 14 The ECJ discussed this principle in an earlier ruling, stating: [E]very national court must, in a case within its jurisdiction, apply community law in its entirety and protect rights which the latter confers on individuals any provision of a national legal system and any legislative, administrative, or judicial practice which might impair the effectiveness of Community law by withholding from the national court having jurisdiction to apply such law the power to do everything necessary at the moment of its application to set aside national legislative provisions which might prevent Community rules having full force and effect are incompatible with those requirements which are the very essence of Community law. 15 The important implication of the Effectiveness principle in regards to the Alcatel case is that the ECJ noted that the right of review is supreme for Member States and required certain remedies (i.e., overturning a finalized contract) that might have been foreign, in concept, to the jurisprudence of some Member States. According to one commentator, Alcatel represented the only case which refers to effectiveness regarding national remedies in procurement. 16 The effect of the Alcatel decision was understood almost immediately as the dominant guidance concerning public procurements and had effect on Member States through the concept of indirect effect. 17 Consequently, member states and the European Commission began a series of reforms aimed at addressing the problems in the public procurement system noted by the ECJ in Alcatel. Individual states in Austria and Germany amended their regulations within months of the decision so as to require, at a minimum, the contracting authority to inform tenderers about an award decision prior to finalizing the contract. 18 The First Iteration of Remedy Reforms In 2004, the EU adopted and promulgated a new set of directives concerning public procurement. The intended effect of Directives 2004/17 19 and 2004/18 20 were to simplify the procurement regulations while affording member states a maximum of flexibility in implementing their public contract regimes. 21 These two directives mirrored the earlier (and subsequent) directives on procurement by dividing the regulations between contracts for public works, supply, and 90 Summer 2010 / Journal of Contract Management

3 services, and those for public utilities. This consolidation did require at least 10 days to pass between a notice of an award decision and the date that the contract could be finalized. 22 However, this effort was not intended to create a sweeping reform, or to answer the call of the Alcatel decision; rather, it was a consolidation of the prior directives, and the European Commission had even launched a series of Internet consultations to tackle the issues of national review procedures and other challenges to the award of public contracts. 23 Many member states were either significantly delayed in implementing the small changes embodied in this consolidation or implemented them through decrees or other non-legislative modes. 24 The Second Iteration of Remedy Reform The New Remedies Directive created formal requirements for member states to provide bid challenge procedures and measures to ensure that contracts were not concluded prior to being adjudicated, if challenged. The critical point in considering this directive is that its stated aim is to improve transparency, non-discrimination, and competition guarantees through strengthening of the public procurement directives in the EU. 25 As discussed below, Alcatel pointed out that the principles guiding the EU required, implicitly, an effective review process, but that such were considered a weakness in the directives that were sought to be corrected. 26 The directive explicitly encourages businesses ( economic operators ) to seek out these remedies and to employ the remedies. 27 In May of 2006, the European Commission proposed legislation and began a series of consultations with various stakeholders (including member state governments, economic operators, and academics) to verify the impact of the Directives and methods for improvement. 28 The New Remedies Directive was formally adopted by the European Parliament on December 11, 2007, 29 and entered into force 20 days later. 30 It required implementation by the member states by December 20, 2009, 31 and included a provision for a Commission review of the implementation statutes by December 20, Directive 89/665/EC was modified by the New Remedies Directive, replacing Articles 1 and 2 in their entireties and making additional changes to other articles to effect implementation. 33 Mirroring provisions amended Directive 92/13/EEC, which related to the procurement of water, energy, transport, and postal sectors. 34 The first portion of the amendments seeks to ensure that member states have various review procedures available and that the procedure is available without risk of the contract being concluded. 35 The New Remedies Directive allows member states to require first to seek review with the contracting authority before seeking review at an independent body. 36 These general guidelines are detailed further in the amended Article 2, which details the powers that are to be conferred on the reviewing bodies and adds the standstill period. The first measure is to ensure that for any challenge, there are powers for interim measures to suspend the completion of the contract, set aside any aspect of the award of a contract, and to award damages in cases of infringement. 37 Perhaps the most important section is the addition of Article 2a inserted in the provision. The directive mandates that the effective reviews be given sufficient time to take place before the conclusion of a public contract. The European Parliament determined that no contract may be concluded until a minimum period of 10 days has passed from the day following notification to other tenderers or candidates. 38 The other major change is the direction to create a power to declare a contract ineffective if there is a violation of procedure or an inappropriate contract award as determined by an independent body. 39 Finally, the New Remedies Directive allows for alternative penalties, when ineffectiveness is not sufficient, to impose fines on the contracting authority, and shorten the contract that was awarded improperly. 40 The Importance of the New Remedies Directive The changes presented in the New Remedies Directive show a dramatic change in Europe and may represent a larger-scale shift towards a convergence of thought concerning public procurement contracts. 41 By codifying the standstill provision, as ruled to be required by the ECJ in Alcatel, and requiring national provisions allowing for the ineffectiveness of an improperly-let contract, the European Parliament is changing the answers to some of the threshold questions concerning the member states procurement systems. The expansion of review powers demonstrates a convergence of legal thought regarding competition in and the formation of public contracts as the European system is moving to encompass administrative powers granted by the United States and some international agreements, such as the World Trade Organization s Government Procurement Agreement. 42 Threshold Questions and Implicit Answers In a seminal work, Professor Steve Schooner demonstrated the competing interests that underlie a procurement Journal of Contract Management / Summer

4 system. 43 These considerations, or desiderata, were expanded on by Professor Daniel Gordon concerning protest systems in a subsequent article. 44 Of the eight questions that Prof. Gordon posited and explained, the New Remedies Directive answered four of the farthest-reaching policy-oriented questions, as is appropriate for the EU Directives, while leaving the more specific elements to the member states to decide. The questions the New Remedies Directive answered were: What are the time limits at the forum? Is the procurement on hold during the protest? Who has standing to protest? What power does the forum have to provide meaningful relief if it finds the protest is justified? 45 The questions answers and their implications on the nature of contract formation will be discussed below. Timing Concerns The first questions concern timing in public contracts review. The questions, as posed by Prof. Gordon, ask when a protester must bring a challenge to a procurement action, and follows that by examining what effect a challenge has on the underlying procurement. The combined effect of these two questions, can, as it has in Europe, boil down to a preference in treatment of award decisions. As discussed above, the ECJ ruled in Alcatel that member states must make available means for effective review. While awaiting the changes in the New Review Directive to be implemented in the member states, which mirror the requirements of the Alcatel decision, the ECJ also issued a ruling which clarified the requirements and shows a clear preference that cuts across the two timing questions. At issue in Kingdom of Spain was a Spanish law whereby the notification of an award decision was required within 10 days of that decision, but did not hinder the finalization of the contract. 46 This was brought to the ECJ prior to the adoption of the New Remedies Directive, yet makes clear the policy therein. What Spain had attempted to do with this law was to create a system similar to the United States, wherein a contract can be signed and later changed or cancelled after a sustained bid protest. With this at issue, the ECJ stated, in no uncertain terms, that a reasonable period must pass between the moment when the award decision is communicated to all unsuccessful tenderers and the conclusion of the contract. 47 While the New Remedies Directive mandates that there must be a power of the review body to declare a contract let under inappropriate circumstances to be declared ineffective (and thus cancelled), the option to allow award and finalization to be coincident despite this remedy is not allowed. 48 With the New Remedies Directive, the EU answers these questions by stating that most contracts may not be concluded without a minimum 10-day standstill period. 49 This is the same period that disappointed bidders would have to bring their protest, or to allow the action to conclude. The effect of a protest is noted in paragraph 12, in what seems to state that a challenge of a procurement action must allow enough time for a review body to make a decision, and not to allow conclusion of a contract until a decision is reached. This is consistent with the ECJ s Alcatel and Kingdom of Spain rulings, as it would seem to create an inconsistency if the Directives would allow for a contract to conclude despite a challenge. This system can be contrasted to the U.S. procurement regulations, which require a bid protest to be filed no later than 10 days after the bases of the protest is known. 50 Following the filing of a protest with the Government Accountability Office (GAO), 51 there is a statutorily-mandated stay imposed on the contracting official, so as to have the effect of a standstill period. 52 While there is nothing to prevent the contracting authority to conclude the contract, the statute creates a situation where the same authority is required to instruct the awardee to cease performance until the resolution of the protest. 53 This is similar to the European system in that it provides for effective review, but differs in that it requires the overturning of a contract if a violation of a procurement regulation is found. This contrast shows that Europeans remain firm, at least in part, to the notion that a signed contract is sacrosanct and not subject to further review. In the United States, the government and contractors alike are well aware of the government s ability to terminate a contract for any reason or, merely, for its convenience. Even more importantly, as discussed further below, is the intention of creating greater access to justice and increasing competition by allowing the participants in the system better and more transparent access to the system in which they operate. Standing Concerns The second of the policy-oriented questions that the New Remedies Directives answers concerns who has standing to challenge the acts of a procuring authority. The New Remedies Directive states that review procedures need to be 92 Summer 2010 / Journal of Contract Management

5 available to any person having or having had an interest in obtaining a particular contract and who has been or risks being harmed by an alleged infringement. 54 While not particularly relevant to the discussion of the formation and review of public procurements, it is interesting to note its stark contrast to the United States system where only the next in line to receive the award is actually eligible to protest the award. 55 Relief Concerns The last question that the New Remedies Directive answers is, What power does the forum have to provide meaningful relief if it finds the protest justified? As noted, the Alcatel decision showed that the rule under the European system is that an adequate remedy must be available in situations where improper actions led to the award of a contract, as decided by an administrative body. This, however, is not the only stage in contracting that the ECJ has concerned itself with in recent cases. It does show a consistent trend toward requiring access to justice at a point where the relief could be meaningful, and the New Remedies Directive pushes that trend further. In cases where the ECJ has considered challenges prior to a call for tenders (solicitation), 56 cases that arose concerning actions taken prior to the award decision, 57 cases concerning the award of a contract (as discussed in Alcatel), 58 and in cases concerning terminations of contracts being performed after an infringement, 59 the common thread is that access to a local and expeditious review is critical. Prior to the New Remedies Directive, the rules created a paradox whereby a disappointed bidder was not entitled to a remedy beyond damages under the national laws, and to overturn a contract would require the European Commission to bring an action over the infringement against the member state. 60 What the reforms of the New Remedies Directive show is a change in thought that notes that damages after the award of a contract is not the same as the ability to fairly compete for the contract or to perform the work (for both the economic reasons [profit], but also for the less-tangible reasons, such as gaining past-performance credentials or any number of reasons for wanting to perform a public contract). Contractors and government officials in the United States have long been familiar with the concept of a contract being terminated because of a GAO recommendation 61 or Court order. However, the very familiar notion of termination for the convenience of the government is not as common in the European system. Because the New Remedies Directive requires such appropriate remedies, it is a valid thought to wonder if this is a point of convergence between the European and United States procurement systems. Some commentators have commented that the notion of being able to overturn a contract is disliked because it creates a sense of uncertainty for the contracting authorities as well as for project financiers. 62 One scathing criticism of the New Remedies Directive is that the European Parliament did not specify for member states the conditions for such interim relief. 63 This commentary also notes the prevailing culture in Europe, specifically the United Kingdom, as being non-litigious and preferring to resolve such matters without resorting to costly legal battles. 64 These fears are not unfounded, however, especially because the control over the contract being awarded properly does not rest with the contractors (let alone their project financiers). What can make the idea palatable to all involved is the point that the European Parliament makes in the preamble to the New Remedies Directive, when noting that the reforms are intended to boost transparency and invite economic operators (not simply disappointed bidders) to avail themselves of this new right in order to combat the very uncertainty that is thought to be created by the reform. 65 These reforms need to be considered in light of the experience in the United States wherein bid protests and other such self-protective matters create a system of private attorneys general which have an inherent interest in policing the system, even if that cuts against them at times. 66 As the preamble of the New Remedies Directive notes, ineffectiveness is the most effective way to restore competition and to create new business opportunities for those economic operators which have been deprived illegally of their opportunity to compete. 67 Implications for the Future: Task-and-Delivery- Order Contracting Both praised and reviled, the system of task-and-deliveryorder contracting based on an underlying agreement between a contractor and a government has become a staple of modern public procurement systems and is not likely to leave any time soon. Whether talking about IDIQ contracts in the United States, framework agreements in Europe, or central purchasing agencies, the system of blanket agreements with underlying order placed against them is showing a significant point of convergence (at least in terms of usage) on both sides of the Atlantic, and receiving considerable amounts of scholarly attention. 68 However, because of their nebulous obligations, challenging the award of such vehicles is not often easy as the rights affected are far more abstract. However, in light of the Journal of Contract Management / Summer

6 current discussion, the changes in the New Remedies Directive aimed at framework agreements, and recent case law in the United States, demonstrate a future area of reform and consideration in light of the underlying concerns addressed by the reforms. The New Remedies Directive makes a point to allow Member States to avoid the requirements of the standstill and ineffectiveness provisions if the contract at issue is a framework agreement. 69 This is an aspect of these reforms that should be subject to future reforms if the experience in the United States is at all illustrative of the pratfalls in this style of contracting. Because master agreement contracting creates more potential points where bad acts or other improper competitive behavior can enter the fray, the United States has expanded the powers of review both by judicial and regulatory means. The scope of judicial review of such contracts has not really changed, vis-à-vis the courts of the United States; rather, the courts are looking deeper behind the formation of the master agreements when challenged. The recent Court of Federal Claims matter, Serco, Inc. et al. v. United States, shows that the formation of the basic agreements must be subject to the stringent requirements of any other contracting matter. 70 At issue in this case was the award of a governmentwide acquisition contract (GWAC) to provide a broad range of technology-related services, products, and equipment known as the Alliant GWAC. 71 Eight plaintiffs contended that their exclusion from an award was arbitrary, capricious, and contrary to law. 72 After thorough consideration of the solicitation and evaluation methodology, the Court agreed with the arguments of the plaintiffs. The ruling found systemic errors and required the contracting agency to set aside the awards made and enjoined it from making new awards (i.e., reopen the procurement) without changing the evaluation methodologies to be in accordance with law and regulation. 73 This decision is particularly important as it notes the importance of beginning the process on good grounds. As IDIQ contracting is becoming increasingly popular in the United States, 74 the fundamental principles behind the bid-protest mechanism were being sidestepped by awards under master agreements, as even the courts had to consider whether or not they had jurisdiction to consider task order awards. 75 Until recently, task order award challenges had to be brought to either the Boards of Contract Appeals or the courts as claims concerning the administration of a contract, rather than as a protest to the formation of one. That changed with the passage of the 2008 Defense Authorization Act, 76 which contained significant elements concerning procurement reform in the United States. Specifically, Section 843, titled, Enhanced Competition for Task and Delivery Order Contracts, expanded the jurisdiction of GAO to hear protests of the award of certain task or delivery orders if they fell above a certain threshold. 77 What the Alliant decision and the expansion of the protest function at GAO over task order awards demonstrate is the increasing demand that such awards be treated with the same degree of scrutiny as any other government contract. It appears that the United States is trying to shine light on some of the less-transparent aspects of its public contracting system by opening access to review and allowing competitors to take advantage of those reviews to ensure that the system is providing a fair and clean system of awards. What this expansion could demonstrate to Europe is that the expansion of review proceedings lends even greater legitimacy to the contracting system especially in Europe, where concern of like-treatment amongst the Member States is a high concern, creating a system whereby access to review is stymied by a contracting official (either discriminatorily or for more legitimate reasons such as expeditious contracting or ease of use). Conclusion The New Remedies Directive contains reforms for the European system of public contracting that are far-reaching and may lead to further reforms concerning the nature of competition and the formation of government contracts. As shown, the decision in the Alcatel case led directly to reforms that now require Member States to have new systems of review and remedies under those systems that may be unknown in some of the national systems of law. However, despite their critics, the reforms will create a more open and competitive market for Europeans, if they are able to take advantage of it. Just as aspects of fair competition are re-thought in the United States legal and regulatory scheme as contracting evolves, the dialogue created by the New Remedies Directive will serve to promote the goals of the system, and in the next wave of reform, could expand into task and delivery order contracting if the similar provisions are successful upon implementation. JCM Endnotes 1. Alcatel Austria AG v. Bundesministerium fur Wissenschaft und Verkehr (Case C-81/98) 94 Summer 2010 / Journal of Contract Management

7 (1999) E.C.R. I-7671 (hereinafter Alcatel ). 2. Directive 2007/66/EC of the European Parliament and of the Council of December 11, 2007, amending Council Directives 89/665/EEC and 92/13/EEC with Regard to Improving the Effectiveness of Review Procedures Concerning the Award of Public Contracts (hereinafter referred to as the New Remedies Directive ), available at LexUriServ.do?uri=OJ:L:2007:335:0031:01:EN:HTML. 3. A brief footnote is warranted at the outset concerning the structure of the EU s legal regime relating to procurement matters. At the highest level, the European Community Treaty provides principles and policy guidance which shape the philosophy behind the specific regulations. The directives define the legal framework for each member country to then apply to its own national laws. The directives are neither law nor regulation; however, they shape both, and are considered a means of implementing a political objective. (See generally Jean-Jacques Verdeaux, Public Procurement In the European Union and in the United States: A Comparative Study, Public Contract Law Journal, vol. 32 (2003): 713. Finally, the ECJ will enforce the EC rules under three jurisprudential mechanisms: 1) direct effect, whereby the Court decides that member nations are obligated to directly follow the guidance of the EU directives; 2) indirect effect, which follows the judicial reasoning behind direct effect, but allows the Court to implement a non-implemented community rule (such as a ruling with forward-looking implications); and 3) state liability, whereby the Court will decide a matter, even if the previous two methods do not provide standing, but to deny a ruling would deny justice. (See generally Despina Pachnou, Direct and Indirect Effect of Directives and State Liability: Their Applicability in Relation to the Procurement Remedies, Public Procurement Law Review, vol. 5 (2000): ) Although an important feature to note is that enforcement of specific rules is largely decentralized, and left for national courts. (See generally, Despina Pachnou, Enforcement of the EC Procurement Rules: The Standards Required of National Review Systems Under EC Law in the Context of the Principle of Effectiveness, Public Procurement Law Review, vol. 2 (2000): 55 74). 4. Matthias Oehler and Martin Dischendorfer, Case C81/98: The Ability to Challenge the Contract Award Decision Under Community Law, Public Procurement Law Review, vol. 2 (2000): at CS54 and CS57 (noting that, despite the importance it attained, at the time the decision did not surprise the parties involved, or other members of the EU, and cites examples of national legislation that seemingly predicted the outcome). 5. Commission of the European Communities v. Kingdom of Spain (Case C-444/06), available at LexUriServ/LexUriServ.do?uri=CELEX:62006J0444:EN:HTML (hereinafter Kingdom of Spain ). 6. Martin Oder, Requirements of Effective Remedies Prior to the Conclusion of a Contract A Note on the Judgment of the Court of Justice in Commission v. Spain (Case C-444/06), Public Procurement Law Review, vol. 5 (2008): NA212, Alcatel, see note 1, at Ibid., at Adrian Brown, Applying Alcatel in the Context of Competitive Dialogue, Public Procurement Law Review, vol. 6 (2006): Alcatel, see note 1, at 32 ( the importance of this objective of effectiveness in particular at the stage where infringements can still be rectified (emphasis in orginal)). 11. Christopher Brennan, Information Requirements and Review Procedures Are the United Kingdom s Standstill Provisions Adequate, Public Procurement Law Review, vol. 6 (2007): NA , at NA Ibid. 13. Pachnou (vol. 2 (2000)), see note 3, at Ibid. 15. Administrazione delle Finanze dell Stato v. Simmenthal SpA (Case C-106/77) (1978) E.C.R Pachnou (vol. 2 (2000)), see note See Pachnou (vol. 5 (2000)), note 3, at Oehler and Dischendorfer, see note 4, at CS Directive 2004/17/EC of the European Parliament and of the Council of March 31, 2004, coordinating the Procurement Procedures of entities Operating in the Water, Energy, Transportation, and Postal Services Sector, available at oj/2004/l_134/l_ en pdf. 20. Directive 2004/18/EC of the European Parliament and of the Council of March 31, 2004, on the Coordination of Procedures for the Award of Public Works Contracts, Public Supply Contracts, and Public Service Contracts, available at oj/2004/l_134/l_ en pdf. 21. See Sue Arrowsmith, Implementation of the New EC Procurement Directives and the Alcatel Ruling in England and Wales and Nothern Ireland: A Review of the New Legislation and Guidance, Public Procurement Law Review (2006): Ibid., at See Rhodi Williams, The Commission s Proposal for a New Remedies Directive, Public Procurement Law Review (2006): NA , See Martin Trybus, The Morning After the Deadline: The State of Implementation of the New EC Public Procurement Directives in the Member States on February 1, 2006, Public Procurement Law Review (2006): NA82 90 (providing a detailed account of each member state s actions regarding the implementation of the 2004 Directives). 25. New Remedies Directive, see note 2, at preamble paragraph Ibid. 27. Ibid., at preamble paragraph See Liisa Koskinen, Reform of Public Procurement Remedies: A First Look at the Commission Proposal for an Amending Directive, EIPASCOPE (2006/3): 19 24, available at product/ _scop06_3_3.pdf. 29. New Remedies Directive, see note Ibid., at Article 4. Journal of Contract Management / Summer

8 31. Ibid., at Article 3(1). 32. Ibid., at Article 1(6) and 2(6). 33. Ibid., at Article Ibid., at Article Ibid., at Articles 1(3) and 1(5). 36. Ibid., at Article 1(4). This could be analogized to an agency-level protest in the U.S. system, which under the Competition in Contracting Act allows for the stay of execution of a contract for an additional period, even before further review by the Government Accountability Office. 37. Ibid., at Article 1 (Amended Article 2(1)). 38. The 10-day period assumes that notification occurs by electronic means or fax, and enlarges to 15 days if by other methods. 39. New Remedies Directive, see note 2, at Article 1(2)(2d). 40. Ibid., at Article 1(2)(2e). 41. This change, it could be argued, merely represents a change in codification, rather than the rights and duties embodied under the EU Directives. This argument would note that the ECJ ruled that the right existed, and merely required codification or recognition by the member states. By analogy, one could note the U.S. Supreme Court s jurisprudence concerning the right to privacy. While recognizing this argument, this article will regard the rights and obligations created under the New Remedies Directive as a change in thought concerning public procurement, as it does represent a new codification of the rights and obligations. 42. See generally, Sue Arrowsmith, The Character and National Challenge Procures under the Government Purchasing Agreement, Public Procurement Law Review (2002): Steven L. Schooner, Desiderata: Objectives for a System of Government Contract Law, Public Procurement Law Review (2002): Daniel I. Gordon, Constructing a Bid Protest Process: The Choices that Every Procurement s Challenge System Must Make, Public Contract Law Journal (Spring 2006): Ibid. The other questions posed were: Where is the forum located? How broad is the forum s jurisdiction? What evidence does the forum have before it in reaching its decision? and How difficult is it for a protester to win? 46. Kingdom of Spain, see note Ibid., at Oder, see note 6, at NA There are exceptions when the standstill period does not apply. EU Directive 2004/17/EC Article 31 outlines various cases where publication is not necessary while still using a negotiated procedure to award a contract. The New Remedies Directive adds, in paragraph 8, that cases of extreme urgency also need not require a standstill period. It also discusses the impact on framework agreements, which will be discussed later. 50. Generally, 4 C.F.R. 21.2(a)(2) requires the protest to be filed within 10 days of notice of the award to another bidder, but may be extended in situations where a debriefing is requested by the bidder and the grounds of protest are not known before that debrief. 51. It is significant to note, although it will not be detailed in this article, that GAO presents only one possible forum where a bid protest can be mounted in the United States. A disappointed bidder may also bring the action to the agency (following which it would still have the ability to bring the matter to GAO for further review), or to the federal courts, which have the power to issue a temporary restraining order which could prevent the performance of a contract. 52. United States Code (U.S.C.) Title 31, 3553(d). 53. Ibid. 54. New Remedies Directive, see note 2, at paragraph 17, and amended Article This essentially forms the basis for a disappointed offeror to have a direct economic interest as required by the regulations permitting the protest. See Eastman Kodak Co., Comp. Gen. Dec. B , 86-1 CPD See Stadt Halle Arbeitsgemeinschaft Thermische Restabfall und Energieverwertungsanlage TREA Leuna (Case C-26/03) (2005) (where the ECJ ruled that procurement actions, even if outside the scope of a formally-initiated procurement, must be subject to the review procedures of the Procurement Directives of the EU, or risk rendering them optional ). 57. See Hospital Ingenieure Krankenhaustechnik Planungs-Gesellschaft mbh (HI) v. Stadt Wien (Case C-92/00) (2002) E.C.R. I (where the ECJ ruled that the withdrawal of an invitation for offers was a reviewable decision by a contracting authority). 58. See Mike Gelders, Standstill Obligations in European and Belgian Public Procurement Law, Public Procurement Law Review (2005): See ibid., noting Commission v. Germany (Case C-125/03), not reported (finding that, prior to these reforms, the limiting of review procedures to awarding damages did not legitimize the bad act, but did not go so far as to require an overturning of the contract under European law). 60. Ibid., at See Robert S. Metzger and Daniel A. Lyons, A Critical Reassessment of the GAO Bid-Protest Mechanism, Wisconsin Law Review (2007): 1225, GAO, as an arm of the legislative branch, does not have the power to mandate a U.S. government agency to terminate a contract it finds was awarded improperly, but may make such a recommendation, which is generally followed as the agencies are required to report to the Congress each year concerning their compliance with such recommendations. See 31 U.S.C. 3554(b)(1). However, it should be noted that GAO s recommendation power includes the ability to recommend awarding of a contract to the protester, if it is found that that result would be consistent with the requirements of regulation or statute. See, e.g., L&E Associates, Comp. Gen. Dec. B , 95-1 CPD See Jennifer McEwen, The New Procurement Remedies Directive: A Double-Edged Sword, The In-House Lawyer (March 2008): Summer 2010 / Journal of Contract Management

9 63. See Christine Boch, The Implementation of the Public Procurement Directive in the UK: Devolution and Divergence, Public Procurement Law Review (2007): Ibid. 65. New Remedies Directive, see note 2, at preamble paragraph See generally, Gordon, note 44, at New Remedies Directive, see note 2, at preamble paragraph See generally, Christopher R. Yukins, Are IDIQs Inefficient? Sharing Lessons with European Framework Contracting, Public Contract Law Journal (2008); Annejanette Kloeb Heckman, Challenges to Task and Delivery Order Awards Under Multiple Award Contracts: Recent Developments and Proposals for Change, WTR Procurement Law (2007); and James Chard, Gustaf Duhs, and John Houlden; Body Beautiful or Vile Bodies? Central Purchasing in the UK, Public Procurement Law Review (2008): NA New Remedies Directive, see note 2, Article 2d(1)(c) and Article 2d(5). 70. Serco, Inc. et al. v. United States, 81 Fed. Cl. 463 (Fed. Cl. 2008) (hereinafter referred to as Alliant ). 71. Ibid., at Ibid., at Ibid., at Heckman, see note See, Group Seven Associates, LLC v. United States, 68 Fed. Cl. 28 (Fed. Cl. 2005). 76. Public Law Ibid., at 843 (conferring jurisdiction to GAO to hear protests of awards greater than $10 million let under IDIQ agreements). Journal of Contract Management / Summer