A Short Tour of Legal Aspects of Public Procurement, 3rd Edition

By Richard Pennington posted 4 days ago

  

NIGP: The Institute for Public Procurement has announced the release of their new edition of Legal Aspects of Public Procurement. (A PDF preview of chapter 1 is available through the Taylor & Francis e-book ink; the EPUB format e-book is available from VitalSource.com,)

     I am a co-author and summarize here the most significant changes from the 2nd edition. The overall structure was retained—Michael Flynn and Kirk Buffington’s book has stood the test of time in NIGP classes—with two new chapters added about legal issues in competitive sealed proposals (e.g. requests for proposals) and the legal context of contract administration.

     The book starts with the basics. Chapter 1 contains the essential principles and structure of the United States legal system. It includes the foundations of statutory, common, and administrative law. The chapter provides an updated review of laws protecting market competition. Like its predecessor, the 3rd edition includes a discussion of intellectual property laws and open records/freedom on information statutes. For the first time, the new edition adds an introduction to international law considerations.

     Then the book in chapter 2 focuses on the laws directly framing the practice of public procurement professionals. The chapter dives deeply into the government’s authority to contract, the law of agency, and the relationship between the principal (in our case the government) and its agents (typically, the public procurement professionals). This chapter discusses the framework and key concepts of the ABA’s Model Procurement Code, the procurement law in the United States that has been adopted by about half the states and many local governments. Chapter 2 also introduces the federal Uniform Guidance regulations that replaced previous policy governing federally-funded procurement. New in this edition is a brief introduction to cooperative procurement law.

     Chapter 3 perhaps is the heart of the book.  It covers the basic components of contract law, including the six essential elements needed to form a legal contract. The chapter addresses conditions that can lead to a voidable contract, including bilateral mistakes, fraud, and some misrepresentations.  A short case study was added about assignments and novations. The chapter discusses remedies for breach of contract and damages. It concludes by comparing and contrasting private and public contracting.

     Chapter 4 about the Uniform Commercial Code is familiar to those who have read the 2nd edition, although it has been reorganized to move contract formation issues to the beginning. The chapter is a comprehensive review of Article 2 of the UCC that governs the sale of goods in the United States. The coverage includes the “battle of the forms”; express and implied warranties; performance issues like rejection, acceptance, and revocation of acceptance; sellers’ and buyers’ remedies for breach of contract; and liquidated and other damages for breach.

     Perhaps the biggest difference between public and private contracting is the law's requirement that governments use competitive processes to select contracting partners. Chapter 5 emphasizes the legal issues in competitive sealed bidding, still the most widely used process that is euphemistically called "low bid." There is a lot that goes into effective invitations for bids. Solicitations require development of specifications and appropriate contract terms and conditions. Then there are formalities that are followed in public bidding, like publication, bid receipt, and determination of responsiveness of bids. The 3rd edition adds short case studies about contractor responsibility—the capability to perform—and the availability of bid protests by suppliers who feel the process was not fair.

     With this edition, a new Chapter 6 was added to introduce the legal issues in competitive sealed proposals (e.g. RFPs), used often in more complex contracting when the selection of a contractor requires consideration of best value, not just price. The chapter discusses pre-solicitation issues, such as confidentiality of information, organizational conflicts of interest, and the impact of international law on procurement practices. The likelihood of requests for confidentially to protect trade secrets can affect solicitation development. The chapter introduces cost and price analysis, a topic not as relevant to competitive sealed bidding. The new edition explores proposal responsiveness in RFPs and legal issues that can arise between the time of proposal receipt and contract award, especially during the discussions or negotiations that occur between a public entity and the proposer. Legal issues with evaluations also are discussed, as are issues that can arise post-award during debriefings and post-award contract negotiation.

     The new Chapter 7 looks for the first time at legal issues in a sometimes under-emphasized part of procurement: contract administration. While Chapter 5 has a useful checklist for contract terms and conditions, Chapter 7 highlights key legal principles that illustrate the operation of many of them. The chapter discusses changes during contract performance, clauses of particular importance to construction, and theories of constructive change that can arise during contract administration activities. The chapter covers legal issues involving excusable delay, time of performance, and scope in government contracts.  The chapter builds on the previous edition's treatment of contract termination. And the chapter treats the topic of waiver separately because of its importance. The discussion includes liability allocation clauses, some of the most negotiated provisions, and how they operate. The chapter closes with a discussion of contract controversies.

     With the phenomenal growth and impact of technology in the public sector, Chapter 8 provides an opportunity to explore legal issues in evolving developments in IT procurement. The original chapter, much of it retained in this revision, provided a good framework for understanding the “small print” in contracts and issues to consider when negotiating software licenses. The revised chapter invites analysis of legal issues in new developments in information technology. Software often is not hosted on government sites but is in the “cloud,” requiring analysis that is not license-based. In addition, the high number of failures in large software integrations, so-called “waterfall” implementations, has spawned new project delivery methods, such as Agile and modular procurement. Chapter 8 looks at these developments from the perspective of legal issues introduced earlier in the book.

     If contracts are the heart of the practice of public procurement, ethics are its soul. Chapter 9 about ethics and professionalism largely was kept intact from the previous book; it's remained popular. The chapter discusses ethics with respect to obligations to employers, suppliers, the profession, the field of public administration, and the general public. Chapter 9 ends with a new summary of attorney rules of professional conduct that are especially relevant to procurement practitioners.

     Michael Flynn and Kirk Buffington leveraged a wonderful tool in their original book: case studies. I used them extensively when I taught Legal Aspects. Chapter 10 concludes the text by providing both actual case law and hypothetical situations. The cases summarize legal decisions about the acceptance and rejection of goods as well as cases involving the rights of both parties in contract award disputes. New cases have been added about contract administration topics. The chapter’s hypothetical studies parallel issues related to Article 2 of the Uniform Commercial Code with respect to liquidated damages, the unenforceable terms of a purchase order acknowledgment, implied warranties and contract breach, the law of agency, and volume purchase commitments. Terrific idea, Michael and Kirk!

     In the intervening decade since the last edition was published, full-text judicial opinions have been published online. The cases used in this book can be found without a legal research database subscription. They can provide excellent discussion topics in office meetings and classrooms (virtual and live; I know because I used some last week in online training!). Another innovation with this edition is the use of call-out boxes in the chapters. They are short, textual “asides” that illustrate points or show how concepts are applied.

     Legal Aspects covers a lot of ground.  It provides a glimpse of the legal framework that governs public contracting. Hopefully, the reader will gain a true appreciation and understanding of the breadth and depth of the legal aspects of public procurement. And the value that these public procurement professionals bring to the table in managing the complexity and supporting the mission of governments.  

Richard Pennington
CPPO, J.D., LL.M.
Denver, Colorado
https://www.linkedin.com/in/crichardpennington

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5 hours ago

Thank you for pursuing the update and bringing it to fruition.  You are uniquely qualified and creditable to work on this in collaboration with colleagues.  As the former CPO for Colorado, and all of your state and federal legal experience, your insights are welcome knowledge for our public procurement professionals.  You put the legal aspects through a public procurement lens so that we have a better understanding of our choices.  I hope that the public legal professionals also take a good read - that supports the synergy with all of us to optimize procurement actions while protecting our public entity.