transparency

TRANSPARENCY IN GOVERNMENT PROCUREMENT: AN INTERNATIONAL CONSENSUS?Author(s): Megan A. KinseySource: Public Contract Law Journal, Vol. 34, No. 1 (Fall 2004), pp. 155-173Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/25755307 .Accessed: 13/12/2013 14:39

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TRANSPARENCY IN GOVERNMENT PROCUREMENT: AN INTERNATIONAL CONSENSUS?

Megan A. Kinsey

I. Introduction. 155 II. Why Does Transparency Matter?. 157

III. History of the Move Toward Transparency. 159 IV. Playing Both Sides of the Coin: The United States as an

Example. 160 V. The Issues Addressed Within the Working Group on

Transparency. 162 A. Definition and Scope of Government Procurement in the

Transparency Agreement. 162 1. Who Is Doing the Procuring?. 163 2. What Is Being Procured and What Types of

Transactions Are Covered?. 164 B. Procurement Methods. 165 C. Publication of Information on National Legislation and

Procedures. 166 D. Information on Procurement Opportunities, Tendering, and

Qualification Procedures. 166 E. Time Periods. 166 E Transparency of Decisions on Qualifications, Contract

Awards, Notification Procedures, and Domestic Review Procedures. 167

G. Other Matters Related to Transparency, Such as Maintenance of Record Proceedings, Information

Technology, and the Fight Against Bribery and Corruption.. 168 H. WTO Settlement Procedures and Technical Cooperation

and Special and Differential Treatment for Developing Countries. 169

VI. Market Access: The Hidden Purpose of Transparency. 169 VII. Is the Agreement Going to Do Anything?. 172

Megan A. Kinsey received herJ.D. with honors from The George Washington University Law School in May 2004 and currently is a law clerk for the Honorable Michael D. Mason

of the Circuit Court of Montgomery County, Maryland. While at GWU, she served as a member of the Public Contract Law Journal. The author thanks Professor Steven Schooner for guidance with this Note.

155


156 Public Contract Law Journal Vol. 34, No. 1 Fall 2004

I. INTRODUCTION

At the December 1996 WTO Ministerial Conference in Singapore, the World Trade Organization (WTO) created the Working Group on Trans

parency in Government Procurement (Working Group).1 The WTO created the Working Group for the purpose of conducting "a study on transparency in government procurement practices, taking into account national policies, and, based on this study, to develop elements for inclusion in an appropriate agreement."2

Procurement of products and services by government agencies for their own purposes represents an important share of total government expenditures and thus has a significant role in domestic economics.3 The Agreement on Government Procurement (GPA) seeks to ensure the best value for money through an open and nondiscriminatory procurement regime while balancing the government's need to achieve other domestic policy goals, such as pro

motion of local industries or business groups.4 Under the WTO rules, gov ernment procurement had been effectively omitted from the scope of many other trade agreements, such as the General Agreement on Tariffs and Trade

(GATT), where government procurement was explicitly excluded from the

key national treatment obligation.5 More recently, government procurement obligations were excluded from the commitments set forth in the General

Agreement on Trade in Services (GATS).6 When the WTO was established, a second Agreement on Government Procurement, the GPA, was also created. The GPA is one of the multilateral agreements included in the Annex to the

1. WTO, Singapore Ministerial Declaration, \2\, WT/MIN(96)/DEC (Dec. 18, 1996), available at http://www.wto.org/english/tratop_e/gproc_e/gpmand_e.htm see WTO, The Doha Declaration Explained: Transparency in Government Procurement, at \ 26, available at http://www.wto.Org/english/ttatop_e/dda_e/dohaexplained_e.htm#ttansparency_in_govt_ procurement (last visited Sept. 12, 2004); see also Sue Arrowsmith, Towards a Multilateral Agree ment on Transparency in Government Procurement, 47 Int'l & Comp. L.Q. 793, 793-95 (1998), for a discussion of the history surrounding the Working Group.

2. WTO Report (2000) of the Working Group on Transparency in Government Procure ment to the General Council, at 1 HI, WT/WGTGP/4 (Oct. 31, 2000), available at http:// www.wto.org/english/tratop_e/gproc_e/gpttan_e.htm [hereinafter WT/WGTGP/4].

3. WTO, Overview of the Agreement on Government Procurement, at http://www. wto.org/english/tratop_e/gproc_e/over_e.htm (last visited Sept. 12, 2004) [hereinafter GPA Overview].

4. Id. 5. Id. See General Agreement on Tariffs and Trade (GATT), Oct. 30, 1947, 61 Stat. A-ll,

T.I.A.S. 1700, 55 U.N.T.S. 194, art. V, available at http://www.wto.org/english/docs_e/ legal_e/gatt47_e.pdf.

6. General Agreement on Trade in Services (GATS), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex IB, Legal Instruments

? Results of the Uruguay Round, 33 I.L.M. 1167 (1994), available at http://www.wto.org/English/docs_ e/legal_e/26-gats.pdf. Considering that government procurement averages about 10-15 percent of GDP in most states, this lack of regulation represented a considerable gap in the multilateral

trading system.


Global Consensus on Transparency in Government Procurement? 157

Agreement establishing the WTO, which signifies that not all WTO mem bers are bound to it.7

Through the Working Group, the WTO is in the process of negotiating a new agreement (the Agreement) that will expand on the ideas addressed in the GPA but will focus on transparency issues.8 The Agreement is well inten tioned and has a noble goal that would improve economic conditions in many closed countries; however, the Agreement is unlikely to have as great an im

pact as anticipated because of dissention between the negotiating parties of the Working Group. This dissention will likely hinder any substantial agree

ment that has drastic clauses. In the process of creating this Agreement, the Working Group has en

countered many problems in determining the definitions, scope, and appli cability of a perspective agreement.9 One such issue that will have a grave effect on the completion of the Agreement is the issue of transparency leading to market access?an unwanted evil for many of the participating states. "The view has been expressed within the Working Group that a distinction should be made between obligations on transparency and market access commit ments in the area of government procurement."10

The Working Group has considered twelve main issues, which are dis cussed in most of the Working Group's publications: (1) the definition and

scope of government procurement; (2) procurement methods; (3) publication of information on national legislation and procedures; (4) information on pro curement opportunities, tendering, and qualification procedures; (5) time pe riods; (6) transparency of decisions on qualifications; (7) transparency of de cisions on contract awards; (8) domestic review procedures; (9) other matters related to transparency, such as maintenance of record proceedings, infor

mation technology, language, and the fight against bribery and corruption; (10) notification procedures; (11) WTO settlement procedures; and (12) tech nical cooperation and special and differential treatment for developing countries.11

Not every issue is under contention. This note will address the primary issues within the above list that have been a source of disagreement between the negotiating parties of the Working Group since its formation in 1996.

Additionally, this note will address the present contradictions between prac

7. Hence, the First Agreement on Government Procurement was promulgated in the 1970s,

signed in 1979, and entered into force in 1981. GPA Overview, supra note 3. 8. WT/WGTGP/4, supra note 2, \ 4; see also Sue Arrowsmith, Transparency in Government

Procurement: The Objectives of Regulation and the Boundaries of the WTO, 37 j. World Trade 283

(2003). 9. See WTO Report (1999) of the Working Group on Transparency in Government Pro

curement to the General Council, WT/WGTGP/3 (Oct. 12, 1999), available at http:// www.wto.org [hereinafter WT/WGTGP/3], for examples of dissenting opinions and alternative

viewpoints regarding issues of transparency. 10. Id. at 4, \ 2 (attach., Sept. 24, 1999). 11. Id.; see also WT/WGTGP/4, supra note 2.



tice and policy within the United States, a leader in the movement toward further transparency.

II. WHY DOES TRANSPARENCY MATTER?

One important question to be answered before a real discussion about

transparency can occur is: What is transparency and why is it so important? Transparency is merely a part of the process to bring us to a more efficient, fair, and legitimate government procurement system. Although there is no set definition for transparency, in essence, it is the means by which Governments broadcast the steps taken during the procurement process.12 In most respects, the international economic community has strived, since the beginning of

trade, to reduce trade barriers and open up the markets.13 Increasing trans

parency facilitates those goals. "Transparency is often referred to as one of the three fundamental prin

ciples of the WTO, the others being most-favoured-nation and national treat ment."14 Therefore, it is a legitimate goal of the WTO to have uniform trans

parency across the spectrum of its member nations. As stated at the July 15, 2003, meeting of the WTO Working Group on Transparency in Government Procurement to the General Counsel:

With respect to the issue of the importance of transparency in government procurement for international trade, it was noted that all Member governments purchased goods and services both domestically and abroad. The view was expressed that, conse

quently, there was a significant amount of international trade generated by public entities when, in the exercise of the sovereign powers, they decided to purchase internationally. Given the impact on international trade, rules ensuring transpar ency should be negotiated in the WTO.15

The purpose of the Doha Accord was to achieve multilateralism in global trade.16 Alternatively stated, the purpose was to develop an approach "to the conduct of international trade based on cooperation, equal rights, and obli

gations, non-discrimination and participation as equals of many countries re

12. See generally Steven L. Schooner, The Open Market (June 10, 2003), at http:// www.govexec.com/features/0603/0603veiwl.htm; World Trade Organization, Understand ing the WTO 110 (2003).

13. See e.g., Transparency International, Integrity Pact and Public Contracting, at

http://www.transparency.org/integrity_pact/index.html (last visited Sept. 4,2004) ("If corruption [in public contracting] is not contained, it will grow. For these reasons, Transparency Interna tional has been working persistently to raise the awareness of governments, companies, and civil

society worldwide of the importance of preventing and combating corruption in public contracting...").

14. WTO Work on Transparency in Government Procurement, Second Annual Meeting of the OECD Anti-Corruption Network for Transition Economies (Nov. 2, 1999), available at

http://www.nobribes.org/Documents/Istanbul99/Seattleprespack99proc.doc. 15. WTO Report (2003) of the Working Group on Transparency in Government Pro

curement to the General Council, at 2 \ 8, WT/WGTGP/7 (July 15, 2003) (emphasis in origi nal), available at http://www.wto.org/english/tratop_e/gproc_e/gptran_e.htm [hereinafter

WT/WGTGP/7]. 16. WTO, The Doha Declaration Explained, supra note 1 (listing elements of the Doha man

date and suggested elements for a transparency agreement).



gardless of their size or share of international trade."17 Transparency in trade, and therefore government procurement, is essential in achieving the ultimate

goal of multilateralism. One of the most important effects that transparency can have on a pro

curement system is that it ensures that procurement decisions are based on

legitimate criteria.18 In other words, transparency reduces the possibility of

corruption. Transparency supports this goal by keeping practices of the Gov ernment evident and clear to those participating, rather than hiding them behind closed doors. This is a legal truth in many, but not all, government systems. As discussed below, the United States publishes the practices and

procedures it follows in making procurement decisions, which, in effect, re duces or even eliminates any corrupt practices that may take place. In other countries of the world, this does not occur.

Transparency also improves the amount and level of competition that oc curs. A transparent system encourages participation by suppliers who other wise would not be aware of the possible contract solicitation for bids.19 In the absence of transparency, the market is only open to those suppliers that have connections or agreements with the Government. This barrier can be anal

ogized to a tariff, which keeps the market closed and more expensive for the

parties involved in the long run.

III. HISTORY OF THE MOVE TOWARD TRANSPARENCY

Although government procurement measures can operate as trade barriers, currently, they are largely excluded from the multilateral rules. Government

procurement measures are dealt with through the multilateral Agreement on Government Procurement (GPA)20 that was concluded in 1993 at the end of the Uruguay Round.21 The overall aim of the GPA is to promote transparency. Currently, the agreement only applies to 29 members of the WTO,22 and the

provisions are limited to "tendering procedures, qualification of suppliers, technical specifications, tender documentation, award of contracts and bid

challenge procedures."23 Since the GPA has limited participation, the WTO took on the project and created the Working Group.

17. Inaamul Hague, Doha Development Agenda: Recapturing the Momentum of Multilateralism and Developing Countries, 17 Am. U. Int'l L. Rev. 1097, 1102 (2002) (emphasis added).

18. Arrowsmith, supra note 1, at 796. 19. Id at 796-97. 20. Agreement on Government Procurement, Apr. 15, 1994, Marrakesh Agreement Estab

lishing the World Trade Organization, Annex 4B, Legal Instruments ? Results of the Uru

guay Round, vol. 31, 1915 U.N.T.S. 103 (1994), available at htxp://www.wto.org/English/ docs_e/legal_e/5 2 -dproc.pdf.

21. Arrowsmith, supra note 1, at 794. 22. Aruba, Canada, the European Community and its 15 member states, Hong Kong-China,

Iceland, Israel, Japan, Liechtenstein, the Netherlands, Norway, Singapore, South Korea, Swit

zerland, and the United States. 23. Alan W.H. Gourley et al., International Legal Developments in Review: 2000 Business Regu

lation, 35 Int'l Law. 395, 400 (2001).



The GPA mandates transparency and procurement procedures for the 29 nations.24 Its requirements include, but are not limited to, (1) creating a system with clear procedures and award criteria; (2) extending the reach of transpar ency requirements to local, state, and other government entities; (3) extending transparency requirements to the procurement of services; (4) recording pro curement proceedings; (5) disclosing information to interested parties includ

ing the publication of the award, the name and address of the winning offeror, and the amount of the bid; (6) ensuring that there is no discrimination against offerors of a different nationality, origin, or affiliation; and (7) mandating a formal system for challenging bids.25

A number of reasons may explain the limited participation in the GPA. One is that Governments do not want to relinquish the possibility of using procurement as a means to support national industry against foreign com

petition.26 While the GPA does have articles that provide some scope for

signatories to implement such policies, there are still political pressures to avoid any agreements that will limit a Government's power in such cases.27

The GPA also may limit a Government's power to use procurement in sup port of social goals, such as regional development or support of disadvantaged groups.

The first multilateral initiative was a built-in mandate for negotiations on services procurement covering both transparency and nondiscrimination un der GATS Article XIII.2.28 Further, the work of the GATS working party largely stopped and no real progress was made.29 Shortly after this initiative

began, however, the WTO created the Working Group herein discussed.30 The WTO intended for the Working Group to explore the issue in relation to both goods and services and limit the scope of the discussion to only these issues.31

24. The WTO GPA was signed in April 1994 and took effect in January 1996. Victor Mosoti, The WTO Agreement on Government Procurement: A Necessary Evil in the Legal Strategy for Devel

opment in the Poor World? 25 U. Pa. J. Int'l Econ. L. 593, 625 (2004). 25. Id. at 625-27. 26. Arrowsmith, supra note 8, at 285-86. 27. Id. 28. Id. at 285. 29. See id. at 285-86. Prior to Singapore, it had merely collected information on national

policies, as summarized in WTO Report of the Meeting of 23 July 1997, at 1 15, S/WPGR/M/12 (Sept. 3, 1997), available at http://docsonline.wto.org.

30. GPA Overview, supra note 3. 31. Prof. Arrowsmith notes another reason for creating the Working Group in stating,

"transparency may contribute to the opening up of international markets even in states which do not accept a 'national treatment' obligation, and for this reason the WTO has set up a working party to develop an interim agreement concerned only with transparency." Sue Arrowsmith, National and International Perspectives on the Regulation of Public Procurement: Harmony or Conflict? in Public Procurement: Global Revolution 1, 18 (Sue Arrowsmith & Arwel Davies eds., 1998).



IV. PLAYING BOTH SIDES OF THE COIN: THE UNITED STATES AS AN EXAMPLE

In many respects, the United States has been an example of how a trans

parent system should operate. Modern technology prevalent in the American business environment permits a previously unimagined level of transparency within the procurement system.32 Transparency in the federal government procurement system is maintained in many ways, particularly by (1) publish ing all of the statutes, regulations, and rules that define the process; (2) pub licizing requirements to maximize competition; (3) articulating clearly in

every solicitation; (4) announcing to all unsuccessful offerors (and the public) which offeror received the award and in what amount and debriefing unsuc cessful offerors and explaining how the procurement rules were followed; (5) providing for "protest" or "disappointed offeror" procedures; and (6) em

ploying appropriate oversight, such as government inspectors general, to pe riodically audit agency actions.33 Many of these elements echo those required by the WTO GPA listed above.

But the level of transparency within the United States has fallen dramati

cally after the reforms of the early 1990s. In the view of transparency advocate Professor Steven Schooner, these reforms have driven much of the procure ment system underground.34 As a result of the 1990s reforms, billions of dol lars' worth of government contracts pass through a largely opaque process.35

To justify these reforms, supporters have argued that although transparency may have been somewhat sacrificed, beneficial trade-offs have resulted.36 In

exchange for the transparency, contractors are more efficient and can be more

profitable, thus stimulating the U.S. economy.37 A prime example can be seen in the rebuilding effort of post-war Iraq that

began in early 2003. When discussions began over who would reap the bene fits from the Iraq rebuilding effort, many thought that the entire industrialized

world would play a part. Yet, as it turned out, only a small amount of American

companies were invited to bid on the available contracts.38 Of the $18 billion set aside for Iraq in 2003, only $1 billion has been spent, much of it without

32. Steven L. Schooner & Christopher R. Yukins, A Measure of Success: To Draft Good Pro curement Reforms, We Have to Agree on Our Guiding Principles, Legal Times, Mar. 17, 2003, at 34.

33. See Steven L. Schooner, Desiderata: Objectives for a System of Government Contract Law, 11 Pub. Procurement L. Rev. 103, 104-06 (2002).

34. Schooner & Yukins, supra note 32. 35. Id. 36. Joseph Petrillo, Federal Contract Law: Is Procurement Too Reformed? Debates Get Sharp,

Gov't Computer News, July 22, 2002, available at http://www.gcn.eom/2 l_20/manager/19368 1/html.

37. Steve Kelman, Assessing Our Goals, Fed. Computer Wk., Dec. 2, 2002, available at

http://www.fcw.eom/fcw/articles/2002/l 202/pol-kelman-12 -02 -02 .asp. 38. Steven Schooner, Mending Fences, Burning Bridges, NJ. Star Ledger, Mar. 30, 2003,

Perspective Section, at 1.



the competitive bidding process.39 For example, S&K Technologies is the

recipient of a contract that was awarded without any competitive bidding, and is one of the many contracts that is being criticized by government investi

gators for its failure to follow proper procurement processes.40 Experts predict that this is merely a fraction of what is to come of the estimated $30 billion or more of future contracts.41

The process for the initial contracts instituted by the U.S. Agency for International Development (USAID) has been criticized for including only a small handful of companies; none of which was based outside of the United States.42 This recent practice of the United States is directly contrary to what is advocated at the WTO meetings. Although the United States does have one of the most transparent systems in today's world, the United States is

regressing in many respects. This is an additional wrinkle in the effort to create an Agreement that creates uniformity in transparency across borders.

V. THE ISSUES ADDRESSED WITHIN THE WORKING GROUP ON TRANSPARENCY

A. Definition and Scope of Government Procurement in the Transparency Agreement Scholars and the representatives alike have differing opinions on the exact

definition of transparency. As Professor Sue Arrowsmith points out, "[a] fun damental obstacle to progress on these questions is that. .. there is a lack of

clarity surrounding the very concept of 'transparency'."43 For the Working Group to make any progress, it is extremely important to determine a clear

working definition. Professor Schooner defines transparency as "a system [that] employs procedures by which offerors and contractors (and even the

public at large) ensure that the government business is conducted in an im

partial and open manner."44 Professor Arrowsmith has a different definition: a transparent government procurement system is one in which "the rules to be applied in conducting procurements and information on specific procure ment opportunities are made clearly known to affected parties."45 Professor Arrowsmith also has stated that the "concept of transparency... refers to the idea that procurement procedure should be 'characterized [sic] by clear rules

39. Lisa Myers and the NBC Investigative Unit, Questions Mount over Iraq Rebuilding Con tracts, MSNBC.com, available at http://msnbc.msn.eom/ID/5990392/print/l/display.ode/1098 (last up dated Sept. 15, 2004).

40. Id. 41. Thomas Fogarty, Companies Bid on Rebuilding Iraq, USA Today, Mar. 26, 2003, at B3. 42. Center for Responsive Politics, Rebuilding Iraq?The Contractors, available at http://

www.opensecrets.org/news/rebuilding_iraq/index.asp (last modified Apr. 28, 2003). 43. Arrowsmith, supra note 8, at 283. 44. Schooner, supra note 33, at 105. 45. Arrowsmith, supra note 1, at 796.



and by means to verify that those rules were followed.'"46 Although there may not be a set definition, it is evident that transparency, in the simplest terms, calls for an open system that provides critical information to interested par ties.47 To be successful, a workable system of transparency must address two

questions: "(1) Has full information in terms of the criteria that apply in the

procurement process been disclosed; [and] (2) Have those criteria actually been applied in the award of a contract."48

The states who are parties to the Working Group have struggled to define49 what government procurement is, and they have struggled in determining to what areas of procurement to apply the principles of transparency.50 A set definition is essential to achieve an agreement that will actually have some effect. A topic of discussion for every meeting of the Working Group has been to define the scope and definition of "transparency." The parties have re

peatedly made a number of observations on what type of general definition is necessary. While some states tended to believe that the Working Group should draw upon a definition that was provided in previous agreements, such as the GATT and GATS,51 other states argued that it would be sufficient to

rely upon the definitions provided in each member's national legislation.52 Thus far, the members of the WTO have failed to clarify what definition they ultimately will adopt in a transparency agreement.53

There is also a lack of agreement on the coverage of a prospective agree ment. While some parties have expressed the view that transparency disci

plines should apply to government procurement practices as broadly as pos sible, there are some who believe that transparency should be narrowly applied.54 There are two main views that have emerged in the negotiations. One such view is what could be called the "open-market wholly transparent system," whereby all contracts and information would be widely available to all interested. The other view tends to prefer a system where transparency is

only required in certain fields to be determined by the individual Government in question. The two competing sides have distinctive members as well. The

46. Arrowsmith, supra note 31, at 18 (citations omitted). 47. Professor Arrowsmith lists similarities among existing procurement regimes. Id. The

goals satisfied by these similarities should be goals the Working Group strives to meet through the Agreement. They include a set of formal rules, publication of the rules, curtailing the dis cretion of procurement officers through the rules, and a method of enforcement. Id. at 18-19

(citations omitted). 48. CUTS Centre for International Trade, Economics & Environment, Unpacking Trans

parency in Government Procurement: Rethinking the WTO's Government Procurement Agreement ? 3.2

(Aug. 16, 2004) (draft on file with author). The Centre also offers methods of improving current

transparency systems through uniformity and the use of modern technology. 49. WT/WGTGP/3, supra note 9. 50. Id. H3-4. 51. GATT, supra note 5, art. Ill, \ 8; GATS, supra note 6, art. XIII, \ 2. 52. WTO Report of the Meeting of 7 June 2000, at 4, J 19, WT/WGTGP/M/10 (Aug. 1.

2000), available at http://www.wto.org/english/tratop_e/gproc_e/gptran_e.htm [hereinafter WT/WGTGP/M/10].

53. Arrowsmith, supra note 8, at 286. 54. WT/WGTGP/M/10, supra note 51.



United States, Canada, Mexico, and many European countries tend to be on the more open side of the argument while China, Indonesia, Malaysia, and India tend to have views on the more narrow side of the argument.55

The major issues included in the scope of the definition of government procurement are based around a few central questions that the parties must answer before developing a cohesive agreement: (1) who is doing the pro curement that the Agreement will govern; (2) whether goods or services are

being procured; and (3) what types of transactions are covered.56 The progress of the Working Group is hindered by the lack of clarity in the very concept of transparency.57

1. Who Is Doing the Procuring? Should the WTO Transparency Agreement extend to all levels of Gov

ernment or should there be distinctions between the central Government of a state versus state and local levels? The Working Group has encountered three main levels of argument concerning this question.58 The first of these levels argues that the Agreement should cover all levels of Government be cause, otherwise, a large part of government procurement would be left to the discretion of the various nations outside the confines of the Agreement.59

The second level is more restrictive. This level argues that the Agreement should be applied to procurement by central government entities and entities at the highest level of sub-central Government. This argument is supported by the idea that it would be difficult for the states to ensure compliance at all levels of Government because each state's governmental infrastructure differs.

Others further argue that the Agreement should be limited to central entities

because, in many countries such as Brazil,60 an international agreement on behalf of sub-central entities could not be negotiated without a mandate from those entities.61

It is important for the Transparency Agreement to be as broad as possible in order for the Agreement to reach its goals. Since procurement is done at all levels of Government, it would be most beneficial for the Agreement to reach all levels of Government. In most cases, enforcement may prove to be a problem.62 As noted by the Argentinean representative to the Working Group, developing countries with newer government structures might have to be accorded special treatment with regard to the obligations that may be

imposed on entities at sub-central levels.63 Such states with a lower level of central supremacy over the noncentral levels would almost certainly encoun

55. Id. at 4-8, f( 19-32. 56. See generally WT/WGTGP/3, supra note 9. 57. Arrowsmith, supra note 8, at 286. 58. WTAVGTGP/3, supra note 9, at 5, H 6. 59. WT/WGTGP/7, supra note 15, at 5, H 18. 60. WT/WGTGP/M/10, jw/ra note 51, at 4-5,


ter problems trying to enforce the transparency obligations in the sub-central divisions.

What is the solution? Like most matters in international law, the Working Group should take the most inclusive of the choices because there are op portunities for each prospective state to limit the Agreement as necessary for its own purposes.64 While it may not be the most desired choice, there is no other way to ensure broad agreement. While the international community strives to make uniform standards, their competing goal is broad application of the Agreement. As long as the object and purpose of the Agreement are not defeated by individual limitations, the Agreement will have the most effect if it is applied over the whole of the global economic community.

2. What Is Being Procured and What Types of Transactions Are Covered?

The main question facing the Working Group is whether a transparency agreement should extend to both goods and services and any combination of

goods and services or whether it should be limited in application to goods.65 The problem that arises, however, is that contracts typically are for both goods and services, and it is often difficult to draw a distinction between the two. Professor Arrowsmith writes: "[T)here are good reasons for applying the [fu ture] agreement to all procurement by the covered entities."66 That makes the

Agreement itself transparent and its scope well understood.67 The same countries that favored the more limited application of the Agree

ment in terms of which entities would be covered also favor a more limited

agreement in terms of what the Agreement will cover. Malaysia, India, In

donesia, and Egypt68 have the view that they, and many other developing countries, do not have a regulated system that controls the services industry as it does for goods.

The Working Group is also considering whether or not the Agreement should cover threshold values of procurement contracts.69 In principle, it seems that the Agreement should not be limited in scope based on the value of the contracts. States have expressed that there could be certain provisions that have more flexibility when the contract is valued below a certain threshold value. This argument is fueled by the fact that transparency at all levels of

procurement is in itself costly, and it may not be cost-effective to have trans

parent procedures for the lower-level contracts.70 Many states have expressed the view that the Working Group should consider the prospective practices of each individual state party to the negotiations.

64. See Vienna Convention on the Law of Treaties, opened for signature May 23, 1969, Art. 19, 1155 U.N.T.S. 351 (entered into force Jan. 27, 1990).

65. WT/WGTGP/3, supra note 9, at 6, % 9. 66. Arrowsmith, supra note 1, at 807. 67. Id. 68. WT/WGTGP/M/10, supra note 51, at 5,1 22. 69. WT/WGTGP/3, supra note 9, at 6, f 10. 70. Jtf.



Specifically, India, Egypt, Malaysia, and Indonesia believe that there should be a minimum threshold level below which transparency obligations would not apply, and that level should be higher for developing countries.71 Sur

prisingly, Japan, Brazil, Canada, and many European countries believe that there should be threshold levels to which the Agreement should apply.72 Many other countries, including the United States, seem to be open to the issue of thresholds, but they stress that, in respect to transparency, the costs of trans

parency are generally low and the benefits very high.73

B. Procurement Methods

During the Working Group negotiations, the point was made that the method of procurement employed "was less important than ensuring that it conformed with [the] basic principles on transparency."74 The Working Group agreed on the point that a "transparency agreement should allow pro curement authorities to choose the best method for meeting the objectives of the procuring entity as well as in the interests of efficiency, competition, and

transparency."75

C. Publication of Information on National Legislation and Procedures

While it may seem apparent that procedures and information concerning national legislation should be published in order to achieve the requisite trans

parency, this view is not the consensus. Many nations, particularly those whose national procedures are already publicly available, suggested that this practice should be mirrored within the international realm of procurement.76 How ever, the nations that oppose the concept of such an agreement in the first

place, e.g., India, Pakistan, Malaysia, and Egypt,77 are of the opinion that

publication of national legislation could be an onerous endeavor and the cost would not justify the possible benefits.78 Keeping with its national policy, the

representative of Hong Kong-China said that there should be no requirement to publish information that could be deemed internal to the Government.

D. Information on Procurement Opportunities, Tendering, and Qualification Procedures

An agreement on transparency should establish specific guidelines on what

opportunities are available, as well as what qualifications a bidder/contractor must meet in order to qualify for the government contract. Uniformity across borders is an important goal of an agreement in order to ensure that con

71. WT/WGTGP/M/10, supra note 51, at 5-6, H 23. 72. Id. 73. A/, at 6,^24. 74. WT/WGTGP/3, supra note 9, at 9, H 18. 75. Id. 76. WT/WGTGP/M/10, supra note 51, at 9,1 34. 77. Arrowsmith, supra note 8, at 286. 78. WT/WGTGP/M/10, supra note 51, at 9, H 34.



tractors in each separate nation will be informed as to the procedures in every other nation.

The objecting states, those mentioned inter alia, have an opposing view.

They believe that any provisions establishing a uniform set of rules in the

Agreement would be too prescriptive.79

E. Time Periods

The Working Group also discussed whether "it was accepted that a trans

parency agreement should have a provision on time-periods couched in terms of the considerations that should be taken into account in setting those periods rather [than] in terms of prescribing minimum periods, and if so, what those considerations should be."80 Many of the representatives in the Working Group have expressed the opinion that there should not be a minimum time

period requirement, but rather, the time-period requirement should be flex ible based on the particular procurement at issue.81

The time-period requirement refers to how much time the government entity would have to prepare and submit bids on procurement opportunities.82

This requirement would create a set length of time for a Government to consider the bids received and also provide a set time for contractors to submit bids. The end result is more uniformity and transparency within each pro curement system.

E Transparency of Decisions on Qualifications, Contract Awards, Notification Procedures, and Domestic Review Procedures

While this area of the negotiations is not one of high contention, the major concern is that, whatever the specific qualifications must be for each pro curement opportunity, those qualification criteria must be made available to the suppliers in advance.83 The same can be said in regard to the transparency of contract awards. While the basic premise that the existence of an award should be transparent and bidders put on notice has been agreed upon, the extent of such notice will most likely be based on the discretion of each state

but, at a minimum, will include the basic information required to properly inform the public about the award.84

In regard to domestic review procedures, one view is that inclusion of such a provision would exceed the scope of any international transparency agree ment.85 From the discussions that have taken place in the Working Group thus far, it is apparent that most member states have their own domestic administrative and judicial review mechanisms to ensure that domestic rules

79. Id. at 9, H 35. 80. Id. at 10,


and regulations governing procurement are observed by those involved in the

procurement process.86 In a related discussion, the member states in the Working Group have

made comments related to the domestic review principles that have been endorsed by the Asia-Pacific Economic Cooperation (APEC),87 which en dorsed the idea that domestic review provisions are important for a transpar ency agreement.88 The member states considered APEC's work on domestic review procedures as a good basis for their own future work on the domestic review provision in the Working Group. However, many states are unable to

compromise in regard to domestic review and believe that APEC is not a

good lead because APEC's decisions are nonbinding in nature, unlike a pos sible transparency agreement.89

G. Other Matters Related to Transparency, Such as Maintenance of Record

Proceedings, Information Technology, and the Fight Against Bribery and

Corruption The Working Group also has discussed uniformity in procurement systems

in order to make the overview easier in the future. With updated technology implemented to record and administer procurement opportunities, maintain

ing transparency in every system is a less burdensome process. The fight against bribery and corruption within the procurement process

is an important side issue that underlies all the provisions of a possible agree ment. Professor John Cibinic writes, "[transparency embodies the idea that if you shine the light of day on agency [and government] practices, [their] violations of rules or their dumb procurement practices will be hung out for

everyone to see and try to eliminate."90 It is undisputed that, if procedures are transparent, the opportunities for corruption are dramatically decreased. A transparency agreement would force Governments to "reallocate govern ment spending away from goods that were more prone to bribery."91 "Such rules can make it more difficult to disguise and maintain [the] discriminatory

86. WTO Report of the Meeting of 25 September 2000, at 7, J 30, WT/WGTGP/M/11 (Dec. 19, 2000), available at http://wvvw.wto.org/english/tratop_e/gproc_e/gptran_e [here inafter WT/WGTGP/M/11].

87. Id. at 7-8, \ 32; see also WTO, APEC Non-Binding Principles on Government Procurement, WT/WGTGP/W/24 (Sept. 21, 1999), available at http://www.wto.org/english/tratop_ e/gproc_e/gptran_e.htm.

88. WT/WGTGP/7, supra note 15, at 7, T[ 26 ("domestic review obligations [in a Transpar ency Agreement] should be strong but non-prescriptive... .[They] could include simple and flexible provisions on domestic review procedures that took into account and accommodated

independent administrative or judicial tribunals and review procedures that currently existQ in various Member countries."

89. WT/WGTGP/M/11, supra note 85, at 7-8, \ 32. 90. Ralph C. Nash & John Cibinic, Acquisition Reform: A Progress Report, 16 Nash & Cibinic

Report \ 48, Oct. 2002, at 54. 91. Simon J. Evenett & Bernard M. Hoekman, Government Procurement: Market Ac

cess, Transparency, and Multinational Trade Rules 18 (World Bank Policy Research Work

ing Paper No. 3195, 2004).



procedures" that accompany corruption and discrimination in procurement.92 Discouraging corruption will require the publication of a strict no-tolerance

policy and procedures for punishing those who succumb to corruption and fail to comply with the transparency requirements.93

As Professor Arrowsmith notes, "[t] adding discriminatory internal mea sures is a central WTO activity."94 While many trade agreements on pro curement prohibit discrimination while including transparency,95 the Working Group is pressured to take things a step further. However, the Doha Decla ration that created the Working Group "makes it clear that the transparency

mandate does not include negotiations on national preferences ... thus al

lowing a state to adopt overt preferences."96 This discussion leads to the final

question of this note: Will an agreement have any of the effects it is meant to have?

H. WTO Settlement Procedures and Technical Cooperation and Special and

Differential Treatment for Developing Countries

The Working Group has discussed a procedure for dispute settlement within this structure. It has been said that a government dispute settlement in a transparency agreement should reflect the general approach adopted

within the WTO.97 These dispute settlement procedures have applied to the

provisions in the agreement establishing the WTO, transparency-related rules, and other provisions in WTO agreements.98

The three drafts of the Agreement that have been presented contain pro posals for dispute settlement procedures that mirror the provisions contained in the GATT Articles XXII and XXIII and GATS Articles XX and XXIII.99

The discrepancy in these possible procedures is that the binding power of the

dispute settlement body would in fact be nonbinding, while the Agreement is supposed to have a binding effect.100

Differential treatment of developing countries is an underlying reason for

many of the disputes that have been outlined so far. The member states in the Working Group come from varying stages of economic development and have differing internal procedures for such development. It is clear that, if

92. Arrowsmith, supra note 8, at 287. 93. See Hon. Basil Pesambili Mramba, Opening Statements at the Joint WTO-World Bank

Regional Workshop on Procurement Reforms and Transparency in Government Procurement for Anglophone African Countries (June 14,2003) (conference materials available in The George

Washington University Law Library). 94. Arrowsmith, supra note 8, at 288. 95. Id. 96. Id. 97. WTO, Work of the Working Group on the Matters Related to Items VI-XII of the List of the

Issues Raised and Points Made, at 25, \ 99, WT/WGTGP/W/33 (Oct. 3, 2002), available at hxtp:// www.wto.org/english/tratop_e/gproc_e/gptran_e.htm.

98. Id. 99. Id. _ 100. 100. Id.


any agreement is to be finalized, it must be flexible and allow for differenti

ating standards as appropriate for each applicable state. As evidenced by the outlined discussion above, the Working Group has a

very large task in its efforts to create a single binding agreement with global application. Not only are the member states disagreeing on the larger pro visions that would have a greater effect, but there also seems to be disagree ment as to the basic direction of an agreement. It is clear to any outsider who looks at the path of the discussion that there are states that do not want an

agreement to be created at all.

VI. MARKET ACCESS: THE HIDDEN PURPOSE OF TRANSPARENCY

It can easily be argued that the debate over market access is the primary reason for the Working Group's failure to expeditiously create a more expan sively applicable transparency system.101 The debate focuses on whether trans

parency is being sought for its purported benefits or as a means to achieve market access. In the academic community, there are two camps that opine on what transparency in government procurement is all about. These diverg ing beliefs are also clearly apparent outside the academic realm. The market access debate is the fundamental argument used by developing countries dur

ing the WTO meetings to thwart efforts to create a uniform transparency system.102

Professor Schooner believes transparency is a means to "ensure that gov ernment business is conducted in an impartial and open manner."103 Those scholars and nations taking this perspective see a fundamental need for trans

parency in order to guarantee public access and fairness in the procurement of government contracts.104 This need is heightened by the idea that the con tracts are funded by public dollars, and, therefore, the public has a right to be confident that the procurements are conducted fairly and are achieving the most efficient result.105 Further support for this view is apparent in the United

101. See John Linarelli, The WTO Transparency Agenda: Law, Economics and International Re lations Theory, in Public Procurement: The Continuing Revolution 235,242 (Sue Arrowsmith & Martin Trybus eds., 2003). Although the WTO's inability to negotiate a comprehensive pro curement agreement may be viewed by many as a failure, scholars have used this "stalemate" as an opportunity to reevaluate the GPA and offer suggestions for ensuring its future success. CUTS, supra note 47, ? 7. These suggestions include, but are not limited to, enhancing the protection needed by offerors in developing nations, enhancing developing nations by ensuring that their

procurement efforts result in efficient contracts whereby the nations stretch their limited dollar as far as possible, and ensuring that procurement policies enable nations to weigh cost against benefit and thereby not always feeling compelled to award the contract to the lowest bidder. Id. (citations omitted). Once the issues are identified, CUTS continues by stating a list of ten ques tions that may prove helpful as the WTO moves toward implementing an agreement. Id. These

questions may prove helpful for future analysis. 102. See CUTS, supra note 47, ? 5. 103. See Schooner, supra note 33, at 105. 104. See id. 105. See id. at 106.



States' view expressed at the General Council intersessional meetings in

January-February 1999:

It had been understood by all Members that the Singapore mandate was stricdy limited to transparency and did not extend to market access in the area of govern

ment procurement. The requirements in an eventual agreement should not call into question national policies, including those that were deemed necessary to achieve certain socio-economic and development objectives, such as domestic pref erences, provided that they were administered in a transparent manner.106

In essence, these scholars simply do not believe that the efforts to ensure a universal system of transparency should be hindered by the potential for market access. Rather, they believe that the two, although interrelated, should be evaluated independently. The need for transparency is so fundamental that the risks associated with market access to developing countries should not hinder unifying transparency requirements.

Others, particularly those from smaller or developing nations, believe that

transparency is a means of generating business for the wealthier nations. In

essence, they state that a transparency agreement serves as a method for the WTO to endorse a means for the more powerful nations to easily generate market access to the procurement activities of the less developed nations.107 Those in this camp believe that agreeing to a universal transparency system will provide them with only marginal gains, while developed nations will ben efit from improved access to the developing countries' markets.108 These na tions are threatened by the EC's progressive liberalization approach, which

encourages the WTO to draft the agreement such that market access issues could be revisited in the future, with the potential for using the Transparency Agreement as a step toward an agreement for market access.109 The concern of the developing countries is what fuels many of the disagreements discussed

throughout this note. This author thinks that transparency may have no real purpose other than

to promote market access. The problems that have arisen in the Working Group negotiations can all be linked to a growing concern in either promoting or limiting market access through this Agreement. As noted by Professor

Arrowsmith, transparency work "could also generate information for future

106. Linarelli, supra note 100, at 242 (citing the General Council meeting). 107. It may be argued that the concern over market access, while of importance, is also a

facade being used by Governments of developing countries to stall or prevent the development of a transparency agreement. Many developing countries have attempted and failed to implement procurement reforms. Rather, these nations continue to be plagued by many of the problems discussed throughout this note. The result of these failed attempts may be a movement to quash efforts to develop any transparency agreement. See generally Robert Hunja, Design of Procure

ment Reforms: Issues and Challenges, Address at the Joint WTO-World Bank Regional Work

shop on Procurement Reforms and Transparency in Government Procurement for Anglophone African Countries (June 14-17,2003) (conference materials available in The George Washington University Law Library) (detailing reformation efforts, successes, and failures by developing nations).

108. CUTS, supra note 47, ? 5 (citations omitted). 109. Linarelli, supra note 100, at 242-43.



negotiations to open markets."110 In the process of negotiating the present Agreement, information concerning the size, practices, and nature of domestic markets has become available, not only to other negotiating members but to the public at large.111

The underlying effect of a transparency agreement creating broader market access is precisely why some states oppose its creation. "This possible function of transparency, which was not ruled out at Doha," has not been discussed or

pursued much by any delegation at the Working Group meetings to date.112 If it were discussed, it is apparent that there would be a wide spectrum of

opinions, especially by the states wholly in support of the Agreement and, on the other side, those against the Agreement.

The international investment scene also is concerned about the effect of

transparency improvement. It has been noted by members of the WTO that

many international investment agreements do not have comprehensive trans

parency provisions, and it is up to the WTO to provide such gap fillers as the members deem necessary.113 A comprehensive transparency agreement in gov ernment procurement is a start to achieve that goal for foreign investment.

VIL IS THE AGREEMENT GOING TO DO ANYTHING?

Many states, most notably those with histories of open trade and trans

parency already built into their Government, are using the Agreement to try and open up other markets that have traditionally been more closed off. On the other hand, the more reluctant states want to ensure that any agreement passed by the WTO does not infringe on the states' markets by opening them up to foreign competition. The Working Group has until 2005 to continue its study and progress on a new transparency agreement. Today, issues that caused disagreement in past Working Group meetings remain in controversy between the parties.

It can be assumed that the limited participation in the GPA, as well as the

contradictory practice of states, is telling for the future of any transparency agreement. Every issue that arises in the negotiations has at least two separate views and multiple states on each side of the fence. It is evident from the discussions of the Working Group that Governments that are traditionally protective over their activities in the economy tend to remain protective.

In order to ensure a positive outcome in the Doha Accord Working Groups, especially the Working Group on Transparency, developing coun tries must make serious efforts to change their internal mindset. The nations

110. Arrowsmith, supra note 8, at 296. 111. This is dependent upon the public's access to WTO information, via written mate

rial/research or electronic information. 112. Arrowsmith, supra note 8, at 296; see also WT/WGTGP/1 through WT/WGTGP/15,

available at http://www.wto.org, to note lack of discussion in summary. 113. WHTO Report (2002) of the Working Group on the Relationship between Trade and

Investment to the General Council, at 7, \ 37-38, WT/WGTI/6 (Dec. 9. 2002), available at

http://www.wto.org/english/tratop_e/gproc_e/gptran_e.htm.



giving the most resistance to reform in the area of transparency are the de

veloping nations, such as India, Malaysia, Indonesia, Pakistan, and Hong Kong-China. Those countries have a tendency to want greater government control over procedures and are concerned about outside competition inter

fering with government prerogatives and purposes. It is important for those nations to focus on the long-term effects that a transparency agreement is

likely to have, rather than the short-term burdens that may be accompanied by it.114

Although the aspirations in the Working Group are in the international

public interest, based on the lack of progress the Working Group has made in the last five years, the resulting Agreement, in the author's opinion, will be

very vague and broad, much like its predecessor provisions in the GPA In

ternally, each member state's courts or administrative bodies will be able to

interpret the provision in a multitude of ways. Therefore, it is important for the Working Group to choose a direction for this Agreement.

In the author's view, the best way to pursue a transparency agreement that will have any lasting effect would be to create a flexible "backbone with bind

ing ribs" of regulation. While this type of agreement will further the goals of the Doha agenda, it will not have the downfall of the GPA, i.e., an inflexibility that made many of the provisions too burdensome to apply.115 An agreement that does not incorporate flexible provisions will not be achieved absent mul

tiple reservation and/or abstaining state parties. The possibility of reservations in the area of scope and market provisions is likely, especially considering the areas of contention. If the Agreement was pursued and reservations taken, however, some states would ultimately be against the object and purpose of the Agreement in the first place.

Because of the discussions of the Working Group and the continued ar

gument over basic facets of a possible agreement, this author feels that the

completion of an effective agreement is not in the near future of the WTO. This opinion is shared by other commentators on the issue. Professor Ar rowsmith states, "[i]f a more straightforward approach is adopted .. . there is a strong chance that an agreement can be developed which is useful in practice but also enjoys the support of most WTO members, thus opening up the

possibility for a first truly 'multilateral' instrument on government procure ment."116 In this case the members will have to include transparency in a

broader scope of its negotiations in other areas of trade with as much vigor as they have in government procurement in order to promote the ideas as a norm rather than a rarity. The progress in the current negotiations is telling, and it seems that many parties are simply not ready to take such a huge step in an area as sacred as government procurement. Smaller steps in all areas

may be needed to achieve the ultimate goal.

114. Hague, supra note 17, at 1124-25. 115. See Arrowsmith, supra note 1, at 816. 116. Id.


Article Contentsp. 155p. 156p. 157p. 158p. 159p. 160p. 161p. 162p. 163p. 164p. 165p. 166p. 167p. 168p. 169p. 170p. 171p. 172p. 173

Issue Table of ContentsPublic Contract Law Journal, Vol. 34, No. 1 (Fall 2004), pp. i-vi, 1-210Front MatterEDITOR'S NOTE [pp. v-vi]WHAT IS A PROCUREMENT? AND WHY CAN'T DoD AND THE COURTS GET IT STRAIGHT? [pp. 1-23]APPLYING THE FALSE CLAIMS ACT TO COMMERCIAL IT PROCUREMENTS [pp. 25-44]SOLDIERS OF "QUI TAM" FORTUNE: DO MILITARY SERVICE MEMBERS HAVE STANDING TO FILE "QUI TAM" ACTIONS UNDER THE FALSE CLAIMS ACT? [pp. 45-102]A CRITICAL LOOK AT THE COMPENSATION COST PRINCIPLESTOCK OPTIONS AND RESTRICTED STOCK [pp. 103-153]NotesTRANSPARENCY IN GOVERNMENT PROCUREMENT: AN INTERNATIONAL CONSENSUS? [pp. 155-173]THE SAFETY ACT OF 2003: IMPLICATIONS FOR THE GOVERNMENT CONTRACTOR DEFENSE [pp. 175-205]

Book ReviewGOVERNMENT CONTRACTS COSTS &PRICING [pp. 207-210]

Back Matter

transparency

Documents

transparency agreement

transparency matter

jstor terms

procurement opportunities

procurement methods

jstor archive

working group

hidden purpose of transparency