TRANSPARENCY IN GOVERNMENT PROCUREMENT: AN INTERNATIONAL CONSENSUS? Author(s): Megan A. Kinsey Source: Public Contract Law Journal, Vol.

34, No. 1 (Fall 2004), pp. 155-173 Published by: American Bar Association Stable URL: http://www.jstor.org/stable/25755307 . Accessed: 13/12/2013 14:39
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TRANSPARENCY INGOVERNMENT PROCUREMENT: AN INTERNATIONALCONSENSUS?

Megan A. Kinsey
I. Introduction. 155 II. Why Does Transparency Matter?. 157 III. History of theMove Toward Transparency.

159 States as an Group on in the

V. The

IV. Playing Both Sides of the Coin: The United 160 Example. Issues Addressed Within 162 Transparency. A. Definition 1.Who the Working

and Scope of Government Transparency Agreement. 162 2. What Is Doing

Procurement

the Procuring?. 163 Is Being Procured andWhat Types of Transactions Are Covered?. 164 Legislation and and

B. Procurement Methods. 165 C. Publication of Information on National Procedures. D. 166

of Record Proceedings, Information the Fight Against Bribery and Corruption.. and Technology, H. WTO Settlement Procedures and Technical Cooperation and Special and Differential Treatment forDeveloping 169 Countries. VI. Market Access: The Hidden Purpose ofTransparency. VII. Is theAgreement Going to Do Anything?. 172 169

Information on Procurement Opportunities, Tendering, 166 Qualification Procedures. E. Time Periods. 166 E Transparency of Decisions on Qualifications, Contract Awards, Notification Procedures, and Domestic Review 167 Procedures. G. Other Matters Related toTransparency, Such as Maintenance

168

from The George herJ.D. with honors Washington University Megan A. Kinsey received isa law clerk HonorableMichael D. Mason Law School in for the May 2004 and currently Maryland. While at GWU, she servedas a Montgomery County, of theCircuit Court of StevenSchooner Public Contract Law Journal.The author thanks member of the Professor Note. for guidancewith this

155

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156

Public ContractLaw Journal I. INTRODUCTION

Vol. 34,No. 1 Fall 2004

World

1996WTO Ministerial Conference in Singapore, the Trade Organization created the (WTO) Working Group on Trans in Government Procurement created parency (Working Group).1 The WTO on "a the transparency Working Group for the purpose of conducting study in government procurement practices, taking into account national policies, and, based on this study, to develop elements for inclusion in an appropriate
agreement."2

At the December

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

Government Procurement (GPA) seeks to ensure the best value formoney 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 theGeneral Agreement on Tariffs and Trade

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

1.WTO, Declaration, \2\, WT/MIN(96)/DEC (Dec. 18, 1996), Singapore Ministerial at see WTO, available The http://www.wto.org/english/tratop_e/gproc_e/gpmand_e.htm Doha Declaration at \ 26, available in Government Procurement, Explained: Transparency at http://www.wto.Org/english/ttatop_e/dda_e/dohaexplained_e.htm#ttansparency_in_govt_ (last visited Sept. 12, 2004); see also Sue Arrowsmith, Towards aMultilateral Agree procurement ment on (1998), for Transparency in Government Procurement, 47 Int'l & Comp. L.Q. 793, 793-95 a discussion of the history surrounding the Working Group. 2. WTO on inGovernment Procure Report (2000) of the Transparency Working Group ment to the General at 1 HI, WT/WGTGP/4 Council, (Oct. 31, 2000), available at http:// [hereinafterWT/WGTGP/4]. www.wto.org/english/tratop_e/gproc_e/gpttan_e.htm on Government Procurement, 3. WTO, at Overview of the Agreement http://www. (last visited Sept. 12, 2004) [hereinafter GPA wto.org/english/tratop_e/gproc_e/over_e.htm Overview]. 4. Id. T.I.A.S. 5. Id. See General Agreement on Tariffs and Trade (GATT), Oct. 30, 1947, 61 Stat. A-ll, at 1700, 55 U.N.T.S. 194, art.V, available 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 ? the of the World Trade Organization, Annex IB, Legal Results Instruments Establishing Uruguay 33 I.L.M. 1167 (1994), available at Round, http://www.wto.org/English/docs_ that government procurement averages about 10-15 percent e/legal_e/26-gats.pdf. Considering inmost states, this lack of of GDP regulation represented a considerable gap in the multilateral trading system.

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mation

mem which signifies that not allWTO WTO, Agreement establishing the bers are bound to it.7 is in the process of negotiating the WTO Through Working Group, the a new agreement (the Agreement) thatwill expand on the ideas addressed in theGPA but will focus on transparency issues.8The Agreement iswell inten tioned and has a noble goal thatwould improve economic conditions in many closed countries; however, theAgreement 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 theAgreement is the issue of transparency leading tomarket 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 inmost of the Working Group's publications: (1) the definition and of scope 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 technology, language, and the fight against bribery and corruption; settlement procedures; and (12) tech notification (10) procedures; (11)WTO 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. note will address the present contradictions between prac this Additionally,
in the 1970s, Procurement was promulgated the First Agreement on Government 7. Hence, in 1981. GPA Overview, supra note 3. signed in 1979, and entered into force 8. WT/WGTGP/4, supra note 2, \ 4; see also Sue Arrowsmith, Transparency in Government 283 Trade 37 j.World Procurement: The Objectives ofRegulation and the Boundaries of the WTO, on inGovernment Pro (1999) of the Transparency Working Group 12, 1999), available at http:// Council, WT/WGTGP/3 (Oct. for examples of dissenting opinions and alternative [hereinafterWT/WGTGP/3], www.wto.org viewpoints regarding issues of transparency. 10. Id. at 4, \ 2 (attach., Sept. 24, 1999). 11. Id.; see alsoWT/WGTGP/4, supra note 2. 9. See WTO Report to the General curement

(2003).

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tice and policy within the United

further transparency.

States, a leader in the movement

II. WHY DOES TRANSPARENCY MATTER? important question to be answered before a real discussion about is transparency and why is it so important? What transparency can occur is: a is of the process to bring us to a more efficient, part Transparency merely no set and fair, legitimate government procurement system.Although there is definition for transparency, in essence, it is themeans by which Governments One

broadcast the steps taken during the procurement process.12 Inmost 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 the others being most-favoured-nation and national treat WTO, ciples of the to have uniform trans ment."14 Therefore, it is a legitimate goal of the WTO across its nations. As the of member stated at the July 15, parency spectrum on of the WTO 2003, meeting Transparency inGovernment Working Group Procurement to theGeneral Counsel:

ingovernment With respect to the issue of the importance procurement oftransparency was noted that all Member governments purchased goods trade,it for international
and services both domestically view was and abroad. The that, conse expressed amount there was a significant of international trade generated by public quently, to in the exercise entities when, of the sovereign powers, they decided purchase Given the impact on international trade, rules ensuring transpar internationally.

WTO.15 ency should be negotiated in the

The purpose of the Doha Accord was to achieve multilateralism in global trade.16Alternatively 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:// World Trade Organization, Understand www.govexec.com/features/0603/0603veiwl.htm; ing the WTO 110 (2003). 13. See and Public Contracting, at International, e.g., Transparency Integrity Pact (last visited Sept. 4,2004) ("If corruption http://www.transparency.org/integrity_pact/index.html Interna [in public contracting] is not contained, itwill grow. For these reasons, Transparency 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 OECD Network Anti-Corruption

in Government Procurement, Second Annual of the Meeting for Transition Economies (Nov. 2, 1999), available at

WT/WGTGP/7].

http://www.nobribes.org/Documents/Istanbul99/Seattleprespack99proc.doc. on 15. WTO in Government Pro (2003) of theWorking Report Group Transparency curement to the General Council, at 2 \ 8,WT/WGTGP/7 (July 15, 2003) (emphasis in origi at available nal), [hereinafter http://www.wto.org/english/tratop_e/gproc_e/gptran_e.htm 16. WTO, The Doha Declaration Explained, supra note 1 (listing elements of the Doha date and suggested elements for a transparency agreement). man

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legitimate criteria.18 In other words, transparency reduces the possibility of corruption. Transparency supports this goal by keeping practices of theGov ernment evident and clear to those participating, rather than hiding them behind closed doors. This is a legal truth inmany, but not all, government systems. As discussed below, the United States publishes the practices and procedures it follows inmaking procurement decisions, which, in effect, re duces or even eliminates any corrupt practices thatmay take place. In other

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

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, themarket is only open to those suppliers that have connections or agreements with the Government. This barrier can be anal which keeps themarket closed and more expensive for the ogized to a tariff, 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 themultilateral rules. Government procurement measures are dealt with through themultilateral Agreement on Government Procurement (GPA)20 thatwas concluded in 1993 at the end of theUruguay Round.21 The overall aim of theGPA is to promote transparency. and the WTO,22 Currently, the agreement only applies to 29 members of the are to of limited provisions suppliers, "tendering procedures, qualification technical specifications, tender documentation, award of contracts and bid WTO challenge procedures."23 Since the GPA has limited participation, the took on the project and created the Working Group.

Momentum Multilateralism 17. Inaamul Hague, Doha Development Agenda: Recapturing the of 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 of the Uru Instruments ? Results Annex 4B, Legal World Trade Organization, lishing the guay Round, 103 (1994), available at htxp://www.wto.org/English/ vol. 31, 1915 U.N.T.S. docs_e/legal_e/5 2 -dproc.pdf. 21. Arrowsmith, supra note 1, at 794. 22. Aruba, Canada, and its 15member states, Hong Kong-China, the European Community the Netherlands, Iceland, Israel, Japan, Liechtenstein, Norway, Singapore, South Korea, Swit zerland, and the United States. et al., International 23. Alan W.H. Gourley Legal Developments lation, 35 Int'l Law. 395, 400 (2001). inReview: 2000 Business Regu

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One

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 name and address of thewinning offeror, ing the publication of the award, the 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. is thatGovernments procurement as a means

The GPA mandates transparency and procurement procedures for the 29 nations.24 Its requirements include, but are not limited to, (1) creating a system

petition.26While signatories to implement such policies, there are still political pressures to avoid any agreements thatwill 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.

do not want to relinquish the possibility of using to support national industry against foreign com the GPA does have articles that provide some scope for

created the began, however, theWTO 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

The first multilateral initiativewas 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

24. The WTO GPA was signed inApril 1994 and took effect inJanuary 1996. Victor Mosoti, The WTO Agreement on Government Procurement: A Necessary Evil in theLegal Strategy for Devel opment in thePoor 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.

(Sept. 3, 1997), available at http://docsonline.wto.org. 30. GPA Overview, supra note 3. 31. Prof. Arrowsmith notes another reason for in stating, Group creating theWorking "transparency may contribute to the opening up of international markets even in states which do not accept a 'national treatment' has set up a working obligation, and for this reason theWTO party to develop an interim agreement concerned only with transparency." Sue Arrowsmith, National and International Perspectives on theRegulation ofPublic Procurement: Harmony or Conflict? in Public Procurement: Global Revolution 1, 18 (Sue Arrowsmith & Arwel Davies eds.,

in WTO Reportof the policies,as summarized Meeting of 23July1997,at1 15,S/WPGR/M/12

Prior

to

Singapore,

it had merely

collected

information on national

1998).

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

In many respects, theUnited States has been an example of how a trans parent system should operate. Modern technology prevalent in theAmerican business environment permits a previously unimagined level of transparency within the procurement system.32Transparency in the federal government is in maintained many ways, particularly by (1) publish procurement system 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 inwhat 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 as government inspectors ploying appropriate oversight, such general, to pe actions.33 audit of these elements echo those required agency Many riodically But the level of transparency within theUnited 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

WTO GPA listed above. by the

To

justify these reforms, supporters have argued that although transparency may have been somewhat sacrificed, beneficial trade-offs have resulted.36 In aremore efficient and can be more exchange for the transparency, contractors

profitable, thus stimulating theU.S. economy.37 A prime example can be seen in the rebuilding effortof post-war Iraq that over who would reap the bene began in early 2003. When discussions began fitsfrom the Iraq rebuilding effort, many thought that the entire industrialized world would play a part. Yet, as it turned out, only a small amount ofAmerican companies were invited to bid on the available contracts.38Of 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 on Our curement Reforms, We Have to 17, 2003, at 34. Guiding Principles, Legal Times, Mar. Agree 33. See Steven L. Schooner, Desiderata: Objectives for a System ofGovernment Contract Law, 11 L. Rev. 103, 104-06 (2002). Pub. Procurement 34. Schooner & Yukins, supra note 32. 35. Id. 36. Joseph Petrillo, Gov't Computer News, 1/html. Federal Contract Law: Is Procurement Too Reformed? Debates Get Sharp, at http://www.gcn.eom/2 l_20/manager/19368 July 22, 2002, available

Dec. 2, 2002, available at 37. Steve Kelman, Assessing Our Goals, Fed. Computer Wk., -02 -02 .asp. 202/pol-kelman-12 http://www.fcw.eom/fcw/articles/2002/l 38. Steven Schooner, Mending Fences, Burning Bridges, NJ. Star Ledger, Mar. 30, 2003, Perspective Section, at 1.

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is the the competitive bidding process.39 For example, S&K Technologies was a contract without of that awarded any competitive bidding, and recipient 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 ismerely a fraction of what is to come of the estimated $30 billion
or more of future contracts.41

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

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 theUnited States.42This recent practice of theUnited States is directly contrary towhat The

A. Definition and Scope ofGovernment Procurement in theTransparency 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 tomake 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 inwhich "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 over and the NBC Investigative Unit, Questions Mount Iraq Rebuilding Con available at http://msnbc.msn.eom/ID/5990392/print/l/display.ode/1098 tracts, MSNBC.com, (last up dated Sept. 15, 2004). 40. Id. on Fogarty, Companies Bid Rebuilding Iraq, USA Today, Mar. 26, 2003, at B3. for Responsive Politics, Rebuilding Iraq?The Contractors, available at http:// (last modified Apr. 28, 2003). www.opensecrets.org/news/rebuilding_iraq/index.asp 43. Arrowsmith, supra note 8, at 283. 44. Schooner, supra note 33, at 105. 45. Arrowsmith, supra note 1, at 796. 41. Thomas 42. Center

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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 those criteria actually procurement process been disclosed; [and] (2)Have been applied in the award of a contract."48 The stateswho 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.50A set definition is essential to achieve an agreement that will actually have some effect.A topic of discussion for everymeeting 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

and bymeans to verify that those rules were followed.'"46 Although theremay 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

rely upon the definitions provided in each member's national legislation.52 WTO Thus far, the have failed to clarifywhat definition they members of the a in will transparency agreement.53 ultimately adopt There is also a lack of agreement on the coverage of a prospective agree some parties have expressed the view that transparency disci ment. While should plines apply to government procurement practices as broadly as pos are some who believe that transparency should be narrowly there sible, are two main views that have emerged in the negotiations. There applied.54 One

some states tended to believe that the is necessary. While Working Group should draw upon a definition thatwas provided in previous agreements, such as the GATT and GATS,51 other states argued that itwould be sufficient to

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

such view iswhat 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 systemwhere transparency is

46. Arrowsmith, supra note 31, at 18 (citations omitted). lists similarities among existing procurement 47. Professor Arrowsmith regimes. Id. The strives to meet through Working Group goals satisfied by these similarities should be goals the include a set of formal rules, publication of the rules, curtailing the dis the Agreement. They cretion of procurement officers through the rules, and a method of enforcement. Id. at 18-19 (citations omitted). & Environment, Unpacking Trans Centre for International Trade, Economics 48. CUTS WTO's Government Procurement Agreement ? 3.2 parency inGovernment Procurement: Rethinking the on filewith author). The Centre also offers methods of improving current (Aug. 16, 2004) (draft 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 6, art. XIII, \ 2. supra note 5, art. Ill, \ 8; GATS, 2000), available at http://www.wto.org/english/tratop_e/gproc_e/gptran_e.htm [hereinafter

WT/WGTGP/M/10 (Aug. 1. 52.WTO Report of the Meeting of 7 June2000, at4, J 19,

WT/WGTGP/M/10].

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

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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 themore 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.56The 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?

cause, otherwise, a large part of government procurement would be left to the discretion of the various nations outside the confines of theAgreement.59 The second level ismore 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 would be difficult for the states to ensure compliance at all by the idea that it
levels of Government because each state's

Should theWTO 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 firstof these levels argues that the Agreement should cover all levels of Government be

Others

further argue that theAgreement 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 amandate from
those entities.61

governmental

infrastructure

differs.

It is important for theTransparency 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, itwould 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 theWorking Group, developing countries with newer government structures might have to be accorded special treatment with regard to the obligations thatmay be on at entities sub-central levels.63 Such states with a lower level of imposed 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, 61. WT/WGTGP/3, 6. jwpm note 9, at 5, <J supra note 51, at 4-5,

<| 20. I 20.

63.

62. WT/WGTGP/M/10, Id.

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ter problems trying to enforce the transparency obligations in the sub-central divisions. is the solution? Like most matters in international law, the What Working should take the most inclusive of the choices because there are op Group portunities for each prospective state to limit theAgreement as necessary for its own purposes.64While itmay not be themost desired choice, there is no other way to ensure broad agreement. While the international community

strives tomake 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, theAgreement will have themost effect if it is applied over thewhole of the global economic community. 2. What

Is Being Procured andWhat Types ofTransactions Are Covered? a transparency The main question facing the Working Group iswhether to services and of should extend both and combination any agreement goods or to in it and services be limited whether should application goods.65 goods The problem that arises, however, is that contracts typically are forboth 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."66That makes the

Agreement itself transparent and its scope well understood.67 The same countries that favored themore limited application of theAgree ment in terms of which entities would be covered also favor a more limited India, In agreement in terms of what the Agreement will cover. Malaysia, 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 when the contract isvalued below a certain threshold that have more flexibility value. This argument is fueled by the fact that transparency at all levels of may not be cost-effective to have trans procurement is in itself costly, and it contracts.70 for lower-level the parent procedures Many states have expressed the prospective practices should consider the view that the Working Group of each individual state party to the negotiations.
64. See Vienna Convention on the Law ofTreaties, openedfor signature May 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, 69. WT/WGTGP/3, 70. Jtf. supra note 51, at 5,1 supra note 9, at 6, f 10. 22. 23, 1969, Art. 19,

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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 and Brazil, Canada, many European countries believe that Japan, prisingly, there should be threshold levels towhich theAgreement should apply.72 Many other countries, including theUnited 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 theWorking 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

concerning national legislation should be published in order to achieve the requisite trans parency, this view isnot 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 and Egypt,77 are of the opinion that place, e.g., India, Pakistan, Malaysia, of national be an onerous endeavor and the cost could publication legislation would not justify the possible benefits.78Keeping with itsnational policy, the said that there should be no requirement representative ofHong Kong-China to publish information that could be deemed internal to theGovernment. D. Information onProcurement Opportunities, Tendering, and Qualification

C. Publication ofInformation on National Legislation and Procedures itmay seem apparent that procedures and information While

Procedures

An agreement on transparency should establish specific guidelines on what are as as well what available, opportunities qualifications a bidder/contractor must meet in order to for the government contract. Uniformity across qualify borders is an important goal of an agreement in order to ensure that con
71. WT/WGTGP/M/10, 72. Id. 73. A/, at 6,^24. supra note 51, at 5-6, H 23.

74. WT/WGTGP/3, 75. Id. 76. WT/WGTGP/M/10, 77. Arrowsmith,

supra note 9, at 9, H 18. 34.

note 51, at 9, H 34. 78.WT/WGTGP/M/10, supra

supra note 51, at 9,1 supra note 8, at 286.

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

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 "itwas 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 theWorking 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 entitywould have to prepare and submit bids on procurement opportunities.82

to This requirement would create a set length of time for a Government consider the bids received and also provide a set time for contractors to submit bids. The end result ismore 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 isnot one of high contention, themajor 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
79. Id. at 9, H 35. 80. Id. at 10, <B2. 81. Id. 82. 83. Id. at 11, H 44. 84. Id. % 46. 85. Id. <fl 47.

to ensure that domestic rules

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and regulations governing procurement are observed by those involved in the 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 futurework on the domestic
procurement process.86

review provision in the Working Group. However, many states are unable to in is not a regard to domestic review and believe that APEC compromise are a pos in because APEC's decisions unlike lead nature, good nonbinding sible transparency agreement.89 OtherMatters Related toTransparency, Such asMaintenance ofRecord Proceedings, Information Technology,and theFight Against Bribery and

G.

to "reallocate govern A transparency agreement would force Governments ment spending away from goods thatwere more prone to bribery."91 "Such more difficult to disguise and maintain [the] rules can make it discriminatory 86.WTO
(Dec.

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.

Corruption The Working Group also has discussed uniformity in procurement systems in order tomake 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.

87. Id. at 7-8, \ 32; see also WTO, WT/WGTGP/W/24 21, (Sept.

inafter WT/WGTGP/M/11].

19, 2000),

WT/WGTGP/M/11 Report of the Meeting of 25 September2000, at 7, J 30,

available at http://wvvw.wto.org/english/tratop_e/gproc_e/gptran_e APEC 1999), [here on Government Procurement, Non-Binding Principles at available http://www.wto.org/english/tratop_

& Cibinic 90. Ralph C. Nash & John Cibinic, Acquisition Reform: A Progress Report, 16Nash Report \ 48, Oct. 2002, at 54. & Bernard M. Hoekman, 91. Simon J. Evenett Market Ac Government Procurement: and Multinational Trade Rules 18 (World Bank Policy Research Work cess, Transparency, 3195, 2004). ing Paper No.

e/gproc_e/gptran_e.htm. 88. WT/WGTGP/7, supra note 15, at 7, T[ 26 ("domestic review obligations [in a Transpar should be strong but non-prescriptive... ency Agreement] .[They] could include simple and flexible provisions on domestic review procedures that took into account and accommodated that currently existQ in independent administrative or judicial tribunals and review procedures countries." various Member 89. WT/WGTGP/M/11, supra note 85, at 7-8, \ 32.

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that accompany corruption and discrimination in procurement.92 corruption will require the publication of a strict no-tolerance Discouraging 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 centralWTO While many trade agreements on pro activity."94 curement prohibit discrimination while including transparency,95the Working However, the Doha Decla Group is pressured to take things a step further. 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 ismeant to have? procedures" H. WTO Settlement Procedures and Technical Cooperation and Special and Differential Treatmentfor 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 theWTO, transparency-related WTO rules, and other provisions in agreements.98 The three drafts of the Agreement that have been presented contain pro posals for dispute settlement procedures thatmirror the provisions contained The

in the GATT Articles XXII andXXIII andGATS Articles XX andXXIII.99

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 JointWTO-World Bank on Procurement Reforms and inGovernment Procurement Regional Workshop Transparency forAnglophone African Countries The George (June 14,2003) (conference materials available in Washington University Law Library). 94. Arrowsmith, supra note 8, at 288. 95. Id. 96. Id.

on the Matters Related to Items VI-XII 97. WTO, Work of the of theList of the Working Group at 25, \ 99,WT/WGTGP/W/33 Issues Raised and Points Made, (Oct. 3, 2002), available at hxtp:// www.wto.org/english/tratop_e/gproc_e/gptran_e.htm. 98. Id. 99. Id. _ 100. 100. Id. <[ 101.

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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

must be flexible and allow for differenti any agreement is to be finalized, it 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 on the larger pro application. Not only are the member states disagreeing visions thatwould have a greater effect, but there also seems to be disagree

It can easily be argued that the debate over market access is the primary reason for the Working Group's failure to expeditiously create amore expan The debate focuses on whether trans sively applicable transparency system.101 is its for parency being sought 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 WTO ing the meetings to thwart efforts to create a uniform transparency 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
system.102

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 theUnited

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 a to theWTO's comprehensive pro inability negotiate curement agreement may be viewed a failure, scholars have used this "stalemate" as by many as an to reevaluate theGPA and offer opportunity suggestions for ensuring its future success. CUTS, are not limited to, supra note 47, ? 7. These suggestions include, but 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. the issues are identified, CUTS continues by stating a list of ten ques (citations omitted). Once moves toward tions that may prove helpful as the WTO 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.

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States' view expressed at the General January-February 1999: It had been understood by allMembers
limited ment achieve

Council

intersessional meetings

into question national policies, including those thatwere deemed necessary to

certain socio-economic provided that they were and development administered such as domestic objectives, in a transparent manner.106 pref

to transparency access in the area of govern and did not extend to market an eventual in The should not call procurement. agreement requirements

that the Singapore mandate was stricdy

erences,

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 to endorse a means for themore powerful nations to easily generate WTO market access to the procurement activities of the less developed nations.107 in this camp believe that agreeing to a universal transparency system Those will provide themwith only marginal gains, while developed nations will ben efitfrom improved access to the developing countries' markets.108 These na tions are threatened by the EC's progressive liberalization approach, which to draft the agreement such thatmarket access issues WTO encourages the could be revisited in the future,with the potential for using theTransparency Agreement as a step toward an agreement formarket access.109The concern of the developing countries iswhat fuelsmany 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

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

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). It may be argued that the concern over market access, while of importance, is also a of developing countries to stall or prevent the development facade being used by Governments of a transparency agreement. Many developing countries have attempted and failed to implement reforms. Rather, these nations continue to be plagued by many of the problems procurement to quash discussed throughout this note. The result of these failed attempts may be a movement efforts to develop any transparency agreement. See generally Robert Hunja, Design of Procure at the JointWTO-World ment Reforms: Issues and Bank Regional Work Challenges, Address on Procurement Reforms and Transparency forAnglophone inGovernment Procurement shop 107. in The George Washington and failures by developing

African Countries (June 14-17,2003) (conference materials available (detailing reformation efforts, successes, University Law Library) nations). 108. CUTS, supra note 47, ? 5 (citations omitted). 109. Linarelli, supra note 100, at 242-43.

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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 other side, those against theAgreement. The international investment scene also is concerned about the effect of WTO that transparency improvement. It has been noted by members of the many international investment agreements do not have comprehensive trans to provide such gap fillers as the WTO parency provisions, and it is up to the members deem necessary.113A comprehensive transparency agreement in gov ernment procurement is a start to achieve that goal for foreign investment. VIL ISTHE AGREEMENT GOING TO DO ANYTHING?

The underlying effectof 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 itwere discussed, it is apparent that there would be a wide spectrum of opinions, especially by the states wholly in support of theAgreement and, on

discussions of the that are traditionally Working Group that Governments over in to their activities the tend remain protective economy protective. In order to ensure a positive outcome in the Doha Accord Working Groups, especially the Working Group on Transparency, developing coun triesmust make serious efforts to change their internalmindset. The nations

Many states, most notably those with histories of open trade and trans parency already built into theirGovernment, are using theAgreement to try and open up other markets that have traditionally been more closed off.On the other hand, themore reluctant states want to ensure that any agreement WTO does not infringe on the states' markets by opening them passed by the to up 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 pastWorking Group meetings remain in controversy between the parties. It can be assumed that the limited participation in theGPA, 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

110. Arrowsmith, supra note 8, at 296. 111. This is dependent upon the public's access toWTO information, via written mate rial/research or electronic information. 112. Arrowsmith, supra note 8, at 296; see alsoWT/WGTGP/1 through WT/WGTGP/15, available at to note lack of discussion in summary. http://www.wto.org, 113. WHTO Report on the between Trade and (2002) of theWorking Group Relationship at 7, \ 37-38, WT/WGTI/6 Investment to the General Council, (Dec. 9. 2002), available at http://www.wto.org/english/tratop_e/gproc_e/gptran_e.htm.

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are the de giving the most resistance to reform in the area of transparency as and Hong such Pakistan, India, Indonesia, nations, Malaysia, veloping a tendency to want greater government countries have Those Kong-China. control over procedures and are concerned about outside competition inter feringwith 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 thatmay be accompanied by it.114 Working Group are in the international Although the aspirations in the on of based the lack interest, progress the public Working Group has made in the last fiveyears, the resulting Agreement, in the author's opinion, will be In very vague and broad, much like its predecessor provisions in the GPA or administrative bodies will be able to courts state's each member ternally, interpret the provision in a multitude of ways. Therefore, it is important for the Working Group to choose a direction for thisAgreement. In the author's view, the best way to pursue a transparency agreement that

state parties. The possibility of reservations tiple reservation and/or abstaining 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 firstplace. ar Because of the discussions of the Working Group and the continued a over that the feels author this facets of basic gument possible agreement, not in the near future of the WTO. completion of an effective agreement is 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 isuseful in practice but also enjoys the support of most WTO members, thus opening up the on government procure a instrument 'multilateral' for first truly possibility 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 thatmany 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.

will have any lasting effectwould be to create a flexible "backbone with bind this type of agreement will further the goals of ing ribs" of regulation. While will not have the downfall of theGPA, i.e., an inflexibility theDoha agenda, it An agreement thatmade many of the provisions too burdensome to apply.115 that does not incorporate flexible provisions will not be achieved absent mul

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