UNCITRAL Reviews Revised Model Law on Procurement

UNCLAS SECTION 01 OF 02 UNVIE VIENNA 000347 DEPT FOR IO/T, EB/IFT/ODF AND L/PIL EMBASSIES FOR ECON/POL SIPDIS E.O. 12958: N/A TAGS: ABUD AORC EAID EINV ETRD KCRM KUNR UNCITRAL AU UN SUBJECT: UNCITRAL Reviews Revised Model Law on Procurement ¶1. (U) SUMMARY: The forty-second session of the United Nations Commission on International Trade Law (UNCITRAL) met in Vienna from June 29 to July 17, 2009. During the Commission meeting, a Committee of the Whole was formed to engage in a second reading of the revised UNCITRAL model law on procurement. For the past several years, the Working Group on Procurement has been engaged in an effort to update UNCITRAL's 1994 Model Law on Public Procurement and its accompanying Guide to Enactment to reflect new practices and technological developments, in particular those resulting from the use of electronic communications in public procurement. The Committee of the Whole did not complete a second reading of the model law, in part because many delegations participated in the session that had not attended earlier meetings of the Working Group. After the Committee session, the Commission met briefly and adopted the report of the Committee. (Note: Further information on this initiative is available through the UNCITRAL website, at http://www.uncitral.org.) END SUMMARY. ¶2. (U) The Committee of the Whole spent the entire session reviewing chapter I of the seven-chapter revised model law. The most significant issue slowing progress was the inclusion of defense and national security procurement. The 1994 Model Law on Procurement includes a blanket exemption for procurement relating to defense and national security, due to its sensitive and often confidential nature. The Working Group on Procurement had decided in 2004, however, that the procurement regime of the revised Model Law should apply to all sectors of procurement. The U.S. and other delegations sought a series of amendments to the text that would address inter alia classified procurement. These amendments, however, were opposed by several delegations that suggested revisiting the working group's decision to include defense and national security procurement within the model law. Mexico proposed on the final day keeping defense and national security procurement in the Model Law, and that the Secretariat propose specific amendments to implement this new coverage in the Model Law with respect to direct procurement, sole source procurement, and the protection of confidential information. That approach was approved by the group. ¶3. (U) Another significant issue was the inclusion of socioeconomic factors within the model law. The text of the 1994 Model Law provides that in the selection of the lowest evaluated tender, consideration could be given to the effect that acceptance of a submission would have on such factors as the balance of payments position of the State, countertrade arrangements offered by suppliers or contractors, and the extent of local content. The debate in the Committee of the Whole centered on whether it would be appropriate to abandon a listing of these somewhat dated socioeconomic initiatives and simply make a reference to use of socioeconomic factors. Some delegations favored a more modern list of socioeconomic programs that states often use in procurement, while several delegations expressed concern with any expanded list of socioeconomic programs in procurement. The chair deferred the issue for future consideration. ¶4. (U) At the close of the session the Secretariat was instructed to redraft the open issues in Chapter I before the next session of the Working Group in December 2009 so delegations would have a complete revised version of the model law before them. ¶5. (U) In order to expedite the work, after the first two days, when little progress had been made in the Committee of the Whole, the U.S. and other delegations formed an informal drafting group that reviewed the text of the draft model law and offered proposed changes. The U.S. delegation informally chaired that drafting group which operated on the margins of the Committee of the Whole sessions. Many of the changes proposed by the drafting group with respect to Chapter I were accepted during the Committee of the Whole debate. At the final Committee of the Whole session, various members of the drafting group (Angola, Austria, Czech Republic, France, Germany, Morocco, Nigeria, Senegal, Turkey, the United Kingdom, and the United States) submitted a conference room paper offering proposed changes and comments on those provisions of the model law that were not reviewed by the Committee of the Whole (i.e., Chapters II through VII of the proposed revised UNCITRAL Model Law on Procurement). The Chairperson accepted the paper, requested that it be made available in English for the current session and translated and posted on the UNCITRAL web site. UNVIE VIEN 00000347 002 OF 002 ¶6. (U) After the Committee of the Whole session, the Commission adopted the report of the Committee, as well as the reports on the September, February and May (i.e. the 14th -16th) sessions of the Working Group. During the Commission session, several developing countries again stressed the need to complete the model law as quickly as possible. Kenya noted that it was in the process of updating its laws and would like to have a completed text within the next year so that it could benefit from the new provisions in the law on new procedures for electronic reverse auctions, framework agreements, and competitive negotiation. ¶7. (U) The Working Group will resume the second reading of the draft text at its next session scheduled for December 2009, and probably will require at least the proposed December and February sessions to complete the second reading. Thus, it is unclear whether the revised model law will be ready for adoption at next Commission session in June 2010. After the revised model law is adopted, the Working Group will need to consider revisions to the accompanying Guide to Enactment. ¶8. (U) The U.S. delegation was led by Michael Dennis from L/PIL. The delegation had two advisers for the Committee of the Whole session: Don Wallace, Jr., of the International Law Institute and the Georgetown University Law Center, and Christopher Yukins, co-director of the government contracts program at the George Washington University Law School. Both advisers have been involved in this UNCITRAL reform initiative since it was launched in 2004, and Professor Wallace was directly involved in the drafting of the original UNCITRAL model procurement law, which was published in ¶1994. PYATT