The Use of Public Procurement to Effect Economic Recovery: The Case of the United States Christopher Yukins George Washington University Law School Washington, DC African Development Bank The High Level Forum on Public Procurement Reforms in Africa Tunis, November 16, 2009

2 Assessing Procurement Under the Recovery Act

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5 The United States Is Seeing a Surge in Recovery Act Spending From recovery..gov

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7 Two Pathways for Recovery Act Funds $770 Billion 25%-30% Federal Agencies Federal Agency Contracts Federal Acquisition Regulation 70%-75% Grants to States State Contracts State Procurement Laws White House (OMB) Guidance

8 HANDLING SOCIOECONOMIC PRESSURES

9 From Recovery.gov Q: To what extent does the Recovery Act preserve access to Federal contracts and procurement opportunities for women- and minority- owned businesses? A: There is nothing in the Recovery Act that changes any existing Federal laws or regulations in place dedicated to establishing or fostering the growth of women- or minority-owned businesses. Moreover, as noted more fully in Section 1.6 of OMB's Initial Implementing Guidance to agencies for the Recovery Act, dated February 18, 2009, the Executive Branch shall distribute Recovery Act funds in accordance with all anti-discrimination and equal opportunity statutes, regulations, Executive Orders, and policies that apply to the expenditure of funds under Federal contracts, grants, cooperative agreements, loans, and other forms of Federal assistance. Generally applicable civil rights laws also continue to apply Q: To what extent does the Recovery Act preserve access to Federal contracts and procurement opportunities for women- and minority- owned businesses? A: There is nothing in the Recovery Act that changes any existing Federal laws or regulations in place dedicated to establishing or fostering the growth of women- or minority-owned businesses. Moreover, as noted more fully in Section 1.6 of OMB's Initial Implementing Guidance to agencies for the Recovery Act, dated February 18, 2009, the Executive Branch shall distribute Recovery Act funds in accordance with all anti-discrimination and equal opportunity statutes, regulations, Executive Orders, and policies that apply to the expenditure of funds under Federal contracts, grants, cooperative agreements, loans, and other forms of Federal assistance. Generally applicable civil rights laws also continue to apply

10 But... – The Office of Management and Budget guidance of April 3, 2009 said: Targeting assistance consistent with other policy goals. Federal agencies should take additional policy considerations into account, to the extent permitted by law and practicable, when determining how best to use Recovery Act funds for achieving the Act's objectives, such as supporting projects that ensure compliance with equal opportunity laws and principles, support small businesses including disadvantaged business enterprises, engage in sound labor practices, promote local hiring, and engage with community-based organizations. These policy goals are outlined further in the attached guidance document, at Section 1.6. Targeting assistance consistent with other policy goals. Federal agencies should take additional policy considerations into account, to the extent permitted by law and practicable, when determining how best to use Recovery Act funds for achieving the Act's objectives, such as supporting projects that ensure compliance with equal opportunity laws and principles, support small businesses including disadvantaged business enterprises, engage in sound labor practices, promote local hiring, and engage with community-based organizations. These policy goals are outlined further in the attached guidance document, at Section 1.6.

11 “SHATTERING THE PRINCIPAL”: SOCIOECONOMIC INITIATIVE?

12 The Principal-Agent Relationship Principal Purchase Principal Agent Purchase Principal

13 Controls Against Conflicts of Interest Agent Purchase Principal Monitoring Costs Bonding Costs Residual Costs

14 Obama Administration: Shattering the Principal Agent Purchase Principal Monitoring Costs Bonding Costs Residual Costs

15 CONCLUSION