VZCZCXRO5776
PP RUEHRN
DE RUEHUNV #0513/01 2621106
ZNR UUUUU ZZH
P 181106Z SEP 08
FM USMISSION UNVIE VIENNA
TO RUEHC/SECSTATE WASHDC PRIORITY 8427
RUCNDT/USMISSION USUN NEW YORK 1327
RUEHBS/AMEMBASSY BRUSSELS 0156
RUEHRN/USMISSION UN ROME 0050
INFO RUEHVI/AMEMBASSY VIENNA 1233
RUEHXX/GENEVA IO MISSIONS COLLECTIVE
RUEHFR/AMEMBASSY PARIS 0861

UNCLAS SECTION 01 OF 02 UNVIE VIENNA 000513 
 
DEPT FOR IO/T, EB/IFT/ODF AND L/PIL 
EMBASSIES FOR ECON/POL 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ABUD AORC EAID EINV ETRD KCRM KUNR UNCITRAL AU UN
SUBJECT: UNCITRAL WORKING GROUP REVISES MODEL LAW ON PROCUREMENT 
 
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SUMMARY 
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¶1.  (U) The United Nations Commission on International Trade Law 
(UNCITRAL) Working Group I (Procurement) met in Vienna September 
8-12, 2008 to discuss proposed reforms to the UNCITRAL model 
procurement law.  For the past several years, the Working Group on 
Procurement has been engaged in an effort to update its 1994 Model 
Law on Procurement of Goods, Construction and Services 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.  [Note: 
Further information on this initiative is available through the 
UNCITRAL website, at http://www.uncitral.org.] END SUMMARY. 
 
¶2.  (U) The U.S. delegation was led by Michael Dennis from L/PIL. 
The delegation had two advisers:  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 formally in 2004, and Professor Wallace was 
directly involved in the drafting of the original UNCITRAL model 
procurement law, which was published (in its current form) in 1994. 
 
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REMEDIES 
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¶3.  (U) The Working Group meeting began with a discussion of 
"remedies," or what we call "bid protests" in the United States. 
The United States has a long tradition of allowing vendor challenges 
to procurement decisions.  That tradition has been extended to the 
UN Convention Against Corruption, and the World Trade Organization 
(WTO)'s multilateral Government Procurement Agreement (GPA). Both 
the Convention and the Agreement, with the strong support of the 
United States, call for effective remedies systems in procurement. 
 
 
¶4.  (U) This growing international consensus behind effective 
remedies systems made it important to ensure that the UNCITRAL model 
procurement law also provides for effective remedies systems.  The 
working group discussed this issue over two days, and concluded that 
remedies under the UNCITRAL model law should be strengthened 
substantially.  The Working Group expects that the UNCITRAL model 
law, as revised, will provide for remedies systems that are as good, 
or better, than those called for by the WTO GPA, and that remedies 
systems implemented under the UNCITRAL model law will easily meet 
the minimum requirements of the UN Convention Against Corruption. 
 
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FRAMEWORK AGREEMENTS 
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¶5.  (U) In the third and fourth days of the session, the Working 
Group discussed "frameworks" agreements (known in the United States 
as "indefinite-delivery/indefinite-quantity" contracts or 
"catalogue" contracts).  Our federal procurement law has addressed 
these contracts in detail since 1994, and the European procurement 
directives, since 2004, have also endorsed them.  [Comment: The 
UNCITRAL working group thus gives the United States and some of its 
main trading partners an opportunity to discuss the issues presented 
by these types of contracts, before they emerge in the much more 
contentious GPA negotiations.] 
 
¶6.  (U) The two days of discussion followed on many previous working 
group and expert meetings regarding framework agreements. 
Ultimately, the Working Group endorsed three basic types of 
framework agreements: 
 
* Type I:  "Closed" framework agreements, with a small number of 
awardees, who, once the master agreements are in place, can be 
awarded orders based on prices and conditions set forth in the 
original master agreement.  These types of agreements are very rare 
in the U.S. federal system, because they put comparatively little 
competitive pressure on the awardee contractors. 
 
* Type II:  "Closed" framework agreements that call for a second 
round of competition:  with the master agreements in place, once a 
customer agency has a need, the agency may call for a 
"mini-competition" among those contractors that hold master 
agreements to serve the agency.  These types of agreements are 
 
UNVIE VIEN 00000513  002 OF 002 
 
 
common in the U.S. federal system. 
 
* Type III:  "Open" framework agreements, which operate much like 
Type II agreements, but which are presumptively open, for an 
indefinite period, to any eligible vendor.  The U.S. General 
Services Administration (GSA) sponsors a contract type, the 
"Multiple Award Schedule" (MAS) which uses this model.  Thousands of 
contractors are members of the GSA MAS contracts.  The European 
Commission has published a directive on procurement which 
contemplates this type of framework agreement, among others; in 
practice, the U.S. experience with these types of agreements is much 
more robust. 
 
 
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CONFLICTS OF INTEREST IN PROCUREMENT 
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¶7.  (U) On the last day of the meeting, the Working Group discussed 
potential reforms to check conflicts of interest in procurement. 
Our concerns were the following: 
 
* The UN Convention Against Corruption, which has been broadly 
adopted, calls in Article 9 for procurement rules to check conflicts 
of interest. 
 
* Broad international interest in the UN Convention Against 
Corruption may mean it serves as a catalyst for the next round of 
international improvements in procurement. 
 
* Because standards for conflicts of interest can vary enormously 
between legal cultures, it would be difficult to establish 
international standards for conflicts of ethics in procurement.  We 
have urged the Working Group, therefore, that the current reform 
initiative should identify and support ways to develop systems for 
mitigating conflicts of interest -- systems such as regular reports, 
and whistleblower complaints. 
 
¶8.  (U) The Working Group agreed that the Model Law should include 
provisions setting out the relevant principles and that the detailed 
explanations and considerations would be set out in the Guide to 
Enactment. 
 
 
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SCHEDULE OF FUTURE WORK 
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¶9.  (U) The Working Group also agreed to a schedule for future work, 
deciding that a complete version of the revised model law would be 
presented to the Working Group at its February 2009 session in New 
York.  The Working Group further agreed that its aim was to submit 
the revised model law to the Commission at its 42nd session in June 
2009 in Vienna.  The Secretariat indicated that it lacked resources 
to prepare a draft of the legislative guide prior to the February 
session of the Working Group, but that it would be able to provide a 
draft of the Guide for the commission meeting in June 2009.  The 
Working Group decided that, time permitting, the Commission should 
also review the draft legislative guide at its June 2009 session. 
 
 
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WORKING METHODS AND RULES OF PROCEDURE 
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¶10.  (SBU) In discussions this week both with French delegates and 
the Secretariat, it appears that the French objections to UNCITRAL's 
working methods have abated for now.   The French delegation told us 
that they are happy with the acting Secretary's handling of NGOs, in 
particular, and would not raise the issue of working methods and 
rules of procedure during the working group session.  We assess that 
this change in attitude reflects both perceived improvements in the 
work of the Secretariat, as well as reticence to be critical of the 
Secretariat when acting Secretary Renaud Sorieul, a French national, 
is on the short list to occupy the vacant Secretary position.  The 
current Deputy and current acting Secretary, Mr. Sorieul, is one of 
three finalists for the position that Slovenian Jernej Sekolec left 
in July.  A decision on the vacancy is imminent and will be made in 
New York. 
 
SCHULTE