The Week Ahead in the European Parliament – January 25, 2019

Summary

Next week will be a committee week in the European Parliament.  There will also be a mini plenary session.

Interesting votes and debates are expected to take place.

On Tuesday, January 29, Mr. George Ciamba, Romania’s Minister-delegate for European Affairs will introduce to the Members of the Committee on Constitutional Affairs (“AFCO”) the priorities of the Romanian presidency of the Council of the EU.  On January 1, 2019, Romania took over the rotating presidency of the Council for the first time since its EU accession.  Over the next six months, the Romanian presidency will take actions based on the so-called “four pillars”, i.e., (i) Europe of convergence, (ii) Europe of safety, (iii) Europe of global actor, and (iv) Europe of shared values.

On Wednesday, January 30, Members of the European Parliament (“MEPs”) are expected to vote on the Committee on Industry, Research and Energy (“ITRE”) report on the proposal for a regulation on the implementation and functioning of the .eu Top Level Domain Name.  The .eu top level domain (“TLD”) guarantees the interoperability of trans-European networks by providing a complementary registration domain and a global registration in the generic top-level domains.  The Proposal aims to ensure a better management of the .eu TLD by reinforcing security in the digital single market.  In addition, it will promote innovation in the .eu system at the level of the registry as well as in the downstream markets of registrars and registrants.  See the draft report here, the amendments tabled to the draft report here and the proposal for a regulation here.

On Thursday, January 31, MEPs are expected to vote on the Committee on Constitutional Affairs (“AFCO”) report on Amendments to the Parliament’s Rules of Procedure.  Among other things, the amendments aim to reform the standards of conduct for MEPs, including by enhancing transparency rules and measures to prevent harassment.  In addition, the amendments require that key actors involved in the legislative procedure (e.g., rapporteurs and shadow rapporteurs) make available online information on all the meetings they hold with interest representatives.  See the draft report here.

Meetings and Agenda

Monday, January 28, 2018

·       No meetings of note

Tuesday, January 29, 2018

Committee on Budgetary

09:00 – 18:30

Debates

·       EU Anti-Fraud Programme (COD) – Adoption of draft report

o   Rapporteur: José Ignacio SALAFRANCA SANCHEZ-NEYRA (EPP, ES)

Joint meeting: Budgetary Control and Civil Liberties, Justice and Home Affairs committees

14:30 – 15:00

·       Appointment of the European Chief Prosecutor – exchange of views with the Commission on the procedure for the appointment

Committee on Civil Liberties, Justice and Home Affairs

14:30 – 18:30

Votes (16.30 – 16.45)

·       Listing of third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from that requirement, as regards the withdrawal of the United Kingdom from the Union (COD) – adoption of draft report and vote on the decision to enter into interinstitutional negotiations and on the composition of the negotiating team

o   Rapporteur: Claude MORAES (S&D, UK)

·       Draft Agreement on cooperation between Eurojust and Georgia (CNS) – vote on the simpliied procedure (Rule 50(1) without amendment) report

o   Rapporteur: Sylvia-Yvonne KAUFMANN (S&D, DE)

Debate (17.00 – 18.30)

·       Exchange of views with Věra JOUROVÁ, Commissioner for Justice, Consumers and Gender Equality

Committee on Constitutional Affairs

09:00 – 12:30
Debate (09.15 – 10.15)

·       Priorities of the Romanian Presidency of the Council of the EU – presentation of the programme by George CIAMBA, Minister-delegate for European Affairs

Votes (11.00)

·       Protection of personal data in the context of elections to the European Parliament (COD) – vote on the provisional agreement resulting from interinstitutional negotiations (Rule 69f(4)) (single vote by a majority of the votes cast)

o   Co-rapporteurs: Mercedes BRESSO (S&D, IT) and Rainer WIELAND (EPP, DE)

·       Implementation of the legal provisions and the Joint Statement ensuring parliamentary scrutiny over decentralised agencies (INI) – adoption of draft report

o   Rapporteur: György SCHÖPFLIN (EPP, HU)

·       Right of inquiry – proposal for a Regulation of the European Parliament (EP) on the detailed provisions governing the exercise of the EP’s right of inquiry replacing the Decision of the EP, the Council and the Commission of 19 April 1995 (95/167/EC, Euratom,ECSC) – consideration and adoption of motion for a resolution

o   Rapporteur Ramón Jáuregui ATONDO (S&D, ES)

 

Wednesday, January 30, 2018

Plenary session

15:00 – 15:30

Formal sitting

·       International Holocaust Remembrance Day

15:30 – 00:00

·       Resumption of session and order of business

·       Combatting the climate of hatred and physical violence against democratically elected mandate holders

·       The rule of law and fundamental rights in Hungary, developments since September 2018

·       Latest developments in the cross-strait relations between China and Taiwan

·       Implementation and functioning of the .eu top level domain name

o   Rapporteur: Fredrick FEDERLEY (ALDE, SE)

·       Annual report on competition policy

o   Rapporteur: Michel REIMON (Greens/EFA, AT)

·       Annual report 2017 on the protection of the European Union’s financial interests- fight against fraud

o   Rapporteur: Marian-Jean MARINESCU (EPP, RO)

·       Roma integration strategies

·       Women on boards

·       Gender balance among non-executive directors of companies

·       NAIADES II – An action programme to support inland waterway transport

·       State of the US-EU trade negotiations

 

Thursday, January 31, 2018

Plenary session

09:00 – 11:20

Debates

·       Debate with the Prime Minister of Finland, Mr Juha Sipilä, on the Future of Europe

11:30 – 13:30

Votes and explanation of votes

·       Motions for resolutions concerning debates on cases of breaches of human rights, democracy and the rule of law (Rule 135)

·       Texts on which debate is closed

15:00 – 16:00

Debates

·       Amendments to Parliament’s Rules of Procedure

o   Rapporteur: Richard CORBETT (ALDE, UK)

·       Union Customs Code: inclusion of the municipality of Campione d’Italia and the Italian waters of Lake Lugano in the customs territory of the Union

o   Rapporteur: Jasenko SELIMOVIC (ALDE, SE)

·       Accession of the Dominican Republic to the 1980 Hague Convention on the Civil Aspects of International Child Abduction

o   Rapporteur: Mary HONEYBALL (S&D, UK)

·       Accession of Ecuador and Ukraine to the 1980 Hague Convention on the Civil Aspects of International Child Abduction

o   Rapporteur: Mary HONEYBALL (S&D, UK)

·       Accession of Honduras to the 1980 Hague Convention on the Civil Aspects of International Child Abduction

o   Rapporteur: Mary HONEYBALL (S&D, UK)

·       Accession of Belarus and Uzbekistan to the 1980 Hague Convention on the Civil Aspects of International Child Abduction

o   Rapporteur: Mary HONEYBALL (S&D, UK)

·       Association of the Overseas Countries and Territories with the European Union including relations between the EU, Greenland and Denmark

o   Rapporteur: Maurice PONGA (EPP, FR)

·       Annual report 2017 on the protection of the European Union’s financial interests- fight against fraud

o   Rapporteur: Marian-Jean MARINESCU (EPP, RO)

·       Implementation and functioning of the .eu top level domain name

o   Rapporteur: Fredrick FEDERLEY (ALDE, SE)

·       Harmonisation of gross national income at market prices (GNI Regulation)

o   Rapporteur: Roberto GUALTIERI (S&D, IT)

·       Annual report on competition policy

o   Rapporteur: Michel REIMON (Greens/EFA, AT)

·       NAIADES II – An action programme to support inland waterway transport

 

Committee on Legal Affairs

Time to be confirmed

Joint meeting with BUDG committee

·       Use of digital tools and processes in company law (COD) – trialogue/conciliation

Rapporteur: Tadeusz ZWIEFKA (EPP, PL)

 

 

Vive le Prezida! Madagascar Presidential Elections of 2018

In November and December 2018, Madagascar went through two rounds of presidential elections. These were supposed to pull the country out of its marasmus of irregularly changing leaders that bedeviled its entire 20th century history.

In 2001, election results were disputed: victory was claimed both by Didier Ratsiraka, the on-and-off President for the previous quarter century, and by Marc Ravalomanana (Marc), the mayor of Antananarive (Tana), the country’s capital. The world looked on at the bizarre picture of a country with two presidents (and two capital cities, for a period of time). Marc eventually prevailed, with the support of the international community, and embarked on an ambitious development program.

In 2009, something of a repeat followed: during Marc’s second term in office, he was challenged by another mayor of Tana, Andry Rajoelina (Andry) who with military support staged a coup d’état. Andry’s rule, however, was not recognized internationally. The economy stagnated.

Elections were finally held in 2013, with proxies of the two antagonists running against each other. Andry’s man, Hery Rajaonarimampianina (Hery), won narrowly.

The 2018 elections featured all four of the above mentioned former presidents among the 36 total candidates, on what ended up being a rather complicated ballot, particularly considering that one third of the population is illiterate. There were a considerable number of alleged spoiled ballots based on incorrect markings denoting the voter’s preference, for example, by markings like “+” rather than the required “x.” These errors were so significant in some jurisdictions that the central authorities had to eventually review and correct some local results.

The first round of elections was marred by a variety of other problems as well. A group of 25 long-shot candidates formed “the Coalition,” joining together to protest against various aspects of the election, including the incomplete and/or obsolete election rosters, as well as the non-transparent sources and uses of campaign financing. Many of these complaints were shared by international observers. Ballot counting was undercut by poorly trained election workers and remarkably complicated post-election procedures. It did not help that the Central Election Commission (CENI) took a long time to collate the votes. The High Constitutional Court (HCC)—using different software than CENI—eventually verified the results.

Only two candidates realized support in the double digits and progressed to the second round: none other than the old adversaries Andry Rajoelina (39.23 percent) and Marc Ravalomanana (35.35 percent). In a traditional division of the country (the Madagascar Darby, as it has been called), Andry’s support proved to be strongest in the agricultural lowlands in the North, the Eastern seaboard and South, whereas Marc polled best in the more industrial Central Highlands, including the capital Tana. Hery, the outgoing president, trailed badly, with 8.82 percent of the vote, but still won outright in the Sava region in the North-East and made a strong showing in the extreme South of the country. Of all the other candidates, which included five women and the 84-year old veteran Didier Ratsiraka, only three topped 1 percent of the vote.

In the run-up to the second round of voting, CENI made important efforts to improve the voting logistics, particularly in training election personnel. Of course, having two candidates instead of 36 in and of itself simplified the voting dramatically. The question was, would Andry manage to protect the relatively slim lead that he held over Marc in the first round? Up to a point, this depended on which way the defeated candidates would throw their support. In effect, they split three ways—between the two leaders, and non-committed. Hery, the only third candidate with any serious backing, stayed non-committed (“ni-ni”). One might imagine, however, where his true inclinations lie, having acted as Andry’s erstwhile finance minister, and his proxy in the 2013 elections.

In the second round, Andry defeated Marc fairly persuasively, roughly 55 percent to 45 percent. The provisional results, published on December 27, were consistent with the final results published on January 8, 2019: 55.66 percent for Andry, 44.34 percent for Marc. Another noteworthy statistic was the participation level which was even lower than in the previous elections: in the second round, it dropped from over 54 percent to just under 48 percent—recapitulating the pattern of 2013, when the first round saw over 60 percent participation, dropping to under 51 percent in the second round.

Not surprisingly, the results were challenged by Marc, the loser, but have been upheld by CENI and the HCC, as well as the significant international observer community. On January 8, 2019, the high constitutional court confirmed the election results and Marc reportedly shook Andry’s hand in court. Andry later told supporters that Marc congratulated him, easing fears of significant post-election unrest. With more than two-thirds of the island’s 25 million people living in extreme poverty, the people of Madagascar and the international community can now focus on whether Andry Rajoelina, the new “Prezida,” succeeds in kick-starting the economic motor of the country.

 

Karel Kovanda, a Covington Senior Advisor, was part of the 2018 European Union’s Election Observation Mission in Madagascar.

This post can also be found on CovAfrica, the firm’s blog on legal, regulatory, political and economic developments in Africa.

The Week Ahead in the European Parliament – January 18, 2019

Summary

Next week will be a committee week in the European Parliament.

Interesting votes are expected to take place.

On Tuesday, the Committee on Environment, Public Health and Food Safety (“ENVI”) is expected (subject to confirmation) to vote on the compromise agreement reached between the Parliament and the Council of the EU on December 19, 2018, on the proposal for a Single-Use Plastics Directive.  The compromise agreement was adopted officially by the Council of the EU today, January 18.  The purpose of the proposal is to prevent and reduce the impact of certain plastic products on the environment.  More specifically, the new rules target the ten single-use plastic products most often found on Europe’s beaches and seas.  Also, the new rules include obligations for producers to help cover the costs of waste management, collection targets and short timeline for achieving reductions in the consumption of some single-use plastic products, including plastic tobacco filter.  See the draft compromise text here.

On the same day, ENVI will also vote on its non-legally binding own-initiative report on the Implementation of the Cross-Border Healthcare Directive.  The report seeks to analyze possible shortcomings in the implementation of the Cross-Border Healthcare Directive (Directive 2011/24) and make recommendations to improve the Directive.  The draft report assesses various aspects of cross-border healthcare, including funding for cross-border healthcare, patient mobility, patient information and access to cross-border healthcare, e-Health and interoperable healthcare applications.  See the draft report here, and the amendments tabled to the draft report here.

Also on Tuesday, ENVI is expected to vote on the compromise agreement reached between the Parliament and the Council of the EU on November 27, 2018, on the proposal for a Regulation on the Definition, Presentation and Labelling of Spirit Drinks.  The proposal intends to replace current Regulation 110/2008. Among other things, it replaces the existing procedures for the protection of geographical indications (“GIs”) that apply to spirit drinks with new ones based on updated procedures for quality schemes applied to agricultural products.  In addition, the Commission would adopt a “publicly accessible updated electronic register” of recognised GIs for spirit drinks.  The proposal also includes provisions regarding joint applications and oppositions.  See the draft comprise agreement reached on the proposal here. Continue Reading

Domestic Sourcing Requirement Doesn’t Fit DOD’s Gloves

This article was originally published in Law360 and has been modified for this blog.

The Government Accountability Office (GAO) recently issued a bid protest decision regarding the application of the Berry Amendment’s domestic sourcing requirement to a U.S. Department of Defense (DOD) solicitation for leather combat gloves with touchscreen capability.  In that decision, the GAO found that the nonavailability exception to the Berry Amendment applied to the glove’s kidskin leather even though the agency determined, through market research, that this type of leather was available domestically.  Importantly, this decision provides an opportunity for stakeholders to consider the nuances associated with the Berry Amendment’s nonavailability exception and to reflect upon the complex regulatory landscape of domestic sourcing requirements.

Federal Government Domestic Sourcing Regimes and the Nonavailability Exception

Over the last 100 years, the U.S. government has enacted myriad domestic sourcing laws.  For example, during the Great Depression, Congress enacted the Buy American Act (BAA) to “create jobs for American workers and protect American industry”[1] by requiring the U.S. government, under certain circumstances, to procure items that have been mined, produced or manufactured in the United States.[2]  As implemented through the Federal Acquisition Regulation (FAR) and agency supplemental regulations, like the Defense Federal Acquisition Regulation Supplement (DFARS), the BAA generally requires executive agencies to purchase “domestic end products” unless an exception or waiver applies.[3]

One common exception to the BAA is known as the nonavailability exception.[4]  This exception applies when an end product is “not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality.”[5]  In addition to individual determinations of nonavailability made by a contracting officer, FAR 25.104 identifies certain items — like bananas, lavender oil, chromite, swords, and goat and kidskins — that are subject to a nonavailability class determination because “domestic sources can only meet 50 percent or less of total U.S. government and nongovernment demand” for those items.  However, before a procuring agency can rely on the nonavailability class determination exception to the BAA, it must conduct market research to confirm that the item is, in fact, not available domestically in sufficient quantities to meet the requirements of the procurement at issue.[6]

Another example of a domestic sourcing law is the Berry Amendment, which applies just to DOD procurements.  The Berry Amendment originates from legislation enacted in 1941 on the eve of World War II to ensure that U.S. troops would be supplied with food and uniforms produced in the United States.[7]  The 1941 legislation was fueled by concerns that, despite the existence of the BAA, federal agencies had reportedly purchased large quantities of wool and food from foreign sources.[8]  Congress modified the DOD domestic sourcing restrictions — in what generally became known as the Berry Amendment — over the next several decades through annual appropriations legislation.  And the Berry Amendment was permanently codified with the passage of the FY 2002 National Defense Authorization Act (NDAA).[9]

Today, the Berry Amendment mandates that “funds appropriated or otherwise available to” the DOD cannot be used to procure certain items — like food, clothing, tents, textiles, and hand tools — as either end products or components unless those items are “grown, reprocessed, reused, or produced in the United States.”[10]

Like the BAA, there are several exceptions to the Berry Amendment.  Pertinently, the Berry Amendment does not apply when the head of a military department determines than a domestic item “cannot be acquired as and when needed in a satisfactory quality and sufficient quantity at U.S. market prices,” or when an item is subject to a nonavailablity class determination under FAR 25.104.[11]  Accordingly, a determination of what items are, and are not, available plays a significant role in applying domestic sourcing regimes like the BAA and the Berry Amendment.

The GAO’s Mechanix Wear Decision

In Mechanix Wear,[12] the Defense Logistics Agency (DLA) issued a solicitation to procure over one million pairs of combat gloves and required that “goat/kidskin” leather be used.  The solicitation included DFARS clause 252.225-7012, which implements the Berry Amendment’s domestic sourcing requirements and provides for an exception for items subject to the FAR 25.104 nonavailability class determination.  Although DLA initially permitted offerers to use foreign goat/kidskin leather, after conducting additional market research and determining that domestically produced goat/kidskin was available, DLA amended the solicitation to require that all goat/kidskin leather be 100% domestic.

Soon after the amended solicitation was issued, Mechanix Wear filed a pre-award protest, arguing that DLA’s decision to prohibit the use of foreign goat/kidskin was unduly restrictive and contrary to the Berry Amendment’s nonavailability exception.  Mechanix Wear maintained that the Berry Amendment’s domestic sourcing restriction, as implemented at DFARS 225.7002-2(c) and 252.225-7012(c)(1), did not apply to goat/kidskins because that item was subject to the FAR 25.104 nonavailability class determination.  Accordingly, Mechanix Wear contended DLA’s decision to add a restriction for domestic goat/kidskin simply was unreasonable and contrary to the applicable DFARS provisions.

In response, DLA argued, in part, that it needed to conduct market research to determine whether the goat/kidskin was, in fact, not available domestically.  DLA pointed-out that the Berry Amendment’s nonavailability exception was intertwined with the FAR 25.104 nonavailability class determination, which requires a contracting officer to perform market research before relying on the class determination.  DLA also asserted that the Berry Amendment’s objective of protecting domestic sources of supply and agency policy demand the need to conduct market research.  Thus, after determining that sufficient goat/kidskin was available domestically, DLA believed that it was permitted to amend the solicitation to require that all goat/kidskin be 100% domestic.

The GAO disagreed, finding that the requirement for market research applied only to BAA restrictions and not to Berry Amendment restrictions.  Because the agency lacked authority when it relied on market research to support its domestic sourcing restriction, the GAO recommended that the agency either provide further reasonable support for its requirement that all goat/kidskin be 100 percent domestic or amend the solicitation to remove the domestic sourcing restriction.

The Big Picture

On the one hand, the holding in Mechanix Wear simply is an exercise in regulatory interpretation.  Based on a plain meaning analysis of the DFARS and FAR, GAO determined that the Berry Amendment does not apply to those items specifically identified in the nonavailability class determination at FAR 25.104.

On the other hand, Mechanix Wear provides an opportunity to consider the nuances related to the Berry Amendment’s nonavailability exception, and to observe the complex regulatory landscape of domestic sourcing requirements applicable to federal government procurements.

At its core, the Berry Amendment created a framework that restricts the DOD from acquiring certain items unless they are grown or produced domestically.  As discussed above, the Berry Amendment’s nonavailability exception applies to any item listed in the nonavailability class determination at FAR 25.104.  Although this particular exception is rather unavoidable — i.e., how can a domestic item be procured or used if it is not available domestically — query whether its implementation may be too rigid.

As reflected in Mechanix Wear, the nonavailability exception to the Berry Amendment applies to any item listed at FAR 25.104, even if a DOD agency performs market research and finds that a listed item is produced domestically in sufficient quantities.  This sets up a rather inflexible framework that seems at odds with the underlying purpose of the Berry Amendment — especially when compared to nonavailability class determination assessments under the BAA.[13]  At the same time, this framework should result in more efficient and predictable DOD procurements, which would appear to be in sync with the directive of the Section 809 Panel — a Congressionally-directed independent advisory panel focused on streamlining DOD acquisition regulations.

Regardless of one’s view, it will be interesting to see whether the nonavailability class determination for goat/kidskin may be changed as a result of DLA’s market research as described in Mechanix Wear.  At the very least, FAR 25.104 requires that the list of nonavailable articles be reviewed at least every five years to determine whether items should be removed based on domestic availability.[14]

It also would not be surprising if the Mechanix Wear decision grabs the attention of those in Congress interested in strengthening domestic sourcing restrictions.  For example, the FY 2017 NDAA extended the Berry Amendment’s domestic sourcing restrictions to the acquisition of certain athletic footwear for members of the Armed Forces[15] because of a bipartisan effort led by Sen. Angus King (I-ME), Sen. Susan Collins (R-ME), Rep. Bruce Poliquin (R-ME-02), and Rep. Niki Tsongas (D-MA-03) to protect American jobs and manufacturers located in Maine and Massachusetts.  It is possible that the facts in Mechanix Wear may spur additional bipartisan action to protect American industry.

Finally, the Mechanix Wear decision presents another example of how various domestic sourcing rules often intersect, and demonstrates why contractors need to closely consider whether any waivers or exceptions apply to such rules.  Understanding this complex web of rules allows government contractors to create business development strategies, identify appropriate suppliers and, if necessary, make a compelling argument for why a solicitation should — or should not — include a domestic sourcing requirement.

 

* * *

[1] United States v. Rule Industries, Inc., 878 F.2d 535, 538 (1st Cir. 1989) (citation omitted).

[2] See 41 U.S.C. § 8302(a).  The BAA also requires contractors to incorporate materials that have been manufactured in the United States into certain construction projects.  See id. § 8303(a).

[3] See FAR Subpart 25.1; DFARS Subpart 225.1.  With regard to end products, the BAA is implemented through an evaluation preference based on the unreasonable cost exception.  See FAR 25.101(c), 25.105.

[4] See FAR 25.103(b).  Other BAA exceptions apply when a domestic preference would be inconsistent with the public interest, when the cost of a domestic end product would be unreasonable, for commissary resales, and for information technology that is a commercial item.  See FAR 25.103(a), (c)–(e).  Additionally, the Trade Agreements Act waives the BAA restrictions for certain procurements that meet specified dollar thresholds.  See 19 U.S.C. §§ 2501–2581; FAR 25.402.

[5] FAR 25.103(b).

[6] FAR 25.103(b)(1) (specifying that a class determination “does not apply if the contracting officer learns . . . that an article on the list is available domestically in sufficient and reasonably available commercial quantities of a satisfactory quality to meet the requirements of the solicitation”).

[7] FY 1941 Fifth Supplemental National Defense Appropriations Act, Pub. L. No. 77-29 (now codified at 10 U.S.C. § 2533a).

[8] See Valerie Grasso, Cong. Research Serv., RL31236, The Berry Amendment: Requiring Defense Procurement to Come from Domestic Sources 11–15 (2014).

[9] See FY 2002 NDAA, Pub. L. No. 107-107.

[10] See 10 U.S.C. § 2533a(a).  See also DFARS 225.7002 (implementing the Berry Amendment).

[11] DFARS 225.7002-1 & -2; see also DFARS 252.225-7012(c)(1).

[12] B-416704.2, Nov. 19, 2018, 2018 CPD ¶ 395.

[13] The oddity is further compounded by the acknowledgement in FAR 25.103(b)(1)(i) that the determination that an item should be listed at FAR 25.104 “does not necessarily mean that there is no domestic source for the listed items, but that domestic sources can only meet 50 percent or less of total U.S. government and nongovernment demand.”

[14] Although the civilian and defense acquisition councils issue a notice every five years seeking input on whether the nonavailability list should be revised, the FAR 25.104 list was last amended in 2010 and has barely changed since the FAR Part 25 rewrite in 1999.  See 64 Fed. Reg. 72,416 (Dec. 27, 1999); 69 Fed. Reg. 34,241 (June 18, 2004) (adding five items to the list); 75 Fed. Reg. 34,283 (June 16, 2010) (modifying one item and adding two items).

[15] See Section 817 of the FY 2017 NDAA, Pub. L. No. 114-328.

 

 

The Week Ahead in the European Parliament – January 11, 2019

Summary

Next week, Members of the European Parliament (“MEPs”) will gather in Strasbourg for the plenary session.

Interesting votes, debates and committee debates will take place.

On Monday, January 14, MEPs will debate the non-legally binding Report on the Union’s authorization procedure for pesticides prepared by the Special Committee on the Union’s authorization procedure for pesticides (“PEST”).  This report seeks to address perceived shortcomings in the authorization system for pesticides.  The co-rapporteurs stress the importance of a science-based system and call for greater transparency.  See the draft parliamentary report here.

On Tuesday, January 15, MEPs will discuss several important Council-related developments.  Firstly, the Austrian Chancellor Sebastian Kurz will present the achieved objectives of the Austrian Council presidency over the second half of 2018 to the MEPs.  The MEPs will also debate the presentation of the program of activities and the priorities of the Romanian Council presidency which started on January 1, 2019.  MEPs share expectations that the presidency will have the difficult tasks to manage Brexit and the negotiations on the EU’s long term budget for 2021-2027 which will both shape the future of the EU.  See the priorities of the Romanian Council presidency here. Continue Reading

Investment Adviser Hit With $100K SEC Fine, a Reminder that Public Universities are Covered by Pay-to-Play Rule

In December, the Securities and Exchange Commission (“SEC”) fined an investment adviser $100,000 for violating the SEC’s pay-to-play rule.  The SEC’s rule effectively prohibits investment adviser executives and other “covered associates” of an investment adviser from making political contributions in excess of de minimis amounts ($350 per election if the contributor is eligible to vote for the candidate; $150 if not) to officials of a government entity with which the investment adviser does or may seek to do business.  In this case, two of an investment adviser’s covered associates made political contributions to Ohio gubernatorial candidates and a candidate for Ohio Treasurer well in excess of the SEC rule’s de minimis thresholds: $46,908 in total, spread between several candidates and across several years.

This is not the first big fine the SEC has issued for a pay-to-play rule.  Indeed, the SEC’s enforcement of the SEC rule has increased significantly since the first case in 2014.  Nor does this case involve the largest fine; last summer, for example, a different firm was fined $500,000.

The lesson here for investment advisers relates to the nature of the governmental entities involved.  One was a state pension fund, which most investment advisers will recognize is likely to be covered by the SEC’s pay-to-play rule.

But the other was a public university.  Many forget that public universities, though academic in nature and often largely independent from other government agencies, may invest public assets.  And governing officials at the university may be subject to appointment by an elected official; in this recent case, the Governor of Ohio appoints the members of the university’s board of trustees.  This fine serves as a reminder that it is important for investment advisers to carefully evaluate all potential investors for government entity status, and not only investors of public pension fund assets.

“Four-to-three” mergers no longer taboo? The Commission unconditionally approves the acquisition of Tele2 NL by T-Mobile NL

In November 2018, following an in-depth Phase 2 investigation, the European Commission (“Commission”) unconditionally approved the acquisition of Tele2 NL by T-Mobile NL, respectively the fourth and third largest players in the Dutch retail mobile telecoms market. The merged entity remains the third largest player in this market after KPN and VodafoneZiggo. This transaction is the first “four-to-three” telecom merger approved without remedies under Commissioner Vestager’s term, following earlier Commission decisions on four-to-three mergers in (i) H3G/Wind, where approval of a joint venture was conditional on the divestment of sufficient assets to allow a new MNO to enter the market; and (ii) Three/O2, an acquisition that was blocked by the Commission. It shows that there is no “magic number” for players in the telecoms market and that much will depend on the specifics of the merger.

Background

T-Mobile NL and Tele2 NL are both mobile network operators (“MNOs”) active in the Netherlands. T-Mobile owns a mobile network with nationwide coverage over which it provides 2G, 3G, 4G and NarrowBand-Internet of Things mobile communication services. It also provides fixed broadband, TV and telephony services based on wholesale access to other operators’ fixed network. Tele2 NL has operated a 4G-only mobile network since 2015, and also offers fixed broadband services. In December 2017, the parties announced that T-Mobile would acquire 75% of Tele2’s shares for EUR 190 million.

In June 2018 the Commission launched an in-depth investigation “to ensure that the proposed transaction between T-Mobile NL and Tele2 NL will not lead to higher prices or less choice in mobile services for Dutch consumers“. The Commission outlined the following preliminary concerns:

  1. The reduction in the number of MNOs and the limited incentives of the merged entity to compete with KPN and VodafoneZiggo, could lead to higher prices and less investment in mobile telecommunications networks.
  2. The lessening of competitive pressure in the Dutch retail mobile market, could increase the potential for the coordination of competitive behaviour between the three remaining MNOs.
  3. Prospective and existing mobile virtual network operators (“MVNOs”), who rely on wholesale access to MNOs’ networks to offer their retail mobile services, could potentially face greater difficulties in obtaining favourable wholesale access terms from MNOs.

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Signs of Progress with the Limitations on Subcontracting, but Outstanding Questions Remain

A recently proposed rule would update the Federal Acquisition Regulation (“FAR”) to incorporate statutory changes to limitations on subcontracting that have been in effect since 2013. The U.S. Small Business Administration (“SBA”) has long since revised its own regulations to implement these changes, but some contracting officers have been reluctant to follow these changes in the SBA regulations because the FAR contains contradictory provisions.

The proposed rule is a sign of progress. In particular, it should add significant clarity to the current disconnect between the FAR and SBA regulations. However, the proposed rule is not perfect, and a number of recent developments highlight that outstanding questions remain.

FAR Changes to Limitations on Subcontracting

For the majority of contractors, the proposed rule is most relevant for its change to the way that limitations on subcontracting are calculated.

Specifically, the proposed rule would amend the FAR to recognize a simplified regime for contractor compliance and to expressly permit set aside recipients to subcontract any amount of performance to one or more “similarly situated” small businesses. These changes would significantly benefit small businesses that engage in teaming with other small businesses. In addition, these changes are important for contractors that do not qualify as small businesses—such as large businesses, nonprofit organizations, and certain non-U.S. entities—in that more subcontract spending under set asides can be made available to these types of entities when subcontracts to similarly situated small businesses do not count against limitations on subcontracting.

The FAR currently contains an outdated limitations on subcontracting framework, under which a small business that received a set aside was expected to track performance costs for either personnel or manufacturing, depending on whether a set aside was for services or supplies. A recipient was required to ensure that it performed work amounting to at least 50 percent of such costs, with an exclusion for materials under set asides for supplies. Similar frameworks with different percentages also applied to construction contracts.

Now, under the updated framework that has been in effect by statute since 2013 (and in SBA regulations since 2016), a small business that receives a set aside is only expected to ensure that no more than 50 percent of the amount paid under its prime award is paid to subcontractors that are not similarly situated. Corresponding updates have been made for construction contracts, and material costs continue to be excluded from limitations on subcontracting under set asides for supplies.

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The Week Ahead in the European Parliament – December 14, 2018

Summary

This week, the last plenary session of the year took place before the European Parliament’s Christmas break.

The next Week Ahead in the European Parliament will therefore be sent to you on January 7, 2019.

On Wednesday, December 12, the European Parliament approved the EU’s budget for 2019 by 451 votes to 142, with 78 abstentions.  The budget will provide additional funds to, among others, research, climate protection, and the fight against youth unemployment.  The adopted text can be found here.

On the same day, Members of the European Parliament (“MEPs”) approved the final report, entitled “Findings and recommendations” of the Special Committee on Terrorism (“TERR”), detailing how best to combat terror in the EU.  The report calls for increased cooperation and information-sharing between Member States when the terrorist threat level rises.  The adopted text can be found here.

Also on Wednesday, MEPs agreed the European Parliament’s position at first reading on the proposal for a Regulation complementing EU type-approval legislation with regard to the withdrawal of the United Kingdom from the Union (Brexit preparedness).  The Regulation calls for business continuity and compliance with EU type-approval legislation for manufacturers of vehicles and of non-road mobile machinery.  The adopted text can be found here and the proposal for a Regulation here.

Meetings and Agenda

  • No meetings of note in the European Parliament before January 7, 2019.

 

The Week Ahead in the European Parliament – December 7, 2018

Summary

Next week, there will be a plenary sitting of the European Parliament in Strasbourg, France. This will be the final plenary session of the year. Several significant debates, votes and committee meetings will take place.

On Tuesday, MEPs will debate the Future of Europe together with Cyprus’ President, Nicos Anastasiades, and European Commission President Jean-Claude Juncker.  This is the fourteenth discussion in a series between MEPs and EU leaders on the future of the EU.

On the same day, MEPs will discuss their priorities ahead of the European Council, scheduled for December 13-14, 2018. Their discussions will include the EU’s single market, migration, the Eurogroup, and the EU’s long-term budget.

On Wednesday, the plenary session of the European Parliament is expected to vote in favor of the EU’s budget for 2019, which will provide additional funds to, among others, research, the protection of the climate, or fighting youth unemployment.

On the same day, one day after the expected vote on the Brexit agreement in the UK House of Commons, MEPs will meet with Michel Barnier to discuss the result of the vote and its consequences.

Also on Wednesday, the plenary session of the European Parliament will vote on the final report, entitled “Findings and recommendations” of the Special Committee on Terrorism (“TERR”), detailing how best to combat terror in the EU. The report calls for increased cooperation andinformation-sharing between Member States when the terrorist threat level rises. Read the report here. Continue Reading

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