Buying rules are not foreign policy tools

Robert J. Sherry

The joke about Cambridge, Mass., used to be that it's the only city in America with a foreign policy.

But using your procurement policy as foreign policy is no joke.

In June, the Supreme Court struck down as unconstitutional a Massachusetts law that tried to use buying to punish a foreign country. The court closed the door on the ability of state and local governments to enforce such statutes and ordinances.

In June 1996, Massachusetts had enacted a law limiting state agencies from buying goods or services from companies doing business in Myanmar, unless the business involved news reporting, telecommunications or medical supplies.

The state created a list of the restricted companies. Two exceptions were permitted. One was if the procurement was a sole source or if competition would be limited as a result of excluding a restricted company. The other was if a company on the restricted list submitted a bid that was 10 percent lower than that of the next lowest bidder.

Several months later, Congress enacted a law imposing direct sanctions on Myanmar that included a ban on most aid to the country.

Some time later, a trade association that included companies on the Massachusetts restricted list filed suit to overturn the law. A federal trial court concluded that the law was unconstitutional because it violated the federal government's exclusive authority to regulate foreign affairs.

The court of appeals agreed, and added that the law was unconstitutional for other reasons: It conflicted with the foreign commerce clause of the Constitution, and it was preempted by the federal legislation.

The Supreme Court agreed that the Massachusetts law should be struck down but rested its reasoning solely on pre-emption grounds. It reasoned that Congress clearly intended that the president alone be empowered to decide what sanctions should be levied against Myanmar.

The court's decision is consistent with a great deal of federal pre-emption law. It is inconsistent with the history of state and local selective purchasing laws that involved South Africa in the 1980s, when federal anti-apartheid legislation also flourished.

What local officials can take home from the court's opinion is that selective purchasing laws such as Massachusetts' will receive much more critical scrutiny when federal legislation is passed imposing sanctions on target countries.

States, counties and cities that implement such provisions do so at the risk of having them declared unconstitutional if Congress gets similar ideas.

Robert J. Sherry is a partner in the law firm of McKenna & Cuneo LLP. He heads the government contracts practice in the firm's San Francisco office.


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