Chapter Five - Government Procurement - Canadian Free Trade Agreement

Article 500: Purpose

The purpose of this Chapter is to establish a transparent and efficient framework to ensure fair and open access to government procurement opportunities for all Canadian suppliers.

Article 501: Application of General Rules

Notwithstanding Article 200.2 (Application), Article 202 (Legitimate Objectives) applies to measures regarding covered procurement.

Article 502: General Principles

Each Party shall provide open, transparent, and non-discriminatory access to covered procurement by its procuring entities.
With respect to any measure regarding covered procurement, each Party shall accord to:
1. the goods and services of any other Party, including those goods and services included in construction contracts, treatment no less favourable than the best treatment the Party accords to its own such goods and services; and
2. the suppliers of goods and services of any other Party, including those goods and services included in construction contracts, treatment no less favourable than the best treatment the Party accords to its own suppliers of such goods and services.
With respect to the Government of Canada, paragraph 2 means that it shall not discriminate:
1. between the goods or services of a particular Province or region, including those goods and services included in construction contracts, and those of any other Province or region; or
2. between the suppliers of such goods or services of a particular Province or region and those of any other Province or region.

Article 503: General Procurement Rules

A procuring entity shall not prepare, design, or otherwise structure a procurement, select a valuation method, or divide procurement requirements in order to avoid the obligations of this Agreement. This includes actions such as dividing required quantities of the goods or services to be procured, or diverting funds to entities not covered by this Chapter or to buying groups in a manner designed to avoid the obligations of this Chapter.
A procuring entity shall not use options, cancel a procurement, or modify an awarded contract in a manner that circumvents the obligations of this Chapter.
A procuring entity shall not impose or consider, in the evaluation of tenders or the award of contracts, local content or other economic benefits criteria that are designed to favour:
1. the goods or services of a particular Province or region, including those goods and services included in construction contracts; or
2. the suppliers of a particular Province or region of such goods or services.
Except as otherwise required to comply with international obligations, and provided that its purpose is not to avoid competition or to discriminate against any other Party’s goods, services, or suppliers, nothing in this Chapter shall prevent a procuring entity from:
1. according a preference for Canadian value-added; or
2. limiting its tendering to Canadian goods, services, or suppliers.
Except as otherwise provided in this Chapter, including Article 513, the following is an illustrative list of practices that are considered to be inconsistent with Articles 502.1, 502.2, or 502.3:
1. according a preference for local goods, services, or suppliers;
2. scheduling events in the tendering process in order to prevent suppliers from submitting tenders;
3. specifying quantities of, or delivery schedules for, the goods or services to be supplied in order to prevent suppliers from meeting the requirements of the procurement;
4. using price discounts or preferential margins in order to favour particular suppliers;
5. limiting participation in a procurement only to suppliers that have previously been awarded one or more contracts by a procuring entity;
6. requiring prior experience if not essential to meet the requirements of the procurement;
7. providing information to one supplier in order to give that supplier an advantage over other suppliers; and
8. adopting or applying any registration system or qualification procedure with the purpose or the effect of creating unnecessary obstacles to the participation of suppliers of any other Party in its procurement.

Article 504: Scope and Coverage

Application

This Chapter applies to any measure regarding covered procurement within Canada.
For the purposes of this Chapter, covered procurement means procurement for governmental purposes:
1. by a procuring entity;
2. of a good, a service, or any combination thereof, not procured with a view to commercial sale or resale, or for use in the production or supply of a good or service for commercial sale or resale;
3. by any contractual means, including purchase, lease, and rental, with or without an option to buy;
4. for which the value, as estimated in accordance with Article 505, equals or exceeds the relevant threshold set out in paragraph 3 of this Article, at the time of publication of a tender notice in accordance with Article 506; and
5. that is not otherwise excluded from coverage under paragraph 11 or in a Party’s Schedule to Annex 519.1 .

Thresholds

1. The thresholds for covered procurement are:
  1. for departments, ministries, agencies, boards, councils, committees, commissions, and similar agencies of a Party:
    1. $25,000 or greater for goods, if the largest portion of the procurement is for goods;
    2. $100,000 or greater for services, excluding construction, if the largest portion of the procurement is for services; or
    3. $100,000 or greater for construction;
  2. for regional, local, district, and other forms of municipal government, municipal organizations, school boards, and publicly-funded academic, health, and social service entities as well as any corporation or entity owned or controlled by one or more of the preceding entities:
    1. $100,000 or greater for goods or services, excluding construction; or
    2. $250,000 or greater for construction;
  3. for Crown corporations, government enterprises, and other entities that are owned or controlled by a Party through ownership interests:
    1. $500,000 or greater for goods or services, excluding construction; or
    2. $5,000,000 or greater for construction.
2. These thresholds will be adjusted for inflation in accordance with Annex 504.4.

Buying Groups

A procuring entity shall ensure that any procurement conducted through a buying group is carried out in a manner consistent with this Chapter.
A buying group shall publish a notice for each procurement. The notice must list the participating procuring entities and must outline the potential for other procuring entities to participate in the procurement after the procurement instrument has been put in place.
A procuring entity shall publish a notice of its participation with the buying group at least annually on one of the tendering websites or systems designated by its Party. That notice shall direct potential suppliers to the buying group tender notices website if it is different from its Party’s tendering websites or systems.
Subject to Article 503.1, when a procuring entity procuring through a buying group has little or no control over the procurement process, it is not required to ensure that the procurement is consistent with this Chapter.
Paragraphs 5 through 8 do not apply to subcontracting under a covered procurement provided that the subcontracting does not include situations where the supplier is authorized as an agent of the procuring entity and is able to enter into contracts that bind, and are enforceable by, the procuring entity.

Public-Private Partnerships

Paragraphs 5 through 9, Article 506.6(g), Articles 508.2 through 508.4, Article 508.6, Article 514, and Articles 516.3 through 516.5 do not apply to a procuring entity if procuring under the terms of a public-private partnership.

Non-Application

This Chapter does not apply to:
1. public employment contracts;
2. non-legally binding agreements;
3. any form of assistance, such as grants, loans, equity infusions, guarantees, and fiscal incentives;
4. a contract awarded under a cooperation agreement between a Party and an international cooperation organization if the procurement is financed, in whole or in part, by the organization, only to the extent that the agreement includes rules for awarding contracts that differ from the obligations of this Chapter;
5. acquisition or rental of land, existing buildings, or other immovable property, or the rights thereon;
6. measures necessary to protect intellectual property, provided that the measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between Parties where the same conditions prevail or are a disguised restriction on trade;
7. procurement or acquisition of:
  1. fiscal agency or depository services;
  2. liquidation and management services for regulated financial institutions; or
  3. services related to the sale, redemption, and distribution of public debt, including loans and government bonds, notes, and other securities;
8. procurement of:
  1. financial services respecting the management of government financial assets and liabilities (i.e. treasury operations), including ancillary advisory and information services, whether or not delivered by a financial institution;
  2. health services or social services;
  3. services that may, under applicable law, only be provided by licensed lawyers or notaries; or
  4. services of expert witnesses or factual witnesses used in court or legal proceedings; or
9. procurement of goods or services:
  1. financed primarily from donations that require the procurement to be conducted in a manner inconsistent with this Chapter;
  2. by a procuring entity on behalf of an entity not covered by this Chapter;
  3. between enterprises that are controlled by or affiliated with the same enterprise, or between one government body or enterprise and another government body or enterprise;
  4. by non-governmental bodies that exercise governmental authority delegated to them;
  5. from philanthropic institutions, non-profit organizations, prison labour, or natural persons with disabilities;
  6. under a commercial agreement between a procuring entity which operates sporting or convention facilities and an entity not covered by this Chapter that contains provisions inconsistent with this Chapter;
  7. conducted for the specific purpose of providing international assistance, including development aid, provided that the procuring entity does not discriminate on the basis of origin or location within Canada of goods, services, or suppliers; or
  8. conducted:
    1. under the particular procedure or condition of an international agreement relating to the stationing of troops or relating to the joint implementation by the signatory countries of a project; or
    2. under the particular procedure or condition of an international organization, or funded by international grants, loans, or other assistance, if the procedure or condition would be inconsistent with this Chapter.
For greater certainty, if a contract awarded by an entity is not covered by this Chapter, this Chapter shall not be construed to cover any good or service component of that contract.

Set-asides

This Chapter does not apply to procurement that is part of a small business set-aside program provided that the program is fair, open, transparent, and does not discriminate on the basis of origin or location within Canada of goods, services, or suppliers.

Article 505: Valuation

In estimating the value of a procurement for the purpose of determining whether it is a covered procurement, a procuring entity shall:
1. estimate what the value would be as of the date the tender notice will be published; and
2. include the estimated maximum total value of the procurement over its entire duration, whether awarded to one or more suppliers, taking into account all forms of remuneration, including:
  1. premiums, fees, commissions, and interest; and
  2. the total value of options if the procurement provides for the possibility of options.
If the procurement is for construction, a procuring entity shall include in its valuation the value of all goods and services to be supplied by the supplier. The procurement of goods or services outside the scope of a construction contract is not a procurement for construction, and are subject to the thresholds applicable to goods or services.
If a procurement for goods will include the installation, operation, maintenance, or manufacture of such goods, a procuring entity shall include in its valuation those associated costs.

Article 506: Tender Notices

A procuring entity shall publish a tender notice for each covered procurement on one of the tendering websites or systems designated by its Party.
Each Party shall notify the Secretariat of those designated tendering websites or systems on the effective date. A Party shall notify the Secretariat of any amendment to its notification.
The Parties recognize that the Government of Canada will be developing an electronic Canada-wide single point of access (“SPA”) in accordance with international obligations.
Once developed, the Government of Canada shall consult with the other Parties in order to determine how to adapt the SPA for the purposes of this Agreement. Once all Parties agree that the SPA is suitable for the purposes of this Agreement, a procuring entity shall make its tender notices for each covered procurement directly accessible through the SPA.
All tender notices shall be available to suppliers free of charge.
Each tender notice shall include:
1. the name and address of the procuring entity and other information necessary to contact the procuring entity and obtain all relevant documents relating to the procurement, and their cost and terms of payment, if any;
2. a brief description of the procurement;
3. the nature and the quantity, or estimated quantity, of the goods or services to be procured unless those requirements are included in tender documentation;
4. the address and final date for the submission of tenders;
5. the date, time, and place for any public opening of tenders;
6. a list and brief description of any conditions for participation of suppliers, including any requirements for specific documents or certifications to be provided by suppliers, unless those requirements are included in tender documentation that is made available to all interested suppliers at the same time as the tender notice;
7. a statement that the procurement is subject to this Chapter;
8. the time-frame for delivery of goods or services, or the duration of the contract;
9. a description of any options, unless those requirements are included in tender documentation;
10. the procurement method that will be used, and whether it will involve negotiation or electronic auction;
11. if, pursuant to Article 508, a procuring entity intends to select a limited number of qualified suppliers to be invited to tender, the criteria that will be used to select them and, if applicable, any limitation on the number of suppliers that will be permitted to tender, unless the criteria and any limitations are included in tender documentation; and
12. the language or languages in which tenders or responses to requests for prequalification may be submitted, if they may be submitted in a language other than that of the tender notice.

Article 507: Conditions for Participation

A procuring entity shall limit any conditions for participation in a procurement to those that are essential to ensure that a supplier has the legal and financial capacities, and the commercial and technical abilities, to undertake the relevant procurement.
In establishing the conditions for participation, a procuring entity:
1. shall not impose a condition that, in order for a supplier to participate in a procurement, the supplier has previously been awarded one or more contracts by a procuring entity of a Party;
2. may require relevant prior experience if essential to meet the requirements of the procurement; and
3. shall not require prior experience in the territory of the Party to be a condition of the procurement.
In assessing whether a supplier satisfies the conditions for participation, a procuring entity shall:
1. evaluate the financial capacity and the commercial and technical abilities of a supplier on the basis of that supplier’s business activities both inside and outside the territory of the Party of the procuring entity; and
2. base its evaluation on the conditions that the procuring entity has specified in advance in its tender notices or tender documentation.
If there is supporting evidence, a Party, including its procuring entities, may exclude a supplier on grounds such as:
1. bankruptcy or insolvency;
2. false declarations;
3. significant or persistent deficiencies in performance of any substantive requirement or obligation under a prior contract or contracts;
4. final judgments in respect of serious crimes or other serious offences;
5. professional misconduct or acts or omissions that adversely reflect on the commercial integrity of the supplier; or
6. failure to pay taxes.

Article 508: Prequalification of Suppliers

A procuring entity may limit tenders to prequalified suppliers provided that the prequalification process is consistent with this Chapter.
A request for prequalification inviting interested suppliers to apply for inclusion on a prequalification list shall be published in a tender notice annually on one of the tendering websites or systems designated by its Party and shall include:
1. (a) the criteria that will be used to prequalify suppliers, unless those requirements are included in the qualification documentation;
2. (b) a statement that only the suppliers on the prequalified list will receive further notices of procurement covered by the list; and
3. (c) the period of validity of the list, or if the period of validity is not provided, an indication of the method by which notice will be given of the termination of use of the list.
Notwithstanding paragraph 2, where a prequalification list will be valid for three years or less, a procuring entity may publish the request for prequalification only once, at the beginning of the period of validity of the list, provided that the request for prequalification states the period of validity and that further requests will not be published.
A procuring entity shall allow all prequalified suppliers to participate in a particular procurement, unless the procuring entity states in its request for prequalification any limitation on the number of suppliers that will be permitted to tender and the criteria for selecting the limited number of suppliers.

Standing Arrangements

A procuring entity may establish standing arrangements using a procurement method that is consistent with this Chapter.
In issuing a call for a standing arrangement, a procuring entity shall indicate how subsequent purchases will be made from a supplier under a standing arrangement.

Article 509: Technical Specifications and Tender Documentation

Technical Specifications

1. A procuring entity shall not prepare, adopt, or apply any technical specification or prescribe any conformity assessment procedure with the purpose or the effect of creating unnecessary obstacles to trade.
2. In prescribing technical specifications for the goods or services being procured, a procuring entity shall, if appropriate:
  1. set out the technical specification in terms of performance and functional requirements, rather than design or descriptive characteristics; and
  2. base the technical specification on standards, if they exist.
3. A procuring entity should avoid the use of technical specifications that require or refer to a particular trademark or trade name, patent, copyright, design, type, specific origin, producer, or supplier. If the technical specifications are used in that manner, a procuring entity shall indicate that it will consider tenders of equivalent goods or services that demonstrably fulfil the requirement of the procurement by including words such as “or equivalent” in the tender documentation.
4. A procuring entity shall not seek or accept, in a manner that would have the effect of precluding competition, advice that may be used in the preparation or adoption of any technical specification for a specific procurement from a person who has a commercial interest in the procurement.
5. For greater certainty, a Party, including its procuring entities may, in accordance with this Article, prepare, adopt, or apply technical specifications to promote the conservation of natural resources or protect the environment.
6. For greater certainty, this Chapter is not intended to preclude a Party, including its procuring entities, from preparing, adopting, or applying technical specifications it considers necessary to protect sensitive government information, including specifications that may affect or limit the storage, hosting, or processing of such information outside Canada. For the purposes of this paragraph, “government information” includes third party information held by or on behalf of the government and “sensitive” information includes confidential, classified, or otherwise protected information.

Tender Documentation

A procuring entity shall make available to suppliers tender documentation that includes all information necessary to permit suppliers to prepare and submit responsive tenders. Tender documentation shall include all pertinent details concerning:
1. the evaluation criteria that will be used in the evaluation of tenders, including the methods of weighting and evaluation, unless price is the sole criterion; and
2. the requirements to be fulfilled by the supplier, and the terms or conditions applicable to the tender, including, if applicable:
  1. technical specifications;
  2. requirements for servicing or warranty;
  3. transition costs;
  4. applicable conformity assessment certification, plans, drawings, or instructional materials; and
  5. requirements related to the submission of the tender.
In establishing the date for the delivery of goods or the supply of services being procured, a procuring entity shall take into account factors such as the complexity of the procurement, the extent of subcontracting anticipated, and the realistic time required for production, de-stocking, and transport of goods from the point of supply or the realistic time required for supply of services.

Article 510: Modifications, Clarification, or New Information

A procuring entity shall make available to all suppliers any new information or clarification of the original information set out in the tender documentation provided in response to questions from one or more suppliers, in an open, fair, and timely manner.
Prior to the final date for the submission of tenders, if a procuring entity modifies the evaluation criteria or the requirements set out in the tender documentation, or amends or reissues a tender notice or the tender documentation, the procuring entity shall:
1. publish the modifications or amended or re-issued tender notice or tender documentation on the tendering website or system used by the procuring entity; and
2. extend, if appropriate, the final date for the submission of tenders to allow adequate time for suppliers to modify and re-submit amended tenders.

Article 511: Time Periods

A procuring entity shall, consistent with its own reasonable needs, provide a reasonable period of time for suppliers to prepare and submit responsive tenders, taking into account factors such as:

the nature and complexity of the procurement;
the extent of subcontracting anticipated; and
the time necessary for transmitting tender documentation by non-electronic means.

Article 512: Negotiation

If consistent with its own laws, a Party may provide for its procuring entities to conduct negotiations with suppliers if:
1. the procuring entity has indicated its intent to conduct negotiations in the tender notice required under Article 506; or
2. it appears from the procuring entity’s evaluation that no tender is obviously the most advantageous in terms of the specific evaluation criteria set out in the tender documentation.
A procuring entity shall ensure that any elimination of suppliers participating in negotiations is carried out in accordance with the evaluation criteria set out in the tender documentation, and shall:
1. if negotiations are conducted concurrently with multiple suppliers, provide a common deadline for the participating suppliers to submit any new or revised tenders; or
2. if negotiations are conducted consecutively with one supplier at a time, provide a deadline for the participating supplier to submit any new or revised tender prior to proceeding to negotiate with the next ranked supplier.
In the course of negotiations, a procuring entity shall not give an unfair advantage to, or discriminate against, a supplier.

Article 513: Limited Tendering

Subject to paragraphs 2 and 3, and provided that it does not use this provision for the purpose of avoiding competition among suppliers or in a manner that discriminates against suppliers of any other Party or protects its own suppliers, a procuring entity may use limited tendering in the following circumstances:
1. if:
  1. 1. no tenders were submitted or no suppliers requested participation;
    2. no tenders that conform to the essential requirements of the tender documentation were submitted;
    3. no suppliers satisfied the conditions for participation; or
    4. the submitted tenders were collusive,
  provided that the requirements of the tender documentation are not substantially modified;
2. if the goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute goods or services exist for any of the following reasons:
  1. the requirement is for a work of art;
  2. the protection of patents, copyrights, or other exclusive rights;
  3. due to an absence of competition for technical reasons;
  4. the supply of goods or services is controlled by a supplier that is a statutory monopoly;
  5. to ensure compatibility with existing goods, or to maintain specialized goods that must be maintained by the manufacturer of those goods or its representative;
  6. work is to be performed on property by a contractor according to provisions of a warranty or guarantee held in respect of the property or the original work;
  7. work is to be performed on a leased building or related property, or portions thereof, that may be performed only by the lessor; or
  8. the procurement is for subscriptions to newspapers, magazines, or other periodicals;
3. for additional deliveries by the original supplier of goods or services that were not included in the initial procurement, if a change of supplier for such additional goods or services:
  1. cannot be made for economic or technical reasons such as requirements of interchangeability or interoperability with existing equipment, software, services, or installations procured under the initial procurement; and
  2. would cause significant inconvenience or substantial duplication of costs for the procuring entity;
4. if strictly necessary, and for reasons of urgency brought about by events unforeseeable by the procuring entity, the goods or services could not be obtained in time using open tendering;
5. for goods purchased on a commodity market;
6. if a procuring entity procures a prototype or a first good or service that is developed in the course of, and for, a particular contract for research, experiment, study, or original development. Original development of a first good or service may include limited production or supply in order to incorporate the results of field testing and to demonstrate that the good or service is suitable for production or supply in quantity to acceptable quality standards, but does not include quantity production or supply to establish commercial viability or to recover research and development costs;
7. for purchases made under exceptionally advantageous conditions that only arise in the very short term in the case of unusual disposals such as those arising from liquidation, receivership, or bankruptcy, but not for routine purchases from regular suppliers;
8. if a contract is awarded to a winner of a design contest provided that:
  1. the contest has been organized in a manner that is consistent with the priciples of this Chapter, in particular relating to the publication of a tender notice; and
  2. the participants are judged by an independent jury with a view to a design contract being awarded to a winner; or
9. if goods or consulting services regarding matters of a confidential or privileged nature are to be purchased and the disclosure of those matters through an open tendering process could reasonably be expected to compromise government confidentiality, result in the waiver of privilege, cause economic disruption, or otherwise be contrary to the public interest.
A procuring entity may, in its use of limited tendering under paragraphs 1(a) through 1(i), choose not to apply Articles 504.5 through 504.10, Article 506, Article 507, Article 508.5, Article 508.6, Article 509.7, Article 509.8, Articles 510 through 512, Article 514 and Article 515.
A procuring entity may, in its use of limited tendering under paragraph 1(i), also choose not to apply Article 516.

Article 514: Electronic Auctions

If a procuring entity intends to conduct a covered procurement using an electronic auction, the procuring entity shall provide each participant, before commencing the electronic auction, with:

the automatic evaluation method, including the mathematical formula, that is based on the evaluation criteria set out in the tender documentation that will be used in the automatic ranking or re-ranking during the auction;
the results of any initial evaluation of the elements of its tender if the contract is to be awarded on the basis of the most advantageous tender; and
any other relevant information relating to the conduct of the auction.

Article 515: Treatment of Tenders and Award of Contracts

Treatment of Tenders

A procuring entity shall receive, open, and treat all tenders under procedures that guarantee the fairness and impartiality of the procurement process, and the confidentiality of tenders.
A procuring entity shall not penalize any supplier whose tender is received after the final date and time specified for receiving tenders if the delay is due solely to mishandling on the part of the procuring entity.
If a procuring entity provides a supplier with an opportunity to correct unintentional errors of form between the opening of tenders and the awarding of the contract, the procuring entity shall provide the same opportunity to all participating suppliers.

Evaluation and Award of Contract

To be considered for an award, a tender shall be submitted in writing and shall, at the time of opening, comply with the essential requirements set out in the tender notices and tender documentation and be from a supplier that satisfies the conditions for participation.
Unless a procuring entity determines that it is not in the public interest to award a contract, the procuring entity shall award the contract to the supplier that the procuring entity has determined to be capable of fulfilling the terms of the contract and that, based solely on the evaluation criteria specified in the tender notices and tender documentation, has submitted:
1. the most advantageous tender; or
2. if price is the sole criterion, the lowest price.
If a procuring entity receives a tender from a supplier with a price that is abnormally lower than the prices in other submitted tenders, it may verify with the supplier that it satisfies the conditions for participation and is capable of fulfilling the terms of the contract.

Article 516: Transparency of Procurement Information

Information Provided to Suppliers

A procuring entity shall promptly inform participating suppliers of its contract award decisions, and, on the request of a supplier, shall do so in writing. Subject to Article 517, a procuring entity shall, on request, provide an unsuccessful supplier with an explanation of the reasons why the procuring entity did not select its tender.

Publication of Award Information

No later than 72 days after the award of each contract covered by this Chapter, a procuring entity shall publish a notice on one of the tendering websites or systems designated by its Party. The information shall remain readily accessible for a reasonable period of time. The notice shall include at least the following:
1. a description of the goods or services procured;
2. the name and address of the procuring entity;
3. the name and address of the successful supplier;
4. the value of the successful tender;
5. the date of award; and
6. if limited tendering was used, the conditions and circumstances described in Article 513 that justified its use.

Collection and Reporting of Statistics

Each Party shall make available to the Secretariat, on an annual basis, the number and aggregate value of its covered procurement contract awards, broken down by procuring entity type as set out in Article 504.3.
If a Party publishes its statistics on an official website, in a manner that is consistent with the requirements of paragraph 3, the Party may, instead of reporting to the Secretariat, provide a link to the website, together with any instructions necessary to access and use those statistics.
If a Party requires notices concerning awarded contracts to be published on its tendering website and the notices are accessible through a single database in a form permitting analysis of the contracts covered under this Chapter, the Party may, instead of reporting to the Secretariat, provide a link to that website, together with any instructions necessary to access and use the database.

Article 517: Disclosure of Information

Notwithstanding any other provision of this Chapter, a procuring entity shall not provide to any particular supplier information that might prejudice fair competition between suppliers.
Nothing in this Chapter shall be construed to require the disclosure of information if disclosure:
1. would impede law enforcement;
2. might prejudice fair competition between suppliers;
3. would prejudice the legitimate commercial interests of third persons, including the protection of intellectual property;
4. would be contrary to the public interest; or
5. would be exempt from disclosure under, or its disclosure would contravene, applicable law.

Article 518: Review Procedures

Administrative or Judicial Review Procedures

Each Party shall provide a timely, effective, transparent, and non-discriminatory administrative or judicial review procedure through which a Canadian supplier may challenge:
1. a breach of the Chapter; or
2. if the supplier does not have a right to challenge directly a breach of this Chapter under the laws of a Party, a failure to comply with a Party’s measures implementing this Chapter,

arising in the context of a covered procurement, in which the supplier has, or has had, an interest.

If a Party uses an administrative review procedure, findings shall be issued to the supplier within 90 days after the filing of its complaint unless an extension of time is warranted due to extenuating circumstances, in which case the findings will be issued within 135 days after the filing of the complaint.
The procedural rules for all challenges and the remedies available to the supplier shall be in writing and made generally available.

Consultations

In the event of a complaint by a supplier alleging that there has been a breach or failure as referred to in paragraph 1, the procuring entity and the supplier shall seek to resolve the complaint through consultations. The procuring entity shall accord impartial and timely consideration to the complaint in a manner that is not prejudicial to the supplier’s participation in ongoing or future procurement or its right to seek corrective measures under the administrative or judicial review procedure.

Challenges by Suppliers

Each supplier shall be allowed a sufficient period of time to prepare and submit a challenge, which in no case shall be less than ten days from the time when the basis of the challenge became known or reasonably should have become known to the supplier.
Each Party shall establish or designate at least one impartial administrative or judicial authority that is independent of its procuring entities to receive and review a challenge by a supplier.
If a body, other than an authority referred to in paragraph 6, initially reviews a challenge, the Party shall ensure that the supplier may appeal the initial decision to an impartial administrative or judicial authority that is independent of the procuring entity whose procurement is the subject of the challenge.

Administrative Review Procedures

Each Party shall ensure that a review body that is not a court shall have its decision subject to judicial review or have procedures that provide that:
1. the procuring entity shall respond in writing to the challenge and disclose all relevant documents to the review body;
2. the participants to the proceedings (“participants”) shall have the right to be heard prior to a decision of the review body being made on the challenge;
3. the participants shall have the right to be represented and accompanied;
4. the participants shall have access to all proceedings;
5. the participants shall have the right to request that the proceedings take place in public and that witnesses may be presented; and
6. the review body shall make its decisions or recommendations in a timely fashion in accordance with paragraph 2, in writing, and shall inlude an explanation of the basis for each decision or recommendation.

Remedies

Each Party shall adopt or maintain procedures that provide for:
1. rapid interim measures to preserve the supplier’s opportunity to participate in the procurement. The interim measures under those procedures may result in the postponement or suspension of the procurement process. The procedures may provide that overriding adverse consequences for the interests concerned, including the public interest, may be taken into account when deciding whether interim measures should be applied. The reasons for not applying those measures shall be provided in writing; and
2. if a review body has determined that there has been a breach or failure as referred to in paragraph 1, corrective action or compensation for the loss or damages suffered, which may be limited to either the costs for the preparation of the tender or the costs relating to the challenge, or both.

Article 519: Exceptions

Covered procurement of a Party is subject to the exceptions set out in theParty’s Schedule to Annex 519.1.
A Party may exclude a supplier of any other Party from participating in a covered procurement if:
1. the other Party has set out an exception in its Schedule to Annex 519.1;
2. that exception excludes or impairs the Party’s supplier’s access to any procurement opportunities; and
3. consultations have failed to resolve the matter.
A Party’s exclusion from participation under paragraph 2 may be equivalent to, but must not be more restrictive than, the extent of the exclusion or impairment of its suppliers’ access to any procurement opportunities of the other Party.
Consultations under paragraph 2(c) shall be limited to 15 days.
Paragraphs 2 through 4 do not apply to procurement relating to:
1. the Northwest Territories Business Incentive Policy (including the Northwest Territories Manufactured Products Policy and other directly related programs) or successor programs having similar objectives;
2. the Nunavut Nunavummi Nangminiqaqtunik Ikajuuti (NNI Policy) or successor programs having similar objectives and contracts within the terms of Article 24 of the Nunavut Land Claims Agreement;
3. the Yukon Business Incentive Policy or any successor policy having similar objectives; or
4. regional economic development exceptions maintained by the Northwest Territories, Nunavut, or Yukon, as described in itsSchedule to Annex 519.1.

Article 520: Government Procurement – Specific Definitions

For the purposes of this Chapter:

buying group means a group of two or more members that combines the purchasing requirements and activities of the members of the group into one joint procurement process. Buying groups include cooperative arrangements in which individual members administer the procurement function for specific contracts for the group, and more formal corporate arrangements in which the buying group administers procurement for group members. Buying groups may consist of a variety of entities, including any combination of procuring entities, private sector entities, or not-for-profit organizations;

Canadian good means a good which, if exported outside of Canada, would qualify as a good of Canada under appropriate rules of origin;

Canadian service means a service provided by a natural person based in Canada;

if a requirement consists of only one service, which is being provided by more than one natural person, the service will be considered to be Canadian if a minimum of 70 percent of the total tender price for the service is provided by natural persons based in Canada;

if a requirement consists of two or more services and the requirement will be certified on an aggregate basis, the service will be considered to be Canadian if a minimum of 70 percent of the total tender price for the service is provided by natural persons based in Canada;

Canadian supplier means a supplier that has a place of business in Canada;

Canadian value-added means:

in relation to services, the proportion of the service contract performed by natural persons based in Canada; and
in relation to goods, the value of the portion of the good produced in Canada or the difference between the dutiable value of imported goods and the selling price, taking into account any value added by manufacturers and distributors, and including any costs incurred in Canada related to research and development, sales and marketing, communications and manuals, customization and modifications, installation and support, warehousing and distribution, training, and after-sales service;

the preference for Canadian value-added, as used in Article 503.4(a), means the premium, no greater than 10 percent, that may be awarded by a Party during the evaluation of tenders for Canadian value-added, not the required level of Canadian content;

construction means a service that has as its objective the realization by whatever means of civil or building works, based on Division 51 of the United Nations Provisional Central Product Classification (CPC);

covered procurement means the procurement described in Article 504.2;

electronic auction means an iterative process that involves the use of electronic means for the presentation by suppliers of either new prices, or new values for quantifiable non-price elements of the tender related to the evaluation criteria, or both, resulting in a ranking or re-ranking of tenders;

goods means moveable property and includes raw materials, products, equipment, and other physical objects of every kind and description whether in solid, liquid, gaseous, or electronic form;

in writing means any worded or numbered expression that can be read, reproduced, and later communicated. It may include electronically transmitted and stored information;

limited tendering means a procurement method whereby the procuring entity contacts a supplier or suppliers of its choice;

prequalification list means a list of suppliers that a procuring entity has determined satisfy the conditions for participation in that list, and that the procuring entity may intend to use more than once;

open tendering means a procurement method whereby all interested suppliers may submit a tender;

place of business means an establishment where a supplier conducts activities on a permanent basis that is clearly identified by name and accessible during normal business hours;

procuring entity means an entity whose procurement is covered by this Chapter and not otherwise excluded in a Party’s Schedule to Annex 519.1;

public-private partnership means a performance-based contract between public and private sector parties, where the private sector party assumes a share of the risks involved in the integrated delivery of public infrastructure (for example, design, build, operate, maintain, finance/capital at risk). Under the contract, the risks and rewards are allocated between the parties;

qualified supplier means a supplier that a procuring entity recognizes as having satisfied the conditions for participation;

services means all services, including construction, unless otherwise specified;

standing arrangement means an arrangement with a supplier or suppliers under which a procuring entity may buy goods or services from the supplier or suppliers over a period specified in the arrangement. The arrangement includes all terms applicable to the procurement, such as the cost of the good or service and delivery requirements;

statutory monopoly means an enterprise that in any relevant market in the territory of a Party has been designated by law or by governmental authority as the sole provider of a good or service;

supplier means a person or group of persons that provides or could provide goods or services;

technical specification means a tendering requirement that:

lays down the characteristics of a good or a service to be procured, including quality, performance, safety, and dimensions, or the processes and methods for their production or provision; or
addresses terminology, symbols, packaging, marking, or labelling requirements, as they apply to a good or a service;

tender means a submission from a supplier in response to a tender notice;

tender notice means a notice published by a procuring entity inviting interested suppliers to submit a tender, a response to a request for prequalification, or both; and

transition costs means the direct and additional costs incurred by a procuring entity in the process of moving from one supplier or good or service to another. These costs may include those for training of employees and system integration.

Annex 504.4: Inflation Adjustment

Pursuant to Article 504.4, the thresholds for covered procurement will be adjusted for inflation in accordance with the following:
1. the applicable inflation rate will be determined by reference to the latest Industrial Product Price Index (“IPPI”) series published by Statistics Canada;
2. the first adjustment, to take effect on January 1, 2018, will be calculated using the IPPI values for the August 2015 and August 2017 reference periods;
3. subsequent adjustments will take effect on January 1 every two years after January 1, 2018; and
4. the adjusted threshold will be rounded to the nearest $100.
The adjustment will be calculated using the following formula:

𝑇𝑇𝑐𝑐 × ( 1+ 𝑝𝑝 )= 𝑇𝑇𝑛𝑛, where:
- Tc = Current threshold; p = Percentage increase in prices for the applicable two-year period, determined by the following formula:
𝑝𝑝=𝐴𝐴𝐵𝐵−1, where:
- A = the IPPI value for the August reference period of the year directly before the one in which the adjustment takes effect; and
- B = the IPPI value for the August reference period two years before the August reference period in A; and
- Tn = New adjusted threshold.

The Secretariat shall notify the Parties of the adjusted threshold values no later than November 1 of the year prior to the adjustment taking effect.

Overview

Chapter Five – Government Procurement