Each year Canadian governments purchase over $100 billion in
goods and services, and the EU purchases more than $2.7 trillion
The Canada-EU Comprehensive Economic and Trade Agreement (CETA)
procurement provisions are significant because they open up
procurements by the provinces/territories, municipalities and
utilities, which were previously shielded from disciplines under
international procurement agreements such as the World Trade
Organization (WTO) Agreement on Government Procurement and the
North American Free Trade Agreement (NAFTA). Federal procurements
will also be subject to the procurement disciplines in CETA, but
this is not new because these procurements have always been subject
to WTO and NAFTA disciplines.
This means that Canadian companies bidding on
large lucrative provincial and municipal procurements will
encounter much more competition from EU companies than they have in
the past. On the other hand, these same companies ought to have
more access to EU government contracts at all levels –
so hopefully it will all balance out.
It also means that provincial and municipal government
procuring entitiesand now utilities will
have to be more careful about how they draft and conduct their
procurements and contract awards. They will have to make sure that
their procurement processes and selection and evaluation
criteria are consistent with the requirements in the CETA
provisions. Sole sourcing will be severely restricted and allowed
only under prescribed conditions. Provinces and municipalities will
also have to introduce some form of bid review mechanism whereby EU
suppliers can challenge the procurement before the contract is
awarded and have corrective remedies available. For federal
contracts this is done by the Canadian International Trade
Tribunal, which is the federal government bid review mechanism
under the WTO and NAFTA. In general, most treaties have strict time
limits on when a supplier must challenge the procurement process or
contract award, and generally it is within 10 working days after
the basis of the challenge becomes known to the supplier. This time
delay will also likely be included in CETA.
Only procurements by designated entities for designated goods or
services above designated threshold values will be subject to
CETA's disciplines on procurement. While we have a general
understanding of what these designations are, the devil is in the
detail, and we won't really know what or who is in and what or
who is out until the legal text is released in 2014. However, we do
know now some general parameters, which are as follows.
The CETA disciplines on procurement will apply only to contracts
above a certain designated threshold value. For federal
contracts for goods and services this threshold is
$205,000. For provincial and municipal contracts
for goods and services, this threshold is $315,500. This is also
the threshold for academic institutions, school boards and
hospitals (also known as the MASH sector). For
procurements of goods and services by Crown
corporations, the threshold is $560,000. For contracts for
goods and services by utilities the threshold is
double at $631,000. For construction services
purchased by all levels of government, the threshold is $7.8
million across the board.
In general we know that the following sectors are excluded:
ports and airports;
procurements under $1 million in rural areas in the territories
and Atlantic provinces for regional economic development
procurements by ports and airports;
shipbuilding and repairs; and
national security procurements, that is, sensitive
goods/services procured by security-mandated entities.
While public transit is subject to the CETA procurement
disciplines, Quebec and Ontario will be allowed to retain a 25%
Canadian content requirement for procurement of public-transit
vehicles. However, as mentioned earlier, utilities and Crown
corporations are not excluded and will be subject to the
procurement obligations of CETA.
Looking ahead, we can expect that provinces and municipalities
as well as utilities and Crown corporations will come under
increasing pressure to open up their procurements to U.S.
suppliers. Though this has been done in part in regard to
provincial procurements, under the Canada-U.S. Agreement on
Government Procurement, that agreement is not nearly as intrusive
on provincial, municipal, Crown corporation and utility procurement
practices as CETA.
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