(ii) would cause significant inconvenience or substantial duplication of costs for the procuring entity;
(d) where, and in so far as strictly necessary, for reasons of extreme urgency brought about by events which were unforeseeable by the procuring entity, the goods or services could not be obtained in time using open tendering or selective tendering;
(e) in the case of goods purchased on a commodity market;
(f) where a procuring entity procures a prototype or a first good or service that is developed at its request 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;
(g) in the case of purchases made under exceptionally advantageous conditions that only arise in the very short term in case of unusual disposals such as those arising from liquidation, receivership or bankruptcy, but not in the case of routine purchases from regular suppliers; or
(h) where a contract is awarded to a winner of a design contest, provided that:
(i) the contest has been organised in a manner that is consistent with the principles of this Chapter, in particular with regard to the publication of a notice of intended procurement; and
(ii) the participants are judged by an independent jury with a view to a design contract being awarded to a winner.
2. The procuring entity shall prepare a report in writing on each contract awarded under paragraph 1. The report shall include the name of the procuring entity, the value and kind of goods or services procured, and a statement indicating the circumstances and conditions set out in paragraph 1 that justified the use of limited tendering.
Article 21.15. Electronic Auctions
Where a procuring entity intends to conduct a covered procurement using an electronic auction, the entity shall provide each participant, before commencing the electronic auction, with:
(a) the automatic evaluation method, including the mathematical formula, that is based on the evaluation criteria set out in the tender documentation and that will be used in the automatic ranking or re-ranking during the auction;
(b) the results of any initial evaluation of the elements of its tender where the contract is to be awarded on the basis of the most advantageous tender; and
(c) any other relevant information relating to the conduct of the auction.
Article 21.16. Treatment of Tenders and Awarding of Contracts
Treatment of tenders
1. 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.
2. A procuring entity shall not penalise any supplier whose tender is received after the deadline specified for receiving tenders if the delay is due solely to mishandling on the part of the procuring entity.
3. 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.
Awarding of contracts
4. 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 notices and tender documentation, and shall be from a supplier that satisfies the conditions for participation.
5. Unless a procuring entity determines that it is not in the public interest to award a contract, the entity shall award the contract to the supplier that the entity has determined to be capable of fulfilling the terms of the contract and that, based solely on the evaluation criteria specified in the notices and tender documentation, has submitted:
(a) the most advantageous tender; or
(b) the lowest price, if price is the sole criterion.
6. Where a procuring entity receives a tender with a price that is abnormally low in relation to the prices in other tenders submitted, it may verify with the supplier that the supplier satisfies the conditions for participation and is capable of fulfilling the terms of the contract.
7. A procuring entity shall not use options, cancel a procurement or modify awarded contracts in a manner that circumvents the obligations under this Chapter.
8. Each Party shall make best efforts to provide, as a general rule, a standstill period between the award and the conclusion of a contract, in order to give sufficient time to unsuccessful bidders to review and challenge the award decision.
Article 21.17. Transparency of Procurement Information Information Provided to Suppliers
1. A procuring entity shall promptly inform participating suppliers of the procuring entity's contract award decisions and, on request of a supplier, shall do so in writing. Subject to Article 21.18(2) and (3) a procuring entity shall, upon request, provide an unsuccessful supplier with an explanation of the reasons why the entity did not select its tender, and the relative advantages of the successful supplier's tender.
Publication of award information
2. No later than 72 days after the award of each contract covered by this Chapter, a procuring entity shall publish a notice in the appropriate paper or electronic medium listed in Section I of Annex 21-A and 21-B. Where the procuring entity publishes the notice only in an electronic medium, the information shall remain readily accessible for a reasonable period of time. The notice shall include at least the following information:
(a) a description of the goods or services procured;
(b) the name and address of the procuring entity;
(c) the name of the successful supplier;
(d) the value of the successful tender or the highest and lowest offers taken into account in the award of the contract;
(e) the date of award; and
(f) the type of procurement method used, and, in cases where limited tendering was used in accordance with Article 21.14, a description of the circumstances justifying the use of limited tendering.
Maintenance of documentation, reports and electronic traceability
3. Each procuring entity shall, for a period of at least three years from the date it awards a contract, maintain:
(a) the documentation and reports of tendering procedures and contract awards relating to covered procurement, including the reports required under Article 21.14; and
(b) data that ensures the appropriate traceability of the conduct of covered procurement by electronic means.
Exchange of statistics
4. On request of the other Party, and with a view to the discussions in the Sub-Committee referred to in Article 21.21, each Party shall make available to the other Party statistics on covered procurement of goods, services and construction services, including, to the maximum extent possible, statistics on works concessions. In accordance with Article 21.23, the Parties shall cooperate to achieve a better understanding of each other's public procurement statistics.
5. If a Party requires notices concerning awarded contracts, pursuant to paragraph 2 of this Article, to be published electronically, and if such notices are accessible to the public through a single database in a form permitting analysis of the covered contracts, the Party may, instead of reporting to the Sub-Committee referred to in Article 21.21, provide a link to the website, together with any instructions necessary to access and use such data.
Article 21.18. Disclosure of Information
Provision of information to Parties
1. On request of the other Party, a Party shall promptly provide any information necessary to determine whether a procurement was conducted fairly, impartially and in accordance with this Chapter, including information on the characteristics and relative advantages of the successful tender. Where release of the information would prejudice competition in future tenders, the Party that receives the information shall not disclose it to any supplier, except after consulting with, and obtaining the consent of, the Party that provided the information.
Non-disclosure of information
2. Notwithstanding any other provision of this Chapter, a Party, including its procuring entities, shall not, except to the extent required by law or with the written authorisation of the supplier that provided the information, disclose information that would prejudice legitimate commercial interests of a particular supplier or that might prejudice fair competition between suppliers.
3. Nothing in this Chapter shall be construed as requiring a Party, including its procuring entities, authorities and review bodies, to disclose confidential information if disclosure:
(a) would impede law enforcement;
(b) might prejudice fair competition between suppliers;
(c) would prejudice the legitimate commercial interests of particular persons, including the protection of intellectual property; or
(d) would otherwise be contrary to the public interest.
Article 21.19. Domestic Review Procedures
1. Each Party shall provide a timely, effective, transparent and non-discriminatory administrative or judicial review procedure through which a supplier may challenge the following, arising in the context of a covered procurement in which the supplier has, or has had, an interest:
(a) a breach of this Chapter; or
(b) a failure to comply with a Party's measures implementing this Chapter, where the supplier does not have the right to challenge directly a breach of this Chapter under the laws of a Party.
The procedural rules for all challenges shall be in writing and made generally available.
2. In the event of a complaint by a supplier, arising in the context of covered procurement in which the supplier has, or has had, an interest, that there has been a breach or a failure as referred to in paragraph 1, the Party of the procuring entity conducting the procurement shall encourage the entity and the supplier to seek resolution of the complaint through consultations. The entity shall accord impartial and timely consideration to any such 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.
3. Each supplier shall be allowed a sufficient period of time to prepare and submit a challenge, which in no case shall be less than 10 days from the time when the basis of the challenge became known or should have reasonably become known to the supplier.
4. 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 arising in the context of a covered procurement.
5. Where a body other than an authority referred to in paragraph 4 initially reviews a challenge, the Party shall ensure that the supplier has the right to 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.
6. Each Party shall ensure that the decisions of a review body that is not a court are subject to judicial review or that the review body has procedures that provide that:
(a) the procuring entity shall respond in writing to the challenge and disclose all relevant documents to the review body;
(b) the participants to the proceedings (hereinafter, the "participants") have the right to be heard prior to the review body's decision on a challenge;
(c) the participants have the right to be represented and accompanied;
(d) the participants have access to all proceedings;
(e) the participants have the right to request that the proceedings take place in public and that witnesses may be presented; and
(f) the review body shall make its decisions or recommendations in a timely fashion, in writing, and shall include an explanation of the basis for each decision or recommendation.
7. Each Party shall adopt or maintain procedures that provide for:
(a) rapid interim measures to preserve the supplier's opportunity to participate in the procurement; such interim measures may result in 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 such measures should be applied; just cause for not acting shall be provided in writing; and
(b) where a review body has determined that there has been a breach or a failure as referred to in paragraph 1, corrective action or compensation for the loss or damages suffered, which may be limited to the costs for the preparation of the tender or the costs relating to the challenge, or both.
Article 21.20. Modifications and Rectifications to Coverage
1. The European Union may modify or rectify Annex 21-A and Chile may modify or rectify Annex 21-B.
Modifications
2. If a Party intends to modify its Annex as referred to in paragraph 1, that Party shall:
(a) notify the other Party in writing; and
(b) include in the notification a proposal for appropriate compensatory adjustments to the other Party to maintain a level of coverage comparable to that existing prior to the modification.
3. Notwithstanding subparagraph (b) of paragraph 2 of this Article, a Party does not need to provide compensatory adjustments if the modification covers an entity over which the Party has effectively eliminated its control or influence. Government control or influence over the covered procurement of entities listed in Section A, B or C of Annex 21-A or 21-B is presumed to be effectively eliminated, in so far as the entity's procurement is concerned, where the entity is exposed to competition on markets to which access is not restricted.
4. If a Party notifies the other Party under paragraph 2 of an intended modification of its Annex, the other Party shall object in writing if it disputes that:
(a) an adjustment proposed under subparagraph (b) of paragraph 2 is adequate to maintain a comparable level of mutually agreed coverage; or
(b) the modification covers an entity over which the Party's control or influence has effectively ended in accordance with paragraph 3.
The other Party shall submit any written objection under this paragraph within 45 days of receipt of the notification referred to in subparagraph (a) of paragraph 2 of this Article. If that Party does not submit any written objections within that time period, it shall be deemed to have accepted the adjustment or modification, including for the purposes of Chapter 31.
Rectifications
5. The Parties shall consider the following changes to Annex 21-A or 21-B as a rectification of a purely formal nature, provided that they do not affect the mutually agreed coverage provided for in this Chapter:
(a) a change in the name of an entity;
(b) a merger of two or more entities listed within Section A, B or C of Annex 21-A or 21-B;
(c) the separation of an entity listed in Section A, B or C of Annex 21-A or 21-B into two or more entities that are all added to the entities listed in the same Section of Annex 21-A or 21-B.
6. If a Party proposes a rectification of Annex 21-A or 21-B respectively, that Party shall notify the other Party every two years following the date of entry into force of this Agreement.
7. A Party may notify the other Party of an objection to a proposed rectification within 45 days of receipt of the notification. If a Party submits an objection, it shall set out the reasons why it believes the proposed rectification is not a change provided for in paragraph 5, and describe the effect of the proposed rectification on the mutually agreed coverage provided for in this Chapter. If no such objection is submitted in writing within 45 days of receipt of the notification, the Party shall be deemed to have agreed to the proposed rectification.
Consultations and dispute resolution
8. If the other Party objects to the proposed modification or rectification within 45 days, the Parties shall seek to resolve the issue through consultations after having received the notification. If the Parties do not reach an agreement within 60 days of receipt of the objection, the Party seeking to modify or rectify its Annex may refer the matter to dispute settlement procedure under this Agreement. The proposed modification or rectification will take effect only when both Parties have agreed thereto or on the basis of a final decision pursuant to the procedure provided for in Chapter 31.
9. Failure to reach an agreement in the consultation procedure under paragraph 8 of this Article does not exempt the Parties from the obligation to carry out consultations under Chapter 31.
Article 21.21. Sub-Committee on Public Procurement
On request of a Party, the Sub-Committee on Public Procurement ("Sub-Committee") established pursuant to Article 33.4(1), shall meet to address matters related to the implementation and operation of this Chapter, including the following:
(a) issues regarding public procurement that are referred to it by a Party;
(b) monitoring the cooperation activities undertaken by the Parties as provided for in Article 21.23;
(c) facilitation of the participation of small and medium-sized enterprises in covered procurement as provided for in Article 21.22; and
(d) discussion on the status of implementation of the single point of access under Article 21.6(7).
Article 21.22. Facilitation of Participation by Small and Medium-sized Enterprises
1. The Parties recognise the important contribution that small and medium-sized enterprises (hereinafter, "SMEs") can make to economic growth and employment, and the importance of facilitating the participation of SMEs in public procurement.
2. The Parties recognise the importance of electronic procurement in facilitating the participation of SMEs in procurement procedures by ensuring transparency.
3. The Parties also recognise the importance of business alliances between suppliers of each Party, and in particular between SMEs, including joint participation in tendering procedures.
4. The Parties may:
(a) provide information related to their measures used in order to contribute, promote, encourage or facilitate SMEs' participation in public procurement;
(b) cooperate in the elaboration of mechanisms to provide information to SMEs about the means for participating in covered procurement under this Chapter.
5. To facilitate participation of SMEs in covered procurement, each Party shall, to the extent possible:
(a) provide a definition of SMEs in an electronic portal;
(b) endeavour to make all tender documentation available free of charge;
(c) take any other measure designed to facilitate the participation of SMEs in public procurement covered by this Chapter, provided that such measures do not discriminate against the other Party's enterprises.
Article 21.23. Cooperation
1. The Parties shall make best efforts to develop cooperation activities with a view to achieving a better understanding of their respective public procurement systems, as well as better access to their respective markets, in matters such as:
(a) exchanging experiences and information, such as regulatory frameworks, best practices and statistics;
(b) facilitating participation by suppliers in covered procurement, in particular with respect to SMEs;
(c) developing and expanding the use of electronic means in public procurement systems;
(d) building capability by fostering mutual learning between government officials and staff of procuring entities with a view to fulfilling the provisions of this Chapter.
2. The Parties shall inform the Sub-Committee referred to in Article 21.21 of any such activity.
Article 21.24. Further Negotiations
The Sub-Committee on Public Procurement referred to in Article 21.21 shall review the operation of this Chapter and, no later than four years after the date of entry into force of this Agreement, may propose that the Trade Committee recommend that the Parties hold further negotiations with a view to achieving additional market access opening.
Chapter 22. STATE-OWNED ENTERPRISES, ENTERPRISES GRANTED SPECIAL RIGHTS OR PRIVILEGES AND DESIGNATED MONOPOLIES
Article 22.1. Scope
1. The Parties affirm their rights and obligations under paragraphs 1 to 3 of Article XVII of GATT 1994, the Understanding on the Interpretation of Article XVII of GATT 1994, as well as under paragraphs 1, 2 and 5 of Article VIII of GATS.
2. This Chapter applies to a state-owned enterprise, an enterprise granted special rights or privileges and a designated monopoly ("entity") engaged in commercial activities. If an entity engages in both commercial and non-commercial activities (1), only the commercial activities are covered by this Chapter.
3. This Chapter applies to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies, at all levels of government.
4. This Chapter does not apply to the procurement by a Party of a good or service purchased for governmental purposes and not with a view to commercial resale or with a view to the supply of a good or service for commercial sale, whether or not that procurement is a "covered procurement" as defined in Article 21.2.
5. This Chapter does not apply to any service supplied in the exercise of governmental authority.
6. This Chapter does not apply to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies in cases where in any one of the three previous consecutive fiscal years, the annual revenue derived from the commercial activities of the entity was less than 100 million Special Drawing Rights (SDRs)1.
7. Article 22.4 does not apply to services sectors which are outside the scope of this Agreement.
8. Article 22.4 does not apply to the extent that a state-owned enterprise, enterprise granted special rights or privileges or designated monopoly of a Party makes purchases and sales of goods or services pursuant to:
(a) any existing non-conforming measure that the Party maintains, continues, renews or amends in accordance with Articles 10.11, 11.8 or 18.10 as set out in its schedule in Annex 10-A; or
(b) any non-conforming measure that the Party adopts or maintains with respect to sectors, subsectors or activities in accordance with Articles 10.11, 11.8 or 18.10 as set out in its schedule in Annex 10-B.
1 During the first five years from the entry into force of this Agreement, the threshold will be of less than 200 million SDR.
Article 22.2. Definitions
For the purposes of this Chapter and Annex 22:
(a) "commercial activities" means activities carried out by an enterprise the end result of which is the production of a good or supply of a service to be sold in the relevant market in quantities and at prices determined by the enterprise, and which are undertaken with an orientation towards profit-making (1);
(b) "commercial considerations" means considerations of price, quality, availability, marketability, transportation and other terms and conditions of purchase or sale, or other factors that would normally be taken into account in the commercial decisions of a privately owned enterprise operating according to market economy principles in the relevant business or industry;
(c) "designate" means to establish or authorise a monopoly, or to expand the scope of a monopoly to cover an additional good or service;
(d) "designated monopoly" means an entity, including a group of entities or a government agency, that in a relevant market in the territory of a Party is designated as the sole supplier or purchaser of a good or service, but does not include an entity that has been granted an exclusive intellectual property right solely by reason of such grant;
(e) "enterprise granted special rights or privileges" (1) means any enterprise, public or private, that has been granted, in law or in fact, special rights or privileges, by a Party; special rights or privileges are granted by a Party when it designates or limits to two or more the number of enterprises authorised to supply a good or a service, taking into account the specific sectorial regulation under which the granting of the right or privilege has taken place, other than in line with objective, proportionate and non-discriminatory criteria, thereby substantially affecting the ability of any other enterprise to supply the same good or service in the same geographical area under substantially equivalent conditions;
(f) "service supplied in the exercise of governmental authority" means a service supplied in the exercise of governmental authority as defined in paragraph 3(c) of Article I of GATS, including as defined in the Annex on Financial Services to GATS if applicable; and
(g) "state-owned enterprise" means an enterprise owned or controlled by a Party (2).
Article 22.3. General Provisions
Without prejudice to the rights and obligations of a Party under this Chapter, nothing in this Chapter prevents a Party from establishing or maintaining state-owned enterprises, designating or maintaining monopolies or granting enterprises special rights or privileges.