1. This Chapter applies to measures that a Party adopts or maintains relating to covered procurement, understood as procurement that is carried out:
(a) By an entity included in Annex 7.1;
(b) Through any contractual modality, including purchase, rental or lease, with or without purchase option and public works concession contracts;
(c) Of goods and services, in accordance with Annex 7.1;
(d) Whose estimated contract value is equal to or greater than the corresponding threshold value specified in Annex 7.1, and
(e) Subject to the other terms and conditions set forth in Annex 7.1.
2. This Chapter does not apply to:
(a) Non-contractual agreements or any other form of assistance provided by a Party, including grants, loans, equity contributions, tax incentives, subsidies, guarantees and cooperation agreements;
(b) Procurements made for the direct purpose of providing foreign assistance;
(c) Procurements financed totally or partially by donations, loans or other forms of international assistance, when the delivery of such aid is subject to conditions incompatible with the provisions of this Chapter;
(d) Hiring of public employees;
(e) The contracting or acquisition of fiscal agency services or settlement and administration services for regulated financial institutions, or services telated to the sale, redemption and distribution of public debt including loans and other securities. For greater certainty, this Chapter does not apply to the procurement of banking, trust, financial or specialized and other related services related to the following activities:
(i) public indebtedness, and
(ii) public debt management.
(f) Procurements made by an entity to another agency or enterprise of the State of that Party, whether or not listed in Sections A, B or C of Annex 7.1, provided that the subject matter of the procurement is not subcontracted to a third party that is not a government agency;
(g) The acquisition or rental or lease of land, existing real estate or other real property or rights thereon, and
(h) Public procurements made outside the territory of the Party, for consumption outside the territory of the Party.
Article 7.3. General Principles of National Treatment and Non-Discrimination
1. With respect to any measure covered by this Chapter, each Party, including its entities, shall accord immediately and unconditionally to goods and services of the other Party, and to suppliers of the other Party offering goods or services of either Party, treatment no less favorable than the most favorable treatment accorded by that Party to its own goods, services and suppliers.
2. With respect to any measure governing government procurement covered by this Chapter, no Party may:
(a) Treating a locally established supplier less favorably than another locally established supplier because of its degree of affiliation with a foreign company or degree of foreign ownership, or
(b) Discriminate against a locally established supplier on the basis that the goods or services offered by such supplier for a particular procurement are goods or services of the other Party.
3. Paragraphs 1 and 2 do not apply to:
(a) Customs duties, including customs tariffs or other charges of any kind imposed on or in comnection with importation; the method of collection of such duties and charges; or other import regulations, or
(b) Measures affecting trade in services, other than measures specifically regulating government procurement covered by this Chapter.
Rules of Origin
4. For the purposes of paragraphs 1 and 2, the determination of origin of goods shall be made on the basis of the rules applicable in the normal course of trade in such goods on a non-preferential basis, in accordance with Article 1.2 of the 1994 WTO Agreement on Rules of Origin.
Article 7.4. Denial of Benefits
A Party may deny the benefits of this Chapter to a service supplier of the other Party, after notification and consultations, when:
(a) The Party determines that the service is being supplied by a juridical person that does not have substantive business operations in the territory of that other Party, or
(b) A person who provides the service from a non-Party territory.
Article 7.5. Valuation
1. When calculating the value of a procurement for the purpose of determining whether it is a covered procurement, an entity:
(a) It shall not divide a procurement into separate procurements, nor shall it use a particular method of estimating the value of the procurement for the purpose of evading the application of this Chapter;
(b) It shall include the calculation of the maximum total value over its entire duration including the extension options provided for, taking into account all forms of remuneration, such as premiums, fees, dues, fees, commissions and interest, which may be stipulated in the procurement, and
(c) It shall, when the procurement results in the award of contracts at the same time or in a given period to one or more suppliers, base its calculation on the total maximum value of the procurement during the entire period of its validity including the options for extensions provided for.
2. When the total maximum value of a procurement is not known over its entire duration, such procurement shall be covered by this Chapter.
Article 7.6. Special Compensatory Conditions
With respect to covered procurement, entities may not consider, request or impose special compensatory conditions at any stage of a procurement.
Article 7.7. Technical Specifications
1. Each Party shall ensure that its entities do not prepare, adopt or apply any technical specification with the purpose or effect of creating unnecessary obstacles to trade between the Parties.
2. Any technical specification prescribed by an entity shall, where applicable:
(a) Be specified in terms of performance and functional requirements, rather than descriptive or design characteristics, and
(b) Be based on international standards, when applicable, or otherwise on national technical regulations, recognized national standards, or building codes.
3. An entity shall not prescribe technical specifications that require or refer to a trademark or trade name, patent, copyright, design or type, specific origin or producer or supplier, unless there is no sufficiently precise or intelligible way of otherwise describing the procurement requirements, or it is justified for scientific or technical reasons and provided that, in such cases, expressions such as "or equivalent" are included in the tender documentation.
4. An entity shall not solicit or accept, in a manner that may have the effect of preventing competition, advice that may be used in the preparation or adoption of any technical specification for a specific procurement from a person that may have a commercial interest in that procurement.
Article 7.8. Publication of Procurement Actions
Each Party shall promptly publish in an electronic medium listed in Annex 7.1:
(a) Its measures of general application, which specifically regulate public procurement; and
(b) Any modification to such measures, in the same manner as the original publication.
Article 7.9. Notice of Hiring
1. For each procurement covered by this Chapter, an entity shall publish in advance a notice inviting interested suppliers to submit tenders. Each such notice shall be accessible during the entire period established for the submission of tenders for the procurement concerned.
2. Each procurement notice shall include at least the following information:
(a) The description of public procurement;
(b) The method of contracting to be used;
(c) Any conditions that suppliers must satisfy in order to participate in public procurement, such as registration requirements;
(d) The name of the entity publishing the notice;
(e) The address or point of contact where suppliers can obtain all relevant procurement documentation;
(f) Where applicable, the address and final date for the submission of requests for participation in the procurement;
(g) The address and final date for submission of bids, and
(h) The delivery dates of the goods or services to be contracted or the duration of the contract, unless this information is included in the contracting documents.
3. Entities shall publish procurement notices through means that provide the widest possible non-discriminatory access to interested suppliers of the Parties. Access to such notices shall be available through an electronic point specified in Annex 7.1.
Article 7.10. Procurement Modalities/Procedures Open Bidding
1. Entities shall award contracts through open bidding procedures, through which any interested supplier of the Parties may submit a bid.
Selective Bidding
2. Where the legal system of a Party permits selective tendering, an entity shall, for each procurement:
(a) Publish a notice inviting suppliers to submit applications to participate in a procurement sufficiently in advance for interested suppliers to prepare and submit applications and for the entity to evaluate and make its determination based on such applications, and
(b) Allow all domestic suppliers and all suppliers of the other Party that the entity has determined meet the conditions for participation to submit a tender, unless the entity has set out in the notice or publicly available procurement documents any limitation on the number of suppliers permitted to submit tenders and the criteria for that limitation.
Other Procurement Procedures
3. Provided that an entity does not use this provision to prevent competition, to protect its domestic suppliers or to discriminate against suppliers of the other Party, it may award contracts by means other than open or selective tendering procedures,
(a) When:
(i) no bid has been submitted or no supplier has requested to participate;
(ii) no bid that complied with the essential requirements of the bidding documents was submitted;
(iii) no supplier has complied with the conditions of participation, or
(iv) there has been collusion declared by a competent authority in the submission of bids, and provided that the requirements of the procurement documents are not substantially modified.
(b) When the goods or services can be provided only by one supplier and there is no reasonable alternative, or substitute good or service due to any of the following reasons:
(i) the requirement is for the realization of a work of art;
(ii) protection of patents, copyrights or other exclusive rights; or
(iii) due to the absence of competition for technical reasons.
(c) In the case of additional deliveries of goods or services by the original supplier that are intended to be used as spare parts, extensions or continuity of service of existing equipment, software, services or existing facilities, when the change of supplier would force the entity to acquire goods or services that do not meet the requirements of compatibility with existing equipment, software, services or facilities;
(d) For purchases made in a commodity market;
(e) When an entity procures a prototype or a first good or service that has been developed at its request, in the course of, and for, a particular contract for research, experimentation, study or original development. Where such contracts have been fulfilled, subsequent procurements of such goods or services shall be awarded through open bidding procedures;
(f) When, in the case of public works, additional construction services are required in addition to those originally contracted, which respond to unforeseen circumstances and are strictly necessary for the fulfillment of the objectives of the contract that originated them. However, the total value of the contracts awarded for such additional construction services may not exceed 30% of the amount of the main contract;
(g) To the extent strictly necessary when, for reasons of extreme urgency caused by events unforeseeable by the entity, goods or services cannot be obtained in a timely manner through open or selective tendering procedures and the use of such procedures would result in serious prejudice to the entity or to the performance of its functions. For purposes of this subparagraph, an entity's failure to plan for funds available within a specified period shall not constitute an unforeseen event;
(h) When a contract is awarded to the winner of a design competition, provided that:
(i) the competition has been organized in a manner that is consistent with the principles of this Chapter, in particular with respect to the publication of the notice of the procurement, and
(ii) the participants are rated or evaluated by an independent jury or body.
(i) In the case of purchases made under exceptionally favorable conditions that occur only for a very short period of time in the case of extraordinary disposals such as those derived from liquidation, receivership or bankruptcy situations, but not in the case of ordinary purchases from regular suppliers, and
(j) When an entity needs to contract consulting services involving matters of a confidential nature of the government, the disclosure of which could cause economic instability or be contrary to the public interest.
4. An entity shall prepare a written report or maintain a record for each procurement contract awarded in accordance with paragraph 3. Such report or record shall include the name of the entity, the value and nature of the goods or services procured and an indication of the circumstances and conditions justifying the use of a procedure other than open tendering.
Article 7.11. Deadlines for Submission of Offers
1. An entity shall provide suppliers with sufficient time to prepare and submit appropriate tenders, taking into account the nature and complexity of the procurement.
2. An entity shall allow at least thirty (30) days between the date on which the notice of procurement is published and the final date for submission of bids.
3. Notwithstanding the provisions of paragraph 2, the entities may establish a shorter term, but in no case less than ten (10) days when:
(a) It is a procurement of goods or services of simple and objective specification that reasonably leads to less effort in the preparation of bids;
(b) It is a second publication, or
(c) It cannot observe the minimum period established in paragraph 2, for reasons of urgency duly justified by the entity.
4. A Party may provide that an entity may reduce by five (5) days the deadline for submitting tenders set forth in paragraph 2, when:
(a) The procurement notice is published electronically;
(b) All procurement documents that are made available to the public by electronic means are published from the date of publication of the procurement notice, or
(c) Bids may be received through electronic means by the contracting entity.
5. The application of paragraphs 3 and 4, âmay not result in the reduction of the time limits established in paragraph 2 to less than ten (10) days from the date of publication of the procurement notice.
Article 7.12. Contracting Documents
1. An entity shall provide suppliers with all necessary information to enable them to prepare and submit appropriate bids.
2. Procurement documents shall include at a minimum a complete description of the following:
(a) The nature and quantity of goods or services to be contracted, or, if the quantity is not known, the estimated quantity and any requirements to be met, including technical specifications, conformity assessment certificates, drawings, designs or instruction manuals;
(b) The conditions for supplier participation, including information and documents to be submitted by suppliers in relation to those conditions;
(c) The evaluation criteria to be considered in the award of a contract and, unless price is the sole criterion, the relative importance of such criteria;
(d) When an entity conducts an electronic auction, the rules applicable to the auction, including the identification of the bid elements related to the evaluation criteria;
(e) The date, time and place of bid opening;
(f) The date or period for the delivery of the goods or for the supply of the services or the duration of the contract, and
(g) Any other terms or conditions, such as payment terms, the form in which the bids shall be submitted and the requirement of guarantees, if applicable.
3. Where an entity does not publish all procurement documents electronically, it shall ensure that they are available to any supplier upon request.
4. Where an entity modifies the criteria referred to in paragraph 2 before the agreed date for the submission of tenders, it shall transmit such modifications in writing:
(a) To all suppliers that are participating in the procurement at the time of the criteria modification, if the identities of such suppliers are not known. If suppliers are known, and in all other cases, in the same manner in which the original information was transmitted, and
(b) With sufficient time to allow such suppliers to modify and resubmit their bids, as appropriate.
Article 7.13. Conditions for Participation
1. Each entity shall:
(a) Limit the conditions for participation to those that are essential to ensure that the potential supplier has the legal, commercial, technical and financial capacity to comply with the requirements and technical requirements of public procurement, which will be evaluated on the basis of the supplier's overall business activities. For greater certainty, entities may require suppliers to provide proof of strict compliance with their tax obligations;
(b) Base its qualification decisions solely on the conditions for participation that it has specified in advance in notices or procurement documents; and
(c) Recognize as qualified all suppliers of the Parties that have satisfied the conditions to participate in a public procurement covered by this Chapter.
2. Entities may establish publicly available standing lists of suppliers qualified to participate in procurement, provided that the Party so provides in its legal system. Where an entity requires suppliers to qualify on such a list in order to participate in a procurement, and a supplier that has not yet qualified applies to be placed on the list, the Parties shall ensure that the procedure for registration on the list is initiated without delay and shall allow the supplier to participate in the procurement, provided that the registration procedures can be completed within the time limit for submission of tenders.
3. No entity may impose as a condition for a supplier to participate in a procurement that the supplier has previously been awarded one or more procurement contracts by an entity of that Party or that the supplier has previous work experience in the territory of that Party.
4. An entity shall promptly communicate to any supplier that has applied to qualify its decision as to whether the supplier is qualified. Where an entity rejects an application for qualification or ceases to recognize a supplier as qualified, that entity shall, upon request of the supplier, promptly provide the supplier with a written explanation of the reasons for its decision.
5. Nothing in this article shall prevent an entity from excluding a supplier that is disqualified from contracting with the government in accordance with the legal system of each Party.
Article 7.14. Treatment of Bids and Award of Contracts
1. An entity shall receive, open and treat all tenders under procedures that ensure equality and fairness in the procurement process and shall treat tenders confidentially, at least until they are opened.
2. An entity shall require that a bid, in order to be considered for an award, must be submitted in writing and must be due at the time of bid opening:
(a) Comply with the essential requirements contained in the procurement documents, and
(b) From a supplier that has satisfied the conditions for participation.
3. Unless an entity determines that awarding a contract would be contrary to the public interest, the entity shall award the contract to the supplier that the entity has determined to be eligible to participate and fully capable of performing the contract, and whose tender is considered the most advantageous based solely on the requirements and evaluation criteria specified in the procurement documents.
4. An entity may not cancel a procurement, or terminate or modify a procurement contract, for the purpose of evading the obligations of this Chapter.
5. If, for any reason attributable to the successful bidder, the contract is not perfected or the successful bidder fails to execute the guarantee or fails to perform the contract, the contract may be awarded to the next bidder, and so on, provided that the legal system of each Party so permits.
6. In accordance with the legal system of each Party, an entity shall accept a tender submitted by a supplier even if the tender is received after the time specified for receipt of tenders, provided that the delay is solely attributable to the negligence of the entity.
Article 7.15. Information on Awards
1. An entity shall promptly publish its decision on the award of a procurement contract. On request, an entity shall provide a supplier whose tender was not selected for award with the reasons for not selecting its tender or the relative advantages of the tender that the entity selected.
2. Following an award under this Chapter, an entity shall promptly publish in an electronic medium listed in Annex 7.1, a notice that includes at least the following information about the contract award:
(a) The name of the entity;
(b) The description of the goods or services contracted;
(c) The date of the award;
(d) The name of the supplier to whom the contract was awarded;
(e) The value of the contract, and
(f) The procurement method used.
3. An entity shall maintain records and reports relating to procurement proceedings covered by this Chapter, including the records and reports required by Article 7.10, for a period of at least three (3) years.
4. Subject to Article 7.20, on request of a Party, the other Party shall provide in a timely manner information necessary to determine whether a procurement has been conducted fairly, impartially, and in accordance with this Chapter, including information on the characteristics and relative advantages of the successful tender.
Article 7.16. Integrity In Procurement Practices
Each Party shall ensure that administrative or criminal sanctions are in place to address corruption in its public procurement, and that its entities establish policies and procedures to eliminate any potential conflict of interest on the part of those who are involved in or have influence over public procurement.
Article 7.17. Challenge Procedures
1. Each Party shall establish a timely, effective, transparent and non-discriminatory administrative or judicial review procedure through which a supplier may submit challenges related to a covered procurement in which the supplier has an interest, alleging a breach of this Chapter.
2. Each Party shall establish or designate at least one impartial administrative or judicial authority, independent of its entities, to receive and review the challenges referred to in paragraph 1, and make appropriate findings and recommendations.