4. In estimating the value of a procurement for the purposes of ascertaining whether it is a covered procurement, a procuring entity shall:
(a) take into account all forms of remuneration, including any premiums, fees, commissions, interest, other revenue streams that may be provided for in the procurement and, where the procurement provides for the possibility of option clauses, the maximum total value of the procurement, inclusive of optional purchases; and
(b) without prejudice to paragraph 6, where the procurement is to be conducted in multiple parts, with contracts to be awarded at the same time or over a given period to one or more suppliers, base its calculation on the total maximum value of the procurement over its entire duration.
5. The selection of the valuation method by a procuring entity shall not be used, nor shall any procurement requirement be divided, for the purposes of avoiding the application of this Chapter.
6. In the case of procurement by lease, rental, or hire purchase of goods or services, or procurement for which a total price is not specified, the basis for valuation shall be:
(a) in the case of a fixed-term contract:
(i) where the term of the contract is 12 months or less, the total estimated maximum value for its duration; or
(ii) where the term of the contract exceeds 12 months, the total estimated maximum value, including any estimated residual value;
(b) where the contract is for an indefinite period, the estimated monthly instalment multiplied by 48; and
(c) where it is not certain whether the contract is to be a fixed-term contract, subparagraph (b) shall be used.
7. Where the total estimated maximum value of a procurement over its entire duration is not known, the procurement shall be a covered procurement, unless otherwise excluded under this Chapter.
8. The Parties acknowledge and affirm the Memorandum of Understanding on Defence Industry Cooperation between the Ministry of National Defense of the Republic of Korea and the Department of Defence of Australia, dated 8 August 2001 (the "MOU"), including any amendment to or extension thereto. The Parties recognise that the benefits and responsibilities established under the MOU will continue to apply.
Article 12.2. Exceptions
1. Provided that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between the Parties where the same conditions prevail or a disguised restriction on trade between the Parties, nothing in this Chapter shall be construed to prevent a Party from adopting or maintaining measures:
(a) necessary to protect public morals, order or safety;
(b) necessary to protect human, animal or plant life or health;
(c) necessary to protect intellectual property; or
(d) relating to goods or services of handicapped persons, of philanthropic or not-for- profit institutions, or of prison labour.
2. The Parties understand that paragraph 1(b) includes environmental measures necessary to protect human, animal or plant life or health.
3. Further to Article 22.2 (Essential Security), nothing in this Chapter shall be construed to prevent a Party from taking any action which it considers necessary for the protection of its essential security interests relating to government procurement indispensable for national security or for national defence purposes.
Article 12.3. General Principles
National Treatment and Non-Discrimination
1. With respect to any measure regarding covered procurement, each Party and its procuring entities shall accord to the goods, services and suppliers of the other Party treatment no less favourable than the most favourable treatment the Party and its procuring entities accord to domestic goods, services and suppliers.
2. With respect to any measure regarding covered procurement, neither a Party nor its procuring entities shall:
(a) treat a locally established supplier less favourably than another locally established supplier on the basis of degree of foreign affiliation or ownership; or
(b) discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of the other Party.
Measures Not Specific to Procurement
3. Paragraphs 1 and 2 shall not apply to measures regarding customs duties and other charges of any kind imposed on, or in connection with, importation, the method of levying such duties and charges, or other import regulations including restrictions and formalities, and measures affecting trade in services other than measures regarding covered procurement.
Prohibition of Offsets
4. Neither a Party nor its procuring entities shall seek, take account of, impose or enforce offsets at any stage of a covered procurement.
Rules of Origin
5. Each Party shall apply to covered procurements of goods or services the rules of origin that it applies in the normal course of trade to those goods or services.
Conduct of Procurement and Tendering Procedures
6. Each Party shall ensure that its procuring entities comply with this Chapter in conducting covered procurements.
7. A procuring entity may use open, selective or limited tendering procedures.
8. No procuring entity shall prepare, design, or otherwise structure or divide any procurement, in any stage of the procurement, for the purposes of avoiding the application of this Chapter.
9. Further to Article 22.4 (Disclosure of Information), nothing in this Chapter shall be construed as requiring a Party or its procuring entities to disclose, furnish or allow access to confidential information furnished by a person where such disclosure might prejudice fair competition between suppliers, without the authorisation of the person that furnished that information.
Article 12.4. Publication of Notices
Notice of Procurement
1. In an open tendering procedure, a procuring entity shall publish a notice inviting interested suppliers to submit tenders (hereinafter referred to as "notice of procurement") in electronic or paper media that are widely disseminated and remain readily accessible to any interested supplier of the other Party for the entire period established for tendering.
2. Where, in a selective tendering procedure, a procuring entity publishes a notice inviting applications for participation or requesting suppliers to express their interest in a covered procurement, that notice shall be published in electronic or paper media that are widely disseminated and readily accessible to any interested supplier of the other Party.
3. Unless otherwise provided in this Chapter, each notice of procurement shall include:
(a) 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;
(b) a description of the procurement and any conditions for participation;
(c) where appropriate, the time-frame for delivery of goods or services; and
(d) the address and time limit for the submission of tenders.
Notice of Planned Procurement
4. Each Party shall encourage its procuring entities to publish prior to, or as early as possible in, each fiscal year, a notice regarding their procurement plans for that fiscal year. The notice should, at a minimum, include a description of each planned procurement and indicate the expected time of commencement of the related tender procedure.
Article 12.5. Time Limits
1. A procuring entity shall prescribe time limits for tendering that allow suppliers adequate time to submit applications or requests to participate in a covered procurement and to prepare and submit responsive tenders, taking into account the nature and complexity of the procurement.
2. A procuring entity shall require all participating suppliers to submit tenders in accordance with a common deadline. For greater certainty, this requirement shall also apply where:
(a) as a result of a need to amend information provided to suppliers during the procurement process, the procuring entity extends the time limit for qualification or tendering procedures; or
(b) negotiations are terminated and suppliers may submit new tenders.
3. Unless provided for in paragraph 4, the final date for the receipt of tenders shall not be less than 25 days from the date on which a notice of procurement is published or, in the case of selective tendering, from the date on which the procuring entity invites suppliers to submit tenders.
4. A procuring entity may reduce the time limit for the receipt of tenders to not less than 10 days:
(a) where the procuring entity has published a separate notice, including a notice of planned procurement under Article 12.4.4, at least 30 days and not more than 12 months in advance, and such separate notice contains a description of the procurement, the time limits for the submission of tenders or, where appropriate, applications for participation in a procurement, and the address from which documents relating to the procurement may be obtained;
(b) in the case of the second or subsequent publication of notices for procurement of a recurring nature;
(c) where a state of urgency duly substantiated by the procuring entity renders the time period for tendering established in accordance with paragraph 3 impracticable; or
(d) where the procuring entity procures commercial goods or services that are sold or offered for sale to, and customarily purchased and used by, non-governmental buyers for non-governmental purposes, including goods and services with modifications customary in the commercial marketplace, as well as minor modifications not customarily available in the commercial marketplace.
Article 12.6. Conditions for Participation
1. A Party and its procuring entities shall limit any conditions for participation in a covered procurement to those that ensure the potential supplier's capability to fulfil the contract in question.
2. In assessing whether a supplier satisfies the conditions for participation, a Party and its procuring entities:
(a) shall evaluate the capabilities 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;
(b) shall base its determination solely on the conditions that a procuring entity has specified in advance in notices or tender documentation;
(c) shall not impose the condition that, in order for a supplier to participate in a procurement or be awarded a contract, the supplier has previously been awarded one or more contracts by a procuring entity of that Party or that the supplier has prior work experience in the territory of that Party; and
(d) may require prior experience where relevant to meet the requirements of the procurement.
3. Nothing in this Article shall preclude the exclusion of any supplier on grounds such as:
(a) bankruptcy;
(b) false declarations;
(c) significant or persistent deficiencies in performance of any substantive requirement or obligation under a prior contract;
(d) final judgments in respect of serious crimes or other serious offences;
(e) professional misconduct, or acts or omissions, that adversely reflect on the commercial integrity of the supplier; or
(f) failure to pay taxes.
Article 12.7. Registration and Qualification of Suppliers
1. Where a Party or a procuring entity requires suppliers to register or pre-qualify before being permitted to participate in a covered procurement, that Party or procuring entity shall ensure that a notice inviting suppliers to apply for registration or pre-qualification is published in adequate time to enable interested suppliers to initiate and, to the extent that it is compatible with the efficient operation of the procurement process, complete the registration or qualification procedures.
2. A Party or procuring entity may establish a multi-use list, provided that the Party or procuring entity annually publishes or otherwise makes available continuously in electronic form a notice inviting interested suppliers to apply for inclusion on the list. The notice shall include:
(a) a description of the goods and services, or categories thereof, for which the list may be used;
(b) the conditions for participation to be satisfied by suppliers and the methods that the procuring entity or other government agency will use to verify a supplier's satisfaction of the conditions;
(c) the name and address of the procuring entity or other government agency and other information necessary to contact the entity and obtain all relevant documents relating to the list; and
(d) any deadlines for submission of applications for inclusion on that list.
3. A Party or procuring entity that maintains a multi-use list shall include on the list all suppliers that satisfy the conditions for participation within a reasonably short time.
4. Where a supplier applies for participation in a covered procurement, or for inclusion on a list referred to in paragraph 2, a procuring entity shall promptly advise such supplier of its decision with respect to its application.
Article 12.8. 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 between the Parties.
2. In prescribing the technical specifications for the goods or services being procured, a procuring entity shall, where appropriate:
(a) set out the technical specification in terms of performance and functional requirements, rather than design or descriptive characteristics; and
(b) base the technical specification on international standards, where such standards exist, otherwise on national technical regulations, recognised national standards or building codes.
3. A procuring entity shall not prescribe technical specifications that require or refer to a particular trademark or trade name, patent, copyright, design, type, specific origin, producer or supplier, unless there is no other sufficiently precise or intelligible way of describing the procurement requirements and provided that, in such cases, the procuring entity includes 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 covered procurement from a person that may have a commercial interest in the procurement.
5. Notwithstanding paragraph 4, a procuring entity may:
(a) conduct market research in developing technical specifications for a specific covered procurement; or
(b) allow a supplier that has been engaged to provide design or consulting services to participate in procurements related to such services, provided it would not give the supplier an unfair advantage over other suppliers.
6. For greater certainty, a procuring entity may prepare, adopt or apply technical specifications to promote the conservation of natural resources or protect the environment.
Article 12.9. Tender Documentation
1. A procuring entity shall promptly provide, on request, to any supplier participating in a covered procurement, tender documentation that includes all information necessary to permit suppliers to prepare and submit responsive tenders.
2. Unless already provided in the notice of procurement, such documentation shall include a complete description of:
(a) the procurement, including the nature, scope and, where known, the quantity of the goods or services to be procured and any requirements to be fulfilled, including any technical specifications, conformity certification, plans, drawings, or instructional materials;
(b) any conditions for participation, including any financial guarantees, information, and documents that suppliers are required to submit;
(c) all criteria to be considered in the awarding of the contract;
(d) where there will be a public opening of tenders, the date, time, and place for the opening of tenders; and
(e) any other terms or conditions relevant to the evaluation of tenders.
3. Neither a Party nor its procuring entities shall provide information with regard to a specific covered procurement in a manner which would have the effect of giving a potential supplier or group of potential suppliers an advantage over competitors.
4. Aprocuring entity shall reply promptly to any reasonable request for relevant information submitted by a supplier participating in the tendering procedure.
5. Where, during the course of a covered procurement, a procuring entity modifies the criteria or technical requirements set out in notices or tender documentation provided to participating suppliers, or amends or reissues notices or tender documentation, it shall transmit in writing all such modifications or all such amended or reissued notices or tender documentation:
(a) to all the suppliers that are participating at the time the information is amended, if known, and in all other cases, in the same manner as the original information was provided; and
(b) in adequate time to allow such suppliers to modify and resubmit their tenders, as appropriate.
Article 12.10. Selective Tendering Procedures
To ensure optimum effective competition under selective tendering procedures, procuring entities shall invite tenders from the maximum number of domestic suppliers and suppliers of the other Party that is consistent with the efficient operation of the procurement system. They shall select the suppliers to participate in the procedure in a fair and non-discriminatory manner.
Article 12.11. Limited Tendering
1. Provided that it does not use this Article for the purpose of avoiding competition, to protect domestic suppliers or ina manner that discriminates against suppliers of the other Party, and subject to paragraph 2, a procuring entity may use limited tendering procedures. When a procuring entity applies limited tendering, it may choose, according to the nature of the procurement, not to apply Articles 12.4 through 12.10, 12.12.1, and 12.12.3 through 12.12.8.
2. A procuring entity may use limited tendering only under the following circumstances:
(a) where, in response to a prior notice, invitation to participate, or invitation to tender:
(i) no tenders were submitted or no suppliers requested participation;
(ii) no tenders were submitted that conform to the essential requirements in the tender documentation;
(iii) no suppliers satisfied the conditions for participation; or (iv) the tenders submitted have been collusive,
and the procuring entity does not substantially modify the essential requirements of the procurement;
(b) where, for works of art, or for reasons connected with the protection of exclusive rights, such as patents or copyrights, or proprietary information, or where there is an absence of competition for technical reasons, the goods or services can be supplied only by a particular supplier and no reasonable alternative or substitute exists;
(c) for additional deliveries by the original supplier or its authorised agent that are intended either as replacement parts, extensions, or continuing services for existing equipment, software, services or installations, where a change of supplier would compel the procuring entity to procure goods or services not meeting requirements of interchangeability with existing equipment, software, services, or installations;
(d) for goods purchased on a commodity market;
(e) where a procuring entity procures a prototype or a first good or service that is intended for limited trial or 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;
(f) for new construction services consisting of the repetition of similar construction services that conform to a basic project for which an initial contract was awarded following use of open tendering or selective tendering in accordance with this Chapter, and for which the procuring entity has indicated in the notice of procurement concerning the initial construction service that limited tendering procedures might be used in awarding contracts for such new construction services;
(g) for purchases made under exceptionally advantageous conditions that only arise in the very short term, such as from unusual disposals, unsolicited innovative proposals, liquidation, bankruptcy or receivership and not for routine purchases from regular suppliers;
(h) in so far as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseen by the procuring entity, the goods or services could not be obtained in time by means of an open or selective tendering procedure; or
(i) where a contract is awarded to the winner of a design contest, provided that:
(i) the contest has been organised in a manner that is consistent with this Chapter; and
(ii) the contest is judged by an independent jury with a view to a design contract being awarded to the winner.
3. For each contract awarded under paragraphs 1 and 2, a procuring entity shall prepare a written report that includes:
(a) the name of the procuring entity;
(b) the value and kind of goods or services procured; and
(c) a statement indicating the circumstances and conditions described in paragraphs 1 and 2 that justify the use of a procedure other than open or selective tendering procedures.
Article 12.12. Receipt and Opening of Tenders and Awarding of Contracts
1. Aprocuring entity shall receive and open all tenders under procedures that guarantee the fairness and impartiality of the procurement process.
2. A procuring entity shall treat all tenders in confidence subject to the laws of the Party of the procuring entity. In particular, it shall not provide information to particular suppliers that might prejudice fair competition between suppliers.
3. A procuring entity shall not penalise any supplier whose tender is received after the time specified for receiving tenders if the delay is due solely to mishandling on the part of the procuring entity.
4, Where a procuring entity provides suppliers with opportunities to correct unintentional errors of form between the opening of tenders and the awarding of the contract, the procuring entity shall provide the same opportunities to all participating suppliers.
5. A procuring entity shall require that, in order to be considered for award, a tender be submitted in writing and, at the time of opening, conform to the essential requirements of the tender documentation.
6. Unless a procuring entity determines that it is not in the public interest to award a contract, it shall award the contract to the supplier that the procuring entity has determined to satisfy the conditions for participation and whose tender is determined to be the most advantageous or best value for money, in accordance with the requirements and evaluation criteria specified in the notices and tender documentation.
7. Where a procuring entity receives a tender with a price that is abnormally lower than the prices in other tenders submitted, it may verify with the supplier that it can comply with the conditions for participation and is capable of fulfilling the terms of the contract.
8. A procuring entity shall not cancel a covered procurement, nor terminate or modify awarded contracts, so as to circumvent the requirements of this Chapter.
Article 12.13. Post-award Information
1. No later than 60 days after award of a contract, a procuring entity shall publish a notice in an officially designated publication that includes at least the following information about the award:
(a) the name and address of the procuring entity;
(b) a description of the goods or services procured;
(c) the date of award or the contract date;
(d) the contract value;
(e) the name and address of the successful supplier; and
(f) the procurement method used.
2. A procuring entity shall promptly inform suppliers that have submitted tenders of the contract award decision. A procuring entity shall, on request, provide an unsuccessful supplier with the reasons that the procuring entity did not select its tender.
3. A procuring entity shall maintain records and reports relating to the conduct of procurements covered by this Chapter, including reports required by Article 12.11.3, for a period of at least three years after the date it awards a contract.