restricted tendering procedures: those in which an entity communicates individually with suppliers only in the circumstances and in accordance with the conditions described in Article 14-16;
selective tendering procedures: those in which, under the terms of paragraph 3 of Article 14-12, suppliers
invited by the entity may submit tenders;
supplier: a person who has supplied or may supply goods or services in response to an entity's invitation to tender;
locally established supplier: a natural person resident in the territory of the Party, a company of the Party, and a branch or representative office located in the territory of the Party, among others;
services: contracts for services and construction services, unless otherwise specified.
Section B. Scope of Application and Coverage. National Treatment
Article 14-02. Scope of Application.
1. This Chapter applies to measures that a Party adopts or maintains with respect to purchases:
(a) of a federal or central government entity, as the case may be, identified in Annex 1 to this Article; a government enterprise identified in Annex 2 to this Article; or a state government entity or departmental entity identified in Annex 3 to this Article in accordance with Article 14-24;
(b) of goods, in accordance with Annex 4 to this Article; of services, in accordance with Annex 5 to this Article; or of construction services, in accordance with Annex 6 to this Article; and
(c) when the value of the procurement to be awarded is estimated to equal or exceed the value of the following thresholds, calculated and adjusted in accordance with the inflationary rate of the United States of America as set forth in Annex 7 to this Article, in the case of:
(i) federal or central government entities, of US$50,000 for contracts for goods, services or any combination thereof, and US$6.5 million for contracts for construction services;
(ii) government enterprises, US$250,000 for contracts for goods, services or any combination thereof, and US$8 million for contracts for construction services; and
(iii) State government entities and departmental entities, the value of the applicable thresholds, as set forth in Annex 3 to this Article, in accordance with Article 14-24.
2. Paragraph 1 shall be subject to the transition mechanisms set forth in Annex 8 to this Article and the general notes set forth in Annex 9 to this Article.
3. Subject to paragraph 4, where the procurement that an entity is to procure is not covered by this Chapter, the provisions of this Chapter shall not be construed to cover the components of any goods or services that are the subject of that procurement.
4. No Party shall design, develop or structure a procurement contract in such a manner as to avoid the obligations of this Chapter.
5. Purchases includes acquisitions by methods such as purchase, lease, with or without an option to purchase, but does not include:
(a) non-contractual agreements or any form of government assistance, including cooperative agreements, transfers, loans, capital transfers, guarantees, tax incentives, and government procurement of goods and services provided to individuals or to state governments, departmental and regional entities; nor.
(b) the acquisition of agency services or fiscal deposits, liquidation and administration services for regulated financial institutions, and sale and distribution services of public debt.
Article 14-03. Valuation of Contracts.
1. Each Party shall ensure that, in determining whether a contract is covered by this Chapter, its entities apply the provisions of paragraphs 2 through 7 to calculate the value of that contract.
2. The value of the contract shall be the value estimated at the time of publication of the solicitation in accordance with Article 14-11.
3. In calculating the value of a contract, entities shall take into account all forms of remuneration, including premiums, fees, commissions and interest.
4. In addition to the provisions of paragraph 4 of Article 14-02, an entity may not choose a valuation method or split the purchase requirements into separate contracts for the purpose of evading the obligations contained in this Chapter.
5. Where an individual requirement results in the award of more than one contract or the contracts are awarded in separate parts, the basis for valuation shall be:
(a) the actual value of similar recurring contracts entered into during the preceding fiscal year or the preceding 12 months, adjusted, where possible, for changes in quantity and value anticipated for the following 12 months; or
(b) the estimated value of recurring contracts entered into during the fiscal year or in the 12 months following the initial contract.
6. In the case of lease contracts, with or without an option to purchase, or contracts in which a total price is not specified, the basis for valuation shall be:
(a) in the case of contracts entered into for a specified term, if the term is 12 months or less, the calculation shall be made on the basis of the total value of the contract during its term or, if greater than 12 months, on the basis of the total value including the estimated residual value; or
b) in the case of open-ended contracts, the basis shall be the estimated monthly payment multiplied by 48.
7. If the entity is uncertain whether a contract is for a definite or indefinite term, the entity shall calculate the value of the contract using the method in paragraph 6(b).
8. Where the bidding documents require optional clauses, the basis for valuation shall be the total value of the maximum allowable purchase, including all possible optional purchases.
Article 14-04. National Treatment and Non-Discrimination.
1. With respect to measures covered by this Chapter, each Party shall accord to goods of the other Party, to suppliers of such goods, and to service suppliers of the other Party, treatment no less favorable than the most favorable treatment accorded to:
(a) its own goods and suppliers; and
(b) the goods and suppliers of another Party.
2. With respect to measures covered by this Chapter, no Party may:
(a) accord to a supplier established in its territory treatment less favorable than that accorded to another supplier established in that territory by reason of the degree of foreign affiliation or ownership; or
(b) discriminate against a supplier established in its territory on the grounds that the goods or services offered by that supplier for a particular purchase are goods or services of the other Party.
3. Paragraph 1 shall not apply to measures relating to customs duties or other charges of any kind imposed on or in connection with the collection of such duties and charges, or to other import regulations, including restrictions and formalities.
Article 14-05. Rules of Origin.
For purposes of government procurement covered by this Chapter, neither Party shall apply rules of origin to goods imported from any other Party that are different from or inconsistent with those contained in Chapter V (Rules of Origin).
Article 14-06. Denial of Benefits.
A Party may deny benefits under this Chapter to a service supplier of the other Party, after notification and consultations, where the Party determines that the service is being provided by an enterprise that does not conduct substantial business activities in the territory of either Party and is owned or controlled by persons of a non-Party.
Article 14-07. Prohibition of Special Compensatory Conditions.
Each Party shall ensure that its entities do not take into account, request or impose special countervailing conditions in the qualification and selection of suppliers, goods or services, in the evaluation of tenders or in the award of contracts. For the purposes of this Article, special compensatory conditions are those that an entity imposes or takes into account prior to or during the procurement procedure to promote local development or improve the balance of payments accounts, through local content requirements, licensing of technology, investment, countertrade or similar requirements.
Article 14-08. Technical Specifications.
1. Each Party shall ensure that its entities do not develop, adopt or apply any technical specifications that have the purpose or effect of creating unnecessary obstacles to trade.
2. Each Party shall ensure that, where appropriate, any technical specification that its entities provide is:
(a) is defined in terms of performance criteria rather than design or descriptive characteristics; and
(b) is based on international standards, national technical regulations, recognized national standards, or building codes.
3. Each Party shall ensure that the technical specifications stipulated by its entities do not require or refer to a particular brand or trade name, patent, design or type, specific origin or producer or supplier, unless there is no other sufficiently precise or understandable way of describing the requirements of the purchase and provided that, in such cases, words such as "or equivalent" are included in the bidding documents.
4. Each Party shall ensure that its entities do not solicit or accept, in a manner that would have the effect of precluding competition, advice that could be used in preparing or adopting any technical specification in respect of a particular procurement from a person that may have a commercial interest in that procurement.
Section C. Bidding Procedures
Article 14-09. Bidding Procedures.
1. Each Party shall ensure that the tendering procedures of its entities:
(a) are applied in a non-discriminatory manner; and
(b) are consistent with this Article and Articles 14-10 through 14-16.
2. In this regard, each Party shall ensure that its entities:
(a) do not provide to any supplier information about a particular purchase in a manner that has the effect of preventing competition; and
(b) provide all suppliers equal access to information regarding a procurement during the period prior to the issuance of any solicitation or bidding documents.
Article 14-10. Qualification of Suppliers.
1. Pursuant to Article 14-04, in the qualification of suppliers during the tendering procedure, no entity of a Party may discriminate between suppliers of the other Party or between domestic suppliers and suppliers of the other Party.
2. The qualification procedures followed by an entity shall be consistent with the following:
(a) the conditions for the participation of suppliers in tendering procedures shall be published sufficiently in advance to allow suppliers adequate time to initiate and, to the extent consistent with the efficient operation of the procurement process, complete qualification procedures;
(b) conditions for participation in tendering proceedings, including financial guarantees, technical qualifications and information necessary to demonstrate the financial, commercial and technical capability of suppliers, as well as verification of the supplier's compliance with such conditions, shall be limited to those essential to ensure the performance of the contract concerned;
(c) the financial, commercial and technical capacity of a supplier shall be determined on the basis of its overall activity, including both its activity in the territory of the supplier's Party and its activity in the territory of the Party of the procuring entity, if any;
(d) an entity may not use the qualification process, including the time it requires, for the purpose of excluding suppliers of the other Party from a list of suppliers or not considering them for a particular purchase;
(e) an entity shall recognize as qualified suppliers those suppliers of the other Party that are eligible to participate in a particular purchase;
(f) an entity shall consider for a particular purchase those suppliers of the other Party that apply to participate in the purchase and have not yet been qualified, provided that sufficient time is available to complete the qualification procedure;
(g) an entity maintaining a standing list of qualified suppliers shall ensure that suppliers may apply for qualification at any time, that all qualified suppliers so requesting are included in the list within a reasonably short period of time, and that all suppliers included in the list are notified of the cancellation or removal from the list;
(h) where, after publication of the solicitation in accordance with Article 14-11, a supplier that has not yet been qualified applies to participate in a particular procurement, the entity shall promptly initiate the qualification procedure;
(i) an entity shall communicate to any supplier that has applied for qualification the decision as to whether it has been qualified; and
(j) where an entity rejects a request for qualification or ceases to recognize the qualification of a supplier, the entity shall, upon request, promptly provide relevant information on the reasons for its action.
3. Each Party shall:
(a) ensure that each of its entities uses a single qualification procedure; where the entity establishes a need for a different procedure and, on request of the other Party, is prepared to demonstrate such need, it may use additional qualification procedures; and
(b) endeavor to minimize differences in the rating procedures of its entities.
4. Nothing in paragraphs 2 and 3 shall prevent an entity from excluding a supplier on grounds such as bankruptcy or misrepresentation.
Article 14-11. Invitation to Participate.
1. Except as provided in Article 14-16, an entity shall publish an invitation to participate for all purchases in accordance with paragraphs 2, 3 and 5 in the appropriate publication set out in the annex to this Article.
2. The invitation to participate shall take the form of a solicitation, which shall contain the following information:
(a) a description of the nature and quantity of the goods or services to be purchased, including any future purchase options and, if possible:
(i) an estimate of when such options may be exercised; and
(ii) in the case of recurring contracts, an estimate of when subsequent solicitations may be issued;
(b) an indication of whether the bidding is open or selective;
(c) any dates for commencement or completion of delivery of the goods or services to be purchased;
(d) the address to which the request to be invited to bid or to qualify for the list of suppliers must be sent and the deadline for receipt of the request;
(e) the address to which bids should be sent and the deadline for receipt of bids;
(f) the address of the entity that will award the contract and that will provide any information necessary to obtain specifications and other documents;
(g) a statement of any economic or technical conditions, and of any financial guarantees, information and documents required from suppliers;
(h) the amount and method of payment of any amount to be paid for the bidding documents; and
(i) whether the entity is inviting bids for the purchase or lease, with or without an option to purchase.
3. Notwithstanding paragraph 2, an entity identified in Annex 2 to Article 14-02 or Annex 3 to Article 14-02 may use as an invitation to participate a scheduled purchase solicitation, which shall contain the information in paragraph 2 to the extent available to the entity, but which shall include, at a minimum, the following information:
(a) a description of the subject matter of the purchase;
(b) the time limits for receipt of tenders or requests to be invited to tender;
(c) the address from which documentation related to the purchase may be requested;
(d) an indication that interested suppliers shall express to the entity their interest in the procurement; and (e) identification of an information center at the entity where additional information may be obtained.
4. An entity that uses as an invitation to participate a scheduled procurement solicitation shall subsequently invite suppliers that have expressed an interest in the procurement to confirm their interest, based on information provided by the entity that shall include at least the information set out in paragraph 2.
5. Notwithstanding paragraph 2, an entity identified in Annex 2 to Article 14-02 or Annex 3 to Article 14-02 may use a solicitation relating to the qualification system as an invitation to participate. An entity using such a solicitation shall provide in a timely manner, in accordance with the considerations referred to in paragraph 8 of Article 14-15, information that allows all suppliers that have expressed an interest in participating in the procurement to have a real possibility to evaluate their interest. The information shall normally include the information required for the solicitation referred to in paragraph 2. The information provided to an interested supplier shall be provided without discrimination to all other interested suppliers.
6. In the case of selective tendering procedures, an entity maintaining a standing list of qualified suppliers shall insert annually, in the appropriate publication referred to in the Annex to this Article, a notice containing the following information:
(a) a listing of all current lists, including their headings, relating to the goods or services, or categories of goods or services to be procured through the lists;
(b) the conditions to be met by suppliers in order to be included in the lists and the methods by which each of those conditions will be verified by the entity concerned; and
(c) the period of validity of the lists and the formalities for their renewal.
7. Where, after publication of an invitation to participate, but before the expiry of the time limit for the opening or receipt of tenders, as stated in the invitations or tender documentation, the entity considers it necessary to amend or reissue the invitation or tender documentation, the entity shall ensure that the new or amended invitation or tender documentation is given the same publicity as the original documentation. Any important information provided to a supplier about a particular purchase shall be provided simultaneously to other interested suppliers in sufficient time to allow all interested suppliers adequate time to review the information and to respond.
8. An entity shall state in the solicitations referred to in this article that the purchase is covered by this chapter.
Article 14-12. Selective Tendering Procedures.
1. In order to ensure optimal effective competition among suppliers of the Parties in selective tendering procedures, an entity shall invite as many domestic suppliers and suppliers of the other Parties for each purchase as is consistent with the efficient operation of the procurement system.
2. Subject to paragraph 3, an entity that maintains a standing list of qualified suppliers may select from among the suppliers on the list those to be invited to tender for a particular purchase. In the selection process, the entity shall provide an equal opportunity to suppliers on the list.
3. Pursuant to Article 14-10(2)(f), an entity shall permit a supplier requesting to participate in a particular purchase to submit a tender and shall consider that tender. The number of additional suppliers permitted to participate shall be limited only for reasons of efficient operation of the procurement system.
4. When not inviting or admitting a supplier to tender, an entity shall, at the request of the supplier, promptly provide the supplier with relevant information on the reasons for its action.
Article 14-13. Time Limits for Tendering and Delivery.
1. An entity shall:
(a) in setting a time limit, shall provide suppliers of the other Party sufficient time to prepare and submit tenders, prior to the closing of the tendering period;
(b) in setting a deadline, in accordance with its own reasonable needs, shall take into account factors such as the complexity of the purchase, the anticipated degree of subcontracting, and the time normally required to transmit tenders by mail, whether from overseas locations or within the national territory; and
(c) in establishing the closing date for the receipt of bids or applications for admission to bidding, shall give due consideration to delays in publication.
2. Subject to paragraph 3, an entity shall provide that:
(a) in open tendering procedures, the time limit for receipt of a tender is not less than 40 days from the date of publication of a solicitation in accordance with Article 14-11;
(b) in selective tendering proceedings not involving the use of a standing list of qualified suppliers, the time period for the submission of an application for admission to tender shall be not less than 25 days from the date of publication of a solicitation, in accordance with Article 14-11, and the time period for the receipt of tenders shall be not less than 40 days from the date of publication of a solicitation; and
(c) in selective tendering procedures involving the use of a standing list of qualified suppliers, the period for the receipt of tenders shall be not less than 40 days from the date of the first invitation to tender, but where the latter date does not coincide with the date of publication of a solicitation referred to in Article 14-11, not less than 40 days shall elapse between the two dates.
3. An entity may reduce the time limits provided for in paragraph 2 in accordance with the following:
(a) as provided in paragraph 3 or 5 of Article 14-11, where a solicitation has been issued within a period of not less than 40 days and not more than 12 months, the 40-day period for receipt of tenders may be reduced to not less than 24 days;
(b) in the case of a second or subsequent publication relating to recurring contracts, pursuant to article 14-11, paragraph 2 (a), the 40-day period for the receipt of tenders may be reduced to not less than 24 days;
(c) where, for reasons of urgency duly justified by the entity, the time limits cannot be complied with, such time limits shall in no case be less than ten days from the date of publication of a solicitation in accordance with Article 14-11; or
(d) where an entity referred to in Annex 2 or 3 to Article 14-02 uses a solicitation referred to in paragraph 5 of Article 14-11 as an invitation to participate, the entity and the selected suppliers may fix, by mutual agreement, the time limits; however, in the absence of agreement, the entity may fix time limits that are sufficiently long to permit the proper submission of tenders, but in no case less than ten days.
4. In establishing the date for delivery of goods or services, and in accordance with its reasonable needs, an entity shall take into account factors such as the complexity of the purchase, the anticipated degree of subcontracting, and the time realistically required for the production, dispatch and transportation of the goods from the various places of supply.
Article 14-14. Basis for Tendering.
1. Where entities provide tender documentation to suppliers, the documentation shall contain all information necessary to enable suppliers to properly submit their tenders, including the information required to be published in the invitation to tender referred to in Article 14-11, paragraph 2, except the information required under Article 14-11, paragraph 2(h). The documentation shall also include:
(a) the address of the entity to which the tenders are to be sent and of the office designated to receive them;
(b) the address to which requests for additional information shall be sent;
(c) the date and time of the closing date for the receipt of bids and its period of validity;
(d) the persons accredited to attend the opening of the bids and the date, time and place of such opening;
(e) a statement of any conditions of an economic or technical nature and of any financial guarantees, information and documents required from the suppliers;
(f) a full description of the goods or services to be purchased and any other requirements, including technical specifications, certificates of conformity and any necessary drawings, designs and instructions;
(g) the criteria on which the award of the contract will be based, including any factors, other than price, to be considered in the evaluation of tenders and the cost elements to be taken into account in evaluating tender prices, such as transportation, insurance and inspection charges and, in the case of goods or services of the other Party, customs duties and other import charges, taxes and currency of payment;
(h) the terms of payment; and
(i) any other stipulations or conditions.
2. An entity shall:
(a) provide the terms and conditions of tender upon request by a supplier participating in open tendering procedures or applying to participate in selective tendering procedures, and respond promptly to any reasonable request for clarification thereof; and
(b) respond promptly to any reasonable request by a supplier participating in the tendering proceedings for relevant information, provided that such information does not give that supplier an advantage over its competitors in the procurement proceedings.
Article 14-15. Submission, Receipt and Opening of Tenders, and Award of Contracts.
1. An entity shall use procedures for the submission, receipt and opening of tenders, and the award of contracts that are consistent with the following:
(a) tenders shall be submitted in writing, either directly or by mail;
(b) when tenders transmitted by telex, telegram, facsimile or other means of electronic transmission are accepted, the tender submitted shall include all information necessary for evaluation, including the final price proposed by the supplier and a statement that the supplier accepts all terms and conditions of the invitation;
(c) Tenders submitted by telex, telegram, telefacsimile or other means of electronic transmission shall be confirmed promptly by letter or by a signed copy of the telex, telegram, telefacsimile or electronic message;
(d) the contents of the telex, telegram, telefacsimile or electronic message shall prevail in the event of any difference or inconsistency between it and any other documentation received after the deadline for receipt of bids has expired;
(e) the submission of bids by telephone shall not be permitted;
(f) applications for participation in selective bidding may be submitted by telex, telegram, telefacsimile and, where permitted, by other means of electronic transmission; and
(g) opportunities to correct unintentional errors of form, which are afforded to suppliers during the period between the opening of tenders and the award of the contract, shall not be used in such a manner as to discriminate between suppliers.