2. For the purposes of paragraph 1, "means of electronic transmission" includes the means by which the recipient can produce a hard copy of the tender at the place of destination of the transmission.
3. No entity shall penalize a supplier whose tender is received at the office designated in the tender documentation after the expiration of the time limit, where the delay is due solely to an oversight by the entity.
4. All tenders solicited by an entity in open or selective tendering procedures shall be received and opened in accordance with procedures and under conditions that ensure the regularity of the opening of tenders. The entity shall retain information relating to the opening of tenders. The information shall remain available to the competent authorities of the Party for use, if required, in accordance with Articles 14-17, 14-19 or Chapter XIX (Dispute Settlement).
5. An entity shall award contracts in accordance with the following:
(a) for a tender to be considered for award, it shall, at the time of opening, comply with the requirements set forth in the invitation to tender or the bidding documents and be from suppliers that comply with the conditions for participation;
(b) if the entity receives a tender that is abnormally lower in price than other tenders submitted, the entity may inquire with the supplier to ensure that the supplier satisfies the conditions of participation and is or will be capable of fulfilling the terms of the contract;
(c) the entity shall award the contract to the supplier that it has determined to be capable of performing the contract and whose tender is the lowest priced or most advantageous in accordance with the specific evaluation criteria set forth in the invitation to tender or in the bidding documents, unless the entity decides not to award the contract in the public interest;
d) awards shall be made in accordance with the criteria and requirements established in the bidding documents; and
(e) option clauses shall not be used to circumvent this chapter.
6. No entity of a Party may make the award of a procurement contract conditional on a supplier having previously been awarded one or more contracts by an entity of that Party, or on the supplier's previous work experience in the territory of that Party.
7. An entity shall:
(a) upon the specific request of participating suppliers, promptly inform them of decisions regarding awarded procurement contracts and, if requested by them, shall do so in writing; and
(b) upon the specific request of a supplier whose tender was not selected, provide the supplier with relevant information concerning the reasons why its tender was not selected, the characteristics and advantages of the selected tender, and the name of the successful supplier.
8. Not later than 72 days after the award of the procurement contract, an entity shall insert a notice in the appropriate publication referred to in the annex to Article 14-11 containing the following information:
(a) a description of the nature and quantity of the goods or services that are the subject of the contract;
(b) the name and address of the entity awarding the contract;
(c) the date of the award;
(d) the name and address of each supplier selected;
(e) the value of the contract or of the highest and lowest price bids considered for the award of the contract; and
(f) the bidding procedure used.
9. Notwithstanding paragraphs 1 through 8, an entity may withhold certain information about the award of the procurement contract where disclosure of that information
(a) would impede law enforcement or would be contrary to the public interest;
(b) would prejudice the legitimate commercial interests of a particular person; or
(c) would be detrimental to fair competition among suppliers.
Article 14-16. Restricted Tendering.
1. An entity of a Party may, in the circumstances and in accordance with the conditions described in paragraph 2, use restricted tendering procedures and thereby deviate from Articles 14-09 through 14-15, provided that restricted tendering procedures are not used to avoid the maximum possible competition or in a manner that would constitute a means of discrimination between suppliers of the other Party or of protection of domestic suppliers.
2. An entity may use restricted tendering procedures in the following circumstances and under the following conditions, as appropriate:
(a) in the absence of tenders in response to an open or selective invitation to tender or where tenders submitted have resulted from collusion or do not conform to the essential requirements of the tender documentation, or where tenders have been made by suppliers that do not meet the conditions for participation provided for in accordance with this Chapter, provided that the requirements of the initial purchase are not substantially modified in the award of the contract;
(b) when, in the case of works of art or for reasons related to the protection of patents, copyrights or other exclusive rights, or proprietary information, or for technical reasons there is no competition, the goods or services can only be supplied by a particular supplier, and there are no reasonable alternatives or substitutes;
(c) to the extent strictly necessary when, for reasons of extreme urgency due to events unforeseeable by the entity, it would not be possible to obtain the goods or services in time through competitive or selective bidding;
(d) for additional deliveries from the initial supplier either as replacement parts or continuing services for existing materials, services or facilities, or as an extension of existing materials, services or facilities, where a change of supplier would require the entity to purchase equipment or services that do not conform to the requirement of being interchangeable with existing equipment or services, including computer software, to the extent that the initial purchase of the equipment or services was covered by this chapter;
e) when an entity acquires prototypes or a first good or service to be manufactured at its request in the course of and for the performance of a particular contract for research, experimentation, study or original manufacture. Once such contracts have been fulfilled, the purchase of goods or services made as a result thereof shall be in accordance with Articles 14-09 through 14-15. The original development of a first good may include its production in limited quantity in order to take into account the results of tests in practice and to demonstrate that the product lends itself to mass production, satisfying acceptable standards of quality, but does not include mass production to determine commercial viability or to recover research and development costs;
(f) for goods purchased in a commodity market;
(g) for purchases made on exceptionally favorable terms that are offered only on very short-term terms, such as extraordinary disposals made by companies that are not normally suppliers; or to the disposal of assets of companies in liquidation or under receivership, but does not include ordinary purchases made from regular suppliers;
(h) for contracts to be awarded to the winner of an architectural design competition, provided that the competition is:
(i) organized in accordance with the principles of this chapter, including with respect to the publication of the invitation to suppliers qualified to compete;
(ii) organized in such a way that the design contract is awarded to the winner; and (iii) submitted to an independent jury; and
(i) when an entity requires consulting services related to matters of a confidential nature, the disclosure of which could reasonably be expected to compromise confidential public sector information, cause serious economic harm or, similarly, be contrary to the public interest.
3. Each report shall contain the name of the procuring entity, the value and kind of goods or services procured, the country of origin, and a statement of the circumstances and conditions described in paragraph 2 that justified the use of restricted tendering. The entity shall keep each report available to the competent authorities of the Party for use, if required, in accordance with Articles 14-17, 14-19 or Chapter XIX (Dispute Settlement).
Section D. Challenge Procedures
Article 14-17. Challenge Procedures.
1. In order to promote fair, open and impartial procurement procedures, each Party shall adopt and maintain challenge procedures for purchases covered by this Chapter in accordance with the following:
(a) each Party shall permit suppliers to have recourse to the challenge procedure in connection with any aspect of the procurement process which, for purposes of this Article, commences from the time an entity has defined its procurement requirement and continues until the award of the contract;
(b) before initiating a challenge procedure, a Party may encourage the supplier to seek, with the procuring entity, a resolution of its complaint;
(c) each Party shall ensure that its entities consider, in a timely and impartial manner, any complaint or challenge with respect to procurement covered by this Chapter;
(d) whether or not a supplier has attempted to resolve its complaint with the entity or after failing to reach a successful resolution, no Party may prevent the supplier from initiating a challenge procedure or seeking other relief;
(e) a Party may require a supplier to notify the entity of the initiation of a challenge procedure;
(f) a Party may limit the period within which a supplier may initiate the challenge procedure, but in no case shall this period be less than ten working days from the time the supplier becomes aware of the basis of the complaint or it is considered that the supplier should have become aware of the basis of the complaint;
(g) each Party shall establish or designate a review authority without substantial interest in the outcome of the procurement to receive challenges and issue the relevant determinations and recommendations;
(h) upon receipt of the challenge, the reviewing authority shall proceed to investigate the challenge in an expeditious manner;
(i) a Party may require its reviewing authority to limit its considerations to the challenge itself;
(j) in investigating the challenge, the reviewing authority may delay the award of the proposed procurement contract until the challenge is resolved, except in cases of urgency or where delay would be contrary to the public interest;
(k) the reviewing authority shall issue a decision on the challenge, which may include directions to the entity to reevaluate the bids, terminate the contract, or recompete the contract;
(I) entities shall follow the decisions of the reviewing authority;
(m) at the conclusion of the challenge procedure, each Party shall empower its reviewing authority to make further written recommendations to an entity regarding any phase of its procurement process that has been found to be problematic during the challenge investigation, including recommendations for changes to the entity's procurement procedures, in order to be consistent with this Chapter;
(n) The reviewing authority shall provide, in a timely manner and in writing, the result of its findings and its recommendations with respect to the challenges, and make them available to the Parties and interested persons;
(o) each Party shall specify in writing and make generally available all of its challenge procedures; and
(p) in order to verify that the procurement process was conducted in accordance with this Chapter, each Party shall ensure that each of its entities maintains complete documentation relating to each of its purchases, including a written record of all communications substantially affecting each purchase, for a period of at least three years from the date on which the contract was awarded.
2. A Party may request that the challenge procedure not be initiated until after the solicitation has been published or, if not published, after the bidding documents are available. Where a Party establishes such a requirement, the ten working day period referred to in paragraph 1(f) shall not begin to run until the date on which the invitation has been published or the tender documentation is available.
Section E. General Provisions
Article 14-18. Exceptions.
1. Nothing in this Chapter shall be construed to prevent a Party from taking any action or refraining from disclosing information that it considers necessary to protect its essential security interests in connection with the procurement of arms, ammunition or war material, or any other procurement indispensable for national security or national defense purposes.
2. 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 establishing 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 the goods or services of handicapped persons, charitable institutions or prison labor.
Article 14-19. Provision of Information.
1. In addition to Article 17-02 (Publication), each Party shall promptly publish any laws, regulations, case law, administrative rulings of general application and any procedures, including model contract clauses relating to government procurement covered by this Chapter, by inserting them in the relevant publications referred to in the Annex to this Article.
2. Each Party shall:
(a) explain to the other Party, upon request, its government procurement procedures;
(b) ensure that its entities, upon request by a supplier, promptly explain their government procurement practices and procedures; and
(c) designate, not later than the entry into force of this Agreement, one or more information centers to:
(i) facilitate communication between the Parties; and
(ii) respond, upon request, to all reasonable inquiries from the other Party to provide relevant information on matters covered by this Chapter.
3. A Party may request additional information on the award of the contract that may be necessary to determine whether a purchase was made in accordance with the provisions of this Chapter with respect to unsuccessful bids. For this purpose, the Party of the procuring entity shall provide information on the characteristics and relative advantages of the successful bid and the contract price. Where disclosure of this information may prejudice competition in future tenders, the requesting Party may not disclose the information except after consulting with and obtaining the consent of the Party that provided the information.
4. Each Party shall provide to the other Party, upon request, information available to that Party or its entities on covered procurement by its entities and on individual contracts awarded by its entities.
5. No Party may disclose confidential information, the disclosure of which would prejudice the legitimate commercial interests of a particular person or be detrimental to fair competition between suppliers, without the formal authorization of the person who provided that information to the Party.
6. Nothing in this Chapter shall be construed to require a Party to provide confidential information the disclosure of which would impede law enforcement or otherwise be contrary to the public interest.
7. With a view to ensuring effective monitoring of purchases covered by this Chapter, each Party shall collect statistics and provide to the other Party an annual report in accordance with the following requirements, unless the Parties agree otherwise:
(a) statistics on the estimated value of contracts awarded, both below and above the value of the applicable thresholds, broken down by entity;
(b) statistics on the number and total value of contracts above the value of the applicable thresholds, broken down by entity, by category of goods and services established in accordance with the classification systems developed under this Chapter, and by country of origin of the goods and services procured;
(c) statistics on the number and total value of contracts awarded under Article 14-16, broken down by entity, by category of goods or services, and by country of origin of the goods or services procured; and
(d) statistics on the number and total value of contracts awarded under the exceptions to this Chapter set forth in Annexes 8 and 9 to Article 14-02, broken down by entity.
8. Each Party may organize by state or department, as the case may be, any portion of the report referred to in paragraph 7 that corresponds to the entities listed in Annex 3 to Article 14-02.
Article 14-20. Technical Cooperation.
1. The Parties shall cooperate, on mutually agreed terms, to achieve greater understanding of their government procurement systems, with a view to achieving greater access to government procurement opportunities for suppliers of either Party.
2. Each Party shall provide to the other Party and to suppliers of the other Party, on a cost recovery basis, information concerning training and orientation programs relating to its government procurement systems, and non-discriminatory access to any programs it conducts.
3. The training and orientation programs referred to in paragraph 2 include:
(a) training of government sector personnel directly involved in government procurement procedures;
(b) training of suppliers interested in taking advantage of government procurement opportunities;
(c) explanation and description of specific aspects of each Party's government procurement system, such as its challenge mechanism; and
(d) information regarding government procurement market opportunities.
4. Each Party shall, no later than the entry into force of this Agreement, establish at least one point of contact to provide information on the training and orientation programs referred to in this Article.
Article 14-21. Joint Participation Programs for Micro, Small and Medium-sized Industries.
1. The Parties establish the Micro, Small and Medium Industry Working Group, composed of representatives of each Party. The Working Group shall meet by agreement of the Parties at least once a year, and shall report annually to the Commission on the efforts of the Parties to promote government procurement opportunities for their micro, small and medium-sized industries.
2. The Working Group shall facilitate the following activities:
(a) the identification of available opportunities for the training of personnel of micro, small and medium-sized industries in government procurement procedures;
(b) the identification of micro, small and medium industries interested in becoming business partners of micro, small and medium industries in the territory of the other Party;
(c) the development of databases on micro, small and medium-sized industries in the territory of each Party for use by entities of the other Party wishing to make purchases from smaller scale enterprises;
(d) conducting consultations regarding the factors that each country uses to establish its eligibility criteria for any micro, small, and medium-sized industry program; and
(e) conducting activities to address any related matters.
Article 14-22. Rectifications or Modifications.
1. A Party may modify its coverage under this Chapter only in exceptional circumstances.
2. When a Party modifies its coverage under this chapter:
(a) notify its national section of the Secretariat and the other Party of the modification;
(b) incorporate the change in the relevant Annex; and
(c) propose to the other Party appropriate compensatory adjustments to its coverage in order to maintain a level of coverage comparable to that existing prior to the modification.
3. Notwithstanding paragraphs 1 and 2, a Party may make formal rectifications and minor amendments only to its schedules to Annexes 1 to 6 to Article 14-02 and Annexes 8 and 9 to the same Article, provided that it notifies the other Party and its national section of the Secretariat of such rectifications, and no Party expresses its objection to the proposed rectifications within a period of 30 days. In such cases, it shall not be necessary to propose compensation.
4. Notwithstanding other provisions of this Chapter, a Party may reorganize its entities covered by this Chapter, including programs for the decentralization of the procurement of such entities or programs that result in the corresponding public functions no longer being carried out by any public sector entity, whether or not covered by this Chapter. In such cases, it shall not be necessary to propose compensation. No Party may undertake such reorganizations or programs for the purpose of avoiding compliance with the obligations of this Chapter.
5. Where a Party considers that:
(a) the adjustment proposed pursuant to paragraph 2(c) is not adequate to maintain a level comparable to that of the mutually agreed coverage; or
(b) a rectification or minor amendment pursuant to paragraph 3 or a reorganization pursuant to paragraph 4 does not meet the requirements of those paragraphs and, as a result, requires compensation;
the Party may have recourse to the dispute settlement procedure under Chapter XIX (Dispute Settlement).
Article 14-23. Disposal of Entities.
1. Nothing in this Chapter shall be construed to prevent a Party from disposing of an entity covered by this Chapter.
2. If, by means of a public offering of shares of an entity listed in Annex 2 to Article 14-02, or by other methods, the entity ceases to be subject to federal or central government control, as the case may be, the Party may remove that entity from its list in that Annex and withdraw the entity from coverage under this chapter, after notifying the other Parties and its national section of the Secretariat.
3. Where a Party objects to the removal of the entity on the grounds that the entity in question remains subject to federal or central government control, as the case may be, it may have recourse to the dispute settlement procedure under Chapter XIX (Dispute Settlement).
Article 14-24. Future Negotiations.
1. The Parties undertake to enter into negotiations no later than January 1, 1998 to improve the terms of this Chapter.
2. In those negotiations, the Parties shall review all aspects of their government procurement practices for the purpose of:
(a) evaluating the operation of their government procurement systems;
(b) seek to expand the coverage of the Chapter by incorporating:
(i) other government enterprises; and
ii) purchases subject, in some way, to legislative or administrative exemptions; and c) review the value of the thresholds.
3. Prior to such review, the Parties shall consult with their state governments and departmental entities with a view to reaching commitments, on a voluntary and reciprocal basis, for the incorporation into this Chapter of purchases by entities and enterprises of state governments and departmental entities.
Chapter XV. Investment
Section A. Investment
Article 15-01. Definitions.
For the purposes of this Chapter, the following definitions shall apply:
ICSID: the International Centre for Settlement of Investment Disputes;
ICSID Convention: the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, concluded in Washington, D.C. on March 18, 1965;
Inter-American Convention: the Inter-American Convention on International Commercial Arbitration, done at Panama, January 30, 1975;
New York Convention: the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958;
claim: a claim by a disputing investor against a Party based on an alleged violation of the provisions of this Chapter;
enterprise of a Party: an enterprise constituted or organized under the laws of a Party and a branch office located in the territory of a Party and carrying on business therein; investment:
(a) the application or transfer of resources to the territory of a Party by investors of the other Party for the purpose of profit;
(b) the participation of investors of a Party, in any proportion in the capital stock, of enterprises of the other Party or in activities covered by the investment laws of that other Party; or
(c) that made pursuant to subparagraphs (a) and (b) by an enterprise of a Party with a majority of the capital owned or controlled by investors of the other Party;
investment does not include:
(a) an obligation to pay a credit to a State enterprise or the granting thereof;
b) pecuniary claims arising exclusively from:
(i) commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Party to an enterprise in the territory of the other Party; or
(ii) the extension of a credit in connection with a commercial transaction, the maturity date of which is less than three years, such as trade financing;
investment of an investor of a Party: an investment owned or controlled directly or indirectly by an investor of a Party;
investor of a Party: a Party or an enterprise of the State of that Party, or a national or enterprise of that Party, that carries out the legal acts intended to materialize an investment, or that makes or has made an investment in the territory of the other Party;
disputing investor: an investor that submits a claim to arbitration under the terms of Section B;
national of a Party: a natural person who is a national of a Party in accordance with its law;
disputing Party: the Party against which a claim is made under section B;
disputing party: the disputing investor or the disputing Party;