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A NEW ERA IN SUB-FEDERAL PROCUREMENT CANADA-EU COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA) York Purchasing Cooperative (YPC) Aurora, Ontario March.

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Presentation on theme: "A NEW ERA IN SUB-FEDERAL PROCUREMENT CANADA-EU COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA) York Purchasing Cooperative (YPC) Aurora, Ontario March."— Presentation transcript:

1 A NEW ERA IN SUB-FEDERAL PROCUREMENT CANADA-EU COMPREHENSIVE ECONOMIC AND TRADE AGREEMENT (CETA) York Purchasing Cooperative (YPC) Aurora, Ontario March 18, 2015 Brenda C. Swick McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

2 Overview 1.Changing Dynamic in Public Procurement “Broadening the Net” 2.“Spaghetti Bowl” of International Agreements How CETA fits in 3.Status of CETA 4.CETA Coverage & Thresholds 5.Procurement Obligations under CETA Qualifier - this is an overview - devil is in the detail 6.What CETA means to your organization 7.Next Steps McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

3 1.Broadening the Net ¬Canada is signing new trade treaties ¬Very high priority on federal government agenda ¬All treaties contain procurement chapter ¬Pressure on Canada to open up procurement practices of all levels of government ¬being fuelled by foreign suppliers who want access to “the entire” Canadian procurement market ¬no longer just federal procurements ¬now drilling down to sub-federal provincial and municipal procurement, crown corps, utilities & MASH ¬Why? ¬Significant public purchasing dollars at sub-federal level ¬At least $100 billion is spent annually by all governments & MASH McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

4 1.Broadening the Net ¬Canada-EU Comprehensive Economic Trade Agreement (CETA) According to the EU, “The public procurement market access offer that Canada has made is the most ambitious and comprehensive offer Canada and its Provinces have ever made to any partner, including the US. The outcome regarding the inclusion of provincial and territorial governments, regional and local government entities, including agencies, crown corporations, and the MASH sector is highly satisfactory.” ¬Bottom Line: Procurements by municipalities will become ¬much more competitive ¬more scrutinized ¬more susceptible to challenge McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

5 2.Spaghetti Bowl: Procurement Agreements Canada-US Agreement on Government Procurement Applies to provincial procurements being bid on by US suppliers Exempts provincial crown corporations Requires compliance with the WTO Government Procurement Agreement NAFTA-Chapter TenApplies to federal procurements being bid on by US, Canadian and Mexican suppliers Not applicable to provinces or municipalities CITT is the bid review mechanism and provides rapid interim measures and remedies WTO Agreement on Government Procurement Applies to federal contracts being bid on by Canadian and foreign suppliers from 37 countries Not applicable to provinces or municipalities CITT is bid review mechanism Agreement on Internal Trade (AIT)Applies to federal, provincial and municipal & MASH contracts being bid on by Canadian suppliers CITT is bid review mechanism for federal contracts only Dispute settlement mechanism for provincial./MASH New West Trade Partnership Agreement (NWPTA) Applies to B.C. Alberta and Saskatchewan provincial and municipal procurements being bid on by suppliers carrying on business in those provinces State to state and private party bid review mechanism Canada-EU Comprehensive Economic and Trade Agreement Will apply to procurements by federal, provincial, municipal, Crown corporations, MASH and utilities/ being bid on by EU and Canadian suppliers McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

6 3.Status of CETA ¬September 2014 – At the Canada-EU Summit in Ottawa, leaders release text of the Agreement. ¬Legal Scrub – final legalized text – late spring 2015 ¬Translation ¬Sent to EU Council – late 2015 ¬Ratification in Canada – federal – Q ¬Legislative package introduced into House of Commons ¬Committee hearings ¬Opportunity to appear ¬Important to shape implementation to protect and promote your interests ¬Implemented into Canadian law – Q ¬All of legislation will have been changed ¬Provincial Implementation ¬Important to shape implementation to protect and promote your interests ¬European Parliament ratification vote – Q McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

7 4.CETA Coverage ¬3 rules: designated entity; designated good/service; exceed monetary threshold (based on the value of the contract – cannot divide a procurement into separate parts or select a particular valuation method in order to circumvent the Agreement) ¬Designated Entity - Broad coverage – unprecedented – bigger than NAFTA ¬Federal ¬Provincial ¬Municipalities (but in Ontario not municipal energy entities) ¬School boards and publicly funded academic, health and social service entities ¬Crown corporations ¬75% of procurements by public utilities ¬Mass transit by provinces McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

8 4.CETA Coverage ¬Designated contract ¬All goods covered with enumerated exception in Annex X-05 ¬Services Annex X-06 ¬Construction Services – Annex X-07 ¬Arguable that goods or service must meet the CETA Rule of origin to be a covered procurement ¬Issue which should be discussed with Province in implementation McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

9 4. CETA THRESHOLDS (CDN$)/ *in SDRs Trade Agreement Government EntityCrown CorporationsUtilities CETAGoodsServicesConstructionGoodsServicesConstruction Federal205,000 7,800,000560,000 7,800,000630,000 Provincial/ Territory 315,000 7,800,000560,000 7,800,000630,000 MASH (Municipal, Academic, School boards, Hospitals) 315,000 7,800,000N/A 630,000 McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

10 5.Procurement Obligations under CETA ¬Devil is in the detail: some caution - still have not seen final legal text ¬Will apply the WTO Agreement on Government Procurement (GPA/113) 2 April 2012 ¬Nondiscrimination ¬Canadian municipalities must not discriminate against European (or other Canadian) suppliers in their procurements ¬In law or in fact ¬Lots of case law on this ¬Substantive Rules ¬Procurements must be conducted in a “transparent, fair and impartial manner” ¬Tender documentation shall include a complete description of “all evaluation criteria that the entity will apply” ¬Predict these two requirements alone will be basis for vast majority of procurement challenges under CETA McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

11 5.Procurement Obligations under CETA ¬Tendering Procedural Rules ¬Must publish “notice of intended procurement” ¬Commitment to create a single point of electronic access for ALL notices of procurement opportunities within 5 years of entry into force ¬Need to talk to Province ¬Requirements for contents ¬Must indicate whether procurement covered by CETA ¬Must publish summary with it that is readily accessible ¬Specific rules on the conduct of procurements by electronic means ¬Detailed requirements for 3 types of tendering procedures ¬Open tendering Procedures – all interested suppliers may bid ¬Selective tendering procedures – only prequalified suppliers may bid ¬Limited tendering procedures – sole source McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

12 5.Procurement Obligations under CETA ¬Tendering Procedural Rules (cont’d) ¬Rules for qualifications of suppliers ¬Must be restricted to those that are “essential” to ensure that the supplier has the legal and financial capacity and the commercial and technical capabilities to undertake the procurement ¬May require relevant “prior experience” but not require that the prior experience be in the territory of the procuring entity ¬Slippery slope McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

13 5.Procurement Obligations under CETA ¬Time Periods ¬“Sufficient time” to prepare bids taking into account complexity; extent of subcontracting; time to transmit non-electronic tenders from foreign places ¬Selective (prequalification) ¬Min 25 days to submit qualificationrequest ¬General rule: ¬Open - 40 days from when NIP issued ¬Selective - 40 days from when prequalified suppliers invited to bid ¬Can reduce to not less than 10 days where ¬State of urgency “duly substantiated” renders 40 days impracticable ¬Can reduce by 5 days where ¬NIP published by electronic means ¬All tender documentation is available electronically and ¬Entity accepts electronic bids ¬Can reduce to 13 days where commercial goods/services and NIP and tender documents published electronically at same time ¬Exceptions to exceptions McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

14 5.Procurement Obligations under CETA ¬Evaluation Criteria ¬“All evaluation criteria” must be disclosed in the tender documentation including “the relative importance of such criteria” (except where price is the sole criterion) ¬No hidden evaluation criteria and no undisclosed weighting ¬Account for over 50% of CITT cases ¬Rules on Technical Specifications ¬Prohibits biased technical specifications ¬Cannot used technical specifications to create “unnecessary obstacle to trade” ¬Specifications should be described in terms of functional and performance requirements; and by particular design, brand or type ¬If impractical, and design or description included, then language must allow products that are “equivalent” to the brand described McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

15 5.Procurement Obligations under CETA ¬Rules on Debriefing ¬On request ¬Must provide ¬Explanation why bid was not selected; and ¬the relative advantages of the successful supplier’s tender ¬Similar requirement under NAFTA ¬Requires disclosure of score of winning bidder and value of contract ¬Evaluation team guidelines, instructions ¬Raw scoring sheets of evaluators & notes & consensus scoring sheets ¬Purpose is ¬to allow unsuccessful bidder to improve its bid for next time; and ¬to understand whether the procuring entity has breached its procurement obligations under the Agreement ¬10 day rule for filing bid dispute starts McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

16 5.Procurement Obligations under CETA ¬Sole Sourcing – Limited Tendering ¬Must meet 2-part test 1.Must not be done to avoid competition or in a manner that discriminates against EU suppliers and 2.For one of the following reasons: 1.Goods/services can only be provided by one supplier and no reasonable alternative or substitute exists due to 1.Protection of patents copyrights or other exclusive rights, or 2.Due to an absence of competition for technical reasons 2.For additional deliveries by the original supplier that were not included in the initial procurement where a change of supplier 1.Cannot be made for economic or technical reasons such as requirements of interchangeability or interoperability with existing equipment, software, services or installations procured under the initial procurement; and 2.Would cause significant inconvenience or substantial duplication of costs of the procuring entity 3.As is strictly necessary where for reasons of extreme urgency brought about by events unforeseeable by the procuring entity, the goods/services cannot be obtained in time using open tendering procedures McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

17 5.Procurement Obligations under CETA ¬Sole Sourcing (cont’d) ¬If sole source used, procuring entity must prepare a report and publish it ¬outlining the value and kind of goods/services sole sourced ¬indicating the circumstances and conditions that justified the sole source award ¬Prudent approach would be to publish intention to sole source in advance and ask for comments ¬Similar to federal Advance Contract Award Notices (ACANs) McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

18 5.Procurement Obligations under CETA ¬Domestic Review Procedures ¬Each Party must introduce “timely, effective, transparent and non- discriminatory” procedure to allow disappointed supplier to challenge a contract award or the process ¬Procedural rules for challenge must be in writing and easily available ¬Complaint must be heard by either an impartial administrative body or a judicial authority that is independent of the procurement entity ¬If review body is not a court, its decision must be subject to review by the courts or its review must be conducted in a manner which meets certain prescribed procedures including ¬Procuring entity can hold hearing in writing ¬Right for complainant to ask that the hearing take place in public ¬Right to be heard for all parties ¬Right to access to all relevant documents ¬Reasons for decision/recommendation ¬The bid review mechanism for federal contracts is the Canadian International Trade Tribunal ¬Its decisions are subject to judicial review by Federal Court McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

19 5.Procurement Obligations under CETA ¬Domestic Review Procedures ¬Suppliers must have “sufficient time” to submit a challenge which cannot be less than 10 days from the time when the basis of the challenge became known or reasonably should have become known to the supplier ¬Not easy to win – but can be disruptive and time-consuming ¬Reputation risks on both sides ¬Must introduce procedures for ¬“Rapid interim measures” to preserve the ability of the supplier to participate in the procurement ¬May include suspension of procurement process pending outcome of dispute ¬Discretionary relief ¬Stop Contract Award process before the CITT – must be filed before contract is awarded McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

20 5.Procurement Obligations under CETA ¬Domestic Review Procedures (cont’d) ¬If breach, reviewing authority must be able to impose remedies on procuring entity for corrective action or compensation for the loss or damages suffered ¬Bid preparation costs ¬Costs of challenge ¬Lost profit award ¬Setting aside contract award and awarding to applicant ¬Re-evaluationof the tender McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

21 5. Procurement Obligations under CETA ¬Canadian International Trade Tribunal ¬Federal bid review mechanism for complaints filed under NAFTA, WTO GPA, AIT and 6 other trade agreements ¬May award the complainant ¬Costs incurred in filing and proceeding with a complaint ¬Bid preparation costs ¬discretionary ¬Such remedy as it considers appropriate, including ¬the re-solicitation of the designated contract, ¬that the contract be terminated and be awarded to the complainan. ¬that the complainant be compensated for the loss of the contract or for the opportunity it lost (lost profits) McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

22 6.WHAT DOES THIS MEAN FOR YOUR ORGANIZATION? ¬Will make it more difficult for procuring entity to use procurement ¬as a tool for local economic/ social development ¬unless under thresholds or non-designated entity/contract ¬Will require procuring entity to shoulder the administrative costs associated with: ¬providing information about procurements practices ¬publishing detailed notices of intended procurements ¬issuing RFPs and contract awards in accordance with CETA rules ¬providing substantive debriefings ¬defending action, if challenged before bid review mechanism ¬Put procuring entities in jeopardy of their procurement processes being slowed or derailed by having to ¬deal with an order suspending the procurement pending the resolution of a complaint ¬implementing remedy of review body ¬New and not new - all of this already happens at the federal government level which has been subject to international trade agreements since 1994 ¬trade agreements are now reaching down further to sub-federal entities McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

23 7.NEXT STEPS ¬Municipalities need to understand ¬what their procurement obligations are under CETA ¬“what is in” and “what is out” ¬What is a “designated contract”? ¬What are “designated goods” or “designated services”? ¬What exemptions apply? ¬Understand the recourses and remedies which are available to a disappointed EU or Canadian suppliers who successfully challenge a procurement ¬Understand the exposure to your procurement if it challenged and take steps early on to mitigate that risk ¬Engage now with the Federal and Provincial Government on Implementation ¬Shape implementation to protect and promote your interests McCarthy Tétrault LLP Brenda C. Swick March 18, 2015

24 Questions? ¬Brenda C. Swick McCarthy Tétrault LLP Brenda C. Swick March 18, 2015


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