# North American Free Trade Agreement, 1992 Oct. 7 Tariff Phasing Descriptions

## Chapter 20 (Institutional Arrangements and Dispute Settlement Procedures).

Book page: https://www.cyberlibrary.org/en/books/north-american-free-trade-agreement-1992-oct-7-tariff-phasing-d-b3e14787/index.md

Article 1017: Bid Challenge

1. In order to promote fair, open and impartial procurement procedures, each Party shall adopt and maintain bid challenge procedures for procurements covered by this Chapter in accordance with the following:

(a) each Party shall allow suppliers of any good or service of another Party to submit bid challenges concerning any aspect of the procurement process, which for purposes of this Article begins after an entity has decided on its procurement requirement, leading up to and including the contract award;

(b) a Party may encourage a supplier to seek a resolution of any complaint with the entity concerned prior to initiating a bid challenge;

(c) each Party shall ensure that its entities accord fair and timely consideration to any complaint regarding procurement covered by this Chapter;

(d) whether or not a supplier has attempted to resolve its complaint with the entity, or upon an unsuccessful attempt at such a resolution, no Party shall prevent the supplier from initiating a bid challenge or seeking any other relief available to such supplier;

(e) a Party may require a supplier to notify the entity upon initiation of a bid challenge;

(f) a Party may limit the period within which a supplier may initiate a bid challenge, but in no case shall the period be less than 10 working days from the time when the basis of the complaint became known, or reasonably should have become known, to the supplier;

(g) each Party shall establish or designate a reviewing authority with no substantial interest in the outcome of procurements to receive bid challenges and make findings and recommendations concerning them;

(h) upon receipt of a bid challenge, the reviewing authority shall expeditiously investigate the challenge, and may be required to limit its considerations to the challenge itself;

(i) in investigating the challenge, the reviewing authority may delay the awarding of the proposed contract pending resolution of the challenge, except in cases of urgency or where such a delay would be contrary to the public interest;

(j) the reviewing authority shall issue a recommendation to resolve the challenge, which may include directing the entity to reevaluate offers, terminate or re-compete the contract in question;

(k) entities normally shall follow the recommendations of the reviewing authority;

(l) each Party should authorize its reviewing authority, following the conclusion of a bid challenge, to make additional recommendations in writing to an entity respecting any facet of the entity's procurement process that is identified as problematic during the investigation of the challenge, including recommendations for changes in the procurement procedures of the entity to bring them into conformity with the obligations of this Chapter;

(m) the reviewing authority shall provide its findings and recommendations respecting bid challenges in writing and in a timely manner, and shall make them available to the Parties and all interested persons;

(n) each Party shall specify in writing and shall make generally available all its bid challenge procedures; and

(o) each Party shall ensure that each of its entities maintains complete documentation concerning each of its procurements, including a written record of all communications substantially affecting each procurement, for at least three years from the date the contract was awarded, to allow verification that the procurement process was carried out in accordance with the obligations of this Chapter.

2. A Party may require that a bid challenge be initiated only after the notice of procurement has been published or, where a notice is not published, after tender documentation has been made available. If a Party imposes such a requirement, the 10 working day period described in paragraph 1(f) shall begin not earlier than the date that the notice is published or the tender documentation is made available.

Article 1018: Exceptions

1. Notwithstanding Article 2102 (National Security), for purposes of this Chapter nothing shall be construed to prevent a Party from taking any action or not disclosing any information which it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for 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 Parties where the same conditions prevail or a disguised restriction on trade between the Parties, nothing in this Chapter shall be construed to prevent any 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 institutions or of prison labor.

Article 1019: Provision of Information

1. Each Party shall promptly publish any law, regulation, precedential judicial decision, administrative ruling of general application and any procedure, including standard contract clauses, regarding government procurement covered by this Chapter in the appropriate publications listed in Annex 1010.1 (Publications).

2. Each Party shall:

(a) be prepared, upon request, to explain to any other Party its government procurement procedures; and

(b) ensure that its entities, upon request from a supplier, promptly explain their procurement practices and procedures.

3. A Party may seek such additional information on the award of the contract as may be necessary to determine whether the procurement was made fairly and impartially, in particular with respect to unsuccessful tenders and further to Article 1015(6) (Submission, Receipt and Opening of Tenders and Awarding Contracts). To this end, the Party of the procuring entity shall provide information on both the characteristics and relative advantages of the winning tender and the contract price. In cases where release of this information would prejudice competition in future tenders, the information shall not be released except after consultation with and agreement of the Party which gave the information to the requesting Party.

4. Each Party shall provide, upon request, to any other Party, information available to that Party and its entities concerning covered procurement of its entities and the individual contracts awarded by its entities.

5. No Party shall disclose confidential information the disclosure of which would prejudice the legitimate commercial interests of a particular person or might prejudice fair competition between suppliers, without the formal authorization of the person that provided the information to that Party.

6. Nothing in this Chapter shall be construed as requiring any Party to disclose 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 procurement covered by this Chapter, each Party shall collect statistics and provide to the other Parties each year an annual report in accordance with the following reporting requirements, unless the Parties unanimously agree to modify such requirements:

(a) statistics on the estimated value of all contracts awarded, both above and below the applicable threshold values, broken down by entities;

(b) statistics on the number and total value of contracts covered by this Chapter above the applicable threshold values, broken down by entities, categories of goods or services according to uniform classification systems to be determined by the Parties, and country of origin of the contract;

(c) statistics, broken down by entities, and by categories of goods or services, on the number and total value of contracts awarded under each use of the procedures described in Article 1016 (Limited Tendering), and country of origin of the contract; and

(d) statistics, broken down by entities, on the number and total value of contracts awarded under derogations to the Chapter listed in the appropriate annexes.

8. With respect to the reports described in paragraph 7 that pertain to entities listed in Annex 1002.2 (State and Provincial Government Entities), each Party may organize such reports by state or province.

9. Each Party shall give favorable consideration, where appropriate, to a request from any other Party for the exchange of additional information on a reciprocal basis.

10. The Parties shall undertake and complete by the date of entry into force of this Agreement further technical work to make available the complete goods and services classification list to be used by their entities in procuring goods and services under this Chapter and develop concordances between each of these systems, and, if necessary, the agreed uniform system.

Article 1020: Technical Cooperation

1. The Parties shall cooperate, on mutually agreed terms, to increase understanding of their respective government procurement systems, with a view to maximizing access to government procurement opportunities for the suppliers of all Parties.

2. Each Party shall provide to the other Parties and to the suppliers of such Parties, on a cost recovery basis, information concerning training and orientation programs regarding its government procurement system, and access on a non-discriminatory basis to such programs as it conducts.

3. The training and orientation programs referred to in paragraph 2 include:

(a) training of personnel directly involved in government procurement procedures;

(b) training of suppliers interested in pursuing government procurement opportunities;

(c) explanation and description of specific elements of each Party's government procurement system, such as the bid challenge mechanism; and

(d) information about government procurement market opportunities.

4. Each Party shall establish at least one contact point to provide the information regarding the training and orientation programs pertaining to its government procurement system.

Article 1021: Joint Programs for Small Business

1. The Parties shall establish, within 12 months after the date of entry into force of this Agreement, the Committee on Small Business comprising representatives of the Parties. The Committee shall meet as mutually agreed, but no less than once a year, and shall report annually to the Commission on the efforts of the Parties to promote government procurement opportunities for their small businesses.

2. The Committee shall work to facilitate the following activities of the Parties:

(a) identification of available opportunities for the training of small business personnel in their government procurement procedures;

(b) identification of small businesses interested in becoming trading partners of small businesses in the territory of any other Party;

(c) development of data bases of small businesses in the territory of each Party for use by entities of any other Party wishing to procure from small businesses;

(d) consultations regarding the factors that each Party uses in establishing its criteria for eligibility for small business programs, if any; and

(e) actions to address any related matter.

Article 1022: Rectifications or Modifications

1. A Party may make modifications to its coverage under this Chapter only in exceptional circumstances.

2. Where a Party makes modifications to its coverage under this Chapter, the Party shall:

(a) notify the other Parties and its Section of the Secretariat of the modification;

(b) reflect the change in its schedule of the appropriate Annex; and

(c) propose to the other Parties appropriate compensatory adjustments to its coverage in order to maintain a comparable level of coverage as existed prior to the modification.

The other Parties shall consider whether any proposed adjustment made pursuant to subparagraph (c) is adequate to maintain a comparable level of the mutually agreed coverage under this Chapter. Where any Party does not agree that the proposed adjustment is sufficient, it may have recourse to dispute settlement procedures under Chapter Twenty (Institutional Arrangements and Dispute Settlement Procedures).

3. Notwithstanding paragraphs 1 and 2, a Party may make rectifications of a purely formal nature and minor amendments to its Annexes 1002.1 through 1002.7, provided that it notifies such rectifications to the other Parties and its Section of the Secretariat, and any other Party does not object to such proposed rectification within 30 days. In such cases, subparagraph 2(c) shall not apply. If a Party does object that the proposed rectification would result in a substantive change in the balance of coverage under this Chapter, it may have recourse to dispute settlement procedures under Chapter Twenty (Institutional Arrangements and Dispute Settlement Procedures).

4. Notwithstanding any other provision of this Chapter, a Party may undertake legitimate reorganizations of its government procurement entities covered by this Chapter, including programs through which the procurement of such entities is decentralized or the corresponding government functions cease to be performed by any government entity, whether or not subject to this Chapter. In such cases, subparagraph 2(c) shall not apply. No Party shall undertake such reorganizations or programs to avoid the obligations of this Chapter. If a Party objects to the withdrawal on the grounds that the functions continue to be performed by a government entity, that Party may have recourse to dispute settlement procedures under