Chapter Ten

                          Government Procurement


Article 1001: Objectives

     The Parties shall strive to achieve the liberalization of
their measures regarding government procurement, as specified by
the obligations in this Chapter, so as to provide balanced,
non-discriminatory, predictable and transparent government
procurement opportunities for the suppliers of each Party.


Article 1002: Scope and Coverage

1.   Subject to Annexes 1002.1 through 1002.7, this Chapter applies
to any measure regarding the procurement of goods or services or
any combination thereof, by any entity listed in Annex 1002.1
(Federal Government Entities), Annex 1002.3 (Government
Enterprises) and, when completed, Annex 1002.2 (State and
Provincial Government Entities), where the value of the contract to
be awarded is estimated, at the time of publication of a notice in
accordance with Article 1010 (Invitation to Participate), to equal
or exceed the applicable threshold as set forth in paragraph 3.

2.   Where the contract to be awarded by the entity is not covered
by this Chapter, this Chapter shall not be construed to cover any
good or service component of that contract. However, no Party shall
prepare, design or otherwise structure any procurement contract in
order to avoid the obligations of this Chapter. 

3.   Subject to Annex 1002-A, the applicable thresholds in U.S.
dollars are:

     (a) for entities listed in Annex 1002.1 (Federal Government
 Entities),

     (i) $50,000 for goods contracts,

     (ii) $50,000 for services contracts, except for
 construction services contracts, and

     (iii) $6.5 million for construction services
 contracts; and

     (b) for entities listed in Annex 1002.3 (Government
 Enterprises)

     (i) $250,000 for goods contracts,

     (ii) $250,000 for services contracts, except for
 construction services contracts, and

     (iii) $8.0 million for construction services
 contracts.

4.   Threshold values are denominated in real terms and therefore
shall incorporate the inflation rate of the United States. The
United States shall, every two years, calculate and notify to the
other Parties the threshold values denominated in nominal terms
according to of Annex 1002.8 (1) (Indexation and Conversion of
Thresholds).

5.   Each Party shall comply with Annex 1002.8 with respect to the
calculation and conversion of the value of thresholds into national
currencies.

6.   For purposes of this Chapter, procurement includes procurement
by such methods as purchase, lease or rental, with or without an
option to buy, in accordance with the thresholds and coverage
applicable in this Chapter. Procurement does not include the
acquisition of fiscal agency or depository services, liquidation
and management services for regulated financial institutions and
sale and distribution services for government debt.

7.   As between any Parties who are also party to the GATT
Agreement on Government Procurement or any successor agreement to
which such Parties are party, this Chapter shall prevail to the
extent of any inconsistency between the provisions of such
agreement and this Chapter.


Article 1003: Valuation of Contracts

1.   Each Party shall ensure that its entities, in determining
whether any contract is subject to this Chapter, apply paragraphs
2 through 6 in calculating the value of that contract.

2.   An entity, in calculating the value of a contract, shall take
into account all forms of remuneration, including premiums, fees,
commissions and interest.

3.   An entity shall not select a valuation method, or divide
procurement requirements into separate contracts, to avoid the
application of this Chapter.

4.   Where an individual requirement for a procurement results in:

     (a) the award of more than one contract, or

     (b) in contracts being awarded in separate parts,

the basis for valuation shall be either:

     (c) the actual value of similar recurring contracts concluded
 over the previous fiscal year or 12 months adjusted,
 where possible, for anticipated changes in quantity and
 value over the subsequent twelve months; or

     (d) the estimated value of recurring contracts in the fiscal
 year or 12 months subsequent to the initial contract.

5.   In the case of a contract for lease or rental, with or without
an option to buy, or in the case of a contract that does not
specify a total price, the basis for valuation shall be:

     (a) in the case of a fixed-term contract, where the term is
 12 months or less, the total contract value for its
 duration or, where the term exceeds 12 months, the total
 contract value including the estimated residual value; or

     (b) in the case of a contract for an indefinite period, the
 estimated monthly installment multiplied by 48.

If the entity is uncertain as to whether a contract is for a fixed
or an indefinite term, the entity shall calculate the value of the
contract using the method set forth in subparagraph (b).

6.   In cases in which tender documentation specifies the need for
optional purchases, the basis for valuation shall be the total
value of the maximum permissible procurement, inclusive of all
possible optional purchases.


Article 1004: National Treatment and Non-discrimination

1.   With respect to all measures regarding government procurement
covered by this Chapter, each Party shall accord to goods of any
other Party, as determined in accordance with the rules of origin
referred to in Article 1005(1) (Rules of Origin), to services of
any other Party, as determined in accordance with Article 1005(2),
and to the suppliers of such goods or services, treatment no less
favorable than the most favorable treatment that it accords to:

     (a) goods, services and suppliers of that Party; and

     (b) goods, services and suppliers of any other Party.

2.   With respect to all measures regarding government procurement
covered by this Chapter, no Party may:

     (a) treat a locally established supplier less favorably than
 another locally established supplier on the basis of
 degree of foreign affiliation or ownership; or

     (b) discriminate against a locally established supplier if
 the goods or services offered by that supplier for the
 particular procurement are goods or services of any other
 Party.

3.   Paragraph 1 does not apply to customs duties and charges of
any kind imposed on or in connection with importation, the method
of levying such duties and charges, and other import regulations,
including restrictions and formalities.

4.   Each Party reserves the right to deny to an enterprise of any
other Party the benefits of this Chapter in accordance with the
provisions of Article 1113 (Denial of Benefits), except
subparagraph (a).


Article 1005: Rules of Origin

1.   No Party shall apply to goods that are imported from any other
Party for purposes of government procurement covered by this
Chapter, rules of origin that are different from or inconsistent
with the rules of origin the Party applies in the normal course of
trade, which will be the non-preferential rules set out in Chapter
Three (for country of origin marking purposes) at such time as they
become the rules of origin applied in the normal course of trade.

2.   Notwithstanding any other provision of this Chapter, a Party
may deny to an enterprise that is a supplier of services of another
Party the benefits of this Chapter if:

     (a) nationals of any non-Party own or control that
 enterprise; and 

     (b) that enterprise has no substantial business activities in
 the territory of the Party under whose laws it is
 constituted.


Article 1006: Prohibition of Offsets

     Each Party shall ensure that its entities do not, in the
qualification and selection of suppliers, goods or services, or in
the evaluation of bids and the award of contracts, consider, seek
or impose offsets.


Article 1007: Technical Specifications

1.   Each Party shall ensure that its entities do not, with the
purpose or the effect of creating unnecessary obstacles to trade,
prepare, adopt or apply any technical specification laying down:

     (a) the characteristics of the goods or services to be
 procured such as quality, performance, safety and
 dimensions, symbols, terminology, packaging, marking and
 labelling; 

     (b) the processes and methods for their production related to
 the goods characteristics; or 

     (c) requirements relating to conformity assessment.

2.   Each Party shall ensure that any technical specification
prescribed by its  entities is, where appropriate:

     (a) specified in terms of performance criteria rather than
 design or descriptive characteristics; and

     (b) based on international standards, national technical
 regulations, recognized national standards or building
 codes.

3.   Each Party shall ensure that the technical specifications
prescribed by its entities do not require or refer to a particular
trademark or name, patent, design or type, specific origin or
producer or service provider unless there is no sufficiently
precise or intelligible way of otherwise describing the procurement
requirements and provided that, in such cases, words such as "or
equivalent" are included in the tender documentation.

4.   Each Party shall ensure that its entities do 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 procurement from a
person that may have a commercial interest in that procurement.


Article 1008:Tendering 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 the provisions of this Article and
 with Articles 1009 (Qualification of Suppliers) through
 1016 (Limited Tendering).

2.   In this regard, each Party shall ensure that its entities:

     (a) do not provide to any supplier information with regard to
 a specific procurement in a manner that would have the
 effect of precluding competition; and

     (b) provide all suppliers equal access to information with
 respect to a procurement during the period prior to the
 issuance of any notice or tender documentation.


Article 1009: Qualification of Suppliers

1.   No entity of a Party may, in the process of qualifying
suppliers in tendering procedures, discriminate between suppliers
of the other Parties or between domestic suppliers and suppliers of
the other Parties.

2.   The qualification procedures followed by an entity of a Party
shall be consistent with the following:

     (a) any conditions for participation by suppliers in
 tendering procedures shall be published sufficiently in
 advance so as to provide the suppliers adequate time to
 initiate and, to the extent that it is compatible with
 efficient operation of the procurement process, to
 complete the qualification procedures;

     (b) any conditions for participation by suppliers in
 tendering procedures, including financial guarantees,
 technical qualifications and information necessary for
 establishing the financial, commercial and technical
 capacity of suppliers, as well as the verification of
 whether a supplier meets those conditions, shall be
 limited to those that are essential to ensure the
 fulfillment of the contract in question;

     (c) the financial, commercial and technical capacity of a
 supplier shall be judged both on the basis of that
 supplier's global business activity and its activity, if
 any, in the territory of the Party of the procuring
 entity;

     (d) no entity may misuse the process of, including the time
 required for, qualification in order to exclude suppliers
 of any other Party from a suppliers' list or from being
 considered for a particular procurement;

     (e) an entity shall recognize as qualified suppliers those
 suppliers of any other Party that meet the conditions for
 participation in a particular procurement;

     (f) an entity shall consider for a particular procurement
 those suppliers of any other Party that request to
 participate in the procurement and that are not yet
 qualified, provided there is sufficient time to complete
 the qualification procedure;

     (g) an entity that maintains a permanent 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 qualified
 suppliers included in the list are notified of the
 termination of any such list or of their removal from it;

     (h) if, after publication of a notice in accordance with
 Article 1010 (Invitation to Participate), a supplier that
 is not yet qualified requests to participate in a
 particular procurement, the entity shall promptly start
 the qualification procedure;

     (i) an entity shall advise any supplier that requests to
 become a qualified supplier of its decision as to whether
 that supplier has become qualified; and

     (j) where an entity rejects a supplier's application to
 qualify or ceases to recognize a supplier as qualified,
 the entity shall, upon request of the supplier, promptly
 provide pertinent information concerning the entity's
 reasons for doing so.

3.   Each Party shall:

     (a) ensure that each of its entities uses a single
 qualification procedure, except that an entity may use
 additional qualification procedures where the entity
 determines the need for a different procedure and is
 prepared, upon request of any other Party, to demonstrate
 such need; and

     (b) make efforts to minimize differences in the qualification
 procedures of its entities.

4.   Nothing in paragraphs 2 and 3 shall prevent an entity from
excluding any supplier on grounds such as bankruptcy or false
declarations.


Article 1010: Invitation to Participate

1.   An entity shall, in accordance with paragraphs 2, 3 and 5,
publish an invitation to participate for all procurements, except
as otherwise provided for in Article 1016 (Limited Tendering), in
the appropriate publication listed in Annex 1010.1 (Publications).

2.   The invitation to participate shall take the form of a notice
of proposed procurement, which notice shall contain the following
information:

     (a) a description of the nature and quantity of the goods or
 services to be procured, including any options for
 further procurement and, if possible 

     (i) an estimate of the timing when such options may be
 exercised, and 

     (ii) in the case of recurring contracts, an estimate of
 the timing of the subsequent tender notices for the
 goods or services to be procured;

     (b) a statement as to whether the procedure is open or
 selective and whether it will involve negotiation;

     (c) any date for starting delivery, or completion of
 delivery, of goods or services to be procured;

     (d) the address to which an application to be invited to
 tender or to qualify for the suppliers' lists must be
 submitted, the final date for receiving such an
 application and the language or languages in which it may
 be submitted;

     (e) the address to which tenders must be submitted, the final
 date for receiving tenders and the language or languages
 in which tenders may be submitted;

     (f) the address of the entity that will award the contract
 and that will provide any information necessary for
 obtaining specifications and other documents;

     (g) a statement of any economic and technical requirements to
 be met and of any financial guarantees, information and
 documents required from suppliers;

     (h) the amount and terms of payment of any sum payable for
 the tender documentation; and

     (i) a statement as to whether the entity is inviting offers
 for purchase, lease or rental with or without an option
 to buy, or more than one of these methods.

3.   Notwithstanding paragraph 2, any entity listed in Annex 1002.2
(State and Provincial Government Entities) or Annex 1002.3
(Government Enterprises) may use, as an invitation to participate,
a notice of planned procurement, which shall contain as much of the
information referred to in paragraph 2 as is available to the
entity but which shall include, at a minimum, the following
information: 

     (a) a description of the subject matter of the procurement;

     (b) the time limits set for the receipt of tenders or an
 application to be invited to tender;

     (c) the address at which requests for documents relating to
 the procurement should be made;

     (d) a statement that interested suppliers should express
 their interest in the procurement to the entity; and

     (e) the identification of a contact point within the entity
 from which further information may be obtained.

4.   Any entity that uses a notice of planned procurement as an
invitation to participate shall subsequently invite suppliers that
have expressed an interest in the procurement to confirm their
interest on the basis of information provided by the entity, which
information shall include at least the information referred to in
paragraph 2.

5.   Notwithstanding paragraph 2, any entity listed in Annex 1002.2
(State and Provincial Government Entities) or Annex 1002.3
(Government Enterprises) may use, as an invitation to participate,
a notice regarding a qualification system.  Any entity that uses
such a notice shall, subject to the considerations referred to
Article 1015 (8) (Submission, Receipt and Opening of Tenders and
Awarding of Contracts), provide in a timely manner information that
allows all suppliers that have expressed an interest in
participating in the procurement to have a meaningful opportunity
to assess their interest. The information shall normally include
the information contained in the notices referred to in paragraph
2. Information provided to one interested supplier shall be
provided in a non-discriminatory manner to all other interested
suppliers.

6.   In the case of selective tendering procedures, any entity that
maintains a permanent list of qualified suppliers shall publish
annually in one of the publications listed in Annex 1010.1
(Publications) a notice containing the following information:

     (a) an enumeration of any lists maintained, including their
 headings, in relation to the goods or services or
 categories of goods or services to be procured through
 the lists;

     (b) the conditions to be fulfilled by suppliers in view of
 their inscription on the lists referred to in
 subparagraph (a) and the methods according to 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.   If, after publication of an invitation to participate, but
before the time set for the opening or receipt of tenders as
specified in the notices or the tender documentation, an entity
finds that it has become necessary to amend or reissue the notice
or tender documentation, the entity shall ensure that the amended
or reissued notice or tender documentation is given the same
circulation as the original. Any significant information given by
an entity to one supplier with respect to a particular procurement
shall be given simultaneously to all other suppliers concerned and
sufficiently in advance so as to provide all suppliers concerned
adequate time to consider such information and to respond to it.

8.   An entity shall indicate, in the notices referred to in this
Article or in the publication in which the notices appear, that the
procurement is covered by this Chapter.


Article 1011: Selective Tendering Procedures

1.   To ensure optimum effective competition between the suppliers
of all Parties under selective tendering procedures, an entity of
a Party shall, for each procurement, invite tenders from the
maximum number of domestic suppliers and suppliers of the other
Parties, consistent with the efficient operation of the procurement
system.

2.   Subject to paragraph 3, any entity that maintains a permanent
list of qualified suppliers may select suppliers to be invited to
tender for a particular procurement from among those listed. In the
process of making any selection, the entity shall provide for
equitable opportunities for suppliers on the list.

3.   Subject to Article 1009 (2)(f) (Qualification of Suppliers),
an entity shall allow any supplier that requests to participate in
a particular procurement to submit a tender and shall consider the
tender. The number of additional suppliers permitted to participate
shall be limited only by the efficient operation of the procurement
system.

4.   If an entity does not invite or admit a supplier to tender,
the entity shall, upon request of the supplier, promptly provide
pertinent information concerning its reasons for not doing so.


Article 1012: Time Limits for Tendering and Delivery

1.   An entity of a Party shall:

     (a) in prescribing any time limit, provide adequate time to
 allow suppliers of the other Parties to prepare and
 submit tenders before the closing of the tendering
 procedures;

     (b) in determining any time limit, consistent with its own
 reasonable needs, take into account such factors as the
 complexity of the procurement, the extent of
 subcontracting anticipated, and the time normally
 required for transmitting tenders by mail from foreign as
 well as domestic points; and

     (c) take due account of publication delays when setting the
 final date for receipt of tenders or applications to be
 invited to tender.

2.   Subject to paragraph 3, an entity shall provide that:

     (a) in open procedures, the period for the receipt of tenders
 is no less than 40 days from the date of publication of
 the notice referred to in Article 1010 (Invitation to
 Participate);

     (b) in selective procedures not involving the use of a
 permanent list of qualified suppliers, the period for
 submitting an application to be invited to tender is no
 less than 25 days from the date of publication of the
 notice referred to in Article 1010 (Invitation to
 Participate), and the period for receipt of tenders is no
 less than 40 days from the date of issuance of the
 invitation to tender; and

     (c) in selective procedures involving the use of a permanent
 list of qualified suppliers, the period for receipt of
 tenders is no less than 40 days from the date of the
 initial issuance of invitations to tender. If the date of
 initial issuance of invitations to tender does not
 coincide with the date of publication of the notice
 referred to in Article 1010 (Invitation to Participate),
 there shall not be less than 40 days between those two
 dates.

3.   An entity may reduce the periods referred to in paragraph 2 in
accordance with the following:

     (a) where a notice referred to Article 1010 (3) or (5)
 (Invitation to Participate) has been published for a
 period of no less than 40 days and no more than 12
 months, the 40 day limit for receipt of tenders may be
 reduced to no less than 24 days;

     (b) in the case of the second or subsequent publications
 dealing with recurring contracts within the meaning of
 Article 1010 (2) (Invitation to Participate), the 40 day
 limit for receipt of tenders may be reduced to no less
 than 24 days;

     (c) where a state of urgency duly substantiated by the entity
 renders impracticable the periods in question, the
 periods may be reduced to no less than 10 days from the
 date of publication of the notice referred to in Article
 1010 (Invitation to Participate); or

     (d) where an entity listed in Annex 1002.2 (State and
 Provincial Government Entities) or Annex 1002.3
 (Government Enterprises) is using as an invitation to
 participate a notice referred to in of Article 1010 (5)
 (Invitation to Participate), the periods may be fixed by
 mutual agreement between the entity and all selected
 suppliers; but in the absence of agreement, the entity
 may fix periods which shall be sufficiently long to
 enable responsive bidding and shall not be less than 10
 days.

4.   An entity shall, in establishing any delivery date for goods
or services and consistent with its own reasonable needs, take into
account such factors as the complexity of the procurement, the
extent of subcontracting anticipated and the time realistically
required for production, destocking and transport of goods from the
points of supply.


Article 1013: Tender Documentation

1.   Where an entity provides tender documentation to suppliers,
the documentation shall contain all information necessary to permit
suppliers to submit responsive tenders, including information
required to be published in the notice of procurement, except for
Article 1010 (2)(h) (Invitation to Participate). It must also
include the following information:

     (a) the address of the entity to which tenders should be
 sent;

     (b) the address where requests for supplementary information
 should be sent;

     (c) the language or languages in which tenders and tendering
 documents may be submitted;

     (d) the closing date and time for receipt of tenders and the
 length of time during which any tender should be open for
 acceptance;

     (e) the persons authorized to be present at the opening of
 tenders and the date, time and place of the opening;

     (f) a statement of any economic and technical requirement to
 be met and of any financial guarantee, information and
 documents required from suppliers;

     (g) a complete description of the goods or services required
 and any requirements to be fulfilled, including technical
 specifications, conformity certification and necessary
 plans, drawings and instructional materials;

     (h) the criteria for awarding the contract, including any
 factors other than price that are to be considered in the
 evaluation of tenders and the cost elements to be
 included in evaluating tender prices, such as transport,
 insurance and inspection costs, and in the case of goods
 or services of any other Party, customs duties and other
 import charges, taxes and currency of payment;

     (i) the terms of payment; and

     (j) any other terms or conditions.

2.   An entity shall:

     (a) forward tender documentation at the request of any
 supplier that is participating in open procedures or has
 requested to participate in selective procedures, and
 reply promptly to any reasonable request for explanations
 relating thereto; and

     (b) reply promptly to any reasonable request for relevant
 information made by a supplier participating in the
 tendering procedure, on condition that such information
 does not give that supplier an advantage over its
 competitors in the procedure for the award of the
 contract.


Article 1014: Negotiation Disciplines

1.   An entity may conduct negotiations:

     (a) in the context of procurements in which the entity has,
 in the notice referred to in Article 1010 (Invitation to
 Participate), indicated its intent to negotiate; or

     (b) when it appears from the evaluation of the tenders that
 no one tender is obviously the most advantageous in terms
 of the specific evaluation criteria set forth in the
 notices or tender documentation.

2.   Negotiations shall be used primarily to identify the strengths
and weaknesses in the tenders.

3.   An entity shall treat all tenders in confidence. In
particular, an entity may not provide to any person information
intended to assist any supplier to bring its tender up to the level
of any other tender.

4.   An entity may not, in the course of negotiations, discriminate
between different suppliers. In particular, an entity shall:

     (a) carry out any elimination of suppliers in accordance with
 the criteria set forth in the notices and tender
 documentation;

     (b) provide in writing all modifications to the criteria or
 to the technical requirements to all suppliers remaining
 in the negotiations;

     (c) permit all remaining suppliers to submit new or amended
 tenders on the basis of the revised criteria or
 requirements; and

     (d) when negotiations are concluded, permit all remaining
 suppliers to submit final tenders in accordance with a
 common deadline.


Article 1015: Submission, Receipt and Opening of Tenders and
 Awarding of Contracts

1.   An entity shall use procedures for the submission, receipt and
opening of tenders and the awarding of contracts that are
consistent with the following:

     (a) tenders shall normally be submitted in writing directly
 or by mail;

     (b) if tenders by telex, telegram, telecopy or other means of
 electronic transmission are permitted, the tender made
 thereby must include all the information necessary for
 the evaluation of the tender, in particular the
 definitive price proposed by the supplier and a statement
 that the supplier agrees to all the terms, conditions and
 provisions of the invitation to tender;

     (c) a tender made by telex, telegram, telecopy or other means
 of electronic transmission must be confirmed promptly by
 letter or by the dispatch of a signed copy of the telex,
 telegram, telecopy or electronic message;

     (d) the content of the telex, telegram, telecopy or
 electronic message shall prevail where there is a
 difference or conflict between that content and the
 content of any documentation received after the time
 limit for submission of tenders; 

     (e) tenders presented by telephone shall not be permitted;

     (f) requests to participate in selective tendering procedures
 may be submitted by telex, telegram or telecopy and if
 permitted, may be submitted by other means of electronic
 transmission; and

     (g) the opportunities that may be given to suppliers to
 correct unintentional errors of form between the opening
 of tenders and the awarding of the contract shall not be
 permitted to give rise to any discriminatory practice.

In this paragraph, "means of electronic transmission" consists of
means capable of producing for the recipient at the destination of
the transmission a printed copy of the tender.

2.   An entity may not penalize a supplier whose tender is received
in the office designated in the tender documentation after the time
specified for receiving tenders if the delay is due solely to
mishandling on the part of the entity. An entity may also consider,
in exceptional circumstances, tenders received after the time
specified for receiving tenders if the entity's procedures so
provide.

3.   All tenders solicited by an entity under open or selective
procedures shall be received and opened under procedures and
conditions guaranteeing the regularity of the openings. The entity
shall retain the information on the opening of tenders and the
information shall remain at the disposal of the competent
authorities of the respective Party so that it may be used if
required under the procedures of Article 1017 (Bid Challenge),
Article 1019 (Provision of Information) or Chapter Twenty
(Institutional Arrangements and Dispute Settlement Procedures).

4.   An entity shall award contracts in accordance with the
following:

     (a) to be considered for award, a tender must, at the time of
 opening, conform to the essential requirements of the
 notices or tender documentation and have been submitted
 by a supplier that complies with the conditions for
 participation;

     (b) if the entity has received a tender that is abnormally
 lower in price than other tenders submitted, the entity
 may enquire of the supplier to ensure that it can comply
 with the conditions of participation and is or will be
 capable of fulfilling the terms of the contract;

     (c) unless the entity decides in the public interest not to
 award the contract, the entity shall make the award to
 the supplier that has been determined to be fully capable
 of undertaking the contract and whose tender is either
 the lowest tender or the tender that in terms of the
 specific evaluation criteria set forth in the notices or
 tender documentation is determined to be the most
 advantageous;

     (d) awards shall be made in accordance with the criteria and
 essential requirements specified in the tender
 documentation; and

     (e) option clauses shall not be used in a manner that
 circumvents the provisions of this Chapter.

5.   No entity of a Party shall make it a condition of the awarding
of a contract that the supplier has previously been awarded one or
more contracts by an entity of that Party, or that the supplier has
prior work experience within the territory of that Party.

6.   An entity shall:

     (a) upon request, promptly inform suppliers participating in
 tendering procedures of decisions on contract awards and,
 if so requested, inform them in writing; and

     (b) upon request of a supplier whose tender was not selected
 for award, provide pertinent information to that supplier
 concerning the reasons for not selecting its tender and
 the characteristics and relevant advantages of the tender
 selected, as well as the name of the winning supplier.

7.   An entity shall publish a notice in the appropriate
publication listed in Annex 1010.1 (Publications) no later than 72
days after the award of a contract, which notice shall contain the
following information:

     (a) a description of the nature and quantity of goods or
 services included in 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 winning supplier;

     (e) the value of the contract, or the highest and lowest
 tenders considered in the process of awarding the
 contract; and

     (f) the tendering procedure used.

8.   Notwithstanding any other provision of this Article, an entity
may withhold certain information on the award of a contract, where
disclosure of such information would impede law enforcement or
otherwise be contrary to the public interest or would prejudice the
legitimate commercial interest of a particular person, or might
prejudice fair competition between suppliers.


Article 1016: Limited Tendering

1.   An entity of a Party may, in the circumstances and subject to
the conditions specified in paragraph 2, deviate from the
provisions of Articles 1008 (Tendering Procedures) through 1015
(Submission, Receipt and Opening of Tenders and Awarding of
Contracts), provided that such limited tendering is not used with
a view to avoiding maximum possible competition or in a manner that
would constitute a means of discrimination between suppliers of the
other Parties or protection of domestic suppliers.

2.   An entity may use limited tendering in the following
circumstances and subject to the following conditions, as
applicable:

     (a) in the absence of tenders in response to an open or
 selective tender, or when the tenders submitted either
 have resulted from collusion or do not conform to the
 essential requirements of the tender documentation, or
 when the tenders submitted come from suppliers who do not
 comply with the conditions for participation provided for
 in accordance with this Chapter, on condition that the
 requirements of the initial procurement are not
 substantially modified in the contract as awarded;

     (b) when, for works of art or for reasons connected with the
 protection of patents, copyrights or other exclusive
 rights, proprietary information, confidential consulting
 services or, when 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) in so far as is strictly necessary when, for reasons of
 extreme urgency brought about by events unforeseeable by
 the entity, the goods or services could not be obtained
 in time by means of open or selective tendering
 procedures;

     (d) for additional deliveries by the original supplier that
 are intended either as replacement parts or continuing
 services for existing supplies, services or
 installations, or as the extension of existing supplies,
 services or installations, when a change of supplier
 would compel the entity to procure equipment or services
 not meeting requirements of interchangeability with
 already existing equipment or services, including
 software to the extent that the initial procurement of
 the software was covered by this Chapter;

     (e) when an entity procures a prototype or a first good or
 service that is developed at its request in the course
 of, and for, a particular contract for research,
 experiment, study or original development. When such
 contracts have been fulfilled, subsequent procurements of
 goods or services shall be subject to Articles 1008
 (Tendering Procedures) through 1015 (Submission, Receipt
 and Opening of Tenders and Awarding of Contracts).
 Original development of a first good may include limited
 production in order to incorporate the results of field
 testing and to demonstrate that the good is suitable for
 production in quantity to acceptable quality standards.
 It does not extend to quantity production to establish
 commercial viability or to recover research and
 development costs;

     (f) for goods purchased on a commodity market;

     (g) for purchases made under exceptionally advantageous
 conditions that only arise in the very short term. This
 provision is intended to cover unusual disposals by firms
 which are not normally suppliers; or disposal of assets
 of businesses in liquidation or receivership. It is not
 intended to cover routine purchases from regular
 suppliers; and

     (h) for a contract awarded to the winner of an architectural
 design contest, on condition that the contest

     (i) has been organized in a manner that is consistent
 with the principles of this Chapter, notably as
 regards the publication, in the sense of Article
 1010 (Invitation to Participate), of an invitation
 to suitably qualified suppliers to participate in
 the contest,

     (ii) has been organized with a view to awarding the
 design contract to the winner, and 

     (iii) is to be judged by an independent jury. 

3.   An entity shall prepare a report in writing on each contract
awarded by it under the provisions of paragraph 2. Each report
shall contain the name of the procuring entity, indicate the value
and kind of goods or services procured, the name of the country of
origin, and a statement indicating the circumstances and conditions
described in paragraph 2 that justified the use of limited
tendering. Each report shall remain with the entity concerned at
the disposal of the competent authorities of the respective Party,
so that it may be used if required under the procedures of Article
1017 (Bid Challenge), Article 1019 (Provision of Information) or
Chapter 20 (Institutional Arrangements and Dispute Settlement Procedures).


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