FTA expands government procurement opportunities - Free Trade Agreement between United States and Canada

Business America, Jan 30, 1989 by Kenneth Fernandez

Canadian Government procurement valued at almost $500 million annually will be opened to U.S. suppliers as a result of the U.S.-Canada Free Trade Agreement (FTA). The FTA expands the size of the government procurement market which is open to free and fair competition between both U.S. and Canadian suppliers in one another's markets.

The Canadian federal government generally grants domestic products a minimum price differential equivalent to 10 percent of the difference in value of foreign content in determining the lowest tender. The various provinces, municipalities, and Crown (quasigovernmental) Corporations grant similar preferences to local, provincial, or Canadian products.

The United States and Canada are both signatories to the General Agreement on Tariffs and Trade (GATT) Government Procurement Code. The FTA builds on this Code, which applies only: (1) to national procurement (it does not apply to provincial, local, or Crown procurement); (2) to procurements made by specified government agencies; (3) to procurements exceeding a specified minimum value (currently $171,000); and (4) to procurement of merchandise. Services are excluded unless they are an incidental-less than 50 percentpart of the value of the contract.

The FTA incorporates these obligations and benefits of the Code, with two exceptions: (1) the FTA threshold at which procurements will be open to U.S. and Canadian suppliers on a non-preferential basis is set at $25,000 rather than at the $171,000 set by the Code; and (2) only those goods which are manufactured in the United States and Canada and which contain at least 50 percent U.S. and/or Canadian content (by cost) will be treated on an equal basis with domestic goods for FTA covered procurements.

The lowering of the threshold at which U.S. manufacturers will be able to compete for Canadian Government contracts is especially valuable to small- and medium-size firms. Many smaller firms have not been able to take advantage of the GATT Government Procurement Code because it covers only higher dollar value, large volume procurements which they are not prepared to service.

The principal contractor for governmental goods and services in Canada is the Department of Supply and Services (DSS), which acts as the central purchasing agent for all federal departments and agencies. Public Works Canada acts as the central purchasing agency for construction contracts for most but not all federal entities, and Defense Construction Limited handles projects for the Department of National Defense.

DSS establishes and maintains source lists of qualified foreign and domestic suppliers of goods for which it contracts. These source lists are maintained by DSS Head Office Product Directorates in Hull, Quebec, and within seven geographic Regional Centers across Canada. To be placed on the appropriate source list(s), firms should request application forms (DSS-UAS 1069) from:

Supply and Services Canada Corporate Relations Branch Place du Portage, Phase Ill II Laurier Street Hull, Quebec, Canada K I A OS5

Further information on Canadian federal and provincial procurement practices and preferences, agencies covered by the GATT Code, etc., is available in the pamphlet Government Procurement OpportunitiesCanada, which may be obtained from the Office of Canada, Room 3033, U.S. Department of Commerce, Washington, D.C. 20230.