PRESS BRIEF

GOVERNMENT PROCUREMENT

Key Issues

Possible Decision on Government Procurement

    Ministers at the Singapore Ministerial will consider whether to establish a group to negotiate an agreement aimed at ensuring transparency and fairness in government procurement procedures. Proponents of the idea seek greater openness and equity in government procurement procedures. Elimination of preferences for domestic supplies and suppliers is not part of this discussion.

    Government procurement has been effectively excluded from the scope of the multilateral rules under the WTO, in the areas both of goods and of services. WTO Member countries continue to discriminate against the goods, services and suppliers of other countries in their procurement practices. Since government procurement of goods and services often represents 10-15% of GNP, this is a major gap in the multilateral trading system.

    This gap has been partially filled through a plurilateral Agreement on Government Procurement (GPA), which was concluded in 1994. This is a plurilateral agreement in the WTO framework with only 23 WTO Members as parties to it. The General Agreement on Trade in Services (GATS) calls for multilateral negotiations on government procurement of services. Work is under way in this connection in the Working Party on GATS Rules which reports to the Council on Trade in Services. No equivalent multilateral work is provided for in connection with the procurement of goods.

Review of the Agreement on Government Procurement

    Members of the plurilateral Agreement on Government Procurement (GPA) have submitted a report to the Ministerial Conference reminding Ministers of their decision to undertake an early review of the Agreement. This Review starts in 1997 with an examination of possible methods for conducting such negotiations. The aim will be the expansion of the coverage of the Agreement, the elimination of discriminatory measures and practices which distort open procurement and the simplification and improvement of the Agreement, in particular adaption to advances in the area of information technology. An important consideration underlying this decision is the desire to make the Agreement more accessible to non-members and to promote the expansion of its membership. The members of the Agreement have made it clear they would support and actively contribute to any multilateral work on government procurement that might be agreed to at Singapore. Such support would not prejudice their own efforts to improve and extend the GPA and to encourage more WTO Members to join it.

BACKGROUND

    The Agreement on Government Procurement (GPA) entered into force on 1 January 1996. It requires non-discriminatory practices and open procedures in government procurement among member states, and covers not only central government purchasing of goods (as under the earlier, Tokyo Round Agreement on Government Procurement), but also procurement of services, including public works, and procurement at the sub-central levels of government. Procurement in public utilities is also included. The exact coverage is determined by national schedules of purchasing entities and of services attached to the Agreement. Compared to the earlier, Tokyo Round Agreement, coverage has been increased ten-fold.

    The GPA applies to contracts above certain thresholds in value. In the case of central government purchases of goods and services, the threshold is Special Drawing Rights (SDR) 130,000 (around $176,000). For purchases of goods and services by sub-central government entities, the threshold varies but is generally in the region of SDR 200,000. For utilities, the threshold for goods and services is generally in the area of SDR 400,000. For construction contracts, in general the threshold is SDR 5 million.

    Membership presently consists of Canada, the European Community and 15 Member States, Israel, Japan, Korea, Aruba (part of the Kingdom of the Netherlands), Norway, Switzerland and the United States. Liechtenstein and Singapore have completed accession negotiations and are expected to become members shortly. Chinese Taipei and Hong Kong are in the process of negotiating their accession.

    The cornerstone of the rules in the Agreement is national treatment: foreign suppliers and foreign goods and services must be given treatment in government procurement no less favourable than that accorded national suppliers, goods and services. In order to ensure that this basic principle is followed and that foreign suppliers have an equal opportunity to compete, the Agreement lays heavy emphasis on transparent procedures, dealing in some detail with tendering procedures, the use of technical specifications in invitations to bid, the conditions on the qualification of suppliers eligible to bid, the publication of invitations to tender and time limits for tendering and delivery. It also addresses the contents of tender documentation provided to potential suppliers, the submission, receipt and opening of tenders and the awarding of contracts and ex-post information regarding the award of contracts. An important new feature is that members are required to put in place domestic procedures through which aggrieved bidders can challenge procurement decisions and obtain redress if such decisions are inconsistent with the requirements of the Agreement.


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