Incoterms_® and Commercial Contracts

Executive Summary

The Government Procurement Agreement (GPA) provides bidders established in the territory of one of the Parties to the Agreement, access to the government procurement markets of other Parties. Access is not absolute, however, as not all government entities or goods and services are covered by the Agreement, and it only applies to procurements exceeding specified monetary thresholds.

Where a bidder has access under the GPA, the Agreement guarantees it nondiscriminatory treatment as well as minimum procedural safeguards (in terms of documentation, qualification, time limits, awards, etc.) that will allow it to compete on an equal footing with domestic bidders.

GPA Parties must ensure that these minimum safeguards are reflected in their national legal framework. Any failure to grant access to foreign bidders consistent with the GPA will give the bidder the right to challenge the procurement process under the domestic complaint review procedure in the procuring country that the GPA requires Parties to establish. An unsuccessful bidder could also try to persuade its government to bring proceedings in the WTO.

1.0 Introduction

All Governments purchase goods and services from the market with public resources and for public purposes. This activity is referred to as government procurement. The size of the government procurement market is huge; it has been estimated that, on average, it accounts for 15-20% of a country’s GDP.¹While it is considered best practice for governments to obtain the goods and services they need from the market by way of open competition so as to achieve the greatest possible choice and lowest price, many governments also make use of government procurement to achieve other domestic policy goals, such as the promotion of specific local industrial sectors or social groups. In doing so, they often discriminate against foreign suppliers by providing preferential treatment for domestic goods, services and suppliers. Governments may simply refuse to consider foreign bids. Or they may make it difficult for foreign bidders to win tenders. For example, under the Buy American Act, the US Government applies a notional mark-up of 6% (12% where small businesses are involved) to foreign bids, meaning that a foreign bid has to be more than 6% (or 12%) below the lowest US bid in order to be considered price competitive. Barriers of this sort are not addressed by the multilateral rules of the WTO as government procurement is explicitly exempted from the national treatment disciplines of both the General Agreement on Tariffs and Trade²and the General Agreement on Trade in Services.³[Page200:]

Companies in the business of providing goods, services or construction works internationally may, however, benefit from an agreement negotiated during the Uruguay Round called the Agreement on Government Procurement (GPA).⁴ This is one of the so-called “plurilateral” agreements, which means that it only applies to the WTO Members that have ratified it. It does not apply automatically to all procurement, but if a WTO Member is a Party to the GPA, then procurement by designated government agencies will be opened up on equal terms to bidders from other Parties that have ratified the Agreement, which include most developed countries. Currently, 19 Members, including the EU, which represents its 28 Member States, have ratified the Agreement.⁵The fundamental aim of the GPA is to open government procurement markets on a mutual and reciprocal basis among the Parties. The current version of the Agreement, which entered into force in 2014, opens procurement activities worth an estimated US$1.7 trillion annually⁶to international competition (i.e., to suppliers from GPA Parties offering listed goods and services, including construction services).⁷

A company competing for a Party’s government procurement contracts will have the same access as domestic bidders and bidders from other Parties. The national government procurement rules will also be familiar to bidders because they will be consistent with the terms of the GPA. GPA rules require that open, fair and transparent conditions of competition be applied in government procurement. The GPA also establishes common procurement methods and conditions of participation that must be followed by all Parties. As part of the accession process, each candidate for membership must have its national government procurement rules approved. If there is any inconsistency between its national rules and the GPA requirements, the national legislation must be amended before the WTO Member can be accepted as a Party. This does not mean that the government procurement rules in all Parties are identical, only that the basic provisions and safeguards will be the same.

The GPA consists of two parts – the basic rules and the Appendices.⁸Appendix I is of particular interest because it contains a series of annexes that consist of each Party’s market access schedules of commitments, and explain exactly how each Party applies the GPA. It is critical to understand that the Agreement does not apply automatically to all procurement activities of each Party. Each Party to the Agreement negotiated which entities and which goods and services (including construction services) would be covered by the Agreement. This was done in order to achieve a roughly equal amount of coverage, at least in the case of developed countries.⁹This balance is no longer the focus of accession negotiations, especially in the case of developing and least developed countries which benefit from special and differential treatment under Article V of the GPA. Coverage schedules indicate whether a procurement activity is covered by the Agreement. Only those procurement activities that are carried out by covered entities purchasing listed goods, services or construction services exceeding specified threshold values are covered by the Agreement. It is essential, therefore, for a business to know how these Annexes apply and what procurement is covered.

* Of Counsel, Grayston & Company, Brussels; practicing barrister with Littleton Chambers; and Senior Fellow in Public Procurement Law at the University of Nottingham.

Before bidding on a procurement project in a WTO Member that is a Party to the GPA, a business should check the Party’s schedule to see whether the procuring entity and the goods or services being procured are listed. The schedules are publicly available on-line, both as text (https://www.wto. org/english/tratop_e/gproc_e/gp_app_agree_e.htm) and in an inter-active format (https://e-gpa.wto.org/en/Help/QuickAccess).

A bidder that feels that its bid has been rejected in breach of the GPA or national rules implementing the GPA is able to challenge the alleged breach in a court or other national tribunal. Importantly, the same rights are given to bidders from all Parties to[Page201:]the GPA. Thus, if a business considers that its rights under the GPA have been breached, it can bring an action to remedy that breach directly in the courts or tribunals of the Party in question. The bidder can also try to elevate the case to the international level by persuading its government to bring a case in the WTO, since the GPA also includes a dispute settlement mechanism that can be initiated by the bidder’s government (but not by the bidder itself).

2.0 Government Procurement Agreement Coverage

As noted above, the GPA does not apply to all government procurement activities of the Parties to the Agreement. In order to be covered, the procurement activities must:

• Be carried out by a covered entity;
• Involve covered goods, services or construction services;
• Be above the relevant financial threshold; and
• Not be specifically exempted in the notes to the schedules.

2.1 Country Coverage

Bidders will only be able to benefit from the GPA if the purchasing government is a Party to the GPA. That covers a lot of significant markets. As of April 2017, the GPA had 19 parties covering 47 WTO Members: Armenia, Canada, the European Union with regard to its 28 member states, Hong Kong China, Iceland, Israel, Japan, the Republic of Korea, Liechtenstein, Moldova, Montenegro, the Netherlands with respect to Aruba, New Zealand, Norway, Singapore, Switzerland, Chinese Taipei, Ukraine and the United States.¹⁰

Ten other WTO Members are in the process of acceding. These are Albania, Australia, China, Georgia, Jordan, the Kyrgyz Republic, Oman, the Russian Federation, Tajikistan, and the former Yugoslav Republic of Macedonia.¹¹China is currently the most significant country negotiating access. At the time of writing, China was preparing to submit its sixth revised offer. The conclusion of the negotiations has been delayed as the coverage of state-owned enterprises (SOEs) on offer remains limited and there is no agreement on a number of derogations, such as for small and medium-sized enterprises (SMEs), and on set-asides.

2.2 Entity Coverage

To benefit from the Agreement, the public buyer in a Party must also be identified as a procuring entity in the GPA. As noted above, the Agreement does not cover procurement by all government entities, although most significant government entities in each Party are covered. Only procurement carried out by the entities listed for each Party in Annexes 1, 2 or 3 in Appendix 1 of the GPA is covered:

• Annex 1 covers central government entities;
• Annex 2 covers sub-central government entities such as states, provinces, Länder, prefectures and municipalities; and
• Annex 3 covers other entities that the Parties have agreed to place under the Agreement, such as public undertakings and public authorities, notably in the utilities sector, or federal enterprises. These are generally undertakings operating in the sectors of the generation and supply of gas and electricity, water, operation of urban transport networks (trams, underground systems, etc.), and the provision of port and airport facilities.

Coverage is not equal between the Parties, although the goal (as mentioned above) was to try to achieve roughly equal coverage in the case of developed country Parties.

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KOREA – MEASURES AFFECTING GOVERNMENT PROCUREMENT12

The only case involving the GPA to be litigated in the WTO turned on the question of entity coverage. The Korean Airports Authority (and its successors), which had put out a tender for the construction of the new Inchon International Airport, was not listed in Korea’s schedule. The WTO panel held that the fact that the Authority was controlled by the Ministry of Construction and Transportation, which was listed, was not enough to bring it under the GPA.

Members requested consultations in two other cases, but these matters did not proceed through the panel stage. In Japan – Procurement of a Navigation Satellite, the parties reached a mutually agreed solution, and in United States – Measures Affecting Government Procurement, the Panel agreed to suspend proceedings based on a request by the Complainants.¹³

In the case of the EU, Annex 3 covers a range of EU entities in the same way that they are covered in the EU system. For example, entities in the EU utilities sector (“other entities” in the GPA) are not covered explicitly by name as they appear in many country annexes, but they are nevertheless covered by way of the general definition which applies to them through the EU procurement directives (together with an indicative list of entities for each country). In other Parties, a more limited number of entities are covered. The United States, for example, includes only ten entities identified by name in its Annex 3, mostly power and port authorities.¹⁴ Canada also includes ten entities, mostly museums and galleries. Some contracts to be awarded by these entities are excluded in the notes attached to the Annexes. Entity coverage is very Party-specific.

2.3 Product and Service Coverage

The provisions of the GPA apply to the procurement of goods (other than defencerelated goods and goods specifically excluded by the Parties) listed in Annex 4, construction services listed in Annex 6, and other services (defined by reference to the UN Central Product Classification (“CPC”)) listed in Annex 5. Procurement includes purchase, lease, rental or hire purchase, with or without an option to buy.

2.3.1 Construction Services

Although it took time to reach agreement on coverage of other services, the Parties managed early on to reach a mutual agreement on the scope of the construction services to be covered and a common definition now appears in each Party’s Annex 6. It defines a construction service contract as “a contract which has as its objective the realisation by whatever means of civil or building works, in the sense of Division 51 of the CPC.” This division includes all types of services in connection with construction, from the pre-erection work at the construction site (of buildings, roads or other infrastructure) to the building and completion itself. Under the Revised GPA, this also includes coverage of build-operate-transfer contracts by three of the Parties: the EU, Japan and Korea.

2.3.2 Other Services

The scope of coverage of non-construction services was more difficult to negotiate and, until the Revised Agreement, there were considerable differences between the Parties’ coverage. The Parties’ Annex 5 is now much more consistent in coverage of non-construction services and includes telecommunications which had previously only been covered to a very limited extent.

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2.3.3 Exclusions and Exceptions

Military products are explicitly excluded by each Party. In addition, Article III contains exceptions similar to the general and security exceptions contained in Articles XX and XXI of the GATT. Thus:

• The GPA does not prevent any Party taking 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 to national security or for national defence purposes; and
• The GPA does not prevent a Party from imposing or enforcing measures necessary to protect public morals, order or safety, human, animal or plant life or health or intellectual property; or relating to the products or services of handicapped persons, of philanthropic institutions or of prison labour, provided they are not a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade. Some of these exceptions are similar or identical to the general exceptions in Article XX of the GATT and Article XIV of the GATS, discussed in Chapters Two and Ten of this book.

2.4 Value Threshold

The GPA applies only to relatively large value contracts that exceed the threshold values set out in Appendix 1 to the Agreement. These contracts are more likely to be of interest to foreign bidders. The thresholds are as follows:

• For the supply of both goods and services to Annex 1 (central government) entities, the threshold is SDR 130,000¹⁵, with some minor exceptions;
• For sub-central government entities in Annex 2, the threshold is generally SDR 200,000;
• For Annex 3 entities, such as public bodies, most Parties apply a threshold of SDR 400,000; and
• In the case of construction services procured by entities in all three Annexes, most countries apply a threshold value of SDR 5 million, although, in the case of Japan and Korea, the threshold can be as high as SDR 15 million.

In order to prevent manipulation of contract valuation that would remove particular contracts from the scope of the GPA, Article II:6 provides that no procurement requirement may be divided or a particular valuation method used, in either case with the intention of avoiding the application of the GPA. Article II:6 – II:8 also provides methods of contract valuation to take account of recurring contracts, contracts for the lease, rental or hire purchase of products or services or where contracts do not specify a total price and option clauses. As well as price, remuneration will include any premiums, fees, commission and interest receivable.

2.5 Country Exemptions

Many of the notes attached in Party Annexes 1-6 contain exemptions relative to the subject matter of the Annex, e.g., in relation to certain entities or to specific goods or services. Each Party also has a separate Annex 7 that sets out general notes, which also include exemptions that apply across the board. This is used, for example, to protect set-asides for small and minority-owned businesses (Canada and the United States) or for indigenous peoples (Canada and New Zealand). It is also used to apply general reciprocity conditions so that some contracts will be open to bidders from other Parties only to the extent that they have provided reciprocal access to the [Page204:]goods or services in question, or in order to match the threshold levels applied by some parties (e.g., in the United States Annex 7 in respect of Korean construction contracts, where the threshold is SDR 15 million).

Would-be bidders will need to study both the general notes of Annex 7 as well as the notes contained in each of the relevant Party annexes in order to determine whether they have full access to a particular procurement market.

3.0 The Core Principles

Since bidders will be able to rely on the provisions of the GPA in the GPA markets in which they operate (where those are included in the GPA coverage explained above), they should be familiar with the provisions of the Agreement (as revised in 2012). In challenging any unlawful exclusion or rejection, bidders will be relying on the challenge procedures of the country in question and will be applying the laws of that country. However, those laws must be consistent with the GPA and the first port of call for bidders may be the revised GPA itself.

Knowing the rights granted by the revised GPA will enable bidders to know what rights they have in the government procurement markets of each of the Parties, and what rights of redress should be available.

The GPA is based on a set of core principles, namely non-discrimination, transparency and procedural fairness. References to the core principles below are to the revised text:

• Guarantees of most-favoured-nation and national treatment for bidders from other Parties to the Agreement with respect to procurement of covered goods, services and construction services as set out in each Party’s schedules (Article IV);
• Provisions regarding accession to the Agreement (Article XXII) and the availability of special and differential treatment for developing and least developed countries (Article V);
• Detailed procedural requirements regarding the procurement process designed to ensure that covered procurement under the Agreement is carried out in a transparent and competitive manner that does not discriminate against the goods, services or suppliers of other Parties (Articles X, XV, XVI);
• Additional requirements regarding transparency of procurement-related information (e.g., relevant statutes and regulations) (Article XVII); and
• Requirements regarding the availability and nature of domestic review procedures for supplier challenges which must be put in place by all Parties to the Agreement (Article XVIII).

3.1 Non-Discrimination

The principle of non-discrimination is important for bidders and it reflects two of the pillars of the GATT: the national treatment and the most-favoured-nation (MFN) obligations. These principles are guaranteed by Article IV:1 of the GPA which requires each Party, “immediately and unconditionally”, to provide to the products, services and suppliers (including service providers) of the other Parties, with respect to[Page205:]covered procurement, treatment no less favourable than (a) that accorded to domestic products, services and suppliers (national treatment), and (b) that accorded to products, services and suppliers of any other Party to the Agreement (MFN).

Article IV:2(b) complements these provisions by ensuring that there will be no discrimination against locally established suppliers on the basis of the place of production of the good or service (i.e., the origin of the product or service as opposed to the nationality of the supplier), provided that the Member in which the goods are produced is a signatory to the GPA. The purpose of this provision is to assure that a locally established supplier will not be discriminated against when offering goods or services supplied by another Party to the Agreement.

4.0 The Procedural Rules

Implementation of the basic obligations of non-discrimination is ensured by setting out a number of detailed operational rules for tendering to be followed by procuring entities in GPA Parties (which must ensure that their legal framework is consistent with these basic requirements).¹⁶This is done by prescribing three methods of tendering (open, selective and limited), supplemented by provisions relating to the preparation of tender documentation, the qualification of suppliers, selection procedures, receipt and opening of tenders and the award of contracts. In addition, the rules also provide transparency requirements relating both to tender notices and their publication, time limits for tendering and delivery, and information on the award of contracts. The GPA also contains specific rules with regard to technical specifications. These different elements provide guarantees for bidders from Parties to the Agreement.

4.1 Tendering Procedures

Article IV:4(a) foresees the use of three main procedures although they are not exclusive. They are: (i) open tendering under which all interested suppliers may submit a tender; (ii) selective tendering under which only qualified suppliers invited to do so by the procuring entity may submit a tender;¹⁷and (iii) limited tendering. Limited tendering may only be used when certain conditions are met, e.g., where no tenders were submitted in response to an open tender; where there is only one supplier capable of meeting the requirement as a result of intellectual property rights; in cases of urgency; and for additional deliveries or goods bought on a commodity exchange. Negotiations are generally not permitted in the case of tendering procedures but, under Article XII of the GPA, may be used during open or selective procedures provided the intention to do so was indicated in the invitation to participate or where it appears from the evaluation that no one tender is obviously more advantageous in terms of the specific evaluation criteria set out in the notice or tender documentation.

In addition to allowing for the greater use of electronic tools, the Revised GPA also permits the use of electronic auctions. This will be a reverse (or Dutch) auction, meaning that the prices bid are reduced incrementally until the lowest price is achieved. If a procuring entity uses such an auction, it must state this in the notice of intended procurement (Article VII:2(f)), and include relevant information in the tender documentation (Article X:7(e)). In particular, the procuring entity will need to disclose the automatic evaluation method, including the mathematical formula, based on the evaluation criteria set out in the tender documentation that will be used in the automatic ranking or re-ranking during the auction.

4.2 Tender Documentation

In order to provide fairness and equality of treatment, Article X:7 requires that the tender documentation contain all information necessary to permit tenderers to submit[Page206:]responsive tenders, including the information published in the notice of intended procurement. Pursuant to Article X:10, procuring entities are required to forward the tender documentation to any bidder that requests them, and to respond promptly to any reasonable requests for explanations.

TENDER DOCUMENTATION

Under Article X:7, the tender documentation must contain the technical specifications, the qualification criteria (in terms of economic and technical requirements), financial guarantees and information or documents required from suppliers, conditions relating to electronic procurement and auctions, terms and condition of contract, including payment terms and the criteria for awarding the contract, which may include price and other cost factors, quality, technical merit, environmental characteristics and terms of delivery. The documentation must also provide information with respect to the address to which tenders and requests for supplementary information should be sent, information regarding bid opening and the language or languages in which tenders should be submitted.

4.3 Qualification

The main obligation of the GPA is that procuring entities not discriminate among suppliers of other Parties or between domestic suppliers and suppliers of other Parties. The qualification criteria to be used in all cases must be published in sufficient time to allow interested suppliers the opportunity to satisfy the qualification criteria. With a view to ensuring objectivity in the qualification criteria, any conditions for participation in tendering procedures must be limited to those that are essential to ensure that a bidder has the legal and financial capacities and the commercial and technical abilities to undertake the relevant procurement (Article VIII:1). The Party or its procuring entities may maintain a supplier registration system under which interested suppliers are required to register and provide certain information but this does not, like multi-use lists (see below), constitute qualification for procurement procedures.

4.4 Multi-use Lists

Multi-use lists are lists of suppliers that a procuring entity has determined satisfy the conditions for participation and that the procuring entity intends to use more than once. Unlike the pre-qualification process of selective tendering, multi-use lists are not contract-specific but may be used for several contracts over a stated period of time.

• Article IX:7 requires annual publication of an appropriate notice and, where published by electronic means, made available continuously;
• Procuring entities must allow bidders to apply at any time for inclusion on a multi-use list and must consider the application; and
• They must include all qualified bidders on the list within a reasonably short time. The lists must not be closed.

4.5 Tender Notices

Except for procurements fulfilling the conditions of the limited tender procedure set forth in Article XIII, Article VII:1 of the GPA requires that contract award procedures be initiated by a published Notice of Intended Procurement (NIP). Each NIP must contain specific information (indicated in Article VII:2) and must make clear that the procurement is covered by the GPA. For Annex 1 entities (central government) [Page207:]electronic publication is mandatory, so that bidders will be able to find opportunities published on the relevant website. For Annex 2 (sub-central government) and Annex 3 entities (other),¹⁸electronic publication is “encouraged”.

OTHER OPTIONS FOR ANNEX 2 OR ANNEX 3 ENTITIES

Annex 2 or 3 entities may use a Notice of Planned Procurement (NPP) in place of an NIP. An NPP is a broader notice published by the procuring entity as early as possible in each fiscal year regarding its future procurement plans (i.e., indicating all of its procurement intentions rather than addressing an individual procurement). It should include the subject-matter of the procurement and the planned date of the publication of the NIP. If an NPP is to be used instead of an NIP, then it must include as much of the information referred to in Article VII:2 as is available to the procuring entity, and a statement that interested suppliers should express their interest in the procurement to the procuring entity, allowing the procuring entity to invite them to submit tenders at the appropriate time.

Annex 2 or 3 entities may also use a notice inviting suppliers to apply for inclusion on a multi-use list in place of an NIP, provided that the notice is appropriately published and includes the information required for publication of such lists, and as much of the information required under Article VII:2 as is available, together with a statement that the notice constitutes an NIP (Article IX:12).

4.6 Time Limits

Given the complexity in bidding internationally, Article XI of the GPA establishes minimum time periods to allow both domestic and foreign bidders time to prepare and submit their bids. Although the standard time periods are 25 days for the submission of requests to participate in selective tendering procedures and 40 days for tendering (both for open and selective tendering), there is a broad range of possibilities depending on circumstances and media used for publication and transmission. Under Article XI:5, these time periods may be shortened where electronic means are used because electronic tools reduce the time needed to receive and submit documents. They may also be shortened in the event of urgency. The full range of time limits is set out in Article XI.

4.7 Treatment of Tenders and Award of Contracts

A procuring entity is required to receive, open and treat all tenders under procedures that guarantee the fairness and impartiality of the procurement process, and the confidentiality of tenders. The permitted award criteria are relatively flexible and, in addition to allowing awards based on price, permit other criteria, such as quality, technical merit, environmental characteristics¹⁹and terms of delivery to be taken into account, provided they have been set out in the tender documentation. The entity must make the award to the tenderer that has been determined to be fully capable of undertaking the contract²⁰and whose tender is either the lowest tender or the tender which in terms of the specific evaluation criteria set forth in the notices or tender documentation is determined to be the most advantageous. When the procuring entity has received a tender that is abnormally lower than other tenders submitted, Article XV:6 allows the procuring entity to enquire with the tenderer to ensure that it can comply with the conditions of participation and be capable of fulfilling the terms of the contract.

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4.8 Information on the Award of Contracts

Within 72 days of the award of any contract awarded under any of the procedures foreseen in the Agreement, the procuring entity must publish, in the publication listed in Appendix III, a notice containing information on the award of a contract which includes the basic information set out in Article XVI:2, including the name of the successful bidder, the value of the successful bid or the highest and lowest bids received, and the type of procurement used. As well as publishing the required notices, the entities are under an obligation to provide an unsuccessful bidder, promptly on request, with an explanation of the reasons why the entity did not select its tender and the relative advantages of the successful bidder’s tender.

An unsuccessful bidder should make such a request and compare the reasons given for the award with the criteria listed in the tender documentation, to determine if the award was based on other criteria, in which case a challenge might be possible.

5.0 Challenges

One of the most important and far-reaching mechanisms introduced by the GPA is the right of an aggrieved bidder to launch a private bid challenge. Article XVIII of the GPA provides all bidders having an interest in a covered procurement the right to bring an action against a breach of the Agreement before an impartial administrative or judicial authority. Moreover, if no such right has been granted under the domestic system of the Party (contrary to the requirement of the GPA), then that bidder has the right to challenge that failure through the administrative or judicial authorities of that Party.

In the event of a complaint by a supplier, the Parties are encouraged in Article XVIII:2 to seek resolution of the complaint through consultations (not to be confused with WTO consultations). This does not prejudice the bidder’s right to seek corrective measures under the administrative or judicial review procedure, and bidders must be given non-discriminatory, timely, transparent and effective procedures enabling private bid challenges. They must also be given sufficient time to prepare and submit a challenge, which may not be less than 10 days from the time when the basis of the challenge became known or reasonably should have become known to the bidder.

5.1 Procedures

In accordance with Article XVIII, challenges are to be heard by an impartial administrative or judicial authority that is independent of the procuring entities.²¹If the complaint is initially reviewed by a non-independent entity, such as a committee or an individual in the procuring body, the Member must provide an appeal to an impartial administrative or judicial authority. The process must have procedures which provide that:

• Participants can be represented and heard before an opinion is given or a decision is reached, and have the right to present witnesses;
• Participants must have access to all proceedings and have the right to request that the proceedings take place in public;
• The procuring entity must disclose all relevant documents to the review body; and
• Opinions or decisions must be given in writing with a statement describing the basis for the opinions or decisions.

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5.2 Interim Measures

In order to avoid delay in the procurement process and to protect the commercial interests involved, the GPA requires the challenge procedure “normally” to be completed in a timely fashion. Of course, breaches may sometimes only become apparent once the award has been made, and even the most rapid review mechanism may be too brief to bridge the gap between award and signature of the contract. The GPA, therefore, provides in Article XVIII:7 for the possibility of rapid interim measures to correct breaches of the Agreement and to preserve commercial opportunities. Such measures may result in suspension of the procurement process. At the same time, however, such procedures may also provide that overriding adverse consequences for the interests concerned, including the public interest, may be taken into account in deciding whether such measures should be applied. In those circumstances, just cause for not acting must be provided in writing.

5.3 Remedies

In addition to providing for what is effectively a decision on the merits of the case (i.e., a determination whether or not there has been a breach or a failure to implement the Agreement), the GPA provides, broadly, for correction of the breach of the Agreement or compensation for the loss or damages suffered, although these may be limited to either the costs for the preparation of the tender or the costs relating to the challenge, or both. This seems to reflect the different possibilities in the Party jurisdictions, some of which may allow for recovery of lost profits whilst others may limit compensation to wasted costs. The GPA does not provide grounds for exercising this limitation and this will depend on the jurisdiction in question. Similarly, no specific corrective action is foreseen and this will also depend on the jurisdiction, but might include re-tendering where this remedy is available in the courts of the Party in question.

5.4 WTO Appeal

The WTO dispute settlement mechanism is also available in the case of GPA breaches.²²However, as noted above, an unsuccessful bidder cannot bring a case in the WTO, but must persuade its government to take action. Under Article XX:3 of the Agreement, no dispute arising under the GPA may result in the suspension of concessions or other obligations under any other WTO Agreement, and no dispute arising under any other WTO Agreement may result in the suspension of concessions or other obligations under the GPA. This means that the only available retaliation would be denial of GPA treatment to bidders from the respondent Party, making this a rather narrow remedy.

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6.0 The 2012 Government Procurement Agreement

As noted above, the GPA Parties revised the Agreement in 2012. The most important change concerns a significant expansion of the number of entities covered by the Agreement. The WTO has estimated that the gain in market access is between US$80 billion and US$100 billion a year.²³Other improvements reflect changes in modern procurement processes, as well as changes to the structure and terminology of the Agreement. They include:

• Introduction of a specific new requirement for participating governments and their relevant procuring entities to avoid conflicts of interest and to prevent corrupt practices, signalling the Parties’ belief that the GPA can play a part in promoting good governance;
• Clarification and improvement of the special and differential treatment provisions (S&D) that are available to developing country WTO Members acceding to the GPA in order to facilitate their accession, thus expanding the membership of the Agreement and market access opportunities;
• Taking into account developments in current government procurement practice, notably the use of electronic tools by setting out related requirements to ensure that the general principles of the GPA are fully respected when electronic media is used and by incorporating additional flexibility for Parties’ procurement authorities, e.g., applying shorter notice periods when electronic tools are used; and
• Revision of the wording of various provisions of the Agreement to streamline them and make the text easier to understand.

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