In response to the “Buy American” policies enacted in the United States, the Ontario government has responded with the Fairness in Procurement Act, 2018 to protect Ontario-based businesses and suppliers.
The Act came into force on April 1, 2018. This Act reduces procurement opportunities for suppliers from “Offending American Jurisdictions”, which means a jurisdiction of the United States of America that has been designated by a regulation (“OAJ”). Ontario has the power to enact regulations to target those states that have adopted or enacted legislation that is discriminatory or prevents Ontario suppliers from participating or succeeding in procurement processes.
This Act applies to broader public sector entities such as hospitals, colleges, universities, and children’s aid societies, and any other entity prescribed by the regulation (“BPS Entities”), as well as government entities such as the Crown, public bodies, the Independent Electricity System Operator, and the Ontario Power Generation (“Government Entities”).
Broad Powers by the Government of Ontario under the Act
The objective of the Act is to defend the province’s economic interest and protect the interests of Ontarians and Ontario businesses. The Act provides broad powers to the Government of Ontario to respond proportionally to discriminatory procurement practices enacted by the United States.
If a supplier from an OAJ participates in an Ontario procurement process initiated by BPS Entities or Government Entities, that foreign supplier si subject to policies, sanctions, or requirements as set out in the regulations, such as:
- Exclusion from participating or being awarded procurement contracts
- Providing additional information to Government Entities or BPS Entities
- Meeting additional requirements when participating in procurement processes
- Proposals being subject to additional or more stringent evaluation criteria than applies to other proposals.
Such regulations would require Government Entities or BPS Entities to impose such measures on suppliers from OAJs. However, BPS Entities and Government Entities may obtain exemptions from the Act and its regulations.
The Act also grants broad powers to void a procurement contract if such contract or the procurement process contravenes the Act or a regulation made under the Act. It also stipulates that if there are any conflicts with any other legislation, the Act would prevail.
Under the Act, every regulation made under the Act must be reviewed at least once every four years after it is made until it is revoked.
If the OAJ removes offending policies and legislation, the responding regulation will be revoked by the Ontario government. For example, the Ontario government had initially sought public consultations for a proposed regulation responding to the policies enacted by Texas, restricting the use of iron and steel from Texas, related to any construction, remodeling, or altering of any building, structure, or infrastructure, or supply of material. However, the province has decided to not move forward with the proposed regulation in response to the positive advocacy efforts in Texas, which illustrates that the province will only take retaliatory actions against discriminatory procurement practices from OAJs.
O.REG 117/18: Suppliers from New York
Currently, O.REG 117/18 is the only regulation enacted under the Act. The regulation designates New York as an OAJ, which governs the procurement contracts related to structural iron entered into by suppliers from that state. This is in response to the New York Buy American Act, which prevents Ontario iron suppliers participating in procurement for public works contracts for surface roads or bridges.
O.REG 117/18 does not apply to the BPS Entities. It applies only to Government Entities’ procurement processes for construction, reconstruction, alteration, repair, maintenance, or improvement of a surface road or bridge where the value of the contract is expected to be greater than $US1 million. The regulation prevents the procurement of any structural iron in the performance of a procurement contract and incorporation into any surface road or bridge from a supplier from New York.
What should Procuring Entities in Ontario Do?
Government Entities must review how O.REG 117/18 will impact their procurement policies and procedures. It is unclear as to how many more regulations will be passed under this Act, but if more American states enact “Buy American” policies, it can be expected that Province of Ontario will respond proportionally by creating regulations to protect Ontario suppliers and businesses.
Procuring entities in Ontario must be diligent in keeping abreast of any current and proposed regulations to determine how it will affect their organization’s procurement policies and practices to ensure its compliance with the Act.
If you require assistance regarding your organization’s procurement policies and procedures or further information, please contact: Pamela Seto at email@example.com.