AGREEMENT ON INTERNAL TRADE - AIT

SUMMARY OF MASH ANNEX - A.I.T. (AGREEMENT ON INTERNAL TRADE - ANNEX 502.4 PROCUREMENT)


AIT Agreement- MASH 502.4 Procurement Document
What is the MASH Annex?
Purpose of the MASH Annex
Who is covered by the MASH Annex?
When does the MASH Annex take effect?
Electronic Tendering System
What Procurement is covered?
Specific situations where MASH entities are exempted from MASH Annex rules.
What is a fair acquisition process under the MASH Annex?
What must a tender notice contain?
How are bids evaluated under the MASH Annex?
Are there any exceptions to the MASH Annex?
Canadian Content and Regional Economic Development
Who will monitor the agreement to ensure that MASH entities are complying with the agreement?
What happens if there is a dispute between a MASH entity and a supplier?
Are there Language requirements?
What happens if another agreement covers procurements by MASH entities?
Will the implementation of the MASH Annex be reviewed?
Use of this Summary
Further Information
A.I.T. Document


What is the MASH Annex?

The MASH Annex, or the MASH procurement agreement, is an annex to the procurement chapter (Chapter 5) of the Agreement on Internal Trade (AIT)*. The AIT, which came into effect July 1, 1995, placed an obligation on Parties to negotiate an agreement that extends the procurement provisions to municipalities, academic institutions, school boards and health care institutions.

* Only those sections of Chapter 5 and other chapters of the AIT that are specified in section B(2) of the MASH Annex apply to MASH entities. The pertinent sections of Chapter 5 that apply to MASH entities are outlined in the MASH Annex which include: the provincial contact person, scope and coverage of the Annex, the types of procurement excluded from the Annex, and definitions of Chapter 5 of the AIT.


Purpose of the MASH Annex

The purpose of the MASH Annex is to promote open and competitive tendering practices in the broader public sector across the country. There are two key principles in [Sections D and E] of the MASH Annex to achieve this end: non-discrimination and transparency.

Within the parameters of the MASH Annex, provinces and MASH entities cannot adopt or maintain procurement measures that discriminate against suppliers or goods or services of suppliers from other provinces or territories. An illustrative list of discriminatory practices can be found in Appendix B of the Annex.

With respect to transparency, all provinces and MASH entities must ensure that their procurement procedures and policies, whether through legislation, regulation or policy guidelines are made readily accessible upon request by a province, a MASH entity or a supplier. As well, information regarding contracts awarded to a supplier(s) must be made readily accessible upon request.


Who is covered by the MASH Annex?

Section C(1) states that the MASH Annex applies to all municipalities, municipal organizations, school boards and publicly funded academic, health and social service entities. Municipal organizations include those entities that are under the direct control of municipalities. However, power utilities operated by municipalities are excluded from this Annex until the Energy Chapter of the AIT is finalized.

C(2) indicates that each province/territory is obligated to identify its MASH entities by listing the applicable legislation in Appendix A of the Annex. As well, provinces/territories are obligated to maintain an up to date list of their MASH entities that can be accessed by other parties to the Annex.

In addition, buying groups as defined in Section (H) that conduct bulk purchasing on behalf of MASH entities are also covered by the MASH Annex.


When does the MASH Annex take effect?

The MASH Annex takes effect on July 1, 1999. As of that date, MASH entities will be required to post their contracts that are subject to the MASH Annex on a national electronic tendering system.


Electronic Tendering System

Probably the most significant change facing MASH entities in their tendering procedures is that they will have to post their tender notices on an electronic tendering system that is readily accessible to business suppliers across Canada. The University of Regina and WUPA (Western Universities Supply Management Association) have agreed to utilize a website maintained by the University of Regina - Supply Management Services for the request of tender postings by WUPA and the tender posting for the supplier. This site is available at the following: AIT Agreement - Posting Site or can be accessed from Supply Management Service's Homepage from the crest icon called "WUPA".


What Procurement is covered?

It is estimated that the MASH Annex will cover about $40 billion of procurement carried out by the broader public sector across Canada.

Section C(3) specifies that the MASH Annex covers all contracts that equal or exceed $100,000 for goods and services and $250,000 for construction. While contracts below these threshold levels are excluded from the Annex, MASH entities are encouraged to conduct fair tendering practices and to post these tenders on the electronic tendering system.


Specific situations where MASH entities are exempted from MASH Annex rules

MASH entities may undertake a procurement practice that is inconsistent with the non-discrimination and transparency sections of the Annex provided the purpose of the procurement is to achieve a legitimate objective (such as protection of the environment) as outlined in Section F of the Annex, and provided the practice is not blatantly trade restrictive.


What is a fair acquisition process under the MASH Annex?

Section G outlines the fair acquisition process.

All procurement covered under the Annex shall be subject to a tendering process. The process includes all components of tendering including requests for information, requests for quotation, requests for proposals, requests for qualification and requests for tenders.

A fair acquisition process must be based on the highest degree of competition, efficiency and effectiveness and be consistent with the non-discrimination requirements and for ready access to the procurement measures maintained by the MASH entities.

MASH entities may continue using existing procurement policies and procedures provided they are compatible with the provisions of this Annex.

Long term contractual arrangements between a covered entity and a supplier are permitted provided they are compatible with provisions of the MASH Annex.

Covered entities may continue to participate in buying groups provided the activities of each buying group are compatible with the provisions of the MASH Annex.

What must a tender notice contain?

Section G(9) indicates that a tender notice must include at least the following information:
- a brief description of the procurement contemplated;
- the place where a person may obtain further information and tender documents;
- the conditions for obtaining tender documents;
- the place where the tenders are to be sent;
- the date and time limit for submitting tenders;
- the time and place of the opening of the tenders in the event of a public opening; and
- a statement that the procurement is subject to the MASH Annex.


How are bids evaluated under the MASH Annex?

Section G(10) outlines that covered entities can take into account any number of criteria in evaluating bids which may include:
- quality
- quantity
- delivery
- price
- servicing
- the capacity of the supplier to meet the requirements of the procurement
- any other criteria consistent with the provisions of the MASH Annex.

MASH entities must ensure that the bid documents clearly identify the requirements of the procurement, the criteria that will be used in the evaluation of the bids and the methods of weighing and evaluating the criteria.


Are there any exceptions to the MASH Annex?

There are exceptions in the MASH Annex that allow MASH entities to exclude procurement activity under certain circumstances from the obligations of the Annex. These exceptions are outlined in Appendices C and D of the MASH Annex. Examples include: situations where procurement must be done on an urgent basis; where the procurement is of a confidential nature; or where there is only one supplier available to provide the good or service.

As well, the MASH Annex outlines a number of goods and services that are not subject to the rules of the Annex. They include:
- health and social services;
- procurement for "legitimate objectives" purposes (e.g. for public order, safety, health, environmental and consumer protection, health and safety of workers, affirmative action and purchases from disadvantaged groups, fundamental climatic or geographic factors);
- procurement of goods intended for resale to the public;
- contracts with public or non-profit organizations;
- procurement of goods, services or construction purchased on behalf of an entity not covered by the Annex;
- procurement from philanthropic institutions, prison labour or persons with disabilities;
- procurement financed primarily through donations;
- procurement of cultural or artistic goods or services;
- professional services such as doctors, nurses, dentists, pharmacists, veterinarians, engineers, land surveyors, architects, accountants, lawyers and notaries;
- procurement of certain financial services;
- contracts with Aboriginal organizations;
- procurement under urgent or confidential circumstances;
- procurement of goods and services for use outside of Canada;
- procurement financed by international cooperation organizations; and
- procurement for regional economic development purposes.


Canadian Content and Regional Economic Development

Section J allows MASH entities to provide a 10% preference to companies that manufacture or distribute goods and services that have Canadian value added. For services, Canadian value added refers to the amount of the service contract performed by Canadian residents. For goods, it refers to the amount of costs incurred to produce the product in Canada.

Section K allows a province to exclude a procurement of a MASH entity for regional economic development purposes. The MASH entity must report the economic development proposal to the province in which it is located for approval. If approved, the proposal must be reported in the tender document. The onus is on the province to justify the MASH entity's regional economic development initiative to other provinces.


Who will monitor the agreement to ensure that MASH entities are complying with the agreement.

Provinces are responsible for ensuring that their respective MASH entities comply with the Annex. However, in practice it will ultimately be the suppliers that monitor whether or not MASH entities are complying with the procurement obligations of the Annex.


What happens if there is a dispute between a MASH entity and a supplier?

Section M outlines the provisions for the resolution of disputes which may arise between a MASH entity and a supplier. The dispute resolution process shall not cause delay in the awarding of a contract by a MASH entity.

In order to preserve the local autonomy of the MASH sector, all complaints must first be addressed at the MASH entity level. If a supplier cannot resolve the complaint in a satisfactory manner, then the complaint can be raised to a contact point at the provincial level. The contact point is Robin Johnson, Trade Policy Branch, Intergovernmental and Aboriginal Affairs at 787-8908.

If the province is of the opinion that the supplier has a legitimate complaint, then officials would contact the province in which the MASH entity is located to initiate consultations. The provinces involved would meet with the MASH entity and the supplier to attempt to resolve the complaint. If an agreement cannot be reached, then the provinces would establish a panel of experts to consider the matter and to report back to provinces. The provinces involved would then undertake to consult each other in order to reach a mutually acceptable settlement, based on the panel's report. The expenses incurred by the panel would be cost shared by the provinces.

If a province does not ensure that its MASH entity complies with the agreement after a dispute panel rules in favour of a supplier, then the province/territory in which the supplier resides can temporarily suspend benefits to the non-complying province/territory. The province in which the injured party resides could encourage a local MASH entity of similar size to disallow suppliers located in the non-complying province from participating in future tenders.


Are there Language Requirements?

Section N specifies that MASH entities must specify the language requirements for their respective procurement procedures.


What happens if another agreement covers procurements by MASH entities?

Section Q states that if there is another agreement between two or more provinces that covers the procurements of MASH entities, the most trade liberalizing agreement will take precedence in the event of an inconsistency.


Will the implementation of the MASH Annex be reviewed?

Under Section P, the implementation of the MASH Annex is subject to the review of the Committee of Ministers on Internal Trade who will consider concerns identified by the MASH sector. Governments have also agreed to initiate a process to harmonize "Standard Terms and Conditions" to be used in bid documents. This process has not yet been initiated. MASH entities will be contacted to participate in this exercise once work is underway.


Use of This Summary

This document is intended to provide a summary of some of the more important provisions of the MASH Annex. It should not be relied upon as an official document. Users should consult the AIT and the MASH Annex for all purposes of interpretation and application, including any questions as to their rights and obligations under the AIT and the MASH Annex.


Further Information

For further information about the MASH Annex call:
Jim Woytuik
Supply Management Services
Phone: (306) 585-4126 or
E-Mail: jim.woytuik@uregina.ca

Government Level:
Robin Johnson
Intergovernmental and Aboriginal Affairs
Saskatchewan Government
Phone: 787-8908


A copy of the Agreement on Internal Trade can be accessed from the website of the Internal Trade Secretariat, an organization located in Winnipeg which is responsible for administering the agreement. The website address is: Agreement on Internal Trade
 
   
 
 
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