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Fairness in Procurement Act, 2018

Archived Backgrounder

Fairness in Procurement Act, 2018

Treasury Board Secretariat

The Fairness in Procurement Act, 2018, would, if passed, allow Ontario to take responsive and proportional action to discriminatory government procurement practices by U.S. subnational jurisdictions. 

"Buy American" policies in the U.S. at the state level could restrict or inhibit Ontario-based businesses from participating or succeeding in certain state government procurement contracts. Two such policies include:
  • The New York Buy American Act, scheduled to be implemented on April 1, 2018. This legislation could prevent Ontario iron from being supplied for New York State public works contracts over $1 million (USD) for surface roads or bridges.
  • The Texas Buy American Act, which was enacted on September 1, 2017. This legislation requires that all construction contracts awarded by all state government entities require the use of U.S. made iron and steel, with some exceptions.

The proposed legislation would give Ontario the flexibility to choose whether and how to respond to discriminatory procurement actions against U.S. states by providing the authority to make responsive regulations. If made, the responsive regulations would:

  • Be pursued in instances when a U.S. subnational jurisdiction (state or local governments) enacts legislation or adopts a discriminatory policy that may inhibit or prevent Ontario suppliers from participating or succeeding in procurement processes initiated by procuring entities from the offending U.S. subnational jurisdiction. In this way, Ontario would be responding to new discriminatory legislation put in place.
  • Provide specific parameters for action.

Once the regulation comes into force, Ontario's procuring entities could be required to exclude companies from a U.S. state from competing on specific procurements. The responsive regulation would be revoked in the event that the offending U.S. subnational jurisdiction removed its "Buy American" policy, or provided Ontario-based suppliers with an exemption.

These regulations would be designed to be proportional to restrictions made by a U.S. subnational jurisdiction. For example, if a state were to put in place a "Buy American" policy on a specific product, so that any procurement by that state would require that the product be made in the U.S., Ontario could design a responsive regulation. 

The responsive regulation would be limited to the offending state so it would not target suppliers from other jurisdictions and it would focus on procurement.

Application and Exemptions

The proposed legislation and subsequent regulation would potentially apply to a range of Ontario government and broader public sector (BPS) entities. The proposed legislation would establish the authority to create regulations that could allow for exemptions in certain cases. Procuring entities in the Ontario government could receive a waiver from the restrictions imposed in a regulation.

Enforcement

Should a BPS entity enter into a contract that contravenes the legislation or a responsive regulation developed under the legislation's authority, the proposed legislation provides that the contract would be void, unless the government validates it. Specific measures for BPS entities that contravene the legislation or regulation could also be included in the instructions for how to administer responsive regulations.

Value of Procurement for Ontario, New York and Texas

Ontario currently has strong, mutually beneficial relationships with New York State and Texas. The economies in Ontario, New York State and Texas benefit enormously from an integrated partnership that supports good jobs on both sides of the border.

In 2015-16, the Ontario Public Service awarded more than 500 U.S.-based businesses with contracts worth approximately $460 million. This is approximately seven per cent of the $6.4 billion in contracts that the Ontario government awarded that fiscal year. Of this, approximately $160 million in contracts were awarded to 77 New York-based corporations and $16.7 million in contracts were awarded to 52 Texas-based corporations.

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