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Fairness in Procurement Act, 2018

Archived Backgrounder

Fairness in Procurement Act, 2018

Treasury Board Secretariat

Ontario is standing up for workers and businesses with the passage of the Fairness in Procurement Act, 2018. This Act allows Ontario to take responsive and proportional action to address 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 valued at 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 legislation will 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.

Proposed Regulations

The government has posted proposed regulations to respond proportionally to the restrictions set out in New York State and Texas "Buy American" legislation. The proposed regulations, which were posted for public comment, are intended to impose certain measures on government entities entering into procurement contracts with suppliers from New York State and Texas.

In the case of New York State, proposed reciprocal regulations would apply to procurements by Ontario government entities for construction, reconstruction, alteration, repair, maintenance or improvement of surface roads and bridges, containing iron, and where the value of the contract is over $1 million (USD).

In the case of Texas, proposed reciprocal regulations would apply to procurements by Ontario government entities for the construction, remodeling or altering of any building, structure or infrastructure or supply of material containing iron or steel for those projects.

Should a supplier from New York State or Texas be the successful bidder or chosen supplier, the procurement contract must include a provision restricting the supplier from using any iron from New York State that would be permanently incorporated into any surface road or bridge; and, in the case of Texas, the contract must restrict the supplier from using any iron or steel from the state of Texas.

The proposed regulations would prohibit Ontario government entities from entering into a procurement contract for the construction projects mentioned, unless the contract includes the provisions restricting the use of iron from New York State and iron or steel from Texas.

The proposed regulations:

  • Would apply to Ontario government entities.
  • Would not apply to any procurement contract resulting from a procurement process initiated by an Ontario government entity before the proposed regulation came into force.
  • May contain a process for obtaining exemptions from the application of the proposed regulation.

The intent is that a responsive regulation would be revoked if the offending jurisdiction repeals its "Buy American" legislation, or provides Ontario suppliers with an exemption from the application of the legislation.

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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