Offsets in Canada Considerations

Transcription

1 Offsets in Canada Considerations European Club for Countertrade & Offsets Symposium #9 November 20, 2014 Vienna, Austria Brenda C. Swick Partner- Government Contracting /International Trade

2 Overview 2 Overview of Defence Procurement Legal Regime & Key Players New Defence Procurement Strategy How ITBs fit into the procurement process Rating of ITBs Application of ITBs Value Propositions in Pre-soliciation; RFPs; Proposals Evaluation of Value Propositions Challenge of Contract Award based on Evaluation of VP Corruption and Offsets Implication of Canada s New Debarment Rules on Offsets Concluding Remarks

3 Overview- Legal Regime 3 Financial Administration Act Government Contracting Regulations Standard Acquisition Clauses & Condition Supply Manual Offsets Defence Production Act Controlled Goods Security Clearances Export and Import Permits Act Export permits Trade Agreements Agreement on Internal Trade Act Defence and security contracts Federal Court of Canada/Canadian International Trade Tribunal Bid disputes

4 Overview Key Players 4 Industry Canada ITB Management, Policy & Authority Regional Agencies Assist in evaluation & management of ITB Atlantic Canada Opportunities Agency Western Economic Diversification Canada Canada Economic Development for Quebec Regions Federal Economic Development for Southern Ontario Department of National Defence (DND) Project Management: Operational Requirements: Technical Authority & Project Funding Canadian Coast Guard Civilian, non-military organization Public Works & Government Services Contracting Management: Contract Authority

5 New Defence Procurement Strategy 5 Overhauls Canada s Industrial Regional Benefits Policy Required defence/security contracts to undertake business activities in Canada valued at 100% of contract Going forward IRBs will be rebranded as Industrial Technological Benefits (ITBs) Retains reinvestment requirement but certain industrial considerations ( Value Propositions ) Value Propositions will be rated and weighted as part of bid evaluation process Significant difference from pass/fail Actual weight to VPs will be determined on a procurement-by-procurement basis Default weighting in the overall evaluation will be 10% Based on extent to which it supports the KICs POSSIBILITY OF LOSING TO OTHERWISE COMPETITIVE BID DEPENDING ON STRENGTH OF VPs

6 Application of ITBs 6 ITBs will be applied differently: Procurements valued +$100M value propositions will be mandatory $20M - $100 M application on a case-by-case basis 25,000 - $20 M revised Canadian Content Policy will apply Where sufficient competition, procurements are limited to Canadian goods and/or services

7 Value Propositions now included in RFP & Proposals 7 RFI/other released in advance of solicitation to assess Canadian capability Transparency RFP/Solicitation document will contain Value Proposition Requirements Must be reasonable Comply with Chapter 5 of the Agreement on Internal Trade Defence and Security contracts subject to the AIT Must clearly identify the VP requirement; the criteria that will be used to evaluate the VP requirement The weighting criteria used in evaluating the VP Required in order for bidders to know what points will be given for the different components making up their Value Proposition If VP requirement unclear/unfair/discriminatory May file protest to PWGSC within 10 days Further recourse to Canadian International Trade Tribunal Must be a Canadian supplier

8 Value Propositions now included in RFP & Proposals (cont d.) 8 Regional Plans Enhanced Reporting Obligations To monitor delivery of benefits to Canada

9 Evaluation of VPs 9 Bids will be evaluated taking into account: how they meet the stated requirements in the RFP support identified Key Industrial Capabilities support others productivity drivers timeframe in which Value Proposition will be fulfilled

10 Evaluation of VPs (cont d.) 10 Evaluation of VP must be: Reasonable Meet the requirements of Chapter 5 of Canada s AIT Be clear Be fair Be non-discriminatory Not based on undisclosed criteria

11 Challenge of Contract Award based on Evaluation of VP 11 May complain that VP was assessed unfairly by evaluation team Technical specifications in VP favour one supplier over another Solicitation documents do not clearly indicate how VPs submitted will in fact be assessed VPs were not assessed in accordance with the evaluation criteria set out in the RFP Weight was given to certain evaluation criteria in a manner inconsistent with the terms of the RFP

12 Challenge of Contract Award based on Evaluation of VP 12 Disappointed bidder who loses based on its VP rating may complain that VP was assessed unfairly by evaluation team Technical specifications in VP favour one supplier over another Solicitation documents do not clearly indicate how VPs submitted will in fact be assessed VPs were not assessed in accordance with the evaluation criteria set out in the RFP Weight was given to certain evaluation criteria in a manner inconsistent with the terms of the RFP

13 Challenge of Contract Award based on Evaluation of VP 13 If evaluation of VP not in accordance with requirements Disappointed bidder may file protest before CITT/Federal Court To rely on AIT, bidder must be Canadian supplier CITT remedies: may order that the government Re-write the VP requirements in the solicitation Re-write the VP evaluation criteria and clearly state how those criteria will be evaluated Re-evaluate the VPs in the bids Issue a new solicitation Cancel the contract and award it to the complainant Award the complainant compensation (e.g., lost profits)

14 Corruption and Offsets 14 Bribery of foreign public officials Risk of exposure to corruption in offset agreements in foreign countries Corruption of Foreign Public Officials Act Strengthened in 2014 The amended CFPOA Establishes nationality jurisdiction applicable to all offences Previously, the Canadian authorities only had jurisdiction over offences that occurred in whole or in part in Canada Maximum sentence of imprisonment applicable to the offence of bribing a foreign public official is increased from 5 years to 14 years (there is still no maximum fine amount) A new offence relating to books and records and the bribing of a foreign public official or the hiding of that bribery, also punishable by up to 14 years imprisonment Facilitation payments exception to the offence of bribing a foreign public official is to be repealed in the future

15 Corruption and Offsets - Debarment 15 Integrity Provisions: Bidder certifies that neither it nor its affiliates have not been convicted of certain prescribed offences in last ten years including: Bribery of Canadian government officials (Criminal Code of Canada) Bribery of Foreign government officials (Corruption of Foreign Public Officials Act) Bid Rigging (Competition Act) Tax Evasion If convicted during term of contract- Government may terminate contract on terms very unfavourable Bidder also certifies that neither it nor affiliates in ten years prior to bid submittal have been convicted of any similar foreign offence Means convictions of similar offence in US or other country could give rise to ten year debarment in Canada

16 Corruption and Offsets - Debarment 16 What does this means for Offsets? Prime bidder must ensure that its subcontracts include Integrity provisions no less favourable to Canada than those imposed in the resulting contract Prime may flow down offset to subcontractors in subcontract With government approval If so, prime must ensure that subcontractor is able to sign onto Integrity Provision terms Prime should obtain certifications from subcontractor that they have read and fully comply with the Integrity provisions and confirmation inter alia, that neither the subcontractor not any of its affiliates have been convicted of an Integrity Offence or a similar foreign offence Subcontract should include provision about what happens if during the subcontract, the Prime learns from its subcontractor that it or its affiliates has been convicted of an Integrity Provision of similar foreign offence

17 Concluding Remarks - ITBs 17 ITBs are are complex, evolving and must be accepted if a company wishes to pursue Canadian military and Coast Guard procurements Many details still to be clarified Well advised to monitor evolution of ITBs Participate in industry consultations on the new KICs Ensure that you understand new requirements in future solicitations Know your rights to challenge the RFP/award if VP is, or has been evaluated, in a manner which is not consistent with Canadian legal requirements Preferable to bid through Canadian supplier Remember 10-day rule (don t sit on your rights)

18 Concluding Remarks - Debarment 18 New debarment rules require bidders To understand the rules as they apply to both themselves and their affiliates To give early and thorough consideration to the integrity terms that are to be include in subcontracts To ensuring that subcontractors can meet those requirements To establishing the necessary due diligence procedures *****

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