Ontario Passes Legislation to Respond to Protectionist Procurement Policies – Province Standing up for Ontario Workers and Businesses

Ontario is standing up for workers and businesses by taking measured actions in response to discriminatory American procurement policies.

The Fairness in Procurement Act, 2018 (summary below) was passed today in the Ontario legislature, and will allow the province to take responsive action to address unfair government procurement practices that are being implemented in New York State and Texas, and considered in other states. These policies represent a worrying trend towards protectionism and prevent Ontario businesses from accessing cross-border procurement opportunities.

The legislation gives Ontario the flexibility to choose whether and how to respond to discriminatory actions by creating regulations to address those actions. Responsive regulations will be pursued when a U.S. subnational jurisdiction enacts legislation or adopts an unfair, discriminatory policy. The government has posted proposed regulations to respond proportionally to the restrictions set out in New York State and Texas “Buy American” legislation. Proposed summary of regulations are posted below.

“Ontario and the U.S. both benefit from a strong, balanced economic relationship, including through open procurement. With this legislation, our government is taking action to advocate for the interests of Ontario businesses and workers, not only to emphasize the importance of reciprocal access to state government procurement projects, but also to seek ways to strengthen and promote our long-standing business relationships with our partners south of the border.”— Michael Chan, Minister of International Trade

Defending the interests of Ontario workers and businesses is part of Ontario’s plan to create fairness and opportunity during this period of rapid economic change. The plan includes a higher minimum wage and better working conditions, free tuition for hundreds of thousands of students, easier access to affordable child care, and free prescription drugs for everyone under 25 through the biggest expansion of medicare in a generation.

QUICK FACTS

• The New York Buy American Act, which is scheduled to be implemented on April 1, 2018, 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, enacted on September 1, 2017, requires that all construction contracts awarded by all state government entities require the use of U.S.-made iron and steel, with some exceptions.

Proposed Fairness in Procurement Act, 2018 (Bill 194)

Bill or Act: Bill 194: Fairness in Procurement Act, 2018

Summary of the Proposal

If passed, (passed today) Bill 194, the proposed Fairness in Procurement Act, 2018, would permit the Lieutenant-Governor in Council to make regulations governing procurement practices of Ontario government and/or broader public sector entities. These regulations would be in response to legislation or policies implemented by sub-national (i.e. state or local) American jurisdictions that, in the opinion of the President of Treasury Board, may inhibit or prevent Ontario suppliers from participating or succeeding in public procurement processes initiated by those jurisdictions. If the bill is passed, the government intends to bring forward two new proposed regulations to respond to theBuy American legislation enacted by the states of New York and Texas – one responding to each of the US jurisdictions.

The Government of Ontario values open, transparent and competitive procurement. The proposed regulations are intended to respond proportionally to the restrictions set out in the New York and Texas legislation. The proposed regulations are intended to impose certain measures on Government entities entering into procurement contracts with suppliers from the state of New York and with suppliers from state of Texas.

The proposed regulation responding to the Buy American legislation in the state of New York, if made:

1. would designate the state of New York as an offending American jurisdiction;

2. would apply only to the following type of procurements by Ontario government entities:
a. for the construction, reconstruction, alteration, repair, maintenance or improvement of surface roads or bridges; and
b. where the value of the procurement contract is over $1 million USD

3. would require that for the type of procurement above, should a supplier from the state of New York 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 in any surface road or bridge

4. would prohibit Ontario government entities from entering into a procurement contract in 2 above unless the contract includes the provisions set out in 3 above  Proposed Regulations under the Proposed Fairness in Procurement Act, 2018 (Bill 194).

The proposed regulation responding to the Buy American legislation in the state of Texas, if made:

1. would designate the state of Texas as an offending American jurisdiction;
2. would apply only to procurements by Ontario government entities (see definition at the end of this document) for the construction, remodeling or altering of any building, structure or infrastructure or supply of material containing iron or steel for those projects;

3. would require that for the type of procurement above, should a supplier from the state of Texas be the successful bidder or chosen supplier, the procurement contract must include a provision restricting the supplier from using any iron or steel from the state of Texas

4. would prohibit Ontario government entities from entering into a procurement contract in 2 above unless the contract includes the provisions set out in 3 above

Both proposed regulations, if made:
– 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, or to procurement contracts already in effect when the proposed regulation came into force;
– may contain a process for obtaining exemptions from the application of the regulation

The scope of any proposed responsive regulation may be expanded in the event that the identified offending American jurisdiction imposes additional restrictions on Ontario suppliers.

The intent is that a responsive regulation under the proposed Fairness in Procurement Act, 2018 would be revoked if the identified offending American jurisdiction repeals its Buy American legislation, or provides Ontario suppliers with an exemption from the application of the legislation.