"Buy America" retaliation - Ontario's Fairness in Procurement Act, 2018 (Bill 194)

The Government of Ontario has tabled Bill 194 - the Fairness in Procurement Act, 2018. The Preamble states that the Government of Ontario values open, fair and competitive procurement. The purpose of this legislation is to allow the Government of Ontario to respond to Buy America restrictions imposed on Ontario's business opportunities to participate in public procurement.

Once this Bill is enacted, the Government of Ontario will have the authority to respond proportionally through a regulation tailored to retaliate against the Buy America measure in issue.

Designation of an offending American jurisdiction

Pursuant to Bill 194, The Ontario Cabinet (Lieutenant Governor in Council) can make regulations designating an American jurisdiction (e.g. any State of the United States of America) as an offending jurisdiction if in the opinion of the President of the Treasury Board, the government of the American jurisdiction has enacted legislation or otherwise provided direction to entities under its authority to apply requirements, restrictions, policies, sanctions or other measures that may inhibit or prevent Ontario suppliers from participating or succeeding in procurement processes initiated by purchasers from the offending American jurisdiction¹. In other words, if a State Government adopts a "Buy America" policy that prevents an Ontario supplier from participating in a procurement, the Government of Ontario can designate that State as an offending American jurisdiction.

If a State is designated an offending American jurisdiction, then the participation of suppliers from the offending American jurisdiction in procurement processes initiated by an Ontario "Government entity"² or "broader public sector entities"³ will be required to comply with a regulation that will set out requirements, restrictions, policies or other measures on the procurement.

Likewise, the Ontario Government entity and broader public sector entity must also comply with the retaliation regulation.⁴ A procurement contract entered into by a broader public sector entity is void if the procurement contract⁵ or the process by which it was entered contravenes the Fairness in Procurement Act, 2018 or a regulation made under the Act, unless the Minister by order validates the contract.⁶ In addition, if a broader public sector entity contravenes the Act or a regulation made under the Act or if it enters into a procurement contract that contravenes the Act or a regulation, it will be subject to prescribed sanctions, or other measures.⁷

Retaliatory measures

The prescribing and governing requirements, restrictions, policies, sanctions or other measures that may be imposed on suppliers, Government entities or broader public sector entities for the purposes of a subsection 2(2) regulation that will limit the participation of suppliers from American jurisdictions include:

1. excluding suppliers from offending American jurisdictions from participating in procurement processes or being awarded procurement contracts,
2. requiring suppliers from offending American jurisdictions to provide additional information to Government entities or broader public sector entities or meet additional requirements when participating in procurement processes,
3. evaluating proposals for procurement contracts from offending American jurisdictions according to additional or more stringent criteria than applies to other proposals, and
4. requiring Government entities or broader public sector entities to impose requirements, restrictions, policies, sanctions or other measures described in subclauses (i), (ii) and (iii) on suppliers.

Entry into force

Bill 194 must be passed by the Legislature of Ontario and will come into force on a day to be named by proclamation of the Lieutenant Governor.