BACKGROUND: U.S. Procurement Covered under Revised GPA

The revised GPA sets the standard for the procurement that the United States covers in other agreements.

Beginning in 1981, the United States (U.S.) has opened its government procurement to a number of trading partners by means of bilateral and plurilateral trade agreements.  Under those agreements, the U.S. has never opened all of its procurement.  Rather, it has specified the procurement that it opens to the parties of each agreement based on the following elements:

• the monetary value of the procurement (thresholds);
• lists of federal and state entities and government enterprises;
• goods and services excluded from coverage; and
• exclusions and exceptions.

The procurement that the U.S. covers under the recently revised WTO Government Procurement Agreement (GPA) is the focus of this posting.  Procurement covered by the U.S. under other agreements is based on the GPA, though it is  generally less extensive.  The U.S. allows all GPA Parties to participate in the procurement described below, except as noted. Thresholds:  Under the GPA, the U.S. opens procurement valued at or above the following thresholds:

• Federal government procurement of goods and services:  threshold of 130,000 Special Drawing Rights (SDRs) ($204,000).
• Sub-central (State) procurement of goods and services:  threshold of 355,000 SDRs ($558,000).
• Utilities and other government enterprises’ procurement of goods and services:  $250,000 threshold for federal government enterprises and a 400,000 SDRs ($629,000) threshold for sub-central government enterprises.
• Construction services procured by all entities:  threshold of 5 million SDRs ($7,864,000), except for Korea.  For Korea, the U.S. applies a threshold of 15 million SDRs for sub-central entities and government enterprises since Korea applies the higher threshold.

These thresholds are based on the most recent biannual adjustments and apply from January 1, 2014 through December 31, 2015. Federal Government Entities:  The U.S. covers 89 Federal government entities under the GPA, subject to the following exclusions.

• Department of Agriculture (USDA):  Excludes agricultural goods made in furtherance of agricultural support or human feeding programs.
• Department of Commerce:  Excludes procurement related to the shipbuilding activities of the U.S. National Oceanic and Atmospheric Administration.
• Department of Defense (DoD):  The U.S. specifies DoD coverage with three lists of goods:  1)  goods that are excluded because they are subject to domestic purchase requirements, including clothing and apparel covered by the Berry Amendment; 2) goods that are generally not covered due to the application of the national security exception in the GPA; and 3) goods that are generally covered, subject to the application of the national security exception.
• Department of Energy (DOE):  Excludes procurement that supports the safeguarding of nuclear materials or technology, where the procurement is conducted under the Atomic Energy Act, as well as oil purchases related to the Strategic Petroleum Reserve.
• Department of Homeland Security:  Excludes procurement of textiles and apparel by the Transportation Security Administration.
• Department of Transportation: Excludes procurement by the Federal Aviation Administration.
• General Services Administration: Excludes procurement of hand tools, measuring tools, and cutlery and flatware.
• U.S. Agency for International Development:  Excludes procurement for the direct purpose of providing foreign assistance.

The U.S. does not give Japan the right to participate in procurement of the National Aeronautics and Space Administration since it does not cover its space agency. Sub-central Entities (States):  The U.S. covers the procurement of specified entities in 37 states:

• Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, Wisconsin and Wyoming.

A variety of restrictions apply to the procurement of the states.  The states do not cover printing services under the GPA.  Also, the U.S. does not waive “buy America” requirements that are attached to federal funds given to states for mass transit and highway projects. Utilities and Other Government Enterprises:  The U.S. covers procurement of the following entities:

• Federal entities engaged in the electricity sector: Tennessee Valley Authority and four Power Marketing Administrations (Bonneville, Southeastern, Southwestern and Western Area).
• St. Lawrence Seaway Development Corporation.
• Port Authority of New York and New Jersey:  The U.S. does not cover its procurement of maintenance, repair, and operating materials and supplies (e.g., hardware, tools, lamps/lighting and plumbing); or its procurement pursuant to multi-jurisdictional agreement (i.e., for contracts that have initially been awarded by other jurisdictions).  In exceptional cases, where the Board of Directors requires the purchase of certain goods produced in the region, the GPA does not apply.
• Port of Baltimore.
• New York Power Authority.

The U.S. also covers the financing of power generation and telecommunications projects by the USDA’s Rural Utilities Service (RUS).  The U.S. commits that the RUS will not impose any domestic purchase requirement as a condition of its financing of such projects that are above $7,864,000. For the entities in this category, the U.S. does not waive “buy America” requirements that are attached to federal funds for airport projects.  Three airports are covered under the Port Authority of New York and New Jersey (La Guardia, JFK and Newark). The U.S. excludes Canada from the procurement of the entities listed in this section and with respect to the RUS financing commitment.  The U.S. also excludes Japan from the procurement of TVA and the Power Administrations, as well as the RUS financing commitment.  The reason for the exclusions is that neither Canada nor Japan cover their electric utilities. Goods:  The U.S. opens the procurement of all goods purchased by the listed entities, except for the goods that are excluded, as noted above.  Services:  The U.S. covers all services purchased by its listed entities except for the following:

• All transportation services, including launching services.
• Services associated with the management and operation of government facilities, or privately owned facilities used for governmental purposes, including federally funded research and development centers (FFRDCs).
• Public utilities services, including telecommunications and ADP-related telecommunications services except enhanced (i.e., value-added) telecommunications services.
• Research and Development services.

Also, the U.S. does not cover procurement of any service in support of military forces located overseas. Construction Services:  The U.S. covers all construction services, except dredging. Exclusions:  The U.S. excludes procurement that it sets aside for its small- and minority-owned businesses.  A set-aside includes any form of preference, such as the exclusive right to provide a good or service, or any price preference. Jean Heilman Grier February 10, 2014 Related Posts U.S. Agreements Open Foreign Procurement TTIP Negotiations: US-EU Procurement Commitments Challenges of Covering State Procurement in TPP and TTIP WTO Government Procurement Agreement: Background U.S. & Canada Should Exchange Electric Utility Procurement in the TPP