Comprehensive Coverage of Central Government Procurement in TTIP?

In the TTIP negotiations, the U.S. and EU should consider exchanging comprehensive coverage of procurement of their central government entities.

The negotiations of the Transatlantic Trade and Investment Partnership (TTIP) provide an opportunity for the United States to take a new approach to its coverage of federal government procurement. To date, in its procurement agreements, the U.S. has always used a positive list, opening only the procurement of the federal entities that it lists in the agreements. For example, in the recently revised WTO Government Procurement Agreement (GPA), the U.S. lists 89 federal entities – the most in any agreement. Under the TTIP, the U.S. should consider shifting to a negative list, in which it would cover all federal entities, except those that it lists. Such a U.S. offer should be in exchange for the comprehensive coverage that the European Union (EU) provides in the recent GPA revision to several trading partners – but not to the U.S.

In the TTIP negotiations, the U.S. should consider covering all federal entities subject to the Federal Acquisition Regulation (FAR). The FAR is the primary federal regulation that applies to the procurement of most federal agencies. Its purpose is to provide “uniform policies and procedures for acquisition by all executive agencies” (FAR 1.101). If there are agencies that are subject to the FAR that the U.S. is not able to cover for security or other reasons, they could be excluded from the TTIP. Entities such as the Federal Aviation Administration that are exempt from application of the FAR would not be covered.

Previously, the U.S. has resisted comprehensive coverage of all federal agencies because of the uncertainty of ascertaining all the entities that would be captured by such an approach. However, limiting it to the entities subject to the FAR should address that concern. This approach could also be facilitated by enlisting the assistance of the agencies responsible for ensuring compliance with the FAR. The FAR assigns that responsibility to the Secretary of Defense (for the military departments and defense agencies), the Administrator of National Aeronautical and Space Administration (NASA) (for NASA activities) and the Administrator of the General Services Administration (for civilian agencies other than NASA) (FAR 1.202).

Using application of the FAR to set the parameters for federal government coverage would be comparable to the approach that Japan and Armenia use in the GPA. Japan bases its coverage of central government entities on “All entities covered by the Accounts Law.” Similarly, Armenia describes its GPA entity list as referring to “all central government entities and subordinated organizations covered by Law on Procurement of the [Republic of Armenia].”

A U.S. offer of FAR-covered entities should be made in exchange for rights to the EU’s comprehensive coverage of the central government entities of its 28 member states that it incorporated into the revised GPA. That coverage ensures access to the procurement of all  central government entities – both existing entities and those to be created in the future. However, to date the EU has given that coverage to only five GPA parties: its European Free Trade Agreement (EFTA) partners (Iceland, Liechtenstein, Norway and Switzerland), as well as the Netherlands with respect to Aruba.

The EU has withheld that comprehensive coverage from the U.S. and other GPA parties. Instead, for all of these parties, the EU continues to use a positive list of the covered entities. But, the EU did not even provide the U.S. with access to all of the entities on its positive list. It denied the U.S. rights to the procurement of more than 200 central government entities. That disparity in coverage should be rectified in the TTIP.

If the TTIP is to set a new standard for procurement obligations, the U.S. and EU should seek to exchange comprehensive coverage of central/federal entities. In addition to comprehensive coverage of the central government entities of its member states, the EU should also expand its coverage of EU-wide entities from the current three that it covers under the GPA.

Jean Heilman Grier

May 12, 2014

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