25.403 World Trade Organization Government Procurement Agreement and Free Trade Agreements
Source: FAR 25.403 on acquisition.gov
FAR 25.403 requires contracting professionals to accurately determine acquisition value and apply trade agreement rules, ensuring only eligible U.S. or designated country products/services are acquired above WTO GPA and FTA thresholds.
Overview
FAR 25.403 outlines the requirements for applying the World Trade Organization Government Procurement Agreement (WTO GPA) and Free Trade Agreements (FTAs) to federal acquisitions. It specifies how eligible products from WTO GPA and FTA countries must be treated, establishes methods for calculating contract value thresholds to determine coverage, and details purchase restrictions under the Trade Agreements Act. The section ensures that procurement procedures are fair and that only U.S.-made or designated country end products or services are acquired when covered by the WTO GPA, unless exceptions apply. Special calculation rules are provided for leases and recurring purchases to prevent circumvention of thresholds.
Key Rules
- Nondiscriminatory Treatment
- Eligible products from WTO GPA and FTA countries must receive nondiscriminatory treatment in covered procurements.
- Threshold Calculation
- Specific methods are provided for calculating the estimated value of acquisitions (including leases and recurring purchases) to determine if WTO GPA or FTA coverage applies. All options must be included, and acquisitions cannot be divided to avoid thresholds.
- Purchase Restrictions
- For acquisitions covered by the WTO GPA, only U.S.-made or designated country end products or services may be acquired, unless such offers are unavailable or insufficient. This restriction does not apply below the WTO GPA threshold or to certain DoD purchases.
Responsibilities
- Contracting Officers: Must ensure proper threshold calculations, apply nondiscriminatory treatment, and enforce purchase restrictions as required.
- Contractors: Must offer eligible products/services and understand threshold and eligibility requirements.
- Agencies: Must oversee compliance with trade agreement provisions and ensure acquisitions are not structured to evade thresholds.
Practical Implications
- This section prevents discrimination against eligible foreign products/services and ensures compliance with international trade agreements.
- Accurate threshold calculations are critical to determine applicability and avoid improper exclusions.
- Common pitfalls include miscalculating contract value, improperly dividing acquisitions, or failing to apply purchase restrictions when required.
(a) Eligible products from WTO GPA and FTA countries are entitled to the nondiscriminatory treatment specified in 25.402(a)(1). The WTO GPA and FTAs specify procurement procedures designed to ensure fairness (see 25.408).
(b) Thresholds.
(1) To determine whether the acquisition of products by lease, rental, or lease-purchase contract (including lease-to-ownership, or lease-with-option-to purchase) is covered by the WTO GPA or an FTA, calculate the estimated acquisition value as follows:
(i) If a fixed-term contract of 12 months or less is contemplated, use the total estimated value of the acquisition.
(ii) If a fixed-term contract of more than 12 months is contemplated, use the total estimated value of the acquisition plus the estimated residual value of the leased equipment at the conclusion of the contemplated term of the contract.
(iii) If an indefinite-term contract is contemplated, use the estimated monthly payment multiplied by the total number of months that ordering would be possible under the proposed contract, i.e., the initial ordering period plus any optional ordering periods.
(iv) If there is any doubt as to the contemplated term of the contract, use the estimated monthly payment multiplied by 48.
(2) The estimated value includes the value of all options.
(3) If, in any 12-month period, recurring or multiple awards for the same type of product or products are anticipated, use the total estimated value of these projected awards to determine whether the WTO GPA or an FTA applies. Do not divide any acquisition with the intent of reducing the estimated value of the acquisition below the dollar threshold of the WTO GPA or an FTA.
(c) Purchase restriction.
(1) Under the Trade Agreements Act (http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title19-section2512&num=0&edition=prelim" target="_blank">19 U.S.C. 2512), in acquisitions covered by the WTO GPA, acquire only U.S.-made or designated country end products or U.S. or designated country services, unless offers for such end products or services are either not received or are insufficient to fulfill the requirements. This purchase restriction does not apply below the WTO GPA threshold for supplies and services, even if the acquisition is covered by an FTA.
(2) This restriction does not apply to purchases of supplies by the Department of Defense from a country with which it has entered into a reciprocal agreement, as provided in departmental regulations.