Overview
This section details the application of the World Trade Organization Government Procurement Agreement (WTO GPA) and various Free Trade Agreements (FTAs) to federal acquisitions. It establishes the requirement for non-discriminatory treatment of eligible foreign products and provides specific methodologies for calculating contract thresholds to determine when these agreements apply.
Key Rules
- Non-Discriminatory Treatment: Eligible products and services from WTO GPA and FTA member countries must be treated as favorably as domestic offers, provided the procurement exceeds specific dollar thresholds.
- Threshold Calculation for Leases/Rentals:
- Fixed-term (≤ 12 months): Use the total estimated acquisition value.
- Fixed-term (> 12 months): Use the total estimated value plus the estimated residual value of the equipment at the end of the term.
- Indefinite-term: Multiply the estimated monthly payment by the total number of months possible (including all optional ordering periods).
- Uncertain term: Multiply the estimated monthly payment by 48.
- Aggregation and Options: The estimated value must include all option years. Agencies are prohibited from splitting requirements into smaller purchases to circumvent threshold limits.
- Purchase Restrictions (TAA): Under the Trade Agreements Act, for acquisitions covered by the WTO GPA, agencies must acquire only U.S.-made or designated country end products/services. This strict restriction does not apply to acquisitions that fall below the WTO GPA threshold, even if they are covered by an FTA.
- DoD Exception: The purchase restrictions do not apply to Department of Defense supplies from countries with which the DoD has a reciprocal agreement.
Practical Implications
- Calculation Accuracy: Contracting Officers must be diligent in calculating the "total estimated value" of a contract—including options and residual equipment values—as reaching the WTO GPA threshold triggers a mandatory "buy only" restriction rather than a simple price preference.
- Sourcing Restrictions: Once the WTO GPA threshold is crossed, products from non-designated countries (e.g., China, India) are generally prohibited unless no other offers are received, significantly narrowing the pool of acceptable vendors to those providing U.S. or designated country products.