CHAPTER IV

CHAPTER IV: CHALLENGE PROCEDURES AND DISPUTE SETTLEMENT

4.1 Bid challenge by interested suppliers

WTO

As set out in Article XX of the GPA, members are required to establish bid challenge procedures. Nevertheless, some signatory countries have specified in their schedules derogations on the applicability of the bid challenge procedures with respect to certain procurements with certain signatories to ensure reciprocity.
Parties undertake to encourage suppliers to seek resolution of complaints through consultation with the procuring entity to obtain corrective measures under the challenge system. Entities are obliged to retain documents concerning procurements covered by the GPA for a period of three years. Suppliers may be required to initiate a challenge within a specified time limit, which shall not be less than 10 days.
Challenges shall be heard by a court or by an impartial and independent review body with no interest in the outcome of the procurement. A review body which is not a court shall either be subject to judicial review or to procedures which ensure procedural fairness and transparency.
Challenge procedures requisites are set out in Article XX of the GPA. They "shall provide for:
1. rapid interim measures to correct breaches of the agreement and to preserve commercial opportunities. Such action may result in suspension of the procurement process. However, procedures may provide that overriding adverse consequences for interests concerned, including the public interest, may be taken into account in deciding whether such measures should be applied. In such circumstances, just cause for not acting shall be provided in writing:
2. an assessment and possibility for a decision on the justification of the challenge; and
3. correction for the breach of the agreement or the compensation for the loss or damages suffered, which may be limited to the cost for tender preparation or protest."
The challenge procedure shall normally be completed in a timely fashion in order to protect commercial and other interests involved.

IDB

Procedure for submitting protests (paragraph 3.8 (l) of the BPPP). The bidding documents must indicate the proper forum for due process to take place, to resolve protests or complaints that may arise up the time the contract is signed by the winning firm, allowing at least 10 (ten) calendar days to present them.
Procurement Committee of the Bank (Section VI paragraph 6.1 of the BPPP). In addition, because the Bank must be assured that procurement which it finances is carried out in accordance with its policies and procedures, it will consider protests submitted at any stage of the bidding process. For this purpose, the Bank has a Procurement Committee, consisting of six managers representing the Departments most involved with procurement. The Committee is charged with continually reviewing all Bank rules and policies relating to procurement, as well as resolving major procurement -related issues arising during the execution of projects. Among other issues the Committee reviews: exceptions to the system of international competitive bidding; deviations for the established procurement norms in loan contracts; award to bidders whose bids were not evaluated as the lowest; and all protests by bidders submitted during the procurement process. The decisions of the Committee are adopted by a vote of at least four of its six members. If a majority decision is not reached, the issue is submitted for resolution by the Executive vice-president of the Bank. It should be noted that the Committee is not a court and, therefore, representatives of the Borrower or the contractor do not appear before it.
The Bank officially recognizes a protest when a complaint, objection, or other manifestation of disagreement has been submitted in writing and within the established time limits by the contractor to the competent authority of the country of the Borrower or to the Bank itself. If a process has been submitted the procurement process is suspended until the process is resolved in accordance with the principles hereunder stated.
The Bank recommends that the protest be submitted to the Borrower, who is usually responsible for resolving the dispute in the first instance, with a copy to the Bank?s appropriate Country Office. The Country Office will send a report covering the case to the Secretary of the Procurement Committee, with its recommendation, as well as the documents referred to hereunder, for review by the Committee.
In order to resolve protests submitted by bidders, the Committee analyzes the following basic documents:

the bidding documents including the draft contract;
the bidding procedures set forth in the loan agreement;
applicable national law;
a copy of the protest and supporting documents submitted by the protesters;
the response submitted by the Borrower;
any other documents pertinent to the case; and
recommended course of action submitted by the Bank?s respective Country Office.

The Committee can resolve the case, by either upholding the request of the Borrower, or, when the decision proposed by the Borrower is not legally acceptable or is incompatible with Bank policy, by rejecting it. The decision will be communicated to the authorities of the Borrower. The Borrower is responsible for notifying the parties involved regarding the Bank?s decision.
The Committee?s decisions can not be appealed. While such decisions do not obligate the Borrower, the Bank will not finance procurement which has not been adjusted or resolved in accordance with its decision.
The Committee publishes an annual summary of its decisions, which contains a brief description of the cases decided, as well as statistical information. The publication is available to the general public from the Bank?s Procurement Policy and Coordination Office.
The Procurement Policy and Coordination Office handles matters related to procurement policies, rules and training. It is responsible for reviewing procurement provisions in loan documents before they are presented to the Bank?s Board of Executive Directors; monitoring procurement activities of Borrowers to ensure compliance with Banks requirements; providing assistance to Bank and Borrower personnel; providing assistance and support to the Procurement Committee; and managing the Bank?s procurement-related information system. The Bank?s legal department also contains a unit responsible for addressing legal issues related to procurement, including those concerning tender procedures which form part of the Bank?s loan contracts and preparing the BPPP.
Review mechanisms. The Bank verifies the existence of national regulations that ensure the legal protection bidders, and permit, within reasonable time frames, the use of the review mechanisms necessary to guarantee such protection.
Submission of protests. The Borrower may not impose conditions that would impede, restrict or increase the cost of submission of protests by firms participating in bidding for the acquisition of goods or execution of works with the resources of the Project.

MERCOSUR

Not covered.

NAFTA

Rules are similar but more detailed than those of the WTO bid challenge procedures and are set out in Article 1017 of the Agreement.
Parties are obliged to adopt and maintain bid challenge procedures. It allows suppliers of another Party to seek review of decisions made by the entities during the procurement process.
Before the initiation of a bid challenge, the Parties may encourage suppliers to seek the resolution of the complaint through consultations. However, Parties can not prevent the supplier from initiating a bid challenge or seeking any other relief available. Suppliers may be required to notify the entity of this initiation. Parties are allowed to limit the period within which a supplier may initiate a bid challenge, but that period may not be shorter than 10 working days from the time when the basis of the complaint became known by the supplier.
Parties are required to establish or designate the reviewing authority which will decide on the complaint. This authority should be impartial and with no interest in the outcome of procurements. Entities are generally obliged to follow the recommendations and findings of the reviewing authority which may include the re-evaluation of offers and changes in the procurement procedures of the entity to bring them into conformity with the obligations of the Agreement.
Entities are obliged to retain documents concerning procurements covered by the Agreement for a period of three years.
Parties shall make generally available and in writing its bid challenge procedures and the recommendations and findings issued by the reviewing authority.

ANDEAN GROUP

Not covered.

CENTRAL AMERICAN COMMON MARKET

Not covered.

CARICOM

Not covered.

GROUP OF THREE ACCORD

Bid challenge procedures are similar to the ones in NAFTA and are set out in Article 15-17. However, they do not apply to Colombia or Venezuela, and only apply to Mexico.

BILATERAL AGREEMENTS WITH MEXICO

Bid challenge procedures are similar to the ones in NAFTA and are set out in Article 14-17 of the Mexico-Bolivia Agreement and 12-17 of the Mexico-Costa Rica Agreement.

BILATERAL AGREEMENTS WITH CHILE

Not covered.

4.2 Dispute Settlement

WTO

As set out in Article XXII of the GPA, a Party which considers that its rights or benefits under the Agreement have been nullified or impaired by another party, whether or not the application of a measure by such other Party conflicts with the provisions of the Agreement, may seek resolution of the dispute through consultations. Recourse to panel procedures is an option if bilateral consultations fail to produce settlement.
The provisions of the Understanding on Rules and Procedures Governing the Settlement of Disputes under the WTO, which contains specific rules for government procurement dispute settlement, are applicable except as specifically provided by Article XXII:2-7.
All requests for establishment of Panels will be forwarded to the Dispute Settlement Body (DSB). This body is responsible for establishing panels; adopting panel and Appellate Body reports; making recommendations or giving rulings in the matters submitted to it; maintaining surveillance of implementation of rulings and recommendations; and authorizing suspension of concessions and other obligations, or consultations regarding remedies when withdrawal of measures found to be in contravention of the Agreement is not possible.
Panels established by the DSB to examine disputes under the GPA must include persons qualified in the area of government procurement. Every effort shall be made to accelerate the proceedings to the greatest extent possible. Final reports by the panel should be provided no later than four months after the date in which the terms of reference and composition of the panel were agreed. In case of delay, this period must not exceed 7 months.
Any dispute resulting in the suspension of concessions or other obligations under the GPA, can not result in the suspension of concessions or other obligations under any of the Agreements listed in Appendix 1 to the Dispute Settlement Understanding.