./.WORLD TRADE
ORGANIZATIONWT/WGTGP/W/16
19 February 1998
(98-0937)
Working Group on Transparency
in Government ProcurementOriginal:  English
TRANSPARENCY IN PROCUREMENT METHODS
Communication from the United States
Introduction
The Secretariat's synthesis paper and the Chairman's Checklist paper describe what are
generally considered the three main categories of procurement methods:  (1) open tendering;
(2) selective tendering;  and (3) single tendering (also known as limited or sole-source tendering).While specific circumstances governing a particular procurement often dictate the need for a
particular method, open tendering is generally viewed as the most transparent procedure and single
tendering as the least transparent.  For this reason, the United States believes that a WTO transparency
agreement could set forth specific conditions on the circumstances in which single tendering is
justified, thereby ensuring that a substantial loophole to the agreement's obligations is not created,while at the same time allowing members to flexibly choose among alternative procurement methods
to best address their procurement needs.
How single or limited tendering can undermine transparency
In many government procurement systems, including that of the United States, statutes and
regulations may permit single tendering to be conducted without many of the normal proceduralguarantees on transparency.  The plurilateral WTO Government Procurement Agreement (GPA) itself
provides in Article XV that the Agreement's general transparency provisions need not apply in cases
of limited tendering.
If a government has unfettered discretion to utilize single tendering for any or all
procurements, it could effectively escape the obligations of a WTO transparency agreement.  To avoid
such a potential loophole and ensure a common level of mutually agreed balance in obligations, WTO
Members may want to consider specifying the general circumstances under which single tendering isjustified.  Additionally, a transparency agreement could provide that single tendering be conducted
with a minimum level of transparency.  At the same time, a transparency agreement should not
impinge on a country's legitimate use of single tendering when circumstances warrant.
Commonly accepted circumstances justifying single tendering
According to the Secretariat's synthesis paper, the three international instruments (GPA,
UNCITRAL Model Law, and World Bank Guidelines) and many countries' national legislation and
regulations specify circumstances in which single tendering is justified.  A few of these are described
below.WT/WGTGP/W/16
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Extreme urgency:  When events unforeseeable by the procurement authority require urgent
procurement of goods and services, many countries permit exceptions to generally applicable
transparency requirements.  Natural disasters are an obvious example.
Absence of tenders or collusion in tenders:  If, as the result of an open tendering procedure,
no responsive tenders are received or tenders appear to be collusive, procurement authorities may
contact individual suppliers with no requirement that they readvertise.
Proprietary procurements:  It may be clear at the outset of a procurement that only one
supplier or a limited group of suppliers have the proprietary rights to goods or services being
procured.
Commodity markets and fire sales:  In commodity markets, there may be no individual
suppliers since the market is the supplier.  In so-called "fire sales", there may be circumstances in
which the procurement authority can realize exceptional savings at a one-time event (e.g. liquidation
sales).
National security:  Many countries permit waiver of general transparency requirements when
a national defence agency undertakes procurement of sensitive goods or services.
The examples identified above are not intended to be exhaustive, nor must a listing in a
transparency agreement be exhaustive as well.  To the extent, however, that a provision in a
transparency agreement may be open-ended, it could still provide general criteria for circumstancesthat are not included in a non-exhaustive list (e.g. must be published in law or regulation).
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