DAOD 3016-1, National Security Exception Under Trade Agreements Instruction


1. Introduction

Date of Issue: 2003-09-12

Application: This is a directive that applies to employees of the Department of National Defence (DND) and an order that applies to officers and non-commissioned members of the Canadian Armed Forces (CAF members).

Approval Authority: This DAOD is issued under the authority of the Assistant Deputy Minister (Materiel) (ADM(Mat)).

Enquiries: Director General International and Industry Programs (DGIIP)


2. Overview

Terminology

2.1 In this DAOD, "security interests" means:

  1. "essential security interests" as used in the North American Free Trade Agreement (NAFTA) and the World Trade Organization - Agreement on Government Procurement (WTO-AGP); and
  2. "national security interests" as used in the Agreement on Internal Trade (AIT).

Purpose

2.2 The purpose of this DAOD is to ensure that DND employees and CAF members request invocation of the national security exception (NSE) in accordance with the applicable guidelines.

3. Operating Principles

Basis for NSE Invocation

3.1 The NSE clauses in trade agreements are intended to ensure that a government is not prevented from taking any action or protecting any information in relation to its procurements that it considers necessary to safeguard its security interests.

3.2 The NSE procedure shall be applied only if a specific security interest is identified. The following are examples of security interests:

  1. the sensitive nature of the procurement is such that it has to be restricted to specific suppliers;
  2. there is a need to ensure a source of supply in Canada for particular goods or services necessary for DND and CAF operational readiness; and
  3. the procurement has a national security dimension and its acquisition cannot be delayed by the mandatory bidding period of the applicable Trade Agreements.

NSE not to be Invoked

3.3 The following are examples of cases in which the NSE shall not be invoked:

  1. to address time pressures, except when it is related to a national security need; and
  2. to provide justification for a sole source procurement where there is no national security need.

Review Process

3.4 The review process shall include early and direct consultations between Public Works and Government Services Canada (PWGSC) officials (where PWGSC is the contracting authority), DGIIP and the originating staff.

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4. National Security Exception Procedure

NSE Procedure Table

4.1 The following table describes the procedure normally involved in invoking the NSE:

Step Who? Action

1

Departmental authorities (Director General (DG) Level or higher)

  • consult early in the process with DGIIP and appropriate PWGSC contracting officers;
  • using the NSE Questionnaire as a tool, provide DGIIP with a briefing note to ADM(Mat), and as appropriate, a draft letter from ADM(Mat) to Assistant Deputy Minister (Operations Branch), PWGSC, containing the rationale for invoking the NSE; and
  • include in the rationale among other things:
    • a statement of the trade agreements for which the NSE is to be requested;
    • a description of the specific security interest requirements; and
    • a description of the goods and/or services to be procured.

2

DGIIP

  • reviews and provides a written recommendation to ADM(Mat) regarding the applicability of the NSE to the procurement in question, based on the rationale provided;
  • retains files containing supporting documentation in relation to each NSE application;
  • supports ADM (Mat) and PWGSC in the invocation process, as required; and
  • seeks legal advice from DND/CF Legal Advisor (DND/CF LA).

5. Responsibilities

Responsibility Table

5.1 The following table identifies the responsibilities associated with this DAOD:

The ... is / are responsible for ...

DGIIP

reviewing and providing recommendations to ADM(Mat) on all proposals seeking to invoke the NSE by DND or PWGSC.

Departmental authorities (DG level or higher)

providing DGIIP with the NSE justification consistent with the DAOD, in consultation with DGIIP.

DND/CF LA

providing legal advice on the NSE application with regard to the trade agreements.

6. References

Acts, Regulations, Central Agency Policies and Policy DAOD

  • North American Free Trade Agreement, Article 1018.1
  • World Trade Organization Agreement - Agreement on Government Procurement, Article XXIII.1
  • Agreement on Internal Trade, Article 1804
  • DAOD 3016-0, National Security Exception Under Trade Agreements

Other References

  • Contracting Policy, Appendix C, Treasury Board Contracts Directive, Treasury Board of Canada Secretariat (Emergency Contracting Authorities)
  • Contracting Policy, Appendix U, Guidelines for Contracting Under Trade Agreements, Treasury Board of Canada Secretariat
  • Supply Manual, Chapter 5, Public Works and Government Services Canada
  • Guidelines for Invoking National Security Exceptions (NSE), Treasury Board of Canada Secretariat
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