Public Procurement Law

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• International: The UNCITRAL (1993)
provides a model law
• National
Proclamation No.430/2005
Prepared in accordance with UNCITRAL
model law
Determines procedures in public procurement
for goods, works and services
Establishes the PPA
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• The PPA
 Authority and establishment set out from art. 8-16
 Mandate:
 Ensures the application of fair, competitive,
transparent, non-discriminatory and value for money
procurement;
 Sets standards for the public procurement systems of
the Federal Government;
 Monitors compliance (administrative) of this
proclamation by procuring entities;
 Builds procurement capacity of the Gov’t
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• Objectives of the proclamations:
 Promote economic and efficient use of public funds;
 Promote fair, transparent and non-discriminatory public
procurement; hence enhances public confidence.

• The UNCITRAL model adds (implied in the Eth’s case):

 Encourage suppliers’ and contractors’ participation regardless of
nationality; hence promote international trade;
 Promote competition;
 Promote integrity, fairness and public confidence.
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• Scope:
All federal procurement except
When necessary to use different option for national
defense and security reasons.
 The MFED shall define the economic and efficient
options of procurement in such cases
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• Definition of terms
“Procurement” means the purchasing, hiring
or obtaining by any contractual means of
goods, works and services;
“Consulting services” are given special
definition as services of intellectual nature
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• International obligation
If this proclamation conflicts with Gov’t’s
arrangements with other states or
international bodies, those arrangements shall
prevail
• Procurement directives
– To be given by the MFED
• The Ministry can arrange combined procurement
of items incase different entities need it
• Is obliged to make legal texts publicly available
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• Responsibilities of procuring entities
 Establish a Procurement Unit staffed at an
appropriate level;
 Establish a tender committee;
 Advertise bid opportunities;
 Communicate award decisions;
 Certify the availability of funds to support the
procurement activity before signing a contract;
 Sign contracts for procurement activities;
 Investigate complaints by bidders; and render
decisions thereon;
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Submit a copy of any complaints and reports
of the findings and decisions to the PPA;
Ensure that the implementation of the
awarded contract is in accordance with the
terms and conditions of the award;
 Outsource procurement activities to third
parties, if necessary;
Keep records at least up to 10 years after
completions of procurement proceedings
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• Qualifications of suppliers
– Possess prof, tech, financial, equipment, managerial, reputation,
personnel to execute the work;
– Legal capability;
– Not insolvent, bankrupt, in receivership, business suspended or not in a
legal proceedings for any;
– Fulfilled obligation to pay tax according to the country’s law;
– They/or their CEOs haven’t been sued for fraud on procurement in the
last (x years)
• The entity can demand documents pertaining to above (subjected to
intellectual property)
• Procuring entity shouldn’t demand criteria other than set up here
• Evaluation should be in accordance to a clear procedure set out in
the bid document
• The UNCITRA model law allows for prequalification (art 7)
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• Disqualification
 False information for the purpose of qualification
 Materially inaccurate or incomplete bids
• Substantially affects scope, quality, or performance of the
Works;
• Substantial limits, inconsistent with the bidding documents,
the Employer’s rights or the Bidder’s obligations under the
Contract;
• Whose rectification would affect unfairly the competitive
position of other bidders presenting substantially responsive
bids.
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• Equal opportunity
• No discrimination of suppliers based on
nationality, or on unjustifiable grounds
except Preferences of
– 15% margin for goods produced in Ethiopia
(any good >20% value added here)
– 7.5% for works done by Ethiopian nationals
– If the procuring entity shall discriminate on
such bases (nationality), should clearly
stipulate reasons (UNCITRAL)
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• Technical specifications
– Should be clear and able to give enough information
for the purpose of a fair procurement
– Preferable to use performance rather than design or
descriptive characteristics
– If possible based on national standards, if not on
international ones
– As much as possible should not refer to a specific
trademark, if has to, should specify ‘or equivalent’
– Must not create obstacle in participation (UNCITRAL
model law)
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• Rights of the entity:
– Can reject all bids by citing reason (no need
to justify), without incurring any liability;
– Shall reject a bid if any of the bidders offered
or promised to offer gratitude to any of its
officials or gov’t authorities
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• Types of bidding (theory)
Bid Qualification Procedure

Competitive Bid Negotiated Bid

(Direct)

Financial Proposal
Short-Listed Bid Open Bid
(Restricted)

Financial Pr.
One-Stage Procedure Two-Stage Procedure

Technical Proposal
Technical & Financial
Proposal Financial Proposal
*preferred form of bidding
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• Types of procurement to be used
One-stage 0pen bidding (preferred)
Restricted bidding
• If procured item can only be available from limited
suppliers
• Time and cost to evaluate bid is un proportional to
value of bid
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 Direct procurement (negotiated)
• Item can only be supplied by one supplier
• Additional delivery to original items on the reason of
compatibility
• Uncovering of additional works not included in initial contract
and separation of the additional work is difficult
• For new works where job basically comforts with original
work awarded on the basis of open/restrictive bid
• For continuation of consultancy where original service was
satisfactory and continuing is of economic advantage
• On the case of ‘sales’, not by regular suppliers
• Case of pressing emergency and hence delay would create
serious damage
• In most of the above cases, a limit is put to the extent of the
contract (on the procurement directive by MFED)
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• Request for proposal
 For consultancy services where cost of consultancy
exceeds 50% of total contract
 The request shall be to not less than 3,nor more than
7 prospective suppliers
 Request shall contain
• Name & address of procuring entity
• Description of service required
• Reminder not to bid if it creates conflict of interest
• Criteria in proposal evaluation
• Place and deadline for submission
• Can negotiate with 1st ranked bidder and ask for clarification
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• Request for quotation
For readily available goods and for works
&services of established market but less than
a certain value (the MFED to determine the
threshold)
Shall solicit quotation from as many but at
least 3 suppliers
Clear statement of what is required
Only from equal opportunity suppliers
Only one price quotation (UNCTIRAL)
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• Two-stage bidding
 When not possible to formulate detailed
specifications/ characteristics of item to be procured
• Proposals of various natures are needed to be explored
• Technical works needed to be negotiated upon
 Research and development (R &D) works, when
goods are not to be produced for commercial viability
or recover cost
 When all bids were rejected or bid offer couldn’t
attract potential bidder and entity believes that such
would be the case again
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• Other forms:
The PPA can, on exceptional cases, authorize
other form of tendering given that it is
economically justifiable
• A procurement entity shall plan
procurements rationally and no unsound
cause is made for the sake of avoiding the
procurement options mentioned herein
above
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• International procurement methods
Open International bidding
• To be used when effective competition is not
available at home, procurement is above a certain
threshold (to be ratified by the MFED on its
directive)
• Follow all local procedures plus
– Document to be in language in common use in
international trade
– Invitation to be advertised using same language and in
newspapers of international circulation
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– Enough time should be allowed
– Specifications in international standards if they don’t
conflict with national
– Bid price should be in Birr or widely used international
currency
– International GCC and SCC

• Other types of bidding, if used, should

comply with the above and their
corresponding local requirements
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• Compliance:
 No compliant can be made on
• Choice of procurement procedure if in accordance to
proclamation
• Decision to reject all bids
 Procedures
• First need to be reviewed by head of procuring entity
• The PPA will also give administrative review
• Court will have final jurisdiction (UNCITRAL)
• Other: Offences and their corresponding
punishments are stipulated under article 54 of
the act