Tender or bid in Ethiopia is something the majority of businesses would like to participate in since the biggest buyer in Ethiopia is the government and the various governmental ministries, authorities, offices, public enterprises, corporations, etc are required to buy through tender. So it is necessary to know the regulation and procedures of tender or bid in Ethiopia.
1. Tender or Bid Regulations in Ethiopia
There are several documents in relation to the regulation of tender or bid in Ethiopia, which include;
- Ethiopian Federal Government Procurement and Property Administration Proclamation No. 649/2009
- Federal Public Procurement Directive on June 2010
- Procurement Directive Revised on Dec-2015 on Focus of Construction bids Threshold amounts and Experiences required
- Procurement Directive on December, 2016
The government organs which primarily regulate tender or bid in Ethiopia is the Ministry of Finance and Economic Cooperation (herein after MoFEC), and the Public Procurement and Property Administration Agency (herein after the Agency). In the meantime, the Procurement and Property Administration Proclamation No. 649/2009 (herein after the Proclamation) set the general framework for the regulation and procedures in relation to government tender or bid.
Here are some highlights on the regulations of tender or bid in Ethiopia.
The Powers of the Agency (Article 16 of the Proclamation)
The Agency has the following powers to:
- require any information, documents, records and reports in respect of any aspect of the public procurement process where a breach, wrongdoing, mismanagement or collusions has been alleged, reported or proven against any public body;
- summon witnesses, call for the production of books of accounts, plans, documents and examine witnesses and parties concerned on oath;
- give warning to or suspend for a definite or indefinite period of time from participating in public procurement፡ candidates, suppliers or persons involved in the disposal of public property where it proves that they have offered a price higher than the market or committed an act contravening the provisions of the Proclamation and the directives issued by the Minister;
- conduct audit on its own program or cause audit to be conducted where it receives allegations of misconduct warranting such audit on a process of public procurement and property administration;
- upon the request of public bodies, exceptionally and when justified on sound grounds, may permit the use of a procedure which is not consistent with the procedures laid down by the Proclamation or the procurement directives.
Preferences and Non-Discrimination
(Article 25 and 24 of the Proclamation)
According to article 25 of the Proclamation, goods produced in Ethiopia (which also includes goods whose value has been added by 35%), works carried by Ethiopian nationals, and for consultancy services rendered by Ethiopian nationals, will get preference in the evaluation process. In particular, where in the evaluation of bids for procurement of goods, services or works equal percentage points are resulted for bidders offering similar price and quality, preference shall be given to local goods, services or companies.
Other than the above preference, a public body must not discriminate potential candidates on the basis of nationality, race or any other criterion not having to do with their qualifications
Form of Communications and Language
(Article 26 and 27 of the Proclamation)
Communications between candidates and public bodies must be in writing (electronic may also be used). Any communications not made in written form shall be subsequently referred to and confirmed in writing.
The language used in a national bid (which doesn’t involve international bidders) is Amharic. However, if it is found to facilitate the procurement process, the public body concerned may authorize the use of English language in the preparation of bid documents and bid proposals in a national bid in which only local bidders participate, provided that such an act is not prejudicial to fair competition. English language is also used for international bids.
Qualification of Candidates (Article 28-29 of the Proclamation)
In order to participate in public procurement, candidates must qualify by meeting the following criteria and such other criteria, as the public body considers appropriate under the circumstances:
- that they possess the necessary professional and technical qualifications and competence, financial resources, equipment and other physical facilities, managerial capability, experience in the procurement object, reputation, and the personnel, to perform the contract;
- that they have the legal capacity to enter into the contract;
- that they are not insolvent, in receivership, bankrupt or being wound up, their business activities have not been suspended, and they are not the subject of legal proceedings for any of the foregoing;
- subject to the directives that are issued by the Ministry, that they are registered in the suppliers list;
- that the period for which they were suspended from participating in public procurement is over;
- that they have renewed trade license and fulfilled their obligations to pay taxes according to Ethiopian tax laws;
- that they have a bank account
The above stated requirements along those established by the public body should be set forth in the bid documents or other documents for solicitation of proposals, and should apply equally to all candidates.
Note, that the submission of false, inaccurate or incomplete information would disqualify such candidate.
The bid should also contain technical specifications and descriptions laying down the characteristics of the goods or services to be procured. In particular, the bid should clearly describe public body’s requirement with respect the quality, performance, safety and where necessary dimensions, symbols, terminology, packaging, marking and labeling, or the processes and methods of production and requirements relating to conformity assessment procedures.
Rejection of Bids, Proposals and Quotations
(Article 30 of the Proclamation)
Public bodies may for one or more of the following reasons reject in whole or in part bids, proposals or quotations at any time prior to the conclusion of procurement contract where:
- there is proof of error in the procurement proceeding which could affect the outcome of the bid;
- it is ascertained that the procurement has no use in enabling the public body to obtain a better technical or economic advantage as a result of a change of work plan or another alternative representing a better option to meet the requirement of the public body;
- bidders fail to meet the minimum criteria set forth in the bid document;
- the minimum price offered in the bid does not match with the market price circulated by the Agency and the public body expected that it can get a better price advantage by re-advertising the bid;
- the price offered by the successful bidder exceeds the budgetary allocation made for the procurement and the public body cannot make up for the deficiency from any other source;
- it is proved that the bidding is not sufficiently competitive as a result of connivance among candidates.
Public bodies have to give notice to candidates forth with disclosing the reasons for rejecting bids, proposals or quotations wholly or partially. However, they are not required to justify the reasons. If the decision to reject all bids results before the opening date and time, the bids received shall be returned unopened to the candidates submitting them.
Methods of Procurement (Article 33 of the Proclamation)
There are six methods of procurement which are; open bidding, request for proposals, two stages tendering, restricted tendering, request for quotation, and direct procurement. From these methods, public bodies are required to use the open bidding method except as otherwise provided in the Proclamation. See the section below on the conditions and procedures for each of the Methods.
2. Tender or Bid Procedures in Ethiopia
Procedures for Open Tender
Advertisements and Invitation to bid (Proclamation 35 and 36 of the Proclamation)
The first procedure is an ‘invitation to bid’ which must be consistent to the standard bid documents prepared by the Ministry. Invitation to bid must be advertised in at least one times in a national news paper of general circulation which is published in the language the bidding document is prepared. The public body may also advertise the bid on a national radio or television where it finds it necessary.
Apart from the standard bidding document, an invitation to bid should include the following particulars:
- the name and address of the public body;
- a brief description of the goods, works or services to be procured;
- the means and conditions for obtaining the bidding documents and the place from which they may be obtained;
- the place and deadline for the submission of bids; and
- the place and time for opening of bids, along with an announcement that bidders or their representatives are allowed to attend at the opening of bids.
Bidding Document (Article 37-40 of the Proclamation)
After the invitation to a bid, the public body issues a bidding document. The bidding document must contain sufficient information to enable competition among bidders, such as instructions for the preparation of submission of bids, date of submission, bid submission forms, the number of copies to be submitted with the original bid, general and specific conditions of the contract and the type of evidence for qualifications. Further the bidding document includes the conditions for furnishing bid security.
Submission and Receipt of Bids, and Opening of Bids (Article 41and 42 of the Proclamation)
Next, potential candidates are required to submit their bids to the public body issuing the bidding document. Bids should be submitted in writing, signed and sealed in an envelope, before the deadline stated in the invitation to bid. Then the public body will open the bids which were submitted before the deadline.
Examination and Evaluation of Bids (Article 43 of the Proclamation)
A bid becomes tenable if it conforms to salient requirements provided in the bidding document. The public body may ask bidders for clarification of bids in order to assist in the examination and evaluation of bids. However, the assistance should not result in a change in substance of the bid (e.g. change in price). In particular, a bid is deemed as valid even if it contains minor deviations i.e. those defects that do not alter the substance of the bid (usually arithmetic corrections). If the bidder rejects such arithmetic corrections then the bidder will be disqualified.
A bid may also be deemed as unfit if it has failed to demonstrate the qualification requirements (discussed earlier or see article 28 of the Proclamation)
In other words, a successful bid is:
- the bid that is found to be responsive to the technical requirements and with the lowest evaluated price;
- if the bidding document sets a preference for potential candidates who offer a better economic advantage then such bidder will become successful.
- where it is ascertained in post evaluation of bids that the legal, financial and technical standing of the candidate selected as the successful bidder conforms to the requirements stated in the bidding document.
Notification of Award and Signing of Contract (Article 46 and 47 of the Proclamation)
A qualified bidder, who presented a successful bid, is notified that his bid has been accepted before the expiry period of bid validity. The bidder, then, will sign a contract of agreement with the public body. In certain circumstances the bidder is required to furnish contract security to make good any damage the public body may sustain as a result of the supplier’s default.
Procedures for Restricted Tendering
(Article 49 and 50 of the Proclamation)
A public body may use restricted tendering as a method of procurement only where the following conditions are satisfied:
- it is a ascertained that the required object of procurement is available only with limited suppliers;
- the cost of procurement does not exceed a certain threshold to be specified in a directive to be issued by the Minister; or
- where a repeated advertisement of the invitation to bid fails to attract bidders.
Restricted tendering procedures are the same as those applied in open tendering, except that:
- where the object of procurement is available only with limited suppliers the invitation to bid is sent to all such suppliers. Therefore such bid is not subjected to advertisement.
- if restricted tendering is used for the reason stated above in bulletin 2 and 3, the invitation to bid shall as far as possible be sent to limited suppliers chosen from among those registered in the suppliers list on the basis of the following consideration:
- any selection shall allow opportunities for suppliers on the list,
- the number of suppliers to whom the invitation to bid is sent shall be such that it is sufficient to ensure effective competition and shall not as far as possible be less than five competitors.
Procedures for Direct Procurement
(Article 51 and 52 of the Proclamation)
According to article 51 (1) of the proclamation, a public body may use direct procurement upon the satisfaction of certain conditions. Some of the conditions include;
- when in absence of competitions for technical reasons the goods, works consultancy or other required services can be supplied or provided only by one candidate;
- for additional deliveries of goods by the original supplier which are intended either as parts of replacement for existing supplies, services or installations or as the extension of existing supplies, services or installation where a change of supplies would compel the public body to procure equipment or services not meeting requirements of interchangeability with already existing equipment or services;
- for purchase of goods made under exceptionally advantageous conditions which only arise in the very short term.
The procedure for direct procurement commences upon the preparation of description of goods needed by the public body. Then, the public body freely negotiates on price and conditions of offer with a sole candidate. The result of the negotiation (agreement) must be stipulated in contracts in which both are parties to. The contracts for direct procurement should be approved by the head of the public body.
Procedures for Request for Proposals
(Article 53 and 54 of the Proclamation)
A public body uses this method of procurement when it seeks to obtain consultancy services or contracts for which the component of consultancy services represents more than 50% of the amount of the contract.
The selection of candidates for consultancy services above a threshold to be determined by a directive is made after inviting candidates to submit expression of interest. Requests for proposals is addressed to not less than three and not more than seven candidates selected by the public body.
A request for proposals must contain at least the following information:
- the name and address of the procuring entity;
- description of the services required, normally through terms of reference;
- in the case of consultancy assignments which may involve potential conflicts of interest, a reminder that candidates for such assignments must exclude themselves from procurement of goods and works which may follow as a result of or in connection with the consultancy agreement;
- the criteria for evaluating the proposals, the relative weight to be given to price and other criteria, and the manner in which they will be applied in the evaluation of proposals; and
- place and deadline for the submission of proposals
After the request for proposal has been communicated to the public body then, the candidates will submit their proposal within the specified time frame. The public body may negotiate with the first ranked candidate with respect to the nature, volume and organization of the services included in their proposals.
An award is made to the candidate whose proposal is most advantageous, determined in accordance with the criteria and procedures for evaluating proposals set forth in the request for proposals.
Procedures for Request of Quotation
(Article 55 and 56 of the Proclamation)
Public bodies may engage in procurement by means of request for quotations for the purchase of readily available goods or for procurement of works or services for which there is an established market, so long as the estimated value of the contract does not exceed an amount stated in the procurement directive issued by the Minister.
Public bodies must request quotations from as many candidates as practicable, but from at least three, if possible from among suppliers registered in the suppliers list. As long as their other suppliers, who can supply the same goods, services or works, are available, the public body shall not repeatedly invite the same suppliers to submit their quotations. The public body has the obligation to ensure that equal opportunity of participation in public procurement is given to all candidates engaged in the business.
Additionally, the request should contain a clear statement of the requirements of the public body as to quality, quantity, terms and time of delivery of the goods, works, consultancy or other services as well as other special requirements.
Candidates then prepare their quotations and submit it to the public body within the specified period. Candidates must comply with Article 28 of the Proclamation on qualifications of candidates, which is discussed earlier.
A candidate who has submitted their quotations in accordance with the request of quotation are placed in a purchase order.
Procedures for Two-Stage Bidding
(Article 57 and 58 of the Proclamation)
Public bodies may engage in procurement by means of two-stage bidding:
- when it is not feasible for the public body to formulate detailed specifications for the goods or works and in the case of services, to identify their characteristics and, in order to obtain the most satisfactory solution to its procurement needs;
- when the public body seeks to enter into a contract for the purpose of research, experiment, study or development, except where the contract includes the production of goods in quantities sufficient to establish their commercial viability or to recover research and development costs;
- where bid proceedings are initiated but no bids are submitted as a result of the nature of the object of procurement not being clearly described or where all bids are rejected due to failure on the part of the public body concerned to draw up a clear and complete specification; or
- because of the technical character of the required goods or works, or because of the nature of the consultancy or other services it is necessary for the public body to negotiate with the suppliers.
Two-stage bidding as its name denotes involves two stages.
In the first stage the public body prepares a solicitation documents that call upon suppliers to submit their proposals without a tender price. The solicitation documents may also solicit proposal relating to the technical, quality or other characteristics of the goods, works or services as well as to contractual terms and conditions of supply, and where relevant the professional and technical competence and qualifications of the suppliers.
The public body, then, identify responsive bids by evaluating the proposals submitted by the bidders at the first stage of the bid proceeding against its requirements. The public body may without prejudice to their intellectual property rights at the first stage hold discussion with the candidates on the content of their proposals.
Next, the public body draws up a specification which is more appropriate to its requirements on the basis of the evaluation against the requirements of the proposals submitted to it at the first stage of the bid proceeding. It then proceed to communicate the revised specification to the candidates who submitted responsible bids at the first stage and invite such candidates to submit proposals on the basis of the revised specification.
Therefore, the second stage commences upon the invitation to bid based on the revised specifications. A supplier not wishing to participate in the second stage of tendering in accordance with the reformulated specification may withdraw from the proceeding. Note that article 43 of the proclamation, dealing with examination and evaluation on open tender, is also applicable to two-stage bidding.