ADDIS COLLEGE

SCHOOL OF GRADUATE STUDIES

DEPARTMENT OF CONSTRUCTION TECHNOLOGY
& MANAGEMENT

Degree program: - M.Sc. in Construction Management

Course title: - Advanced Construction Procurement and
Contract Management
 Course Contents
Unit 1 – Introduction to construction Procurement & Contract
Management

Unit 2 – Procurement through public private partnerships

Unit 3 – public Procurement Law (Ethiopian)

Unit 4 – The practice of contracting in construction

Unit 5 – Claim and Dispute Management System

Unit 3

Public Procurement Law (Ethiopian)

➢ proclamation no. 649/2009. the Ethiopian federal
government procurement and property administration
proclamation.
➢ Proclamation No 471/2005/6 (as amended) &
➢ Proclamation No.430/2005
It applies to all federal public procurement
 Cont’d …

❖ Objective of the law

Economic & effective use of public fund
Promoting fairness
Achieving Transparency
non-discriminatory

❖ Procurement means purchasing, hiring or obtaining

Goods
works
Services
 Cont’d …

❖ Goods means
Raw materials, products, equipment, commodities in solid,
liquid or gaseous form and electricity, services related to
supply
❖ Works Means
All work associated with construction, reconstruction,
demolition, repair or renovation……
❖ Services means
Any object of procurement other than works, goods &
consultancy services
❖ Consultancy services
Service of an intellectual & advisory nature
 Basic procurement rules
❑ Records of procurement
• Keep records of procurement for 10 years
• Brief description
• Invitation to bid
• Suppliers names & Address
• Evaluation criteria & summary of evaluation
• Information to suspend or cancel
• Grounds for using procurement procedure
 Cont’d …

❑ Non- discrimination
• Candidates shall not be excluded on the basis of nationality,
race or criteria not having to do with their qualification

❑ Preference Margin
• Up to 15% for goods produced in Eth.
• Up to 7.5% for works carried by Ethiopian nationals
• further preference for small and micro-enterprises
❑ Form of communication
• Shall be in writing
• The agency may determine the extent of use of electronic means
 Cont’d …

❑ Qualification of candidates
• Possess professional & tech. qualification…
• Have legal capacity
• Are not insolvent or bankrupt……
• Fulfilled obligations to pay taxes
❑ Contractor or supplier may be required to submit appropriate
evidence
❑ No criteria other than provided above shall be used
❑ Evaluation based on Qualification Criteria
❑ A contractor or supplier shall be disqualified if
• Information submitted contains basic error
• Information submitted is inaccurate or incomplete
 Cont’d …

❑ Rejection of all tenders

• Procuring entity may reject all tenders, offers
• Upon request the procuring entity shall communicate
grounds for rejection but not required to justify
• Procuring entity shall incur no liability
= there is proof of error in the procurement proceeding which could affect the
outcome of the bid;
= bidders fail to meet the minimum criteria set forth in the bid document;
= the price offered by the successful bidder exceeds the budgetary allocation
made for the procurement and the public body
= it is proved that the bidding is not sufficiently competitive as a result of
connivance among candidates.
 Cont’d …

❑ Technical specification
• Shall be prepared to give correct & complete Desc.
• Create conditions of fair & open competition
• Requirement for quality, performance, safety….
❑ Description of the technical spec.
• in terms of performance rather than descriptive characteristics
• Based on national standards where such exist or otherwise on
internationally recognized standards or construction codes
❑ Reference to particular trade mark not required unless there is
no other way of describing it
❑ If trade mark is used the “or equivalent” is used
 Choice of Methods of procurement

❑Open bidding (tendering)

❑Restricted tendering
❑Direct procurement
❑Request for proposals
❑Request for quotations
❑Two stage tendering
 Public Private Partnership

❑ The Minister may issue directive prescribing the rules

governing the formation of Public Private Partnership and the
modes of implementation of such partnership.
 Conditions for use Restricted Tendering

❑ Goods, works or services are available from limited number of

suppliers
❑ Estimated value of contract does not exceed the threshold set
in directives
❑ where a repeated advertisement of the invitation to bid fails to
attract bidders in respect of a procurement subject to the
directive to be issued by the Minister.
 Conditions for use of direct procurement
❑ Only one candidate can supply or provide
❑ For additional deliveries by the original supplier, with limits
❑ Additional works which cannot be separated from the original contract
❑ New works consisting of repetition of similar works of which the initial
contract was awarded on open or restricted tender
❑ Continuation of consultancy services
• Original contract has been satisfactorily performed
• Leads to gains in economy & efficiency
❑ Purchase of goods made under exceptionally advantageous condition
• In very short term & Do not cover routine purchases
❑ Head procuring entity has determined it is urgent & delay will create
serious problem
❑ When the contract price does not exceed the amount stated in the directives
 Conditions for use of request for proposal

❑ For consultancy services or

❑ Contracts for which consultancy services is more 50% of the contract
amount
❖ Public bodies may engage in procurement by means of request for
proposals 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.
Conditions for use of request for Quotation
❑ Purchase of readily available goods
❑ For procurement of works or services for which there is an established
market
❑ does not exceed the amount stated in directives
➢ 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 to be issued by the Minister.
 Conditions for use of two-stage tender

❑ It is not feasible to formulate detailed Spec

• It seeks bids, proposals or offers to various possible means of
meeting its needs
• Because the technical character it necessary to negotiate with suppliers
❑ Contract for the purpose of research, study or development
❑ No bids were submitted or all rejected and it is unlikely that new bid will
be successful
 Open Tendering
❑ Advertisement
• Invitation to be published in at least one national news paper of general
circulation
• Time for preparation not less than specified in directives
❑ Invitation to bid shall contain (minimum)
• Name address of procuring entity
• Brief description and time of delivery
• Means & conditions for obtaining bid documents & place
to obtain
• Place & deadline
• Place & time for opening bids
 Cont’d …

❑ Contents of the bid documents

• Instruction for preparing tenders
• Deadline, date, hour & place of submission and opening
• Forms of bid & bid security
• No. of copies to be submitted with the original
• Condition of contract
• Specification of requirements
• Evidence to be provided by the bidder
• Bid validity
• Evaluation criteria, points given to each criteria
• The right to reject all bids prior to acceptance
 Cont’d …

❑ Modifications to bid documents

• At any time before deadline of submission
• Procuring entity may issue addendum
• Any addendum shall be communicated
• Procuring entity may extend the deadline of submission
❑ Bid Security
• Bids must be accompanied by bid security (deposit, bid guarantee)
• Security will be forfeited if a bidder withdraws his bid within the validity
• In case of successful bidder if he repudiates the contract or fails to furnish
performance security.
 Cont’d …

❑ Submission of tenders
• At place , date & time
• Tender shall be submitted in writing, signed
• Receipt showing date & time tender received, where it is impossible to
put the bid document in bid box due to size
• Tender received after deadline shall be returned an opened
❑ Opening of tenders
• Tenders shall be opened at the time stipulated in the bid, immediately
• All who submitted shall be allowed to be present
• Name and tender price shall be announced and a copy made available
any bidder on request.
 Cont’d …

❑ Examination, evaluation
• Contractors may be asked clarification to assist evaluation
• No change in matter of substance
• Correction of arithmetic errors
• Responsive if it confirms to all requirements set in the bid
• Minor deviations that do not materially alter or depart from the
requirements
• Procuring entity shall not award contract to the bidder who
– does not provide evidence of qualification and fiscal and registration in
suppliers list
– does not accept arithmetic error
– is not responsive
• Procuring entity shall evaluate & compare bids that are responsive
 Cont’d …

•The successful bid shall be

–Lowest evaluated price or
–Lowest evaluated bid on the basis of factors affecting the
economic value, if specified in the bid document
•Process to be confidential
–Information not to be disclosed until award is announced
–No bidder shall influence the evaluation
–If any bidder wishes to contact procuring entity it shall be
in writing
• not to be requested to modify their bids as a condition for award
 Cont’d …

•Notification of award & signing

–Prior to expiry of bid validity notify the successful bidder
its bid accepted
–Notification of award shall specify the time within which to
sign contract
–The unsuccessful bidder will informed who the successful
bidder is & why he lost the bid
–Existence of contract shall be confirmed through signature
of contract document
–Contract shall not be signed prior to receipt of notice by the
unsuccessful bidder & before period spec. in Art.52
 Other procurement methods

❑ Restricted tendering procedure

• Provisions of open tendering shall apply except that:
• Invitation to limited number of qualified candidates, sufficient to ensure
effective competition
• Select among those registered in suppliers list
• Time for preparation of bid shall not be less than minimum number of
days specified
• Procuring entity will decide if bid security is required
 Direct procurement procedure

❑ Procuring entity shall prepare a description of its need, quality, quantity,

terms and time of delivery
❑ Free to negotiate with the sole candidate Any agreement reached to shall be
confirmed by contract signed by both parties
 Request for proposals procedure
❑ Addressed to several suppliers, not less than 3, not more than 7
❑ Invite candidates to submit expression of interest to submit proposal
❑ Establish evaluation criteria
❑ Request for proposals shall contain
• Name & address of the procuring entity
• Description of services required through TOR
• Reminder that candidates must exclude themselves from procurement of
related good & works
• Evaluation criteria, relative weights to be given to price and other criteria
• Place & deadline for submission
• Adequate time to prepare proposals
• Procuring entity may negotiate with the first ranked candidate on their
proposals and may seek or permit revisions
• Award shall be made to the candidate whose proposal is most advantageous,
determined in accordance with the criteria set in the request for proposals
 Two-stage bidding

❑ First stage- proposals without tender price

• Technical, quality, contractual terms & conditions, professional & tech.
competence
❑ Second stage- final tenders with prices with respect to single set of
specifications
• May delete or modify any aspect specified originally
• Any such modification shall be communicated to the suppliers
 Request for quotations
❑ From as many candidates as possible, at least 3
❑ Request shall contain requirement as to quality, quantity, terms & time of
delivery
❑ Adequate time to prepare their quotations
❑ Purchase shall be made from the candidate who meets the requirement &
lowest price
❑ Insure the candidates who are in the suppliers list have equal opportunity
❑ Final bids shall be evaluated and compared
❑ The procuring entity may engage in negotiation with the first ranking
bidder concerning any aspect of its bid, except price
 International procurement
❑ Open international bidding
• Where effective competition cannot be obtained unless foreign firms are
invited
• Procurement above threshold to be determined by directives
• Shall observe the provisions of open tendering as well as the following
– Language used in international trade
– News paper sufficient circulation to attract foreign completion
• Shall observe the provisions…..
– Allow sufficient time for bid preparation
– Technical specification, to the extent compatible with national
requirements be based on international standards
– Candidates shall be permitted to express their bids in Ethiopian Birr or
currency widely used in international trade
– General & special conditions shall be of kind used in international trade.
 Other international procedures

❑ Whenever competitive bidding can not be obtained in open tendering

• Procedures other than open tendering such as restricted bidding or request
for proposals shall be used
 Review
❑ Any candidate may seek review
❑ The following shall not be subject to review
• Choice of procurement procedure
• Rejection of all tenders, proposals, quotations
❑ Ones the procuring entity concluded a contract complaint cannot be
entertained through administrative review
❑ Review by procuring entity
• Complaint to be submitted in writing to head of procuring entity
• Complaint to be submitted within 5 days
• Decision shall be made within 10 days
• If decision is not made with 10 days or the candidate is dissatisfied
complaint can be submitted to the agency with five working days
❑ The decision shall
• State the reasons
• Indicate corrective measures
 Review by the Agency
❑ Upon receipt of complaint the Agency shall give notice the complaint to the
procuring entity
❑ Such notice suspends further action
❑ The Agency may prohibit the procuring entity from acting or
❑ deciding unlawfully or Order to proceed in accordance to this Proclamation
or
❑ Annul in whole or in part an unlawful act
❑ The Agency shall before taking any decision notify interested candidates of
the complaint and shall take into account information & arguments
❑ The Agency shall issue its decision within 15 days stating:
• Reasons for its decision and
• Remedies granted if any
End of Unit 3