Private Sector, Govt at loggerheads on procurement procedures


The private sector has accused the government of procuring mostly from state-owned and affiliated enterprises not in line with the procurement proclamation. They also complained about procurement procedures and the improper implementation of the directives. On the Fourth Public Procurement Dialogue Forum held at the Hilton hotel on Friday, March 8, the Public Procurement and Property Administration Agency (PPPAA) indicated that it is working on the revision of the proclamation ratified in 2009.
A paper presented by the private sector indicates that the special support for local suppliers on international and national bids that was assured in the proclamation has not been practically applied. “This situation occurred due to the fact that procurement auditors were not assigned following the proclamation procedures,” Teshome Beyene, head of the Public Private Partnership Forum, stated in his presentation.
The proclamation ratified in 2009indicated that local pharmaceutical suppliers for instance have an additional 25 percentage points, which the law provides for in competitions with international bidders. As for the supply of other materials or goods, the law provides local suppliers with 15 percentage points. Similarly, for bids on construction and other services, local investors are allotted an additional 7.5 percent points.  And on a national bid, small scale enterprises are given an additional 3 points. However, during the presentation, it was pointed out that these special opportunities have almost been ignored on national and international procurements.
Article 40 of the procurement proclamation declares that public bodies shall include the prerequisite that bids must be accompanied with a bid security, in bidding documents. The amount of such bid security is deemed to be sufficient to discourage irresponsible bidders.  
In addition to the proclamation, the procurement directive article 16 sub article 16 number 2 indicated that the amount of bid security a public body may require shall be in the range of 0.5% to 2% of the total estimated contract price, which the public body has to fix and indicate in the invitation to bid and the bidding document. “However, the bid security to be fixed by the public body shall not exceed 500,000birr,” another article clarified. “Yet Public offices are demanding more than what the law and directive stipulates during procurement processes,” the presenter explained.
He said that this situation will discourage the private sector from participating on a bid and will affect the bid process due to lack of sufficient competitors.
Another problem raised is the delay in releasing the bid security to the supplier after the bid process is completed.
The regulation indicated that in cases where procurements are made using request for quotation, as long as other suppliers, who can supply the same goods and services are available, the public body shall not repeatedly invite the same suppliers to submit their quotations. “The public body shall ensure that equal opportunity of participation in public procurement is given to all candidates engaged in the business,” it clarified.
But the study presented on the forum indicated that, most of the time, the same bidders were invited, which is against the regulation.
Other serious problems with regards to procurement have also been noted during the presentation by participants from the private sector. 
Yet another debate revolved around the issue of state procurements from government enterprises. “The current procurement from government enterprises is against the procurement proclamation,” one of the participants from a private company said.
“It was expected that the role played by the private sector in public procurement was going to grow, but if the current situation is any indication, government procurement from state-owned enterprises has grown in leaps and bounds,” other procurement experts said, magnifying the issue that was raised by several participants.
Officials, who represented the federal Procurement and Property Administration Agency and regional offices, accepted most of the criticisms. Nevertheless, though the problems were observed, the procurement proclamation and directive were appreciated by all participants for their clarity and international standard.
According to experts who took part at the event, the main problem was in the implementation process or in the practical application of procedures.
Tsegaye Abebe, Director of PPPAA, said that they will look into most of the problems of the procurement process. “We accept your suggestions and most of the issues will be addressed by the new proclamation that will replace the existing one,” he said.
On the other hand, government officials also noted problems arising from the private sector itself, especially in terms of quality and other related processes.
They said, “Though you mentioned problems arising from public bodies, the private sector or suppliers are also defaulting not only with regards to the provision of supplies but also on the quality stated in the quotation,” a government representative from the Southern Nations, Nationalities and Peoples’ Regional state explained.
Also responding to the complaints from the private sector, an expert from the agency said, “The private sector accuses the government about its procurement from state-owned and affiliated enterprises against the proclamation, however, it has to deliver factual evidence rather than simple accusations.” He concluded by stating that the government did not and would not go against the country’s proclamation.