JIGJIGA UNIVERSITY

SCHOOL OF GRADUATE STUDIES

Assignment: - Reviewing Ethiopian Procurement Policy and Comparing it

Group Assignment

By

AbdikadirMaktalSirad GSR/0015/10

NimanAbdi Ibrahim GSR/0183/10

Mahamed Ahmed Muhumed GSR/0242/10

Abdirahman Farah Ismail GSR/0022/10

Course: - Project Logistics and Contract Administration

Submitted to: - Dr. Getahun Fenta

April, 2019

Jigjiga, Ethiopia
Introduction

The Federal Democratic Republic of Ethiopia considers it necessary to regulate and improve the
way in which the public procurement of goods, works and services is undertaken. In order to
improve the procurement system, the Government has introduced the Proclamation and
Directive.

The purpose of the Manual is to state the ways in which the Proclamation and Directive shall
improve public procurement in the Federal Democratic Republic of Ethiopia. These are to:

1. ensure procurement is conducted in the most efficient manner possible;

2. encourage competition between persons and/or firms who are willing to supply/provide
goods and services and undertake works in the public sector;

3. ensure that all persons and firms, who are providing works, goods, and services, in the
public sector, are treated equally;

4. ensure that public sector procurement is implemented fairly;

5. improve business opportunities within the Federal Democratic Republic of Ethiopia; and

6. Introduce the Proclamation, Directive, Standard Bidding Documents and the Manual
which shall apply to all public bodies involved in public procurement.

The Proclamation, Directive, and the Manual when used together should ensure that all
procurement activities are performed in an appropriate manner and that public bodies,
government officials, candidates, bidders, suppliers, contractors, consultants, persons or firms
involved in procurement shall be fully accountable for their actions. The Proclamation,
Directive, and the Manual stipulate the sanction in the event of non-compliance by any involved
party.

Legislation can only provide the overall framework to be followed, and with the increasing
importance, value and complexity of procurement, effective guidelines and step-by-step Manual
are required to assist procurement staff and officers involved in the procurement process.
Therefore, there is a need to provide necessary interpretations, clarifications, instructions and
examples in order to make the Proclamation and Directive user friendly. The Procurement
Manual is expected to immensely help the procurement units in the relevant public bodies and
their officers to apply the Proclamation and Directive correctly and with full confidence. The
Manual is also accompanied by standard forms, guidance notes, check lists and flow charts for
clear understanding of the Proclamation and Directive. The clarifications, explanations and
examples given in the Manual are expected to clarify procurement issues and applications for
procurement officer in applying the Proclamation and Directive. Compliance with the Manual
along with the Proclamation and Directive is a mandatory requirement for all public bodies.

Whereas, The World Bank has a new, modern and business-friendly Procurement Framework,
This modernized approach means greater focus on value for money, more ways bidders to
differentiate bids, and more opportunities for dialogue and discussion.

World Bank procurement staff is based in 72 countries to support borrowers throughout the
procurement process. Staff works with governments to achieve the highest bidding and contract
management standards to get the best development result.

Under the new procurement framework, there are four key innovations to help businesses and
country clients:

1. Needs and risks of a project are analyzed through a Project Procurement Strategy for
Development (PPSD). This analysis enables the borrower to have a strategy on how best
to engage with bidder. The analysis will ensure that procurement processes are fit for
purpose, allow choice, and are appropriate to the size, value, and risk of the project.
2. Value for Money has been introduced as a core procurement principle in all procurements
financed by the World Bank. This means a shift in focus from the lowest evaluated
compliant bid to bids that provide the best overall value for money, taking into account
quality, cost, and other factors as needed.
3. The approach to resolving procurement-related complaints has been significantly
improved with capacity to promptly respond to any concerns during the procurement
process. A standstill period has been introduced - a pause between identifying who
should win the contract and actually awarding them the contract so that other bidders can
voice any concerns before a contract is actually legally formed and awarded.
 4. The World Bank will be more involved in contract management of procurements with
high value and high risk to ensure the best possible outcomes and that problems are
resolved quickly.

Good public procurement for both the Ethiopia and World Bank is

 Economy;
 Efficiency;
 Fairness;
 Reliability;
 Transparency; and
 Accountability and Ethical Standards.

Economy: Procurement is a broad concept, which goes beyond purchasing activity, whose
purpose is to give the public body best value for money. Value implies right price, right quality,
right time, right place, and right quantity. Moreover, lowest initial price may not equate to lowest
cost over the operating life of the item procured. But the basic point is the same: the ultimate
purpose of sound procurement is to obtain maximum value for money.

Efficiency: The best public procurement is simple and swift, that meets the public body's need as
planned, producing positive results immediately. In addition, efficiency implies practicality,
especially in terms of compatibility with the administrative resources, organizational capabilities
of the purchasing entity and its procurement personnel with the planned/envisaged type and
volume of procurements.

Effectiveness: Effectiveness means the extent to which the entity is able to procure goods, works
and services of quality, in a timely and most economical manner.

Fairness: Good procurement is non-discriminatory, impartial, consistent, and therefore reliable.

Transparency: Good procurement establishes and then maintains rules and procedures that are
accessible, predictable and unambiguous. It should be fair and seen to be fair.
Accountability and Ethical Standards: Good procurement holds its practitioners and other
officers responsible for enforcing and obeying the rules. It makes them subject to challenge and
to sanction, if appropriate, for neglecting or bending those rules. Accountability is a key
inducement to individual and institutional probity, a key deterrent to collusion and corruption,
and a key prerequisite for procurement credibility. All procurement officers and other staff
should adhere to the professional ethical code.

Methods of Procurements

Procurement method for Ethiopia

A procurement method is the technique that public body uses to acquire goods, works and
services. The procurement methods described in this chapter are applicable to the procurement of
goods, works and services (consultancy and non-consultancy). The method selected depends on a
number of factors including the type of goods or service being procured, the value of the good or
service being procured, the potential interest of foreign bidders and even the cost of the
procurement process itself. The Proclamation provides as follows:

 Open Bidding

All interested firms bidders are given adequate notification of contract requirements and all
eligible bidders are given an equal opportunity to submit a tender. The public body must give
sufficient public notification of bidding opportunities to potential bidders to determine their
interest and prepare bid documents.

 Request for Proposals

 Two-Stage Bidding

 When the public body is unable to formulate detailed specifications. Suitable for goods
and works

 On complex contracts i.e. Turn Key projects, or for consulting services

 When PB seeks to enter into a contract for the purpose of research, experiment, study or
development;

 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;

 Highly technical character or nature of the required goods or works, consultancy and
non-consulting services

 Restricted Bidding

 Request for Quotations; and

 Direct Procurement

Procurement method for World Bank

 International Competitive Bidding

LIB may be used to procure off-the-shelf textbooks when a limited number of titles are available
for selection and to procure publishing services where specific local/regional experience is
essential. LIB may also be used where sophisticated multimedia publishing services are needed,
particularly those involving video and computer assisted learning techniques. This is usually
because the number of qualified and experienced publishers is limited.

 International and Local Shopping

This method of procurement may be used to procure small quantities of off-the-shelf titles with
an estimated value of less than US$ 50,000. It may also be acceptable for publishing services
contracts where a there is a limited number of qualified publishers that are proficient in the
required local language.

 Direct Contracting

Direct contracting is acceptable when particular titles have been pre-selected from existing titles
by the Borrower with Bank approval. Since after selection no competition is possible, it is
essential that an objective procedure be followed in the pre-selection process so that price can
play a role in the selection. In some projects, direct contracting can be used as the method of
procurement to facilitate community participation. Direct contracting is used especially where
sub – projects are scattered or remote, making it less attractive for contractors, and eliminating
the need for extensive supervision and reviews by the Bank. In such projects, the TTL/PS/PAS
perform quarterly reviews and the procurement schedule is regularly audited and updated as
necessary.

 the technical complexity of the work to be undertaken;

 local practice of using community labour;

 The availability of small contractors in the area.

 Force Account

Force Account, which are works such as construction and installation of equipment and non-
consulting services carried out by a government department of the Borrower’s country using
its own personnel and equipment,66 may be the only practical method of procurement under
specific circumstances. The use of Force Account requires that the Borrower sets maximum
aggregate amounts for the use of Force Account, to which the Bank shall give its no
objection, and applies the same rigorous quality checks and inspection as for contracts
awarded to third parties. Force Account shall be justified and may only be used, after Bank
no objection, under any of the following circumstances:
 quantities of construction and installation works that are involved cannot be defined in
advance;
 construction and installation works are small and scattered or in remote locations for
which qualified construction firms are unlikely to bid at reasonable prices;
 construction and installation works are required to be carried out without disrupting
ongoing operations;
 risks of unavoidable work interruption are better borne by the Borrower than by a
contractor;
 specialized non-consulting services such as aerial surveys and mapping, as a matter of
Borrower’s law or official regulations for consideration such as national security, can
only be carried out by specialized branches of the government; or
  Urgent repairs to prevent further damages, requiring prompt attention, or works to be
carried out in conflict-affected areas where private firms may not be interested.

Procurement cycle

The procurement of the Ethiopia and World Bank are different as shown figures bellow

Procurement cycle in Ethiopia

Ethiopia procurement cycle starts identifying need

 Requirement identification
 Preparation of the Annual Procurement Plan
 Preparation of specification
 Bidding document
 Advertise
 Receive and open bids, proposals and quotations
 Evaluation of the bids, proposals and quotations
 Endorsement by Endorsing Committee
 Award of the contract and advertise the award
 Contract implementation
Procurement cycle in World Bank

World Bank procurement cycle starts country assistance strategy

Language

 Ethiopia uses English, Amharic and Ethiopian regional languages based on the
understanding of local community.
 World Bank uses English, French and Spanish.