General Information and Tender Procedures  [ top] 

Product procurement or consultant services procurement  

The first step in the tender procedure is the identification of the need to procure. These are referred to as technical specifications. When it comes to descriptions of consultant services, those are usually referred to as “Terms of  Reference”. 

Technical specifications for vehicles and equipment are normally performance-oriented  and should refer specifically to the required:

• functional attributes;

• outputs and end uses of the goods/services.

• service aspects.

Procurement of consultant services requires the preparation of terms of reference,  explaining mainly the following:  

• objectives

• scope of  work

• methodology

• out puts 

Qualification of Suppliers  [ top]

At the preparatory stage of  procurement, public bodies need define, not only their needs in terms of technical specifications, but also the minimum qualifications that suppliers must have in order to be eligible for government contracts.

Formal qualification; registration

In order to participate in public procurement proceedings, suppliers must demonstrate that they;

• have legal capacity to enter into a procurement contract, normally through a trade license; and

• that they have fulfilled their obligations to pay taxes normally through a tax clearance certificate.

In order to demonstrate their formal qualifications, suppliers must file with the Ministry of  Finance, Government Procurement Unit, an application for registered supplier status in the form to be supplied by the Unit. 

The Ministry of Finance will, if necessary consult other appropriate authorities, and will, upon being satisfied that the application is complete, issue a registration certificate within 5 days.

Substantive qualifications

Suppliers must also demonstrate that they possess the necessary substantive qualifications to perform the contract for which they compete in the particular case, meaning that they possess the necessary:

• professional and technical competence and experience,

• financial resources,

• equipment and other physical facilities,

• managerial capability and personnel.

Public bodies may require suppliers to provide appropriate documentary evidence or other information, as it may deem useful to satisfy itself that the suppliers are substantively qualified. Any substantive qualification requirement must be set forth in the bidding documents.

The public body shall evaluate the substantive qualifications of suppliers in accordance with the criteria and procedures set forth in the bidding documents. This evaluation is distinct from, and carried out separately from, the evaluation of the tenders submitted.

Tenders from suppliers who fail to demonstrate the required formal and substantive qualifications must be rejected.

In prequalification proceedings, the public body will invite interested suppliers to demonstrate their qualifications. The invitation to prequalify shall contain, as a minimum:

• a summary of the contract for which prequalification is deemed necessary;

• instructions for preparing  and submitting prequalification applications;

• any documentary evidence or other information which must be submitted by applicants;

• the qualification criteria. 

Duration and location  [top]

The public body shall ensure that invitations to bid are publicised for sufficient duration and location (at least two times in one consecutive week). The publicity should clearly state how, where and when the bidding documents are obtained. This may include:-

• the procuring agency;

• the tender number (if any);

• the items or services to be procured;

• the price of the bidding documents;

• the amount of the bid security;

• the place, final date and time of submission of bids;

• the date of opening the bid;

• the procuring agency’s address and other details.

• Sale of  bidding documents 

Payment for bidding documents  [ top]

Bidding documents may be sold to any interested bidder upon the submission of a written application and a non-refundable fee.  

Time allowed for preparation of bids  [ top]

Bidders shall be afforded at least 20 days from the date of publication of the first notice for preparation of tenders in the case of domestic purchases; when foreign bidders are expected to respond to the invitation, the preparation period shall be at least 45 days. 

Bid documents  [ top]

For all tenders public bodies must prepare bid documents that include:

• an invitation to tender;

• instructions to bidders;

• specifications;

• bid proposal including the price schedule;

• terms and conditions of contract. 

Invitation to Tender  [ top]

Public bodies shall ensure invitations to bid are publicised for sufficient duration and location-invitations should be publicised at least 2 times in 1 consecutive wee in The Ethiopian Herald and/or Addis Zeman or other public media. 

Instructions to Bidders  [ top]

Instructions to bidders will vary between different types of procurement contract.  However, every instruction should include:

• the methodology of evaluating all bids and the criteria for that evaluation;

• an indication that the bidders should include in their offer the type of item and the name of the producer, country of origin, model number and year of manufacture;

• the requirement that bidders have a Certificate of Registration in the suppliers list;

• the requirement bidders shall put their name, signatures and addresses in offers

• an indication that the bidders shall not alter or amend and that they shall not withdraw their tender after the opening ceremony;

• an indication that bidders who attempt to influence the tender shall be disqualified from that contract, future Government contracts and shall forfeit its bid security;

• the place and the time where any samples will be openly shown to bidders and an indication that the samples shall be returned to unsuccessful bidders;

• the time and place of delivery;

• the validity date of the tender;

• an indication of bid and performance securities required;

• the date and time of the closing deadline for bids and the opening of those bids;

• the requirement that bidders shall undertake to observe the country's laws against fraud and corruption (including bribery) as listed in the bidding documents during the procurement process.

Specifications

An essential step in procurement is to draw up a clear statement of the user's requirements.  This is especially important for the procurement of high cost or complex goods or services.  Also referred to as the functional specification, the user requirement should specify the desired functional attributes, outputs and end uses of the goods or services that are to be procured, including those attributes relating to required technical capabilities, operating characteristics and performance standards.

Bid proposals and price schedules

Public bodies shall include it in the bid documents, where relevant, detailed technical proposals and a price schedule for completion by the bidders.

Terms and conditions of contracts

Draft terms and conditions of contract shall be issued to the bidders as part of the tender documents.  A pro-forma contract that public bodies should use as a template is included in the Procurement Manual, main clauses must include:

• Liquidated damages- it is recommended that public bodies include in their invitations to tender a statement that for each day of delay for the main good or service and its accessories beyond the delivery date stated in the bid document, the supplier will be due to pay 1/10^th of 1 percent liquidated damages to the public body of the CIF value of the undelivered item to a maximum of 10% of the contract price).  If the supplier fails to do so then the public body shall have the right to terminate the contract;

• Price- there are 2 price aspects that public bodies should state in the bid document: 

  • the supplier will indicate unit and total price.  In case of error the unit price shall be accepted and used as the base for recalculation of the bid price;

  • for price analysis the conversion of any currency to a common currency, the official rate of exchange on the day of opening the tender shall be applied.

• Delivery time- the bidder shall state the definite date of delivery or delivery period. The delivery period shall commence on the opening of the letter of credit for international purchases, and the date of signing of the contract for local purchases.

• Inspection and acceptance-final inspection of the good or service shall be made in the presence of a representative of the supplier at the agreed destination.  All assembly and demonstration costs shall be borne by the supplier.

• Warranty -the supplier shall guarantee that all items included in the good or service shall be new, of high quality and workmanship.  Suppliers shall give warranty in writing as part of their bid.

Settlement of dispute/arbitration- the conditions of contract should include provisions dealing with the applicable law and the forum for the resolution of any disputes relating to the contract.

• Force Major- neither the buyer nor the supplier shall be responsible to perform the contract in case of failure due to force major such as earthquake, flood, epidemic disease, war or other natural calamities and industrial disruption.

• Terms of payment- the bid document shall also include reference to payment terms.

Modifications to tender documents

Any alteration to the content of tender documents shall be effected only through the public media by which the original invitation to tender was made.  The time for closing and opening the bids may be extended where modifications in the tender documents are to be announced in the invitation to tender.

Bid opening

Bids shall be opened in public at the time and place stated in the invitation to tender.  Bids shall be opened on the same day as the closing date.  Public bodies shall invite bidders to attend.  Bids shall be opened in the presence of:

• the bidders or an authorised representative of the bidder whether or not the bidder has chosen to be present;

• members of the Tender Committee, and Internal Audit if possible.

The Chairman of the Tender Committee shall open each tender and read out the name of the tenderer, the price of bid for the contract and any salient points.  The Secretary of the Tender Committee shall take minutes of the tender opening procedures.  These minutes will include a record of the bidders, price and any other salient points.  This record and the original tenders will be signed by the Tender Committee members present.

Public bodies may disqualify any bidder that commits any of the following offences:

• fails to observe any provisions in the Financial Regulations and Directives or any conditions stipulated in the tender documents;

• fails to fulfil any obligations he  has undertaken in previous Government tenders;

• fails to deposit the required bid bond or performance bond;

• offers or gives gratuities to any official or employee with a view to securing favourable treatment or to win the tender, if proven beyond all reasonable doubt;

• commits any fraudulent act in respect of the tender, if proven beyond all reasonable doubt.

Procurement of vehicles

The procurement of vehicles is carried out by the consolidation of the Government's annual requirements.  This procurement is carried out on behalf of all the Government by the National Committee for bulk purchasing in the Ministry of Transport and communication (MTC).  Public bodies must notify MTC of their annual vehicle procurement needs by July 30^th each year.

MTC prepare detailed specifications, organise and place the tenders for purchase and evaluate bids that they receive.  MTC then inform public bodies of the recommended suppliers, details of specifications and prices that they should contract with the suppliers for. Public bodies are therefore responsible for placing the contracts according to the recommendations of MTC and paying the invoice.  Where the Head of the public body determines that there is a pressing need in which delay would create serious problems, the public body may procure such a vehicle based on the recommendations of MTC.

Procurement for works construction contracts

All provisions of this Directive apply to procurement for works construction contracts.  However, in certain areas as defined by Proclamation 4/1995 the Ministry of Urban Works and Development (MoWUD) are responsible for developing and maintaining detailed guidance.  This guidance shall be developed and maintained in consultation with the MoF, Public bodies should therefore follow MoWUD guidance.

Procurement of consultancy services

All provisions of this Directive apply to procurement of consultancey services.  However, when public bodies need to procure consultancy services they should give specifications to the Ministry of Economic Development And Co-operation (MEDAC) who maintains records of consultants.  Public bodies should negotiate and contract with consultants based on the recommendations from MEDAC.  

Procurement of Non-Ethiopian Goods and Services  [ top]

Public bodies should undertake the same steps to procure foreign goods and services as they would for local services. However, there are several additional steps required to facilitate the purchase and receipt of those goods and services in addition to these usual steps:-

• attaining foreign currency;

• obtaining a Letter of Credit;

• transportation and shipping; and

• customs clearance.

Attaining foreign currency

The payment of foreign currency for foreign purchases is effected through any commercial bank in Ethiopia.The procedure will be as detailed in National Bank Directive No. FXD/07/1998.

Obtaining a Letter of Credit

A Letter of Credit is a document issued from one bank to another that promises to pay a supplier on receipt of a written document on behalf of the supplier. The Letter of credit will be based on the agreement between public bodies and suppliers. The issuing bank will inform the correspondent bank by opening of the Letter of Credit in the name of the supplier to pay the supplier on receipt of shipping documents. Consequently, the correspondent bank will make the payment effective immediately after receiving the shipping documents from the supplier.

There are 2 types of Letters of  Credit:-

• revocable, where the issuing bank has the right to cancel or amend the payment after the opening of the Letter of Credit. This is possible only where the issuing bank informs the correspondent bank before it has paid the contract price to the supplier. As this type of Letter of Credit does not bind the purchaser to fulfil its contractual obligation, it is not practical for use by public bodies;  and

• irrevocable, where the Letter of Credit cannot be altered after it has been opened. Furthermore, there are 2 types of irrevocable Letters of Credit -

  • unconfirmed, where the issuing bank is bound by Law to pay the supplier in question, whereas the advising or correspondent bank is not bound by Law to pay the supplier. If the correspondent bank does not pay the contract price to the supplier, the supplier can only sue the issuing bank for the unpaid amount;

  • confirmed, where both parties (Issuing and Advising bank)are obliged to respect all conditions stated on the Letter of Credit and make the disbursement effective. In such a case, the advising bank is known as the confirming bank. The issuing bank informs the confirming bank about the opening of the confirmed and irrevocable Letter of Credit and hence to give the supplier a payment guarantee.

• Once the Letter of Credit is opened, if the confirming bank fails to pay the contract price to the supplier, the supplier has the right to sue both banks.

The Letter of Credit should be opened by the purchaser within one working week after the foreign exchange permit for imports has been received.

Transportation and Shipping

Goods purchased from abroad should be transported through Ethiopian Shipping Lines (ESL) or Ethiopian Airlines (EAL). If ESL or EAL does not call to that specific port, the goods can be transported to the nearest port that ESL or EAL calls and the transhipment should be effected by ESL or EAL. If the goods are shipped by ESL, the Bill of Loading; if shipped by EAL, the Airway bill should be received by the purchaser.

The goods can be transported by sea, air, in land or rail based on the contract agreement that is signed by both parties. The responsibility for arranging the insurance depends upon the contract:-

• if the contract entails the delivery of the goods on a free on board (FOB) basis, the purchaser is responsible to cover all costs associated with the transportation and insurance;

• if the contract entails the delivery of the goods on a cost and freight (C&F) basis, the supplier is responsible to cover all costs associated with the transportation up to the port of the purchaser, whereas the purchaser is responsible to insure the goods;

• if the contract entails the delivery of the goods on cost, freight and insurance (CIF) basis, all costs associated with the transportation and insurance of the goods will be covered by the supplier.

Insurance

Where the purchaser has the responsibility for the insurance it should insure using the Ethiopian Insurance Corporation (EIC). Public bodies will require following documents when they want to make a claim for short-shipment or damaged goods:-

• take the original forms - insurance policy, bill of lading/airway bill and the chamberised invoice as evidence;

• also use the exchange of letters with the relevant Port Authority, Captain of the ship in connection with the damage or short-shipment of the goods;

• the short landing certificate of the Maritime and Transit Services Enterprise;

• the insurance survey report; and

• a report on the delivery and receipt of the goods.

Customs clearance

After the international and internal transportation of goods, public bodies will have to clear the goods through Ethiopian Customs. Public bodies should use the facilities of a clearing agent to do this.

There are number of documents that public bodies will have to give to Customs in order to clear the goods being imported:-

• the original Bill of lading or airway bill;

• the original invoice;

• the bank import permit;

• the insurance policy;

• the bank debit advice.

Public bodies should submit all of the above documents to Customs with a completed "Declaration". This form can be bought by public bodies from Customs. The information that public bodies should insert onto the Declaration are as follows:-

• the names of the supplier and the buyer;

• the method of shipping;

• the Port of lading;

• the license number;

• the tax payer number;

• the year of production of the goods;

• the Bill of lading/airway bill number;

• the bank permit number;

• the production price;

• the currency of purchase;

• the quantity of goods;

• the kind, type and weight of the goods;

• the tariff number or homogenised systems code;;

• the price of the goods;

• the taxable amount;

• the rate of tax;

• the tax amount due;

• other taxes and charges;

• gross amount of other taxes and charges;

• the name of the transit agent;

Types of Tenders  [top]

There are 6 approved methods of procurement:

Except as otherwise provided by articles 14 - 20, public bodies engaging in the procurement of goods and construction shall do so by means of open tendering procedures.  Public bodies may use a method of procurement other than tendering proceedings only pursuant to these articles.

1.  Open Tendering  [top]

Public bodies should prepare the documents and follow the steps required for open tendering provided for in articles 22 - 51.  These steps should also be followed when procuring under alternative methods of procurement, except where specifically provided for.

Procedures for Open Tendering

The public body should firstly assess its need or demand for the goods or services to be purchased.

The need or demand for the goods or services to be purchased should be requested and approved by the authorising unit within the public body.  It should also reflect the interests of all concerned units in the public body;

After the need assessment is undertaken, the public body should prepare bidding documents.  These documents should include the following:

• An invitation to tender;

• Instructions to bidders;

• Specifications and detailed descriptions of the goods and services to be purchased;

• Draft of basic terms and conditions of contracts; and

• Standard forms for tenders, including the quality and price schedules.

2.  Two-stage tendering  [