The highly anticipated draft procurement proclamation amendment has been tabled to the council of Ministers for review before being sent to parliament for ratification. The customs tariff book is under revision, while the duty free scheme is expected to come up with new arrangements.
The new proclamation that will revise the 2009 ‘Procurement and Property Administration Proclamation649/2009’ is expected to stiff the procurement process for the federal government.
The draft proclamation is stated as one of the major roll outs of the reformist government which is applied to improve the economic condition of the country.
Eyob Tekalegn, State Minister of Finance (MoF), said that the draft proclamation is one of the highly expected laws to be improved before the end of the current parliamentary period.
He said that the existing proclamation has gaps that take unnecessary time on the procurement process and shall therefore be improved in the coming amendment.
He said that the public procurement system is riddled with serious problem. “To tell you the truth it has failed,” he remarked.
He explained that the procurement scheme always takes a long period with a focus on proforma, not considering value for money alongside other massive problems.
“Based on that, we have revised the proclamation and sent it to the Council for review in the coming two weeks, which will then face ratification by parliament,” Eyob added.
The procurement process for instance since last budget year was highlighted by failure. The Public Procurement and Property Disposal Service procurement’s attempt to buy wheat on behalf of different government bodies had failed for different reasons that led to experts on the sector to critic the government rules and directives.
Eyob accepted these claims and he emphasized that it will be solved on the upcoming revised law.
He said that the minimal bid security amount had allowed anybody to try their best to participate on the bid and this is supposed to be improved. “For instance on the wheat procurement, which is close to a billion dollar procurement per year, any small company was participating on the bid. The problem is the amount of bid security, which is very small,” he explained.
He added that the bid security will be one of the area to face revision on the upcoming law, “When you come up with such huge value of procurement you have to make sure that capable bidders participated in the process.”
According to the State Minister, a plausible solution should be to up a put high bid bond amount, select proper time for any given product procurement and other practices when implementing the process.
He said generally that in the new proclamation holistic changes will be put in place. “For instance public enterprises procurement process will be improved. For the small equipment procurement enterprises should not engage on 4 months process. The new proclamation will give some mandates to cut the unnecessary procurement process.”
The 2010 public procurement directive article 16 sub articel16.2 stated 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 500,000 birr,” it added.
On the bid security for the procurement of the 100,000 metric tons of wheat, the bid security was not higher than 100,000 birr, which companies who are familiar with Ethiopian wheat supply criticized stating that it is very small compared with the value of the grain.
They said that due to the smaller security amount, untested new participates were involved on the bid process which led to bidders’ winning the bid but consequently failed to supply the product. “This has happened for the past one and half years,” experts argued stating that the government had waited until now to change it because it was not mentioned on the proclamation.
“It shall be corrected by amending the directive,” they said. Eyob to this end said that the relevant body has understood the situation that transpired in the recent past and the government is now working to cut the source of the problem.