College of Business and Economics

Department of Logistics and Supply Chain

Management

Course Title:- Government and Foreign Procurement

Chapter Two
Approved Methods of Ethiopian Government purchasing

Prepared by:- Moges A. (Lecturer /MBA)

 Approved Methods of Procurement by Ethiopia Government
1. Open Tendering:
2. Two-stage Tendering
3. Requests for Proposals
4. Restricted Tendering
5. Requests for Quotations
6. Single Source Procurement
• Except as otherwise provided in the Proclamation and Directive,
public bodies shall use open bidding as the preferred procedure
of procurement
• Public bodies may use a method other than open bidding only
where conditions for use of such other method stipulated in the
Proclamation and Directive are satisfied.
• A Public Body using a method of procurement other than open
bidding, pursuant to article 33/3 of the Proclamation shall record
a statement of the grounds and circumstances on which it relied
to justify the use of that method.
2. Procurement by means of two stage Bidding
• procurement made by means of two stage tendering shall be carried out in
accordance with the procedures set forth for national or international
competitive bidding, as the case may be, in article 16 or 17 of the
procurement Directive respectively.
The following bid procedures shall apply in respect of two stage bidding:-
• It shall be stated in the invitation to bid that the procurement shall be carried
out by means of two stage bidding.
• Candidates shall not be required to furnish bid security during the first stage of
the two stages bidding.
• Since the purpose of the first stage evaluation is to draw up detailed schedule
of requirements based on proposals from candidates and to identify the
bidders qualifying for the second stage bidding.
• The bidding document prepared by the Public Body for the first stage shall
state the requirements of the Public Body in general terms and incorporate
the necessary description and questionnaires.
• The technical proposal submitted by candidates during the first stage shall be
opened in the absence of the candidates in the manner stated in the invitation
to bid.
• During the first stage evaluation the Public Body may also hold
discussion with all, some or one of the candidates as necessary.
• The discussion to be conducted accordingly shall aim at creating
better understanding of and develop the proposal submitted by
the candidates.
• The bidding document to be proposed for the second stage
bidding shall as far as possible complies with the procedure of
competitive bidding.
• Invitation shall be sent to the candidates whose proposals have
been accepted in the first stage of bidding. Such bidders shall be
required to furnish bid security.
• The Public Body shall send to such bidders or require them to
collect in person the bidding document prepared for the second
stage bidding.
• The invitation to bid sent to the candidates shall state clearly the
requirements they have to fulfill to obtain the bidding documents.
3. Procurement made by means of Request for Proposal
• Where a Public Body opts to procure consultancy service by means
of request for proposal and the estimated value of such
procurement is above birr three hundred thousand, it shall issue
invitation for expression of interest.
The selection of consultants to be invited to submit proposals shall be
made in the following manner:
• By selecting those with better qualification from among
consultants responding to an invitation for expression of interest
issued by the Public Body.
• In case of the number of consultants having the competence to
deliver the required service being limited, inviting all of such
consultants.
• If the estimated value of the procurement is below three hundred
thousand birr, by random selection from among consultants in the
suppliers list.
• The number of consultants to be invited to submit proposal shall,
as far as Possible, is not less than three and not more than seven.
• The Public Body shall send simultaneously to the addresses of the
selected consultants, a letter of Notification to submit their
proposal.
• If the Public Body finds it appropriate, it may send to the selected
consultants the bidding document prepared for this purpose free
of charge together with the letter.
• The bidding document shall be prepared in conformity with the
standard bidding document issued by the Agency and in
accordance with the procedure applicable to national competitive
bidding prescribed in the directive
• The negotiation to be held with the selected consultant shall focus
on the:-
– Content of the consultancy work.
– The method applied to accomplish the work.
– The quality of the human power to be engaged by the consultant.
– The material to be used by the consultant in the performance of the
service.
– the content of the report to be submitted by the consultant as well as the
manner of Submitting such report and such other issues arising from the
performance of the service.
• The agreement to be reached with the consultant, shall not be
detrimental /harmful/ to the interest of the Public Body, nor favor
the selected consultant to the prejudice /discriminate/ of the
other bidders.
The evaluation and selection of consultants shall be carried out in
accordance with the following methods:-
1. Selection based on Quality and Cost
• In evaluating and comparing technical proposals submitted by
consultants in a bid for Procurement of consultancy service, public
bodies shall use the following criteria:
– The experience of the consultant relevant to the service
required
– The methodology the consultant proposes to apply in
conducting the study or research.
– The knowledge the consultancy service to be rendered by the
consultant transfers to the Public Body.
– The level of participation of Ethiopian consultants in the
important components of the consultancy service to be
rendered by foreign consultants
The following percentage points shall be given for each criterion
listed above depending on the type of the required consultancy
service:
• For experience of the consultant …………………………… 5- 10%
• For method applied in doing the study or research…. 20 – 50%
• For ability to transfer knowledge…………………………… 5 – 10 %
• For competence of key professionals engaged in the Consultancy
service…………………………………………………………………….. 30 – 60%
• For participation of Ethiopians …………………………………. 5 – 10%
• Bidders getting less than 70% in technical evaluation shall be
rejected and the envelopes containing the financial proposals of
those consultants scoring 70% and above shall be opened.
• The envelopes containing the financial proposals of those
consultants who failed to achieve the points required to qualify
for financial evaluation shall be returned to them unopened.
• Prices offered by local consultants shall, for the purpose of
evaluation, include local taxes.
• Prices offered by foreign consultants may also include translation,
travel, stationery and other incidental /supplementary/ expenses.
• In the financial evaluation, the highest point shall be given to the
lowest priced bid, and conversely /on the other hand/, the
lowest point shall be given to the highest priced bid.
• For the evaluation purpose of consultancy service, the share of
technical proposal shall be 80% and the remaining 20% shall be the
share of financial proposal.
• The consultant scoring the highest point in the total sum of the
technical and financial Evaluation shall be selected as the
successful bidder.
2. Quality based selection
• Quality based selection shall be used under the following
conditions:-
– Where the
• complexity of the consultancy service calls for special qualification or
• it is difficult to prepare TOR or
• it is difficult to define precise terms of reference or the required input
from the consultants
• the client expects the consultants to demonstrate innovation in their
proposals.
– Assignments that have a high downstream impact and in which
the objective is to have the best experts.
– Assignments that can be carried out in substantially different
ways, when comparison of such proposal is expected to be
difficult.
• The Envelopes containing the technical proposals shall be opened
in the presence of the bidders.
• The bidder scoring the highest point in the evaluation of the
technical proposals shall be selected as the successful bidder.
• If the price offered by the selected bidder is beyond the public
bodies ability to pay, the Public Body may enter into a contract
with the bidder scoring the second highest point in the technical
proposal to procure the required service.
• Upon signature of the contract with the selected bidder, the
envelopes containing the financial proposals of the unsuccessful
bidders shall be returned to such bidders unopened.
3. Selection Based on Fixed Budget
• This method is appropriate only when the assignment is simple
and can be precisely defined and when the budget is fixed.
• The envelopes of the technical proposals shall be opened in the
presence of the bidders.
• The financial envelopes of the bidders, who have technically
qualified, shall be opened in their presence and the price offered
by each bidder shall be read out
• Bidders offering price in excess of the budget available for the
procurement shall be disqualified.
• The bidder offering the price within the budget limit allocated to
the procurement and scoring the highest point in the total sum of
the technical & financial evaluations shall be selected as the
successful bidder.
• If necessary, negotiation may be held with the selected bidder on
certain issues excluding price .
4. Procurement by Restricted Bidding
• Procurement made by means of restricted tendering shall be
executed in accordance with national or International
competitive bidding procedures.
• Procurement made by means of restricted tendering shall be
carried out in compliance with the following rules:-
– The invitation to bid shall be sent directly to the address of the
candidate .
– If the required object /material/ of procurement is available
only with limited suppliers, the invitation to bid shall be
sent directly to the respective addresses of all suppliers.
– when the number of suppliers are large, at least five
candidates shall be select in a fairly manner from the
suppliers list if the value of the procurement falls within the
threshold.
• When Public Body believes collecting charges for bidding
documents from candidates is not appropriate, they can send
bidding document to the candidates together with the invitation
to bid.
• The Public Body shall not disclose /reveal/ the identity of
candidates invited to participate in a procurement by restricted
bidding.
• If all the candidates invited to participate in a procurement by
restricted bidding have submitted their bid documents before the
date set for expiration of the floating period, the Public Body
shall fix a new date for bid opening and communicate this to all
candidates to be present on that date without having to wait until
the initial closing date.
• if the Public Body is of the opinion that in view of their limited
number, requiring /asking/ the candidates to furnish bid security
discourages them from participating in the bid. It may, in lieu of
bid security, require them to sign bid declaration form attached as
annex 5 to the Ethiopian government procurement directive
and submit such form with their bid documents
• the total contract value of a procurement made by restricted
bidding shall not exceed the following
– For procurement of works birr ………………….. 2,000,000
– For procurement of Goods birr ……………………. 500,000
– For procurement of consultancy services birr…… 300,000
– For procurement of services birr…………………… 400,000
• To carry out procurement by means of restricted bidding the
following conditions must be satisfied in the order in which they
are listed
– Invitation to open bid for the procurement must have been
published at least twice and the invitation must have attracted
no bidder, or the bidders responding to the second invitation
to bid must have failed to meet the technical requirements set
forth by the Public Body for that procurement
– There must have been no factor associated with:-
• The invitation to bid
• Mode or amount of bid security
• Bidding document or any other element of the procurement
process, restraining candidates from participating in the bid.
 – The Public Body must have believed that inviting suppliers
engaged in the field pertaining /willing/ to the object of
procurement to participate in the bid.
– The Public Body must, as far as possible, have established
through inquiry /investigation/ that the suppliers engaged in the
field have no ulterior reason for not wanting to participate in
open bid for the procurement, which is illegitimate or prejudicial
to the interest of the Public Body.
5. Procurement by Request for Quotation
• public bodies have to be inclusive in planning their procurement
and apply open bidding to meet anticipated procurement needs
to the extent possible.
• However, they may apply request for quotation to procure goods,
works or services they need of which cannot be foreseen, or
which cannot be included in the Public body’s bulk purchase of
needed items, or which are needed for immediate use and the
estimated value of which is within the threshold.
• A Public Body may carryout procurement by means of request for
quotation with the authorization of the head of the Public Body or
his representative if the value of such procurement falls within the
threshold set forth below for each type of procurement
– For procurement of works birr …………………….. 250,000.00
– For procurement of goods birr ……………………… 100,000.00
– For procurement of consultancy birr……………… 60,000.00
– For procurement of services birr ………………….. 75,000.00
• In any public procurement made by means of request for
quotation, the organization should invite supplier or bidder by
posting the needs of the organization on the specified notice
board.
• The procurement execution should be compliance with the
following rules to ensure fairness in the competition:
– Procurement needs of the organization which is posted on the
board should stay for 2-3 consecutive working days.
– Unless the interest of the Public Body requires otherwise, the
same supplier or suppliers shall not be selected repeatedly, so
that other suppliers in the suppliers list may have the
opportunity of competition to sale to the Public Body.
– The Public Body has to establish a system to prevent possible
acts of connivance /involvement/ in offering and accepting
price in the process of procurement by request for quotation
and carry out price verification regularly.
• Each candidate shall be allowed to quote a firm /solid/ price which
may not be changed. No negotiation shall be allowed between the
Public Body and the candidate on the price quoted by the
candidate.
• For diplomatic missions of the Ethiopian Government may, by
authorization of the Ministry of Foreign Affairs, procure
requirements the value of which does not exceed USD $ 10,000
Per purchase order, by collecting Pro-forma invoices in the
country to which they are assigned.
• The successful supplier shall be selected on best price basis, by
comparing supplies meeting the quality characteristics the public
body’s requirements as described in the specification
• For the purpose of evaluation, prices offered by suppliers in
response to a request for quotation shall include taxes.
• For the purpose of price verification in regard to procurements
made by means of request for quotation, public bodies shall refer
to the current price list posted on the agency’s website and to the
price survey carried out by procurement unit and accepts the
lowest price in respect of an item as the prevailing market price
of that item.
• Public bodies may, by permission of the Agency, employ
electronic method to send requests for quotation and receive
quotations provided that the following conditions are satisfied:
– If the method employed by the Public Body has a safety
mechanism of ensuring that information sent and received
through that electronic communication method cannot be
accessed by any person other than the person to
whom/which the information is sent , before the time that
such information becomes public,
– If it is ascertained that all suppliers having the potential to
transact with the Public Body through request for quotation
have the knowledge and facility necessary to use the electronic
method of communication:
– If the alternative to send quotations by post is available to
those who cannot use the electronic means for various
reasons.
• In procurement made by request for quotation, the letter of
purchase order sent by the Public Body to that supplier constitute
a contract between the Public Body and the supplier.
• Hence, it is not necessary for the Public Body and the supplier to
sign a contract.
• Public bodies may not split procurements merely to take
advantage of provisions governing procurements by request for
quotation.
6. Single source procurement
• The use of single source as a method of procurement shall be
subject to the following rules:
• public bodies may procure from the same supplier, additional
requirements of goods, works, consultancy or other services of
the same kind as those they have procured from that supplier
under a previous contract in accordance with the following
stipulations, if there is any advantage to be gained from
procuring such additional requirements from that same supplier.
• The volume of the additional requirements of goods, works or
consultancy assignment may not exceed 25% of the volume of
such goods, works or consultancy assignment under the initial
contract
• Job order for the additional requirements must be issued before
the expiration of the initial contract or within six months after the
expiration of the initial contract.
• No adjustment shall be allowed to the unit price of items
included in the additional procurement.
• If the additional requirements include inputs for which the initial
contract allows price adjustment, adjustment may be made in
respect of such inputs by applying the method used in calculating
such adjustments in the performance of the initial contract.
• public bodies may, subject to the following conditions, enter into a
new contract or vary the initial contract for the execution of works
which have not been foreseen or not included in the initial
contract.
– The Public Body has to ascertain that the additional works
should have been included in the initial contract, and the
separation of the additional works from the initial contract
would be difficult for technical or economic reasons.
– The value of the additional work shall not exceed 30% of the
total value of the initial contract.
– If the unit price of the additional works can be determined by
reference to the initial contract, the unit price of the initial
contract shall apply to the additional works.
– If the unit price of the additional works cannot be
determined by reference to the initial contract, the price to be
agreed through negotiation between the Public Body and the
contractor shall conform to the prevailing market price.
• procurement through collection from open market (Special
Shopping) shall be resorted to if the requirement relates to an
item needed for study or research and which is not available from
regular suppliers or procuring the requirement through
collection from open market is economical to the Public Body
in accordance with the following procedure:-
– An authorization from the head of the Public Body or his
representative to use procurement by collection from open
market has to be obtained by presenting a memo justifying the
use of such procurement.
– The Public Body shall form an ad hoc committee; consists of
three members, to procure the requirement through collection
from open market. As far as possible, a person having
knowledge of the required object of procurement shall be in
the committee.
– The ad hoc committee shall identify and communicate to the
head of the public Body, the place and day of open market
in which the required supply is available in sufficient
quantity.
– The ad hoc committee shall carry out the procurement jointly
from the open market.
– The ad hoc committee shall select the seller from the open
market offering the best quality and price for the item needed
and buy the item from that seller through negotiation of the
price to be paid for that item.
• A document shall be prepared stating the object and quantity
of the procurement, the place of the open market, the price paid,
the name and address of the sellers and the sellers to sign on the
document.
• Items bought through collection from open market shall be
handled carefully to protect them from being perished in the
process of transportation and delivered safely to the appropriate
unit of the Public Body.
• The ad hoc committee shall prepare a minute on the execution of
the procurement and report same to the head of the Public Body.
• Public bodies may carry out directly from any supplier,
procurement of goods or services not included in their
procurement plan, or goods or services necessary to solve
problems encountered during travel the value of which does
not exceed birr 1500 (one thousand five hundred birr).
• however, the total value of such small procurements within a
fiscal year shall not exceed birr 30,000.00 (thirty thousand Birr)
• Diplomatic missions of the Ethiopian Government may carry out
procurements of emergency requirements not included in their
procurement plan and the value of which does not exceed USD
$300 (three hundred USD) in a single purchase order.
• However, the total value of such small procurements within a
fiscal year shall not exceed USD $6000.00 (six thousand USD.