Chapter Three

Methods of Ethiopian Government Procurement

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 Learning Outcomes:
 Understand various approved public procurement methods.
 Learn the basic concepts of tendering and its different
types.
 Explore regulatory requirements in government purchasing.

 Gain insight into alternative methods for government

purchasing.
 3.1 Methods of Ethiopian Government Procurement
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 The following methods shall be used in public procurement:

 Open Bidding;  Restricted Tendering;
 Request for Proposals;
 Request for Quotation;
 Two stage Tendering;
 Direct Procurement.
 public bodies shall use open bidding as the preferred Method
 Public bodies may use other method only where conditions stipulated
under article 33/3 of the Proclamation are satisfied
 Public bodies shall not split procurement requirements with the intention
of avoiding the preferred procurement procedure
 3.2 Procurement Threshold
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 Threshold refers to a set value or limit that determines the specific

procurement method to be used based on the estimated value of
goods, services, or works being procured.
 Ethiopian federal government procurement threshold :
Object of procurement RFQ Restricted Bid NCB ICB
Works 1,000,000 15,000,000 600,000,000 >600m
Goods 400,000 3,750,000 200,000,000 >200M
Service 300,000 3,000,000 84,000,000 >84M
Consultancy Service 240,000 2,250,000 30,000,000 >30M
Remark
 3.3 Open Bidding/open tendering;
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 Procurement method where an organization publicly invites wide range of

suppliers to submit bids for the provision of goods, services, or works.
 Open tendering is the most competitive bidding
 Key Features
 Public Advertisement: The tender is publicly advertised, often on government
websites, newspapers, and other public platforms.
 Equal Opportunity: All potential suppliers are given equal opportunity

 Transparency: The process is transparent, with clear rules & evaluation criteria.

 Competitive Pricing: The open nature encourages competitive pricing

 Regulation Compliance: It often complies with legal & regulatory requirements

 Category :National and international

 Cont.…
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 Advantages
 Fairness and Transparency: All potential suppliers have an equal chance
 Best Value for Money: Encourages competition, => better pricing and quality.
 Reduced Risk of Corruption: Transparent processes reduce the risk corruption.
 Disadvantages
 Time Consuming: The process can be lengthy .
 Resource Intensive: Requires significant administrative resources to manage the
process.
 Complexity: May be complex, especially for small businesses or suppliers
unfamiliar with the process.
 Cont.…
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 National Competitive Bidding(NCB)

 national competitive bidding is restricted to local suppliers.

 International Competitive Bidding (ICB)

 International competitive bidding allows participation from
international suppliers
 Other International Procurement means
 public bodies may execute International Procurement by
means of two stage bidding, request for proposals,
restricted bidding, request for quotation or direct
procurement .
 International Competitive Bidding
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 Procurement made by international competitive bidding if the value

of the contract exceeds the threshold indicated below :
a) For works above birr……………..…. 600,000,000.00
b) For goods above birr ……………. . .200,000,000.00
c) For services above birr……………. . .84,000,000.00
d)For consultancy services above birr... . .30,000,000.00
 Foreign Bidders have to produce manufacturers authorization if a

Public Body requires them to do so, unless they themselves are

manufacturers of such goods.
 ICB cont.…
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a) Bid advertisement & documents shall be prepared in English,

b) advertisement shall be published in wide circulation news paper .
c) schedule of requirements comply with national & internationally standard.
e) Bid prices quoted & bid securities shall be furnished in a freely convertible
currency
f) Where a foreign bidder uses local inputs, portion shall be expressed in birr.
g) Unless stated in contract disputes shall be judged in accordance with
Ethiopian Law.
 3.4 Procurement By Two stage Tendering
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 Useful when requirements are complex or not fully defined.

 Allows for refining requirements between stages, leading to more accurate
and targeted proposals.
 A process involving two stages.
 In the first stage, suppliers submit preliminary proposals.

 In the second stage, shortlisted suppliers submit detailed bids.

 May require more time due to the two stage process

 Since the purpose of the first stage is to draw up detailed schedule of
requirements based on proposals from candidates, the bidding document
for the first stage shall state the requirements of the Public Body in general
terms and incorporate the necessary description and questionnaires.
 Procurement by means of two stage
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Bidding(2SB)
 Procurement shall be carried out in accordance with NCB and ICB
 It shall be stated in the invitation to bid that the procurement 2SB
 Bid security shall not be required during the first stage .
 The technical proposal submitted during the first stage shall be opened in the
absence of the candidates in the manner stated in the invitation to bid.
 The first stage evaluation shall focus on examining the proposals to identify the
schedule of requirements necessary and the bidders qualifying for the second stage
bidding.
 Invitation shall be sent to the candidates whose proposals have been accepted in the
first stage bidding to participate in the second stage bidding.
 Such bidders in 2nd stage shall be required to furnish bid security.
 3.5 Procurement By Restricted Tendering
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 A form of tendering where only a select group of suppliers are

invited to submit bids.
 Used when there is a limited number of qualified suppliers or when a
project requires specialized skills.
 Can be faster and more efficient with a smaller pool of suppliers.
 May reduce competition and transparency if not properly managed.
 shall be executed in accordance with NCB and ICB
 The invitation to bid shall be sent directly to the candidate
 At least five candidates shall be selected in a fairly manner
 Procurement By Restricted Bidding
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 Used if the value of the procurement falls with in the threshold

a) For works above birr……………..…. 15,000,000.00
b) For goods above birr ……………. . .3,750,000.00
c) For services above birr……………. . .3,000,000.00
d)For consultancy services above birr... . .2,250,000.00
 The Public Body shall not disclose the identity of candidates invited

 If all the candidates invited have submitted before deadline, communicate all
candidates & open the bid without having to wait until the initial closing date.
 Due to limited number ,bid security discourages them from participating in the
bid. It may require them to sign bid declaration form and submit with bid
documents.
 Procurement By Restricted Bidding
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 To carry out procurement by means of restricted bidding the following

conditions must be satisfied in the order in which they are listed.
 a) Invitation to open bid published at least twice, and attracted no
bidder, or the bidder failed to meet the technical .
 b) There must have been no factor restrain bidders .
 c) supplementary procedure shall apply for procurement of
consultancy services by means of restricted bidding through request
for proposal.
 3.6 Request for Proposals (RFP)
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 An RFP is a formal request for suppliers to submit detailed proposals

on how they would meet specific project requirements.
 Commonly used for complex projects or services where a simple bid
may not capture the full scope of work.
 Allows for more detailed proposals and a comprehensive evaluation
process.
 Requires clear evaluation criteria to assess different proposals.
 3.6 Request for Proposals (RFP)
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 Public Body may procure consultancy service using RFP

 Estimated value of such procurement > 2,250,000.00
 It shall issue invitation for expression of interest
 The selection of consultants to be invited to submit proposals shall be made :
 a) By selecting those with better qualification from among consultants responding to an
invitation for expression of interest .
 b) Inviting all consultant case of limited number of consultants having the competence to
deliver the required service .
 c) If the estimated value of the procurement is < 2,250,000.00 birr, by random selection
from among consultants in the suppliers’ list.
 The number of consultants to be invited, as far as Possible, 3 to 7.
 Public Body shall send to selected consultants, a letter of Notification to submit proposal.
 3.7 Request for Quotations (RFQ)
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 RFQ is a request for suppliers to provide price quotes for specific

goods or services.
 Typically used for standard or low cost items where detailed
proposals are not required.
 Quick and straightforward, ideal for smaller purchases.
 May not be suitable for complex or high value projects.
 Procurement by Request for Quotation.
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 public bodies may apply request for quotation to procure goods, works or services
 need of which can not be foreseen, or
 which can not be included in the Public Body’s bulk purchase or
 which are needed for immediate use and the estimated value of which is within the threshold
established
 A Public Body may carryout procurement by means of RFQ with the authorization of
the head without having to obtain the approval of the procurement endorsing
committee if the value of such procurement falls within the threshold :
 a) For works, …………………………….. birr 1,000,000.00
 b) For goods, ……………………………. birr 400,000.00
 c) For services, …………………………..…birr 300,000.00
 d)For consultancy, ……………………..…..birr 240,000.00
 Procurement by Request for Quotation.
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 not less than three candidates, as far as possible selected

 a) the same supplier shall not be selected repeatedly,
 Each candidate shall be allowed to quote a firm price .
 No price negotiation shall be allowed
 The successful supplier shall be selected on best price basis,
 For purpose of price verification price survey carried out by the procurement
unit and accept the lowest price
 letter of purchase order sent by the Public Body to that supplier constitute a
contract between the Public Body and the supplier.
 Public bodies may not split procurements merely to take advantage of
provisions governing procurements by request for quotation.
 3.8 Direct Purchasing/single source
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 Involves purchasing directly from a supplier without a competitive

process.
 Used in emergencies or when there is only one supplier who can meet
the requirement.
 Can be quick and efficient in urgent situations
 25. Single source procurement.
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 Public bodies may carry out single source procurement when the following conditions
are satisfied.
 additional requirements of goods, works, consultancy or other services a) The volume
of the additional requirements of goods, works or consultancy assignment may not
exceed 25% initial contract;
 b) 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;
 c) No adjustment shall be allowed to the unit price of items .
 d) 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.
 Single source procurement.
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 public bodies may, vary the initial contract which have not included in the initial
contract.
 a) The Public Body has to ascertain that the separation of the additional works from
the initial contract would be difficult for technical or economic reasons.
 b) The value of the additional work shall not exceed 30% of initial contract.
 c) 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 can not 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.
 When it is ascertained that the spare parts required for the equipment used by the
Public Body are supplied only by the original supplier. However, for the purpose of
this subarticle, the following conditions must be satisfied.
 Request for proposal
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 Reading assignment