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Bill Introduces Online Reverse Auction System


August 29 , 2020
By BEMENET WONDEWOSSEN


The government has drafted a new bill that introduces electronic reverse auctions, an online real-time procurement process whereby suppliers vie to secure a deal by offering increasingly lower prices during a scheduled period of time.

The new system will be used for products and services that have clear specifications, have multiple suppliers, and can be procured only through a financial evaluation process without a technical evaluation. The electronic reverse auction process will be replacing a procedure in which the government picks the winning company with the lowest price offer.

The draft proclamation, which also compels state-owned enterprises to process their procurements through the Public Procurement & Property Disposal Services, was sent to the Office of the Attorney General for legal review. The bill was drafted by the Public Procurement & Property Administration Agency but for the past six years went through various iterations as it shuttled between the Ministry of Finance, the Council of Ministers and the Agency.

The drafting process ran long due to two major causes, according to Setegen Gelan, director of public relations & communications at the Agency, mentioning weak institutional capacity at the Agency and political instability in the country as causes for the delay. During the drafting process, the Agency took the experiences of Tanzania and Kenya into account.



The Ministry of Finance and the Council of Ministers gave comments on the bill while it was in the making, according to Setegn.

Haji Ibssa, corporate communications director at the Ministry of Finance, said the Ministry has reviewed the bill to make sure that it complies with the other laws that are in the amendment process.


The bill, which is going to replace the decade-old proclamation, will stop the sale of bid documents and will make public enterprises and government offices avail bidding documents on their own and the Agency's websites. The Agency is also in the process of launching a locally developed online platform called Electronic Government Procurement (EGP).

The bill also reduced the value addition rate for local manufacturers to get a margin of preference beginning at 35pc. The reduced value addition rate will be determined by new directives to be issued, according to the draft proclamation, which is expected to be legislated before December.




Lease agreements for the procurement of machinery and equipment, which can become outdated due to technological advancements, will also be allowed by the new bill. Before making large and expensive procurements, the government offices are required to prepare a project procurement strategy, according to the draft proclamation.

A new independent body that will directly report to the Prime Minister will be formed to play a mediating role whenever a complaint is filed against the government institutions involved in the procurement processes, according to the bill.

The draft proclamation prohibits state-owned enterprises from taking part in a bid that is announced by a federal agency they report to. A former employee of the government office who left that institution less than a year ago cannot take part in a bidding process announced by his former employer.

The Services, under the Agency, has been conducting procurements of goods and services on behalf of 174 budgetary government institutions since 2009. The new amendment will enable the Services to handle the procurement of public enterprises that are not budgetary institutions.


Mehari Redai (PhD), a university lecturer at Addis Abeba University School of Law & Governance, says that the bill has two dimensions.

Since state-owned enterprises are reporting to government institutions, which follow the government procurement procedure, it will not be wrong to make the state-owned enterprises follow the same procurement process, according to Mehari.

"But since most of the state-owned enterprises are business-oriented companies, they need to go through a process that will benefit them," he said.



PUBLISHED ON Aug 29,2020 [ VOL 21 , NO 1061]


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