RECONNAINCE SURVEY REPORT ON ICT PROCUREMENT PROCEDURES...

Ethiopian Information and Communication Technology Development Agency (EICTDA)

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Report on ICT Procurement Procedures and Processes: Kebede Ourgessa , August 2007.

RECONNAINCE SURVEY REPORT ON ICT

PROCUREMENT PROCEDURES AND

PROCESSES August, 2007


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Table of content Pages

Acronyms and Definition of Terms 4

PREFACE 5

Chapter I

Introduction

1.1 Background 8

1.2 Need for Assessment 10

1.3 Objective and Scope of Assignment 11

Chapter II

Literature Review

2.1 Functional definition of ICT 14

2.2 Highlight on ICT Business in Ethiopia 15

2.3 Over view of Public Procurement Guideline and practice in Ethiopia 17

2.4 ICT Procurement Guideline and procedure; the World Bank 20

Chapter III

Survey Methodology

3.1 Sample Size 28

3.2 Data collection method 29

3.2.1 Questionnaire 29

3.2.2 Interview 30

3.2.3 Literature review 31

3.3 Survey Implementation 31

3.4 Data Analysis 33

3.5 Limitation of the Survey 33


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Chapter IV

Survey Findings

4.1 Profile of the respondents 36

4.2 Findings of core subject matter 39

4.3 General comments and Interview Results 50

Chapter V

5. Key shortfalls of the Assessment

5.1 Eligibility 58

5.2 Bid bond Requirement 59

5.3 Bid Invitations 61

5.4 Bid Evaluation Criteria and Methods 63

Chapter VI

Concluding Remarks and Recommendations

6.1 Conclusions 72

6.2 Recommendations 75

References 80

Annexes:

Annex I Summary of Findings (Table) 81

Annex II TOR 92

Annex III Questionnaire 95

Annex IV List of Respondents

Annex V IFB Advertisement Copy


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Acronyms and Abbreviation

1 PPA Public Procurement Agency

2 ICT Information Communication and Technologies

3 EICTDA Ethiopian Information Communication Technologies Development

Agency

4 FDRE Federal Democratic Republic of Ethiopia

5 SPRP Sustainable Poverty Reduction Program

6 SBD Standard bid Document

7 RFP Request for Proposal

8 TOR Terms of Reference

9 IFB Invitation for Bid

10 ITB Instruction to Bidders

11 ITC Instruction to Consultants

12 IC Individual Consultants

13 QCBS Quality Cost Based Selection

14 QBS Quality Based Selection

15 MoFED Ministry of Finance and Economic Development

16 ICB International Competitive Bidding

17 NCB National Competitive Bidding

18 LIB Limited International Bidding

19 RFQ Request for Quotation

20 L/C Letter of Credit

21 CPO Cash Payment Order


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PREFACE

EICTDA contracted an individual consultant, Ato Kebede Ourgessa, dated July

7, 2007 for a service to assess the Government’s ICT Procurement Procedure and

Process. The main objective of the survey was to find out the current

procurement process, practice, encourage participation of the private sector to

promote and develop ICT in the county.

As Government is the major market of ICT, it is expected to contribute towards

improvement of the ICT industry. Adoption of uniform procurement policy,

guideline, procedures, rules, regulations and practice are some of the

instruments demand intervention of the government. Despite some efforts,

Government sponsored ICT procurements are being commented for lack of

transparency, unified (standard) guidelines, procedures and practices. These

problems are more acute in defining and setting Specifications, TOR, RFP/BD)

bid security, evaluation criteria, contract award, performance bond, payment

structure and related contract administration tasks.

This survey attempts to assess current limitations of procurement procedures,

processes practices and aiming to find out any shortfalls and come up with

specific practical recommendations.

To this end, questionnaire designed by team of experts has been used and issued

to 105 vendors/suppliers engaged in delivery of ICT related products and


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services in Addis Ababa. Data analysis and interpretation was made on 81

respondents participated in the survey. In addition, the consultant has also

conducted unstructured interview on 3 selected firms that represent firms

engaged on delivery of services, including training and hardware/software.

Various literature papers and documents were reviewed on ICT policy, public

as well as World Bank Procurement guideline, procedure, with great emphasis

on ICT procurement. Further more, available statistical data and information on

the sector, Public Procurement Proclamation (430/2005), Financial Regulation

Proclamation and Public Procurement Directive currently enforced, including

SBS and sample IFBs have been reviewed.

Due attention was given to examine, cross-check the relevance, inter dependence,

differences and the significance of quantitative and qualitative data to the

objectives of the assessment. Analysis and interpretations highlight the current

status and possible intervention areas of the sector.

The report is organized under 6 sections. The first chapter summarizes

background information relative to legal or policy framework of ICT, rationale

and objective of the assignment.

The second chapter deals with literature review specific to the assignment and

the third chapter is focused on the survey methodology, approach and

implementation. Survey findings are described under chapter four. Main

findings of the report are stated under chapter 5 and possible intervention areas

are cited under chapter 6. The report is accompanied by references and annexes

(1-5)


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CHAPTER ONE

INTRODUCTION


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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND

1.1.1 The Federal Democratic Republic of Ethiopia has committed itself to

utilize products of Information and Communication Technologies

(ICTs) as enabler for implementing the country’s development

program and has embarked on major National ICT Capacity

Building Program. The main vision of the program is to “Develop

and exploit ICTs as an accelerator for the attainment of national

development objective and global competitiveness”.

The development program consists of four strategic objectives.

a. Creating an enabling policy, regulatory and legal environment for

the growth and utilization of ICTs;


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b. Developing the necessary ICT human resources, infrastructure,

rural access, ICT standards and local content;

c. Strengthening various national ICT policy, regulatory and

advocacy institutions to facilitate the mainstreaming of ICTs for

socio-economic development.

d. Facilitating the use of appropriate technologies for development of

applications and content for Rural Development, Good Governance

and service delivery in priority sectors {1}”

These strategic objectives are part and parcel of the SDPRP and

contribute to poverty reduction by enhancing rapid economic

growth and maintaining macro-economic stability.

1.1.2 ICT – Assisted Development Project (ICTAD) is one of the

institutional frameworks established to enhance pro-poor growth

improvement of human development service delivery through

ICT-assisted intervention. It also fosters economic growth by

supporting the creation of favorable environment for more active

participation of private sector in all aspects of ICT sector

development.

1.1.3 EICTAD was established with the main objective of assisting

communities to improve their livelihood through the use of

appropriate Information and Communication Technologies (ICTs)

that facilitates increased access to markets, development of

information and public service. To achieve this objective the ICT

Assisted Development Project will support public and private

sector providers of information, goods and services to improve the


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quality and quantity of their products through the efficient and

effective use of ICTs.

1.1.4 ICTAD Project has two major project sub-components

Policy and Institutional Support

Application and Community Support.

The first sub-component will establish an enabling environment for the growth

of the ICT sector by supporting a comprehensive assessment of the existing

policy, regulatory and legal framework in the areas of information technologies,

telecommunication, broadcasting, knowledge sharing, and Internet. The policy,

regulation and legal framework sub-component will help to identify policy and

regulatory impediments to the growth of ICT, and proposes favorable trade

taxation, privacy security policies, supports drafting of appropriate business law,

preparation of new policies and regulations that will address the current

deficiencies.

Assessment of Government’s ICT procurement procedure and process is part of

ICTAD efforts aimed at creating enabling environment for the private sector.

1.2 NEED FOR THE ASSESSMENT

1.2.1 Since its establishment EICTAD has committed itself to empower and

initiate different enabling environments to the private sector involved in

ICT related delivery of goods or services. Moreover, a unit in charge of

coordinating development of the private sector has been established and

effort has been made in mobilizing and ensuring active participation of

the private sector.


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Streamlining the current ICT procurement process is one of the key

objectives and agendas of the unit and the EICTAD as a whole.

1.2.2 Recent informal study conducted by representatives from EITPA

(Ethiopian IT Professional Association) and EICTAD revealed that the

current ICT procurement procedure and practice is “not favorable” to the

local private sector. Absence of standard/unified/ procurement guideline,

procedures, technical specifications/ RFP, requirements of bidding

process such as bid security, evaluation criteria, performance bond and

terms of payment are said to be some of the limitations affecting

development of the sector.

1.2.3 As a way forward EICTDA has appointed a team consisting of IT experts

from the Government, private sector and Ethiopian ICT Professional

Association to examine the problem and come up with practical

recommendations. The team has come out with a recommendation and

the need for a benchmark study on the current ICT procurement

procedure and process.

As part of the recommendation, the team has developed a questionnaire

and TOR (Terms of Reference) used for the assessment of private sector

ICT procurement process. The team further decided to hire a consultant

to undertake the study related to the current ICT public procurement

procedure and practice, identify shortfalls and recommend workable

recommendations.

1.3 OBJECTIVE AND SCOPE OF THE ASSIGNMENT


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1.3.1 The main objective of the assignment is to assess the current Governments

ICT procurement procedures, bidding processes and examine areas of the

shortfalls and provide specific recommendations with the following

specific objectives:

(I) Assess and identify existing Government Procurement

guidelines and procedures.

(II) Examine short falls of bidding procedures and processes,

including gaps of Government procurement guidelines,

procedures and evaluate information provided by the

private sector.

(III) Identify clearly major weakness areas

(IV) Provide specific recommendations and best practices.


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CHAPTER II

SURVEY OF LITRATURE


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CHAPTER II

SURVEY OF LITRATURE

2.1 FUNCTIONAL DEFINITION OF ICT

According to Wikipdia (free encyclopedia) Information Technology (IT) as

defined by the Information Technology Association of America (ITTA) is

“the study, design, development, implementation, support or management

of computer based information system, particularly software applications

and computer hardware”

It deals with the use of computers and computer software to convert, store,

protect, process, transmit and retrieve information securely.

Its development has gone through different designs, generations, systems,

performance capabilities product and service mixes. As a result significant


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transformation of information and communication has impacted on all

aspects of human life.

It’s broaden term includes the field of electronic communication. People

usually tend to use the abbreviation of ICT (Information Communication

Technology)

Definition of the term relative to the objective and purpose of the

assignment could be ICT components related to hardware, software, and

supply or consultancy service.

Hence, ICT procurement encompasses both supply of products (goods) and

provision of consulting services of different contract mix. Goods contract

component may include hardware and off the Shelf Software Products

including routine installation and maintenance support.

ICT services are contracts related to provision of intellectual service

according to acceptable professional standards. Both contracts have their

own specific procurement guidelines procedures, technical requirements,

evaluation and SBDs.

2.2. HIGHLIGHT ON ICT BUSINESS IN ETHIOPIA

2.2.1. ICT service industry in Ethiopia is a very recent phenomenon. Its

application and utilizations are at an infant stage. Its introduction to

the country has merely counted a couple of decades and its

contribution to communications, improvement of working

environment, like service delivery and social and economic


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development is very minimal. Significant portion of the Ethiopian

population hardly knows or has access to the benefits derived from

ICT.

Moreover, supply and utilization of ICT is concentrated in few

towns of the country and Addis Ababa is the major share holder.

Addis Ababa hosts majority of end-users and suppliers of ICT

products and services.

2.2.2. According to records obtained from Federal Public Procurement

Agency, a total of 612 firms hold Business License for the supply of

computers, related products and services.

Out of the total registered companies the distribution by business

category indicates as shown in the table I below:

Companies

S/N

Business category No. Percent

1 Importing 312 50.98%,

2 Service 157 25.65%,

3 Commission Agent 48 7.84%

4 Stationery Material 45 7.35%

5 Retailer 31 5.06%

6 Others 18 2.94%

7 Manufacturing 1 0.163%

Total 612 100


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Firms registered under “Service giving” business category include

routine maintenance of computers, related equipment, training (127

or 81%) and System Development (30 or 19%).

2.2.3. Development of ICT business sector also lacks specialization,

understanding, uniformity and clear business strategy. Despite

complexity of the sector, mechanisms and instruments are lacking

governing acquisition, distribution or delivery of ICT products and

services. ICT is traded formally as well as informal, by big or small

vendors, exclusively or with different mix of products (services) and

there is prevalence of confusion with regard to product and service

components. Such confusion is further manifested among the end

users and suppliers alike.

Procurement of ICT is one of the tasks not clearly defined and

understood by both the supplier and end users.

2.3. Overview of Public Procurement in Ethiopia.

2.3.1. Public Procurement in Ethiopia is regulated by (a) the Financial

Proclamation No. 57/1996 which constitutes the Procurement Law (b)

the Financial Regulation No. 17/1997 issued by the Council of

Ministers (c) the Ministry of Finance Procurement Directives and

contracts issued in 1997, 1999 and revised in 2005 at the Federal level.

In 2005 the Government has established Public Procurement Agency

which is responsible to oversight policy and monitoring of Public


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procurement. Procurement law enacted in 2005 (as per Proclamation of

No. 430/2005) is required among other things, establishment of

regulatory body, development of Procurement Directives, preparation

of standard bidding documents, guidelines and implementation of

capacity building strategy at all levels.

2.3.2. As part of the procurement reform, Ministry of Finance and Economic

Development has prepared Public Procurement Directive and

guidelines of 2005 (1997 E.C.) It is currently enforce in all public

procurement process.

The Directive is intended to serve procurement of goods, works and

service contracts. It specifies activities and procedural requirements of

a procurement cycle. Procurement needs assessment, planning,

selection of methods, bid receipt and opening, evaluation, contract

award and follow-up of contract performance. The Directive also

provides SBDS and formats used for such activities and content

embodied for some SBDS and formats. Technical specification is for

Goods contracts as TOR (Terms of Reference) is meant for procurement

of consultancy service that shall be prepared under the support of

technical personnel.

2.3.3. The Directive provides six distinct procurement methods i.e. ;

Open bidding with floating time of 30 and 45 days for local and

international respectively.

Two stage bidding (for complex contracts)


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Request for Proposal for services component constituting 50% of the

total contract.

Selective bidding (Restricted Tender)

Request for Quotation

Direct Contracting (Direct Procurement)

2.3.4. Selection of appropriate procurement method is the responsibility of

tender committee. Selection shall be made depending on the conditions

of the contract. Procurement is undertaken by using Ministry and

periodically reviewed by PPA of Ministry of Finance and Economic

Development. Review shall be made before invitation of bids or

preparatory period, in the course of procurement execution and

performance audit shall be made after completion of the contract or

evaluation reports. Review before invitation includes examination or

verification of formats/contents/ of Standard Bidding Document,

Technical specification/TOR/ schedule of requirements, form of

contract and other related formats.

2.3.5. Tender Committee is responsible to handle bid opening, evaluation

propose contract award. Merit rating (system) evaluation shall be used.

Bid security is mandatory for contracts with cost estimate of Birr 40,000

and above and shall be submitted in the amount of 1% of the cost

estimate in the form of CPO, L/C, Bank Guarantee or certified cheque .

It shall be released following award of contract and Performance Bond

Submission of the winner. Forms provided for Bid Security and

Performance Bond is irrevocable, payable up on demand by the

purchaser and used for both contracts.


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2.3.6. It is noted that Goods contracts of the Directive is accompanied by

instruction to bidders, evaluation formats (sample formats) and consist

of both goods and service contracts. Evaluation provided for

consultancy service combines evaluation of technical and financial

proposals (at weight of 0.80 and 0.20 respectively)

2.3.7. According to the Public Procurement Proclamation No. 430/2005

Preparation of technical specifications focuses on performance or

operational or functional capacity/features of the goods and prohibits

reference to brands, catalog number or other similar classifications.

2.4. ICT PROCUREMENT GUIDELINE AND PROCEDURES - THE

WORLD BANK

2.4.1. Procurement of ICT is one of the challenging tasks of both the supplier

and the purchaser. Different Professionals, Services mix of contracts

and technological diversities pose difficulty of understanding on how,

what and method of procurement. It is due to the following conditions:

Their technical content is diverse and difficult to define

ICTs are affected by changing business objective organization

policies and institutional capacity of the end user.

They are subject to rapid technological change

They entail mixture of professional services and supply of diverse

hard and soft technologies { }


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Due to these difficulties less is known by most purchasers with regard to

contract type involved, procedures to be followed, bidding documents used

and commercial practices administered.

2.4.2. ICT procurement is the common term used to designate all

procurements that have something to do with computing and

communication technologies regardless of their hardware, software,

supply or service components.

2.4.3. ICT procurement consists both goods and service contracts. But still

there is confusion in defining clear demarcation between supply of

product and service components. The fact that some ICT products

include both hardware and off the shelf software, there is a

combination of physically quantifiable machine and instructions

provided in optical disk. Hardware is also supplemented by supply of

services, such as maintenance or installation of useful software – which

is not physically quantified.

2.4.4. According to ICT procurement guideline of the WB, there are four

important type of procurements. Product and service contents are the

basis of such classifications:

Off-the-Shelf IT supply and Maintenance contracts

Systems Supply and Installation Contracts

System Engineering Contracts

Consulting Services Contracts


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This classification is key characteristic of IT procurement that indicates the co.

existence of product and service components. All IT procurements have

varying degree of product and service contents. Contracts with high product

content such as off-the-shelf IT supply’s maintenance and system

development and installation have high product content, hence categorized

under goods contracts. System Engineering and Consulting Services have

high service content and categorized under service contracts.

Complexity, design and implementation risks are also factors used to

classification of ICT procurement into two: goods and products.

Based on the design and implementation risks procurement of ICT could be

termed either Straight Forward ICT Procurements or Complex ICT

procurements

I. Straight Forward ICT Procurements

There are two types of ICT procurement considered straight forward, namely

pure consultancy services and straight forward supply and maintenance off-

the-shelf IT products.

A) Straight forward pure consulting service is an

intellectual/professional/service where design and most implementation

risks are borne by the client. Examples of this type are assignments related to

preparation of a strategic information system plan or procurement plan for

information system, developing bidding document, management support

services for an IS project.


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Bidding process, evaluation and contract award shall follow acceptable

guideline and procedure of consulting service contract. Apart from the TOR,

bidding documents shall consider standard RFP.

In Straight IT equipment supply and maintenance procurements, the

technical risk of the off-the-shelf supply and maintenance products is

assumed by the purchaser who defines required product and service

specification. Some of the example is:

Local area network

Assorted products (such as file servers, workstations, printers and

UPS)-that require installation and simple interconnection.

Supply, straight forward installation and maintenance of a broad

area network.

Off-the-shelf hardware and software license for a particular

business process.

A license for commercial data base management system software.

Bidding process, evaluation, contract award application of the bidding

document shall be suitably tailored to the nature of the contract. Product and

service specifications may require combined evaluation of both price and

technical merit (non-price aspect), but price is the primary selection criteria.

Standard bidding documents for procurement of ICT products shall be used.

B. COMPLEX ICT PROCUREMENTS

Complex procurements of ICT are contracts where the design risks to be

borne primarily by the supplier or contractor. Professional judgment,

expertise, project and risk management skills of the supplier are critical.

Unlike the straight toward procurement it may need:


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Pre and post qualification of bidders

Quality of the statement of work and the technical specifications

Different version of project plan

Methodology and control of work

Flexibility of terms of payment

Quality control process

Professional obligations

Provision for transfer of knowledge

Flexibility of contract terms and conditions

II. Complex IT procurement consists two types of contracts

a) SUPPLY AND INSTALLATION OF INFORMATION SYSTEM

Increased supplier’s risk and complex service requirements are key features

that distinguish from goods procurement. The purchaser defined mainly

performance specification of the contract. The supplier is responsible for the

design, supply and installation of the needed facilities. It extends to the

provision of any other products or services required to make the facility

perform to specifications. Thus, the procurement is large and complex service

component.

b) SYSTEM ENGINEERING OR SYSTEM INTEGRATION CONTRACTS

SUCH TYPE OF CONTRACTS are complex, combine aspects of engineering

contracts, consulting services and supply of goods:

Complex business applications (eg. Banking system, treasury Mgt

system etc).

Complex custom software development services


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Integration of off –the-shelf with custom software and hardware

components.

System Engineering contracts (projects) involving extensive

technical services for design, development, customization,

installation, training, operation and technical support.

Build-operate contracts to out source IS-intensive functions.

Supplier may share a large part of the design and implementation risk.

Complex IT procurements are processed in two different modalities; Single

stage and two stages.

Single Stage Procurement Process: It is used when bidding is based on

technical and service specifications. Examples are large wide area computing

network with variety of office support and application services, extensive

operational acceptance testing requirements and centralized network

management-where the design risk is borne by the purchaser.

It is also used for functional or performance specifications, if such

specifications are likely to met only by established products in the market. It

may need extensive bidder conferencing and clarification process

specification changes.

Two Stage Procurement Process: It shall be used for a complex supply

and installation of procurement of IT that is based primary on business or

performance requirements rather than on technical specifications.

Example of this type is procurement of a wide area network specified

through a set of business requirements rather than precise technical

specifications number and functionality of workstations, the availability and


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response time of office and application services, the flexibility of

communication options, the extent and reliability of centralized network

management and security functions.

Different technical solutions proposed by bidders will be evaluated on their

merits of different technical solutions. The process involve (I) development of

functional specifications (II) assessment of first stage proposals and

specifications of needed technical or commercial adjustments (III) evaluation

of second stage bids against functional specifications, regardless of their

technical differences.

Two stage procurement is used when the work necessary to complete the

facilities or systems being procured is well outside the clients’ domain of

management expertise.


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CHAPTER III

SURVEY METHODOLOGY


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CHAPTER III

SURVEY METHODOLOGY

3.1 SAMPLE SIZE

Sample selection of the study has not strictly followed scientific sampling

techniques. Initially some 55 vendors were listed for consideration.

However, later it was found out to include more respondents and the level

of sample size was planned to include 115 ICT suppliers. Out 115 ICT

suppliers 105 were approached and received structured questionnaire. But

only 81 were able to respond to the questionnaire.

Population reached represents different locations of Addis Ababa and type

of businesses. In terms of geographical location, only six sub-cities of Addis

Ababa have been subjected to the study. Detail of Respondents from each

sub-city shown in table II below.


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Moreover, three firms engaged on ICT related service or products have

been subjected to unstructured interview. The interview has considered and

represent firms engaged on delivery of ICT related training, consultancy

and product.

Table II: Detail of suppliers and sub-cities covered under the survey

S/N Sub-city No Percent

1. Kirkos K/Ketema 42 51.85

2. Bole K/Ketema 22 27.16

3. Arada K/Ketema 10 12.34

4. Nifas Silk Lafto K/Ketema 1 1.23

5 Yeka K/Ketema 1 1.23

6 Ledeta K/Ketema 1 1.23

7 Others 4 4.93

Total 81 100

3.2 DATA COLLECTION METHODS


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Major data collection was made through structured questionnaire. In

addition the consultant has attempted to his level best to use other available

data collection methods and instruments. Following are major data

collection instruments.

3.2.1 QUESTIONNAIRE

Structure of the questionnaire was designed inline with the

purpose of the study. It includes optional, close-ended and open

ended questions with the aim of exploring details of respondents

experience and suggestions on public procurement guideline and

practice. It provides set of hypothetical statements and

corresponding predetermined responses. Respondents are

motivated to review such hypothetical statements and respond by

selecting one or more response types among the predetermined

responses as it shown in the questionnaire (Annex II)

The first seven questions are intended to acquire basic data of the

respondents. It includes names, addresses, business category, year

of experience and number of employees of each respondent.

Subject matter of the questionnaire is elaborated under item

numbers 8 through 22.

It is carefully designed to obtain data of the following major areas;

Practical experience, requirements and frequency of

participation on public procurement process and practice

Perceptions and views on ICT procurement process,

contract award and delivery

Identify any shortcomings of public procurement


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Forward areas needed for further improvement on

procurement and sector related issues.

The last question (no. 23) is open - ended and provides chance of

respondents to state their comments within or outside of the

survey frame of reference. Structured questionnaire was

administered to a total of 105 establishments. Respondents were

given time for preparation, encouraged to fill (aided and unaided

on the spot) and submit in person or via surface mail. Out of the

total firms received the format, 81 were found responding to the

query.

3.2.2 INTERVIEW: The purpose of conducting unstructured interview was to

acquire additional information that will support data collected through

questionnaire. Three firms were selected for an unstructured interview

and criteria for selection is based on category of business; firms engaged

in provision of the product, service and training aspects of ICT. Data

obtained in this connection include view of the respondents with regard to

the overall business environment of ICT, taxation, and experience on

public procurement procedure and process as compared to NGOs,

projects or private firms.

3.2.3. LITERATURE REVIEW:

It was believed that relevant literature review will help in

understanding salient features, trends, problems and procurement

practices of the sector. Hence, the consultant has reviewed

literature related to ICT concept definition, development (trends) of

ICT, project preparation and appraisal documents of EICTDA,

Government and World Bank procurement guidelines, procedures,


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Directives, manuals, bidding documents, formats and other related

documents. Moreover, IFB formats and advertisements issued on

different news papers and standard bidding documents being used

have been thoroughly reviewed.

3.3 SURVEY IMPLEMENTATION

Survey implementation corresponds to data collection methods adopted.

Data collection under questionnaire has considered deployment of two

carefully selected and trained enumerators. Each enumerator was

responsible to make door – to- door visits of vendors, brief on the objective

of the survey, issue the questionnaire, (receipt acknowledged) agree on time

table for collection and finally collect responses. Due attention was made to

ensure that such questionnaires were issued to and filled out by owner or

high management level of the firm under consideration. Data collection

under the method was realized through two modalities. Initially, it was

believed that the selected population is responsible to review (for two days)

and fill out details of the questionnaire within a given time (2 to 3 days).

Hence, the consultant was only required to reach the respondents, make

briefing on the objective, importance of the survey, give the questionnaire

and collect responses. This was not gone as anticipated, due to different

goods reasons. The first reason is failure of most respondents to respond in

time. The second problem was attached to certain barrier, and limitations

such as language. The third could be lack of willingness and understanding

of survey objective.

Therefore, it was necessary to apply the second modality that demanded the

consultant to employ qualified enumerators (2) to influence and support

respondents in filling out the questionnaire. Data collection of both methods


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has taken more than 30 days. Unstructured interview was conducted by the

consultant and interviewee were given sufficient time to discuss on the

questions (one to one and half hours per person). It involved two way

communications, cross reference, substantiation and justifications on the

noted experiences of the respondents.

3.4.DATA ANALYSIS: Data collected under the above stated methods have

been used for analysis and further interpretation of the survey. Data analysis

has involved application of interrelated procedures, examination of

interdependence and relevance of the data to the major concerns of the

survey. It has considered verification (for completeness), editing, grouping

and classification of raw data to the predetermined category of responses of

the survey. Responses of all respondents were grouped into category of

responses made against set of questions provided under each subject matter

as shown in Annex I (Table 1 – 18). Statistical tables provided under Annex I

have considered data classification and counts for the number of cases falling

in various groups of response results. Cross reference has been made to check

the exclusiveness or inclusiveness or complementarities of data acquired

under different methods. Presentation of the analysis considers both

summarized narration and statistical tables and charts.

3.5.LIMITATION OF THE SURVEY:

In light of the intended purpose, the consultant feels that the survey was a

good start and successful. Nevertheless, following are some of the noted

limitations and problems of the survey:

Subject matters of the survey design/ questionnaire/ has not

considered complete picture of the sector. The consultant feels that

pre-test survey could have served to understand major


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34

impediments of the sector/on the ground/ and help to design

functional questionnaire accordingly.

Resistance, willingness and capacity of the respondents have

relatively affected implementation and quality of the survey.

Absence of complete background documents and data of different

aspects.

Absence of Baseline Survey relative to business community under

consideration.

Difficulty encountered in getting timely and complete information

or data of the survey.

CHAPTER IV

FINDINGS OF THE SURVEY

Findings of this report are based on relevant data and information gathered

through questionnaire, interview and survey of literature. A total of 105

respondents (for questionnaire) and three firms (interview) were approached

and encouraged to respond to the survey. However, out of the total of the sample

population only 81 responded to the questionnaire. Non-response of the

remaining 24 (about 22%) was attached to delay of responses (70%), option to use

surface mail delivery (16%) and lack of interest to respond (14%).

Findings of the survey are analyzed under the following major headings: Profile

of Respondents; Findings of the core subject matter of the questionnaire; and


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35

comments and responses to the unstructured interview. It is presented using

Statistical tables, charts and narrations as appropriate.

4.1. PROFILE OF THE RESPONDENTS

4.1.1 Respondent address

All of the respondents are located in Addis Ababa and distribution to sub-

cities is as under;

Kirkos K/Ketema 51.85%,

Bole K/Ketema 27.16%,

Arada K/Ketema 12.43%,

Nifas Silklafto K/Ketema 1.23%,

Yeka K/Ketema 1.23%,

Ledeta K/Ketema 1.23%

“Others” 4.93%.

Respondents specified as “Others” are firms not wanted to disclose their address.

This is due to optional requirement of the questionnaire. Number of respondents

considered from each sub-city is indicated in Table 1 of Annex I.

4.1.2. Business Profile

Business profile of the respondents shows multiple business option of

firms. This has resulted in the possibility of one firm to engage in more

than one business types. According to response of the questionnaire firms

engaged in one of the business categories constitute 46.91% (38) of the

total respondents and firms opted for two types of business categories

account 28.41% (23). Firms executing three to four business categories are

24.68% (20).

Majority of firms have involved in supply of Hardware/Software ICT

products (35.91%), followed by Network and Network Equipment,


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36

22.09%, ICT System Development, (15.47%) IT consulting firm (11.05%)

and Training (11.04%).

Suppliers trading ICT products (Hard ware/Soft ware plus Network,

Network Equipment and others) have about 63% share and the

remaining goes to Service component of the sector, mainly IT System

Development, Training and Consultancy services (37%).

Goods component includes vendors engaged on retail trade of ICT

accessories (stationery items that constitute 4.98% of the total

respondents). It is noted that due to multiple business option of the

respondents, total responses to the pre-defined business categories of the

questionnaire is 181 and hence is the basis for calculating statistical

figures of the chart is shown below.

Chart 1: Business Profile

4.1.3.

4.1.4.

4.1.5.

4.1.6.

4.1.7.

4.1.3. Year of Experience in the Business


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37

Experience of the respondents is one of the indications that the sector is at

its development stage. Out of the total respondents, firms with experience

of more than ten years constitute merely about 22.2% of the total

respondents. Significant numbers of respondents have experience from 1

to 10 years and accounted at about 69.13% of the total respondents. Detail

of experience under defined years is shown in chart 2.

Chart 2: Respondents Year of Experience in ICT Business

4.1.3. Number of Employees

Respondents with less than 20 employees are 69.13% (56), below 49

employees are about 90% and firms employing more than 100 are 2.47%.

Detail of defined employees range is shown as under (Chart 3)


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4.2. Findings of the core subject matter

Findings of the core subject matter focus on experiences and views of

respondents on Public Procurement procedure and practice. It is analyzed

under 13 distinct sub-headings of the questionnaire and touches up on all

categories of survey statements and responses.

4.2.1. Frequency of Tender Participation

Frequency of tender participation is requested since establishment of firms

and deals with all Government sponsored tenders. It is noted that

Government sponsored tenders is participated by all respondents. But it is

with varying frequency of participation. Respondents participated less

than 20 times constitute about 46% (37), 20-50 times is participated by

about 22% and above 50 times participation is reported by 32% of

respondents. Chart 4 shows frequency of participation on government

sponsored bid.


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39

4.2.2. ICT Tender Participation

Almost all respondents are intending to participate in Government

tenders for ICT products and services. 93.8% respondents are willing to

participate and 6.2% of the respondents report no interest to bid. The

reasons for not participating is reported due to late business entry or “Just

entered in to Business” (60% 0r 3) and 40% indicated that they have no

confidence on bidding process and discouraged due to requirements of

the bidding process.

4.2.3. Bid Security Submission requirement

59.25% of respondents report that they have experience of “Always”

depositing bid bonds and 37.03% reported depositing “Sometimes”. Some

3.72% respondents are either “Rarely” or “Never” deposit bid bonds as it

shown in chart 5 below. About 63% of responses show that average period

for bid bond release is within 6 months and release time with in the

bracket of 6-12 months is reported by 37% of the respondents.

Chart 5: Frequency of depositing bid bond


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40

4.2.4. Frequently used media for Bid opportunity

Detail of media used for bid opportunity combines and ranges

from limited invitations or personal contacts to widely circulated

local news papers and radios. Responses of respondents in this

regard show multiple media used for bid opportunity. Due to this

opportunity the total response is counted as 133. On the basis of the

count frequently used media for ICT bid opportunity is local

newspapers (56.40%), followed by invitation (28.57%) and others

included Radio (5.26%), Internet (5.26%), Personal contact (3.75%)

and others (0.75%).

Chart 6: Frequently used media for bid opportunity


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4.2.5. Views on contents of the ToR (Terms of Reference)

This question stimulates respondents to express their position on pre-

defined hypothetical statements of the questionnaire by selecting one

of the response types of the questionnaire. Expected response types

include “Strongly Disagree”, “Disagree” “Neutral” “Agree” “Strongly

agree” or “No Comment”.

According to findings of the survey, 74.07% of the respondents perceive

and agree that ToRs prepared for ICT procurement lack clear and concise

needs of the client. But some 14.8% agree that ToR prepared by purchasers

embodies clear and concise needs of the clients and 11. 1% is indifferent;

(6.17% for Neutral and 4.94% is “No Comment).

Similarly about 63% of the respondents agree that profiles and skills

required for the task are not clearly provided in the TORs and it is not the

case for 11.1% of the respondents. “Neutral” position is responded by

13.58% and 12.35% of the respondents responded “No Comment”.

59.3% of the respondents concur that proposal preparation time given by

clients is very short. But this idea is not shared by 16% of the respondents

and 24.6% show indifference as indicated in table 11 of Annex 1

(Statistical Table).

4.2.6. Content of Technical Specifications


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Review on the content of technical specifications considers position of

respondents to 4 specific survey statements as shown in table 12 of Annex

I.

It is found out that bout 70% of the respondents report that specifications

prepared for ICT procurement are poor and incomplete. 12% of the

respondents feel that specifications prepared for ICT are adequate enough

for preparation of bids. “Neutral” position constitutes 12.34% and “No

comment” is responded by 4.93% of the respondents.

11.1% of the respondents disagree that specification of goods prepared by

clients is conflicting and vague. Concurrence to the statement is

responded by about 63%, “Neutral” and “No comment” responses are

opted by 16% and 9.9% respectively.

59.2% of the respondents agree that specification of clients include

obsolete descriptions of goods and this view is not shared by 8.6%

respondents vague. 32.1% of the respondents are reported under

“Neutral” and “No comment”

28.4% of respondents Strongly agree that specification of clients are

Brand specific and includes unlicensed Software and “Agree” is

responded by about 21% respondents. Disagreement is marked among

11.1%, “Neutral” is responded by 17.2% and the remaining 8.64% of the

respondents have no comment. Please refer in table 12 of Annex 1 of the

Statistical Table.

4.2. 7. Factors Affecting Quality of proposals

Respondents are required to express their view whether proposal

submission period, lack of skilled resources from the supplier and the


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client are key reasons affecting quality of proposals. According to the

result of the survey, 55.55% of the respondents agree that time is one of

the factors affecting submission of quality proposals. But 16% of the

respondents disagree that time is not the major factor. 19.75% responded

“Neutral”.

Lack of skilled personnel on the part of the supplier is reported by 51.84%.

But 22.2% of the respondents agree that lack of skilled personnel on the

part of the supplier has nothing to do with the quality of proposals.

Absence of manpower resources including technical capacity of the

purchaser to understand and evaluate proposals is noted by 62.96% of the

respondents as indicated in table 13 of Annex 1. Others have the opinion

that proposals are made against the prepared ToR and consequently it is

quite natural to correspond quality of proposal to quality of ToR and vice

versa.

4.2.8. Bid Evaluation Process

Views of respondents on evaluation process is intended to examine

reaction of respondents to pre-defined hypothetical statements as

described in table 14 of Annex I of statistical table.

44.45% of the respondents strongly agree that evaluation process of ICT

tender is time taking and 35.8% of the respondents also agree that it takes

too long time. In effect more than 80% of the respondents agree that bid

evaluation of most clients is time taking. But 11.1% of the respondents do

not share such perception.


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44

About 63% of the respondents agree that evaluation team lacks

organization but this argument is not shared by 11.105% of the

respondents.

Lack of technical understanding on the part of the client is reported by

77.7%. But about 8% of the respondents disagree with such statement.

About 7% of the respondents disagree that evaluation team is prone to

corruption, nepotism and favors as against 53.08% concurrence to the

statement. 20.9% and 18.5% of the respondents have opted for “Neutral”

and “No comment” response respectively.

About 51% of the respondents feel that evaluation process does not

encourage local ICT suppliers. But 11% of the respondents do not share

this view. About 38% of the respondents have responded “Neutral”

(20.98%) and “No comment” (17.3%).

More than 8.6% of the respondents agree that evaluation process has clear

technical and financial evaluation percentage breakdown. More than 67%

of the respondents agree that evaluation process lacks clear technical and

financial evaluation breakdown. 12.34% and 11.2% responded Neutral

and No comment respectively. Details of the response are shown in table

14 Annex 1 (Statistical Table).

4.2.9. Content of Contract document and factors affecting delivery of

ICT contracts

69.13% of the respondents report that contract document of ICT is

unfavorable to the supplier. They argue that terms and conditions of the

contract give more attention and elaboration on the duties and obligations

of the supplier. About 7.4% of the respondents feel that terms and


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45

conditions of the contract agreement are favorable to the supplier. 11.1%

of respondents opted for “Neutral” and 12.34% offered “No comment”

positions.

About 2.4% of the respondents feel that complaints aroused during

bidding process is addressed by an independent body. But 76.53 % agree

that there is no an independent body that attends complaints of suppliers

during procurement process. 7.4% remained neutral and response for

“No comment” is 13.58%.

22.2% of the respondents view that delay of project implementation has

nothing to do with Bank Process. But 41.97% of the respondents have the

view that delay of project implementation has something to do with Bank

Process. The remaining respondents are either neutral or have offered “No

comment”.

22.2% of the respondents disagree that delay of project implementation

are not related to the custom Process. This is not the case for 74.07% of the

respondent that feel contribution of Custom process to project

implementation delays. About 10% have remained neutral and 11.11%

offered No comment as detailed in table 16 of annex 1.

55.96% of the respondents feel that insignificant weight given to ICT

procurements, lack of human resource and commitment on the part of the

purchaser are factors significantly contribute to project implementation

delay.

4.2.10. Areas of procurement Activity needed Improvements

It is remarked that about 13% of the respondents report they are satisfied

with the current procurement process. But dissatisfaction on the current


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46

process is reported by more than 67% of the respondents. “Neutral” and

“No Comment” position response share the remaining percentage (20%).

More than 67% of the respondents feel that TOR (Terms of Reference) Bid

document prepared by clients need further improvement. But some 6% of

the respondents feel that there is no need of revision. 27% of the

respondents are either “neutral” or given ‘no comment”.

Responses of 64..2% of the respondents show that Bid Security and

Performance Bond submission is one of the areas needed further revision

& improvement. But it is not the case for 8.64% of the respondents. Some

27% of the respondents are not worried about the problem of Bid Security

and Performance bond submission requirement. About 27% of the

respondents have opted either for Neutrality of No comment.

More than 7% of the responses indicate that improvement or revision is

not required for current selection rules of bid evaluation team. But more

than 64% of the responses show that there should be a need for the

revision and improvement of selection rules of the bid evaluation team.

More than 28% of the respondents are indifferent.

Improvement on current procurement guideline is recommended by 61%

of the respondents. This is not the case for 7.2% of the respondents.

Neutrality and no comment are responded by 38.8%.

Close to 73% of the respondents suggest that the overall procurement

process need to be revised. But over 12% of the respondents feel that there

should be no need of improvement on overall procurement process.

Detail is shown in table 16 of Annex 1 (Statistical Table).

4.2.11. Vendor Classification


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47

58.03% of the respondents believe that vendor classification of ICT

companies is needed for the development of the sector and improvement

of ICT products and services. About 40% of the respondents do not

believe in classification of vendors. Some 9%% do not the benefit of

having vendor classifications as shown in chart 7 below.

4.2.12. Settlement of Disputes Out of the total respondents, 91.36% report that they had experience of

delay (conflict on payments, contractual litigations) and 8.64%

respondents reported no experience of such cases.

Respondents encountered disputes over payment and contract

agreements have used different dispute resolution mechanisms. It

included Negotiation (89.2%), Abandoning or ignoring the payment,


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48

6.75% and others means such as Arbitration rules, through court (1.35%),

through high level of authorities (1.35%). Share of each mechanism is

shown in chart 8 below.

Most of the respondents disclose that the fact that provisions of the

agreements are designed in favor of the purchaser, unconditional

compliance of the supplier to the terms and conditions of the client is

mandatory. But no statement has been made with regard to the definition

or type of “Negotiation” used to settle the marked dispute.

4.2.13. Status of ICT development

About 32.1% of the respondents positively feel that development of ICT in

the country is “Encouraging” and “Some what encouraging” was reported

by 49.38% of the respondents. 13.58% respondents are pessimists on the

development of the ICT industry. Discouraging factors are attributed to

absence of incentives (23.14%), unfavorable business environment


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49

(20.37%) uncontrolled business competition (28.7%), continuous rise of

cost of living (12.037%) and business regulation system (15.74%).

4.3. General Comments and Interview results

4.3.1. Cross cutting solutions are needed to improve problems associated with

customs and business regulations.

It is felt that service delivery of customs authority is being improved over

time. But it is still commented for lack of uniform taxation system. Unit

rate database used for tax assessments is not progressively updated in line

with the going international market, technological advancement and

country of origin. Thus, cases are reported when tariff assessments are set

arbitrarily and causes for price escalation of some ICT products. Due to

absence of established unit rate database, tariff of some ICT products are

governed by tariff of similar country of origin. Such a practice is applied

despite comparative differences of two countries. In addition customs

inspection is not handled by technical personnel with requisite know-how

of ICT products.

Consequently some respondents feel that administration of different

taxation system will affect competitiveness of suppliers and hinders equal

opportunity of play ground. It also opens room for nepotism and

corruption.

It was indicated that the current tax rate of ICT products is 5% plus 15%

VAT, 3% withholding and 10% recently introduced Sure Tax. Eventually

the total tax payable for ICT products is about 33% of the direct cost. It is


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commented that customs tariffs for ICT development in general Software

in particular be reasonably dropped so that ICT industry will be

encouraged.

4.3.2 Problem of Public Procurement Practices.

It is expressed that current procurement guideline, procedure and

requirements have various shortcomings. Despite some

improvements, transparency, economy, efficiency and fairness of

procurement process are below the desirable level.

Bid floating time is inadequate for bid preparation and submission.

Registration and business license are some of the preconditions

hindering participation of bidders. Procedure and provisions of bid

document with regard to prequalification requirement, condition

evaluation criteria, factors and terms of contract and payments are

either not provided or vaguely stated.

Prequalification requirements related to financial, technical

capacity and past performance records (for bidding as well as

contract award) are unrealistically set at high level which is above

the capacity of local ICT suppliers. Hence, foreign ICT suppliers

will be the one qualified to take up most contracts.

The issue of economy is merely defined in terms of value of

money, but not in terms of other critical factors. Hence, technical

factors have little room for consideration.

4.3.3 Bid Security


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Some respondents feel that the amount and form of bid security be

revisited. Bid security amounts are set arbitrarily and CPO, Bank

Guarantee are form of Securities only acceptable to government

sponsored bids. This requirement is irrespective of the size of the

contract (both small and big contracts).

Bid Security requirement is also applicable to Service Contracts.

Release of Bid security depend either on the will of the purchaser or

effort of the bidder. It is reported that there are cases when release

of Bid Securities takes more than one year.

4.3.4 Problems of Technical Specification/TOR

Statements of most respondents indicate that bidding documents

are not adequate enough to define requirements of the process.

Majority of the purchasers are concerned only with the acquisition

of the contract and give little room for critical procedural and

technical issues determining sustainability of the ICT

products/services. Technical specifications relative to ICT

products are not only lacking the level required detail, but also

incomplete. They tend to focus on Brand names of special model

rather than broadly specifying relevant characteristics, performance

and operational requirements of the required items. It is the

opinion of the respondents that such practices have affected both

the purchasers and suppliers.

On the other hand, it is the concern of some respondents that such

brand fixation is significantly hindering marketing of ICT products

being assembled in the country.


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52

Moreover some technical specification or TOR prepared by clients

is either oversized or downsized. It does not consider the capacity

or know- how to efficiently utilize the product or service under

consideration.

4.3.5 Evaluation Criteria, Factors and Process

Evaluation criteria used for bid comparison are commented for lack

of objectivity. Unquantifiable factors dominate objective evaluation

criteria. Point or rating system is one instance and used to evaluate

best with inferior qualities on equal footing.

In addition, evaluations take longer time than expected.

Respondents have the fear that capacity of the evaluators is one of

the impediments affecting timely completion and meaningful

comparison of bids on equal basis.

Evaluation criteria governing procurement of goods and services

are not distinctly identified and administered separately.

Transparency requirement after completion of bid evaluation result

is not practiced by most clients.

It is commented that post qualification is made for all contracts,

irrespective of the size, method and contract type. Criteria for post

qualification lack clarity and induce undesirable subjectivity.

4.3.6 Performance Bond

It is the requirement of procuring entities that performance bond be

submitted by the successful bidder. This requirement has three

problems:


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a) The fact that it is submitted in form of Cash, Bank

Guarantee or CPO, it will affect cash flow requirement of the

winner.

b) It is required for all types and size of contracts even for

smaller contracts.

c) Release of the performance bond shall not follow distinct

time schedule of contract performance.

4.3.7 Problems related to contract agreement include lengthy time taken,

lack of comprehensiveness to describe requirements of the client or

supplier; incorporation of more responsibilities and obligations on

the part of the supplier as a condition of contract award.

Respondents feel that contract agreements are designed in favor of

the client and those found favoring suppliers are, in most cases,

violated by the client.

4.3.8 Terms and structure of payment is one of the issues not

uniformly attended.

It is reported that despite early mobilizations demand of some

clients, structure and administration of contract payment have

many problems. Advance payments are attached to submission of

Bank Guarantee of equivalent of amount. But Bank Guarantees are

issued against deposit of the equivalent amount of money. Thus, it

is underlined that Advance Payment against Bank Guarantee will

not contribute to the cash flow requirements of bidders.


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54

Terms of payment are not uniform and applicable to all contracts.

There are cases when clients omit or structure such provisions in a

manner to avoid possible risks and pressurize the supplier to

accept such terms. It is remarked that payments are not made in

time and a manner stipulated in the agreement. Consequently,

suppliers are subjected to various difficulties such as shortage of

cash flow, delay of project deliveries and failure to meet various

business obligations. Bankruptcy is also one of the possible

scenarios and undesired consequences.

It is the opinion of majority of respondents that improvements of

the stated problems call for concerted effort of stakeholders.

Following are suggestions forwarded;

Respondents feel that current public procurement practice

problems are inherently extensions of the problems of some

provisions of the guideline and procedure. Thus, the current

manual including SBD currently enforce be revisited, reviewed,

revised and harmonized with best practice with special focus on

the supply of ICT products and services. This remedy should

include institutionalization of transparency and accountability in

procurement implementation process.

Respondents understand that some provisions of public

procurement guideline combine best practices and provide

flexibility in the course of application. But procurement

implementing agencies have no requisite technical and managerial


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capacity. Thus, capacity building is one of the areas compliment

improvement of the guideline.

It is stated that development of ICT industry is contingent up on

fair competition and standard norm for operation. Problems of fair

competition are attributed to the competition between legal Vs

illegal firms, licensed Vs unlicensed (individual) tax exempted Vs

tax payer, value added Vs not value added supply of ICT products

and services.

Thus, vendor classification is one of the solutions recommended for

the development of the industry.

EICTDA is perceived as the government agency responsible to

oversee/support or stimulate active participation of private sector

in the development of ICT industry. This perception was defined

to include removing obstacles, constraints, creating enabling

environment, regulatory and Institutional framework for the sector.


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CHAPTER V

KEY SHORTFALLS OF THE CURRENT PUBLIC

PROCUREMENT PROCESS AND PRACTICE

KEY SHORTFALLS OF THE CURRENT PROCUREMENT PRACTICE

Presentation of key problems of the assessment mainly focuses on

comparing problem statement with responses of the respondents and


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brings out key shortfalls or strengths, if any. It is analyzed based on the

stated problem domains of the TOR that include :

a. Non – availability of standard Procurement Procedures and Guidelines

b. Non-Standard Evaluation Criteria and method

c. The existing of ambiguously defined technical specifications

d. The existing of insufficient RFP document

e. Unfavorable amount of Bid and Performance Bonds requirement

f. Non existence of arbitration in case of conflict

g. Unfavorable and non structured payment procedures.

Problems stated under the above paragraph are functions and emanated from

the problem of not having standard procurement procedures and guidelines.

Hence, exploration of the above problem statements is made in examining

problems of Procurement procedure, guideline and issues associated with each

activity of a procurement cycle, as elaborated below:

5.1. Non-availability of procurement guideline and procedure. It is well

known that this problem is complaints of most private sector,

specially firms or individuals engaged in the supply of ICT products

and services. The consultant has endeavored to find out to what

extent this conclusion holds true. In principle the government has a

procurement guideline and procedure for the procurement of goods,

works and services. As a matter of fact effort of the Government has

continued since 1996 when the Ethiopian Government (at Federal

level) issued Proclamations No. 57/1996 and No. 17/1997 to

regulate the Financial Administration of the country.


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Since 2005 the FDRE has been trying to adopt and establish public

procurement guideline and procedure including regulatory body.

Proclamation No. 430/2005 has determined procedure of Public

Procurement and establishing its supervisory Agency; Public

Procurement Agency. All of the provisions enshrined in the

Proclamation, by and large are consistent to internationally accepted

norms and standards.

Further to Proclamation No. 430/2005 the Ministry of Finance and

Economy Development has also prepared and adopted a

Procurement Directive that directs activities of procuring entities and

application of guidelines, procedure, SBD and formats for

procurement implementation. Standard bidding Documents for

Goods, Works and RFP (under refinement) for procurement of

services are some of the documents provided to govern relation of

the purchaser and supplier or contractor.

It is observed that most of these documents are being revised since

1996 and value addition is going on for further improvement.

However, it has also shortcomings inherently attached to both the

guideline and its application. Following are major problems relative

to the objectives of this survey:


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5.2. Eligibility: It is requirement of the guideline that bidders should

pass eligibility criteria as a condition for bid. Thus bidders are

required to present documentary evidences proving that they;

Have registration certificate (a manufacturer or supplier from the

Ministry of Finance and Economic Development.)

Professional competence certificate for the provision of service

contracts. It is noted that the Procurement Directive provides that

concerned authorities should issue such registration certificates, up

on request, with in 3 days.

Have paid their tax obligations attested by authorities (tax

collector)

Have valid trade license in the field

Thus, eligibility requirement is major pre-condition that determines bid

participation of a given bidder. Any bidder failed to submit such evidences will

be declared non-eligible to bid and not allowed to purchase bidding documents.

IFB advertisements are some of the additional tools used to describe such

eligibility requirements during procurement process.

But the acceptable practice in this regard usually considers eligibility as a

condition to sign the contract, not for bid participation. Thus, it is one of the

discouraging factors and used to eliminate most of ICT suppliers from

participation.

5.3. Bid Bond Requirement: Both Proclamation No. 430/2005 and

procurement Directive require submission of Bid Bonds, in a lump-

sum amount in the form of (Bank Guarantee, CPO or Cash). The


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amount is set based on the cost estimate of the contract under

consideration not exceeding 1% of the procurement cost estimate.

But actual practice of most procurement implementing entities does

not follow the guideline. First the Bid Bond amount is usually set

above the requirement of the guideline (minimum is 2 to 5% of price

offered by the Bidder as shown under Annex 5 of sample IFB

advertisements).

The second problem is Bid Bond as a requirement is demanded

irrespective of volume of procurement. Public procurement Directive

dictates that Bid Security Submission is a requirement for contract

amounts of equivalent of Birr 40,000 and above. Thus, Bid Security

obligation of Bidders starts from Birr 40,000 and one could imagine

the extent of Bid Security Submission requirement of a given bidder.

The third problem is the need and requirement of Bid Security for

Service contracts as well which is not the case of best international

practice.

It is also indicated in responses of most respondents that release of

Bid Security may extend to 12 months. This circumstance has

significant impact on cash flow requirement of bidders.

5.4. Bid Invitations: According to Public Procurement Proclamation No.

430/2005 invitation for bids shall correspond to respective methods

and bid formats used. Hence invitations shall follow specific

procedural requirements, formats and documents of the opted

method. But following are some of the problems attached to bid

invitations;


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Bid invitations are not adequate enough to provide relevant

information and requirements of bid process;

Invitations do not attract wide competitions; it is due to limited

floating time and application of in appropriate media. This

practice is opted despite 45 and 30 days floating time

requirement for international and national bids respectively;

Invitations do not provide broad information on the scope of the

contract;

Invitations lack transparency and not fairly accessed to the

bidders. This is much critical for contracts procured under

shopping method;

Most implementing agencies tend to opt for floating of tenders

in news papers (Mostly Amharic Version) in spite threshold

amount involved big or small contracts;

Most IFB copies reviewed show that they are instruments used

for prequalification of bidders. As noticed under Annex 5, IFBs

are instruments specifying requirements of bid process and

embody prior decisions of the purchaser with regard to

eligibility, Brand type, Model Number and measures taken in

the event of failure of bidders to fulfill such requirements.

As the result problems of invitations are major causes hindering

bidding opportunity of most bidders, hampering economy (for the

client), fair competition and timely contract delivery.

5.5. Preparation of Technical specifications/TOR


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Both Public Procurement Proclamation No 430/2005 and Directive

underline the importance of fair, wide competition and

transparency. Hence it requires procurement implementing entities

give due consideration to;

Preparation of bid documents that shall contain sufficient

information to enable competition among the bids to take

place on the basis of complete, neutral and objective terms as

well as contents of the bid document.

Preparation of technical specifications/TOR/ for the

purpose of giving a correct and complete description of the

object of procurement and for the purpose of creating

conditions of fair and open competition be in terms of

performance, quality, safety, quality, dimension etc but not

reference to a particular trademark or name, patent, design

or type, specific original, producer or service provider.

Use of SBD/RFP as appropriate

But application of these requirements has various shortfalls as it is noticed

in the previous chapter, mainly manifested on preparation of TOR,

Technical Specifications, RFP and Standard Bidding documents.

Technical specifications are not vaguely stated but also embody some

discriminatory aspects as observed in defining requirements under

specific trademarks and Brand name. Ambiguity is also true for

preparation of TORS and much more critical when it comes to

procurement of ICT.


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ToRs prepared by most procurement entities are commented for lack of

clear understanding and definition of what is TOR meant for; specifying

unachievable or overestimated scope of services. Comments of most

respondents and interview conduct with some firm indicated that

TORs/specifications of ICT contracts are not designed to clearly specify in

line with the nature and type of contract. They lack of detail descriptions

related to the scope, key qualification criteria to perform the task, rights,

obligations and risks involved in the execution of the contract.

Failure of TORs/ Specifications to describe certificate or Authorization

requirements for developed/supplied ICT software and acceptance of

unlicensed software/server are cases reflecting the degree of the problem.

It is remarked that RFP/SBDs are rarely used by procurement

implementing entities. RFP/SBDs used are not tailored to the requirement

and conditions of the contract.

The effect of these problems is multifaceted and affects both the suppliers

of ICT and end users. It goes without saying that they significantly affect

quality of proposals, products, services, faire competition, economy and

sustainability of the ICT contracts.

5.6 Factors affecting submission of Quality Proposals

It is well known that quality of bids/proposals submitted by bidders has direct

relation with the conditions, terms and clarity of the bidding process under

consideration. Implementation capacity of both the client and bidder is one of the

factors affecting quality of bid/proposals. Time provided for bid/proposal/

preparation and submission is one aspect limiting quality of bids. Bidders also

have capacity and skill limitation in understanding requirement of the contract


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and preparation of bids. It holds true for most clients who lack requisite skill and

resources to prepare and evaluate quality bids/proposals. About 65% of

respondents believe that both the client and bidders lack requisite technical skill

to prepare bids/proposals.

5.7. Bid Evaluation Criteria and Methods

Provisions of Proclamation of 430/2005 and procurement Directive

state that bid evaluations are made against evaluation criteria specified

in the bidding document, TOR or RFP (Request for Proposals).

But it is remarked that about 80% of the respondents have no

confidence on the bid evaluation process of most procurement

implementing entities. Concern of respondents is reasonably shared

due to the following reasons;

Evaluation criteria are rarely specified and those specified lack

clarity. It is more serious for small and service contracts that are

subject to undesired evaluation criteria

Procurement operation of most implementing entities has not fully

adopted implementation requirements of proclamation No

430/2005 and Procurement Directive issued by MOFED. Hence

evaluation criteria of such directives have not been fairly

administered.

Most procurement implementing agencies lack requisite

institutional skill or capacity to prepare bid documents and

undertake bid evaluations as per the requirement of the Directive.

Bid Evaluation Criteria provided in the Directive lack objectivity

and do not give room for the development of local ICT suppliers.


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For instance, evaluation Criteria used for procurement of goods

provides point rating system. It stipulates and combines evaluation

weights of price (60 to 90%), Spare parts (0 to 20%) Operating and

maintenance cost (0 to 25%) after Sales Services (0 to 20%) and

Standard of the item (0 to 20%). This Evaluation Method or Criteria

has different deficiencies that include:

a). Technical evaluation is not made on Pass/Fail Criteria.

Hence, rejection on technical grounds is not anticipated.

b). the fact that weight given to financial evaluation is high,

quality is compromised against economic benefit.

c). Factors and conditions used to calculate Operating,

Maintenance costs, after sales services and standard of items are

not known. It is also very difficult to administer such criteria

and not feasible for all goods contracts.

d). in the absence of established evaluation factors, subjectivism

and favor shall prevail.

Public procurement gives paramount importance to the need of

prequalification criteria of bidders. Financial, technical, resource

and past performance records are some of the key prequalification

requirements indiscriminately applied on both local and foreign

ICT suppliers. Direct application of such prequalification

requirements is some of the impediments discouraging

development of local ICT suppliers. Local ICT suppliers are not in a

position to compete with a foreign supplier that excels them in

every aspect.


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Both the Proclamation and Procurement Directive stipulate that

implementing entities carryout bid evaluation process as earliest

and as prompt as possible (i.e. prior to the expiry date of bid

validity). Issuance of notice to the unsuccessful bidders as well as

release of Bid Security shall be made following signing of contract.

Nevertheless, the actual practices do not comply with the provisions of

the Directive. This practice is common for all types and size of

contracts. Lengthy evaluation process of implementing, entities is

demonstrated and related with the minimum time taken to release Bid

Securities (i.e. 6-12 month)

Such uncontrolled lengthy period has significant impact on the price,

project implementation and technological aspects of the item or

services. Technological aspect is one of the major causes for concern

when it comes to ICT products and services; that are subject to

frequent innovations and improvements over time.

5.8. Contract Signing and delivery of goods/services

It is views of respondents (74.065%) documents including formats used for

the procurement of ICT products and services are designed in favor of the

purchaser. Proclamation No. 430/2005 and Procurement Directive of

MOFED stipulate that conditions and terms of the contract shall be

modestly designed to incorporate duties, responsibilities, and obligations of

signatories and schedule of requirement under question. But these

conditions are mostly applicable for large contracts and seriously abused in

the course of application. Because contract formats prescribed by the


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proclamation has not been institutionalized at all levels. Hence contracts of

small procurements are subject to incorporate unwarranted provisions that

could favor the client.

5.9. Dispute settlement mechanism

Some of the respondents feel that public procurement practices has no

instrument to address complaints during bid process. Nevertheless, public

procurement proclamation and Procurement Directive provide procedures

and review requirements of complaints filed by bidders against an act or

omission by the procuring entity. Complaints submitted by bidders shall be

reviewed and resolved both at procuring entity and Procurement Agency

levels.

But these provisions are not known by most procurement implementing

entities and provisions contained in the agreement are not adequate enough

to settle disputes arisen in the course of contract performance. It is more

acute when it comes to disputes or complaints related to payment.

5.10. Delay of contract performance

Some respondents report that delay of contract completion and delivery

have something to do with the existing Bank, Custom process, Capacity and

Commitment of the client. Given implementation pace of other activities

and efficiency of current public service delivery, one cannot rule out

significant time taken to complete delivery of goods or services. Bank

process is relatively standard that requires timely presentation of relevant

documents related to processing Foreign Exchange Permit Application,


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opening and amendment of L/C if applicable. These activities involve

efficiency of both the purchaser and supplier. But process of customs

clearance is tedious and time taking. Most clients have no requisite technical

capacity to supervise contract performance and approve quality of ICT

products/services delivered. This problem is common for all types and

sizes of contracts. The impact of contract performance delay may include

price increase, delay of payment or cash flow problem of the supplier

(which may result in bankruptcy) and delay of expected service.

5.11. Performance Bond submission requirement

It is found out that submission of Performance Bond is one of the

preconditions (of the successful bidder) to sign the contract. As per the

Procurement Directive of 2005, (Art. 11.4 para 1) except contract procured

under Request for Quotation and Rent, all contracts are subject for 10%

Performance Security Submission requirement. This requirement has the

following problems;

The size of the contract requiring submission of performance bond is

set for contracts estimated at Birr 40,000 and above.

Required Form of Performance Security is either in Bank Guarantee,

CPO or Certified Cheque for all size of contracts. Conditional

performance Bond is not allowed.

Performance Security is also required for Consultancy Service

contracts, which is not practiced elsewhere

Performance Securities are not released as per the terms and

conditions of the contract. Consequently, probability is high for

bidders to deposit Performance Securities for different contracts to


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various clients. This in turn is an opportunity cost to the supplier and

impacts on periodic cash flow need of bidders.

5.12. Payment and Contract Administration

Contract Administration is one of the procurement activities requiring

relevant inputs, due attention and discharge of contractual obligations of

the purchaser and the supplier. It is the stage where contract performances

are checked, goods or services are delivered and payments are effected as

per the terms and conditions of the contract agreement. According to

survey result, contract administration aspect of public procurement has

short falls related to:

Delay of payments and contract performance

Absence of mechanism for disputer resolution;

Delivery of sub-standard quality of goods or services.

Weak performance follow-up and supervision on the part of the

client.

Public Procurement Proclamation No. 430/2005 and Procurement Directive

of MOFED attach payment of contracts against submission of deliverable

goods, works or services. Payment of goods contracts (under ICB) is

structured to include Advance payment (not exceeding 30% of the total

contract price) up on submission of equivalent amount of Bank Guarantee.

The remaining volume of payment shall be made as per the special

conditions of the contract.

Payment of Service Contracts also has Advance payment not exceeding 30%

of the contract price against Bank Guarantee and the remaining volume as


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per reporting requirements/deliverables/ of the service. But Bank

Guarantee for Advance payment is not the case for civil work contracts.

Nevertheless such terms and conditions are not observed for all contracts

uniformly. Most ICT contracts entered under National Competitive Bidding

method are drafted in a manner of avoiding or minimizing any sort of

financial risk on the part of the purchaser. Thus it is common practice by

most clients to effect payment after complete delivery of goods/ services.

Bidders having cash shortage may face difficulty in ensuring completion of

the contract in time. Procuring entities also have certain problems that affect

timely payment.

Most government offices have every thing to penalize suppliers for delayed

contract performance or may declare “take or leave it” even if payment is

considerably delayed. But suppliers have nothing to resort to when

payments are delayed or contracts are terminated by the client. Suppliers

have no alternative or recourse to apply provisions of agreements to ensure

timely release of payment. Dispute resolution mechanisms have not been

developed and practiced. Thus most suppliers have to forcefully enjoy the

likely negative consequences attached to payment delay.

5.13. Classification and Standardization of ICT Product or Service Delivery

It is remarked that ICT industry in this country is somewhat encouraging

and taking shape. As shown under profile of respondents, target population

considered for the assessment is classified under different business

categories. Each respondent has the chance of engaging in more than one


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business types that extends to 4 types of product or service lines. This

scenario will enable end-users to get different products/services under one

roof and get access to different product or service lines. It will also help

suppliers to provide comprehensive and integrated services or products.

But it also affects competitiveness position and benefits gained from

product or service specialization of the business community. Specialization

serves for market segmentation, promotes comparative advantage, creates

sound business environment and delivery of quality of product/or services.

It is responded that unfair competition and business environment are noted

as major factors affecting development of the sector. Unfair competitions are

underlined between legal, illegal, tax payers or non tax payers’ standard- non

standard products or services.

Currently ICT products and services are traded by firms registered under

different business categories: Importer, Commission Agent, Retailer,

Stationery Materials, Service, ICT Trainer, and ICT Consulting firm, ICT

Equipment, Maintenance and the like. Firms registered under such business

categories have chance of providing any type of ICT products or services.

Hence, it looks very difficult to identify who is who, what and how it offers

ICT products or services. The principle of “me too” business is flourishing

resulting to the level of ICT market imperfection. Given capacity limitation

of most clients, therefore, the time has come now whereby it becomes very

difficult to select the right supplier, price and quality of ICT product/service.

Regulatory framework is lacking to prove or verify standard of ICT products

or services.

Hence, respondents are calling up on the concerned to workout functional

instrument governing operation of ICT suppliers.


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CHAPTER VI.

CONCLUDING REMARKS AND RECOMMENDATIONS


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6. CONCLUDING REMARKS AND RECOMMENDATIONS

6.1. CONCLUDING REMARKS

The FDRE has understood that development of ICT will support sustainable

poverty reduction program of the country. Hence, it has formulated

strategies, policy statements, different programs and projects. ICT Assisted

Development Project is one of its kinds established to implement different

ICT capacity building endeavors of the government. ICT private sector

development is one of the areas given due attention of the government in

general and EICTDA in particular.

Improvement of public procurement procedure and guideline is one aspect

contribute towards private sector ICT development, in streamlining the

existing public procurement practice and participation of the sector.

Assessment of public procurement procedure and practice is part of such


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efforts expected to pin point ICT related bottlenecks and come up with

possible solutions.

The survey was initiated and executed under close supervision of

government, private ICT professionals and suppliers. It was conducted in

Addis Ababa and involved more than 80 firms engaged on delivery of ICT

products and services. As a preliminary survey, it has touched up on

strengths, weakness, threat and basic problems of public procurement

practice, including its impact on the delivery of ICT products and services. It

has also shown sector specific issues affecting ICT procurement as

demonstrated in the prevalence of unfair competition, absence of value

addition, specialization and market segmentation needed for ICT product

and service delivery.

Despite some improvements public procurement process and practices are

found to be major impediments continued affecting the development of the

sector. These impediments are marked mainly on mode of operations and

procedural requirements of different stages of a procurement cycle. Thus

public procurement implementation is still beyond level required

transparency, fairness, economy and efficiency.

These problems are associated partly with the provisions of the guidelines

(procedural requirements) and partly with the implementation capacity of

both the purchaser and ICT supplier.

Procedural requirements related to bid invitations, eligibility,

prequalification, bid or performance bond submission, evaluation criteria,

contract award and terms of payment are inherent problems of the guideline

affecting the over all procurement process. Limited institutional and technical


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implementation capacity of both end-user and ICT suppliers are additional

challenges undermining basic principles and objectives of procurement.

More importantly, the current public procurement guidelines have not

considered nature and conditions of contracts needed for ICT products and

services. Accordingly procurement of ICT products is treated under

procurement guideline and procedures of goods or services.

Commercial practices and business environments also have impact on the

development of the sector. Problems associated with registration, taxation,

lack of classification of vendors and frequent technological innovation of ICT

products/services are cause for concern.

Problems of public procurement are posing multifaceted impacts on both the

supplier and end-users. Unless carefully addressed stranded development of

the sector is the ultimate impact.

Hence, there is a need to devise possible functional solutions contribute to

curb such problems and the development of the sector.


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6.2. RECOMMENDATIONS

It is noticed that ICT procurement guideline and procedure currently in use

has different shortcomings.

Recommendations made to this end focus on four major areas and

elaborated as under:-

6.2.1. Improvement on existing procedures and guidelines:-

6.2.1.1. It is observed that the public procurement guideline and procedure

requires eligibility of local suppliers as a condition for bid. This

situation will limit the number of bidders and consequently affects

economy of procurement and benefit of the purchaser as well.

Thus, bidders should be given opportunity of getting the bid


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document and eligibility requirement be imposed as a condition

only for contract award.

6.2.1.2. Bid and Performance Security submission requirement is meant for

all types of contracts and size of procurement. Advocacy task is

needed on the part of EICTDA/ICTAD, private sector ICT

Professional Association and concerned authorities that such

requirements be revised under the following conditions:

The current minimum threshold amount set for bid or

performance security submission requirement (ETB 40,000) is

raised to higher threshold amount in the range of 300,000 –

400,000 Birr. If needed, conditional securities should be

permitted for contracts estimated below ETB 300,000 –

400,000. Conditional bonds are issued by insurance

companies up on nominal collateral or commission. Hence

suppliers are not required to raise cash for the document

issuance.

Given the volume of public procurement, the private sector is

dependent up on procurement needs of the government.

Possible contract default of bidders is less likely and will

result in declaration and debarment of the bidder from any

government sponsored bid. Hence negotiation should be

initiated for acceptance Bid Security Declaration instead of

unconditional Guarantee, CPO or Cash requirement for Bid

Security.

Bid or Performance Security requirement is additional

burden for ICT service providers. Consultancy service is


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knowledge based and the level of input made for preparation

of proposals and delivery of services is significant. Hence

consultants are usually not required to submit such securities

as a condition for bid or contract award. Under public

Procurement practice Bid or Performance Security

submission of consultants is mandatory. Thus this practice

should be dropped. If it is insisted Professional Liability

equivalent of contract price and in the form of conditional

bond could be adopted.

6.2.1.3. It is noted that most ICT contracts do not incorporate felt needs

of the client (TORs and Specifications) and will not serve successful

contract performance. It is the causes for concern especially for big and

complex ICT contracts that require satisfactory capability of suppliers.

To curve such problems, two possible but interdependent windows

could be looked into:

Public procurement guideline may set qualification criteria for

prequalification of bidders whereby capable bidders are short listed

and identified for future bid opportunity. This method could help

to eliminate incapable bidders and evaluate bidders of equal

capability. This practice is provided in public procurement

proclamation No. 430/2005, whereby bidders/consultants/ are

short listed for future possible assignments, based on key

qualification criteria relating to previous experience, financial

capacity and technical capability. It is unfortunate; however, this

provision is not used for ICT contract and surprisingly puts local

and foreign suppliers in one basket. Such prequalification


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requirements should specify encouraging provisions for local

suppliers.

Pre-bid conference is also another mechanism to bring together

both the client and the bidder and reach agreement on the scope of

the assignment.

6.2.1.4. The current evaluation criteria used (especially for goods) is another

problem need to be given timely remedial action. It is one of the areas

where subjectivism dominates objective criteria. Thus point rating

system should be avoided in favor of Pas/Fail criteria.

6.2. 2. Capacity building

6.2.2.1. It is observed that most of the shortcomings of public

procurement process and practice are attached to weak capacity of

procuring entities. Most members of the business community also have

capacity limitation. Hence, concerted effort is needed to enhance

implementation capacity of both the client and suppliers. This capacity

building task may be organized and implemented by ICT – Assisted

Development Project inconjuction with the government, ICT Professional

Association and the business community.

6.2.3. Vendor Classification and facilitation of favorable business Environment

6.2.3.1. Vendor classification has different advantages for ICT suppliers. It

also serves purpose of procurement objective and practice in a way to

enable the purchaser to identify the right quality and supplier. Thus


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Vendor classification of different category, capacity, product and service is

devised.

6.2.3.2. Unfavorable business environments such problem of Customs

(Tariff and lengthy process) taxation requirements, tax relief and incentive

packages of some ICT components (such as software) should be looked

into and administered.

6.2.4. Adoption of ICT specific Procurement guideline and Procedure

It is observed that ICT procurement has its own specific procurement

guideline and procedures. The current Public procurement guideline of

Ethiopia does not consider peculiarity of ICT procurement procedure and

process. Therefore, preparation and adoption of a separate ICT procurement

guideline will help to sustain ably avoid the problem of ICT procurement and

hence contribute to the development of the sector.

6.2.5. Consideration of E-Procurement - World Bank's Studies

According to the World Bank employing ICT is a critical element for

procurement reform. The results are immediate and impressive. With an

initial investment of $26 million to install an e-procurement system, Korea

saved $2.5 billion a year. ICT-based procurement reform in the Philippines

education sector saw the price of school textbooks drop in half and the cost

of classroom construction fall by 40 percent.

Studies show that simply increasing access to information about tender

opportunities via the Internet can increase the number of bidders, with

dramatic cost-saving results.

For more complex back-office reform, technology equipment costs are


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falling each year and major improvements can be made in relatively

affordable stages thanks to the growing use of license-free open source

software. Open source software is dramatically changing the nature and

potential for e-government systems to be used in developing countries.

Online Procurement Program promotes more open and efficient

government procurement worldwide, and is actually making this happen

through the leading dgMarket tender publishing service. It includes more

than $520 billion worth of government procurement notices annually, and

growing. It also helps developing countries implement national

procurement Websites to publish their tender information, using the

dgMarket platform.

6.2.6. Consideration of Sensitization Workshop

A one day sensitization workshop should be organized to all stakeholders

on how to apply cost effective, transparent and good governance ICT

procurement system and the need for reformation at Federal, and Regional

level.

http://dgfoundation.org/programs/online-procurement


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References 1. EICTDA – ICT Policy

2. Project Appraisal Document ICT – Assisted Development Project

3. Proclamation of 430/2003 for the establishment of PPA and Public

Procurement

4. Proclamation No. 57/1996, Federal Government, Financial Administration

Addis Abba, 19th 0f December, 1996.

5. Proclamation No. 17/1997, Council of Ministers, Regulation on the

Financial Administration of Federal Government, Addis Abba, July 1st,

1997

6. Procurement Directive of 2005

7. ICT – Business type and category in PPA, unpublished

8. World Bank Procurement Guideline

9. WB ICT Procurement Guideline, Procedure and SBD

10. Notes on ICT Procurement , World Bank

11. SBD, Ministry of MoFED, AA, Ethiopia

12. Internet ICT for Development

13. News Papers – Addis Zemen and Reporter Amharic

14. Others


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Annex 1: Summary of findings (Statistical Table) Table 1: distribution of Respondents per Sub- City

SUB-CITY No. Kirkose Kifla ketema 42Bole Kifla ketema 22Arada Kifla ketema 10Nifas Silk Lafto Kifla ketema 1Yeka Kifla Ketema 1Ledeta Kifla Ketema 1Gonder City 1Unknown 3 81

Table 2: Deatail of business lines of respondents


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1 - Type of business No. %

Hardware/software suppler 20 24.7Hardware/software suppler and Networking and networking equipment supplier 14 17.28Hardware/software suppler and It solution provider/system developer 1 1.23Hardware/software suppler and It trainer / school college 1 1.23Hardware/software suppler, Networking and networking equipment supplier and It solution provider/system developer 5 6.17Hardware/software suppler, Networking and networking equipment supplier and It consulting firm 1 1.23Hardware/software suppler, Networking and networking equipment supplier and It trainer / school college 2 2.47Hardware/software suppler, Networking and networking equipment supplier, It trainer / school college and It solution provider/system developer 1 1.23Hardware/software suppler, Networking and networking equipment supplier, It solution provider/system developer and It consulting firm 3 3.7Networking and networking equipment supplier 1 1.23Networking and networking equipment supplier and It consulting firm 1 1.23Networking and networking equipment supplier, It consulting firm and It trainer / school college 1 1.23It solution provider/system developer 1 1.23It solution provider/system developer and It consulting firm 1 1.23It solution provider/system developer and It trainer / school college 1 1.23It solution provider/system developer, It trainer / school college and It consulting firm 2 2.47It consulting firm 0 0It consulting firm and It trainer / school college 1 1.23It trainer / school college 5 6.17Hardware/software suppler, Networking and networking equipment supplier, It solution provider/system developer, It consulting firm and It trainer / school college 5 6.17Hard ware /soft ware supplier and GIS consulting ,training ,GIS and image software and hardware (Gps ,surveying equipment ,plotter digitizer). 1 1.23


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85

Website and networking design and installation 1 1.23Communication server ,equipmentsupplier and service provider. 1 1.23Hard ware /soft ware supplier, IT Solution Provider, IT Consulting Firm and especially on Management and Accounting softwares. 1 1.23IT Consulting Firm and Socio-Economic Consulting. 1 1.23Hard ware /soft ware supplier , networking and network equipment supplier, IT Trainer / School College and Maintenance of Hard ware. 1 1.23 Hard ware /software supplier and staionery. 1 1.23Hard ware / soft ware supplier and Computer & accessories , stationeries. 1 1.23Hard ware / soft ware supplier and Accessories. 1 1.23Hard ware / soft ware supplier Office equipment suppliers. 1 1.23Brand Computer supplier. 1 1.23 Computer Accessories 3 3.70

Total 81 100

Table 3: Service year of respondents

Respondents 2 - Numbers of year of service in ICT No. % < 1 year 7 8.641 - 5 year 29 35.86 - 10 year 27 33.33> 10 years 18 22.22

Total 81 100 Table 4: Frequency of bid participation

Respondents 3 - How many times have you participated since you engaged in the business ? No. % Less than 20 37 45.6790123 20 - 50 18 22.2222222 50 and above 26 32.0987654

Total 81 100 Table 5: Number of permanent and temporary employees

4 - How many permanent and temporary employees does your company employ?

Less than 20 20 - 49 50 - 99 100 and above

Total

Table 6: participation of respondents on government sponsored bids

Respondents 5 - Do you participate in government tenders for ICT products and services? No. % Yes 76 93.825NO 5 6.17

Total 81 100 Table 7: problems affecting bid participation of respondents

Respondents 6 - Why not ? No. % Just entered into the business 3 60Did not find appropriate business 0 0Losing confidence on the bid bond and bid process 1 20Discouraging with bid bond requirement 1 20performance bond 0 0

Total 5 100 Table 8: frequency of bid bond requirement

Respondents 7 - How often do you deposit bid bond with your offering ? No. % Always 48 59.25Sometimes 30 37.03Rarely 2 2.47

never 1 1.23Total 81 100

Table 9: Average bid bond retention period reported by respondents.

Re

8 - What will be the average retention period of your bid bond with the client? NoLess than 6 month 56 - 12 month 3More than 6 month

Total 8

Table 10: detail of media used for bid opportunity Responde

9 - How do you find out about government ICT tenders? No. From local News paper 46Invitation 23From Internet 5From local Radio 5Others 2Total 81

Table 11: Perception of respondents on TOR preparation

10 - How do you review the TOR preparation of majority of government ICT tenders? 10.1 - Service

Strongly disagree Disagree Neutral Agree Strongly agree No comment

No. % No. % No. % No. % No. % No. % concise t 6 7.407 6 7.407 5 6.1728 36 44.444 24 29.628 4 4.93

nd concise required set in the

4 4.938 5 6..1728 11 13.58 36 44.4444444 15 18.5185 10 12.345tion time

6 7.407 7 8.641 12 14.814 34 41.97 14 17.283 8 9.8r the

4 4.938 7 8.641 18 22.22 27 33.33 11 13.58 10 12.345

Comments of Respondents

The TOR holds at most frustrating rules instead of attractive terms. looking at the price only(instead of evaluating total solution ,total cost of

ownership and ROI

No capable professional are available to define the size and budget of the project ,evaluate the tender ,following and to handle over the project.

Unachievable technical requirement at the level of local companies. Over qualification requirements. Tenders evaluation takes very long time.

Table 12: Perception of respondents on the preparation of specifications

10.2 - Goods

Strongly disagree Disagree Neutral Agree Strongly agree No comment

No. % No. % No. % No. % No. % No. % lete of

3 3.703 7 8.641 10 12.34 36 44.44 21 25.92 4 4.9vague of

2 2.469 7 8.641 13 16.04 32 39.506 19 23.456 8 9.87

of ded in

1 1.234 6 7.407 14 17.283 28 34.567 20 24.691 12 14.8are ic and censed

2 2.469 7 8.641 15 18.518 27 20.9677419 23 28.395 7 8.6Comments of Respondents (without editing)

Regarding personal computers, there is a brand misconception and most clients are depending on a single brand personal computers.

Not looking at the TCO and ROI. They also lack clean and concise needs. Sometimes they purchase heavy divisty network printer for every PC. Not looking at the complete solution.

Table 13: Reasons attributed to poor quality of proposals

11 - What are the key reasons for failing to submit quality proposals?

Strongly disagree Disagree Neutral Agree strongly agree No

comment NO. % No. % No. % No. % No. % No. %

3 3. 703 10 12.34 16 19.753 28 34.56 17 20.9876 7 8.641

5 6.17 13 16.04 12 14.81 25 30.86 17 20.98 9 11.11

2 2..46 8 9.87 12 14.81 33 40.74 18 22.22 8 9.876

Limited capacity of suppliers in technical know-how Lack of skilled professional at clients side who is in charge of TOR preparation Most of companies said that they provide quality proposal Lack of clarity of the TOR Technical proposal do not have value for their clients, they always stick to the low priced

items. Client is mostly interested in the price schedule section of the proposal, making our efforts in

technical discussion useless.

Table 14: Opinion of respondents about bid evaluation process 12, How do you view the Evaluation process?

Strongly disagree Disagree Neutral agree Strongly

agree No comment NO. % No. % No. % No. % No. % No. %

takes to long 1 1.2345679 8 9.87654321 4 4.9382716 29 35.8024691 36 44.44444444 3 3.70acks

3 3.7037037 6 7.40740741 9 11.1111111 28 34.5679012 23 28.39506173 12 14.81acks anding 3 3.7037037 4 4.9382716 5 6.17283951 44 54.3209877 19 23.45679012 6 7.40s prone to tism /

4 4.9382716 2 2.4691358 17 20.9876543 25 30.8641975 18 22.22222222 15 18.52for local ticipate 3 3.7037037 6 7.40740741 17 20.9876543 24 29.6296296 17 20.98765432 14 17.28nical and on down 4 4.9382716 3 3.7037037 10 12.345679 32 39.5061728 23 28.39506173 9 11.11

Comments without editing The evaluation process do not participate the suppliers sometimes it is hard or not possible to get

the evaluation result. Lack of transparency and accountability also contribute the poor evaluation process.

Table 15: Respondents view on contract document and delivery of ICT contracts. 13, How do you view Contract documents and procurement delivery of ICT projects to the government?

Strongly disagree disagree Neutral Agree Strongly agree No comment

No. % No. % No. % No. % No. % No. % mostly

supplier 1 1.2345679 5 6.17283951 9 11.1111111 38 46.9135802 18 22.22 10 12.34ent body that s during

1 1.2345679 1 1.2345679 6 7.40740741 37 45.6790123 25 30.86 11 13.58ause Bank

2 2.4691358 16 19.7530864 21 25.9259259 25 30.8641975 9 11.11 8 9.87ause Custom

3 3.7037037 1 1.2345679 8 9.87654321 32 39.5061728 28 34.56 9 11.11ause not due to IT projects

2 2.4691358 6 7.40740741 19 23.4567901 26 32.0987654 16 19.75 12 14.81man resource d user skills ) 1 1.2345679 5 6.17283951 17 20.9876543 29 35.8024691 21 25.92 8 9.87

nt from the client 0 0 5 6.17 18 22.2222222 29 35.8024691 15 18.51851852 14 17.28Comments as stated by respondents.

Sometimes the tender documents are prepared in favor of a single company and the communication is already done at the back door and others are just participating to accompany the winner one.

Contracts should be balanced and previous problematic areas need to be addressed in new contract. Imposition and enforcing contracts of the chief.

Table 16: procurement processes and activities recommended for improvement. 14, Which areas of procurement process do you feel needs revision and improvement

Strongly disagree Disagree Neutral Agree Strongly agree NO comment

No. % No. % No. % No. % No. % No. % the current process 19 23.4567901 36 44.4444444 7 8.64197531 8 9.87654321 2 2.469135802 9 11.11111111

ument 1 1.2345679 4 4.9382716 14 17.2839506 35 43.2098765 19 23.45679012 8 9.87654321nce Bond

0 0 7 8.64197531 12 14.8148148 29 35.8024691 23 28.39506173 10 12.34567901es of Evaluation

2 2.4691358 4 4.9382716 12 14.8148148 27 33.3333333 25 30.86419753 11 13.58024691Guideline 2 2.4691358 8 9.87654321 9 11.1111111 26 32.0987654 24 29.62962963 12 14.81481481ocurement process 2 2.4691358 8 9.87654321 6 7.40740741 31 38.2716049 28 34.56790123 6 7.407407407

Comments as stated by respondents There should be an independent body or organization (limited with the evaluation committee. The selection Rules of evaluation need very strong improvement. Payment condition should need revision and improvement.

Table 17: Respondents’ opinion on the need of Vendor Classification.

Respondents

15, Do you think vendor classification of ICT companies is needed? No. % Yes, it is needed 47 58.03No, It is not needed 27 33.33Don't know 7 8.64

Total 81 100

Table 18: Experience of respondents on settlement of disputes and conflict resolution. 16, How do you resolve conflict with the customer over contract agreement and service payment? Respond No.No such case 7Mostly ignore it 3Through arbitration rules and procedures in the country 1Through negotiation 66Through court 1Left in pending 2Through high level authorities 1

Total 81Comments as stated by respondents

They apply their agreement which entirely designed to favor the purchaser. You only go with their terms and conditions. We couldn't get into conflict , we have to do what the government organization

wants otherwise they will report to the ministry of finance after that we can't participate in any government tender.

Since there are no rules most companies do not have enough alternatives , government agencies impose conditions on local company and yet expect excellent service.

They appeal to the clients , fair consideration and when impossible try to escalate to higher authorities

Table 18: respondents’ reflection on ICT development in Ethiopia

Respondents

17, Overall, How do you view the ICT development in the Country? No. % Encouraging 26 32.09Some what encouraging 40 49.38Not encouraging 11 13.58NO comment 4 4.93

Total 81 100

18, If your answered ' not Encouraging ' / ' some what Encouraging ' what is / are the discouraging factors?

Respondents

Factors No. % No incentive to be in the ICT business 25 23.14The Business environment 22 20.37Uncontrolled business Competition 31 28.70Continuous rise of cost of living 13 12.03Business regulatory system 17 15.74

Total 108 100

Annex II Ethiopian Information and Communication

Technology Development Authority (EICTDA)

Terms of Reference for the Assessment of the Government's ICT

Services Procurement Procedures and Processes

1. Background

The Government of Ethiopia, through the Information and Communication Technology Development Authority (EICTDA) has been continuously initiating and encouraging the direct participation and involvement of the private sector, in particular those engaged in ICT businesses, in its endeavor to promote and develop ICT in the country. One of its objectives is to streamline the current practice of the ICT services procurement methods which is found to be inadequate and demands improvements. Recent informal study indicates that the current ICT procurement [both for the consultancy services and delivery of computer goods] is not favorable for the local private sector engaged in ICT related trade and services. The informal study indicates that the current practices are greatly lacking the followings:

• The non availability of standard procurement procedures and guidelines

• The non standard evaluation criteria and method • The existing of ambiguously defined technical specifications • The existing of insufficient RFP [request for proposal] document • Unfavorable amount of bid and performance bonds • Non existence of arbitration in case of conflict • Unfavorable and non structured payment procedures

As a result, the local private sector has voiced their dissatisfaction and concern on the procurement procedures, and has requesting EICTDA to assess in detail the current limitations. The private sector would like the current ICT procurement guidelines and procedures closely reviewed with the aim of developing conclusive recommendations and suggestions that will help the private sector build capacity and deliver better services.

EICTDA has already shown the commitment and the goodwill to improve and streamline the current procurement process by taking the initial step of holding a national workshop that has allowed the private sector to voice their concerns. As a way forward, EICTDA has also appointed a seven team of experts nominated from the private sector, the local ICT professional association and the Government, to look into the above stated issues and develop a workable and amicable recommendation to EICTDA within the coming two months. It is on this background that the need for an external consultant arose and this TOR has been developed to detail out the key deliverables.

2. Objectives of Assignment

The main objective of the consultancy is to asses the current ICT procurement procedures, pin-pointing the current shortfalls with specific recommendations.

3. Tasks of the Consultant

The consultant will:

Evaluate the current ICT procurement practices with the already prepared 115 questionnaires

Provide professional comments on the practices When undertaking the above tasks, the consultant can get inputs and other relevant information from the following two committee members. These are:

Ato Tesma Geda Ato Mengistu Motbaynor Private and ICT business

4. Outputs

The following are the key deliverables by the Consultant: Part I:

Evaluate through a questionnaire, the current ICT procurement practices and their shortfalls.

Provide professional comments on the practices

Part II: Develop a workable solution for the above procurement shortfalls with

input form international best practices.

The assignment period is not exceeding one month.

5. Qualifications and Experience

5.1 Qualifications

Degree (Minimum Bachelor or Higher) in undertaking and

managing procurement and related and other university degree with relevant and proven experience in the desired field of assignment. A Master Degree can be substituted with demonstrated long-term field of experience in the area of procurement and related activities.

5.2 Work Experience

Demonstrable working experience in undertaking and managing procurement. In particular ICT and related activities is highly desirable

Having conducted or participated in similar successful consultancy and/or advisory projects in the field of engagement will be considered and will be an advantage

Experience with the production of guidelines and any other operational manuals in the context of ICT or related procurement and management programs or projects will be an advantage.

6. Payment

The consultant will be paid a lump sum of _________ (equivalent to one month) in one installment on completion and delivery of the guideline after the completion of the evaluation and acceptance of the committee members.

7. Reporting

The consultant shall report to the Committee Member Chairman immediately after the completion of the report. Any queries or in case of further information it has to be addressed to the two committee members listed above.

ANNEX III

ANNEX III: Questionnaire - ICT Procurement Study Private Company

1. DATE: (mm/dd / yy) 2. Region 3. City

/ / 4. Name and Address of Company (OPTIONAL)

Name of Company :

SUB City Kebele House No. P.O.Box

Telephone Number: Fax Number

5. Type of business

Hard ware /software supplier

networking and network equipment supplier

IT Solutions Provider/System Developer

IT Consulting Firm

IT Trainer/School College

Other (Specify) 6. Number Of years of Service in ICT

< 1 year 1-5 years 6-10 Years >10 years 7. How many times have you participated since you engaged in the business?

less than 20 20-50 50 and above

8. How many permanent and temporary employees does your company employ?

less than 20 20 to 49 50 to 99 100 and above 9. Do you participate in Government tenders for ICT products and service?

Yes (Go to Question 11) No


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Report on the Assessment of Government’s ICT Procurement Procedures and Processes: Kebede Ourgessa, August 2007.

99

10.Why not ? Just entered into business

Didn't find appropriate Business

Lack of Confidence

Losing Confidence on the Bid Bond and Bid process

Discouraged with Bid Bon requirement

Performance Bond

Other Means( Specify) Go to Question 21 11. How often do you deposit Bid bond with your offering?

Always Sometimes Rarely Never(Go to Question 13) 12. What will be the average retention period of your Bid Bond with the Client?

less than 6 month 6-12 month more than 12 months

13. How do you find out about Government ICT Tenders?

From Local News paper

From local Radio/Station

From internet

By Invitation(Short Listing)

Through personal contact

Other Means( Specify)

14. How do you view the TOR preparation of majority of Government ICT tenders? 14.1 Services

Strongly Disagree Disagree neutral agree strongly

agree No

Comment

Lack of clear and concise needs of the client Undefined clear and concise company profile and skills set required from the supplier set in the TOR Proposal preparation time set is very short lack of amount of budget for the project


________________________________________________________________________

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100

Other –Specify :

14.2 Goods

Strongly Disagree Disagree Neutral Agree strongly

agree No

Comment

Poor/ Incomplete preparation of specification

Conflicting and vague Specification of Goods

Obsolete Specification of goods included in TOR TOR which are Brand specific and include unlicenced Software Other –Specify :

15. What are the key reasons for failing to submit quality proposal?

Strongly Disagree Disagree Neutral Agree Strongly

agree No

Comment

Short time to prepare the proposal

Lack of skilled resources from the supplier

The client does not have the resources to understand detailed & elaborated proposal

Other –Specify :

16. How do you view the Evaluation process?


________________________________________________________________________

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101

Strongly Disagree Disagree Neutral Agree Strongly

agree No

Comment

Evaluation team takes too long

Evaluation team lacks organization

Evaluation team lacks technical understanding

Evaluation team is prone to corruption / nepotism / favoritism

Lack of incentives for local companies to participate

Lack of clear technical and financial evaluation percentage breakdown

Other – Specify :

17. How do you view Contract documents and procurement delivery of ICT projects to the gov.?

Strongly Disagree Disagree Neutral agree strongly agree No Comment

Contract document mostly unfavorable to the supplier Lacks an independent body that listens to complaints during procurement Projects are late because Bank processes Projects are late because Custom processes Project are late because not due importance is given to IT projects from the client Lack of skilled human resource from the client( End user skills)

Lack of commitment from the client

Other – Specify : 18. Which areas of the procurement process do you feel needs revision and improvement?

Strongly Disagree Disagree Neutral agree strongly agree No Comment

Satisfied with the current process TOR/ Bid Document Bid/Performance Bond requirement The selection rules of Evaluation team Procurement Guideline The overall Procurement process

No Comment

Other – Specify :


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19. Do you think vendor classification of ICT companies is needed?

Yes, It is needed No, it is not needed Don't Know 20.How do you resolve conflict with a customer over contract agreement and service payment ?

No Such case Through Negotiation Left it pending

Mostly Ignore it Through court Through high level authorities

Through arbitration rules and procedures in the country( Explain)

Other –Specify:

21. Overall, How do you view the ICT development in the Country?

Encouraging Some what Encouraging Not Encouraging No comment 22. If you answered 'not Encouraging'/ ’somewhat Encouraging’ what is/are the discouraging factors?

No incentive to be in the ICT business Uncontrolled Business Competition

Business regulatory system

The Business Environment Continuous rise of cost of living

Other –Specify:


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23. Please add any other comments /Suggestions that you feel we need to take into consideration to improve the ICT procurement procedure in Ethiopia


________________________________________________________________________

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105

ANNEX IV

LIST of RESPONDENTS


________________________________________________________________________

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106

ANNEX V

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