Easier bidding ahead: New law in Egypt to streamline public expenditure
Safeya Mounir, , Friday 11 May 2018
A new law will soon be ratified to increase transparency and decrease corruption in government transactions

Parliament is expected to ratify the new government procurements, sales and contracts law which will regulate the tenders and auctions conducted by government bodies in place of the existing Law 89/1998.

The Planning and Budget Committee is currently discussing the bill, which aims at keeping up with international developments concerning government purchases, in addition to making sure that the state receives value for money in public spending.

The aims of the law are to put an end to unnecessary spending, regulate public expenses, fight corruption, decrease the pressure on the state budget, simplify procedures, and facilitate executive workflows. It will also help to strengthen transparency, equal opportunity and competition.

According to the committee, the new law will facilitate the business community’s access to information regarding government procurements through planning purchases a year ahead, publishing this information on the government procurement portal.

It facilitates contract management, especially before announcing a call for tenders and after the selection process.

The law prioritises high-quality local products and helps limit the informal economy. It also encourages the development of small- and micro-enterprises and provides employees executing tenders and auctions with training.

For the first time special entities and funds financed by the treasury or affiliated to state bodies are subject to the law, which should help to tighten up monitoring of these entities and regulate public expenditure, deputy chairman of the Planning and Budget Committee Yasser Omar said.

Omar believes that one merit of the new law is that the selection of the winners of tenders does not depend only on the lowest bids, as is the case in the current law, but will also take into account the bidder’s track record in business and financial strength.

New to the law is Article 3, which allows for two-phase tenders in cases where there is no comprehensive technical description for a project up for tendering. Article 3 of the law also takes into consideration projects for which there is no precedent in tendering, such as Nuclear Energy Authority projects.

This article allows for two tenders, one to define specifications and another to define the price, Omar explained.

Article 5 of the new law regulates contractual procedures for consulting services to enable government bodies to contract consulting services that are the most creative and technologically advanced.

The new law also encourages small businesses, Omar said. Article 7 allows small- and micro-enterprises to take part in local tenders for projects worth up to LE1 million to help them develop and grow.

According to Omar, the new law grants the cabinet the right to purchase medicines in case of emergencies, for example. Unlike the current law, the new legislation regulates direct contracting.

In order to foster transparency and the decentralisation of decision-making, Article 9 of the new law allows the cabinet to conclude low-budget contracts directly and to draw up contracts for products and services already determined by the state.

The article also regulates procedures related to Law 5/2015 that gives priority to local products in government contracts.

Article 10 allows an administrative body to call on different sectors to acquire ideas, specifications or indicative prices in order to stay up to date on technical and commercial developments.

It allows expressions of interest before tenders are submitted in order to expand the competition platform and invite the largest number of companies in the field.

The law also introduces new purchasing mechanisms, Omar said. Central procurement allows the Ministry of Health to issue tenders for medicines and equipment for affiliated hospitals, instead of each hospital running its own tenders.

This should help to reduce prices and promote transparency, Omar said.

Article 12 of the law gives the cabinet the right to allow government bodies to issue calls for limited, local or direct tenders on the cabinet’s terms.

It may also seal a direct contract with an Egyptian or foreign natural or legal entity if this presents a comprehensive, fully-financed investment project in line with the state’s economic and development goals.

The project needs to be approved after being presented to the minister concerned and after receiving the green light from the Ministry of Finance.

Article 14 of the new law obliges administrative bodies to prepare a yearly plan of the operations it needs during the following fiscal year.

The plan is to be published on the government procurement portal and is to be committed to when preparing the budget as well as announced to the business community.

According to Article 26 of the new law, insurance will drop to 1.5 per cent from two per cent for government projects, in order to encourage companies to take part in tenders.

An advantage of the new law, according to Daker Abdel-Illah, a member of the Egyptian Construction Federation, is that it grants the right to file complaints in case of disputes.

Currently, the body that issues the tender has leverage, Abdel-Illah explained, but the new law will create more balance, including the right to resort to special courts.

*A version of this article appears in print in the 11 May 2018 edition of Al-Ahram Weekly with headline: Easier bidding ahead