reconnaince survey report on ict procurement procedures...
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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
Ethiopian Information and Communication Technology Development Agency (EICTDA)
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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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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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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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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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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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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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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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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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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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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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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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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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(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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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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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.
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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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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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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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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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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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ANNEX IV
LIST of RESPONDENTS
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ANNEX V
Copies of IFB Advertisements (2)