An Overview Of The Changes Introduced By The Public Procurement And Disposal Of Public Assets (Amendment) Act Of 2021
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The Public Procurement and Disposal of Public Assets (Amendment) Act 2021 has introduced changes in the procurement process some of which have a direct bearing on the bidder’s participation in the procurement process. The Act amends the Public Procurement and Disposal of Public Assets Act No.1 of 2003 which is the principal legislation on public procurement and disposal of public assets in Uganda. The key relevant changes are highlighted in the overview below.
Application of PPDA Act extended to Pre-Contract Financing by a provider
The application of the Act has been extended to all public procurement and disposal activities in respect to resources in the form of Pre-Contract financing by the Provider or any finances of a similar nature within the context of development co-operation agreements for the implementation of national programes.
Ministry of Finance and PPDA are currently developing Pre-Contract Financing Regulations which will elaborate and provide for legal framework under which an interested provider may pre-contract finance a project.
Removal of PPDA from the Administrative Review Process
Disputes arising in the procurement process are no longer to be referred to The Public Procurement and Disposal of Public Assets Authority (PPDA) (section 2(b) of the 2021 Act. Powers that were previously vested in PPDA under section 89,90 and 91 of the PPDA Act 2003 to carry out administrative review have been removed from PPDA and vested in the Accounting Officer.
Accordingly, the Complaints Review Committee of PPDA Board which was previously empowered to handle complaints from providers and any other interested parties arising out of the execution of the procurement or disposal function by the procuring and disposing entities have been disbanded (Section 9 of the Act). Powers to handle disputes arising in the procurement process have been vested in the Accounting Officer under section 33 of the Act.
Changes introduced in the process of administrative review
Powers of Administrative review have been vested in the accounting officer. A new and elaborate process of administrative review by the accounting officer has been introduced (under section 33) as follows;
First, a bidder who is aggrieved by a decision of a procuring and disposing entity may make a complaint to the Accounting Officer of the procuring and disposing entity.
Secondly, a bidder may also seek administrative review for any omission or breach by a procuring and disposing entity, of the provisions of the Act, regulations or guidelines made under the Act or any provision of the bidding documents.
The complaint against a procuring and disposing entity must be in writing and is required to be submitted to the Accounting Officer, of the procuring and disposing entity within ten working days after the date the bidder first becomes aware or ought to have become aware of the circumstances that give rise to the complaint.
The procuring and disposing entity against which a complaint is made is required on request to provide the bidder with a report indicating the reasons for the rejection of the bidder and the stage at which the bidder was rejected.
On receiving the complaint, the Accounting Officer must immediately suspend the procurement or disposal process, as the case may be. The Accounting Officer shall request the bidders to extend the period of the bid validity and bid security for the duration of the suspension.
The Accounting Officer is required to make and communicate a decision, within ten days of receipt of a complaint. The decision must be in writing, addressed to the bidder who makes the complaint. It must also indicate the reasons for the decision taken and the corrective measure to be taken, if any.
Where an Accounting Officer does not make a decision or communicate a decision within the period specified above or where a bidder is not satisfied with the decision made by the Accounting Officer, the bidder may make an application to the Tribunal.
Where a bidder believes that the Accounting Officer has a conflict of interest in respect of the complaint, omission or breach or that the matter cannot be handled impartially by the procuring and disposing entity, the bidder can make an application to the Tribunal for determination of the complaint, omission or breach. Where a bidder intends to make an application to the Tribunal on the above grounds, the bidder is required to give the Accounting Officer notice within five working days after the expiry of the periods above.
This means that a procurement or disposal process that is suspended as above shall remain suspended until the Tribunal makes a decision, where a bidder makes an application to the Tribunal; and an Accounting Officer shall not enter into a contract with a provider during the administrative review period; or before the expiry of time period required for giving notice; or where the matter is referred to the Tribunal, before the Tribunal makes a decision. Thus, a procurement or disposal process must remain suspended where a bidder appeals to the Tribunal against a decision of a procuring and disposing entity. The Tribunal is required to issue a decision within a period of not more than fifteen working days upon receipt of an application for review.
The amendment is also clear on persons who may apply to the Tribunal for Administrative review of a decision of a procuring and disposing entity and they include; a bidder who is aggrieved; a person whose rights are adversely affected by a decision made by the Accounting Officer; a bidder who believes that the Accounting Officer has a conflict of interest. The amendment is also clear on the matters which can be a subject of administrative review by the Tribunal as above and clearly outlines matters that shall not be a subject of administrative review as follows; a decision by a procuring and disposing entity to reject or cancel any or all bids prior to award of a contract; a decision of a procuring and disposing entity to discontinue a procurement or disposal process, after receiving submissions from bidders following an expression of interest or a pre-qualification; and decision by a procuring and disposing entity to limit the participation of bidders under a preference scheme or a reservation scheme.
A person who is aggrieved by the decision of the Tribunal may appeal to the High Court only on points of law within thirty days after being notified of the decision of the Tribunal or within such further time as the High Court may allow. A procurement or disposal process that is suspended during the period of review by the Tribunal shall be resumed and shall continue during an appeal to the High Court.
The High Court has powers to hear and determine the appeal and to make such decisions or orders as it deems appropriate by reason of its decision, including an order affirming or setting aside the decision of the Tribunal and may hold the Accounting Officer or any other person personally liable and award damages to the aggrieved bidder. A decision or order of the High Court is final and conclusive and shall not be subject to appeal to any other court.
Changes in respect to powers of the accounting officer
The accounting officer has been given an additional role in respect to the procurement process. The Accounting Officer of a procuring and disposing entity has the overall responsibility for the execution of the procurement and disposal process in the procuring and disposing entity, and in particular, has been added an additional role of certifying that the price of the works, services or supplies to be procured conform to the prices in the guidelines issued by the Authority, among other functions (section 15 (a)(fa)of the Act.
For purposes of disposal, the accounting officer has been made responsible for assessing and verifying the public assets identified by a user department or by the Board of Surveys, for disposal; causing the assets verified as above to be valued in accordance with regulations made under the Act; and approving the reserve price of the public assets to be disposed off (section 15(fb) of the 2021 Act). These powers were previously vested in the contracts committee.
According to the amendment, An Accounting Officer shall not sign a contract for a procurement where the price quoted by the best evaluated bidder is higher than the price in the guidelines issued by the Authority. Previously, an Accounting Officer was not to sign a contract, where the price quoted by the bidder who is evaluated by a Contracts Committee as the best evaluated bidder is higher than the market price established by the Accounting Officer.The accounting officers powers to undertake an assessment of the market price of the supplies, services or of the unit costs of the works in respect of which the procurement is to be made by a procuring and disposing entity prior to the commencement of a procurement process have been removed.(section 15(5) of the 2021 Act)
Changes in respect to powers of the contracts committee
The Contracts Committee shall be responsible for adjudication of recommendations from the Procurement and Disposal Unit and for the making of award decisions. Initially it was award of contract. A award decision must be made within ten working days upon receipt of a submission from the procuring and disposal unit (section 17 (2) of the 2021 Act).
Amendment enables use of both manual and electronic records and communication
A procuring and disposing entity is required to maintain records on its procurement and disposal proceedings for a period of seven years from the date of a decision to terminate the procurement or disposal action, or the date of the contract completion, whichever comes later. The new law enables records of a procuring and disposing entity to be maintained in a manual form or an electronic form (section 18 of the 2021 Act).
The records to be maintained by a procuring and disposing entity above include a summary report of the procurement procedure used in respect of each contract, which must indicate; a description of the objectives of the respective procurement; a list of the participating bidders; the bid prices; the bid evaluation criteria; a summary of the evaluation and comparison of bids, including the grounds for rejecting any of the bids; where applicable, a summary of the proceedings of the administrative reviews including the decisions taken; a statement of the grounds for cancellation of procurement proceedings among others.
The Act also provides that the standard forms and documents used to record all details of the procurement or disposal process by PPDA may be a manual form or an electronic form. Where the standard forms and documents are in an electronic form, the procuring and disposing entity is required to provide or enable access, reading and printing of the standard forms and documents, as may be necessary (section 19 (2) of the 2021 Act).
Similarly, the law previously required that all communication between a procuring and disposing entity, bidder, or provider must be in writing and communication in any other form had to be referred to and confirmed in writing. The 2021 Act allows electronic communications and particularly provides that communication between a procuring and disposing entity, bidder, or provider may be transmitted electronically (section 20 of the 2021 Act). The requirement that communication may be transmitted electronically includes a requirement to provide or enable access, reading and printing of the communication.
The Amendment also provides that any information or document that is to be issued by the Authority or a procuring and disposing entity and any information or document that may be submitted by a bidder, in a procurement or disposal process, may be communicated or submitted, as the case may be, using electronic means (section 45)
Additional guidance on aggregation of procurement requirements
In accordance with the budget preparation procedures issued by the Minister, a procuring and disposing entity is required in each financial year, by a date determined by the Secretary to the Treasury, to prepare and submit to the Secretary to the Treasury and to the Authority, its annual procurement plan for the following financial year. A procuring and disposing entity is required to plan its procurement and disposal in a rational manner and in particular must aggregate its requirements where possible, both within the procuring and disposal entity and between procuring and disposal entities, to obtain value for money and to reduce procurement costs. The amendment to the Act has further provided (under section 21) that for the purposes of aggregation of procurement requirements as required above, the Secretary to the Treasury shall for each financial year, using the procurement plans submitted by the procuring and disposing entities, determine the procuring and disposing entities with procurement requirements that qualify to be aggregated. The Secretary to the Treasury shall also communicate to the concerned procuring and disposing entities giving instructions on how the requirements that are aggregated are to be reflected in the procurement plan of the procuring and disposing entity. The procurement of aggregated requirements shall be in accordance with guidelines issued for that purpose.
Introduction of Sustainable procurement
The amendment has included a new requirement on sustainable procurement. A procuring and disposing entity is required for each procurement to take into account environmental protection, social inclusion and stimulating innovation (section 61A).
Removal of prohibition on negotiations between a procuring entity and bidder
Previously, the law provided limitations on negotiations between a procuring entity and the bidder. The law stated that Negotiations shall not be carried out between a procuring and disposing entity and a contractor, in respect of a proposal of the contractor, except where the competitive procurement method was used and only one bid was received in response to the call for bids; the direct procurement method was used; or the procurement is for consultancy services. The amendment has removed this restriction and provided (in section 25) that negotiations may be carried out between a procuring and disposing entity and the bidder with the best evaluated bid.
Changes in respect to cancellation of procurement and disposal processes and rejection of bids
The amendment has specifically prescribed the conditions under which a procurement and disposal process may be cancelled by a procuring and disposing entity. Previously, a procuring and disposing entity had broad albeit arbitrary powers to reject any or all the bids at any time prior to the award of a contract.The amendment has narrowed the circumstances and conditions under which this may happen by specifically providing that a procuring and disposing entity may, on the approval of the Contracts Committee, cancel a procurement process or a disposal process at any time, before a contract is awarded to the best evaluated bidder where; the money available for the procurement is not adequate; there is a significant change in the technical details or circumstances of the procurement requirement; or the circumstances that gave rise to the request for procurement change significantly. Therefore cancellation is only restricted to the above circumstances and it must be with approval of the contracts committee.
Introduction of Electronic reverse auction as a procurement method
The amendment has introduced one more method of procurement. Among the already existing methods which include open domestic bidding, open international bidding, restricted domestic bidding, restricted international bidding, quotation method, direct procurement and micro procurement, there has been introduced Electronic reverse auction method (section 28 of the Act). Electronic reverse auction is a procurement method where bidders competitively make offers for a procurement using electronic means, within a specified time period and the bidder with the lowest price is evaluated within the time period, as the best evaluated bidder.
Introduction of new methods of procurement for complex, specialized and strategic goods, works and services
Procurement of complex, specialized and strategic goods, works or services is subjected to two specified methods. The Act provides that a procuring and disposing entity shall in respect of the procurement of complex, specialized or strategic goods, works or services use the competitive dialogue method or the competitive negotiation method.
The competitive dialogue method or competitive negotiation method must be used where a procuring and disposing entity is not able, to define the technical specifications and methods appropriate for a procurement or the legal and financial implications of the procurement, at the beginning of a procurement.
The use of the competitive dialogue method or the competitive negotiation method must be approved by the Attorney General and the Minister, prior to the commencement of the procurement process.
“Complex, specialized and strategic goods, works or services” means goods, works or services that are innovative and high risk and to which the other methods of procurement cannot be applied (section 31 of the 2021 Act)
