Chapter I

Administrative Contracts in General

Introduction

This unit is intended to acquaint students with the nature generally of and the
formation and object of administrative contracts. Administrative contracts are
very much important in ETHIOPIA under current settings.
Some people say it is bad to have too much interference in the private sphere in
the era of privatization.
The government should regulate the market being another argument.
Leaving aside the literary arguments, legally Ethiopia has devoted one title in
its civil code to specifically deal with administrative contracts.
In addition to this, we have procurement proclamation to enable equitable,
efficient and effective procurement. In this section, we will have something to
say on Ethiopian administrative contract.

1.1 Brief Genesis of Administrative Contracts

Though hard to locate the exact time, one can still validly locate philosophical
and economic backgrounds of administrative contracts.
Back in the days of Adam Smith who preached the laissez faire argument with
the effect of diametrically insulating the state from the market, the role of the
state was exponentially limited to enabling the state to undertake only its
“traditional” functions.
As per Adam Smith, the state was advised to let the market alone.
The state should put its hands off the market but without forgetting to create
internal peace and order, facilitating the market by formulating a peaceful
environment and without directly intervening in the market.
 To this end, the state should establish institutions like the police, courts and
parliaments. Such an impact on the economy as caused by leaving the market
alone however would not outlive such a condition as the Great Depression.
The Great Depression proved the fact that markets cannot operate by their
forces alone-rather to some extent the state should regulate the market.
Next generation political economists devised the WELFARE state where we have
a state which regulates the market- that provides public services such as
education, health, transport, water, light, sanitation, recreation etc.
Thus, apart from its traditional functions, the state was also conferred with those
additional functions listed above. Basically the state used to institutionalize its
coercive force to carry out its protection function.
But with the growth in the type and nature of functions and because the
appropriate way of attaining goals as the case may be is entering into contract.
Either by its coercive force or its right to enter in to contract the state strives to
carry out its ever growing functions.
To this end of utilizing its contracting capacity, government enters into a special
type of contract called administrative contract. Note that it is from this
background, apart from other things, that administrative contracts derive their
peculiar feature.

1.2 Administrative Contracts and Other Forms of Contracts: General

Overview

Because of the need to carry out its functions, government, via its branches,
will embark upon different activities, which inevitably will invite the interplay
of its branches and the private sector.
These branches otherwise known as administrative agencies assist government
to properly take its tasks of service provision among other things.
 It is therefore while these agencies carry out their functions that they use the
law of administrative contracts to their ends.
The ends are public services, the means of administrative contracts.
If this is so, administrative contracts are contracts under the strict sense of the
law but only an “administrative” one (see for example Art. 1676(2) cum Art.1675
of Ethiopian civil code with Art. 3131 of the same).

But this nature of the contract i.e. being an administrative contract makes the same
different from the beginning to the end from other types of contracts that we know.

Our inquiry therefore will be what is there in administrative contracts? What

grain of difference does the qualification administrative add over non-
qualified contracts?
One basic addition by the qualification is associated with prerogative (privilege)
matters.
Because administrative agencies favorably enjoy the presumption of acting on
behalf of the public and because public interest is overriding enough to put
aside even basic principles of the law the agencies will enter into an arrangement
where the platform is squarely fitted to their play than to the other contracting
party.
When talking about administrative contracts, hence, one is talking about a
contract where the two parties are unequal.
Being a contract between unequal parties from the onset, at the end of the day,
it will end up entitling parties in unequal manner.
If this is so, how should we define administrative contracts? Well as noted earlier
the general contract title of the civil code is applicable to this case because of
Articles 1676, 3131 and Art. 1675.
Definition

Art.1675

“A contract is an agreement whereby two or more persons as between themselves

create, vary or extinguish obligations of a proprietary nature”.

Administrative contracts do share all of the above elements. The differences,

however, extend beyond the requirements of Art. 1675 far in to the requirements
of Art. 3132 which partly reads as: “A contract shall be deemed to be an
administrative contract where”
a. It is expressly qualified as such by the law or by the parties; or
b. It is connected with an activity of the public service and implies a
permanent participation of the party contracting with the administrative
authorities in the execution of such service.

Let us examine the elements of Art.3132: “Expressly qualified as such by the

law or the parties”
According to this expression, a contract (remember Art.1675) will be an
administrative contract if the law expressly qualifies it as an administrative
contract.
To this end, the law clearly enumerates what can be considered as
administrative contract. But what if the law expressly disqualifies a contract to
be an administrative contract? Both instances are the experiences of Ethiopia.
In the civil code, we have such articles as Article 3207 (public service) and 3244
(public work) which expressly qualify contracts as administrative contracts.
As to the second instance, we have the Mining Proclamation No.52/1993 which
disqualifies contracts concluded by the administrative authorities with other
parties under Art. 55(2).
 The second implication of Art. 3132 (1) is that parties may qualify expressly a
contract as an administrative contract. An issue worth raising at this juncture will
be ‘are all contracts administrative contracts merely because they are qualified
as such by the parties? ’
Among other things, a contract qualified as such by the parties on face value
cannot be considered as an administrative contract unless one of the parties is
an administrative authority.
For one other reason to be consequently discussed i.e. for content consideration
a contract merely qualified as an administrative contract by the parties will not
also be an administrative contract. What about a contract that involves an
administrative authority but not qualified as such by the parties? Stated
otherwise are all contracts that make one of the parties an administrative
authority administrative contracts?

René David says

As a French legal scholar and as I think it fit, in our classification of law,

public law should be distinguished from private law. Especially it is
important to separate civil law from administrative law…contracts made
by public officials have this [special trait] which enable us call them
administrative contracts and treat them separately from civil
law.[emphasis]

This, as it may, the civil code proceeds to say-“ … Connected with an activity of
the public service and implies a permanent participation of the party
contracting with the administrative authorities in the execution of such
service”
The previous element is more or less concerned with the form of the contract,
meaning the name the parties give to their contract when they first form it. The
form it takes confers the contract a special nature.
 Here we are concerned with the content of the contract that is its object which
determines the nature of the contract.
Based on the object and the manner of meeting their object together with the
type of the parties and their manner of participation in executing the object of
the contract, we have another mechanism of distinguishing administrative
contracts from ordinary contracts.
The object: this is one of the ways which is helpful to distinguish administrative
contracts from the rest of the contracts. Art. 3207 (1) identifies one of the objects
as an activity of a public service”. In turn we have to consider what a public
service is in our law.

Public service

Any activity which a public community has decided to perform for the reason
that it to be necessary in the general interest and considered that private
initiative was inadequate for carrying it out shall constitute a public service.
According to Art 3207(1) two reasons make “any activity” a “public service”
without which the activity cannot be considered so. What are these reasons?
One of these reasons is necessity. This necessity should be the need of the
general interest. So anything necessary and considered as such by a public
community to the general interest will fulfill the first requirement of Art.
3207(1).
The second reason is inadequacy on the part of the private sector. Thus a public
service is any activity but which private individuals on their initiative cannot
carry out among other things because of financial constraints.
Thus only a contract that has made its object ‘‘an activity of the public
service…” will have the chance to qualify as an administrative contract.
Next to this, the manner of participation on the part of the contractor
determines the nature of the contract. As such, a contract to be an
administrative contract should imply a permanent participation of the
 contractor… in the execution of such service. Let us in turn see what permanent
participation is.

Permanent participation

Does permanent under Art. 3132(b) implies bondage? How long should a
contract last?
Letting a contract to last forever jeopardizes the basic rights of an individual.
Contracts should not be servitudes. Our first consideration therefore should be
the individual. Thus we are saying that permanent participation of Art. 3132(b)
must not imply the indefinite and forever nature of the relationship. Further
“permanent” should imply continuous, uninterrupted, regular and normal
participation of the contractor in the relationship and the expansion of a public
service.
One other issue worth mentioning is the implication the “or” conjunctive has
under Art. 3132(a) & (b).
Does the conjunctive make the requirements optional or should we expect the
cumulative applications of sub-articles (a) & (b)?
To elucidate, if we are to make the requirements under Art. 3132 optional then
we are saying that mere qualification of a contract as an administrative
contract will make the same an administrative contract.
Sticking to the second extreme will however force us to consider all the
elements under Art. 3132 and their affirmative existence to say a contract and
administrative contract.
Which one position do you think is reasonable? Why?
No less important is the difference between “administrative agencies’’ and
“public enterprises”. We say this is important because the law prescribes in
addition the nature of one of the parties to an administrative contract. As
observed above, the law says one of the parties to an administrative contract
should be an administrative authority.
 But what is an administrative authority? Does it also mean public enterprise?
Consider Art 2(f) of Proclamation No. 649/2009- “Procuring entity means public
body, which is partly or wholly financed by Federal Government budget, higher
education institutions and public institutions of like nature”.
From this it is possible to infer that at least two things make an entity an
administrative body. The first is the source of income of the entity. If the entity
partly or wholly derives its income from the government, there is a possibility to
consider it a public body which can enter into administrative contracts. On the
other hand the purpose of the organ makes it an administrative body.

Comparison: Genre and View Comparison

Here our basic concern will be comparing and contrasting administrative

contracts and other types of contracts on one hand, and the common law and
civil law on the other hand.
Administrative contracts are similar to other types of contracts because of their
formation, validity requirements and the form.
On the other hand, administrative contracts are different from other contracts
because of their formation, content and execution.
Let us briefly explain the points- But first what do you think are the views of the
two legal systems towards administrative contracts?
The common law views administrative contracts just like other ordinary
contracts whose consequences will show up to be the treatment of parties as
equal members to the venture. No party will enjoy priority. Both are equal
parties to and in the case.
As a consequent incidence, the common law requires no new or special law
governing administrative contracts. There is only one contract law regime that
governs all the instances.
These outlooks will naturally lead to the adjudication of cases that involve
administrative contracts by the ordinary courts of law.
 Perspective change is observable under the civil law system where parties to
administrative contracts are unequal, whose case will be governed by a special
regime and adjudicated by special tribunals (i.e. administrative tribunals).
This is specially the case in France.
1.3 Formation of Administrative Contracts.
Normally, the requirements under Art. 1678 are those, which determine the
viability of any contract. Under this very normal condition, exceptional
situations are envisaged with regard to formality requirements. In addition to
consent and object requirements, the law also shows the possibility of agreeing in
favor of a given form or a form by the normal operations of the law [art.1678 (a)
and Art. 1719 by virtue of Art. 1676]. Thus, the law either prescribes adherence
to a certain form (Arts. 1724 & 1725), or parties may agree to make their
contracts in a written form.
Art.1724 makes mandatory that contracts with administrative authorities be
made following a written form. Any contract to which a government agency is a
party, including any type of employment contract, should be made in writing.
As was noted before, Art. 1676 warrants the use of Title XII on contracts in
General by explicitly stating “… regardless of the nature thereof and the parties
there to.” Because of this, Art. 1678 and consequent provisions that govern the
formation of a valid contract will also be valuable in our consideration. In
addition, Articles 3140-3145 and 3134-3136 will be considered.
1.3.1 Validity Requirements

Consent

These justifications can be gathered from Art. 1679 and Art. 1680, while the
former talks about the constitutive nature of consent, the latter talks about the
evidentiary role of the same. Read Art. 3134 and identify the role played by
consent. What is the role?
 Under Art. 3134, it is the contract concluded by the administrative agencies that
proves the existence of consent. Meaning mere conclusion of a contract by an
administrative body implies the existence of consent on the part of the
administrative body. It partly reads:

“…, the conclusion of a contract by the administrative authorities implies an express

manifestation of will on their part”

Hence, we derive consent from the specific form that the contract follows.
Because Art.1724 prescribes the making of an administrative contract in a written
form, this is indicative of the existence of consent on the part of the
administrative agencies.
As a formal and not simple agreement the law does not require the mere
existence of consent but its manifestation in some particular form.
The law requires therefore proving consent as expressed by the parties. What
can be counted as special under administrative contracts however may be the
insufficiency of implied consent.
On the part of administrative contacts always one has to prove the existence of
express consent. To be specific, Art.3134 (2) says “Where an authority competent
to approve a contract keeps silent, such silence shall not, in the absence of a
formal provision, be deemed to amount to approval.”

Capacity

Administrative contracts are made by artificial persons be it the administrative

agency or the contractor which is usually a business organization.
Capacity, under such circumstances, means a different thing. It cannot be about a
mental state nor can it be about chronology. Rather, capacity is all about
establishment, registration or license.
Generally, capacity is either legal or technical. Let us begin with the contractor.
 Basically any juridical or physical person that wants to conclude a contract with
administrative agencies should have: (Art.28 of Proclamation No. 649/2009)
A. Technical and professional capacity
B. Legal capacity
C. Financial capacity
D. Fiscal capacity

What about administrative authorities? What capacity should they have?

a. The administrative agency should have legal personality which means it

should be established through a proclamation or regulation.
b. Next to this validity question and after its positive determination the agency
should possess the capacity to enter into contracts.
c. Such capacity may emanate from law or practice (i.e. specific activities or
functions). Sometimes capacity may also emanate from authorization.
d. An administrative agency is still duty bound to assert its financial capacity.
To this end “procuring entities shall be responsible for certifying the
availability of funds to support the procurement activity before signing a
contract “(Art.7(1) (e) of Proclamation No. 430/2005) but now repealed.

Here it is worth raising two questions. The first is, “Does lack of credit have a
consequence of invalidating administrative contract?” the second is Can such
an act be counted as ultra vies?
To address these questions, it is good to consider articles 3142 & 401 of the civil
code and Art.7 (1) (e) of the proclamation. In a crystal clear phraseology, Art.
3142 validates an administrative contract formulated regardless of credit
requirement. To be specific, a contract concluded by an administrative
authority shall be valid not withstanding that such authority has not received
the necessary credits for the performance of the contract.
 On the other hand, Art. 401(1) tries to expose what an ultra vires constitutes.
Thus, Acts performed by the bodies referred to in this chapter are in excess of the
powers given to them by law or without the absence of the conditions or
formalities required by law shall be of no effect.
Art 401 serves at least two purposes. Firstly it tries to tell us what ultra vires
activities are. Next to this, it sanctions the activities by declaring them as
nearly void.
At other times, consent might not be this. Rather consent might be approval (Art.
3144) whereby no consent is expected to be expressed until and unless “…such
approval is given.
This is usually the case “where the conclusion of the contract is subjected to the
necessity of a further approval…”

Object

The object of a valid contract should be lawful and possible next to being defined
(determined). Art 1711 leaves the parties to freely determine the object of their
contracts the extent of the freedom however being “the restrictions and
prohibitions as are provided by law.”
You can therefore infer from this that both parties involved in a contract have a
say on the object of the contract. Art.1711 thus underscores the fact that object
determination is not one-way traffic. Peculiar however to administrative
contracts, administrative agencies are entitled to formulate in advance model
specification, general clauses and common directives (Art 3135).
Predominantly administrative contracts have objects determined by
administrative agencies.
However, it is good to note the fact that the legal limit under Art. 1716 is
applicable to objects determined by administrative contracts. Can you justify
this assertion?
 Next to insuring the participation of parties in determining the object of their
contracts, the law also wants to maintain the integrity of the object on the face of
the law. Though determined by anyone, still the object should be clearly stated
in an understandable manner (Art.1714).
An administrative contract should also have a possible and lawful object.

Form

The requirements of the law here are two. The contract should be made in
writing and it should be registered.
We can explain of the two fold purposes of the law.
- Designed as a pre-appointed evidence of the fact of consent and of its
forms to the intent that this method of defining rights and liabilities may
be provided with the safeguards of permanence, Certainty and publicity.
Because a contract is law (Art.1731) and because some of the features of a
good law with an “internal morality” per Lon Fuller are permanence,
determinacy and publicity writing down a contract caters ”the law” these
qualities. The quality of publicity conferred on contracts by following
Art. 1724 does also serve the ends of Art 12 of the FDRE constitution by
manifesting the transparency theory.
Any necessary formality has the effect of drawing a sharp line between the
preliminary negotiations and the actual agreement and so prevents the parties
from drifting by inadvertence into unconsidered consent. What is there in the
document expresses the consent. One cannot later modify the consent as written
by the one expressed orally.
On top of the prescription under Art 1724, some administrative contracts
should be formed following procedures of tender. This will be discussed in
depth in our consequent discussion of “modalities of formation.”
1.3.2 Modalities of Formation
Some administrative contracts need additional modalities of formation.
Accordingly, we have instances when administrative contracts are concluded
following a procedure of tender.
As art 3147(1) makes it clear by utilizing “may be…” it is optional that such a
procedure is followed. To show the possibility however the law reads
“Administrative contracts (may be) concluded by the procedure of allocation
by tender”
Once however we are channeled to make an administrative contract by the
procedure of allocation by tender, we will act to the contrary i.e. fail short of
allocating by tender, “… under pain of nullity.”
The natural questions will be “Why are we channeled as such and when are
we channeled?”
To begin with the second, we are forced to conclude an administrative contract
by allocation “… whenever the law imposes such obligation”.
Let us consider the full text of Art 3147(2). “(Administrative contracts) shall be
concluded by (the procedure of allocation by tender)…, whenever the law
imposes such obligation.”
Hence once the law dictates us to conclude an administrative contract by the
procedure of allocation by tender we have to do it in that way the consequence of
not following the diction being nullity.
Among other things the law prescribes to meet the objectives of transparency
and taking into account, the sensitivity of the obligation. Thus tender minimizes
potential dealings between administrative officials and the other contracting
party. And secondly because after all the contract is to be concluded to provide
the best for the public, the procedure of tender aims at selecting the best
contracting party in terms of reasonable price and modest quality.
By taking these rationales into account the law prescribes adherence to the
procedure with the procedure under Art.3148-3169. To this end, administrative
 contracts that should be made by the procedure of allocation are governed by
Articles 3148-3169.
If the contract is to be concluded after allocation, Art.3148 tells us that “the
allocation shall be notified to the public in the manner prescribed by
administrative regulations or in default… in the manner which appears the most
appropriate”.
The law, in this case, is concerned not only with the publicity issue but even
with the mechanism of attaining this publicity.
The minimum threshold of the content of the notice of allocation is available
under Art. 3149 fashioned in a mandatory spirit but effectuates in an optional
manner i.e. what happens if the notice fails to include one of the lists under
Art.3149?

One other issue worth noting is the status of this publication under Art. 3148. Should
we consider it as an offer or as a declaration of intention? Note that an offer has a
quite different legal consequence from a declaration of intention. See for example
Art.1690 and 1687 on this issue.

After administrative agencies declare their intention by notifying the public about the
allocation, “The contractors or suppliers who intend to present themselves as
tenderers shall deposit in the place indicated and within the time specified by the
specifications (a declaration of their intention) to tender and their tender.” (Art.3153).

“The declaration of intention (offer) to tender shall indicate the name, first name,
qualifications and address of the candidate.” (Art.3154 (1)]

“The [tender] shall contain an offer of the price and the undertakings of the
candidate” [Art. 3155(1)]

The above provisions show us the need to comply with formality requirements on the
event of declaring our intention. Because they are about declaration of intention, we
should not think of the formation of an administrative contract at this level. What else
should we consider?

As to Art.3159, for example, “The office of allocations shall firstly take cognizance of the
declarations of intention to tender.” To verify whether these have been regularly
deposited and whether the tenderer fulfill the conditions required for admission to the
allocation. “This verification is not to determine the successful tenderer. Rather it is
to determine admission to the allocation”.

A provisional successful tenderer is the one who makes the “most advantageous tender
for the administrative authorities (Art 3164 (1). Among other things the most
advantageous tender is determined by the offered price. To this end Article 3164(2)
reads “for this purpose, the office shall take into account the price offered and all the
modalities of the tender in conformity with the specifications”.

Even the designation of a provisional successful tenderer does not imply the
conclusion of an administrative contract.

For that matter the office (of allocation) need not designate any provisional
successful tenderer where regulations of the allocation prescribe that the
administrative authorities do not intend to negotiate beyond a certain price. (Art
3165(1)).

On the advent of approval, the contract shall be concluded. Art. 3168 says the
successful tenderer will no more be qualified as a provisional but a permanent
successful tenderer.

This being one aspect of forming administrative contracts as governed by the civil code,
we have other modalities of forming administrative contracts under proclamation No
649/2009. We will briefly consider the procedures under this proclamation.
1.3.3 Process of forming administrative contracts under proclamation
No. 649/2009

Under private contracts, parties have at every liberty to choose their would be
contracting party. This is not the case under administrative contracts.
The manner of selecting the prospective contracting party will have in view such
considerations as ensuring the economic and efficient use of public fund and
making public procurement in a manner, which is fair, transparent and non-
discriminatory (Preamble of Proclamation No. 649/2009).
Administrative contracts, therefore, have this view in advance thereby limiting
contracting parties from freely picking up their prospective counter parts.
Under article 2(5) of the proclamation No. 649/2009 “procurement” is defined as
mean obtaining goods, works, consultancy or other services through
purchasing, hiring or obtaining by any other contractual means”. Hence,
procurement is not concerned only in purchasing of goods, works or services. It
is given a wider meaning than possibly known in ordinarily parlance an
equivalent of purchasing.
According to the proclamation, the rule of procurement is “open bidding”.
Article 33(2). of the proclamation stipulates; “except as otherwise provided in
this proclamation, the procuring entity shall [use] open bidding as the preferred
procedure of procurement”.
The instances whereby open bidding may be disregarded are laid down under
Article 3(2). And it should be taken into account that due to their sensitive and
secretive nature the purchase of goods, services or works relating to “national
security or defense” can be made in a different procedure than laid down by the
proclamation.
There are certain types of government contracts to which the contracting
methods and the procedure indicated in the Proclamation and the Civil Code do
not apply. These are:-
 1. Contracts relating to national security and defense
Article 3(2)(a) of Proclamation No. 649/2009 provides that the MoFED may in
the interest of national security and defense permit the use of a different
contracting procedure than those recognized by the Proclamation.
2. Contracts financed by external source
This refers to contracts financed by loan or grant obtained from other states
and international organizations.
Article 6 of the Proclamation provides that if the provisions of the
proclamation conflict with an obligation of the government of Ethiopia
arising out of an agreement, the provisions of the agreement shall prevail.
3. Contracts between government bodies for the supply of goods, execution of
work, provision of consultancy or services for consideration.
This is the last category of contracts that are excluded from the scope of
application of the rules that apply to administrative contracts is contract
concluded by an administrative body with another administrative body for
the supply of goods or services or for the performance of work.1

Tendering is made the preferred method of contracting by administrative authorities

because it has its own advantages. These are:-
1. The essence of tendering is competition.
2. It will help to ensure transparency and accountability in the contracting
process and avoid collusion, partiality and other harmful practices in the
contracting process.
3. It gives equal chance of participation in public works financed by the tax
payers’ money.

The proclamation under its Article 33 recognizes six modalities of procurement. The
first one is open bidding. The other five modalities of procurement are to be used
exceptionally only when certain conditions are fulfilled. These are:-
1
Supra note 35, Article 3(2)(b)
 1. Open bidding (Articles 35 and 48)
2. Restricted tendering (Articles 49 and 50)
3. Direct Procurement (Articles 51 and 52)
4. Request for Proposal procedure (Articles 53 and 54)
5. Request for Price Quotation procedure (Articles 55 and 56)
6. Two-stage bidding (Articles 57 and 58)
Administrative authorities have to use open bidding procedure. However, they
can also use on fulfillment of certain specified conditions mentioned respectively
in Articles 49, 51, 53, 55, and 57 of the Proclamation, one or the other forms of
contracting methods indicated above.

General terms of business are general terms and conditions to be prepared by

individual administrative bodies as per Article 3135 of the Civil Code and which specify
the condition of performance of the contracts that individual administrative authorities
conclude. They are of three types: -
a. Model specifications2
b. General clauses and conditions3
c. Common directives4
These general terms are to be prepared in advance by individual
administrative authorities to be part of the contract to which they apply and
they have to be incorporated in all the contracts to which they apply and
contractors intending to participate in the contract have to accept them or not
contract at all.
The effects of the general terms of business differ according to whether they
relate to the conclusion of the contract or to the interpretation, content and
execution of the contract.5

2
Supra note 3, Article 3136(1)
3
Supra note 3, Article 3136(2)
4
Supra note 3, Article 3136(3)
5
Supra note 3, Articles 3137 – 3139
 Administrative authorities can make modifications to the general business
terms that they have drawn up. Such modification will not affect the rights and
obligations of the parties to an administrative contract where the modification
is made subsequently to the conclusion of the contract.6
The specification7 may pertain to:
o Technical specification of the good, work or service to be procured
(technical specification), and
o The competence required from contractors interested in the contract
(Specification as to competence)
o Clearly describe the administrative body’s requirements with respect to
quality, performance, safety and, where necessary, dimensions,
symbols, terminology, packing, marking, and labelling or the process
and method of production and requirements relating to conformity
assessment procedures.
o Include the qualifications which are required for admission to tender
and the eliminating tests to which the tender submitted by bidders will
be subjected.8
So far we have studied the documents that administrative authorities should
prepare before they proceed to enter into contract by choosing one or the other of
the contracting methods that we mentioned above.
Now let us turn to study the conditions and procedures of the various
contracting methods recognized by the law.

6
Supra note 3, Article 3139
7
Supra note 35, Article 29(1-4)
8
Supra note 3, Article 3152
 1. Open Bidding

In principle, all procurements shall be undertaken in open bidding. The

proclamation under Article 35(1) dictates that “invitation to bid shall be
advertised in at least one national newspaper of general circulation”. The
bidding shall be considered as open if it is advertised in such a way as to allow as
many bidders as possible to competitively participate. (See Articles 35 – 48)
So, administrative authorities have to always use open bidding in entering to
contract, unless the contract is one that has to be concluded using one or the
other of methods of contracting provided from Article 49 – 58 of Proclamation
No. 649/2009.
Procedures which administrative authorities should follow when they use open
bidding method:
A. Preparation of bidding documents

Bidding document is a document prepared by a contracting administrative

body and contains a specification of the desired object of procurement.9 Article
37 of the same proclamation provides that, in order to make the competition
among bidders on the basis of complete, neutral and objective terms the
bidding document shall contain sufficient information, and in particular it
must include:
i. Instruction for the preparation and submission of bids;
ii. Information about the final date for submission of bids by bidders, the
address to which the bid must be sent, the date, hour and place of opening
of the bid, as well as an announcement that bidders or their
representatives are allowed to attend the bid opening ceremony;
iii. Bid submission forms and, where applicable, forms of bid security to be
provided;

9
Supra note 35, Article 2(12)
 iv. The number of copies to be submitted with the original bid;
v. The general and specific conditions of contract;
vi. Specifications of requirements, including time limit for delivery or
completion of the task, as appropriate;
vii. Evidence to be provided by bidders to demonstrate its qualification as
well as its fiscal and legal standing;
viii. The period during which the bid remains in force;
ix. The criteria and the points to each criterion for evaluation of bids and
award of the contract;
x. A reservation to the effect that the contracting administrative authority
may reject all bids at any time prior to the notification of the award; and
xi. The price adjustments that may be made during contract implementation
and the condition under which such price adjustments can be made.
B. Advertising invitation to bid

The invitation to bid has to be advertised at least one time in a national news
paper of general circulation which is published in the language the bidding
document is prepared or, where appropriate on a national radio or television.10

The invitation to bid must as a minimum contain the following particulars11:

i. The name and address of the administrative body making the invitation to bid;
ii. A brief description of the goods, works or services to be procured;
iii. The means and conditions for obtaining the bidding documents and the place
from which they may be obtained;
iv. The place and deadline for the submission of bids; and
v. The place and time for opening of bids, along with an announcement that
bidders or their representatives are allowed to attend at the opening of bids.

10
Supra note 35, Article 35 (1&2)
11
Supra note 35, Article 36
 Once the invitation to bid is advertised the bidding documents must be
available to interested contractors free of charge or at a price not exceeding the
cost of reproduction and delivery of such documents to interested bidders.
Once the invitation to bid is advertised the contracting administrative
authority cannot freely modify the bidding documents. However, since
contracts that administrative authorities contracts have to be in the interest of the
public, the necessary modification can be made to the bidding document when
that is necessary to protect the interest of the public.
So, at any time prior to the deadlines for submission of bids, the public body
may, on its own initiative or in response to an inquiry by a candidate having
purchased the bidding documents, modify bidding documents by issuing an
addendum, which becomes an integral part of the bidding documents.
The modification shall immediately be communicated to all interested bidders
having purchased the bidding documents and when appropriate a reasonable
extension of the deadline for submission of bid shall be made.12
Nevertheless, the administrative authorities are not allowed to make
modifications to the specifications.13 Where the modification is necessary, it
may be made but a new invitation to bid has to be made.
C. Receipt of bids

The next step, after advertisement, is receipt by the contracting administrative

authority of bids submitted by bidders. Bidders have to submit their bid in
writing, signed and in sealed envelope, to the place and before the deadline
stated in the invitation to bid.14
Normally bids have to put their bid document in the bid but where it becomes
impossible to put the bid document in the bid box due to its large size, the

12
Supra note 35, Article 39
13
Supra note 3, Article 3151
14
Supra note 35, Article 41(1)
 administrative authority shall give receipt to the bidder indicating the time
and date on which the bid document was submitted.15

The bid that interested contractors submit should consist of the following items:
a. Declaration of intention to tender16
This is a kind of cover letter to the bid that individual bidders submit and represents
a formal declaration of intention to take part in the tender. It shall indicate the full
name, qualification and address of the bidder, and references shall be annexed
thereto.

b. Bid document17
The bid or tender document is the document in which the bidder specifies his offer
of the price and the terms and conditions which he is willing to be bound by.

c. Bid bond/security18
Bidders have to submit together with their bid a bid bond or security. As the
purpose of the bid bond is to discourage irresponsible bidders, the amount
of the bid security should be such as to discourage irresponsible bidders.
Bid security is not required for all types of contracts. Sub-article 3 of Article
40 provides that contracts in respect of which bid security is required and the
amount of the bid security thereof shall be determined by a directive to be
issued by the MoFED.
The bid security can be in the form of cash deposit or bid guarantee. The
bid security that is to be made in the form of bid guarantee can, depending on
the preference of the bidder, be in the form of casher’s certified check (CPO)
from a recognized bank, letter of credit (LC) or bank guarantee.

15
Supra note 35, Article 41(2)
16
Supra note 3, Articles 3153 and 3154
17
Supra note 3, Article 3155 and 3156
18
Supra note 35, Article 40
The bid security will be forfeited if a bidder withdraws his bid within the validity
period of the bid or in case of a successful bidder, if he repudiates the contract or
fails to furnish performance or contract security.19
At last, the candidate that submitted a bid cannot withdraw or modify until the
result of the bid is known.20
As indicated in Article 3167(3) of the Civil Code, it is the designation of the
successful bidder that will release other bidders from the obligation they entered
into by submitting bid.
However, a bidder may expressly limit in his bid the period for which he binds
himself by the tender he submitted. In such cases the bidder will be bound by the
offer he made in the bid only for such period as he fixed in the bid.
D. Opening of bids

After the deadline for the submission of bids, the next step in the open bidding
process is the opening, evaluation and examination of bids. All the bids
received before the deadline for submission of bids shall be opened by the
staff(s) of the Public Procurement and Property Administration Unit who is/are
in charge of carrying out procurement activities of the administrative body.
The opening of the bid shall be done immediately after the deadline for
submission of bids and in the time and place indicated in the bidding
document or in the invitation to bid.21
As provided under Article 3158 of the Civil Code the opening of the bid shall be
held in public. The process of opening the bid involves unsealing of the
envelops that contain the bids, reading aloud the name of the bidder and the
total amount of each bid, discounts offered and any such information that is
necessary to let the bidders know their relative rank and record the facts.22
Where, however, technical and financial proposals are submitted in two

19
Supra note 35, Article 40(3)
20
Supra note 3, Article 3156(1)
21
Supra note 35, Article 42
22
Supra note 35, Article 42(2)
 separate envelops, the envelope containing the price offered by the bidder
shall be read after the evaluation of the technical proposal.
E. Examination and evaluation of bids and selection of the successful
bidder

The purpose of the examination and evaluation of bids is to identify the

responsive bids and select the most advantageous bid and award the contract
to the bidder.
Information relating to the examination, clarification, and evaluation of bids and
recommendations for award must not be disclosed to bidders or other persons
not officially concerned with the process until the successful bidder is
announced.23
The assessment of whether a bid is in conformity with the salient requirements
indicated in the bidding document and decision to admit or to exclude a bid, as
non-responsive, from comparison is the power of the contracting administrative
authority through the contracting officer in charge.
In no case can, however, the administrative authority admit into competition
when24:
a) The bidder failed to demonstrate that he is qualified,
b) The bidder does not accept correction of arithmetic errors, and
c) The bid is not responsive

These cases are out rightly excluded by the law maker.

At the end of the evaluation and comparison of the responsive bids the best bid will
be selected. The successful bid will be25:
a) the bid that is found to be responsive to the technical requirements and
with the lowest evaluated price;

23
Supra note 35, Article 43& 44
24
Supra note 35, Article 43(5)
25
Supra note 35, Article 43(8)
 b) where this is stipulated in the bidding documents by the contracting
administrative authority, the bid offering better economic advantage
ascertained on the basis of factors affecting the economic value of the
bid, other than price, which have been specified in the bidding
documents and which are quantifiable and can be expressed in terms of
money;
c) Where it is ascertained in post evaluation of bids that the legal, financial
and technical standing of the candidate conforms to the requirements
stated in the bidding documents prepared by the contracting
administrative body.
Normally, at the end of bid process the administrative authority has to designate
the successful bidder. The notification of award to be given to the successful
bidder shall specify the time within which the contract must be signed.
The unsuccessful bidders shall also be informed as to who the successful bidder
is and why they have lost the bid.26
The bid bond of the unsuccessful bidders will also be released.
The administrative authority, however, need not designate the successful
tenderer when the bidding document prepared by the contracting
administrative authority stipulates that the administrative authority does not
intend to contract beyond a certain price.27
There are two options for the administrative body if it is found that two or more
bidders have the same points or result.
o The first option is to select the successful bidder by lot from among the
bidders that have equal points.
o Absent such stipulation in the bidding documents, the administrative
authority has to announce a new bid.28

26
Supra note 35, Article 46(1)
27
Supra note 3, Article 3165(1)
28
Supra note 3, Article 3166
 Even though the administrative body that caused the tender to be made should
announce the successful tenderer, the identification of the successful bidder has
no the effect of concluding the contract.29 It has only the effect of the
identification of the best offeror with whom the contract may be concluded.30
It has also the effect of releasing the other tenderers from the obligation they
entered into by submitting tender.31 The contract will only be deemed
concluded when the administration approves the result of the tender.32 But,
this may not always be the case because on some matters negotiation may be
required before the formal conclusion of the contract.33 However, the
administrative body is not allowed negotiating with the successful bidder on the
price offered and on other issues related to price.34
Once the result is approved, the successful bidder, on some types of contracts,
has to supply contract security so as to make good any damage the
administrative body may sustain as a result of default by the contractor under
the contract.35
2. Restricted tendering

Restricted tendering is to be undertaken by administrative bodies when one of the

following conditions is fulfilled36:
a) If it can be established that the required object of procurement is available
only with limited suppliers. In such cases, it is preferable to engage in the
tender process by inviting the limited number of potential bidders to
bid than wasting time and money.

29
Supra note 3, Article 3167(1)
30
Supra note 3, Article 3167(2)
31
Supra note 3, Article 3167(3)
32
Supra note 3, Article 3168
33
Supra note 3, Article 3168(2)
34
Supra note 35, Art. 45
35
Supra note 35, Art. 47
36
Supra note 35, Article 49
 b) When the cost of procurement does not exceed the threshold specified
in respect of restricted tendering in the procurement directive to be
issued by the MoFED.
c) Where a repeated advertisement of open bidding fails to attract bidders.

The procedure of restricted tendering is the same as open tendering except that it
involves the following special procedures stipulated in Article 50 of Proclamation no.
649/2009. These are:-
a. The manner of communication to interested bidders

The method of invitation to bid is different in case of restricted tendering i.e. the letter
of invitation to bid will be sent to all such suppliers.37
b. The time allowed for the preparation of bids by the invited bidders

It shall not be less than the minimum number of days stated in the procurement
directive. If, however, all the suppliers invited to participate in the bid have
submitted their bids before the closing date, the administrative body can open the
bid before the minimum number of days expire, by giving bidders prior notice.38

3. Request for Proposal Method

This is the other method of contracting as recognized by proclamation No.

649/2009. According to Article 53 of this proclamation, administrative bodies
will have to use this method of procurement for the conclusion of contracts
intended to obtain consultancy services or contracts for which the component
of the consultancy services constitutes more than 50% of the contract. This is
because, in case of procurement of consultancy service quality is more
important beyond price.

37
Ibid.
38
Supra note 35
 So, the administrative body may request the potential bidders to come up with
their own proposal. By this approach, the administrative body will be able to
identify the consultant that fits its requirements.
According to Article 54(2) the administrative body should send request for
proposal to not less than three and not more than seven candidates selected by
the administrative body itself. Where the value of the contract is above a
threshold to be determined by the procurement directive to be issued by the
Ministry of Finance and Economic Development, the request for proposal shall
be sent after inviting candidates to express their interest for participation in
the bid and only to those candidates that expressed their interest.39

As required under Article 54(3), the request for proposal that is to be addressed to
candidates shall contain the following information:-
a) The name and address of the contracting administrative authority;
b) Description of the services required by way of terms of reference (ToR);
c) In case of consultancy assignments which may involve potential conflict of
interest, a reminder that candidates for such assignments must exclude
themselves from procurement of goods and works which may follow as a result
of or in connection with the consultancy agreement;
d) The criteria for evaluating the proposals, the relative weight to be give to price
and other criteria, and the manner in which they will be applied in the evaluation
of the proposals; and,
e) Place and deadline for the submission of proposals.

The administrative body has to select the candidate whose proposal is most
advantageous determined in accordance with the criteria and procedures set forth in
the request for proposals.40

39
Supra note 35, Art. 54(1)
40
Supra note 35, Art. 54(6)
 4. Price Quotation Procedure (Pro forma procurement)

As stipulated in Article 55 of Proclamation No. 649/2009, for administrative bodies to

use price quotation method of contracting two cumulative conditions must be fulfilled:
1. The procurement must relate to readily available goods or works or services
for which there is an established market, and
2. The estimated value of the contract should not exceed the amount stated in the
procurement directive.
When using price quotation procedure, administrative bodies have to request
price quotations from as many candidates as possible, but from at least three
candidates and these must be from the registered suppliers list.41
The request shall contain a clear statement of the requirements of the
administrative body as to quality, quantity, terms and time of delivery of the
goods, works, consultancy or other services as well as other special
requirements.42
The contracting administrative authority shall give adequate time to the
candidates in which to prepare their bid (price quotations). The administrative
body shall ensure that equal opportunity of participation in public procurement
is given to all candidates engaged in the business.43
5. Two-Stage Bidding

According to Article 57 of Proclamation No. 649/2009, there are four independent

conditions for the use of two-stage bidding. These are:
1) When it is not feasible for the procurement body to formulate detailed
specifications for goods or works and in the case of services to identify their
characteristics, in order to obtain the most satisfactory solution to its
procurement needs;

41
Supra note 35, Article 56
42
Ibid.
43
Supra note 35, Art. 56(2)
 2) When the administrative body seeks to enter into a contract for the purpose of
research, experiment, study or development except where the contract includes
the production of goods in quantities sufficient to establish their commercial
viability and to recover the research and development costs;
3) Where bid proceedings have been initiated but no bids are submitted as a
result of the nature of the object of procurement not being clearly described or
where all bids are rejected due to failure on the part of the administrative body
concerned to draw up a clear and complete specification;
4) Because of the technical character of the required goods or works or because of
the nature of the consultancy or other services it is necessary for the public
body to negotiate with the suppliers.
6. Direct Procurement

Direct procurement is an exception to the general rule that competitive

bidding must be used in public procurement. Competitive bidding may not be
feasible on some matters despite its advantages. In such cases it is necessary to
resort to direct procurement method. The fact that direct procurement does not
involve competitive bidding makes it different from the other methods of
contracting. So, there is no need of invitation for submission of bids, evaluation
and comparison of bids and selection of one candidate from among the bidders
in direct procurement.

Administrative bodies can use direct procurement only under the following
conditions:44
a) When the goods, works or services is available only from one candidate;
b) For additional deliveries of goods by the original supplier which are intended
either as parts of replacement for existing supplies, services or installation or as
the extension of existing supplies, services or installation, where a change of
supplies would compel the administrative body equipment or service not

44
Supra note 35, Article 51
 meeting requirements of interchangeability with the already existing
equipment or services;
c) When additional works, which have been not included in the initial contract
have, through unforeseeable circumstances, become necessary since the
separation of the additional works from the initial contract would be difficult
for technical or economic reasons;
d) For new works consisting of the repetition of similar works which conform to a
basic project of which an initial contract has been awarded on the basis of
open or restricted tendering;
e) For continuation of consultancy services, where the original contract has been
satisfactorily performed and the continuation is likely to lead to gains in
economy and efficiency;
f) When the need for procurement is one of pressing emergency in which delay
would create serious problems and therefore injurious to the performance of the
public body;
g) Where situations arise in which shopping becomes necessary to meet the
special needs of the administrative body;
h) For purchase of goods made under exceptionally advantageous conditions
which only arise in the very short term. This condition is intended to cover
unusual disposal by firms, which are not normally suppliers.
i) Micro procurements- minor procurements the value of which does not exceed
the amount to be stated in the procurement directives.

2.4. Object of Administrative Contracts

Provisions of the law that govern the object of contracts in general require the parties to
conclude a contract that has a possible, defined and lawful object. On top of that,
Articles 3170 and 3171 deal with lack of object and unlawfulness of object. But within
the realms of unlawfulness of object, Article 3143 prescribes aggravated failures to
comply with administrative laws or regulations that dictate about the necessities of
authorization. As to Article 3143 such a contract concluded in the absence of an
authorization shall be of no effect as if the object of the contract is unlawful. The
assumption here is the agency is acting ultra vires.
2.4.1. Absence of Object
There is no mistake in holding to the effect that when an object (cause) is absent
from a contract when the object is an impossible object in the first place. Thus
if parties agree to do or to refrain to do a certain act which in reality is impossible
the law considers such a contract as a contract without object. Absence manifests
itself at least in two ways. An object might be absent from the beginning or the
object of a contract may vanish in the course of time.
A contract shall be null on the ground of lack of cause where, at the time when
it is made, it makes it impossible to attain the result desired by the
administrative authorities and known to the other contracting party.
Article 3170 views the object of the contract from the angle of the rationales of
administrative contracts. Because administrative contracts are concluded aiming
at serving the public, a public that cannot be properly served for reasons
mentioned in our introduction if left in the hands of private individuals. Thus the
object of administrative contracts should be purposive. And this purpose is all
about serving the public via administrative contracts. Accordingly,” … the result
desired by the administrative authorities…” thereof is this issue of purposive
ness”
2.4.2. Unlawfulness of Object
As mentioned earlier an object of any contract should be possible as it should also be
lawful. Article 1716(1) reads “[a] contract shall be of no effect where the obligations of
the parties or one of them are unlawful or immoral.”
This being the general rule, the picture changes when we consider administrative
contracts as envisaged under Article 3171.
As opposed to Article 1717 which says “the motive for which the parties entered
into a contract shall not be taken in to account in determining the unlawful or
immoral nature of their obligations”, Article 3171(1) basically views the nature
 of the object from the perspective of its motive. Thus, a contract shall be null
on the ground of unlawful cause where it is made by the administrative
authorities with [an unlawful object in view.45
One instance of unlawful motive is available under Article 3171 (2). If the “
contract is made by the administrative authorities with a view to procuring
advantages of a pecuniary nature to the other contracting party and not for a
reason of general interest” then such a view is an unlawful view which plays in
favor of nullifying the contract. As per the clarifications of view on this matter by
Rene David, “these two Articles (i.e. Articles 3170 and 3171) are devised to
protect public interest from possible mistakes committed by administrative
authorities and the dealings made by authorities and individuals to thwart
public interest and promote individual interest”. These two provisions are not
sufficient to avoid the potential dealings. This is even conceded by the drafter of
the civil code. However, Rene David tries to mitigate the issue by calling upon
the liberal economic system that the country was following. As such he argued
by saying too much intervention seems impossible.

45
Supra note 3, Article 3171 (1)