Public Procurement & Government Contracts 2020

Last Updated April 06, 2020

Zambia

Law and Practice

Authors



Mulenga Mundashi Legal Practitioners has its office in Lusaka with a team of five partners, four associates, two legal assistants and eight trainee advocates. MMLP is a full-service law firm with strong capabilities and a proven track record in corporate advisory, commercial transactions and high-level corporate litigation.

The following legislation regulates the procurement of government contracts in Zambia:

  • the Public Procurement Act No 12 of 2008 of the Laws of Zambia (the “Public Procurement Act”);
  • the Public Procurement (Amendment) Act No 15 of 2011 (the “Public Procurement Amendment Act”);
  • the Public Procurement Regulations Statutory Instrument No 63 of 2011 (the “Public Procurement Regulations”); and
  • the National Council for Construction Act No 13 of 2003 of the Laws of Zambia (the “NCC Act“), only to the extent that the Act applies to construction projects by government and other public entities. 

Section 3(1) of the Public Procurement Act stipulates that the Act applies to procurement carried out by procuring entities using public funds. Pursuant to Section 2 of the Public Procurement Act, procuring entities include the following:

  • government agencies;
  • parastatal bodies (a statutory corporation or body, a local authority or a company in which the government has a majority or controlling interest); or
  • any other body or unit established and mandated by the government to carry out procurement using public funds.

Public funds are funds received by an officer by virtue of the officer’s employment, including public moneys. Public moneys are moneys received by an officer in the course of the officer’s employment or any other person directly or indirectly for the purpose of government; it includes all stores, stamps, negotiable instruments, bonds, debentures, investments and other securities raised or received by or on behalf of, or for the benefit of, the Republic.

All contracts to be entered into by procuring entities are subject to the Procurement Regulations. In other words, all government agencies, parastatals and all entities using public funds as mandated by the government are obliged to subject their contracts to procurement regulations. The type of procurement, good or service to be provided and the value will determine the method of procurement as follows:

  • Goods and non-consulting services
    1. open international bidding: amounts over ZMW5 billion;
    2. open national bidding: amounts over ZMW500 million;
    3. simplified bidding: amounts up to ZMW500 million; and
    4. direct bidding: amounts up to ZMW10 million.
  • Works
    1. open international bidding: amounts over ZMW50 billion; 
    2. open national bidding: amounts over ZMW500 million;
    3. simplified bidding: amounts up to ZMW500 million; and 
    4. direct bidding: amounts up to ZMW10 million.
  • Consulting services
    1. open national selection: amounts over ZMW300 million;
    2. open international selection: amounts over ZMW500 million;
    3. simplified bidding: amounts up to ZMW300 million; and
    4. direct bidding: amounts up to ZMW10 million.

Regarding participation in public procurement, Section 37 of the Public Procurement Act provides for non-discrimination save for the limited circumstances set out under Section 63 of the Act. Section 63 provides that a procuring entity, in consultation with government bodies responsible for economic and social policy, formulate preferential or reservation schemes for certain targeted groups with a view to enhancing economic opportunity and attaining particular social and economic objectives.

When restricting bidding or reserving or setting aside requirements, the Act provides that the groups will be specifically targeted as follows:

  • Zambian citizens or local suppliers;
  • goods, works or services manufactured in or provided from Zambia or a particular region or performed by Zambians or persons from a particular region;
  • Zambian suppliers in a particular industry or economic sector;
  • enterprises owned by women;
  • small- and medium-sized enterprises; and
  • any other group designated by government policies.

It should also be noted that for open bidding and open selection, these types of bidding are on a national basis but in certain circumstances where it is appropriate, international bidding involving foreign bidders is permitted where the estimated value exceeds the prescribed threshold, the goods, works or services are not available under competitive price and other conditions from at least suppliers in Zambia or regional or international participation is required in accordance with an agreement entered into by the Zambian government.

The key obligations under the Public Procurement Act, the Public Procurement Amendment Act and the Public Procurement Regulations are as follows:

  • procuring entities are required to establish a procurement committee;
  • procuring entities need to establish procurement units responsible for managing their procurement activities and this entails adequate procurement planning;
  • the procurement unit of an entity needs to ensure that adequate funds are budgeted prior to initiating procurement proceedings and included in a procuring entity’s relevant budget;
  • records of procurement proceedings, contracts, decisions to terminate, settlements of disputes and resolutions of complaints need to be kept for at least seven years;
  • discrimination is prohibited when selecting bidders unless it is related to eligibility or qualifications;
  • procurement requirements and the estimated value of goods, works or services need to be recorded;
  • procurement processes can only commence when funds are available and the requisite approval has been given;
  • each procurement process requires a controlling officer or chief executive officer to appoint an evaluation committee;
  • bidders are required to have legal capacity and be solvent;
  • a bidder should not be in receivership or bankrupt;
  • a bidder should demonstrate that it has fulfilled its obligations to pay taxes and social-security contributions; and
  • the bidder or its directors should not have been convicted of any criminal offence related to their professional conduct or the making of false statements or misrepresentations as to their qualifications to enter into a contract.

Save for the award process that applies to “limited bidding” or “simplified bidding”, the Public Procurement Regulations mandate prior advertisement.

Regulation 20(1) provides that a notice shall be published in the government Gazette, a daily newspaper of general circulation in Zambia; in any media of wide regional or international circulation; on the internet, where feasible; and in a prominent place on the notice board at the office of the procuring entity.

The Regulations do not specify the exact information to be disclosed in the advertisement. The Regulations stipulate that the advertisements must be published in English. There is an additional requirement for a statement of procurement requirements that must be provided to the bidders (the solicitation document). This statement must describe the goods, works or consulting or non-consulting services that are sought by the procuring entity.

The law does not preclude preliminary market consultations before launching the contract award procedure. Pursuant to Section 46(1)(a) of the Public Procurement Act, a pre-qualification process is permitted where the procurement method used is open bidding. Further, Regulation 44 of the Public Procurement Regulations permits a procuring entity to use pre-qualification under open bidding in order to obtain a shortlist of bidders who have been assessed to be capable of effectively performing the proposed contract.

The legislation mandates the tender procedures that are to be used for the award of a contract. Pursuant to the Public Procurement Act and the Regulations, the methods of procurement are as follows: 

  • Open bidding: this procurement method is open to all eligible bidders on equal terms through advertisement of the opportunity. A procuring entity can use open bidding for the procurement of all goods, works and non-consulting services. This form of bidding has the objective of obtaining value for money by promoting private sector participation through the maximum possible competition.
  • Open selection: this procurement method is used for the procurement of consulting services. Open selection is open to application for short listing on equal terms by all bidders through advertisement of the opportunity.
  • National competitive bidding is limited to citizen and local bidders.
  • International competitive bidding is open to all bidders, including citizens, local and foreign bidders.
  • Limited bidding: this type of bidding has the objective of obtaining competition and value for money to the extent possible where the circumstances do not justify or permit the use of open bidding. This procurement method is used for the procurement of goods, works or non-consulting services where they are only available from a limited number of suppliers, there is an urgent need and engaging in open bidding would be impractical or the requirement is of a specialised nature or relates to public safety or security.
  • Limited selection is a procurement method for consulting services obtained by direct invitation, without open advertisement.
  • Simplified bidding is where a number of bidders present quotations and they are compared.
  • Direct bidding is where a bid is obtained directly from a single bidder, without competition. This form of bidding has the objective of achieving timely and efficient procurement where the circumstances or value do not justify or permit the use of competition.

Regulation 75 permits negotiations to occur with the best evaluated bidder after the procuring entity has obtained approval for the same. These negotiations are limited to the following:

  • minor amendments to the special conditions of the contract;
  • minor changes to the delivery, completion or installation schedule;
  • minor alterations to the technical details of the statement of requirements;
  • reductions in quantities for budgetary reasons, where the reduction is in excess of any amount provided for in the solicitation document;
  • minor amendments to finalise the payment arrangements; or
  • clarifying details that were not apparent or could not be finalised at the time of bidding.

Negotiations are not permissible for the following:

  • substantial changes to the technical quality or details of the bid;
  • material alterations to the terms and conditions of the proposed contract;
  • reduction of prices or unit rate; or
  • substantial alterations to anything which was a deciding factor in the evaluation of bids. 

The procedure for negotiations is as follows:

  • the negotiations can only take place after the evaluation report has been approved by the approvals authority, the Central Tender Committee;
  • the negotiations can only take place with the bidder recommended for the contract unless negotiation fails, in which case the procurement unit of an entity must obtain prior authorisation from the Central Tender Committee to open negotiation with the next ranked bidder;
  • a plan for the negotiations which specifies the issues to be negotiated must be prepared; and
  • the negotiation must take place with at least two members of staff of the evaluation committee who must prepare the minutes of the negotiations.

According to Section 43(2) of the Public Procurement Act, the choice of the procurement method will depend on the estimated value of the procurement, the nature of the procurement, special circumstances and whether national or international competition is required.

A procuring entity is not permitted to split procurement requirements in an attempt to avoid a particular method of procurement where such requirements could be treated as a single procurement.

Lastly, procurement shall only be undertaken where the procuring entity has requisite and available funds and this has been confirmed by the controlling officer.

The legislation does not impose any obligations as to the timing for publication of the procurement documents. Time limits are regulated by the solicitation documents drafted by the procuring entities according to their particular needs and their relevant timeframes.

There is not a strict timeframe within which expressions of interest must be submitted as the law only provides that they must be published in line with the notice issued by the procuring entity. Regulation 53 of the Public Procurement Regulations does provide that a bidding period starts on the date of the first publication of the bid notice or issue of solicitation documents to all prequalified or shortlisted bidders and finishes on the submission deadline. The minimum bidding periods are as follows:

  • four weeks for open national bidding;
  • six weeks for open international bidding; and
  • four weeks for limited bidding where procurement is only open to Zambian nationals or six weeks where the limited bidding involves international and foreign bidders.

Where there is an emergency or urgency, the minimum bidding periods do not apply.

Eligibility of participation depends on the procurement method or process selected. Direct bidding only provides for one bidder to be eligible to apply. Limited bidding and limited selection occur where there are direct invitations to parties to apply. Further, in relation to qualification, the procuring entity is mandated to verify the qualifications of bidders based on designated qualification criteria related to technical competence and resources, capacity to perform, previous experience and satisfactory performance of similar contracts, and the bidder’s financial position.

Depending on the process selected, interested parties would have to meet the criteria stipulated by the procuring entity in the solicitation documents. It should be noted that Section 37 of the Public Procurement Act provides for non-discrimination on the basis of nationality, race, religion, gender or any other criteria that is not related to eligibility or qualifications.

It is possible to restrict participation in the procurement process for direct bidding, direct selection, limited bidding and limited selection – for which a procuring entity needs prior authorisation from the Central Tender Committee. Further, Section 63 of the Public Procurement Act permits granting preference or reserving or setting aside certain procurement requirements for a target group such as enterprises owned by women, small- and medium-sized enterprises, Zambian suppliers, citizens or local suppliers or for manufacturers of goods, works or services provided from or performed in Zambia or a particular region. This is done to augment the economic opportunities of specified target groups and achieve economic and social goals.

The Public Procurement Regulations do not provide for how the shortlist is to be determined, they merely provide for the circumstances in which the restriction can take place. Regulation 14 provides that procuring entities can only limit bidding for goods, works and non-consulting services. In relation to these, the entity can only limit bidding if open bidding would be inappropriate because the goods, works or non-consulting services relate to public safety or security, are only available from a limited number of suppliers or when there is an urgent need for these goods or services. 

Regulation 15 provides that limited selection can be used for consulting services where there are limited suppliers, there is an urgent need for the services and open biding has failed to secure an award or is inappropriate as it relates to public safety or public security.

Direct bidding (single sourcing) limits procurement to one bidder where the circumstances or value do not justify or permit the use of competition.

The Regulations do not provide for the minimum number of qualified suppliers to be invited but for the circumstances in which the restriction can take place.

The evaluation of bids is determined by the type, value and complexity of the procuring entity’s requirements. All procurement processes require a solicitation document which contains a description of the procurement, clear instructions on the process and rules and conditions of the contract. The criteria for evaluating the winner of the contract award is largely dependent on the contents of the solicitation document which, according to Section 50(2) of the Public Procurement Act, must clearly outline the methodology and criteria used to evaluate bids – only the methodology or criteria in the solicitation document should be used to evaluate bids.

Bidders may be required to meet specific qualification criteria, which shall be specified in the solicitation document. Such criteria may include or relate to factors such as professional and technical qualifications; financial resources and conditions; equipment and other physical facilities, personnel and managerial capability; record of past performance of similar contracts; and registration with a relevant professional body, either in Zambia or the bidder’s country of origin.

Evaluation committees are required to conduct a preliminary evaluation to determine that bids meet all procedural requirements contained in the solicitation document ie, the bid has been submitted in the correct format, it has been signed and authorised, and all key documents have been submitted. The purpose of the preliminary evaluation is to ensure there has not been a material deviation from the terms and conditions of the procurement in the solicitation document – if there is, the bid must be rejected.

After the preliminary evaluation, there must be a technical evaluation of the bid where bids are compared to the technical requirements of the statement of requirements in the solicitation document. The evaluation committee is required to consider conformity to specifications or standards in the terms of reference, understanding of the assignment and suitable staffing and arrangements. A financial evaluation of the bid must also be conducted.

Section 36 of the Public Procurement Act provides that where it is desirable to have participation of local communities and non-governmental organisations, increased utilisation of local materials and employment of labour-intensive technologies, the procedures for procurement and the contract may be adapted accordingly. This provision seeks to ensure that where particular procurement needs community participation, the procedures used should allow for the same to occur provided that the procedures used are efficient.

There is an obligation to release the statement of procurement requirements which outlines, amongst other issues, how bidders are selected and the evaluation of tenders. The object of this document is to ensure fair and open competition and to ensure that the goods, works or services that are subject to procurement are fit for purpose and meet appropriate quality standards.

Section 53 of the Public Procurement Act provides that within seven days of awarding a contract, all those who submitted bids, including all unsuccessful parties, must be informed of who received the contract award and the value of the proposed bid. Section 56 requires the procuring entity to inform unsuccessful bidders that their bids were not successful and to give reasons for the decision made by the procuring entity.

Section 53 of the Public Procurement Act provides that within seven days of awarding a contract, a notice should be given indicating the best evaluated bidder and value of the contract. This requirement does not apply where simplified or direct or limited bidding (if there is insufficient time) are used.

Section 53(2) of the Public Procurement Act requires a standstill period of at least ten days between the notification of the contract award decision and the conclusion of the contract.

The Zambia Public Procurement Authority (the “ZPPA” or the "Authority") is the regulatory body that is empowered to review the decision of an awarding authority. An application for the review of a decision made by a procuring entity must be submitted within ten working days from the date the bidder submitting the application was informed or became aware of the circumstances giving rise to the application.

If a party is not satisfied with the ZPPA's review process, they can appeal it. The appeal must be done by arbitration and in accordance with the provisions of the Arbitration Act No 19 of 2000.

The ZPPA is mandated to uphold the decision of the procuring entity or set the decision aside, giving reasons and corrective measures according to Regulation 180 of the Public Procurement Regulations.

Section 80 of the Public Procurement Act provides that, where a procuring entity contravenes the legislation, the ZPPA may transfer the procurement function to a body or procurement agency appointed by that authority, . This transfer shall subsist until the ZPPA is satisfied that the causes of the contravention have been rectified by the procuring entity. In essence, the ZPPA may deprive a procuring entity of its procurement capacity where it is not discharging its functions in terms of the legislation.

The ZPPA must ensure that no contract award is made before the resolution of an application to appeal against the decision of a procuring entity.

A bidder or supplier aggrieved by a decision of a procuring entity has standing to challenge the awarding authority's decision.

The application to appeal a decision made by a procuring entity must be made within ten working days from the date the party submitting the application was informed or became aware of the circumstances giving rise to the application, or from the date on which it should have become aware of these circumstances, whichever is earlier.

Within five days of receiving the appeal, the ZPPA may either make a decision without holding a hearing or hold a hearing. Where a hearing is held, the Authority itself prescribes timeframes within which the proceedings will be resolved but, if no hearing is held, the case must be determined within five days.

The ZPPA does not release information pertaining to the number of procurement claims that it reviews per year.

If the challenge is before the ZPPA as a review body as contemplated under Section 70 of the Public Procurement Act, there is a ZMW1,000 charge (approximately USD70) for submission of the application to review a decision made by a procuring entity. All other costs related to the application are not envisaged under the Public Procurement Act and the bidder/supplier will bear these costs. 

In the event that the challenge goes to arbitration, an arbitral tribunal may award costs on the basis that “costs follow” the event, that is to say that the successful party in the arbitration will be awarded costs, which are ordinarily stipulated to be agreed between the parties and in default of agreement to be taxed in such manner as may be agreed by the parties or determined by the arbitral tribunal.

The modification of contracts is permissible, subject to the provisions of the Public Procurement Act. Any amendments to a contract require the prior authorisation of the appropriate approval authority, namely the Central Tender Committee and the Attorney General of Zambia. Any amendments that are made without the approval of the Attorney General shall be void.

To the extent that the Public Procurement Act permits direct bidding where only one bid is considered directly, without any competition, it follows that it is permissible to directly award a contract. Section 32 of the Act provides that this is permissible where the circumstances or value do not justify or permit the use of competition. Section 32(2) prescribes that this method can only be used where:

  • the goods, works or consulting or non-consulting services are only available from a single source and no reasonable alternative or substitute exists;
  • there is an emergency and an urgent need thus making it impractical to use another procurement method;
  • additional goods, workers or services need to be procured from the same source due to compatibility, standardisation or continuity;
  • an existing contract could be extended for additional goods, works or services of a similar nature and no advantage could be obtained by further competition; and
  • the estimated value of the goods, works or services does not exceed the prescribed threshold, which is over ZMW300 million for open national selection and simplified bidding, ZMW500 million for open international selection and up to ZMW10 million for direct bidding.

Paragraph 7(2) of the Second Schedule to the Public Procurement Act states that all procurement with a value above the level that the ZPPA has determined shall be submitted to the Central Tender Committee for prior authorisation.

Disputes that arise out of public procurement are required to be submitted to arbitration pursuant to Section 71 of the Public Procurement Act. As such, any arbitral decisions made in this field in the past year are not available to the public.

There are currently no legislative amendments being considered.

Mulenga Mundashi Legal Practitioners

First Floor Zimbabwe House
Haile Selassie Avenue
Lusaka
Zambia

+260 211 254250

+260 211 254260

info@mmco.co.zm
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Law and Practice

Authors



Mulenga Mundashi Legal Practitioners has its office in Lusaka with a team of five partners, four associates, two legal assistants and eight trainee advocates. MMLP is a full-service law firm with strong capabilities and a proven track record in corporate advisory, commercial transactions and high-level corporate litigation.

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