Public Procurement in Mozambique by nyf51324


A Valuable Joint Venture

March 2010                                  INTERNATIONAL JOINT VENTURES
                                            PORTUGAL - MOZAMBIQUE

                                            Public Procurement
                                            in Mozambique
                                            I. Introductory Note                          and institutions and are extendible
                                                                                          to lower levels that have to execute
                                            The Mozambican Public Procurement             a budgetary schedule, including
                           Miguel Spínola   legal framework is regulated by Decree        Municipalities and Public Companies
                                            no. 54/2005 of 13/12, which approved the      (all of those in which the State holds a
                                            Regulations for Public Works Contracts        100% stake).
                                            and Supply of Goods and Services to
                                            the State (henceforth referred to as the      In formal terms, all documents related
                                            “Regulations”).                               to procurement must be drafted in
                                                                                          Portuguese; however, the Awarding Entity
                                            Approval of these Regulations by the          may decide to simultaneously draft them
                                            Mozambican government seeks to                in another language. In this situation, the
                                            address the most important issues related     Portuguese version will always prevail.
                                            to Public Procurement in a unitary and
                                            systematic manner and is essentially a        Procurement        that     simultaneously
                                            clear effort to make Public Procurement       involves a public works contract, supply
                                            rules more suited to Public Procurement       of goods and services and leasing shall
                     Taciana Peão           market demands, both in Mozambique            be subject to the Regulations that are in
                     Lopes                  and abroad.                                   force in relation to the part of the subject
                                                                                          of the contract that is more economically
              II. Scope and Principles                      significant.

                                            The Regulations define the main rules         III. Legal Frameworks of Public
                                            and principles applicable to public works     Procurement
                                            contracts and the supply of goods and
                                            services to the State, including consulting   The Regulations provide for three
                                            services and granting of concessions.         separate    legal   frameworks  for
                                                                                          procurement, namely: the General
                                            The Regulations enshrine the traditional      Regime, the Special Regime and the
                                            principles of Public and Administrative       Exceptional Regime.
                                            Law that govern Public Administration,
                                            which      should      always    comply       (i) General Regime:
                                            with principles of legality, finality,
                                            reasonableness, proportionality, pursuit      The General Regime for public works
                                            of the public interest, transparency,         contracts and supply of goods and
                                            equality and publicity.                       services to the State is the Public Tender.

                                            The Regulations apply to all State bodies     The Public Tender is the procurement

    method via which any interested party          • Undertake procurement within the              It should be pointed out that
    can participate, providing it satisfies the    scope of financed projects with resources
    requirements established in the Tender         originating from an official foreign            procurement conducted
    Documents.                                     cooperation agency or multilateral              under the Exceptional
                                                   financial body, whenever the adoption
    The Public Tender unfolds according to a       of distinct criteria is a condition of the
                                                                                                   Framework shall be
    logical set of steps. The process comprises    respective agreement or contract.               subsidiarily governed by
    the following phases: (i) Preparation; (ii)                                                    the Public Tender criteria
    Launch; (iii) Submission and opening           iii) Exceptional Regime:
    of the proposals and qualification                                                             stipulated in the Regulations.
    documents; (iv) Assessment of the              Lastly, there is an Exceptional Regime that
    proposals and qualification documents;         on the basis of “Public Interest” allows
    (v) Curative actions; (vi) Classification;     the Public Awarding Entity to select any        be dispensed with, fully or partially, when
    (vii) Selection Board Recommendation;          one of the following pre-contractual            dealing with a works contract or supply
    (viii) Decision; (ix) Complaints and           procedures:                                     of goods or services on a small scale.
    appeal; (x) Awarding of the contract.
                                                   • Tender with Prior Qualification;              Mozambican Bidder vs. Foreign Bidder
    The Tender Documents may require the           • Limited Tender;
    pledging of guarantees as a condition          • Tender with Two Stages;                       For the purpose of the Regulations,
    of acceptability of the proposal. These        • Tender according to Segments; and             a Mozambican bidder is defined as
    guarantees can be permanent or                 • Direct Agreement.                             follows: (i) an individual person with
    temporary and the maximum limit of their                                                       Mozambican nationality; and (ii) a legal
    values is stipulated in the Regulations.       It should be pointed out that procurement       person that has been established under
    The following forms of guarantee shall         conducted under the Exceptional Regime          Mozambican law, whose shareholder
    normally be accepted by the Awarding           shall be subsidiarily governed by the           capital is more than 50% held by an
    Entity: (i) bank guarantee; (ii) cash bond;    Public Tender criteria stipulated in the        individual Mozambican person or legal
    (iii) certified cheque; (iv) public debt       Regulations.                                    person whose shareholder capital is
    securities; and (v) insurance-guarantee.                                                       more than 50% held by an individual
    However, the Tender Documents can              IV. Bidders                                     Mozambican person.
    provide for other forms of guarantee.
                                                   All individual or legal persons, from           The Awarding Entity may restrict
    The price proposal shall be submitted          Mozambique or abroad, are eligible to           the Tender to Mozambican bidders,
    in Mozambican currency, namely the             bid for public works contracts or supply        whenever the value of the procurement
    Metical, except in cases stipulated in the     of goods and services to the Mozambican         is less than 5,250,000,000.00 Metical
    Tender Documents.                              State providing they demonstrate that           for public works contracts and
                                                   they are legally, economically-financially      2,625,000,000.00 Metical in the case of
    (ii) Special Regime:                           and technically qualified and their tax         acquisition of goods and services.
                                                   situation is in good standing.
    In contrast to the General Regime (Public                                                      It should also be pointed out that the
    Tender) there is the Special Regime,           Within the scope of this “qualification”        Awarding Entity may establish “national
    which allows the Awarding Entity to            there is the need for the proposals to          preference margins” (10% of the value of
    adopt criteria that are different from those                                                   the contract, before tax, for works; and
    defined by the Regulations.                    include the following documents, among
                                                   others: (i) certificate of commercial           15% of the value of the contract, before
                                                   registration and updated articles of            tax, for goods and services), as well as
    The special criteria shall be listed in the
    Tender Notice and Tender Documents             association: (ii) statement signed by           minimum margins for “incorporating
    and shall be admissible in cases where         the bidders indicating that they do not         national factors” (30% of the factory
    the Awarding Entity wishes to:                 exhibit any of the various common               door price of the finished product, the
                                                   “impediments” (cf. Art. 19 of the               Finance Minister being allowed to adjust
    • Undertake procurement by virtue              Regulations); (iii) consortium project or       this percentage).
    of a treaty or international agreement
    between Mozambique and another State           consortium incorporation agreement
                                                   (in the case of corporate groupings);           Foreign bidders shall satisfy the criteria
    or international organisation requiring
                                                   (iv) periodic income statement and              established by the Regulations, specific
    adoption of a Special Regime, or;
                                                   annual statement of accounting and tax          legislation and the tender documents,
                                                   information; (v) certificate attesting to       subject to submission of documents
                                                   registration or enrolment in a professional     equivalent to those required from
    The Public Tender is the                       activity compatible with the object of          Mozambican bidders.
    procurement method via                         the procurement in question, license
                                                                                                   Foreign bidders (whether or not they are
                                                   or equivalent document issued by the
    which any interested party                     relevant authority (in the case of activities   authorised to exercise their activity in
    can participate, providing                     subject to such documents).                     Mozambique) shall also comply with the
                                                                                                   following: (i) have a proxy residing and
    it satisfies the requirements                  The documents referred to above                 domiciled in Mozambique with special
    established in the Tender                      (necessary for proper legal, economic-          powers to receive summons, legal
                                                                                                   notices and to respond administratively
    Documents.                                     financial and technical qualification) can

    MGA& PLMJ, A Valuable Joint Venture
March 2010

Bidders that are part of                          Proposals, the best technical proposal         from the interpretation and execution
                                                  shall win. If the tie in the classification    of the contract, which is to take place
consortiums or associations                       of the Proposals persists, a “lottery” shall   in Mozambique and in the Portuguese
are always permitted to                           take place during a public session.            language (in compliance with specific
                                                                                                 legislation on this matter).
participate in tenders.                           VII. Decision Criteria for Concession
                                                  Tender                                         When provided for in the Tender
and judicially for their acts, requiring                                                         Documents, the Awarding Entity shall
submission of the applicable proxy                The decision of the tender for concession      require that the Contractor provide a
instrument together with the documents            of works or supply of public services can      permanent guarantee suited to proper and
stipulated in the Regulations; (ii) provide       be taken by complying with the following       timely compliance with its obligations,
evidence of their legal, economic-                criteria, individually or jointly:             and its submission shall be a pre-requisite
financial, technical and taxation good                                                           for signing the contract, payment of
standing in their country of origin; (iii)        • Best price offer for the concession;         advances shall not be permitted without
provide evidence no bankruptcy claim or           • Lowest rate or price to be applied in        pledging a guarantee in the same amount,
certificate exists either in Mozambique           relation to users;                             excepting rare situations provided for by
or in the country of origin and lastly;           • Best quality of services or goods made       the Regulations and subject to certain
(iv) submit documents drafted in                  available to the public; and                   pre-requisites on admissibility.
Portuguese.                                       • Best service and satisfaction of
                                                  demand.                                        IX. Amendment and Termination of
Bidders that are part of consortiums or                                                          Contracts
associations are always permitted to              VIII. On Contracts – Applicable Rules
participate in tenders.                                                                          Contracts governed by the Regulations
                                                  The contracts governed by the Regulations      can only be amended or changed
Members of a consortium or association            are of an administrative nature with           on the appropriate grounds apostille
may not participate – individually or             all the ensuing legal implications. That       when changes must be introduced to
within a consortium or association – in           is to say, execution of contracts for          (i) the project or specifications; (ii) the
the same tender.                                  public works and supply of goods and           contractual value; (iii) the framework
                                                  services signed by State bodies and            for executing the works or supplying the
V. Publication                                    institutions is governed by Section IX of      service or the method of supplying the
                                                  the Regulations, by the clauses of said        goods; (iv) the terms of payment.
It shall be obligatory to publish the             contracts and by the general criteria of
Tender Notice in the press or head office         Public and Administrative Law, subject         Mozambican law provides for unilateral
of the Awarding Entity and in the case            to the principles of the general theory        amendments or modifications of initial
of an “International Tender” it shall be          of contracts and additionally to the           contract conditions (cf. art. 52). As such,
disclosed via the Government Gazette              provisions of private law.                     the Awarding Entity shall be obliged
and/or Internet site.                                                                            to accept, under the same contractual
                                                  The contracts provided for under the           conditions, any additions or deletions
As a general rule, all documents                  Regulations shall be formulated in             made to the works, goods or services,
included in the administrative procedure          writing and shall follow the formats           up to 25% of the initial value of the
of the procurement are open to public             indicated in the Tender Documents. The         contract.
consultation, barring the exceptions              contracts must also be submitted to the
provided for in the Regulations.                  Administrative Court for prior inspection      The Regulations also establish (cf. art. 54)
                                                  within 5 days of being signed.                 the reasons for which the Awarding Entity
VI. Assessment Criteria and Decision on                                                          and the Contractor may freely cancel
the Proposals                                     Because of the administrative nature           the contract unilaterally. The party who
                                                  of the Contracts in question, the
As regards the assessment criteria, i.e.          Regulations consider certain clauses to
awarding criteria, it should be pointed                                                          As regards the assessment
                                                  be essential, namely (i) identification of
out that the guiding criterion is that of the     the parties; (ii) Object of the contract;      criteria, i.e. awarding criteria,
“lowest price.” As such, in general, the          (iii) Date of commencement and expiry;         it should be pointed out that
proposal offering the lowest price is the         (iv) Guarantees; (v) terms and conditions
one chosen for awarding of the contract.          of payment; (vi) Estimate of total
                                                                                                 the guiding criterion is that
In the event of a tie, the final classification   charges; (vii) Applicable sanctions; (viii)    of the “lowest price.” As
of the Proposals shall be determined by a         Legal venue or other venue for settling
“lottery.”                                                                                       such, in general, the proposal
                                                  disputes; (ix) Anti-corruption clause;
                                                  and (x) Other conditions that the parties      offering the lowest price is
The Regulations also stipulate that,
exceptionally, the awarding criterion
                                                  consider essential to proper execution of      the one chosen for awarding
                                                  the contract.
can be a “combined criterion,” i.e. a                                                            of the contract. In the event
criterion that takes into account the             Important from the point of view of the        of a tie, the final classification
technical assessment of the proposal and          foreign investor/bidder is inclusion of
respective price, requiring, however, due         a clause that provides for independent
                                                                                                 of the Proposals shall be
justification. If there is tie in assessing the   arbitration to resolve conflicts resulting     determined by a “lottery.”

    A Valuable Joint Venture

                                                          wishes to unilaterally cancel the contract     entities subject to the jurisdiction of the
                                                          (on one or more grounds) shall notify          Court. There are subjected to trial of
                                                          the other party of its intention to cancel,    public expenses, according to Article 32,
                                                          precisely indicating the causes and            paragraph a), the central bodies of State
                                                          respective grounds. The notified party –       and Public services, custom or not, with
                                                          within a period not exceeding thirty days      administrative and financial autonomy,
                                                          – shall remedy the causes attributed to it     including autonomous funds. Moreover,
                                                          and after said period the notifying party      the only exemptions from the visa are
                                                          may unilaterally cancel the contract on        those set forth in Article 31, paragraph
                                                          the grounds set out in the notification.       1, a), b) and c), ie, the legal statutes of
                                                                                                         appointments issued by the President of
        MGA                                               The Regulations clearly and precisely          the Republic, the legal statutes related to
        “Leading Law firm in Mozambique”                  establish the consequences of unilateral       elective posts and any other legal statutes,
        IFLR1000, 2007, 2008 & Chambers and               cancellation from the point of view of the     orders or contracts especially foreseen
        Partners, 2006                                    Awarding Entity and the Contractor (cf.        by law. In addition, the law sets forth, in
                                                          art. 55).                                      paragraph 2, that despite the exceptions,
        “1st Overall Legal Firm”
        Professional Management Review Africa,                                                           it is necessary to note down, where the
        2007, 2008                                        One last note regarding the obligation         law requires.
                                                          to submit these contracts to the
                                                          Administrative Court visa.                     Generally speaking, these are the main
                                                                                                         characteristics of the Public Procurement
        PLMJ                                              Indeed, Law no. 5/92, of May 6th 1992,         framework of Mozambique, a country
        “Portuguese Law Firm of the Year”                 sets forth, in Article 30, paragraph 2, that   with great potential and rapidly evolving
        Chambers Europe Excellence 2009, IFLR             under the supervision of public expenses       economic development that has grown
        Awards 2006 & Who’s Who legal Awards
                                                          of the State, the Section of Public            and will continue to grow significantly in
        2006, 2008, 2009
                                                          Expenses Fiscalization and Administrative      terms of Public Procurement, particularly
        “Corporate Law Firm of the Year -                 Court Visa is the responsible entity           public mega projects, involving energy,
        Southern Europe”                                  for verifying the compliance of the            infrastructure construction, exploration
        ACQ Finance Magazine, 2009
                                                          contract’ laws in force, regardless of         of natural and rail resources.
        “Best Portuguese Law Firm for Client              their nature, when entered into by the
        Clients Choice Award - International Law
        Office, 2008
        “Best Portuguese Tax Firm of the Year”
        International Tax Review - Tax Awards
        2006, 2008
        Mind Leaders Awards TM
        Human Resources Suppliers 2007

        This Newsletter is intended for general
        distribution to clients and colleagues and the
        information contained herein is provided as a
        general and abstract overview. It should not be
        used as a basis on which to make decisions and
        professional legal advice should be sought for
        specific cases. The contents of this Newsletter
        may not be reproduced, in whole or in part,
        without the express consent of the author. If
        you should require further information on this
        topic, please contact Miguel Spínola (mgsp@ or Taciana Peão Lopes (tpeaolopes@


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