Code of Public Tenders

Code of Public Tenders & Service Delegations

A new Code of Public Tenders and Service delegations abrogating the previous Code of Code of Public Tenders (Presidential Decree No. 10-236 of 7 October 2010) has been published in the Algerian Official Gazette dated September 20, 2015 and is effective from December 20, 2015.

The new Code confirms the legal concept of « Service delegations » by which the State can proceed, in specific areas, with the performance of services or purchase of goods necessary for the operation of public service through a concession, governance or management contract, leasing. This Public-Private Partnership (PPP) is increasingly becoming a prominent method for delivering key public services in Algeria permitting to the State to appoint any private or state legal entity, to ensure the operations of public services, from the realization of infrastructure and up to their day-to-day operation. The contractual framework regimes of PPP is varied.

Besides regimes already introduced in the Algerian regulations: leasing, governance or stewardship, the legal framework is mainly limited to:

- the "concession regime" (Water Code of 1983 and Decree No. 86-227 of September, 1986 on concession to the exploitation of public domain water resources (searching and captation of water, amended and supplemented by Law of 1996);

- the "public service delegation" to Private Sector, as for example in the field of desalination, was boosted by the government’s plans to develop desalination plants, developed under BOT arrangements. The law No. 05-12 of August ‘, 2005 on Water enlarged the possibilities of public service delegation to private sector activities. The new Code of Public Tenders and Service delegations confirms the possibilities of the state to use the "public service delegation" regime.

These regimes are allowing to the state, through extra-budgetary funding sources, to acquire, finance, implement and manage, in areas where the law permits that, works, goods or services for the good functioning of public service through the Public tenders to key public services. The importance of enhancing the role of private sector in value chains is of State' high consideration.

This cooperation for broad-based sustainable growth and inclusive development is engaging the private sector in crucial national planning, to increase the sustainable development, to transfer the risks to those that manage them best, and to make the private sector as equal and complementary partner in development. The private capital allows minimizing corruption and improves the framework for public governance of Public-Private Partnerships. The new rules formally stress all that.

But the code must be read with other specific provisions, including from the "Civil Code”, the “Penal Code" and the "Code of Civil and Administrative Procedure". Its implementing regulations remain to be adopted to give effect to the new provisions. In the meantime, the previous implementing regulations of 2010 Code will continue to be applied.

Whole of the Algerian regulations in different areas include contradiction and lack of precisions; especially when the law relates to further unpublished rules, what makes the Algerian codification not clear, not predictable and not transparent.

To be an ideally integrated procurement framework, the new Code should be carefully compared with the existing practices and then periodically evaluated for its amendment.

Summary of the must important rules of the new Code:

The National Contract Committees (related to works, supplies, services and studies) are replaced by regional or sector Contract Committees to examine the bids. Besides, a Monitor for the regulation of public tenders and a national body for the resolution of disputes will be created.

Emphasis is still placed on Algerian production. The governmental purchaser must:

take into account the potential of Algerian companies when drafting the eligibility criteria and the offer evaluation procedure;
favor integration to the national economy and products to be acquired on the local market;
include in the specifications training and transfer of knowledge in relation with the contract;
provide in the specifications, when the foreign companies are bidding alone, the obligation to subcontract at least 30% of the original contract price to Algerian companies, except in case of duly justified impossibility.

The notion of “a preference margin” is affirmed again for domestic bidders, under which Algerian businesses are favored over foreign firms. The foreign companies should bid with 25% cheaper than the domestic company, in order to win the contract (Article 83). Furthermore, foreign companies who win the bid will be obliged to establish an investment partnership with a local firm (Article 84).

It’s not excluded that some contracts shielded from “partnership commitment” by the 2010 code must now contain an express requirement to make a local investment. Whereas the 2010 Code make exemption from the investment partnership requirement for direct bilateral contracts after consultation, when it pertain to “national institutions of State sovereignty”, and to contracts concluded pursuant to the simple negotiation procedure, the requirement of investment in the last version only “may be” exempted (Article 85 of the new Code).

Regardless of the chosen contract procedure, there is an obligation to include a contractual clause requiring that imported products may only be used if the national equivalent is not available or its quality do not comply with applicable standards. And the governmental purchaser may use foreign sub-contractors only when Algerian entities are unable to meet its needs.

The contract price can exceptionally be set up on a provisional basis. And in the case of complex contracts, the governmental purchaser can include a contractual incentive clause in order to obtain a better price, quality and/or completion time.

Additional guidelines are used for the selection of indices when prices can be updated.

The following rules simplify the tender process:

in case of emergency, the code states an authorization procedure for the performance of services prior to the conclusion of a contract;
offer evaluation procedure and the criteria to be used for the choice of the contractor;
rules applicable to group of companies;
conditions of subcontracting;
the acceptance procedure;
the appeal procedure,
publication of the award, etc.

National and foreign Bidders can appeal the award of the contract to the relevant Contract Committee within 10 days of the publication of the award.

The deontology is reinforced through a Code for involved public officials in the tender process. The code will be adopted after a draft by the foregoing Monitor duly approved by the Ministry of Finance. The public officials must undertake to comply with this Code and sign a declaration of absence of conflict of interests. The Code will also set forth an obligation for the contracting department to comply with the principles of freedom of access to the tender process, of equality of treatment and of transparency of procedures. And the offers must be assessed based on objective selection criteria decided prior to the launch of the tender procedure: quality, delivery time, price, technical value, after-sale service, financing terms, social performances to promote occupational integration, sustainability, etc.

In conclusion, this Code preserves many notions and rules from the previous code and revamps some aspects of the tender process.

Click to read the original up to date (January 2016) Code in Arabic ( قانون الصفقات العمومية ) or in French: (Code des Marchés Publics).