Process of Forming Administrative Contracts -The Law of Administrative contaracts- Teaching Materiall unit one
1.3.3 Process of Forming Administrative Contracts under the Proclamation
Under private contracts, parties have at every liberty to choose their would be contracting party. This being 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.430/2005).
Administrative contracts, therefore, have this view in advance thereby limiting contracting parties’ from freely picking up their prospective counter parts.
To begin with our discussion, it is good to first understand what procurement is per proclamation No 430/2005. Accordingly, “procurement” is to be understood as “the purchasing, hiring or obtaining by any other contractual means goods, works and services.” [Art.2 (e) of the proclamation]
We should therefore understand procurement in a wider sense to include not only purchasing but also hiring and any other contractual means enabling the acquisition of goods, works and services.
If this is procurement, what are the means of procurement? The rule here is “open bidding”. That is why Art. 25(1) prescribes “[e]except as otherwise provided in this proclamation, the procuring entity shall [use] open bidding as the preferred procedure of procurement.”
The otherwise provisions of the proclamation are enumerated under Art 25(2) of the same. Next to this, upon delimiting the scope of application of the proclamation, Art.3.(2) takes into account another consideration that authorizes the use of a different procedure of procurement. This is obviously true in purchase of goods, services or works that involves “national security or defense”. But should all procurements that involve the above entities be undertaken following a different procedure than open bidding?
At least six modalities of procurement including open bidding are recognized by the proclamation. These are available under Articles 25-30. They are:
1. Open bidding:
This is the rule under the proclamation. The first thing that comes to mind when thinking of open bidding is advertisement. Art.31 (1) prescribes the modality of advertisement. Thus, “invitation to bid shall be advertised in at least one national newspaper of general circulation. Additionally, the procedures under articles 32-42 should be complied with.
Generally the bidding will be considered as open because it is advertised as such by allowing a great number of bidders to competitively participate. Briefly, there are five steps here:
This is possible after following the conditions under Art 26(1). When “the good, works or services… are available only from a limited number of suppliers” or when the time and cost of bidding is disproportionate to the value of the things to be procured, the mode of procurement will be restricted tendering.
The procedures to be followed under restricted tendering are those listed under open tendering except for the modifications introduced under Art.44.Some of them include:
3. Direct Procurement:-
Generally speaking, the rule in the procurement proclamation is open bidding. However, under clearly enumerated cases direct procurement is envisaged as a possibility. Direct procurement in a way should not be used to avoid possible competition among bidders nor should it be used to discriminate among them. Taking this as background, the proclamation enumerates the possible conditions that warrant the use of direct procurement as one means of procurement. Some of the conditions listed under Art.27 include:
1. Absence of competition because of technical reasons,
2. Provision of supplies for replacement, as extension for existing supplies or when procurement from another supplier forces the procuring entity to procure equipment or service not meeting requirements of interchangeability
3. When additional works which were 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 and economic reasons
4. Determination by the head of the procuring entity that the need is pressing and of emergency and delay will result in serious problem and injurious to the performance of the procuring entity
Do you have anything to say with regard to the list that we have under Art.27? Is the list exhaustive? Why? Why not?
1.4 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, Art. 3143 prescribes aggravated failures to comply with administrative laws or regulations that dictate about the necessities of authorization. As to Art. 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.
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. Let us see Art. 3170.
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.
Art.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”
Hence if an administrative contract “makes it impossible to attain the result desired...” then the contract will be considered as lacking cause. Now read Art. 3170 again and consider the above discussion.
Unlawfulness of Object
As mentioned earlier an object of any contract should be possible as it should also be lawful. Art. 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 Art. 3171. As opposed to Art 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”, Art. 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.] (Art.3171 (1))
One instance of unlawful motive is available under art.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. 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.
1. Have you understood the peculiarity of administrative contracts? Explain the difference between Art.1716 and 1717 on one hand and Art.3171 on the other hand.
2. Discuss the historical context of administrative contracts without forgetting to analyze the conditions that necessitated government intervention in the private domain.
3. Compare and contrast administrative contracts and other forms of contracts.
4. What are the conditions that warrant direct procurement? What makes the same different from open bidding?
5. Why do you think the master draftsperson limited the degree of intervention only to Articles 3170 and 3171? Do you agree with the limitation? Why? Why not?
Administrative contracts are recent phenomena considered with other forms of contracts. This is attributable to their nature.
These contracts are special because of the interests they manifest and the parties they involve. Though the civil law system considers them as special, the common law seems indifferent towards them. This has resulted in different outcomes in both legal systems. The Ethiopian civil code has opted to follow the French approach of specially treating administrative contracts.
In Ethiopia, administrative contracts are considered special because they are considered sensitive to issues that involve the public at large.
Consequent to this, administrative contracts are special in their form, object and parties. The pre-contractual setting of administrative contracts is also special in a sense that the law clearly regulates the pre-contractual situation of the parties. This is done by the civil code and the Proclamation.