Could the gov’t’s new digitized contracting system help level the playing field for private sector construction + contracting players? The Finance Ministry is gearing up to launch a trial phase of its new platform for government contracting as it looks to regulate and standardize procurement procedures between the government and public and private companies. The focus of the initial trial phase will be on major corporations, sources with knowledge of the matter told Enterprise. The new measures — which include digitizing the process — are designed to ensure fairer distribution of government contracts and prevent the largest companies in the market from monopolizing contracts. The system will also reduce the direct allocation of contracts without a transparent bidding process, our sources say.

More transparency anticipated: The shift to a new digitized system focused on opening up the bidding process could lead to more competitive pricing on government contracts, our sources suggest. Currently, many contracts are awarded through direct order rather than an open tender process, which has limited access to business agreements for some companies, they said.

The goal? A level playing field: The overarching goal for the new contracting system is to boost private sector competitiveness on government projects, improve quality, and ensure a more level playing field as part of the government’s broader push to boost private sector activity in the economy, according to Finance Ministry sources we spoke with. A future phase of the new system will involve gradually rolling out the new system to all administrative bodies nationwide.

End-to-end contracting digitization: The new platform will digitize all contracting procedures required under the Public Contracts Act, from assessing needs to bidding, tendering, awarding, contract management and detailed reporting, General Authority for Government Services head Mohammed Adel told Enterprise. This will support decision-makers and bring more transparency across the contracting cycle. The platform also provides secured electronic contracts via printed barcodes and centralized digital archiving to protect the rights of both contracting parties.

REFRESHER- Tender procedures have undergone a facelift in recent years: Back in 2018, the House of Representatives passed the Public Contracts Act (formerly known as the Auctions and Tenders Act) in a bid to decentralize and streamline tender procedures for public project contracts. The executive regulations, which were issued the following year, stipulated that the government would set up an e-procurement system for its projects. However, the legislation had raised concerns about potentially opening the door for the government to expand the use of no-bid contracts, although the Finance Ministry said at the time that the regulations would fight “monopolies” and “concentration of economic power.”

It’s still early days, but there’s progress underway: So far, the new digital platform covers 3,555 government entities with 63 tenders currently open for bidding, according to the website. Suppliers and contractors are beginning to register on the system to be eligible for the digital bidding process, sources at the Finance Ministry who requested to remain anonymous told Enterprise.

What kind of contracts are up for grabs? The e-procurement portal allows companies and individuals to browse project contracts, with the option to filter these contracts by the nature of the contract (i.e. whether it will be a direct order, an open bidding process, an open auction, a local auction, or international auction or tender). Projects can also be filtered by the type of work or agreement, which includes buying, selling, or renting real estate; providing technical services; contracting work; and usufruct agreements, among several other categories.

REMEMBER- There’s plenty of infrastructure spending underway, creating windows for local construction and contracting players to reel in liquidity: The move to shake up the government contracting process comes as the Madbouly government continues to invest in its infrastructure development push over the coming years. The government’s sustainable development plan for the current fiscal year earmarked around EGP 1.05 tn for public investments in infrastructure, including transport, construction, and water and sewage projects.

The business community is happy with the move towards limiting direct order contracts and ramping up competition in open bids, particularly as unifying contracting under one entity will improve oversight and transparency, Egyptian Federation of Construction and Building Contractors head Mohammed Sami Saad told Enterprise. The construction industry has long called for limits on direct allocation without tendering, which have deprived many firms of project opportunities, he added.

Your top infrastructure stories for the week:

  • Cairo Airport glow-up: Cairo International Airport Company signed an MoU with infrastructure consulting firm Aecom and tech security company Pangiam to work on the construction of a fourth terminal, as well as a consultancy agreement with Singapore’s Changi Airport to upgrade the airport.
  • Gov’t wants more for the Gabal El Zeit wind farm: The government is in talks with emerging markets private equity giant Actis to up its bid for the 580-MW Gabal El Zeit wind farm to USD 600-800 mn.
  • Port money: The European Bank for Reconstruction and Development is expected to approve a USD 125 mn loan for Damietta Port’s second container terminal,
  • Train money: Cabinet approved a EUR 250 mn loan from the Asian Infrastructure Investment Bank to redevelop Alexandria’s Abu Qir railway.
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