Amendments to the Public Procurement Regulation
Procurement by public entities has undergone various changes over the years. Decree-Law no. 48817, of 19 February 1969, applied in Mozambique through Ordinance no. 555/71, of 12 October, which approved the Construction and Provision of Public Works Regulation, was updated through Decree no. 42/89, of 28 December, subsequently amended by Decree no. 29/97, of 23 September, which approved the Procurement of Public Works, Supply of Goods and Provision of Services to the State Regulation. This Decree was revoked in 2005 by Decree no. 54/2004, of 13 December, later revoked by Decree no. 15/2010, of 24 May, having this one been revoked by the current of Procurement of Public Works, Supply of Goods and Provision of Services to the State Regulation, approved by Decree no. 5/2016, of 8 March (hereinafter referred to as “the Regulation”). Since its approval in 2016, the Regulation has undergone two amendments approved by Decrees no. 71/2020, of 13 August which amends paragraph g) of article 94 of the Regulation and by 89/2021 of 29 of October, respectively. In this article we intend to disclose the amendments brought to the Regulation by Decree no. 89/2021 of 29 October.
Decree no. 71/2020, of 13 August amends the entities to which direct award applies, extending this form to cases in which the contracting party is the Presidency of the Republic and the Information and Security Services of the State.
Decree no. 89/2021 of 29 October amends the Regulation in respect to Provisional Guarantee, which constitutes an admissibility requirement for the bidder.
Article 101 of the Regulation provides for the following types of Guarantees: a) Provisional; b) Definitive; and c) For Payment for an Advance Payment. Article 102 of the previous version of the Regulation provided that the presentation of a Provisional Guarantee (that must be submitted together with the proposal in terms of paragraph 1 of the same article) was a condition for the admissibility of the proposal and that proposals submitted without the Guarantee would be disqualified.
With this amendment, in addition to the Provisional Guarantee, the bidder has the option of submitting a Declaration of Guarantee which should be notarized by a Public Notary in a template to be approved by the Functional Unit for the Supervision of Acquisitions which is the Integrated Body in the Ministry of Economy and Finance responsible for all activity related with public procurement. Alternatively, the Provisional Guarantee in one of the forms provided by the Regulation remains applicable and the bidder may use whichever form it deems more convenient, as the Provisional Guarantee continues to be a condition for admissibility of proposals and failure to present it results in the bidder being disqualified from participating in the tender. Although the amendment was approved on 6 and published on 29 October 2021 and entered into force on the date of its publication, the template mentioned above is not yet available, which is the basis for the amendment, which means that there is no practical application. Thus, its applicability is dependent on the approval of the template which will still need to be received and understood by the business sector before it starts being used.
In terms of article 69 of Regulation, the Provisional Guarantee is presented when the amount of the tender is higher than 5.000.000,00 MT (five million Meticais) for construction of public works and 3.500.000 MT (three million and five hundred thousand Meticais) for the supply of good and provision of services. Considering that the Declaration of Guarantee is an alternative to the Provisional Guarantee, we understand that its submission will only be for these cases.
The amendment is much needed and adequate as it will allow entrepreneurs with less financial capacity to participate in public procurement, considering that one of their complaints has been that they only participate in small tenders because they do not possess the capacity to submit the Provisional Guarantees required for high value tenders. It is also beneficial because creates conditions to increase the availability of bidders and consequently increases the possibility of the awarding party to choose the best option amongst various proposals.
From a legislative process point of view, we understand that this amendment could have been made in a clearer manner. Although the Provisional Guarantee is submitted together with the proposal, it can be used in the award phase of the contract, with the necessary increase of the amount, as the case may be. Being it an alternative to the Provisional Guarantee, when moving on to the next phase of the bid, the Definitive Guarantee should comply with one of the forms of guarantee provided in article 105 of Regulation. Thus, we understand that this alternative should have been introduced as one of the forms of permitted guarantees, therefore making it applicable to both stages of the tender, without having to change the form of guarantee.
In summary, Decree no. 89/2021, of 29 October amends paragraphs 1 and 2 of article 102 of the Regulation, by including an alternative to the Provisional Guarantee, which is a Declaration of Guarantee made through a template still to be approved and which must be notarized by a Notary, thereby allowing entrepreneurs of different classes to participate in more demanding tenders, as its submission is a condition for admissibility of proposal and lack thereof disqualifies the bidder. We are aware that the process of approval of the guarantee declaration template and a public consultation to receive contributions on the proposed template are underway. We hope that the template will be approved soon in order for the alternative to be effectively used by the interested parties.
 Article 105 of the Regulation provides that the following are forms of guarantee: bank guarantee, proof of deposit or bank transfer, verified cheque, government debt title and insurance guarantee. The tender documents can provide for another form or a combination of the different forms can be used to add up to the required amount.
 Tenders with an amount below that indicated in Article 69 of the Regulation.
 Guarantees shall not exceed 1.5 and 10 percent of the tender value, as provisional and definitive, in accordance with Articles 102 and 103 of the Regulation.