PPDA Law On Preference And Reservation Schemes

There are different procurement methods as per the act though the choice of a procurement or disposal method has to first be approved by the Contracts Committee and one of them is open domestic bidding.

Open domestic bidding is one of the procurement methods considered and it is a procurement or disposal method which is open to participation on equal terms by all providers through advertisement of the procurement or disposal opportunity.

Open to participation on equal terms by all providers, through advertisement of the procurement or disposal opportunity and which specifically seeks to attract foreign providers.

It is used to obtain the maximum possible competition and value for money, where national providers may not necessarily make this achievable. Restricted domestic bidding is the procurement or disposal method where bids are obtained by direct invitation without open advertisement.   Restricted domestic bidding is used to obtain competition and value for money to the extent possible, where the value or circumstances do not justify or permit the open bidding procedure.

When a particular sector within a given area has been identified as eligible for a reservation scheme, only eligible bidders within the given sector or area are allowed to participate in the procurement process. They compete amongst each other for the procuring and disposing entity.

A reservation scheme is intended to promote the use of local expertise and materials and participation of local communities and organizations among others.  A preference scheme on the other hand is an arrangement where advantage is given to local bidders when procuring works, goods and services in a public procurement process.

A preference scheme is usually applied where both local and foreign bidders submit bids and proposals and its purpose is to give local bidders a competitive edge over foreign bidders.

Preference schemes are used where the open domestic or international biding methods are used and where proposals are invited from both national and foreign consultants and the least cost and quality based selection methods are used.

When procuring goods, works or services under open bidding, the margin of preference is applied to the bids by adding a specified percentage margin to a financial bid or proposal price of those bidders who do not qualify for preference thereby raising their bid and the following shall apply;

  • A procuring and disposing entity is required to grant a margin of preference to goods which qualify for preference like domestically manufactured goods, where goods are manufactured and mined in Uganda or grown / extracted (15%)
  • For works by Ugandan contractors or services provided by Ugandan consultants (7%). Goods qualify as domestically manufactured goods where the labor or value addition to the goods is more than 30% and the production facility in which the goods are manufactured, assembled or processed is in Uganda and is involved in manufacturing assembling or processing of the goods at the time of the submission of the bid
  • A contractor on the other hand qualifies for preference where he is incorporated in Uganda and more than 50% of the capital is owned by Ugandan citizens. Also to note is that if the contractor is a legal entity, more than 50% of the capital is owned by government or by a procuring and disposal entity

PPDA in consultation with a competent authority and relevant shareholders, is mandated to specify the public procurement contracts to be subject to a reservation scheme and PPDA shall designate the particular sectors within a specified geographical area that are eligible to participate in the reservation scheme

A reservation scheme is therefore an exception to the general rule that public procurement shall be open to all eligible bidders. Its serves to exclude potential bidders from participating in a particular procurement by reserving the procurement for specified bidders. It is applied to particular sectors designated by the authority within a specified geographical area, in consultation with a competent authority and relevant shareholder.