Promoting Industrial Growth and Encouraging Foreign Direct Investment in Egypt
Government Contracts
Responsible Entities
- Issuance of General Circular of the Ministry of Finance No. 24 of 2021 regarding the collection of revenues and the rights of the State Treasury, which included "the administrative authorities do not disburse the amounts of money due to suppliers and contractors until after submitting a statement from the Insurance Fund to pay the insurance dues and a certificate of the tax position (the last tax return for general taxes - and value-added tax).
- As a result of this circular, no financial extracts due to suppliers or contractors were disbursed until a receipt for payment of 5% social insurance was submitted.
- There are no previous businesses with any governmental authority. Many corporates whether large, small, or micro, are unable to contract with governmental agencies in any contracts as most governmental authorities request a history of previous governmental business, even though that exists with the private sector, it is not recognized by the government.
- Delaying the financial dues of private sector enterprises/companies/corporates with governmental agencies, delay of their financial dues despite the completion of the inspection, addition, installation, operation or initial receipt of the project, for unclear and unknown reasons, which negatively affects them in fulfilling their obligations towards other entities, in addition to their financial inability and the lack of sufficient financial liquidity to continue their activity.
- Obliging governmental agencies to write the date of receipt of financial dues in the attribution order or supply order issued by them, explaining that in the event of the implementation of the company's work, the financial dues are paid within fifteen working days, and in the event of delay for this period, delay fines are calculated on the government entity estimated at 5% of the total attribution order or supply order for each month of delay, and transferring employees to investigation to hold the erring and the cause of the delay accountable.
- The prices of services provided by the state change suddenly, such as the increase in customs tariffs, the change in the exchange rate, or the increase in tax obligations, which causes the company financial losses due to the obligations it previously had before this increase with government sector agencies, and some micro-companies are even reluctant to participate in the field of government contracts due to this problem.
- The State's obligation to establish a transitional period of at least six months in the event of a desire to change the prices of the services it provides or the obligations it imposes on the private sector.
- Establish an insurance fund to protect small and micro businesses from sudden price changes.
- In case of a sudden change in the prices of services or government obligations, the State shall be obliged to hold private contractors accountable with the State before the application of these obligations by accounting them at the old prices until the completion of their contractual obligations.
- Failure to accept significantly low-value bids.
- Monopoly of contracts on specific entities and contracting by direct agreement in Article 78 of Law 182.
- Activating the accounting and complaints system for the concerned authorities
- Reduce dependence on the human factor and automate tenders.
- Activating the points evaluation system (sound evaluation bases) by amending Law 182 and setting specific percentages for administrative bodies.
- In the case of disbursement of the dues of the supplier companies on which the tender is awarded, the items shall be supplied within ten days of receiving the supply order, but the disbursement of extracts shall be suspended by the finance representative until the contract is drafted.
- In the case of supplying items that do not have a guarantee after supply, such as (stationery - carpentry - plumbing tools) it is not necessary to make a contract for them, or to make ready-made contracts with specific values for a specific amount from 1000 EGP to 50000 pounds whose use does not disrupt the disbursement of extracts, except (maintenance) or any devices that have a guarantee for which contracts are issued according to the concluded agreement.
- Government agencies face the problem of writing contracts for all operations, even for simple amounts such as 1000 EGP and above, which represents a burden on the supplier himself because his dues are delayed until the contract is completed, despite its supply and receipt from him due to the urgency of the entity to obtain its needs - which led to the reluctance of some suppliers to conclude any contracts and their refusal to deal.
- Not being obliged to write a contract up to a certain financial limit, which is proposed to be 50,000 pounds, and allows the entity to spend directly from its budget.
- Exclusion of companies due to the lack of some documents that must be attached to the technical offer during the opening of technical envelopes, noting that companies have documents such as (proof of subscription document in the public contracting portal - proof of the presence of a maintenance center - another tax return document - previous work - etc.)
- Giving a grace period of three days from the date of opening the envelopes, and in the event that the entity is not provided with these documents within the period, the company will be excluded before transferring the process to the decision committee.
- In the event of awarding a single bid, some members of the accounting unit do not comply with the application of Article 39 of Law No. 182 of 2018 by notifying the successful bidder of the payment of the insurance and after 7 days the supply order is issued to the company, which entails a delay fine thereafter.
- Commitment to implement in accordance with the provisions of Article 39 of the Tenders Law 182 of 2018 that the sole proprietorship is notified that it has been awarded and the attribution order is issued within two days only after the expiry of 7 days without making the supply order.
- In mechanical works, the company is required upon contracting to pay the insurance of irregular workers at the insurance office of the operation, and the payment order is delayed until payment, and upon delay, interest is paid.
- Deducting the insurance of irregular workers from the government entity that made the offering and is paid from that entity to the insurance directly without delaying the dues, or providing a place where the share of the insurances is paid directly, and thus saving time and effort for business owners, especially in the case of carrying out work at in the whole country, which requires travel to the governorates to the insurance offices for payment, which causes a delay in the process of paying contractors' dues and an increase in costs and implementation time.
- The length of the documentary cycle and the return of the document more than once to meet the payment of corporate dues (15 days for auditing and disbursement of dues within 60 days) and partially reviewing the document, which results in a long period and returning the document more than once to complete it.
- Reducing the time period where companies wait to pay their dues for at least 6 months, which is a very long period on the capital cycle, which leads to the reluctance of many companies, especially small ones, to participate in government contracts.
