Algeria Heightened Sensitivity about Non-Competitive Contracts
Non-competitive procurements in Algeria’s public sector are possible only in limited circumstances.
In relatively difficult international markets, many new-to-market American companies understandably prefer non-competitive contracts. These contracts facilitate closer partnerships with the customer, justify investments in facilities, technology, and know-how transfer in a relatively unknown market, and help suppliers achieve economies of scale. Before pursuing a market entry strategy for Algeria based on developing these types of opportunities, American companies should know that non-competitive procurements in the public sector are rare.
Like in the United States, non-competitive procurement is generally a sensitive topic in Algeria’s public sector, and competition is the preferred procurement process method. During Algeria’s current period of political transition, which was caused mainly by widespread dissatisfaction with government corruption, contracting authorities are even more reluctant to pursue non-competitive contracting vehicles. Like in the U.S., auditors, and taxpayers view these types of contracts with skepticism. Non-competitive processes are perceived to create situations where the taxpayer does not get a fair value, or taxpayer dollars are misused.
While single-source contracts, called “mutual consent agreements” in Algeria, are not categorically a bad thing, according to Algeria’s procurement laws, they are only appropriate under the following limited circumstances:
- When a tender fails to attract sufficient bids twice
- When the desired equipment or services are so special (e.g., unique, provided only by one known source, involving issues of compatibility with existing systems, requiring limited or proprietary systems), that a tender is not an efficient procurement mechanism*
- For sensitive contracts for national security-related government agencies
- When a previously awarded contract is terminated, and circumstances do not permit the issuance of another tender
- For projects specified in bilateral cooperation agreements (e.g., financing agreements with bi-lateral or multi-lateral financial institutions, development projects, or grants)
- When emergency supplies are needed to provide for the essential needs of the population
- For urgent, national priority projects
Each public entity’s contracting authority determines which procurement vehicle to use and is responsible for adequately justifying its decisions, especially in non-competitive procurement. These contracting authorities are subject to regular audits. The procedure for awarding a mutual consent contract can be simple or include advance consultation with a supplier.
If your firm is considering developing export opportunities in Algeria that require non-competitive procurement processes, please contact Kamal.Achab@trade.gov, Sr. Commercial Specialist at the U.S. Commercial Service in Algeria for business counseling regarding the probability of a successful outcome.