Ministry Overhauls SOE Procurement With Technical Committee Requirements

The Ministry of Finance has made the use of technical committees mandatory for all complex or high value procurements executed by federal state-owned enterprises (SOEs).

The requirement embedded in a new Ministry directive marks a decisive shift from discretionary evaluation practices to a standardized and institutional mechanism that went into effect on July 22, 2025.

In the preamble of the newly enacted Procurement Execution directive, its authors state they aim to correct gaps in previous procurement procedures and provide SOEs with an improved and harmonized framework.

Under Article 10 of the directive, every SOE is now required to establish a technical committee for procurements involving technical complexity—including infrastructure, consulting, industrial goods, and service contracts.

These committees will play a decisive role in assessing the quality, feasibility, and compliance of bids before endorsement or approval is granted.

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A committee, to be established by the head of the state-owned enterprise, is required to consist of at least three members although the directive grants the SOE chief the leeway based on the estimated value and complexity of the procurement.

Committees are charged with reviewing technical documents in reference to specifications outlined in bidding documents and submitting the results of an evaluation to the procurement unit or the procurement committee.

Prior to this, an SOE’s board of directors exercised broad latitude in procurement oversight, approving tenders and amendments without a uniform national standard. Directive 1070/2025, however, this directive dismantles that patchwork authority. Boards are now largely stripped of operational control, tasked only with oversight within the limits defined by the directive.

The only two responsibilities assigned to the board of directors of an SOE are evaluating the investment and capital procurement budget execution reports and ensuring that feedback and corrective actions proposed by internal audit units or board audit subcommittees are implemented.

The piece of legislation details a strict chain of command, assigning distinct responsibilities to procurement units, procurement endorsing committees, and heads of enterprises—all under scrutiny of the Public Procurement and Property Administration Authority (PPPA).

SOEs are now also required to publicly disclose procurement information. Article 16 mandates that enterprises publish bid notices, tender evaluations, and contract awards. They must also implement electronic procurement systems and keep all procurement documentation archived and accessible.

“Except for confidential information withheld for security reasons, major information related to the procurement conducted by state-owned enterprises shall be made public through the state-owned enterprise’s official website or other electronic means, as applicable, within five business days after the successful bidder has been selected and the procurement contract has been signed,” reads the directive.

Procurement officers with personal ties to bidders are banned from committee participation. Moreover, the directive bars former employees from participating in bids involving their previous institutions.

The directive also introduces a robust mechanism to address conflicts of interest in SOE procurement processes, mandating immediate internal review upon the receipt of any credible information.

This includes compelling anyone suspected of having a conflict of interest to provide “a written explanation regarding the potential conflict” and then determining the next steps by “gathering additional information in such a manner as the state-owned enterprise deems appropriate.”

The directive explicitly prohibits employees and officers engaged in procurement from accepting gifts that could influence or appear to influence procurement-related decisions, including job offers, personal discounts, or hospitality that may compromise their impartiality.

Beyond fiscal compliance, it mandates procurement units factor lifetime cost analyses, environmental protection standards, and social impact filters in tender evaluation.

The directive also tightens the rules surrounding the once-loosely policed realm of emergency and direct procurements.

Narrow and verifiable conditions under which direct purchases can be made have been defined and special justifications must be documented and submitted to the relevant authorities for approval.

According to the updated directive, public procurement can now lawfully be extended to suppliers or contractors who have previously delivered goods or services—provided strict conditions are met.

“It is deemed advantageous to procure additional goods, consultancy, or non-consultancy services of the same type and price from a supplier who has previously provided them,” the regulation states, stressing that this must be done “with the supplier’s consent and following the procedures detailed.”

Among the conditions, the additional procurement must not exceed the total value of the original contract and must be ordered either within the contract’s validity period or within twelve months of its completion, while unit prices are required to remain unchanged (unless price adjustments were already permitted and applied).

The directive also authorizes the execution of unanticipated construction works. However, these additions are capped at 40 percent of the original contract’s total value and must either align with the original scope or “result in better economic value if integrated with the main work.”

When a price is not specified in the original contract, the directive stipulates that it “shall be executed at a price agreed upon through negotiation, provided that it is confirmed to reflect the prevailing market price.”