Assignment 2

Referring the PPA (2011) condition of contract for consultancy services, explain and
explore the following core legal issues.
prequalification criteria and selection procedure for consultancy services1
1 Announcement and pre-qualification (long-listing)
Procedures are the same as for Quality-Based Selection When international expertise is required,
the Client should also advertise the job in international newspapers and/or on web sites and/or
technical magazines, seeking expressions of interest. The following information should be
included in the announcement (advertisement) which invites Consultants to submit their
expressions of interest for the project.
 information about the Client and the contact person;

 source of finance and the estimated budget for construction works (only if there are firm
limits on the available financing);

 name, location and size of the project;

 whether the services will be procured nationally, internationally, or a as a combination;

 limitations on eligibility (as may be set by sources of financing);

 type and scope of services required (a brief summary of the job);

 areas of expertise deemed to be critical;

 estimated time schedule for the project;

 the forms of Agreement and any special terms or conditions;

 insurance requirements;

 information required from the applicant Consultancy Firms (general and similar
experience, permanent key staff, resources, brochures, financials, etc.);

 method of Consultant selection;

 deadline for the submission (personally or online) of expressions of interest;

 limit of page count for submittals (when appropriate).

The information requested should be the minimum required to make a judgment on the firms’
suitability, and not be so complex as to discourage Consultants from expressing interest nor to
create undue cost burden on Consultants.

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2 Short listing
The Client (or a Consultant adviser) shall examine the expressions of interest submitted by
eligible Consultants and prepare a short list. Consideration of firms other than those which have
expressed interest in accordance with the Client’s announcement and pre-qualification conditions
is not recommended.
As applicable, the Client should bear in mind the following factors during short-listing, ensuring
that it is done in accordance with instructions given when requesting expressions of interest:
 general and relevant experience – technical competency;

 capacity to complete the work – resources within the firm;

 access to support resources and established associations;

 availability of key personnel; „ managerial capacity to perform;

 financial capability to perform (if applicable);

 past performance on Client contracts (e.g., delivered time and to budget);

 location of the firm’s office in relation to the work;

 knowledge of special local conditions (such as seismic conditions, permafrost, ecological

constraints etc.;

 meaningful partnerships/associations with National Consultancy Firms in international

projects (as recommended by FIDIC for the capacity building of National Consultancy
Firms; Ref. F11);

 Quality Management System established in the firm (if applicable);

 Detailed information of permanent key staff;

 Integrity Management System (if applicable);

 political, social, cultural and environmental sensitivity (without conflicting with integrity
principles);

 security level required.

FIDIC recommends that the Client have access to appropriately experienced and knowledgeable
people when forming the short list. Where the resources are not available in-house, Consultants
can be retained. Financial resources of the firm must be evaluated realistically to match the needs
and must not be exaggerated, keeping in mind that Consultancy Services are intellectual services.

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3 Request for Proposals (RPF)
Procedures are generally the same as for Quality-Based Selection (see Section 4.1.3).
a - Letter of invitation (LOI)
The letter of invitation shall state the intention of the Client to enter into an Agreement for the
provision of Consultancy Services, the source of funds, and the date, time and address for the
submission of proposals.
b - Terms of Reference (TOR)
The Client is responsible for drafting the TOR for selection, which should include an assessment
of the physical magnitude and resource requirements of the project. The TOR shall be prepared
by the Client, or by an independent Consultant(s) retained by the Client and specialized in the
area of the assignment.
The brief or scope of the services described in the TOR shall be compatible with the available
construction budget. The TOR shall define clearly the objectives, goals and scope of the
assignment, and provide background information (including a list of existing studies and basic
available data) to facilitate the Consultants’ preparation of their proposals. If the transfer of
know-how or technical training will be an objective, it should be specifically outlined along with
details of number of staff to be trained, and so forth, to enable the Consultants to estimate the
required resources. The TOR shall list the services and surveys necessary to carry out the
assignment and the expected outputs (reports, data designs, tender documents, maps, surveys,
etc.).
c - Information/Instructions to Consultants (ITC) The ITC shall contain the same information as
for QBS, with the following additional requirements relating to price:
 the minimum passing score (threshold) for quality (when applicable);

 a request for cost estimate details in a particular format, including rates (staff
costs) and reimbursable costs. The cost of staff time shall be estimated on a
realistic basis for both National and Foreign or Locally Based Foreign
Consultancy Firms, separately for each. (These details will form the basis for
Agreement negotiations and must be submitted in a separate, sealed envelope.);

 necessary information about the proposal submission procedure, including the

requirement that the technical proposals and financial proposals be sealed and
submitted separately in a manner that shall ensure that the technical evaluation
will not be influenced by price;

 details of the two-stage evaluation process, a listing of the technical evaluation

criteria and weights given to each criterion, the details of the financial evaluation,
the relative weights for quality and cost;

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  the procedure for the announcement of the technical scores together with the
public opening of the financial proposals;

 the formula by which the financial scores shall be calculated;

 whether or not a threshold shall be applied to the financial proposals, and the cost
below a certain percent of the Client’s pre-estimated cost for Consultancy services
shall be announced as non- conforming and shall not be evaluated. The exception
to this is, if a Consultant is proposing an innovative approach to the work which
results in a justified lower cost of services. The Consultant should be allowed to
defend its approach and, if able to justify it, should not be announced as non-
conforming;

 currency(ies) in which the costs of services shall be expressed, compared and

paid;

 the period for which the Consultants’ proposals shall be held valid (normally 60
to 90 days) and during which the Consultants shall undertake to maintain, without
change, the proposed key staff and shall hold to both the rates and total price
proposed, in case of an extension of the proposal validity period, the right of the
Consultants not to maintain their proposal. This validity period is particularly
important where the price is being evaluated.

d - The Proposed Agreement Procedures are the same as for Quality-Based Selection.
4 Preparation and submission of proposals.
Both technical and financial proposals shall be submitted in separate, sealed and correspondingly
marked envelopes, with both envelopes put together in one outer envelope. Receipt and opening
of proposals The technical and the financial proposals submitted (either personally or online) by
the Consultants shall be registered by the officer-in-charge at the time they are received. They
shall be kept safe until they are to be opened. interviews of key Consultant team members; a visit
to the Consultants’ premises; discussions with the Consultant’s past Clients and project end
users; and inspections of past projects. These activities can be carried out by teams of experts
including Client representatives and individual Consultants. Care must be taken to ensure that
such measures are carried out in a perfectly fair and equitable manner, with appropriate
transparency. The evaluation of the proposals shall be carried out in three stages:
a - Evaluation of the technical proposals (quality)
b - Evaluation of the financial proposals (cost)
c - Combined technical and financial
5 Receipt and opening of proposals

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 The technical and the financial proposals submitted (either personally or online) by the
Consultants shall be registered by the officer-in-charge at the time they are received. They shall
be kept safe until they are to be opened. Any proposal received after the announced closing time
for submission of
proposals shall be returned unopened. Only where there is good reason, should the Client extend
the deadline for the submission of proposals. No amendments shall be given and/or accepted
after the agreed deadline. When the deadline has passed, the proposals submitted shall be opened
without delay. The envelopes containing the technical proposals shall be opened; any financial
envelopes shall be retained unopened until the technical evaluation is finished and announced to
the Consultants as explained below. In some countries, it has been a common practice to deposit
the financial proposals with a reputable notary public or other independent authority until they
are opened. The Consultants invited to submit proposals should be invited to attend the opening
of both technical and financial proposals. Minutes shall be prepared and signed by the legal
representatives of both the Client and the Consultants, at the times of the openings.
6 Evaluation of proposals
The Client shall systematically evaluate in short time (for example in 1/5th of the time allocated
for proposal preparation) and rank each proposal against the basis for selection outlined in the
RFP. This process helps to maintain the integrity of the selection process,
Consultant’s past Clients and project end users; and inspections of past projects. These activities
can be carried out by teams of experts including Client representatives and individual
Consultants. Care must be taken to ensure that such measures are carried out in a perfectly fair
and equitable manner, with appropriate transparency. The evaluation of the proposals shall be
carried out in three stages:
a - Evaluation of the technical proposals (quality)
b - Evaluation of the financial proposals (cost)
c - Combined technical and financial evaluation.
7 Selection of the Consultancy Firm and negotiations
The Consultancy Firm which obtains the highest total score (weighted technical plus weighted
financial score) shall be invited for negotiations. the methodology, staffing, Client’s inputs and
any special conditions of the Agreement and confirmation of availability of all staff, nominated
in the proposal submitted by the Consultant. Only minor changes shall be made, if necessary.
Financial negotiations shall include clarification of the Consultancy Firm’s (or each partner
firm’s) tax liability in the country of the investment, and how this tax liability has been or would
be reflected in the agreement.
Proposed unit rates for staff time and reimbursable costs shall not be negotiated, since these
have already been a factor of selection in the cost component of the proposal. If the negotiations
fail to result in an acceptable Agreement, the Client shall terminate the negotiations and invite
the Consultant with the next highest total score. The first invited firm shall be informed of the

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reasons for this termination and the Client shall not reopen negotiations with the same firm.
Negotiations should be conducted in an atmosphere of cooperation. This should strengthen and
build the confidence and trust which are absolutely essential to healthy Client - Consultant
relationship.
8 Agreement
The recommended form of agreement is the FIDIC Client – Consultant Model Services
Agreement or at least a recognized standard contract, with appendices filled in as appropriate,
reflecting the scope of the work. The final TOR and the agreed methodology shall be
incorporated in the scope of Services. The selected firm should not be allowed to change the key
staff, or any major items included in its proposal, unless both parties agree that undue delay in
the selection has made it necessary. The Consultant’s team, or team member can only be
changed for significant reasons after the Agreement is signed. The Client must be informed, and
the former team/team member must be replaced with another team/team member of similar
qualifications with the Client’s approval.
9 Notification
When the Agreement has been signed, all those firms which have submitted proposals should be
informed by the Client within a reasonable time that they were not successful.
All tenderers should receive the following:
a - Name of the successful Consultant and its overall score
b - Price of the Agreement
c - Number of proposals received
If there is a change in the preferred Consultant after de-briefing, the following procedure shall be
followed:
a) The LOI (Letter of Intent) of the first preferred Consultant shall be withdrawn.
b) The LOI shall be issued to the next preferred Consultant.
c) Appropriate provisions should be incorporated in the RFP accordingly.
If the above procedures will not be followed, the Client should explain in the RFP which other
procedures are to be followed if the preferred Consultant changes after d

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2 contract documents and breach of contract in consultancy service
Contract document is the written document that defines the basis of the contract including both
parties’ roles, responsibilities and detailed description of the work or service such as drawings,
specifications, procedures, any other conditions etc. It should include sufficient information to be
able to complete the work or service.
They are so important if a disagreement arises, there will be a document that the parties can refer
back to in order to get the relationship back on track.
According to PPA (2011) referring Article 7
7. Contract Documents
7.1 The documents forming the Contract shall be interpreted in the following order of
precedence in the event of any conflict between the documents comprising this Contract:
(a). Agreement, including all appendices;
(b). The Special Conditions of Contract;
(c). The General Conditions of Contract;
(d). Any other document listed in the SCC as forming part of the Contract.
7.2 All documents forming the Contract are intended to be correlative, complementary, and
mutually explanatory.
7.3 Any action required or permitted to be taken, and any document required or permitted to be
provided, under the Contract by the Public Body or the Consultant may be taken or provided by
the authorized representatives specified in the SCC Clause 12.1.
7.4 The Contract constitutes the entire agreement between the Public Body and the Consultant
and supersedes all communications, negotiations and agreements (whether written or oral) of
parties with respect thereto made prior to the date of Contract. No agent or representative of
either Party has authority to make, and the Parties shall not be bound by or be liable for, any
statement, representation, promise or agreement not set forth herein.
Breach of contract occurs when one party in a binding agreement fails to deliver according to the
terms of the agreement. A breach of contract can happen in both a written and an oral contract.
The parties involved in a breach of contract may resolve the issues among themselves or in a
court of law.
According to PPA (2011) referring Article 19
19. Breach of Contract
19.1 Either party commits a breach of contract where it fails to discharge any of its obligations
under the specific contract.

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19.2 Where a breach of contract occurs, the party injured by the breach shall be entitled to the
following remedies:
(a). Compensation / Claim for liquidated damages as specified in GCC Clause 26; and/or
(b). Termination of the contract.
19.3 In any case where the Public Body is entitled to damages, it may deduct such Suspension
damages from any sums due to the Consultant or call on the appropriate guarantee.
3 phase of consultancy services
1. Entry and Contracting

This first phase deals with the initial contact with the client about the project. If you're
independent, you're meeting directly with a potential client. If you're working through a recruiter,
think of this stage as an interview. Tasks include:
 Setting up the first meeting.

 Exploring what the problem is.

 Determining if you're the right consultant for the work.

 Listing the client's expectations.

 Specifying what expectations, you have.

 Figuring out how to get started.

When consultants talk about their disasters, their conclusion is usually that the project was faulty
in the initial contracting stage.

2. Data Collection and Diagnosis

It's important that consultants come up with their own sense of the problem. Some consider this
step to be where the consultant adds the most value. Out of this phase the consultant needs to
know who is going to be involved in defining the problem; what methods will be used; what kind
of data should be collected; and how long will it take. If you're consulting through an agency,
you've likely already been hired by this point. If not, you run the risk of working for free so be
careful.
3. Feedback and the Decision to Act
As a consultant you'll need to report your findings from phase 2. The key here is to take the
mountain of information that has been collected and reduce it so that it can be managed and
understood.

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A consultant must also decide how to involve the client in the process of analyzing the
information. Be prepared to encounter resistance when giving feedback to the organization. The
more high-profile the project, the more resistance you are likely to encounter. The consultant
must handle this resistance before an appropriate decision can be made about how to proceed.
This phases is pretty much what others call the planning phase and includes setting the goals for
the project and selecting the best action steps.
4. Implementation
As the name implies, this step involves taking everything that has been decided previously and
implementing the solution decided upon. Often, the implementation falls to the organization, but
sometimes the consultant will remain deeply involved in the efforts.
Some projects start implementation with an educational event. This should be a series of
meetings to introduce some change. It may require a single meeting to get different parts of the
organization together to address a problem. It may be a training session. In cases, the consultant
is usually involved in rather complicated design work and in running the meeting or training
session.
Generally, it consultants remain involved with the project through to completion. This is
especially true if you are a lead developer or architect.
5. Extension, Recycle, or Termination
This begins with an evaluation of the main event. Following this is the decision whether to
extend the process to a larger segment of the organization. Sometimes it is not until after some
implementation occurs that a clear picture of the real problem emerges. In this case the process
recycles and a new contract needs to be discussed. If the implementation was either a huge
success or a moderate-to-high failure, termination of further involvement on this project may be
in the offing. There are many options for ending the relationship and termination should be
considered a legitimate and important part of the consultation. If done well, it can provide an
important learning experience for the client and the consultant, and also keep the door open for
future work with the organization.
4 Right and obligation of the consultancy parties in consultancy service.
The term rights refer to what we gain, and obligations refer to what we should do when we come
to on the contracting parties in consultancy service.
According to PPA (2011) referring Article 43
Obligations of the Consultant
43. Consultant’s Responsibilities
43.1 The Consultant shall perform the Consultancy Services and carry out their obligations
hereunder with all due diligence, efficiency and economy, in accordance with generally accepted
professional standards and practices, and shall observe sound management practices, and employ
appropriate technology and safe and effective equipment, machinery, materials and methods. The

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Consultant shall always act, in respect of any matter relating to this Contract or to the Services,
as faithful adviser to the Public Body, and shall at all times support and safeguard the Public
Body’s legitimate interests in any dealings with Sub Consultants or Third Parties.
43.2 The Consultant shall respect and abide by all applicable laws and regulations in force. The
Consultant shall indemnify the Public Body against any claims and proceedings arising from any
infringement by the Consultant, its sub-consultants or their employees of such laws and
regulations.
43.3 The Consultant shall ensure that Consultancy Services conform to applicable environmental
and quality standards, that no chemical or other product/equipment is used in such a way as to
cause negative impact on the environment in general and occupational health hazards for the
personnel of the Public Body in particular, and shall employ the most recent technology, safe and
effective equipment, machinery, materials and methods, as necessary. The Consultant shall
always act, in respect of any matter relating to this Contract, to safeguard the Public Body's
legitimate interests, pursuant to Conditions of this Contract
43.4 The Consultant shall obtain the Public Body's prior approval in writing before taking any of
the following actions:
(a). Entering into a subcontract for the performance of any part of the Consultancy Services, it
being understood that the Consultant shall remain fully liable for the performance of the
Consultancy Services by the Sub-consultant and its Personnel pursuant to the Appendix C;
(b). Any other action that may be specified in the SCC. 43.5 The Consultant shall furnish the
Public Body with any personnel data or information required by the Public Body to arrange the
provision of documentation required in accordance with GCC Clause 31.3.
43.6 The Consultant shall comply with administrative orders given by the specific contract
manager. Where the Consultant considers that the requirements of an administrative order go
beyond the authority of the specific contract manager or of the scope of the contract, it shall, on
pain of being time-barred, notify the specific contract manager, explaining its opinion, within 30
days after receipt thereof. Execution of the administrative order shall not be suspended because
of this notice.
43.7 The Consultant shall treat all documents and information received in connection with the
contract as private and confidential, and shall not, save in so far as may be necessary for the
purposes of the performance thereof, publish or disclose any particulars of the contract without
the prior consent in writing of the Public Body or the specific contract manager after consultation
with the Public Body. If any disagreement arises as to the necessity for any publication or
disclosure for the purpose of the contract, the decision of the Public Body shall be final.
According to PPA(2011) referring Article 31
Obligations of the Public Body
31. Provision of Assistance and Exemptions

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31.1 Unless otherwise specified in the SCC, the Public Body shall use its best efforts to ensure
that the Government shall:
(a). Provide the Consultant, Sub-Consultants and Personnel with work permits and such other
documents as shall be necessary to enable the Consultant, Sub-Consultants or Personnel to
perform the Consultancy Services.
(b). Arrange for the Personnel and, if appropriate, their eligible dependents to be provided
promptly with all necessary entry and exit visas, residence permits, exchange permitsand any
other documents required for their stay in the Federal Democratic Republic of Ethiopia.
(c). Facilitate prompt clearance through customs of any property required for the Services and of
the personal effects of the Personnel and their eligible dependents.
(d). Issue to officials, agents and representatives of the Government all such instructions as may
be necessary or appropriate for the prompt and effective implementation of the Services.
(e). Exempt the Consultant and the Personnel and any Sub-Consultants employed by the
Consultant for the Services from any requirement to register or obtain any permit to practice
their profession or to establish themselves either individually or as a corporate entity in the
Federal Democratic Republic of Ethiopia.
(f). Grant to the Consultant, any Sub-Consultants and the Personnel of either of them the
privilege, pursuant to the laws of the Federal Democratic Republic of Ethiopia, of bringing into
the Federal Democratic Republic of Ethiopia reasonable amounts of foreign currency for the
purposes of the Services or for the personal use of the Personnel and their dependents and of
withdrawing any such amounts as may be earned therein by the Personnel in the execution of the
Services.
(g). Provide to the Consultant, Sub-Consultants and Personnel any such other assistance as may
be specified in the SCC.
31.2 The Public Body shall supply the Consultant with any information or documentation at its
disposal which may be relevant to the performance of the contract. Such documents shall be
returned to the Public Body at the end of the period of the Contract.
31.3 The Public Body shall issue to its employees, agents and representatives all such
instructions as may be necessary or appropriate to facilitate the prompt and effective
performance of the Consultancy Services.
31.4 The Public Body shall give the Consultant access to its premises, where required for the
performance of the Consultancy Services, and assist the Consultant with any security
documentation necessary at the premises where the Consultancy Services are to be performed in
accordance with the Contract.

5 Subcontracting in consultancy service

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Subcontracting is the practice of assigning or out sourcing, part of the obligation and tasks under
a contract to another party.
According to PPA (2011) referring Article 14
14. Subcontracting
14.1 A sub-contract shall be valid only if it is a written agreement by which the Consultant
entrusts performance of a part of the Contract to a third party.
14.2 In the event the Consultant requires the Consultancy Services of Sub-consultants that are
not included in the Contract, the Consultant shall obtain the prior written approval and clearance
of Public Body for all Sub-consultants. The Consultancy Services to be subcontracted and the
identity of the subcontractors shall be notified to the Public Body. The Public Body shall with
due regard to the provisions of GCC Clause 10 within 15 days of receipt of the notification,
notify the Consultant of its decision, stating reasons should he withhold such authorization.
14.3 The terms of any sub-contract shall be subject to and conform to the provisions of this
Contract.
14.4 The Public Body shall have no contractual relations with the Sub-Contractors
14.5 Sub-consultants must satisfy the eligibility criteria applicable to the award of the contract
and they cannot be in any of the situations excluding them from participating in contract.
14.6 The Consultant shall be responsible for the acts, defaults and negligence of his Sub
Consultants and their agents or employees, as if they were the acts, defaults or negligence of the
Consultant, his agents or employees. The approval by the Public Body of the subcontracting of
any part of the contract or of the Sub- Consultant to perform any part of the consultancy services
shall not relieve the Consultant of any of his obligations under the contract.
14.7 If the Consultant enters into a subcontract without approval, the Public Body may apply, as
of right without giving formal notice thereof, the sanctions for breach of contract provided for in
GCC Clauses 19 and 21.
14.8 If a Sub- Consultant is found by the Public Body to be incompetent in discharging its duties,
the Public Body may request the Consultant forthwith, either to provide a Sub- Consultant with
qualifications and experience acceptable to the Public Body as a replacement, or to resume the
implementation of the tasks itself.
6 Amendment in consultancy services
in consideration of the mutual agreements contained below and other good and valuable
consideration, the receipt and adequacy of which is acknowledged, the parties agree as follows:
1. Definitions.
All capitalized terms in this Amendment that are not defined herein shall have the meanings
provided in the Management Agreement.

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2. Extension of Term.
The term of the Management Agreement is extended for a period of ______ year(s), beginning
on _______________________ and ending on ________________________, unless terminated
earlier as provided in the Management Agreement.
3. Fees.
Paragraph ___ of the Management Agreement is amended to provide that the monthly fee of
the Property Manager shall be _______________ percent (____%) of gross collections.
4. Representations and Warranties.
Owner and Property Manager each warrants that it has not executed, and represents that it will
not execute, any other agreement with provisions contradictory to or in opposition to the
provisions of the Management Agreement, as amended by this Amendment (the “Amended
Management Agreement”) and that, in any event, the requirements of the Amended
Management Agreement are
(i) paramount and controlling as to the rights and obligations set forth in any other agreement
and (ii) supersede any other requirements in conflict with the Amended Management
Agreement.
7 Termination in consultancy service
Termination describes a contract expiring or being brought to an early end.
According to PPA (2011) referring Article 21
21. Termination
Termination by the Public Body
21.1 Termination shall be without prejudice to any other rights or powers under the contract of
the Public Body and the Consultant.
21.2 In addition to the grounds for termination defined in these General Conditions, the Public
Body may, by not less than thirty days’ written notice of termination to the Consultant stating the
reason for termination of the contract and the date on which such termination becomes effective.
(except in the event listed in paragraph (o) below, for which there shall be a written notice of not
less than sixty days), such notice to be given after the occurrence of any of the events specified
in this GCC Sub-Clause 21.2 (a) to (p), terminate the Contract ,if:
(a). The Consultant fails to provide any or all of the Consultancy Services within the period
specified in the Contract, or within any extension thereof granted by the Public Body pursuant to
GCC Clause 68 or if the Consultancy Services do not meet the Schedule of Requirements stated
in the Contract;
(b). The Consultant fails to remedy a failure in the performance of their obligations as specified
in a notice of suspension pursuant to GCC Clause 20 within thirty days of receipt of such notice

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of suspension of assignment or within such further period as the Public Body may has
subsequently approved in writing;
(c). The Consultant becomes (or, if the Consultant consists of more than one entity, if any of its
Members becomes) insolvent or bankrupt or enters into any agreements with its creditors for
relief of debt or take advantage of any law for the benefit of debtors or go into liquidation or
receivership whether compulsory or voluntary, other than for a reconstruction or amalgamation;
(d). The Consultant fails to comply with any final decision reached as a result of direct informal
negotiation pursuant to GCC Sub-Clause 25.2 hereof;
(e). The Consultant is unable, as the result of Force Majeure, to perform the Consultancy
Services for a period of not less than sixty (60) days;
(f). The Consultant assigns the contract or sub-contracts without the authorization of the Public
Body;
(g). The Consultant has been guilty of grave professional misconduct proven by any means
which the Public Body can justify;
(h). The Consultant has been declared to be in serious breach of contract financed by the Federal
Democratic Republic of Ethiopia's budget for failure to comply with its contractual obligations.
(i). The Consultant has been engaged in corrupt or fraudulent practices in competing for or in
executing the Contract.
(j). Any organizational modification occurs involving a change in the legal personality, nature or
control of the Consultant, unless such modification is recorded in an addendum to the Contract;
(k). Any other legal disability hindering performance of the Contract occurs;
(l). The Consultant fails to provide the required guarantees or insurance, or the person providing
the underlying guarantee or insurance is not able to abide by its commitments.
(m). Where the procurement requirement of the Public Body changes for any apparent or
obvious reason;
(n). Where it emerges that the gap between the value of the Contract and the prevailing market
price is so wide that allowing the implementation of the contract to proceed places the Public
Body concerned at a disadvantage;
(o). The Public Body, in its sole discretion and for any reason whatsoever, decides to terminate
the Contract.
(p). The accumulated liquidated damage reached its maximum as stated in GCC Clause
26.1(b).
Termination by the Consultant

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21.3 The Consultant may, by not less than thirty (30) days' written notice to the Public Body, of
such notice to be given after the occurrence of any of the events specified in GCC SubClause
21.3 (a) to (d) terminate the Contract if:
(a). The Public Body fails to pay any money due to the Consultant pursuant to the Contract and
not subject to dispute pursuant to Clause 25, within forty-five (45) days after receiving written
notice from the Consultant that such payment is overdue;
(b). The Public Body is in material breach of its obligations pursuant to the Contract and has not
remedied the same within forty-five (45) days (or such longer period as the Consultant may have
subsequently approved in writing) following the receipt by the Public Body of the Consultant’s
notice specifying such breach;
(c). The Consultant is unable as the result of Force Majeure, to perform a material portion of the
Consultancy Services for a period of not less than sixty (60) days; or
(d). The Public Body fails to comply with any final decision reached as a result of settlement of
disputes pursuant to GCC Clause 25 hereof.
Disputes About Events of Termination
21.4 If either Party disputes whether an event specified GCC Sub-Clauses 21.2 (a) to (n) or GCC
Sub-Clause 21.3 hereof has occurred, such Party may, within forty-five (45) days after receipt of
notice of termination from the other Party, refer the matter to settlement of disputes pursuant to
GCC Clause 25 and this Contract shall not be terminated on account of such event except in
accordance with the terms of any resolution award.
21.5 In the event the Public Body terminates the Contract pursuant to the GCC Sub-Clause 21.2
(a) to (n) the Public Body may procure, upon such terms and in such manner as it deems
appropriate, Consultancy Services similar to those undelivered or not performed, and the
Consultant shall be liable to the Public Body for any additional costs for such similar
Consultancy Services. However, the Consultant shall continue performance of the Contract to the
extent not terminated.
21.6 If the Public Body terminates the Contract in the event specified in GCC Sub-Clause 21.2
(o) the notice of termination shall specify that termination is for the Public Body's convenience,
the extent to which performance of the Consultant under the Contract is terminated, and the date
upon which such termination becomes effective.
Payment upon Termination
21.7 If the Public Body terminates the Contract in the event specified in GCC Sub-Clause 21.2
(o) Public Body shall reimburse the Consultant for all reasonable costs incurred by the
Consultant prior to receipt of the notice of termination.
21.8 In the event the Public Body terminates the Contract pursuant to the GCC Sub-Clause 21.2
(c) termination will be without compensation to the Consultant, provided that such termination

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will not prejudice or affect any right of action or remedy that has accrued or will accrue
thereafter to the Public Body.
21.9 In the event of any termination by the Public Body under this Clause, for the avoidance of
doubt, the Consultant will not be restricted from making any claim in respect of the Contract
Price to the extent the Contract Price is outstanding and due and payable.
8 Claims and settlements of disputes
Claim can be defined as a legal demand or assertion by a claimant for compensation, payment or
reimbursement for a loss under a contract or an injury due to negligence. The basic reason that
leads to the claim is a failure of parties to properly carryout their obligations.

Settlement of disputes is the process of resolving disputes between parties and claim handling
practices. There are
1 Non-adversarial: non legal binding means of settling disputes.
a) Negotiation- Can be defined as a non -binding procedure involving direct interaction of the
disputing parties when one party approaches the other with the offer of a negotiated settlement
on an object assessment each others position.
b) Meditation -is also an informal alternative to litigation mediators are individuals, trained in
negotiations, who bring opposing parties together and attempt to work out a settlement or
agreement that both parties who accept or reject.
c)Conciliation: is also an alternative dispute resolution process where by the parties to a dispute
use a conciliator, who meets with the parties both separately and together in an attempt to resolve
their difference.
d)Quasi-conciliation: it comes about when one of the parties unilaterally appoints an expert
professional to advise on a dispute perhaps to obtain a second opinion. The investigators may be
appointed to discover the facts accordingly to make a recommendation to the party about how to
proceed the issue. If the other party also appoint such a professional, then the two of them may
get together and compare their findings and their conclusions.
2)Adverbial means of settling disputes
a) Arbitration -is the voluntary submission of a dispute to one or more persons for final and
binding determination on contrary to above discussed non adversarial means of settling disputes.
Arbitration process is formal and well structured.
It is also on orderly proceeding and governed by rules of procedure prescribed by law. On
contrary to mediation or conciliator we have discussed above arbitrary has broad power to
determine matters of fact, law,and procedure and a well as final power of decision .
b) litigation -is the last resort for the parties if they cannot resolve their disputes by any one of
the above indicated methods. Litigation is more expensive interms of attorney's fees and time
costs than in case of arbitration.

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According to PPA (2011) referring Article 25
25. Settlement of Disputes
25.1 During any dispute, including a dispute as to the validity of the Contract, it is mutually
agreed that the Consultant shall continue its performance of the provisions of the Contract
(unless the Public Body requests in writing that the Consultant does not do so).
25.2 The Public Body and the Consultant shall make every effort to resolve amicably by direct
informal negotiation any disagreement, controversy or dispute arising between them under or in
connection with the Contract or interpretation thereof.
25.3 If a dispute arises between the Public Body and the Consultant in relation to any matter
which cannot be resolved by the Authorized Officer and the Consultant's Contract Manager
either of them may refer such dispute to the procedure described in ITC Sub-Clause 25.4.
25.4 In the second instance each of the Public Body and the Consultant shall appoint more senior
representatives than those referred to in Sub-Clause 25.3 to meet solely in order to resolve the
matter in dispute. Such meeting(s) shall be chaired by the Public Body (but the chairman shall
not have a casting vote). Such meeting(s) shall be conducted in such manner and at such venue
(including a meeting conducted over the telephone) as to promote a consensual resolution of the
dispute in question at the discretion of the chairman.
25.5 If the Parties fail to resolve such a dispute or difference by conciliation within twenty-eight
(28) days from the commencement of such conciliation, either party may require that the dispute
be referred for resolution through the courts in accordance with Ethiopian Law.
25.6 Only those Contracting Authorities that are allowed by law to proceed to arbitration can do
so.

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