Out-Law Analysis 4 min. read
03 Nov 2022, 11:56 am
In recent years, several amendments to the Public Tender Law and the Public Tender Regulation in Qatar have had a significant impact on the procurement process.
Qatar Decree Law No. 18 of 2018 made a series of amendments to Law No. 24 of 2015, known as the Public Tender Law, including Article 2 of its preamble and nine other articles.
The 2018 decree amended the definition of an ‘emergency’ in the Public Tender Law to include events that compromise the state or the government. As a result, the Public Tender Law now defines an emergency as: “any serious and unexpected threat to safety or security, or any serious breach that threatens loss of life, property, production, environmental pollution, or any circumstance that would compromise the status of the State or its governmental entities, and cannot be dealt with by normal tender procedures.”
The change also impacts the meaning of Article 8 of the Public Tender Law, which states that: “Contracting is in direct agreement… in emergency or urgent situations, which cannot follow tender or practice procedures…”
While the change may have been prompted by short-term diplomatic pressures faced by Qatar in 2018, it has also had a positive impact in the years since. In 2020, for example, it provided a basis for government entities to continue their procurement activities during the unprecedented upheaval caused by the Covid-19 pandemic.
The decree amended Article 2 of the Preamble to read: “With the approval of the Prime Minister, at the minister's suggestion, an act or service or the supply of an item may be excluded from compliance with the provisions of this Act.” Prior to the decree, Article 2, as a default, only excluded the country’s armed forces, the police and other military agencies, along with Qatar Petroleum – now Qatar Energy – and the Qatar Investment Authority from application of the Public Tender Law. The change to Article 2 of the Preamble provides enhanced discretion for government entities to facilitate their procurement activities, subject to the approval of the prime minister.
The following changes were also made to Article 36 of the Public Tender Law:
"By decision of the Council of Ministers, at the minister's suggestion, may identify the items that government agencies are obliged to provide from national products.”
"The participation of established companies and entities registered with the Free Zones Authority and the Qatar Financial Authority, or with other legally authorized entities, shall be in the tenders, auctions, practices, competitions and direct agreement, in accordance with the terms and regulations of a decision of the Council of Ministers, at the minister's suggestion.”
These amendments, made to enhance the use of Qatari national products, also permit companies and entities established in the free zone areas to participate in the public tendering opportunities without any discrimination.
In 2019, Qatar Cabinet Decision No. 16 amended an earlier Cabinet Decision from 2015 regarding the implementation of the Public Tender Regulation.
According to the changes to Articles 18, 19 and 20, every bid must be submitted with a bid bond within the conditions of the announcement or the invitation. The maximum amount that may be requested cannot exceed 5% of the estimated value. The tender committee chairman can approve certain exemptions from the bid bond requirement for tenders related to consultancy services; technical, research, media, sponsorship and marketing services; or whose value is less than 500,000 Qatari Riyals (QAR). The change allows professional firms participating in public tenders to do away the burden of the bid bond, which is in line with the customary practice in these sectors.
Changes to Articles 21, 22 and 23 mean that the announced tender conditions determine the amount of the performance bond at not less than ten percent (10%) of the contract value. The full performance bond is now kept until the final execution of the contract, including the warranty or maintenance period.
As with the bid bond, an exemption is available – with the tender committee chairman’s approval – for tenders and direct agreements related to consultancy services; technical, research, media, sponsorship and marketing services; warranty and maintenance services; and cases where the value of the process is less than QAR 500,000.
The previous wording of Article 36 stated that: “A joint venture of two or more companies registered in the State may apply for the tender, provided that the JV establishes a company for the sole purpose of implementing the contract after being awarded and before concluding the contract.”
The amended wording now reads: “The bid may be submitted by an alliance formed of two or more companies by virtue of an alliance document legalized by the competent authorities.”
The change allows companies who wish to participate in public tenders as part of a joint venture or consortium to do so without establishing a separate legal entity registered in Qatar for the purpose of performing the public contract. It also allows them to enter into contractual arrangement among themselves for the joint venture or consortium.
The local procurement requirement, outlined in Articles 33 and 34 remains unchanged. A minimum of 30% of the total contract value – such as raw materials, transportation services, security, custodial and supply services – must still be procured from local markets.
Likewise, the delay penalty, which can be imposed for each day of delay with a maximum of 10% of the total value of contract or items, set out in Article 80, is unchanged. The limit to adjustment in Article 81 still allows variation by a maximum of 20% of the contract value without a new tender. Advance payments can still be disbursed at a maximum of 20%, as set out in Article 83.
Written by Joseph Lee of Pinsent Masons.