On 1 October 2008, the new tender law, promulgated by Sultani Decree 36/2008, came into effect in the Sultanate of Oman, repealing the existing tender law and its implementing regulations (promulgated by Sultani Decree 86/1984). In this article, we summarise some of the key changes and fundamental issues raised by the introduction of the new law. Scope of the new law
Significantly, the new law applies to a greater spectrum of entities than the previous law. Entities which are subject to the new law are: all units of the “administrative apparatus of the state”, including those that have independent legal personality; public organisations and establishments, including government regulatory bodies established under SD 116/91 with independent legal status; and companies which are wholly owned by the Government.
The new law has also increased the types of work and services which will be subject to the tender process. One new item that has been introduced is the purchase and lease of real estate. This may potentially have a huge impact, as it is likely to be wide enough to cover the procurement of usufruct rights in land.
Different ways to procure
Under the new law there are now five different ways to procure works and services: (1) by public tender; (2) by restricted tender; (3) by direct award; (4) by Mumarasa; and (5) by the new concept of Musabakah.
Where the new law applies, entities would normally procure works and services by means of a public tender. In certain circumstances, however, the entities may choose to take advantage of an alternative method to procure where available.
1. Public tender
The public tender process is the main way in which works and services are procured. Although the principles under the new law remain similar to those under the old, there are some amendments worth mentioning.
Firstly, under the old law, if a bidder was in a dispute with the Government over an existing contract, the Tender Board had the power to disregard their bid. The new law has now removed this discretionary power. Secondly, entities subject to the new law are now permitted to make a change order greater than RO 100,000 or 10% of the value of a contract without having to re-tender. This is conditional upon certain provisions being satisfied, however it should allow greater flexibility in the tendering process.
2. Restricted tender
As an alternative to a public tender, the concept of a tender restricted to pre-qualified bidders was found in the old law for tenders of a specialised nature. The new law has retained these principles and, in addition, has outlined the basic pre-qualification procedures.
3. Direct award
The new law has increased the variety of circumstances in which a contract can be awarded directly. Previously, only contracts worth less than RO 10,000 (US$25.975) were eligible and only then if it was shown that a direct award was necessary. The new law allows a contract to be awarded directly in four different situations. These are:
(a) in special cases (not specified);
(b) when a contract is awarded to a government unit, organisation or company;
(c) if the value of the contract does not exceed RO 10,000; or
(d) in the case of necessity, if the value of the contract does not exceed RO 25,000 (US$64,940).
The principle behind a Mumarasa is that of a negotiated contract. The new law has confirmed that procurement by Mumarasa is allowed in “special circumstances” and in certain “specific circumstances”, in each case where this will lead to contracts on the best commercial terms available. The new law has expanded the list of specific circumstances and includes work conducted abroad for the Government and the purchase and lease of real estate.
While there were no specific provisions in the old law for Musabakah, the concept has in practice been used before. The principle of Musabakah is competition, and is neither a pure tendering process nor a direct award. However, it can only be used in respect of work relating to the carrying out of studies, drawings, designs, models or other technical work. The basic idea is that the concerned entity will ask bidders, through a public announcement or a direct invitation, to submit their studies/designs etc and, from the pool of entries, a winner will be chosen. Unlike the direct award, contracts of any value can be procured through a Musabakah if the other conditions are satisfied. In addition, bidders are not required to provide bid bonds, performance bonds or professional indemnity insurance.
In conclusion, the new tender law will have a significant impact on the way Omani Government entities procure works and services. Compliance with the tender law will become mandatory for a wider range of entities, but a greater number of procurement methods will be available. These procurement methods are also intended to be more flexible than under the previous law.