The Federal Regulation of
Conditions of Purchases, Tenders and Contracts, Financial Order No. 16 of 1975
(the Public Tenders Law) regulates bidding for public sector tenders. With
certain exceptions, only UAE nationals, foreign entities represented by a UAE
agent, or foreign entities with UAE partners (i.e., a UAE entity with at least
51 per cent UAE ownership (‘national entities’) may bid for public sector
tenders for the supply of goods and public works projects that are governed by
the Public Tenders Law. As a result, foreign entities wishing to perform public
sector contracts are generally required to have some level of UAE national
participation. Such participation typically takes the form of either:
(i) A registered commercial
agency
(ii) A ‘service agent’ of the
foreign entity’s UAE branch office
(iii) The majority owner of a
joint venture in which the foreign entity owns 49 per cent or less of a UAE
limited liability company (i.e. a national entity).
The following are three major
exceptions to the application of the Public Tenders Law:
1) The Public Tenders Law does
not apply to purchases and contracts conducted by the federal defence forces –
procurements for the federal defence forces are conducted pursuant to Decree 12
of 1986 of the Deputy Supreme Commander of the Armed Forces (the ‘Armed Forces
Procurement Regulations’.
2)The Public Tenders Law
relates to federal government procurement and not procurement by the
governments of the individual emirates. For example, Abu Dhabi has a
procurement system, which generally tracks that of the Federal Public Tenders
Law by requiring suppliers to have commercial agents or national companies that
are registered with the Abu Dhabi municipality.
3) The general requirement for
UAE national participation is not uniformly observed by all government agencies
in the context of certain direct sales to the public sector or private tenders
in which the government solicits bids directly from relevant manufacturers,
particularly in cases in which the goods or services are quite specialized or
not widely available. These ‘exceptions’ arise on a case-by-case basis
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