Supply Contract Tenders in Oman: An Overview for Foreign Companies

A wide array of new projects, many of which are being promoted in the context of the Tanfeedh programme, continue to attract foreign companies wishing to do business in Oman.  This article’s primary focus is with respect to tenders for supplies, one of the four main tender categories, together with contracting, consultancy and training.

The possibility of participating in tenders for foreign companies who do not hold a commercial registration in Oman depends on a number of elements, including the type of tender, in addition to various bureaucratic and logistic issues.

Generally, tenders issued in Oman, both by private and public entities, are either restricted to locally registered companies (sometimes referred to as “local tenders”) or are open to foreign companies (sometimes referred to as “international tenders”).  Foreign companies not registered in Oman may participate independently in tenders that are not restricted to local companies, subject to the other requirements set out below.  In addition, whilst a foreign company is generally required to register in Oman within 30 days from the award of a contracting or construction contract, this does not apply to supply contracts, which rarely (if ever) require a permanent local presence.

Many government entities, government-participated entities and large corporations have a “vendors’ list” or a similar registry of approved suppliers, and only companies that have completed the relevant application process and are registered in such a list may participate in tenders issued by the relevant entity.  A number of these entities allow the registration of foreign companies in their vendors’ lists.

In this context it is worth mentioning that the oil & gas sector has elected to create a new registration system.  The previous registration with the Ministry of Oil & Gas (the “Ministry”) no longer applies and the Ministry promoted, instead, the creation of a joint supplier registration system (“JSRS”).  The sector companies increasingly restrict their procurement to JSRS suppliers.  Registration is available both for local and international companies, but local companies typically pay lower registration fees.

In supply contracts, local distributors of the products concerned or local providers of the relevant services will visually be registered in all or most vendors’ lists and therefore be able to acquire tender documents and participate in tenders issued by the various tendering entities.  Therefore, if there are serious time constraints and the foreign company is unlikely to be able to complete the registration process on time to tender for the specific contract, the foreign company may always consider participating in a joint venture with a duly registered local company.  Locally registered companies may be favoured in tenders, which take into account In Country Value.  The involvement of a local company may be even more beneficial, from this point of view, if it is a small or medium-sized enterprise.

The relationship between a foreign supplier and its local counterparty often takes the form of a distribution agreement which, under Omani law, may be non-exclusive.  In any event, the Commercial Agencies Law, pursuant to Royal Decree 26/1977 (as amended), now allows the direct sale or distribution of goods by foreign companies and, therefore, ultimately permits that a foreign company sells and distributes goods in Oman without the requirement of using a local agent/distributor.

In summary, and subject to any additional rules that may apply, a foreign company wishing to tender for supply contracts in Oman will need to review the relevant tender documents and verify that (a) the tender is open to foreign companies; (b) it is not restricted to companies registered in a vendors’ list (the foreign company may consider registering in the relevant vendors’ list(s) if foreign companies/producers are allowed to do so in the specific instance); and (c) the delivery of the goods can be performed without the involvement of a local company (which would import the goods with its import licence and deal with customs duties and the relating formalities), e.g., by direct delivery to the tendering entity.