Tendering in Oman: Practical Issues

Foreign companies wishing to tender in Oman need to understand a wide range of matters such as legal procedures, applicable government policies, the procurement guidelines, approvals required, and the implications of policy and law changes.

In this article, we highlight some issues which may impact on tendering in Oman.

• The Tender Board: Article 3 of the Tender Law provides that contracts for the supply or execution of works or transport or offers of services, consultancy studies, technical works, and purchase and lease of real estate shall be through public tenders. Certain types of contracts such as security and defence units do not go through the Tender Board; rather, these are carried out through other ministries.


• Registration: Before a foreign company may submit a bid to the Tender Board, it must register with the Tender Board. The criteria for registration depends on whether the project is for construction, supply, consultancy, or training.


• Local Representation: It is not necessary for the foreign company to have a local presence in Oman at the time of bid submission. Article 23 of the Tender Law provides that foreign companies, however, must form a local entity within 30 working days of winning the bid. Some quasigovernmental entities require foreign companies to submit their tenders through a local Omani agent, but there is no such requirement with the Tender Board.


• Standard Government Contract: Companies should be aware that the contract entered into with the government is the Omani Standard Forms and Conditions, which is based on the FIDIC standard form.


• Applicable Laws: In addition to the Tender Law, companies also should be aware of other relevant laws such as the Law of Engineering Consultancy Offices and the Foreign Capital Investment Law.


• International Treaties: The U.S.-Oman FTA and the GCC-Singapore FTA each include a dedicated chapter on government procurement.


• Oil and Gas Projects: There are additional requirements for companies wishing to bid on oil and gas projects. For example, some tenders require Oman Society for Petroleum Services (OPAL) certification.

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Signing of Documents by the Government

All contracts and obligations in the name of the Government of the Sultanate of Oman or on its behalf must be signed in accordance with Royal Decree 48/76 (as amended by Royal Decrees 80/94 and 23/97) or approved by a special decision of H.M. The Sultan.

Any contracts or obligations with the Government for RO 250,000 or more must be signed by two signatories, namely:

• (i) the competent Minister, (ii) head of the Government Unit, (iii) the Chairman of the Organisation/ General Organisation/ public corporation, or (iv) by the person specifically authorised by any of them in writing; and
  
  
• (i) the Minister supervising the Ministry of Finance or by the person he authorises in writing where the contracts or obligations are for RO 500,000 or more; or (ii) the Undersecretary of the Ministry of Finance for Financial Affairs or by the person he authorises in writing where the contracts or obligations are for RO 250,000 or more but less than RO 500,000.

If the contracts or obligations amount to less than RO 250,000, then the Royal Decree sets out the relevant signing requirements for contracts or obligations for (i) RO 100,000 or more but less than RO 250,000, (ii) RO 50,000 or more but less than RO 100,000, and (iii) less than RO 50,000.

There are also separate signing requirements for contracts and obligations in the name of H.M. Sultan or in the name of the Government and which provide that the Government or any of The Ministries/ the Government Units/ Organisations/ General Organisation undertake any investments or provide a third party with a loan or a grant to obtain a loan from such third party or issue bonds or any debenture loan or undertake any security or other financial dealings.

In the event that these signing requirements and the other conditions set out in the Royal Decree (as amended) are not met, then such contracts or obligations with the Government shall not be recognised and shall have no legal effect in Oman.

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