Smart Alert | FEDERAL LAW NO. 11 OF 2023 on Procurements in the Federal Government and FEDERAL LAW NO. 12 OF 2023 on the Regulation of the Partnership between the Public and Private Sectors
Smart Alert | FEDERAL LAW NO. 11 OF 2023 on Procurements in the Federal Government and FEDERAL LAW NO. 12 OF 2023 on the Regulation of the Partnership between the Public and Private Sectors
INTRODUCTION
The present legal note provides a summary of two significant legislative developments in the United Arab Emirates “UAE”:
- Federal Law No. 11 of 2023 on Procurements in the Federal Government (hereinafter “Federal Law No. 11 of 2023”).
- Federal Law No. 12 of 2023 on the Regulation of the Partnership between the Public and Private Sectors (hereinafter “the New PPP Law”),
These laws create comprehensive frameworks for federal procurement and public-private partnership designed to enhance transparency, efficiency, and strategic collaboration between public and private entities.
The law was enacted on December 1, 2023, and its implementation is expected to be guided by executive regulations and other decrees and cabinet resolutions. A guidebook for the Public-Private Partnership (PPP) is also planned to be issued shortly.
FEDERAL LAW NO. 11 OF 2023 ON PROCUREMENTS IN THE FEDERAL GOVERNMENT
Federal Law No. 11 of 2023 is a comprehensive statute designed to regulate procurement activities of federal entities in the UAE. This law applies to all federal procurement activities, with specific exemptions for entities such as the Ministry of Defense and procurements related to national security. The law does not appear to provide for any exemptions or specificities in connection with the Environment sector.
Key Objectives and Principles
The primary objectives of this law are to ensure transparency, efficiency, and fairness in federal procurement processes. It underscores the importance of equality, fair treatment, and non-discrimination among suppliers.
The statute mandates that federal entities plan and manage their procurement needs, selecting appropriate procurement methods that promote fair competition.
- Direct Procurement: This method involves directly procuring goods or services from a single supplier, often due to a long-standing relationship or a specific requirement that cannot be met through a competitive bidding process.
- Emergency Procurement: This method involves procuring goods, services, or works in a timely and efficient manner to respond to an emergency. Emergency procurement is often necessary due to the urgency of the situation and the need to act quickly. The basic principles of a fair tender process are listed as follows:
- Equality and Non-Discrimination :
- The law ensures that all procurement procedures are subject to the principles of transparency, freedom of competition, and equal opportunities at all stages.
- Federal agencies must take into account non-discrimination between participating suppliers, unless they decide to limit participation to certain categories in accordance with the law and its executive regulations.
- Fair Competition:
- The law promotes fair competition by protecting suppliers’ confidential information and sensitive business information, including information that affects fair competition between participating suppliers.
- Federal agencies must not disclose confidential information or sensitive business information except in specific circumstances, such as with written consent from the relevant supplier or as required by law, international agreements, judicial orders, or regulatory authorities.
- Public Interest:
- The law prioritizes public interest by ensuring that procurements contribute to achieving the government’s strategic visions and priorities, such as supporting local companies, small and medium enterprises, national products, and sustainable commercial activities.
- Overall Value:
- Purchasing decisions are based on achieving the highest public value and securing the best possible outcomes against the cost of procurement throughout the procurement cycle and contract duration.
Governance and Responsibilities
Federal entities are responsible for the entire procurement process, from defining requirements to signing contracts. They must adhere to principles of transparency and integrity, ensuring that all procurement activities are conducted openly and that suppliers are treated equally.
The law also aims to protect the confidential and sensitive commercial information of suppliers, allowing disclosure only under specific conditions in order to maintain trust and encourage participation.
Procurement Methods and Transparency
The law specifies that procurements should be conducted, generally, through a public tender process unless exceptions apply. This approach ensures maximum transparency and competitiveness.
The Law does not list any a specific method of procurement at this stage, and the exemptions are not expressly listed except for the Defense sector.
The Law does not impose for example a minimum number of enterprises that must be selected through a public tender process. However, this may be clarified in the near future with forecasted decrees.
In addition, the law outlines various procurement methods, each designed to foster fair opportunities and attract the best suppliers. These methods include:
Public Tender Process:
This is the primary method, where all procurement operations are submitted to a public tender announced through the procurement system. This ensures maximum transparency and competitiveness.
Shared Services and Agreements: Procurement can be done through shared services and agreements between different federal agencies, allowing them to collaborate and pool resources efficiently.
Informal Methods:
Small Purchases: Procurement of low-value items, usually below a certain threshold, through simplified procedures.
Micro-Purchases: Transactions of even lower value often made using government purchase cards or other similar mechanisms.
Formal Methods:
Sealed Bids: Posting solicitations on government websites and inviting interested vendors to submit sealed bids, which are evaluated based on strict criteria and requirements.
Proposals: Allowing more flexibility and technical evaluation, giving vendors the opportunity to showcase unique solutions.
Non-competitive Procurement:
Utilized in cases where there is only one source capable of providing the required goods or services, urgent needs, sole-source suppliers, or specific statutory provisions allowing for non-competitive procurement.
Integrity and Confidentiality:
Mechanisms to maintain integrity include ensuring impartiality among procurement employees and prohibiting conflicts of interest. Employees involved in procurement must not possess any direct or indirect interest in the procurement processes they oversee.
he Federal Law No. 11 of 2023 on Procurements in the Federal Government includes provisions to maintain integrity and prevent conflicts of interest in procurement processes:
- Impartiality and Objectivity
- Conflict of Interest
- Grievance Mechanisms.
- Confidentiality
- Integrity Clauses: The law allows Federal agencies to include integrity clauses in procurement contracts, requiring suppliers to comply with ethical standards and prohibiting corrupt practices.
Furthermore, federal entities are required to safeguard the confidentiality of supplier-sensitive information and may disclose such information only with the supplier’s consent or as mandated by law.
CONCLUSION
Federal Law No. 11 of 2023 establishes comprehensive regulations aimed at promoting transparency, efficiency, fairness, and integrity in federal procurement processes. By emphasizing principles of equality, non-discrimination, and fair competition, the law seeks to ensure a level playing field for suppliers while safeguarding the confidential information of stakeholders.
Through its governance framework, the law entrusts federal entities with the responsibility of planning and managing procurement activities diligently, with a focus on transparency, integrity, and avoiding conflicts of interest. Overall, Federal Law No. 11 of 2023 sets a robust foundation for accountable and ethical procurement practices within the federal government of the UAE.
The law emphasizes the importance of compliance and the consequences of non-compliance, which might lead to penalties and fines. While it does not explicitly state the range of penalties and fines for non-compliance, it stipulates that any provision violating or contradicting the law’s provisions shall be repealed. However, the law does not explicitly mention the suspension of market operations as a consequence of breaching the rules.
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FEDERAL LAW NO. 12 OF 2023 ON REGULATION OF PPPS
The New PPP Law aims to regulate and enhance the partnership between the public and private sector at the federal level in the UAE.
This regulation aims to consolidate and strengthen the partnership between the public and private practices throughout the UAE, leveraging current frameworks at the Emirate level in order to promote cooperation and incentivize private investment in key projects.
Scope and Application
The New PPP Law applies to any partnership project whether fully or partially financed by the private sector resources and procured by a federal entity. Key exclusions include partnership contracts concluded before the law’s enactment, small-value projects, and certain national security-related contracts.
Partnership Projects Guidebook
An essential aspect of the New PPP Law is its dependency on the forthcoming Partnership Projects Guidebook, which will delineate the protocols for tendering project agreements, and selecting participants.
The Guidebook is expected to align closely with existing Emirate-level guidelines and directives to ensure uniformity and transparency in the partnership between the public and private processes.
Tender Process and Methods
The law establishes a comprehensive framework governing the partnership between public and private projects from inception to implementation.
It delineates various procurement methods, including the two-stage method, emergency procedure, and direct appointment, each governed by stringent criteria to ensure fairness and competitiveness.
Project Documentation and Incentives
The New PPP Law specifies the content required in project agreements, including provisions for change of law, unforeseen economic conditions, and termination.
It also allows for government guarantees to cover financial obligations, enhancing investor confidence.
Additionally, the law allows incentives for private sector partners, such as reimbursement of bid costs and Intellectual Property licensing costs, making the partnership between public and private projects more attractive.
Innovation and Standardization
The law encourages innovation by allowing flexible payment methods and incorporating localization provisions in project agreements. By standardizing key principles and procedures.
The New PPP Law aims to streamline the partnership between public and private processes and promote consistency across federal projects.
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INTERRELATION AND SYNERGIES
Unified Procurement Standards
Both New PPP and Federal Law emphasize the need for transparency, fairness, and efficiency in procurement and the partnership between the public and private processes.
Federal Law No. 11 focuses on general procurement practices, while the New PPP Law addresses the specific requirements of public-private partnerships by creating a cohesive framework for all types of federal procurements.
Promotion of Private Sector Participation
The New PPP Law complements Federal Law No. 11 by encouraging private sector investment and participation. Both laws ensure a level playing field for suppliers and private partners, promoting robust competition and high-quality outcomes.
The New PPP Law is expected to streamline the process, enhance transparency, promote competition, increase private sector participation, and improve project management and should not in theory, slow down the process.
Procedural Integration
The procedural requirements outlined in both laws are designed to align continuously, reducing administrative burdens and ensuring consistency. These procedural requirements are designed to ensure consistency and reduce administrative burdens. They are aligned with EU regulations in the field of public procurement and concessions, which are implemented through EU Directives and Regulations.
For French groups, these requirements can help ensure compliance with EU regulations and facilitate the implementation of PPP projects in France.
The anticipated Guidebook under the New PPP Law will likely reflect the procedural standards of Federal Law No. 11, further integrating federal procurement practices.
Focus on Efficiency and Innovation
Together, these laws support the UAE’s strategic goals of modernizing public administration and fostering innovation by standardizing procurement practices and encouraging private sector collaboration, they aim to achieve efficient use of public resources and sustainable development outcomes.
CONCLUSION
In conclusion, Federal Law No. 12 of 2023, the New PPP Law, marks a significant step towards regulating and strengthening public-private partnerships at the federal level in the UAE.
By unifying public-private partnerships practices across the country and leveraging existing frameworks, the law aims to facilitate collaboration and attract private investment in critical projects.