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Legal Notes on Tendering in the Sultanate of Oman

Guiding Principle

This Article pertains to legal procedures, applicable government policies which need to be taken under consideration by foreign investors intending to take part in the tendering process in Oman.

A. Tender Regulations

I. Legal Framework

Art.1.  General Provisions

Article 3 of the OM-TL provides that contracts with the Government for the supply or execution of works or transport or any kind of services, consultancy studies, technical works, and purchase and lease of real estate shall be through public tenders to the Tender Board. The Tender Board is a central governmental body in charge for all tenders of all ministries with some exceptions. Certain types of contracts such as security and defence units do not go through the Tender Board. These are carried out directly by the concerned ministries. Additionally, the Ministry of Defence  and the Royal Oman Police have their own tender boards pursuant to their own regulations. The same applies to the tendering process at Petroleum Development Oman LLC and Oman LNG LLC while the projects are not subjected to the Tender Law.

Art.2.  Requirement of the 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.

Art.3.  Local and International Tenders

Acc. to Art. 16 OM-TL, the OM-TL governs the entire procedures set forth in that Law and its Implementing Regulations, irrespective whether local or international. The term and condition attached to each tender are applied complementary. An international tender means a tender open to international companies and corporations, that are not carrying on business in Oman and that are not registered with Ministry of Commerce and Industry (registration is obligatory after a successful award of a tender). A local tender means a tender in which participation is limited to those registered in the Commercial Registry (Ministry of Commerce and Industry) or in a professional register which the Board may accept in specific cases. Therefore, it is not necessary for the foreign company to have – except for local tenders – a local presence in Oman at the time of the bid. Art. 23 OM-TL provides that foreign companies, however, must form a local entity within 30 working days from winning the bid. Some quasi-governmental entities restrict foreign companies to submit their tenders through a local Omani agent. However, there is no such requirement with the Tender Board.

II. The Contract Specimen

The contract specimen entered into with the government is the Omani Standard Forms and Conditions, which is based on the FIDIC standard form. 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. 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, i.e. a pre-qualification.

B. Classification of Contractors

I. Gradation

Participation in a tendering process requires from the local companies to pre-qualify beforehand with the Tender Board[1]. All eligible companies are classified and given a grade, according to their issued capital, which determines the minimum and maximum sizes of contracts, the type of tender project that a company is eligible to participate in[2].

Classification (Grade) Minimum capital (OMR) Tender value (OMR)
Excellent[3] 250,000 650,000 and up
One 100,000 250,000 to 950,000
Two 50,000 50,000 to 350,000
Three 25,000 15,000 to 75,000
Four 15,000 Up to 15,000

II. Registration with the tender Board

To pre-qualify with the Tender Board is necessary to fill in a copy of the Registration Form from the Tender Board attaching the following supporting documents:

  • a list of all names of the Omani employees approved by the Public Authority for Social Insurance (PASI) and
  • a Clear Transaction Form to be obtained from the same authority,
  • an OM-Commercial Registration Certificate with a list of activities to be obtained from the Ministry of Commerce and Industry (MOCI),
  • Authorised Specimen Signatories of those, who sign on behalf of the company on a form of the MOCI with ID copies/passport copies of authorised signatories,
  • a Certificate of Grade from Oman Chamber of Commerce and Industry (OCCI),
  • a list of the names of expatriates, along with passport copies and card numbers and the expiry dates approved by Ministry of Manpower,
  • an Omaniziation Ratio Certificate (to be obtained from Ministry of Manpower representative at the Tender Board),
  • a Tax Clearance Certificate from Secretariat General for Taxation, Ministry of Finance.

The validity of the pre-qualification Certificate depends on the degree (some are valid for one year and others for up to two years). Companies should renew their Registration Certificate within one month from the expiry date.

October, 2014 Catherine Jaskiewicz
Meyer-Reumann & Partners, Oman Office

[1]        Source: http://www.tenderboard.gov.om/arb/registrationsRequments.aspx

[2]        Although architects and engineering consultants must register with the Tender Board, they are not subject to the Board’s minimum capital requirements.

[3]        Companies with issued capital of at least 500,000 OMR receive international-grade classifications, where there is no limit to the tender value for contracts awarded.

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