The new UAE Federal Procurement Law – What’s new?

Corporate Commercial / UAE

The new UAE Federal Procurement Law – What’s new?

Andrea Tithecott
Partner,
Head of Regulatory and Healthcare

Introduction

The United Arab Emirates has recently enacted a new federal procurement law, that replaces the previous law. The new law aims to regulate the general framework for procurement in the federal government, enhance digital procurement systems, ensure equality and non-discrimination among suppliers, promote integrity and transparency, and provide flexibility and efficiency in procurement and contracting processes.

The following table compares some of the main features and provisions of the two laws.

Feature/Provision	Former position	New position
Legal status	Repealed: A cabinet resolution issued by the Minister of Finance based on the proposal approved by the Cabinet. The arrangements for the digital procurement policy for the federal government remain in force. The arrangements under the former law concerning procurement and warehouse management Regulations within the federal government, shall persist in application, provided they shall not contradict the new law. Such continuity remains in effect until the formulation and issuance of new regulations, directives, and any pertinent policies are issued.	A federal law issued by the President of the UAE after approval by the Federal National Council and the Cabinet.
Scope of application	Applicable to procurement, supply, and work execution by federal entities, including ministries, independent federal entities, authorities, and agencies.	Applicable to all procurement and contracting activities at federal agencies, with specific exemptions
Exemptions	Exemptions from the application of the resolution include procurements related to national security, defense, intelligence, and emergencies, as well as procurements by the Central Bank, the State Audit Institution, and the Federal Supreme Court.	Exemptions from the application of the law include procurements related to national security, defense, intelligence, and emergencies, as well as procurements by the Central Bank, the State Audit Institution, the Federal Supreme Court, the Federal Judicial Authority, and the Federal Authority for Nuclear Regulation.
Governance	The Ministry of Finance is responsible for overseeing the implementation of the resolution, issuing directives and procedures, creating and managing the e-procurement system, and providing technical support and training to federal entities.	The Cabinet is responsible for issuing regulations implementing the law, and the Minister of Finance is responsible for issuing necessary directives and procedures, creating and managing the procurement system, and providing technical support and training to federal agencies.
Procurement system	The resolution requires the use of the e-procurement system for all procurement operations, except for direct award and petty expenses.	The law requires the use of the procurement system for all procurement and contracting activities, except for direct award and petty expenses, and allows for the use of other electronic means in case of system failure or unavailability.
Purchasing principles	The resolution stipulates the principles of transparency, competition, impartiality, equality, and protection of supplier information, and prohibits any conflict of interest or collusion among suppliers or federal entity employees.	The law stipulates the same principles as the resolution, and adds the principle of sustainability, which requires federal agencies to consider environmental, social, and economic aspects in procurement and contracting.
Procurement provisions and methods	The resolution defines the procurement provisions and methods, such as annual procurement plan, supplier classification and prequalification, bid, letter of award, contract management officer, letter of credit, request for variation, variation order, certificate of completion, work order, subcontract, purchase requisition, request for quotation, purchase order, permanent imprest, temporary imprest, warehouse department, bidding, bidder, examination report, maximum inventory level, minimum inventory level, inventory replenishment, reorder point, returns management, price agreement, green companies, and fourth-degree consanguinity.	The law defines the procurement provisions and methods, such as annual procurement plan, supplier classification and prequalification, bid, letter of award, contract management officer, letter of credit, request for variation, variation order, certificate of completion, work order, subcontract, purchase requisition, request for quotation, purchase order, permanent imprest, temporary imprest, warehouse department, bidding, bidder, examination report, maximum inventory level, minimum inventory level, inventory replenishment, reorder point, returns management, price agreement, green companies, and fourth-degree consanguinity, and adds the definitions of cost-plus pricing policy, prequalification standards, bid validity period, and direct award.
Awarding provisions and controls	The resolution specifies the awarding provisions and controls, such as the evaluation criteria, the awarding committee, the awarding decision, the notification of award, the contract signing, and the performance guarantee.	The law specifies the same awarding provisions and controls as the resolution, and adds the provisions for the bid bond, the bid opening, the bid withdrawal, the bid correction, the bid cancellation, the bid rejection, the bid acceptance, and the contract amendment.
Contract provisions and controls	The resolution specifies the contract provisions and controls, such as the contract language, the contract duration, the contract value, the contract obligations, the contract amendments, the contract termination, the contract dispute resolution, and the contract penalties.	The law specifies the same contract provisions and controls as the resolution, and adds the provisions for the contract assignment, the contract suspension, the contract liquidation, and the contract performance evaluation.
Considering complaints	The resolution does not include any provisions for considering complaints from suppliers or federal entities regarding procurement and contracting processes or decisions.	The law includes provisions for considering complaints from suppliers or federal entities regarding procurement and contracting processes or decisions, and establishes a committee for considering complaints at the Ministry of Finance, as well as the procedures and conditions for submitting and reviewing complaints.
General provisions	The resolution includes general provisions, such as the language of procurement contracts and documents, the contracting among federal entities, and the exceptions from the provisions of the resolution.	The law includes the same general provisions as the resolution, and adds the provisions for the protection of public funds, the prohibition of splitting procurement and contracting activities, the prohibition of accepting gifts or benefits, the confidentiality of information, and the penalties for violating the law.
Awarding provisions and controls	The resolution specifies the awarding provisions and controls, such as the evaluation criteria, the awarding committee, the awarding decision, the notification of award, the contract signing, and the performance guarantee.	The law specifies the same awarding provisions and controls as the resolution, and adds the provisions for the bid bond, the bid opening, the bid withdrawal, the bid correction, the bid cancellation, the bid rejection, the bid acceptance, and the contract amendment.

Recommendations
For those bidding on procurement projects with the federal government, it is recommended to familiarize themselves with the new law and its regulations, directives, and procedures, and to comply with the requirements and obligations stipulated therein. It is also recommended to use the procurement system and other electronic means for submitting and tracking bids, and to ensure the validity, accuracy, and completeness of the bid documents and information. Moreover, it is recommended to respect the principles and values of procurement and contracting, and to avoid any conflict of interest, collusion, or corruption. Finally, it is recommended to seek legal advice and assistance in case of any dispute, complaint, or violation related to procurement and contracting with the federal government.

ConclusionThe new federal procurement law introduces several changes and additions to the previous law, which aim to improve the legal framework, the governance, the system, the principles, the provisions, the methods, the controls, and the accountability of procurement and contracting in the federal government. The new law also expands the scope of exemptions, the definitions of terms, and the provisions for complaints and penalties. The new law reflects the UAE's vision and strategy to enhance the efficiency, effectiveness, transparency, and sustainability of public procurement and contracting, and to align with the best international practices and standards.

For further information,
please contact Andrea Tithecott.

^{Published in}^{March 2024}