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July 19, 2022
Public procurement in the UAE is regulated under Cabinet Decision No. 4 of 2019 (UAE Procurement Law) and its amendments. The UAE Procurement Law applies to procurement, supply contracts, works and providing services which are performed by the Government, ministries or federal bodies affiliated with the government.
That said, the UAE Procurement Law does not apply to certain federal entities and procurements. Article 2 of the UAE Procurement Law exempts the following from the application of the procurement law.
Ministry of Defence.
State Security Department.
All Procurement Processes for military use are performed by the Ministry of Interior or any federal entity of security or military capacity, as specified by the decision of the Concerned Minister.
The Federal Entities that are engaged in international agreements or obligations related to Procurement Processes performed by the said entities.
Fixed assets of Title 3 of the Budget relating to pending constructions, as mentioned in the Unified Structure Manual of the Federal Government Accounts.
All procurements of pharmaceuticals.
All partnership contracts with the private sector that are classified as “partnership projects”, and specified in the Regulations and Procedures Manual on Partnership Contracts between the Federal Entities and Private Sector, approved by Cabinet Decision.
The Council of Ministers may, after consulting the Ministry, add or exclude any federal entity from the implementation of the provisions of this Decision.
At the local level, standalone procurement laws have been issued by several Emirates which are applicable to the concerned Emirate. For example, Dubai Law No. 12 of 2020 sets out the framework regulating the procurement procedure for government entities of Dubai.
The UAE Procurement Law under Article 25 recognises different methods of procurements, including tendering, direct solicitations, mumarasa (negotiation), competitive dialogue and contest, etc. and sets out the procedure to be followed for undertaking procurement under each of these methods.
Public-Private Partnership – An Alternative
Apart from public procurement, public-private partnerships or PPP have been given strong impetus in the recent past. PPP is a contract between a government agency and a private entity for performing a public project. The level of partnership between the entities generally depends on the project being developed.
PPP could take the form of service contracts, management contracts, finance leasing contracts, concession contracts, BOT and BOOT contracts, etc. All PPPs are risk-based partnerships with the nature & extent of risks depending on the project being undertaken. PPP contracts are typically on a long-term basis.
The private sector provides skills and capabilities to the project and typically contributes through finance, establishment, construction, development, operation, restoration, rehabilitation and maintenance of the project, amongst others.
PPP also attracts foreign investment and promotes the economic growth of the country.
The Government of UAE issued Cabinet Decision No. 2/2017 setting out a high-level framework of guidelines and procedures for partnership with the private sector.
The Dubai Law No. 22 of 2015 is the relevant law for PPPs to be established in Dubai. Abu Dhabi has also issued Abu Dhabi Law No. 2 of 2019 and Abu Dhabi Administrative Decision No 179 of 2020 on the regulation of PPP in Abu Dhabi.
Terminals and Ports of the UAE
The UAE is a global hub for maritime trade, with several ports serving as key infrastructural destinations for trade. Ports and terminals have been developed in the UAE by the government or through partnerships with the private sector. Public-private partnerships are key for driving investments in the country, improving the quality of public services, reducing the burden of financial risks for the government and enabling the government to implement its projects efficiently.