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Legislative framework of public procurement and concessions

The Central Tenders Committee (CTC), an independent government agency attached to the Council of Ministers, is the government authority responsible for prequalifying firms, issuing government tenders and awarding contracts. Tendering procedures executed by this committee are regulated by law number 37/1964. Law number 81/1977 authorizes government bodies to independently import commodities and/or commission the execution of works directly, or by way of tenders, and not through the CTC, if the value of the contract is not in excess of KD 5,000. However, such contracts shall not be concluded to cover the same commodities or works more than once in one calendar month.

The CTC is made up of six members appointed by decree from the Council of Ministers for a term of two years, subject to re-appointment, and one representative each from the Ministry of Finance, the Department of Legal Advice and Legislation, the Ministry of Planning, the government authority for which the tender has been let and the government authority which will supervise the execution of the tender. The CTC acts on behalf of nearly all government departments, but is independent from them, being directly responsible to the Council of Ministers.

A limited number of government bodies and enterprises (Kuwait Airways, Kuwait University and Kuwait Ports Authority) are exempted from CTC supervision. The Ministries of Defense and Interior (including the security forces) can also issue their own tenders independently of the CTC. Consulting contracts do not fall under the purview of the CTC. Invitations to consultants are issued by the Consultants Selection Committee at the Ministry of Planning to those consultants registered with the ministry.

A foreign company must be registered through a Kuwaiti agent and prequalified if it is to bid for any government contract. To prequalify, the Kuwaiti agent of the concerned company must submit a standard set of documents outlining its capabilities to the CTC. The CTC in turn sends a list of approved companies to the ministry or ministries concerned, which in turn assesses the technical qualifications of the company in question, particularly its experience with similar projects, technical capabilities and financial strength. Once this assessment is made, a short list of prequalified companies is returned to the CTC. The CTC can add a company to the shortlist if it feels it has been erroneously excluded.

Prequalification may be required by an international company each time it bids for a contract. When ministries require services or products that are very similar from project to project, particular companies that have performed the service or provided the product before are often asked to do so again. Occasionally, the ministries prequalify companies automatically, and only those companies are asked to bid on the project. On rare occasions when a particular company has a skill or product that is unusual or hard to obtain it may be asked to bid for a contract, even if it does not currently have an agent.

Public works projects are classified into those which can be carried out by local contractors and those that are allotted to international contractors. The CTC classifies local contractors into four categories according to past performance, technical and financial capabilities and work expertise. This classification is not applied to foreign companies.

All forthcoming government tenders, whether administered by the CTC or by another body, are advertised in Al Kuwait Al Youm, the official gazette published every Sunday.

To obtain the tender documents, a covering letter in Arabic plus a fee in the form of a certified check are required. The documents can only be collected at the place and time shown in the official gazette. The fee for tender documents varies depending on the expected value of the contract.

Bids must be submitted to the CTC before the deadline, and in the place and manner prescribed. Bids must usually be submitted on the forms provided with the tender documents. The submitted bid must conform exactly with the conditions laid down in the tender documents. The bid must be accompanied by all supporting documentation required and the original receipts for the purchase of the tender documents. Extremely minor discrepancies can in some cases legally result in disqualification.

Submitted tenders will be evaluated on the basis of price and conformity to the technical specifications issued. Though the CTC and other tender committees are obliged to award contracts to the lowest bidder, some exceptions are permitted. Where a company has submitted an artificially low bid and it appears that the company will be unable to finish the work to the required standard, the government body may recommend another company which is not the lowest bidder. In instances where a ministry feels it can justify taking a higher priced bid for technical reasons, it can recommend that bid.

With regards to tenders for supply contracts, locally produced goods enjoy a 10% price margin over comparable imported items. Goods produced in GCC states enjoy a 5% price advantage. When there is no local competition, GCC goods have a 10% advantage. No price preference is given to local contractors or service companies.

An initial bank guarantee to be issued in Arabic by a Kuwaiti bank, and varying from 2.5% to 5% of the bid value must be submitted with the bid. A successful bidder who does not sign the contract may forfeit this bid bond. Unsuccessful bidders have their bank guarantees released. Upon signing the contract, the successful bidder must replace the initial guarantee with a performance guarantee from a Kuwaiti bank, typically 10% of the contract value.

On contracts for the performance of works the contractor may receive an advance payment to cover his initial costs of up to 10% of the total contract value. This advance is deducted as payment on account of work in progress. Some contracts allow the ministries to make a retention of 10% from each work in progress payment in the early stages. A retention during the maintenance period is also usual. All contracts contain penalty clauses to cover delays in completion, sub-standard quality and similar faults. A completion certificate is often given to a contractor when project work is completed. A maintenance performance of works on the supply of equipment. A final acceptance certificate, enabling the contractor to receive his final payment and releasing him from further liability, is given at the end of the maintenance period.

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