Are there any restrictions or legislative regimes affecting procurement?

Construction

Belgium Small Flag Belgium

For public procurement, a certain number of legal restrictions apply. These can be found in the Act of 17 June 2016 on public procurement and the Royal decree of 18 April 2017 on the award of public procurement contracts in the classic sectors. This Royal decree contains various obligations to be observed by public authorities during tendering (publication of a contract notice, procedures to be followed, rules governing the validity of tenders received, etc.).

Furthermore, public authorities are also bound by the provisions of the Act of 20 March 1991 organising the accreditation of contractors. In order to qualify for certain projects, the contractors must prove that they are sufficiently qualified on the basis of categories (nature of the works) and classes (price of the works). Public authorities will always specify in the tender documents which category and class are required for the tendered works. 

There is no similar set of rules for private procurement procedures.

Oman Small Flag Oman

Although there has been a trend towards greater participation by the private sector (see question 27) the majority of construction procurement in Oman is undertaken by the public sector. With limited exceptions, public procurement takes place under the Tender Law (RD 36/2008 -“Tender Law”). Private entities are not subject to the Tender Law and may procure services at their discretion.

Denmark Small Flag Denmark

Except for the public procurement legislation, there is no specific legislation affecting procurement. General contract law and principles apply.

Spain Small Flag Spain

In private contracts, the general principles of obligations and contracts set in the Civil Code or in the law regulating the specific type of contract have to be respected.

Regarding public contracts, the relevant regulation is Law 9/2017, of 8th of November, of Public Sector Contracts. This regulation establishes many restrictions to public construction contracts such as, for example, the need to follow a very complex public tender and to guarantee the principles of equality, transparency and free competition.

Indonesia Small Flag Indonesia

In general, what is specifically regulated is the procurement of goods and services for government related projects being funded by the APBN. Construction contracts which are not funded by the APBN shall be based on the principles of freedom of contract. Notwithstanding this, the provisions of Law number 5 of 1999 on the Prohibition to Conduct Monopolistic and Unfair Business Practices shall apply.

For projects which are funded from the APBN, the Construction Law and PR No. 16/2018 provide the following restrictions in relation to the procurement:

  1. The construction services legal entity and the representative office of a foreign construction services company may only procure the construction services for the (i) high risk, (ii) high technology, and/or (iii) high cost market segment.
  2. The Service User is prohibited to employ a contractor who has an affiliation with the project for public interest without tender or selection, or electronic procurement.
  3. Direct procurement shall be conducted for goods/construction work/other services which have the value in maximum amount of Rp200,000,000;
  4. Direct appointment shall be conducted for goods/construction work/other services under the specific conditions as follows:

    (a) The undertaking of sudden preparation activities to follow up on international commitments which is attended by President/Vice President;

    (b) confidential goods/services for state interest including intelligence , witness protection, the security of President and Vice President, former President and Vice President including their families and state visitor at head of state/government level, or other confidential goods/services in accordance with laws and regulations provision;

    (c) building construction work as one integrated construction system and or responsibility integration of building failure risk entirely which cannot be planned/calculated earlier;

    (d) goods/construction work/other services which can only be provided by 1 (one) capable business entity;

    (e) procurement and distribution of superior seeds including the seed of rice, corn, and soybean, and fertilizer which covers Urea, NPK, and ZA to the farmer in terms of securing the seed and fertilizer supply in precise and fast manner for the implementation of food security improvement;

    (f) pre-facility, facility, and public utility work in public environment for low welfare society which is conducted by the respective developer;

    (g) goods/construction work/other services in specific and may only be conducted by the patent rights holder, or party which had obtained the license from the patent rights holder, or tender winner party to obtain a license from government, or

    (h) goods/construction work/other services which after the re-tender had been conducted suffer a failure.

  5. Fast tender shall be conducted in terms of:

    (a) the work specification and volume has been determined precisely; and

    (b) the business entity is qualified in the system information of work provider.

Mexico Small Flag Mexico

Public Procurement of construction projects is regulated by the “Public Works Law and related Services” applicable to the Federation and to each State or Mexico City. Non compliance to applicable regulations make the public procurement and/or the contract that breaches such provisions null and void.

Colombia Small Flag Colombia

Restrictions related to procurement exists only in public procurement, there is a special regulated procedure for the selection of contractors based on the principles of objective selection and transparency. On the private sector there is no regulatory restrictions concerning procurement.

Switzerland Small Flag Switzerland

Public bodies are subject to special rules, implying a competitive call.

Australia Small Flag Australia

Procurement rules generally apply to contracts awarded by government bodies using public money, or relating to public property. At the federal level, the Public Governance, Performance and Accountability Act 2013 (Cth) regulates government procurement. Legislation in each state and territory also establishes central bodies to conduct and regulate state procurement and publish codes of conduct. Rules also apply to local government procurement activities.

Norway Small Flag Norway

Yes. For both public and private actors competition restrictions apply. The most important restrictions are the prohibition of exclusivity clauses/agreements and the prohibition of anti-competitive cooperation where the cooperating contractors could submit bids individually/separately.

For public employers, further restrictions apply according to the Public Procurement Act of 2016 and its corresponding regulations. The Act regulates the procedure for conducting tender competitions, and shall ensure the most efficient use of resources in public procurement based on business and equal treatment.

Private actors are basically free to manage their procurements, as long as they are in compliance with the competition rules and within the limits of pre-contractual liability.

Sweden Small Flag Sweden

There is no legislation on procurement for private employers. Private employers are free to procure their project in the way they want. The Public Procurement Act (which is based on the EU directives) applies to public procurement of construction works.

Hong Kong Small Flag Hong Kong

In Hong Kong, developers generally are free to choose any contractor to carry out construction works for their projects. In the private sector, the primary statutory requirement is that the contractors must have been registered in the appropriate categories of registered contractors under the Buildings Ordinance (Cap. 123). In the public sector, procurement is controlled through administrative rules promulgated by the relevant government departments. For example, the Development Bureau maintains an approved list of contractors as suitable candidates for tendering public sector works in various categories.
In Hong Kong, and as would be expected, a large proportion of work in the construction industry is procured by way of tendering. This either is on a competitive basis or a negotiated basis – or sometimes a combination of both. The methods of tendering commonly used are open competitive tendering, selective competitive tendering and negotiated tendering.
In formal competitive bid situations, to ensure fair and open competitive tendering, it is essential that the tenders submitted by each contractor be based on the identical tender documentation. Once tenders have been opened, comparatively lower tenders are noted, but the award of contract is not necessarily made to the lowest priced bidder. The focus is put on whether the contractor is a responsible bidder, with the necessary technical, managerial and financial capability and integrity to undertake and complete the work in a satisfactory manner. In practice, where tenders are invited, an explicit statement is made that the employer does not guarantee to accept the lowest tender.
The public procurement process is governed by the Stores and Procurement Regulations issued by the Financial Secretary under the Public Finance Ordinance (Cap. 2). These regulations are supplemented by circulars / memoranda issued by relevant Government departments. The procedures laid down in these Regulations and circulars memoranda are fully consistent with the World Trade Organisation Agreement on Government Procurement (WTO GPA), to which Hong Kong has been a signatory since 20 May 1997. Quasi-government bodies such as the Airport Authority, Hospital Authority, Housing Authority and the West Kowloon Cultural District Authority may have a different procurement process and strictly speaking are not bound by the Public Finance Ordinance and the Stores and Procurement Regulations (although the WTO guidelines are regarded by them as being persuasive guides to good practice).

United Kingdom Small Flag United Kingdom

Public procurement is governed by the EU procurement rules, which have been implemented into English law by the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016. These regulations are intended to open up competition throughout the EU and to ensure that contracts are awarded fairly and transparently without national bias.

If the rules apply (there are exceptions), the contract must be advertised in the Official Journal of the European Union and tendered using one of five available procedures. The process can take between 6 weeks to 18 months depending on the procedure chosen and the complexity of the contract.

United States Small Flag United States

There are no material restrictions or legislative regimes that affect private construction procurement. However, some states have enacted statutes that impact the rights and obligations of parties to a construction contract. For instance, some states prohibit certain kinds of contractual indemnification obligations, and some states also have statutes governing payment, such as the Prompt Payment Act. Where contracts contain provisions in conflict with state law, such provisions are considered void and unenforceable. Additionally, there are numerous state and federal statutory frameworks affecting public construction procurement.

Serbia Small Flag Serbia

Save for public procurements, which are to be conducted based on the Law on Public Procurement of the Republic of Serbia, there are no restrictions affecting procurements specifically. The parties that are obliged to apply the Law on Public Procurement are governmental bodies of the Republic of Serbia, bodies of the autonomous provinces of the same republic, as well as local self-government bodies – that are all referred as to contracting authorities. Amongst other reasons, any public procurement contracts, which were concluded without having conducted the public procurement procedure, which the contracting authority has been obliged to conduct according to the provisions of the Law on Public Procurement, as well as if the same contracts are concluded contrary to the provisions of the said law that are governing the prevention of corruption and conflict of interest, shall be null and void.

UAE Small Flag UAE

The UAE Federal Government Contracts Regulations (as amended) are relevant when contracting with the Federal Government. The UAE’s two most active Emirates (Abu Dhabi and Dubai) have also issued their own legislation that applies to contracts with local Emirate Government Authorities. These broadly follow the Federal Regulations.

The Government of Abu Dhabi has issued several iterations of the “Purchases, Tenders, Auctions, and Warehouses Manual” pursuant to Law No. 6 Year 2008. This provides some ground rules by which Government Authorities and those hoping to contract with them must play. Included in the Manual are rules governing the tender procedure, bonds, limits on the amount of liquidated damages that can be levied, variation procedures, and Contractor registration requirements.

Dubai Law 22 of 2015 (the “PPP Law”) provides similar guidance to Dubai Government Authorities and those tendering for contracts in the Emirate. The PPP Law was introduced to encourage the use of PPP models in Dubai. It contains similar guidance to that included in the Abu Dhabi “Manual” in relation to tender scoring, bid terms, and bonds. Where the PPP Law is silent, or another method is adopted, Law No. 6 of 1997 (the Procurement Law of Dubai) shall apply.

Germany Small Flag Germany

The procurement process is highly regulated and quite formalised. For laws that apply to procurements see answer to question 7.

Austria Small Flag Austria

The only restrictions on procurement are those in respect of public clients. Public contracting is covered by the Federal Procurement Act.

France Small Flag France

For public contracts, non-compliance with the mandatory tendering procedure may result in the cancellation of the contract. Criminal law sanctions may also apply.

For private contracts, the tender process is not mandatory but, if the project owner uses such process, it will have to comply with the rules set by the bidding documents. In case of non-compliance, the project owner may face potential claims for damages by evicted bidders.

Greece Small Flag Greece

As far as the private procurement is concerned, the parties enjoy great freedom as to both the selection of their counterparty and the formulation of individual terms that best suit their needs, subject to the restrictions referred to under Question 8 above.

Unlike in private contracts, the awarding and execution of public contracts is subject to multiple requirements and restrictions laid down by the Public Procurement Law, which in their majority are mandatory for both the contracting authorities and the tenderers/contractors; as such, breach thereof renders the tendering procedure and by extension the respective public contract invalid. Most importantly, the contracting authorities are under the obligation to comply with the principles of equal treatment, transparency, non – discrimination and proportionality. Eligibility of the tenderers is likewise strictly regulated, among others, in Art. 25 of the Public Procurement Law, which provides that any parties established outside the EU, the European Economic Area (EEA) or any third country that is not a signatory to the GPA (WTO) or to any other relevant bilateral or multilateral agreement by which Greece is bound, are not eligible to pursue award of a public contract in Greece. Further to the above, multiple requirements apply in order to ensure that the performance of public contracts is compliant with any applicable environmental, social, labour law and other mandatory provisions established by EU, national or international law and that the contract is not awarded to operators falling under any grounds for mandatory and non-mandatory exclusion.

Saudi Arabia Small Flag Saudi Arabia

The Government Tenders and Procurement Regulation of 2006 makes public tenders for government contracts mandatory, and state-owned corporations tend to follow this in practice.

Malaysia Small Flag Malaysia

Generally, there are no restrictions on procurement within the private sector, other than a legal requirement for contractors to register with the applicable board, for instance the Construction Industry Development Board of Malaysia (“CIDB”).

For public procurement, the legislative framework consists of the following:

(a) Financial Procedure Act 1957;
(b) Government Contract Act 1949;
(c) Treasury Directives and Circular Letters; and
(d) Federal Central Contract Circulars.

These rules and regulations are equally applicable to the federal government, the state governments, the local authorities and other statutory bodies. Parties who are interested in doing business with the government would have to first undergo a registration process intended to ensure that parties are capable of providing the services or to carry out the works. There are three types of public procurement modes: direct purchase, quotation and tenders. The applicable mode will be dependent on the value and whether it is for the procurement of supplies, services or works.

In line with Malaysia’s efforts to curb and deter bribery and acts of corruption, the Malaysian Government has within the public procurement regime, implemented the Integrity Pact introduced by Transparency International. Civil servants, members of procurement boards/committees, bidders and consultants are required to declare that there has been no act of corruption in the procurement process.

Further, it is not uncommon to see imposition of certain requirements for ‘Bumiputera’ (a Malaysian of indigenous Malay origin) participation requirement, especially in large projects. This is part of the Government’s initiative to encourage and increase share of the national wealth amongst the Bumiputera.

Updated: October 16, 2018