Oman - Selling to the GovernmentOman - Selling to the Government

Most government procurement contracts are subject to the requirements of the FTA, namely, non-discrimination and national treatment for U.S. competitors. The FTA, however, does not govern military procurement and other procurements deemed to be a matter of national security. Although the FTA removed the requirement that a U.S. company obtain an Omani sponsor or partner, given the need for local follow-up and knowledge of the market, companies choosing not to open a local office are especially encouraged to consider obtaining a local partner. Branches of foreign consultancies fulfilling a Government of Oman tender can be 100 percent foreign-owned, but are typically dismantled upon completion of the contract as there historically has not been a provision in Omani law for permanent registration of a foreign branch. These temporary consultancies (present less than 90 days) are responsible for 10 percent withholding tax on royalties and management fees, typically paid by the local client.
“In-Country Value” (ICV) is the Government of Oman’s policy effort to incentivize companies, both Omani and foreign, to invest in Oman through their procurement of local goods and services and training of Omanis.  While ICV was first conceived primarily for oil and gas contracts, the principle is now embedded in government tenders in all sectors, including transportation and tourism. Please refer to the section on Openness to and Restrictions upon Foreign Investment in the Investment Climate Statement below for more details.

Most major civilian projects and acquisitions for the government are channeled through an independent Tender Board comprised of senior government officials and staffed by a limited number (around 40) of professional technocrats. The Tender Board usually relies upon the recommendation of a consultant and the procuring ministry in awarding contracts. Petroleum Development Oman (PDO) runs its own tender board, as do the Royal Oman Police, the Diwan of the Royal Court, the Oman Telecommunications Company, and the Ministry of Defense.  
The Tender Board website is the largest, though not exhaustive, compilation of open government tenders and is updated on a regular basis. However, once bids are submitted, the bid consideration process is often opaque and some companies complain of protracted timelines.  Tender announcements are widely published in local newspapers and the official government gazette. Tender opportunities are published in English and in Arabic. Procedures for appeal are specified in the Tender Law and regulations, as well as in the FTA.

Public tendering is required for all purchases above OMR 10,000 (USD 26,000) by ministries, government agencies, and public corporations. Ministries can award contracts through their internal tender boards for projects up to one million rials (USD 2,600,000). Projects exceeding this amount must be referred to the Tender Board, which determines the terms of bidding, invitations for bids, and selection of firms for awards. Depending on their activities, companies may register with the Tender Board under any of the following four categories:

1. Contractors (registered with MOCI and OCCI)
2. Consultancy Offices or Firms
3. Supplies or Supply Companies
4. Training Institutes

A temporary deposit in the form of a bank guarantee for 1- 3 percent of the value of the tender is required to bid. The registration application forms indicate the regulations for capital, employees, infrastructure, etc. required for classification of companies into different grades. Each project is assigned a tender grade depending on the sector. For example, a large construction contract may require increased capital requirements and higher grades for bidding companies. Local SMEs may receive a bidding preference in government tenders within a ten percent price differential. Contracts awarded through the Tender Board comply with Omani Standard Forms and Conditions, based on the International Federation of Consulting Engineers (FIDIC) standard. Contracts are often, but not necessarily, awarded to the lowest bidder. After notification of an award, final negotiations concerning clarifications and adjustments take place before the contract is executed.

Bidders must generally reside in Oman or have a local agent named in the bid. U.S. companies can register a 100 percent U.S.-owned company without a local partner. Other foreign companies can participate in the tenders as follows:

1. If the tender board announces an international tender (typical for large infrastructure projects), international companies and institutions not registered in the Sultanate may participate in international tenders provided that they register in accordance with the regulations prevailing in the Sultanate within a maximum period of thirty work days from the date the international company is notified of being awarded the contract. U.S. companies can register for tenders without a local partner.
2. With a government contract, foreign companies can register a temporary branch for the duration of the work.
3. Many international companies choose to establish an agency agreement with local companies. This agency agreement is registered with MOCI and the agent participates in tendering on behalf of the foreign company.

Bidders are allowed to be present at the opening of bids, or may view the process broadcast live on the Tender Board's website. Contract award notices are published online. Successful bidders are required to provide a performance bond (5 percent of the value of the contract) as a guarantee.
Successful international bidders are generally required to enroll with the Commercial Registration Department of the MOCI and become members of the Oman Chamber of Commerce and Industry (OCCI) within 30 days of award of the contract.

The Tender Board currently includes ranking members from the Ministries of Civil Service, Manpower, and Housing; as well as the Secretary General of the Supreme Committee for Planning and the Undersecretary of the Ministry of Commerce.

Tender Bid Bonds:
As part of the tendering process in Oman, bidding contractors will often arrange for a third party guarantor (usually a bank or insurance company) to issue a bid bond on their behalf to the project owner, as a guarantee that the winning bidder will perform its contract in accordance with the terms of its bid. The bid bond is subject to full or partial forfeiture if the winning bidder fails to either execute the contract or replace the bid bond with the requisite performance bond. Bid bonds typically range in value from one to three percent of the tender contract price. Under Omani law, a bid bond must be for at least one percent of the contract price or project value, and the bid bond must have a minimum duration of ninety days (which is extendable). A bidder seeking to withdraw its bid after the bid opening will lose the bid security. Unsuccessful bidders are reimbursed for the bid bond upon losing the tender. Pursuant to the Tender Law issued by Royal Decree 36/08, non-submission of the requisite bid bond with the bid can be grounds for disqualification of the bid. The winning bidder must replace the bid bond with a performance bond that constitutes five percent of the contract price within ten days or, in the case of foreign bidders, within 20 days of being notified of the acceptance of the tender. Failure to provide the performance bond within the stipulated number of days can result in the full amount of the bond becoming payable to the owner of the project as compensation for the default and, additionally, could lead to cancellation of the award.

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