The legislations regulating the procurement of government contracts in Kuwait are the following (the “Procurement Regulations”):

• The Public Private Partnership Law (the “PPP Law”) No 116 of 2014 and its executive regulations establishes a legal framework for partnerships between public and private sectors in the development of infrastructure and public services. It outlines the procedures for selecting private partners, the terms of the partnership agreement, and the allocation of risks and responsibilities.
• The State Property Law No 105 of 1980 and its amendments (the “State Property Law”) is a legal framework that governs the acquisition, management, and disposal of state-owned properties. It outlines the procedures for the allocation of such properties to investors as well as the conditions for their use and maintenance.
• The Public Tenders Law No 49 of 2016 regulating public tenders in Kuwait as amended by Law No 74 of 2019 (the “Public Tenders Law”) is a legal framework that regulates the procurement of goods, services, and works by government agencies and public institutions. The law establishes principles of transparency, competition, and equal treatment of all bidders, and outlines the procedures and requirements for submitting and evaluating bids, awarding contracts, and resolving disputes.
• Bids Circular No 4 of 1997 (the “Bids Circular”) further outlines the steps of the bidding process and goes hand in hand with the State Property Law.

In principle, public entities including government bodies, ministries or departments or any public entity with a supplementary or an independent budget that enter into an agreement with private sector investor(s), being a local or foreign individual(s) or legal person(s), are subject to the procurement regulations listed above.

Kuwaiti public procurement legislations apply to contracts for procuring works, the supply of products and/or goods, the performance of services of economic or social importance, or to improve an existing public service, or to develop, reduce the costs or increase the efficiency of any such service. According to the the Public Tenders Law, specialised committees are established in some public authorities to carry out procurement, contracting and services, and some procurement operations in these authorities are excluded according to:

• Defence, National Guard and Interior Affairs;
• the Central Bank; and
• Kuwait Oil Company and its wholly owned companies.

In accordance with the provisions of the State Property Law, the allocation of state properties shall only apply to residential, industrial, commercial and agricultural plots and shall not apply to governmental houses or any other state property that is mandated by special rules.

Under the PPP Law, the public-private partnership project models available will depend on the value of the PPP project under the following thresholds.

• Model 1 – PPP project value at up to KWD60 million: in accordance with Article 12 of the PPP Law the successful investor shall establish the “Project Company”. The successful investor may acquire shares solely, directly in the Project Company, or through a grouping of several private local or foreign legal persons.
• Model 2 – Project valued in excess of KWD60 million up to KWD250 million: based on Article 13 of the PPP Law, the PPP project shall be procured in a competition between investors willing to invest in the PPP project. Accordingly, the Kuwait Authority for Partnership Projects (KAPP) establishes the Project Company as a Kuwaiti public shareholding company following the procurement of the project and selection of the successful investor, and shall distribute its shares as follows:
1. 50% as IPO shares;
2. 26–44% Project Company shares; and
3. 6–24% shares owned by the concerned public entity.

However, Article 16 of the PPP Law provides an exception to the above. Should the Higher Committee established under the PPP Law so propose, the Council of Ministers may decide to competitively tender special nature development projects which have a total estimated value not exceeding KWD250million. The successful investor undertakes to establish the Project Company wholly.

• Model 3 – PPP project valued at more than KWD250 million: Article 16 of the PPP Law provides that where the total estimated cost of a PPP project exceeds such value, a Kuwaiti public shareholding company shall be established pursuant to the rules established under Model 2 above.

Under the State Property Law, it is permissible, by virtue of a decision by the Council of Ministers, to own private or movable state property free of charge as well as use it rent free if the selling value or rental value disposed or waived does not exceed KWD50,000.

Under the PPP Law, an investor can be a private entity, person or group of people locally based or a foreign legal person whose qualifications are approved by the Higher Committee to put forward a PPP project proposal.

The Bids Circular specifies that the bidder must be a Kuwaiti individual or a company, registered in the Commercial Register and with the Kuwait Chamber of Industry and Commerce. The bidder may be a foreigner provided he is associated with a Kuwaiti partner or agent via a documented contract.

Article 4 of the Public Tenders Law mentions that the Central Agency for Public Tenders (CAPT)’s scope covers local procurement contracts belonging to a public entity located in a foreign country whether the person or entity being contracted with is Kuwaiti or not.

Kuwait has a comprehensive set of Procurement Regulations that govern public procurement activities. The key obligations under the procurement legislations in Kuwait are as follows.

• Competition – the Procurement Regulations require that procurement procedures must be designed to promote competition. This means that procurement authorities must ensure that there is a sufficient number of suppliers bidding for contracts and that the bidding process is fair and open.
• Transparency – the Procurement Regulations require that all procurement activities must be transparent and fair.
• Equal Treatment – the Procurement Regulations require that all suppliers must be treated equally. This means that procurement authorities must apply the same selection criteria and evaluation methods to all suppliers or bidders.
• Cost-effectiveness – the Procurement Regulations require that procurement activities must be cost-effective. This means that procurement authorities must seek to achieve the best value for money by balancing the cost of goods and services with their quality and suitability for the intended purpose.

The Procurement Regulations in Kuwait seek to ensure that public procurement activities are conducted in a transparent, competitive, and accountable manner, and that they comply with ethical and legal standards. For instance, under the Public Tenders Law, the CAPT forms a technical department including engineers, quantity surveyors and individuals with expertise from different specialties provided that their experience will not be less than 10 years and they shall be responsible to implement technical standards to classify contractors, assess applications, study and evaluate bids or even the technical recommendation of the relevant public authority, study cost estimates of the tender project and compare with the estimates of the relevant authority, study and evaluate variation orders, etc, all to ensure fair and equal treatment.

The PPP Law states that the selection of the investor is subject to principles of transparency, freedom of competition, openness and equal opportunity. In addition, there are various entities and committees established for a proper chain of command to ensure transparency in dealings.

The Kuwaiti legislations mandate the prior advertisement of regulated contract award procedures under the Public Tenders Law, the PPP Law and the State Property Law, but are silent to this effect under the provisions of the Bids Circular.

Under the Public Tenders Law, the owner of the project shall request the successful bidder to attend for signing the contract within 30 days as of the date of submission of the final bid bond payment.

The CAPT, after the approval of the State Audit Bureau on the awarding, shall notify the successful tenderer in writing – with acknowledgment of receipt – of the acceptance of its bid and of the awarding of the tender to him, within one week, and a copy of this letter shall be sent to the project owner. The decision shall be published in the Official Gazette and on the CAPT’s website immediately after its issuance.

Under the PPP Law, the announcement of projects accepted for procurement is made in the Official Gazette and at least two Kuwaiti dailies, both in Arabic and English, as well as in other local and international media outlets, and through publication on the KAPP website. The announcement shall include an overview of the PPP project, its objectives and its proposed location (if any), and the procedure for submitting the expression of interest and any other information or conditions related to the PPP project, and the period for submitting the expression of interest shall not be less than two weeks from the date of publication of the announcement.

Under the State Property Law, the call for the bids shall be announced in the Official Gazette and in one or more local papers (at least one announcement must be made), provided that such announcement includes the following:

• the number and subject of the bid;
• the place of receipt of the bid documents;
• amount to be paid for the bid documents;
• the entity to which the bids are submitted;
• the deadline for receiving bids;
• bidding process timeline;
• value of the initial bid bond; and
• any other information that the concerned authority deems fit to include.

The legislations do not prohibit a party from carrying out preliminary market consultations before officially launching the contract award procedure. A potential awarding authority can carry out an unofficial investors’ outreach process but may nevertheless require such investors to sign a confidentiality agreement or a non-disclosure letter if commercially sensitive information will be communicated to them that may affect the bidding process later on.

The Kuwaiti legislations mandate the tender procedures that may be used for the award of a contract. As such, the tender procedure is outlined under each legislation as follows.

Tender Process Under the PPP Law

• As per the provisions of the PPP Law, the tendering process for the project shall be managed by a Competition Committee to be set up for each PPP project.
• The Competition Committee shall be constituted separately for the proposed project, by a decision of the Kuwait Authority for Partnership Projects (KAPP) and subsequent to the approval of the Higher Committee, for the purpose of reviewing, studying and preparing all documents pertaining to the project and to further evaluate all technical and financial proposals.
• The comprehensive feasibility study may be prepared by either the Competition Committee, the Project Company, or the concerned public entity, in accordance with the PPP Law, to be presented before the Higher Committee for approval of the project.
• There is then a call for expression of interest under which the following is laid out.
1. The KAPP may announce the request for expression of interest for the project before the qualifications procedures, to assess the desire and interest of the private sector to participate in the implementation of the PPP project before the tendering of the project.
2. The KAPP may announce the Request for Expression of Interest for PPP projects, as a procedure preceding the qualification proceedings, in order to assess the interest and willingness of the private sector to participate in the implementation of the project prior to undertaking the procurement proceedings, in the Official Gazette and other local or international media that are suitable with the nature of the project, and through the publication of the same on the website of the KAPP.
3. The KAPP examines the expression of interest applications submitted by investors, based on which it determines whether to take the necessary legal actions to invite the investors for pre-qualification, before submitting its recommendation to the Higher Committee.
• The pre-qualification steps are as follows.
1. The Higher Committee may undertake either a pre-qualification or a post-qualification process based on the recommendation of the KAPP and in accordance with the nature of the PPP project.
2. The draft request for quote (RFQ) documents are prepared by the KAPP (with the assistance of the Transaction Adviser) in collaboration with the concerned public entity and shall be submitted to the Higher Committee for final approval; thereafter, the advertisement of the RFQ shall be made.
3. The duration for submission of the qualification requests shall be no less than 15 days from the date of publication in the Official Gazette, unless the Higher Committee decides to undertake a post-qualification process based on the KAPP recommendation and the nature of the project.
4. The Competition Committee reviews the qualification applications submitted by the prospective bidders, based on the criteria, methodology, and relative weight of each factor as stated in the RFQ. Thereafter, the Competition Committee submits to the KAPP a report summarising the results of the evaluation of the qualification applications.
5. After examining the report, the KAPP submits it to the Higher Committee, along with KAPP’s recommendations.
6. The KAPP shall publicly announce the list of pre-qualified bidders in the Official Gazette and the local newspapers and identify them on the KAPP website.
• Lastly, the Request for Proposal (RFP) steps are as follows.
1. The Competition Committee (with the assistance of the Transaction Adviser) shall develop the RFP package for the tendering process and submit it to the department of legal advice and legislation and the public entity for review and approval.
2. The KAPP and the Competition Committee would then raise the RFP package along with the draft PPP agreement and the draft advertisements for the Higher Committee’s approval.
3. After approval, the advertisement of the RFP should be distributed by the KAPP through media outlets, the Official Gazette, at least two Kuwaiti daily newspapers, both in Arabic and English, other local and international media that are suitable having regard to the nature of the PPP project, and the KAPP website.
• The proposal of each bidder shall comprise the technical bid, the financial bid, and the bid bond of the investor in accordance with the provisions of the PPP Law and as per the project’s procurement documents, as well as the RFQ in case of post-qualification.

Tender Process Under the State Property Law and the Bids Circular

The initiation process

• The project tender process under the State Property Law regime is regulated by the provisions of the Bids Circular.
• The procurement system department shall be responsible for the preparation, processing, placement and implementation of contracting procedures for the bid.
• The public entity involved in the project prepares the study for the bid and sends it to the procurement system department along with the bid request letter.
• The study shall be presented to the procurement system department for its approval and for determining the estimated bid value.
• The procurement system department prepares the bidding documents and sends them to the department of legal advice and legislation for its review.
• As mentioned above, the call for bids is then announced in the Official Gazette and in one or more local papers.

Qualification process

• At this stage of the bidding process, the procurement system department undertakes the following.
• Arranges a session to open the financial envelopes for the submitted bid offers.
• Reviews the bid documents and amount of each investor and disqualifies any investor who has failed to comply with the bid requirements.
• Its secretary evaluates the technical and financial offers and submits their report along with each investor’s primary bid security to the procurement system department for review.
• It may clarify some points that are not clear with the accepted bids, provided that its decision does not affect the total bidding prices or the conditions of the bid.
• Neither the State Properties Law nor the Bids Circular provide for unofficial investors’ outreach process, or any requirements or restrictions related thereto. However, it is commonly suggested, in the event investors are to be contacted and provided with non-public and commercially sensitive information or information that may affect competition at the time of initiation of the bidding process, that a confidentiality agreement be signed with such investors (although not mandatory).

Tender Process Under the Public Tenders Law

Call for expression of interest

• The announcement of the invitation for the project tender, or for submitting bids or pre-qualification requests shall be published in the Official Gazette, as well as on the website of the CAPT, in advance no later than 30 days from the project pre-qualification requests deadline.
• The project bid should be submitted along with the bid documents and accompanied by an initial bid bond.
• The bid shall remain in force, and it is not permissible to deviate from it, from time of its release until the end of its period of validity. No modification to the prices will be considered after the submission of tender.

Qualification process

• The CAPT arranges a session to open the financial envelopes for the submitted bid offers to study them and submit recommendation with regard thereto to the CAPT within a period of 30 days from the date of referral to it. In cases of major and technically complex projects the relevant public authority shall have a right to demand extending this period up to a maximum 60 days for reasons acceptable to the CAPT.
• The envelopes shall be returned, and the CAPT board shall have a right to take assistance from the technical sector at the CAPT, to express an opinion if necessary.
• The CAPT board may decide to refer the technical proposals of the acceptable bids to the special technical committee formed for this purpose. The technical committee shall solely study them or take part in the same with the relevant public entity as deemed fit by the CAPT board.
• The applicants of the technically accepted proposals shall be notified of the date and venue for convening the session for opening the financial envelopes.
• The CAPT board meets on the date and place specified for the opening of the financial envelopes, and undertakes their opening directly (following the same procedures as with regard to the opening of the technical envelope), after verifying the integrity of the financial envelopes.

Tender Procedure Under the PPP Law

The PPP Law provides for one tender procedure that must apply to PPP projects. As such, the awarding procedure under this law can be described as follows.

• The Competition Committee, established for the PPP project, shall undertake evaluation of the technical proposals and submit a report along with its recommendations to the Kuwait Authority for Partnership Projects (KAPP) for approval.
• The KAPP shall notify the investors whose technical offers were approved and those who were rejected.
• The Competition Committee shall arrange a public session to open the financial envelopes for the offers submitted by the investors.
• The Competition Committee must prepare a report in connection with the evaluation of the technical and financial offers and submit it to the KAPP.
• The KAPP must notify the concerned investor and the relevant ministry of the preferred investor to proceed with negotiations.

The KAPP must seek the approval of the Higher Committee (for the PPP projects) for the whole PPP contracts package. Following this step, all agreements are negotiated and signed by the Project Company and the relevant governmental entity.

Tender Procedure Under the State Property Law

Similarly, this legislation provides for one tender procedure, the process of which is outlined below.

• The procurement system department studies the bids and refers all accepted bids to the concerned units or technical departments for their recommendations and opinions.
• Investors with the best offer and conforming bidding documents shall be awarded the bid.
• In the event of any equal bids, the bid awarding may be divided equally if it does not conflict with the project’s interest.
• The procurement system department reserves the right, at any time, to cancel the bid at its sole discretion.

Tender Procedures Under the Public Tenders Law

Several tender procedures are set out under this legislation as follows.

• Limited tender through which a certain number of skilled suppliers or contractors, registered with the CAPT, are called based on their technical and financial specialisation.
• General or limited negotiations (competitive negotiations or solicitation offers) through which specialists or a few of them are invited so that each of them could present, upon being informed on the required specifications, an offer based on the conditions laid out.
• Direct command under which the required object is directly obtained from the market through the relevant party supplying the items directly.
• It is permissible to resort to collective procurement tenders, electronic negotiations and framework procurement agreements according to the relevant contracting conditions.
• Public entities may contract for any purpose without involving the CAPT, in accordance with a circular issued by the MOF portraying the needs of the concerned party, if the contract amount does not exceed KWD75,000. A review by the Council of Ministers is made every five years to increase the value mentioned by a maximum of 20%.

Award

Additionally, the awarding of the project based on the tender models described above can be summarised as follows.

• The CAPT in the cases that do not require a technical examination of the tender, shall award the tender immediately to the owner of the bid which is consistent with the requirements of the tender documents of the least price.
• Regarding tenders with technical and financial proposals, which require highly complex technology, a high engineering level and accurate technical specifications with high cost, the tenders are awarded in these cases to the tenderer that meets the technical requirements and whose bid was of less cost.
• The CAPT shall notify the relevant authority of the result of the tender, and the relevant authority shall respond, commenting on the award during a period not exceeding ten days from the date of receipt of the notification.

Under the PPP Law

• The KAPP advertises the RFP and waits for the submission of proposals within an estimated timeframe of two to three months. Within the same timeframe, the Competition Committee evaluates these proposals to award qualified investors the project.
• Documents for the qualifying investors are then prepared, reviewed and approved by Competition Committee, transaction adviser of the PPP project and the KAPP in order for them later to be advertised to the qualified investors, all this within an estimated timeframe of three to four months.
• Once the RFP documents are prepared, reviewed and approved by the concerned authorities, the RFP documents are advertised by the KAPP, following which KAPP receives the proposals submitted by the investors.
• The Competition Committee and the KAPP then evaluate these proposals.
• The Competition Committee negotiates with the preferred investor.

It is worth noting that, before the KAPP announces the identity of the successful investor, the department of legal advice and legislation and the State Audit Bureau must first grant their approval.

Under the State Property Law and the Bids Circular

The State Property Law and the Bids Circular do not provide for any accurate bid process timeline. However, in practice the estimated bidding process under the State Property Law and the Bids Circular framework may take up to six months, noting that the procurement system department of the Kuwaiti Ministry of Finance determines each tendering step period depending on the project type.

Under the Public Tenders Law

As mentioned under 2.3 Tender Procedure for the Award of a Contract, the announcement in the Official Gazette is made no later than 30 days from the project pre-qualification request deadline. The CAPT must submit its recommendation with regards to the bid offers within a period of 30 days from the date of referral. This time limit can be extended to 60 days in case of major or complex projects.

The PPP Law mentions that the time limit for receipt of a request for expression of interest shall not be less than two weeks from the date of the announcement’s publication. However, there is no mention of a time limit for the receipt of expressions of interest under the State Property Law.

Under the Public Tenders Law, each competent procurement authority shall determine the deadline for submitting bids regarding any procurement process or pre-qualification requests or for responding to any call announced to express interest in participating in a limited tender. This is done to allow sufficient time for all tenders wishing to submit bids, or request for qualification to review the announcement and respond to it.

The announcement of the invitation for the project tender, or for submitting bids or pre-qualification requests, shall be published in the Official Gazette, as well as on the website of the Central Agency for Public Tenders, in advance no later than 30 days from the project pre-qualification requests deadline.

Under the PPP Law

The PPP Law provides the criteria related to investor qualification. The investor wishing to participate in the tendered project must prove its ability to successfully implement it and fulfil its obligations if awarded the project contract. Any person or company, whether Kuwaiti or non-Kuwaiti is eligible to apply for a project concept to KAPP. However, as mentioned in 1.4 Openness of Regulated Contract Award Procedure, the investor’s qualifications must be approved by the Higher Committee.

The primary value of the insurance must be paid (in KWD) either in the form of a certified cheque or letter of guarantee issued by a local Bank. The offer must be made in local currency (KWD). Any documentation or information relevant to the offer should be attached.

All consortiums submitting proposals must provide the necessary documents, including a certified copy of their consortium agreement as well as the identification of the authorised representative of the consortium along with their appointment document.

The successful investor must submit a performance bond in the required amount, in the form of a letter of guarantee issued or confirmed by a bank licensed to operate in the State of Kuwait. This letter should include the wording of the guarantee, the time of delivery following the investor’s appointment, its validity period, and means of renewal.

Under the Bids Circular

The Bids Circular lays out the bidding criteria a bidder must follow for a successful submission. Among many are the following.

• The bidder must be Kuwaiti and can either be an individual or a company, registered in the Commercial Register and with the Kuwait Chamber of Industry and Commerce. The bidder can be a foreigner provided that he has a Kuwaiti partner or agent supported by a certified contract.
• Bids must contain total prices upon submission at the official currency (KWD).
• The bid must include a primary insurance amounting to no less than 20% of the bid amount. The insurance shall be in the form of a certified cheque or guarantee form from a local bank issued in the name of the bidder addressed to the relevant governmental entity and not to include any restriction or condition to be valid throughout the validity period of the bid.
• The final insurance is determined to be at least 10% of the bid amount and is similar to the primary insurance in terms of steps, bearing in mind that the validity period of the guarantee letters (as final guarantees) extends for a period of 90 days after the completion of the contract.

The Project Company that shall be established for the management of the awarded project must be Kuwaiti (ie, Kuwaiti shareholding in the company shall be minimum 51%). In the event any foreign investors wish to participate in the Project Company, it is important to take into account foreign ownerships restrictions, as foreign shareholding is restricted to 49% and hence foreign investors cannot own all the shares or the majority of the controlling shares of the Project Company.

However, this situation can be mitigated under the provisions of Law No 16 of 2013 regarding the promotion of direct investment in Kuwait, pursuant to which the Kuwait Direct Investment Promotion Authority (KDIPA) grants foreign investments licences enabling foreign investors to own up to 100% of the equity in the Project Company established and registered in Kuwait.

Under the Public Tenders Law

The Public Tenders Law and its executive regulations (No 30 of 2017) lay out four categories under which bidders must apply. The categories are divided based on the value and importance of the project, as follows:

• the first category is for high-value projects estimated at more than KWD10 million;
• the second category allows bidders to apply given that the project value is not below KWD5 million and is not more than KWD100 million;
• the third category is for project value that is not below KWD1 million KWD and not more than KWD10 million; and
• the fourth and last category concerns local bidders for a project value not more than KWD2 million.

If the project value increases, this does not mean that bidders are eligible to switch categories if they have already applied under a specific one. However, bidders should apply for another category by abiding by the process laid out in the executive regulations.

To apply for a category, the bidder shall be Kuwaiti (an individual or a company) registered in the Commercial Registry. He must be registered in the relevant field he is tendering in: for instance, registered in the supplier or contractors’ registry. The bidder can be a foreigner, but certain provisions will not apply to him.

The offer can be limited to national companies that have sufficient specialisation in the local market. The offer can also be limited to foreign companies when needing to carry out works in a way requiring technical specialties not available locally, and this upon request by the relevant authority.

The Bids Circular provides that the public entity has the right to qualify the bidders before placing the bid. There is no reference under this legislation to a minimum number of qualified suppliers that may be invited to participate in a contract award procedure.

As mentioned under 2.4 Choice/Conditions of a Tender Procedure, participation in the procurement process under the Public Tenders Law can be restricted to a certain category of qualified investors based on the criteria and the conditions set out under the law. However, no specification is made as to the minimum number of qualified suppliers invited to participate in the process.

In addition to what is mentioned under 2.4 Choice/Conditions of a Tender Procedure, tenders are evaluated and a winner is awarded on the basis of the following criteria.

Under the PPP Law

To participate in a project that is being tendered according to the Law, investors must demonstrate their ability to carry out the project and fulfil their obligations if they win the competition and are awarded the project.

The assessment of the investor’s capability is conducted via qualification procedures. Depending on the project’s nature and as per the KAPP recommendation, the Higher Committee may conduct either a pre-qualification or a post-qualification process to ensure the appropriate selection of investors with the ability to implement each project independently. Thus, the proposal with the better technical offer prevails. In all instances, the State Audit Bureau must give approval for the competition award.

The KAPP shall submit the results of the feasibility study, whether prepared by the Competition Committee, private sector or public entity, as well as its recommendations regarding the approval or rejection of the project in accordance with the PPP model. If the project is approved, the recommendation shall include the following:

• proposed method of competition for the procurement of the project (either through a bidding process or a tender process);
• type of PPP Model to implement;
• identify the concerned public entities relevant for the project for them to participate in the procurement process, approve technical specifications, participate in evaluating the offer and award for the project, sign the PPP agreement and follow up on the operation and implementation of the project until its term;
• the proposed timetable for the procurement stages;
• proposed investment term;
• any exemptions or specific privileges to be granted;
• the purpose of the proposed service, ie economic or social purpose or whether it is to develop or improve an existing service;
• any request for the allocation of the land (if any); and
• any other requirements based on the project’s nature.

Based on its feasibility study, the project to be tendered for investment must meet the following criteria.

• Project must conform to all legal, technical, and environmental conditions. It shall also be economically feasible, and the benefits offered by the project to the state or the service owners should be suitable and reflect best practice standards.
• A comparison is made between whether the project is implemented through a PPP model or by a public entity and this comparison shall include the following:
1. value for money;
2. risk allocation;
3. use of technology and transfer of knowledge; and
4. project must be promising financially to the investor and an investment risk shall be made vis-à-vis the private sector to create an opportunity for competition.

Under the State Property Law and the Bids Circular

In addition to what is stated under 2.3 Tender Procedure for the Award of a Contract and 2.4 Choice/Conditions of a Tender Procedure, the Bids Circular provides that the tender is awarded to the highest price bid provided that all tendering requirements have been met and that the value given is greater or equal to the estimated value of the bid.

Under Public Tenders Law

As mentioned under 2.7 Eligibility for Participation in a Procurement Process, once bidders select and apply under their selected category and fulfil the requirements needed for their successful application, the selection process takes place. The CAPT, in cases not requiring a technical examination of the tender, awards the tender immediately to the bid owner who was consistent in following and fulfilling the tender document requirements and offered the lowest price. Tenders that contain technical and financial technicalities will be selected if they meet these technical and financial requirements at the lowest price.

The CAPT Board of Directors discloses the result of the technical tender once the technical evaluation is completed. The bidder affected by the assessment decision may appeal such decisions as further detailed under 4.1 Responsibility for Review of the Awarding Authority’s Decisions.

Generally, it seems that the contract award is granted by the relevant authority concerned in reviewing the documents presented by the bidders, assessing whether such documents conform to the submission criteria and the purpose of the project.

It is worth noting that, when comparing tender submissions, the CAPT reviews the criteria in an objective manner and keeps the cost as a primary criterion. The CAPT also employs a points system to assign technical project work to a bidder determined by their achievement of certain criteria that are based on a points system.

Under the Procurement Regulations, there is no obligation to disclose the criteria of evaluation on which bidders are selected or tenders evaluated. This is left at the discretion of the relevant public authority concerned in selecting the successful bidder.

The Bid Circular provides that the Procurement System Department notifies the unsuccessful bidders to return their samples within 15 working days from the notification date and releases their primary insurance. In contrast, the Public Tenders Law does not provide for a notification obligation or procedure concerning the parties who have not been selected.

On the other hand, the PPP Law mentions that the KAPP must inform both approved and rejected investors of their technical offers. Those who were rejected have the option to file a grievance with the Grievance Committee following the terms and conditions outlined under the Law and its executive regulations.

Under the PPP Law

As mentioned above, the KAPP shall notify investors whose technical offers were approved.

Under the State Property Law and the Bids Circular

The procurement system department shall notify the winning bidder whose bid has been accepted in writing of the bid result, after obtaining the approval of the State Audit Bureau within five working days from the date of the bid selection.

Under the Public Tenders Law

• The public entity, owner of the project, shall request the successful bidder to attend for signing the contract within 30 days as of the date of submission of the final bid bond payment.
• Following the State Audit Bureau’s approval of the award, the CAPT shall notify the successful tenderer in writing – with acknowledgement of receipt – of the acceptance of their bid and of the awarding of the tender to them, within one week, and a copy of this letter shall be sent to the public entity. The decision shall be published in the Official Gazette and on the website of the Agency immediately after its issuance.
• The public entity shall notify the successful bidder, for the payment of the final bid bond after ten days from the awarding. If the successful bidder does not submit such payment within one month upon notification, the successful bidder may be considered withdrawn from the bid, unless the public entity extends the final payment.
• The public entity enters into the bid contract with the selected investor, upon submission of the final bid bond.
• The bid contract must reflect and include all bid requirements and conditions.
• The procurement system department shall then follow up on the implementation of the Project Bid Contract in co-ordination with the public entity and the selected investor.

Under the PPP Law, at the request of the complainant, the Grievance Committee may issue a decision to temporarily suspend the contracting proceedings until the complaint is resolved. If the grievance is rejected either explicitly or implicitly, the proceedings shall continue.

Under the Public Tenders Law’s executive regulations No 30 of 2017, the head of the procurement authority or the CAPT’s committee, according to the specialisation, may stop the procurement procedures within seven working days from the date the complaint was submitted.

The PPP Law

After establishing the negotiation and signing of the PPP agreement, the KAPP must seek the approval of the Higher Committee for the whole PPP contracts package. Under the PPP Law, procurement proceedings can be cancelled for public interest purposes. The Higher Committee is behind the cancellation decision based on the proposal by the KAPP and the decision shall detail the reasons behind the cancellation.

All complaints and grievances related to any proceeding or decision that violates the Law and its Executive Regulations shall be reviewed by the Grievance Committee. This committee was established based on a decision by the Council of Ministers. The concerned person must submit the complaint or grievance to the committee within 15 days after being notified of the decision or becoming aware of it.

Regarding complaints and grievances, the Higher Committee has the authority to take whatever action it deems necessary in response to the Grievance Committee’s recommendations or decisions. Any decisions made by the Higher Committee in this regard will be considered final.

The State Property Law

The procurement system department studies the bids and refers all accepted bids to the concerned technical departments for their opinions. The procurement system department has the right and authority, at its sole discretion, to cancel the bid at any time.

The Public Tenders Law

In cases that do not need a technical examination, the CAPT awards the tender immediately to the owner of the bid consistent with the requirements of the tender documents of the least price. The CAPT notifies the concerned authority of the tender result, and the concerned authority shall respond, commenting on the award, during a period not exceeding 10 days from the date of receipt of the notification. The owner of the project then requests the successful bidder to attend to sign the contract within 30 days of the date of submission of the final bid bond payment.

The award of the tender to the successful bidder does not entail any right for him before the government should the latter decide to withdraw from entering into a contract as the result of a decision taken by a Department of the Council of Ministers after consulting with the concerned authority based on a memorandum issued by that authority. The decision is taken by a majority of two-thirds of its members and the bidder shall only be considered as successful upon signing the contract.

Any interested party may appeal against decisions issued by the classification committee, that is, the one that decides under which category the bidders are classified, within two weeks from the notification date.

The bidder’s complaint shall be submitted to the head of the competent procurement authority where it breaches any of its obligations under this law and causes loss or damage to the bidder; this takes place at any stage of the procurement process. If the complaint relates to the person handling the technical documents of the tender or its general conditions, in violation of the rules and equal opportunity, any person affected by such act has the right to file complaint until the bidding process is over. If the complaint is about procurement procedures before completion of the contract or before the beginning of its implementation, it must be submitted within a period of seven working days from the date the decision was published.

The complaint must be dealt with within seven days from the date it was submitted, and through a reasoned decision indicating the necessary corrective measures taken to maintain the integrity of the tender procedures.

Under the Public Tenders Law

Public authorities subject to the provisions of the Public Tenders Law are subject to investigation for any act of negligence or default in handling and preparing the tender documents and the consequent issuance of unjustified variation orders, as well as for cases of inaction in awarding procedures or committing anything that would breach the provisions of this law.

At the request of the affected party, the referral to investigation is made and a decision must be reached by either abstaining or penalising the party in breach within a maximum of 30 days from the date of discovery or becoming aware of the breach. Furthermore, Article 84 adds that any act of violation of the Law is void, and the party who suffers damage as a result of such violation may claim compensation.

The Public Tenders Law provides further that any bidder who suffers loss caused by a tenderer’s breach or by a party violating the procurement procedure, may file a complaint before the procurement authority or the head of the relevant authority as the case may be. The bidder may ask the relevant entity to reconsider what caused the loss or ask for remedial steps to be taken. Grievance against the CAPT’s Board decisions shall be submitted to the Grievance Committee within seven working days of publishing the decision relating to the bid and, in the event of complaints regarding a fault made by CAPT’s Board affecting the contractor, the decision shall be submitted within 30 days from the day of fault.

The State Property Law and the Bid Circular are silent on this point.

Under the PPP Law, any individual who is affected by a decision that violates the provisions stated under this law or its executive regulations can file a complaint to the Grievance Committee. The committee is open to receiving complaints or grievances from any party who has a connection to and suffered harm as a result of the errors or actions that may have occurred during the contracting procedures that were conducted by the KAPP, or any decisions made by the Higher Committee. Upon request from the complainant, the grievance committee has the authority to suspend the contracting proceedings until a decision is made regarding the complaint.

Further to the details provided under 4.2 Remedies Available for Breach of Procurement Legislation, an unsuccessful investor can challenge or appeal the decision of an awarding authority as follows.

Under the Public Tenders Law

The Public Tenders Law mentions that the General Assembly of the Court of First Instance determines a courtroom with the competence to consider public procurement cases and disputes associated therewith, from which, administrative disputes. In the Court of Appeal, a specialised entity shall be formed to consider appealed judgments issued by the administrative entity. The verdict shall be decisive and may not be challenged by any method of appeal.

Under the State Property Law

The State Property Law mentions that the management, use and sale of state property is within the competence of the concerned public entity owning such property under the conditions set forth by the Ministry of Finance (MOF) and in accordance with the general rules stipulated by the Council of Ministers, hence the overlooking power of the Council.

Furthermore, in line with the scope of the State Property Law, the MOF reserves the right to accept or reject any bid, and to annul the bidding process and reject all bids, at any time prior to award of contract, without thereby incurring any liability to the affected bidder or bidders or any obligation to inform the affected bidder or bidders of the grounds for the MOF’s action.

Given that the contract governing the relation between the investor and the public entity is an administrative contract, the administrative department is the competent authority to consider disputes that arise between administrative authorities and other contractors in commitment contracts, public works contracts, supply contracts, or any other administrative contract, and it has full jurisdiction over them. This is based on Law No 20 of 1981 and its amendments.

Under the PPP Law

The PPP Law mentions that the Council of Ministers establishes a Grievance Committee that will receive grievances from concerned parties relating to any decision issued in violation of the provisions of the PPP Law. Any concerned party is entitled to file a complaint or grievance before the committee regarding any inaccuracies related to the contracting procedures conducted by KAPP, or any decision made by the Higher Committee.

Complaints or grievances must be submitted within 15 days from the date the contested decision or action is issued and notified to the complainant. The Grievance Committee must promptly notify the Higher Committee or the Authority upon receiving such complaints or grievances.

Within 15 working days of receiving a grievance, the Grievance Committee will issue a decision either accepting or rejecting the grievance, providing justification for its decision. Both the complainant and the respondent shall be notified promptly after the decision is made. If the Grievance Committee fails to make a decision, the complaint shall be deemed rejected. The decision made by the Grievance Committee shall be forwarded to the Higher Committee, whose decision shall be considered final.

Council of Ministers

The Council of Ministers has the power to regulate the development and implementation of projects in Kuwait. The Council is vested with the executive power to control and supervise the interests of the state in the manner specified under the Kuwaiti Constitution. As such, the Council of Ministers can be said to have the standing to challenge the awarding authority’s decisions if they conflict with public interests or are against the state’s policies.

Please refer to 4.1 Responsibility for Review of the Awarding Authority’s Decisions and 4.4 Challenging the Awarding Authority’s Decisions.

The Procurement Regulations and the related applicable laws do not specify the time length of the subject proceedings. In practice, they typically vary between six months and three years depending on the particularity of the case.

It is challenging to assess the average number of procurement claims considered by the relevant review bodies as such information is not publicly available.

The appeal filed against the decision issued by the awarding authority (as an administrative authority) is subject to payment of a fee amounting to KWD10. However, if there is a financial claim under an administrative contract between the awarding authority and the private investor, then a proportional fee will be due which is equivalent to 2.5% for all claims up to KWD10,000, and, for any amount exceeding the KWD10,000 limit, a proportional fee of 1% is then applied.

The Public Tenders Law mentions that the relevant authority may not issue any variation orders in the contract tender to vary in the range of 5% (more or less) without the approval of the CAPT and the allocation of the respective financial requirements by the responsible entity.

Under the PPP Law, any amendment to be made is to be agreed upon in accordance to the provisions stipulated under the PPP contract. The Higher Committee shall submit its report with any contractual amendments to it to the Council of Ministers.

Under the State Property Law, the bid offer may not be modified by the project company upon submission of the bidding documents.

It is worth mentioning that the project procurement and management is thoroughly reviewed and controlled by the Ministry of Finance (MOF), whether the project has been awarded to the Project Company under the legal framework of the PPP Law or the State Property Law. The MOF retains an important degree of control and supervision on the project tendering process, contracting process and implementation stage. Indeed, for instance, no deviations or variations from the project tender documents must be made in the contracts.

The contracting parties to the PPP agreement/bid contract must agree on the variation mechanism of any of the project’s conditions in the project’s contracts, as no amendments must be made without the prior approval of the MOF or the concerned authorities thereto. Additionally, as an administrative contract, the project contracts typically contains “exorbitant clauses”: these clauses contain certain prerogatives to the public entity, such as the right to terminate the agreement for public interest and amend the private investor’s obligations under the agreement, which shall be executed without any objection.

During the implementation process, any variations to the project’s execution framework must be approved by the public entity. For any additional buildings, infrastructures, structures required to be established, a justifying letter must be submitted to the MOF and the concerned governmental authorities to obtain their express approval on the matter.

Refer to 2.4 Choice/Conditions of a Tender Procedure and 2.8 Restriction of Participation in a Procurement Process.

Most of the cases submitted before courts relate to the non-renewal of the contract by the public entity. In a case initiated in 2019 and continued until 2021, a contract had been made under the State Property Law  between a public entity and a private investor, and, upon expiry of that contract, the public entity did not renew the contract with the same investor it originally contracted with. The contract was awarded to a new investor offering a more attractive offer than the previous investor.

The latter filed a lawsuit before the Commercial Department of the Court of First Instance on the grounds that the new investor did not fulfil the technical requirements of the bid. The new investor objected by demonstrating proof of his expertise. The Court of First Instance ruled in the favour of the new investor.

Aside from the introduction of the Public Tenders Law No 49 of 2016 and its amendment No 74 of 2019, replacing Law No 37 of 1964, there have been no recent amendments introduced to date.