Egypt: The New Public Contracts Law No. 182 Of 2018

Last Updated: 2 November 2018
Article by Youssry Saleh & Partners

After being approved by the Egyptian Parliament, President Abdel Fatah El-Sisi has issued Law No. 182 of the year 2018 that regulates the contracts and agreements which are concluded by the Public Authorities in Egypt within the upcoming period that includes specific regulations that the General Authorities shall follow and apply.

Moreover, it aims to cancel Tenders and Auctions Law No. 89 of the year 1998 and as an amendment for its consequences as well. Taking into consideration that Ministry of Finance prepared the new law favoring the Social and Economic changes to satisfy the current and future government needs.

The law has updated the technicalities that enable the authorities to rent the movables instead of purchasing, these updates are done for reducing the expenses of the government on one side, and on the other side, for the purpose of avoidance of squandering public money. Accordingly, Article 4, of the law establishes a committee for the economic changes that includes the ministries concerned with the economic affairs. In addition to that, this study specializes in analyzing the economic changes and indicators which affect in providing the requirements to the administrative bodies in which it assists its efforts in providing the services in the required quality.

Article 5 of the decree relevant to the abovementioned law stipulates that this law shall be in force after 30 days after the day of its publication.

This law has been issued in order to achieve a positive return on performance of the governmental entities which are subject to the provisions of the law, and control and rationalization of public spending, in addition to combating corruption.

Article 7 provides that the contract for the purchase or lease of movables or real estate or the contracting contracts or the provision of services must be concluded through public tender. The exception may be made by an estimated decision of the authority based on the contracting administration by one of five ways:

  1. General practice;
  2. A limited tender;
  3. A two-stage tender;
  4. A local tender; and
  5. A direct agreement.

The same article provides for the contract to sell or lease movables, real estate or projects that do not have legal persons and authorizes the use or exploitation of real estate and projects, including tourist establishments and cafeterias, by public auction or bidding on closed envelopes. An exception may be made by reasoned decision of the competent authority to conduct contracting in one of three ways:

  1. Limited bidding;
  2. Local bidding; and
  3. Direct agreement.

Article 10 prohibits resorting to the splitting of contracts in order to circumvent the conditions, rules and procedures. Nevertheless Article 11 obligates administrative authorities, before proceeding with the procedures to verify the availability of funds allocated to them, provided that the terms of the proposal include the fact that the contract is within necessary actual requirements.

It is also prohibited to contract in order to exhaust the financial appropriations. In the last month of the financial year, contracting is prohibited except in exceptional cases required by the necessity of work and with the approval of the competent authority represented by the Minister or the Governor or the Chairman of the Board of Directors or the fund or their equivalent in the Authorities.

Article 37 obliges the cancellation of the tender or the practice of all types before deciding whether they are permanently dispensed with or the public interest so requires, or if there is collusion between bidders, fraudulent practices, corruption or monopoly.

Article 40 specifies performance rates of the final insurance, which vary according to the type of transaction and the objects under contract. Article 41 stipulates that the final insurance shall not be paid by the bidder within the specified period. The contract may be canceled or executed by one of the following bidders to be given in the order of priorities of the administrative body.

Article 49 obligates the administrative authority to receive the contracting place on the dates specified in the contract if it is compatible with the agreed specifications and conditions. The contractor, in case of failure by the authority may submit a petition to the competent authority (the minister or governor) to form an impartial committee to study the reasons for inaction. In order to follow up, a copy shall be submitted to the general contracting office for complaining.

Accordingly, the Presidential decree does not violate the provisions of the participation of the private sector in the infrastructure projects, services and public utilities issued by Law No. 67 of 2010 and also it does not violate the New Egyptian Investment Law.

Thus, the abovementioned articles are amended in the new issued law in order to tighten the control and achieve the economic efficiency of the State to gain the real value in exchange for what is spent from public money and avoid unjustified disbursement which will lead to an affirmative impact on the authorities which are subject to the provisions of law in order to assist them in fighting the occurred corruption organizing procedures, facilitating and achieving the objectives of decentralization as well as establishing the principles of transparency and equal opportunity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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