Public Tender Law

The Public Tender Law governs all supply, service and construction contracts entered into with an Egyptian governmental entity. Government contracting must be by way of public tenders or by public negotiations between the government entity and the contractor. The following cases are exceptional ways in contracting

A limited tender may be used where the nature of the contract requires certain types of suppliers, contractors consultants, technicians or other experts, whether situated in Egypt or abroad

A local tender may be used where all contracts (up to a value of L.E 200,000) are confined to local suppliers

Limited negotiations may be used where items manufactured are only available from certain contractors or the nature of the items or its purpose requires obtaining it from its production locations or where technical works require certain specialists, or where national security dictates confidentiality

Direct contracting, but in extraordinary cases.

There is no standard Government contract. Each Ministry or Government agency uses its own form of contract (conforming to the provisions of the Public Tender Law). Public tenders must advertised in a daily newspaper locally or abroad, depending on the nature of the contract and must ensure equal opportunity and free competition

Although a government contract must be awarded on the basis of the most qualified and lowest bid, an Egyptian domestic contractor is accorded priority if its bid does not exceed the lowest foreign bid by more than 15%.

Each tender must be accompanied by the payment of a provisional deposit of up to 2% which is returned to unsuccessful tenders. A final deposit of up to 5 % from the value of the contract must paid by the winner within 10 days of their tender being accepted. The contract may be cancelled if payment of the final deposit is not made, and any losses suffered by the government entity as a direct result may be recovered.

A maximum fine of up to 10% of the value of construction contracts and up to 3% of the value of supply contracts and technical assistance contracts may be levied on contractors for late performance or late delivery.

The Public Tender Law Permits Government entities to terminate contracts where the bidder has acted fraudulently, declared bankruptcy. Tenders may be rejected upon receipt due to (among others):

• For reasons of public interest and welfare,
• If only one tender was submitted, or
• The lowest tendered price exceeds the estimated value of the contract.

A contract may be terminated by the Government entity at any time if the contractor party defaults. Any losses incurred may be recovered. In cases of late-performance or non-performance the concept of force majeure is recognized in accordance with principles of the Egyptian Civil Code under which certain types of hindrances must be clearly stated in the contract if they are to be considered force majeure (e.g. the unavailability of materials, strikes and shipping delays).

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