Tendering and bidding constitute the principal procedure through which substantial procurements, particularly procurements by Iraqi public entities, are awarded. The procedure is governed in the public sector by the Government Contracts Execution Instructions No. 2 of 2014 issued by the Ministry of Planning, as supplemented and amended, together with the Public Financial Management Law No. 6 of 2019 and sectoral procurement frameworks for specific sectors. In the private sector, tendering procedures are governed by the procurer’s internal procurement policy, supplemented by the general law of obligations under the Iraqi Civil Code No. 40 of 1951.
Public Procurement Framework
The Iraqi public procurement framework is established principally by the Government Contracts Execution Instructions No. 2 of 2014, which prescribe the procedures applicable to contracts entered into by Federal Iraqi public entities. The Instructions address the categorisation of procurement, the methods of contract award, the qualification of bidders, the conduct of tenders, the evaluation of bids, the award of contracts, and the management of contract performance. The Public Financial Management Law No. 6 of 2019 establishes the broader fiscal framework within which public procurement is conducted, including the budget appropriation, commitment, and payment authorisation processes. Sectoral frameworks apply additional requirements in particular sectors, including the oil and gas sector, the electricity sector, and the defence sector.
Methods of Contract Award
The Government Contracts Execution Instructions recognise several methods of contract award, including:
- Open tendering, which is the principal method of award for substantial contracts and which involves the public invitation of bids
- Restricted tendering, in which bids are invited from a pre-qualified list of bidders
- Two-stage tendering for complex procurements involving an initial qualification stage
- Direct contracting, in which the contract is awarded without competitive tendering, available only in defined circumstances
- Request for proposals, used for procurements involving substantial technical or methodological elements
The choice of method is governed by the value of the procurement, the nature of the contract goods or services, the urgency of the requirement, and the availability of qualified bidders.
Bidder Qualification
Bidders are required to satisfy qualification requirements addressing legal, financial, technical, and integrity dimensions. Legal qualification includes the bidder’s commercial registration, tax compliance, social security compliance, and the absence of debarment. Financial qualification includes the bidder’s audited financial statements, capital adequacy, and capacity to provide the required performance security. Technical qualification includes the bidder’s experience, capacity, and the qualifications of its key personnel. Integrity qualification includes the absence of conviction for corruption offences and the absence of inclusion on debarment lists. The qualification requirements are specified in the tender documentation and assessed against the bidder’s qualification submission.
Tender Documentation
The tender documentation comprises the instruments through which the procurer specifies its requirements and the basis on which bids will be evaluated and contracts awarded. The principal documents include the invitation to tender, the instructions to bidders, the form of the bid, the technical specifications, the form of the contract, the bid evaluation criteria, and the schedules. The documentation should be drafted with sufficient precision to support the consistent submission and evaluation of bids and to provide the contractual matrix for the awarded contract. Material defects in the tender documentation, including ambiguity, contradiction, or omission of material requirements, may give rise to challenges to the conduct of the tender.
Bid Bonds and Performance Security
Tenders for substantial contracts typically require the submission of bid bonds and the provision of performance security upon award. The bid bond is a financial guarantee securing the bidder’s obligation to maintain its bid for the period specified in the tender and to enter into the contract upon award. The performance security is a financial guarantee securing the bidder’s performance of the awarded contract. Both instruments are conventionally provided in the form of bank guarantees issued by Iraqi banks under Central Bank of Iraq supervision, or in such other form as the tender documentation permits. The amounts, the validity periods, and the conditions for calling on the guarantees should be specified in the tender documentation.
Bid Submission and Opening
The procedure for bid submission engages the form in which bids are to be submitted, the place and time for submission, the consequences of late submission, and the requirements for the sealing and identification of bids. The procedure for bid opening typically engages a formal session conducted at a stated time and place, with the participation of bidder representatives, at which the bids are opened, the principal commercial elements (such as the bid price) are read aloud, and a record is kept of the bids received. The procedure is designed to ensure transparency in the receipt of bids and to support subsequent evaluation.
Bid Evaluation
Bid evaluation is the process through which the procurer assesses the bids submitted against the evaluation criteria specified in the tender documentation. Evaluation typically proceeds in stages, including:
- Preliminary examination, assessing the completeness and formal compliance of the bids
- Technical evaluation, assessing the conformity of the bids to the technical requirements
- Commercial evaluation, assessing the bid price and commercial terms
- Combined scoring, where the evaluation methodology combines technical and commercial scoring
- Award recommendation, identifying the bid offering the best combination of compliance, quality, and price
The evaluation should be documented in an evaluation report capable of supporting the award decision and the response to any subsequent challenge.
Contract Award
The contract is awarded by the issuance of a notice of award to the successful bidder, followed by the execution of the contract in accordance with the form prescribed in the tender documentation. The contract execution is subject to the satisfaction of any conditions precedent, including the provision of performance security and the completion of any internal authorisations within the procurer. The contract should reflect the terms of the tender documentation and the bid as accepted, with any variations specifically agreed.
Challenge Procedures
Bidders aggrieved by the conduct of the tender or by the award decision may bring challenges through the procedures established under the Government Contracts Execution Instructions and the broader administrative law framework. The procedures typically engage an initial administrative review by the procurer or the supervising authority, with subsequent recourse to the administrative courts in accordance with the rules governing administrative litigation. The challenge procedures provide an important corrective mechanism but engage specific procedural requirements that should be observed with care, including in respect of the time limits for the lodging of challenges.
Private Sector Tendering
Private sector tendering is governed by the procurer’s internal procurement policy and by the general law of obligations under the Iraqi Civil Code. The substantive features parallel public sector tendering in their structure, although the procurer enjoys greater flexibility in the design of the procedures and in the conduct of the award. Private sector tendering nevertheless engages substantial commercial discipline, and the documentation should be designed to support the consistent conduct of the procurement and the management of subsequent disputes.
How We Can Help
Etihad Law Firm advises on tendering and bidding in Iraq, including in respect of public procurements governed by the Government Contracts Execution Instructions No. 2 of 2014, the preparation of bid submissions, the structuring of bid bonds and performance security, the response to award decisions, the bringing and defence of tender challenges, and the conduct of private sector tendering procedures.