UAE Transforms Government Procurement with Federal Decree-Law No. 11 of 2023

The Ministry of Finance in the United Arab Emirates has officially announced the issuance of Federal Decree-Law No. 11 of 2023 on Federal Government Procurement. The law establishes a framework for the procurement of products and services across federal government entities in the UAE.

The newly enacted law, which came into force on December 1, 2023, is designed to set clear principles, controls, and standards for government procurement operations. Drawing inspiration from advanced and flexible international best practices, it aligns with the UAE's digital agenda, promoting the implementation of state-of-the-art digital procurement systems.

One of the primary objectives of Federal Decree-Law No. 11 is to ensure equality, fairness, and transparency among suppliers participating in government procurement processes. The legislation emphasises the inclusion of relevant stakeholders and participants in the purchasing process within federal entities, aiming to enhance operational efficiency and effectiveness while maintaining quality and achieving spending efficiency.

The law focuses on strengthening integrity, trust, transparency, and competitiveness in all procurement procedures. By adhering to global quality standards and sustainable development practices, the UAE aims to provide public value and serve public interests through its procurement activities.

In addition to supporting SMEs and the national economy, the law provides flexibility, improves purchasing and contracting operations' performance, and enhances the efficiency of planning and procurement management at the federal level.

Federal Decree-Law No. 11 applies to all procurement and contracting activities and procedures of federal entities, including ministries, authorities, and central agencies, along with their subsidiaries. It also extends to independent and autonomous federal entities operating under the government's supervision, following their own administrative and organisational structures and budgets, and operating on a not-for-profit basis.

While certain entities are exempt due to the unique nature of their operations, the law recommends that these exempt entities refer to Federal Decree-Law No. 11 of 2023 as a guide to achieve the best value for their purchases.

The governance of the procurement process, including the roles and responsibilities of federal entities, councils, committees, and relevant organisational departments, is standardised by this law and its executive regulations. All procurement operations, at every stage, are mandated to adhere to the principles of transparency, competitiveness, and equal opportunities outlined in the law and its regulations.

To ensure flexibility and business continuity, the law stipulates that existing policies, such as Cabinet Resolution No. (1/1) of 2022 on the adoption of the Digital Procurement Policy and Cabinet Decision No. (4) of 2019 on procurement regulation and storehouses management, will continue to be enforced as long as they do not conflict with its provisions until the issuance of the executive regulations.

Importantly, Federal Decree-Law No. 11 of 2023 does not apply to procurement contracts concluded by federal entities before December 1, 2023. However, the provisions of the law must be followed in case of amendment, renewal, or extension of these existing contracts, reflecting the government's commitment to gradual and smooth implementation.