Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Tender Law No. 49 of 2016 regulates government tenders. The Central Agency for Public Tenders (CAPT), under the jurisdiction of the Council of Ministers, acts on behalf of most government ministries. It oversees public tenders that are valued at more than 75,000 KD (approximately $248,500). Under the law, foreign bidders can bid on public tenders without a local agent; however, an agent is needed for the execution phase. The law which went into effect in 2017 requires foreign bidders to purchase at least 30% of the materials from the local market, where available. The law favors local sourcing by mandating a 15% price preference for locally produced items. Bidders are selected based on scores against a specified point-based criterion. In addition, bidders can now file a grievance if they have an issue with the tendering process. Besides awarding contracts, CAPT invites companies to pre-qualify, and to attend pre-tender meetings. All CAPT announcements can be found at the website https://capt.gov.kw/en/, and are published weekly in Arabic in the official gazette, al-Kuwait al-Youm. An English translation of the gazette is available for subscription from translation offices and publishing companies.
Tenders are usually awarded on the basis of the lowest price once technical compliance has been established. Businesses should note that if a bidder wins a tender but then refuses to sign the contract, the concerned Ministry has the right to confiscate the bid bond as well as the performance bond, which may equal 5-10% of the contract’s value.
Many companies add 10-15% to the cost of the project to mitigate the potential risk of projects or losing the performance bond. Foreign companies cannot sell directly to the government nor can they participate in public tenders except through a local agent. In the oil sector, for instance, suppliers must be approved by an internal committee and placed on a list of “pre-approved” companies. For major projects, international companies are typically invited to pre-qualify.
There is a 10% price preference on public contracts in favor of Kuwaiti businesses. If a contracting officer or authority determines that a local company meets the technical specifications of the proposal, and even though the bid price may be higher (within 10%), the local company is awarded the contract.
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy Center for Foreign Government Contracts and for additional information.
Financing of Projects
The Gulf Investment Corporation (GIC) is headquartered in Kuwait and was established by the governments of the GCC (Bahrain, Kuwait, Saudi Arabia, Qatar, Oman, and the UAE). As a multi-service financial institution, its primary objective is to offer a wide range of financial services to both corporate and private investors. The GIC offers portfolio management, financial advisory services, bond and equity issues, direct investment support, and capital market activities. Investment is focused on regional manufacturing, agriculture, industrial services, and minerals exploration.
The International Investor (TII) and the International Investment Group (IIG)
Both institutions are private Islamic investment groups offering project and export finance support.
Kuwait is a member of the World Bank’s International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA).