Law
No. (8) of 2014
Amending
Law
No. (6) of 1997 Concerning Contracts of Government
Departments
in the Emirate of Dubai[1]
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We, Mohammed bin Rashid Al
Maktoum, Ruler of Dubai,
After
perusal of:
Law No. (6) of 1997 Concerning Contracts of
Government Departments in the Emirate of Dubai and its amendments,
Do hereby issue this Law.
Article (32) of the above
mentioned Law No. (6) of 1997 will be superseded by the following:
1. An interest-free performance bond of
ten percent (10%) of the value of the Contract will be collected from the
winning bidder. The performance bond will be in the form of an unconditional
and irrevocable letter of guarantee issued by a bank operating in the UAE, and will
be submitted on a special form prescribed by the concerned Department. Unless
the Committee decides otherwise, the performance bond must be valid for ninety
(90) days after expiry of the term of the Contract in case of supply and
services Contracts, or until final delivery in case of works Contracts.
2. Where the Contract value cannot be
precisely determined, the value of the performance bond will be a lump sum .
3. The amount of the performance bond
must be increased if the value of the supplies, works, or services exceeds the
value specified in the Contract. Where a contractor fails to satisfy the full
amount of the performance bond, the Department will be entitled to deduct the
required amount from any sum due to the contractor.
4. In case of divisible supply Contracts,
the amount of the performance bond may be gradually reduced according to the percentage
of completion of the Contract, provided that the performance bond will not be
less than ten percent (10%) of the value of the uncompleted part of the Contract.
5. Notwithstanding the provisions of paragraph
(1) of this Article, exemption from the requirement to provide a performance
bond may, subject to the approval of a Director General or his authorised
representative, be granted in the following cases:
a. where the supply period stipulated in a
Contract does not exceed fifteen (15) days from the date of signing the Contract,
in which case the validity of the bid bond must be extended for a period of not
less than thirty (30) days of the final delivery of supplies;
b. in case of Contracts for supplying
materials and services where the party contracting with the Department is a
foreign company operating within or outside of the UAE, or a company
established in a free zone, and the supplier refuses to provide the performance
bond while the Department is in urgent need of these supplies for which no appropriate
alternative can be provided by another entity;
c. without prejudice to Article (64) of
this Law, in case of works or consultancy services Contracts where the value of
the Contract does not exceed five hundred thousand Dirhams (AED 500,000); or
d. without prejudice to Article (64) of
this Law, where the contractor is unable to provide the performance bond and
the Contract is for works whose value
exceeds five hundred thousand Dirhams (AED 500,000), up to two million Dirhams
(AED 2,000,000), in which case ten percent (10%) of the payments owed to the
contractor will be retained as security due to failure to provide the
performance bond until the final delivery of the project, and the retained
amount may be paid to the contractor in return for providing a bank guarantee for
the same amount.
6. Public authorities and corporations,
and companies in which the Government holds at least fifty percent (50%) of the
share capital, may be exempt from the requirement to provide bid bonds and
performance bonds.
This
Law comes into force on the day on which it is issued, and will be published in
the Official Gazette.
Mohammed bin Rashid Al Maktoum
Ruler
of Dubai
Issued in Dubai on 21 May 2014
Corresponding to 22 Rajab 1435 A.H.
©2014 The Supreme Legislation Committee in the
Emirate of Dubai
[1]Every effort has been made to produce an
accurate and complete English version of this legislation. However, for the
purpose of its interpretation and application, reference must be made to the
original Arabic text. In case of conflict the Arabic text will prevail.