Statistical and Analytical Reports

Tenders Law

Published Date: July 2005
Status: Available (Hardcopy / Softcopy)

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Since the passing of the General Audit Law (GAL) by Iran’s Parliament (Majlis) in 1987, no attempt had been made to pass a bill for tender holding procedures, refer to in GAL, until year 2002 when Majlis passed the much overdue Tenders Law.
Tenders Law has been prepared on the basis of the United Nations Commission on International Trade Law (UNCITRAL) legal pattern, utilizing the experiences of other countries in this regard.

The Law pursues two basic principles of “transparency” and “guaranteeing the rights of tender participants”. The World Bank released a report on the Law in Feb 2004, calling it as one of the most significant achievements of legislative action in Iran stressing on its contents aimed at “transparency” and creating “competitiveness”.

Unlike the previous laws, the procedures and stages involved in the tenders are thoroughly explained and clarified in this Law. Although some experts find the Law very bulky and complex, nevertheless some useful bureaucratic tools have been foreseen in the Law.
One of the issues addressed in the Law is the qualitative assessment of the tender participants before inviting them to the tender. This helps the tender holder to select contractors/producers capable of undertaking and fulfilling relevant commitments.

Another issue tackled by the Law is the correlation between price and quality. This issue constitutes a major challenge in supplying goods and equipments and also in selecting contractors and consultants. The past laws were more lenient but had failed to explicitly specify the way of incorporating quality of the commodities and services into their prices. Cheapness was the criterion for purchasing. But this has no real economic rationale.
This issue has been dealt with in the Tenders Law in the concept of “appropriate price”. In the past, there were some concerns about use of “appropriate price” or “balanced price”. It was feared that applying the criteria would violate the rights of some participants on technical scores. However, according to this Law, these criteria should be specified and made public in advance. It also stresses that any technical decision should be made before opening the financial packages.

Given the global experiences during the past few years, a new classification should be provided for the economic transactions between the State and the private sector, in line with Iran’s domestic situation and the role it is playing in the international economy.

The Tender Law pattern is somehow compatible with the UNCITRAL legal pattern developed in the UN. This enables Iran to gain the much-needed acceptable position in international transactions.
Iran’s Management and Planning Organization (MPO) have been assigned the task of preparing the Executive Regulation of Article 23 of the Law. In general, the Law is inclusive of five Regulations, one of which pertains to preparing a law for passing judgments in tender-related affairs. This has to be approved by Majlis and it will have its own special Executive Regulation. MPO is obliged to prepare the other four Regulations as well, requiring the collaboration of the Executive bodies and the Ministry of Finance and Economic Affairs. The said four regulations are as follows:
The regulation for Information and Documentation System of Tenders
The regulation for Qualitative Assessment of Tender Participants
The regulation for holding Limited Tenders
The regulation for acquiring consulting services.

In view of the above mentioned facts/points and with the intention of acquainting foreign potential participants in Iranian tenders, particularly in the oil and gas sectors, with the full details of the applicable law, Iran Oil Gas Network has embarked on preparing an authentic translation of the ‘Tenders Law’, which follows:

Table of Contents:

Part 1: General Issues
Article 1: Applicability
Article 2: Definitions
Article 3: Categorization of transactions
Article 4: Categorization of tenders

Part 2: Foundations of tenders
Article 5: Tender Commission
Article 6: Responsibilities of the Tender Commission
Article 7: Complaints Commission
Article 8: Responsibilities of the Complaints Commission

Part 3: Holding Tenders
Article 9: Tender holding procedure
Article 10: Securing the financial resources
Article 11: Methods of holding a tender
Article 12: Qualitative assessment of tender participants
Article 13: Tender Notice
Article 14: Tender documents
Article 15: Order of preparing and submitting proposals
Article 16: Terms & conditions for submission of proposals
Article 17: Clarification of documents
Article 18: Opening the proposals
Article 19: Commercial/Technical evaluation of the proposals
Article 20: Financial evaluation and specifying winner of tender
Article 21: Signing the contract

Part 4: Tender regulations
Article 22: Correspondence and delivery of documents
Article 23: Documentation and information
Article 24: Renewal and annulment of tender
Article 25: Investigation of complaints
Article 26: Mode of holding a limited tender
Article 27: Abandoning the tender procedures
Article 28: Tender Abandoning Commission
Article 29: Non-binding cases on holding tender
Article 30: Abolshing previous laws


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