Public Private Partnerships ("PPPs") are essentially a form of collaboration between government entities and private institutions with a view of financing, development, building and operation of projects, including but not limited to public transportation networks, parks, convention centers and more. PPPs offer a large range of benefits including the sharing of risks and rewards between the public and private sectors, the promotion of inward foreign investment, the utilisation of private sector expertise and innovation and the improvement to the quality of public services.
Scope of Application
The provisions of the PPP Guide apply to all partnership projects between government entities and the private sector and therefore do not apply to: (i) partnership projects between government entities and wholly state-owned companies, and (ii) projects of a military, security or confidential nature between the
Initial and Performance Bond
Prior to winning the bid and securing the award, the bidding contractor is required to submit to the Tender Board alongside the bid an 'initial bond' as determined by the Board. A 'bid' refers to a set of declared procedures for selling or leasing the assets owned by the State, whether movable or immovable, to obtain the highest prices submitted by bidders.
In accordance with Article 2.2.3 of the PPP Guide, the initial bond shall not be returned if: (i) the bidder withdraws its proposal or amends it after the deadline for submission of proposals, (ii) the successful bidder fails to sign the Partnership contract, or (iii) the successful bidder fails to submit a performance bond. Under Article 28 of the Tender Law, the initial bond shall be refunded to the prospective investor(s) within seven (7) days from the date of submitting the performance bond by those who are awarded the tender.
After winning the bid and being successfully awarded the tender with the concerned government entity, the Awarded Investor is required under Article 2.4.5 of the PPP Guide and Article 76 of Decision No. 37/2002 Issuing the Implementing Regulations of the Tender Law ("IRTL"), to submit a 'performance bond', the amount of which is determined by the Tender Board, within ten (10) days from the date of receiving the Letter of Intent. As for contracts concluded with contractors abroad, the payment shall be within twenty (20) days. Subject to the Board's approval, the period specified for submitting the performance bond in the two previous cases may be extended by a period not exceeding ten (10) days. If the Awarded Investor fails to submit such bond within the deadline, they are deemed to have withdrawn from the tender, and the Board may seize the initial bond and not refund the same.
Incorporation of a Company
In order to implement the PPP project, it is often a requirement that a
Contract Execution and Duration
Once the award has been announced and communicated to all the concerned parties, a contract is produced typically under the Board's Model Form of Contracts. This contract between the government entity and the Awarded Investor should be signed within a maximum period of thirty (30) days from the date of issuing the award decision in accordance with Article 54 (as amended) of the Tender Law.
Pursuant to Article 3.13 of the PPP Guide, the contract shall include a duration that does not exceed fifteen (15) years commencing on the date of its conclusion or the date specified by the concerned government entity in coordination with the Ministry of Finance. The contract may, with the consultation of the
Rights of Compensation to the
PPPs typically involve the execution of highly complex, costly and lengthy projects that may bear the risk of increases in implementation costs, which may not be foreseeable upon the conclusion of the Project Contract. The contract may provide for the compensation of the
Assignment of the Contract
The Project Contract contains extensive contractual obligations on either party, however the parties may not, in accordance with Article 3.6 of the PPP Guide, assign the rights and obligations of the
Contract Termination
In accordance with Article 4.3 of the PPP Guide, the concerned government entity may, after consulting the Ministerial Committee, terminate the Project Contract if: (i) the
PPP Disputes
The Bahrain Chamber for Dispute Resolution ("BCDR"), as established by Decree Law No. 30/2009 with Respect to the Bahrain Chamber for Resolution of Economic, Financial and Investment Disputes, is the competent body to settle disputes between the
Concluding remarks
PPPs continue to enhance and attract investment in various sectors of the Kingdom's economy. PPPs in the housing sector are perhaps the most prominent examples of the rewards of
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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