Moving with the times: Changes to the rules governing public contracts

Public procurement contracts are of great importance in Morocco, representing 15% of GDP in 2013. The principles governing public contracts required amendment in order to comply with international standards. Amending the status of public contracts was also an opportunity to give the necessary attention to strategic issues such as environmental protection and job creation. In addition, it was a chance to convey a clear message that improving the business climate through the enhancement of both transparency and competition was a priority.

The new regulations were designed to address all of these objectives and correct the deficiencies of the previous decree, dating back to 2007. However, a certain number of the decree’s provisions have only been reformulated, rather than truly amended.

For example, the principle of national preference applicable to works and study public contracts already existed in the previous regulations and is reproduced in the latest decree in similar terms. As this was already provided for in the former version of the decree, the contracting authority may decide to increase the offer of a foreign bidder by up to 15%.

MAIN NEW FEATURES OF THE DRAFT DECREE: undefined Uniformity: Uniformity of scope has been enshrined into law as the decree applies equally to state contracts, public institutions and companies, and local authorities and local government groupings. The objective is to establish uniformity regarding the rules applied by public entities when awarding contracts. However, the regulations will only apply to local authorities on a temporary basis until a financial regime applicable to the regions and other local authorities is established. Uniformity is also of material significance as the regulations affect works, service and study contracts, as well as architectural services. It is worth noting that an entire chapter of the decree is dedicated to architectural services. New tools in the contract process: The new rules introduce the call for expressions of interest, which is normally a valued way for the contracting authority to preselect the candidates most able to provide a complex service, and subsequently to negotiate with only a certain number of them.

However, the legislator did not wish to pursue this approach in the only article dedicated to the procedure, in which it is expressly stated that the call for expressions of interest may not lead to a reduction in the number of candidates. As the regulations stand, it is simply a method of identifying potential candidates, with the conditions for using the various procurement methods leading to negotiations or a restricted circle of bidders being a prerequisite in all cases for the ability to use group purchasing via collective purchasing. It is a mechanism reserved for the purchase of items of the same type by two or more contracting authorities, which pool the procurement phase and then sign a document establishing the collective purchase, and designating the coordinator and operating rules of the collective. This should enable public awards to be rationalised due to the economies of scale that are generated. New types of contracts: The new regulations introduce the “design-build” contract, which is defined as a single contract with a sole contractor covering both project design and performance of works, or the design, supply and construction of a “complete installation”, the term “turnkey” having ultimately been rejected. The regulations specify that such contracts must be awarded by competitive tender. In the absence of clarification, the question arises as to the areas in which contracting authorities may make use of such contracts. The application of other regulations, notably those relating to planning rules, may make the use of such contracts somewhat problematic, but will provide a useful tool for both the energy sector and information technology services. Simplification & clarification of procedures: The main simplification measure concerns the contents of the bidders’ administrative files. The regulations state that a tax certificate, social security registration certificate and registration certificate at the commercial registry of the tenderer will only be demanded of the bidder to which the authority intends to award the contract.

In view of the often lengthy waiting periods prior to receipt of such documents, this simplification is important and prevents competent candidates from being penalised for purely administrative reasons. The regulations also clarify the obligation to include references for similar services provided in the technical submission documents. Such references are now only required for current services. It now only remains to be seen how this term will be interpreted by the various contracting authorities. Modernisation: The use of new technologies in the administration of public procurement contracts has been officially adopted via the publication on the public contracts website of all the information relating to public tenders, and the gradual transfer of all procedures to digital processing. This will take place between now and 2020, according to the Tax Office.

This is all part of the initiative to modernise public services, and especially the fight against corruption. The public contracts website will therefore become the reference system for the administration of public procurement contracts. Providing the option of making tender submissions via an online offer and receipt system is also being planned.

The regulations also provide for the utilisation of reverse bidding, which is a computerised offer selection procedure enabling bidders to revise their offers downwards as the bid process progresses, up until the deadline set by the contracting authority. Preferential measures in support of small & midsized firms: The regulations state that the contracting authority must award 20% of the forecast value of contracts within a budgetary year to small and medium-sized companies. At the beginning of each year and at the latest by the end of the first quarter, the contracting authority is required to publish a programme of the planned public contracts.

The terms that enforce this regulation and the list of public establishments subject to its provisions are set out in an order issued by the minister for economic and financial affairs dated November 28, 2013. This order has partly negated the substance of the measure, as the largest procurement entities are exempt from the obligation. Certain provisions in the previous decree have been carried over into the new regulations, such as the allotted markets and the use of subcontractors, to enhance access for small and medium-sized companies. Clarification of the definition of “financially most beneficial” offer: The previous regulations provided that, in addition to pricing, qualitative criteria – such as quality of services, professional guarantees and technical assistance – should also be taken into account, and be applied to both offer admissibility and evaluation. This system was associated with a scoring method that included the weighting or prioritisation of the various criteria.

The new regulations also provide for qualitative criteria such as environmental performance and aesthetic and functional qualities, but ultimately, after acceptance of the bidders, the overall price of the offer will become the sole selection criterion.

Quality entails a cost and it is prejudicial that such qualitative criteria are not taken into account in the final evaluation of offers. It could cause bidders to meet such criteria in a purely superficial manner, while ensuring a minimal impact on their overall financial package as the sole selection criterion.

STUDY CONTRACTS: Study contracts contain a number of new features as the regulations now include the obligation to receive approval from the Government General Secretariat prior to the commencement of legal studies giving rise to the drafting of legislation and regulations, and also the possibility of providing a preliminary phase defining the objectives and performance levels to be achieved.

The award method for such contracts constitutes the sole exception to the aforementioned principle as the new regulations provide for the weighting of technical and financial scores in selecting the offer which is financially the most beneficial. Bidder guarantees & complaint mechanisms: Finally, the new regulations have endeavoured to improve bidder guarantees and complaint mechanisms through the introduction of a “standstill” period of 15 days prior to awarding the contract, which enables unsuccessful bidders to initiate any administrative proceedings. Another important mechanism is the ability to apply directly to the Contracts Commission without having to wait for a response from the concerned contracting authority and the minister.

OBG would like to thank Lefèvre Pelletier & associés and Romain Berthon, partner; Lina Fassi Fihri, partner; and Alain Gauvin, partner, for their contribution to THE REPORT Morocco 2014