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Procurement

Morocco develops the national preference for public procurement

The spread of the Covid-19 pandemic in Morocco led the Moroccan government to declare a state of health emergency by Decree-Law No. 2-20-292 dated 23 March 2020. The restrictions associated with the state of health emergency have had a negative impact on the Moroccan economy. In this context, the Moroccan government adopted measures to support the gradual resumption of economic activity.

Circular No. 15/2020 dated 10 September 2020, addressed by the Head of Government to Ministers and Deputy Ministers (the “Circular“), aims to promote the mechanisms of national preference in public procurement.

What are the main themes developed in the Circular?

Pursuant to the Circular, public purchasers shall comply with the following requirements:

  • application of Moroccan standards or other standards applicable in Morocco under international agreements to any provisions or specifications or terms and conditions included in public contracts or contracts awarded by companies delegated to manage a public service or subsidized by the State (see article 35 of Law No. 12-06 dated 11 February 2010 on standardization, certification and accreditation);
  • limiting the use of supplies and services provided by foreign companies in order to encourage the consumption of Moroccan products. However, Moroccan public purchasers may deviate from this requirement if no Moroccan product complies with the required technical specifications;
  • application of the provisions in force relating to the national preference in the selection of public procurement holders, which we will develop below.

What’s new for 2019 in terms of national preference?

Previously, national preference was optional for Moroccan public purchasers (see article 155 of Decree No. 2-12-349).

National preference was optional for public purchasers to favor, under certain conditions, “Moroccan companies” in procurement procedures over foreign companies. Accordingly, bids from foreign firms are automatically given a lower score than bids from Moroccan companies.

Decree No. 2-19-69 dated 24 May 2019 amends Decree No. 2-12-349 on public procurement in order to further facilitate the access of cooperatives and autoentrepreneurs to public procurement.

On the one hand, the new article 155 of Decree No. 2-12-349 extends the scope of application of the structures concerned by the national preference, which previously only applied to Moroccan companies. Henceforth, the national preference concerns cooperatives, unions of cooperatives and autoentrepreneurs. However, questions remain regarding the qualification of Moroccan company since Moroccan law does not precisely define the criteria to determine a company’s nationality.

On the other hand, article 155 makes it mandatory to apply national preference to all public procurement procedures.

Which markets are concerned by national preference?

The scope of the procurements concerned is limited. National preference only applies to bids relating to contracts for works and related studies (see article 155 of Decree No. 2-12-349 as amended by Decree No. 2-19-69).

What are the modalities of application of national preference mechanism?

National preference consists in increasing the amounts of the bids submitted by foreign companies. This increase shall not exceed 15% of the amount of the foreign company bid (see article 155 of Decree No. 2-12-349 as amended by Decree No. 2-19-69).

As an example, for a financial bid not exceeding MAD 100 million (i.e. approximately EUR 10 million), the rate is set at 15%. However, when the financial bid is greater than MAD 100 million, a 15% surcharge should be applied for MAD 100 million and 7.5% for the rest of the amount.

If the amount of the contract exceeds MAD 100 million, its award will be subject to the prior approval of a Commission chaired in particular by the Minister of the Economy (for State administrations) and in particular by the Minister of the Interior (for local authorities).

This Commission shall award procurement contracts by a majority decision.

How does it work in the case of a bid by a group composed of Moroccan and foreign companies?

Groups comprising national and foreign companies bidding for public contracts are required to apply the percentage increase of the bid amount of 15% maximum (see article 155 of Decree No. 2-12-349 as amended by Decree No. 2-19-69). However, this increase of maximum 15% applies only to the share of foreign companies compared to the overall amount of the group’s offer. The methods for calculating and applying this measure also remain to be defined.

However, some subjects have not yet been addressed by the Circular. A foreign company could consider either anticipating this 15% increase by offering a 15% cheaper price to the Moroccan company’s bid or applying as a subcontractor of a Moroccan company.

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