New regulations setting forth the framework on public procurement and the rules on the performance of public sector contracts have been recently approved.

This new statute, approved by means of Law No. 41/2020, of 23 December 2020 (“the Public Contracts Act”), states the aim of bringing in improvements deemed warranted from the track record of the previous statute, notably in terms of expediting and facilitating procurement procedures.
 
In this Alert we draw attention to some of the key points. 

• A general legal framework is set forth regulating the formation and execution of Concession Agreements, notably Public Works and Public Service Concessions. This new regime, a novelty in the Angolan legal system, includes inter alia rules on the rights and duties of both the Grantor and the Concessionaire, special overriding rights conferred upon the Grantor, a general maximum term for concession agreements, risk sharing principles, specific references to rights conferred upon lenders, rules on the ability to encumber concession assets, the type of situations that enable the Grantor to seize or terminate concessions, as well as causes for termination and consequences thereto. 
   
• The scope of application of public procurement rules has been clarified with regard to State-owned and State-controlled companies, subjecting them to the public procurement rules for contracts in excess of Akz 500 million only when they are financed, in total or in part, by State funds. Contracts below this threshold are always excepted from the public procurement rules regardless of State funding. The threshold also does not apply to concessions, which are always subject to the public procurement rules.
   
• New types of procurement procedures have been brought in and detailed, notably ‘emergency contracting’ procedures, to deal with unforeseeable and emergency situations, reserved contracts concerning the provision of certain goods or equipment, notably in the fields of health, social and schooling services. Adjustments have been made to the electronic dynamic procedure, aiming to allow awards in less than 24 hours.
   
• The thresholds used to define which public procurement procedure needs to be followed based on the estimated value of the contract have been updated: the simplified procedure (direct award) can henceforth be adopted for contracts with estimated value up to Akz 18 million, tenders by invitation only can be adopted for contracts with estimated value up to Akz 182 million; above the latter threshold the procedure to be followed is the open tender or the restricted tender with prequalification. Open tenders or restricted tenders with prequalification must always be adopted for concession agreements.
   
• The rules on the choice of procurement procedure on the basis of material criteria, regardless of the estimated value of the contract, have also been amended, notably to the effect that direct awards may be used in relation to contracts for the execution of projects financed by international lenders.
   
• A single performance bond to be provided by the successful bidder, securing the prompt and correct performance of the contract, is foreseen, and, contrary to what happened hitherto, a minimum amount is now set forth, of at least 5% of the contract price.
   
• The new Public Procurement Act also establishes for the first time a set of rules concerning infringements and the corresponding fines and ancillary penalties for breaches, as well as the possibility for the National Public Procurement Service to suspend contracts, this entity now being entrusted with new powers in relation to the supervision of procurement procedures and the performance of public sector contracts.

 A number of important terms and conditions are still to be laid down in secondary legislation, to be approved by the President of the Republic.
 
The Public Contracts Act enters into force on 22 January 2020.

For more information on this Legal Alert please contact:
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