Tuesday 27 / October / 2026
Muscat: The Ministry of Finance, in cooperation with the Projects, Tenders and Local Content Authority, has announced the issuance and update of a package of new unified contracts. This includes the issuance of the Design, Procurement and Construction Contract, and the updating of the Construction Contract and the Engineering Consultancy Contract.
The move forms part of a comprehensive plan to modernise the contractual framework in line with best international practices, align it with the specific requirements of local projects, enhance the reliability of the business environment, and entrench the efficiency of the contracting system.
The issuance of this contract package responds to current requirements for executing projects with higher efficiency, clearer procedures, and proactive risk management. It follows comprehensive technical and legal reviews of the previous contracts, aimed at developing and addressing contractual challenges, enhancing the efficiency of the contracting system in project delivery, and aligning the contracts with approved best practices in project management and execution, with a focus on raising the efficiency of government spending. This will contribute to accelerating project completion, improving execution quality, controlling costs, reducing risks and disputes, and ensuring clarity in accountability procedures and mechanisms.
It will also enhance local content by enabling national companies and small and medium enterprises to participate more effectively in the execution of government projects.
The new updates to the unified government contracts focused on redrafting the general framework of the contracts to achieve greater clarity in the contractual relationship between project parties and to limit overlap of authorities. This reinforces the principles of transparency and contractual fairness, with a positive reflection on execution quality and adherence to timelines, and reduces variation orders during the execution of government projects, while considering several aspects such as insurance, guarantees, and the rights of the contractor and the employer.
The new contractual clauses also included the incorporation of local content and compliance with Omanisation ratios. The contractor is explicitly obligated to meet local content requirements, including the employment and training of Omani national cadres and reliance on local suppliers and contractors.
The unified government contracts safeguard the rights of all parties, providing a clearer contractual environment and setting out a clear path for dispute resolution or settlement.
The most notable updates in the contracts include the cancellation of the retained amounts of 5 percent of the actual contract value, a step aimed at enhancing contractors' financial liquidity and accelerating project execution. They also introduce corrective procedures to address delays in project execution, beginning with obligating the contractor to submit a recovery plan when the delay reaches 5 percent to return the project to its approved track, and reviewing the contractor's eligibility when the delay reaches 15 percent, with the possibility of restricting their participation in future government projects.
The unified government contracts incorporate a broader concept of force majeure to cover natural events, epidemics, and pandemics. This enhances clarity of contractual obligations and keeps pace with changes and exceptional circumstances that may affect project execution, achieving greater balance in risk distribution among contract parties. The unified government contracts also grant the employer broader powers to withhold or suspend payments and the right of set-off in accordance with contractual controls, thereby maintaining commitment to works execution and quality.
