On October 29, 2024, the Libyan Council of
Ministers issued Decree No. 600 of the Year 2024, enacting a brand-new
set of Administrative Contracts Regulations (ACR). Effective immediately upon issuance, this comprehensive legal framework annuls
and supersedes the long-standing General People’s Committee Decision No. 563 of
2007.
For businesses, contractors, and legal practitioners
operating or planning projects in Libya, understanding these updated rules is
critical. Below is a detailed executive summary and operational overview of the
new regulations.
1. Core Definitions & Scope of Application
The regulations strictly govern all Administrative
Contracts financed or funded by the Libyan Public Treasury or approved
within the state development plan.
- What is an
"Administrative Contract"? Under Article 1, it is defined
as any contract concluded by a public administrative body or unit to
implement/supervise development projects, offer technical advice, or
manage a public facility. Crucially, these contracts contain exceptional,
non-civil clauses specifically designed to protect and prioritize the
public interest.
- Applicability: The rules
apply to all new contracts and, retroactively, to existing administrative contracts, provided they do not directly contradict pre-agreed contractual terms.
- Recognized
Contract Types: Public works, consultancy appointments, supply and installation,
operation and maintenance of public utilities, and facility management.
2. Institutional Jurisdictions & Oversight
The regulation establishes a clear hierarchy for who
can authorize procurement and sign agreements:
- The Council of
Ministers: Retains exclusive power over strategic or special-nature projects,
emergency contracts outside the general budget, contracts involving
multiple sectors, and any contract signed with an unregistered foreign
executing entity.
- Ministries: Authorized to
conduct technical/economic feasibility studies and approve award minutes
within their designated sector budget limits.
- Administrative
Units (Municipalities/Public Companies): Responsible for localized
studies, while their final awards must still be sanctioned by their
supervising Ministry or the Council of Ministers.
3. Approved Methods of Government Contracting
While General Bidding (Public Tender) remains
the default legal mandate to ensure maximum competition and fair pricing, the
regulations permit alternative methods under strict exceptions:
|
Method
|
Description /
Conditions
|
|
General Bid (Tender)
|
The primary method, split into internal (local) or
international options.
|
|
Restricted (Limited) Tender
|
Limited to pre-qualified or registered contractors.
Used for specialized supplies or consultancies. Requires at least 3
participants.
|
|
Tender Negotiation
|
Direct negotiation Rounds with specialized entities
to secure optimal terms during urgent needs or failed bids.
|
|
Direct Agreement (Direct Order)
|
Permitted for national security, sole-source
monopolies, or small-scale emergency maintenance. Strict monetary thresholds
apply up to 1M LYD (Minister approval), 5M LYD (Prime Minister approval), and
above 5M LYD (Council of Ministers approval).
|
|
Two-Stage Bid
|
Technical proposals are submitted first without
pricing, followed by financial bids from technically qualified contenders.
|
|
Framework Agreement
|
Used for repeated or time-sensitive, unpredictable
supply needs over a maximum 2-year duration.
|
|
Public Auction
|
The mandatory mechanism for leasing out or selling
state-owned movables and real estate.
|
4. Key Financial Disclosures, Securities, and
Guarantees
To mitigate state risk, the GNU has instituted rigid
rules surrounding bid bonds, performance bonds, and tax liabilities:
- Preliminary
Deposit (Bid Bond): Must accompany all bids (0.5% to 1.5% of
estimated project value for public works/goods; capped at 0.5% for real
estate). It must be an unconditional, irrevocable bank guarantee from a
commercial bank operating in Libya.
- Performance
Bond (Final Guarantee): Successful bidders must scale up
their security deposit to 4% of the total contract value within 30
days of award notification. For standard government procurement under
Chapter Seven, this bond is set at 15%.
- Taxes and Fees: Contractors
are legally liable for all Libyan stamp duties, income taxes, surtaxes,
and consumption duties. The regulations strictly forbid transferring the
contractor's tax burden to the contracting public entity.
- Advance
Payments: Public works contractors may request an advance payment capped at 15%
of the original contract value, disbursed in three equal 5% increments
based on milestones (site takeover, work plan approval, and completion of
temporary site setups). Consultancy contracts are capped at a 10%
advance. All require matching bank guarantees.
5. Execution Controls & Penalties for Default
The regulation places heavily structured operational
obligations on the contractor:
- Use of National
Products: Contractors are legally mandated to utilize national local
materials and products, provided they meet technical specifications and
remain price-competitive.
- Social
Responsibility (Community Care): In a push for corporate social
responsibility, national contractors must allocate up to 2% of
expected net profits to health, social, or cultural care. For foreign
contractors, this allocation is a minimum of 2%, and for joint
ventures, it is a minimum of 1%.
- Subcontracting
Restrictions: Total assignment or wholesale subcontracting of a contract to a
third party is completely prohibited and triggers immediate contract
cancellation and bond confiscation. Partial subcontracting of specialized
works is allowed only if disclosed in the original technical bid or
approved via subsequent written consent.
- Delay
Penalties: Standard delay fines are set at 5% of the total contract
value for public works, capped at 10% for supply defaults, and up
to 20% for other specialized administrative agreements.
- Blacklisting
& Deprivation: Severe breaches, fraudulent behavior, bribery, or
unexcused delays can land a company on an official state Black List,
barring them from direct or indirect bidding across all state entities.
6. Transparency & The Electronic Platform
In a bid to modernize state procurement, promote equal
opportunity, and eliminate influence peddling, the regulations introduce a
centralized Unified Electronic Platform. All administrative bodies are
obligated to announce public tenders, upload procurement documents, and manage
bidding processes through this platform, unless technically unfeasible or
restricted by national security protocols.
7. Dispute Resolution & Legal Jurisdiction
- Local Courts: Libyan courts
maintain ultimate jurisdiction over disputes arising from these
regulations.
- Arbitration: Administrative
contracts must outline a multi-tier dispute mechanism: initial review by
an appointed Opinion and Dispute Avoidance Council, followed by
formal arbitration pursuant to the Libyan Commercial Arbitration Law.
Resorting to international or foreign-partner arbitration requires
explicit, prior approval from the Council of Ministers.
Download the English translation of Decree No. 600-2024 from the Google Drive link
below:
Important Note: I have shared a preliminary English translation of GNU Decree 600-2024 via the Google Drive link in this post. Please note that this particular version is a rough draft and needs significant improvements for full accuracy. I will be working on uploading a corrected, highly accurate translation in a later phase. However, if your team needs an exact or verified translation of specific Articles right now, please send me an email, and I will prioritize your request and reply in the shortest time possible.
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When comparing the new Administrative Contracts
Regulations (ACR) under Decree No. 600 of 2024 to the legacy
framework Decision No. 563 of 2007, several major changes stand out.
These changes focus on modernizing procurement, strengthening state oversight,
increasing electronic transparency, and providing stricter financial
protections.
The key structural and legal shifts between the 2007
and 2024 frameworks include the following:
1. Digital Modernization & Transparency Mandate
- 2007 Framework: Relied
entirely on traditional print media, notice boards, and physical delivery
for public bid advertisements and submission documents.
- 2024 Framework: Mandates the
use of a centralized Unified Electronic Platform. All government
administrative bodies must now publish tenders and accept encrypted bids
digitally. This completely modernizes state procurement protocols and
seeks to minimize influence peddling.
2. Tightened Financial Authority Limits for Direct
Agreements
- 2007 Framework: Public
officials possessed broader direct spending powers. The head of a
government sector could execute a "Direct Commission" (Direct
Assignment) up to a value of 2 million LYD before needing higher
executive authorization.
- 2024 Framework: Rebranded as
"Direct Agreements," the regulation systematically cuts a
Ministry's direct financial authority in half to 1 Million LYD. Any
direct contract between 1 million and 5 million LYD now requires prior
written permission from the Prime Minister, and anything exceeding 5
million LYD requires Council of Ministers approval.
3. Concrete Defenses Against Delays in Payment
- 2007 Framework: Delayed state
payouts to active contractors lacked clear, immediate remedy mechanisms
within the text, often resulting in prolonged legal deadlocks.
- 2024 Framework: Article 104
explicitly dictates that late state payment is no longer cost-free.
If a valid invoice is delayed by the contracting state entity for more
than 10 weeks, the contractor is granted the legal right to intentionally
slow down or suspend work. Furthermore, the state must pay the contractor
actual necessary operational expenses incurred during that suspension
(capped up to 4% of the delayed extract value), and the delay period must
be automatically added to the contract timeline.
4. Accelerated, Rigid Challenge and Appeal Timelines
- 2007 Framework: Bidders
challenging an award faced slower, more ambiguous bureaucratic review
processes.
- 2024 Framework: Article 25
creates an incredibly tight 7-day window for unsuccessful bidders
to formally challenge a procurement decision. The head of the
administrative body then has exactly 7 working days to issue a final
decision. This strict window prevents projects from stalling
indefinitely but places a heavy administrative burden on state agencies to
have completely meticulous evaluation records ready on the day of the
award.
5. Alternative Dispute Resolution Mechanisms
- 2007 Framework: Lacked
sophisticated, pre-integrated alternative dispute layers, steering mostly
toward lengthy, standard domestic litigation channels.
- 2024 Framework: Prioritizes
alternative resolutions before heading to court. It introduces the
mandatory initial layer of a specialized Opinion and Dispute Avoidance
Council embedded right into the contract. Furthermore, if
international arbitration is sought with a foreign entity, it explicitly
loops in a mandatory safeguard requirement: explicit approval from the
Council of Ministers.
6. Exclusion of Specific Unfunded Project Types
- 2007 Framework: Formally
addressed and organized certain project structures not directly funded by
the public treasury, such as BOT (Build-Operate-Transfer) models.
- 2024 Framework: Focuses
exclusively on contracts explicitly financed from the Public Treasury
or General Budget. It drops coverage for completely unfunded
alternative investment mechanisms, making it an agile framework strictly
for direct public spend.
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