MUSCAT: The Sultanate of Oman has removed a 5 per cent retention requirement from updated standard government contracts, seeking to improve contractors’ liquidity and accelerate project delivery while introducing tighter controls on delays.
The Ministry of Finance announced the changes with the Authority for Projects, Tenders and Local Content on October 27.
The package introduces a design, procurement and execution contract and updates the construction and engineering consultancy contracts. The agreements are mandatory for government entities subject to the Tenders Law.
Removing the retention sum, previously withheld from the contract value, is intended to ease cash flow pressures and help contractors execute projects more quickly.
The revised terms require contractors to submit a recovery plan when project delays reach 5 per cent. At 15 per cent, their eligibility will be reviewed, potentially resulting in restrictions on participation in future government projects.
The measures follow technical and legal reviews of previous agreements aimed at resolving contractual challenges, clarifying procedures and aligning project management and execution with recognised international standards.
The ministry said the changes would improve public spending efficiency by supporting timely completion, controlling costs, strengthening quality and reducing risks and disputes.
The contracts clarify relationships between project parties and reduce overlapping responsibilities. They also address insurance, guarantees and the respective rights of contractors and project owners.
Local content and Omanisation requirements are incorporated into the terms, obliging contractors to recruit and train Omani nationals and use local suppliers and subcontractors.
Abdullah bin Humaid al Habsi, Head of the Project Follow-up Office, said the update formed part of a wider effort to improve project delivery and create a contractual environment that encouraged national companies to participate.
He said the agreements provided government entities with stronger oversight tools while establishing clearer rights and obligations for all parties and supporting adherence to schedules and financial commitments.
The revised definition of force majeure encompasses natural events, epidemics and pandemics, clarifying contractual obligations when exceptional circumstances affect execution and supporting a more balanced allocation of risk.
Project owners also have expanded authority to withhold or suspend payments and offset amounts owed, in accordance with contractual provisions.
The agreements comprise six sections covering the contract template, project-specific terms, general conditions, scope of work and local content, price schedules, and contract management procedures.
The structure is intended to make the documents easier to use, strengthen transparency and governance, and provide clearer mechanisms for managing contracts and settling disputes.
Saleh bin Ali al Harthi, a development budgets expert at the ministry, said four additional standard contracts were at advanced stages of review.
These cover services, small-scale works and services, procurement, and human resources or manpower. Their formal adoption is planned in the near future. The updated agreements are available on the ministry’s website. — ONA
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