New Developments under the Public Procurement Law 2023June 5, 2023
On 16 May 2023, the new Law on Public Procurement (“New PPL”) was promulgated by Royal Kram No. NS/RKM/0112/005 to regulate the rules, methods, procedures, and structures for the management and implementation of all public procurement.
The new law abrogates the Law on Public Procurement promulgated by Royal Kram No. NS/RKM/0112/004 dated 14 January 2012 (“Former PPL”). However, since the associated implementing regulations are still in draft form, the existing regulations will remain in effect until they are finalized.
The New PPL has 15 chapters and 87 articles, which is a significant increase from the Former PPL.
The New PPL introduces several new provisions to the Former PPL, including on the procurement of consulting services, procurement implementation procedures, and the imposition of more severe penalties.
The New PPL sets out to monitor procurement activities, and audit and monitor procurement-related financial arrangements. It specifies that public procurement is subject to subsequent procurement review by the Ministry of Economy and Finance (“MEF”), which has the right to do impromptu inspections during the procurement process where there are suspected problems or complaints have been lodged. Further, public procurement activities are subject to audit and financial inspection.
Interestingly, the New PPL has further expanded the scope of the law to govern all current applicable public procurements, irrespective of the source, except for: (i) any procurement financed by development partners that is required to follow the financing agreement’s procedures; (ii) any procurement that complies with the law on public-private partnerships; and (iii) any procurement involving confidential information related to national defense or the public order (these require the approval of the Prime Minister).
Who can qualify as a bidder?
All bidders are welcome to participate in public procurement, except for bidders who have been blacklisted or forbidden by court order.
The MEF must approve all procuring entities’ procurement plans before the budget execution year. In case of urgent need, the procurement plan can be amended subject to the MEF’s review and approval. However, in certain cases the Minister of the MEF could issue a letter to allow the procuring entity to amend its procurement plan without having to undergo the MEF review and approval process.
The procurement process must follow the seven steps outlined below:
- Preparation of tender documents
- Public announcement of invitation to bid
- Sale of the tender documents and collect and record the application
- Issuance of invitation to submit bidding documents
- Evaluation of all bids
- Awarding of the contract
- Contract management
Once the evaluation process is complete and the bidders have been selected, the procuring entity must issue a notification to all bidders on the contract award decision naming the winning bidder and provide a period of 10 working days for other bidders to lodge a complaint regarding the award decision. If no complaint is received, the procurement unit will arrange for the signing of the project agreements between the successful bidder and the head of the procuring entity.
How to prepare a procurement contract
The preparation of procurement contracts must adhere to a template established by a Prakas of the Minister of the MEF. The contract must be in Khmer and can be translated into other languages if necessary with Khmer as the prevailing language in case of any inconsistency. Interestingly, it is provided under the New PPL that all payments under procurement contracts must made in Khmer riel, except for contracts for carrying out procurement abroad, where payments can be made in a foreign currency.
As mentioned above, there is a significant increase in penalties under the New PPL as indicated in the table below:
|Individual who eliminates bidders, or interrupts tender process, whether through donations, pledges, agreements, or all other dishonest
|Sentence of from 1 to 3 years in prison
Fine of from KHR4 million KHR10 million
(approximately US$1,000 to US$2,500)
|Individual who conduct violence, coercions, or threats against bidders, suppliers, or contractors
|Sentence of from 2 to 5 years in prison
Fine of from KHR8 million to KHR20 million
(approximately US$2,000 to US$5,000)
|A legal person that commits the above offense
|Fine of from KHR20 million to KHR100 million
(approximately US$5,000 to US$25,000)
Besides the above penalties, we also note the inclusion of administrative sanctions in the New PPL, including:
- Written warning
- Immediate cessation of public procurement
- Activities cessation, suspension, revocation, or cancellation of the contract
- Removal from the list of bidders
- Being blacklisted