Legal Alerts

Defense-related public procurement in Morocco is governed by the general law applicable to public procurement, framed by Decree No. 2-22-431 of 15 Chaabane 1444 (8 March 2023) relating to public procurement (“the Public Procurement Code”), which repealed the previous regime dating from 2013, albeit with certain adaptations.

This public procurement may derogate from certain rules in order to provide greater flexibility in procurement procedures and to meet requirements of confidentiality.

This type of contract may give rise to industrial offsets such as the manufacturing or assembly of military equipment on Moroccan territory, which will be subject to the regulatory framework established by Law No. 10-20 relating to defense and security equipment, arms and ammunition.

Modified procurement procedures

The Public Procurement Code provides for several specific exemptions for contracts awarded for the purposes of national defense or public security.

The main ones consist of the possibility to proceed by means of standard agreements, purchase orders, negotiated procedures without prior publication or competition, or simplified or international tender procedures without threshold conditions.

Standard agreements (conventions de droit commun) are agreements under which the State and the supplier have full freedom to define their terms without being bound by the provisions of the General Administrative Clauses (CCAG) that may be issued under Moroccan regulations. These agreements may concern the purchase of vehicles and equipment for national defense or public security purposes, as well as transport, training or expertise services in these areas.

Purchase orders (bons de commande) generally concern low-value supplies or services in the civilian context. The Public Procurement Code sets this limit at MAD 500,000. However, the Code allows greater flexibility for the National Defense Administration to set a higher limit on a case-by-case basis through a person authorized by the Head of Government. The advantage of the purchase order lies in simplifying contracting with the State, as the contractual terms are defined within the purchase order itself rather than in a contractual framework consisting of a CCAG, a Special Administrative Clauses document (CPS) and Common Administrative Clauses (CPC). The services concerned notably include maintenance and repair of military installations and housing.

For major State orders in the field of national defense and public security, the State may depart from standard tender procedures when requirements dictate that the services remain confidential and secret. Such contracts must be authorized in advance, on a case-by-case basis, by the Head of Government, based on a special report prepared by the competent authority. In such cases, the contract will be negotiated directly without publication. The contract must nevertheless comply with the formal structure of a public contract including a CPS and a CCAG to which it refers.

This formal requirement is no longer necessary where the negotiated contract concerns services that are not only relevant to national defense but also present an urgent nature. In such cases, the contract may be concluded through a simple exchange of letters or by means of a special agreement.

Finally, the National Defense Administration is not required to comply with the thresholds applicable to simplified or international or national tenders. Consequently, it may resort to such procedures regardless of the contract amount.

Furthermore, a wide range of adaptations is provided to ensure confidentiality in these contracts, such as the absence of a public bid opening session or the non-publication of procurement plans, lists of contracts and calls for competition, etc.

Industrial offsets

In defense procurement, the Public Procurement Code provides that CPS relating to major defense projects may include industrial offset clauses without financial compensation.

These industrial offsets are typically intended to generate direct investment in Morocco, job creation, transfer of skills or technologies, training, and the purchase or integration of local components in the manufacture of equipment supplied to the Royal Armed Forces.

Such industrial offsets relating to the production of defense equipment will be governed by Law No. 10-20 relating to defense and security equipment, arms and ammunition, as well as its implementing decree, Decree No. 2-21-405.

Law No. 10-20 distinguishes between three categories of defense and security equipment:

• Category A: “defense equipment, weapons and ammunition”;
• Category B: “security equipment, weapons and ammunition”;
• Category C: “weapons and ammunition intended for other uses.”

In the case of establishing a production or assembly unit for military equipment in Morocco, its establishment and operation shall be subject to obtaining manufacturing and import authorization from the National Defense Administration, following the opinion of a National Commission for defense and security equipment, arms and ammunition.

Such authorization generally requires that its holder be a company incorporated under Moroccan law, whose capital is majority-owned by Moroccan nationals, unless an exemption is granted by the administration.

The authorization is accompanied by specifications setting out the obligations of the holder, particularly with respect to traceability, marking, safety, security, access control, personnel recruitment, storage, decommissioning and destruction of equipment.

The authorization may be withdrawn, of course, in the event of non-compliance with the obligations set out in the specifications, but also “for reasons related to public order or public security”.

Philippe de Richoufftz, Partner

Charles Umbach-Bascone, Associate