The launch of the national In-Country Value (ICV) program provides suppliers an excellent opportunity to win government and semi-government tenders because the certification provides companies with a certain weightage during tender evaluations. The Ministry of Industry and Advanced Technology (MoIAT) launched ICV certification in 2021.
In 2018, the Abu Dhabi National Oil Company (ADNOC) launched a procurement-led ICV program that included
- corporate strategy,
- localization of supply chains, and
- the emergence of new local industries and services,
boosting and attracting foreign investments, stimulating economic growth and export optimization, generating profitable job opportunities in the private sector, contributing to national GDP growth, increasing R&D and modern technology spending, and increasing privatization.
This blog defines the ICV certification and outlines its usefulness to business entities in the UAE.
What is ICV Certification?
The UAE Government's National In-Country Value Program (ICV) endorses the Ministry of Industry and Advanced Technology's (MoIAT) responsibility for enhancing the effectiveness and sustainable development of the UAE's industrial sector.
The program evaluates local manufacturing spending, local products and services, investments, hiring and training of Emiratis, and job creation. The program promotes manufacturing in the UAE and redirects spending on goods and services into the national economy.
Who can apply for the ICV Certification?
Any local or foreign company may obtain an ICV certificate following the ICV guidelines.
Tier 1 suppliers (suppliers directly providing goods or services to the Program's Partners) may be required to declare their ICV score as part of their tender evaluation and award process as part of the National ICV Program.
Tier 2 and lower suppliers may also be required to provide their ICV Certificate to compete with Tier 1 suppliers in tenders.
Why is ICV Certification Required for Suppliers?
Although an ICV certificate is not required for suppliers to work with ADNOC, the certification adds value to the provider for the following reasons:
- Suppliers who join the program can benefit from the increased demand for local products and services and the opportunity for government contracting.
- Stakeholders and small and medium businesses (SMEs) can benefit from increased business growth as value chains become more localized due to the ICV program.
- The ICV certification program expands opportunities for local suppliers to form alliances with foreign businesses seeking to capitalize on the competitive advantages of a joint supply chain.
But suppliers who do not have an ICV certificate can still participate in tenders, but their score will be zero, and they will be at a disadvantage over those with a higher ICV score.
- Holders of the ICV certificate may benefit from contractual advantages with partner companies and federal agencies.
- For Instance, all suppliers who directly provide products or services to ADNOC or its group of companies must submit their ICV score and ICV implementation (if required by the RFQ).at the time of tender bids. ICV certification has become essential for any business entity to bid in an ADNOC or group company tender.
- For the same reason, business entities that do not directly engage with ADNOC or other participating entities but do engage with Tier 1 suppliers to participating entities must also obtain an ICV certificate. The ICV score assessment is shaping an ADNOC procurement initiative and award strategy.
Conclusion
In the ADNOC award strategy, the bid evaluation procedure ranks suppliers based on their average ICV score and gives the highest ICV score bidder the first right of refusal.
It also implies that bidders with ICV certificates have an advantage over suppliers who do not. As more and more entities join forces with ADNOC to accept ICV for their procurement initiatives, obtaining an ICV certificate has become critical.
Want to Know More?
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Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.