Dubai Law Sets New Rules For Outsourcing of Government Services

In his capacity as Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, has issued Law No. (5) of 2026 regulating the outsourcing of government services in the emirate.

Under the law, outsourcing refers to a private company contracted to deliver some or all services on behalf of a government entity according to agreed terms and conditions.

What does the law define?

The legislation outlines the responsibilities of the Department of Finance in overseeing this form of outsourcing.

It specifies the rules and procedures governing outsourcing arrangements and details the obligations of the contractor — defined as a licensed private organisation, whether for-profit or non-profit, authorised in Dubai to execute an outsourcing agreement.

Fair competition: The law states that a government entity may appoint one or more contractors to provide the same service. However, exclusive contracts are not permitted unless there is only one bidder, a provision aimed at maintaining fair competition.

Outsourcing contract: The legislation also specifies the elements that must be included in the outsourcing contract, including its duration, the conditions for termination and measures designed to safeguard the contractor’s assets.

Violations and penalties: It addresses violations and penalties as well, allowing a government entity to authorise the contractor to assist in collecting fines related to breaches of applicable regulations by service users.

Monitoring: The law requires the government entity to regularly supervise and assess the contractor’s performance using performance indicators specified in the outsourcing agreement.

At least one Emirati for each expat employee: The contractor must employ at least one UAE national for every non-national employee. Salaries and incentive schemes for Emirati staff must comply with applicable regulations and the provisions set out in the outsourcing contract.

Must comply within three years

The provisions of Law No. (12) of 2020 on Contracts and Warehouse Management in the Dubai Government apply to procedures for selecting a contractor and to matters not specifically covered in the outsourcing agreement.

The legislation also requires both the government entity and the contractor to align their operations with its provisions within three years from the date the law comes into force.

Any provisions in other legislation that conflict with this law are repealed to the extent of the inconsistency. The law takes effect from the date of its publication in the Official Gazette.

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