Key Features of the New Government Tenders and Procurement Law

At its meeting this evening, the Council of Ministers approved the new Government Tenders and Procurement Law, which aims to regulate procedures relating to works and procurement. Its key features include:

1. Supporting Local SMEs and Local Content

1.1 Priority shall be given to local small and medium-sized enterprises (SMEs) and local content.

1.2 Local SMEs shall not be required to submit an initial guarantee (bid bond).

2. The Entity Responsible for Unified Procurement

The entity’s responsibilities include:

2.1 Identifying works and procurement required by more than one government entity, standardizing their technical specifications, conducting tendering procedures, receiving and evaluating bids, selecting the best offers, and concluding framework agreements on behalf of government entities in accordance with the Law.

2.2 Preparing lists of works and procurement covered by framework agreements and making them available to government entities through the portal.

2.3 Reviewing feasibility studies and cost estimates submitted by government entities for works and procurement that those entities intend to tender.

2.4 Preparing standard tender documents, prequalification documents, contract templates, contractor evaluation forms, and any other documents required by the nature of the works and procurement.

2.5 Developing training programs to improve the qualifications and skills of personnel responsible for implementing the Law within government entities.

3. A Unified Electronic Portal for Government Procurement

Government tendering and procurement procedures shall be conducted through the portal.

4. Bidder Qualification

4.1 Introducing prequalification and post-qualification procedures to assess bidders’ qualifications and their ability to perform government contracts.

5. New Methods of Government Contracting

5.1 Public Tender

All works and procurement shall be offered through public tender, except where exemptions apply under the Law.

5.2 Limited Tender

This method may be used in the following cases:

• 5.2.1 When the estimated value of the works and procurement does not exceed SAR 500,000.
• 5.2.2 When the works and procurement are available from only a limited number of contractors, suppliers, or service providers.
• 5.2.3 In urgent cases.
• 5.2.4 When the works and procurement are available from civil society institutions, associations, or nonprofit entities.
• 5.2.5 For consulting services.

5.3 Two-Stage Tender

This method applies to works and projects that require detailed technical specifications.

5.4 Direct Purchase

This method may be used in the following cases:

• 5.4.1 When the estimated cost of the works and procurement does not exceed SAR 100,000.
• 5.4.2 For the procurement of weapons, military equipment, and their spare parts.
• 5.4.3 When this method is necessary to protect national security interests.
• 5.4.4 When the works and procurement are available exclusively from a single service provider, contractor, or supplier.
• 5.4.5 When the works and procurement are available from only one civil society institution, association, or nonprofit entity.
• 5.4.6 In emergency cases.

5.5 Framework Agreement

This method applies when it is not possible to determine the quantities of items, the scope of works or services, or the timing of their delivery.

5.6 Electronic Reverse Auction

5.7 Industry Localization and Knowledge Transfer

5.8 Competition

This method applies to works that require intellectual or creative input.

6. Technical Evaluation Before Financial Evaluation

Technical bids shall be examined before financial bids.

7. Standstill Period

A standstill period shall be introduced after the award decision is issued and announced, and before the award is approved and the contract is signed, to allow any objections or grievances to be submitted.

8. Direct Payments to Subcontractors

A government entity may make payments directly to subcontractors, sub-suppliers, or other subcontracted service providers.

9. Partial Withdrawal of Works and Procurement

If a contractor breaches its contractual obligations after receiving notice, the government entity may withdraw part of the works and procurement and arrange for their completion at the contractor’s expense.

10. Claims for Compensation

A party contracting with a government entity may apply to the Administrative Court for compensation if the government entity fails to fulfill its obligations.

11. Alternative Dispute Resolution

The Implementing Regulations shall specify other methods for resolving disputes that arise during contract performance.

12. Regulations Governing Implementation

Regulations shall be prepared to address conflicts of interest and govern the conduct and ethics of personnel responsible for implementing the Law.

For more information, visit the Ministry of Finance’s Government Tenders and Procurement Law page.

SCA Workshops and Feedback on the Draft Law

The Saudi Contractors Authority organized several workshops with contractors and other interested parties to discuss the draft law and develop recommendations for improving it.

The following table presents the feedback raised during those workshops and how it was reflected in the new Law.