Government Tenders and Procurement Law in Saudi Arabia

The Government Tenders and Procurement Law in the Kingdom of Saudi Arabia is a legal framework that governs the processes for government tenders, procurement, and related projects in the Kingdom. Its objectives are to ensure transparency in the awarding of government contracts, uphold integrity, and promote equal opportunities in existing tenders.

The Government Tenders and Procurement Law aims to achieve four key goals. These are: achieving optimal economic efficiency in government procurements and carrying out government projects at fair competitive prices; regulating procedures of tenders and procurements carried out by government authorities and ensuring they are not influenced by personal interest to protect the public funds; guaranteeing transparency in all stages of government tender and procurement procedures; and promoting honesty and competition and ensuring fair treatment of suppliers and contractors in accordance with the principle of equal opportunities.

The Government Tenders and Procurement Law was issued in 2006 to clarify the primary procedures and instructions governing government business and procurement, replacing the earlier Law of Government Procurement and Execution of its Project that had been in place since 1977.

In 2019, a Royal Decree was issued to repeal the 2006 Government Tenders and Procurement Law and establish a new law under the same name. However, certain articles from the previous law (Articles Sixty-One, Sixty-Two, and Sixty-Three), which pertain to leasing and investing in government-owned real estate, remained in effect. Additionally, the committee formed under Article Seventy-Eight, responsible for reviewing contractor compensation requests and restrictions on dealings, would continue its work until these matters were fully resolved and the new tenders law came into force.

The Government Tenders and Procurement Law comprises ninety-nine articles, classified into seven titles, which are: General Provisions, Manner of Contracting, Proposals and Awards, Concluding and Executing Contracts, Sale of Movables, Review of Complaints, Violations, and Appeals, and Concluding Provisions.

The new tenders law introduces articles that modernize procedures for government business and procurement. These include requirements for advance planning by government entities, as outlined in Title Five, and the development of a contractor evaluation mechanism to safeguard public funds. Additionally, the law introduces several new contracting methods, such as the reverse auction, an electronic process where bids are successively lowered within a set timeframe to select the lowest offer.

The new law addressed the principle of transparency for government institutions by introducing a regulation under the new tender law called the “Regulations on the Conflict of Interests in Implementation of the Law.” Additionally, it issued another regulation to govern the conduct and ethics of those responsible for enforcing the law.

The Government Tenders and Procurement Law outlines key principles, including equality, ensuring that all those seeking to engage with a government entity are provided equal opportunities and treated fairly. Competitors are granted access to clear and consistent information regarding the required work and purchases, available within a specified timeframe.

The law also prioritizes transparency, mandating that all public tenders adhere to principles of openness, transparency, and equal opportunity. No bids or contracts may be accepted or finalized unless they comply with the law's regulations. Furthermore, works, purchases, and contracts must align with the actual needs of the government entity and be offered at fair prices that do not exceed prevailing market rates. Preference is given to local small and medium enterprises, local content, and companies listed on the capital market.

The Government Tenders and Procurement Law stipulates the establishment of a portal to publish government tenders and procurements unless it is feasible for technical reasons or reasons relating to national security. The law requires the portal to ensure the highest degree of privacy, confidentiality, safety, transparency of information, and integrity of procedures. The portal must make available to interested parties tender-related information and data as specified by the regulations. The portal maintains a record for each government entity, which includes information, data, and procedures relating to concluded contracts, as well as tendered projects and works, as specified by the regulations. The Ministry of Finance charges a fee for the services rendered through the portal. The Council of Ministers determines the amount of the fee and may amend it upon the ministry's recommendation.

The "Etimad Platform," launched in 2018, is an electronic system for government financial services. It serves as a unified digital tool that streamlines tendering and procurement processes across all government sectors. The platform promotes transparency between government entities and suppliers, while also expanding access to a wider range of suppliers. This fosters greater competition and improves the quality of government projects. The platform facilitates a fully electronic process for tendering, receiving invitations, purchasing brochures, reviewing offers, and awarding contracts.

The Government Tenders and Procurement Law stipulates that prospective bidders must meet the requirements necessary for carrying out government works and procurements. It also requires the government entity to carry out pre- or post-qualification for its works and procurements. If the pre-qualification is conducted, the invitation to tender is limited to those who have passed the pre-qualification phase. The law also stipulates that pre- or post-qualification criteria must be objective and measurable, and be inclusive of the bidders' technical, financial, and administrative capabilities, as well as the amount of their contractual obligations, in a manner that is commensurate with the nature, size, and value of the project or work.

Tender documents include information and data relating to works and procurements offered for tender. Tender documents must be made available on the unified government procurement portal. If technically infeasible, a sufficient number of hard-copies are made.

The Government Tenders and Procurement Law outlines provisions for various aspects of public procurement and contracting. These include technical terms and specifications for the works and purchases offered, the estimated costs, bid evaluation criteria, bid comparison and acceptance, and competition division. It covers competitor solidarity, contracting methods for general and limited competitions, urgent cases, consulting services, two-stage bidding, direct purchases, framework agreements, and electronic reverse auctions. The law also addresses industry localization, knowledge transfer, competition controls, bid submission, initial guarantees, bid opening, bid evaluation, contract validity, competition cancellation procedures, suspension periods, and related authorities. Additionally, the law sets forth guidelines for concluding and executing contracts, such as contract drafting, implementation timelines, final guarantees, financial compensation, price adjustments, change orders, contract assignment and subcontracting, fines, contract extensions, partial withdrawals, contractor liability, contract termination, contractor performance evaluation, and the sale of movables. It also includes mechanisms for handling complaints, violations, and grievances.