The public procurement bidding process in Saudi Arabia

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The bidding process

i Notice

As a general rule, all works and purchases must be put out to public tender and are announced on a unified web portal of government procurement under the supervision of the Ministry of Finance.²⁰ However, the amended Procurement Law provides for certain exceptions to public tender,²¹ as discussed below.

ii Procedures

Limited tender contracts, which fall outside public tender requirements, are permitted in the following cases:²²

1. if the works and purchases are only available from a limited number of contractors or suppliers;
2. if the estimated value of the works and purchases does not exceed 500,000 riyals, by inviting the greatest possible number of bidders, provided that they are not fewer than five;²³
3. urgent cases;
4. if the works and purchases are available from civil society associations or organisations, or from non-profit entities, provided that they execute the contracts concluded on their own; and
5. consulting services.

Limited tenders are subject to more relaxed rules than those applicable to public tenders. The rules for limited tenders are set out in Section III of Chapter II of the 2019 Regulations.

The procurement of arms, other military equipment and spare parts is now subject to direct purchase through GAMI²⁴ and is exempt from public tender (see Section IV.i).

In addition, Article 32 of the amended Procurement Law permits direct procurement in certain exceptional cases, such as when services are exclusively available from a sole supplier or the estimated value of the contract does not exceed 100,000 riyals.

iii Amending bids

The amended Procurement Law permits amendments of the prices of contracts or framework agreements only in the following cases, as further specified by the 2019 Regulations:²⁵

1. if there is a change in the prices of materials or services covered by the tender and specified by the 2019 Regulations;
2. if changes to customs tariffs, duties or taxes are introduced; or
3. if, during the implementation of a contract, unforeseeable material difficulties arise.

Moreover, the contracting government entity may issue variation orders involving increases in contracts by not more than 10 per cent of their value or reductions by not more than 20 per cent of their value, as further stipulated by the 2019 Regulations.²⁶