Saudi Arabia has reversed an earlier ban on the government contracting with foreign firms.
Government entities can now sign contracts with other international companies and international institutions even if they do not have a regional headquarters in the Kingdom.
The decision was announced by the Local content and Government procurment authority.
It reflects a transformation of ensuring spending efficiency and making sure that major strategic projects are delivered on time.
Concentrate on Efficiency and Project Delivery
Authorities said the move is aimed at striking a balance between regulatory compliance and practical requirements.
While the “regional headquarters relocation” rule has been enforced, flexibility is being brought to prevent project delays.
Earlier this year, the kingdom suspended contracts with foreign companies that did not have a regional headquarters in Saudi Arabia.
This was applied in a general way to all government bodies, institutions, funds and affiliated authorities.
Officials now have come to the realisation that some projects need specialised technical expertise and competitive pricing which may not always be available locally.
Exception Requests with Etimad Platform
Government bodies that want to contract with such companies must submit exception requests.
These requests are to be filed through the digital “Etimad Platform” which operates under the Ministry of Finance.
The platform is the official digital gateway for budget management, contracts and procurement processes.
Authorities stressed that applications should be made before embarking on a tender or a procedure for a direct contract.
Two official circular letters have gone out describing the process of submitting and how these contracts will be dealt with.
Conditions for the Foreign Companies
Foreign companies with no regional headquarters will retain the right to bid for public tender. However, their bids will be only accepted under strict conditions.
Their offer needs to either be the sole technical compliant bid or they need to be at least 25 percent lower than the next competitor.
Projects with an estimated value of less than or equal to SAR 1 million are exempt from these controls and offer additional flexibility for contracts on a smaller scale.
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